Q2 2025 Corus Entertainment Inc Earnings Call

Good morning, My name is joelle and I will be your conference operator today.

Joelle: Good morning, my name is Joelle and I will be your conference operator today.

Joelle: At this time, I would like to welcome everyone to the Corus Entertainment Q2 2025 Analyst and Investor Conference Call. All lines have been placed on mute to prevent any background noise.

At this time I would like to welcome everyone to the course Entertainment Q2, 'twenty 'twenty five analyst and Investor Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.

Joelle: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. Thank you.

Would like to withdraw your question. Please press star two.

Joelle: As a reminder, this call has been recorded.

John Gossiping: Thank you as a reminder, this call is being recorded I will now turn the call over to Mr. John Gossiping co CEO and CFO of course entertainment. Mr. Gosling you may begin your conference.

John Gosling: I will now turn the call over to Mr. John Gosling, Co-CEO and CFO of Corus Entertainment. Mr. Gosling, you may begin your conference. Thanks very much, Joelle. And good morning, everyone.

Speaker Change: Thanks, very much joelle.

Speaker Change: Good morning, everyone. Welcome to you of course entertainments fiscal 'twenty twenty-five second quarter earnings call.

John Gosling: Welcome to Corus Entertainment's fiscal 2025 second quarter earnings call. Joined today by Troy Reeb, our Co-Chief Executive Officer. Before I read the cautionary statement, I would like to remind everyone that we have slides that accompany today's call, and you can find them on our website at www.corusent.com under the Investor Relations-Events and Presentations section. Let's move on to the standard cautionary statement found on slide 2. We note that forward-looking statements may be made during this call. Actual results could differ materially from forecast, projections, or conclusions in these statements. We would also like to remind those on our call today, in addition to disclosing results in accordance with IFRS, courts also provide supplementary non-IFRS or non-GAAP measures as a method of evaluating the company's performance and to provide a better understanding of how management views the company's performance.

Speaker Change: I'm joined today by <unk>, our co Chief Executive Officer before I read the cautionary statement I would like to remind everyone that we have slides that accompany today's call and you can find them on our website at www Dot <unk> dot com under the Investor Relations Dash events and presentations section.

Speaker Change: Let's move on to the standard cautionary statement found on slide two.

Speaker Change: We note that forward looking statements may be made during this call actual results could differ materially from forecasts projections or conclusions in these statements.

Speaker Change: We would also like to remind those on our call. Today. In addition to disclosing results in accordance with I F. R. S. Court also provides supplementary non iron forest or non-GAAP measures as a method of evaluating the company's performance and to provide a better understanding of how management views the company's performance today.

John Gosling: Today, we will be referring to certain non-GAAP measures in our remarks. Additional information on these non-GAAP financial measures, the company's reported results, and factors and assumptions related to forward-looking information can be found in courts' second quarter 2025 report to shareholders and the 2024 annual report, which can be found on CDAR Plus or Investor Relations-Financial Reports section of our website.

Speaker Change: Today, we will be referring to certain non-GAAP measures in our remarks.

Speaker Change: Information on these non-GAAP financial measures the company's reported results and factors and assumptions related to forward looking information can be found in <unk> second quarter 2025 report to shareholders and the 'twenty 'twenty four annual report, which can be found on SEDAR, plus or Investor Relations Dash Financial report section.

Speaker Change: Of our website.

John Gosling: I'll start on slide 3 by sharing details of an important and significant step we have taken to progress our capital and debt plan. A few weeks ago, we completed a transaction that provides Corus with a more stable footing for our operations. The cooperation of lenders and constructive support of key debt investors, we assigned, amended, and extended our credit facility. The updated credit facility provides improved terms, including total debt-to-cash flow ratio of 9.5 times to 1 through December 31, 2025, an extension of the maturity date to March 20, 2027, increased access to up to $75 million of revolving credit, and a fixed interest rate of 7.29% on the entire facility compared to the prior floating rate.

Speaker Change: I'll start on slide three by sharing details of an important and significant step we have taken to progress our capital in that plan.

Speaker Change: Few weeks ago, we completed a transaction that provides of course with a more stable footing for our operations the cooperation of lenders and constructive support I've keep that investors, we assigned amended and extended our credit facility.

Speaker Change: Do you have to have a credit facility provides improved terms, including total debt to cash flow ratio of nine five times to one through December 31, 2025 and extension of the maturity date to March 20th 2027.

Speaker Change: <unk> access to up to $75 million revolving credit and a fixed interest rate of 7.29% on the entire facility compared to the prior floating rate.

John Gosling: Effective March 21st, 2025, our debt is now comprised of the imaginary stated credit facility, which is made up of a drawn term loan and a $75 million revolver. And then along with the senior unsecured notes of $500 million due in 2028 and $250 million due in 2030. We're very pleased with this outcome, which better positions us to create sustainability in the business, provide necessary financial flexibility to adapt to ongoing shifts and factors affecting our industry in the near term, as we continue efforts to right-size our cost structure through efficiency and cost reduction measures. Transaction also supports our commitment and ability to provide Canadians with the programming news and audio content they love and expect from Corus.

Speaker Change: If march 21st 2025 of our debt is now comprised of the amended and restated credit facility, which is made up of a drawn term loan and a $75 million revolver and then along with its senior unsecured notes at $500 million due in 2028 and $250 million due in 2030.

Speaker Change: We're very pleased with this outcome, which better positions us to create sustainability in the business provides necessary financial flexibility to adapt to ongoing shifts in factors affecting our industry in the near term.

Speaker Change: As we continue efforts to rightsize, our cost structure through efficiency and cost reduction measures.

Speaker Change: Transaction also supports our commitment and ability to provide Canadians with the programming news and audio content, They love and expect from of course.

Troy Reeb: With that, I'll turn it over to Troy for our current view of the business. Thank you, John. Moving to slide four, given recent events in our country and abroad, we have witnessed a remarkable change in Canadians' consumer behavior. The response to U.S. tariffs and threats has created concerns, challenges, and opportunities for brands. As a proud Canadian company, we are undertaking important initiatives to help rally our audiences to shop Canadian and protect our economy and Canadian workers. We believe it is our responsibility to champion this message and to ensure that Canadians have a trusted and reliable source of news and information.

Speaker Change: With that I'll turn it over to try for a current view of the business.

Speaker Change: Thank you John moving to slide four given recent events in our country and abroad. We have witnessed a remarkable change in Canadian consumer behavior. The response to U S tariffs and threats has created concerns challenges and opportunities for brands.

Speaker Change: The Prime Canadian company, we are undertaking important initiatives to help rally our audiences to shop Canadian and protect our economy and Canadian workers. We believe it's our responsibility to champion this message and to ensure that Canadians have a trusted and reliable source of news and information.

Troy Reeb: We were one of the first major media organizations to marshal all of our platforms, brands, and local programs to encourage listeners and viewers to support the local businesses that provide jobs in their communities. Porus is also working closely with our clients, offering them a variety of ways to show their support of the Buy Canadian movement. We do not expect our content supply to be disrupted by any potential tariffs, should they actually materialize. And we have seen incredible response to our programming this year, providing an attractive multi-platform environment for advertisers to reach our highly engaged audience.

Speaker Change: We were one of the first major media organizations to Marshal all of our platforms brands and local programs to encourage listeners and viewers to support the local businesses that provide jobs in their communities for.

<unk> is also working closely with our clients offering them a variety of ways to show their support of the buy Canadian movement, we do not expect our content supply to be disrupted by any potential tariffs should they actually materialize and we've seen incredible response to our programming this year, providing an attractive multiplatform environment for advertisers to reach our highly engaged Audi.

Speaker Change: Answers.

Troy Reeb: In addition to existing opportunities within the Corus ecosystem, we are also working with our clients to create custom content and help them connect with their Canadian customers during this pivotal moment of national resilience. We have leaned into our hundreds of weekly hours of Canadian original programming and homegrown brands like Flavor Network and Home Network to create new integration opportunities for clients who want to fly their Canadian colors across digital environments alike. At the same time, there has never been a better time to re-examine the breadth and depth of our extensive multi-platform video and audio offerings.

Speaker Change: In addition to existing opportunities within the course ecosystem. We are also working with our clients to create custom content and help them connect with their Canadian customers. During this pivotal moment of a national resilience, we have leaned into our hundreds of weekly hours of Canadian original programming and homegrown brands like flavor network and home network to <unk>.

Speaker Change: New integration opportunities for clients, who want to fly their Canadian colors.

Speaker Change: Oh and digital environments alike.

Speaker Change: At the same time, there has never been a better time to reexamine, the breadth and depth of our extensive multiplatform video and audio offerings investing in Canadian media supports our efforts to provide entertainment critical news and information for Canadians by Canadians.

Troy Reeb: Investing in Canadian media supports our efforts to provide entertainment, critical news and information for Canadians, by Canadians.

Troy Reeb: Over to slide five. Global News has witnessed tremendous gains in viewership, which is not surprising, given the increased interest in events south of the border and globally, and the impact of the current federal election cycle. Audiences are embracing global news as a trusted source of information, driving 12% growth in total minutes viewed across both broadcast and streaming platforms. This increase reflects increased viewing to both linear and digital, up 11% and 18% respectively.

Speaker Change: Over to slide five.

Speaker Change: Global news has witnessed tremendous gains in viewership, which is not surprising given the increased interest in events south of the border and globally and the impact of the current federal election cycle audiences are embracing global news as a trusted source of information and driving 12% growth in total minutes viewed across both broadcast and streaming platforms.

Speaker Change: This increase reflects increased viewing to both linear and digital up 11% and 18% respectively.

Troy Reeb: On Linear TV, Global National is the number one national news broadcast in Canada and we are number one in morning news. Additionally, Global News has the highest number of subscribers on YouTube compared to any other national Canadian news broadcaster. We're incredibly proud of our teams and their commitment to keeping Canadians informed during these turbulent times.

