Corus profit dips in Q3 despite revenue gains

President and CEO Doug Murphy told investors the company's diverse business portfolio will help it "withstand recessionary pressures" in 2023.

Corus Entertainment president and CEO Doug Murphy says the broadcaster is in a position to “withstand recessionary pressures,” thanks to its diverse portfolio across linear and digital TV revenue streams.

The CEO made the remark to investors on Wednesday during a call on Corus’ Q3 2022 financial performance, which saw a year-over-year profit dip in the third quarter of fiscal 2022, despite a revenue bump across its TV and radio businesses.

Corus’ profit came to $123.7 million in Q3 2022, down 5% from $130.7 million in Q3 2021. The company largely attributed the profit decrease to the lack of emergency relief on CRTC fees and the Canada Emergency Wage Subsidy (CEWS). Approximately $4.5 million in reported profit in Q3 2021 was attributed to CEWS.

Consolidated revenue increased by 8% year-over-year, up to $433.5 million compared to $403 million in Q3 2021. The largest gains were seen in merchandising, distribution and other revenue with a 58% increase, up to $35.7 million compared to $22.2 million in the previous year’s quarter, and radio, up 27% at $29.3 million compared to $23.1 million in Q3 2021.

Meanwhile, subscriber revenue was up by 5% to $130.4 million compared to $124.4 million, while television revenue increased by 6%, coming in at $404.1 million compared to $379.8 million in Q3 2021.

However, the company also reported a 15% increase in expenses in its television division in Q3 2022, up to $276.6 million compared to $239.8 million, due to increased Canadian content production spend to catch up to expenditure requirements, costs related to the acquisition of Aircraft Pictures, as well as an increase of general and administrative costs. Free cash flow came in at $27.4 million, a 58% decrease from $64.7 million in the same period in 2021.

Murphy allayed investor concerns over whether a potential recession, triggered largely by inflation and Russia’s invasion of Ukraine, would impact Corus’ revenues and profits in 2023, pointing to its various business segments.

The CEO said advertising would primarily be affected, but the company expects to continue to grow its subscriber revenue, as well as continue its content sales work through Corus Studios, pointing to U.S. streamer Hulu as one of its strong long-term licensing partners.

Murphy also estimated that revenue generated from the launch of PlutoTV in Canada this fall, made possible in a deal with Paramount Global, will be “marginal” in the first year, but “margin-enhancing as it scales.” Corus is the Canadian ad representative for the U.S.-based FAST channel.