Corus Entertainment’s first quarterly report of 2016, announced on January 13th, reported an income of almost 20 per cent less than that of the same quarter in 2015. It was the second year in a row that the first quarter showed losses. Corus owns multiple television networks in Canada, with brands like YTV and HBO Canada chief among its assets. The company also owns 39 Canadian radio stations.
It was the same day that the company announced that it was purchasing Shaw Media, a division of Shaw, another entertainment corporation, for $2.65 billion. As media companies struggle to adapt to the changing industry landscape, Corus is no exception, even as it’s purchasing of Shaw would seem to indicate otherwise.
In the report, the company trumpeted the deal with Shaw while acknowledging that revenues were up one per cent compared to the first quarterly of 2015. The actual financial gain made by Corus’s shareholders, however, fell 13 cents per share.
Corus Entertainment Fiscal 2016 Results
Link: https://www.documentcloud.org/documents/2701293-Corus2016.html#document/p1/a274345
Source: Corus Entertainment
Jordan Whelan, president of Toronto-based Big Smoke Media, a media buying company, attributes Corus’s fall to the change in the way people consume entertainment. “I have noticed that a lot of the ad offerings of these media companies are stale and archaic. Many of these companies are getting eclipsed by the web and failed to evolve fast enough,” writes Whelan in an email. “Why would a major corporation continue to buy commercials, which can be skipped over by those who record shows?”
Whelan’s statement rings true, as Corus lost almost five per cent in advertising revenue compared to the same quarter in 2015. The other main source of revenue for the company, subscriber fees, held relatively steady. That could also be about to drop, however. As Canada’s broadcasting regulations change and people are free to pick and choose which channels they wish to subscribe to rather than being forced to pick certain bundles.
“I think they’re in a place where they’re in danger of bleeding subscribers and losing some revenue that way,” says James Bradshaw, media reporter for The Globe and Mail, in a phone call. “There are a lot of digital options out there and people are wondering how many channels they want to be paying for and are starting to gear up for the regulatory changes that are coming that are going to allow people, if they want to, to start picking their channels one by one.”
Corus Entertainment May 2015-Jan 2016 by Nathan Caddell
Corus Entertainment May- Jan by ncaddell on TradingView.com
Source: TradingView
It is important to note that while the company has seen a drop in income, it is still, in its current state, profitable. “When we say they had a bad year last year, we mean that they saw declines in their revenue overall and they were in a lot of cases kind of below what Bay Street and Wall St had expected of them,” says Bradshaw. “It’s just below what they had been making before so it’s a step in the wrong direction, even though they’re still making money.”
As for whether the acquisition of Shaw will help the company increase its current profits, Whelan, for one isn’t sure. He does think that this deal will harm the general public, however: “Despite the strong PR campaigns, it is important to realize that this is not good for consumers both in terms of choice, pricing and potential job losses.”
“Was it right the move?” asks Bradshaw. “It’s a little early for me to be saying that.”
Corus Entertainment director of communications Sally Tindal declined to comment.