TORONTO - Corus Entertainment Inc. (TSX:CJR.B) expects to grow its profitability and raise its dividend in the coming financial year, executives from the Toronto-based media company told analysts in a briefing Wednesday.
Corus owns specialty TV channels such as YTV, radio stations in many Canadian cities and kid-oriented content producers such as the Nelvana animation studio that, its executives say, put the company in good shape for further growth.
Chief executive John Cassaday said one of the positive trends Corus is expecting is growth in advertising sales at its specialty television channels — based on early results for the fiscal first quarter ending Nov. 30.
"That may be the headline this morning, because I think coming out of Q4 there were some questions in people's mind about whether that train had slowed," Cassaday said.
"We saw continued momentum on our specialty ad sales in Q1, despite what you read and heard and maybe suspected given the economic conditions that we're in."
Cassaday's remarks came shortly after central banks on Canada, the United States, Europe and Japan announced they were working together to ensure banks had sufficient access to funds to maintain their lending activities.
The move — similar to the central banks' response to the credit crunch three years ago that sparked the 2008-09 recession — is the latest symptom of unease over the prolonged government debt crisis among countries that use the euro.
The eurozone debt problem, which had been quite for several months, began to make headlines again in August — coinciding with the fiscal fourth quarter of many Canadian media and cable companies, including Corus.
While the impact of the global economic slowdown has been less severe in Canada than in many other developed countries, several media companies have noted advertisers are wary and watching consumer spending carefully.
"Radio has been somewhat softer than we expected," Cassaday said.
As noted in a previous Corus briefing, the radio segment had soft add sales in September followed by stronger results in October — the first two months of the current fiscal first quarter.
"What happened in November, we softened a bit again. Not terrible — certainly low single digits — but probably we saw a decline in our radio business."
There was also significant difficulties in the business that sells products for children aged two to 11 years, based on characters created or owned by the company's Nelvana animation studio and shown on channels like Treehouse TV.
For instance, sales of DVDs "dried up"in the quarter and revenue from toy sales were down due to the transition of Zellers department stores to Target, Cassaday said.
Chief financial officer Tom Peddie said Corus — which is controlled by the Shaw family through their multiple-vote shares — is looking to increase its dividend as again in fiscal 2012 due to stronger operating profits and cash flow.
"With respect to dividend growth, we're pretty committed to it. There'd have to be a pretty significant downturn in the economy (to change that)," Peddie told an analyst who asked whether there might not be an increase if Corus misses its guidance for operating profit and free cash flow.
The company said Wednesday it is aiming for between $300 million and $310 million in consolidated segment profits in fiscal 2012, which would be five to nine per cent above the 2011 level.
It also said Wednesday it estimates $125 million of free cash flow in the 2012 financial year, which began on Sept. 1 and ends next Aug. 31.
In the past, the Toronto-based media company has done so by repurchasing its shares from the market but it's not currently doing so and the company's priority is a dividend increase, he said.source
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