Corus Entertainment on Friday (June 26) capped off a busy week for the Canadian broadcast sector with the release of its Q3 financial results, which, unsurprisingly, were deeply impacted by the COVID-19 pandemic and the subsequent drop in ad revenue for its suite of TV and radio properties.
Overall, quarterly revenue dropped by 24% to $349 million, from $458 million the year prior. Within that, TV revenue dropped by 21% to $331 million, with TV ad revenue dropping by 31%.
While president and CEO Doug Murphy (pictured) and EVP and CFO John Gossling were frank about the fact Q3 had been a “very tough quarter,” the conference call accompanying the release of the results gave further insights into a range of topics, including the deal with NBCUniversal for Peacock originals, the advancement of its Corus Studios strategy and the growth of its OTT offering StackTV.
Sales uptick gathers momentum
While the production shutdown has created myriad challenges for Canadian broadcasters and producers, the most obvious opportunity has been the ability to sell domestic product south of the border. Titles like CBC’s Coroner and Bell Media’s Transplant have already secured high-profile sales to The CW and NBC, respectively, while Corus Studios’ Island of Bryan was previously picked up by Discovery-owned HGTV, where it has already premiered stateside under the new title Renovation Island.
During the call, Murphy unveiled sales for a further four series: HGTV has acquired Scott’s Vacation House Rules (McGillivray Entertainment) and Making it Home with Kortney & Dave (Scott Brothers Entertainment), while Food Network picked up Fire Masters and The Big Bake (both produced by Nikki Ray Media). In total, Corus has sold 85 hours of content to Discovery’s flagship networks since the pandemic closed sets across North America and Europe in March.
“The worldwide production hiatus has definitely kick-started our content-ownership sales and strategy, and its merits as a source of revenue diversification,” said Murphy, adding that many Corus Studios titles now have two or more seasons under their belts, making them more attractive to international buyers.
Deal for Peacock titles give Corus scheduling flexibility
Corus’ deal with NBCUniversal for the exclusive rights to air Peacock originals was arguably the single biggest piece of news to come out of last week’s Upfront presentations. Under the multi-year agreement, Corus has acquired linear and digital rights to shows from the soon-to-launch streaming service, which goes live in the U.S. on July 15. The deal comes seven months after Bell Media secured inked a similar deal for the exclusive rights to HBO Max programming.
And as with the Bell Media agreement, Corus’ deal with NBCUniversal likely means it will be a number of years before either HBO Max or Peacock are available as direct-to-consumer offerings in Canada. Murphy has stated previously that he believes it will be five to 10 years before U.S. studios are going direct to consumer in Canada – last fall he said he believed the threat of U.S. studios and networks going over-the-top in Canada had been overestimated as a challenge to Corus’ business model.
Asked whether there had been a bidding war between Corus and Bell Media to get the Peacock deal over the line – and whether it had been a pricy one – Murphy kept his cards close to his vest, saying the following: “Premium content comes with a premium price, but it was within our budget for foreign acquisitions… I can tell you right now that our friends at NBC, at the other side of the table, are very smart negotiators, but we have a great, smart team, and I think there’s a very strong mutual regard and a sense of collaboration. Our programming leadership has a strong insight into what we can do with the content, and our NBCU partners saw the [value of the marriage], so I think it was a win-win for both sides.”
To the point of what Corus can do with the Peacock content, Murphy said a positive outcome of the deal is that it brings with it a pipeline of premium and, crucially, in-the-can content that can be deployed across any of Corus’ platforms. The ability to be flexible will be important later in the year, he noted, as network titles such as New Amsterdam, FBI and Prodigal Son shift into mid-season (and potentially beyond, should the coronavirus pandemic keep sets in the U.S. closed for longer than expected).
Because these will be streaming releases, Murphy added that there is no pressure to air them day-and-date with their U.S. launches, meaning Corus will premiere the Peacock titles when it makes sense to do so — but only once advertiser demand has returned. “We’re going to be very judicious in terms of how we debut new content. There’s got to be advertising demand there,” he said.
StackTV hits 200,000 subs
For the first time since its launch a year ago, Corus unveiled subscriber details around its streaming offering StackTV, a multi-channel bundle available via Amazon Prime Video Channels.
With the service hitting 200,000 subscribers, Murphy said it has “become a meaningful part of [Corus'] business portfolio,” with signups accelerating during the initial period of lockdown. Murphy said that while Corus has not given any official projections on how many subs StackTV could reach, he sees a target market of around one million households. “We think we’ve got a good runway for a little while,” he said.
Elsewhere, Murphy said that, based on projections from producers Corus works with, he expects production costs to increase somewhere between 5% and 16%, though, like many, Corus is still awaiting a resolution on the insurance issue.
From Playback Daily’s Jordan Pinto