Corus Entertainment Inc.

Good morning. My name is Ludi and I will be your conference operator today. At this time, I would like to welcome everyone to the Chorus Entertainment Q3 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 the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number 2. Thank you. As a reminder, this call is being recorded. I will now turn the call over to Mr. John Gosling, CEO of Commerce Entertainment. Mr. Gosling, you may begin your conference.

Great. Thank you, Ludi, and good cooler morning, everyone, and welcome to Commerce Entertainment's fiscal 2025 third quarter earnings call. I'd like to remind everyone, as usual, that we have slides. to accompany today's call, and you can find them on our website at www.coruscant.com under the Investor Relations section. I'll start off today by drawing your attention to our standard cautionary statement, which can be found on slide two. We note that forward-looking statements may be made during this call, and actual results could differ materially from forecast projections or conclusions in these statements. We'd also like to remind those on the call today that in addition to disclosing results in accordance with IFRS, the course 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 measures, the company's reported results, and factors and assumptions related to forward-looking information can be found in our third quarter report to shareholders and the 2024 annual report. which can be found on CDR Plus or on our investor relations website. Joining me on today's call are Jennifer Lee, who is our chief administrative and legal officer, as well as senior finance team members and veterans, of course, Doug Spence and Ann Duggan, all of whom are outlined on slide three. Now, over to slide four, I'll start today's call with a brief update on the recent change in the CEO role. In the past year, we did have a co-CEO structure, and that enabled the company and the management team to focus on the various challenges and initiatives throughout the business that we were navigating. Given the completion of many key actions that I will touch on in a moment, the board decided to revert to a more typical structure with a single CEO. We do want to thank Troy Reid for his contributions to our company and industry over the past 25 years. And on behalf of the board and all of us at Chorus, we wish him all the best in his next chapter. For my part, I look forward to continuing to work with our strong leadership team and our many talented individual teams, building on the nearly 10 years I have already spent in a leadership role here at Chorus. Over the past year, since I first transitioned to the co-CEO role, we have already undertaken meaningful changes to our business, all to position ourselves for a more sustainable future and to adapt to an ever-changing industry. A few things to note. In March, as you will have seen, we assigned, amended, and extended the credit facility, which provides improved terms and better positions to create sustainability in our business. We have also significantly reduced our operating costs and gained efficiencies through workflow optimization and unfortunate but necessary headcount reductions of nearly 30% compared to where we were in August of 2022. At the same time, we have pursued portfolio optimization through the sunset of three specialty television services and divested of certain real estate assets. Global remains one of Canada's most trusted and most watched networks and has the best performance in over a decade. Overall viewing of the global news is up 4% year-over-year in spring 2025 and 6% for the year to date. We also launched our two rebranded specialty lifestyle networks, Home and Flavor, and added fresh and exciting unscripted programming to our Slice brand. In turn, this has increased the value proposition of our popular digital assets, Stack TV, and the global TV app. And most important, perhaps, is that we continue to make, produce, and acquire the content Canadian viewers love, deployed across our conventional networks, especially brands and digital platforms. All right, moving to slide five. In fact, June marks a very exciting time for our business as we unveil our programming lineup for the upcoming broadcast year. As we recently shared in our upfront, our programming schedule is packed with exciting new shows and returning hits that build on the success we experienced over this year. Forrest connects with over 31 million Canadians every month, bringing them the content they want, where they want to watch and listen to it. Global TV was number one in core primetime for fall 2024 and spring 2025 in the adults 18 plus demo. And looking to the fall, we are well positioned for another great year with over 16 hours of simulcast, and top returning titles like 9-1-1, Matlock, the NCIS franchise, Saturday Night Live, which holds the crown as late night's number one show, Ghost, which is the number one comedy, and, of course, Survivor, the number one reality show in Canada as it heads into its landmark 50th season. We are also excited to have secured some new titles, for example, workplace comedy DMV, the latest NCIS franchise, CIA, and the highly anticipated drama Sheriff Country, which is a spin-off from the hit series Fire Country. All right, on slide six, on specialty programming, we currently have 75% of the top 20 entertainment specialty programs, and as we announced at the upfront, we have secured another incredibly strong upcoming lineup. Our exclusive content partnership with NBCUniversal is set to deliver a new Peacock and Sky original series, including The Paper, which is from the universe of the mega hit The Office, The Copenhagen Test, featuring Canadian and now global star Simu Liu, and All Her Fault, a suburban thriller starring Sarah Snook. We will also welcome back new seasons of hits like Ted and Bel-Air. Our unscripted and reality networks will see the return of the number one entertainment specialty program, The Curse of Oak Island, as well as our very own Top Chef Canada, which is coming back for season 12. We're also excited to welcome back Gordon Ramsay's Kitchen Nightmares and our, of course, original series, House of Ali. and rock-solid builds. Some of our new specialty series include Life is Messy and World War II with Tom Hanks. You can also expect new course originals like Building Bomber, Halloween Bake Shop, and Holiday Bake Shop. These are just a few of the titles that will drive tremendous performance on specialty, including our Refresh Bestie channels. We like to experience the particular success we are experiencing on Home and Flavor and our Homegrown Fashion Reality series, Life. Homeward Flavor are both top 20 English language specialty services and the number one and number two lifestyle networks. Place also ranks in the top 20 with audiences up 5% this spring in the key adult 2554 demo, benefiting from refreshed content and the addition of talk shows from the daily news and crime genres. All three of these services are vesting their newly created direct competitor services by considerable margins. All right, turning to slide seven. Our streaming portfolio had its strongest winter-spring season really ever for tuning, and over 19 million average hours were streamed, and that's up 7% year-over-year for the winter-spring season. We are pleased that StackTV subscriptions have remained relatively resilient following our Q2 price adjustments. Prior to the launch of our strong upcoming fall schedule, we have added hundreds of hours of video-on-demand to the service, and these include back seasons of popular history, lifetime, and detour series such as Alone, Curse of Oak Island, Married at First Sight, Gypsy Rose, Life After Lockup, Supernatural, and The Mentalist, all of which create more value for existing and new subscribers. These additions, as well as the launch of new seasons of key subscription drivers like Alone, Rick and Morty, and Big Brother, are expected to support our efforts to increase viewer engagement heading into the fall. Our global TV app continues to gain momentum with audiences, particularly in live viewing, global news, and entertainment streams. And in recent months, we've seen some of the highest levels of engagement since launching the app. We've also implemented live linear dynamic ad insertion on all of our live streams and made progress on enhanced search capabilities on key connected TV platforms. At a high level, the advertising environment remains very challenging, characterized by ongoing uncertainty in the economic environment, an oversupply of digital inventory from foreign competitors, and generally lower advertising demand on linear television. This continues to create a very low visibility environment industry-wide. As you can see in our Q3 results, which I'll turn to next, we have and will focus on the most attractive opportunities whenever possible and continue to be disciplined in cost management. All right, moving on to slide eight for an overview of our consolidated Q3 results. As we expected, the key in federal election provided a tailwind for us in the quarter, partially offsetting pressure in other advertising categories and leading to results that were in line with our Q3 outlook for TV advertising. This, combined with lower subscription revenue, contributed to consolidated revenue of $298 million, and that was a 10% decrease from the prior year. Consolidated second profit was $62 million per quarter, reflecting the impact of the lower revenue and partially offset by the ongoing benefits of our cost control measures. We delivered significant total general and administrative expense reductions of $10 million or 9% in the quarter. This was at the high end of our third quarter outlook and includes a decrease of 7% employee costs all reflecting our state equipment to managing expenses and right-sizing our business. Consolidated segment profit margins for the quarter were 21%, and that's an increase from 20% last year. Free cash flow of negative $33 million in the quarter decreased from last year, and that reflects lower segment profit, seasonally higher working capital usage, and net program rights of some investments, as well as higher restructuring costs. At the end of the third quarter, we were in compliance with all loan covenants and had $82 million of cash and cash equivalents, and approximately $45 million was available to be drawn under the revolving credit facility. Net debt to segment profit was 5.39 times at the end of the third quarter, and that compares to 3.84 times at the end of August 2024. That primarily reflects the impact of the lower segment profit. Looking ahead to the fourth quarter of fiscal 2025, the advertising environment factors discussed earlier are incorporated into our outlook. As a result, the over-year decline in television advertising revenues for Q4 of fiscal 2021 is expected to be in the 20% range. Amortization of PV program rights is once again expected to be relatively flat compared to the prior year quarter. And our implementation of additional cost reduction initiatives is expected to benefit consolidated general and admin expenses in the range of 10% to 15% reduction compared to last year. As we pursue additional initiatives to offset the lower expected revenue and await further details on the recent CRTC decision, concerning the Quantum of Courses funding from the Independent Local News Fund. Well, it's too early to comment on advertising trends for the upcoming broadcast year, but I mentioned earlier, we are excited and confident with the strength of our content and the 2025-26 programming lineup. Our upfront was very well received, and we are looking forward to further building on our strong audience performance this year. At this point, I'll pass it to Doug Spence, who will walk through the segmented results.

