Corus Entertainment announces third quarter results

Corus Entertainment announces third quarter results

- Earnings per share of $0.45 for the third quarter, up 29% from prior year - Combined Radio and Television revenues up 4% for the third quarter - Segment profit of $71.8 million, up 11% for the third quarter

TORONTO, July 9 /PRNewswire-FirstCall/ -- Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) announced its third quarter financial results today, led by continued revenue growth from its broadcasting businesses.

"This was another strong quarter for Corus Entertainment meeting our expectations," said John Cassaday, President and CEO of Corus Entertainment Inc. "Once again, we delivered excellent results from our Television division; solid revenue performance from all of our divisions; and continued excellent overall cost control. We remain very optimistic about our outlook, particularly given the growth opportunities in the expanding women's segment of specialty television and continued strong economic performance in western Canada, supporting our radio and premium television businesses."

   Third Quarter Results   ---------------------  

Consolidated revenues for the three months ended May 31, 2008 were $207.8 million, up 5% from $197.6 million last year. Consolidated segment profit was $71.8 million, up 11% from $64.8 million last year. Net income for the quarter was $37.7 million ($0.45 basic and diluted), compared to net income of $29.6 million ($0.35 basic and $0.34 diluted) last year. The current quarter benefited from $10.0 million in recoveries related to income tax changes, and was negatively impacted by an accrual of $9.7 million related to disputed regulatory fees.

Corus Television contributed quarterly revenues of $114.6 million, up 5% from $109.2 million last year, led by specialty advertising growth of 2% and subscriber revenue growth of 2%. Quarterly segment profit increased to $49.6 million, up 8% from $46.1 million last year.

Corus Radio revenues were $77.0 million, up 3% from $74.8 million last year. Segment profit was $24.7 million compared to $25.1 million last year.

Corus Content revenues were $16.3 million, up 12% from $14.6 million last year. Segment profit was $3.7 million, compared to $0.1 million last year.

   Year-to-Date Results   --------------------  

Consolidated revenues for the nine months ended May 31, 2008 were $601.4 million, up 3% from $581.5 million last year. Consolidated segment profit was $204.9 million, up 5% from $194.5 million last year. Net income for the nine-month period was $112.4 million ($1.35 basic and $1.32 diluted), up 31% compared to net income of $85.8 million ($1.02 basic and $0.99 diluted) last year. The current period benefited from $23.2 million in recoveries related to income tax changes, and was negatively impacted by an accrual of $9.7 million related to disputed regulatory fees.

Corus Television contributed revenues of $345.3 million, up 4% from $332.1 million last year, led by specialty advertising growth of 3% and subscriber revenue growth of 2%. Segment profit increased to $156.1 million, up 5% from $148.4 million last year.

Corus Radio revenues were $218.0 million, up 4% from $209.2 million last year. Segment profit was $60.4 million, up 1% from $60.1 million last year.

Corus Content revenues were $39.1 million, down 10% from $43.7 million last year. Segment profit was $4.6 million, compared to $3.2 million last year.

In the first nine months of fiscal 2008, the Company purchased for cancellation 2,601,800 Class B Non-Voting Shares at an average price of $22.51 per share. In June 2008, a further 524,400 Class B Non-Voting Shares were purchased and cancelled at an average price of $19.59 per share.

   Corus Entertainment Inc. reports in Canadian dollars.    About Corus Entertainment Inc.   ------------------------------  

Corus Entertainment Inc. is a Canadian-based media and entertainment company. Corus is a market leader in specialty television and radio with additional assets in pay television, advertising and digital audio services, television broadcasting, children's book publishing and children's animation. The company's multimedia entertainment brands include YTV, Treehouse, W Network, Movie Central, Nelvana, Kids Can Press and radio stations including CKNW, CKOI and Q107. Corus creates engaging branded entertainment experiences for its audiences across multiple platforms. A publicly traded company, Corus is listed on the Toronto (CJR.B) and New York (CJR) exchanges. Experience Corus on the web at www.corusent.com.

The unaudited consolidated financial statements and accompanying notes for the quarter ended May 31, 2008 and Management's Discussion and Analysis are available on the Company's website at http://www.corusent.com/corporate/investor_information/press_releases.asp.

A conference call with Corus senior management is scheduled for July 9, 2008 at 8:30 a.m. ET/7:30 a.m. CT/6:30 a.m. MT/5:30 a.m. PT. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call is (866) 321-6651 (North America) or (416) 642-5212 (International). The confirmation code for this call is: 4627540. PowerPoint slides for the call will be posted at 8:15 a.m. ET on July 9, 2008 and can be found on the Corus Entertainment website at: http://www.corusent.com/corporate/investor_information/index.asp.

