Corus Entertainment Inc. Class B · TSX:CORS
Corus Entertainment Inc. Class B — Investor Day (September 2008)
91 slides from Corus Entertainment Inc. Class B's investor day presentation, Sep 25, 2008
Slide 1: Investor Day
Investor Day September 25, 2008
Slide 2: Safe Harbour Disclosure
Safe Harbour Disclosure To the extent any statements made in this presentation contain information that is not historical; these statements are forward-looking statements within the meaning of applicable securities laws. These forward-looking statements related to, among other things, our objectives
Slide 3: Investor Day: Television Division
Investor Day Television Division September 25, 2008
Slide 4: Corus Television
Corus Television The pieces are falling into place Digital New
Slide 5: Agenda
Agenda 1) Paul Robertson, President, Television 2) Susan Ross, EVP GM, Specialty and Pay Television 3) Doug Murphy, EVP GM, Corus Kids, President, Nelvana
Slide 6: Overview
Overview Major Focus on Growth Exciting New Pay TV Offering New Networks Strong Business Fundamentals New Structure at Corus Kids Offers Great Potential Cost Control
Slide 7: Introducing HBO Canada
Introducing… Launching October 30 All Movie Central subscribers now get HBO Canada Additional 200 hours of HBO programming Major Initiative to Grow Subscribers Expect to add 50K in F’09 Annual value of $5 million Enhances Value of Pay TV Offering HBO brand is highly valued by our cus
Slide 8: Movie Central
Movie Central Return of BIG shows: Entourage Sept. 7 Dexter Sept. 28 Californication Sept. 29 Powerful movie lineup: The Golden Compass Oct. 11 I am Legend Oct. 24 There Will Be Blood Oct. 25 Atonement Nov. 1 Sweeney Todd Nov. 8 Strong programming plus HBO Canada launch will driv
Slide 9: New Networks
New Networks Top 5 digital channel – Adults 18-49 Adds peak season kid inventory Top 3 digital channel – W18-34 Cosmo brand is a major draw for cosmetics and personal care New Re-launch November 3 Currently only $1 million in ad sales Available to over 5 million subs
Slide 10: Some Benchmarks
Some Benchmarks Subs (000) Ad Revenue $(M) 4,882 $20 4,739 $7 3,169 $9 7,180 $53 Source: CRTC Returns, 2006
Slide 11: Specialty Ad Revenue
Specialty Ad Revenue Outlook for fall is solid Completed upfront deals +20% versus year ago Q1 bookings tracking above year ago Specialty market still favoured Share of audience 50% Share of ad revenue 31% Women’s demo remains red hot Corus adult networks up double digits Food, Per
Slide 12: Corus Kids
Corus Kids New structure offers great potential Integrate content decisions Revenue and cost synergies International growth potential Getting traction with our ratings Leveraging Nick relationship Now winning the critical after-school period Excellent growth prospects Strong BDU in
Slide 13: Cost Control
Cost Control Major focus on managing costs Process system redesign Margins best in class TV Division Segment Profit Margin F’08 F’06 F’07 (9 months) 41.1% 41.8% 45.2%
Slide 14: Summary
Summary The pieces are falling into place New networks are a strong source of revenue growth HBO Canada and return of big series will drive pay TV growth Specialty ad revenue is solid New structure for Kids business is a great opportunity We will remain diligent on cost control
Slide 15: Pay and Specialty Growth Opportunities
Investor Day Pay and Specialty Growth Opportunities September 25, 2008
Slide 16: The Power of Women
The Power of Women
Slide 17: Corus Is Building a Strong Women's Portfolio
Corus Is Building a Strong Women’s Portfolio W18-34 W25-54 W35-54
Slide 18: Women Are an Important Market Segment
Women Are an Important Market Segment There are over 12.5M Women 20+ in Canada 14% growth 1996 to 2006 Additional 12% growth projected from 2006 to 2016 14,180 12,662 11,066 Population 000s 1996 2006 2016 W20+ Source: Statistics Canada; Table 051-0001 - Estimates of population, by age group and
Slide 19: Women Mean Business
Women Mean Business 6.8 million Canadian women work outside the home Wealth controlled by Canadian women will increase to approximately $2.2 trillion Cdn by 2010 Women control 80% of household purchases, including big ticket items Source: StatsCan, Labour Force Survey Friday, September 5, 2008
