• Consolidated revenues declined 24% for the quarter and 9% year-to-date
• Consolidated segment profit⁽¹⁾⁽²⁾ decreased 35% for the quarter and 13% year-to-date
• Consolidated segment profit margin⁽¹⁾ of 32% for the quarter and 34% year-to-date
• Net loss attributable to shareholders of $752.3 million ($3.61 loss per share basic) for the quarter and $655.6 million ($3.12 loss per share basic) year-to-date, which includes non-cash impairment charges related to broadcast licenses and goodwill of $786.8 million
• Net debt to segment profit⁽¹⁾ of 3.22 times at May 31, 2020 up from 3.00 times at February 28, 2020
• Free cash flow⁽¹⁾⁽²⁾ of $90.8 million for the quarter and $208.9 million year-to-date

TORONTO, June 26, 2020 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

"Corus remains focused on our essential role in delivering news, information and entertainment to communities across Canada in the face of the challenges brought on by COVID and its significant impact on our third quarter results," said Doug Murphy, President and Chief Executive Officer.  "I am extremely proud of our team and their extraordinary dedication, at a time when it is critical to keep Canadians connected and informed." 

"In Q3, we saw increased viewership and engagement across all of our platforms, as Canadians rediscovered the power of television and Corus. With the economy materially impacted by the COVID pandemic, these audiences were not optimally monetized as advertising demand is tightly correlated to sales and economic activity," continued Mr. Murphy.  "This week we held our virtual Upfront, revealing a very strong fall schedule which, when coupled with these recent viewing trends, gives us reasons for optimism in the coming year. Notably, our subscriber revenue remained resilient, benefitting from the accelerated uptake of STACKTV. In this unprecedented environment, Corus remains intensely focused and disciplined as we manage the business, advance our strategic priorities and maintain a solid financial position."

Consolidated Results from Operations

Consolidated revenues for the three months ended May 31, 2020 were $349.0 million, down 24% from $458.4 million last year, and consolidated segment profit was $111.3 million, a decrease of 35% from $170.5 million last year. Net loss attributable to shareholders for the quarter ended May 31, 2020 was $752.3 million ($3.61 loss per share basic), as compared to net income attributable to shareholders of $66.4 million ($0.31 per share basic) last year. Net loss attributable to shareholders for the third quarter of fiscal 2020 includes broadcast license and goodwill impairment charges of $786.8 million ($3.69 per share, net of income taxes) and integration, restructuring and other costs of $2.6 million ($0.01 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $19.0 million ($0.09 per share basic) for the quarter. Net income attributable to shareholders for the prior year quarter includes integration, restructuring and other costs of $2.3 million ($0.01 per share, net of income taxes), a gain on debt modification of $3.9 million ($0.01 per share, net of income taxes) and a loss on disposal of the Telelatino Network of $0.3 million ($nil per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $66.1 million ($0.31 per share basic) for the prior year quarter.

Consolidated revenues for the nine months ended May 31, 2020 were $1,192.8 million, a decline of 9% from $1,310.0 million last year, and consolidated segment profit was $411.3 million, a decrease of 13% from $475.3 million last year. Net loss attributable to shareholders for the nine months ended May 31, 2020 was $655.6 million ($3.12 loss per share basic), as compared to a net income attributable to shareholders of $133.1 million ($0.63 per share basic) last year. Net loss attributable to shareholders for the nine months ended May 31, 2020 includes broadcast license and goodwill impairment charges of $786.8 million ($3.66 per share, net of income taxes) and integration, restructuring and other costs of $15.2 million ($0.05 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $124.9 million ($0.59 per share basic) for the current fiscal year. Net income attributable to shareholders for the nine months ended May 31, 2019 includes integration, restructuring and other costs of $19.5 million ($0.07 per share, net of income taxes), an impairment of an investment in associates of $8.7 million ($0.03 per share, net of income taxes), a gain on debt modification of $3.9 million ($0.01 per share, net of income taxes) and a loss on disposal of the Telelatino Network of $0.3 million ($nil per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $153.1 million ($0.72 per share basic) for the prior fiscal year.

