Corus Entertainment Announces New Layoffs Amid Cost Cutting

Corus Entertainment Inc. says it expects to have cut roughly 25% of its full-time workforce by the end of next month compared with the start of its 2023 fiscal year, a reduction that equates to about 800 positions as the company pursues aggressive cost savings.

The Toronto-based broadcaster, which operates television and radio properties across Canada, has faced a difficult year marked by declining advertising revenue, regulatory relief requests and high-profile changes to programming rights.

In its latest quarter, Corus reported a loss attributable to shareholders of $769.9 million, wider than a $495.1 million loss a year earlier, while revenue dropped 16%. Third-quarter revenue totaled $331.8 million, down from $397.3 million in the prior-year period.

Television revenue declined 17% to $308.2 million, from $371.2 million a year earlier, and radio revenue fell 9.9% to $23.6 million, compared with $26.2 million in the same quarter last year.

“We’re making tough decisions to close parts of the business we can no longer support and to pause longer-term development activities as we implement efficiency measures,” co-CEO John Gossling said on a conference call with analysts. “Our plan is to emerge smaller but more profitable, with a sustainable future.”

Inflation and other factors have impacted ad revenue

Corus executives point to multiple headwinds that have reduced advertising demand this year. Among them are lingering effects from the 2023 Hollywood strikes, which delayed production schedules for key programming, as well as broader inflationary pressures and increased competition for ad dollars.

In May, the Canadian Radio-television and Telecommunications Commission (CRTC) approved Corus’s request to relax some of its Canadian content spending obligations after the company warned of mounting financial strain. The regulator noted that a potential exit by Corus from the Canadian broadcasting market would significantly reduce content choices for viewers.

The company’s outlook darkened further when it learned that, as of the end of this year, it will lose the Canadian rights to several lifestyle and entertainment brands, including HGTV, Food Network, Cooking Channel, Magnolia Network and OWN. Those rights were secured in a multi-year agreement between Rogers Communications Inc. and Warner Bros. Discovery, effective Jan. 1.

Rogers is also set to acquire Canadian programming rights for channels such as Discovery Channel Canada, Discovery Velocity, Discovery Science and Animal Planet from Bell Media, altering the competitive landscape for licensed content.

Following those developments, Corus announced leadership changes: Doug Murphy retired and John Gossling and Troy Reeb were named co-CEOs. Reeb told analysts the company intends to continue offering home and culinary programming under new channel brands, despite the licensing shifts.

Corus has said it is exploring “all legal and regulatory remedies” in response to the Warner Bros. Discovery–Rogers agreement, stressing its intention to protect its business interests. Both Gossling and Reeb declined to detail specific strategies, including whether the company might pursue court injunctions similar to actions taken by other broadcasters, saying they did not want to disclose the full approach at this time.

Company to reduce legacy costs in news, other business areas

On a per-share basis, Corus recorded a third-quarter loss of $3.86 per diluted share for the quarter ended May 31, compared with a loss of $2.48 per diluted share a year earlier. On an adjusted basis the company reported a loss of $0.10 per share, versus an adjusted profit of $0.09 in the prior-year quarter.

Shares in Corus traded sharply lower, down four cents or 20% to 16 cents on Monday morning, reflecting investor concern about the company’s near-term prospects. RBC analyst Drew McReynolds wrote that, given the still-challenged operating environment, Corus’s stock is likely to remain under pressure.

As part of its cost-cutting plan, Corus said it will target legacy cost structures across the business, including its news division. Reeb said the news operation will continue to pursue efficiency gains and leverage digital tools to produce local content more cost-effectively.

“We are fortunate to have well-known legacy brands at Corus,” Reeb said, “but carrying outdated cost structures is not sustainable. We must redouble our efforts to reduce legacy costs in news and across all areas of the company to ensure a viable future.”

The company’s strategy emphasizes trimming overhead, refocusing resources on core programming and accelerating digital initiatives as it adapts to the changing broadcasting landscape.

More about investing:

• Hamilton steelmaker Stelco sold to Cleveland-Cliffs for $3.4 billion
• Mission digital: How Coinbase is reshaping Canada’s crypto landscape
• AI ETFs in Canada: How investors can ride the AI wave
• Is a vacation home a good investment?