contents
4
6
10
11
12
13
51
Financial Highlights
Message to Shareholders
Corus Television Brands
Corus Radio Brands
Board of Directors
Executive Leadership Team
Officers
Management’s
Discussion and Analysis
Management’s Responsibility
for Financial Reporting
52
55
56
57
58
59
Independent Auditor’s Report
Consolidated Statements
of Financial Position
Consolidated Statements
of Income and Comprehensive
Income
Consolidated Statements of
Changes in Equity
Consolidated Statements
of Cash Flows
Notes to Consolidated
Financial Statements
101
Corporate Information
Corus Entertainment Annual Report 2022 | 3
financial highlights 2022
$1,599
million
$1,543
million
$525
million
$444
million
2021
2022
2021
2022
consolidated revenue
up 4%
consolidated segment profit1
down 15%
28%
consolidated segment
profit margin1
$240
million
free cash flow1
3.02x
net debt to
segment profit1
at August 31, 2022
1 Segment profit, segment profit margin, free cash flow and net debt to segment profit do not have a standardized meaning prescribed by IFRS.
The Company believes these non-IFRS measures are frequently used as key measures to evaluate performance. For definitions, explanations
and reconciliations refer to the “Key Performance Indicators and Non-GAAP Financial Measures” section of Management’s Discussion and Analysis
on page 26.
4 | Corus Entertainment Annual Report 2022
ANNUAL SELECTED FINANCIAL INFORMATION(1)
The following table presents summary financial information for Corus for each of the listed years ended August 31:
(in millions of Canadian dollars, except per share amounts)
Revenue
Segment profit (2)
Net income (loss) attributable to shareholders
Adjusted net income attributable to shareholders (2)
Basic earnings (loss) per share
Adjusted basic earnings per share (2)
Diluted earnings (loss) per share
Free cash flow(2)
Total assets
Long-term debt (inclusive of current portion)
Cash dividends declared per share
Class A Voting
Class B Non-Voting
2022
1,598.6
443.6
(245.0)
106.9
($1.19)
$0.52
($1.19)
239.6
3,502.5
1,261.7
$0.2350
$0.2400
2021
1,543.5
524.6
172.6
182.2
$0.83
$0.88
$0.83
251.9
3,856.6
1,349.3
$0.2350
$0.2400
Notes:
(1) For further information refer to Management’s Discussion and Analysis on page 13.
(2) Segment profit, adjusted net income attributable to shareholders, adjusted basic earnings per share, and free cash flow do not have a
standardized meaning prescribed by IFRS. The Company believes these non-IFRS measures are frequently used as key measures to evaluate
performance. For definitions, explanations and reconciliations refer to the “Key Performance Indicators and Non-GAAP Financial Measures”
section of Management’s Discussion and Analysis on page 26.
FISCAL 2022 FINANCIAL PROFILE
Business Segment
Revenues
Sources of Revenue
Business
Segment Profit
television
93%
advertising
60%
television
97%
radio
7%
distribution,
production
& other
8%
subscriber
32%
radio
3%
Corus Entertainment Annual Report 2022 | 5
message to
shareholders
At Corus, we have a diverse portfolio of
businesses that has continued to deliver results
amidst a challenging economic environment.
We have a strong track-record of prudently
managing our portfolio of businesses while
positioning Corus for the future by investing in
the business, reducing bank debt and providing
attractive returns for our shareholders.
We are pleased with the progress we have made
in advancing our long term strategic plan and
its priorities, which was evident in our results for
the first three quarters of the year. We faced a
choppy advertising market in the fourth quarter
and as we enter our new fiscal year, cross currents
persist, ebbing and flowing through all advertising
categories.
We are confident in our ability to manage these
headwinds, as we have done successfully many
times in the past, maintaining a resolute focus
on cost management while at the same time
executing our strategic plan.
Our results for the year were:
• Consolidated revenue of $1.6 billion, up 4%;
• Consolidated segment profit1 of $444 million,
down 15%;
• Free cash flow1 of $240 million; and
• Year-end leverage of 3.02x net debt to
segment profit1.
on-going focus on capital
allocation and shareholder value
We achieved our goal of significantly improving
our financial flexibility, successfully concluding
another high yield note offering as well as the
amendment and extension of our bank credit
facility this past year.
Our goal to drive net debt to segment profit1
below 2.5 times over the longer term remains in
focus, despite the emergence of macroeconomic
challenges which are currently impacting
advertising revenues. We have paid down
$735 million of total debt in the last four years,
demonstrating a strong commitment to financial
and operating discipline.
We have built a solid financial foundation to
support the advancement of our strategic plan
while deploying debt repayment, dividends
and share repurchase strategies to support
shareholder yield.
We have a strong track record of
prudently managing our portfolio of
businesses while positioning Corus for
the future by investing in the business,
de-levering and providing attractive
returns for our shareholders.
6 | Corus Entertainment Annual Report 2022
Three years ago, we launched STACKTV followed soon
thereafter by the refreshed Global TV App, and then Global
News over-the-top (OTT) news streams. All of these are now
available across multiple platforms with further expansion
opportunities ahead. These, along with the addition of
TELETOON+ and Pluto TV, have enabled us to deploy our
broad basket of content rights effectively and efficiently
across our networks and all streaming windows to maximize
the value of those rights as we deliver more audiences, digital
impressions and thus inventory. We measure this growth
using our New Platform Revenue1 metric, which increased by
32%, now at 10% of total Television advertising and subscriber
revenue for the year.
STACKTV is a key part of this strategy. This major market and
industry innovation we describe as the re-aggregation of our
channels business on direct to consumer streaming platforms,
is all fully ad supported and available both live and on demand.
Originally launched on Amazon Prime Video, the service is
now also available within the traditional distribution system
on Rogers Ignite Streaming, and on leading sports-first
service FuboTV.
We have recently bolstered STACKTV with the addition of
new channels this year, including Lifetime and the upcoming
launch of the Disney suite of services to further improve the
value proposition and drive subscriber acquisition.
This fall, we launched TELETOON+, transforming a popular
historic Corus cartoon channel brand into a powerhouse
animation streaming service available to subscribers through
Amazon Prime Video Channels, Bell Fibe TV App or RiverTV.
We are confident in the TELETOON+ offering and its appeal
to both existing and potential new subscribers, with brand new
series and favourite classics for kids, commercial free and fully
downloadable.
our long-term growth narrative
remains unchanged
We have a strong track-record of prudently managing our
portfolio of businesses while positioning Corus for the
future. Our efforts to diversify our revenues in advertising,
subscriptions and owned content are evident in our results
for the year.
Transform how
we sell media
Put more content
in more places
Grow our owned
content business
Our portfolio of businesses is delivering new offerings for
audiences and advertisers, subscriber revenue growth, and
increased international content sales.
video advertising is a growth market
There is a large and growing addressable market for video
that Corus will continue to pursue in the years ahead.
Our increasingly diverse portfolio of video offerings (linear,
streaming and on-demand) is designed to serve audiences
who want to consume our premium content on both
traditional and new emerging platforms. We are meeting
the demand from advertisers and audiences alike for more
premium digital video offerings.
Our goal is to transform how we sell media and this is
demonstrated by our leadership position in advanced
advertising. Advertisers are increasingly adopting our
optimized advertising solutions as well as our automated
buying platform in the traditional and digital environments to
drive better returns on their advertising investments. We have
expanded our premium digital video offerings and rolled out
dynamic advertising insertion within select video on demand
environments, creating incremental advertising inventory.
Our progress is measured by our Optimized Advertising
Revenue1 metric, which increased 41% in the year. In our
fourth quarter, we reached a new milestone, with more
than 50% of Television advertising revenue attributable to
optimized advertising.
We have also successfully renewed, extended and expanded
the content rights we acquire from major content partners,
underscoring our conviction that we can consistently
secure premium video content in an evolving competitive
environment.
This supports the on-going resiliency of our channels
business well into the next licensing regime and opens the
door for Corus to pursue the many premium digital video
opportunities that we have identified.
powerful streaming portfolio
In recent years we have made smart strategic choices, building
an impressive streaming portfolio in pursuit of that large and
growing digital video market.
1 Segment profit, free cash flow, net debt to segment profit, optimized advertising revenue and new platform revenue do not have a standardized meaning prescribed by IFRS. The Company believes
these non-IFRS measures are frequently used as key measures to evaluate performance. For definitions, explanations and reconciliations refer to the “Key Performance Indicators and Non-GAAP Financial
Measures” section of Management’s Discussion and Analysis on page 26.
Corus Entertainment Annual Report 2022 | 7
Corus has teamed up with Paramount Global to launch Pluto
TV in Canada on December 1, 2022. Pluto TV, the world’s
leading FAST (free ad-supported streaming television)
service, is yet another way we are putting more content in
more places while providing new opportunities for advertisers.
This is a blue ocean opportunity for Corus. More than 110
unique, free curated FAST channels with over 20,000 hours of
content is now available on all major platforms including web,
mobile and connected TVs. Pluto TV offers a full spectrum
of free programming including drama, comedy, lifestyle, kids,
movies, around-the-clock news, in addition to a curated slate
of Corus Original library series that span a variety of genres.
This opportunity pairs our leading ad sales capabilities with
Pluto TV’s best-in-class platform and technology, serving
compelling content to audiences and providing more premium
video options for advertisers.
home and design pairs perfectly with Corus’ suite of lifestyle
programming, further enhancing our leadership in factual
reality content.
We are working within the traditional television ecosystem
to sustain the channels business through investments in
the Global TV App for authenticated users and by providing
premium Video on Demand offerings to enable binge viewing.
New modern library hits and exclusive content have been
deployed across the platform to add even more value for
viewers while supporting our goal to create more premium
video inventory for advertisers.
The traditional channels business is a large, recurring
and resilient one with industry collaboration on advanced
advertising that is enhancing the value proposition for both
subscribers and advertisers alike.
recurring subscriber revenue
This year we reached a company milestone with our highest
subscription revenue of $518 million for the year, which was up
4% over last year. A combined result of recurring revenue from
our large traditional channels business accentuated by the
growth of STACKTV, this is evidence that our strategy to put
more content in more places is working.
resilient channels business
Global TV remains a fan-favourite in core primetime and our
most popular specialty services underscore the important
role Corus plays in the lives of Canadians with big, highly
differentiated channel brands such as HGTV, HISTORY,
Showcase, Food Network and W Network.
We are always looking to optimize our portfolio by improving
our offering of specialty channels. This year we launched
Magnolia Network Canada, a new powerhouse channel
providing a unique viewer experience curated by lifestyle brand
icons Chip and Joanna Gaines in partnership with Warner Bros
Discovery. Magnolia Network’s exclusive content across food,
growing our owned content business
It has been a record year for our content business. We have
made meaningful progress expanding our studio offerings
with a strong slate of shows from Nelvana and Corus Studios,
and adding new and complimentary genres. We are focused
on investments in development and production to take
advantage of the global demand for hit content.
One of the businesses within this portfolio that is driving
significant content revenue growth is Corus Studios.
It continues to deliver Canadian original programming that
resonates with our audiences with a growing portfolio of
almost 900 episodes. This year we announced our largest
strategic output deal ever for the international marketplace
between Corus Studios and Hulu. Building on Corus Studios’
previously announced sale in 2021, this multi-year agreement
sees Hulu acquire an incredible 400+ episodes of lifestyle,
renovation, unscripted and crime content.
At Nelvana, we are
investing in development,
in our co-production
frameworks, and in
the expansion of our
production slate to create
franchise IP with new and
subsequent seasons of
shows. Our co-production
framework with Nelvana/
Discovery Kids Joint
Venture redknot, for
example, has in just a
few short years, created
three animated series
which are broadcast
in Canada and Latin
America, and sold around
the world. Additionally,
our Nickelodeon co-
production framework has
two animated series in
production this year.
8 | Corus Entertainment Annual Report 2022
sustain-
ability
report
2022
We are also making purposeful progress
in expanding our owned content offering.
In February, we announced the acquisition
of a majority interest in Academy Award®
and Emmy Award® nominated Aircraft
Pictures. We also
launched Waterside
Studios, our new IP and production venture
focused on bringing premium scripted
Canadian content for youth and primetime
audiences to the Canadian and international
marketplace.
The fact is our originals from Corus Studios, Nelvana and now
Aircraft Pictures and Waterside Studios are driving audiences,
diversifying our content supply from output deals with US
major studios, and accelerating the growth of our owned
content business in the international marketplace with buyers
both streamers and broadcasters alike.
advanced focus on sustainability
As a company, we are making it a priority to embed sustainability
into all areas of our organization and be a leading partner
within our industry. We are building accountability by setting
goals focused on supporting our people, building sustainable
business practices to protect the planet, supporting the
communities we serve, and finding new ways to build value for
our people, clients, customers, communities and shareholders.
Our commitment to be a more sustainable company is outlined
in our inaugural 2022 Sustainability Report – an important
milestone in our work to formally integrate Environmental,
Social and Governance (ESG) goals into everything we do and
share our progress and evolution towards a more focused
approach to sustainability. Our ESG goals will be an integral part
of how we deliver against our strategic and financial priorities,
build resiliency and demonstrate our ongoing efforts to make
Corus a great place to work.
We remain steadfast in our commitment to meeting the
needs of all our stakeholders and supporting the communities
where we live and work. This year, we helped raise over $33
million for more than 750 charitable organizations across
Canada through our Corus Cares initiative.
creating value over the long-term
At Corus, we have experienced advertising recessions and
economic slowdowns before and each time we have quickly
moved to tightly manage our expenses while maintaining a
disciplined focus on capital allocation, shareholder yield, and
the ongoing execution of our strategic plan and priorities.
While we manage through this challenging economic
environment, we will do so with a view to the future and a
commitment to carefully managing our expenses and our cash.
We have built a solid foundation to support the advancement
of our strategic plan while enhancing our focus on shareholder
friendly activities. We are confident in our long-term plan and
in our team.
Doug Murphy
Heather Shaw
President and CEO
Executive Chair
Corus Entertainment Annual Report 2022 | 9
Corus Television
Conventional Stations
B.C.
Okanagan
Lethbridge
Calgary
Edmonton
Saskatoon
Regina
Winnipeg
Toronto
Durham
Peterborough
Kingston
Montreal
New Brunswick
Halifax
News Programming
1
Lifestyle
Drama
Kids
Original Content
Multi-platform Presence: Premium Digital Video Streaming + Digital Platforms
premium
VOD
2
10 | Corus Entertainment Annual Report 2022
1 BC1 is a specialty network dedicated to Global News programming
2 Launched December 1, 2022
Corus Radio
Vancouver, British Columbia
CKGO-AM
AM730 All Traffic
All The Time
CKNW-AM
980 CKNW
CFMI-FM
Rock 101
Vancouver’s
Greatest Hits
CFOX-FM
The World
Famous CFOX
Calgary, Alberta
Edmonton, Alberta
CHQR-AM
770 CHQR
CHED-AM
630 CHED
Winnipeg, Manitoba
CFGQ-FM
Q107 Calgary’s
Classic Rock
CHQT-AM
Global News Radio
880 Edmonton
CKRY-FM
Country 105
Today’s Country
CISN-FM
CISN Country
103.9
CKNG-FM
CHUCK @ 92.5
CJOB-AM
680 CJOB
CFPG-FM
Peggy @ 99.1
CJKR-FM
Power 97
Barrie/Collingwood, Ontario
CHAY-FM
Fresh 93.1
CIQB-FM
Big 101.1
CKCB-FM
95.1 The Peak FM
Kitchener, Ontario
Cornwall, Ontario
CJDV-FM
107.5 Dave Rocks
CKBT-FM
91.5 The Beat
CFLG-FM
104.5 Fresh Radio
CJSS-FM
Boom 101.9
Guelph, Ontario
Kingston, Ontario
CJOY-AM
1460 CJOY
CIMJ-FM
Magic 106.1
CKWS-FM
104.3 Fresh Radio
CFMK-FM
Big 96.3
Hamilton, Ontario
CHML-AM
900 CHML
CING-FM
Energy 95.3
CJXY-FM
Y108
London/Woodstock, Ontario
CFPL-AM
980 CFPL
CFHK-FM
103.1 Fresh Radio
CFPL-FM
FM96
CKDK-FM
Country 104
Ottawa, Ontario
Peterborough, Ontario
CKQB-FM
Jump! 106.9
CJOT-FM
boom 99.7
CKRU-FM
100.5 Fresh
Radio
CKWF-FM
The Wolf
101.5 FM
Toronto, Ontario
CFIQ-AM
640 Toronto
CFNY-FM
102.1 the Edge
CILQ-FM
Q107
Corus Entertainment Annual Report 2022 | 11
board of
directors
Heather Shaw
Chair of the Board of Directors
Doug Murphy
President and Chief Executive Officer
Fernand Bélisle
Independent Lead Director
Chair of the Human Resources and
Compensation Committee
Michael Boychuk
Member of the Audit Committee
Stephanie Coyles
Member of the Audit Committee
Member of the Human Resources and
Compensation Committee
Charmaine Crooks
Michael D’Avella
Member of the Corporate Governance Committee
Sameer Deen
Member of the Corporate Governance Committee
Mark Hollinger
Chair of the Corporate Governance Committee
Member of the Human Resources and
Compensation Committee
Barry James
Chair of the Audit Committee
Margaret O’Brien
Julie Shaw
Vice Chair of the Board of Directors
Member of the Corporate Governance Committee
executive
leadership
team
Doug Murphy
President and Chief Executive Officer
John Gossling, FCPA, FCA
Executive Vice President and Chief Financial Officer
Colin Bohm
Executive Vice President,
Content and Corporate Strategy
Cheryl Fullerton
Executive Vice President,
People and Communications
Shawn Kelly
Executive Vice President, Technology
Jennifer Lee
Executive Vice President and General Counsel
Greg McLelland
Executive Vice President and Chief Revenue Officer
Troy Reeb
Executive Vice President, Broadcast Networks
officers
Heather Shaw
Executive Chair
Executive Leadership Team
All members of the Executive Leadership Team
are Officers of the Company.
12 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
Management’s Discussion and Analysis of the financial position and results of operations for the year ended
August 31, 2022 is prepared as at October 20, 2022. The following should be read in conjunction with the
Company’s August 31, 2022 audited consolidated financial statements and notes therein. The financial
highlights included in the discussion of the segmented results are derived from the audited consolidated financial
statements. All amounts are stated in Canadian dollars unless specified otherwise.
Corus Entertainment Inc. (“Corus” or the “Company”) reports its financial results under International Financial
Reporting Standards (“IFRS”) in Canadian dollars. Per share amounts are calculated using the weighted average
number of shares outstanding for the applicable period.
USE OF NON-IFRS FINANCIAL MEASURES
The Management’s Discussion and Analysis contains references to certain measures that do not have a
standardized meaning under IFRS as prescribed by the International Accounting Standards Board (“IASB”) and are
therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures
are provided as additional information to complement IFRS measures by providing a further understanding of
operations from management’s perspective. Accordingly, non-IFRS or non-Generally Accepted Accounting
Principles (“GAAP”) measures should not be considered in isolation nor as a substitute for analysis of financial
information reported under IFRS. The Company presents non-IFRS or non-GAAP measures, specifically,
segment profit (loss), segment profit margin, adjusted segment profit, adjusted net income (loss) attributable
to shareholders, adjusted basic earnings (loss) per share, free cash flow, net debt and net debt to segment profit,
as well as supplementary financial measures such as optimized advertising revenue and new platform revenue.
The Company believes these non-IFRS or non-GAAP and supplementary financial measures are frequently
used by securities analysts, investors and other interested parties as measures of financial performance and to
provide supplemental measures of operating performance and thus highlight trends that may not otherwise
be apparent when relying solely on IFRS financial measures. A reconciliation of the Company’s non-IFRS or
non-GAAP measures is included in the Key Performance Indicators and Non-GAAP Financial Measures section
of this report.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
To the extent any statements made in this document contain information that is not historical, these statements
are forward-looking statements and may be forward-looking information within the meaning of applicable
securities laws (collectively, “forward-looking information”). This forward-looking information relates to, among
other things, the Company’s objectives, goals, strategies, targets, intentions, plans, estimates and outlook,
including the adoption and anticipated impact of the Company’s strategic plan, advertising and expectations
of advertising trends for fiscal 2023, subscriber revenue and anticipated subscription trends, distribution,
production and other revenue, the Company’s dividend policy and the payment of future dividends; the Company’s
leverage target; the Company’s proposed share purchases, including the number of Class B non-voting shares
to be repurchased under its normal course issuer bid, if any, and timing thereof; the Company’s ability to manage
retention and reputation risks related to its on-air talent; expectations regarding financial performance, including
capital allocation strategy and capital structure management, operating costs and tariffs, taxes and fees, and
can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “plan”, “will”,
“may” or the negatives of these terms and other similar expressions. In addition, any statements that refer
to expectations, projections or other characterizations of future events or circumstances may be considered
forward-looking information.
Although Corus believes that the expectations reflected in such forward-looking information are reasonable,
such information involves assumptions, risks and uncertainties and undue reliance should not be placed on
such statements. Certain material factors or assumptions are applied with respect to the forward-looking
information, including without limitation: the estimates and judgments set out under the heading “Critical
Accounting Estimates and Judgments”, in this document; factors and assumptions regarding the general market
conditions and general outlook for the industry including: the impact of recessionary conditions and continuing
supply chain constraints; the potential impact of new competition and industry mergers and acquisitions;
changes to applicable tax, licensing and regulatory regimes; inflation and interest rates, stability of the
advertising, subscription, production and distribution markets; changes to key suppliers or clients; operating
and capital costs and tariffs, taxes and fees, the Company’s ability to source, produce or sell desirable content
and the Company’s capital and operating results being consistent with its expectations. Actual results may differ
materially from those expressed or implied in such information.
Corus Entertainment Annual Report 2022 | 13
MANAGEMENT’S DISCUSSION AND ANALYSIS
Important factors that could cause actual results to differ materially from these expectations include, among
other things: the Company’s ability to attract, retain and manage fluctuations in advertising revenue; the
Company’s ability to maintain relationships with key suppliers and clients and on anticipated financial terms
and conditions; audience acceptance of the Company’s television programs and cable networks; the Company’s
ability to manage retention and reputation risks related to its on-air talent; the Company’s ability to recoup
production costs; the availability of tax credits; the availability of expected news, production and related credits,
programs and funding; the existence of co-production treaties; the Company’s ability to compete in any of the
industries in which it does business including with competitors which may not be regulated in the same way or
to the same degree; the business and strategic opportunities (or lack thereof) that may be presented to and
pursued by the Company; conditions in the entertainment, information and communications industries and
technological developments therein; changes in laws or regulations or the interpretation or application of those
laws and regulations including statements, decisions or positions by applicable regulators including, without
limitation, the Canadian Radio-television and Telecommunications Commission (“CRTC”), Canadian Heritage
and Innovation, Science and Economic Development Canada (“ISED”); changes to licensing status or conditions;
unanticipated or un-mitigable programming costs; the Company’s ability to integrate and realize anticipated
benefits from its acquisitions and to effectively manage its growth; the Company’s ability to successfully defend
itself against litigation matters and complaints; failure to meet covenants under the Company’s senior credit
facility, senior unsecured notes or other instruments or facilities; epidemics, pandemics or other public health
and safety crises in Canada and globally, including COVID-19; physical and operational changes to the Company’s
key facilities and infrastructure; cybersecurity threats or incidents to the Company or its key suppliers and
vendors; and changes in accounting standards.
Additional information about these factors and about the material assumptions underlying any forward-looking
information may be found under the heading “Risks and Uncertainties” in this document. Corus cautions that the
foregoing list of important assumptions and factors that may affect future results is not exhaustive. When relying
on the Company’s forward-looking information to make decisions with respect to Corus, investors and others
should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise
specified, all forward-looking information in this document speaks as of the date of this document. Except as
otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update
or revise any forward-looking information whether as a result of new information, events or circumstances that
arise after the date thereof or otherwise.
The following discussion describes the significant changes in the consolidated results from operations.
14 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
OVERVIEW
Corus is a diversified Canadian-based integrated media and content company that creates and delivers high
quality brands and content across platforms for audiences in Canada and around the world. The Company’s
portfolio of multimedia offerings encompasses 33 specialty television networks, 15 conventional television
stations, 39 radio stations, digital assets, a social media digital agency, a social media creator network, technology
and media services, and a global content business.
Corus operates through two reporting segments: Television and Radio. The Corporate results represent
the incremental cost of corporate overhead in excess of the amount allocated to the operating segments.
Generally, Corus’ financial results depend on a number of factors, including the strength of the Canadian national
economy and the local economies of Corus’ served markets, local and national market competition from other
broadcasting stations, platforms and other advertising media, government regulation, market competition from
other distributors of animated and unscripted lifestyle programming and Corus’ ability to continue to provide
popular programming.
TELEVISION
The Television segment is comprised of 33 specialty television networks, 15 conventional television stations,
streaming services, a social media digital agency, a social media creator network, technology and media services,
and the Corus content business, which includes the production and distribution of films and television programs,
merchandise licensing, book publishing, and animation software. On December 31, 2020, Corus ceased
operation of the BBC channel.
Revenue for the specialty television networks is generated from both advertising and subscribers, while revenue
from the conventional television stations are derived primarily from advertising. Revenue for the content
business is generated from the licensing of proprietary films and television programs as well as the provision of
production services, merchandise licensing, book publishing, and animation software. Media and technology
services revenue is generated principally from the provision of services. For both advertising and subscriber
revenue, it is critical that the Company offer Canadians entertaining content that engages them. The Company’s
content is available to Canadians through a variety of platforms, including conventional or specialty television,
streaming services, online websites, mobile apps and connected TVs. Catering to consumer demand for quality
and choice, the Company strives to offer the best content available to Canadians when and where they choose
to consume it.
RADIO
The Radio segment is comprised of 39 radio stations across Canada situated primarily in urban centres in English
Canada, with a concentration in the densely populated area of Southern Ontario. The Company’s primary
method of distribution is over-the-air, analog radio transmission, with additional delivery platforms including
HD Radio, websites, podcasts and mobile apps.
Revenue for the Company’s radio business is derived primarily from advertising.
