Corus Entertainment Inc.

Good morning, my name is Jenny, and I will be your conference all-creator today. At this time, I would like to welcome everyone to the Chorus Entertainment First Quarter 2025 Analyst and Investor Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to address your question, please press star 2. Thank you. As a reminder, this call is being recorded. I will now turn the call over to Mr. Troy Reeb, co-CEO of Chorus Entertainment. Mr. Reeb, you may begin your conference.

Thank you, Operator, and good morning and Happy New Year, everyone. Welcome to Chorus Entertainment's Fiscal 25 First Quarter Earnings Call. I am Troy Reeb, and I am joined today by John Gosling, Co-Chief Executive Officer and CFO. Before I read the cautionary statement, I'd like to remind everyone that we have slides to accompany today's call. You can find them on our website at www.correscent.com under the Investor Relations Events and Presentations section. Now let's move to the standard cautionary statement found on slide two. We note that forward-looking statements may be made during this call. Actual results could differ materially from forecasts, projections, or conclusions in these statements. We'd like to remind those on our call today that in addition to disclosing results in accordance with IFRS, Corus also provides supplementary non-IFRS or non-GAAP measures as a method of evaluating the company's performance and to provide a better understanding of how management views the company's performance. Today, we will be referring to certain non-GAAP measures in our remarks. Additional information on these non-GAAP financial measures, the company's reported results, and factors and assumptions related to forward-looking information can be found in Corus's first quarter 2025 report to shareholders and the 2024 annual report, which can be found on CDAR Plus or in the Investor Relations Financial Reports section of our website. With that out of the way, I will start on slide three. It is a new year with new opportunities, starting with the successful launch of our exciting new lifestyle brands, Flavor Network and Home Network. Along with an impressive group of advertisers who came aboard as official launch partners, we are supporting the launch of these two great brands with a two-month free preview across most major distributors. Home and Flavor feature an outstanding lineup of fresh content, exclusive decorous, including ever-popular Canadian originals like Great Chocolate Showdown and Pamela's Garden of Eden, along with new additions like Extreme Makeover Home Edition and Chasing Flavor with Carla Hall. Advertiser interest and audience demand for the new brands has been very encouraging. While still early, obviously, the ratings for these channels have remained consistent with prior to the rebrands. And while certainly some shifts in audience behavior may yet occur due to new competing channels, We are very pleased to have maintained all of our carriage for these networks and look forward to updating you on their ongoing progress. As part of our right-sizing efforts, we made the prudent decision to focus our home and culinary programming into the two big brands, Home Network and Flavor Network, and that has resulted in the discontinuation of Cooking Channel and Magnolia Network on December 31, 2024. In late October, we partnered with NBC Universal to launch a new Stack TV KU bundle that is delivering moderate growth and is a good example of how we are pursuing even more value through innovation for our Stack TV subscribers. Moving to slide four, following one of the strongest fall seasons in recent memory with global ranking number one in core prime time, Chorus was the only Canadian private broadcaster that saw a lift in its overall share of viewings. Fall marked the first back-to-normal program schedule, and Global delivered six of the top 10 and 11 of the top 20 shows in the fall season, including number one reality show, Survivor, number one late-night program, Saturday Night Live, number one comedy, Ghosts, blockbuster drama, and number two overall, 9-1-1, hit new top 10 show, Matlock, starring Kathy Bates, and the latest installment of the NCIS franchise, NCIS Origins, also in the top 20. And as we head into our winter-spring season, we have an equally strong schedule, featuring the return of many of these top shows, along with highly anticipated new medical drama Doc, global original and fan favorite Family Law, and modern Sherlock Holmes-themed medical mystery series Watson. Over to slide five. Taurus has long been the leader in specialty entertainment television, with decades of success in building big Canadian stars, acquiring and creating content that resonates with viewers, delivering massive audiences, and creating passionate fans. We held 16 of the top 20 specialty entertainment programs for the fall season, including number one, Curse of Oak Island, number two, Secret of Skinwalker Ranch, and top 10 Canadian original, Top Chef Canada, which was recently greenlit for yet another season on Flavor Network. Once again this year, throughout Hallmark Channel's countdown to Christmas, W Network ranked as the number one specialty entertainment television station in Canada for adults 25-54. Despite shifts in its program supply, Slice continues to perform well on the strength of new acquisitions, including The Daily Show and True Crime News. This new programming lineup replaced our former supply of output shows from Bravo in the US, and it is delivering impressive audiences. In fact, Slice finished the fall season with 50% higher ratings in total audience than the recently launched Bravo Canada. The success of our programming strategies is particularly evident on our streaming platforms, with total hours streamed growing 24% versus prior year, and Stack TV, Pluto TV, and the Global TV app, all contributing to that increase. We have seen continued audience growth in our 14 free global news streaming channels, at the same time as our news audiences have also grown 8% on linear television, with across-the-board increases in all day parts. To be clear, that is not relative to overall declines in linear television, but real year-over-year growth in viewing to global news on traditional TV. And across all platforms, viewing to global news has increased 7% year over year, with impressive 31% growth on globalnews.ca and 52% on Pluto TV. Moving to slide six. Despite our improved audiences in the last two years, the advertising marketplace has changed rapidly, and there continues to be a challenge coming from an abundance of premium digital video inventory with all major streaming services now offering ad-supported tiers. In response, we are intensely focused on balancing supply and demand while rolling out new initiatives that provide strong rationale and incentives for advertisers to buy TV and streaming video from Chorus. In particular, new business development and direct client relationships remain a top priority. Powered by the strength of our news products and connection to the community, our local business remains an area of strength as we continue to combat the overall oversupply challenge. Since John and I became co-CEOs last June, we have been squarely focused on right-sizing the company. While you heard a lot initially about headcount reductions, including a reduction of almost half of our executive officers, our ongoing efforts are now more focused on ensuring that all product lines can generate positive margins and have cost structures in line with their revenue potential. I'll turn it over to John now.

Great. Thanks very much, Troy, and good morning, everyone. Hope you're staying warm. I will start on slide seven. As Troy mentioned, persistent industry-wide advertising trends had a significant impact on our television advertising demand in the first quarter, as we expected. This, combined with slightly lower subscription revenue, contributed to consolidated revenue of $327 million, and that was a 12% decrease from last year. Consolidated segment profit was $84 million for the quarter, and that reflects the impact of the lower revenue and a 3% increase in amortization of program rights due to the return of scripted programming that was disrupted, of course, in the prior year. This was partially offset by our cost savings initiatives, which helped to drive total expense reductions of $6 million in the quarter, and that included a meaningful decrease of 14% in employee costs on a consolidated basis. Consolidated segment profit margins for the quarter were 26%, and that compares to 31%.