TORONTO — Corus Entertainment broke even for the third quarter but execs warned that the financial woes of its former Teuton kidvid partner RTV might leave it short of its year-end fiscal targets.
Toronto-based Corus posted a tiny net income of C$500,000 ($319,000) for the quarter ended May 31, a far cry from last year’s $66 million. That boffo figure was due to higher gains from investments, including the sale of its interest in specialty web the Family Channel and future tax recovery.
Cash-strapped RTV and Corus’ kid vid subsid Nelvana ended a mutual output deal earlier this month. RTV returned the license rights for 15 series, while Nelvana, which waived any claims against RTL, returned six shows.
Executives holding an analyst conference call said Nelvana wiped $3.8 million owed by RTV off its books because “the chances of collecting were nonexistent.”
Nelvana is cutting costs to recoup the loss. It laid off 65 employees two weeks ago, and is hunting further savings.
As a result, Corus lowered its gross earnings estimates for the year from $105.3 million to the $99 million to $102 million range.
Revenue for the quarter was up 8%, however, to $95.3 million, led by strong gains in its TV and radio operations. “We are clearly seeing the benefits of executing well against our three-point plan,” said Corus prexy-CEO John Cassaday. The plan involves cutting debt by at least $63.5 million, improving operating margins and consolidating core assets.
“We expanded our industry-leading margins in radio and television. Ad sales are also recovering, and were most apparent in two key areas, (kids specialty channel) YTV and our Toronto radio properties.”
During the third quarter, Corus inked a deal to unload the publishing company Klutz to Scholastic for $43 million in cash plus a three-year earn-out based on revenue.