Corus Entertainment Annual Report 2022 | 15
MANAGEMENT’S DISCUSSION AND ANALYSIS
KEY FINANCIAL INFORMATION
The following table presents key summary financial information for Corus, its operating segments, and a
reconciliation of segment profit to net income for each of the listed years ended August 31:
(in millions of Canadian dollars, except per share amounts)
2022
2021
Revenue
Television
Radio
Consolidated revenue
Segment profit (loss) (1)
Television
Radio
Corporate
Consolidated segment profit (1)
Depreciation and amortization
Interest expense
Goodwill impairment
Debt refinancing
Restructuring and other costs
Other income, net
Income (loss) before income taxes
Income tax expense
Net income (loss) for the year
Net income (loss) attributable to:
Shareholders
Non-controlling interest
Net income (loss) for the year
Adjusted net income attributable to shareholders (1)
Earnings (loss) per share
Basic earnings (loss) per share
Adjusted basic earnings per share (1)
Diluted earnings (loss) per share
Free cash flow (1)
Total assets
Long-term debt (inclusive of current portion)
Cash dividends declared per share
Class A Voting
Class B Non-Voting
Notes:
(1) As defined in “Key Performance Indicators and Non-GAAP Financial Measures” section.
16 | Corus Entertainment Annual Report 2022
1,492.7
105.9
1,598.6
458.1
13.3
(27.8)
443.6
156.9
107.1
350.0
(3.4)
8.1
16.8
(191.9)
40.3
(232.2)
(245.0)
12.8
(232.2)
106.9
($1.19)
$0.52
($1.19)
239.6
3,502.5
1,261.7
1,446.3
97.2
1,543.5
549.2
14.2
(38.7)
524.6
152.3
104.1
—
1.9
11.3
(8.2)
263.3
68.8
194.6
172.6
22.0
194.6
182.2
$0.83
$0.88
$0.83
251.9
3,856.6
1,349.3
$0.2350
$0.2400
$0.2350
$0.2400
MANAGEMENT’S DISCUSSION AND ANALYSIS
FISCAL 2022 COMPARED TO FISCAL 2021
For a discussion on the Company’s results of operations for the fourth quarter of fiscal 2022, we refer you to
Corus’ Fourth Quarter 2022 Report to Shareholders filed on SEDAR on October 21, 2022.
The following discussion describes the significant changes in the consolidated results from operations for the
year ended August 31, 2022 compared to the prior year.
REVENUE
For the year ended August 31, 2022, consolidated revenue of $1,598.6 million increased 4% from $1,543.5 million
in the prior year. On a consolidated basis, advertising revenue increased 3%, subscriber revenue was up 4%
and distribution, production and other revenue increased by 8% from the prior year. Revenue increased 3% in
Television and 9% in Radio. Further analysis of revenue is provided in the discussion of segmented results.
DIRECT COST OF SALES, GENERAL AND ADMINISTRATIVE EXPENSES
For the year ended August 31, 2022, direct cost of sales, general and administrative expenses of $1,154.9 million
increased 13% from $1,018.9 million in the prior year. On a consolidated basis, direct cost of sales increased
16%, employee costs increased 6%, while other general and administrative costs increased 20% from the prior
year. The increase in direct cost of sales was driven principally by the increases in amortization of program
rights, amortization of film assets, production service work, and costs associated with certain sales initiatives.
The increase in employee costs was primarily attributable to the Canada Emergency Wage Subsidy (“CEWS”)
benefits of approximately $13.5 million in the prior year, higher labour costs and increased commission costs,
partially offset by lower short-term compensation accruals and share-based compensation expense in the
current year. Other general and administrative expenses increased as a result of the return of Part I and Part II
CRTC fees that added $9.6 million compared to the prior year. In addition, increased spend on advertising and
marketing costs, travel and entertainment costs, higher trade mark fees and tariff royalties that are positively
correlated with revenue, as well as increased professional fees, software and system fees, and repairs and
maintenance costs, partially offset by reduced common area rent costs. Further analysis of expenses is provided
in the discussion of segmented results.
SEGMENT PROFIT
For the year ended August 31, 2022, segment profit was $443.6 million, a decrease of 15% from $524.6 million in
the prior year. The decrease in segment profit for the year was principally a result of an increase in amortization
of program rights and film investments in the current year, as well as CEWS benefits and relief on CRTC fees
received in the prior year. Segment profit margin of 28% for the year ended August 31, 2022 was down from
34% in the prior year. Further analysis is provided in the discussion of segmented results.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense for the year ended August 31, 2022 was $156.9 million, an increase from
$152.3 million in the prior year. The increase was a result of higher amortization of brands of $7.7 million, offset
by lower amortization of capital assets of $1.6 million and other intangible assets of $1.5 million.
INTEREST EXPENSE
On February 28, 2022, the Company issued $250.0 million in Senior Unsecured Notes due February 28, 2030
(the “2030 Notes”) that pay interest at 6.0%. The Company used the net proceeds of the Notes issuance to
repay bank debt.
On March 18, 2022, the Company’s credit facility with a syndicate of banks was amended and restated. The
principal amendments were to extend the maturity on both the senior secured term credit facility (the “Term
Facility”) and the senior secured revolving credit facility (the “Revolving Facility”, together with the Term Facility
collectively referred to hereafter as the “Credit Facility”) to March 18, 2027 and to eliminate quarterly mandatory
repayments and mandatory repayments of the net proceeds from the issue of other debt on the Term Facility.
Further information about debt refinancing can be found in the Liquidity and Capital Resources section of this
report, under the subheading Liquidity.
Interest expense for the year ended August 31, 2022 of $107.1 million increased from $104.1 million in the
prior year. The increase in interest expense principally results from higher imputed interest of $3.9 million on
long-term liabilities associated with program rights, trade marks and right-of-use assets, as well as a $2.9 million
deferred gain amortization in the prior comparable period, offset by lower interest on long-term debt of $4.5
million in the current year. Interest on long-term debt is lower due to lower bank debt levels, partially offset by
Corus Entertainment Annual Report 2022 | 17
MANAGEMENT’S DISCUSSION AND ANALYSIS
interest on the 5.0% Senior Unsecured Notes of $500.0 million due 2028 issued in fiscal 2021 (the “2028 Notes”)
and the 2030 Notes (together with the 2028 Notes collectively referred to hereafter as the “Notes”) issued
on February 28, 2022. The Company used the net proceeds of the Notes to repay bank debt in the amount of
$245.6 million from the 2030 Notes issuance in fiscal 2022 and $490.7 million from the 2028 Notes issuance in
fiscal 2021.
The effective interest rate on bank loans and Notes for the year ended August 31, 2022 was 4.5% compared
to 4.2% in the prior year. The increase in the effective rate results from higher interest rates on the Notes and
higher floating interest rates, offset by lower overall rates on the bank loans resulting from a smaller portion
thereof subject to fixed rate interest swaps.
BROADCAST LICENCE AND GOODWILL IMPAIRMENT
Broadcast licences and goodwill are tested for impairment annually as at August 31 or more frequently if
events or changes in circumstances indicate that they may be impaired. The macroeconomic environment
became increasingly uncertain in the fourth quarter of fiscal 2022, characterized by persistently high inflation
and continuing supply chain constraints, and as a result advertising demand and spending across the North
American television media industry contracted meaningfully. In addition, there was a significant decline in the
Company’s share price from August 31, 2021, which resulted in the Company’s carrying value being greater
than its current market enterprise value. As the Television operating segment had actual results that fell short
of previous estimates and an outlook that is less robust, a non-cash goodwill impairment charge of $350.0
million was recorded in the Television operating segment (refer to note 11 of the audited consolidated financial
statements for further details).
The Company has completed its annual impairment testing of Radio broadcast licences and goodwill for fiscal
2022 and determined that there were no impairment charges or recoveries required for the operating segment
as at August 31, 2022.
DEBT REFINANCING
On March 18, 2022, the Company amended and restated its Credit Facility (refer to note 14 of the audited
consolidated financial statements for further details), which resulted in a non-cash gain on debt modification
of $4.2 million, offset by a write-off of unamortized debt financing fees of $0.8 million.
On May 31, 2021, the Company amended its Credit Facility. This transaction resulted in a non-cash write off of
unamortized debt financing fees of $3.5 million, offset by a gain on debt modification of $1.6 million.
RESTRUCTURING AND OTHER COSTS
For the year ended August 31, 2022, the Company incurred $8.1 million of restructuring and other costs
compared to $11.3 million in the prior year. The current and prior year costs relate to ongoing system integration
costs as well as restructuring costs associated with employee exits.
OTHER EXPENSE (INCOME), NET
Other expense for the year ended August 31, 2022 was $16.8 million compared to other income of $8.2 million
in the prior year. In the current year, other expense includes net foreign exchange losses of $9.8 million, a fair
value loss on the Notes prepayment options of $7.3 million, and a trademark intangible write-off of $2.2 million,
as a result of the rebranding of DIY channel to Magnolia Network, offset by $2.4 million from rental income,
miscellaneous interest income and gains from asset sales associated with the decommissioning of certain
transmitter sites. In the prior year, other income included net foreign exchange gains of $5.1 million and income
of $3.1 million from rental income, gains related to net insurance proceeds received, the sale of property and
miscellaneous interest income.
INCOME TAX EXPENSE
The Company’s effective income tax recovery rate for the year ended August 31, 2022 was 21.0% compared
to an effective income tax expense rate of 26.1% in the prior year. The difference between the statutory rate
of 26.5% and effective tax rates for the year ended August 31, 2022 resulted primarily from the impairment
recorded on goodwill in the Television operating segment recorded in the fourth quarter of fiscal 2022.
NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS AND EARNINGS (LOSS) PER SHARE
Net loss attributable to shareholders for the year ended August 31, 2022 was $245.1 million ($1.19 loss per share
basic), compared to net income attributable to shareholders of $172.6 million ($0.83 per share basic) in the prior
year. Net loss attributable to shareholders for the year ended August 31, 2022 includes a non-cash goodwill
impairment charge of $350.0 million ($1.69 per share) in the Television operating segment, restructuring
18 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
and other costs of $8.1 million ($0.03 per share) and a debt refinancing gain of $3.4 million ($0.01 per share).
Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $106.9
million ($0.52 per share basic) for the current fiscal year. Net income attributable to shareholders for the year
ended August 31, 2021 includes restructuring and other costs of $11.3 million ($0.04 per share basic) and debt
refinancing costs of $1.9 million ($0.01 per share). Adjusting for the impact of these items results in an adjusted
net income attributable to shareholders of $182.2 million ($0.88 per share basic) for the prior year period.
The weighted average number of basic shares outstanding for the year ended August 31, 2022, was 205,905,000
compared to 208,367,000 in the prior year. The average number of shares outstanding in the current year
decreased as a result of the purchase and cancellation of Class B Non-Voting Participating Shares under the
Company’s normal course issuer bid (“NCIB”), which took place between January 2022 and August 2022.
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Other comprehensive income for the year ended August 31, 2022 was $15.7 million, compared to $43.4 million
in the prior year. For the year ended August 31, 2022, other comprehensive income includes an unrealized gain
on the fair value of financial assets of $5.0 million, an unrealized gain on the fair value of cash flow hedges of
$4.9 million, an actuarial gain on the remeasurement of post-employment benefit plans of $4.5 million and an
unrealized gain from foreign currency translation adjustments of $1.3 million. In the year ended August 31, 2021,
other comprehensive income includes an actuarial gain on the remeasurement of post-employment benefit
plans of $19.4 million, an unrealized gain on the fair value of financial assets of $12.3 million and an unrealized gain
on the fair value of cash flow hedges of $14.4 million, offset by the amortization of a deferred gain on terminated
interest rate swaps of $2.1 million and an unrealized loss from foreign currency translation adjustments of $0.5
million.
TELEVISION
The Television segment is comprised of 33 specialty television services (34 prior to December 31, 2020),
15 conventional television stations, streaming services, a social media digital agency, a social media creator
network, technology and media services, and the Corus content business, which consists of the production and
distribution of films and television programs, merchandise licensing, book publishing and animation software.
FINANCIAL HIGHLIGHTS
(thousands of Canadian dollars)
Revenue
Advertising
Subscriber
Distribution, production and other
Total revenue
Expenses
Segment profit (1)
Segment profit margin (1)
(1) As defined in the “Key Performance Indicators and Non-GAAP Financial Measures” section
Year ended August 31,
2022
2021
859,598
518,483
114,627
1,492,708
1,034,563
458,145
31%
842,202
498,049
106,036
1,446,287
897,128
549,159
38%
Revenue for the year ended August 31, 2022, increased 3% from the prior year as a result of growth of 2% in
advertising revenue, 4% in subscriber revenue and 8% in distribution, production and other revenue. Growth in
advertising revenue over the first three quarters of the year was eroded by a contraction of advertising demand
and spend in the fourth quarter across the North American television media industry as a result of disruptions
to consumer behaviour patterns and supply chains. The growth in advertising revenue for the year was driven by
increased advertising in entertainment, financial services, retail, travel, and communications categories, offset
by automotive, health and beauty, direct to consumer, as well as food and beverages categories. Subscriber
revenue benefited from continued growth on streaming services resulting from subscriber growth and the
expansion of streaming services via new distributors, as well as retroactive adjustments tied to distribution
agreement renewals with large cable providers in the second and third quarters of the year, all of which offset
lower subscribers in the traditional linear system. The increase in distribution, production and other revenue
was primarily attributable to production service work resulting from the business acquisition made in the second
quarter of fiscal 2022 and revenue related to software support.
Corus Entertainment Annual Report 2022 | 19
MANAGEMENT’S DISCUSSION AND ANALYSIS
Expenses for the year ended August 31, 2022, were up 15% from the prior year as a result of increases of 16% in
direct cost of sales, 11% in employee costs and 22% in other general and administrative expenses. The increase
in direct cost of sales was driven by a 13% ($64.1 million) increase in amortization of program rights, an 85%
($11.0 million) increase in amortization of film investments and a 29% ($9.0 million) increase in other cost of
sales. The increase in amortization of program rights was driven predominantly by the increase of Canadian
content production, increased original programming deliveries and the extension of long-term output deals
compared to the prior year. The increase in amortization of film investments was driven mainly by the business
acquisition made in the second quarter of fiscal 2022. The increase in other cost of sales was principally a result of
costs associated with certain sales initiatives. The increase in employee costs was due to the CEWS benefits of
$11.1 million in the prior year, as well as higher labour and commission costs, partially offset by lower short-term
compensation accruals compared to the prior year. The increase in other general and administrative expenses
was a result of the $8.8 million increase in CRTC Part I and II fees as relief was provided in the prior year, as well
as increases in marketing costs, travel and entertainment, fees related to streaming and digital services, trade
mark fees, facility costs, and consulting costs.
Segment profit(1) was down 17% in fiscal 2022 primarily as a result of an increase in amortization of program
rights and film investments, CEWS benefits and relief on CRTC fees in the prior year as discussed above. Segment
profit margin(1) for the year ended August 31, 2022 was 31%, down from the prior year at 38%.
(1) As defined in the “Key Performance Indicators and Non-GAAP Financial Measures” section
RADIO
The Radio segment is comprised of 39 radio stations situated primarily in urban centres in English Canada,
with a concentration in the densely populated area of Southern Ontario. Corus is one of Canada’s leading radio
operators in terms of audience reach.
FINANCIAL HIGHLIGHTS
(thousands of Canadian dollars)
Revenue
Expenses
Segment profit (1)
Segment profit margin (1)
(1) As defined in the “Key Performance Indicators and Non-GAAP Financial Measures” section
Year ended August 31,
2021
2022
97,196
105,878
83,045
92,611
13,267
14,151
13%
15%
Revenue for the year ended August 31, 2022, increased 9% from the previous year. Advertising revenue growth
in the year was driven by the entertainment, professional services, travel, general services and retail categories,
muted by continued declines in the automotive and food categories.
Direct cost of sales, general and administrative expenses increased $9.6 million for the year ended August 31,
2022 compared to the prior year. The increase for the year was primarily due to increased labour costs, which
included CEWS benefit in the prior year of $1.9 million, increased sports rights costs due to the return of normal
league schedules, increased tariff royalties levied under the Copyright Act that are positively correlated with
movements in revenue, and the increase of $0.8 million in CRTC Part I and II fees as relief was provided in the
prior year.
For the year ended August 31, 2022, segment profit(1) decreased $0.9 million and segment profit margin(1) of
13% was down from 15% in the prior year.
(1) As defined in the “Key Performance Indicators and Non-GAAP Financial Measures” section
20 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
CORPORATE
The Corporate results are comprised of the incremental cost of corporate overhead in excess of the amount
allocated to the operating divisions.
FINANCIAL HIGHLIGHTS
(thousands of Canadian dollars)
Share-based compensation
Other general and administrative costs
Year ended August 31,
2021
17,734
20,958
2022
4,196
23,573
27,769
38,692
Share‐based compensation includes expenses related to the Company’s stock options and other long‐term
incentive plans (such as Performance Share Units ‐ “PSUs”, Deferred Share Units – “DSUs”, and Restricted Share
Units – “RSUs”). The expense fluctuates with changes in assumptions, primarily regarding the Company’s share
price and number of units estimated to vest.
The decrease of $13.5 million in share-based compensation expense for the year ended August 31, 2022 results
from the decrease in the Company’s share price, which is partially offset by the change in the fair value of the total
return swaps (refer to the Liquidity and Capital Resources section of this report under the heading Off-balance
Sheet Arrangements and Derivative Financial Instruments for further details on this swap arrangement).
Other general and administrative costs for the year ended August 31, 2022 increased $2.6 million from the
prior year. The increase is principally related to higher labour costs, the benefit of CEWS in the prior year of $0.5
million, increases in professional fees and directors fees, offset by lower short-term compensation accruals and
a reduction in common area rent costs.
QUARTERLY CONSOLIDATED FINANCIAL INFORMATION
SEASONAL FLUCTUATIONS
Corus’ operating results are subject to seasonal fluctuations that can significantly impact quarter-to-quarter
operating results. The Company’s advertising revenue is dependent on general advertising revenue and retail
cycles associated with consumer spending activity, accordingly the first and third quarter results tend to be the
highest and second and fourth quarter results tend to be the lowest in a fiscal year. The Company’s distribution
and production revenue is dependent on the number and timing of film and television programs delivered.
Consequently, the Company’s results may fluctuate materially from period-to-period and the results of any
one period are not necessarily indicative of results for future periods.
The following table sets forth certain unaudited data derived from the Company’s interim condensed consolidated
financial statements for each of the eight most recent quarters ended August 31, 2022. In Management’s opinion,
these unaudited interim condensed consolidated financial statements have been prepared on a basis consistent
with the audited consolidated financial statements filed on SEDAR on October 24, 2022, for the years ended
August 31, 2022 and August 31, 2021, except as disclosed in note 3 of the consolidated financial statements.
Corus Entertainment Annual Report 2022 | 21
MANAGEMENT’S DISCUSSION AND ANALYSIS
Revenue (1)
Segment
profit (1)
Net
income (loss)
attributable to
shareholders
Adjusted
net income (loss)
attributable to
shareholders (1)
Earnings (loss) per share
Diluted
Adjusted
basic (1)
Free
cash
flow (1)
Basic
2022
4th quarter
3rd quarter
2nd quarter
1st quarter
2021
4th quarter
3rd quarter
2nd quarter
339,594
433,458
361,661
56,189
123,728
86,556
(367,065)
26,621
16,221
(17,116) $
(1.82)
30,159 $ 0.14
16,964 $ 0.08
$
(1.82) $
$ 0.14 $
$ 0.08 $
463,873
177,170
76,165
76,931 $ 0.37
$ 0.36 $
(0.08)
0.15
0.08
44,713
27,468
88,417
0.37
79,987
361,255
402,999
358,874
102,700
130,671
112,640
19,920
40,666
35,300
21,699 $ 0.10
44,324 $ 0.20
37,496 $ 0.17
$ 0.10 $
$ 0.19 $
$ 0.17 $
0.10
0.21
0.18
35,181
64,702
89,690
1st quarter
(1) As defined in “Key Performance Indicators and Non-GAAP Financial Meausres”.
178,607
420,355
76,664
79,851 $ 0.37
$ 0.37 $
0.38
62,374
SIGNIFICANT ITEMS CAUSING VARIATIONS IN QUARTERLY RESULTS
• Net income attributable to shareholders for the fourth quarter of fiscal 2022 was negatively impacted by a
non-cash television goodwill impairment charge of $350.0 million ($1.73 per share) and restructuring and other
costs of $1.8 million ($0.01 per share).
• Net income attributable to shareholders for the third quarter of fiscal 2022 was negatively impacted by
restructuring and other costs of $4.2 million ($0.02 per share) and was positively impacted by a debt refinancing
gain of $3.4 million ($0.01 per share).
• Net income attributable to shareholders for the second quarter of fiscal 2022 was negatively impacted by
restructuring and other costs of $1.0 million ($nil per share).
• Net income attributable to shareholders for the first quarter of fiscal 2022 was negatively impacted by
restructuring and other costs of $1.0 million ($nil per share).
• Net income attributable to shareholders for the fourth quarter of fiscal 2021 was negatively impacted by
restructuring and other costs of $2.4 million ($nil per share).
• Net income attributable to shareholders for the third quarter of fiscal 2021 was negatively impacted by debt
refinancing costs of $1.9 million ($0.01 per share) and restructuring and other costs of $1.6 million ($nil per
share).
• Net income attributable to shareholders for the second quarter of fiscal 2021 was negatively impacted by
restructuring and other costs of $3.0 million ($0.01 per share).
• Net income attributable to shareholders for the first quarter of fiscal 2021 was negatively impacted by
restructuring and other costs of $4.3 million ($0.01 per share).
OUTLOOK
The Company currently anticipates that in fiscal 2023, programming costs will grow modestly on a full-year
basis, with approximately half of this driven by the CRTC’s decision requiring the Company to make up Canadian
programming expenditures (“CPE”) shortfalls from fiscal 2020 that resulted from COVID-19 disruptions in
productions. In addition, due to the general macroeconomic conditions and other risks, the Company currently
anticipates some year-over-year softness in Television advertising revenue, including lower Television
advertising revenue for the first quarter of the new fiscal year.
FINANCIAL POSITION
Total assets at August 31, 2022 were $3.5 billion, compared to $3.9 billion at August 31, 2021. The following
discussion describes the significant changes in the consolidated statements of financial position since August
31, 2021.
Current assets at August 31, 2022 were $404.5 million, up $5.6 million from August 31, 2021.
Cash and cash equivalents increased by $11.2 million from August 31, 2021. Refer to the discussion of cash
flows in the next section.
22 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
Accounts receivable decreased $14.6 million from August 31, 2021. The decrease was primarily a result of a
decrease in trade accounts receivable, offset by a $6.9 million increase attributable to a business acquisition.
The accounts receivable balance is subject to seasonal trends. Typically, the balance of trade receivables is higher
at the end of the first and third quarters and lower at the end of the second and fourth quarters as a result
of the broadcast advertising revenue seasonality. The Company carefully monitors the aging and collection
performance of its accounts receivable.
Tax credits receivable increased $8.2 million from August 31, 2021, of which $13.2 million relates to a business
acquisition, offset by tax credit receipts exceeding accruals relating to film productions.
Investments and other assets decreased $34.7 million from August 31, 2021, principally as a result of a
distribution of $44.2 million from a venture fund investment, a decrease in the net asset position of certain
post employment benefits of $2.0 million and adjustments of $6.2 million to certain other investments, offset
by a $12.9 million fair value adjustment to venture funds, as well as the $3.9 million change in fair value of both
the foreign exchange forward contracts and the prepayment option on the Notes.
Property, plant and equipment decreased $22.2 million from August 31, 2021 as a result of depreciation expense
exceeding additions.
Program rights increased $84.6 million from August 31, 2021, as additions of acquired rights of $644.5 million
were offset by amortization of $559.8 million.
Film investments increased $19.4 million from August 31, 2021, as film additions (net of tax credit accruals) of
$36.6 million were offset by film amortization of $23.9 million and $6.7 million was added related to a business
acquisition.
Intangibles decreased $66.6 million from August 31, 2021, principally as a result of amortization of $117.7 million
exceeding renewals and extensions of several trade mark output agreements of $46.0 million and net additions
to other assets of $5.1 million.
Goodwill decreased $348.7 million from August 31, 2021 as a result of a non-cash goodwill impairment charge
of $350.0 million in the television operating segment, offset by an addition of $1.4 million related to a business
acquisition.
Accounts payable and accrued liabilities increased $17.1 million from August 31, 2021, principally as a result
of higher program rights payable and trade marks payable, offset by decreases in the software license liability,
trade accounts payable and other accrued liabilities, which include other working capital accruals, unremitted
sales taxes and short-term compensation accruals.
Provisions, including the long-term portion, increased $1.7 million from August 31, 2021, principally as a result
of restructuring-related additions exceeding payments.
Long-term debt, including the current portion, as at August 31, 2022 was $1,261.7 million compared to
$1,349.3 million as at August 31, 2021. As at August 31, 2022, the $15.6 million classified as the current portion
of long-term debt is comprised of interim production financing. During the year ended August 31, 2022, the
Company repaid bank debt and interim production financing of $354.8 million, issued 2030 Notes of $250.0
million that resulted in the additions of deferred fees of $5.9 million and the fair value of prepayment options of
$9.6 million, extended the Credit Facility that resulted in a net gain of $3.4 million on debt modification, added
$13.5 million in production financing related to a business acquisition and amortized $3.3 million of deferred
financing charges.
Other long-term liabilities increased $45.1 million from August 31, 2021, primarily from increases in long-term
program rights payable and trade mark liabilities resulting from renewals and extensions of output deals, and
an increase in unearned revenue, offset by adjustments in the fair value of foreign exchange forward contracts
derivatives, the reduction of long-term lease liabilities and employee obligations.
Share capital decreased by $34.3 million from August 31, 2021 as a result of 8.14 million shares repurchased
under the NCIB and an estimated 0.6 million shares that the Company has committed to purchase under an
automatic share purchase plan during the Company’s quarterly blackout period from September 1, 2022 through
October 21, 2022. Contributed surplus decreased by $1.0 million primarily as a result of the repurchases under
the NCIB, offset by share-based compensation expense.
Corus Entertainment Annual Report 2022 | 23
MANAGEMENT’S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Overall, the Company’s cash and cash equivalents position increased by $11.2 million for the year ended August
31, 2022. Free cash flow(1) for the year ended August 31, 2022 was $239.6 million compared to $251.9 million
in the prior year. The decrease in free cash flow(1) for the year ended August 31, 2022 is mainly attributable
to a decrease in cash provided by operating activities of $57.7 million, offset by a $43.5 million venture fund
distribution.
Cash provided by operating activities for the year ended August 31, 2022 was $216.8 million compared to $274.5
million for the prior year. The decrease for the year of $57.7 million in cash provided by operating activities arises
from an increase of cash used in the net change in non-cash working capital of $27.2 million and lower cash
provided by operations of $30.5 million, which includes a higher spend on program rights and film investments
of $30.4 million and $23.5 million, respectively, offset by a higher net income from operations, adjusted for
non-cash items of $22.4 million.
