TORONTO — Corus Entertainment Inc. has gained some breathing room.
The company says it has agreed to a deal with its lenders that will buy it some time as it works to slash costs and reduce its debt.
The agreement amends and restates its existing syndicated, senior secured credit facilities with its bank group, led by RBC Capital Markets and TD Securities.
The restated credit facility was changed to reduce the total limit on the revolving facility to $150 million from $300 million and increase the maximum total debt to cash flow ratio required under the financial covenants.
The announcement came as the broadcaster reported a fourth-quarter loss compared with a profit a year ago as its revenue fell 21 per cent. Corus said its net loss attributable to shareholders amounted to $25.7 million or 13 cents per diluted share for the quarter ended Aug. 31.
The result compared with a profit attributable to shareholders of $50.4 million or 25 cents per diluted share in the same quarter last year.
Co-chief executive John Gossling called the debt deal “the most important step to date” amid a tough year for the company’s balance sheet as it copes with advertising revenue declines, regulatory challenges and licensing battles.
Gossling said Friday that Corus has “essentially” met its target of shedding 800 jobs compared with the beginning of its 2023 fiscal year, a figure he revealed in July in order to reduce the company’s full-time workforce by 25 per cent.
“The mix is a little bit different than we had expected, but from a from dollar savings perspective, we are definitely hitting that target,” Gossling told analysts on the company’s earnings call.
“We continue with similar cost reduction initiatives in fiscal 2025 given the ongoing headwinds faced by the industry.”
But he declined to comment when asked by an analyst about media reports surrounding potential interest by other companies in acquiring Corus.
The Globe and Mail reported in September that Quebecor Inc. made an offer to buy Corus months ago, while asking lenders to write off at least 60 per cent of Corus’ $1.05 billion debt, but the cash-strapped company had yet to respond.
“It’s all speculation,” said Gossling.
“I think what we’re expecting is there will be lots more news flow, lots more rumours, and we’re not going to comment on any of them because, of course, as you can imagine, there’s probably certain things that aren’t even remotely true in what you’re reading.”
Corus’ revenue for the quarter totalled $269.4 million, down from $338.8 million a year ago. Television revenues in the quarter fell 21.1 per cent to $248 million compared with $314.2 million last year, while radio revenue dropped 13.4 per cent to $21.3 million compared with $24.6 million a year earlier.
On an adjusted basis, Corus said it lost two cents per share for its latest quarter compared with an adjusted loss of four cents per share a year earlier.
Co-CEO Troy Reeb said Corus has still not yet seen advertising revenues return “at the level we would like,” highlighting the growth of ad-supported digital video platforms such as streaming services.
He said that has led to an oversupply of inventory, putting pressure on digital advertising demand, as advertisers “now have more ways to reach consumers in the streaming and digital space.”
“This creates challenges for our sales teams,” Reeb said.
“Rest assured, we have a plan for fighting back against the continued encroachment of U.S. tech giants into the Canadian advertising market. It is to focus on what matters, the value of our content, of our communities and of our people.”
In June, Corus was hit by the loss of rights to key brands like HGTV, Food Network, Cooking Channel, Magnolia Network and OWN, as of the end of this year. That was due to Rogers Communications Inc. inking a multi-year deal with Warner Bros. Discovery for its popular lifestyle and entertainment brands in Canada that takes effect Jan. 1.
Corus later announced it would launch two new lifestyle brands to compete against Food Network and HGTV, called Flavour Network and Home Network, respectively, as of Dec. 30.
The networks will offer a blend of original Canadian programming and international content acquired through new and expanded licensing agreements.
“We did have a number of advertisers commit to being launch partners with us for the launch of those brands,” Reeb said.
“We have no concerns about our ability to get high sellout rates on those channels in the new year.”
This report by The Canadian Press was first published Oct. 25, 2024.
Companies in this story: (TSX:CJR.B)
Sammy Hudes, The Canadian Press