report to shareholders
Fourth Quarter 2024
For the Three Months and Year Ended August 31, 2024 (Unaudited)
Table of Contents
3 Financial Highlights
4 Business Highlights
5 Management's Discussion and Analysis
6 Overview of Consolidated Results
10 Business Segment Information
10 Television
11 Radio
12 Corporate
12 Quarterly Consolidated Financial Information
14 Financial Position
15 Liquidity and Capital Resources
17 Outstanding Share Data
17 Key Performance Indicators and Non-GAAP Financial Measures
20 Risks and Uncertainties
21 Outlook
21 Impact of New Accounting Policies
21 Critical Accounting Estimates and Judgements
22 Controls and Procedures
23 Interim Condensed Consolidated Financial Statements and Notes
Fiscal 2024 Fourth Quarter • Report to Shareholders | 2
FINANCIAL HIGHLIGHTS
(These highlights are derived from the unaudited interim condensed consolidated financial statements) | Year ended | |||
(in thousands of Canadian dollars except per share amounts) | Three months ended | |||
2024 | August 31, | 2024 | August 31, | |
2023 | 2023 | |||
Revenue | 248,048 | 314,232 | 1,176,738 | 1,408,468 |
Television | ||||
Radio | 21,305 | 24,611 | 93,860 | 102,772 |
269,353 | 338,843 | 1,270,598 | 1,511,240 | |
Segment profit (loss)(1) | 45,707 | 49,774 | 294,780 | 340,580 |
Television | ||||
Radio | 1,407 | 2,976 | 9,442 | 13,460 |
Corporate | (4,814) | (6,477) | (20,793) | (20,035) |
42,300 | 46,273 | 283,429 | 334,005 | |
Segment profit margin(1) | 18% | 16% | 25% | 24% |
Television | ||||
Radio | 7% | 12% | 10% | 13% |
Consolidated | 16% | 14% | 22% | 22% |
Net income (loss) attributable to shareholders | (25,675) | 50,412 | (772,641) | (428,724) |
Adjusted net income (loss) attributable to | (4,003) | (9,075) | 11,427 | 28,553 |
shareholders (1) | ||||
Earnings (loss) per share: | ($0.13) | $0.25 | ($3.87) | ($2.15) |
Basic | ||||
Diluted | ($0.13) | $0.25 | ($3.87) | ($2.15) |
Adjusted basic(1) | ($0.02) | ($0.04) | $0.06 | $0.14 |
Free cash flow(1) | 39,142 | 31,654 | 114,152 | 106,840 |
- In addition to disclosing results in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), the Company also provides supplementary non-IFRS measures as a method of evaluating the Company's performance and to provide a better understanding of how management views the Company's performance. These non-IFRS or non-Generally Accepted Accounting Principles ("GAAP") measures can include: segment profit (loss), segment profit margin, free cash flow, adjusted net income (loss) attributable to shareholders, adjusted basic earnings (loss) per share, net debt to segment profit, proforma net debt to segment profit, and new platform revenue. These are not measurements in accordance with IFRS and should not be considered as an alternative to any other measure of performance under IFRS. Please see additional discussion and reconciliations under the Key Performance Indicators and Non-GAAP Financial Measures section below.
Fiscal 2024 Fourth Quarter • Report to Shareholders | 3
BUSINESS HIGHLIGHTS
Multi-Platform Video Business
• Corus Introduces: Flavour Network and Home Network. On September 18, 2024, Corus announced its two all-new, Canadian-ownedlifestyle brands will launch in Canada on December 30, 2024. Launching with more than 460 premiere hours in Winter/Spring 2025, the Corus-ownednetworks will feature a mix of Canadian original programming, as well as international acquisitions through new and expanded license deals. The broad slate of exclusive content delivers new voices and formats, familiar faces from proven hits, and global representation to deliver a hand-picked, content-firststrategy and curated brand experience.
• Corus adds 173 hours of premium new content to Slice's fall schedule. While continuing to be home to premium reality content featuring real-lifeexperiences and iconic talent, Slice expands deals with trusted studio partners to feature new unscripted genres including true crime and daily news.
Corus Audio
• Corus introduces new classic alternative radio station in Calgary. Iconic Alternative 107.3 the Edge will play 30 years of alternative hits from the 80s, 90s and 2000s.
