investing - Corus Entertainment

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INVESTOR DAY
NOVEMBER 29, 2012
TECHNOLOGY UPDATE
Vision: To be globally recognized as Canada’s most influential entertainment company
CORUS CAPITALIZES ON DISRUPTIVE
CHANGE
• New devices, networks and distribution models continue to
empower consumer consumption of content
• Canadian distributors have improved their TV Everywhere
offerings, significantly challenging emerging OTT services
• Despite a fragmented market, consumers still believe that
traditional media commands the best reach and impact for
advertisers1
While digital interactive media is disruptive – its impact on
traditional media has been additive
22
1
Deloitte GfK survey, June 2012
CORUS’ TECHNOLOGY FRAMEWORK
Support
Innovate
Invest
structure, people, process
23
REALIZING THE POTENTIAL OF
CORUS QUAY
• Technology innovation is driving
measurable savings in technical
operations, content preparation and
signal origination
• No significant capital investment on
horizon – Corus Quay continues to
have capacity required for growth
• In early 2013, all Corus channels will
be available to distributors in HD and
three new international channels will be
launched from Corus Quay
Corus Quay is built for Growth
24
CORUS QUAY DELIVERS
9 Corus operates 21 broadcast channels, delivering 44 separate signals
9 In 2012, Corus’ technical infrastructure required 90% less servers, consuming
40% less energy compared to 2010
9 Corus’ broadcast library contains 25,159 hours of content,
nearly all in HD, filling 928 terabytes of storage
9 Corus processes nearly 7,000 hours of VOD content each month
9 Corus encodes more than 30 different versions of our content
for use in broadcast, VOD and broadband
for
9 Corus has reduced content management staff by 20% since
2010, while increasing output by 30%
9 Corus’ transcode costs are 40x lower than commercial costs
9 Corus Radio streams nearly 6 million hours of radio content each month
9 Corus Television’s core brands deliver 9 websites, 14 applications and 3.8
million video streams to 750,000 unique visitors each month
25
TV EVERYWHERE ADDS VALUE
• Corus partners with distribution affiliates to maximize the value of
our non-linear video products in support of linear television
• New Canadian TV Everywhere products are meeting the four
screen challenge – television, computer, smartphone and tablet
–providing best-in-class experiences to Canadian viewers
• These products are supporting the pay television experience and
will help to grow subscribers in 2013
The TV Everywhere ecosystem is adding
consumer value and supporting subscriber
growth and retention
26
TV EVERYWHERE FOR
MOVIE CENTRAL
Corus’ partnership approach to TV Everywhere
effectively illustrated with launch of Shaw Go
27
DIGITAL AND INTERACTIVE MEDIA
SUPPORT CORUS BRANDS
• Corus uses digital and interactive media to support, complement
and extend our brands and our relationship with audiences
9 Corus builds websites and apps, distributes online video and
actively participates in social media as powerful marketing
tools for our television and radio brands
9 Corus is building a complementary content strategy for its
major vertical markets, with a focus on Women and Kids
• Significant opportunities exist for innovation in international video
distribution and interactive products
• Intensive focus in 2012 prepares Corus for success in 2013
28
DIGITAL AND INTERACTIVE MEDIA
POISED FOR GROWTH IN 2013
9
9
9
Merged Digital &
Affiliate Teams
Aligned products
within Nelvana
Added VP Digital
Content
9
Added new talent
9
9
9
Structural Reorganization
Board level
strategic review
Brand scrutiny
Strategic Review
Curated content & social engagement
Added editor and
seeking
complementary
content
New social tools and
tracking
9
9
Digital Strategy & Execution
Added sales
tracking tools
Joined CPAX
New sales focus, tools
29
CORUS IS EXTENDING ITS REACH
social
(Facebook/Twitter)
ENGAGEMENT
broadcast websites
broadcast
apps
licensed games
PRODUCTS
Nelvana apps
radio
websites
radio
app
BDU SVOD
DISTRIBUTION
BDU TV Everywhere
eBooks
30
NELVANA WEBSITES, APPS, EBOOKS
LAUNCHED IN 2012
• Nelvana has launched 14 iOS apps for its most popular brands,
with more under development
9 Apps can provide a new
context for existing IP, with
far less cost than a new
series
