The Corus logo is displayed in Toronto on June 22, 2018. (BNN Bloomberg)
Corus Entertainment Inc., the Toronto-based media company, is facing significant challenges and plans to reduce its full-time workforce by 25% by the end of next month. This move translates to approximately 800 job losses as the company aims to cut costs aggressively during a difficult period.
Corus has struggled with declining advertising revenue, regulatory hurdles, and licensing disputes, which have severely impacted its financial health. In its most recent quarterly report, the company disclosed a staggering loss of $769.9 million attributed to shareholders, a notable increase from a $495.1 million loss during the same period last year. The company's revenue fell by 16%, amounting to $331.8 million, down from $397.3 million in the previous year.
The television sector particularly suffered, with revenues dropping 17% to $308.2 million compared to $371.2 million last year. Radio revenues also took a hit, falling 9.9% to $23.6 million from $26.2 million. During a recent conference call, co-CEO John Gossling emphasized the need for tough decisions, stating that the company is shuttering parts of the business that can no longer be sustained while pausing long-term development initiatives.
“We’re focusing on becoming a smaller, more profitable business with a sustainable future,” Gossling said, outlining the company's strategy moving forward.
The advertising slump has been attributed to several factors, including the ongoing effects of the Hollywood strikes earlier this year, which delayed key programming, as well as inflation and increased competition. To address its financial woes, Corus received permission from Canada’s broadcasting regulator to ease some of its Canadian content spending requirements, highlighting the serious nature of its situation. The regulator noted that Corus's potential exit from the Canadian broadcasting landscape would limit viewer options significantly.
In another blow, Corus recently lost the rights to popular brands such as HGTV and the Food Network due to a multi-year deal between Rogers Communications Inc. and Warner Bros. Discovery, effective January 1. This deal also involved Rogers taking over Canadian programming rights from Bell Media for channels like Discovery and Animal Planet.
Following these developments, Doug Murphy announced his retirement as CEO, leading to the appointment of Gossling and Troy Reeb as co-CEOs. Reeb assured analysts that Corus intends to continue providing culinary and home content under new brands and is exploring all possible legal avenues to protect its interests following the Warner Bros. deal.
During the last quarter, Corus reported a loss of $3.86 per diluted share, up from a loss of $2.48 per share the previous year. On an adjusted basis, the company posted a loss of 10 cents per share compared to a profit of 9 cents a year ago. Following the announcement, Corus's shares fell by 20%, reflecting ongoing investor concerns about the company’s future.
Analyst Drew McReynolds noted that Corus is likely to face continued pressure on its stock due to the challenging operating environment. In response to its financial difficulties, Reeb highlighted that the news division will strive for industry-leading efficiency while leveraging digital technology to produce local content.
Reeb stressed the need to reduce legacy costs across all areas of the business, stating that while Corus has a strong brand legacy, it does not need to carry outdated cost structures.