International Content Business
• Nelvana brings three popular kids' television series to Peacock across the U.S. All three seasons of Agent Binky: Pets of the Universe, The Dog & Pony Show and Super Wish are now available to stream exclusively on Peacock in the U.S.
Ongoing Focus on Capital Management
• Corus advances its deleveraging goals. In the fourth quarter of fiscal 2024, Corus paid down $2.7 million of debt and $38.8 million in the fiscal year.
• Corus announces amendment and restatement of credit facility. On October 25, 2024, Corus announced that it has completed an agreement to amend and restate its existing syndicated, senior secured credit facilities with its bank group, a copy of which will be made available under the Company's profile on SEDAR+ at www. sedarplus.ca.
Corporate News
• Corus refines revenue leadership structure. On August 7, 2024, Corus announced that as part of its ongoing efforts to right-size its business for sustainability, the decision was made to eliminate the role of EVP and Chief Revenue Officer. Greg McLelland stepped down from the role effective August 31, 2024, with Barb McKergow taking on the expanded role of SVP, Advertising, joining Corus' Senior Leadership Team.
Advanced Focus on Sustainability
• Corus gives back to local communities. In the fourth quarter, Corus helped raise $9.5 million for over 250 community giving initiatives as well as provided 620 volunteer hours to 58 local organizations across Canada.
Regulatory Developments
• CRTC announces public consultation on Independent Local News Fund. On July 23, 2024, the CRTC launched a public consultation on the future structure of the Independent Local News Fund ("ILNF"), including eligibility and allocation criteria. The regulator expressed a preliminary view that Corus stations should be eligible to receive proceeds. The relevant policy and order are currently the subject of judicial reviews and/or statutory appeals filed by online undertakings, with one appeal specifically focused on the ILNF (and such appeal being opposed by the Canadian Association of Broadcasters).
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's Discussion and Analysis of the financial position and results of operations for the three months and year ended August 31, 2024 is prepared as at October 24, 2024. The following should be read in conjunction with Management's Discussion and Analysis, consolidated financial statements and the notes thereto included in the Company's Annual Report for the year ended August 31, 2023 and the interim condensed consolidated financial statements and notes of the current quarter. The financial highlights included in the discussion of the segmented results are derived from the unaudited interim condensed consolidated financial statements. All amounts are stated in Canadian dollars unless specified otherwise.
Corus Entertainment Inc. ("Corus" or the "Company") reports its interim financial results under International Accounting Standard ("IAS") 34 - Interim Financial Reporting, as issued by International Financial Reporting Standards ("IFRS") in Canadian dollars. Per share amounts are calculated using the weighted average number of shares outstanding for the applicable period.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document contains forward-looking information and should be read subject to the following cautionary language:
To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking information"). This forward-looking information relates to, among other things, the Company's objectives, goals, strategies, targets, intentions, plans, estimates and outlook, including the adoption and anticipated impact of the Company's capital allocation strategy, capital structure and liability management including liquidity, leverage targets, ability to repay debt, and or renegotiate existing debt terms, dividend policy and the payment of future dividends, strategic plan, advertising and expectations of advertising trends for fiscal 2025, subscriber revenue and anticipated subscription trends, distribution, production and other revenue, the Company's ability to manage retention and reputation risks related to its on-air talent; expectations regarding financial performance, operating costs and tariffs, taxes and fees, and can generally be identified by the use of words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" or the negatives of these terms and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances may be considered forward-looking information.