Speaker Change: On linear TV global National is the number one national news broadcast in Canada, and we are number one in morning News. Additionally, global news has the highest number of subscribers on Youtube compared to any other national Canadian news broadcaster, we're incredibly proud of our teams and their commitment to keeping Canadians informed during these turbulent times.

Troy Reeb: Moving to slide six, Corus is experiencing significant audience momentum on conventional television overall. Since January, Global's overall audience is tracking 11 percent ahead of last year and 25 percent ahead in core prime time. Global owns 11 of the top 20 shows, including the number one reality show, Survivor, number one comedy, Ghosts, number one late night show, Saturday Night Live, now celebrating its 50th anniversary.

Speaker Change: Going to slide six course is experiencing significant audience momentum on conventional TV overall since January global's overall audience is tracking 11% ahead of last year and 25% ahead in core Prime time Global owns 11 of the top 20 shows including the number one reality show survivor and number one comedy ghosts.

Speaker Change: Number one late night show Saturday Saturday Night live now celebrating its 50th anniversary.

Troy Reeb: Turning to slide seven, and our specialty portfolio. We own 16 of the top 20 specialty entertainment programs, including two programs from each of Flavor Network and Home Network. Impressively, Home and Flavor have landed as the number one and number two specialty lifestyle networks in only a few short months, with almost 11 million Canadians tuning into the network's attractive programming.

Speaker Change: Turning to slide seven and our specialty portfolio.

Speaker Change: We own 16 of the top 20 specialty entertainment programs, including two programs from each of flavor network and home network impressively home and flavor have landed as the number one and number two specialty lifestyle networks in only a few short months with almost 11 million Canadians tuning into the networks attractive programming. This is a testament to our strong.

Troy Reeb: This is a testament to our strong legacy of popular Canadian lifestyle programming and the strength of our team who built these all-Canadian brands from scratch in just a few short months. Audience momentum is building in our streaming portfolio as well, with the strongest Q2 ever for both monthly active users and hours streamed, the latter of which was up 18 percent over last year. Stack TV delivers the highest engagement of our digital platforms, drawing in audiences with its extensive offering of bingeable content and live streams. Our subscriptions also remain relatively resilient, following our recent retail pricing increase of $2 a month on our standalone Stack TV product across platforms. On the advertising front, we are still experiencing low visibility given tariff-related activity and potential economic impacts and how that trickles down to advertising spend.

Speaker Change: Legacy of popular Canadian lifestyle programming and the strength of our team who built visa all Canadian brands from scratch in just a few short months.

Speaker Change: This momentum is building in our streaming portfolio as well with the strongest Q2 ever for both monthly active users and hours streamed the latter of which was up 18% over last year stack television delivers the highest engagement of our digital platforms drawing an audience is with its extensive offering of <unk> content and live streams are.

Speaker Change: <unk> also remained relatively resilient following our recent retail pricing increase of $2 a month on our standalone stack PV product across platforms.

Speaker Change: On the advertising front, we are still experiencing low visibility given the tariff related activity and potential economic impacts and how that trickles down to advertising spend we are beginning to see some benefits from the strong performance of our content sales on global were resilient in the second quarter, but we are still seeing some challenges in our specialty portfolio as a result of it.

Troy Reeb: We are beginning to see some benefits from the strong performance of our content. Sales on Global were resilient in the second quarter, but we are still seeing some challenges in our specialty portfolio as a result of an oversupply of digital video inventory in the broader market and generally lower advertising demand on linear television.

Speaker Change: Oversupply of digital video inventory and the broader market and generally lower advertising demand on linear television.

Troy Reeb: The Buy Canadian movement I referenced earlier is helping to mitigate some of the industry-wide advertising trends as companies adjust their business strategies and marketing campaigns to build on the increased interest in Canadian products from consumers. The federal election is also expected to provide a tailwind given the heightened interest in news and information in the current environment. However, increasingly, we are seeing last-minute spending, particularly related to the uncertainty caused by the implementation of new tariffs.

Speaker Change: By Canadian movements I referenced earlier is helping to mitigate some of the industry wide advertising trends as companies adjust their business strategies and marketing campaigns to build on the increased interest in Canadian products from consumers.

Speaker Change: The federal election is also expected to provide a tailwind given the heightened interest in news and information in the current environment.

Speaker Change: However, increasingly we are seeing last minute spending, particularly related to the uncertainty caused by the implementation of new tariffs, we remain committed to supporting our advertisers as they make necessary adjustments along the way.

Troy Reeb: We remain committed to supporting our advertisers as they make necessary adjustments along the way.

John Gosling: I'll now pass it over to John for the financial results of the quarter. Great. Thanks, Troy. I'm on slide 8. As Troy mentioned, industry-wide advertising trends persist and continue to impact television advertising demand overall. This, combined with lower subscription revenue, contributed to consolidated revenue of $270 million in the quarter, a 10% decrease from the prior year. Consolidated segment profit was $18 million for the quarter, and that reflects the impact of the lower revenue and a 14% increase in amortization of program rights due to the late-quarter return of scripted programming in the prior-year quarter. This was partially offset by our cost-saving initiatives, which helped to drive total G&A expense reductions of $14 million or 12% in the quarter, including a meaningful decrease of 15% in employee costs.

Speaker Change: I'll now pass it over to John for the financial results of the quarter, great. Thanks, Troy I'm on slide eight as Troy mentioned industry wide advertising trends persist and continue to impact television advertising demand overall.

John Gossiping: This combined with lower subscription revenue contributed to consolidated revenue of $270 million.

John Gossiping: In the quarter, a 10% decrease from the prior year consolidated segment profit was $18 million for the quarter and that reflects the impact of the lower revenue and a 14% increase in amortization of program rights due to the late quarter return of scripted programming in the prior year quarter.

John Gossiping: Partially offset by our cost saving initiatives, which helped to drive total G&A expense reductions of $14 million or 12% in the quarter, including a meaningful decrease of 15% and employee costs. We are pleased with the progress we're making on this front delivering a result that was slightly ahead of our prior outlook for Q2 consolidated segment profit.

John Gosling: We are pleased with the progress we are making on this front, delivering a result that was slightly ahead of our prior outlook for Q2. Consolidated segment profit margins for the quarter were 6% compared to 18% last year. Free cash flow of $46 million in the quarter increased 40% from last year, and that exceeded our expectations. Higher working capital contribution, lower net program rights, and film investment, as well as reduced cash taxes, were the main contributors this quarter, and that was more than enough to offset the impact of the lower segment profit. This result underscores the ongoing careful management of our cash as we implement additional cost-reduction measures.

John Gossiping: <unk> for the quarter or 6% compared to 18% last year free.

Free cash flow of $46 million in the quarter increased 40% from last year and that exceeded our expectations higher working capital contribution lower net program rights in film investment as well as reduced cash taxes were the main contributors this quarter and that was more than enough to offset the impact of the lower segment profit there.

John Gossiping: This result, underscores the ongoing careful management of our cash as we implement additional cost reduction measures at.

John Gosling: At the end of the second quarter, we were in compliance with all loan covenants and had $92 million of cash and cash equivalents, and approximately $64 million was available to be drawn under the previous $65 million revolving credit facility. Net debt to segment profit was 5.04 times at the end of the second quarter, compared to 3.84 times at August 31st, 2024, primarily reflecting the impact of the lower segment profits.

John Gossiping: At the end of the second quarter, we are in compliance with all loan covenants and had $92 million of cash and cash equivalents at approximately $64 million was available to be drawn under the previous $65 million revolving credit facility.

John Gossiping: Yeah.

John Gossiping: Net debt to segment profit was 5.04 times at the end of the second quarter compared to $3 eight four times at August 31, 2024, primarily reflecting the impact of the lower segment profit.

John Gossiping: Looking ahead to the third quarter of fiscal 2025.

John Gosling: Looking ahead to the third quarter of fiscal 2025, oversupply of digital advertising inventory from foreign competitors, coupled with lower demand for traditional television advertising and the potential impact of U.S. tariffs on the overall economy are factored into our outlook. As a result, the year-over-year percentage decline in television advertising revenue for Q3 of fiscal 2025 is expected to be in the mid-teens. We anticipate amortization of TV program rights will be relatively flat compared to the prior year quarter, as the impact of last year's Hollywood strikes move into the rearview mirror. In addition, we anticipate another decline in consolidated G&A expenses in the range of 5 to 10% compared to Q3 last year, as a result of the continued implementation of cost reduction initiatives to help further offset the lower expected revenue.

John Gossiping: Our supply of digital advertising inventory from foreign competitors, coupled with lower demand for traditional teller as TV advertising and the potential impact of U S. Tariffs on the overall economy are factored into our outlook as a result, the year over year percentage decline in TV advertising revenue for Q3 of fiscal 2025 is expected to be in the mid teens.

John Gossiping: We anticipate amortization of TV program rates will be relatively flat compared to the prior year quarter as the impact of last year's Hollywood strikes move in to the rearview mirror.

John Gossiping: In addition, we anticipate another decline in consolidated G&A expenses in the range of 5% to 10% compared to Q3 last year as a result of the continued implementation of cost reduction initiatives.

John Gossiping: Further offset the lower expected revenue.

John Gossiping: Over to slide nine now.

John Gosling: over to slide 9 now. TV segment revenues were $252 million for the quarter, and that's down 9%. This was mainly driven by lower TV advertising revenue, which declined 13% in Q1 and was modestly ahead of the outlook we gave the last quarter, benefiting from the strength of our programming and audiences. Subscriber revenue of $112 million for the quarter was down 5%, reflecting declines in the traditional distribution system, partially offset by modest growth in streaming subscribers. Excluding the impact of rightsizing initiatives in our specialty TV portfolio, subscriber revenue was down 2%. Distribution, production, and other revenue was lower for the quarter, driven by fewer episode deliveries and reduced service work.

John Gossiping: Television segment revenues were $252 million for the quarter and that's down 9%.

John Gossiping: Mainly driven by lower television advertising revenue, which declined 13% in Q1 and was modestly ahead of the outlook, we gave last quarter.

John Gossiping: From the strength of our programming and audiences.