9 Apps can also provide an
inexpensive testing
opportunity for new IP
• Kids Can Press is now offering
more than 60 eBooks in market
with read-along features on
most major digital book
platforms
31
2012: FINGERPRINT DIGITAL
INVESTMENT
• Fingerprint Digital, Inc. is an educational gaming
platform for kids and their parents, delivering
content across any connected device
• Fingerprint is developing new games featuring
Corus properties and integrating Fingerprint’s
technology into Corus applications to leverage
the platform tools and add to the Fingerprint user
base
Fingerprint provides an effective marketing and distribution
platform
32
2011: SOCAST (FORMERLY
SUPERNOVA) INVESTMENT
• SoCast creates proprietary digital and interactive
tools to increase revenue and ratings for
broadcasters
• Publishing
• Engagement
• Analytics
• Community
• Corus acquired an equity stake in late 2011,
after the successful deployment of contest
and engagement tools at Corus Radio’s
CFOX-FM in Vancouver
• Corus Radio will deploy SoCast SRM
across its stations in 2013
Turning fans and followers into customers and
advocates
33
2012: CORUS NOW OWNS 100% OF
TOON BOOM ANIMATION
• Toon Boom Animation Inc. is the worldwide leader in
digital content and animation creation software
• In 2004, Corus acquired a 50% interest to drive cost reduction,
digital conversion and quality improvement at Nelvana
• In March 2012, Corus acquired the
remaining 50% of Toon Boom in an
immediately accretive transaction
• In 2013/2014, Toon Boom will launch
consumer products aimed at kids and
families
Toon Boom has been a very good investment for Corus,
driving savings and increased value over the past 8 years
34
CORUS’ OTHER
STRATEGIC INVESTMENTS
Relay Ventures (formerly known as the BlackBerry Partners
Fund II) is strictly focused on the emergence of mobile as the
computing platform of the future
Steamboat Ventures is associated with the Walt Disney
Company and pursues investments where technology, media
and consumer sectors intersect
These investments offer exposure to young companies for
partnership and potential acquisition
35
CORUS CONTINUES TO
GROW AND INNOVATE
• Corus is realizing capacity, capability and cost advantages
from its investment in Corus Quay
• Corus is supporting the television ecosystem by working with
distribution partners on TV Everywhere
• Corus is innovating for growth in digital and interactive media,
with new structure, new leadership and a focused strategy
• Corus is investing to support its current business and to explore
future business opportunities
36
CORUS’ COMMITMENT TO HUMAN CAPITAL
AND CSR DRIVES PERFORMANCE
Corus’ commitment to:
• Optimal Organizational Design
• Learning and Development
• Pay-for-Performance
• Corporate Social Responsibility (CSR)
38
CORUS CONTINUOUSLY OPTIMIZES ITS
ORGANIZATIONAL DESIGN
9 Continuous Review of Optimal Organizational Design to
Drive Efficiencies and Contain Costs
9 Labour Costs
9 Productivity and Engagement
Productivity increased 10% for our Television Division and 13% for our
Radio Division from F’09 to F’12
39
CORUS’ CORE VALUES DRIVE
PRODUCTIVITY AND ENGAGEMENT
ACCOUNTABILITY
• Clarity around roles and responsibilities
INNOVATION
• Alignment around our Core Values
TEAMWORK
KNOWLEDGE
INITIATIVE
COMMUNICATE, COMMUNICATE, COMMUNICATE
40
EXTERNAL RECOGNITION ATTRACTS AND
RETAINS A TALENTED WORKFORCE
Employer of Choice
Retention and Recruitment
41
CORUS’ FOCUS ON LEARNING AND
DEVELOPMENT DRIVES ENGAGEMENT
• Corus U
• Succession Planning
• Development Plans for High Potential Employees
42
PAY-FOR-PERFORMANCE ALIGNS EMPLOYEES
WITH CORUS’ KEY GOALS AND OBJECTIVES
Key Drivers
Annual Goal Setting and Reviews
Short‐term Incentive Plans
Longer‐term Incentive Plans
(PSUs and RSUs)
Appropriate Mix of Fixed and Variable Compensation
43
CORUS CONNECTS WITH ITS COMMUNITIES
• Contributor to United Way
• Supporter of Charitable Initiatives Across the Country
New Philanthropic Focus will Enable Corus to Deepen its
Connection to the Communities it Serves
44
CORUS CARES
• Strategy for Doing Well and Doing Good
• Corus Feeds Kids
Our Goal…
Raise $3M in Donations and
Donate 3,000 Employee Volunteer Hours
in 3 Years
45
THE CRTC IS CHANGING
• New CRTC Chair: Jean-Pierre Blais
• The CRTC Act provides that the CRTC will include not more than 13 full-time
commissioners. The CRTC is now at 11.
