July 9, 2008 / 11:14 AM / 10 years ago

Corus results gets lift from television growth

OTTAWA (Reuters) - Corus Entertainment Inc (CJRb.TO) CJR.N, a Canadian media and entertainment company, on Wednesday beat expectations by posting a 27 percent jump in quarterly profit on growth in television advertising and subscriber gains.

Corus, like its peers, is under scrutiny for signs that economic weakness is squeezing advertising sales.

Despite such concerns, the company showed a 5 percent rise in television revenue and a 3 percent increase in radio revenues in its third quarter ended May 31, and said it expected ads sales to hold up going forward.

“Unlike many people, who are predicting dire consequences for ad sales companies like ours, we’re just not seeing that,” Chief Executive John Cassaday said on a conference call with analysts.

“I’m not going to suggest that this is going to be the most buoyant period, but I am going to suggest that we do believe that we have real good growth prospects.”

Corus, which owns television, radio and publishing assets as well as the Nelvana animation house, said profit rose to C$37.7 million ($37 million), or 45 Canadian cents a share, in the quarter, compared with C$29.6 million, or 34 Canadian cents, in the same period a year earlier.

Analysts had expected earnings of 40 Canadian cents per share, according to Reuters Estimates.

Revenue rose 5 percent to C$207.8 million, just short of analyst estimates of C$208.6 million.

Corus also reaffirmed its 2008 forecast for earnings before interest, tax, depreciation and amortization of C$250 million to C$260 million with free cash flow of C$90 million to C$100 million.

Shares added 21 Canadian cents to C$17.01 on the Toronto Stock Exchange and 31 cents to $16.80 on New York on Wednesday. So far this year, the stock has dropped about 29 percent.

“The media sector has been getting pummeled of late on concerns relating to the impact of a slowing economy on advertising sales,” said Genuity Capital Markets analyst Carl Bayard in a recent note.

Quarterly results, which management said met their expectations, were led by a 5 percent increase in television revenue to C$114.6 million. Specialty advertising and subscriber revenue both grew 2 percent.

Profit for the segment, which includes such channels as Treehouse and Movie Central, rose 8 percent to C$49.6 million.

Radio revenue grew 3 percent to C$77 million. Profit dipped to C$24.7 million from C$25.1 million as strength in western Canada was offset by a “challenging” market in Quebec.

Content unit revenue increased 12 percent to C$16.3 million and profit jumped to C$3.7 million from C$100,000 on high-margin library sales and music rights deal.

RBC Capital Markets analyst Drew McReynolds said sales and profit were slightly above expectations, reflecting strength in the content and radio units. Television results were in line with expectations, but specialty advertising growth of 2 percent lagged his 7 percent forecast.

Corus said the current quarter got a C$10 million lift from income tax recoveries, largely offset by a C$9.7 million hit for the accrual of regulatory fees.

($1=$1.01 Canadian)

    Reporting by Susan Taylor and Jennifer Kwan; Editing by Frank McGurty

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