BUSINESS

Corus Entertainment hikes dividend 10% as specialty TV boosts revenue, profit

01/10/2012 02:16 EST | Updated 03/11/2012 05:12 EDT
TORONTO - Corus Entertainment Inc. hiked its monthly dividend by 10 per cent as it reported stronger first-quarter profits, but the specialty television producer faced some challenges growing advertising revenues during the period.

The media and entertainment company, which owns W Network and CosmoTV as well as other specialty TV channels, said Tuesday it will raise its annual dividend by nine cents per share.

The increase came as Corus (TSX:CJR.B) reported quarterly profits of $91.2 million, or 61 cents per share for the quarter ended Nov. 30, the first quarter of the company's 2012 fiscal year.

That beat average analyst estimates that had predicted 59 cents per share, according to a survey by Thomson Reuters, and was an increase from net profits of $90.7 million, or 58 cents per share, a year earlier.

Corus, like many media companies, has endured softer advertising revenues in recent months, driven mostly by reluctance from companies to buy more advertising in an uncertain economic climate.

While the company noted that results are improving, advertising revenues were still weaker at $119.4 million, compared with $120.3 million a year earlier.

Corus also faced softness in its pay TV business comprised of Movie Central and HBO Canada, which delivers new and recent movies to viewers in Western Canada. The premium pay TV channels ended the quarter with 973,000 regional subscribers, a decline from 984,000 in the previous quarter, and short of the one million subscribers Corus had predicted it would reach in 2010.

The competitive landscape for premium television has changed notably since Corus made those initial predictions. Netflix Canada emerged in late 2010 with its streaming video service and has since grown to more than a million subscribers across the country.

Corus president and CEO John Cassaday told analysts on a conference call that he sees the current decline as "being stable" and that he expects a "decent uptick" in the coming quarters.

"We are anticipating that we will be able to grow the pay business this fiscal on the strength of the programs that we have in place, particularly the focus on our HD channels and also the new content that is coming forward," he said.

Corus experienced better results from its main specialty channels business, with double-digit ad sales growth at the channels marketed towards women, which gave the company's results and extra bump.

Overall, revenues rose seven per cent to $236.9 million from $222.2 million, with the television operations increasing to $185 million from $167.5 million.

Corus operates numerous specialty cable channels including the Canadian version of OWN:The Oprah Winfrey Network, Teletoon, kids' channels YTV and Nickelodeon Canada, country music lifestyle channel CMT Canada, and Sundance Channel Canada.

However Corus' radio division didn't fare as well, with revenues dropping to $51.9 million from $54.6 million.

"We are well positioned for a turnaround in the economy and are encouraged by a number of positive indicators to support the ongoing growth of our business," Cassaday added.

We "remain confident in our ability to achieve our guidance range for fiscal 2012 targeting consolidated segment profit of $300 million to $310 million."

Corus increased its annual dividend by nine cents to 95.5 cents for class A shares and 96 cents for class B shares.

The company, which has about 1,800 employees, also owns radio stations across the country and children's animated content producer Nelvana.

The Shaw family, which controls the company through its multiple voting class A shares, also controls Shaw Communications (TSX:SJR.B).

Corus B shares fell 10 cents to $21.24 in afternoon trading on the Toronto Stock Exchange.