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Corus Entertainment has gained the Canadian rights to Disney Channel content.Aaron Vincent Elkaim/The Canadian Press

Corus Entertainment Inc. is seeking to reassure investors that it has a plan to return to growth after reporting third-quarter figures that missed expectations amid a turbulent time for the broadcast media business.

Although analysts had predicted a tough quarter, revenue and profit fell further than expected as Corus, which owns television brands such as YTV and Teletoon as well as 39 radio stations, copes with a digital shift in its audience.

Like many of its competitors, Corus has been buffeted by a weak advertising market. But faced with a series of regulatory changes on the horizon that will allow consumers to unbundle their TV packages, Corus has been spending money to double down on its relationships with high-profile brands, such as Disney, Nickelodeon and HBO, to ensure it stands out in a "pick-and-pay" environment.

Acknowledging "a challenging quarter" driven mostly by "continued softness in advertising demand," Corus president and chief executive officer Doug Murphy told analysts on a conference call that "we're going to get this business tracking towards growth. We're going to make some tough decisions on costs."

In the short term, however, Corus has had to spend more to bolster its content. Direct costs in the TV segment rose 6 per cent in the third quarter, which ended May 31, in part because of a content deal signed with HBO. Corus is planning to launch a revamped Disney Channel in the fall, and recently expanded its rights deal with Nickelodeon, which means program costs will be higher.

Regulatory changes by the Canadian Radio-television and Telecommunications Commission, which will allow consumers to choose and pay for channels individually by late 2016, will force some channels to work harder to show their value rather than rely on being bundled with other popular choices. But it has also given Corus more flexibility in the way it programs its channels.

"Our strong brands and compelling content will triumph," Mr. Murphy said.

Corus is also hoping to take advantage of the growing shift to online video streaming. The company has licensed 16,000 episodes this fiscal year to services in other countries such as the United States, Britain and Germany, which brings new revenue from its huge catalogue. And it has launched the free mobile platform TreehouseGO, with plans to roll out another five such apps by the end of the year.

"The TV industry needs to follow the consumer, and this is just basically the price of admission," Mr. Murphy said.

Corus reported a loss of $8.1-million, or 9 cents a share, compared with a loss of $30.3-million or 36 cents, a year earlier. The 2015 loss was driven by a $51.8-million non-cash impairment charge writing down the value of underperforming programs and film investments. The comparative quarter last year also included a $75-million impairment charge tied to the value of goodwill and radio broadcast licences.

Revenue for the third quarter, which ended May 31, was $203-million, down 5 per cent from $214-million a year earlier.

"The miss was largely due to weaker-than-expected advertising trends and higher costs," Aravinda Galappatthige, an analyst at Canaccord Genuity Corp., said in a research note.

Ad revenue for specialty TV fell 11 per cent compared with the third quarter last year; subscriber revenue declined 3 per cent.

Radio revenue was down 7 per cent, also worse than expected, driven in part by a slower recovery in the Toronto market.

Follow James Bradshaw on Twitter: @jembradshawOpens in a new window

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