Research Update: Corus Entertainment Inc. Downgraded To 'BB-' On Higher Leverage, Weak Performance

We expect Toronto-based Corus Entertainment Inc.'s performance will remain challenged through the next few quarters with a 10%-15% decline in the company's advertising revenue, which--along with the lackluster performance in TV subscriber and radio segments--has caused its leverage to increase to mid-4x. However, we expect the company will stabilize its leverage close to 4x by fiscal 2024 year-end as it continues to pay down debt, limit shareholder distributions, and experience recovery in advertising next year. However, we do not expect advertising recovery and profitability will return to earlier levels. Therefore, S&P Global Ratings lowered its issuer credit rating on Corus to 'BB-' from 'BB'. We also lowered our issue-level rating on the company's secured debt to 'BB+' from 'BBB-' and

...- We expect Toronto-based Corus Entertainment Inc.'s performance will remain challenged through the next few quarters with a 10%-15% decline in the company's advertising revenue, which--along with the lackluster performance in TV subscriber and radio segments--has caused its leverage to increase to mid-4x. - However, we expect the company will stabilize its leverage close to 4x by fiscal 2024 year-end as it continues to pay down debt, limit shareholder distributions, and experience recovery in advertising next year. However, we do not expect advertising recovery and profitability will return to earlier levels. - Therefore, S&P Global Ratings lowered its issuer credit rating on Corus to '##-' from '##'. We also lowered our issue-level rating on the company's secured debt to '##+' from '###-' and our rating on the unsecured debt to '##-' from '##'. The recovery ratings are unchanged. - The stable outlook indicates our forecast that Corus' leverage will improve and stabilize close to 4x by...

Research Update