• Vacancies: Vice-Chair Telecom; an Ontario regional and five other terms are
ending in 2013 (three are national)
• Key questions:
• Will we see a smaller CRTC?
• Will there be a change of direction for the CRTC?
• What did the Chair mean by his phrase “putting the consumer first?”
47
LESSONS FROM BELL-ASTRAL
9 The CRTC decision did not establish a new paradigm
9 Bell will be back
9 Purchasers will need to make their case in a clear and
compelling manner: the public interest
Growth Through Acquisition Remains a Viable Option
48
TV – OWN: OPRAH WINFREY NETWORK AND
GENRE EXCLUSIVITY
• The CRTC’s public hearing about OWN on December 11, 2012
will focus on Nature of Service compliance and the Genre
Exclusivity policy
• The CRTC will eventually review the genre policy in depth,
starting with music services (e.g. CMT) in 2013 and then other
genres in 2014
• The rules will likely open up as:
• Government’s innovation goal met with new services
• Consumers want everything and regulatory walls are no
longer feasible
49
RADIO OWNERSHIP RULES
• The 2 FM + 2 AM ownership rule in large markets to be examined
• Multiple License Ownership (MLO) and Local Management
Agreements (LMA) policies are on the CRTC’s agenda for late
2013 or early 2014
50
COPYRIGHT REFORM
• BILL C-11
• Most of the changes came into force on November 7, 2012
• Better protection for our content
• Radio industry is looking to benefit from the tariff reduction
Copyright Opportunity will Grow and Liability will Drop
51
YES - THERE IS OPPORTUNITY
• New faces and new attitudes (we hope)
• New policies should provide more flexibility
• New copyright legislation will reduce costs and improve protection of
our content
There is Still Opportunity to Grow in the Regulated Realm
52
CORUS RADIO CONTINUES TO
DELIVER RESULTS
• Radio makes a significant contribution to Corus Entertainment
• Financial contribution
• Marketing support
• Corporate image support
• Notable improvements in Corus Radio’s performance
• Ratings growth in Western Canada
• Country format resurgence in Alberta
• Ontario stability
• Opportunities for growth
• Digital and interactive media
• Turnaround stations
• Direct retail advertisers on News Talk
54
Country
Calgary
country105.com
Edmonton
cisnfm.com
Greatest Hits
London
more1039.ca
Guelph
cjoy.com
Hamilton
vinyl953.com
Peterborough
kruzfm.ca
Kingston
ckwsfm.com
Cornwall
cjssfm.com
Classic Rock
Vancouver
rock101.com
Calgary
q107fm.ca
Edmonton
joefm.ca
Kingston
fm96.ca
Toronto
q107.com
Peterborough
thewolf.ca
exploremusic.com
thecompletebeatles.ca
Corus Radio is a Leader in News Talk
Modern/
Mainstream Rock
Talk
Vancouver
cfox.com
Vancouver
cknw.com
Winnipeg
power97.com
Vancouver
am730.ca
Guelph
magic106.com
