Corus says television advertising dollars could bloom this spring

TORONTO – A sluggish advertising market has Corus Entertainment Inc. hoping reluctant customers will come out of the woodwork later this year.

Outgoing chief executive John Cassaday said Tuesday that he’s seeing “encouraging signs of renewed interest” from television advertisers that he expects will play out starting in the spring.

“We believe we are well positioned to benefit from any gains in advertising demand as the year progresses,” he told analysts in a conference call, after Corus delivered its latest financial results, which included lower profits and a slight uptick in revenue for its fiscal first quarter ended Nov. 30.

The Toronto-based media company, which operates a variety of specialty TV channels and a slate of radio stations, has been cautious about the advertising market for several quarters and last October lowered its guidance for the 2014-2015 financial year that ends Aug. 31.

At the time, executives described a new unpredictability in the way advertisers bought airtime, saying that more of them chose to spend their marketing budgets at the last minute, which made it tougher for Corus to anticipate demand for its speciality channels, like the W Network, ABC Spark and OWN: The Oprah Winfrey Network.

On Tuesday, Cassaday delivered a slightly more optimistic tone for where advertisers were headed.

“Given the current ratings strength of our core networks, the rebound in kid-targeting advertising and anticipated improvements in the consumer packaged goods category, we are forecasting specialty advertising revenues to strengthen in the balance of the year,” Cassaday said.

The reasons for his optimism haven’t shown up in the financial results quite yet, as Corus’ first-quarter profit slipped from the same time last year, while revenues were propped up by TV channel acquisitions.

Net income dropped to $51.9 million compared with $150.9 million in the same period last year, when the company recognized a $127.9-million gain on the value of its stake in Teletoon.

Last year, the company acquired full ownership of the Teletoon channel when it bought the 50 per cent formerly owned by Astral Media, after competition authorities ordered BCE Inc. (TSX:BCE) to sell certain Astral assets as part of a friendly takeover deal.

In the agreement, Corus also took ownership of the Historia and Series+ channels.

Adjusted profits, which filter out the acquisitions, were also $51.9 million or 60 cents per share, compared to $55.2 million or 65 cents per share a year ago.

Overall revenues increased slightly, rising to $227.1 million from $226 million a year earlier.

Within the divisions, TV revenue grew to $181.5 million from $177.9 million, while the radio operations saw weaker ad sales that contributed to pulling revenue down to $45.6 million from $48.1 million.

Corus also announced that its annual dividend will increase by five cents, to $1.14 per class B share and $1.135 per class A share.

RBC Capital Markets analyst Haran Posner said the results were modestly below his expectations, mainly due to weak advertising revenue from TV channels catering to women and family audiences.

Posner said in a note that Corus’ dividend increase was “consistent with our expectation for an increase in the low- to mid- single-digit range.”

On Monday, Corus announced that Cassaday will step down from the chief executive position on March 30, and will be succeeded by chief operating officer Doug Murphy.

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