Corus Entertainment Inc.

Good afternoon. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chorus Entertainment Q4 and year-end 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 one on your telephone keypad. If you would like to withdraw your question, please press star, too. Thank you. As a reminder, this call is being recorded. I will now turn the call over to Mr. John Gosling, CEO of Chorus Entertainment. Mr. Gosling, you may begin your conference.

Great. Thank you very much, Operator, and good afternoon, everyone. Welcome to our fiscal 2025 fourth quarter and year-end earnings call. Thanks for joining us on what we know is a very busy day for reporting in our sector, and we appreciate you taking the time with all this air traffic. I'd like to remind everyone that we have slides to accompany the call, and you can find them on our website at www.coresent.com under the investor relations dash events and presentations section. I'll start off by drawing your attention, as usual, 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 forecasts, projections, or conclusions in these statements. We'd like to remind those on our call today, in addition to disclosing results in accordance with IFRS, CORS 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 and the company's reported results and factors and assumptions related to forward-looking information can be found in our fourth quarter 2025 report on shareholders and the 2025 annual report, both of which can be found on CDR Plus or in the investor relations financial reports section of our website. All right, joining me on today's call are Jennifer Lee, who is our Chief Administrative and Legal Officer, as well as Senior Finance Team members Doug Spence and Ann Duggan. All of them are outlined on slide three. Over to slide four. Well, I'll start with an update on the performance of our impressive fall schedule, which rolled out just two weeks ago across global and our specialty TV channels and, of course, on our digital platforms like Stack TV. It's still a bit early in the season, but we have already seen solid momentum with audiences since launch. Consistent with our track record of delivering returning hits together with the most anticipated new shows, we are seeing the latest seasons of Survivor, 9-1-1, Saturday Night Live, Matlock, Elspeth, NCIS Origins, and FBI, along with promising debuts like Sheriff Country and DMV posting strong ratings on Global. This is despite competition from the World Series, which, of course, wraps up this weekend. Historically, we have seen dips in viewing and related ad spend due to special sporting events such as NHL playoffs in June. But in that case, we did rebound strongly with our estimated market share of linear TV advertising spend in July and August actually exceeding what we saw earlier in the year. Turning to slide five and look at our specialty channels, we're seeing the same trends with our programming line-up delivering more top 20 shows than any of our competitors. with hits like The Secret of Skinwalker Ranch and number one factual series Hazardous History with Henry Winkler on History, the number one reality competition series The Challenge on Slice, all-new course original Halloween Bake Shop, and audience favorite Top Chef Canada on Flavor Network, and House Hunters International on Home Network. Backed by popular demand on W Network, we recently launched Hallmark Channel's Countdown to Christmas event, which reaches nearly 10 million fans, including all those on the call, and last year led to the network's number one specialty entertainment service rank during the event. In addition to having the number one and number two specialty lifestyle networks with home and flavor, this September we have also seen Slice increase its rank position, entering into the top 20 among specialty networks. Our smart programming choices are sustaining our momentum, delivering results with audiences who are discovering the latest, most popular content on our network within a highly competitive landscape. Let's move on to slide six. We know that demand for premium content is not abating, but the ways audiences look for, watch, or listen to content continues to shift. As part of our strategy to provide Canadians more ways to connect with the premium content they love, we've been working to grow our digital suite of products and services. And this summer, we added Detour to Stack TV to further expand its value for subscribers. And in addition, last month, we launched 12 free ad-supported television or fast channels on the global TV app, including Romance 365, Busted at the Border, Non-Stop Drama, and Crime Beat. Our streaming platform saw an overall combined increase in its stream in September with the launch of our fall schedule, providing strong support for Stack TV subscriber acquisition in the past few weeks. Our global TV apps' new fast channels are also off to a great start. Expanding our digital inventory also enhances our ability to provide cross-platform advertising solutions. We're proud to be an industry leader in terms of matching value and tailored creative with the content and audience metrics that clients want. clients increasingly desire integrated campaigns that flow seamlessly across video, digital, and audio, and Chorus is leveraging our multi-platform portfolio to bring their campaign storytelling to life. So, as we wrap fiscal 2025 and kick off fiscal 2026, I'm confident we have the right content, brands, and offerings to build on our audience momentum from the past year. In fact, in 2025, we saw improved audience metrics in certain key demos, achieving a moderate year-over-year increase in share of Canadian specialty and conventional viewing among adults ages 25 to 54. Before commenting more specifically on our fourth quarter and year-end results, I want to acknowledge what most of you have noted across the industry. We are all seeing a challenging advertising environment due to ongoing geopolitical and economic uncertainty and increased levels of advertising inventory available from competing digital players. As a result, our ongoing focus on discipline cost management and operational efficiencies will remain in place, the benefits of which are evident in our Q4 and full-year results. We'll balance that with the pursuit of new opportunities that offer growth and attractive returns. We also continue our work to strengthen our financial foundation and rightsize our balance sheet. Today, we announced an increase in our revolver to $125 million as part of a prudent liquidity management strategy that gives us more flexibility. Now moving on to slide seven. Our fourth quarter and year end results, along with our outlook for the first quarter, reflect the continuation of trends we were seeing in the advertising market, and specifically our linear TV results reflect broader market and macro economic conditions. In Q4, our overall decline in linear TV advertising revenue was in line with the market, even with others bringing competing brands and offering them wide distribution and extended free previews. Given these broader factors, TV advertising revenue in the fourth quarter was moderately lower than the outlook we provided on the Q3 call back in June. This combined with lower subscription revenue and the expected decline in content revenue contributed to consolidated revenue of $232 million for the quarter, which was a 14% decrease from the prior year. We delivered $1,127,000,000 in consolidated revenue for the year, and that was a decrease of 11% year over year. The quality of segment profit was $26 million for the quarter and $189 million for the year, and that reflects the revenue decline partially offset by the benefits of our cost reduction initiatives. The fourth quarter, these included a 19% reduction in G&A expenses, which were ahead of our Q4 outlook, up 10% to 15% reduction, including a decrease of 8% in employee costs. This was partially offset by a modest increase in amortization of program rights and some amortization resulting in 1% higher direct cost of sales. Combined, these helped to drive total expenses lower by $21 million, or 9% for the quarter. For the year, total expenses were lowered by $49 million, or 5%, reflecting meaningful progress on our standing commitment to manage our costs and right-size our business, and reflect a 12% reduction in G&A expenses, which includes an 11% decrease in employee costs, partially offset by the 1% increase in direct cost of sales. And again, that was due mainly to the return of programming following the Hollywood Labor Actions, which impacted deliveries in the prior year. Consolidated segment profit margin was 11% for the quarter, and that's down from 16% last year, while the segment profit margin for the full year of 17% was down from 22% in the prior year. Pre-cash flow was negative $25 million in Q4 and negative $22 million for the year. Now, in the fourth quarter, this reflects lower segment profit, higher working capital usage, and higher restructuring costs, partially offset by the benefit of reduced net investment and program rights. Just to be specific, on the working capital usage in Q4, that was unusually high due to several factors, which included the end of the federal government's HST remittance and corporate tax installment holidays that we were benefiting from through Q3, as well as reduced accounts payable and accrued liabilities balances at the end of the year, and that was due mainly to timing. At the end of our fourth quarter, we were in compliance with all covenants and had approximately $60 million in cash and cash equivalents and $35 million available to be drawn under our revolving credit facility, which is prior to the increased capacity that we announced today. Net debt to segment profit increased to 6.01 times at the end of the fourth quarter compared to 5.39 times at the end of the last quarter, and that increased from 3.84 times at the end of last year, and that was driven by the lower segment profit and slightly higher debt balances. As mentioned earlier, we are seeing ongoing disruptions of advertising markets in the first quarter of fiscal 2026, and these factors are incorporated into our outlook. The majority of our fall schedule on global launched mid-October, and we are encouraged by the early viewing results. Compared to last year, television advertising revenue for Q1 of fiscal 2026 is expected to decline in a similar range to the fourth quarter of fiscal 2025, and amortization of TV program rights is expected to decrease by 5% to 10%. compared to the prior year quarter. In addition, we anticipate further declines in consolidated G&A expenses in the range of 10% to 15%, and that continues to exclude any potential impact from the independent local news fund compared to last year, and that's as a result of significant cost reduction initiatives that have been implemented over the last year. Our ongoing work to further offset the lower expected revenue will be balanced with delivering on our longer-term strategic objectives and taking the necessary steps to fortify our financial foundation. With that, I'll now pass it on to Doug Spence, who will walk you through the segmented results.