John Gossiping: Subscriber revenue of $112 million for the quarter was down 5%, reflecting declines in the traditional distribution system, partially offset by modest growth in streaming subscribers.

John Gossiping: The impact of right sizing initiatives and our specialty TV portfolio subscriber revenue was down 2%.

John Gossiping: Distribution production out of their revenue was lower for the quarter driven by fewer episode deliveries and reduced service work.

John Gosling: On our Q1 call, we highlighted the expected increase in amortization of program rights in the second quarter, which is related to the late quarter return of programming in the prior year.

John Gossiping: On our Q1 call we highlighted the expected increase in amortization of program rights in the second quarter, which is it related to late quarter return of programming in the prior year. The results were generally in line with this Q2 outlook and importantly, we will finally returned to an apples to apples comparison in the third quarter.

John Gosling: The results were generally in line with this Q2 outlook, and importantly, we will finally return to an apples-to-apples comparison in the third quarter. Our cost reduction initiatives resulted in a significant decrease in TV employee costs in the quarter. They were down 15% as a result of significant headcount reduction initiatives over the past year, as well as a 4% decline in other G&A expenses. Overall, TV segment profit was down $36 million in the second quarter as we contended with the expected increase in the amortization of program rights. This, combined with the contraction in advertising demand as well as lower subscription distribution, production and other revenue, exceeded the benefit of G&A expense savings from our numerous cost reduction initiatives.

John Gossiping: Our cost reduction initiatives resulted in a significant decrease in TV employee costs in the quarter. They were down 15% as a result of significant head count reduction initiatives over the past year as well as a 4% decline in other G&A expenses overall television segment profit was down $36 million in the second quarter as we contended with the expected.

John Gossiping: The increase in the amortization of program rights.

John Gossiping: That's combined with the contraction of advertising demand as well as lower subscription distributions.

John Gossiping: Other revenue exceeded the benefit of G&A expense savings from our numerous cost reduction initiatives.

John Gosling: TV segment profit margins were 9% in the quarter, and that compares to 21% in the prior period.

John Gossiping: Television segment profit margins were 9% in the quarter and that compares to 21% in the prior period.

John Gosling: All right, moving to slide 10, radio segment revenue of $19 million for the quarter decreased 14% from the prior year due to lower advertising demand and the impacts of audience declines in the sector.

John Gossiping: Alright, moving to slide 10 radio segment revenue of $19 million for the quarter decreased 14% from the prior year due to lower advertising demand and the impacts of audience declines in this sector radio segment profit however of $1 4 million increased over the prior year quarter with 17% expense decline from cost containment measures more than offsetting.

John Gosling: Radio segment profit, however, of $1.4 million increased over the prior year quarter with a 17% expense decline from cost containment measures, more than offsetting the lower advertising demand. Radio segment profit margin increased to 8% from 4% in the prior year period.

John Gossiping: The lower advertising demand radio segment profit margin increased two 8% from 4% in the prior year period.

Troy Reeb: And with that, I'll turn it over to Troy for closing comments. All right, thank you, John. Finally, over to slide 11, looking ahead to Q3, we're planning to build on our latest operational and financial achievements. The updated credit facility represents a key milestone for Corus, and it better positions us to deliver on our longer term plan to create a more sustainable business. Although headwinds certainly persist in the broader industry and economy, we have confidence in our position as a leader in Canadian media. We will forge ahead to build even stronger connections with audiences and our advertising partners, buoyed by the strength of our brands and attractive upcoming programming, including Canadian favorites like Renovation Resort and the premiere of new Corus Studios original Big Burger Battle.

Trey: With that I'll turn it over to Trey for closing comments.

Trey: Alright. Thank you Jon finally over to Slide 11, looking ahead to Q3, we're planning to build on our latest operational and financial achievements. The updated credit facility represents a key milestone for <unk> and better positions us to deliver on our longer term plan to create a more sustainable business, although headwinds certainly persist in the broader industry and economy, we have come.

Trey: And our position as a leader in Canadian media, we will forge ahead to build even stronger connections with audiences and our advertising partners buoyed by the strength of our brands and attractive upcoming programming.

Trey: Including Canadian favorites like renovation resorts and the Premier of New course studios original Big Burger Battle.

Troy Reeb: We, along with our domestic broadcast counterparts, are also taking every opportunity to reinforce that buying Canadian means investing in Canadian media, too. This means repatriating ad dollars to Canadian companies who have robust multi-platform offerings and a proven ability to effectively reach audiences.

Trey: We along with our domestic broadcast counterparts are also taking every opportunity to reinforce that buying Canadian means investing in Canadian media to this means repatriating AD dollars to Canadian companies, who have robust multi platform offerings and a proven ability to effectively reach audiences. We want to thank our teams for maintaining folk.

Troy Reeb: We want to thank our teams for maintaining focus on the road ahead as we work to build a stronger Canadian media industry, take the necessary steps to continue to right-size our business, and to pursue new opportunities.

Trey: <unk> on the road ahead as we work to build a stronger Canadian media industry take the necessary steps to continue to rightsize, our business and to pursue new opportunities back over to you operator.

Joelle: Back over to you, Operator. Thank you.

Trey: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone, you'll hear a prompt that your hand has been raised should you wish to decline from the polling process. Please press star followed by the two if you are using a speaker phone. Please lift the handset before pressing any keys.

Joelle: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised.

Joelle: Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any.

Trey: One moment. Please for your first question.

Joelle: Operator, we're getting some noise in the line. Can we just pause for a second and make sure it's not affecting the participants? Alright, it looks like it's okay, we can proceed.

Speaker Change: We're getting for noise in the line can we just pause for a second and make sure it's not affecting their participants.

Trey: Alright, it looks like it's okay. We can proceed.

Trey: Okay. Your first question comes from.

Vince Valentini: Okay, your first question comes from Vince Valentini with TD Cowen. Your line is now open. Thanks very much. Can you hear me okay, John and Troy? Yep. Great.

Speaker Change: Vince Valentini with TD Cowen Your line is now open.

Vince Valentini: Thanks, very much can you hear me, Okay, John address yes, great.

John Gosling: Let me start on subscription revenue, try to unpack that a little bit, make sure I understand. Minus 2% would be if you back out the impact of the channels you deliberately shut down, as opposed to the minus 5% reported, is that correct? Correct, yes. And how does the free view period for Home and Flavor factor into that because you were giving it away for free for the first of the lot, right? So there shouldn't have been much subscription revenue or do I have that wrong? No, in the case of those channels, because they were existing channels, the revenue from those channels of the existing subscribers continues.

Speaker Change: Let me start on subscription revenue try to unpack that a little bit make sure I understand.

Speaker Change: Minus 2% would be if you back out the impact of the channels you deliberately.

Speaker Change: Got down as opposed to the minus 5% reported is that correct correct yes.

Speaker Change: And how does the three view period for home and flavor factor into that because you were giving it away for free for the first of all all right. So it shouldn't have been.

Speaker Change: <unk> subscription revenue, where do I have that wrong.

Speaker Change: No in the case of those channels because they were existing channels that the revenue from those channels of the existing subscribers continues the freeview applies to people that weren't receiving the channels.

John Gosling: The free view applies to people that weren't receiving the channels, you know, going into it. So we don't give up all the subscriber revenue on those channels for free. Okay, gotcha. So you were still what you were getting before from people who were subscribing, you still got so no impact there. Perfect. And the free previews, Vince basically open up the channel to the full cable to all cable subscribers or satellite subscribers. So there's sort of no lock on the channel anymore. But the existing subscribers continue to Perfect.

Speaker Change: Going into it so we don't give up all the subscriber revenue on those channels periphery.

Speaker Change: Got you. So you were still what you were getting before from people who were subscribing you still got so no impact there perfect and.

Speaker Change: The free previews, Vince basically open up the channel to the full cable to all cable subscribers or satellite subscribers. So theres sort of no lock on the channel anymore, but the existing subscribers continue to remit.

Speaker Change: Perfect.

John Gosling: And then looking forward with the the Stack TV price increase, would that, you would think that would have an immediate impact on Q3 and Q4 subscription revenue and maybe take that minus two closer to zero? Yeah, it will definitely help the ARPU. I'd say, you know, we're going to have to deal with a little bit of initial churn on that, you know, as some customers decide to rebalance their streaming offerings. But yes, we think longer term, maybe not right away in Q3, that it will have a positive impact on that line.

Speaker Change: Then looking forward with the the stack TV price increase would that you would think that would have an immediate impact on Q3, and Q4 subscription revenue and maybe take that minus two closer to zero.

Speaker Change: Yes, it will definitely help the <unk> I'd say, we're going to we're going to have to deal with a little bit of initial churn on that.

Speaker Change: As some customers decided to rebalance their.

Speaker Change: They are streaming offerings, but yes.

Speaker Change: Yes, we think longer term, maybe not right away in Q3 that it will have a positive impact on that line.

Speaker Change: Okay.

John Gosling: Okay.

Vince Valentini: Second time, you mentioned no content supply disruption from tariffs. I just want to make sure we fully understand it. What about on exports of shows that you're making and selling into the U.S. and internationally? Are those exempt from the current tariffs as you understand it? Well, most of our U.S. content supply is locked up under a previous deal with one supplier, so we don't have a lot for sale that would be in any way a meaningful line item. So most of our sales would be ex-U.S. at this point for our generated content, even if Canadian programming was terrible.

Speaker Change: Second have you you mentioned no content supply disruption from tariff. So just make sure we fully understand it what about.

Speaker Change: One exports of shows that youre, making and selling into the U S and internationally.

Speaker Change: Are those exempt from the current tariffs as you understand it.

Speaker Change: Well most of the R. R U S content supply is locked up.

Speaker Change: Previous deal with one supplier. So we don't have a lot for sale that would be in any way a meaningful line item. So most of our sales would be ex U S. At this point for our generated content, even if there was a even if Canadian programming was tariffs.

Vince Valentini: and we don't have clarity on whether that's the case or not. Oh, you don't have clarity, but even if there is some sort of tariff, the contract still exists and the counterparty has to still buy that content. Okay. Good.

