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Edited Transcript of CJRb.TO earnings conference call or presentation 26-Jun-20 12:00pm GMT

Q3 2020 Corus Entertainment Inc Earnings Call

CALGARY Jul 13, 2020 (Thomson StreetEvents) -- Edited Transcript of Corus Entertainment Inc earnings conference call or presentation Friday, June 26, 2020 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Douglas D. Murphy

Corus Entertainment Inc. - President, CEO & Director

* John Richard Gossling

Corus Entertainment Inc. - Executive VP & CFO

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Conference Call Participants

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* Adam Shine

National Bank Financial, Inc., Research Division - MD, Head of Montreal Research & Research Analyst

* Aravinda Suranimala Galappatthige

Canaccord Genuity Corp., Research Division - MD

* David John McFadgen

Cormark Securities Inc., Research Division - Director of Institutional Equity Research

* Drew McReynolds

RBC Capital Markets, Research Division - MD of Canadian Telecommunications & Media Research and Analyst

* Jeffrey Fan

Scotiabank Global Banking and Markets, Research Division - Director of Telecommunication Services & Canadian & U.S. Telecom and Cable Equity Research Analyst

* Maher Yaghi

Desjardins Securities Inc., Research Division - VP, Telecom, Media & Tech Analyst and Intellectual Property Analyst

* Vince Valentini

TD Securities Equity Research - Analyst

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Presentation

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Operator [1]

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Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Corus Entertainment Q3 2020 Analyst and Investor Conference Call. (Operator Instructions) As a reminder, this call is being recorded. I will now turn the call over to Mr. Doug Murphy, President and CEO of Corus Entertainment. Please go ahead.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [2]

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Thank you, operator, and good morning, everyone. We hope that you and your families are staying healthy and safe during this time. I want to welcome you to Corus Entertainment's Fiscal 2020 Third Quarter Earnings Call. I'm Doug Murphy; and joining me this morning is John Gossling, Executive Vice President and Chief Financial Officer.

Before I read the cautionary statement, I'd like to remind everyone that we have supported slides for this call. You can find them on our website at www.corusent.com under Investor Relations section.

Now let's move to the standard cautionary statement found on Slide 2. Today's discussion contains forward-looking statements that may involve risks and uncertainties. Additional information concerning factors that could cause actual results to materially differ from those in our forward-looking statements are contained in the company's filing with the Canadian securities administrators on SEDAR.

I'll start on Slide 3. When we last spoke in early April, we talked about how quickly the world had changed, and it continues to do so. Our responsibility as a national and local broadcaster is to provide the public, reliable, timely news, and entertainment programming. That responsibility has never been greater than it is now. As you well know, significant and unprecedented challenges emerge for businesses in the weeks following the implementation of COVID-related restrictions.

At Corus, this difference -- this experience was no different. Our immediate focus was on the health of our employees and ensuring they were safe and secure. We then quickly acted to implement our business continuity measures. Once established, our next action internally was to confirm our steadfast commitment to purposely advance our strategic priorities in the midst of this crisis. I am pleased to report that we have done just that. These advances include working with the industry in Canada to embrace common audience segments to ensure better targeted advertising, reaching more Canadians on digital platforms such as STACKTV, deepening our strategic studio partnerships as we secure a strong schedule for the coming broadcast year, achieving meaningful share gains in TV and Radio given the strength of our content and finding new buyers for our own and controlled TV series around the world.

To achieve these wins while seamlessly providing the essential services Canadians need from us is a testament to the talent and resiliency of our team at Corus. That said, Q3 was a very tough quarter. As witnessed by other broadcasters around the world, we experienced significant advertising revenue declines.

TV advertising was down 31%, and Radio advertising was down 52%. At the same time, we took immediate steps to review all of our costs and took a disciplined approach to reduce expenses.

Fortunately, our resolute focus on deleveraging our balance sheet these last 2 years provided Corus with the financial flexibility to withstand the impact of the short-term challenges. And we also prioritize spending and investments to ensure our momentum in advancing our strategic priorities was uninterrupted.

Corus as an essential service is doing our job in keeping Canadians connected and informed. Our team is working at peak capacity, with more than 75% working from home to deliver news and entertainment. The federal government has been doing their job, too, by providing support to hundreds of thousands of Canadians and their employers through the Canada Employment Wage Subsidy and other programs.

We applaud the move by the Ministry of Canadian Heritage to introduce a $500 million emergency support fund for cultural heritage and sports organizations. Our production and creative communities are facing tremendous hardships in our country as most, if not all, productions remain on hiatus. These 2 measures will position our economy, both creative and otherwise, for a more rapid return to a new normal of economic activity once the public health agencies begin to further lift COVID-related restrictions. For Corus, this has enabled us to fully focus on the uninterrupted delivery of news, information, and entertainment services for all Canadians.

Over to Slide 4. We are learning a lot about the acceleration of existing trends, and we're seeing the emergence of some new ones during this pandemic. Audiences is spending more time with video. We are seeing this as they rediscover television, and we're seeing this across digital video platforms. At Corus, we have made great strides in serving our existing video subscribers with an improved value proposition, and we are reaching new audiences that don't subscribe to a video bundle through a traditional distributor.

For example, 1 short year ago, we launched STACKTV. It was a success right out of the gate and grew markedly every month, accelerating as more Canadians were required to self-isolate. STACKTV has now become a meaningful part of our business portfolio with over 200,000 Canadian subscribers and growing, a milestone we are excited to share.

We are also investing to improve the subscriber value proposition by providing enhanced flexibility to consume our Corus video content on the go, complementing the significant investments our distribution partners are making in new platforms to improve the TV experience. Viewers have embraced our expanded Global TV app, which has seen an acceleration in downloads and time spent during the crisis. With nearly 4 million downloads to date and more than 6.9 million video starts in the first month alone, our viewers are taking advantage of new ways to access our content.

Over to Slide 5. Audiences are rediscovering television, and they're rediscovering Corus. Since mid-March, Corus has seen a meaningful shift in audience share, given the strength of our content. Survivor is a great example. In its 40th season, the season finale on Global had a strong showing in 15 years, with 2.4 million total viewers. This demonstrates unequivocally that a hit on TV is still big, and we saw significant tune in for audiences in the younger 18 to 34 demo.

