Corus stock falls more than 18% after $935.9M quarterly loss, dividend cut

Corus Entertainment Inc. shares were near their all-time lows Wednesday after the company announced a $935.9 million loss tied mostly to a devaluation of its broadcast licences and slashed its dividend to accelerate debt reduction.

Reduced dividend will divert about $150 million per year to reducing debt

The new corporate logo of Corus is seen in this photo taken in Toronto on June 22, 2018. The company's shares fell Wednesday after it reported its third-quarter earnings and cut its dividend. (Tijana Martin/Canadian Press)

Corus Entertainment Inc. shares touched all-time lows Wednesday after the company announced a $935.9 million loss tied mostly to a devaluation of its broadcast licences and slashed its dividend to accelerate debt reduction.

The company's B shares fell 18.4 per cent or $1.15 to close at $5.10 i on the Toronto Stock Exchange. Earlier, they had touched an intraday low of $4.96, falling to their lowest levels in nearly 19 years as a public company.

The Toronto-based television, radio and production company said the loss included a $1.01-billion non-cash impairment charge related to its radio broadcast licences and goodwill, an intangible asset related to acquisitions.

Impairment charges generally reflect the future earning power of a business's assets. Excluding those and other expense items, Corus would have had a profit in the three months ended May 31.

Cutting debt

The reduced dividend will divert about $150 million per year to reducing Corus debt — a move that management said would give it more financial flexibility in the long-term.

Besides holders of Corus publicly traded non-voting shares, the dividend cut will affect members of the founding Shaw family, which controls both the media company and Shaw Communications Inc. through their voting stock.

Corus chief executive Doug Murphy told analysts that the company has a long-term strategy for rebuilding its business in turbulent times, amid intense competition, changing technologies and an uncertain regulatory landscape.

"While our immediate focus will be on debt reduction payments, we will continue to make prudent investments that support our strategic priorities to ensure our company remains vital for the long term," Murphy said.

"Development of our long-term plans began long before this quarter, more than three years ago in fact."

The acquisition of Shaw Media — parent of the Global television network and a number of specialty cable channels — was part of the plan but increased the Corus debt load and made Shaw Communications a major shareholder for the first time since 1999, when Corus was spun off as an independent publicly traded company.

Dividend payments

Corus said Wednesday it will start paying a quarterly dividend of six cents per class B share starting in September compared with its current dividend which is a monthly payment to shareholders of 9.5 cents per class B share.

The reduction in the dividend came as Corus says the loss amounted to $4.49 per share for the quarter ended May 31 compared with a profit of $66.7 million or 33 cents per share a year ago.

Revenue in what was the company's third quarter totalled $441.4 million, down from $461.6 million in the same quarter last year.

Television revenue fell to $403 million compared with $422.3 million a year ago, while radio revenue fell to $38.4 million compared with $39.3 million in the same quarter last year.

On an adjusted basis, which excludes the impairment charge and other one-time items, Corus says it earned $78.1 million or 37 cents per share for the quarter compared with an adjusted profit of $70.1 million or 35 cents per share a year ago. Analysts on average had expected a profit of 36 cents per share, according to Thomson Reuters Eikon.