Cash provided by investing activities for the year ended August 31, 2022 was $25.2 million compared to cash used
in investing activities of $29.5 million in the prior year. The increase of $54.7 million in the year was attributable
to the venture fund distribution of $43.5 million, a decrease of $5.9 million in net cash outflows for intangibles,
investments and other assets, an increase of $3.6 million from a business combination, net of cash acquired,
and a decrease of cash used for additions to property, plant and equipment of $1.7 million.
Cash used in financing activities for the year ended August 31, 2022 was $230.8 million compared to $247.2
million for the prior year. The decrease of $16.4 million in the year arises principally from decreases of repayments
of bank loans of $295.8 million and financing fees of $6.2 million, offset by a $250.0 million decrease in financing
from the issuance of Notes and an increase of share repurchases of $34.7 million.
(1) A definition and reconciliation of free cash flow to the consolidated statements of cash flows is provided in the “Key Performance Indicators
and Non-GAAP Financial Measures” section of this report.
LIQUIDITY
The Company’s capital management objectives are to maintain financial flexibility in order to pursue its
strategy of organic growth combined with strategic acquisitions and to provide returns to its shareholders.
The Company defines capital as the aggregate of its shareholders’ equity and total long-term debt less cash
and cash equivalents.
The Company manages its capital structure in accordance with changes in economic conditions. In order to
maintain or adjust its capital structure, the Company may elect to issue or repay long-term debt, issue shares,
repurchase shares through a normal course issuer bid, pay dividends or undertake any other activities as deemed
appropriate under the specific circumstances.
The Company monitors capital using several key performance metrics, including: net debt to segment profit ratio
and dividend yield. The Company’s stated long-term objectives are a leverage target (net debt to segment profit
ratio) below 2.5 times and to maintain a dividend yield in excess of 2.5%. In the short term, the Company may
permit the long-term leverage range to be exceeded (for long-term investment opportunities), but endeavours
to return to the leverage target range as the Company believes that these objectives provide a reasonable
framework for providing a return to shareholders and is supportive of maintaining the Company’s credit ratings.
As at August 31, 2022, the Company was in compliance with all loan covenants, had a cash and cash equivalents
balance of $54.9 million and had available approximately $300.0 million under the Revolving Facility, all of which
could be drawn. Management believes that cash flow from operations and the existing Credit Facility will provide
the Company with sufficient financial resources to fund its operations for the following 12 months.
On March 18, 2022, the Company’s credit agreement with a syndicate of banks was amended and restated. The
principal amendments were to extend the maturity on both the Term Facility and Revolving Facility to March
18, 2027 and to eliminate quarterly mandatory repayments and mandatory repayments from the net proceeds
from the issue of other debt on the Term Facility. For further details on the Credit Facility, refer to note 14 of the
Company’s consolidated financial statements.
24 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
TOTAL CAPITALIZATION
As at August 31, 2022, total capitalization was $2,245.1 million compared to $2,669.5 million at August 31,
2021, a decrease of $424.4 million. The decrease in total capitalization is principally related to an increase in
accumulated deficit of $291.5 million, a reduction in share capital of $34.3 million resulting from the purchase
and cancellation of Class B Non-Voting Participating Shares under the NCIB, a decrease in total debt and lease
liabilities of $96.8 million, offset by an increase in cash and cash equivalents of $11.2 million.
OFF BALANCE SHEET ARRANGEMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company had a Canadian interest rate swap agreement to fix the interest rate on a portion of its outstanding
term loan facility, which expired on August 31, 2022. The fair value of future cash flows of interest rate swap
derivatives change with fluctuations in market interest rates. The estimated fair value of these agreements as
at August 31, 2022 was $nil (2021 – $6.7 million liability).
Subsequent to August 31, 2022, the Company has entered into $250.0 million of interest rate swap agreements
effective November 30, 2022 to fix the interest rate on a portion of its outstanding term loan facility, which
expires on March 18, 2027. The counterparties to the swap agreement are highly rated financial institutions and
the Company does not anticipate any non-performance (refer to notes 14 and 32 of the audited consolidated
financial statements for further details on interest rate swap agreements).
As at August 31, 2022, the Company has a series of forward foreign exchange contracts totalling $80.5 million
U.S. dollar, to fix the foreign exchange rate and therefore cash flows related to a portion of the Company’s U.S.
dollar denominated liabilities. These forward contracts are not designated as hedges for accounting purposes;
they are measured at fair value at each reporting date by reference to prices provided by the counterparty. The
counterparty of the forward contracts is a highly rated financial institution and the Company does not anticipate
any non-performance. The estimated fair value of future cash flows of the forward contract derivatives change
with fluctuations in the foreign exchange rate of the U.S. dollar to Canadian dollars. The estimated fair value of
these agreements as at August 31, 2022 was an asset of $1.6 million (2021 – liability of $2.6 million), which has
been recorded in the consolidated statements of financial position as investment and other assets (refer to note
5 of the audited consolidated financial statements for further details), and within other expense (income), net in
the consolidated statements of income (loss) and comprehensive income (loss) (refer to note 20 of the audited
consolidated financial statements for further details).
The Company has total return swap agreements on 3,597,500 share units to offset its exposure to changes
in the fair value of certain cash settled share-based compensation awards. The estimated fair value of these
Level 1 financial instruments will fluctuate with the market price of the Company’s shares. The counterparties
of these swap agreements are highly rated financial institutions and the Company does not anticipate any
non-performance. The estimated fair value of these agreements as at August 31, 2022 was a liability of $4.0
million (2021 – asset of $4.9 million), which has been recorded in the consolidated statement of financial position
as an other long-term liability (refer to note 15 of the audited consolidated financial statements for further
details) and within employee expenses in the consolidated statement of income (loss) and comprehensive
income (loss) (refer to note 18 of the audited consolidated financial statements for further details).
CONTRACTUAL COMMITMENTS
The Company has the following undiscounted contractual obligations at August 31, 2022:
(thousands of Canadian dollars)
Total debt (1)
Purchase obligations (2)
Lease liabilities (3)
Other obligations (4)
Total Within 1 year
2 - 3 years
4 - 5 years More than 5 years
1,284,549
1,208,855
304,548
303,938
15,574
763,983
32,302
120,550
—
416,899
60,538
160,562
518,975
27,973
55,472
22,826
750,000
—
156,236
—
Total contractual obligations
(1) Principal repayments on bank debt and Notes.
(2) Purchase obligations are contractual obligations under contracts relating to program rights, satellite and signal transport costs and
3,101,890
625,246
637,999
932,409
906,236
various other operating expenditures, that the Company has committed to for periods ranging from one to five years.
(3) Lease liabilities relate to right-of-use assets which include land and buildings related to telelvision and radio operations and equipment
leases.
(4) Other obligations include financial liabilities, trade marks, other intangibles and forward foreign exchange contracts.
Corus Entertainment Annual Report 2022 | 25
MANAGEMENT’S DISCUSSION AND ANALYSIS
In addition to the contractual obligations in the table above, the Company will pay interest on any bank debt and
Notes outstanding in future periods. In fiscal 2022 the Company incurred interest on bank debt and Notes of
$58.5 million (2021 – $63.0 million).
KEY PERFORMANCE INDICATORS AND NON-GAAP FINANCIAL MEASURES
The Company measures the success of its strategies using a number of key performance indicators. Certain
investors, analysts and others utilize these measures in assessing the Company’s operational and financial
performance and as an indicator of its ability to service debt and return cash to shareholders. These have been
outlined below, including a discussion as to their relevance, definitions, calculation methods and underlying
assumptions. In addition to disclosing results in accordance with IFRS as issued by the IASB, the Company also
provides non-IFRS or non-GAAP measures as a method of evaluating the Company’s performance. Certain
key performance indicators are not measurements in accordance with IFRS and should not be considered as
an alternative to net income or any other measure of performance under IFRS. These non-IFRS or non-GAAP
financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other issuers.
The Company uses supplementary financial measures to disclose financial measures that are not (a) presented in
the financial statements and (b) is, or is intended to be, disclosed periodically to depict the historical or expected
future financial performance, financial position or cash flow, that is not a non-GAAP financial measure. The
Company has disclosed optimized advertising revenue and new platform revenue as supplementary financial
measures as discussed below.
REVENUE
Revenue is a measurement defined by IFRS. Revenue is the gross inflow of economic benefits arising in the
course of the ordinary activities of an entity that results in increases in equity, such as cash, receivables or
other consideration arising from the sale of products and services and is net of items such as trade or volume
discounts and certain excise and sales taxes. It is one of the bases upon which free cash flow, a key performance
indicator defined below, is determined; therefore, it measures the potential to deliver free cash flow as well as
indicating the level of growth in a competitive marketplace.
The primary sources of revenue for the Company are outlined in the Overview section.
The Company’s sources of revenue are well diversified, with revenue streams for the year ended August 31, 2022
derived primarily from three areas: advertising 60%, subscriber fees 32% and distribution, production and other
8% (2021 – 61%, 32% and 7%, respectively).
OPTIMIZED ADVERTISING REVENUE
Optimized advertising revenue is calculated as advertising revenue attributable to audience segment selling
and to the Cynch automated buying platform expressed as a percentage of Television advertising revenue.
The Company believes this is an important measure to enable the Company and investors to evaluate the
performance on how Television advertising is sold.
(thousands fo Canadian dollars, except percentages)
Optimized advertising revenue (numerator)
Television advertising revenue (denominator)
Optimized advertising revenue percentage
2022
2021
% change
371,540
263,734
859,598
842,202
43%
31%
41%
2%
NEW PLATFORM REVENUE
This metric combines subscriber revenue from streaming initiatives and advertising revenue from digital
platforms expressed as a percentage of total Television advertising and subscriber revenue. New platform
revenue reflects progress on the Company’s participation in rapidly growing streaming distribution platforms
and digital advertising markets.
26 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
(thousands of Canadian dollars, except percentages)
New platform revenue (numerator)
2022
142,284
2021
107,807
% change
32%
Television advertising revenue
Television subscriber revenue
Total Television advertising and subscriber revenue (denominator)
New platform revenue percentage
859,598
518,483
1,378,081
10%
842,202
498,049
1,340,251
8%
2%
4%
3%
DIRECT COST OF SALES, AND GENERAL AND ADMINISTRATIVE EXPENSES
Direct cost of sales, and general and administrative expenses include amortization of program rights (costs of
programming intended for broadcast, from which advertising and subscriber revenue is derived); amortization of
film investments (costs associated with internally produced and acquired television and film programming, from
which distribution and licensing revenue is derived); other cost of sales relating to production service work, book
publishing, merchandising, marketing (research and advertising costs); employee remuneration; regulatory
licence fees; and, selling, general administration which includes overhead costs. For the year ended August 31,
2022, consolidated direct cost of sales, and general and administrative expenses were comprised of direct cost
of sales 54%, employee remuneration 30%, and general and administrative expenses 16% (2021 – 53%, 32%,
and 15%, respectively).
SEGMENT PROFIT AND SEGMENT PROFIT MARGIN
Segment profit is calculated as revenue less direct cost of sales, general and administrative expenses as reported
in the Company’s consolidated statements of income (loss) and comprehensive income (loss). Segment profit
and segment profit margin may be calculated and presented for an individual operating segment, a line of
business, or for the consolidated Company. The Company believes these are important measures as they allow
the Company to evaluate the operating performance of its business segments or lines of business and its ability
to service and/or incur debt; therefore, it is calculated before (i) non-cash expenses such as depreciation and
amortization; (ii) interest expense; and (iii) items not indicative of the Company’s core operating results, and
not used in management’s evaluation of the business segment’s performance, such as: goodwill and broadcast
licence impairment; significant intangible and other asset impairment; debt refinancing; non-cash gains or
losses; restructuring and other costs; gain (loss) on disposition; and certain other income and expenses as
included in note 20 to the audited consolidated financial statements. Segment profit is also one of the measures
used by the investing community to value the Company and is included in note 22 to the audited consolidated
financial statements. Segment profit margin is calculated by dividing segment profit by revenue. Segment profit
and segment profit margin do not have any standardized meaning prescribed by IFRS and are not necessarily
comparable to similar measures presented by other companies. Segment profit and segment profit margin
should not be considered in isolation or as a substitute for net income prepared in accordance with IFRS as
issued by the IASB.
(thousands of Canadian dollars, except percentages)
Revenue
Direct cost of sales, general and administrative expenses
Segment profit
Segment profit margin
2022
1,598,586
1,154,943
443,643
28.0%
2021
1,543,483
1,018,865
524,618
34.0%
FREE CASH FLOW
Free cash flow is calculated as cash provided by operating activities less cash used in investing activities, as
reported in the consolidated statements of cash flows, and then adding back cash used specifically for business
combinations and strategic investments and deducting net proceeds from dispositions. Free cash flow is a key
metric used by the investment community that measures the Company’s ability to repay debt, finance strategic
business acquisitions and investments, pay dividends, and repurchase shares. Free cash flow does not have any
standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by
other companies. Free cash flow should not be considered in isolation or as a substitute for cash flows prepared
in accordance with IFRS as issued by the IASB.
Corus Entertainment Annual Report 2022 | 27
MANAGEMENT’S DISCUSSION AND ANALYSIS
(thousands of Canadian dollars)
Cash provided by (used in):
Operating activities
Investing activities
Add: cash used in (provided by) business acquisitions and strategic investments (1)
Free cash flow
(1) Strategic investments are comprised of investments in venture funds and associated companies.
2022
2021
216,835
25,172
242,007
(2,422)
239,585
274,493
(29,526)
244,967
6,980
251,947
ADJUSTED NET INCOME AND ADJUSTED BASIC EARNINGS PER SHARE
Management uses adjusted net income attributable to shareholders and adjusted basic earnings per share as a
measure of enterprise-wide performance. Adjusted net income attributable to shareholders and adjusted basic
earnings per share are defined as net income and basic earnings per share before items such as: non-recurring
gains or losses related to acquisitions and/or dispositions of investments; costs of debt refinancing; non-cash
impairment charges; and business acquisition and restructuring costs. Management believes that adjusted net
income attributable to shareholders and adjusted basic earnings per share are useful measures that facilitate
period-to-period operating comparisons. Adjusted net income attributable to shareholders and adjusted basic
earnings per share do not have any standardized meaning prescribed by IFRS and are not necessarily comparable
to similar measures presented by other companies. Adjusted net income attributable to shareholders and
adjusted basic earnings per share should not be considered in isolation or as a substitute for net income (loss)
and basic earnings (loss) per share attributable to shareholders as prepared in accordance with IFRS as issued
by the IASB.
(thousands of Canadian dollars, except per share amounts)
Net income (loss) attributable to shareholders
Adjustments, net of income tax:
Goodwill impairment
Debt refinancing
Restructuring and other costs
Adjusted net income attributable to shareholders
Basic earnings (loss) per share
Adjustments, net of income tax:
Goodwill impairment
Debt refinancing
Restructuring and other costs
Adjusted basic earnings per share
2022
(245,058)
348,597
(2,526)
5,925
106,938
($1.19)
$1.69
($0.01)
$0.03
$0.52
2021
172,550
—
1,389
8,279
182,218
$0.83
—
$0.01
$0.04
$0.88
NET DEBT
Net debt is calculated as long-term debt plus lease liabilities, less cash and cash equivalents as reported in
the consolidated statements of financial position. Net debt is an important measure as it reflects the principal
amount of debt owing by the Company as at a particular date. Net debt does not have any standardized meaning
prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies.
(thousands of Canadian dollars)
Total debt, net of unamortized financing fees and prepayment options
Lease liabilities
Cash and cash equivalents
Net debt
2022
1,261,650
134,369
(54,912)
1,341,107
2021
1,349,293
143,546
(43,685)
1,449,154
NET DEBT TO SEGMENT PROFIT
Net debt to segment profit is calculated as net debt divided by segment profit for the year. Net debt to segment
profit is an important measure of the Company’s liquidity and it is one of the key metrics used by the investing
28 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
community to measure the Company’s ability to repay debt through ongoing operations. Net debt to segment
profit does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar
measures presented by other companies.
(thousands of Canadian dollars)
Net debt (numerator)
Segment profit (denominator)
Net debt to segment profit
2022
1,341,107
443,643
3.02
2021
1,449,154
524,618
2.76
ENTERPRISE RISK MANAGEMENT FRAMEWORK AND APPROACH
Risks primarily arise from the Company’s business environment, strategies and objectives. Corus strives to
proactively mitigate its risk exposures through rigorous performance planning, risk review and reporting, and
effective operations and business management. Residual exposure for certain risks is further mitigated through
appropriate insurance coverage where this is deemed to be most effective and commercially available.
Corus strives to avoid taking on undue risk outside of its risk appetite and assesses potential risks for alignment
with business strategies, objectives, values and risk tolerance. The Company has established an Enterprise
Risk Management Framework (“ERMF”) which includes identifying, assessing, managing, monitoring and
communicating the principal business risks that impact the Company.
Corus’ ERMF supports its risk culture, capabilities and practices that we rely on to manage risks in creating,
preserving and realizing value. The ERMF emphasizes transparency and accountability and supports a common
understanding among stakeholders of how Corus manages risk. Principally, the ERMF enables Corus to:
• determine and define the types risks arising from or most relevant to our strategy and operations;
• create and maintain effective risk management governance and oversight; and
• appropriately manage and respond to risks.
Corus has defined the following major risk categories and related subcategories to which our businesses and
operations could be exposed:
MAJOR RISK CATEGORY
STRATEGIC
FINANCIAL
OPERATIONAL
LEGAL AND COMPLIANCE
REPUTATIONAL
RISK
Customer Change and Adoption
Industry and Competition (including suppliers)
Economic Conditions
Credit
Tax
Market
Liquidity
Process
People
Health and Safety
Technology and Cybersecurity
Physical and Infrastructure
Legal
Regulatory
Privacy
Compliance
Reputational
Environmental & Social
Risk Culture
Corus believes that risk culture starts with the “tone at the top” i.e. set by the Board of Directors (“Board”),
Chief Executive Officer (“CEO”), and the Executive Leadership Team (“ELT”). The Company’s culture embraces
accountability, listening, learning, communication, and transparency. This includes a culture and approach to risk
Corus Entertainment Annual Report 2022 | 29
MANAGEMENT’S DISCUSSION AND ANALYSIS
taking and management, which means that all employees are encouraged to identify and escalate risks when
they believe the Company is or could be operating outside of its risk appetite.
At Corus, ethical conduct is an important part of the risk culture. Corus has a Code of Conduct and Ethics that
applies to and guides employees and directors in their business activities and conduct and requires them to act, at
all times, with integrity, professionalism and ethically. If there are any concerns that cannot or are not addressed
through the governance structures in place to identify, discuss and manage risk, Corus has comprehensive
policies and processes to enable any employee to raise a concern, including anonymously through a hotline.
Risk Appetite
Part of delivering against Corus’ strategy and doing the right thing for its stakeholders is growing value. As such,
Corus takes risks necessary to build and grow its businesses, products and brands, but only if they:
• fit the Corus business strategy;
• are understood and manageable; and
• do not harm the reputation of the Company or its brand(s).
RISK GOVERNANCE
The Company’s governance structure emphasizes and balances Board and management level oversight with
clear ownership of and management of risks within businesses. The Company’s Board has overall responsibility
for risk governance and ensures that there are processes in place to effectively identify, assess, monitor, and
manage principal business risks to which the Company is exposed. This includes oversight of the implementation
of enterprise risk management procedures and the development of entity level controls. The Board carries out
its risk management mandate primarily through its Committees and senior management as follows:
• the Audit Committee, which is responsible for overseeing the Company’s policies and processes designed
to mitigate and manage applicable regulatory compliance risk, including the adequacy of internal control
over financial reporting;
• the Human Resources and Compensation Committee, which is responsible for the Company’s policies and
processes designed to mitigate and manage risks associated with the Company’s compensation plans;
• the Corporate Governance Committee, which is responsible for maintaining and monitoring the Company’s
governance processes, including its Code of Conduct;
• the Executive Leadership Team, which is responsible for the establishment of enterprise risk management
processes; and
• the Company’s Risk Management Committee (“RMC”), which oversees and manages risk management
processes.
In addition, entity level controls, (including the Company’s Code of Conduct), financial controls and other
governance processes are in place and monitored regularly by the Company’s Risk and Compliance group, which
functions independently from management and provides the Audit Committee and management with objective
evaluations of the Company’s risk and control environment.
A strategic risk assessment is conducted as part of the Company’s strategic planning process to identify and
assess the principal business risks facing the Company and their potential impact on the achievement of the
Company’s strategic objectives. Emerging risks are included in the assessment and risks are prioritized using
standard risk assessment criteria.
The RMC, which reports to the ELT, is mandated to maintain the Company’s ERMF for identifying, assessing,
managing, monitoring, and reporting the principal business risks that impact the Company. The RMC is
comprised of various senior managers from across the organization, with all key operating segments and
functions represented. The Committee meets on a quarterly basis to review strategic, operational, financial,
legal and compliance as well as reputational risks to the Company. The likelihood and impact of these risks are
ranked on a high, medium and low basis. These risks are reviewed by the Company’s Disclosure Committee, the
ELT, and finally, with the Board as part of the quarterly risk review process.
As part of comprehensive risk management, Corus has risk identification and assessment mechanisms that
are focused on recognizing and understanding existing risks, risks that may arise from new or evolving business
initiatives, aggregate risks, and non-traditional or emerging risks. The Company supports a process of risk
identification and assessment that enable and enhance its understanding of risk interdependencies and support
the identification of emerging risk.
Corus has risk control processes that are established and communicated through the Audit Committee and other
committees of the Board, ELT and management approved policies. The Company also has associated processes,
30 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
guidelines and procedures that further enable compliance with these policies. In addition, where required or
appropriate, there are risk controls in the form of monetary limits, limitations on delegated authorities to risk
tolerances, processes for escalating concerns, incidents or breaches, and review and testing procedures for key
controls. The Risk and Compliance group has a direct line of reporting to the Audit Committee and conducts
independent testing of key controls in the Company as well as continuous monitoring.
There is regular reporting on risk throughout business activities and in business forums. In addition, the RMC
regularly reports on its risk monitoring activities to the ELT, the Board and its committees. Finally, committees
are established and convened to monitor and report on certain specific risk areas that may require more focus,
particular expertise or frequency of monitoring.
RISKS AND UNCERTAINTIES
This section provides a summary description of the principal risks and uncertainties that could have a material
adverse effect on the business and financial results of the Company. This discussion is not exhaustive and any
discussion about risks should be read in conjunction with the “Cautionary Statement Regarding Forward-Looking
Information” and the Company’s most recent public disclosure documents.
A. STRATEGIC RISKS
ECONOMIC CONDITIONS
The Company’s operating performance is affected by general Canadian and worldwide economic conditions.
Changes or volatility in domestic or international economic conditions or economic uncertainty or geopolitical
conflict and tensions, may affect discretionary consumer and business spending, resulting in increased or
decreased demand for Corus’ product offerings. In addition, elevated consumer price index inflation driven by
sharp increases in energy and food prices as well as supply disruptions and strong demand for goods can also
affect the Company’s business, operations and financial performance. All of the foregoing factors may adversely
affect the Company through disruption to supply chains, increased costs of labour or disruption to availability
of labour, related reduced advertising demand or spending, or lower demand for the Company’s products
and services, all of which may lead to decreased revenue or profitability. Finally, in all cases, the Company’s
business and financial condition are subject to audience and consumer acceptance of its brands, programming,
and talent. Changes to or negative perception of any of Corus’ brands, programming or talent could adversely
affect the Company, including by affecting audience and consumer acceptance, reducing the attractiveness
or value of the Company’s brand, programming or talent to advertisers or partners, or disrupting its ability to
provide programming as planned or anticipated. Any or all of the foregoing can negatively impact the Company’s
operations and financial results and plans.
INDUSTRY AND COMPETITION; CUSTOMER CHANGE AND ADOPTION
Industry and Competition
Corus operates in an open and highly competitive marketplace. The television production industry and television
and radio broadcasting services have always involved a substantial degree of risk. There can be no assurance of
the economic success of the Company’s radio stations, music formats, talent, television programs or networks
because the revenue derived from such services and products depend upon audience acceptance of these or
other competing programs released into, or networks existing in the marketplace at or near the same time,
the availability of alternative forms of entertainment and leisure time activities, general economic conditions,
public tastes generally and other intangible factors, all of which could rapidly change, and many of which are
beyond Corus’ control. The lack of audience acceptance for Corus’ radio stations, television programs, specialty
(discretionary) television networks and conventional (basic) television stations would have an adverse impact on
Corus’ businesses, results of operations, prospects and financial condition. Corus’ failure to compete in these
areas could materially adversely affect Corus’ results of operations.
Corus also faces competition from both regulated and unregulated players using existing, new or evolving
technologies and from illegal services. The rapid deployment of evolving technologies, services, products
and strategic partnerships have reduced the traditional lines between internet and broadcast services and
further expanded the competitive landscape. The Company may also be affected by changes in customer
discretionary spending patterns, which in turn are dependent on consumer confidence, disposable consumer
income and general economic conditions. New or alternative media technologies and business models, such
as video-on-demand, subscription-video-on-demand, personal video recorders, mobile television, internet
protocol television, over-the-top internet-based video entertainment services, connected TVs, virtual
multichannel programming distributors, audio streaming platforms, digital radio services, satellite radio,
podcasting and direct-to-home satellite compete with, or may in the future compete with, Corus’ services for
programming and audiences. As well, mobile devices like smartphones and tablets allow consumers to access
Corus Entertainment Annual Report 2022 | 31
MANAGEMENT’S DISCUSSION AND ANALYSIS
content anywhere, anytime and are creating consumer demand for mobile, portable or free content. These
technologies and business models may increase audience fragmentation, reduce subscribers to Corus’ services,
reduce Corus’ linear television and radio ratings or have an adverse effect on advertising revenue from local and
national audiences. Technological developments may also disrupt traditional distribution platforms by enabling
content owners to provide content directly to consumers, thus bypassing traditional content aggregators. While
Corus invests in infrastructure, technology and programming to maintain its competitive position, there can
be no assurance that these investments will be sufficient to maintain Corus’ market share or performance in
the future.
