Transcript Document

Financial Highlights
The Year in Review
“Safe Harbor” Disclosure
Certain statements included in this presentation constitute “forwardlooking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and
other factors which could cause actual results to differ materially
from future results expressed or implied by such forward looking
statements. Such factors include, among others, the following: the
impact of conditions in the entertainment, information and
communications industries; risks associated with the economic,
political and regulatory policies of local governments and laws and
policies of Canada; the potential impact of increased competition in
the Company’s markets; and other factors which are described in
the Company’s filings with the Securities and Exchange
Commission.
Our operating performance was great…
our share performance was not
Overview of the market
• 2002 was a tumultuous year
• economic impact of the events of Sept. 11th
• capital markets impacted by an erosion of
investor confidence – Enron, Worldcom
• Global ad recession – especially in Europe
• Sector uncertainty fuelled by Vivendi and
TW/AOL
Response to conditions
Aggressive three-point plan
• Reduce our debt by $100 - $150 million
• Accelerate our pace to achieve
consolidated EBITDA margins of 30%
• Focus on rationalizing our core assets
We delivered on the plan…
• Reduced debt from $800 million in Q1 to $630 million
at year-end
• Improved our industry leading operating margins in
television and radio
• Significantly reduced headcount and restructured our
operations for improved efficiency and effectiveness
• Disposed of non-core assets such as Klutz, The
Comedy Network and Viewer’s Choice while adding
strategic assets such as W and Locomotion
…in difficult market conditions for content
• Worst market conditions in 30 years
• Supply of product was at an all-time high
• Demand dropped with a reduction in the
number of buyers
• Revenue per episode dropped 30%
Nelvana write-down
• Despite record levels of new productions
• Despite a strengthened competitive position
• Despite improved EBITDA for our
production, distribution and merchandising
divisions
Market Focus
• Negative reaction to Nelvana
- Share price down by 30%
• Positive reaction to debt issue
- Notes continue to trade at a premium
Corus share price
performance vs. Cdn. peers
15%
10%
5%
0%
-5%
Corus
CHUM
Alliance
-10%
-15%
-20%
-25%
-30%
-35%
Aug. 31 2002 vs. 2001
Astral
Corus share price
performance vs. U.S. peers
0%
Corus
Disney
AOL Time
Warner
Viacom
Clear Channel
-10%
-20%
-30%
-40%
-50%
-60%
-70%
Aug. 31 2002 vs. 2001
Emmis
Operating performance review
Our television assets once again delivered excellent results
Revenue
$284 million
+24%
EBITDA
$90 million
+22%
Margin
31.6%
Television peer comparison
Television margins are superior to CHUM and Astral
CORUS
ASTRAL
CHUM
EBITDA
$90m
$89m
$27m
MARGIN
31.6%
27.9%
7.5%
Source: Annual Reports
Television peer comparison
Television also measures up on revenue and EBITDA growth
CORUS
ASTRAL
CHUM
REVENUE
+24%
+19%
+22%
EBITDA
+22%
+32%
-16%
Source: Annual Reports
Television achievements
• Relaunched WTN as W
– Audience numbers up 50%
• Relaunched Pay TV business
– Subscribers up 22%
• Launched 5 digital channels
• Acquired a 50% interest in Locomotion
• Increased our interest in Telelatino to 50.5%
Operating performance
The consolidation and relaunch of our Radio stations are
also delivering improved results
Revenue
$211 million
+10%
EBITDA
$53 million
+10%
Margin
25%
Radio peer comparison
Our radio margins are superior to both CHUM and
Astral but not as good as some of the U.S. companies
CORUS
ROGERS
ASTRAL
CHUM
EMMIS*
CLEAR
CHANNEL*
EBITDA
$53m
$34M
$8m
$11m
$114m
$1.6b
MARGIN
25%
21%
17%
10%
44%
41%
*U.S. dollars
Source: Annual Reports/Public Documents
Radio peer comparison
Radio also performed well on revenue and EBITDA growth
CORUS
ASTRAL
CHUM
EMMIS*
CLEAR
CHANNEL*
REVENUE
+10%
+2.7%
+3.0%
+7.1%
+42.4%
EBITDA
+10%
-3.2%
-28.0%
+6.6%
+29.6
Source: Annual Reports/Public Documents
Radio achievements
• Reduced annual operating costs
• Focus on cost control
• Consolidation of management
– Established MBO and strategic plan process for
performance based management
– System wide programming and market evaluation
– Rationalized assets
– Created Corus Sales University
Difficult year for Content…
• $350m write-down over the year
• Revenue per episode dropped 30%
• Collapse of the German market
• Consolidation of Canadian book retailers
…but some successes
• Positive outlook for merchandising
– Beyblade and Rescue Heroes
• Increase in episode production
• Lower cost of production
• Maintained strong U.S. presence
– 24 series on air in the States
• 30% increase in library sales
• Disposition of Klutz on favourable terms
Impressive three-year growth
$,’000’s
700
652
600
557
500
Revenue
EBITDA*
EBITDA
400
300
200
162
229
40
100
0
49
65
1999
2000
124
116
2001
2002
* Excluding film investment write-down of $40 million
CAGR
Revenue – 59%
EBITDA – 47%