Corus profits halved in fourth quarter as value of broadcast licences falls

TORONTO – Corus Entertainment Inc. (TSX:CJR.B) says profits were nearly halved in the fourth quarter as expenses climbed higher and its radio division faced turbulence from advertisers.

The media company said Thursday it expects securing more advertising dollars will remain difficult in the next financial year, a factor that was taken into consideration when it booked a charge from the lower estimated value of its radio broadcast licences.

The outlook added to a growing sentiment in the media industry that early 2014 could leave companies struggling to improve their results. A similar opinion was delivered by newspaper company Postmedia (TSX:PNC.B) in its financial results on Thursday.

Corus chief executive John Cassaday said advertising softness will extend into the company’s first quarter results.

“To drive growth, radio has launched a focused sales initiative to secure new direct business that is gaining traction across our major markets,” he told analysts in a conference call.

“Leadership changes have been made to stimulate fresh thinking and improved performance.”

Radio stations have faced a new wave of competition from on-demand Internet radio stations. Over the past few years, companies like Rdio and Songza have grabbed a part of the market. Those names have joined an already crowded space that includes online and satellite radio companies like SiriusXM and Radio.

In its overall results, Corus said net income attributable to shareholders fell to $11.9 million, or 14 cents per share, from $23.3 million or 28 cents a share in the same period last year.

Revenues declined to $193.6 million from $195.6 million in the comparable period ended Aug. 31 a year earlier.

On an adjusted basis, earnings per share slipped to 31 cents, falling eight cents below analyst expectations, according to a survey by Thomson Reuters.

During the quarter, the company booked a series of charges like a $5.7-million impairment on its broadcast licences, about $5.2 million related to recent acquisitions and restructuring costs, and another $7.1 million on investment impairments.

Within its divisions, the quarterly revenue for radio operations dropped nearly eight per cent to $44 million.

Revenue for Corus’ television operations increased about 1.1 per cent to $149.6 million, helped by a six per cent increase in revenues for its specialty advertising channels.

Corus is controlled by the Shaw family, but operates separately from Shaw Communications Inc. (TSX:SJR.B). The company owns a variety of television, radio and production assets, including a slate of specialty channels, including YTV, Treehouse, Nickelodeon Canada, ABC Spark, which cater to children and family shows.

It also operates the W Network, the Canadian version of OWN: Oprah Winfrey Network and Cosmopolitan TV.

The company runs 37 radio stations, children’s book publishing, and animation assets.

Despite the unpredictable advertising environment, Corus still expects a strong fiscal 2014, Cassaday said.

“The recent reorganization of our leadership team will support our growth objectives and we are excited about the significant value that our pending acquisitions will bring to the business,” he noted in a release.

Corus is in the process of integrating some assets that it bought from BCE Inc. (TSX:BCE) to receive regulatory approval for its purchase of Astral Media. The transaction allowed Corus to buy the remaining half of Teletoon from Astral and other TV and radio interests.

Shares of the company dropped more than four per cent, or $1.08, to $23.67 on the Toronto Stock Exchange.