Although Corus believes that the expectations reflected in such forward-looking information are reasonable, such information involves assumptions, risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied with respect to the forward-looking information, including without limitation: factors and assumptions regarding the Company's ability to maintain necessary access to loan and credit facilities, the general market conditions and general outlook for the industry including: the impact of recessionary conditions and continuing supply chain constraints; the potential impact of new competition and industry mergers and acquisitions; changes to applicable tax, licensing and regulatory regimes; inflation and interest rates, stability of the advertising, subscription, production and distribution markets; changes to key suppliers or clients; operating and capital costs and tariffs, taxes and fees, the Company's ability to source, produce or sell desirable content and the Company's capital and operating results being consistent with its expectations. Actual results may differ materially from those expressed or implied in such information. Important factors that could cause actual results to differ materially from these expectations include, among other things: the Company's ability to maintain necessary access to loan and credit facilities, the Company's ability to attract, retain and manage fluctuations in advertising revenue; the Company's ability to maintain relationships with key suppliers and clients and on anticipated financial terms and conditions; audience acceptance of the Company's television programs and cable networks including new, re-branded or re-programmed channels; the Company's ability to manage retention and reputation risks related to its on-air talent; the Company's ability to recoup production costs; the availability of tax credits; the availability of expected news, production and related credits, programs and funding; the existence of co-production treaties; the Company's ability to compete in any of the industries in which it does business including with competitors which may not be regulated in the same way or to the same degree; the business and strategic opportunities (or lack thereof) that may be presented to and pursued by the Company; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations including statements, decisions or positions by applicable regulators including, without limitation, the Canadian Radio-television and Telecommunications Commission ("CRTC"), Canadian Heritage and Innovation, Science and Economic Development Canada ("ISED"); changes to licensing status or conditions; unanticipated or un-mitigatable programming costs; the Company's ability to integrate and realize anticipated
Fiscal 2024 Fourth Quarter • Report to Shareholders | 5
benefits from its acquisitions and to effectively manage its growth; the Company's ability to successfully defend itself against litigation matters and complaints; failure to renegotiate, obtain relief from, or meet covenants under the Company's senior credit facility, senior unsecured notes or other instruments or facilities; epidemics, pandemics or other public health and safety crises in Canada and globally; physical and operational changes to the Company's key facilities and infrastructure; cybersecurity threats or incidents to the Company or its key suppliers and vendors; and changes in accounting standards.
Additional information about these factors and about the material assumptions underlying any forward-looking information may be found under the heading "Risks and Uncertainties" in the Company's Management's Discussion and Analysis for the year ended August 31, 2023 (the "2023 MD&A") and under the heading "Risk Factors" in the Company's Annual Information Form for the year ended August 31, 2023 (the "AIF"). Corus cautions that the foregoing list of important assumptions and factors that may affect future results is not exhaustive. When relying on the Company's forward-looking information to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise specified, all forward-looking information in this document speaks as of the date of this document and may be updated or amended from time to time. Except as otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update or revise any forward-looking information whether as a result of new information, events or circumstances that arise after the date thereof or otherwise. For a discussion on the Company's results of operations for fiscal 2023, we refer you to the Company's Annual Report for the year ended August 31, 2023, filed on SEDAR+ on December 8, 2023. Additional information relating to the Company, including the AIF, is available on SEDAR+ at www.sedarplus.ca.
OVERVIEW OF CONSOLIDATED RESULTS
REVENUE
Revenue for the fourth quarter of fiscal 2024 of $269.4 million decreased 21% from $338.8 million in the prior year's quarter. On a consolidated basis, advertising revenue decreased 15%, subscriber revenue was down 7%, while distribution, production and other revenue declined 70% compared to the prior year's quarter. Revenue declined 21% in Television and 13% in Radio.
For the year ended August 31, 2024, consolidated revenue of $1,270.6 million decreased 16% from $1,511.2 million in the prior year. On a consolidated basis, advertising revenue decreased 14%, subscriber revenue was down 6% and distribution, production and other revenue declined 58% from the prior year. Revenue decreased 16% in Television and 9% in Radio. Further analysis of revenue is provided in the discussion of segmented results.
DIRECT COST OF SALES, GENERAL AND ADMINISTRATIVE EXPENSES
Direct cost of sales and general and administrative expenses for the fourth quarter of fiscal 2024 of $227.1 million decreased 22% from $292.6 million in the prior year's quarter. On a consolidated basis, direct cost of sales decreased 31%, employee costs decreased 9% and other general and administrative expenses decreased 14%. The decrease in direct cost of sales was driven principally by the decline in amortization of program rights and film investments. The decrease in employee costs was primarily due to reduced headcount and short-term compensation accruals. Other general and administrative expenses were lower largely as a result of the elimination of CRTC Part II fees effective April 1, 2023, reduced tariff royalties and trade mark fees that are positively correlated with revenue, reduced rental costs, reduced advertising costs and lower consulting costs, offset by increased software and system license fees.
