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The Corus building sits at the foot of Sherbourne Street along the Toronto waterfront on August 18, 2010. (1--Sarah Dea/The Globe and Mail)
The Corus building sits at the foot of Sherbourne Street along the Toronto waterfront on August 18, 2010. (1--Sarah Dea/The Globe and Mail)

Corus profits rise despite sharp drop in advertising Add to ...

A torrent of gloomy economic news from around the globe has begun to affect Canada’s media companies. As earnings reports emerge this week, it’s becoming clear that in August and September especially, there was a significant slowdown in the commercials for cars and clothes that television and radio channels depend on for a major slice of their revenues.

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On Wednesday, Corus Entertainment Inc. reported improved profits company-wide in the three months ended Aug. 31, but within the positive news was one note of decline: a 6-per-cent drop in advertising revenues on its specialty TV stations, such as W Network and CMT – a sharp difference from the improvements executives had forecast a few months ago.

“Clearly there [were]confidence issues in the economy and I think people were sitting on their wallet a little bit,” chief executive officer John Cassaday said.

His remarks echoed comments from Rogers Communications Inc. , which also reported Wednesday that it had seen a slowdown in the advertising market.

“I think fear and caution … are words that a lot of advertisers are talking about with the harrowing recession,” said Rogers Media president Keith Pelley.

According to Corus executives, the downward trend began with automotive advertising, which began scaling back in the wake of the tsunami in Japan in the spring. The caution spread to other advertising markets with news of the debt crisis in Europe and wider global economic concerns, culminating in a “disappointing month” in September.

There is some relief, however: Companies report the ad market bounced back a bit in October, and expect further momentum as the holiday season ramps up.

For Corus, the declines were due to a few channels that bled ratings in the quarter, resulting in lower advertiser demand. Telelatino had a 30-per-cent decrease, largely because it was compared to an unusually strong period last year that included World Cup soccer. CMT was also down slightly. The company’s most profitable specialty channel, W Network, also contributed to the ratings slide.

But Mr. Cassaday said women’s channels – a major focus for Corus, along with its kids’ channels, which also target women because advertisers expect moms to watch with their children – are still performing well. The newly launched Oprah Winfrey Network, or OWN, is growing quickly, as is CosmoTV.

“Women are still buying lipstick,” Mr. Cassaday said. “That category will continue to grow.”

Corus announced Wednesday it is adding to its portfolio of channels through a new partnership with Walt Disney Co. ABC Spark will launch in early 2012, targeting the “millennial” crowd, a tech-savvy demographic. The target audience is broad, with varying tastes – aged roughly 15 to 34. Executives are also depending on parents co-viewing the way they do on channels such as Treehouse and YTV, but ABC Spark will target older parents watching with older children.

“While we are aware of all of the macro global economic concerns, we continue to believe that Canada will perform better than the rest of the world,” Mr. Cassaday said. “…We are expecting to see ad growth in the sectors that we compete in, radio and specialty TV.”

The Toronto-based company reported net income of $29.2-million or 35 cents a share in the quarter. This was an improvement from a year-ago profit of $6.8-million, or 8 cents per share.

Revenues for the quarter totalled $200.2-million. This was up 6.4 per cent from $187.4-million last year.

 

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