Television – Broadcast Business
The financial success of Corus’ specialty television services depend on obtaining revenue from advertising
and subscribers, while Corus’ conventional television services depend primarily on obtaining revenue from
advertising. These services are also dependent on the effective management of programming costs. Any failure
by Corus’ discretionary and basic television services to compete effectively could materially adversely affect
Corus’ results of operations.
i) Advertising and Subscriber Revenue
The conventional and specialty television business and the advertising markets the Company operates in are
highly competitive. Numerous broadcast and specialty television networks, alternative forms of entertainment,
as well as online advertising platforms and websites, and over-the-top digital distribution services that are not
regulated by the CRTC compete with Corus for advertising and subscriber revenue. The CRTC also no longer
requires the licensing of new discretionary services. These services can be launched at any time using the CRTC’s
exemption order which further increases competition. Corus’ services also compete with a number of foreign
programming services which have been authorized for distribution in Canada by the CRTC, such as A+E and CNN.
This competition is for both supply of programming and also for audiences and can affect both the costs and
revenue of a network. In addition, competition among specialty television services in Canada is highly dependent
upon the offering of prices, marketing and advertising support and other incentives to cable operators and other
distributors for carriage so as to favourably position and package the services to subscribers to achieve high
distribution levels.
Corus’ ability to compete successfully depends on a number of factors, including its ability to secure popular
television and other programming rights for all platforms, including traditional linear broadcast rights and
non-linear rights, in order to achieve audience acceptance, high distribution levels and attract advertising. Corus’
ability to continue to attract advertising customers also depends on its ability to meet the evolving expectations
of its advertising customers. Accordingly, there can be no assurance that Corus’ television services will be able
to maintain or increase their current share of audience and advertising revenue as well as maintain or increase
current levels of subscriber distribution and penetration (see Pandemics).
ii) Programming Expenditures / Audience Acceptance
Programming costs are the most significant expenses in the Television segment. Although the Company has
processes to effectively manage these costs, increased competition in the television broadcasting industry due
to factors mentioned above, changes in viewer preferences and other developments could impact the availability
of premium content and/or increase the cost of programming content which could have a material adverse
effect on Corus’ operations and/or financial results. Programming costs are also subject to inflationary factors
and macroeconomic conditions.
In addition, programming content may be purchased or commissioned for broadcast one or two years in advance,
making it more difficult to predict how such content will perform in terms of audience acceptance. Audience
acceptance cannot be accurately predicted. The success of a program also depends on the type and extent of
promotional and marketing activities, the quality and acceptance of competing programs, general economic
conditions and other intangible factors, all of which can rapidly change and many of which are beyond Corus’
control. A failure to select and obtain content demanded by viewers or otherwise a lack of audience acceptance
of Corus’ television programming could have a material adverse effect on Corus’ operations and/or financial
results.
Commission of original television programs requires a significant amount of capital. Factors such as labour
disputes, technology changes or other disruptions affecting aspects of production may affect Corus or its
independent production partners and cause cost overruns and delay or hamper completion of a production
(see also Reliance on Key Suppliers and Customers and Pandemics).
32 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
Television – Content Business
The production and distribution of television, books and other media content is very competitive. There are
numerous suppliers of media content, including vertically integrated major motion picture studios, television
networks, streaming entities, independent television production companies and book publishers around the
world. Many of these competitors are significantly larger than Corus and have substantially greater resources,
including easier access to capital. Corus competes with other television and motion picture production
companies (including streamed content producers) for ideas and storylines created by third parties as well as
for actors, directors and other personnel required for a production.
Further, vertical integration of the television broadcast industry worldwide and the creation and expansion of
new networks, which create a substantial portion of their own programming, have decreased the number of
available timeslots for programs produced by third-party production companies. There also continues to be
intense competition for the most attractive timeslots offered by those services. There can be no assurances
that Corus will be able to compete successfully in the future or that Corus will continue to produce or acquire
rights to additional successful programming or enter into agreements for the financing, production, distribution
or licensing of programming on terms favourable to Corus or that Corus will be able to increase or maintain
penetration of broadcast schedules (see also Pandemics).
Radio
The financial success of each of Corus’ radio stations is dependent principally upon its share of the overall
advertising revenue within its geographic market, its promotional and other expenses incurred to obtain the
revenue and the economic strength of its geographic market. Radio advertising revenue is highly dependent
upon audience share (derived from interest in on-air talent, music formats, and other intangible factors). Other
stations may change programming formats at any time to compete directly with Corus’ stations for listeners and
advertisers or launch aggressive promotional campaigns in support of already existing competitive formats. If a
competitor, particularly one with substantial financial resources, were to attempt to compete in either of these
fashions, ratings at Corus’ stations could be adversely impacted, resulting in lower net revenue.
Radio broadcasting is also subject to competition from other media, such as television, outdoor advertising,
print and internet as well as alternative media technologies, such as satellite, music streaming, podcasting and
music downloading services. Potential advertisers can substitute advertising through the broadcast television
system (which can offer concurrent exposure on a number of networks to enlarge the potential audience)
or through daily, weekly and free-distribution newspapers, outdoor billboard advertising, magazines, other
print media, direct mail marketing, internet and mobile advertising. Competing media commonly target the
customers of their competitors, and advertisers regularly shift dollars from radio to these competing media
and vice versa. In markets near the U.S. border, such as Kingston, Ontario, Corus also competes with U.S. radio
stations. Accordingly, there can be no assurance that Corus’ radio stations will be able to maintain or increase
their current audience share and advertising revenue share.
KEY CUSTOMERS AND SUPPLIERS
Corus uses and recognizes the value of using third parties to support its businesses, as they provide access to
leading applications, processes, products and services, specialized expertise, innovation, economies of scale,
and operational efficiencies. However, they may also create reliance upon the provider with respect to continuity,
reliability, and security, and their associated processes, people and facilities. Applications, processes, products,
and services of its providers could be subject to failures or disruptions as a result of human error, natural disasters,
utility disruptions, pandemics or other public health emergencies, malicious insiders, cyber-attacks or other
criminal or terrorist acts, or non-compliance with regulations, which could in turn impact Corus’ operations.
Such adverse effects could limit Corus’ ability to deliver products and services to customers, or damage its
reputation, which in turn could lead to disruptions to its businesses and financial loss.
Reliance on Key Customers and Suppliers
Corus procures its content from a limited number of key third party suppliers, some of whom are global in scale
and have significant negotiating leverage. Certain of these third parties are launching or have launched their
own direct-to-consumer businesses in Canada, which could impact the terms on which the Company is able
to secure premium content. While Corus may have alternate sources of content, there can be no assurance
that Corus would be able to source alternate content desirable to the Company’s viewers. The loss of a key
supplier may adversely affect Corus’ operations and/or its financial results. Suppliers may also experience
business difficulties, including labour strikes, privacy and/or security incidents, restructure their operations, be
consolidated with other suppliers, discontinue products or sell their operations or products to other vendors,
which could affect the future development and support of the Company’s services (see also Pandemics).
Corus Entertainment Annual Report 2022 | 33
MANAGEMENT’S DISCUSSION AND ANALYSIS
Corus enters into long-term agreements with various Broadcasting Distribution Undertakings (“BDUs”) for
the distribution of its television services. Corus derives most of its subscriber revenue from its relationships
with a small number of the largest BDUs. As these contracts expire, there could be an adverse effect on Corus’
operations and/or its financial results if Corus is unable to renew them on acceptable terms or at all, including
revenue per subscriber and packaging that affects the networks’ subscriber reach. Similarly, the majority of
Corus’ advertising revenue is derived from a small number of large advertising agency “upfront commitments”.
Any significant change in volume, rates and/or other terms associated with these sales commitments may have
a positive or adverse effect on Corus’ operations and/or financial results.
Corus relies on certain information technology providers, telecommunications carriers and certain utilities to
conduct Corus’ business. Any disruption to the services provided by these suppliers, including labour strikes and
other work disruptions, bankruptcies, technical difficulties or other events affecting the business operations of
these information technology providers, telecommunications carriers and utilities may affect Corus’ ability to
operate and therefore have an adverse impact on its operations and/or its financial results.
The media industry continues to evolve with a number of recently announced mergers and acquisitions, which
may have commercial and competitive implications for the Company and the industry generally. For example, on
March 15, 2021 a transaction was announced whereby Rogers Communications Inc. (“Rogers”) would purchase
all outstanding Class A Shares and Class B Shares of Shaw Communications Inc. (“Shaw”, with the transaction
referred to as the “Proposed Rogers/Shaw Transaction”). This transaction is still subject to regulatory review
by the Competition Bureau and Innovation, Science and Economic Development Canada. These parallel review
processes are ongoing. If successful, this transaction would see the Shaw Family Living Trust (“SFLT”) become
one of the largest shareholders in Rogers, but SFLT would not be the controlling shareholder. As such, there is
uncertainty as to the commercial and competitive landscape implications of the resulting merger, if approved,
as well as the timing. While Corus maintains strong business relationships with its key suppliers, clients and
partners, including Rogers and Shaw, the terms and conditions or revenue derived from current subscriber,
programming, licensing and advertising arrangements may change in the future and the other risks noted above
in respect of BDUs and advertiser revenues may also materialize. In addition, it is possible that funding currently
provided by Shaw to Corus for the production of local news, pursuant to CRTC policies, may not be provided
to Corus in the future as a result of Rogers’ position that it will discontinue the Shaw-Corus local funding
arrangement, and redirect these funds to Rogers-owned Citytv television network.
ACQUISITIONS AND OTHER STRATEGIC TRANSACTIONS
The Company may, from time to time, make strategic acquisitions which involve significant risks and uncertainties.
As such, the Company may experience difficulties in realizing the anticipated benefits, incur unanticipated
expenses and/or have difficulty incorporating or integrating the acquired business, the occurrence of which
could have a material adverse effect on the Company.
B. OPERATIONAL RISKS
Corus inherently, and in normal course business, faces operational risks. This includes risks, losses, or other
negative impacts associated with or loss resulting from inadequate or failed internal processes or technology
or from human activities or from external events. Corus seeks to actively and continuously identify, monitor,
manage, mitigate and, where required, remediate operational risk in order to create and sustain shareholder
value, successfully execute its business strategies, and operate efficiently. However, failure to adequately
mitigate such risks could impact Corus’ ability to meet strategic objectives, pose a risk of censure or penalty,
may lead to litigation, and increase reputational, financial, legal and other risks.
HEALTH & SAFETY
Pandemics, epidemics and other systemic or widespread health and safety risks could occur, and could materially
negatively impact the Company’s business, affairs, operations, financial condition, liquidity, availability of
credit and results of operations, including but not limited to its ability to maintain operations or meet revenue
or expense targets, projections or plans. By nature, the severity and length of such risks depend on future
developments that are highly uncertain and cannot be predicted with any meaningful precision.
Pandemics
Pandemics or epidemics and other health and safety risks could have an adverse effect on the Company’s
ability to maintain operations, the general economy and financial markets and the ability of suppliers to provide
products and services needed to operate the business. Any or all of the foregoing can result in a declining level
of retail and commercial activity, which could, in turn, have a negative impact on the demand for, and prices of,
the Company’s products and services.
34 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
Corus may also be criticized or face increased risk of litigation and governmental and regulatory scrutiny,
customer disputes, negative publicity, or exposure to litigation (including class actions, or regulatory and
government actions and proceedings) as a result of the effects of the COVID-19 pandemic. The COVID-19
pandemic has resulted in an increase, and may result in further increases, in certain of the risks outlined in this
document, including strategic, operational, financial, legal, and reputational risks.
Specifically, the impact of COVID-19 and measures to prevent its spread have affected the Company in a number
of ways. Advertising sales in fiscal 2022 were higher than the lows experienced in the latter half of fiscal 2020 and
early 2021, but a more robust recovery was muted by continued COVID-19 restrictions, vaccine hesitancy, as well
as broad disruptions to the global supply chain and high inflation (see ECONOMIC CONDITIONS). The Company
continues to work closely with its advertisers and agencies to create relevant and innovative marketing and
advertising opportunities. There is no guarantee that further impacts may not occur depending on pandemic
recovery conditions and pace within Canada and globally.
The COVID-19 pandemic has created additional operational and compliance risks, including the need to
implement and execute new programs and procedures for operating and delivering the Company’s products and
services; provide enhanced safety measures for its employees and customers; comply with changing regulatory
guidance; address the risk and increased incidence of attempted fraudulent activity and cybersecurity threat
behaviour; and protect the integrity and functionality of Corus’ systems, networks, and data as a larger number
of employees work remotely. Corus is also exposed to human capital risks, and risks arising from mental wellness
concerns for employees due to issues related to health and safety matters, and other environmental stressors
as a result of measures implemented in response to the COVID-19 pandemic.
The Company’s suppliers and other third parties upon which Corus relies, have and may continue to be exposed
to similar and other risks which could in turn impact Corus’ operations. Notably, the production shut-down in
fiscal 2020 and slow restart of Canadian productions resulted in the Company being unable to meet all of its
Canadian programming expenditures (“CPE”) regulatory requirements in fiscal 2020 resulting in a shortfall in
spending of approximately $50 million. In August 2021, the CRTC provided television broadcasters with the
flexibility to make up the shortfalls on CPE obligations during fiscal 2020 over an extended period. The Company
has ramped up its development efforts for new original programming, however there are always risks that the
Company will continue to be challenged to meet CPE requirements, particularly if productions are shut-down
again as a result of continuing pandemic conditions and impacts.
Given the constantly evolving nature, extent and sentiments about the COVID-19 pandemic, it is difficult to
predict with certainty medium or long-term impacts of the pandemic to the Company. Key unknowns that may
affect the Company and its business and financial positions include the duration, severity and the impact of
future outbreaks, imposition of emergency measures, and fluctuations in financial and commodity markets. In
addition, labour shortages due to illness or, restrictions on the movement of personnel as well as supply chain
disruptions could result in a material reduction or even cessation of all or a portion of the Company’s operations.
Provinces and territories have lifted many of the health restrictions related to COVID-19, which in turn has seen
a reduced return to on-site work across various sectors.
However, disruptions caused by prior imposition or removal of public health restrictions, public sentiment about
the pandemic and continuing COVID-19 infection rates, including labour shortages, employee absenteeism
at the Company or its clients and suppliers, changes in consumer demand, and supply chain shortages or
disruptions, particularly in the automotive, retail, tourism and entertainment sectors, can negatively impact
the Company’s operations and financial performance, including advertising demand and revenue. There can
be no certainty that current vaccination and public health measures can mitigate negative impacts caused by
the COVID-19 pandemic on the Company’s business in the short to medium term. Potential additional related
impacts include, but are not limited to, an impairment of long-lived assets, an impairment of investments in
venture funds and a change in the estimated credit loss on accounts receivable.
However, in summary, the extent to which COVID-19 and any other pandemic or public health or safety crisis
impacts the Company’s business, affairs, operations, financial condition, liquidity, availability of credit and results
of operations will depend on future developments that are highly uncertain and cannot be predicted with any
meaningful precision.
Corus Entertainment Annual Report 2022 | 35
MANAGEMENT’S DISCUSSION AND ANALYSIS
PEOPLE
Employee Retention, Recruitment, Engagement and Diversity
Corus’ operations depend on the expertise, efforts and engagement of its employees. The talent and workforce
in Corus’ industry is highly competitive and the Company’s success is highly linked to its ability to attract and
retain a high-performing, diverse, and engaged workforce, including in key growth areas, of technology and
digital media fields as well as in specialized creative, and on-air areas. To achieve this, the Company recognizes
the need to focus on providing career and development opportunities, competitive compensation and benefits,
fostering an inclusive, equitable and diverse workplace, and a great employee experience to both attract and
retain qualified and high performing individuals. The Company undertakes annual talent review and succession
planning processes to assess capabilities for all areas of the business. The outcomes from these processes
inform plans throughout the Company to retain, develop, or acquire talent.
Failure to maintain and achieve this focus, and changes to the Company’s workforce as a result of factors
such as turnover, restructuring, retirement, inadequate succession planning, cost reduction initiatives, labour
disruption, deterioration in overall employee morale and engagement, or other events, could have an adverse
impact on Corus’ operations and/or financial results.
The Company’s broadcasting assets in television and radio are federally regulated by statute and by related
policies governing on air depiction and employment diversity. The Company is committed to building and
maintaining a diverse workforce and an inclusive and equitable work environment throughout the organization.
To this end the Company has a dedicated Diversity, Equity and Inclusion team to define and lead execution of
action plans, as well as a Diversity, Equity and Inclusion Council to provide feedback and ideas about diversity,
equity and inclusion priorities, and monitors the implementation of the triennial Employment Equity Plan.
The Company recognizes that an essential element of building a strong and successful company is having and
hiring people with the right capabilities, experiences, character and mind-set, which has a direct impact on
evolving the diversity of its workforce. In fiscal 2022, the Company completed Diversity, Equity and Inclusion
training for the senior leadership team and all of the Company’s employees. The Company continues to enhance
how it sources, attracts and selects new Board candidates and employees, with a lens of diversity, equity and
inclusion, which will ensure all levels of the Company better reflect the diversity of the communities in which it
operates. To further support its commitment to diversity, equity and inclusion, seven Employee Resource Groups
have been formed to support Black, Latinx / Hispanic, Asian, people with disabilities, 2SLGBTQ+, Indigenous
and Women team members. These groups provide the Company an important sounding board, resource
and partners to develop Corus’ anti-racism, diversity and inclusion initiatives. Failure to address perceived or
actual systemic racism and bias, to recruit and retain a diverse and inclusive workforce or foster and maintain a
diverse and inclusive work environment could have an adverse impact on Corus’ ability to execute its strategies,
reputation, operations or financial results.
Unionized Labour
As at August 31, 2022, 28% of the Company’s employees were employed under one of six collective agreements
represented by two unions. Renegotiating collective bargaining agreements could result in higher labour costs
and be challenging in the context of a declining workload due to transformation, a maturing footprint and
improved efficiencies. During the bargaining process there may be project delays and work disruptions, including
work stoppages or work slowdowns, which could have an adverse impact on Corus’ operational and/or financial
results.
TECHNOLOGY AND CYBERSECURITY
Technology and cyber security risks for virtually all businesses have increased in recent years. This is due, in part,
to the proliferation, sophistication and constant evolution of new technologies and attack methodologies used
by sociopolitical entities, organized criminals, malicious insiders, or service providers, nation states, hackers and
other internal or external parties. In the normal course of business, Corus’ technologies, systems and networks,
and those of third parties including key suppliers and partners (including mobile, internal, and cable providers)
providing services to Corus or distributing Corus’ product and content, continue to be subject to cyber-attacks,
and may be subject to disruption of services, data security or other breaches. While Corus has not experienced
a material service disruption as at the date of the document, in the ordinary course and from time to time, it
does experience a limited number of service disruptions. In general, Corus can experience financial, operational,
reputational and other losses or damage arising from technology or cyber security threats to itself or to key
suppliers, customers and partners.
36 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
Information Technology Systems
The day-to-day operations of Corus are highly dependent on information technology systems and internal
business processes and the ability of Corus and its service providers to protect the Company’s networks and
information technology systems. An inability to operate or enhance information technology systems could have
an adverse impact on Corus’ business, including its ability to produce accurate and timely invoices, manage
operating expenses and produce accurate and timely financial reports. Although Corus has taken steps to reduce
these risks, there can be no assurance that potential failures of, or deficiencies in, these systems or processes
will not have an adverse effect on Corus’ operations and/or its financial results.
An inability to protect the Company’s systems, applications and information repositories against cyber threats,
which include cyber-attacks such as, but not limited to, hacking, computer viruses, denial of service attacks,
industrial espionage, unauthorized access to confidential, proprietary or sensitive information, unauthorized
access to corporate or network information technology systems or other breaches of security could result in
service disruptions to, or could have an adverse impact on, the Company’s business operations and could harm
the Company’s brand, reputation and customer relationships. Although the Company has taken steps to reduce
these risks, there can be no assurance that future cyber threats, if to occur, will not have an adverse effect
on the Company’s operating results. Establishing response strategies and business continuity protocols to
maintain operations if any disruptive event materializes is critical to the Company. A failure to complete planned
and sufficient testing, maintenance or replacement of the Company’s networks, equipment and facilities as
appropriate, could disrupt the Company’s operations or require significant resources.
The Company uses several cloud-based systems in the operation of its business. The Company depends on
these cloud-based technology system providers to provide uninterrupted system access as well as to ensure the
Company’s data, which resides in those systems, is appropriately protected and safeguarded. An inability to have
continuous access to these systems could result in an adverse impact to Corus’ day-to-day operations, including
the inability to generate accurate and timely financial data. The third party cloud-based system providers may
also be subject to cyber-attacks, which could result in the loss of data and/or reputational damage. There can be
no assurance that the steps Corus takes to reduce the risk of service outages or cyber-attacks will be adequate
to prevent them in the future.
INTELLECTUAL PROPERTY RIGHTS
Television / Radio – Broadcast Business
Corus pays significant licence fees to acquire rights to content and branding on an exclusive basis.
From time to time, various third parties may contest or infringe upon these owned or licensed rights. Any such
infringement, including increasingly rampant online piracy and illegal distribution of copyrighted television
content, may have a material adverse impact on Corus’ operations and financial results. Corus takes commercially
reasonable efforts to minimize these risks including negotiating and enforcing protective covenants in its
content licensing agreements.
There are systems in place to track proper registration and renewal of Corus’ owned trade mark portfolio, and
to have notice of third-party applications that may potentially conflict with Corus’ trade marks, all with a view to
ensuring that Corus’ registrable intellectual property is afforded the maximum protection under applicable law.
Upon notice of a potential infringement of its owned or licensed intellectual property, Corus reviews these
matters to determine what, if any, steps may be required or should be taken to protect its rights, including legal
action, negotiated settlement and/or seeking remedies from intellectual property licensors. There can be no
assurance that the steps that Corus takes to establish and protect its intellectual property will be adequate to
prevent or eliminate infringement of its intellectual property and protect Corus’ ability to competitively market
and brand its television and digital services and/or be the exclusive distribution source of key licensed content
in Canada.
Corus’ linear television and digital platforms and services broadcast, make available, distribute and may
contain many forms of content including licensed audio-visual programming, text, news, graphics, databases,
photographs, recipes, audio files (music or otherwise) and rich interactive content, blog content, and
user-generated content including story comments, and internal and external links. Corus takes steps to ensure
that procedures are in place to clear rights and to monitor user-generated content. There remains a risk,
however, that some potentially defamatory or infringing content can be posted on a Corus website. Corus carries
insurance coverage against this risk but there remains an exposure to liability for third-party claims.
Corus Entertainment Annual Report 2022 | 37
MANAGEMENT’S DISCUSSION AND ANALYSIS
Television – Content Business
Corus must be able to protect its trade marks, copyrights and other proprietary rights to competitively produce,
distribute and licence its television programs and published materials and market its merchandise. Accordingly,
Corus devotes resources to the establishment and protection of trade marks, copyrights and other proprietary
rights on a worldwide basis.
From time to time, various third parties may contest or infringe upon the Company’s intellectual property rights.
The Company reviews these matters to determine what, if any, actions may be required or should be taken,
including legal action or negotiated settlement. There can be no assurance that the Company’s actions to
establish and protect trade marks, copyrights and other proprietary rights will be adequate to prevent imitation
or unauthorized reproduction of the Company’s products by others or prevent third parties from seeking to block
sales, licensing or reproduction of these products as a violation of their trade marks, copyrights and proprietary
rights. Moreover, there can be no assurance that others will not assert rights in, or ownership of, the Company’s
trade marks, copyrights and other proprietary rights, or that the Company will be able to successfully resolve
these conflicts. In addition, the laws of certain foreign countries may not protect proprietary rights to the same
extent as do the laws of the United States or Canada.
NEWS OPERATIONS
Global News’ primary directive is to report accurate, balanced, timely and comprehensive news and information
in the public interest. Independence is a fundamental Global News value and, accordingly, Global News will resist
attempts at censorship or pressure to alter news content, real or apparent. Integrity, fairness and transparency
are at the foundation of the Company’s news gathering process, and Global News is committed to reporting
news without distortion or misrepresentation.
In support of this directive, the Company has promulgated and has in effect a comprehensive set of Journalistic
Principles and Practices setting out guidelines and standards for all news staff in their dealings with frequently
asked editorial, ethical and legal, and professional conduct questions. These Journalistic Principles and Practices
adhere closely to, amongst other things, the Radio Television Digital News Association Canada’s Code of
Ethics and Professional Standards, the Canadian Association of Broadcasters’ Code of Ethics and the Canadian
Association of Journalists Ethics Guidelines.
Due to the unique nature of news-gathering and news-reporting, a number of risks may also arise in the
ordinary course of Global News’ investigation and reporting on the activities of individuals, corporations and
governments. These include legal and ethical risks such as claims in respect of defamation, invasion of privacy,
misrepresentation, and infringement of other rights (for example, Intellectual Property Rights and Piracy). A
significant part of news-gathering and reporting arises in the context of court proceedings. Certain mandatory
publication bans apply to criminal proceedings and, in addition, a court may impose a discretionary publication
ban or sealing order in respect of the proceedings or materials used or related to investigations leading to
a criminal charge. Where Global News has not otherwise successfully overturned or reduced the scope of a
publication ban or sealing order through proper legal process, its policy is to fully comply with court-ordered
publication bans and sealing orders. However, because there is no formalized publication ban notice system in
place in most provinces, and because publication bans can often be subject to different interpretations, there
is no assurance that Global News will not inadvertently breach a publication ban or sealing order and if that
happens, there is a risk that Global News may be held to be in contempt of court. Similarly, Global News’ policy
is to resist production orders, warrants and subpoenas for its footage and other materials through proper
legal process but, where this is not successful, Global News will comply with production orders, warrants and
subpoenas of proper scope and detail.
Due to Global News’ strong commitment to editorial independence, certain news-reporting may pose a risk to the
Company’s advertising revenue streams if advertisers are displeased with their portrayal in news programming
and, as a result, choose to reduce or withdraw entirely, their advertising business with the Company.
The deliberate deployment of journalists to dangerous and hostile environments may expose employees and the
Company to risks related to kidnapping, injury and death, as well as costs related to medical care and emergency
repatriation of employees.
The Journalistic Principles and Practices articulate appropriate ways to deal with the above risks and describes
proper protocol when such risks arise. In addition, news staff are provided with regular training to mitigate these
risks and the Company carries customary and appropriate insurance to further mitigate risks. However, there
can be no assurances that the Journalistic Principles and Practices comprehensively mitigate such risks. Events
out of the Company’s control may affect the Company’s ability to operate and therefore have an adverse impact
on its operations and/or its financial results.
38 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
PRODUCTION OF FILM AND TELEVISION PROGRAMS
Each production is an individual artistic work and its commercial success is determined primarily by the size
of the market and audience acceptance. The latter cannot be accurately predicted. The success of a program
is also dependent on the type and extent of promotional and marketing activities, the quality and acceptance
of other competing programs, general economic conditions and other ephemeral and intangible factors, all of
which can rapidly change and many of which are beyond Corus’ control.
