Corus expects more revenue from 'kids, family, women' specialty channels

Multimedia company Corus Entertainment Inc. is looking ahead to more growth from its specialty TV channels for "kids, family and women" after television advertising revenues propelled its third-quarter profits.

"Television had a superb quarter and was the driving force behind our strong Q3 results," chief executive John Cassaday said Thursday.

The Toronto-based company's fourth quarter is expected to have TV lead the way again, Cassaday said after Corus (TSX:CJR.B) posted a 39 per cent increase in its quarterly profit.

"Our television division will again be the engine driving strong top line and segment profit growth," he told analysts on a conference call.

"We are forecasting double-digit revenue gains for television in the fourth quarter, as we expect to benefit from continued exceptional growth in our merchandising business coupled with continued ad sale momentum from our three key customer verticals — kids, family and women."

Corus operates specialty cable channels such as the Canadian version of OWN:The Oprah Winfrey Network, kids' channels YTV, Teletoon and Nickelodeon Canada, W Network, country music lifestyle channel CMT Canada, Sundance Channel Canada and CosmoTV.

In its third quarter, Corus said television advertising revenues were up 15 per cent.

Cassaday also said the OWN network is off to a solid start since launching in March and Corus is anticipating significant advertising growth in the next quarter.

The company also announced its monthly dividend will increase by 16 per cent to 7.25 cents per share for Class B shareholders.

The higher dividend comes as the company said quarterly profits rose to $39.2 million, up 39 per cent over the same time last year. Earnings per share were 47 cents, above analyst expectations of 45 cents per share, according to a poll by Thomson Reuters.

The stronger earnings compare to profits of $28.3 million a year ago, or 35 cents per share.

Corus said revenue increased to $211.8 million, above estimates of $209 million from analysts polled by Thomson Reuters. A year ago the company posted revenues of $198.4 million.

But Cassaday said radio revenues likely won't improve until next year.

"We are very confident that we have the plans in place and the ratings are coming back our way and we're looking for a significant turnaround in our radio business going into 2012."

RBC Capital Markets analyst Drew McReynolds said the "impressive" TV results offset weakness in the company's radio revenues.

McReynolds said growth in specialty TV advertising was driven again mainly by CMT and kids' channels.

The weakness in radio revenues "warrants scrutiny" but likely will have some temporary effects, he said in a research note.

Corus is also facing increased competition from web-based services like online TV and movie provider Netflix.

The company has said it intends to be competitive by pushing ahead plans to deliver its licensed content on a variety of devices such as laptops and mobile phones, in addition to television.

The Shaw family, which controls the company through its multiple voting Class A shares, also controls Shaw Communications (TSX:SJR.B), Canada's second-largest cable TV operator.

Corus also owns radio stations across the country and children's animated content producer Nelvana.