Mr. Troy Reeb reports

CORUS ENTERTAINMENT ANNOUNCES FISCAL 2024 FOURTH QUARTER RESULTS

Corus Entertainment Inc. has released its fourth quarter and annual financial results.

"We have made significant progress on our plan to create a more sustainable future following challenging industry-wide conditions and increased competitive intensity this past year," said Troy Reeb, co-CEO (chief executive officer). "Notably, we've generated considerable interest for the upcoming launch of our two all-new lifestyle brands, Flavour Network and Home Network, and the expansion of programming on Slice has yielded impressive results. Coupled with the strength of our fall schedule, these initiatives give us confidence we are on the right path."

"Our commitment to right-sizing our business is evident in our fourth quarter and year-end results," said John Gossling, co-CEO and chief financial officer. "We delivered increased free cash flow for the year, benefiting from our meaningful cost-reduction efforts and deliberate focus on assets with the highest potential to generate returns. We also announced today that we have entered into an amended and restated credit facility, which is an important step in our more comprehensive plan to address our balance sheet and facilitates the execution of our business strategy."

Highlights:

• Consolidated revenue decreased 21 per cent for the quarter and 16 per cent for the year;
• Consolidated segment profit (1) decreased 9 per cent for the quarter and 15 per cent for the year;
• Consolidated segment profit margin (1) of 16 per cent for the quarter and 22 per cent for the year;
• Net loss attributable to shareholders of $25.7-million (13 cents per share basic) for the quarter and $772.6-million ($3.87 per share basic) for the year, including non-cash impairment charges of $960.0-million for the year ($742.0-million after tax);
• Pro forma net debt to segment profit (1) of 3.84 times at Aug. 31, 2024, excluding contributions to segment profit from a prior-year business divestiture, was up from the pro forma net debt to segment profit as at Aug. 31, 2023, of 3.62 times;
• Free cash flow (1) of $39.1-million for the quarter and $114.2-million for the year.

Operational highlights

Corus has launched its fall schedule for Global TV and Corus's specialty networks on traditional and streaming platforms. In addition, Corus announced the upcoming launch of new lifestyle channels Flavour Network and Home Network, added new content for specialty channel Slice, continued to implement cost-saving initiatives, and made bank debt repayments. The company continues to navigate an uncertain macroeconomic and competitive environment.

Corus introduces Flavour Network and Home Network. On Sept. 18, 2024, Corus announced its two all-new, Canadian-owned lifestyle brands will launch in Canada on Dec. 30, 2024. Launching with more than 460 premiere hours in winter/spring of 2025, the Corus-owned networks will feature a mix of Canadian original programming, as well as international acquisitions through new and expanded licence deals. The broad slate of exclusive content delivers new voices and formats, familiar faces from proven hits, and global representation to deliver a hand-picked, content-first strategy and curated brand experience.

Corus adds 173 hours of premium new content to Slice's fall schedule. While continuing to be home to premium reality content featuring real-life experiences and iconic talent, Slice expands deals with trusted studio partners to feature new unscripted genres, including true crime and daily news.

Financial highlights

Free cash flow (1) of $39.1-million in the fourth quarter (Q4) and $114.2-million for the year compared with $31.7-million and $106.8-million, respectively, in the same comparable prior-year periods. The increase in free cash flow (1) for the fourth quarter and the year is mainly attributable to higher cash provided by operating activities, offset by higher cash used in investing activities.

Net debt to segment profit (1) was 3.84 times as at Aug. 31, 2024. Pro forma net debt to segment profit (2) was 3.84 times at Aug. 31, 2024, up from 3.62 times at Aug. 31, 2023. This ratio increased as a result of the decline in segment profit (1) for the most recent four quarters exceeding the effect of the reduced net debt.

Corus paid down $2.7-million of debt during the fourth quarter of fiscal 2024 and $38.8-million for the year.

As of Aug. 31, 2024, the company had $82.4-million of cash and cash equivalents, and $30.0-million available to be drawn under its revolving facility.

(1) Free cash flow, segment profit (loss), net debt to segment profit and pro forma net debt to segment profit do not have standardized meanings prescribed by IFRS (international financial reporting standards). The company reports on these because they are key measures used to evaluate performance. For definitions and explanations, see the discussion under the key performance indicators and non-GAAP (generally accepted accounting principles) financial measures section of the fourth quarter 2024 report to shareholders, and/or the management's discussion and analysis in the company's annual report for the year ended Aug. 31, 2023 (2023 MD&A).

(2) Pro forma net debt to segment profit ratio excludes contributions to segment profit from Toon Boom Animation Inc., which was sold in August, 2023, for the most recent four quarters.

The unaudited interim condensed consolidated financial statements and accompanying notes for the three months and year ended Aug. 31, 2024, and the management's discussion and analysis are available on the company's website in the investor relations section and under the company's SEDAR+ profile.