Production of film and television programs requires a significant amount of capital. Factors such as labour
disputes, technology changes or other disruptions affecting aspects of production may affect Corus or its
co-production partners and cause cost overruns, and delay or hamper completion of a production (see Reliance
on Key Customers and Suppliers and Pandemics).
Financial risks exist in productions relating to tax credits and co-production treaties. The aggregate amount
of federal and provincial tax credits a qualifying production may receive can constitute a material portion of a
production budget and typically can be as much as 30% to 40% of the Canadian production budget. There is no
assurance that government tax credits and industry funding assistance programs will continue to be available
at current levels or that Corus’ production projects will continue to qualify for them. As well, a number of Corus’
productions are co-productions involving international treaties that allow Corus to access foreign financing
and reduce production risk as well as qualify for Canadian government tax credits. If an existing treaty between
Canada and the government of one of the current co-production partners were to be abandoned, one or more
co-productions currently underway may also need to be abandoned. Losing the ability to rely on co-productions
would have a significant adverse effect on Corus’ production capabilities and production financing.
Results of operations for the production and distribution business for any period are dependent on the number,
timing and commercial success of television programs and feature films delivered or made available to various
media, none of which can be predicted with certainty.
Consequently, revenue from production and distribution may fluctuate materially from period to period and the
results of any one period are not necessarily indicative of results for future periods. Cash flows may also fluctuate
and are not necessarily closely correlated with revenue recognition.
Revenue from the film library can vary substantially from year to year, both by geographic territory and by year
of production. The timing of the Company’s ability to sell library product in certain territories will depend on the
market outlook in the particular territory and the availability of product by territory, which depends on the extent
and term of any prior sale in that territory.
ENVIRONMENTAL
Global climate change could exacerbate certain of the threats facing the Company, including the frequency and
severity of weather-related events. Corus’ operations, service performance, reputation and business continuity
depend on how well the Company and its contracted service providers, protect networks and IT systems, as
well as other infrastructure and facilities, from events such as fire, natural disaster (including, without limitation,
seismic and severe weather-related events such as snow and wind storms, wildfires, flooding, extended heat
waves, and tornadoes), power loss, building cooling loss and other events. Establishing response strategies
and business continuity protocols to maintain service consistency if any disruptive event materializes is critical
to the achievement of continued operations and could require significant resources and result in significant
remediation costs.
The Company also owns or leases a variety of properties, including its transmitter sites. Some or all of these
sites may contain fuel storage systems for backup power generation. Leaks or spills from any of these storage
tanks may pose an environmental risk or result in adverse environmental conditions that could result in liability
for the Company.
Failure to understand the opportunities and expectations resulting from the societal shift to increased focus
on Environmental, Social and Governance (“ESG”) factors could result in additional operational costs and
overlooking areas for innovation or differentiation.
Any of the above-mentioned events could have an adverse effect on Corus’ operational and/or financial results.
Corus Entertainment Annual Report 2022 | 39
MANAGEMENT’S DISCUSSION AND ANALYSIS
C. FINANCIAL RISKS
LEVERAGE RISK
The Company’s stated long-term objectives are a leverage target (net debt to segment profit ratio) below
2.5 times and to maintain a dividend yield in excess of 2.5%. In the short-term, the Company may permit the
long-term leverage range to be exceeded (for long-term investment opportunities), but endeavours to return
to the leverage target range as the Company believes that these objectives provide a reasonable framework for
providing a return to shareholders and is supportive of maintaining the Company’s credit ratings.
Under the Credit Facility, the Company has undertaken to comply with financial covenants including leverage
ratios. Failure to remain in compliance with financial covenants could result in the termination of lender
commitments to make advances, the acceleration of debt repayment and, in the case of secured lenders, the
exercise of any and all rights under the security provided.
The Company’s maintenance of increased levels of debt could adversely affect its financial condition and results
of operations. In addition, increased debt service payments could adversely impact cash flows from operating
activities, thereby reducing the amount of cash flows available for working capital, capital expenditures,
acquisitions, future business opportunities, and other general corporate purposes, as well as limiting the
Company’s ability to pay dividends at current levels.
DIVIDEND PAYMENTS
Payment of dividends on the Company’s Class A Voting Shares and Class B Non-Voting Shares is dependent on
the cash flow of the Company and subject to change. The Company currently pays quarterly share dividends on
both its Class A Voting Shares and Class B Non-Voting Shares in amounts approved quarterly by the Board of
Directors. While the Company expects to generate sufficient free cash flow in fiscal 2023 to fund the Company’s
annual dividend rate for fiscal 2023, actual results may differ from the Company’s expectations and there can
be no assurance that the Company will be able to continue dividend payments at the currently anticipated rate
or at all in the future. A reduction or cessation of the payment of dividends could materially affect the trading
price of the Class B Non-Voting Shares.
MARKET VOLATILITY
The market price for the Class B Non-Voting Shares may be volatile and subject to fluctuations in response to
numerous factors, many of which may be beyond Corus’ control. Financial markets have experienced significant
price and volume fluctuations that have been particularly affected by the market prices of equity securities
of companies and that have often been unrelated to the operating performance, underlying asset values or
prospects of such companies. The market price for the Company’s Class B Non-Voting Shares may decline in
the future, even if the Company’s operating results, underlying asset values or prospects have not changed
(see Pandemics).
CAPITAL MARKETS
The Company may require continuing access to capital markets to sustain its operations. Disruptions in the
capital markets, including changes in market interest rates or lending practices or the availability of capital,
could have a materially adverse effect on the Company’s ability to raise or refinance debt. There can be no
assurances that additional financing could be available to the Company when needed or on terms that are
acceptable. The Company’s inability to raise or refinance capital when required to fund on-going operations or
capital expenditures could limit growth and may have a material adverse effect on Corus, its operations and/or
its financial results (see Pandemics).
TAXES
Corus’ business is subject to various tax laws, changes to tax laws and the adoption of new tax laws, regulations
thereunder and interpretations thereof, which may have adverse tax consequences to the Company. While Corus
believes it has adequately provided for all income and commodity taxes based on information that is currently
available, the calculation and the applicability of taxes in many cases require significant judgement in interpreting
tax rules and regulations. In addition, Corus’ tax filings are subject to government audits which could result in
material changes in the amount of current and deferred income tax assets and liabilities and other liabilities
which may, in certain circumstances, result in the assessment of interest and penalties.
40 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
INTEREST RATE RISK
The Company utilizes long-term financing extensively in its capital structure, which includes a banking facility, as
more fully described in note 14 to the audited consolidated financial statements. Interest rates on the balance of
the bank loans fluctuate with Canadian bankers’ acceptances. As such, Corus is exposed to risk on the interest
rate of the Company’s debt.
The Company manages its exposure to floating interest rates through the maintenance of a balance of fixed rate
and floating rate debt or through the use of interest rate swap contracts to fix the interest rate on its floating
rate debt. As at August 31, 2022, 59% (2021 – 70%) of the Company’s consolidated long-term debt was fixed
with respect to interest rates. Increases in interest rates could materially increase the cost of its financing and
have a material adverse effect on the Company’s financial performance.
The Company has entered into $250.0 million of interest rate swap agreements effective November 30, 2022
to fix the interest rate on a portion of its outstanding term loan facilities, which expire on February 26, 2027.
The counterparties of the swap agreement are highly rated financial institutions and the Company does not
anticipate any non-performance.
CREDIT RISK
In the normal course of business, the Company is exposed to credit risk from its accounts receivable from
customers. The carrying amounts for accounts receivable are net of applicable allowances for doubtful accounts,
which are estimated based on past experience, specific risks associated with the customer and other relevant
information (see Pandemics).
As at August 31, 2022, the Company’s trade receivables and allowance for doubtful accounts balances were
$291.2 million and $3.2 million, respectively.
FOREIGN CURRENCY RISK
A portion of the Company’s revenue and expenses are in currencies other than Canadian dollars and, therefore,
are subject to fluctuations in exchange rates. In fiscal 2022 approximately 5% (2021 – 5%) of Corus’ total revenue
was in foreign currencies, the majority of which was U.S. dollars. As at August 31, 2022, the Company had U.S.
dollar denominated payables of approximately $238.8 million (2021 – $210.5 million). Accordingly, fluctuations
in the Canadian dollar - U.S. dollar exchange rate may adversely affect Corus’ financial results.
The Company manages its exposure to foreign exchange risk on U.S. dollar payments through the use of foreign
exchange forward contracts to fix the exchange rate on a portion of its U.S. denominated payables. As at August
31, 2022, $80.5 million (2021 – $132.3 million in U.S. dollar) of the Company’s U.S. denominated payables were
fixed with respect to foreign exchange rates.
The impact of foreign exchange gains and losses are described in note 24 to the audited consolidated financial
statements in the Risk Management section.
HOLDING COMPANY STRUCTURE
Substantially all of Corus’ business activities are operated by its subsidiaries. As a holding company, the
Company’s ability to meet its financial obligations is dependent primarily upon the receipt of interest and
principal payments on intercompany advances, management fees, cash dividends and other payments from
its subsidiaries together with proceeds raised by the Company through the issuance of equity and the incurrence
of debt, and from proceeds received on the sale of assets. The payment of dividends and the making of loans,
advances and other payments to the Company by its subsidiaries may be subject to statutory or contractual
restrictions, are contingent upon the earnings of those subsidiaries and are subject to various business and
other considerations.
Corus Entertainment Annual Report 2022 | 41
MANAGEMENT’S DISCUSSION AND ANALYSIS
D. OWNERSHIP RISK
CONTROL OF CORUS BY THE SHAW FAMILY
A majority of the outstanding Class A Voting Shares of the Company are held by SFLT and its subsidiaries. As at
August 31, 2022, SFLT and its subsidiaries hold 2,885,530 Class A Voting Shares, representing approximately
86% of the outstanding Class A Voting Shares, for the benefit of descendants of the late JR Shaw and Carol Shaw.
The sole trustee of SFLT is a private company controlled by a board comprised of seven directors, including,
as at August 31, 2022, Heather Shaw, Julie Shaw, three other members of their family and two independent
directors. The Class A Voting Shares are the only shares entitled to vote in all shareholder matters except in
limited circumstances as described in the Company’s Annual Information Form. Accordingly, SFLT is, and as
long as it holds a majority of the Class A Voting Shares will continue to be able to elect a majority of the Board
of Directors of the Company and to control the vote on matters submitted to a vote of the Company’s Class A
shareholders.
SFLT is the controlling shareholder of Shaw, and as a result, Shaw and Corus are subject to common voting
control.
E. LEGAL AND COMPLIANCE
Legal and compliance risk includes legal, regulatory, compliance and related risks. These are risks associated
with the Company’s actual, threatened, anticipated or perceived failure to comply with applicable laws, rules,
regulations, regulatory guidance, contractual obligations, Code of Conduct, or standards of fair business
conduct or market conduct, which could lead to financial loss, fines, sanctions, liabilities, or reputational harm
that could be material to the Company.
Corus is exposed to such risks, inherently, in virtually all of its activities as part of the normal course of business.
While it strives to appropriately and continuously identify, monitor, manage, mitigate and if required, remediate,
such risks, failure to adequately mitigate such risks could impact Corus’ ability to meet strategic objectives,
pose a risk of censure or penalty, may lead to litigation, and increase reputational risks. Financial penalties,
reputational damage, and other costs associated with legal proceedings, and unfavourable judicial or regulatory
determinations may also adversely affect Corus’ prospects, plans, business, results of operations and financial
condition.
Impact of Regulation and Regulatory Matters
Corus’ radio and television business activities are regulated by the CRTC under the Broadcasting Act. Accordingly,
Corus’ results of operations could be adversely affected by changes in regulations, policies and decisions by the
CRTC. These changes may relate to, or may have an impact on, among other matters, licencing, licence renewal,
competition, the television programming services the Company must distribute, infrastructure access and the
potential for new or increased fees or costs, described below. In addition, the costs of providing services may be
increased from time to time as a result of compliance with industry or legislative initiatives to address consumer
protection concerns or Internet-related issues such as copyright infringement, unsolicited commercial e-mail,
cybercrime, and lawful access. There can be no assurance that future regulatory requirements will not be
imposed on Corus. Any changes in the regulatory regime could have a material adverse effect on Corus and its
reputation, as well as Corus’ results of operations and future prospects.
The CRTC, among other things, issues licences to operate radio and television stations. The Company’s CRTC
licences must be renewed from time to time and cannot be transferred without regulatory approval. Corus’ radio
stations must also meet technical operating requirements under the Radiocommunication Act and regulations
promulgated under the Broadcasting Act.
The CRTC imposes a range of obligations upon licencees, including exhibition (number of hours broadcast)
requirements for Canadian content, Canadian content expenditure requirements and access obligations (i.e.
closed captioning or descriptive video). Any failure by the Company to comply with the conditions of a licence
could result in a revocation or forfeiture of the licence or imposition of mandatory orders from the Federal Court
that could lead to the imposition of fines.
Canadian content programming is also subject to certification by various agencies of the Canadian federal
government. If programming fails to so qualify, the Company’s television licencees would not be able to use the
programs to meet its Canadian content programming obligations and Corus’ Nelvana operations might not
qualify for certain Canadian tax credits and industry incentives.
Corus’ radio, conventional television and specialty television undertakings rely upon blanket licences held by
rights-holding collectives in order to make use of the music component of the programming and other uses
of works used or distributed by these undertakings. Under these licences, Corus is required to pay a range of
42 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
tariff royalties established by the Copyright Board pursuant to the requirements of the Copyright Act (Canada)
(the “Copyright Act”) to collectives (which represent the copyright owners) and individual copyright owners.
These royalties are paid by these undertakings in the normal course of their business. The levels of the tariff
royalties payable by Corus are subject to change upon application by the collecting societies and approval by
the Copyright Board. The Government of Canada may, from time to time, make amendments to the Copyright
Act to implement Canada’s international treaty obligations and for other purposes. Any such amendments could
result in Corus’ broadcasting undertakings being required to pay additional royalties for these licences.
Refer also to the Canadian Communications Industry – Regulatory Environment section of the Company’s
Annual Information Form for further information. Also refer to the discussion of the “Proposed Rogers/Shaw
Transaction” in this document.
Group Based Licensing
In 2010, the CRTC adopted a “group based licensing” (“GBL”) approach for the renewal of the televisions licences
of larger groups such as Corus. This established a framework of policy and regulation that is applied on a group
basis rather than to individual licensees. The CRTC grouped all services into three licence categories: basic;
discretionary; and on-demand services. Radio licensees continue to be renewed on an individual basis.
During the weeks of November 22, 2016 through December 2, 2016, the CRTC held public hearings concerning
the renewal of the group based television licences held by the large English- and French-language ownership
groups including Corus. On May 15, 2017, the CRTC issued its decisions. All Corus English-language and
French-language television services were given new five-year licence terms, which began on September 1, 2017
and were scheduled to conclude on August 31, 2022. The key issues arising from these decisions include the
CPE requirements and expenditure towards programming of public national interest (“PNI”) which for the first
time were standardized across all of the large English market media groups. CPE requirements were set at 30%
and PNI requirements were set at 5%. The CRTC also removed the vestiges of legacy conditions of licence in
accordance with the CRTC’s Let’s Talk TV policy.
Following an appeal of the 2017 GBL decisions to the federal Cabinet, on August 30, 2018, the CRTC released
“reconsideration” of decisions for the television services of large English- and French-language private
ownership groups, including Corus. Revised and additional conditions came into effect on September 1, 2018
and will apply until August 31, 2022, the end of the current licence term. For the English-language groups, the
CRTC established new PNI expenditures based on historical expenditures for each group.
Corus’ English-language group of services are now subject to an 8.5% PNI expenditure requirement of the
previous year’s gross revenue and will be required to direct 0.17% of its previous year’s gross revenue to the
Foundation Assisting Canadian Talent on Recordings (or “FACTOR”), a temporary requirement which will be
in effect for the current licence term. The CRTC determined that specific funding for short-form films and
documentary content is not necessary. French-language groups will be required to devote at least 75% of their
CPE requirement to original French-language programs effective September 1, 2019, and at least 50% of their
CPE requirement for the 2018-2019 broadcast year. French-language groups will be required, as a temporary
measure, to direct 0.17% of their previous year’s gross revenue to La Fondation Musicaction était née (or
“MUSICACTION”) for the remainder of the current licence term.
On July 4, 2022, the CRTC administratively renewed all Corus English- and French-language television licences
for two years on their existing terms and conditions. The licences are now scheduled to expire on August 31,
2024.
The Company has concluded that the impact of these amendments to its television broadcast licences and
compliance has no material adverse impact to Corus’ business, results of operations, prospects and financial
condition.
More information can be found at www.crtc.gc.ca. Information contained on, or accessible through, third party
websites is not deemed to form a part of, or be incorporated by reference into, this MD&A.
Broadcasting Act Amendments
On February 2, 2022, the Government of Canada tabled Bill C-11 (“Bill”), which proposed amendments to the
Broadcasting Act. The Bill proposed incorporating online broadcasting undertakings which operate in Canada
but are currently exempt from regulation, in the Canadian broadcasting regulatory framework.
Bill C-11 dovetails the policy approach taken by the Canadian Government in the previous parliamentary session
with Bill C-10, which died on the order paper on August 16, 2021. Specifically, rather than prescribe an entire new
broadcasting regulatory framework, C-11 aims to bring a new class of “online undertakings” into the existing
framework and delegates authority to the CRTC to execute the transition.
Corus Entertainment Annual Report 2022 | 43
MANAGEMENT’S DISCUSSION AND ANALYSIS
To assist the CRTC, the Bill grants the regulator new regulatory tools such as: the authority to issue “administrative
monetary penalties” for non-compliance; comprehensive information-gathering and monitoring powers; and
the flexibility to structure service conditions at a business segment, corporate group and a service level.
After a thorough review and resulting amendments of the original text, the House of Commons Standing
Committee on Canadian Heritage referred Bill C-11 back to the full House of Commons on June 20, 2022. The
House adopted the amended version of Bill C-11 on June 21, 2022 and referred it to the Senate of Canada on
the same day. The Bill is currently at the Second Reading stage with the Senate. It will henceforth be referred to
the Senate Standing Committee on Transportation and Communications.
To further guide the CRTC in those processes, the Government promised to issue a separate, binding “policy
direction” to the CRTC that addressed “contributions from online broadcasters” and “Regulatory fairness,”
among other themes.
On February 9, 2022, Liberal Member of Parliament, Patricia Lattanzio, introduced a new private member’s bill,
Bill C-252, which is substantially similar to Bill S-228 which proposed amendments to the Food and Drug Act to
prohibit food and beverage marketing directed at children under 13 (Bill S-228 was not called to a vote before
the 2019 federal election call and thus did not become law). Bill C-252 was debated at Second Reading in the
House of Commons on May 6, 2022. If the Bill passes Second Reading, it will go the Standing Committee on
Health for further study and consultation. If passed, the Act will come into force one year from the day on which
it receives royal assent.
More information can be found at www.canada.ca. Information contained on, or accessible through, third party
websites is not deemed to form a part of, or be incorporated by reference into, this MD&A.
Copyright Act Requirements
The Company’s radio, conventional television and specialty television undertakings rely upon licences issued
under the Copyright Act to make use of the music component of the programming and other uses of works used
or distributed by these undertakings. Under these licences, the Company is required to pay a range of tariff
royalties established by the Copyright Board pursuant to the requirements of the Copyright Act to collectives
(which represent the copyright owners) and individual copyright owners. These royalties are paid by these
undertakings in the normal course of their business.
The levels of the tariff royalties payable by the Company are subject to change upon application by the
collective societies and approval by the Copyright Board. The Government of Canada may, from time to time,
make amendments to the Copyright Act to implement Canada’s international treaty obligations and for other
purposes. Any such amendments could result in Corus’ broadcasting undertakings being required to pay
additional royalties for these licences.
PRIVACY
Canada’s anti-spam legislation (together with the related regulations, “CASL”) sets out a comprehensive
regulatory regime regarding online commerce, including requirements to obtain consent prior to sending
commercial electronic messages and installing computer programs. CASL is administered primarily by the CRTC
and non-compliance may result in fines of up to $10 million. Corus has in place a compliance program with
respect to CASL including electronic communications guidelines to minimize risk of non-compliance.
The Personal Information Protection and Electronic Documents Act (“PIPEDA”) sets out the standard for obtaining
consent for the collection, use and retention of personal information. Privacy protection of personal information
is an area of law that is fast evolving in order to keep pace with technological and business model changes. Corus
believes it takes reasonable and prudent steps to comply with PIPEDA and other privacy legislation, including
having appointed a Privacy Officer to manage all privacy issues relating to Corus’ business activities.
On June 16, 2022, Bill C-27 was tabled by the Minister of Innovation, Science, and Industry in Parliament. If
passed, Bill C-27 will establish a new, federal private sector privacy law, the Consumer Privacy Protection Act
(replacing PIPEDA), and a new Personal Information and Data Protection Tribunal. The Bill has yet to receive Royal
Assent and become law. There can be no assurance that the Company’s compliance procedures will prevent a
non-compliance event, which could materially adversely impact Corus’ results of operations.
Restrictions on non-Canadian Ownership and Control
The Company is subject to Canadian ownership and control restrictions, including restrictions on the ownership
of the Class A Voting Shares and Class B Non-Voting Shares under the Broadcasting Act. Although the Company
believes it to be in compliance with the relevant legislation, there can be no assurance that a future CRTC
determination, or events beyond the Company’s control, will not result in Corus ceasing to be in compliance
44 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
with the relevant legislation. If such a development were to occur, the ability of Corus’ subsidiaries to operate
as Canadian carriers under the Broadcasting Act could be jeopardized and the Company’s business could be
materially adversely affected.
Litigation and Contingencies
The Company and its subsidiaries are involved in litigation arising in the ordinary course and conduct of its
business from time to time. The Company recognizes liabilities for contingencies when a loss is probable and
capable of being estimated. As at August 31, 2022, there were no actions, suits or proceedings pending or
against the Company or its subsidiaries which would, in management’s estimation, likely be determined in such
a manner as to have a material adverse effect on the business of the Company. Should any litigation in which
the Company becomes involved be determined against the Company, such a decision could adversely affect the
Company’s ability to continue operating as well as the trading price of the Class B Non-Voting Shares.
F. REPUTATIONAL
Corus has reputational risk associated with the potential that stakeholder perceptions, whether true or not,
regarding its business prospects, plans, practices, actions or inactions, will or may cause a significant decline in
its value, brand, liquidity or customer base, or require costly measures to address. This could include negative
perception or publicity of individuals, particularly public-facing talent, who work for or with Corus, whether
true or not. Such negative perceptions could harm Corus’ reputation overall as well as the reputations, financial
values, and prospects of individual brands, programs, stations or businesses.
The Company includes the consideration of Environmental and Social risks as part of reputational risk while
recognizing that such risks may impact or be impacted by other types of risks. Environmental and social risk is
the risk of financial loss or reputational damage resulting from the Company’s inability to appropriately meet or
adapt to changing environmental or social risks and opportunities, that impact or are associated with its business
and operations, including affects on clients or the communities in which Corus operates. A failure to monitor
and address evolving stakeholder expectations, environmental management standards, and prepare for or
comply with regulatory requirements related to Environmental, Social and Governance (“ESG”) or sustainability
disclosures and performance could adversely impact the Company’s reputation and result in higher operational
costs and, in the event of regulatory non-compliance, financial loss.
TRANSACTIONS WITH RELATED PARTIES
Related party transactions are reviewed by Corus’ Corporate Governance Committee, the majority of whom are
independent directors. The following sets forth the certain transactions in which the Company is involved (see
CONTROL OF CORUS BY THE SHAW FAMILY).
SHAW COMMUNICATIONS INC.
The Company has transacted business in the normal course with Shaw and its subsidiaries. These transactions
are measured at the exchange amount, which is the amount of consideration established and agreed to by the
related parties, and have normal trade terms.
(thousands of Canadian dollars)
Revenue
Advertising
Subscriber
Distribution, production and other
Expenses
Cable and satellite system distribution access fees
Administrative and other fees
Advertising
Accounts receivable from Shaw
Accounts payable to Shaw
2022
2021
28,772
107,171
3,673
8,510
1,762
4,009
20,793
2,292
24,882
113,684
3,629
8,492
1,965
3,542
21,790
1,956
Corus Entertainment Annual Report 2022 | 45
MANAGEMENT’S DISCUSSION AND ANALYSIS
OUTSTANDING SHARE DATA
Class A Voting Shares are convertible at any time into an equivalent number of Class B Non-Voting Shares.
The Class B Non-Voting Shares are convertible into an equivalent number of Class A Voting Shares in limited
circumstances as described in the Company’s most recent Annual Information Form.
(shares/units)
Shares Outstanding
Class A Voting Shares
Class B Non-Voting Shares
Stock Options
Vested
Non-vested
As at October 20,
2022
As at August 31,
2021
3,371,526
196,093,632
3,412,392
204,954,666
4,852,325
2,730,775
4,203,200
3,022,450
IMPACT OF NEW ACCOUNTING POLICIES
NEW ACCOUNTING PRONOUNCEMENTS ADOPTED IN FISCAL 2022
There are no new amendments to accounting standards that are effective for the Company’s annual consolidated
financial statements commencing September 1, 2021.
PENDING ACCOUNTING PRONOUNCEMENTS
IFRS 3 – Business Combinations (“IFRS 3”)
Amendments to IFRS 3 were issued in May 2020, and are effective on or after January 1, 2022, with earlier
application permitted. The amendments update references within IFRS 3 to the 2018 Conceptual Framework and
require that the principles in IAS 27 - Provisions, Contingent Liabilities and Contingent Assets be used to identify
liabilities and contingent assets arising from business combination. The Company has concluded that there
is no impact of adopting these amendments on its consolidated financial statements on September 1, 2023.
IAS 1 – Presentation of Financial Statements (“IAS 1”)
In January 2020, IASB issued an amendment to IAS 1, which affects only the presentation of liabilities in the
statement of financial position and not the amount or timing of their recognition. The amendments clarify that
the classification of liabilities as current or non-current should be based on rights that are in existence at the end
of the reporting period and align the wording in all affected paragraphs to refer to the right to defer settlement
by at least 12 months. That classification is unaffected by the likelihood that an entity will exercise its deferral
right. The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and are
to be applied retrospectively. The Company is still assessing the impact of adopting these amendments on its
consolidated financial statements.
IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”)
Amendments to IAS 8 were issued in February 2021, IASB issued Definition of Accounting Estimates, which
amends IAS 8. The amendment replaces the definition of accounting estimates. Under the new definition,
accounting estimates are “monetary amounts in financial statements that are subject to measurement
uncertainty”. The amendment provides clarification to help entities to distinguish between accounting policies
and accounting estimates. The amendments are effective for annual reporting periods beginning on or after
January 1, 2023. The Company is still assessing the impact of adopting these amendments on its consolidated
financial statements.
IAS 12 – Income Taxes (“IAS 12”)
Amendments to IAS 12 were issued in May 2021, IASB issued Deferred Tax related to Assets and Liabilities arising
from a Single Transaction, which amends IAS 12. The amendment narrows the scope of the initial recognition
exemption so that it does not apply to transactions that give rise to equal and offset temporary differences.
As a result, companies will need to recognize a deferred tax asset and deferred tax liability for temporary
differences arising on initial recognition of transactions such as leases and decommissioning obligations.
The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and are to
be applied retrospectively. The Company is still assessing the impact of adopting these amendments on its
consolidated financial statements.
46 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
IAS 37 – Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”)
Amendments to IAS 37 were issued in May 2020, and are effective for annual reporting periods beginning on
or after January 1, 2022, with earlier application permitted. The amendments address identifying onerous
contracts and specify the cost of fulfilling a contract which includes all costs directly related to the contract.
These include incremental direct costs and allocations of other costs that relate directly to fulfilling the contract.
The Company has concluded that there is no impact of adopting these amendments on its consolidated financial
statements on September 1, 2023.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Company’s significant accounting policies are described in note 3 to the fiscal 2022 audited consolidated
financial statements and notes thereto, which have been prepared in accordance with IFRS. The preparation
of these fiscal 2022 consolidated financial statements requires management to make estimates, assumptions
and judgments that affect the reported amounts of assets and liabilities, and related disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue
and expenses during the reporting periods.
Management uses estimates when accounting for certain items such as revenue, allowance for doubtful
accounts, amortization of programming and film investments, useful lives of capital assets, asset impairments,
provisions, share-based compensation plans, employee benefit plans, deferred income taxes and impairment of
goodwill and intangible assets. Estimates are also made by management when recording the fair value of assets
acquired and liabilities assumed in a business combination.
Estimates are based on a number of factors, including historical experience, current events and other assumptions
that management believes are reasonable under the circumstances. By their nature, these estimates are subject
to measurement uncertainty and actual results could differ. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are
revised and in any future periods affected.
Actual results could differ from those estimates. Critical accounting estimates and significant judgments are
generally discussed with the Audit Committee each quarter. The most significant estimates and judgments
made by management are described below.
IMPAIRMENT OF LONG-LIVED ASSETS
At each reporting date, the Company assesses its long-lived assets, including property, plant and equipment,
program rights, film investments, goodwill and intangible assets, for potential indicators of impairment, such as
an adverse change in business climate that may indicate that these assets may be impaired. If any impairment
indicator exists, the Company estimates the asset’s recoverable amount. The recoverable amount is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of those
from other assets, in which case the asset is assessed as part of the cash generating unit (“CGU”) to which it
belongs. An asset’s or CGU’s recoverable amount is the higher of its fair value less costs to sell and its value in
use. The determination of the recoverable amount in the impairment assessment requires estimates based
on quoted market prices, prices of comparable businesses, present value or other valuation techniques, or a
combination thereof, necessitating management to make subjective judgments and assumptions.
Goodwill is allocated to a CGU or group of CGUs for the purposes of impairment testing based on the level
at which management monitors it, which is not larger than an operating segment. The Company records an
impairment loss if the recoverable amount of the CGU or the group of CGUs is less than the carrying amount.
Goodwill and indefinite-life assets, such as broadcast licences, are not amortized but are tested for impairment
at least annually or more frequently if events or changes in circumstances indicate that an impairment may have
occurred. The Company completes its annual impairment testing process for broadcast licences and goodwill
during the fourth quarter each year.
The test for impairment of either an intangible asset or goodwill is to compare the recoverable amount of the
asset or CGU (or group of CGUs in the case of goodwill) to the carrying value. The recoverable amount is the
higher of an asset’s or CGU’s (or group of CGUs in the case of goodwill) fair value less costs to sell and its value
in use. The recoverable amount is determined for an individual asset unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets (such as broadcast licences
and goodwill) and the asset’s value in use cannot be determined to equal its fair value less costs to sell. If this is
the case, the recoverable amount is determined for the CGU to which the asset belongs.
Corus Entertainment Annual Report 2022 | 47
MANAGEMENT’S DISCUSSION AND ANALYSIS
In calculating the recoverable amount, management is required to make several assumptions including, but not
limited to, segment profit growth rates, future levels of capital expenditures, expected future cash flows and
discount rates. The Company’s assumptions are influenced by current market conditions and general outlook
for the industry, both of which may affect expected segment profit growth rates and expected cash flows. The
Company has made certain assumptions for the discount and terminal growth rates to reflect possible variations
in the cash flows; however, the risk premiums expected by market participants related to uncertainties about the
industry, specific CGU or groups of CGUs may differ or change quickly depending on economic conditions and
other events. Changes in any of these assumptions could have a significant impact on the recoverable amount
of the CGU or groups of CGUs and the results of the related impairment testing.
The macroeconomic environment became increasingly uncertain in the fourth quarter of fiscal 2022,
characterized by persistently high inflation and continuing supply chain constraints, and as a result advertising
demand and spending across the North American TV media industry contracted meaningfully. In addition, there
was a significant decline in the Company’s share price from August 31, 2021, which resulted in the Company’s
carrying value being greater than its current market enterprise value. As the Television operating segment
had actual results that fell short of previous estimates and an outlook that is less robust, a non-cash goodwill
impairment charge of $350.0 million was recorded in the Television operating segment. The Company also
assessed for indicators that previous impairment losses had decreased. There were no previously recorded
impairment charges reversed.
Due to the uncertainty related to the economic environment, the Company has noted there is significant
estimation uncertainty related to the Company’s growth rates and future cash flow estimates, which could
change in the near term and the effect of such changes could be material. An increase of 50 basis points in the
pre-tax discount rate, a decrease of 50 basis points in the earnings growth rate each year, or a decrease of 50
basis points in the terminal growth rate, each used in isolation to perform the radio broadcast licence and both
the television and radio goodwill impairment tests, would have resulted in an additional goodwill impairment
charge in the Television segment of between $40.0 million to $126.0 million.
A significant portion of the Company’s total assets are long-lived intangible assets and goodwill. As at August 31,
2022, 55% (2021 — 61%) of the Company’s total assets were long-lived intangible assets. The Company records
impairment losses on its long-lived assets when it believes that their carrying value may not be recoverable.
Recoverability is highly dependent on the projected operating results of the Company. There can be no assurance
that the Company will not record impairment charges in the future that could materially adversely impact Corus’
financial results.
INCOME TAXES
The Company is subject to income taxes in Canada and foreign jurisdictions. The calculation of income taxes
in many cases, however, requires significant judgment in interpreting tax rules and regulations. The Company’s
tax filings are subject to audits which could materially change the amount of current and deferred income tax
assets and liabilities and could, in certain circumstances, result in the assessment of interest and penalties.
Additionally, estimation of the income tax provision includes evaluating the recoverability of deferred tax assets
based on the assessment of the Company’s ability to use the underlying future tax deductions before they
expire against future taxable income. The assessment is based upon existing tax laws, estimates of future
profitability and tax planning strategies. If the future taxable results of the Company differ significantly from
those expected, the Company would be required to increase or decrease the carrying value of the deferred tax
assets with a potentially material impact on the Company’s consolidated statements of financial position and
consolidated statements of income (loss) and comprehensive income (loss). The carrying amount of deferred
tax assets is reassessed at each reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to utilize all or part of the deferred tax assets. Unrecognized deferred
tax assets are recognized to the extent that it is more likely than not that taxable profit will be available against
which deferred tax assets can be utilized.
48 | Corus Entertainment Annual Report 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
POST-EMPLOYMENT BENEFIT PLANS
The Company has various registered defined benefit plans for certain unionized and non-unionized employees
and a supplementary executive non-registered retirement plan which provides pension benefits to certain of
its key senior executives. The amounts reported in the consolidated financial statements relating to the defined
benefit plans are determined using actuarial valuations that are based on several assumptions including the
discount rate, rate of compensation increase, trend in healthcare costs, and expected average remaining
years of service of employees. While the Company believes these assumptions are reasonable, differences in
actual results or changes in assumptions could affect employee benefit obligations and the related income and
comprehensive income statement impact. The differences between actual and assumed results are immediately
recognized in other comprehensive income (loss). The most significant assumption used to determine the
present value of the future cash flows that is expected will be needed to settle employee benefit obligations
and is also used to calculate the interest income on plan assets. It is based on the yield of long-term, high-quality
corporate fixed income investments closely matching the term of the estimated future cash flows and is reviewed
and adjusted as changes are required. The following table illustrates the incremental increase on the accrued
benefit obligation and pension expense of a 1% decrease in the discount rate:
(thousands of Canadian dollars)
Weighted average discount rate – registered plans
Weighted average discount rate – non-registered plans
Impact of: 1% decrease – registered plans
Impact of: 1% decrease – non-registered plans
Accrued benefit obligation
at August 31, 2022
Pension expense for the
year ended August 31, 2022
4.80%
4.80%
$28,042
$4,106
3.20%
2.97%
$2,950
$79
The significant assumptions used on the benefit obligation are disclosed in note 29 of the audited consolidated
financial statements.
SHARE-BASED COMPENSATION
In the evaluation of the fair value of stock options, DSUs, PSUs, and RSUs granted to eligible officers, directors
and employees, the Company makes estimates and assumptions. Critical estimates and assumptions related
to stock options include their expected life, the risk-free interest rate and the expected volatility of the market
price of the shares. Critical estimates and assumptions related to DSUs, PSUs and RSUs include number of
units expected to vest, the estimated dividend equivalents, and the achievement of specific vesting conditions.
The Company believes that the assumptions used are reasonable based on information currently available, but
changes to these assumptions could impact the fair value of stock options, DSUs, PSUs and RSUs and therefore,
the share-based compensation costs recorded in direct cost of sales, general and administrative expenses.
Corus Entertainment Annual Report 2022 | 49
CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management, under the supervision of the President and CEO and Executive Vice President and Chief Financial
Officer (“CFO”), is responsible for establishing and maintaining disclosure controls and procedures, as defined in
National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings, and have designed
such disclosure controls and procedures (or have caused it to be designed under their supervision) to provide
reasonable assurance that material information with respect to Corus, including its consolidated subsidiaries,
is made known to them. Disclosure controls and procedures ensure that information required to be disclosed
by Corus in the reports that it files or submits under the provincial securities legislation is recorded, processed,
summarized and reported within the time periods required. Corus has adopted or formalized such disclosure
controls and procedures as it believes are necessary and consistent with its business and internal management
and supervisory practices.
Management evaluated, under the supervision of and with the participation of the CEO and CFO, the
effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by
these annual filings, and have concluded that, as of August 31, 2022, the Company’s disclosure controls and
procedures were effective.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management, under the supervision of the CEO and CFO, is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined by National Instrument 52-109 – Certification of
Disclosure in Issuers’ Annual and Interim Filings, and have designed such internal control over financial reporting (or
have caused it to be designed under their supervision) to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of the consolidated financial statements in accordance with IFRS.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements
on a timely basis. Also, projections of any of the effectiveness of internal control are subject to the risk that the
controls or that the degree of compliance with the policies and procedures may deteriorate. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to the financial
statement preparation and presentation.
Management evaluated, under the supervision of and with the participation of the CEO and CFO, the effectiveness
of the Company’s internal control over financial reporting, as of August 31, 2022, based on the criteria established
in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). Based on its evaluation under this framework, management concluded that
the Company’s internal control over financial reporting was effective as at August 31, 2022.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company’s internal control over financial reporting that occurred during fiscal
2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.
The design of any system of controls and procedures is based in part upon certain assumptions about the
likelihood of certain events. There can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions, regardless of how remote.
ADDITIONAL INFORMATION
Additional information relating to the Company, including the Annual Information Form, can be found on SEDAR
at www.sedar.com.
50 | Corus Entertainment Annual Report 2022
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of Corus Entertainment Inc. (“Corus” or the “Company”)
and all of the information in this Annual Report are the responsibility of management and have been approved
by the Board of Directors (the “Board”).
The consolidated financial statements have been prepared by management in accordance with International
Financial Reporting Standards (“IFRS”). When alternative accounting methods exist, management has chosen
those it deems most appropriate in the circumstances. Financial statements are not precise since they
include certain amounts based on estimates and judgments. Management has determined such amounts on a
reasonable basis in order to ensure that the consolidated financial statements are presented fairly in all material
respects. Management has prepared the financial information presented elsewhere in this Annual Report and
has ensured that it is consistent with the consolidated financial statements.
Corus maintains systems of internal accounting and administrative controls of high quality, consistent with
reasonable cost. Such systems are designed to provide reasonable assurance that the financial information is
relevant, reliable and accurate, and that the Company’s assets are appropriately accounted for and adequately
safeguarded. During the past year, management has maintained the operating effectiveness of internal control
over external financial reporting. As at August 31, 2022, the Company’s Chief Executive Officer and Chief Financial
Officer evaluated, or caused an evaluation of, under their direct supervision, the design and operation of the
Company’s internal controls over financial reporting (as defined in National Instrument 52-109 - Certification of
Disclosure in Issuers’ Annual and Interim Filings) and, based on that assessment, determined that the Company’s
internal controls over financial reporting were appropriately designed and operating effectively.
The Board is responsible for ensuring that management fulfills its responsibilities for financial reporting and is
ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out
this responsibility through its Audit Committee (the “Committee”).
The Committee is appointed by the Board, and all of its members are independent unrelated directors. The
Committee meets periodically with management, as well as with the internal and external auditors, to discuss
internal controls over the financial reporting process, auditing matters and financial reporting items, to
satisfy itself that each party is properly discharging its responsibilities, and to review the Annual Report, the
consolidated financial statements and the external auditor’s report. The Committee reports its findings to the
Board for consideration when approving the consolidated financial statements for issuance to the shareholders.
The Committee also considers, for review by the Board and approval by the shareholders, the engagement or
re-appointment of the external auditor.
The consolidated financial statements have been audited by Ernst & Young LLP, the external auditor on behalf
of the shareholders. Ernst & Young LLP has full and free access to the Committee.
Douglas D. Murphy
President and
Chief Executive Officer
John R. Gossling, FCPA, FCA
Executive Vice President and
Chief Financial Officer
Corus Entertainment Annual Report 2022 | 51
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Corus Entertainment Inc.
Opinion
We have audited the consolidated financial statements of Corus Entertainment Inc. and its subsidiaries (the
Group), which comprise the consolidated statements of financial position as at August 31, 2022 and August
31, 2021, and the consolidated statements of income (loss) and comprehensive income (loss), consolidated
statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects the
consolidated financial position of the Group as at August 31, 2022 and August 31, 2021, and its consolidated
financial performance and its consolidated cash flows for the years then ended in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matter
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of
the financial statements of the current period. These matters were addressed in the context of the audit of the
financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to this matter. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of
the financial statements. The results of our audit procedures, including the procedures performed to address the
matter below, provide the basis for our audit opinion on the accompanying consolidated financial statements.
Assessment of goodwill and intangible asset impairment
Key Audit Matter
As at August 31, 2022, goodwill and indefinite life intangible assets amounted to $316 million and $896 million,
as disclosed in notes 9 and 10 to the consolidated financial statements, respectively. Management assesses at
least annually, or at any time if an indicator of impairment exists, whether there has been an impairment loss in
the carrying value of these assets. When performing impairment tests, the Group estimates the recoverable
amount of the cash generating unit (CGU) or group of CGUs, to which goodwill and indefinite life intangible
assets have been allocated, using a value in use (“VIU”) discounted cash flow model or fair value less costs to
sell (“FVLCS”) model. The Group discloses significant judgments, estimates and assumptions and the result of
their analysis in respect of impairment in Note 11 to the consolidated financial statements.
Auditing management’s annual goodwill and indefinite life intangible assets impairment test was complex, given
the degree of judgment and subjectivity in evaluating management’s estimates and assumptions in determining
the recoverable amount of the respective CGU and group of CGUs. Significant assumptions included growth
rates, earnings margins, and discount rate, which are affected by expectations about future market and economic
conditions.
52 | Corus Entertainment Annual Report 2022
How our audit addressed the key audit matter
To test the estimated recoverable amount of the CGU and group of CGUs, our audit procedures included, among
others:
• Tested the mathematical accuracy of the impairment model;
• Evaluated the historical accuracy of management’s estimates on growth rates and earnings margins by
comparing management’s past projections to actual performance;
• Compared management’s estimated growth rates and the earnings margins to historical performance and
economic trends;
• Involved our valuation specialists to assess the Group’s impairment model, valuation methodology, and
to compare the aggregate recoverable amount of the CGUs to the Group’s enterprise value;
• With the assistance of the valuation specialists, assessed the selection and application of the discount
rate used in the VIU model by comparing the risk-free rate and risk premiums to comparable market data;
• Performed sensitivity analysis on the significant assumptions to evaluate the change in calculated
recoverable amounts that would result from changes in the underlying inputs; and
• Assessed the adequacy of the Group’s disclosures included in Note 11 of the accompanying consolidated
financial statements in relation to this matter.
Other information
Other information consists of the information included in the Annual Report, other than the financial statements
and our auditor’s report thereon. Management is responsible for the other information. The other information
comprises:
• Management’s Discussion and Analysis; and
• The information, other than the consolidated financial statements and our auditor’s report thereon, in the
Annual Report.
Our opinion on the consolidated financial statements does not cover the other information and we do not and
will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If based on
the work we will perform on this other information, we conclude there is a material misstatement of other
information, we are required to report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with IFRS, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Corus Entertainment Annual Report 2022 | 53
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Laura Sluce.
Toronto, Canada
October 20, 2022
Chartered Professional Accountants
Licensed Public Accountants
54 | Corus Entertainment Annual Report 2022
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at August 31,
(in thousands of Canadian dollars)
ASSETS
Current
Cash and cash equivalents
Accounts receivable (note 4)
Income taxes recoverable
Prepaid expenses and other assets
Total current assets
Tax credits receivable
Investments and other assets (note 5)
Property, plant and equipment (note 6)
Program rights (note 7)
Film investments (note 8)
Intangibles (notes 9 and 11)
Goodwill (notes 10 and 11)
Deferred income tax assets (note 21)
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities (note 12)
Current portion of long-term debt (note 14)
Provisions (note 13)
Total current liabilities
Long-term debt (note 14)
Other long-term liabilities (note 15)
Provisions (note 13)
Deferred income tax liabilities (note 21)
Total liabilities
Share capital (note 16)
Contributed surplus (note 16)
Accumulated deficit
Accumulated other comprehensive income (note 17)
Total equity attributable to shareholders
Equity attributable to non-controlling interest
Total equity
Commitments, contingencies and guarantees (notes 14 and 28)
See accompanying notes
2022
2021
54,912
311,015
17,180
21,423
404,530
32,744
63,931
294,026
660,722
59,122
1,620,796
316,308
50,301
3,502,480
526,899
15,574
8,540
551,013
1,246,076
376,570
9,830
415,010
2,598,499
781,918
1,511,481
(1,574,358)
33,000
752,041
151,940
903,981
3,502,480
43,685
325,587
5,597
24,106
398,975
24,501
98,667
316,226
576,076
39,732
1,687,432
664,958
50,050
3,856,617
509,817
35,328
7,202
552,347
1,313,965
331,482
9,497
428,963
2,636,254
816,189
1,512,431
(1,282,897)
21,811
1,067,534
152,829
1,220,363
3,856,617
Corus Entertainment Annual Report 2022 | 55
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
For the years ended August 31,
(in thousands of Canadian dollars, except per share amounts)
Revenue (notes 22 and 26)
Direct cost of sales, general and administrative expenses (notes 18 and 26)
Depreciation and amortization (notes 6 and 9)
Interest expense (note 19)
Goodwill impairment (notes 10 and 11)
Debt refinancing (note 14)
Restructuring and other costs (note 13)
Other expense (income), net (note 20)
Income (loss) before income taxes
Income tax expense (note 21)
Net income (loss) for the year
Other comprehensive income (loss), net of income taxes (note 17):
Items that may be subsequently reclassified to income (loss):
Unrealized change in fair value of cash flow hedges
Unrealized foreign currency translation adjustment
Items that will not be reclassified to income (loss):
Unrealized change in fair value of financial assets
Actuarial gain on post-retirement benefit plans
Other comprehensive income, net of income taxes
Comprehensive income (loss) for the year
Net income (loss) attributable to:
Shareholders
Non-controlling interest
Comprehensive income (loss) attributable to:
Shareholders
Non-controlling interest
Earnings (loss) per share attributable to shareholders:
Basic
Diluted
See accompanying notes
2022
1,598,586
1,154,943
156,937
107,108
350,000
(3,428)
8,062
16,847
(191,883)
40,355
(232,238)
4,891
1,296
6,187
5,002
4,466
9,468
15,655
(216,583)
(245,058)
12,820
(232,238)
(229,403)
12,820
(216,583)
2021
1,543,483
1,018,865
152,255
104,078
—
1,885
11,264
(8,197)
263,333
68,760
194,573
12,320
(517)
11,803
12,266
19,359
31,625
43,428
238,001
172,550
22,023
194,573
215,978
22,023
238,001
($1.19)
($1.19)
$0.83
$0.83
56 | Corus Entertainment Annual Report 2022
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share
capital
(note 16)
Contributed
surplus
(note 16)
Accumulated
deficit
816,189 1,512,431 (1,282,897)
— (245,058)
— (49,561)
—
—
—
—
—
Accumulated
other
comprehensive
income
(note 17)
21,811
15,655
—
—
Total equity
attributable
to
shareholders
1,067,534
(229,403)
(49,561)
—
Non-
controlling
interest Total equity
152,829 1,220,363
12,820 (216,583)
(69,333)
864
(19,772)
864
—
—
(1,308)
—
(1,308)
(520)
(1,828)
(in thousands of Canadian dollars)
As at August 31, 2021
Comprehensive income (loss)
Dividends declared
Business acquisition
Change in fair value of put
option liability arising from
business acquisition
Shares repurchased under
normal course issuer bid
(“NCIB”)
Share repurchase
(32,047)
(2,719)
(34,766)
— (34,766)
—
—
—
—
commitment under NCIB
(2,224)
504
Actuarial gain on post-
retirement benefit plans
Share-based compensation
expense
Equity funding by a non-
controlling interest
—
—
—
1,265
—
—
—
—
—
(1,720)
1,265
—
—
—
(1,720)
—
1,265
—
5,719
5,719
—
4,466
(4,466)
—
As at August 31, 2022
781,918 1,511,481 (1,574,358)
33,000
752,041
151,940
903,981
(in thousands of Canadian dollars)
As at August 31, 2020
Comprehensive income
Dividends declared
Actuarial gain on post-
retirement benefit plans
Share-based compensation
expense
Return of capital to non-
controlling interest
Equity funding by a non-
controlling interest
Reallocation of equity
interest
As at August 31, 2021
See accompanying notes
Share
capital
Contributed
surplus
Accumulated
deficit
816,189 1,511,325 (1,425,432)
172,550
(49,991)
—
—
—
—
Accumulated
other
comprehensive
income (deficit)
Total equity
attributable
to
shareholders
(2,258)
43,428
—
899,824
215,978
(49,991)
Non-
controlling
interest Total equity
148,595 1,048,419
238,001
(67,667)
22,023
(17,676)
—
—
—
—
—
19,359
(19,359)
—
1,106
—
—
—
—
—
—
—
—
1,106
—
—
—
—
—
1,106
(1,622)
(1,622)
2,126
2,126
—
617
816,189 1,512,431 (1,282,897)
—
—
21,811
617
1,067,534
(617)
—
152,829 1,220,363
Corus Entertainment Annual Report 2022 | 57
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended August 31,
(in thousands of Canadian dollars)
OPERATING ACTIVITIES
Net income (loss) for the year
Adjustments to reconcile net income (loss) to cash flow from operations:
2022
2021
(232,238)
194,573
Amortization of program rights (notes 7 and 18)
Amortization of film investments (notes 8 and 18)
Depreciation and amortization (notes 6 and 9)
Deferred income tax expense (recovery) (note 21)
Goodwill impairment (note 11)
Share-based compensation expense (note 16)
Imputed interest (note 19)
Debt refinancing
Payment of program rights
Net spend on film investments
Other
Cash flow from operations
Net change in non-cash working capital balances related to operations (note 25)
Cash provided by operating activities
INVESTING ACTIVITIES
Additions to property, plant and equipment (note 22)
Proceeds from sale of property
Business combination, net of cash acquired
Venture fund distribution
Net cash flows for intangibles, investments and other assets
Cash provided by (used in) investing activities
FINANCING ACTIVITIES
Decrease in bank loans
Financing fees
Issuance of senior unsecured Notes
Share repurchase under NCIB (note 16)
Return of capital to non-controlling interest
Equity funding by a non-controlling interest
Payment of lease liabilities (note 6)
Dividends paid (note 16)
Dividends paid to non-controlling interest
Other
Cash used in financing activities
Net change in cash and cash equivalents during the year
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
Supplemental cash flow disclosures (note 25)
See accompanying notes
559,810
23,929
156,937
(10,437)
350,000
1,265
46,201
(3,428)
(564,214)
(41,168)
7,628
294,285
(77,450)
216,835
(17,810)
299
3,606
43,478
(4,401)
25,172
(354,846)
(5,892)
250,000
(34,691)
—
3,742
(17,031)
(49,561)
(19,772)
(2,729)
(230,780)
11,227
43,685
54,912
493,598
12,927
152,255
(22,035)
—
1,106
42,288
1,885
(533,837)
(17,690)
(316)
324,754
(50,261)
274,493
(19,554)
316
—
—
(10,288)
(29,526)
(650,634)
(12,119)
500,000
—
(1,622)
4,102
(16,245)
(49,991)
(17,676)
(2,997)
(247,182)
(2,215)
45,900
43,685
58 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
1. CORPORATE INFORMATION
Corus Entertainment Inc. (the “Company” or “Corus”) is a diversified Canadian-based integrated media and
content company. The Company is incorporated under the Canada Business Corporations Act and its Class B
non-voting participating shares (“Class B Non-Voting Shares”) are listed on the Toronto Stock Exchange (the
“TSX”) under the symbol CJR.B.
The Company’s registered office is at 1500, 850 – 2nd Street SW, Calgary, Alberta, T2P 0R8. The Company’s
executive office is at Corus Quay, 25 Dockside Drive, Toronto, Ontario, M5A 0B5.
