Corus Entertainment (CJR)

F3Q10 (Qtr End 05/31/10) Earnings Call

July 14, 2010 02:00 p.m. ET


John Cassaday - President and CEO

Tom Peddie - EVP & CFO

Doug Murphy - EVP & President, Corus Television

Hal Blackadar - EVP & President, Radio


Adam Shine - National Bank Financial

Paul Steep - Scotia Capital

Bob Bek - CIBC

Scott Cuthbertson - TD Newcrest

David McFadgen - Cormark Securities

Colin Moore - Credit Suisse

Tim Casey - BMO Capital Markets



Ladies and gentlemen, thank you for standing by. Welcome to the Corus Entertainment Third Quarter Analyst Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer-session. (Operator Instructions). As a reminder, this conference is being recorded, Wednesday July14th, 2010. It is now my pleasure to turn the conference over to Mr. John Cassaday, President and Chief Executive Officer. Please go ahead, sir.

John Cassaday

Thank you, operator. Welcome to Corus Entertainment’s fiscal 2010 third quarter report and analyst conference call. First of all, thank you, for joining us today.

Before we read the cautionary statement, we would like to remind everyone that there are a series of PowerPoint slides that accompany this call. The slides can be found on our website in the Investor Relations section. We'll now run through the standard cautionary statement.

This discussion contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1955. Some of these statements may involve risks and uncertainties. Actual results may be materially different from those contained in such forward-looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the Company's filing with the U.S. Securities and Exchange Commission.

I'd like to introduce you to the Corus Entertainment team joining me on the call. Executive Vice President and Chief Financial Officer, Tom Peddie, Doug Murphy, Executive Vice President and President of our Television division, and Hal Blackadar, Executive Vice President and President of our Radio division.

So, if you turn to slide three and four, we are very pleased with our outstanding results for Q3. Turning to slide three and four of the PowerPoint presentation, we finished the quarter with consolidated revenues of $218.4 million, up 12% compared to last year while our consolidated segment profit was $73.8 million, up 20% from a year ago. These exceptional operating profits are a result of strong top line growth while controlling our costs.

Net income for the quarter was $31.4 million or $0.39 per share, compared to a net loss of $145 million or $1.81 per share last year. Net income for the prior year includes a $172.5 million after-tax, broadcast, license and goodwill impairment charge. Removing the impact of this item results in an adjusted third quarter basic earnings per share of $0.34 in the prior year.

Turning to slide five. We are pleased to report that our Television division had another terrific quarter, segment profit up 17%, and revenues of $147 million up 13% versus last year. Television revenues were driven by double-digit growth in both advertising and subscriber revenues.

Total specialty advertising was up 14% versus a year ago and subscriber revenues grew 13% compared to last year. Other revenues increased this quarter by 21%, and this included growth from distribution and merchandising revenues in our content business.

Our Kid segment had a great quarter with overall revenues up 14%, and ad revenues growing 19% due to impressive ratings and successfully monetizing our co-view audience. PPM data shows consistently strong rating games for Teletoon and YTV with YTV's average minute audience for Kid's 2 to 11, up 39% and Kid's 6 to 11, up 45% versus a year ago.

Co-view continues to be a strong growth platform for us with programs like iCarly, Survive This, and 10 Things I Hate About You, contributing to average minute audience ratings for adult 18 to 49 and women 18 to 49 that are more than double that of prior year.

Toys, food and entertainment remained the top advertising categories and we're seeing growth in wireless and personal care categories as well. Our merchandising revenues were up 19% versus a year ago, driven by the success of the Bakugan brand as well as the Backyardigans and Babar. Subscriber revenues achieved single-digit increases and the portfolio benefited from the addition of the Nickelodeon service.

Our specialty in pay group also performed extremely well. Revenues were up 13% from a year ago, both subscriber and specialty ad revenues achieved double-digit growth with subscriber revenue up 16% and specialty ad revenues growing by 10%. This quarter Movie Central subscribers increase 2% from the same period last year. Increased subscriber revenue also reflects strong growth in Cosmo Television as well as a positive response to our two new offerings, Sundance Channel and W Movies.

Turning to our women's portfolio, advertising revenue performance was very strong with double-digit growth versus prior year. Key gains were in retail home entertainment, food products, auto and auto supplies. The recent addition of W Movies to the portfolio has generated strong acceptance in the marketplace, with ad revenue for the service contributing to 20% of the overall growth in the portfolio.

AMA ratings for the women's services resulted in growth across the segment with particularly strong increases for VIVA and CosmoTV which saw a doubling of its audience versus last year.

Moving to slide six, Radio also had a very strong quarter. Total revenue finished up 9% over the prior year. Strong cost controls drove segment profit up by 36% and on a regional basis all three regions, the West Ontario and Quebec saw year-over-year revenue growth with Ontario and Quebec experiencing strong growth, both outperforming the overall market according to TRAM.

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