Thank you, John. I will start on slide eight. TV segment revenue was $213 million for the quarter and $1,043 million for the year, down 14% and 11%, respectively, from the prior year. This was mainly driven by lower TV advertising revenue, which declined 23% in the quarter and 16% for the year. Subscriber revenue was lower by 6% in Q4 and 5% for the year. When we normalized for the sunset of certain specialty channels in the first half of fiscal 2025, subscriber revenue for the quarter was down 3% and 2% for the year compared to the prior year periods. Distribution, production, and other revenue was 3% lower for the quarter and 11% lower for the year, driven by fewer episode deliveries, and reduced service work. Compared to the prior year, expenses were down 10% for the quarter and 5% for the year. Direct cost of sales for TV increased a modest 1% for the quarter and the year. In Q4, the lower costs were mainly driven by a significant reduction of 23% in general and administrative expenses, partially offset by a 2% increase in amortization of program rights. For the year, amortization of program rights increased by 4%, due mainly to the return of programming following the Hollywood strikes impacting programming deliveries in the prior year, as John noted. Amortization of film investments increased by $2 million for the quarter, but decreased $10 million for the year, due primarily to changes in film tax credit assumptions. EV employee costs were down $6 million, or 10% for the quarter, and $29 million, or 12% for the year, as a direct result of headcount reduction initiatives. Other G&A expenses were down $15 million for the quarter and $19 million lower for the year as a result of robust cost efficiency measures and receipt of some funding to offset news production costs. For the year, these reductions were partially offset by additional advertising and marketing expenses related to the rebranding of two specialty networks. Overall TV segment profit declined 34% in the fourth quarter and 32% for the year, mainly reflecting lower revenue, partially offset by the benefit of GMA expense savings from significant ongoing cost reduction initiatives as we work to mitigate the impact of lower revenues. TV segment profit margins were 14% in Q4 and 19% for the year compared to 18% and 25% in the prior year comparable periods. Moving to slide nine, radio segment revenue of $19 million for the quarter and $85 million for the year decreased 10% from both the prior year and the year due to lower advertising demand. Radio segment profit increased to $2.6 million, up 85% in the quarter, and $13 million, up 37% for the year, with cost containment measures more than offsetting the lower advertising demand. Radio segment profit margin improved meaningfully to 13% in Q4 and 15% for the year, compared to 7% and 10%, respectively, in the prior year periods. benefiting from our cost reduction initiatives. I'll now turn it over to Jen for comments on the regulatory environment and recent developments.