Calgary
qr77.com
Kitchener
915thebeat.com
London
fm96.com
Kitchener
davefm.com
Edmonton
630ched.com
Hot AC
Winnipeg
991freshfm.com
London
1031freshfm.com
Barrie
b101fm.com
Hamilton
y108.ca
Edmonton
inews880.com
Toronto
edge.ca
Winnipeg
cjob.com
Barrie
chaytoday.ca
exploremusic.com
London
am980.ca
Collingwood
thepeakfm.com
ongoinghistory.com
Hamilton
900chml.com
Toronto
640toronto.com
Cornwall
variety104.com
CORUS RADIO PROVIDES SIGNIFICANT
FINANCIAL CONTRIBUTION
Consistent
Margin
9 30% margin maintained
9 Q1 pace has improved significantly
Steady
Cash Flow
9 Source of cash for investment
9 Supports dividend policy / share buybacks
Major Source of Corus’ Free Cash Flow
56
INDUSTRY REVENUE HAS RETURNED TO
PRE-RECESSION LEVEL OF $1.6 BILLION
Radio Industry Revenues 2006 – 2011
1,650,000
$1.613 billion
$1.594 billion
1,600,000
(000s)
1,550,000
1,500,000
1,450,000
1,400,000
1,350,000
1,300,000
2006
2007
2008
2009
2010
2011
Source: CRTC Annual Reports
Declines Were Cyclical
57
THE NUMBER OF NEW LICENSES ISSUED
HAS SLOWED IN THE TOP 4 MARKETS
Market
Launch
Vancouver
1
Fall 2009
Calgary
1
Q3 – 2013 est.
Edmonton
3
Spring 2010
Toronto
1
Q3 – 2013 est.
ƒ Barrier to entry has become greater in large markets
ƒ Spectrum availability of good frequencies is exhausted
Gold Rush is Over
58
CORUS RADIO PROVIDES PROMOTION
EXPOSURE FOR CORUS’ TV DIVISION
TV Division
Marketing
Support
9 Ratings leverage for TV services
9 Subscriber growth on Movie Central
Corus Radio is a Great Megaphone
59
RADIO CONNECTS CORUS’ CORPORATE
SOCIAL RESPONSIBILITY INITIATIVE LOCALLY
Corporate Social
Responsibility
Support
9 Leverages direct local community presence
9 Cash and in-kind support by market
“Taking Care of Christmas”
Kim Mitchell interview with Beverley Mahood and Randy Bachman
Radio is Social Media
60
CORUS RADIO MADE
SIGNIFICANT IMPROVEMENTS IN 2012
Corus Radio ‐ PPM Audience Shares
9 Significant ratings
+12%
Vancouver
improvement in
Vancouver and Calgary
+29%
Calgary
9 Edmonton in turnaround
9 Toronto is relatively flat
(11%)
Edmonton
(2%)
Toronto
5%
10%
15%
20%
25%
30%
to its historical average
and continues to hold
its rankings
% Audience Share
Fall 2012 ‐ 8 wks to date
Spring 2012
Source: BBM PPM Ratings R2 2012 / R4 2012, 8 weeks, Adults 18‐54 share
Corus Radio is Strong Where it Matters Most
61
CORUS’ RATINGS HAVE OVERCOME
A SLOWER GROWTH ECONOMY IN ONTARIO
9 Toronto has maintained its
Corus’ FM
Rank
Adults 25‐54
Corus’ FM
Rank
Adults 18‐34
Toronto
3 / 6
2 / 8
London
1 / 2
1 / 2
Corus’ FM stations in
London
Kitchener
3 / 4
1 / 4
9 Very strong ratings in
Hamilton
2 / 3
2 / 3
Market
Source: BBM Spring 2012 rankings by demographic
Mon to Sun 5am to 1am
historical share and rank
9 Significant growth of
