Streaming services pose a big threat…

Corus is a leading media and content company known for delivering high-quality content to its global audiences. The company started with media assets owned by Shaw Communications, which is one of Canada’s top telecommunication company. 

Corus is an operator of leading entertainment assets, powerful brands, and content making it a significant player in the international marketplace. The company’s portfolio of TV services consists of 33 specialty TV channels and 15 conventional TV stations. Corus owns 39 radio stations and its content is sold in more than 160 countries worldwide.

Its TV segment accounted for 93% of 2020 revenues and radio accounted for the balance of 7%. The company derives revenues from advertising (61% of 2020 revenue), subscriptions (32%), and merchandising, distribution, and others (7%). Corus also owns a social digital agency so.da, and Kin Community Canada, a lifestyle entertainment company.

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Investment Data

Revenue Growth & Market Exposure

Corus is a leading media company with a host of strong brands. The company has a wide presence across television, radio, content, and digital. It is a leader in conventional and specialty television and has a portfolio of nearly 40 radio stations running in eight of Canada’s top 10 markets. Its content is also diversified and well-balanced catering to different audiences.

Corus has a wide portfolio of digital assets, animation software, technology, and media services. A few of Corus’s leading brands include Global Television, W Network, OWN: Oprah Winfrey Network Canada, HGTV Canada, Food Network Canada, History, Showcase, Adult Swim, National Geographic, Disney Channel Canada, YTV, and Nickelodeon Canada. 

Corus is a significant player in the international marketplace as well as an industry leader in Canada given its combination of entertainment assets and two decades of extensive experience. Its content is globally distributed through Nelvana animation studio, Corus Studios, and children’s book publishing house Kids Can Press. Corus has shown tremendous growth both organically as well as through strategic acquisitions and has deep relationships with world-class partners like Hallmark, Disney, BBC, NBC, etc.

Corus is investing in expanding multi-platform content distribution capabilities as well as introducing new product offerings like Cynch and premium video-on-demand services. It successfully secured an agreement with NBCUniversal to air exclusive Peacock Original programming in Canada.

Corus should also gain from new product launches including Cynch, STACKTV, and Global TV App. STACKTV already has more than 300,000 subscribers since its launch in June 2019. The latest quarter results marked an improvement in Television advertising revenue, good performance of STACKTV, and growth in the international content licensing business.

Corus’s revenues declined by 14%, while its EPS remained flat at $0.37 YoY. The company recently partnered with Comscore to provide new measurement tools for branded content to advertisers. The company should benefit from new TV shows going online and from its streaming platforms. Corus’ revenues have grown at 15% CAGR in the last five years.

Dividends

Corus sports an attractive dividend yield of 4.8% but a high payout ratio. The company raised its annual dividend payout by 33% in 2018 and has a strong free cash flow generation.

It also renewed its NCIB for one year ending in November 2021. Corus did not cut or suspend its dividend despite the fact that a majority of its revenues are derived from advertising income, which took a back seat during the pandemic.

Corus is a leader in Canadian broadcasting with powerful brands and large audience segments. It is well-positioned to increase its user base given its leading brands, content, and new platforms. Corus continues to secure long-term access to multi-platform rights such as the acquisition of exclusive rights to NBCUniversal’s Peacock Originals.

The company is committed to ongoing cost structure improvement and asset optimization. Corus is actively engaging with advertising customers and partners and achieved significant audience share gains in Television and Radio during the pandemic.

Corus has a high debt load but has been aggressively repaying it in recent times. It has been undertaking significant de-leveraging efforts over the last seven quarters and is also focusing on improving its financial flexibility. Growing global demand for premium video content act as a strong tailwind for Corus.

Competition

The television production industry and television and radio broadcasting services are highly competitive. Corus Entertainment faces competition in both local and national markets as well as with a number of foreign programming services such as A&E and CNN.

It competes with broadcasting stations, platforms, and other advertising media. Corus also faces competition from both regulated and unregulated players. The company continues to invest in infrastructure, technology, and programming to maintain its competitive position.

Bottom Line

Corus’s focus on content creation, as well as its streaming platform, should help reduce its reliance on the traditional T.V. industry. The company is in a good position to leverage its Canadian content spending to grow international content sales. It is focusing on ad tech and data analytics, revenue diversification, expanding the audience base, and owning more content for future growth.

Corus is well-positioned to gain from branded integrations and sponsorships in a cross-platform advertising ecosystem. New platform revenues should act as emerging drivers of future growth.