TORONTO — Corus Entertainment Inc. shares were down 11 per cent early Wednesday after the company announced a $935.9 million loss tied mostly to a devaluation of its broadcast licences and slashed its dividend to accelerate debt reduction.
The company’s B shares were at $5.56 in the first minutes of trading, down 69 cents or 11 per cent from Tuesday’s close and equal to their previous 52-week low on the Toronto Stock Exchange.
The Toronto-based television, radio and production company said the loss included a $1.01-billion non-cash impairment charge related to broadcast licenses and goodwill.
Impairment charges generally reflect the future earning power of a business’s assets. Excluding those and other expense items, Corus would have had a profit in the three months ended May 31.
The reduced dividend will divert about $150 million per year to reducing Corus debt — a move that management said would give it more financial flexibility in the long-term.
Corus chief executive Doug Murphy told analysts that the company has a long-term strategy for rebuilding its business in turbulent times, amid intense competition, changing technologies and an uncertain regulatory landscape.
“While our immediate focus will be on debt reduction payments, we will continue to make prudent investments that support our strategic priorities to ensure our company remains vital for the long term,” Murphy said.
Corus said Wednesday it will start paying a quarterly dividend of six cents per class B share starting in September compared with its current dividend which is a monthly payment to shareholders of 9.5 cents per class B share.
The reduction in the dividend came as Corus says the loss amounted to $4.49 per share for the quarter ended May 31 compared with a profit of $66.7 million or 33 cents per share a year ago.
Revenue in what was the company’s third quarter totalled $441.4 million, down from $461.6 million in the same quarter last year.
Television revenue fell to $403 million compared with $422.3 million a year ago, while radio revenue fell to $38.4 million compared with $39.3 million in the same quarter last year.
On an adjusted basis, which excludes the impairment charge and other one-time items, Corus says it earned $78.1 million or 37 cents per share for the quarter compared with an adjusted profit of $70.1 million or 35 cents per share a year ago. Analysts on average had expected a profit of 36 cents per share, according to Thomson Reuters Eikon.
Corus owns radio stations as well as conventional and specialty television services across the country including Global Television.
Companies in this story: (TSX:CJR.B)
The Canadian Press