Kitchener where the
compression of rankings is
the tightest of all markets
Corus Radio is Strong Where it Matters Most
62
THE COUNTRY FORMAT HAS RETURNED
TO MARKET DOMINANCE IN ALBERTA
Corus’ Tuning Shares Adults 25‐54
2 Year Growth
37%
CISN Country
Edmonton
23%
Country 105
Calgary
0%
2%
Spring 2012
4%
6%
8%
10%
Spring 2010
Source: BBM PPM Ratings R2 2012 vs. R2 2010
Corus’ Country Ratings are the Strongest They Have Been in 2 Years
63
THE EXTENSION OF BRANDS ON WEB AND
MOBILE DRIVE ADDITIONAL GROWTH
9 1.4 million club members
9 735,000 email opt-in members
9 5% revenue CAGR
9 Expanded offerings of mobile
access through audio streams
9 6 million+ hours per month of
encoded audio streaming
9 846,000+ unique listeners
Digital and Interactive Media is Key to Corus Radio’s Future
64
CORUS RADIO’S STREAMING GROWS
MIDDAY FOR IN-OFFICE TUNING
8 am – 4 pm
Active In-Office Listening – Another Growth Engine
65
UNDERSTANDING AUDIENCE BEHAVIOUR
ENHANCES PROGRAMMING ENGAGEMENT
Streaming Hours by Location - AM640 Toronto
July 24 – 31, 2012
Keswick 4%
Cambridge 4%
Wasaga 2%
Ajax 3%, Orillia 2%, Other 2%
Scarborough 4%
Brampton 4%
Burlington 3%
Toronto 64%
Hamilton 8%
Active In-Office Listening – Another Growth Engine
66
UNDERSTANDING AUDIENCES LEADS TO
STRONGER, COMPELLING CONTENT
Toronto
ƒ Special Programming – Billy Talent
impromptu interview
Calgary
ƒ Special Events – Alberta Election Day 2012
Corus Radio is Growing Commercial Ratings with Compelling Programming
67
CORUS DRIVES HIGHER ENGAGEMENT IN
DIGITAL AND INTERACTIVE MEDIA TO BUILD
BIGGER AUDIENCES
9 Deeper levels of engagement with
audiences drives growth in
commercial ratings
9 Brand and audience loyalty expands
with multiple points of contact
Digital and Interactive Media is Key to Corus Radio’s Future
68
OPPORTUNITY EXISTS
TO GROW AD SPEND ON RADIO
Share of Time Spent vs. Share of Ad Spend
40%
35%
30%
25%
20%
15%
10%
5%
0%
38%
33%
31%
29%
27%
23%
14%
6%
Radio
TV
Time Spent
Internet
Print
Ad Share
Source: BBM RTS Study Spring 2011 – Adults 18+ Average time spent with media
TVB Net volume 2011
Print includes Daily Newspapers, Community Newspapers, Magazines Print is Vulnerable
69
INTEGRATED RADIO AND NEWSPAPER
ADVERTISING IS A POWERFUL COMBINATION
9 Extends reach
9 Increases frequency
9 Cost efficient
9 Leverages the unique
communication capabilities of
each medium
9 Targets tightly defined
demographics and geographies
70
THE NEWS TALK FORMAT IS STRONGEST
WITH OLDER, AFFLUENT DEMOGRAPHICS
Vancouver
Calgary
Edmonton
Winnipeg
Toronto
London
Hamilton
“The senior segment (55+) will be the most important demographic segment in
most G7 markets in 2030, and the main driver of consumer spending growth in
these countries”