Slide 20: Television Tuning by Women Has Increased Faster Than Men
Television Tuning by Women Has Increased Faster Than Men 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 1,733 1,707 1,674 1,627 1,621 1,549 1,542 1,499 1,458 1,449 PVTs (000s) Women 18+ Men 18+ Source: BBM Nielsen Media Research – English Canada, Persons Viewing Television – M-Su 6a-6a – Broadcas
Slide 21: Tuned In
Tuned In Women spend 30.1 hours a week watching television Men spend 27.7 hours a week watching television Source: BBM Nielsen Media Research (MARK II 05/06 & 06/07, Blended 07/08) – English Canada, All Stations – Average Weekly Hours Tuned – M-Su 6a-6a – Broadcast Weeks 1-39
Slide 22: The Market for Women Viewers Is Competitive
The Market for Women Viewers Is Competitive 65 OLDER 60 55 50 LIFESTYLE DRAMA 80% 75% 70% 65% 60% 55% 55% 60% 65% 70% 75% 80% 40 35 30 25 20 15 YOUNGER
Slide 23: Corus Has a Strong Position With Women
Corus Has a Strong Position With Women Leading Canadian specialty channel among Women 25-54 For Women 18-34 featuring sex, style and relationship programming New addition to the Corus portfolio. Rebranding to target Boomer Women 35-54
Slide 24: Corus Has Proven It Knows How to Reach Women of All Ages
Corus Has Proven It Knows How to Reach 20 Women of All Ages 17 AMA (000) 12 12 11 11 11 11 10 10 Slice TSN HGTV Space Discovery W Network Tvtropolis Showcase Food BRAVO! Source: BBM Nielsen Media Research – National – 8/27/07-8/31/08 – M-Sun 6a-6a
Slide 25: Cosmopolitan TV
Corus Has Proven It Knows How to Reach Women of All Ages Cosmopolitan TV is now in almost 5 million homes
Slide 26: CLT Re-branding for Boomer Women
Corus Has Proven It Knows How to Reach Women of All Ages CLT is already in 5 million homes nationwide Re-branding to appeal to Boomer Women Celebrate personal discovery and new freedoms of Boomer Women Programming will include lifestyle series that focus on well-being, life planning, dramas
Slide 27: CLT Signature Dramas and Series
CLT Signature Dramas and Series
Slide 28: Corus Has a Strong Position With Women: Ad Revenue
Corus Has a Strong Position With Women and 60 50 40 Ad Revenue 30 $ Million(CDN) 20 10 0 2006 2007 2008 Growth Growth has has been been strong strong and and continues continues
Slide 29: The Power of Women
The Power of Women Spending Power Ad Sales Growth Potential Corus Has a Strong Portfolio Potential for Boomer Women
Slide 30: Growth Opportunities for Pay TV
Growth Opportunities for Pay TV
Slide 31: Premium TV Offers Growth Potential
Premium TV Offers Growth Potential Launch of HBO Canada Digital Growth HD Adoption New and Returning Series
Slide 32: Season Premieres Have Preceded Subscriber Growth
Season Premieres Have Preceded Subscriber Growth 950 900 Subscribers (000s) Writers Strike 850 • MC HD2 Launches • Dexter Premieres • Californication Premieres 800 • Final Season of Sopranos (6a) 750 Begins • Rome Debuts 700 • Sopranos wins Emmy Award 650 600 A ug No v Feb M ay A ug No v Feb M ay A
Slide 33: Upcoming Key Initiatives F'09
Upcoming Key Initiatives F’09 • Media Campaign • CSR Incentive Programs • BDU Marketing Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Q1 Q2 Q3 Q4
Slide 34: HBO Canada
HBO Canada Part of Movie Central multiplex HBO on-air branding Incremental program inventory from HBO SD and HD services
Slide 35: Upside Remains for Movie Central as Digital Rollout Continues
Upside Remains for Movie Central as Digital Rollout Continues Western Digital Growth Movie Central Subscribers Western Digital Subscribers (millions) 2 1.5 1 0.5 0 2007 2008
Slide 36: Digital Up-Sell Opportunity
Digital Up-Sell Opportunity Campaigns targeted to new digital subscribers Monthly direct mail Retail promotion Preview offers HBO Canada key selling feature
Slide 37: High Definition
High Definition HD penetration (HD subscribers/sets) forecast to grow to 38% by 2010 Movie Central has a compelling HD offering for consumers Movie Central HD HBO Canada HD Encore Avenue HD HD Source: CEMC TV Set Sales Projections
Slide 38: Summary
Summary New and returning series are strong HBO Canada will generate great awareness HD adoption and digital rollout represent growth opportunities