This statement contains forward-looking information and should be read subject to the following cautionary language:

To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"). These forward-looking statements related to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, program, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of the words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although Corus believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including without limitation factors and assumptions regarding advertising, program, merchandise and subscription revenues, operating costs and tariffs, taxes and fees and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying such forward-looking statements may be found in our Annual Information Form. Corus cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, events or circumstances that arises after the date thereof or otherwise.

                         CORUS ENTERTAINMENT INC.                        CONSOLIDATED BALANCE SHEETS                                                        As at        As at   (unaudited)                                         May 31,    August 31,   (in thousands of Canadian dollars)                   2008        2007   -------------------------------------------------------------------------   ASSETS   Current   Cash and cash equivalents                           28,518        33,347   Accounts receivable                                172,098       151,380   Income taxes recoverable                               780             -   Prepaid expenses and other                           9,213        10,921   Program and film rights                            125,027       125,068   Future tax asset                                    12,475        13,518   -------------------------------------------------------------------------   Total current assets                               348,111       334,234   -------------------------------------------------------------------------    Tax credits receivable                              28,597        16,875   Investments and other assets                        19,920        17,492   Property, plant and equipment, net                  71,912        78,342   Program and film rights                            102,551        90,687   Film investments                                    70,463        66,593   Deferred charges                                         -         4,100   Broadcast licenses                                 533,876       532,812   Goodwill                                           795,817       795,832   -------------------------------------------------------------------------                                                    1,971,247     1,936,967   -------------------------------------------------------------------------   -------------------------------------------------------------------------    LIABILITIES AND SHAREHOLDERS' EQUITY   Current   Accounts payable and accrued liabilities           166,718       166,083   Income taxes payable                                     -         1,474   -------------------------------------------------------------------------   Total current liabilities                          166,718       167,557   -------------------------------------------------------------------------    Long-term debt                                     627,751       610,697   Other long-term liabilities                         62,745        64,773   Future tax liability                                91,889       102,851   -------------------------------------------------------------------------   Total liabilities                                  949,103       945,878   -------------------------------------------------------------------------    Non-controlling interest                            19,112        15,196    SHAREHOLDERS' EQUITY   Share capital                                      865,686       882,244   Contributed surplus                                 15,741        10,250   Retained earnings                                  140,159        95,568   Accumulated other comprehensive loss               (18,554)      (12,169)   -------------------------------------------------------------------------   Total shareholders' equity                       1,003,032       975,893   -------------------------------------------------------------------------                                                    1,971,247     1,936,967   -------------------------------------------------------------------------   -------------------------------------------------------------------------                            CORUS ENTERTAINMENT INC.                     CONSOLIDATED STATEMENTS OF INCOME    (unaudited)                      Three months ended    Nine months ended   (in thousands of                      May 31,               May 31,    Canadian dollars except        -----------------------------------------    per share amounts)                2008       2007       2008       2007   -------------------------------------------------------------------------   Revenues                        207,819    197,612    601,382    581,539   Direct cost of sales, general    and administrative expenses    136,047    132,801    396,487    386,999   Depreciation                      4,974      5,286     16,253     15,788   Amortization                          -        300          -      1,255   Interest expense                 10,345      9,114     31,407     27,021   Disputed regulatory fees          9,734      1,311      9,734      3,803   Other expense, net                   63        674      3,988      7,237   -------------------------------------------------------------------------   Income before income taxes and    non-controlling interest        46,656     48,126    143,513    139,436   Income tax expense                7,533     17,184     27,124     49,590   Non-controlling interest          1,449      1,355      3,960      4,047   -------------------------------------------------------------------------   Net income for the period        37,674     29,587    112,429     85,799   -------------------------------------------------------------------------   -------------------------------------------------------------------------    Earnings per share     Basic                           $0.45      $0.35      $1.35      $1.02     Diluted                         $0.45      $0.34      $1.32      $0.99   -------------------------------------------------------------------------   -------------------------------------------------------------------------                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                     Three months ended    Nine months ended   (unaudited)                           May 31,               May 31,   (in thousands of                -----------------------------------------    Canadian dollars)                 2008       2007       2008       2007   -------------------------------------------------------------------------   Net income for the period        37,674     29,587    112,429     85,799   Other comprehensive loss,    net of tax     Unrealized foreign currency      translation adjustment           213     (1,437)    (1,054)      (428)     Unrealized change in fair      value of available-for-sale      investments                   (1,121)         -       (938)         -     Unrealized change in fair      value of cash flow hedges        390          -    (11,400)         -   -------------------------------------------------------------------------                                      (518)    (1,437)   (13,392)      (428)   -------------------------------------------------------------------------   Comprehensive income    for the period                  37,156     28,150     99,037     85,371   -------------------------------------------------------------------------   -------------------------------------------------------------------------                            CORUS ENTERTAINMENT INC.         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY                                     Three months ended    Nine months ended   (unaudited)                           May 31,               May 31,   (in thousands of                -----------------------------------------    Canadian dollars)                 2008       2007       2008       2007   -------------------------------------------------------------------------   Share capital   Balance, beginning of period    874,911    887,821    882,244    870,563   Issuance of shares under    Stock Option Plan                  945      8,047     10,783     26,392   Shares repurchased              (10,170)    (9,729)   (27,571)   (11,050)   Repayment of executive    stock purchase loans                 -          -        230        234   -------------------------------------------------------------------------   Balance, end of period          865,686    886,139    865,686    886,139   -------------------------------------------------------------------------   -------------------------------------------------------------------------    Contributed surplus   Balance, beginning of period     13,515      8,450     10,250      6,878   Stock-based compensation          2,237      1,026      6,156      3,106   Exercise of stock options           (11)      (206)      (665)      (714)   -------------------------------------------------------------------------   Balance, end of period           15,741      9,270     15,741      9,270   -------------------------------------------------------------------------   -------------------------------------------------------------------------    Retained earnings   Balance, beginning of period    123,252     88,329     95,568     51,585   Cumulative impact of    accounting changes                   -          -     (1,594)         -   -------------------------------------------------------------------------   Adjusted opening balance        123,252     88,329     93,974     51,585   Net income for the period        37,674     29,587    112,429     85,799   Dividends                       (12,347)   (14,084)   (35,238)   (32,276)   Share repurchase excess          (8,420)   (12,054)   (31,006)   (13,330)   -------------------------------------------------------------------------   Balance, end of period          140,159     91,778    140,159     91,778   -------------------------------------------------------------------------   -------------------------------------------------------------------------    Accumulated other    comprehensive loss   Balance, beginning of period    (18,036)   (10,519)   (12,169)   (11,528)   Cumulative impact of    accounting changes                   -          -      7,007          -   -------------------------------------------------------------------------   Adjusted opening balance        (18,036)   (10,519)    (5,162)   (11,528)   Other comprehensive loss,    net of tax                        (518)    (1,437)   (13,392)      (428)   -------------------------------------------------------------------------   Balance, end of period          (18,554)   (11,956)   (18,554)   (11,956)   -------------------------------------------------------------------------   -------------------------------------------------------------------------                            CORUS ENTERTAINMENT INC.                   CONSOLIDATED STATEMENTS OF CASH FLOWS                                     Three months ended    Nine months ended   (unaudited)                           May 31,               May 31,   (in thousands of                -----------------------------------------    Canadian dollars)                 2008       2007       2008       2007   -------------------------------------------------------------------------   OPERATING ACTIVITIES   Net income for the period        37,674     29,587    112,429     85,799   Add (deduct) non-cash items:     Depreciation                    4,974      5,286     16,253     15,788     Amortization of program      and film rights               35,875     35,398    107,862    101,562     Amortization of film      investments                    8,885      7,389     21,496     26,357     Other amortization                  -        300          -      1,255     Future income taxes            (1,966)     4,911     (7,029)    12,958     Non-controlling interest        1,449      1,355      3,960      4,047     Stock-based compensation        2,284      3,989      5,972     10,040     Other                           2,134        614      6,408      1,184   Net change in non-cash    working capital balances    related to operations           (5,029)    (1,870)   (29,940)   (33,510)   Payment of program and    film rights                    (40,657)   (36,171)  (118,339)  (115,075)   Net additions to film    investments                    (13,212)   (16,192)   (42,690)   (45,694)   -------------------------------------------------------------------------   Cash provided by operating    activities                      32,411     34,596     76,382     64,711   -------------------------------------------------------------------------    INVESTING ACTIVITIES   Additions to property,    plant and equipment             (2,975)    (4,886)   (10,102)   (14,439)   Business combinations                 -          -       (774)   (46,645)   Net change in other    investments and assets          (2,600)      (498)    (4,021)       897   Decrease in public benefits    associated with acquisitions      (958)    (1,699)    (2,903)    (4,302)   -------------------------------------------------------------------------   Cash used in investing    activities                      (6,533)    (7,083)   (17,800)   (64,489)   -------------------------------------------------------------------------    FINANCING ACTIVITIES   Increase (decrease) in    bank loans                         636     (5,093)    21,043     19,838   Issuance of shares under    