Speaker Change: We don't have clarity on whether that's the case or not.

Speaker Change: You don't have clarity, but even if there is some sort of care the contracts still exists and the counterparty has to still buy that content. Okay.

Speaker Change: Good in.

Vince Valentini: And, sorry, two more, because I'm just not sure how many people will be on the line. So I'm going to make sure I get them across. Working capital, John, obviously a substantial inflow of cash in Q2 after a pretty substantial outflow in Q1. Can you level set us on what's going on there and what happens in the second half? Yeah. Look, there's always the sort of normal seasonality that comes from the revenue seasonality. So, you know, we build receivables in Q1. We collect them in Q2. But that wasn't the whole story in Q2. So the other thing that was going on was related to one of our large suppliers.

Speaker Change: Sorry, two more.

Speaker Change: Just not sure how many people would be on the line.

Speaker Change: Make sure I get them across.

Speaker Change: Working capital John Obviously, your substantial inflow of cash in Q2 after a pretty substantial outflow in Q1 can you level set us on what's going on there and what happens in the second half. Yes look there is always there's sort of normal seasonality that comments from the revenue seasonality. So we built <unk>.

Speaker Change: In Q1, we collect them in Q2.

Speaker Change: But that wasn't the whole story in Q2, so the other thing that was going on was.

Speaker Change: Related to one of our large suppliers, we had as you know you'll see there was.

John Gosling: We had, as you'll see, there was a resolution in the quarter of some of the ownership stakes, minority ownership stakes in a few of our larger channels. So related to that, there are some programming payments that didn't happen until March. So there was a benefit in Q2 of upholding those. That was around $20 million that will turn around in Q3. Now, the other thing to watch for, of course, in Q3 is we've now got deferrals on certain government remittances around HST and Ontario Employer Health Tax and tax installments. So that's obviously going to help us going forward.

Speaker Change: A resolution in the quarter of some of the ownership Stakes minority ownership Stakes in a few of our larger channels. So related to that there are some programming payments that didnt happen until March. So there was a benefit in Q2 of holding those that was around $20 million that.

Speaker Change: Will turn around in Q3.

Speaker Change: Now the other thing to watch for of course in Q3 as we've now got deferrals on certain government remittances around HST, and Ontario employer health tax and tax installments. So that's obviously going to help us going forward. So those will reverse within the year and in the case of the larger ones but.

Vince Valentini: Those will reverse within the year in the case of the larger ones, but that's going to benefit Q3. But 20 million negative in the third quarter for the programming. Yeah, I think that's a good estimate.

Speaker Change: That's going to benefit Q3.

Speaker Change: But 20 million negative in the third quarter for the programming I think that's a good estimate.

Speaker Change: It sure does that cleaning up the minority interest in former HGTV and food that they paid you to wash their hands or better have no no no just had to do with the with some of the payments under those previous deals.

John Gosling: Sorry, is that cleaning up the minority interest in former HGTV and food, that they've paid you to wash their hands of that, or how does that work? No, no, no. It just had to do with some of the payments under those previous deals.

Speaker Change: Okay.

Vince Valentini: And my last one will be on advertising.

Speaker Change: And I couldnt be on advertising.

Speaker Change: Let me start with a big picture of the bike Canadian Great strategy and theme is there.

Vince Valentini: Let me start with the big picture, the Buy Canadian, great strategy and theme. Is there, can you give us any sense of people really buying into that thing?

Speaker Change: Can you give us any sense of people really buying into that thing we're gonna take ads away from these.

Troy Reeb: We're going to take ads away from these. Bell Media and Corus but you know collectively we can offer you some pretty good scale across linear and digital for by Canadian.

Speaker Change: These digital platforms, where we've been putting all of our money for the past.

Speaker Change: 10 years in and repatriate it to to a Canadian player that.

Speaker Change: I think you'd argue you didn't it doesn't quite have the scale and digital that.

Speaker Change: Did some of those U S Giants would have.

Speaker Change: Are you getting from feedback from brands that they are actually willing to do that and can you reinforced this strategy with potentially a partnership with bell with if the two of you going out together with the same message and Jay.

Speaker Change: Decide how you want to split it between Bell media and of course, but.

Speaker Change: Collectively we can offer you some really good scale across linear and digital for by Canadian.

Troy Reeb: I won't comment too much on the second part of your question, other than to say I think the entire industry needs to continue to reinforce this message. And I think we're all pleased to see some version of it coming up through, you know, whether, you know, print legacy companies, broadcast legacy companies, etc. And we are hearing lots of intent from Canadian advertisers to try to support these goals. But, you know, there is always a gap between intent and action.

Speaker Change: I won't comment too much on the second part of your question other than to say I think the entire industry needs to continue to reinforce this message in that.

Speaker Change: I think we're all pleased to see some version of it.

Speaker Change: Coming up through.

Speaker Change: Weather.

Speaker Change: Print legacy companies broadcast legacy companies et cetera.

Speaker Change: And we are hearing lots of intent from Canadian advertisers to try to support these goals, but there is always a gap between intent in action I think it's too early to say if this is a meaningful shift we certainly seen some.

Troy Reeb: I think it's too early to say if this is a meaningful shift. We've certainly seen some. We have certainly assisted some Canadian advertisers already in with campaigns that we have packaged by Canadian messaging around. And they have come and sought out partnerships on that messaging specifically because of the ongoing situation.

Speaker Change: We have certainly assisted some Canadian advertisers already in with campaigns that we have packaged by Canadian messaging around and they have come and sought out partnerships.

Speaker Change: On that messaging specifically.

Speaker Change: <unk> of the ongoing situation.

Troy Reeb: But how meaningful a shift that will be in the overall advertising line, I think it's too early to tell.

Speaker Change: But how meaningful a shift that will be in the overall advertising, while I think it's too early to tell.

Vince Valentini: Thanks. Thanks, Vince.

Speaker Change: Yeah.

Speaker Change: Thanks.

Speaker Change: Thanks Vince.

Maher Yagi: Your next question comes from Mayor Yagi with Scotiabank. Your line is now open. Thank you for taking my questions. I'm always happy to join Corus Calls. I wanted to first ask you about the new lending agreement that you signed. Congratulations on that. So just trying to make sure we have the right calculation, the way I'm reading. to contact us. Thank you. We appreciate it. very similar to EBITDA. When I start with net income, I add back interest, depreciation, amortization, stock-based compensation. non-recurring items, et cetera, et cetera. Is it essentially a very close, you know, the cash flow definition in that contract?

Speaker Change: Next question comes from Maher Yaghi with Scotiabank. Your line is now open.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: For taking my questions always happy to join the chorus calls.

Speaker Change: So I wanted to first.

Speaker Change: Ask you about that.

Speaker Change: The new lending agreement that you signed.

Speaker Change: Congratulations on that.

Speaker Change: So just trying to make sure we have the right calculation the way.

Breathing.

Speaker Change: The contract is essentially.

Speaker Change: Very similar to <unk>.

Speaker Change: When I back out net income you know when I start with net income.

Speaker Change: Add back interest depreciation amortization stock based compensation.

Speaker Change: Nonrecurring items.

Speaker Change: Et cetera et cetera.

Speaker Change: Is it essentially a very close you know the cash flow definition in that contract.

John Gosling: How far is it from EBITDA? It's basically trying to mirror that. It's not exactly the same, but the difference is fairly small. There used to be two differences, Maher. One is that we would effectively be trying to solve for proportionate EBITDA, but the impact of that has largely gone away because the minority interest in the former food and HG channels has gone away. So I think you're on the right track. The other difference was always that it's a gross leverage calculation. It's not a net leverage calculation, so any of the cash on hand doesn't factor into the calculation.

Speaker Change: How far is it from EBITDA.

Speaker Change: It's basically trying to.

Speaker Change: Mirrored that it's not exactly the same but the difference is fairly small.

Speaker Change: There used to be two differences matter. One is that we would effectively be trying to solve for proportionate EBITDA, but the impact of of that has largely gone away because the minority interest in <unk>.

Speaker Change: Food and HG, former food and HD channels has gone away. So I think youre on the right track. The other difference was always that it's a gross leverage calculation. It is not a net leverage calculation. So any of the cash on hand doesn't factor into into the calculations, but I think you're pretty close if that's the way you approach it.

John Gosling: But I think you're pretty close if that's the way you approach it.

Speaker Change: Okay, maybe maybe to get us.

Maher Yagi: Okay, maybe maybe to get us even closer, can you provide what was the last four quarters number under the definition of the contract for cash flow? I don't have that at hand, but it was typically between 25 and 40 basis points higher. It's more this quarter because there's a lot more cash on hand, but I don't have it off the top. Okay. And, uh, you're, uh, Your leverage ratio, as stipulated under the contract, you're quite well below it, right, at this point in time. Is there any indication that you will get close, anywhere close to that level before the end of the year?

Speaker Change: Even closer can you provide what was the last four quarters a number under the definition of the contract for cash flow.

Speaker Change: I don't have that at hand, but it was a it was typically between 25 and 40 basis points higher.

Speaker Change: It's more of this quarter, because theres a lot more cash on hand, but.

Speaker Change: I don't have it off the top.

Speaker Change: Okay and.

Speaker Change: Sure.

Speaker Change: Sure.

Speaker Change: Your leverage ratio as stipulated under the contract.

Speaker Change: You are quite 12 below it right at this point in time is there any.

Any indication that you will get close.

Speaker Change: We're close to that level.

Speaker Change: For the end of the year.

John Gosling: So it was designed to make sure that that didn't happen. Yeah, yeah, it seems like it. So, so now that you have. this new credit agreement in place. putting aside all risks to, you know, continuing operations, etc. What does that give you in terms of ability to operate that you didn't have before? And, you know, how does that change the outlook on the business? Look, it gives us a longer runway. You can see that we've got that higher covenant through the end of the calendar year. So that's very helpful. You know, we were we were operating with either, you know, short term, very short term or kind of medium term relief under the former credit agreement.

Speaker Change: It was designed to make sure that that didn't happen yeah yeah.

