Corus Entertainment (CJREF.PK)

Q4 2011 Earnings Call

October 26, 2011 3:00 pm ET


Douglas D. Murphy - Executive Vice President and President of Corus Television

Thomas C. Peddie - Chief Financial Officer and Executive Vice President

John M. Cassaday - Chief Executive Officer, President, Director and Member of Executive Committee

Chris Pandoff - Executive Vice President and President of Corus Radio


Paul Steep - Scotia Capital Inc., Research Division

David McFadgen - Cormark Securities Inc., Research Division

Adam Shine - National Bank Financial, Inc., Research Division

Scott Cuthbertson - TD Newcrest Capital Inc., Research Division

Tim Casey - BMO Capital Markets Canada

Robert Bek - CIBC World Markets Inc., Research Division

Colin Moore - Crédit Suisse AG, Research Division



Ladies and gentlemen, thank you for standing by and welcome to the Corus Entertainment's Q4 Analyst and Investor Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, October 26, 2011. I would now like to turn the conference over to Mr. John Cassaday, President and CEO. Please go ahead.

John M. Cassaday

Thank you, operator. Good afternoon, everyone. I'm John Cassaday and welcome to Corus Entertainment's Fourth Quarter and Year-End Report and Analyst Call. 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 will now run through the standard cautionary statement. This discussion contains forward-looking statements, which may involve risks and uncertainties. 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 filings with the Canadian Securities Administrators.

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

Before turning to our slides and our results, we first want to say that we are absolutely delighted to have announced earlier today an agreement with Disney/ABC Television Group to launch a new national service to be called ABC Spark. This service will be targeted to the millennial generation and builds on the successful ABC Family brand in the United States. This deal represents the first time that Disney and Corus have entered into a licensing agreement for a 24-hour channel and we are, needless to say, very excited about this opportunity. We plan to introduce ABC Spark with a nested block of programming on YTV and CMT, and subsequently launch the network in spring 2012. Why is this important? Three reasons: most importantly is yet another tuck-in channel opportunity to accelerate our growth; second, it gives us access to outstanding Disney programming to drive the growth of our existing Corus services; and third, it's a perfect fit with our family viewing portfolio.

Now turning to Slide 3 of the PowerPoint presentation. We are extremely pleased with our results in 2011. If you were to exclude Quebec Radio, our consolidated revenues for Q4 were $200 million, up 7% compared to the prior year, and revenues for the full year were $825 million, up 8% from the prior year. Corus once again demonstrated its ability to grow.

Turning to Slide 4, we delivered exceptional double-digit consolidated segment profit growth of 14% for the quarter and 12% for the year. Our segment profit of $285 million for the year was within our stated guidance range of $285 million to $295 million even though our Quebec Radio results are excluded for the full year and we had built the plan with the intention of having them to rely on for the year. Had we not divested our Quebec Radio assets, we would have exceeded or at least been at the high end of our guidance for the year. We would also remind you that our corporate costs were a little higher than we anticipated due to stock-based compensation, reflecting our year-end and improved share price.

Our net income from continuing operations for the year, which excludes Quebec Radio, was $143.3 million, up 18% over the prior year. Earnings per share from continuing operations were $1.73 per share compared to $1.48 per share last year, and our free cash flow was in excess of $130 million.

Turning to Slide 5, our consolidated revenue growth for the year was fueled by subscriber revenue increases of 6% and advertising growth of 4%. We were also pleased to deliver exceptional dividend growth to our shareholders this year, increasing our monthly dividend 45% from the prior year.

Following the move to Corus Quay, we have begun to leverage new opportunities from our state-of-the-art facility. Corus Quay's digitally integrated infrastructure allows us to capitalize on the nonlinear, on-demand broadband and mobile rights that we control, and we continue to acquire additional digital rights. We have the capability and the flexibility to deploy our content in any form, on any tablet and in numerous languages. Within our first year, we have already rolled out more than half a dozen high-definition offerings, including YTV, HBO, W Movies and OWN, and plans are in place to launch more of our core brands in HD throughout the coming year. At Corus Quay, we are also in a position to offer extensive outsourcing services to third parties in the industry. Currently, we are originating 32 signals from this facility but we have the capacity to distribute at least twice as many signals, which represents a great business opportunity going forward.

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