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Report On Business Corus CEO hopes new strategy will fuel rebound after tumultuous year

Corus CEO Doug Murphy at the company's offices in Toronto, Ontario Friday September 11, 2015.

Kevin Van Paassen/The Globe and Mail

During his first six months in charge at Corus Entertainment Inc., Doug Murphy kept his head down. The Canadian media company's chief executive spent his days planning, shuffling his executive team, and cutting 3.5 per cent of the company's 2,000-odd staff.

In a hard year for the company, he wanted the hardships over and done with.

Now he has emerged with a promise to "hit the ground running" in the 2016 fiscal year, which just began, and to return the media company known for its kids and women's programming to growth – albeit modestly, for now.

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"It's happy new year for us," he said, in his first in-depth interview since he was named CEO at the end of March.

It's no wonder he's pleased to leave 2015 behind. As ad revenue fell, Corus suffered quarterly losses and took writedowns on programming and radio assets. New regulatory rules for the TV industry compounded those woes by prompting concerns that Corus could find itself vulnerable when consumers are given the ability to "pick-and-pay" for their preferred channels next year. The company's stock price, which sat north of $22 on the Toronto Stock Exchange in mid-March, has fallen steadily since then, closing at $13.36 on Tuesday.

From his open-concept office overlooking Lake Ontario at Corus's Toronto headquarters, Mr. Murphy is keen to demonstrate why he sees calmer waters ahead.

"We're a show-me story right now, quite frankly," he said. "We need to put some points on the board."

Mr. Murphy, 52, is a 12-year Corus veteran who has risen through the ranks, serving most recently as chief operating officer. A hockey-playing Toronto native and father of two girls, aged 7 and 9 – a key Corus demographic – he built his career in senior roles at Walt Disney Co. in the United States, Japan and Canada.

And he has turned to his former employer, as well as other household entertainment names, to fuel Corus's rebound.

The central strategy is to "own and control more content," he said, notably from big brands. As soon as Mr. Murphy took over, the company announced a major expansion of its partnership with Nickelodeon, covering the rights for all digital platforms. More recently, it launched Canada's first branded Disney Channel.

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Corus wants to deepen ties with big-name networks, including HBO, and push more money into its own core channels such as YTV, Treehouse and the W Network, betting that they will stand out when viewers gain the ability to choose channels "à la carte" next year.

"The key for us is to make sure we're part of those channels that are picked," he said.

Corus, which has a market capitalization of $1.16-billion, is also looking to get bigger. "We need to do more M & A," he said. A team is in place, working with a "well-honed target list" of companies, and a small acquisition will be announced Wednesday.

Yet analysts are still skeptical. On a recent conference call, Tim Casey of BMO Nesbitt Burns Inc. said he was "a bit perplexed" that Corus's ad revenue from specialty TV channels fell 11 per cent in the third quarter, when other broadcasters had fared better. Recent financial results showed "a worsening outlook for Corus," according to Aravinda Galappatthige, an analyst at Canaccord Genuity.

Mr. Murphy contends the doom and gloom is exaggerated. "People don't like uncertainty, and the regulatory environment is uncertain," he said.

He expects Corus will lose some subscribers – 1 per cent to 2 per cent in the near term – as new rules from the Canadian Radio-television and Telecommunications Commission's Let's Talk TV hearing take effect. By the end of 2016, the CRTC will require all TV distributors to offer a slimmer basic package and allow customers to add further channels one by one. Already, media companies have seen "a little bit of an acceleration in cord-shaving or cord-cutting," Mr. Murphy said.

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But he feels some perks from the new rules, and the upside of the shift to digital, have too often been ignored. The company is pushing out a suite of "TV everywhere" apps for its Treehouse, YTV, Disney and Nickelodeon channels, which he says will help Corus connect more closely with viewers to promote shows, target marketing and compile better research on customer behaviour.

He also expects to "dramatically increase our production" of both children's animation and adult reality shows, some to air on Nickelodeon and many of which could be sold internationally.

With online streaming eating into traditional TV's business model, producing more content to sell on any platform is "a darn good hedge," Mr. Murphy said. "To the extent to which we may be fragmented or disintermediated or cord-cut or cord-shaved in Canada because people go to Netflix or CraveTV or Shomi, at the same time I'm licensing content to Shomi, right?"

Corus wants to ship more programming to Britain, France and to American giants such as Netflix and Hulu. A yet-to-be-announced pilot project with Amazon.com Inc. is already under way.

"We've been on the balls of our feet for six months now," Mr. Murphy said. "We're going to show the world that we're definitely not dead yet."

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