Speaker Change: It seems like it so so.

Speaker Change: No.

Speaker Change: Now that you have this.

This new credit agreement.

Speaker Change: Green went in place.

Speaker Change: Putting aside.

Speaker Change: Risks to continuing operations et cetera.

Speaker Change: What does that give you in terms of ability to operate that you didn't have before.

Speaker Change: And.

Speaker Change: How does that change the outlook on the business.

Speaker Change: It gives us a longer runway you can see that we've got that higher covenant through the end of the calendar year. So that's very helpful. You know we were we were operating with either short term very short term or kind of medium term relief under the former credit agreement. So if you think back to what happened last year, we went.

John Gosling: So, you know, if you think back to what happened last year, we went. And from, you know, when this all started last summer, we went to sort of a mid-October date to a one-week extension or so to an extension to March. So this gives us a lot more breathing space. And that's designed to deal with the capital structure. It effectively takes the pressure off the business and the uncertainty off the business because that permeates through everything day-to-day, right? It permeates through the employees, it permeates through our clients, it permeates through the studios. Because, you know, everybody wants to, you know, make sure that we, you know, we're on a very solid footing.

Speaker Change: From.

Speaker Change: When this all started last summer we went to a sort of a mid October date to a one week extension or so two an extension to mark. So this gives us a lot more breathing space and Thats designed to deal with the capital structure. It effectively takes the pressure off the business and the uncertainty off the business because that that permeate through everything day to day right.

Speaker Change: It permeates III employees it permeates through our clients for mainstream studios.

Speaker Change: Everybody wants to make sure that we you know we're on a very solid footing and thats what it gives us it gives us that certainty and ability to now go forward.

John Gosling: And that's what it gives us. It gives us that certainty and ability to now go forward.

John Gosling: And look, the question that you're probably going to ask, because everybody's asked this question. So what happens after December? The cabinet is going to step back down to 425.

Speaker Change: The question that you're probably gonna ask because everybody's asked this question. So what happens after December Kevin is going to step back down to $4 25, and that's correct. So that's why between now and December 31 were working on other solutions for the balance sheet I can't say, what those are because they're not determined yet.

John Gosling: And that's correct. So that's why between now and December 31st, we're working on other solutions for the balance sheet. I can't say what those are because they're not determined yet. But rest assured, there are conversations that are going on. And that's what we're working towards is to have a solution there.

Speaker Change: But rest assured there are conversations that are going on and and that's what we're working towards is to have a solution there and that's probably all I can say.

John Gosling: That's probably all I can say.

Speaker Change: Yeah, I have no doubt your ability to manage these issues John so.

Maher Yagi: Yeah, I have no doubt your ability to manage these issues, John.

Speaker Change: So maybe maybe a few questions on the operations themselves.

Troy Reeb: Maybe a few questions on the operations themselves. As you said, viewership is up a lot. At some point, how do you translate that into dollars? I know there's a lot of inventory. You discussed that there's a lot of inventory out there for sale.

Speaker Change: As you say as you said.

Speaker Change: Doing viewership is up a lot.

Speaker Change: Uh huh.

Speaker Change: At some point, how do you translate that into dollars.

Speaker Change: I know, there's a lot of inventory you discussed that there's a lot of inventory out there for sale.

Troy Reeb: Is there a point or at some point, could there be a repricing of how much you charge on your channels to place advertisements? you know, become a little bit more competitive on price versus the digital platforms. How can we, you know, move the needle on that front? Well, right now, you know, we've talked about the explosion in digital, premium digital video inventory that's taken place over the last, you know, sort of seven to eight quarters. And, you know, if you use the estimates that were provided by Google, there's 200% more video inventory in the marketplace now than there was two years ago.

Speaker Change: Is there is there a point or at some point could there be.

Speaker Change: Repricing of how much you charge on your channels to place advertisements.

Speaker Change: Are you now.

Speaker Change: Become a little bit more competitive on price versus the core platforms.

Speaker Change: How can we move the needle on that front.

Speaker Change: Well right now.

Speaker Change: We've talked about the explosion in it.

Speaker Change: Digital premium digital video inventory, that's taken place over the last.

Speaker Change: Sort of seven to eight quarters and.

Speaker Change: If you use the estimates that were provided by Google.

Speaker Change: There is 200% more video inventory in the marketplace now than there was two years ago. So that when you have that kind of disparity between supply and demand. It obviously puts downward pressure on pricing overall pricing is.

Troy Reeb: So that when you have that kind of disparity between supply and demand, it obviously puts downward pressure on pricing overall. Pricing is a, you know, pricing is an elastic thing in this industry and as it is in most. But I will say this, we do have higher sellout rates across our platforms than certainly the upstart digital competitors do. And we keep a close eye on that as to as to sell out levels. There was a time not that long ago, the more inventory you could create on Canadian media platform, the more you could sell. That demand was incredibly high.

Speaker Change: Pricing is an elastic thing in this industry and as it is in most.

Speaker Change: But I will say this we do have higher sellout rates across our platforms and then certainly.

Speaker Change: The upstart digital competitors do.

Speaker Change: And we keep a close eye on that as to as.

Speaker Change: The sellout levels, there was a time not that long ago. The more inventory you could create on the Canadian media platform. The more you could sell that demand was incredibly high.

Troy Reeb: And that has obviously changed.

Speaker Change: And that has obviously changed so part of our right sizing efforts that John and I have talked about on previous calls is to to basically try to match our inventory availability with the actual demand from advertisers, while still leaving us some room for growth. It's why we've taken such aggressive.

Troy Reeb: So part of our right sizing efforts that John and I have talked about on previous calls is to to basically try to match our inventory availability with the actual demand from advertisers while still leaving us some room for growth. It's why we've taken such aggressive cost control measures, because we don't as fantastic as it is to have growing audiences. You know, if you can't monetize them, that makes it very difficult for the business. So the good news is that we're able to create these growing audiences with a lower cost structure and and how we actually equal supply and demand.

Speaker Change: Cost control measures.

Speaker Change: We don't.

Speaker Change: As fantastic as it is to have growing audiences.

Speaker Change: If you can't monetize them that makes it very difficult for the business. So.

Speaker Change: The good news is that we're able to create these growing audiences with a lower cost structure and and how we actually.

Troy Reeb: It's probably going to take a little bit of a little while, a few more quarters before before those two things start to equalize. What we do know is there's not a lot of additional new demand being created. So the explosion of additional inventory I talked about, it's not like it's getting bigger, but it's going to take a while for the for that for the demand to catch up to all the available.

Speaker Change: Equally supply and demand, it's probably going to take a little bit a little while a few more quarters before before those two things start to equalize. What we do know is there's not a lot of additional new demand being created so the explosion.

Speaker Change: Of additional inventory I talked about it's not like it's getting bigger, but it's going to take a while for the for that.

Speaker Change: For the demand to catch up to all the available inventory.

Speaker Change: Perfect. Okay. Thank you and then in terms of regulation I mean, now that we are in an election cycle.

Troy Reeb: Perfect. Okay. Thank you.

Maher Yagi: And in terms of regulation, I mean, now that we are in an election cycle. You know, with the caretaker conventions, you know, in place, nothing is probably moving on the regulatory front.

Speaker Change: You know the character conventions keno in place nothing is probably moving on the regulatory front.

Speaker Change: What's your take on.

Troy Reeb: What's your take on What's next? You know, can we, under a new government? From your experience, what is it going to mean in terms of the path that the regulator was on? Could that completely change or the view is that we will continue on with that direction? in order to give Canadian broadcasters some regulatory relief. Well, I'll say this, or do we, or do we go from from back to back to the starting? Look, I think you're correct that because of the election being called, a number of CRTC processes which were in full flight have been delayed, but we're pleased that the Commission has put them back on the table.

Speaker Change: What's next.

Speaker Change: And Kevin we under a new government.

Speaker Change: Hum.

Speaker Change: From from your experience.

Speaker Change: What what is it going to mean in terms of the path.

Speaker Change: The regulator was on the.

Speaker Change: That's completely change or the view is that we will continue on.

Speaker Change: With that direction.

Speaker Change: In order to give.

Speaker Change: Canadian broadcast or some some regulatory relief.

Speaker Change: Well I'll say this.

Speaker Change: Do we go from from back to back to the starting point.

Speaker Change: Look I think you are correct that because of the election being called.

Speaker Change: Number of CRT see processes, which were in full flight had been delayed but we're pleased that the commission has put them back on the table. So we have firm schedules now for the three delayed hearings.

Troy Reeb: So we have firm schedules now for the three delayed hearings, one in May on Canadian content, one in June on sort of structural relationships between streamers, broadcasters, and distributors, and then one in September on the audio industry. So those are back on the calendar. They have clear parameters built around them that have been based on previous mandate letters that have been given to the CRTC. We will continue to work with the expectation that those hearings are going to move forward and we will be meaningful participants in them, and no one can ever predict what a new government might do, but we're encouraged that the bureaucracy, at least, sees its responsibility to move forward.

Speaker Change: One in May on Canadian content, one in June on sort of structural relationships between streamers broadcasters and distributors and then one in September on the on the audio industry. So those are back on the calendar. They have clear parameters built around them that have been based on previous mandate letters that have been given to the CRT C. We will.

Speaker Change: To work.

Speaker Change: With the expectation that those hearings are going to move forward and we will be meaningful participants in them.

Speaker Change: And no one can ever predict what a new government might do but but we're encouraged that the.

Speaker Change: The bureaucracy at least.

Speaker Change: Sees its responsibility to move forward and is doing so.

Mark: Okay, great. Thank you very much thanks Mark.

Maher Yagi: Okay, great. Thank you very much.

Aravinda Galapati: Thanks, Meir. Your next question comes from Aravinda Galapati with Canaccord Genuity. Your line is now open. Good morning. Thanks for taking my questions.

Speaker Change: Yeah.

Speaker Change: Your next question comes from Rich <unk>.

Speaker Change: <unk> <unk>.

Speaker Change: <unk> <unk> with Canaccord Genuity. Your line is now open.

