Canadian TV companies still have work to do to keep viewers and continue to attract advertisers, the CEO of Corus Entertainment Inc. said on Friday, while also rejecting the “malaise” about the future of the industry.
“We’re not going to abdicate the on-demand binge-viewing space to the unregulated interlopers,” chief executive Doug Murphy said during a conference call to discuss the company’s fourth-quarter earnings, referring to non-Canadian companies such as Netflix Inc., Amazon.com Inc. and Apple Inc.
Those foreign players have been aggressive in courting viewers to consume more content through online-based streaming services. Netflix, for example, plans to spend US$8-billion on programming this year alone to continue to attract subscribers.
To compete, the TV industry as a whole needs to better serve on-demand audiences with “more slick platforms," Mr. Murphy said. And it needs to target ads to specific audiences, as opposed to the more broad demographic-based sales – most prominently for adults between the ages of 18 and 34 – typical of television advertising.
While there is still advertiser demand for TV spots, the inventory has decreased as viewing levels have fallen, Mr. Murphy said. Corus has partnered with Rogers Communications Inc. to experiment with “dynamic ad insertion,” which lets advertisers more easily place ads in video-on-demand content. The test has attracted “significant advertiser demand," he said, and Corus is in talks with other TV providers about expanding it.
The Toronto-based company is also testing a new advertising sales tool called Cynch, which is designed to mimic the ease of ad buying that is now de rigueur in the digital space. Media buying agencies should be able to open an app to buy advertising on TV the same way they do with Facebook or Google, Mr. Murphy said.
“It’s pretty easy, in my view at least, to see your way through to a point in time where the television advertising universe is optimized and much more appealing to advertisers,” Mr. Murphy said.
Such advertising technology is “going to to take some time,” to materially affect TV advertising revenue trends, Mr. Murphy said. Until that happens, Corus expects those revenues to continue to decline, in percentage terms, in the low single digits. TV advertising revenue fell 4 per cent in the fourth quarter to $219-million.
“I think television is still a critically important part of the media mix for advertisers. I think the content on TV is still attractive to consumers," he said.
Revenues for Corus’s television business – which includes the Global TV network as well as specialty channels such as HGTV Canada and Food Network Canada – were $344.6-million in the fourth quarter, down slightly from $346-million in the same period last year. For the entire year, the segment saw revenues drop 2 per cent. This was in line with the company’s expectations, Mr. Murphy said, and the company remains “cautiously optimistic” about the state of the market.
Corus is also monitoring the development of “virtual multichannel video programming distributors” or vMVPDs, in the United States. These include services such as Sling TV, DirecTV Now, YouTube TV and Hulu Live, which make live and on-demand TV content available online.
“We believe it’s only a matter of time before these services start to enter the Canadian market," Mr. Murphy said. "We see this as a potential source of new subscriber revenue, and an excellent opportunity to reach audiences that prefer to stream their video content ... not to mention additional digital advertising inventory.”
Corus’s quarterly results beat analyst estimates, as the company reduced costs, and declines in the television business slowed. Total revenue in the quarter ended Aug. 31 fell to $379.1-million from $381.2-million in the prior year. The company’s net income was up 16.4 per cent to $33.7-million, or 16 cents per share.
Corus’s share price has fallen more than 60 per cent this year, but rose 6.1 per cent in trading on Friday.
Corus’s total revenues for the fiscal year were $1.65-billion, down from $1.68-billion in fiscal 2017.
The coming year is going to be an important one on the regulatory front, as Corus and other Canadian media companies make their submissions regarding the review of the Broadcasting Act.
Mr. Murphy applauded a recent report from the Canadian Radio-television and Telecommunications Commission that signalled a need for changes to broadcast regulations, including the suggestion that all companies participating in the sector should contribute to Canadian programming. At the same time, he said, the industry needs “a lot less regulation and a lot more flexibility” in determining how it spends money on programming, in order to remain competitive. He also renewed calls to tax digital competitors such as Netflix that operate in Canada.