Shares of Corus Entertainment plunged on Friday as the company announced the suspension of its dividend in response to a decline in advertising demand.
At 9:42 a.m. ET, shares were trading nearly 19% lower at 74 Canadian cents (54 cents).
The Canadian mass media company has decided to prioritize debt repayment by redirecting capital that would otherwise have been allocated to dividends.
Corus attributes the decrease in advertising demand to prolonged strikes by the Writers Guild of America and The Screen Actors Guild-American Federation of Television and Radio Artists, which have exerted additional pressure on advertising demand and revenue.
However, it is worth noting that the advertising slump began even before the strikes. In its third quarter report released in June, Corus revealed that the decline in advertising had started a year earlier.
In the fourth fiscal quarter, Corus managed to turn a profit of C$50.4 million, marking a significant improvement compared to the C$367.1 million loss previously incurred. This success can be attributed to a cash injection resulting from the divestiture of its animation software company Toon Boom Animation, sold for C$147.5 million to Integrated Media Company in July.
After excluding one-off costs, the adjusted loss narrowed to C$0.04 a share, surpassing analysts' expectations for a wider loss of C$0.09 a share based on a FactSet poll.
Revenue for the quarter remained relatively stable at C$338.8 million compared to last year's C$339.6 million.
Doug Murphy, Chief Executive of Corus Entertainment, acknowledged that the weak advertising economy continues to be impacted by the strikes.