Speaker Change: Good morning, Thanks for taking my questions.

Aravinda Galapati: I just wanted to focus a little bit on sort of the new networks, Home and Flavor. Obviously, that was, you know, what everybody's sort of focused on, you know, during, you know, what the outcome would be during the transition. Maybe can you just talk to, you know, the impact on advertising? And I apologize, I missed the first couple of minutes if you indicated this. The advertising decline, is there any way you could have, you know, kind of ballpark what the impact was, you know, from the transition to the legacy channels to the... Sure, Irvin, I'll take a crack at that without getting too specific.

Just wanted to focus a little bit on to the new.

Speaker Change: Networks home and flavor, obviously that was what everybody's sort of focused on doing what the outcome would be during the transition.

Speaker Change: Maybe can you just talk to the <unk>.

Speaker Change: Impact on advertising and I apologize I missed the first couple of minutes. If you indicated this.

Speaker Change: The advertising decline is there any way you could have.

Speaker Change: It was kind of ballpark what the impact was.

Speaker Change: From the transition to the to the legacy channels to these two.

Speaker Change: Yeah sure I'll take a crack at that without.

Speaker Change: Without getting too specific so.

John Gosling: So like last quarter, Q1. Within TV advertising revenue, it's mostly linear, obviously. When we look at the split between conventional and specialty, not a big surprise given we had strikes last year, but global is performing in Q2 quite well. It's not quite flat, but it's close to flat year over year, which would tell you then that specialty is performing worse than what you see in the reporting, and that's a function of what we've been talking about for the last little while, just the proliferation of all this digital inventory, which tends to eat away at the demand for specialty, especially on some of the lower tier networks that we have.

Right.

Speaker Change: Last quarter Q1.

Speaker Change: Within TV advertising revenue cut.

Speaker Change: Between its mostly linear obviously.

Speaker Change: When we look at the split between conventional and specialty.

Speaker Change: Not a big surprise, given we had strikes last year, but global is performing in Q2 quite well, it's not quite flat, but it's close to flat year over year.

Speaker Change: Which would tell you that in that specialty is it's performing worse than what you see in the reporting.

Speaker Change: And Thats a function of what we've been talking about philosophy allows that just the proliferation of of all of this digital inventory, which tends to eat away at the demand for specialty, especially on some of the lower tier networks that we have so.

Speaker Change: I understood that a whole context, I think he can stay at home and flavor from an audience perspective, and Troy can fill us in a bit more but when ice perspective is doing incredibly well from a revenue perspective, it's performing at those two are performing at very similar levels to our top five, especially channels, which shouldnt be a big surprise given what we said in our prepared.

Troy Reeb: Under sort of that whole context, I think you can say that Home and Flavor, from an audience perspective, and Troy can fill this in a bit more, but from an audience perspective is doing incredibly well. From a revenue perspective, it's performing at, those two are performing at very similar levels to our top five specialty channels, which shouldn't be a big surprise given what we said in our prepared remarks, which is that they're kind of top one and two in terms of entertainment networks. So that's probably the way to think about it is, they're doing fine in the context of our other top specialty networks, but specialty overall is down pretty significantly and that's really the big challenge we have.

Speaker Change: Remarks, which is that there are kind of top one and two in terms of entertainment networks. So that's probably the way to think about it is.

Speaker Change: Theyre doing fine in the context of our other top especially networks, but especially overall is down.

Speaker Change: Pretty significantly and that's that's really the big challenge we have.

Speaker Change: Yeah, and I would just add.

Troy Reeb: And I would just add, when we launched those networks, we knew we would have new competitors. And so we adjusted the budgets accordingly. We've been very pleased with the performance, not only from an audience standpoint, but we're achieving our estimates on those channels in terms of advertising as well. So, but again, those are unadjusted budgets because we knew we would be facing some aggressive new customers. Okay, okay, that's helpful. So when you say it's number one and number two, especially lifestyle networks, it is so basically it's outperforming the two legacy networks in terms of ratings, because you're taking the whole kind of the numerous numbers here, right?

Speaker Change: When we launched those networks, we knew we would have new competitors.

Speaker Change: So we adjusted the budgets accordingly.

Speaker Change: We've been very pleased with the performance not only from a.

Speaker Change: From an audience standpoint, but.

Speaker Change: We're achieving our estimates on those channels in terms of in terms of advertising as well so but again those are unadjusted budgets, because we knew we would be facing some aggressive new competition.

Speaker Change: Okay. Okay. That's helpful. So when you say, it's number one and number two.

Speaker Change: Specialty.

Speaker Change: Style networks. It is so basically it's outperforming the two legacy networks in terms of ratings, because you're taking the whole kind of the numerous numbers here right.

Aravinda Galapati: Yes, yeah, by by a very wide margin, like four to five to one. Okay. All right. It's good to know.

Speaker Change: Yes by a very wide margin like four to five to one.

Speaker Change: Four or five to one okay, alright, alright, thats good to know.

Speaker Change: And then in terms of subscriber revenues.

Aravinda Galapati: And then, in terms of subscriber revenues, you know, thank you for the clarity. That's helpful. Is it fair to say – I mean, you've given forward guidance on advertising. Is it fair to say that, you know, despite this – I mean, Q2 obviously still has a month under the prior deal. Is it fair to say that mid-single digit is still kind of achievable on the subscriber side, notwithstanding what you mentioned about pressure on the specialty front? So you're talking about mid-single-digit decline? Yes. Yeah. No, I think that's a good way to think about it. Okay.

Speaker Change: For the clarity that's that's helpful.

Speaker Change: Is it fair to say I mean, you've given forward guidance on it.

Speaker Change: Advertising is it fair to say that.

Speaker Change: Despite this 70 in Q Q2, obviously still has a month of the prior under the prior deal.

Speaker Change: Is it fair to say that mid single digits is still kind of achievable.

Speaker Change:

Speaker Change: On the on the.

Speaker Change: Subscriber side and notwithstanding what you mentioned about pressure on the specialty front.

So youre talking about mid single digit decline, yes, yes, no I think thats a good way to think about it.

Speaker Change: Okay. Okay.

John Gosling: And then lastly, just on the balance sheet, you know, I've asked this question before, but in terms of asset sales, as you kind of sort of browse through your portfolios, is there anything that sort of emerged that you feel, you know, could sort of translate to some, you know, divestitures? Any update there? Yeah, I don't think there's anything more to say. I mean, we talked about there's some transmitter land, you know, you saw us do one in Edmonton in the first quarter. I think there's other opportunities there. In terms of other obvious things, look at, you know, Some of these assets come with a fairly high degree of difficulty given regulatory constraints and other things.

Speaker Change: And then lastly on the.

Speaker Change: Just on the balance sheet.

Speaker Change: I've got I've asked this question before but in terms of asset sales as you kind of set of browse through your.

Speaker Change: Your portfolio is there anything that sort of emerged that you feel could instead of <unk>.

Speaker Change: Translate to some.

Speaker Change: Divestitures any update there would be helpful.

Speaker Change: I don't think there's anything more to say I mean, we talked about theres some transmitter land.

Speaker Change: You saw us do one in Edmonton and in the first quarter I think there's other opportunities there.

Speaker Change: In terms of other obvious things okay.

Speaker Change: Some of these assets come with a fairly high degree of difficulty given regulatory constraints and other things so.

John Gosling: So, you know, and you've seen what we've tried to do in the past, for example, with the French Channels. So I'd say, you know, other than the land, we're not necessarily counting on anything to happen, but we'll be opportunistic if there is an ability to do something at the right price, then we would certainly entertain that. All right. Thank you very much. I'll pass the line. Thanks a lot. Thanks, Arvind.

You've seen what we've tried to do in the past for example, with the French channels. So.

Speaker Change: I would say.

Speaker Change: No other than the land, we're not necessarily counting on.

Speaker Change: Anything to happen, but we'll be opportunistic if there is an ability to do something at the right price then we would certainly entertain that.

Speaker Change: Okay, Alright, thank you very much I'll pass the line. Thanks, a lot things urban.

Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.

Joelle: Ladies and gentlemen, as a reminder, should you have a question, please press star 1.

Speaker Change: Your next question comes from drew Mcreynolds with RBC. Your line is now open.

Drew Mcreynolds: Your next question comes from Drew McReynolds with RBC. Your line is now open. Yeah, thanks very much. Good morning. Just a few random ones for me.

Drew Mcreynolds: Yes, thanks very much good morning, just a few random ones for me.

Speaker Change: Back to the channel optimization John.

Drew Mcreynolds: Just back to the channel optimization, John, you know, in terms of What was just discussed on the Outlook or trajectory for subscription revenues is the optimization process to a couple of... panels a year? Like how fluid, you know, is your portfolio from that perspective? Or what you've already done or what you're doing right now looks to be, you know, what's required, let's just say, over the next two to three years? No, I think it's fair to say, Drew, it's, it is fluid. You know, there's a, there are a lot of moving pieces, obviously, in terms of audience demand, and distributor requirements, and, you know, content supply.

Speaker Change: In terms of.

Speaker Change: What was just discussed on the <unk>.

Speaker Change: Look our trajectory for subscription revenues.

Speaker Change: R R.

Speaker Change: The optimization process do a couple of them.

Speaker Change: Panels, a year like how fluid.

Speaker Change: As your portfolio from that perspective or.

What you've already done or what Youre doing right now looks to be.

Speaker Change: Whats required, let's just say over the next two to three years.

Drew Mcreynolds: No I think it's fair to say drew it's it is fluid.

Speaker Change: There are a lot of moving pieces, obviously in terms of audience.

Drew Mcreynolds: Audience demand.

Drew Mcreynolds: Distributor requirements and content supply so.

John Gosling: So, you know, it's, it's very difficult to predict how all those things will come together. But, you know, we're, we're still working on obviously, you know, as we look to optimize, you know, our cost structure, then, you know, we'll look at all these things. But for now, it's, it's hard to get specific because there are a lot of moving pieces. Okay, that's fine.