The importance of having a trusted source of news has never been greater. The growth of news on linear television and digital platforms such as globalnews.ca has been incredible. In fact, we are now the #1 digital news brand in Canada. We are bigger online than any other broadcaster, private or public, bigger online than any newspaper or digital-only competitor. This spring, our ongoing commitment to and investment in news was further realized when we launched Canada's first 24/7 streaming news channels available completely free through the Global TV app and Amazon Prime Video, making news even more accessible and delivering stories that keep Canadians connected both at home and abroad.

To satisfy our audiences' desire for more information about emerging world events, our team has created special news programming such as Coronavirus: Canada in Crisis; Coronavirus: The New Reality; and Living in Colour: Being Black in Canada. And in radio, some notable new trends have emerged, which are encouraging. It is no surprise that drive-time tuning has declined. But what is of interest is a significant increase in streaming as listeners find new ways to access our Corus radio stations digitally through the radio player app on mobile devices or voice-activated devices at home or via Internet-connected televisions. Listening to radio at home is on the rise during the crisis.

And lastly, and for you, Rock fans out there, Rock, Music is back during this pandemic-induced situation. In Vancouver, our 2 Rock Stations, CFOX, and Rock 101, ranked 1 and 2. And in Toronto, for the first time in more than a decade, 2107 is a top 3 station.

Moving to Slide 6. Some of you have heard me describe our pandemic experience using the metaphor of chapters being written in the book of COVID. Chapter 1 was titled Shock-and-awe and is evident in our Q3 revenues. We saw sudden significant advertising cancellations as clients reduced discretionary spending on marketing to protect their own businesses, given the shutdown induced reduction in their sales. Chapter 2 stabilization witnessed the advent of new advertising campaigns with newly approved and retooled messaging. We are now in Chapter 3, the modest recovery as part of the economy slowly reopened. As noted earlier, despite the impact of COVID, we remain focused on the long game. And an important part of that is our investments in leading-edge advertising solutions as we transform how television is sold.

Last week, our industry organization, SyncTV, announced a critically important industry solution in Canada. Corus, Bell Media, Rogers Sports & Media, and later this year Quebecor Media, will all adopt common audience segments. Advertisers will now be able to build a better, more targeted advertising campaign, benefiting from a common shared grouping of 19 audience segments that will reach 90% of total linear TV audiences in Canada. Our efforts to better target audiences to common segments is but one part of our strategy to transform how we sell television. Another is to improve the ease of transacting television through an automated platform, Cynch. This self-service platform will increase the efficiency and effectiveness of buying television. Cynch's latest upgrade now delivers live inventory across 20 of our specialty channels for adults, with Global to be added later this year.

Over to Slide 7. As mentioned, we held our first virtual upfront this week, where we revealed our schedule for the upcoming broadcast year, both conventional and specialty television. Let me offer a few quick highlights.

You have heard of us speak of our strategy to deepen our long-term relationships with world-class content partners by securing premium content for distribution in new ways and places. On Tuesday, we announced a new multiyear deal with NBCUniversal for originals from Peacock exclusive to Corus in Canada. Shows like Brave New World, Girls5Eva, Saved By The Bell will not only air on our linear channels, but they will also be available for any of our on-demand platforms with full stacking rights.

Moving to Slide 8. Our Global fall schedule is packed full of premium dramas with successful returning series that viewers come back for every week. We're turning to our lineup, our fan favorites, New Amsterdam, back for its third season; and last year's newest hits, Evil and FBI: Most Wanted, both renewed for a second season. And on Sunday evenings, we will have 4 full hours in simulcast to CBS, starting with the iconic 60 Minutes; then The Equalizer, a new series starring Queen Latifa; and then NCIS: LA and NCIS: New Orleans from the popular NCIS franchise; and of course, Survivor will be back yet again, appealing to that record fan base that watch this year's season finale.

I'm now on Slide 9. As we announced on Tuesday, all of our specialty networks will feature a strong pipeline of shows from our U.S. studio partners as well as hit Corus Original series. From new seasons of The Good Fight, Batwoman and Outlander, to the debut of Beyond Oak Island, we have an impressive fresh schedule to kick off the new broadcast year.

Moving to Slide 10. As part of our upfront this week, we debuted our ever-expanding slate of owned content. Corus Studios announced a deep lineup of 20 new and returning series, including new seasons of the hit series Island of Bryan and Rust Valley Restorers. More and more of our series produced by Corus Studios have multiple seasons, which increases their appeal around the world. And there are announcements of some new shows as well, such as Cheese: A Love Story; and Family Home Overhaul. Our slate of owned content from Nelvana is equally impressive. Seven new and returning series have been announced, including the long anticipated live-action mystery drama reboot of The Hardy Boys, which will debut on YTV this fall and on Hulu in the U.S. later this year. Nelvana series, Ollie's Pack and The Dog & Pony Show, will debut on YTV and on Treehouse. New seasons of popular Nelvana-produced series, Esme & Roy, Miss Persona and Ranger Rob, round off the schedule.

The worldwide production hiatus has definitely kickstarted our content ownership sales and strategy and its merits as a source of revenue diversification. For example, HGTV and Food Network owned by Discovery U.S. Inc. has acquired 6 Corus Studios. This represents 85 hours of content for their flagship networks in the U.S. HGTV welcomes 3 series this summer, including Scott's Vacation House Rules; Making It Home With Kortney & Dave; and the hit series, Island of Bryan, which will be retitled Renovation Island in the U.S. market. They've already had strong audiences in the first few weeks of viewing. Food Network acquired 2 series, including Fire Masters and The Big Bake, for their audiences later this year. And as previously noted in April, we announced the sale of a second season of the hit series Rust Valley Restorers to Netflix for international distribution outside of Canada. Many of these series will be in production once the restrictions are lifted, which bodes well for future international sales of subsequent season in the years ahead as we build franchise IP.

With that, I'll hand it over to John to review the Q3 financial results as well as our current financial position.