A conference call with Corus senior management is scheduled for Oct. 25, 2024, at 8 a.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. To instantly join the conference call by phone, please register on-line to be connected to the conference call automatically. You can also dial direct to be entered into the call by an operator. The dial-in number for the conference call for local and international callers is 1-416-945-7677, and for North America is 1-888-699-1199. This call will be archived and available for replay in the investor relations section of the Corus website beginning Oct. 25, 2024, at 11 a.m. ET, or accessible by telephone until Nov. 1, 2024, at 1-888-660-6345 (toll-free in North America) or 1-289-819-1450 (local or international), using replay code 23680 followed by the pound key. More information can be found on the Corus Entertainment website in the investor relations section.

Risks and uncertainties

Significant risks and uncertainties affecting the company and its business are discussed under the heading risks and uncertainties and seasonal fluctuations in the 2023 MD&A, as filed on SEDAR+ on Oct. 30, 2023.

As discussed further in the 2023 MD&A, the company's operating performance is affected by general Canadian and worldwide economic conditions. Changes or volatility in domestic or international economic conditions, economic uncertainty, or geopolitical conflict and tensions, including current continuing factors that can create or exacerbate recessionary conditions, may affect discretionary consumer and business spending, including on advertising and marketing, resulting in changes to demand for Corus's product and services offerings. The continued elevated consumer price index inflation also affects the company's business, operations and financial performance through disruption to supply chains, increased costs of programming, services and labour, reduced advertising demand or spending, or lower demand for the company's products and services, all of which may lead to decreased revenue or profitability.

As previously identified, additional key factors that have and may continue to adversely impact the company's ability to compete successfully and its financial results include, but are not limited to: industry-wide, continuing reduced advertising demand or spending on linear television; macroeconomic supply chain disruptions, which in turn impact advertising; ability to secure programming rights; changes to acquired programming costs and arrangements, which continue to increase; and continued inaction or slower action by Corus's federal broadcast regulator to revisit Canadian program spending requirements, which represent a significant portion of the company's cost base. A more extensive discussion of risks and uncertainties that may affect the company's business, operations and financial performance can be found in the 2023 annual MD&A.

Programming and trademark output arrangements for HGTV, Food Network, Cooking Channel, Magnolia Network and OWN will not be renewed upon their expiry on Dec. 31, 2024. The company is currently undertaking a review of these channels and while some lifestyle channels will be retired, HGTV and Food Network will be rebranded as Home Network and Flavour Network based on the strength of top-rated Canadian programs and foreign content supply. This is expected to impact revenue on the company's services in calendar 2025, which may lead to decreased profitability.

In addition, the company has entered into the credit facility and issued the senior unsecured notes, all of which contain certain financial covenants including with respect to the maintenance of certain leverage ratios. Management has taken and continues to take significant cost reduction actions and make appropriate investments in areas or assets that support sustainable profitability. Management also intends to actively pursue options for such amendments or relief, concurrent with such cost-reduction actions and its regulatory advocacy. However, should the financial performance, specifically the impacts to profitability, continue to decline without successful mitigation and should there be no further changes or amendments to the foregoing financing arrangements, there is material risk that the company will not meet its covenants under: (i) the terms of the credit facility, which sets a maximum total debt to cash flow ratio of 5.75 through to and including Dec. 31, 2024, 7.25 from Jan. 1, 2025, through and including March 31, 2025, and 4.25 thereafter, or; (ii) the senior unsecured notes.

The company's ability to mitigate the concerns above is dependent on its ability to continue to access financing or obtain relief from or amendments to terms with lenders or noteholders with respect to relevant financial covenants or repayment terms under such facilities. While the company has been successful in obtaining requisite relief and amendments in the past, there can be no assurance it will be able to do so in the future. Other financial risks which may be related to or elevated by the foregoing include the volatility of the market price for the company's Class B non-voting shares, which can be impacted by factors beyond the company's control and that can decline even if the company's operating results, underlying asset values or prospects have not changed. Please see the 2023 MD&A for a full discussion of these and other risks and uncertainties.

Outlook

The company continues to expect oversupply of premium digital video inventory from foreign competitors and generally lower demand for linear advertising. As such, the company expects year-over-year declines in television advertising revenue in the first quarter of fiscal 2025 to be similar to the fourth quarter of fiscal 2024. Amortization of TV program rights in the first quarter is expected to increase by a mid-single-digit percentage year over year. The company will continue with its implementation of additional cost-reduction initiatives and expects general and administrative expenses to decline in the range of 5 per cent to 10 per cent for the first quarter compared with the prior year. While the company continues to expect improvement in the macroeconomic environment in the medium term, visibility remains limited at this time.

About Corus Entertainment Inc.

Corus is a leading media and content company that develops and delivers high-quality brands and content across platforms for audiences around the world. Engaging audiences since 1999, the company's portfolio of multimedia offerings encompass 32 specialty television services, 37 radio stations, 15 conventional television stations, digital and streaming platforms, and social digital agency and media services. Corus's roster of premium brands includes Global Television, W Network, Flavour Network and Home Network (launching soon), The History Channel, Showcase, Adult Swim, National Geographic, and Global News, along with streaming platforms StackTV, Teletoon+, the Global TV app and Curiouscast. Corus is also the domestic advertising representative and an original content partner for Pluto TV, a Paramount company, which is the leading free ad-supported streaming television (FAST) service. Corus is an internationally renowned content creator, producer and distributor through Corus Studios and Nelvana.

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