Boston Consulting Group
9 Fastest growing demographic – driving 50% of total consumer spending in the U.S.
and over 60% in Japan
Pharmaceutical Advertising is a Big Opportunity
71
CORUS RADIO’S GROWTH POTENTIAL
FROM TURNAROUND STATIONS
Edmonton
Winnipeg
$7 Million Revenue Potential
72
CORUS RADIO CONTINUES
TO DELIVER RESULTS
• Radio advertising spend has returned to pre-recession levels
• Radio cash flow and EBITDA are stable and growing
• Turnaround stations in the West are well on their way to
contributing greater revenue growth
• Ontario audience ratings are strong
• The retail environment presents growth opportunities with
direct retail advertisers
73
TODAY’S PRESENTATION
• Corus TV – Performance Overview
• Made in Canada – Positioned for Economic Recovery
• International Business – Building on the Corus Advantage
76
CORUS TV’S PORTFOLIO PERFORMS…
• Corus TV’s portfolio of businesses delivered another record year
• A consistent track record of earnings growth
• Corus TV is a well-managed, global business that actively seeks out
promising investments for future growth
Corus TV Offers Growth and Revenue Diversification
77
CORUS TV – A UNIQUE REVENUE PROFILE
Corus TV offers investors a unique revenue profile
• Nelvana’s merchandise licensing business makes gains globally
• Domestic advertising growth driven by strong network performance
• Affiliate revenue growth through new services
Corus TV Revenue: 2009 and 2012 700,000
600,000
+67%
$000s
500,000
Merchandising & Other
400,000
+16%
Subscriber
300,000
Advertising
200,000
+13%
100,000
0
2009
2012
78
THE CHALLENGES…
• Corus Kids business is turning the corner
• Recent ratings rebound bodes well
• Key category focus
• Revenue growth from vertically-integrated broadcasting distribution
undertakings (BDUs) is expected to moderate
• BDUs’ intense focus on cost limits our revenue
• Subscriber growth in Pay TV
• Some trees don’t grow to the sky
• Back-to-back global boys action hits
• Merchandise licensing revenues will soften in the short term
79
WE HAVE HAD CHALLENGES BEFORE BUT…
• Corus TV has demonstrated a unique capacity to achieve steady growth in
all market conditions
Revenue and Expenses 2009‐2012
700,000
EBITDA 2009‐2012
300,000
7.1% CAGR
7.8% CAGR
600,000
250,000
400,000
6.6% CAGR
$000s
$000s
500,000
200,000
300,000
150,000
200,000
2009
2010
Revenue
2011
Expenses
2012
100,000
2009
2010
2011
2012
80
TODAY’S PRESENTATION
• Corus TV – Performance Overview
• Made in Canada – Positioned for Economic Recovery
• International Business – Building on the Corus Advantage
81
CORUS TV BUILDS GREAT BRANDS…
• Corus TV has consistently demonstrated an ability to grow our brand portfolio
• Corus brands: YTV, W Network, Movie Central
• Brand stewards: HBO, Nickelodeon, OWN, ABC Spark
Corus has Launched More Brands than the Entire Canadian Media Industry Combined
82
…THAT ENHANCE OUR REACH IN KEY
VERTICALS…
83
Source: BBM Canada TV Meter – 9/1/2011‐8/31/2012 – M‐Su 2a‐2a – Canada minus Quebec Franco –Kids =2‐11, Teens=12‐17, *Moms=W18‐54 w/Kids <18 in HH, Average Monthly Reach (1 min. qualifier) % of UE.
… WITH HIGHLY-VALUABLE AUDIENCES
• Corus TV delivers women’s audiences in larger, high-consumption
households which are the most valued by our advertisers
84
Source: BBM Canada TV Meter – 2011/2012 BY, Total Canada, M-Su 2a-2a. % Female base: A18-49. Bubble size based on A18-49 AMA(000). HH Size indexed to UE.
OUR WOMEN’S AUDIENCE JUST KEEPS
GROWING…
Average Minute Audience (000s)
• Corus TV’s Women’s business maintains momentum
• Audience growth which leads to revenues
190% Audience
Growth Since F’02
85
Source: BBM Canada TV Meter - Broadcast weeks 1-52(53), Total Canada, Women 25-54, M-Su 2a-2a, Average Minute Audience (000). *W Movies effective, 3/1/2010.
