Calgary, Alta.-based Corus is the largest Canadian radio operator, which owns or has interest in a number of specialty television networks, and, through Nelvana Ltd., is a producer of children's animated programming. The recent outlook revision to negative reflects a slower-than-expected expansion of Corus' cash flow base, due to both cyclical economic factors and structural decline in pricing for the company's programming, limiting the long-term financial prospects of Nelvana. Although Corus generates positive free cash flows and operating margins have improved for its broadcast division, its reformatted radio stations continue to dampen overall improvement in profitability. Moreover, Nelvana's lower-than-expected future contribution to operating income also negatively affects Standard&Poor's Ratings Services view of Corus' business diversity. The ratings on
