Corus Entertainment CEO Discusses F1Q2011 Results – Earnings Call Transcript

Corus Entertainment Inc. (CJREF.PK)

F1Q2011 Earnings Call Transcript

January 11, 2011 4:00 pm ET


John Cassaday – President and CEO

Doug Murphy – EVP and President, Corus Television

Tom Peddie – EVP and CFO

Chris Pandoff – EVP and President, Corus Radio


Adam Shine – National Bank Financial

Drew McReynolds – RBC Capital Markets

Paul Steep – Scotia Capital

Robert Bek – CIBC

David McFadgen – Cormark Securities

Scott Cuthbertson – TD Newcrest



Ladies and gentlemen, thank you for standing by and welcome to the Corus Entertainment's Q1 analyst call. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question and answer session. (Operator instructions) As a reminder, this conference is being recorded, Tuesday, January 11, 2011.

I would now like to turn the conference over to John Cassaday, President and Chief Executive Officer. Please go ahead sir.

John Cassaday

Thank you, operator. Good afternoon everyone. I am John Cassaday and welcome to Corus Entertainment's Fiscal 2011 First Quarter Report and Analyst Call. Thank you for joining us today.

Before we read the cautionary statement, we'd like to remind everyone that there are a series of PowerPoint slides that accompany this call. The slides can be found on our website at in the Investor Relations section. We will 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 1995. Some of these statements may involve risks and uncertainties. Actual results may materially differ 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.

Now I would like to introduce you to the Corus Entertainment team joining me on the call today. First of all, Executive Vice President and Chief Financial Officer, Tom Peddie; next Doug Murphy, Executive Vice President and President of our Television division; and finally Chris Pandoff, our newly appointed Executive Vice President and President of our Radio division.

Turning to slide three of the Power Point presentation, we are extremely pleased with our strong results for the first quarter of fiscal 2011. We finished the quarter with consolidated revenues of $241 million, up 8% from a year ago, and consolidated segment profit of $92 million, up 11% demonstrating the exceptional results that can be achieved with strong top line growth coupled with disciplined cost controls.

The ongoing economic recovery helped drive our growth with increases in ad spending both specialty TV and our Ontario Radio group achieved significant ad revenue growth in the first quarter. As noted earlier, strong revenue growth and cost control initiatives also enabled us to leverage segment profit growth of 11% for the quarter.

Moving to slide four, and our Radio division, Radio performed well in the first quarter achieving revenue increases of 3% reflecting the ongoing recovery of the radio ad market. Radio segment profit was up 2% for the quarter despite having to absorb the cost of the new copyright tariffs and the reintroduction of pension contributions Corus employees.

Ontario drove the division's growth with EBITDA up 12% and revenue increases of 9% led by the Toronto market. Revenues in the rest of Canada was stable with a modest 2% increase in Quebec offsetting the West, which was down slightly. Although, Calgary's ad revenues were up 11%, an encouraging sign of recovery in the West.

According to TRAM results, Corus Radio is outperforming in key markets including Calgary, London, Toronto, Montreal, and Quebec City. Key growth categories that helped drive ad sales for the division this quarter were domestic auto and telecommunications, up by 29% and 50% respectively followed closely by foreign auto, which increased by 12% over the previous year.

In the retail category, Radio saw the biggest gains from home electronics, up over 30%.

Moving to slide five in our Television division, TV achieved exceptional growth in Q1 with revenues up 11% and segment profit up 16%. A buoyant specialty advertising marketplace paved the way for continued advertising growth in the quarter. Our success in monetizing the co-view audience in our Kids portfolio led to strong double digit growth of 17% in ad revenues. Our subscriber revenues also grew significantly, up 9% compared to year ago on the strength of our new services. The division's strong segment profit gains were achieved by effectively managing program costs, and as a result of various cost control initiatives, which we've spoken to you about in the past.

On to slide six, our Kids business was a key contributor to the division's success, delivering exceptional ad revenue growth of 21%, with YTV and TELETOON capitalizing on strong ratings growth and increased demand over our co-view audiences. As well, we saw gains from the international broadcast launches of two of our key Nelvana brands, Babar and BEYBLADE, positioning us for strong growth on the merchandising front in the future.

For our Specialty and Pay assets, our subscribe revenue saw a substantial 11% increase for the quarter, driven by the addition of our two new offerings, W Movies and Sundance Channel, and the positive response to CosmoTV, which continues to generate strong paid subscriber growth.

Advertising revenues for these assets continued to grow as a result of pricing gains and strong market endorsement of our newest services – W Movies, CosmoTV, as well as CMT.

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