Drew Mcreynolds: It's very difficult to predict how all those things will come together, but we're still working on it obviously you know as we look to optimize.

Drew Mcreynolds: Our cost structure then.

Drew Mcreynolds: We will look at all of these things, but for now it's hard to get specific because there are a lot of moving pieces.

Drew Mcreynolds: Okay.

Drew Mcreynolds: That's fine.

John Gosling: On the new channel, so great to kind of hear the success on the transition and migration. Can you remind us when the pre-preview period ended? I don't know if it's the typical three months, and so it has ended. Just what's the update there? Yeah, it has ended. It ended as of the end of March. Our audiences really have seen no significant change since then, so we continue to be very encouraged. Obviously, we love it when we get some sampling from current non-subscribers, but it is our core fans and those services of that kind of content that drive most of the viewing, and clearly the subscribers are sticking with us.

Drew Mcreynolds: On the.

Drew Mcreynolds: <unk> channel so great to kind of hear the success on the transition and migration.

Drew Mcreynolds: Just can you remind us when the free preview period ended I don't know if there is the typical three months and so it has ended.

Drew Mcreynolds: What's the update there.

Drew Mcreynolds: It has ended it ended as of the end of March our audiences.

Drew Mcreynolds: Really have seen no significant change since then so we continue to be.

Drew Mcreynolds: Encourage that obviously, we love it when we can get some sampling from.

Drew Mcreynolds: From current non subscribers, but it is our core fans in those services of that kind of content that drive most of the viewing and clearly the subscribers or are sticking with us.

Drew Mcreynolds: Okay Super.

John Gosling: Okay, super.

John Gosling: Just shifting gears a little bit to radio and You know, a bunch of on this call cover, you know, a couple of the other radio folks, just, you know, characterize the radio industry. Like, we're all aware of the structural headwinds. You know, just in terms of percentage fat dollars that radio gets, there's obviously the national local piece over the years. And of course, on radio, you know, just tends to kind of. Like, like everyone underperforming certain markets outperforming other markets.

Drew Mcreynolds: Shifting gears, a little bit to radio and.

Drew Mcreynolds: On this call cover.

Drew Mcreynolds: A couple of the other radio folks.

Drew Mcreynolds: Ill characterize the radio industry like we're all aware of the structural headwinds.

Drew Mcreynolds: Just in terms of percentage of AD dollars that radio gets theres, obviously national local piece over the years I think course on radio.

Drew Mcreynolds: Just tends to kind of.

Drew Mcreynolds: Everyone underperforming markets outperforming other markets what is happening here on your radio business from your perspective.

John Gosling: What what what is happening here on your radio business from your perspective? We've seen some improvements in EBITDA this quarter, and that's largely from cost reductions and credit to our audio team, which has gotten very creative in how we can continue to meet the programming needs and demands of our audiences while still looking for cost efficiencies. We think there's some more opportunity to continue to do that while we make investments in the brands themselves. You're correct, the radio has a specific challenge in that unlike television, there's not a subscription revenue line. We have seen some success in our audio division in podcasting and increasingly with DAI revenues.

Drew Mcreynolds: But we've seen some improvements in EBITDA this quarter and that's largely from our cost.

Drew Mcreynolds: Cost reductions in.

Drew Mcreynolds: Credit to our audio team, which has gotten very creative in how we can continue to meet the programming needs and demands of our audience as well.

Drew Mcreynolds: Still looking for cost efficiencies, we think there's some more opportunity to continue to do that while we while we make investments in the brands themselves. You are correct that radio has a specific challenge in that unlike TV. There is there is not a subscription revenue.

Drew Mcreynolds: Revenue line, we have seen some success in our audio division in in podcasting and increasingly with dji revenues. So there is there's been some pickup in digital revenues, there and we think digital revenues will become a more meaningful piece of the overall.

Troy Reeb: So there's been some pickup in digital revenues there, and we think digital revenues will become a more meaningful piece of the overall audio revenue line going forward. But there's no doubt that radio as a terrestrial medium faces challenges going forward, and it's one of the reasons I think we're looking for the regulator to be more flexible as we head into a fall hearing. The entire industry wrote a pretty strongly worded letter to the CRTC recently saying that its parameters for that hearing were not nearly wide enough, and I think we're all concerned that without some regulatory change, this will continue to be a challenge.

Audio revenue line going forward.

Drew Mcreynolds: But theres no doubt that.

Drew Mcreynolds: Radio as a terrestrial medium faces.

Drew Mcreynolds: Challenges going forward and it's one of the reasons I think we're looking for the for the regulator to be more flexible as we head into a full hearing the entire industry wrote up pretty strongly worded letter to the to the Crts <unk> recently.

Drew Mcreynolds: Saying that it's it's parameters for that hearing we are not nearly wide enough.

Drew Mcreynolds: And I think we're all concerned that some without some regulatory change this will continue to be a challenged medium.

Speaker Change: Drew I am not sure.

Troy Reeb: I'm not sure that the other data points you can get in the industry, I don't know that they're apples to apples. I think there's some different revenue items that are included that's in radio for some of our competitors. I will say this as well, we don't give a specific outlook for radio for the next quarter just because it's relatively small and not as big a driver obviously as the TV advertising line. But radio for Q3 is looking much, much better. So I think that's giving us a bit of a tailwind there that we're not stuck in this kind of minus 14 mode forever here.

Drew Mcreynolds: The other data points, you can get an industry that I don't know that they are apples to apples I think theres. Some different revenue items that are included.

Drew Mcreynolds: Within radio for some of our competitors I will say this as well look we don't give a specific outlook for radio for the next quarter.

Drew Mcreynolds: Just because it's relatively small and not as big a driver obviously, it's the TV advertising line, but radio for Q3 is looking much much better.

Drew Mcreynolds: So I think that's that's giving us a bit of a.

Drew Mcreynolds: A bit of a tailwind there.

Drew Mcreynolds: We're not stuck in this kind of minus 14 mode forever here.

Drew Mcreynolds: Okay, Okay, yes definitely.

Drew Mcreynolds: Okay. Yeah, definitely. We're aware of not apples to apples, for sure. So thanks for flagging that.

Drew Mcreynolds: We're aware of.

Speaker Change: Not apples to apples for sure. So thanks for flagging that.

Drew Mcreynolds: I'm just going to make one last quick comment too. It's notable as we go through an election cycle, how much all of the political parties are using radio for their advertising campaign. So it's nice to know that some folks in Ottawa understand the value of radio for reaching Canadian audience.

Speaker Change: I'm just going to make one last quick comment too. It's notable as we go through an election cycle, how much all of the political parties are using radio for their for their advertising campaigns. So it's nice to know that some folks in Ottawa I understand the value of radio for reaching Canadian audiences.

Speaker Change: Alan just a trial to just two last ones for me John just maybe on a full year basis.

John Gosling: Okay, just two last ones for me, John, just maybe on a full year basis, what you penciled in for the change in working capital for the fiscal 2025 year, and then bigger picture, you know, we're all trying to figure out the trajectory of the business, and obviously You guys have done what I think is a great job with all the challenges you've faced. Do we get at some point, John or Troy, improving to the point where you can begin to discuss it a little bit more with us. Yeah, I'd say it's probably right now, just given everything that's happening in the world and in, you know, potential impact on the economy, there's less visibility, Drew, than we've had.

What your Pennsylvania for the change in working capital for the fiscal 2025 year, and then bigger picture.

Speaker Change: We're all trying to figure out the EBITDA trajectory of the business and obviously.

Speaker Change: You guys have done a great job.

Speaker Change: With all the challenges you faced.

Speaker Change: Do we get at some point John or Detroit.

Speaker Change: Some some incremental kind of guidance so to speak on.

Speaker Change: Just 30000 foot views of where kind of EBIT begins to kind of stabilize if that's in the cards or just kind of premature to do that and Neil the reason I asked and it's pretty obvious.

Speaker Change: Go ahead of Street estimates out there are still a pretty wide and had been wide for the better part of the last year or so just wondering if from your perspective visibility on where you think that trajectory is headed is improving to the point, where you can begin to discuss it a little bit more with us.

Speaker Change: Yeah, I'd say its probably right now just given everything that's happening in the world and potential impact on the economy.

Drew Mcreynolds: Less visibility drew than than we've had and that's been fairly limited in the past as you know.

John Gosling: And that's been fairly limited in the past, as you know. We only give that outlook for the next quarter because, frankly, we're halfway through it and we have a pretty good sense of how it's going to play. But beyond that, it's really hard to say. And of course, as revenue goes, as you know, that's how EBITDA is going to go. So we'll continue to work on the cost side and that will include programming. But you know, it's just very, very difficult to be able to give any kind of an outlook beyond what we've given.

Drew Mcreynolds: We only give that outlook for the next quarter, because frankly, we're halfway through it and we have a pretty good sense of how it's going to play.

Drew Mcreynolds: Beyond that it's really hard to say and of course as revenue goes as you know thats, how EBITDA is going to go so, but we'll continue to work on the cost side and that will include programming.

Drew Mcreynolds: But it gets very very difficult.

Drew Mcreynolds: To be able to give any kind of an outlook beyond what we've given.

Okay, and just on the working capital side John.

John Gosling: Okay. And just on the working capital side, John? Oh, yeah. Look, working capital typically would be, I'd say, slightly negative structurally in any given year. This year's obviously been a bit of an unusual year, given what, you know, has happened with some of the channels and given, you know, our sort of very high-profile financial situation that puts some pressure on us from suppliers who want to make sure they're going to see their remittances on a more-than-timely basis. So, I think, though, for the full year, if you consider us, you know, slightly negative on working capital, that's probably the place to be, and, you know, we'll see how things go.

John: Yeah look working capital typically would be I'd say slightly negative structurally in any given year.

John: This year has obviously been a bit of an unusual year given what has happened with some of the channels and given you are sort of very high profile financial situation that.

John: Put some pressure on us from suppliers, who want to make sure they are going to to see their remittances on a more than timely basis. So I think for the for the full year. If you consider a slightly negative on working capital that's probably the place to be and.

