CRTC might ease Corus’ Canadian content spending requirements after profit plunge

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This article was published 20/10/2023 (1077 days ago), so information in it may no longer be current.

Canada’s telecommunications regulator is looking to ease some Canadian content spending requirements for Corus Entertainment Inc. as the company says labour unrest in the U.S. entertainment industry and high inflation have hurt its bottom line.

An application from the company last week asked the regulator to “urgently” change some conditions for its English-language television stations and discretionary services.

CRTC secretary-general Marc Morin replied Thursday, saying the commission is in favour of granting the company’s request but will first hold a consultation on the proposals.

He said approving the relief sought “would recognize the urgency of the situation and provide short term flexibility.”

“Given the urgency of the situation, the Commission determines that it is appropriate to give immediate consideration to Corus’ application on an exceptional basis.” Morin wrote.

The company said in a filing that its financial situation is increasingly dire.

In the application to the CRTC on Oct. 11, Corus vice-president and associate general counsel Matt Thompson requested the regulator lower the company’s obligation to spend 8.5 per cent of revenues on programs of national interest for its English-language stations to five per cent.

Corus also asked the regulator to extend the repayment deadline for under-expenditures of Canadian programming requirements.

Corus cited a 22 per cent drop in third-quarter profits this year compared with the same period in 2022.

It noted profits for the quarter had fallen by a wider amount when comparing with five years ago, as it has seen a 43 per cent drop in that time.

“These figures are indicative of a company whose financial capacity is severely constrained,” Thompson said.

The company said it is facing multiple challenges, including recent strikes by the Writer’s Guild of America and the Screen Actors Guild in the U.S. that have affected its TV lineup, along with ongoing high inflation that has raised programming costs while reducing advertising demand.

RBC Capital Markets analyst Drew McReynolds said he expects the CRTC to grant relief but that the move would be “somewhat bittersweet at this juncture.”

“Receiving such near-term relief should help Corus navigate an exceptionally challenging operating environment characterized by cyclical headwinds, an unlevel playing field versus the large foreign digital media companies and the disruptive impacts of U.S. guild strikes,” he wrote in a note to clients.

Still, McReynolds said, “this relief comes after years (and decades) of structural change that has meaningfully impacted Canadian broadcasting profitability.”

Parties can submit feedback on the proposed relief until Nov. 3. Corus will then have five days to file its replies to the CRTC and other groups.

In June, Bell Canada also submitted two applications to the CRTC, which have yet to be ruled upon, asking the regulator to waive local news and Canadian programming requirements for its television stations amid financial strain.

This report by The Canadian Press was first published Oct. 20, 2023.

Companies in this story: (TSX:CJR.B, TSX:BCE)