The Motley Fool

Weak Results Have Corus Shareholders Singing the Blues

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.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.