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [3]

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Thanks, Doug. Good morning, everyone. I hope you're all well and keeping safe. I'll start on Slide 11. Financial discipline is an integral part of how we operate at Corus. At the start of fiscal 2019, we began to accelerate the deleveraging of our balance sheet, increasing our financial flexibility and putting us in a solid position to navigate through these unexpected times.

Over the past 7 quarters, we have repaid $381 million of bank debt, including $131 million for the year-to-date, which includes $80 million in optional debt repayments this year. With the decline in advertising revenue in the current climate, our reported leverage has increased to 3.22x net debt to segment profit at the end of the third quarter, reflecting lower segment profit and the impact of the adoption of IFRS 16 at the beginning of the fiscal year.

We exited the third quarter with a cash balance of $80 million and had available $300 million under our committed revolving credit facility, which expires in 2023, and all of that could have been drawn.

This cash position and our committed revolving credit facility provides us with sufficient liquidity to operate in these uncertain time.

Our financial priorities remain unchanged. We are prudently conserving cash in this environment and increasing our financial flexibility over the longer term remains our focus. Our Q3 results reflect that we have met the eligibility requirements for the Canada Emergency Wage Subsidy, or CEWS, with a consolidated revenue decline in excess of 30% during the April and May 2020 measurement periods.

Approximately $17 million of the estimated CEWS for the 3 months ended May 31, 2020, has been recorded as a reduction of employee costs in the interim financial statement. This program is doing exactly what it is intended to do, provide support to employers like Corus during the period of highest disruption as we continue to provide essential services for all Canadians. We're extremely grateful to the government for quickly recognizing the need for emergency relief during this period of uncertainty and acting quickly to put this program in place.

I'll now provide an update on our Q3 results, starting on Slide 12 before handing the call back to Doug. Our third quarter performance reflects the material business impact from COVID, as Doug has mentioned, particularly on advertising revenues as well as a tough comparable from last year's unusually strong TV advertising revenue growth of 10% in Q3. Consolidated revenues of $349 million declined 24% compared to the prior year quarter. This result was mainly driven by the lower advertising revenues and a decrease in merchandising, distribution and other revenues due to COVID-related shutdowns. Impressively, our subscriber revenues were resilient, increasing slightly this quarter.

Consolidated segment profit was $111 million for the quarter as compared to $171 million in the prior year, reflecting a significant revenue challenges, partially offset by very aggressive cost management. Expenses were meaningfully reduced by approximately $50 million for the quarter as production delays reduced cost of sales, discretionary costs were eliminated and eligibility for the wage subsidy was confirmed for the April and May period. Consolidated segment profit margin was 32% for the quarter. The net loss attributable to shareholders for the quarter of $752 million or $3.61 per share was driven by TV and radio goodwill impairments and radio broadcast license impairments, which aggregated approximately $787 million recorded in the third quarter. The impairment charges are noncash items and adjust the accounting book values at May 31, 2020, to estimated current market value.

Free cash flow was $91 million as compared to $90 million in the prior year quarter, reflecting the positive impact of relief measures enacted by the government, which allowed payment deferrals on Canadian income tax installments and HST/GST as well as lower spend on program rights, and that was offset, of course, by the lower segment profit. Free cash flow for the year-to-date of fiscal 2020 is $209 million compared to $216 million last year.

Current year results do include the impact of the adoption of new accounting standard IFRS 16 leases this year, which increased free cash flow by $4 million for the quarter and $12 million for the year-to-date.

Now let's turn to our TV results for the third quarter. It's detailed on Slide 13. Overall, TV segment revenues for the quarter were down 21%. TV advertising revenue declined 31%, driven by the impact of COVID on demand. And as we mentioned earlier, we're unable to translate increased audiences into revenue. We were also comparing to unusually strong TV advertising revenue growth in the prior year. TV subscriber revenue was up slightly from the prior year, reflecting strong uptake of STACKTV, which more than offset channel portfolio changes made in the last year and the disposal of TLN in March of 2019.

Merchandising, distribution and other revenues were down $2.6 million in Q3, and this reflects the lower number of deliveries on current production as compared to the prior year and decreased merchandising revenue given the shutdown of retail businesses, which impacted the backing on sales. TV expenses in the third quarter were down 15% over the prior year. Direct cost of sales decreased 8%, and that was driven mainly by lower amortization on Canadian programming and a reduction in revenue-based costs. General and administrative expenses were down 26%, benefiting from the elimination of all discretionary spending, relief on Part 1 CRTC fees, implementation of IFRS 16, lower revenue base costs, and estimated CEWS funding of $13.5 million in TV. Overall, TV segment profitable, $116 million, decreased 30% in the third quarter. TV segment profit margins were 35%, and that compares to 40% in the prior year.

Now let's turn to Radio on Slide 14. Radio segment revenues were $18 million, and that was a decrease of $19 million or 52% for the quarter, impacted by the shutdown of businesses across Canada. Radio expenses in the third quarter decreased a significant 29%, principally from lower employee costs tied to CEWS funding of $2.7 million, relief on Part 1 CRTC fees, lower corporate costs that are correlated to revenues and a halt in discretionary spending. Despite all -- cutting all variable costs possible in the Radio segment, the significant decline in revenues in the quarter meant that the Radio segment loss was $1.8 million.

Across the company, we are deeply committed to reducing costs, diligently managing our capital, and readying ourselves to exit this period of uncertainty in a position of strength.

With that, I will turn it back over to Doug.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [4]

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Thank you, John. Moving to Slide 15. It's a surprise to no one that Q3 was a very tough quarter. I am very proud of our team at Corus and what we have accomplished as an essential service for Canadians, providing news, information, and entertainment. We have a very important role in helping all Canadians during this protracted period of self-isolation. I am especially pleased that we're making such meaningful progress in advancing our priorities so that we exit this pandemic in an improved strategic position.

As the future chapters of the book of COVID are revealed, Corus has many reasons to be optimistic for the coming broadcast year and beyond. We have a strong lineup for our fall schedule, as debuted during our virtual upfront this week. We have seen a profound share shift in our favor on both television and radio. Advertisers will return as the economy reopens, there is no doubt, and we are ready to support them. Our advanced advertising and data offerings are transforming how TV is sold, now with the industry in Canada adopting common audience segments and since beginning to scale. Our content is reaching new audiences on platforms such as STACKTV, providing more avenues for advertising and subscriber growth.

