Media and entertainment company Corus Entertainment Inc. has posted a big increase in fourth-quarter and full-year profit as a result of “exceptional” growth in its television division.
Toronto-based Corus said on Wednesday it earned $29.2 million, up from just $4.2 million in the three months ended Aug. 31.
Revenue rose to $200.2 million from $187.4 million, almost entirely on an increase in television revenues to $152.6 million from $139.9 million.
“Corus achieved its segment profit guidance and exceeded free cash flow guidance as a result of tight cost controls in radio, coupled with exceptional revenue and segment profit growth in television,” chief executive John Cassaday said in a statement accompanying the financial results on Wednesday.
For the full year, Corus reported net earnings of $141.3 million compared with $119.7 million in 2010.
“Corus had an excellent year highlighted by double-digit segment profit growth,” Cassaday said.
He added that the company’s annual segment profit guidance included the Quebec radio business for a full year.
“If not for the divestiture of Quebec, we would have been at the high end of our guidance range or exceeded it,” he said.
Corus reported that specialty TV advertising was down 6% in the quarter but increased 11% for fiscal 2011.
RBC Capital Markets analyst Drew McReynolds said the fourth quarter’s decline in specialty advertising was a “major surprise” and said it raises a “red flag.”
“Given management’s indications in July of continued momentum in advertising sales in Q4/11, the decline in specialty advertising is a major surprise to us,” McReynolds wrote in a research note.
McReynolds said Corus has attributed the decline in specialty TV ads to “general market softness,” but he would like more details on what appears to be a “sudden deceleration.”
He said quarterly revenue was just below his expectation of $201 million but the 35 cents of earnings per share was above his estimate of 33 cents.
Corus operates specialty cable channels such as the Canadian version of OWN:The Oprah Winfrey Network, Teletoon, kids’ channels YTV and Nickelodeon Canada, W Network, country music lifestyle channel CMT Canada, Sundance Channel Canada and CosmoTV.
The Shaw family, which controls the company through its multiple voting Class A shares, also controls Shaw Communications, Canada’s second-largest cable TV operator.
Corus also owns radio stations across the country and children’s animated content producer Nelvana.