Thank you, John. I'll start on slide nine. TV segment revenues were $275 million for the quarter, down 11%. This was mainly driven by TV advertising revenue, which declined 15% in Q3. Subscriber revenue of $111 million for the quarter was down 5%, primarily reflecting declines in the traditional distribution system and the sunset of three of our specialty television networks in the first half of this fiscal year. Excluding the impact of these portfolio changes, subscriber revenue was down approximately 2%. Distribution, production, and other revenues were lower for the quarter by $0.6 million, driven by fewer episode deliveries and reduced service work. Total TV expenses were down 12% in the third quarter compared to last year. This decrease was mainly driven by 3% lower amortization of program rights, a $9 million decrease in the amortization of film investments, which includes changes in film tax credit assumptions and the sale of aircraft in the prior year, as well as a decrease in other cost of sales of approximately $5 million related to certain digital initiatives. As John mentioned, the financial impacts of our cost containment measures are also evident with TV employee costs decreasing 10% as a result of headcount reductions over the prior year quarter. We also delivered a 15% decline in other general and administrative expenses through our ongoing cost management initiatives. Overall, TV segment profit was down 8%, or $5.7 million, in the third quarter, with cost reduction measures partially mitigating the impact of lower revenues. TV segment profit margins were 23% in the current year quarter, up from 22% in the prior year period. Moving to slide 10, radio segment revenue was $23 million for the quarter, just 1% lower than the prior year, as we benefited from election spending and stronger performance in Edmonton and Winnipeg driven by NHL playoffs. Radio segment profit of $5.1 million increased significantly over the prior year quarter, with a 13% expense decline from cost containment measures more than offsetting the lower advertising demand. As a result, radio segments profit margin doubled to 22% from 11% in the prior year period. I'll now turn it over to Jen for comments on some important regulatory developments.