TORONTO — Corus Entertainment Inc. shares sank to their lowest level in nearly two years on Wednesday after the media company said its first-quarter results fell short of expectations as some of its TV advertisers adjusted their spending priorities.
Corus shares closed down 17 per cent at $9.17 apiece on Wednesday after it reported a first-quarter profit attributable to shareholders of $77.7 million, or 38 cents per diluted share for the quarter ended Nov. 30, up from $71.1 million or 36 cents per share a year ago.
However, on an adjusted basis, Corus says it earned a profit attributable to shareholders of $78.9 million or 38 cents per share for the quarter, down from an adjusted profit of $80.8 million or 41 cents per share a year ago. That fell short of both its own expectations as well as those of analysts.
Revenue at the television and radio media company totalled $457.4 million, down 22 per cent from the quarter a year ago.
"The advertising industry continues to reassess and recalibrate as marketers evolve their media modelling strategies to optimize the mix of TV, radio and digital media elements," Corus CEO Doug Murphy told analysts.
He said longer-term TV advertising bookings were on a good pace leading into the fall programming season and appeared headed for modest growth.
"However, as the quarter progressed, we saw a shift towards shorter-term buys. ... as we approached the end of the calendar year it also became apparent that certain advertising commitments would not be fulfilled as forecast."
He said the weakness in TV advertising more than offset gains in other parts of the Corus business, which also includes one of Canada's largest private-sector radio operations and the Nelvana animation and publishing business.
At least one major securities dealer lowered its price target for Corus shares, saying it's taking a more cautious view of the stock unless the company demonstrates that it can strengthen TV advertising revenue or find other sources.
"While we believe management is taking the appropriate strategic and tactical initiatives in a changing television industry, a major forecast recalibration and limited visibility leave us on the sidelines," wrote Drew McReynolds, who covers Canadian telecom and media companies for RBC Dominion Securities.
RBC Dominion lowered its price target for Corus by $2 or 17 per cent to $10. The stock hasn't closed below $10 since February 2016.
Murphy said Corus is actively pursuing several initiatives to change the way it does business with advertisers but it needs to do so with partners such as advertising agencies and cable companies.
"We can't just snap our fingers and have the complete rollout done. That's where I think we all need to be somewhat patient," Murphy said.
The Toronto-based company (TSX:CJR.B) said its monthly dividend will remain at about 9.5 cents per share, where it has been since February 2015, and executives told analysts they'd continue to control costs.
Murphy told analysts that Corus is prepared to make certain capital investments, such as technology that identifies more specific audience segments and markets them to advertising agencies.
"We plan to introduce beta trials with the five major (advertising) agencies this year."
David Paddon, The Canadian Press