Our owned and controlled content is appealing to new buyers around the world. And most importantly, our financial discipline to maximize our free cash flow, prudently manage our costs to deliver the balance sheet, and invest for the future remains resolute.

Before I close the call, I want to address the senseless killing of George Floyd and the ensuing wave of condemnation and protests here in Canada and around the world. This has opened up a new level of transparent conversation about racial injustice, in particular, anti-Black racism. At Corus, we acknowledge that systemic racism exists within our society and workplaces. Our company values are built on a foundation of learning and challenging assumptions to create a new, better future. We are deeply committed to redoubling our focus on building an inclusive, sustainable culture here at Corus, in which equity, diversity, and inclusion are central to what we do within our company and in our communities. Together, we all need to do better and to do more. Thank you, and back to you, operator.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Adam Shine with National Bank Financial.

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Adam Shine, National Bank Financial, Inc., Research Division - MD, Head of Montreal Research & Research Analyst [2]

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Doug, maybe can you talk a little bit about some of the trends you're seeing going into the seasonally light Q4? And any look ahead ultimately into the fall? And then just in the context of the release schedule that you put out the other day, can you give us a sense as to sort of how much of that production is sort of already in the can? Or is there any risk to the new fall season as to production is restarting to get some of that output available for the fall?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [3]

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I'm going to start the second question, Adam, and I hope you're well, nice to hear from you. The good news about our model, as you know, is that we have a lot of our audiences are delivered by our specialty channels. And our specialty channels are a function of our exclusive arrangements with the big U.S. brands. And much of the content is already in the cans, whether or not it's HGTV or Food or History, et cetera, et cetera, Disney, Nick, Cartoon, et cetera, we've got a deep, deep library of new shows and catalog shows. So we're feeling very confident that we can maintain audiences even if it's protracted delays in returning to normal, we feel good about that.

On the Global, we announced this week the shows that we're never going air -- start airing in September, October. Some have been shifted to mid-season like Prodigal Son, FBI. They've moved over, New Amsterdam. So those are still evolving. To be honest with you, we're in constant contact with our U.S. studio partners. Everybody is anxious to get back to production. Some shows are already in post, so they're just being finished up now. Anything that was in principle photography are -- is still kind of on hold. But to the best of our knowledge, we've got a pretty good lineup secured for the fall.

Trends. One trends for sure is going to be a great hot Canada Day week next week. And Canadians are going to be outside and on the lakes, and they're not going to be watching a lot of television. And that's pretty normal for this time of year, especially because we had such a cold, late spring. Other than that, in my remarks, I mentioned a number of the trends. I mean, we are not seeing cord shaving and cord cutting. We're seeing stability in our core traditional subscriber business, and we were seeing a very incredible growth in STACKTV, which rounds up to growth in subscriber line, that's going to continue.

We're seeing people listening to radio on digital platforms from home, which is a definite trend change. And we're seeing a lot of interest in our own content business with the phone ringing quite regularly with people looking from our content that can be sold to international markets. So lots of interesting things that we're learning and a lot of it in our favor.

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Adam Shine, National Bank Financial, Inc., Research Division - MD, Head of Montreal Research & Research Analyst [4]

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Doug, if I can just ask one follow-up. Just in the context of the '19 sort of core segments, how should we think about potentially driving incremental revenue during the course of the year, particularly as some of these partners obviously come on board during the course of fiscal 2021?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [5]

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The insight behind the audience segment is to, as you've heard me say before, move away from selling the demo adult 25, 54 to selling targeted audience segments. That enables us to provide our advertiser better targeting, better value, and it enables us to better segment the 70 billion impressions that we sell every year. So we can get better yield on those segments. We can help our advertisers feel that they're getting much better targeting outcomes. And when you talk about the specific categories, I think that was part of your question about trending as well. As the economy reopens, we're seeing different product categories having different kind of profiles. I mean, you've all heard that the U, the V, the L, we're seeing that in categories. So for example, certain categories, travel, airlines, crews, they're not spending any money. Other categories, home improvement, telecom, groceries, online shopping, direct-to-consumer, entertainment and home, gaming, they're spending money. And so the targeted segments enable us to more effectively hit the grocery stores, for example, who want to target large families. So it will enable us, I believe, to come back stronger than we went into the COVID crisis by having a common platform in Canada.

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Operator [6]

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Your next question comes from the line of Drew McReynolds with RBC.

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Drew McReynolds, RBC Capital Markets, Research Division - MD of Canadian Telecommunications & Media Research and Analyst [7]

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Doug, congrats to you for keeping all these initiatives moving forward in a tough environment. It's actually quite impressive to see. Adam ticked off a couple of my questions, but a couple more here. First, to you, Doug, just on a regulatory update. We've seen some obvious delays in the processes of filings with the CRTC, et cetera. And obviously, government's delayed in a few things, but maybe provide an update if you can on where things are with the Broadcast Act review and updated expectations on a radio review.

And John, for you, on the government subsidy side for Q4, your fiscal Q4, just kind of remind us if that continues through the quarter. And lastly, I guess for you, John, on the bad debt side. It doesn't look as if it's a major issue. I think you provisioned a little bit this quarter. But if you can quantify a little bit of that, that would be helpful.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [8]

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I'll kick it off, Drew, and thank you for your kind acknowledgment. We -- Mr. Guilbeault was speaking at the Virtual Banff Media World Festival last week, I think it was. And we're very encouraged to hear that originally, the government said they're going to table the legislation in June. Obviously, the COVID virus has sidelined that. But the ministry was unequivocal in saying that it's going to be brought to the house in the fall. And there will be, thereafter, some more firm direction to the regulatory body to make more media change. Our view is that will include both a leveling of the playing field, which will mean more people contributing to the system, principally the foreign-owned Internet media broadcasters, as I've often described them, Netflix, Apple, Amazon, et cetera, and a commensurate understanding that the existing burdens on traditional broadcasters are unsustainable. So we still believe that that would be the outcome. And obviously, it can't happen soon enough.

John, over to you.