For the year ended August 31, 2024, direct cost of sales, general and administrative expenses of $987.2 million decreased 16% from $1,177.2 million in the prior year. On a consolidated basis, direct cost of sales decreased 21%, employee costs decreased 7% and other general and administrative costs decreased 15%. The decrease in direct cost of sales was driven principally by the decline in amortization of program rights and film investments. The decrease in employee costs was primarily due to reduced labour costs and commission expense, offset by increased pension and benefits costs and short-term compensation accruals. Other general and administrative expenses decreased largely as a result of the elimination of CRTC Part II fees, reduced tariff royalties and trade mark fees that are positively correlated with revenue, lower rental costs, satellite communication charges, and consulting costs, offset by increased software and system license fees. Further analysis of expenses is provided in the discussion of segmented results.
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SEGMENT PROFIT
Segment profit for the fourth quarter of fiscal 2024 was $42.3 million, a decrease of 9% from $46.3 million in the prior year's quarter. The decrease in segment profit for the fourth quarter was principally a result of Television advertising, subscriber and distribution, production and other revenue declines, and the sale of Toon Boom, partially offset by a decrease in amortization of program rights as well as further cost control measures undertaken to reduce general and administrative expenses. Segment profit margin for the fourth quarter of fiscal 2024 of 16% was up from 14% in the prior year's quarter.
For the year ended August 31, 2024, segment profit was $283.4 million, a decrease of 15% from $334.0 million in the prior year. The decrease in segment profit was principally a result of Television advertising, subscriber as well as distribution, production and other revenue declines, partially offset by a decrease in amortization of program rights and general and administrative expenses in the current year. Segment profit margin of 22% for the year ended August 31, 2024 was consistent with 22% in the prior year. Further analysis is provided in the discussion of segmented results.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense for the three months ended August 31, 2024 was $23.5 million, a decrease from $37.1 million in the prior year's quarter. The decrease was a result of reductions in the amortization of brands and trademarks of $13.8 million, offset by increases in amortization of capital assets of $0.5 million. Depreciation and amortization expense for the year ended August 31, 2024 was $111.1 million, a decrease from $157.6 million in the prior year. The decrease was a result of reductions in the amortization of brands and trademarks of $45.2 million, due primarily to the impairment of certain intangible assets during the year, and capital assets of $1.3 million.
INTEREST EXPENSE
Interest expense for the three months ended August 31, 2024 of $24.7 million decreased from $33.0 million in the prior year's quarter. The decrease in interest expense in the quarter results from lower imputed interest of $4.0 million on long-term liabilities associated with program rights, trade marks and right-of-use assets and lower interest on long-term debt of $3.9 million. Interest on long-term debt was lower as a result of repayments of bank debt.
Interest expense for the year ended August 31, 2024 of $107.8 million decreased from $135.4 million in the prior year. The decrease results from lower imputed interest of $15.7 million on long-term liabilities associated with program rights, trade marks and right-of-use assets and lower interest on long-term debt of $11.3 million in the current year. Interest on long-term debt was lower due to repayments of unhedged portion of bank debt, partially offset by higher interest rates on floating interest rate bank debt.
The effective interest rate on bank debt and the Senior Unsecured Notes due 2030 (the "2030 Notes") together with the $500.0 million 5.0% Senior Unsecured Notes due 2028 (the "2028 Notes", collectively referred to hereafter as the "Notes") for both the three months and year ended August 31, 2024 was 6.0% compared to 6.2% and 6.0%, respectively, in the comparable periods of the prior year.