Slide 39: Investor Day: Corus Kids
Investor Day Corus Kids September 25, 2008
Slide 40: Leveraging Our Talent
Leveraging Our Talent Recent reorganization brings all kids businesses together Networks Nelvana Studio Enterprises Early days but there’s enormous potential New roles and responsibilities Cross-pollination opportunities Cost efficiencies and revenue synergies Harness our strategic
Slide 41: Agenda
Agenda Ratings Update Vision for the Kids Business Opportunities for Growth
Slide 42: Corus Networks Ratings Update
Corus Networks Ratings Update Disney’s live-action programming has brought new competitive pressures to broadcasters around the world. In Canada, our Corus K6-11 networks have experienced similar ratings pressure. Total AMAs K6-11 65 60 55 50 45 AMAs (000) 40 35 30 25 20 15 10 Fall 05 Winter 06 Spri
Slide 43: A Strategic Response
A Strategic Response Leverage our Nickelodeon relationship Content deal arms us with compelling programming Insights from Nick’s competitive response in the U.S. “Double Pump” the big guns on the afternoon schedule SpongeBob SquarePants The Fairly OddParents Blitz with great new shows
Slide 44: Corus Networks Regain #1 Status After School
Corus Networks Regain #1 Status After School Corus Networks have re-taken the valuable after-school commercial time slot… Total AMAs K6-11, M-F 4-6PM 140 130 120 110 100 AMAs (000) 90 80 70 60 50 40 30 20 10 0 Fall 05 Winter 06 Spring 06 Sum m er Fall 06 Winter 07 Spring 07 Sum m er Fall 07 Winter 0
Slide 45: Corus Networks Maintain Lead Position with Boys
Corus Networks Maintain Lead Position with Boys …and we remain firmly in control of the Boys 6-11 demo overall. Total AMAs B6-11 45 35 AMAs (000) 25 15 5 Fall 05 Winter 06 Spring 06 Sum m er Fall 06 Winter 07 Spring 07 Sum m er Fall 07 Winter 08 Spring 08 Sum m er 06 07 08 Source: Nielsen Media Rese
Slide 46: Ratings Trend Sets Stage for Revenue Growth
Ratings Trend Sets Stage for Revenue Growth Corus is accountable to providing ratings and delivering audiences to our kids advertisers Success in daytime ratings provides us the opportunity to target adult demos at night, either directly or using our co-viewing strategies Meeting our advertisi
Slide 47: Treehouse: Where It All Begins
Treehouse – Where It All Begins… Treehouse is the first choice for moms and preschoolers Available in 7.9 million homes Highest K2-5 average weekly reach 600,000 moms watch Treehouse every week Ratings Share
Slide 48: Continues on Our Other Networks
…and Continues on Our Other Networks… KIDS 2-5 Ratings Share
Slide 49: Carrying Over to K6-11 Demo
… Carrying Over to K6-11 Demo Ratings Share
Slide 50: Our Network Vision: Grow With Our Audience
Our Network Vision – Grow With Our Audience Treehouse and Corus dominate the preschool market Opportunity to bridge Treehouse audiences to YTV Schedule a K4-7 beachhead on YTV during daytime Build on K6-11 performance 4-7 p.m. Grow co-viewing 7-9 p.m. with parents and kids Establish a “Y
Slide 51: Thinking Beyond Our Networks For Growth
Thinking Beyond Our Networks For Growth Our networks underpin a much larger kids growth strategy beyond advertising
Slide 52: Growth Opportunities: Digital Content
Growth Opportunities – Digital Content BDUs keen to offer more products and services to their customers Corus is unique in that we control digital rights (Nelvana and Nick) Evolving business models will add new revenue
Slide 53: Growth Opportunities: The Corus Advantage
Growth Opportunities – The Corus Advantage Corus is the only Canadian broadcaster that can self-fund new content production Build library and option value Converting COL spending into equity Co-produce with key content producers worldwide (U.S., Japan, France, U.K., Australia) Entertainmen
Slide 54: Growth Opportunities: qubo
Growth Opportunities - qubo Corus owns 12.25% of qubo in partnership with ION Networks, Entertainment Rights, Scholastic and NBC Universal qubo occupies a unique position in the U.S. kids TV landscape with a winning blend of educational and entertaining programming Entering an important distri
Slide 55: Growth Opportunities: KidsCo
