Corus expecting TV ad revenue to stabilize in a ‘handful’ of years

Corus Entertainment Inc.’s wild ride through the unpredictable TV ad market is expected to become more stable as its long-term strategy sets in, its CEO Doug Murphy said Friday. Murphy said he has become more cautious about giving guidance on the direction Corus is headed with the unstable TV ad industry, but noted in a call with analysts following its fourth quarter earnings that the picture will become less chaotic as its plan of attack is fully implemented. “I can see our way to stabilize revenue in a handful of years once we get these various pieces put in place — measurement, new platforms, alignment on ad technology, alignment on roadmap,” he said, adding he can’t commit to saying anything more specific than “stabilization.” Murphy outlined the company’s “optimistic” outlook and plan for the future last quarter, which included better data use, more content and cutting-edge ad technology, including dynamic ad insertions (DAI) in on-demand content. “Our inclination over here — as we are looking into the future, given what we know — is there’s a more positive outlook than I think many believe given the malaise over the media sector in general these days,” Murphy said. Murphy said the advertising technology that his company is currently testing — which will allow advertisers to cater to specific groups of viewers — will still take some time to be fully implemented. Until then, he added, Corus is looking at low negative single-digit ad revenues. For the three months that ended on August 31, Corus saw its TV advertising revenues decline by four per cent over the year to $186.4 million. Total revenues for TV — including a just-over-$1 million increase in subscriber fees from a year earlier that brought the total to $128.3 million and a nearly $5-million increase over the year in merchandising, to $30 million — was $345 million, down by about $1 million from last year. Corus’ TV ad revenues have bounced around in the negative in every quarter this year — four per cent decline in the first quarter, three per cent in the second and five per cent in the third. The company received a lift last year with the purchase of Shaw Communications Inc.’s media division materializing in its balance sheet, seeing comparatively much higher ad growth. It noted in some quarters that year that the TV revenues “are trending as expected, with sequential improvement continuing this quarter” via stronger schedule and ad contract renewals. But analyst Aravinda Galappatthige said in a Friday note that the ad decline this quarter “is not altogether an overly bad result,” considering ad declines are accelerating in the industry at a higher level and factoring in the FIFA World Cup this summer. Corus often cites large sports events like the World Cup as reasons advertisers flee its non-sports content. The analyst added that if ad declines can be contained around the two-to-four per cent range in the near term, while sub revenues stabilize and content grows, the company’s stock can rebound. Currently, the company has an agreement only with Rogers Communications Inc. to include dynamic ad insertion in its content, but Murphy said they are in talks with other broadcasters. The other attraction with Rogers and others is their moves to new IPTV platforms, such as Comcast Corp.’s X1, which Galappatthige expects to be a boon for the content provider. “Substantial support from the BDUs is required to fully exploit these opportunities” in advanced advertising initiatives, said Canaccord Genuity analyst Aravinda Galappatthige in a Friday note. “Encouragingly, we are seeing a fair bit of traction with Rogers, and the rollout of X1 further improves the outlook here. “We think that an important catalyst would be other BDUs setting up for Dynamic Ad Insertion (DAI) for Corus’ platforms.” Radio was also down by nearly $1 million to $34.4 million. Total revenues, including TV and radio, were down slightly to $379.1 million compared to $381.2 million over the year — moderated by an increase in subscriber and merchandising fees. All in, television profit was up to $108.7 million compared to $107.3 million over the year. Combined with higher radio profits of $8.5 million, the combined segments, including the declining corporate division, were up six per cent to $114.6 million year-over-year. Finance Minister Bill Morneau recently said Canada would wait on others before it makes a decision on taxing digital players, such as Netflix Inc. Murphy made his opinion clear on the matter on Friday. “I’m hoping for the sake of the budget that we consider taxing Netflix and others, because certainly we can use the revenue as a nation and that would help level the playing field here with the media companies.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Corus expecting TV ad revenue to stabilize in a ‘handful’ of years

News | October 19, 2018

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Corus expecting TV ad revenue to stabilize in a ‘handful’ of years

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