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [9]

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Sure. Drew, on the wage subsidy for Q4, I guess the first thing to say is there's a little stub piece that comes from the way the periods are defined, that we know that we are eligible for. It's the first week of June. Beyond that, it's very unclear how the extension is going to work. We're going on the assumption that that current rules that say, if you qualify in a month, that means you automatically qualify in the following months would tell us that we would qualify in June, that we don't need to requalify. But we don't know that for certain. And we also don't know what the qualification threshold is going forward on this renewal. So I think a lot of corporate can is waiting to hear from federal government how this is going to work. So we'll have to wait and see.

I mean to size it, it's about $10 million a month. A little bit of that goes against Nelvana that that ends up in the film asset. But we don't have certainty right now for many reasons of what the Q4 benefit could be other than that that first week of June. So that's really all we know at this point.

On the bad debt situation, we did have a little bit of a pickup in our provisions in Q3. It was about $2 million for that period. Needless to say, we're keeping a very close eye on things. The local situation, particularly in radio, would be of some concern, but it's a lot of smaller accounts as opposed to large agency accounts for the most part. So we're being very cautious, also because it's such a huge driver of free cash flow and the working capital impact of it. So, so far, so good for the most part, I'd say on that, we like the trends there, but we are on a daily basis.

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Operator [10]

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Your next question comes from the line of Aravinda Galappatthige with Canaccord Genuity.

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Aravinda Suranimala Galappatthige, Canaccord Genuity Corp., Research Division - MD [11]

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I hope you guys are all doing -- keeping well. I wanted to go back to the advertising trends. Doug, you talked about sort of the 3 phases of the 3 chapters. I was hoping you can perhaps define sort of the modest recovery phase a little bit more.

Quantitatively, what are we talking about? Are we talking to that flat or maybe modest declines or even modest growth? I know that you had a fairly strong May as a cancel that came back. But I was wondering, has that wave sort of ended? So I was looking for a little bit more color on that front.

And secondly, for John. You guys provided some great color around cost reduction in the prior conference call and sort of the different buckets. I was wondering if you can give us an update there. I know that as it's more in Q4 and Q1 that some of the programming cost containment opportunities open up. So I was looking for a little bit more insight on that in that area.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [12]

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Thanks. Aravinda, I hope you're well as well, and you and yours. Okay. So with respect to the advertising, modest recovery chapter, that refers really in May, and that refers to the comparative over the last year. Recall last year Q3 was a barn burner, right? Plus 10% TV ad growth. So in May of last year, the third month of that quarter, we were largely sold out. So this year, we had lots of inventory versus last year. We had no inventory. So it would be logical that we would -- we saw a number of weeks where we had better sales this year May than we had last year May. But that was a function of the quarter in particular. We're still pacing behind Q4. And I don't expect that to get to growth last year. We were plus 4 Q4 last year. So we still have some work to do on the pacing, but it's not going to be growth, it's modest recovery. That's how I describe that.

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [13]

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Aravinda, on the cost side, a lot of it depends on what Doug said in response to Adam's question around programming and timing obviously for Q1. For Q4, I think we have a pretty good sense of that. There should be some additional programming saves compared to Q3. Obviously, we had programming that was ready to go that we aired in Q3. And with the shutdown of the hiatus, it will slow things down a little bit more in Q4.

On the SG&A and the salary costs, that -- obviously, the big nut there is the wage subsidy, whether that applies in Q4 or not. Now even without that, we will see some pretty substantial savings is our current view for Q4, just with the momentum of what we've had in place starting with the lockdown. So it could probably be without the wage subsea, strong double-digit reductions again in operating costs. And then programming, always a bit of a wild card, but it could be high single-digit, low single-digit savings as well for the fourth quarter. And then I'd say Q1 is still just a little bit too uncertain right now given that that potential movement on timing for programming.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [14]

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And maybe I can follow-up on Q4 before you have any follow-up questions, Aravinda. The other thing I would just note is, remember now that the Olympics are gone. So advertisers earmarked a significant amount of dollars for the Olympics. Now they try to decide where to put those dollars. As well, programmers that were not carrying the Olympics had programming strategies to stay away from the Olympics and not get run down by that audience machine. So it's a once-in-a-lifetime, very bizarre quarter to try to get your head around inventory and impressions and programming strategies and demand from advertisers. And then you link that to the sort of to the return to some degree of new normal and the slow ease back of economic activity, and it's anybody's guess. What we know -- what we do know is that we've grown our share. We have made great strides on our advanced advertising and data-based initiatives, and we're going to trade on that and get as much money as we can from our advertising partners.

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Aravinda Suranimala Galappatthige, Canaccord Genuity Corp., Research Division - MD [15]

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A quick follow-up, and I'll pass the line on STACKTV. Thanks for the additional color there. Does the incremental growth that you've experienced get you to sort of revisit the TAM there? Any sort of updated thoughts on what the market, say, ultimate market size would be for you guys given sort of the traction that you're seeing right now?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [16]

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I think the STACKTV product speaks to a number of things. First of all, we're reaching audiences that that are not in the cable bundle, younger Canadians, new Canadians, et cetera. We're meeting audiences that don't want to consume sports, so they can get a Corus bundle, and they're enjoying that.

As a reference, if you look at the U.S. market, and this is just a reference. I'm not suggesting this is our forecast. We don't know is the early answer. But in the U.S., the vMVPDs are 6% to 7% of the marketplace. There's a 110 million homes there. We've got -- and so that's 6 to 7 million -- and we have 14 million homes in Canada. So you can see your way to maybe a target market of 1 million homes. So I think we've got a good runway here for a while.

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Operator [17]

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Your next question comes from the line of Vince Valentini with TD Securities.

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Vince Valentini, TD Securities Equity Research - Analyst [18]

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Let's start with John. The $57 million in tax savings or deferrals, would that have to be mostly paid in Q4? Or do you think that gets deferred further into next fiscal year?

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [19]

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Vince, so the $37 million that we identified as being sales tax, that's the HSC GST portion. That gets paid at the end of June, so that's next week. Corporate tax installments have been deferred now until September 1. So that takes us just out of the fiscal. The $20 million, we're chatting with that before the call. That would have been our normal installment kind of run rate for Q3. But given the reduction in profitability, the actual -- and because we paid installments for the first half of the year, the actual installment for Q3 would have been closer to $5 million. So really, the benefit -- depending on how you're looking at it, the benefit of the tax was $5 million, not $20 million. But yes, year-over-year, there's an impact there. But in terms of where we're at right now, given what you saw in Q3, it's a smaller impact, but that has to get picked up the first day of the next fiscal.