Growth Opportunities - KidsCo Corus owns 1/3 of KidsCo in partnership with Cookie Jar and NBC Universal KidsCo is targeted to preschoolers, K6-11 and their families Provides a “safe and responsible environment for kids” Nelvana’s programming represents more than 40% of the schedule KidsCo
Slide 56: Growth Opportunities: Bakugan
Growth Opportunities - Bakugan Rating well on Cartoon Network and TELETOON Toys flying off the shelf Launching internationally on Cartoon Network Greenlit second season entitled Bakugan: New Vestroia to drive the business into a global hit
Slide 57: Growth Opportunities: The Backyardigans
Growth Opportunities – The Backyardigans The Backyardigans airs in over 40 countries worldwide Ranked #2 on Treehouse and #3 on Nick Jr. Award-winning series Winner of the 2005 Parents Choice Foundation Gold Award for Television in Age 2-5 category 2007 Gemini Award-winner for Best Prescho
Slide 58: Growth Opportunities: Brand Extensions
Growth Opportunities – Brand Extensions Opportunity to extend our channel brands into Live Entertainment Revenue generator Builds awareness Deepens relationship with our audiences Segmented approach Mall tours Character appearances Medium/large format (theatres) Synergies with adve
Slide 59: Summary
Summary Recent reorganization within our kids business sets the stage for an exciting future Corus networks dominate the kids demo in Canada The Corus Advantage is formidable and evolving Our Vision for the kids business is growth: Advertising revenues New revenues from digital Interna
Slide 60: The Regulatory Process: A Full and Complex Agenda
Investor Day The Regulatory Process: A Full and Complex Agenda September 25, 2008
Slide 61: Outline of Remarks
Outline of Remarks The Regulatory Calendar Changes in the Corus Regulatory Matrix The BDU and Discretionary Services Policy Process
Slide 62: The CRTC Calendar
The CRTC Calendar Timing Event October 2008 BDU policy released November 17, 2008 Accessibility public hearings February 2009 New Media public hearings April 2009 Licence renewals for OTA services May 2009 Corus Quebec radio licence renewal hearings September 2009 CBC licence renewal hearings Winter
Slide 63: Corus Licence Changes: More Flexibility
Corus Licence Changes – More Flexibility Television – Changes to COLs for CMT, Movie Central and Encore Avenue Allow for more variety of program types Allow for more flexibility in scheduling Allow for more viewer-oriented services Television – Approvals of transfers and new licences CLT
Slide 64: The Key BDU Policy Issues
The Key BDU Policy Issues 1. The size of the basic BDU package 2. Service access rules 3. Genre protection – domestic and foreign 4. Fee for carriage 5. Ad policy
Slide 65: Corus: Staying Ahead of Policy Changes
Corus - Staying Ahead of Policy Changes The CRTC calendar is complex and we can expect changes in the licensing regime The BDU policy will change the landscape but the Corus brands, strong relationships with BDUs, existing carriage agreements and our customer orientation mitigate any potential i
Slide 66: Investor Day: Technology Overview
Investor Day Technology Overview September 25, 2008
Slide 67: Executive Summary
Executive Summary Corus has created the position of Chief Technology Officer to coordinate and lead the company’s technology agenda Appropriate and effective infrastructure to ensure operational excellence in a fully digital environment New media, new platforms and new business models that can
Slide 68: Why Is Technology Important to Corus?
Why Is Technology Important to Corus? While advertising remains strong, our core broadcast business model is changing in response to distribution innovation On-demand viewing via cable or computer; digital distribution on a rental and sell-through basis Increasing penetration of broadband has
Slide 69: Why Is Technology Important to Corus?
Why Is Technology Important to Corus? The value chain is changing and our approach to content ownership and control is critical to our future success Can we profit from our assets? Can we find them? Do we understand if we have the necessary rights to exploit them? How do we transition our stro
Slide 70: What Are the Key Activities of the CTO?