GOODWILL, BROADCAST LICENCES AND OTHER ASSET IMPAIRMENT
Goodwill and broadcast licences are tested for impairment annually as at August 31 or more frequently if events or changes in circumstances indicate that they may be impaired. The macroeconomic environment became increasingly uncertain during the fourth quarter of fiscal 2022, and as a result advertising demand and spending across the North American television media industry contracted meaningfully. These conditions persisted throughout fiscal 2023 and 2024, and in particular, more unfavourably than anticipated in the third quarter of fiscal 2024. In addition, the labour action of the Screen Actors Guild-American Federation of Television and Radio Artists ("SAG-AFTRA") between June 2023 and November 2023 impacted the majority of scripted productions world-wide that employ SAG-AFTRA talent, which impacted the delivery of programming available for airing on the Company's services. This resulted in a further contraction in advertising demand, particularly in the Television cash generating unit ("CGU"). Further, the Company was unable to renew certain programming and trademark output arrangements with Warner Bros. Discovery which expire on December 31, 2024. The Company's share price has continued to decline meaningfully from August 31, 2023, which resulted in the Company's carrying value being greater than its market enterprise value at May 31, 2023, August 31, 2023 and May 31, 2024. Accordingly, impairment testing was required for both the Television CGU and Radio group of CGUs at all of the aforementioned period ends.
Fiscal 2024 Fourth Quarter • Report to Shareholders | 7
In the third quarter of fiscal 2024, the Company completed impairment testing of broadcast licences, goodwill and definite life intangible assets within the Television CGU and Radio group of CGUs and determined that impairment charges were required. As a result of these tests, the Company recorded non-cash impairment charges in the Television CGU totalling $915.6 million. This included charges against broadcast licences of $526.7 million, brands and trade marks of $315.3 million and program rights of $73.6 million. The Company recorded non-cash impairment charges in the Radio group of CGUs totalling $44.4 million. This included charges against goodwill of $21.1 million and broadcast licences of $23.3 million (refer to note 6 of the interim condensed consolidated financial statements). The Company completed the annual impairment test as at August 31, 2024 and concluded that there was no further impairment.
For the year ended August 31, 2023, the Company recorded total non-cash impairment charges in the Television CGU against goodwill, broadcast licences, as well as brands and trade marks totalling $690.0 million. No impairment was identified in the Radio group of CGUs.
DEBT REFINANCING
On October 26, 2023, May 30, and August 30, 2024, the Company amended its Credit Facility (refer to note 7 of the consolidated financial statements for further details), which resulted in a non-cash loss on debt modification of $0.8 million for the October 26, 2023 amendment and $0 for the others.
RESTRUCTURING AND OTHER COSTS
For the three months and year ended August 31, 2024, the Company incurred $28.3 million and $55.2 million, respectively, of restructuring and other costs, compared to $5.0 million and $20.6 million in the comparable periods of the prior year. The current year costs relate primarily to restructuring costs associated with employee exits, professional fees and employee retention arrangements while the prior year costs relate primarily to restructuring costs associated with employee exits.
DISPOSITION LOSS (GAIN)
On July 31, 2024, the Company completed the sale of its 51% interest in Aircraft Pictures Limited ("Aircraft"), which resulted in a net loss on disposal of $0.6 million. Further detail is provided in note 15 of the Company's interim condensed consolidated financial statements for the year ended August 31, 2024.
On August 23, 2023, the Company disposed of Toon Boom Animation Inc ("ToonBoom"), an indirect wholly owned subsidiary, which resulted in a gain of $142.3 million. The Company received net cash proceeds of $141.2 million (net of divested cash). Further detail is provided in note 15 of the Company's interim condensed consolidated financial statements for the year ended August 31, 2024.
OTHER EXPENSE (INCOME), NET
Other income for the three month period ended August 31, 2024 was $1.8 million, compared to $10.1 million in the prior year's quarter. The current quarter includes interest income of $1.7 million and foreign exchange gains of $1.3 million, offset by other expenses of $1.3 million consisting of redundant rent. The prior year's quarter included $5.9 million of other income consisting of rental income, net of redundant rent, and reversal of liabilities related to program rights, net foreign exchange gains of $1.5 million primarily related to the translation of USD denominated liabilities, interest income of $1.5 million, as well as a reversal of a previously recorded impairment on an equity investment of $0.8 million.
Other income for the year ended August 31, 2024 was $1.7 million compared to $3.7 million in the prior year. In the current period, other income included interest income of $4.8 million, a $1.1 million gain on a property disposal, an asset impairment reversal of $0.3 million and foreign exchange gains of $0.6 million primarily related to the translation of USD denominated liabilities, offset by $5.2 million of other expenses related to the retroactive portion of retransmission royalties and redundant rent, net of rental income. In the prior year's comparable period, other income included $9.8 million of miscellaneous interest and rental income, net of redundant rent, the retroactive portion of a Radio tariff, a reversal of liabilities related to program rights, as well as an impairment recovery of $0.8 million on an equity investment, offset by net foreign exchange losses of $4.6 million and fair value losses on the Notes prepayment options of $2.3 million.
