Corus Entertainment Inc.

Good morning, 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 Q2 2026 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 two. 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.

Thanks very much, operator, and good morning, everyone. I'm John Gosling, Chief Executive Officer, and welcome to Chorus Entertainment's fiscal 2026 second quarter earnings call. I'd like to remind everyone that we have slides to accompany today's call, and you can find them on our website at www.chorusent.com. under the Investor Relations Dash Events and Presentations section. I'll start off 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 our call today, in addition to disclosing results in accordance with IFRS, of course, also provide 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 course of the second quarter 2026 report to shareholders and the 2025 annual report, which can be found on CDR+. or, again, in the Investor Relations-Financial Reports section of our 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 Doug Spence and Ann Duggan, all of whom are outlined on Slide 3. So starting on Slide 4, I'll give you an update on our proposed recapitalization transaction. As you likely already know, I'm pleased to share that we have now received the court order allowing us to proceed with this transaction. This marks an important milestone towards strengthening Corse's financial foundation and positioning the company for the future. We are now moving through the remaining steps, including working to obtain regulatory and stock exchange approvals. As we said before, this transaction is designed to significantly improve our balance sheet, enhance liquidity, and give us greater flexibility to invest in the business. Outcomes, we believe, are in the best interest of the company and our stakeholders. In terms of timing, we are not yet in a position to provide an estimated closing date. The timeline will depend largely on the regulatory process, and we expect to have more clarity on that process as it progresses. In the meantime, our focus remains on execution, and we're making solid progress on key revenue, cost, and efficiency initiatives. By turning now, let's have a look at our global programming performance on slide 5. The Winter Olympics, as expected, resulted in a delayed start to our global winter and spring schedule, along with audience and financial impacts consistent with prior Olympic years. These included shifts in the timing of programming and marketing costs, as well as temporary disruption to typical advertising investment and viewing patterns. Global has quickly regained momentum, emerging as the number one network in core prime time post-Olympics and delivering higher audience levels than the same weeks last year. Global currently has eight of the top ten shows in Canada, including the top three overall, led by the blockbuster 50th season of Survivor, which is delivering 47% higher audiences so far compared to the prior season average. Global's performance underscores the strength of our content slate as we move into the remainder of the broadcast year. Turning now to specialty on slide six. This spring, of course, is home to the top three entertainment specialty networks in Canada, W Network, Home Network, and Showcase, reflecting the continued strength and relevance of our portfolio. Across key genres, we continue to hold leading positions. W Network and Showcase remain the number one and number two drama brands. Home and Flavor are the top two lifestyle brands. History continues as the number one factual network. NYTV remains the leading kids' commercial network. We are also encouraged by the momentum at Slice, which has delivered significant gains and is now a top 20 network. Overall, Cores currently holds 15 of the top 20 entertainment specialty shows, underscoring the depth and consistency of our content offering. We're particularly excited about both our current slate and upcoming programming across the portfolio, which we believe supports our performance in the months ahead. Taking a look at digital, As discussed earlier, digital tuning this winter was impacted by temporary factors related to the Olympics. Wrong audience engagement around returning franchises and new content launches has driven improved tuning past Olympics, with titles like Survivor continuing to be important contributors across platforms. As more of our spring programming rolls out, we're encouraged by the improved performance we're seeing and remain focused on driving engagement and growth across our digital ecosystem. With that, I'll turn it over to Doug Spence now to review the financial highlights for Q2.

Thank you, John. I'll start on slide seven. In our second quarter, lower TV advertising revenue combined with the lower subscription revenue contributed to consolidated revenue of $230 million, a 15% decrease from the prior year. Our results were impacted by lower demand for linear TV in the broader advertising market persistent macroeconomic factors, and, as John noted, by the temporary disruptions to February's programming schedules and advertising investments due to the Olympics. On the subscriber side, lower revenue was driven by the reduced number of specialty channels in our portfolio compared to the prior year, plus ongoing declines in the traditional linear subscription business. Consolidated segment profit of $30 million for the quarter, a significant 72% increase compared to the prior year. The lower Q2 revenue was more than offset by a number of temporary and permanent factors, resulting in a 21% decrease in direct cost of sales, general, and administrative expenses. Direct cost of sales decreased 24%, driven by lower amortization of program rights from the delayed timing of our winter and spring program premieres, which was a temporary situation, and the discontinuation of certain program rights related to our specialty television portfolio changes, which are permanent savings. Put another way, timing accounted for approximately one-third of the $28 million decrease in amortization of program rights in the quarter. Other costs of sales also declined significantly due to costs in the prior year period related to a certain digital sales initiative that has since ended. General and administrative expenses were notably lower, down 17%, including a 9% decrease in employee costs and a 31% decrease in other G&A. While the prior year quarter included some one-time expenses related to the launch of two specialty channels, reduced costs in the current year reflected the benefits of our cost containment program and the receipt of funding to offset news production costs. consolidated segment profit margin was 13% for the quarter, up from 6% last year. Net debt to segment profit was 6.7 times compared to 6.01 times at the end of last year, and was down from 7.39 times at the end of Q1, benefiting from higher segment profit and lower lease liabilities in Q2. At the end of our second quarter, we were in compliance with all loan covenants and had approximately $36 million of cash and cash equivalents, and $35 million available to be drawn under the revolving credit facility. As a reminder, given the recapitalization transaction process, at the end of the second quarter, we obtained a waiver and standstill with the lenders under the credit facility, which provides waivers of certain financial covenants, including the net debt-to-cash flow ratio, until May 30, 2026. Free cash flow of positive $1.3 million in Q2 was lower than the prior year driven by higher working capital usage and increased cash taxes, partially offset by higher segment profit and lower spend on program rights and film investments. I'll now move on to slide eight. TV segment revenue was $212 million for the second quarter, down 16% from the prior year, This was mainly driven by lower TV advertising revenue, which declined 21% to $102 million, and subscriber revenue, which declined 12% to $99 million. Normalizing for the sunset of two specialty networks in December 2024 and five additional channels in September 2025, subscriber revenue declined 7% compared to last year. Distribution, production, and other revenue was $11 million. up 8%, mainly as a result of higher international distribution sales in the quarter. DB segment expenses of $179 million were down 22% from the prior year, driven by a 24% decrease in direct cost of sales, 9% lower employee costs, and a 34% decline in other general and administrative expenses. Direct cost of sales benefited from a decline in amortization of program rates of $28 million, due to factors outlined earlier, and decreased other cost of sales of $7 million associated with certain digital sales initiatives. Segment profit of $33 million, a 48% increase over a prior year, reflects a significant decrease in expenses from ongoing cost reduction initiatives, as well as lower programming costs and other savings as described earlier. which more than offset the lower revenue. TV segment profit margin was 16%, an increase from 9% in the prior year quarter. Over to slide 9. Radio segment revenue of $18 million for the quarter decreased 4% from the prior year due to lower advertising demand. In Q2, increases in the home products and automotive categories were offset by declines in general services, retail, restaurants, professional services, and government, which benefited from elections in the prior year. Radio segment profit increased to $2 million, up 33% in the quarter, reflecting ongoing cost reduction initiatives, which more than offset the lower advertising demand. Radio segment profit margin improved to 11% compared to 8% in the prior year quarter. I'll now turn it over to Jeff.