These consolidated financial statements include the accounts of the Company and all its subsidiaries and joint
ventures. The Company’s principal business activities are: the operation of specialty television networks and
conventional television stations, the operation of radio stations; the operation of digital media assets, a social
media creator network, technology and media services; and the Corus content business, which consists of the
production and distribution of films and television programs, merchandise licensing, book publishing and the
production and distribution of animation software.
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
These consolidated financial statements have been prepared in accordance with IFRS as issued by the
International Accounting Standards Board (“IASB”). These consolidated financial statements have been prepared
using the accounting policies in note 3.
These consolidated financial statements have been authorized for issue in accordance with a resolution from
the Board of Directors on October 20, 2022.
3. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements have been prepared on a cost basis, except for derivative financial
instruments and certain available-for-sale financial assets, which have been measured at fair value. The
consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional
currency and all values are rounded to the nearest thousand, except where otherwise noted. Each entity
consolidated by the Company determines its own functional currency based on the primary economic
environment in which the entity operates.
BASIS OF CONSOLIDATION
Subsidiaries
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries,
which are the entities over which the Company has control. Control exists when the entity is exposed, or has
rights, to variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. The non-controlling interest component of the Company’s subsidiaries is included as
a separate component in equity.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains
control, and continue to be consolidated until the date when such control ceases.
The financial statements of the Company’s subsidiaries are prepared for the same reporting period as the
Company, using consistent accounting policies. All intercompany balances, transactions, unrealized gains and
losses resulting from intercompany transactions and dividends are eliminated in full.
Associates and joint arrangements
Associates are entities over which the Company has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions of the associate but is not control or joint control
over those policies. In assessing the level of control or influence that the Company has over an investment,
management considers ownership percentages, board representation, as well as other relevant provisions in
the shareholder agreements.
A joint venture is a type of joint arrangement in which the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant activities require unanimous consent of
the parties sharing control.
Corus Entertainment Annual Report 2022 | 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The considerations made in determining joint control or significant influence are similar to those necessary to
determine control over subsidiaries. The Company accounts for investments in associates and joint ventures
using the equity method.
Investments in associates and joint ventures accounted for using the equity method are originally recognized at
cost. Under the equity method, the investment in the associate or joint venture is carried on the consolidated
statements of financial position at cost plus post-acquisition changes in the Company’s share of income (loss)
and other comprehensive income (loss) (“OCI”), less distributions of the associate. Goodwill on the acquisition
of the associates and joint ventures is included in the cost of the investments and is neither amortized nor
assessed for impairment separately.
The financial statements of the Company’s equity-accounted investments are prepared for the same reporting
period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with
those of the Company. All intercompany unrealized gains resulting from intercompany transactions and dividends
are eliminated against the investment to the extent of the Company’s interest in the associate. Unrealized losses
are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
After the application of the equity method, the Company determines at each reporting date whether there
is any objective evidence that the investment in the associate or joint venture is impaired and consequently,
whether it is necessary to recognize an additional impairment loss on the Company’s investment in its associate
or joint venture. If this is the case, the Company calculates the amount of impairment as the difference between
the recoverable amount of the associate and its carrying value and recognizes the amount in the consolidated
statements of income (loss) and comprehensive income (loss).
BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method of accounting, which requires the
Company to identify and attribute values and estimated lives to the identifiable intangible assets acquired based
on their estimated fair value. These determinations involve significant estimates and assumptions regarding
cash flow projections, economic risk and weighted average cost of capital. The purchase consideration of an
acquisition is measured as the aggregate of the consideration transferred, measured at acquisition-date fair
value and the amount of any non-controlling interest in the acquiree.
For each business combination, the acquirer measures the non-controlling interest in the acquiree either at
fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are
expensed and included in restructuring and other costs.
The Company determines that it has acquired a business when the acquired set of activities and assets include
an input and a substantive process that together significantly contribute to the ability to create outputs. The
acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the
inputs acquired include an organized workforce with the necessary skills, knowledge, or experience to perform
that process or it significantly contributes to the ability to continue producing outputs and is considered unique
or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing
outputs.
When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts
by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date in the consolidated statements
of income (loss) and comprehensive income (loss).
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration that is deemed to be a financial asset
or liability will be recognized in accordance with IFRS 9 – Financial Instruments: Classification and Measurement
(“IFRS 9”) either in profit or loss or as a change to OCI. If the contingent consideration is classified as equity, it
should not be remeasured until it is finally settled within equity.
REVENUE RECOGNITION
The Company derives revenue from the transfer of goods and services. Revenue recognition is based on the
delivery of performance obligations and an assessment of when control is transferred to the customer. Revenue
is recognized either when the performance obligation in the contract has been performed (“point in time”
recognition) or “over time” as control of the performance obligation is transferred to the customer.
60 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Advertising revenue is recognized in the period in which the advertising is aired on the Company’s television and
radio stations or posted on various websites or other digital assets and when collection is reasonably assured.
Subscriber fee revenue is recognized monthly based on estimated subscriber levels for the period end, which
are based on the preceding month’s actual subscribers as submitted by the distributors.
Customer contracts can have a wide variety of performance obligations, from production contracts to distribution
activities, training and support services. For these contracts each performance obligation is identified and
evaluated. Under IFRS 15 – Revenue from Contracts with Customers, the Company needs to evaluate if a license
represents a right to access the content (revenue recognized over time) or represents a right to use the content
(revenue recognized at a point in time). The Company has determined that most license revenue is satisfied at a
point in time due to there being limited ongoing involvement in the use of the license following its transfer to the
customer. The Company has determined that most service revenue is satisfied over a period of time as project
milestones are met and the Company has an enforceable right to payment for performance completed to date.
The Company’s production and distribution revenue from the distribution and licensing of film rights; royalties
from merchandise licensing, publishing and music contracts; sale of licenses, customer support, training and
consulting related to the animation software business; revenue from customer support; and sale of books are
recognized when the significant risks and rewards of ownership have transferred to the buyer; the amount of
revenue can be measured reliably and the Company has a present right to payment for the good or service;
the stage of completion of the transaction at the end of the reporting period can be measured reliably; the
costs incurred for the transaction and the costs to complete the transaction can be measured reliably; and the
Company does not retain either continuing managerial involvement or effective control.
Customer advances on contracts are recorded as unearned revenue until all of the foregoing revenue recognition
conditions have been met.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and short-term deposits with maturities of less than three months at
the date of purchase. Cash that is held in escrow, or otherwise restricted from use, is reported separately from
cash and cash equivalents.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated
impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment,
and borrowing costs for long-term construction projects if the recognition criteria are met. When significant
parts of property, plant and equipment are required to be replaced at intervals, the Company recognizes such
parts as individual assets with specific useful lives and depreciation, respectively. Repair and maintenance costs
are recognized in the consolidated statements of income (loss) and comprehensive income (loss) as incurred.
Leases and right-of-use assets
The Company assesses whether a contract is, or contains, a lease at the inception of the contract. The Company
recognizes a lease liability with a corresponding right-of-use asset for all lease agreements in which it is the
lessee, except for short-term leases and leases of low-value assets. The lease liability is initially measured at the
present value of the lease payments that are not paid at the commencement date, discounted by using the rate
implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.
The lease liability is subsequently measured by increasing its carrying amount to reflect accretion on the
lease liability (using the effective interest rate method) and by reducing the carrying amount to reflect lease
payments made. The right-of-use asset is depreciated over the shorter of the lease term and the useful life of
the underlying asset. The Company applies International Accounting Standard (“IAS”) 36 – Impairment of Assets,
to determine whether the asset is impaired and account for any identified impairment loss.
The Company does not recognize right-of-use assets and lease liabilities for leases that have a lease term of 12
months or less and do not contain a purchase option or for leases related to low-value assets. Lease payments
on short-term leases and lease of low-value assets are recognized as general and administrative expenses in
the consolidated statements of income (loss) and comprehensive income (loss).
Right-of-use assets are measured at cost, comprised of the initial measurement of the corresponding lease
liabilities and lease payments made at or before the commencement date of any initial direct costs. They are
subsequently depreciated on a straight-line basis over their expected useful lives and reduced by impairment
losses. Right-of-use assets are tested for impairment if indicators of impairment exist.
Corus Entertainment Annual Report 2022 | 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability
and the right-of-use asset. The related payments are recognized as an expense in the period in which the event
or condition that triggers those payments occurs and are presented as such in the consolidated statements of
income (loss) and comprehensive income (loss).
Right-of-use assets are included in property, plant and equipment on the consolidated statements of financial
position. The current portion of lease liabilities are included in accounts payable and accrued liabilities on the
consolidated statements of financial position, while the long-term portion is included in other long-term
liabilities.
Operating lease commitments, for which lease payments are recognized as an expense in the consolidated
statements of income (loss) and comprehensive income (loss), are recognized on a straight-line basis over the
lease term.
Depreciation
Depreciation is recorded on a straight-line basis over the estimated useful lives of the property, plant and
equipment and right-of-use assets as follows:
Land and assets not available for use
Broadcasting equipment
Computer equipment
Leasehold improvements
Right-of-use assets
Buildings
Structure
Components
Furniture and fixtures
Other
Not depreciated
5 – 10 years
3 – 5 years
Lease term
Lease term
20 – 30 years
10 – 20 years
7 years
4 – 10 years
An item of property, plant and equipment and any significant part initially recognized are derecognized upon
disposal or when no future economic benefits are expected from their use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the consolidated statements of income (loss) and comprehensive income
(loss) when the asset is derecognized.
The assets’ residual values, useful lives and methods of depreciation are reviewed at least annually and the
depreciation charge is adjusted prospectively, if appropriate.
BORROWING COSTS
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of
funds. Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of
the cost of the asset. All other borrowing costs are expensed in the period they are incurred.
PROGRAM RIGHTS
Program rights represent contract rights acquired from third parties to broadcast television programs, feature
films and radio programs. The assets and liabilities related to these rights are recorded when the Company
controls the asset, the expected future economic benefits are probable and the cost is reliably measurable. The
Company generally considers these criteria to be met and records the assets and liabilities when the license
period has begun, the program material is accepted by the Company and the material is available for airing.
Long-term liabilities related to these rights are recorded at the net present value of future cash flows, using an
appropriate discount rate. These costs are amortized over the contracted exhibition period as the programs or
feature films are aired. Program and film rights are carried at cost less accumulated amortization.
The amortization period and the amortization method for program rights are reviewed at least at the end of
each reporting period. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the assets are accounted for by changing the amortization period or method, as
appropriate, and are treated as changes in accounting estimates. Amortization of program rights is included in
direct cost of sales, general and administrative expenses, and has been disclosed separately in the consolidated
statements of cash flows.
62 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
FILM INVESTMENTS
Film investments represent the costs of projects in development, projects in process, the unamortized costs of
proprietary films and television programs that have been produced by the Company or for which the Company
has acquired distribution rights. Such costs include development and production expenditures and attributed
studio and other costs that are expected to benefit future periods. Costs are capitalized upon project greenlight
for produced and acquired films and television programs. The Company has segregated its film investments into
two categories: current productions and library or acquired productions. Current productions are considered
library productions immediately subsequent to their initial availability for licensing as they are considered
completed.
Current productions are amortized using a declining balance method of 50% at the time of initial episodic
delivery and at annual rates ranging from 15 – 25% thereafter. Library content is amortized using a declining
balance method at rates ranging from 15 – 25% annually. Acquired rights are amortized using a straight-line
method over the license term.
The amortization period and the amortization method for film investments are reviewed at least at the end of
each reporting period. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the assets are accounted for by changing the amortization period or method,
as appropriate, and are treated as changes in accounting estimates.
Projects in process represent the accumulated costs of television series or feature films currently in production.
Amortization of film investments is included in direct cost of sales, general and administrative expenses, and
has been disclosed separately in the consolidated statements of cash flows.
GOODWILL AND INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets acquired
in a business combination are measured at fair value as at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less accumulated amortization and accumulated impairment charges, if any.
Internally generated intangible assets such as goodwill, brands and customer lists, excluding capitalized program
and film development costs, are not capitalized and expenditures are reflected in the consolidated statements
of income (loss) and comprehensive income (loss) in the year in which the expenditure is incurred.
Intangible assets are recognized separately from goodwill when they are separable or arise from contractual or
other legal rights and their fair value can be measured reliably. The useful lives of intangible assets are assessed
as either finite or indefinite.
Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment
whenever there is an indication that the intangible assets may be impaired. The amortization period and the
amortization method for intangible assets with finite useful lives are reviewed at least at the end of each reporting
period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the assets are accounted for by changing the amortization period or method, as appropriate, and
are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives
is recognized in the consolidated statements of income (loss) and comprehensive income (loss) in the expense
category, consistent with the function of the intangible assets.
Amortization is recorded on a straight-line basis over the estimated useful life of the asset as follows:
Brand names, trade marks and digital rights
Software, patents and customer lists
3 – 20 years
3 – 5 years
Intangible assets with indefinite useful lives are not amortized. Broadcast licences are considered to have an
indefinite life based on management’s intent and ability to renew the licences without significant cost and without
material modification of the existing terms and conditions of the licence. The assessment of an indefinite life
is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in
useful life from indefinite to finite is made on a prospective basis.
Goodwill is initially measured at the excess of the aggregate of the consideration transferred and the amount
recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net identifiable assets of the subsidiary acquired, the difference
is recognized in the consolidated statements of income (loss) and comprehensive income (loss).
Corus Entertainment Annual Report 2022 | 63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to a cash
generating unit (“CGU”) or group of CGUs that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The group of CGUs
is not larger than the level at which management monitors goodwill or the Company’s operating segments.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining
the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on
the relative fair value of the operation disposed of and the portion of the CGU retained.
Broadcast licences, indefinite life intangible assets and goodwill are tested for impairment annually or more
frequently if events or circumstances indicate that they may be impaired. The Company completes its annual
testing during the fourth quarter each year.
Broadcast licences and indefinite life intangible assets by themselves do not generate cash inflows and therefore,
when assessing these assets for impairment, the Company looks to the CGU to which the asset belongs.
The identification of CGUs involves judgment and is based on how senior management monitors operations;
however, the lowest aggregations of assets that generate largely independent cash inflows represent CGUs for
broadcast licence and indefinite life intangible asset impairment testing.
CGUs for broadcast licence and indefinite life intangible asset impairment testing
For the Television segment, the Company has determined that the CGU is the combined group of the conventional
television stations and specialty television networks, the operating segment level. This is the lowest level at
which management monitors broadcast licences for internal management purposes and have independent
cash inflows.
For the Radio segment, the Company has determined that the CGU is a radio cluster whereby a cluster represents
a geographic area, generally a city, where radio stations are combined for the purpose of managing performance.
These clusters are managed as a single asset and overhead costs are allocated amongst the cluster and have
independent cash inflows at the cluster level.
Groups of CGUs for goodwill impairment testing
For purposes of impairment testing of goodwill, the Company has grouped the CGUs within the Television and
Radio operating segments and performs the test at the operating segment level. This is the lowest level at which
management monitors goodwill for internal management purposes.
Other intangible assets
Gains or losses on an intangible asset are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the consolidated statements of income (loss) and
comprehensive income (loss) when the asset is derecognized.
GOVERNMENT FINANCING AND ASSISTANCE
The Company has access to several government programs that are designed to assist film and television
production in Canada. Funding from certain programs provides a supplement to a series’ Canadian license
fee and is recorded as revenue when cash has been received. Government assistance with respect to federal
and provincial production tax credits is recorded as a reduction of film investments when eligible expenditures
are made and there is reasonable assurance of realization. Assistance in connection with internally produced
film investments is recorded as a reduction in film investments. The accrual of production tax credits on a
contemporaneous basis with production expenditures are based on a five-year historical trending of the ratio
of actual production tax credits received to total production tax credits applied for.
The Company remained eligible for the Canada Emergency Wage Subsidy (“CEWS”) in fiscal 2021. Funding from
this program provided a reimbursement for a portion of salaries paid out to employees during the COVID-19
pandemic and was recorded as a reduction of salary expense as eligible expenditures were made and there was
reasonable assurance of realization.
Government grants approved for specific publishing projects are recorded as revenue when the related expenses
are incurred and there is reasonable assurance of realization.
64 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of operations having a functional currency other than Canadian dollars are translated at
the rate of exchange as at the consolidated statements of financial position date. Revenue and expenses are
translated at average exchange rates for the year. The resulting foreign currency translation adjustments are
recognized in OCI.
Foreign currency transactions are translated into the functional currency at the rate of exchange at the
transaction date. Foreign currency denominated monetary assets and liabilities are translated into the
functional currency at the rate of exchange as at the consolidated statements of financial position date. Gains
and losses on translation of monetary items are recognized in the consolidated statements of income (loss)
and comprehensive income (loss).
INCOME TAXES
Income tax expense is comprised of current and deferred income taxes. Income tax expense is recognized in the
consolidated statements of income (loss) and comprehensive income (loss), unless it relates to items recognized
outside the consolidated statements of income (loss) and comprehensive income (loss). Income tax expense
relating to items recognized outside of the consolidated statements of income (loss) and comprehensive income
(loss) is recognized in correlation to the underlying transaction in either OCI or equity.
Current income tax
The Company records current income tax expense or recovery based on taxable income earned or loss incurred
for the period in each tax jurisdiction where it operates, and for any adjustment to taxes payable in respect of
previous years, using tax laws that are enacted or substantively enacted as at the consolidated statements of
financial position date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation. The Company establishes provisions related to tax
uncertainties, where appropriate, based on its best estimate of the amount that will ultimately be paid to or
received from taxation authorities.
Deferred income tax
The Company uses the liability method of accounting for deferred income taxes. Under this method, the
Company recognizes deferred income tax assets and liabilities for future income tax consequences attributable
to temporary differences between the financial statement carrying amounts of assets and liabilities and their
respective income tax bases, and on unused tax losses and tax credit carryforwards. The deferred income tax
assets and liabilities related to intangible assets with indefinite useful lives have been measured based on the
Company’s expectation that these assets will be recovered through use. The Company measures deferred
income taxes using tax rates and laws that have been enacted or substantively enacted at the reporting date
and are expected to apply when the related deferred income tax asset is realized or the deferred income tax
liability is settled.
The Company recognizes deferred income tax assets only to the extent that it is probable that future taxable
profits will be available against which the deductible temporary differences as well as unused tax losses and tax
credit carryforwards can be utilized. Deferred income tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realized. Unrecognized
deferred income tax assets are reassessed at each reporting date and are recognized to the extent that it
has become probable that future taxable profits will allow the deferred income tax asset to be recovered. The
Company recognizes the effect of a change in income tax rates in the period of enactment or substantive
enactment.
Deferred income taxes are not recognized if they arise from the initial recognition of goodwill, nor are they
recognized on temporary differences arising from the initial recognition of an asset or liability in a transaction
that is not a business combination and that affects neither accounting nor taxable profit nor loss. Deferred
income taxes are also not recognized on temporary differences relating to investments in subsidiaries to the
extent that it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to
set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity
and the same taxation authority.
To determine the provision for income taxes, certain assumptions are made, including filing positions on certain
items and the ability to realize deferred income tax assets. In the event the outcome differs from management’s
assumptions and estimates, the effective tax rate in future periods could be affected.
Corus Entertainment Annual Report 2022 | 65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
PROVISIONS
Provisions are recognized if the Company has a present legal or constructive obligation as a result of past events,
if it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can
be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation as of the date of the consolidated statements of financial position, taking into account the risks and
uncertainties surrounding the obligation. In some situations, external advice may be obtained to assist with
the estimates.
Provisions are discounted and measured at the present value of the expenditure expected to be required to
settle the obligation, using an after-tax discount rate that reflects the current market assessments of the time
value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is
recognized as interest expense. Future information could change the estimates and thus impact the Company’s
consolidated financial position and results of operations.
FINANCIAL INSTRUMENTS
The Company’s financial assets and liabilities (financial instruments) include cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities, long-term debt and derivative financial instruments. All
financial instruments are recorded at fair value at recognition. Financial instruments are measured by grouping
them into classes upon initial recognition, based on the purpose of the individual instruments. All financial
instruments are measured at fair value plus, in the case of the Company’s financial instruments not classified
as fair value through profit and loss (“FVTPL”) or fair value through other comprehensive income (“FVTOCI”),
transaction costs that are directly attributable to the acquisition or issuance of the financial instruments. The
classifications and methods of measurement subsequent to initial recognition of the Company’s financial assets
and financial liabilities are as follows:
Financial instrument
Financial assets
Cash and cash equivalents
Accounts receivable
Investments in venture funds
Financial liabilities
Accounts payable and accrued liabilities
Long-term debt
Other long-term liabilities
Derivatives (2)
Interest rate swap agreements (3)
Prepayment options of Notes (4)
Foreign exchange forward contracts (4)
Total return swap agreements (5)
Classification and measurement method
FVTPL
Amortized cost
FVTOCI with no reclassification to net income (1)
Amortized cost
Amortized cost
Amortized cost
FVTOCI
FVTPL
FVTPL
FVTPL
(1) Subsequently measured at fair value with changes recognized in the FVTOCI investment reserve.
(2) Derivatives can be in an asset or liability position at a point in time historically or in the future. For derivatives designated as cash flow
hedges for accounting purposes, the effective portion of the hedge is recognized in accumulated other comprehensive income (loss) and
the ineffective portion of the hedge is recognized immediately into profit and loss. Derivatives not designated as hedges for accounting
purposes are recognized directly in profit and loss.
(3) Debt derivatives related to the Company’s credit facility have been designated as hedges for accounting purposes and are measured
at FVTOCI.
(4) Subsequent changes are offset against other expense (income), net.
(5) Subsequent changes are offset against stock-based compensation expense or recovery in operating costs.
Investments in venture funds
The Company’s investments in venture funds consist primarily of investments in common shares of a venture
fund, which invests in common and preferred shares of entities in the media and entertainment industry
recorded using trade date accounting. Equity securities of venture funds are designated as FVTOCI pursuant to
the irrevocable election under IFRS 9. Changes in the fair value of equity securities are permanently recognized
in OCI and are not reclassified to profit or loss.
66 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Derivative instruments and hedge accounting
The Company uses derivative financial instruments (primarily swaps and forward contracts) to manage exposure
to fluctuations in interest rates, foreign currency exchange rates, and certain share-based payment awards.
The Company recognizes all derivative financial instruments in the consolidated financial statements at fair
value and they are classified based on contractual maturity. Derivative instruments are classified as either
hedges of highly probable forecasted transactions (cash flow hedges) or non-hedge derivatives. Derivatives
designated as a cash flow hedge that are expected to be highly effective in achieving offsetting changes in cash
flows are assessed on an ongoing basis to determine that they have actually been highly effective throughout
the financial reporting periods for which they were designated. Derivative assets and derivative liabilities are
shown separately in the consolidated statements of financial position unless there is a legal right of offset and
intent to settle on a net basis.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges are recognized in OCI. The gain or loss relating to the ineffective portion, if any, is recognized in the
consolidated statements of income (loss) and comprehensive income (loss). Amounts deferred in OCI are
reclassified when the hedged transaction has occurred.
Hedge accounting is applied to interest rate swap agreements that fix the interest rate on the term facility. In
order to apply hedge accounting, a high correlation (which indicates effectiveness) is required in the offsetting
changes in the values of the financial instruments (the hedging items) used to establish the designated hedging
relationships at inception and actual effectiveness for each reporting period thereafter.
A designated hedging relationship is assessed at inception for its anticipated effectiveness and actual
effectiveness for each reporting period thereafter. Any ineffectiveness is reflected in the consolidated
statements of income (loss) and comprehensive income (loss) as debt financing costs.
Determination of fair value
Fair value is defined as the price at which an asset or liability could be exchanged in a current transaction between
knowledgeable, willing parties, other than in a forced or liquidation sale. The fair value of instruments that are
quoted in active markets is determined using the quoted prices where they represent those at which regularly
and recently occurring transactions take place. The Company uses valuation techniques to establish the fair value
of instruments where prices quoted in active markets are not available. Therefore, where possible, parameter
inputs to the valuation techniques are based on observable data derived from prices of relevant instruments
traded in an active market. These valuation techniques involve some level of management estimation and
judgment, the degree of which will depend on the price transparency for the instrument or market and the
instrument’s complexity.
The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy
prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value
measurement based on the lowest level input significant to the fair value measurement in its entirety. The three
levels of the fair value hierarchy are defined as follows:
Level 1 – Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets
and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not
active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Significant unobservable inputs that are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value.
The fair values of cash and cash equivalents as well as total return swaps are classified within Level 1 because
they are based on quoted prices for identical assets in active markets.
The fair value of portfolio investments measured at fair value are classified within Level 2 because even though
the security is listed, it is not actively traded. The Company determines the fair value for interest rate swaps as
the net discounted future cash flows using the implied zero-coupon forward swap yield curve. The change in the
difference between the discounted cash flow streams for the hedged item and the hedging item is deemed to
be hedge ineffectiveness and is recorded in the consolidated statements of income (loss) and comprehensive
income (loss). The fair value of the interest rate swap is based on forward yield curves, which are observable
inputs provided by banks and available in other public data sources, and are classified within Level 2. The fair
value of foreign exchange forward contracts is based on net discounted future cash flows using projected market
rates, which are observable inputs provided by banks and available in other public data sources and are classified
within Level 2.
Corus Entertainment Annual Report 2022 | 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The fair value of third-party-produced equity film investments and the related forward purchase obligations
are classified within Level 3, as there is little to no market activity and the amounts recorded are based on a
discounted cash flow model and expected future cash flows.
The Company’s investments in venture funds consist primarily of investments in common shares of a venture
fund that invests in common and preferred shares of entities in the media and entertainment industry, which
have little to no market activity. As a result, these investments are classified within Level 3.
Both bank credit facilities and interest rate swap agreements are classified within Level 2, as their fair value is
determined by observable market data. The carrying value of bank credit facilities approximates fair value as the
debt bears interest at rates that fluctuate with market rates. The fair value of interest rate swap agreements is
calculated by way of discounted cash flows, using market interest rates and applicable credit spreads.
SHARE-BASED COMPENSATION
The Company has a stock option plan, two Deferred Share Units (“DSUs”) plans, a Performance Share Units
(“PSUs”) plan and a Restricted Share Units (“RSUs”) plan, with units under such plans awarded to certain
employees and directors.
The fair value of the stock options granted that represent equity awards are measured using the Black-Scholes
option pricing model. For stock options, the model considers each tranche with graded vesting features as a
separate share option grant. Forfeitures for the stock options are estimated on the grant date and revised if the
actual forfeitures differ from previous estimates.
