Weak Results Have Corus Shareholders Singing the Blues

Fiscal 2013 has been rather unkind to Corus’ television assets thus far.

| More on:
The Motley Fool

Corus Entertainment (TSX:CJR.B) is one of the worst performers in today’s Canadian market, a rare position for this television/radio juggernaut.  Weaker than expected quarterly results are the reason for today’s sell-off.

Corus owns a collection of television (78% of revenues) and radio assets and it was the television side that caused today’s miss.  Fiscal 2013 is now half complete and television related revenues and profits are down 9% and 7% compared to the same period a year ago.  A decline in specialty advertising (softness in kids and lower CMT (Country Music Television) ratings) and a difficult year-over-year comp due to last year’s Christmas time launch of Beyblade are a big part of the problem.

Acquisitions to the rescue?

In an attempt to bolster its television business, Corus entered into several transactions during the quarter.  A deal with Bell (TSX:BCE,NYSE:BCE) has Corus acquiring the 50% stake in TELETOON that it didn’t already own as well as 2 Ottawa area radio stations.

In addition, Corus acquired French specialty channels Historia and Series+ from Bell and Shaw Media who were the co-owners.  Corus also purchased a 49% interest in specialty TV service ABC Spark from Shaw Media and sold Shaw its 20% interest in Food Network Canada.  Shaw Communications (TSX:SJR.B,NYSE:SJR) controls Corus so these deals between them amount to little more than a shuffling of the deck for the parent.

Corus expects the $494 million it spent on these transactions to help not only stabilize, but provide growth for its television division.

The Foolish Bottom Line

Corus shareholders can at least take comfort in the fact that the company’s free cash flow is on pace to easily eclipse its 2013 guidance of at least $140 million.  This figure sits at $84 million at the half way pole.  The company’s ability to crank out free cash, along with a well-managed balance sheet provide a degree of flexibility that is crucial for any participant in the media world.  Given these characteristics, it’s unlikely that disappointing results, like today’s, will become a habit for this company.

With a money-in-the-bank yield of 4.2% Corus is one of Canada’s great dividend stocks.  In today’s low- rate environment, to outperform, your portfolio should be filled with stocks just like this.  We have identified 13 U.S. companies that promise to have you rolling in dividend cheques before you know it!  Click here now and we’ll send you our special report “13 High Yielding Stocks to Buy Today“ – FREE!  You are just one click away from dividend nirvana!

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler does not own shares in any of the companies mentioned in this report at this time.  The Motley Fool has no positions in the stocks mentioned above.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

A bull outlined against a field
Bank Stocks

Want to Catch the Next Bull Market? Buy This Stock While It’s Still Low

You might think that buying stocks like Royal Bank of Canada before a new bull market begins is risky, but…

Read more »

Dividend Stocks

The Best Stocks to Invest $50,000 in Right Now

Canadian investors should diversify their equity portfolio by buying shares of quality companies across sectors in 2023.

Read more »

analyze data
Dividend Stocks

2 Dividend Stocks to Start Your Perfect Passive Income Portfolio

Start your passive income portfolio off on the right foot by investing in these two dividend stocks with a solid…

Read more »

oil and gas pipeline
Dividend Stocks

Is Now the Right Time to Buy TC Energy Stock?

TC Energy stock is out of favour. Is it time to buy?

Read more »

Dial moving from 4G to 5G
Dividend Stocks

TFSA Investors: Invest $3,000 for $2,150 in Income Every Year 

If you spend time in the market, you can chart out a plan to earn $2,150 in annual passive income…

Read more »

money cash dividends
Investing

Sitting on Cash: Invest $25,000 in This Dividend Stock Instead to Get $82,052 in a Decade

Here's a top dividend stock that is well worth snatching up for Canadians who have some extra cash to burn.

Read more »

Redwood trees stretch up to the sunlight.
Investing

2 Stocks With Surprising Growth Potential

Alimentation Couche-Tard and Restaurant Brands International are stealthy growth stocks that are trading too cheap right now.

Read more »

potted green plant grows up in arrow shape
Investing

2 Incredible Growth Stocks With a Bright Outlook for 2023

Constellation Software (TSX:CSU) stock and another tech titan that may be too cheap to ignore, as it looks to power…

Read more »