INCOME TAX EXPENSE (RECOVERY)
The Company's effective income tax rate for the three months ended August 31, 2024 was 30.2% compared to an effective income tax recovery rate for the three months ended August 31, 2023 of 106.3%. The difference
Fiscal 2024 Fourth Quarter • Report to Shareholders | 8
between the statutory rate of 26.5% and the effective tax rate resulted from changes in valuation allowances and transaction costs.
The Company's effective income tax rate for the year ended August 31, 2024 was 19.3%, compared to the effective tax rate for the year ended August 31, 2023 of 19.2%. The difference between the statutory rate of 26.5% and the effective tax rate resulted from changes in valuation allowances and the impairment of goodwill and intangible assets.
NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS AND EARNINGS (LOSS) PER SHARE
Net loss attributable to shareholders for the fourth quarter of fiscal 2024 was $25.7 million ($0.13 loss per share basic), compared to net income attributable to shareholders of $50.4 million ($0.25 per share basic) in the prior year's quarter. Net loss attributable to shareholders for the fourth quarter of fiscal 2024 includes restructuring and other costs of $28.3 million ($0.11 per share) and a loss on a business divestiture of $0.6 million ($nil per share). Adjusting for the impact of these items results in an adjusted net loss attributable to shareholders of $4.0 million ($0.02 loss per share basic) in the quarter. Net loss attributable to shareholders for the fourth quarter of fiscal 2023 included goodwill, broadcast licence and other asset impairment charges of $100.0 million ($0.37 per share) in the Television operating segment, a gain on a business divestiture of $142.3 million ($0.68 per share) and restructuring and other costs of $5.0 million ($0.02 per share). Adjusting for the impact of these items results in an adjusted net loss attributable to shareholders of $9.1 million ($0.04 loss per share basic) in the prior year's quarter.
Net loss attributable to shareholders for the year ended August 31, 2024 was $772.6 million ($3.87 loss per share basic), compared to $428.7 million ($2.15 loss per share basic) in the prior year. Net loss attributable to shareholders for the the year ended August 31, 2024 includes goodwill, broadcast licence and other asset impairment charges of $960.0 million ($3.72 per share), a debt refinancing loss of $0.8 million ($nil per share), a loss on a business divestiture of $0.6 million ($nil per share) and restructuring and other costs of $55.2 million ($0.21 per share). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $11.4 million ($0.06 per share basic). Net loss attributable to shareholders for the year ended August 31, 2023 includes goodwill, broadcast licence and other asset impairment charges of $690.0 million ($2.90 per share) in the Television operating segment, a gain on a business divestiture of $142.3 million ($0.68 per share) and restructuring and other costs of $20.6 million ($0.07 per share). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $28.6 million ($0.14 per share basic) for the same comparable period of the prior year.
The weighted average number of basic shares outstanding for the three months and year ended August 31, 2024 was 199,440,000 compared to 199,440,000 and 199,521,000 for the comparable periods in the prior year. The average number of shares outstanding in fiscal 2024 decreased from the prior year as a result of the purchase and cancellation of Class B Non-Voting Participating Shares under the Company's normal course issuer bid ("NCIB"), which took place between January 2022 and October 2022.
OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAXES
Other comprehensive loss for the three months ended August 31, 2024 was $1.8 million, compared to other comprehensive income of $12.8 million in the prior year's quarter. For the three months ended August 31, 2024, other comprehensive loss includes an unrealized loss on the change in the fair value of cash flow hedges of $3.8 million, an unrealized loss on the change in the fair value of financial assets of $0.7 million and an unrealized loss from foreign currency translation adjustments of $0.3 million, offset by an actuarial gain on the remeasurement of post-employment benefit plans of $2.9 million. In the prior year's quarter, other comprehensive income includes an actuarial gain on the remeasurement of post-employment benefit plans of $9.6 million, an unrealized gain on the change in the fair value of cash flow hedges of $3.2 million, and an unrealized gain on the change in fair value of financial assets of $0.1 million, offset by an unrealized loss from foreign currency translation adjustments of $0.1 million.