John: And we'll see how things go I feel like with the announcement a couple of weeks ago.

John Gosling: I feel like with the announcement a couple weeks ago, you know, we're feeling sort of much better that we're sort of back to normal in terms of the way that, you know, we're going to see things flow. So, that's probably the best estimate at this point.

John: We were feeling sort of much better that we're sort of back to normal in terms of the way that we're going to see things flow. So that's probably the best the best estimate at this point.

John: Okay perfect. Thank you both thanks.

Drew Mcreynolds: Okay, perfect. Thank you both.

Speaker Change: Your next question comes from Adam Shine with National Bank Financial Your line is now open.

Adam Schein: Your next question comes from Adam Schein with National Bank Financial. Your line is now open. Thanks a lot.

Speaker Change: Thanks, a lot. Good morning, just two questions speaking of the election cycle is Troy referenced you've got the Liberals, maybe it's just pure <unk>.

Adam Schein: Good morning. Just two questions. You know, speaking of the election cycle, as Troy referenced, you know, you've got the Liberals, maybe it's just pure, you know, posturing amidst the campaign, but talking about, you know, significantly funding the CBC going forward, you know, in an environment where clearly the private broadcasters like yourselves are really taking it hard on the chin. So maybe just a few comments from you guys around that and how you react to those types of election campaigning statements.

Speaker Change: Stirring amidst the campaign, but talk to you about.

Speaker Change: Significantly funding the CBC going forward.

Speaker Change: We did environment, where clearly the private broadcasters like yourselves are really taking it hard on the chin. So maybe just a few comments from you guys.

Speaker Change: <unk> that and how you react to those types of election campaigning statements.

Speaker Change: And then I'll circle back on the back of.

John Gosling: And then I'll circle back on the back of, you know, maybe one of Drew's last questions to hit you, John, a little bit more on program amort going forward.

Speaker Change: One of <unk> last questions to hit you chart, a little bit more on.

Speaker Change: Program abhorred going forward.

Just on the first point.

Troy Reeb: Just on the first point, maybe if we tried to see a glass half full here, it's that you have a party leader who is recognizing that Canadian media is very important and needs to be supported. We certainly would say that more than the public broadcaster needs to be supported in new and different ways. And we would echo what the Canadian Association of Broadcasters has said is that any increase in funding for the CBC should come along with a reduction in the amount of advertising that it's able to sell so that some of those ad dollars could be repatriated to the private sector.

Speaker Change: Maybe if we tried to see a glass half full here, it's that you have a.

Speaker Change: Party leader, who is recognizing that Canadian media is very important.

Speaker Change: It needs to be supported we certainly would say that's more than the public broadcaster needs to be supported in new and different ways and we would echo what the Canadian Association of broadcasters have said is that any increase in funding for the CPC should come.

Speaker Change: Come along with a reduction in the amount of advertising that it's able to sell so that some of those AD dollars could be repatriated to the private sector.

Troy Reeb: But I think, as I say, if I try to be an optimist here, what we really want from all the parties is an acknowledgment that in a time when two-thirds of advertising dollars are going to digital platforms, most of them outside of this country, that there needs to be support from government for things that will redirect those dollars back into the Canadian media ecosystem because it's very important for our culture, for our news and information, and for our economy. Okay, fair enough.

Speaker Change: But I think the.

Speaker Change: As I say, if I, if I tried to be an optimist here, what we really want from all the parties is an acknowledgment that in it.

Speaker Change: Time win.

Speaker Change: Two thirds of advertising dollars are going to digital platforms most of them outside of this country.

Speaker Change: There needs to be support from government for things that will redirect those dollars back into the Canadian media ecosystem, because it is very important for our culture for our news and information and for our economy.

Speaker Change: Okay Fair enough you should be out on the campaign Trail Troy.

John Gosling: You should be out on the campaign trail, Troy. John, we're probably a month away from upfront and then you'll deal with LA screenings, but I'm sure you've had some preliminary discussions with Hollywood already. When we think about the lookout to program Amort next year, just preliminarily, do we see the prospect of net savings or is there just the usual inflationary dynamic where flat to up would be a good starting point to assume? Yeah, again, it's a bit early, as you've noted, Adam, just given, you know, the sort of place we are in the cycle right now.

John Gossiping: John just one.

Speaker Change: We're probably a month away from upfront.

Speaker Change: You'll you'll deal with la screenings, but I'm sure you've had some preliminary discussions with Hollywood already when we think about the lookout to program onboard next year.

Speaker Change: Just preliminarily do.

Speaker Change: Do we see the prospect of net savings.

Speaker Change: Or is there just the usual inflationary dynamic where.

Speaker Change: That to us would be a good starting point to assume.

Adam Shine: Yeah again, it's a bit early as you've noted Adam just given.

Speaker Change: The sort of place we are in the cycle right now.

John Gosling: But I'd say, you know, sort of the big moving pieces are, yeah, there'll be some inflation on some of the top rated programming. And you know, we're taking a hard look at that cost. So you know, there are certain of the output deals that are going to have to adjust as they come up. And that's what we're doing right now. So it's hard to kind of roll that all together right now, until we really see what the schedules are going to look like, kind of mid May. But you know, the absolute goal is that we need to reduce that line.

Speaker Change: But I would say sort of the big moving pieces are yes, there'll be some inflation on on some of the top rated programming and we're taking a hard look at that cost. So there are certain of the output deals that are going to have to adjust.

Speaker Change: They come up and that's what we're doing right now so it's hard to kind of roll that all together right now.

Speaker Change: Until we really see what the schedule is going to look like.

Speaker Change: Kind of mid May but.

Speaker Change: Absolute goal is that we need to reduce that line and that'll be a combo of foreign.

John Gosling: And that'll be a combo of foreign and Canadian, although Canadian amortization is starting to kind of, I'd say bottom out a little bit. And I would say strategically, we are focused on ensuring that we go and get those big acquisition titles that ensure customers want to sign up for our subscription services, whether that be traditional cable networks or Stack TV. But at the same time, I think there's a recognition, even from the studios, that the amount of program that they can continue to churn into the system is probably declining. So our focus is on, yes, making sure that we still get those tentpole acquisition titles, but looking at the overall portfolio as one of opportunity to be able to spend.

Speaker Change: Foreign and Canadian although Canadian amortization.

Speaker Change: Is it starting to kind of I'd say bottom out a little bit and I would say strategically we are focused on ensuring that we go and get those big acquisition titles that ensure customers want to sign up for our subscription services, whether that be traditional cable networks or stack television.

Speaker Change: But at the same time I think there's a recognition even from the studios that the amount of program that they can continue to churn into the system.

Speaker Change: Is is probably declining so our focus is on.

Speaker Change: Yes, making sure that we still get those tentpole acquisition titles, but.

Speaker Change: Looking at the overall portfolio is one opportunity to to be able to spend less.

John Gosling: Is there anything in the transition, you know, September to December going forward into the new fiscal where, you know, because in theory I would say you probably have less expensive programming in the transition to the new channels from the WBD Bravo content that, you know, it gives Troy a bit more money to spend on some of that marquee programming, but with, you know, some offsetting lower costs related to some of that WBD transition or is that just a false presumption? No, no. I think generally that's what's happened. I mean, look, those output deals with Warner were very expensive and they performed well and they were, you know, high margin channels.

Is there anything of the transition September to December.

Speaker Change: Going forward into the new fiscal where because in theory I would say you probably have less expensive programming and the transition to the new channels from the W. BD Bravo content that.

Speaker Change: It gives toy a bit more money to spend on some of that Mark Kaye.

Speaker Change: Programming.

Speaker Change: But with some offsetting lower costs related to some of that W. BD transition or is that just a false presumption.

Speaker Change: Generally that's what's happened.

Speaker Change: Look those output deals with Warner were very expensive and they performed well and they were high margin channels.

Speaker Change: But yes I think.

Joelle: But yeah, I think, you know, those, you know, that sort of cash requirement now behind us, you know, and we've obviously reprogrammed the channels and quite successfully. I think overall our view is, yes, that should be less expensive. I don't think it's going to be that material that, you know, given just sort of all the general noise around programming and timing that it's going to be super noticeable, but there's definitely a benefit there. OK. All right. Thank you very much. Thanks, Adam. There are no further questions at this time.

Speaker Change: Does that sort of cash requirement now behind us.

Speaker Change: We've obviously reprogram the channels and quite successfully.

Speaker Change: Overall, our view is yes that should be less expensive.

Speaker Change: I don't think its going to be that material that given just sort of all the general noise around programming and timing that it's going to be super noticeable, but there's definitely a benefit there.

Speaker Change: Okay.

Ed: Alright, Thank you very much thanks Ed.

Ed: There are no further questions at this time I will now turn the call over to Mr. Troy.

Troy Reeb: I will now turn the call over to Mr. Troy Reeb, co-CEO, for closing remarks. Thank you, operator. I would just close by giving the acknowledgement to all of our Corus team members across the country. There is no doubt that as we have pursued our right sizing efforts over the last year, there have been impacts in most of our locations and on some of our brands and certainly in our people. And one thing that has remained incredibly resilient about this business is the morale and willingness of our people to step up because they believe in this content, they believe in these brands, and they believe in the future of Canadian media the same way that John and I do.

Ed: <unk> CEO for closing remarks.

Ed: Thank you operator.

Ed: Just close by.

Speaker Change: Giving the acknowledgment to all of our chorus team members across the country. There is no doubt that.

Speaker Change: As we have pursued our right sizing efforts over the last year there have been impacts in most of our locations and on some of our brands and certainly in our people and one thing that has remained incredibly resilient about this business.

Speaker Change: Is the morale and willingness of our people to step up because they believe in this content. They believe in these brands and they believe in the future of Canadian media at the same way that John and I do so a big thank you to all of our teams for their contributions and thank you operator for assisting us and to everyone who joined the call today.

Troy Reeb: So a big thank you to all of our teams for their contributions and thank you, operator, for assisting us and to everyone who joined the call.

Speaker Change: Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.

Joelle: Thank you ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.