What Are the Key Activities of the CTO? Innovation Lead product, business model and market innovation from a technology perspective Support an innovation agenda across all business units Advocacy Socialize and support new technologies including training, budget support and business model i
Slide 71: A Corus Technology Focus in 2009
A Corus Technology Focus in 2009 Interactive Continue to provide entertainment and information as a support to our broadcast brands Seek new ways to aggregate targeted audiences to offer enhanced value to our partners Rethink the role of the broadcaster; leverage our existing assets and audi
Slide 72: A Corus Technology Focus in 2009
A Corus Technology Focus in 2009 Information Technology Apply technology and digital workflows on a wider basis across the divisions Collaborate through shared infrastructure – storage, network, software and management tools Ensure best workplace technologies are available to Corus and its p
Slide 73: Corus Waterfront 2010
Corus Waterfront 2010
Slide 74: Corus Waterfront 2010
Corus Waterfront 2010 Located at the foot of Lower Jarvis Street in downtown Toronto Eight storeys, 400,000 sq. ft. with 80,000 sq. ft. for expansion Occupancy May 2010 Corus is the sole occupant Corporate offices Toronto radio (Q107, the Edge, AM640) 30+ specialty signals (YTV, Treeho
Slide 75: Corus Waterfront 2010
Corus Waterfront 2010 “< fe sau —_— 3 eS IT - |. 7 " Ta | avi am a | j a il Oia = iil a — mm
Slide 76: Corus Waterfront Design Philosophy
Corus Waterfront Design Philosophy A state-of-the-art technical infrastructure designed to support innovation and expansion for the next decade and beyond Unified technical spaces, networking, electrical and mechanical Reliable power distribution with 24-7 backup and protection, redundancy whe
Slide 77: Corus Waterfront
Corus Waterfront A signature space for Corus Entertainment An anchor tenant in Toronto’s waterfront development plans Adjacent to George Brown College and part of a rapidly revitalizing neighbourhood An opportunity to expose Corus to the community with street-level radio studios, an open per
Slide 78: Capital Spending
Capital Spending Three year estimated capital spend for Corus, including Waterfront Capital represents the ongoing divisional spends and allows for normal equipment lifecycle replacement and upgrade Waterfront is the incremental spend on the fit-out, mechanical, electrical and other furnishing
Slide 79: Summary and Conclusion
Summary and Conclusion The Chief Technology Officer will contribute to Corus’ growth agenda in key, measurable ways: 1. Create a future-oriented technology infrastructure that meets and exceeds both internal and external needs 2. Create a multi-year application and technology strategy that aligns
Slide 80: Investor Day: Radio Panel
Investor Day Radio Panel September 25, 2008
Slide 81: Investor Day: Financial Overview
Investor Day Financial Overview September 25, 2008
Slide 82: Financial Priorities Recap - 2008
Financial Priorities Recap - 2008 Improve Operating Margins and Earnings Increase Dividend Improved Repurchase Shares Total Shareholder Return Increase Share Price
Slide 83: Financial Priorities - 2008 Progress Report
Financial Priorities - 2008 Progress Report Dividend increased from $0.50 to $0.60 per share Up 20% Dividend Yield increased from 2.2% to 3.0% 4 million shares acquired through NCIB Share Price: August 31, 2007 $24.41 August 31, 2008 $19.53 Down 20% Free Cash Flow of approximately $104 m
Slide 84: Net Debt
Net Debt Sept. 1, 1999 – Aug. 31, 2008 800 700 $ Million (Cdn) 600 500 400 300 200 100 0 99 00 01 02 03 04 05 06 07 08 19 20 20 20 20 20 20 20 20 20 Fiscal Year
Slide 85: Net Debt to EBITDA
Net Debt to EBITDA Corus has a strong Balance Sheet Sept. 1, 1999 – Aug. 31, 2008 7.0 Net Debt to EBITDA x 6.0 5.0 4.0 3.0 2.0 1.0 0.0 99 00 01 02 03 04 05 06 07 08 19 20 20 20 20 20 20 20 20 20 Fiscal Year
Slide 86: Industry Valuation Multiples
Industry Valuation Multiples Company EV/EBITDA EV/EBITDA 2007 2008E Corus 10.8 8.3 Canadian Peers (CDN $) Astral 10.7 8.8 CanWest 11.1 9.1 Torstar 7.8 5.7 U.S. Comparables (US $) EMMIS 9.7 8.8 Entercom 9.5 6.6 Time Warner 5.7 4.6 Disney 7.8 7.1
Slide 87: Stock Performance
Stock Performance Company Sept. 1, 2002 Aug. 31, 2008 CAGR Sept. ’02 to Aug. ’08 Corus 9.75 19.53 12.3% Canadian Peers (CDN $) Astral 20.21 33.24 8.6% CanWest 6.23 3.03 -11.3% Torstar 24.50 15.3 -7.5% U.S. Comparables (US $) EMMIS 14.74 2.19 -27.2% Entercom 40.97 6.11 -27.2% Time Warner 12.09 16.37
Slide 88: Market Valuation of Corus
Market Valuation of Corus Current Value Based on Street Consensus for 2009: Target Share Price Range Consensus $20 - $25 $23 EBITDA Range ($M) Consensus ($M) TV $203 - $235 $212 Radio $75 - $84 $81 Nelvana Enterprises $5 - $8 $6 Consolidated $265 - $297 $274 ($CDN)
Slide 89: Real Estate
Real Estate Toronto Waterfront Consolidation Spring 2010 Capital Investment
Slide 90: Financial Priorities - 2009
Financial Priorities - 2009 Continue to Repurchase Shares and Renew NCIB Maintain a Strong Balance Sheet Maintain a Dividend Yield in Excess of 2.5%
Slide 91: Financial Guidance - 2009
Financial Guidance - 2009 Consolidated EBITDA $270 to $280 million Free Cash Flow $70 to $90 million