…AS DOES GROWTH IN CO-VIEWING
REVENUES
• Corus TV pioneered the co-view phenomenon
• Families watch together
• Advertisers buy-in
24,000
Ad Revenue ($000s)
22,000
14.6% CAGR
20,000
18,000
16,000
14,000
12,000
10,000
F'09
F'10
F'11
F'12
Co-Viewing will Continue to Drive Revenues
86
CORUS KIDS IS TURNING THE CORNER
• Very strong Fall audience delivery
• Kids audiences recovering
• Adult co-view audience explodes
40.0
60.0
35.0
+6%
55.0
Average Minute Audience (000s)
Average Minute Audience (000s)
A18-49 in Adult Sales Time Periods
K6-11 in Kids Sales Time Periods
30.0
25.0
20.0
15.0
+31%
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
Fall '10
Fall '11
Fall '12
10.0
Fall '10
Fall '11
Fall '12
Turnaround in Kids Audiences and Upside in Co-Viewing
87
Source: BBM TV Meter: Weeks 6-11 for each year, Total Canada AMA (000)
CORUS AUDIENCE SHARE GAINS MOMENTUM
V2-54 AMA % Change vs. Prior Year
16%
‐1%
‐3%
‐12%
Corus
Shaw
Bell
Rogers
Q1 F'13
Industry-Leading Audience Share Gains
88
Source: BBM Canada TV Meter, Total Canada, 2012/13 weeks 1-11 vs. 2011/12 weeks 1-13
W NETWORK – OUR FLAGSHIP NETWORK
• Audiences love our original content which, as we promised, is delivering
outstanding results
89
W NETWORK ORIGINALS DELIVER
AUDIENCES…AS PROMISED
Mon-Thurs 8p-11p
W25-54 AMA (000s)
+53%
46
Average Minute Audience (000s)
50
40
30
30
20
10
0
Canadian Originals
Q1 F'12
Q1 F'13
Corus Original Content Drives Primetime Audience Growth
90
Source: BBM Canada TV Meter, Total Canada, 2012/13 weeks 1-11 vs. 2011/12 weeks 1-13
OWN – THE OPRAH EFFECT TAKES HOLD!
W25-54 AMA (000s)
+39%
Average Minute Audience (000s)
12
9.6
10
8
+47%
5.3
6
4
6.9
3.6
2
0
M-Su 2a-2a
Q1 F'12
M-Su 6p-12a
Q1 F'13
OWN: Oprah Winfrey Network (Canada) is on Fire!
91
Source: BBM Canada TV Meter, Total Canada, 2012/13 weeks 1-11 vs. 2011/12 weeks 1-13
NICKELODEON – POISED FOR GROWTH
• Nickelodeon original programming
• Expect an increase in households
• Complementary scheduling - more co-view via Nick at Nite
Subscriber homes (millions)
4.0
+46%
3.0
2.0
1.0
0.0
Current
Proposed
Great New Content and More Homes will Increase Audiences
92
ABC SPARK – A BIG OPPORTUNITY
• ABC Spark is the #1 digital network for millennials (F12-34) in Canada*
• Expect an increase in households
• Season premieres set to launch in the New Year
5.0
+35%
Subscriber homes (millions)
4.0
3.0
2.0
1.0
0.0
Current
Proposed
Great New Content and More Homes will Increase Audiences
93
*Source: BBM TV Meter, 3/26/2012 to 11/11/2012, Mon-Sun 2a-2a, F12-34, AMA(000). Ranking based on Canadian English digital networks.
PAY TV SUBSCRIBERS ARE GROWING
•
•
•
•
Exclusive content – HBO, First Run Movies, Showtime
HD On Demand now available
TV Everywhere improves the value proposition
Acquisition and retention campaigns are delivering
94
TODAY’S PRESENTATION
• Corus TV – Performance Overview
• Made in Canada – Positioned for Economic Recovery
• International Business – Building on the Corus Advantage
95
THE CORUS ADVANTAGE
• Corus enjoys a distinctive competitive advantage given our unique
position as a producer, broadcaster and distributor of children’s content
96
WINNING FORMULA: MIKE THE KNIGHT
The Next Big
Preschool Franchise!