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Vince Valentini, TD Securities Equity Research - Analyst [20]

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Okay. You talked about production costs being up 15% until there's a vaccine and given, I guess, distancing and PPE requirements on stage sets and so forth. Can you just clarify, is that just for your Canadian spending? Or do you think your U.S.-sourced content will be up 15% as well?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [21]

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That's a rough -- you're referring to what we talked about during your fireside, Vince?

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Vince Valentini, TD Securities Equity Research - Analyst [22]

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This is in your MD&A today, Doug.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [23]

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Okay, yes. So we -- so basically, the rough estimate from the producers is 5% to 15% is the potential increase to production costs. That's a function of providing the necessary social distancing, all the PPEs that may be required, when they're offset, et cetera, et cetera. I think it's really too early to say. I wouldn't start modeling that necessarily. We're still learning what to do. There's a number of issues that are challenging production returning, not the least of which is the health issue, but there's also issues around insurance. There's issues around this cost piece. There's issues around trying to get people to come back to work, right, because of the SERB. So at this stage, it's way too soon for us to give you any guidance on that. It's an approximation at this time.

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [24]

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And remember Vince, the way that the Canadian program expenditure requirement works is we basically solved for the 30%. So that extra 15, if that's ultimately the right number, would be contained within our regulatory obligation. We wouldn't be suggesting we're going to spend above that.

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Vince Valentini, TD Securities Equity Research - Analyst [25]

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Exactly, John. That's why I asked the question because if it's just Canadian, then you would just -- you'd spend the same amount, but you get slightly fewer hours of content and you'd meet your government obligation. But if it was the U.S. content that was up 15% as well, that's a bit of a different story. So -- but that's a good enough answer for now.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [26]

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And I'd just jump in on that. Let me just sort of -- I don't -- I want to make the note that, that's why our Peacock deal is such an impressive outcome because that content was done in the can, it is top, top stuff and it gives us -- not to mention, are we going deeper with a great partner with NBCU, a long-standing partner with Corus Entertainment, but it also gives us a whole bunch of hit dramas that are available for use.

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Vince Valentini, TD Securities Equity Research - Analyst [27]

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I'm glad you brought that up because that to segue, I wanted to ask about that, Doug. Is there any way you can characterize the cost and negotiations for that deal? Is this something where you had to really twist MVC's arm to get them to sell the content in Canada rather than going with a direct-to-consumer model? And/or was there any sort of big bidding war between Global and or between Corus and Bell to get it? Or was this more normal course and is reasonable cost in order to achieve that exclusive deal?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [28]

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I would say that premium content comes with a premium price, but it was within our budget for foreign acquisition. So was our arm twisting? I can tell you right now that that our friends at NBC, on the other side of the table are very smart negotiators, but we have a great smart team, and I think there's a very strong mutual regard in the sense of collaboration. And our programming leadership has a real strong insight as to what we could do with the content. And our NBCU partners saw the merits and so doing. And so I think it was a win-win for both sides.

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Vince Valentini, TD Securities Equity Research - Analyst [29]

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Okay. And last, I'm going to try the trends one more time, to slightly different spin on it. Because we have had more granular information from a lot of U.S. media companies that along the lines of March and April, sort of down 50%, but then May is more down 20% to 30% and then even maybe even a little less erosion than that heading into June and July. Just for the 3 months during your fiscal Q3, is there any way you can quantify a little bit more granularly for us? How much worse May -- March and April were versus May?

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [30]

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So, Vince, you can read into my comments about the wage subsidy that we were down 30% in April and May. I'd say May was actually a tiny bit worse than April, not materially so. But the fact that we were -- because you can back sell when you see the full quarter number essentially, that it wasn't minus 30. So March wasn't that bad. But given the lockdown started halfway through, I guess, that would make a lot of sense.

So going forward, one of the things, I guess, I didn't say about the qualification level for the extended wage subsidy is. If the qualification level stays at 30, then I don't think we're going to qualify. So that, I guess, it tells you something about what we're seeing going forward on consolidated revenue.

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Operator [31]

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Our next question comes from the line of Jeff Fan with Scotiabank.

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Jeffrey Fan, Scotiabank Global Banking and Markets, Research Division - Director of Telecommunication Services & Canadian & U.S. Telecom and Cable Equity Research Analyst [32]

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Hope you guys are staying well. Most of my questions have been asked. But I do want to touch on the topic of the return of professional sports. Doug, you mentioned no Olympics, and that's fair. But I guess with the sports leagues all looking to restart, if they restart, a couple of them have dates. How do you think that's going to swing viewership and ad budgets as you kind of go through the restart period of July, August and into early fall, when you typically have new shows hitting the market in the fall season?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [33]

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Yes, that's a great question. By the way, I enjoyed watching the Belmont Stakes on the weekend with nobody in the stands, and I -- then New York-bred did very well, Tiz the Law. But nevertheless, I digressed. I think it's really hard to figure out how the sports are going to come back. I mean, you're reading the articles, too, right? Everybody is getting into the COVID and the athletes are concerned. So I guess I will answer your question may be in a different -- with a different answer. What we're seeing in our research, and we've done 6 waves of research now titled Canadians in Isolation. And one of the things, again, that I think distinguishes our company is the amount of our research and insights team as part of our revenue operation. And those waves of insights are teaching us or telling us that we're benefiting from the casual sports viewer who's rediscovered the Corus television offering. And we think we're going to sustain, certainly, a meaningful amount of that share shift is going to stay with us because typically, the casual sports, if you only view sports roughly 15% to 20% of the time. As a hard-core sports viewer is a different cat altogether. So our opportunity really is to retain the casual sports viewer. At least some share of that consumption will stay with Corus. And then when the sports do come back, I really hope they do come back. I mean, it's a significant issue for those broadcasters who have made big wagers in sports. But of course, it's going to be totally predicated upon the health of the athletes and the economics of the leagues. And that, as you're seeing right now with baseball and others, it's not clear what the path forward is. So all I can really talk about in terms of sports is what our plan is to try to retain that that audience share shift so that when sports do come back, whenever they do come back, we'll be able to benefit from the trend that's happened in the ensuing time frame.

