Facing intensifying pressure in its television business, Corus Entertainment Inc. is taking measures to save money, starting with a huge dividend cut that sent the company’s stock plummeting on Wednesday, according to The Globe & Mail.
Corus slashed its dividend by nearly 80 per cent while also announcing a quarterly loss of $936-million, which together dragged the company’s share price down by 18 per cent on the day to a record low.
Analysts were expecting a cut to the dividend, which was considered unsustainable as Corus grapples with high debt, the loss of television advertising revenue and fierce competition for audiences from the likes of Netflix.But the cut went even further than anticipated on Bay Street. Corus also took a $1-billion impairment charge, partly because of TV broadcast licences that are worth less than before. Television ad revenues fell 5 per cent in the fiscal third quarter.
“Our industry is in flux, and we need to adapt and respond,” Corus chief executive Doug Murphy said in a conference call on Wednesday morning.
“We’ve adopted a long-term plan we believe will preserve our ability to compete,” he said, adding that the priorities will be paying down debt, improving the core business and finding new sources of revenue.
With both advertisers and viewers migrating from conventional television to digital alternatives, Corus faces a challenging environment in which to turn things around.
“The key is whether management can execute to achieve more stable results, which nobody expects in the short term and won’t be easy longer term,” National Bank Financial analyst Adam Shine said in a note to clients.
Corus owns a portfolio of 44 specialty television channels, including the Food Network and HGTV, and 15 conventional stations, including Global Television, on top of 39 radio stations.
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