Best in Class
Licensee Base
The Corus
Advantage
World Class
Partners
97
THE CORUS ADVANTAGE – GLOBAL BRANDS
• Corus-Advantaged Shows: Mike the Knight, Sidekick, Scaredy Squirrel,
Franklin, Babar, Max & Ruby, BEYBLADE, Bakugan
Growing with the Corus Advantage
98
CO-PRODUCTION OPPORTUNITIES ABOUND
• Over 50 countries have co-production treaties with Canada
• MIPCOM call to action identifies the best and most creative producers
and animation studios
• Leveraging the Corus Advantage to deliver a wave of new content
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LEVERAGING NELVANA’S CONTENT DIGITALLY
• Digital video represents a significant growth opportunity
100
KIDSCO – A STRENGTHENED PARTNERSHIP
FOR GROWTH
Status
• Equity structure of venture was recast with NBCUniversal 51% / Corus 49%
• KidsCo: 15 million homes, 96 countries,18 languages
Strategic Initiatives
• Selective geographic focus
• Western Europe funds growth in emerging markets
• Managing Euro crisis
• New content strategy – library and first window
• New management, business plan and vision
• Migrating broadcast operations and playout to Corus Quay in January 2013
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CORUS TV - “DOING IT RIGHT”
• Canada’s only pure play broadcaster that will pivot with GDP
• Canada’s only media and entertainment company with a large and
growing international business
• Canada’s best-managed media company with proven fiscal discipline in
selecting growth investments and returning cash to shareholders
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CORUS DELIVERS RESULTS
3 Year Compound Annual Growth (CAGR)
Free Cash Flow
EBITDA
61 135 155 59%
256 286 290 6%
5%
Revenues
768 825 842 2010
2011
2012
Fiscal Year
104
STRONG BALANCE SHEET AND
CREDIT RATING
Net Debt and Leverage: September 1, 2008 – August 31, 2012
800
Millions ($CDN)
2.7x
2.6x
2.7x
600
1.9x
1.7x
400
200
0
Fiscal Year
• Unused lines of credit = access to $400M - $600M of capital
• Fixed rate financing in place for 6 years at 7.25%
• Credit ratings maintained: DBRS=BBB, S&P=BB+
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CORUS DELIVERS STRONG AND
SUSTAINABLE FREE CASH FLOW
Operating and Free Cash Flow: 2008 – 2012
Operating Cash Flow
200
2.00
180
1.80
Corus Quay
Investment
Millions ($CDN)
160
Million (CDN $)
Free Cash Flow Per Share
1.60
140
1.40
120
1.20
100
1.00
80
0.80
60
0.60
40
0.40
20
0.20
‐
0.00
2008
2009
2010
2011
Free Cash Flow Per Share ($CDN)
Free Cash Flow
2012
Fiscal Year
* Free cash flow normalized for business combinations, Fiscals 2010 – 2011 adjusted for continuing operations
Fiscal 2012 Free Cash Flow of $155.1M
Capacity for Increased Dividends/Share Buybacks
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RETURNING CASH TO SHAREHOLDERS
WITH A STRONG DIVIDEND YIELD
Annual Dividend Payout History
Dividend increased 10% in F’12 to
$0.96/Class B Share on an annual basis
For the fiscal years ended August 31
($CDN per Class B Share, Split Adjusted)
0.92
0.74
0.53
0.03
0.04
2004
2005
0.56
0.60
0.60
0.13
2006
2007 Dividend
2008
2009
Strong
Yield of2010
4.2% 2011
Dividend as % of
Free Cash Flow
2012
2008
2009
2010
2011
2012
46%
52%
79%
47%
50%
Strong Dividend Yield of 4.2%
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CORUS DELIVERED EXCEPTIONAL
3 YEAR PERFORMANCE
Corus’ 3 Year Total Shareholder Return = 20% CAGR (1)
Corus (CJR.B)
S&P/TSX Composite Index
S&P/TSX Consumer Discretionary Index
180
160
Return on $100 invested August 31, 2009
$CDN
140
120
100
80
60
2009
2010
2011
2012
Fiscal Year
(1)
Assumes reinvestment of dividends
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POTENTIAL SHARE VALUE
• Free Cash Flow = Increased Shareholder Value
• Sustainable Free Cash Flow of $140 million using Free Cash Flow
multiples of 14x to 18x would equate to a CJR.B share price of $24 - $30
Share Price
$30 $27 $24 14x
16x
18x
Free Cash Flow Multiple
109
FINANCIAL GUIDANCE: FISCAL 2013
Consolidated EBITDA
$293 million to $303 million
Free Cash Flow
$140 million +
110
CORUS DELIVERS
SHAREHOLDER VALUE
ƒ Corus has a great portfolio of assets
ƒ Powered by a strong management team, Corus is an excellent operator,
delivering superior margins and a strong balance sheet with sustainable
free cash flow
ƒ Corus has the firepower to grow
ƒ Corus to deliver value to our shareholders through:
9
9
9
9
Dividends
Share buybacks
Organic growth
Strategic acquisitions
111