Stock Option Plan                  934      7,841     10,118     25,678   Shares repurchased              (18,590)   (21,783)   (58,577)   (24,380)   Dividends paid                  (12,436)   (16,168)   (34,027)   (34,246)   Dividend paid to    non-controlling interest          (139)         -     (1,742)    (1,524)   Other                              (147)      (695)      (226)      (872)   -------------------------------------------------------------------------   Cash used in financing    activities                     (29,742)   (35,898)   (63,411)   (15,506)   -------------------------------------------------------------------------   Decrease in cash and cash    equivalents during the period   (3,864)    (8,385)    (4,829)   (15,284)   Cash and cash equivalents,    beginning of period             32,382     36,737     33,347     43,636   -------------------------------------------------------------------------   Cash and cash equivalents,    end of period                   28,518     28,352     28,518     28,352   -------------------------------------------------------------------------   -------------------------------------------------------------------------                            CORUS ENTERTAINMENT INC.                       BUSINESS SEGMENT INFORMATION    Three months ended May 31, 2008                                  Tele-                       Elimi-  Consol-                         Radio  vision  Content  Corporate  nations  idated   -------------------------------------------------------------------------   Revenues             76,964  114,644   16,338        -     (127) 207,819   Direct cost of    sales, general and    administrative    expenses            52,276   65,033   12,640    6,320     (222) 136,047   -------------------------------------------------------------------------   Segment profit       24,688   49,611    3,698   (6,320)      95   71,772   Depreciation          1,615    2,239       70    1,050        -    4,974   Interest expense        262    1,141        6    8,936        -   10,345   Disputed regulatory    fees                 5,421    4,313        -        -        -    9,734   Other expense, net      (35)     (28)     968     (842)       -       63   -------------------------------------------------------------------------   Income before    income taxes and    non-controlling    interest            17,425   41,946    2,654  (15,464)      95   46,656   -------------------------------------------------------------------------   -------------------------------------------------------------------------     Three months ended May 31, 2007                                  Tele-                       Elimi-  Consol-                         Radio  vision  Content  Corporate  nations  idated   -------------------------------------------------------------------------   Revenues             74,765  109,242   14,606        -   (1,001) 197,612   Direct cost of    sales, general and    administrative    expenses            49,708   63,140   14,554    6,432   (1,033) 132,801   -------------------------------------------------------------------------   Segment profit       25,057   46,102       52   (6,432)      32   64,811   Depreciation          1,516    2,669       40    1,061        -    5,286   Amortization              -        -        -      300        -      300   Interest expense        302      105       31    8,676        -    9,114   Disputed regulatory    fees                   830      481        -        -        -    1,311   Other expense, net      570      151      564     (611)       -      674   -------------------------------------------------------------------------   Income before    income taxes and    non-controlling    interest            21,839   42,696     (583) (15,858)      32   48,126   -------------------------------------------------------------------------   -------------------------------------------------------------------------     Nine months ended May 31, 2008                                  Tele-                       Elimi-  Consol-                         Radio  vision  Content  Corporate  nations  idated   -------------------------------------------------------------------------   Revenues            217,967  345,337   39,113        -   (1,035) 601,382   Direct cost of    sales, general and    administrative    expenses           157,522  189,277   34,499   16,759   (1,570) 396,487   -------------------------------------------------------------------------   Segment profit       60,445  156,060    4,614  (16,759)     535  204,895   Depreciation          4,788    7,489      120    3,856        -   16,253   Interest expense        779    2,827      698   27,103        -   31,407   Disputed regulatory    fees                 5,421    4,313        -        -        -    9,734   Other expense, net     (163)   3,644    2,005   (1,498)       -    3,988   -------------------------------------------------------------------------   Income before    income taxes and    non-controlling    interest            49,620  137,787    1,791  (46,220)     535  143,513   -------------------------------------------------------------------------   -------------------------------------------------------------------------     Nine months ended May 31, 2007                                  Tele-                       Elimi-  Consol-                         Radio  vision  Content  Corporate  nations  idated   -------------------------------------------------------------------------   Revenues            209,192  332,051   43,672        -   (3,376) 581,539   Direct cost of    sales, general and    administrative    expenses           149,053  183,656   40,484   17,472   (3,666) 386,999   -------------------------------------------------------------------------   Segment profit       60,139  148,395    3,188  (17,472)     290  194,540   Depreciation          4,339    8,342       95    3,012        -   15,788   Amortization              -      355        -      900        -    1,255   Interest expense        774      144      297   25,806        -   27,021   Disputed regulatory    fees                 2,315    1,488        -        -        -    3,803   Other expense, net    1,321    5,529    2,251   (1,864)       -    7,237   -------------------------------------------------------------------------   Income before    income taxes and    non-controlling    interest            51,390  132,537      545  (45,326)     290  139,436   -------------------------------------------------------------------------   -------------------------------------------------------------------------  

Source: News - Media

CONTACT: John Cassaday, President and Chief Executive Officer, Corus
Entertainment Inc., (416) 642-3770; Tracy Ewing, Vice President,
Communications, Corus Entertainment Inc., (416) 642-3792; Tom Peddie, Senior
Vice President and Chief Financial Officer, Corus Entertainment Inc., (416)
642-3780

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