Operational Results - Highlights for Q3 2020

 Television

• Segment revenues decreased 21% in Q3 2020 and 8% year-to-date
• Advertising revenues decreased 31% in Q3 2020 and 12% year-to-date
• Subscriber revenues were flat in Q3 2020 and decreased 1% year-to-date
• Merchandising, distribution and other revenues decreased $2.6 million (12%) in Q3 2020 and increased $8.3 million (15%) year-to-date
• Segment profit⁽¹⁾ was down 30% in Q3 2020 and down 12% year-to-date
• Segment profit margin⁽¹⁾ of 35% in Q3 2020 and 37% year-to-date, compared to segment profit margin of 40% and 39%, respectively, in the prior year
• Non-cash goodwill impairment charge in Q3 2020 of $673.0 million

Radio

• Segment revenues decreased $19.3 million (52%) in Q3 2020 and $25.1 million (23%) year-to-date
• Segment profit (loss)⁽¹⁾ decreased $11.5 million (118%) in Q3 2020 and $12.9 million (47%) year-to-date
• Segment loss margin⁽¹⁾ of 10% in Q3 2020 and segment profit margin of 18% year-to-date, compared to segment profit margin of 26% and 25%, respectively, in the prior year
• Non-cash impairment charges in Q3 2020 on broadcast licenses of $67.8 million and goodwill of $46.0 million

Corporate

• Free cash flow⁽¹⁾ of $90.8 million in Q3 2020 and $208.9 million year-to-date, compared to $90.1 million and $216.4 million, respectively, in the prior year. The current year benefited from payment deferrals of Canadian income tax installments and sales tax remittances
• Net debt to segment profit⁽¹⁾ was 3.22 times at May 31, 2020, up from 2.82 times at August 31, 2019, due to reduction in segment profit and the implementation of IFRS 16 - Leases that added $151.4 million to the net debt calculation as at May 31, 2020, offset by bank loan repayments of $43.7 million in the quarter
• In Q3 an additional 1.15 million shares have been repurchased under the Normal Course Issuer Bid. As at May 31, 2020, 3.63 million shares have been repurchased since the implementation of the Normal Course Issuer Bid on November 13, 2019
• Consolidated segment profit margin⁽¹⁾ of 32% in Q3 2020 and 34% year-to-date, compared to 37% and 36%, respectively, in the prior year

COVID-19 Update

The Company continues to closely monitor the evolution of the novel coronavirus ("COVID-19") situation. As the COVID-19 pandemic continues to significantly impact the wellbeing of individuals and the Canadian and global economies, the Company has implemented a specific response plan, informed by measures recommended by public health agencies, to continue providing its essential services and support to customers while safeguarding the health and safety of employees. Appropriate business continuity measures have been taken to ensure uninterrupted service of the Company's television, digital and radio operations.

Restrictions have gradually begun to lift in many provinces allowing the reopening of various sectors and businesses; however, the Company will not rush to return people to their work sites, as it has continued to operate with more than 70% of its workforce working remotely. The Company has adopted an "ease back" approach to ensure that the health of its people and the communities they work in are protected. Development of company-wide principles and guidelines, informed by public health authorities' recommendations, and site-specific plans are being made to set out the appropriate pace and timing for each region and workplace to return-to-work gradually and safely over the next few months. Site-specific plans may include reduced occupancy at some sites, or modification of workspaces to provide the right level of protection to the Company's employees.

It is too soon to gauge the medium to long-term impacts of the current outbreak, given the many unknowns related to COVID-19. These include the duration, severity and possible resurgence of the outbreak as emergency measures are eased. COVID-19 is altering business and consumer activity in many ways. The global response to the COVID-19 pandemic has resulted in, among other things, border closures, severe travel restrictions, the temporary shut-down of non-essential services and extreme fluctuations in financial and commodity markets. Restrictive measures may be re-implemented by one or more governments in jurisdictions where the Company operates. Labour shortages due to illness, Company or government imposed isolation programs, or restrictions on the movement of personnel or possible supply chain disruptions could result in a reduction or cessation of all or a portion of the Company's operations. The extent to which COVID-19 and any other pandemic or public health crisis impacts the Company's business, affairs, operations, financial condition, liquidity, availability of credit and results of operations will depend on future developments that are highly uncertain and cannot be predicted with any meaningful precision, including new information which may emerge concerning the severity of the COVID-19 virus and the actions required to continue to contain the COVID-19 virus or remedy its impact, among others.