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Jeffrey Fan, Scotiabank Global Banking and Markets, Research Division - Director of Telecommunication Services & Canadian & U.S. Telecom and Cable Equity Research Analyst [34]

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Okay. I just want to follow-up also on the Peacock, and congrats on getting that deal done. With respect to monetization of that content, NBCU is obviously focused more on the advertising video-on-demand, the AVOD market. Your monetization sounds like it's going to be linear. Do you have a platform that you think you can help drive the AVOD opportunity in Canada?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [35]

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Well, I mean, increasingly, I would -- I don't think the distinction in my head or our team doesn't between linear and nonlinear anymore. I mean, look at -- what is STACK? Is STACK linear and nonlinear? Half of the viewing is the live feed, right? So that I think what's important to note is, yes, we were able to secure the rights exclusively. And yes, we were able to secure all the rights for every platform on-demand, linear, whatever it looks like. So we'll deploy that in the most optimal way for our audience, for our advertisers and to maximize our distribution revenue.

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Jeffrey Fan, Scotiabank Global Banking and Markets, Research Division - Director of Telecommunication Services & Canadian & U.S. Telecom and Cable Equity Research Analyst [36]

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When does that delivery start to come? Will it be pretty much in line with the Peacock national launch in the U.S.?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [37]

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Yes. I believe so. I mean, we don't need to be day-in, day-out, obviously, because that's not a "broadcast". So we'll -- that was my note earlier is that to the extent to which there's production shutdowns in the U.S., we've got some flexibility with some hit dramas to kind of layer in if we need to when there's demand. So I think that the keynote here, and this is also my comment earlier on the specialty channel content output supply and all of the new shows we already have in the can is we're going to be very, very judicious in terms of how we debut new content. They've got to be advertising demand there. And so the ability to be surgical in terms of driving supply, and then we can drive demand by being surgical with common segments, I think we'll start to see the merits of both of that as the fall quarter kind of plays out.

And I know you, in particular, have been interested in common segment. So I don't want to lose that now. Let me just make a couple of comments. I can't underscore enough how groundbreaking this is in the world for Canada to adopt common segment. There's no other -- there's no other country doing it quite frankly. This should be on the cover of ad week because it will enable our industry to do all that we can do to maximize our economics, provide better service for our advertisers and continue to transform how sell television. And that's fundamental. I don't know what that's worth in the long haul, but it is -- it's a great example of industry working in unison to do the best we can do for our industry. This is where Ottawa has got to come to the table. They cannot sit there and drag their feet and not make the changes they've got to make to let us be more competitive. Having us burdened with obligations that were formed 30 years ago, while we're leading blazing trails in this country with the industry and Ottawa was not doing anything is unacceptable.

And that's, I think, I want to just make that comment -- sorry, it's the soapbox comment, the latter one. But the former one I can tell you definitely is groundbreaking, it's history-making. And Canada, our industry should be very proud for what we've accomplished.

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Jeffrey Fan, Scotiabank Global Banking and Markets, Research Division - Director of Telecommunication Services & Canadian & U.S. Telecom and Cable Equity Research Analyst [38]

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And maybe just a quick follow-up on the timing of the implementation of those segments and when we start to see some of that benefit. When do you think that that will start to happen?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [39]

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The teams are working right now on bringing it to life. I would suspect, sort of in the next broadcast year, it'll start to come to life. I mean we're doing it -- we're obviously doing it now at Corus. But Quebecor is going to come in a little bit later. Rogers has been working with us for a while now. Bell is excited to work with us and Rogers and Energy Solutions. So -- but the specific timing, I'm not completely clear on.

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Operator [40]

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Your next question comes from the line of Maher Yaghi with Desjardins.

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Maher Yaghi, Desjardins Securities Inc., Research Division - VP, Telecom, Media & Tech Analyst and Intellectual Property Analyst [41]

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I wanted to just go back on the U.S. extensions. I understand period 4, which ends in July, 4th of July is the same. The criteria are the same. So you have not decided yet if you're eligible or not, as you mentioned, John, because you're close to that 30% threshold. But let's assume that you don't and period 5 and 6 come in and those eligibilities don't allow you to also access that extension. So you're looking at $30 million of cost -- additional cost per quarter. How -- what are the options in front of you right now to offset those increased costs, if you can, be eligible for a renewal of the CEWS?

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [42]

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So Maher, on the eligibility question, it's quite technical. So yes, we have seen an announcement that the eligibility criteria for the June period, period 4, is minus 30.

But what we don't know is 100% certainty because the legislation is not yet is whether the -- you qualified in May means you automatically qualified in June, rule still applies. That was certainly how the initial wave of the subsidy worked. So we're assuming that's the case. We don't know that with 100% certainty. And then, of course, going forward, we don't know what the cutoff is going to be for that bright line, whether it's something different than minus 30. We're hearing some signals that it is potentially lower, but we don't know that for certain.

And it's -- I guess, you call it an increased cost because we've reduced our costs from the benefit of that. But at this point, we certainly like to know because it's a very material item for us for the fourth quarter, but we just don't, 100% don't know.

Having said all that, we qualified at the consolidated level, which means everybody in the group in Canada qualifies all the employees. There are still scenarios where parts of the business qualify, but not the entire business. And that's where it gets much, much more complicated technically, and we get into some issues around what companies, our employees are paid by, what -- there's a massive spider web of legal entities and regulation rules. And some of those, we think, are getting resolved and some of them -- again, we don't know until we see the legislation. So there's still a possibility. Even if we don't qualify for July and August, that we would see some form of the subsidy coming at us because portions of the business, I think, radio could potentially continue to see pressure much more than whatever the threshold is.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [43]

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Well, I would just add, the industries in Canada, I mean, everybody is just sitting there and waiting for the federal government and the Ministry of Finance to reveal more details on the next reference period. The government is concerned as to why more employers aren't taking advantage of the wage subsidy, and yet, we're waiting for the details. So there's a little bit of let's get this show on the road kind of thing. We're told that -- and the Parliament is coming back on July 8 so -- and the Minister of Finance has said that it will be coming imminently. So let's hope that we get more details in the second week of July.

