Some analysts are now saying Global’s owner is headed for bankruptcy — can Corus be saved?

Signs of trouble have been emerging for a while.

Last September, the broadcaster shut down “Entertainment Tonight Canada,” and in June, long-time CEO Doug Murphy abruptly left the company, replaced by co-CEOs Troy Reeb and John Gossling. Around the time of Murphy’s departure, Global News announced a wave of high-profile layoffs, and anchors Alan Carter of “Global News at 5:30 & 6” and Farah Nasser of “Global National” left shortly after.

Since 2021, Corus has seen its stock tumble from a high of about $6.30 to 20 cents as of early July. Half the equity analysts covering Corus surveyed by Bloomberg think the stock could go even lower: they recommend selling, indicating it could become worthless.

“Anything is possible,” said one analyst. (The Star granted the analyst anonymity as they were not authorized to speak to the media.) “But you would need the advertising market to really pick up on the traditional media side of the business, which at this point doesn’t appear to be happening.

“Barring a miracle, I don’t see it getting better.”

Corus declined to comment on its financial situation, saying it would remain in a quiet period until its third-quarter financial results are released on July 15.

DBRS Morningstar analyst Scott Rattee said Corus could still avoid going into creditor protection, noting that he sees opportunities for recovery. But two of the four analysts the Star spoke with said they believed Corus would have to go through a major restructuring to survive, and could end up shedding or closing down key assets, including Global News. 

Bankruptcy is definitely a possibility, said one, adding that it could happen sooner than expected — possibly “within months or weeks.”

A perfect storm 

The troubles at Corus arose from a perfect storm of questionable decision-making, tough regulations for Canadian content producers, and fierce competition for viewers from streaming giants like Netflix and Amazon Prime Video. 

The decline began with the acquisition of Shaw Media and its 45 TV channels in 2016, which was largely financed by $2.65 billion in debt ($1.85 billion in cash and $800 million in stock).

Private equity firm Catalyst, which had a minority stake in Corus, opposed the deal, arguing that Corus was overpaying by as much as $858 million. But the acquisition went through anyway, backed by the regulator and the Ontario Securities Commission.

The company has been highly leveraged since. Today, it holds around $1 billion in debt, with a significant portion (around $300 million) coming due in 2027. About $500 million in senior unsecured notes are set to mature in mid-2029 and another $250 million is due in 2030, according to DBRS Morningstar. 

Paying off that massive debt won’t be easy.

Like many players in the industry, Corus has been hit by a wave of fiscal challenges over the past year: Canadian programming spending requirements imposed by the Canadian Radio-television and Telecommunications Commission (CRTC) have continued to pressure its bottom line, while TV advertising spending has plummeted and two Hollywood strikes hampered content creation. Then, one more blow: Amazon and Peacock obtained exclusive streaming rights to air key live sporting events, further diminishing the appeal of cable TV.

An exodus of talent

After reporting losses over several consecutive financial quarters, Corus slashed its dividends by more than half in March 2023. Just months later, it announced the closure of “ET Canada” after 18 seasons, citing the cost of producing the show in “a challenging advertising environment.” It finally asked the CRTC for relief in October, saying its debt had reached ”unacceptable levels.”

Corus’s financial struggles forced Global News to shed 35 unionized positions — five per cent of its 690 Unifor Media One members — in June.

Ottawa-based correspondent Abigail Bimman was among three Global News employees given layoff notices while on maternity leave.

Just five weeks before receiving the notice, Bimman went into labour at the office, but chose not to go to the hospital until she finished filing her story, according to sources who spoke confidentially, as they are not allowed to discuss the matter publicly.

Global News Journalists Alan Carter, Mike Drolet, Melanie Zettler and Farah Nasser were also affected, sources confirmed. 

“I especially want to say thank you to you, the viewers,” said Carter, who spent 25 years as a newscaster at Global, in a goodbye message. “Anyone who’s ever come up to me on the street to say hi, or sent me a note, your support and your trust has meant the world to me.”

Unifor has been calling on the federal government and the CRTC to speed up funding for Canada’s news businesses through the Online News Act and the Online Streaming Act, which require streaming services and online platforms to compensate Canadian broadcasters and news outlets, as Canada’s journalists “cannot be made to wait for critical new funding,” said Dan Valente, Unifor assistant to the national officers.

In response, the CRTC said that it will “continue to move quickly” to secure funding. 

An industry in decline

In May, the regulator granted Corus’s request to ease Canadian spending requirements to five per cent of revenue from 8.5 per cent, while also extending a repayment deadline for under-expenditures in such programs. 

“The CRTC’s decision recognized Corus’s financial circumstances and its unique position as Canada’s largest private broadcaster that does not also own a cable or satellite television service,” CRTC spokesperson Leigh Cameron wrote in a statement.

But Corus is not alone in struggling to adapt to a business model focused on subscription revenues while facing a hemorrhage in advertising spending. Bell and CBC have also laid off hundreds of employees this year, joining other media companies in the U.S. that have made cuts, including the Los Angeles Times and the Washington Post. 

“The Canadian broadcasting system needs regulatory relief quickly,” said Scotiabank analyst Maher Yaghi in a note to clients in April.

“The CRTC has been trying to dodge a bullet for far too long. Without allowing the industry more room for consolidation and, more importantly, flexibility in how to spend content dollars, companies will need to undertake additional employee reductions as they try to face a continually declining revenue stream.”

In a move that might have pushed Corus to the edge, telecom giant Rogers Communications recently acquired the rights to Warner Bros. Discovery lifestyle channels, including HGTV and the Food Network, which are some of Corus’s most successful brands. The deal will become effective in January. 

“In this new world, you have players of such massive market scale that can go directly to U.S. studios and simply snap up agreements that undermine those of Canadian broadcasters,” Troy Reeb, co-CEO of Corus, said at the Banff World Media Festival. “I think that’s an abuse of the system, because there are no channels at Rogers right now to put those services on — they will need to launch services.” 

Rogers spokesperson Sarah Schmidt said the company negotiated the deal “in a fair and open market” in a bid to “advance our position as a strong Canadian broadcaster that can compete with foreign streamers.”

“We know they (Corus) have faced a variety of challenges over the last few years. We hope they’re able to evolve with a new business model for their employees, customers and shareholders.”

Can Corus be saved?

It’s possible Corus will find ways to refinance its debt — through additional lines of credit, or by renegotiating the loan maturity dates, for example — and avoid bankruptcy, said DBRS Morningstar’s Rattee. 

“I still think that they have a place in the entertainment landscape,” he said. “What they are trying to do is still viable.” 

“They are generally really good at putting together a schedule that’s got good content on it and attracts viewers,” said Rattee, adding that Corus has time to replace and rebrand some of the channels it lost to Rogers. “Warner Brothers is not the only place that generates either food or home-style programing.” 

Adapting to a new operating environment might mean giving up less successful brands and focusing on their strengths, such as their children’s programming, said Rita Cugini, a regulatory consultant and former CRTC commissioner. 

Broadcasters like Corus are an important part of the media landscape, and Cugini said its demise would leave a permanent gap in the country’s news and entertainment offerings.

“Canada needs that diversity of voices, choices and opinions that come with a variety of broadcasting services.”