The Company's financial priorities remain unchanged. Importantly the Company remains committed to increasing its financial flexibility over the longer term. In this environment, however, the Company believes it is prudent to conserve cash out of an abundance of caution. The Company is constantly evaluating the situation and monitoring any impacts or potential impacts to its business.

Corus Entertainment Inc. reports its financial results in Canadian dollars.

The unaudited interim condensed consolidated financial statements and accompanying notes for the three and nine months ended May 31, 2020 and Management's Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.

A conference call with Corus senior management is scheduled for June 26, 2020 at 8:00 a.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for local and international callers is 1.647.427.7450 and for North America is 1.888.231.8191. More information can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Use of Non-IFRS Financial Measures

This press release includes the non-IFRS financial measures of adjusted net income attributable to shareholders, adjusted basic earnings per share, free cash flow and net debt to segment profit that are not in accordance with, nor an alternate to, generally accepted accounting principles ("IFRS") and may be different from non-IFRS measures used by other companies. In addition, these non-IFRS measures are not based on any comprehensive set of accounting rules or principles.

Non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-IFRS financial measures are meant to supplement, and to be viewed in conjunction with, IFRS financial results. A reconciliation of the Company's non-IFRS measures is included in the Company's most recent Report to Shareholders which is available on Corus' website at www.corusent.com as well as on SEDAR at www.sedar.com.

Caution Concerning Forward-Looking Information

This press release contains forward-looking information and should be read subject to the following cautionary language:

To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking information"). These forward-looking statements relate to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances may be considered forward-looking information. Although Corus believes that the expectations reflected in such forward-looking information are reasonable, such information involves assumptions and risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied with respect to the forward-looking information, including without limitation, factors and assumptions regarding the general market conditions and general outlook for the industry, interest rates, stability of the advertising, distribution, merchandise and subscription markets, operating and capital costs and tariffs, taxes and fees, our ability to source desirable content and our capital and operating results being consistent with our expectations. Actual results may differ materially from those expressed or implied in such information. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; failure to meet covenants under our senior credit facility; epidemics, pandemics or other public health crises, including the current outbreak of novel coronavirus ("COVID-19") and changes in accounting standards. Additional information about these factors and about the material assumptions underlying any forward-looking information may be found under the heading "Risks and Uncertainties" in the Management's Discussion and Analysis for the year ended August 31, 2019 and the third quarter ended May 31, 2020 and under the heading "Risk Factors" in our Annual Information Form. Corus cautions that the foregoing list of important assumptions and factors that may affect future results is not exhaustive. When relying on our forward-looking information to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise specified, all forward-looking information in this document speaks as of the date of this document. Unless otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update or revise any forward-looking information whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.

About Corus Entertainment Inc.

Corus Entertainment Inc. (TSX: CJR.B) is a leading media and content company that develops and delivers high quality brands and content across platforms for audiences around the world. Engaging audiences since 1999, the company's portfolio of multimedia offerings encompass 34 specialty television services, 39 radio stations, 15 conventional television stations, a suite of digital assets, animation software, technology and media services. Corus is an established creator of globally distributed content through Nelvana animation studio, Corus Studios, and children's book publishing house Kids Can Press. The company also owns innovative full-service social digital agency so.da, and lifestyle entertainment company Kin Canada. Corus' roster of premium brands includes Global Television, W Network, HGTV Canada, Food Network Canada, HISTORY®, Showcase, Adult Swim, National Geographic, Disney Channel Canada, YTV, Global News, Globalnews.ca, Q107, Country 105, and CFOX. Visit Corus at www.corusent.com.

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SOURCE Corus Entertainment Inc.