Other comprehensive loss for the year ended August 31, 2024 was $14.3 million, compared to other comprehensiveincomeof$14.4millionintheprioryear. FortheyearendedAugust31,2024,othercomprehensive loss includes an unrealized loss in the fair value of financial assets of $6.9 million, an unrealized loss on the fair value of cash flow hedges of $6.5 million, and an actuarial loss on the remeasurement of post-employment benefit plans of $1.0 million, offset by an unrealized gain from foreign currency translation adjustments of $0.1 million. For the year ended August 31, 2023, other comprehensive income includes an actuarial gain on the remeasurement of post-employment benefit plans of $9.6 million, an unrealized gain on the fair value of cash flow hedges of $4.9 million and an unrealized gain from foreign currency translation adjustments of $1.1 million, offset by an unrealized loss on the fair value of financial assets of $1.2 million.
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BUSINESS SEGMENT INFORMATION
The Company's business activities are conducted through two segments: Television and Radio.
TELEVISION
The Television segment is comprised of 33 specialty television networks (32 effective September 1, 2024), 15 conventional television stations, digital and streaming services, a social media digital agency, a social media creator network, technology and media services, and the Corus content business, which includes the production and distribution of films and television programs, merchandise licensing, book publishing, and animation software (disposed of on August 23, 2023). Revenue is generated from advertising, subscribers and the licensing of proprietary films and television programs as well as the provision of production services, merchandise licensing, book publishing, animation software (disposed of on August 23, 2023), and the provision of technology and media services.
RADIO
The Radio segment comprises 38 radio stations, situated primarily in urban centres in English Canada, with a concentration in the densely populated area of Southern Ontario. Revenue is derived from advertising aired over these stations.
CORPORATE
Corporate results represent the incremental cost of corporate overhead in excess of the amount allocated to the other operating segments.
Management evaluates each segment's performance based on revenue less direct cost of sales, general and administrative expenses. Segment profit (loss) excludes depreciation and amortization, interest expense, debt refinancing costs, restructuring and other costs, impairments, gains or losses on dispositions, and certain other income and expenses.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies of the most recent annual audited consolidated financial statements, except as described in note 3 to the interim condensed consolidated financial statements.
TELEVISION
FINANCIAL HIGHLIGHTS
Three months ended | Year ended | ||||
2024 | August 31, | 2024 | August 31, | ||
(thousands of Canadian dollars) | 2023 | 2023 | |||
Revenue | 115,865 | 137,391 | 652,322 | 768,036 | |
Advertising | |||||
Subscriber | 117,883 | 126,466 | 470,332 | 502,257 | |
Distribution, production and other | 14,300 | 50,375 | 54,084 | 138,175 | |
Total revenue | 248,048 | 314,232 | 1,176,738 | 1,408,468 | |
Expenses | 202,341 | 264,458 | 881,958 | 1,067,888 | |
Segment profit(1) | 45,707 | 49,774 | 294,780 | 340,580 | |
Segment profit margin(1) | 18% | 16% | 25% | 24% |
- As defined in the "Key Performance Indicators and Non-GAAP Financial Measures" section of this report.
Revenue for the three months ended August 31, 2024 declined 21% from the prior year's quarter as a result of decreases of 16% in advertising revenue, 7% in subscriber revenue, and 72% in distribution, production and other revenue. Advertising revenue remained well below the prior year as demand and spending in the linear media industry has been reduced and has been further impacted by an oversupply of digital advertising inventory in the market. The decrease in advertising revenue was relatively consistent with the Q4 outlook and was driven by declines across almost all the major advertising categories, partially mitigated by growth in packaged goods and video games. Subscriber revenue decreased from the prior year's quarter principally as a result of declines in the traditional linear business exceeding moderate growth in the subscriptions to streaming services. The decrease in distribution, production and other revenue was attributable to fewer episode deliveries and reduced service work as well as the disposition of Toon Boom in August 2023.
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Corus Entertainment Inc. published this content on October 25, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on October 25, 2024 at 10:13:09.996.