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Maher Yaghi, Desjardins Securities Inc., Research Division - VP, Telecom, Media & Tech Analyst and Intellectual Property Analyst [44]

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Okay. And is there a relationship between the timing of your stopping of the buyback and the beginning of the benefit that you're receiving from the CEWS, i.e., not expecting to do any buyback while you're getting that benefit?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [45]

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No. There's no -- they're totally unrelated, and we have no interest at this time in doing any buybacks. We're basically -- our priority is to continue to manage our cash in a very disciplined manner to sure we can continue to advance our priorities, as we noted on the call today, but there's no linkage between the wage subsidy and the cessation of the NCIB.

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Operator [46]

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(Operator Instructions) Your next question comes from the line of David McFadgen with Cormark Securities.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [47]

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Yes. So most of my questions were addressed. But you talked in the MDA about stock, offsetting the impact from TLN, and the shutdown of Cosmo and IFC. Can you tell us what the revenue impact was from TLN, Cosmo, and IFC in the quarter?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [48]

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Sure. Those were approximately -- well, you can tell there is approximately offset to the STACK. So you're asking me STACK revenue is, but that's fine. So those channel shutdowns that John spoke, $5 million in the quarter.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [49]

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Okay. All right.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [50]

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I think the note that I want to make on this one is -- and this is something I hope everybody picked up, but I'll say it again for the sake of repetition. Subscriber revenue is a growth opportunity, both STACK, and an existing base. I mean, you sell them together, and we're in a good spot. Canadians are not cutting their cable. They're not shaving right now. They're enjoying watching television. That's a trend that has been, I think, notable. So you'll see it in this line item in Q3. I think we'll see how the future quarters play out. But the bundle remains dominant, and we are also pursuing those Canadians 30%-ish that don't have the bundle.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [51]

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Okay. Does Amazon share churn with you? Just curious to know because I wouldn't think this would be a fairly high churn revenue line.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [52]

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We get a lot of data and we see what our audiences are watching and in detail that we don't typically see sort of otherwise. But in specifics of what they provide and don't provide, we don't want to get into that detail.

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David John McFadgen, Cormark Securities Inc., Research Division - Director of Institutional Equity Research [53]

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Okay. All right. And then just lastly, in the quarter, I think when you reported Q2, you talked about potential to save some revenue -- sorry, take some costs on the U.S. programming side. Did you -- were you able to do that in the quarter at all?

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [54]

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It was quite small, and we knew most of the shows were already ready to go. And there were a couple that were shortened the number of the episodes, but for the most part, we were pretty much on. The real benefit will be Q4. You can see in the programming lineups in the summer now, both for us and for CTV, that there's a lot of reality and probably stuff that was already made or maybe not made in North American. So that's where I think there could be some benefit.

Now having said that, it was already going to be a lower quarter because of the Olympics that Doug mentioned. So there's some examples like the daytime soaps and repeats, and therefore, we're going to save some money on that. But we're managing that very carefully, obviously. But the big hitter in that line is the Canadian just because of the shutdown, and we're just not getting the new show.

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Operator [55]

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Your last question comes from the line of Vince Valentini with TD Securities.

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Vince Valentini, TD Securities Equity Research - Analyst [56]

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Sorry for coming back in again. But just to clarify on your answer to Dave's question there. Subscription revenue should be a growth driver. I agree with that on a pro forma basis, but it seems like every year, you'll find another 1 or 2 channels that are not part of your real core offering, and you decide to shut them down and focus your energy on the sort of top 20. Do you think that pruning is done so that we may actually see the subscription revenues start to show a net growth? Or is it always going to be growth excluding channel shutdowns for the next couple of years?

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [57]

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I'm glad you asked me to clarify that because I probably -- give me -- give you some more context of that. I think subscription, that's probably the more traditional definition. I think that the distribution of our content and revenues we're going to get from it, whether that's in the traditional bundle or on STACKTV on or our Global TV app or on other evolving digital platforms, given the fact that we are increasingly able to secure the rights we need to put the content where it's got to go to follow the audience and drive inventory. To me, that gives me confidence that what you're beginning to see in terms of the distribution and widely defines is going to be a potential area for growth. Does that make it more clear?

And then in terms of calling the herd and shutting down smaller services and such, listen, Vince, we've been very focused on trying to have fewer, bigger, better services and fewer, bigger, better partners, and that's been something that we've done now for 5 years since we acquired Shaw Media. So I think there'll probably still be a couple of examples in the years ahead where we'll probably trim down a little bit more. But none of that's going to be sort of life-threatening from a revenue perspective. And as I say, I think there's lots of opportunities to pursue growing areas through the digital video platforms that will help us to kind of manage anything that we decide to voluntarily shut down.

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John Richard Gossling, Corus Entertainment Inc. - Executive VP & CFO [58]

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I think, Vince, I'd say on channel shutdowns or even rebrands, we've probably been leading the industry, and that maybe isn't -- doesn't feel so good sometimes to be a leader in that respect. But I think it's the right thing to do for our distributors and also for the viewers.

In terms of pro forma, we're not quite that sneakier or maybe clever. We've never defined pro forma as something to exclude channel shutdowns. It's only ever been things that we've disposed of, for the TLN Group or Movie Central.

But we don't try to pro forma that out. That's our challenge to make up that lost revenue, and that's where we're very focused on how we do that.

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Operator [59]

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This concludes our question-and-answer session. I will now turn the call back over to Doug Murphy for closing remarks.

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Douglas D. Murphy, Corus Entertainment Inc. - President, CEO & Director [60]

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Thank you, operator, and thanks, everybody, for your questions. I hope you enjoy a fantastic Canada Day week next week. I know here in Ontario it is going to be spectacular weather, so enjoy. Get outside. Watch TV in the mornings, but get outside in the daytime and enjoy it. And I want to thank all of our team at Corus across the country for all their fantastic work and commitment and have a great day, everybody. Bye-bye.

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Operator [61]

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Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.