This fair value is recognized as share-based compensation expense over the vesting periods, with a related
credit to contributed surplus. The contributed surplus balance is reduced as options are exercised through a
credit to share capital. The consideration paid by option holders is credited to share capital when the options
are exercised.
Eligible executives and non-employee directors may elect to receive DSUs equivalent in value to Class B
Non-Voting Shares of the Company in lieu of certain cash payments. Share-based compensation expense is
recorded in the year of receipt of the DSUs and changes in the fair value of outstanding DSUs, including deemed
dividend equivalents, are recorded as an expense in the period that they occur with a corresponding increase to
the liability. These DSUs can only be redeemed once the executive or director is no longer employed with the
Company.
Eligible executives may be granted awards of DSUs, PSUs and RSUs equivalent in value to Class B Non-Voting
Shares of the Company. DSUs, PSUs and RSUs vest after three to five years and are settled in cash at the end
of the restriction period or in the case of DSUs when the executive is no longer employed with the Company.
DSUs, PSUs and RSUs are accrued over the three- to five-year vesting period as share-based compensation
expense and a related liability.
Forfeitures are estimated on the grant date and revised if the actual forfeitures differ from the estimates. The
liability is recorded at fair value, which includes deemed dividend equivalents at each reporting date. Accrued
DSUs, PSUs and RSUs are recorded as long-term liabilities, except for the portion that will vest within 12 months,
which is recorded as a current liability.
Each DSU, PSU and RSU entitles the participant to receive a cash payment in an amount generally equal to
the 20-day volume weighted average price of the Company’s Class B Non-Voting Shares traded on the TSX at
the end of the restriction period, multiplied by the number of vested units and deemed dividend equivalents
determined by achievement of vesting conditions. The cost of share-based compensation is included in direct
cost of sales, general and administrative expenses.
EMPLOYEE BENEFIT PLANS
The Company maintains capital accumulation (defined contribution), post-retirement benefit plans and defined
benefit employee benefit plans. Company contributions to capital accumulation plans and post-retirement
benefit plans are expensed as incurred.
The defined benefit plans are unfunded plans for certain members of senior management and funded plans
for certain other employees. The costs of providing benefits under the defined benefit plans are calculated by
independent actuaries separately for each plan using the projected unit credit method prorated on service and
management’s best estimate of assumptions of salary increases and retirement ages of employees. On an
interim basis, management estimates the changes in the actuarial gains and losses based on changes in discount
rates. These estimates are adjusted when the annual valuation or estimate is completed by the independent
actuaries. The present value of the defined benefit obligations are determined by discounting estimated future
cash flows using a discount rate based on high-quality corporate bonds with maturities that match the expected
maturity of the obligations. A lower discount rate would result in a higher employee benefit obligation.
68 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Current service, interest and past service costs and gains or losses on settlement are recognized in the
consolidated statements of income (loss) and comprehensive income (loss). Actuarial gains and losses for
the plans are recognized in full in the period in which they occur in OCI. Such actuarial gains and losses are
also transferred to retained earnings and are not reclassified to profit or loss in subsequent periods. The asset
or liability that is recognized on the consolidated statements of financial position is the present value of the
defined benefit obligation at the reporting date less the fair value of the plans’ assets. For the funded plans, the
value of any additional minimum funding requirements (as determined by the applicable pension legislation) is
recognized to the extent that the amounts are not considered recoverable. Recoverability is primarily based on
the extent to which the Company can reduce the future contributions to the plans.
Past service costs are recognized immediately upon the introduction of, or changes to, the defined benefit plans.
IMPAIRMENT OF LONG-LIVED ASSETS
At each reporting date, the Company assesses its long-lived assets, including property, plant and equipment,
program and film rights, film investments, goodwill and intangible assets, for potential indicators of impairment,
such as an adverse change in business climate that may indicate that these assets may be impaired. If any
impairment indicator exists, the Company estimates the asset’s recoverable amount. The recoverable amount is
determined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets, in which case the asset is assessed as part of the CGU to which it belongs. An
asset’s or CGU’s recoverable amount is the higher of its fair value less costs to sell (“FVLCS”) and its value in use
(“VIU”). The determination of the recoverable amount in the impairment assessment requires estimates based
on quoted market prices, prices of comparable businesses, present value or other valuation techniques, or a
combination thereof, necessitating management to make subjective judgments and assumptions.
The Company records impairment losses on its long-lived assets when the Company believes that their carrying
value may not be recoverable. For assets excluding goodwill, an assessment is made at each reporting date as to
whether there is any indication that previously recognized impairment losses may no longer exist or may have
decreased. If the reasons for impairment no longer apply, impairment losses may be reversed up to a maximum
of the carrying amount of the respective asset if the impairment loss had not been recognized.
Goodwill
Goodwill is reviewed for impairment annually or more frequently if there are indications that impairment may
have occurred.
Goodwill is allocated to a CGU or group of CGUs for the purposes of impairment testing based on the level
at which management monitors it, which is not larger than an operating segment. The Company records an
impairment loss if the recoverable amount of the CGU or group of CGUs is less than the carrying amount.
Refer to note 11 for further details on the Company’s annual impairment testing for goodwill.
Broadcast licences and indefinite life intangible assets
Broadcast licences and indefinite life intangible assets are reviewed for impairment annually or more frequently
if there are indications that impairment may have occurred.
Broadcast licences and indefinite life intangible assets are allocated to a CGU for the purposes of impairment
testing. The Company records an impairment loss if the recoverable amount of the CGU is less than the carrying
amount.
Refer to note 11 for further details on the Company’s annual impairment testing for broadcast licences and
indefinite life intangible assets.
Intangible assets and property, plant and equipment
The useful lives of the intangible assets with definite lives (that are amortized) and property, plant and equipment
are assessed at least annually and only tested for impairment if events or changes in circumstances indicate
that an impairment may have occurred.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is calculated using the weighted average number of common shares outstanding
during the year. The computation of diluted earnings (loss) per share assumes the basic weighted average
number of common shares outstanding during the year is increased to include the number of additional common
shares that would have been outstanding if the dilutive potential common shares had been issued. The dilutive
effect of stock options is determined using the treasury stock method.
USE OF ESTIMATES AND JUDGMENTS
The preparation of these consolidated financial statements in conformity with IFRS requires management
to make estimates, judgments and assumptions that affect the application of accounting policies and the
Corus Entertainment Annual Report 2022 | 69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of
the consolidated financial statements and the reported amounts of revenue and expenses during the reporting
periods. Estimates and judgments are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
Accounting estimates will, by definition, seldom equal the actual results.
The most significant estimates made by management in the preparation of the Company’s consolidated financial
statements include estimates related to:
• the recoverability of long-lived assets including property, plant and equipment, right-of-use assets, program
rights, film investments, goodwill, broadcast licences and intangible assets; and fair value assessments on
acquired identifiable assets and obligations;
• certain actuarial and economic assumptions used in determining defined benefit pension costs, accrued
pension benefit obligations, pension plan assets, and accrued supplemental post-employment benefit plan
obligations;
• determining fair value of share-based compensation;
• the estimated useful lives of assets and right-of-use assets;
• determining discount rates used to measure lease liabilities; and
• income tax provisions and uncertain income tax positions in each of the jurisdictions in which the Company
operates.
The most significant judgments made by management in the preparation of the Company’s consolidated
financial statements include judgments related to:
• assessments about whether line items are sufficiently material to warrant separate presentation in
the primary financial statements and, if not, whether they are sufficiently material to warrant separate
presentation in the consolidated financial statement notes;
• identifying CGUs;
• the allocation of net assets, including shared corporate and administrative assets, to the Company’s CGUs
when determining their carrying amounts;
• determining that broadcast licences have indefinite lives;
• inclusion of renewal periods covered by options to extend lease terms included in the measurement of
right-of-use assets and liabilities;
• determining control for purposes of consolidation of an investment; and
• determining income tax rates for recognition of deferred income tax on broadcast licences.
The significant assumptions that affect these estimates and judgments in the application of accounting policies
are noted throughout these consolidated financial statements.
CHANGES IN ACCOUNTING POLICIES
There are no new amendments to accounting standards that are effective for the Company’s annual consolidated
financial statements commencing September 1, 2021.
PENDING ACCOUNTING PRONOUNCEMENTS
IFRS 3 – BUSINESS COMBINATIONS (“IFRS 3”)
Amendments to IFRS 3 were issued in May 2020, and are effective for annual periods beginning on or after
January 1, 2022, with earlier application permitted. The amendments update references within IFRS 3 to the 2018
Conceptual Framework and require that the principles in IAS 27 - Provisions, Contingent Liabilities and Contingent
Assets be used to identify liabilities and contingent assets arising from business combination. The Company has
concluded there is no impact of adopting these amendments on its consolidated financial statements.
IAS 1 – PRESENTATION OF FINANCIAL STATEMENTS (“IAS 1”)
In January 2020, the IASB issued an amendment to IAS 1, which affects the presentation of liabilities in the
statement of financial position and not the amount or timing of their recognition. The amendments clarify that
the classification of liabilities as current or non-current should be based on rights that are in existence at the end
of the reporting period and align the wording in all affected paragraphs to refer to the right to defer settlement by
at least 12 months. That classification is unaffected by the likelihood that an entity will exercise its deferral right.
The amendments are effective for annual periods beginning on or after January 1, 2023 and are to be applied
retrospectively. The Company is still assessing the impact of adopting these amendments on its consolidated
financial statements.
70 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
IAS 8 – ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS (“IAS 8”)
Amendments to IAS 8 were issued in February 2021, IASB issued Definition of Accounting Estimates, which
amends IAS 8. The amendment replaces the definition of accounting estimates. Under the new definition,
accounting estimates are “monetary amounts in financial statements that are subject to measurement
uncertainty.” The amendment provides clarification to help entities to distinguish between accounting policies
and accounting estimates. The amendments are effective for annual periods beginning on or after January 1,
2023. The Company is still assessing the impact of adopting these amendments on its consolidated financial
statements.
IAS 12 – INCOME TAXES (“IAS 12”)
Amendments to IAS 12 were issued in May 2021, IASB issued Deferred Tax related to Assets and Liabilities arising
from a Single Transaction, which amends IAS 12. The amendment narrows the scope of the initial recognition
exemption so that it does not apply to transactions that give rise to equal and offset temporary differences. As a
result, companies will need to recognize a deferred tax asset and deferred tax liability for temporary differences
arising on initial recognition of transactions such as leases and decommissioning obligations. The amendments
are effective for annual periods beginning on or after January 1, 2023 and are to be applied retrospectively. The
Company is still assessing the impact of adopting these amendments on its consolidated financial statements.
IAS 37 – PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (“IAS 37”)
Amendments to IAS 37 were issued in May 2020, and are effective for annual periods beginning on or after
January 1, 2022, with earlier application permitted. The amendments address identifying onerous contracts
and specify the cost of fulfilling a contract which includes all costs directly related to the contract. These include
incremental direct costs and allocations of other costs that relate directly to fulfilling the contract. The Company
has concluded that there is no impact of adopting these amendments on its consolidated financial statements.
4. ACCOUNTS RECEIVABLE
Trade
Other
Less allowance for doubtful accounts
5. INVESTMENTS AND OTHER ASSETS
Balance - August 31, 2020
Increase in investments
Fair value adjustment through OCI with no reclassification to
net income (note 17)
Post-retirement plan asset change (note 29)
Derivative fair value change (note 14)
Balance - August 31, 2021
Increase in investments
Fair value adjustment through OCI with no reclassification to
net income (note 17)
Distribution from a venture fund investment
Post-retirement plan asset change (note 29)
Derivative fair value change (note 14)
Balance - August 31, 2022
Investments in
venture funds
45,992
790
14,538
—
—
61,320
126 5
12,894
(43,478)
—
—
30,862
2022
291,175
23,000
314,175
3,160
311,015
Other
assets
13,432
6,215
—
20,788
(3,088)
37,347
(6,239)
—
(1,971)
3,927
33,069
2021
311,859
17,676
329,535
3,948
325,587
Total
59,424
7,005
14,538
20,788
(3,088)
98,667
131
6,655
(43,478)
(1,971)
3,927
63,931
Corus Entertainment Annual Report 2022 | 71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
INVESTMENT IN VENTURE FUNDS
In accordance with IFRS 9, the Company made the irrevocable election to designate all of its investments in
venture funds as financial assets at fair value through OCI and measured at fair value. The Company considers
this to be an appropriate classification because these investments are strategic in nature and not held for
trading. Changes in fair value of venture funds are permanently recognized in OCI and will not be reclassified
into profit and loss.
OTHER ASSETS
Other assets is comprised of derivative financial instruments, net asset position of registered pension plans
and investments in associates.
6. PROPERTY, PLANT AND EQUIPMENT AND LEASE LIABILITIES
Broadcasting
and computer
equipment
Buildings and
leasehold
improvements
Furniture
and
fixtures
Right-of-
use assets
Land
Other
Total
Cost
Balance - August 31, 2020
Additions
Disposals and retirements
Balance - August 31, 2021
Additions
Disposals and retirements
Balance - August 31, 2022
34,555
—
—
34,555
—
(100)
34,455
262,152
13,157
(40,333)
234,976
21,097
(574)
255,499
171,724
1,943
(12,510)
161,157
1,867
(1,242)
161,782
15,925
258
(2,778)
13,405
244
—
13,649
4,046
(179)
4,470
(1,077)
137,779 14,765 636,900
23,874
(56,877)
141,172 18,632 603,897
18,438
(3,322)
142,464 11,164 619,013
(6,492)
(976)
1,722
(430)
Broadcasting
and computer
equipment
Buildings and
leasehold
improvements
Furniture
and
fixtures
Right-of-
use assets
Land
Other
Total
Accumulated depreciation
Balance - August 31, 2020
Depreciation
Disposals and retirements
Balance - August 31, 2021
Depreciation
Disposals and retirements
Balance - August 31, 2022
Net book value
Balance - August 31, 2021
Balance - August 31, 2022
—
—
—
—
—
—
—
193,708
18,611
(39,996)
172,323
17,274
(243)
189,354
81,244
7,626
(12,260)
76,610
7,456
(443)
83,623
12,624
972
(2,778)
10,818
916
—
11,734
12,292
12,562
(997)
23,857
12,605
(216)
36,246
953
(160)
3,270 303,138
40,724
(56,191)
4,063 287,671
39,211
(1,895)
4,030 324,987
960
(993)
34,555
34,455
62,653
66,145
84,547
78,159
2,587
1,915
117,315 14,569 316,226
7,134 294,026
106,218
LEASES AND RIGHT-OF-USE ASSETS
The Company has the right-of-use of land and buildings under leases. The Company primarily leases land and
buildings related to its television and radio operations. The non-cancellable contract period for the Company’s
leases typically range from 2 to 23 years for offices and 5 to 30 years for transmitter sites.
Variable lease payments included in operating costs were $12.6 million in fiscal 2022 (2021 – $13.6 million).
For the year ended August 31,
Variable lease payment expenses not included in the measurement of lease liabilities
Interest expense on lease liabilities
Expenses for leases of low-value assets
Expenses for short-term leases
Rental income from subleasing activities
2022
12,639
6,456
1,120
895
3,403
2021
13,565
6,859
1,267
2,587
3,899
72 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Lease liabilities
Below is a summary of the activity related to lease liabilities for the year ended August 31:
As at August 31, 2020
Additions
Lease terminations
Interest expense
Payments
As at August 31, 2021
Additions
Lease terminations
Interest expense
Payments
As at August 31, 2022
Less current portion of lease liabilities (note 12)
Long-term portion of lease liabilities (note 15)
7. PROGRAM RIGHTS
Balance - August 31, 2020
Additions
Transfers from film investments (note 8)
Impairment charges
Amortization (note 18)
Balance - August 31, 2021
Additions
Transfers from film investments (note 8)
Amortization (note 18)
Balance - August 31, 2022
148,580
4,470
(118)
6,859
(16,245)
143,546
1,722
(324)
6,456
(17,031)
134,369
(14,632)
119,737
637,819
426,328
8,143
(2,616)
(493,598)
576,076
636,412
8,044
(559,810)
660,722
The Company expects that approximately 37% of the net book value of program rights will be amortized
during the year ending August 31, 2023. The Company expects the net book value of program rights to be
fully amortized by August 2028.
Corus Entertainment Annual Report 2022 | 73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
8. FILM INVESTMENTS
Balance - August 31, 2020
Additions
Tax credit accrual
Transfer to program rights (note 7)
Amortization (note 18)
Balance - August 31, 2021
Additions
Tax credit accrual
Transfer to program rights (note 7)
Acquisitions (note 27)
Amortization (note 18)
Balance - August 31, 2022
44,891
36,048
(20,137)
(8,143)
(12,927)
39,732
60,168
(15,497)
(8,044)
6,692
(23,929)
59,122
The Company expects that approximately 27% of the net book value of film investments will be amortized
during the year ending August 31, 2023. The Company expects the net book value of film investments to be
substantially amortized by August 2041.
9. INTANGIBLES
Balance - August 31, 2020
Additions
Amortization
Balance - August 31, 2021
Additions
Impairment (note 20)
Amortization
Balance - August 31, 2022
(1) Broadcast licences are located in Canada.
(2) Other intangibles principally comprise computer software.
Broadcast
licences (1)
895,983
—
—
895,983
—
—
—
895,983
Brands and
trade marks
879,512
3,602
(102,366)
780,748
46,673
(2,204)
(110,021)
715,196
Other (2)
13,523
6,343
(9,165)
10,701
6,621
—
(7,705)
9,617
Total
1,789,018
9,945
(111,531)
1,687,432
53,294
(2,204)
(117,726)
1,620,796
The Company expects that approximately 14% of the net book value of brands and trade marks with a finite life
will be amortized during the year ending August 31, 2023. The Company expects the net book value of brands
and trade marks with a finite life to be fully amortized by August 2038.
Indefinite life intangibles, such as broadcast licences, are tested for impairment annually as at August 31 or more
frequently if events or changes in circumstances indicate that they may be impaired. At August 31, 2022, the
Company performed its annual impairment test for fiscal 2022 and determined that there were no impairments
on indefinite life intangibles for the year then ended.
10. GOODWILL
Balance - August 31, 2020 and 2021
Acquisitions (note 27)
Impairment (note 11)
Balance - August 31, 2022
Goodwill is located primarily in Canada.
74 | Corus Entertainment Annual Report 2022
Total
664,958
1,350
(350,000)
316,308
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Goodwill is tested for impairment annually as at August 31, or more frequently if events or changes in
circumstances indicate that it may be impaired. In the fourth quarter of fiscal 2022, a $350.0 million impairment
charge was recorded with respect to the TV CGU (refer to note 11 for further details). As at August 31, 2022,
the Company performed its annual impairment test for fiscal 2022 and determined that there were no further
impairments for the year then ended for the Radio CGUs.
11. IMPAIRMENT TESTING
The test for impairment of either an intangible asset or goodwill is to compare the recoverable amount of the
asset or CGU or groups of CGUs to the carrying value. The recoverable amount is the higher of an asset’s or
CGU’s or groups of CGUs FVLCS and its VIU. In fiscal 2022, the Company determined the VIU calculation was
higher than FVLCS and, therefore, the recoverable amount for all CGUs or groups of CGUs was based on VIU.
The recoverable amount for the Television CGU was less than the Television CGU carrying value, while the
recoverable amount for the Radio group of CGUs was greater than the Radio group of CGUs carrying value.
In determining FVLCS, recent market transactions are taken into account, if available. If no such transactions can
be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples,
quoted share prices for publicly traded companies or other available fair value indicators.
The VIU calculation uses cash flow projections, generally for a five-year period, and a terminal value. The terminal
value is the value attributed to the individual CGU’s or groups of CGU’s operations beyond the projected period
using a perpetual growth rate. The key assumptions in the VIU calculations are segment profit growth rates (for
periods within the cash flow projections and in perpetuity for the calculation of the terminal value) and discount
rates.
Segment profit growth rates are based on management’s best estimates considering historical and expected
operating plans, strategic plans, economic considerations and the general outlook for the industry and markets in
which the CGU or groups of CGUs operates. The projections are prepared separately for each of the Company’s
CGUs or groups of CGUs to which the individual assets are allocated and are based on the most recent financial
budgets approved by the Company’s Board and management forecasts generally covering a period of five years
with growth rate assumptions. For longer periods, a terminal growth rate is determined and applied to project
future cash flows after the fifth year.
The discount rate applied to each asset, CGU or group of CGUs to determine VIU is a pre-tax rate that reflects
an optimal debt-to-equity ratio and considers the risk-free rate, market equity risk premium, size premium and
the risks specific to each asset or CGU’s or groups of CGU’s cash flow projections.
In calculating the VIU, the Company uses an appropriate range of discount rates in order to establish ranges of
values for each CGU or group of CGUs.
The pre-tax discount and growth rates used by the Company for the purpose of its VIU calculations of the
Television CGU generally range from 12% to 15% (2021 – 12% to 13%) and nil to 1% (2021 – nil to 1%), respectively.
The pre-tax discount and growth rates included in the VIU calculation of the Radio groups of CGUs generally
ranged from 12% to 15% (2021 – 13% to 15%) and nil to 1% (2021 – nil to 1%), respectively.
As a result of the the goodwill impairment testing in the fourth quarter of fiscal 2022 of the Television CGU, the
Company recorded a goodwill impairment charge of $350.0 million in the Television segment that reduced the
carrying value of goodwill of this CGU to its recoverable amount. No goodwill or broadcast licence impairments
were identified on the Radio groups of CGUs. The Company also assessed for any indicators of whether previous
impairment losses had decreased. No previously recorded impairment losses on broadcast licences were
reversed.
Sensitivity to changes in assumptions
Due to the uncertainty related to the macroeconomic environment, characterized by persistently high inflation
and continuing supply chain constraints, and as a result advertising demand and spending across the North
American television media industry has contracted meaningfully, the Company has noted there is significant
estimation uncertainty related to the Company’s growth rates and future cash flow estimates, which could
change in the near term and the effect of such changes could be material. An increase of 50 basis points in the
pre-tax discount rate, a decrease of 50 basis points in the earnings growth rate each year, or a decrease of 50
basis points in the terminal growth rate, each used in isolation to perform the Radio broadcast licence and both
the Television and Radio goodwill impairment tests, would have resulted in an additional incremental goodwill
impairment charge in the Television CGU between $40.0 million and $126.0 million.
Corus Entertainment Annual Report 2022 | 75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The carrying amount of goodwill and broadcast licences allocated to each CGU and/or group of CGUs are set
out in the following tables:
Broadcast licences
Television
Radio
Toronto
Vancouver
Goodwill
Television
Radio
12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Program rights payable
Trade accounts payable and accrued liabilities
Trade marks and distribution rights
Short-term portion of lease liabilities (note 6)
Dividends payable
Software license liabilities
Film investment accruals
13. PROVISIONS
2022
2021
852,905
852,905
21,775
21,303
895,983
295,209
21,099
316,308
2022
312,254
136,360
48,906
14,632
12,471
996
1,280
21,775
21,303
895,983
643,859
21,099
664,958
2021
260,307
171,165
47,123
14,737
12,479
2,673
1,333
526,899
509,817
The Company recorded restructuring and other costs of $8,062 (2021 – $11,264) associated with employee
exits and system integration costs.
Balance – August 31, 2020
Additions (reductions)
Interest
Payments
Balance – August 31, 2021
Additions
Interest
Payments
Balance – August 31, 2022
Current
Long-term
Balance – August 31, 2022
Restructuring
6,742
4,943
—
(5,758)
5,927
4,135
—
(2,893)
7,169
Onerous lease
obligation
2,034
—
—
(374)
1,660
—
—
(194)
1,466
Asset retirement
obligations
9,159
(426)
216
(17)
8,932
—
216
7
9,155
5,938
1,231
7,169
1,466
—
1,466
556
8,599
9,155
Other
180
—
—
—
180
400
—
—
580
580
—
580
Total
18,115
4,517
216
(6,149)
16,699
4,535
216
(3,080)
18,370
8,540
9,830
18,370
76 | Corus Entertainment Annual Report 2022
14. LONG-TERM DEBT
Senior unsecured guaranteed notes (“Notes”)
Bank loans
Interim production financing
Deferred financing charges
Net debt
Less current portion of long-term debt
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
2022
750,000
505,577
15,574
(9,501)
1,261,650
(15,574)
1,246,076
2021
500,000
865,491
—
(16,198)
1,349,293
(35,328)
1,313,965
Interest rates on the bank loans fluctuate with Canadian bankers’ acceptances. As at August 31, 2022, the
weighted average interest rate on the outstanding bank loans and Notes was 5.6% (2021 – 4.1%). The effective
interest rate on the bank loans averaged 4.5% for fiscal 2022 (2021 – 4.2%).
The banks hold, as collateral, a first ranking charge on all assets and undertakings of Corus and certain of Corus’
subsidiaries as designated under the Amended and Restated Credit Agreement dated March 18, 2022 (the
“Credit Facility”), as amended from time to time. Under the Credit Facility, the Company has undertaken to
comply with financial covenants regarding a minimum interest coverage ratio and a maximum debt to cash
flow ratio. Failure to remain in compliance with the financial covenants could result in the termination of lender
commitments to make advances, the acceleration of debt due and, in the case of secured lenders, the exercise of
any and all rights under the security provided. Management has determined that the Company was in compliance
with the covenants provided under the bank loans as at August 31, 2022.
CREDIT FACILITIES AND SENIOR UNSECURED NOTES
On May 31, 2021, the Credit Facility was amended and restated. The principal amendments were to reduce the
senior secured term credit facility (the “Term Facility”) to one tranche in the initial amount of $923.7 million
and to extend the maturity for the Term Facility and the senior secured revolving credit facility (the “Revolving
Facility”) to May 31, 2025.
On March 18, 2022, the Credit Facility was amended and restated. The principal amendments were to extend the
maturity on both the Term Facility and Revolving Facility to March 18, 2027 and eliminate quarterly mandatory
repayments and mandatory repayments on the Term Facility from the net proceeds from the issue of other debt.
On May 11, 2021, the Company issued $500.0 million in principal amount of 5.0% Senior Unsecured Notes due
May 11, 2028 (the “2028 Notes”). The net proceeds therefrom were used to repay amounts under the Term
Facility.
On February 28, 2022, the Company issued $250.0 million in principal amount of 6.0% Senior Unsecured Notes
due February 28, 2030 (the “2030 Notes” and, collectively with the 2028 Notes, the “Notes”). The net proceeds
were used to repay amounts under the Term Facility.
The carrying value of the debt is accreted using the effective interest rate method over the remaining term of the
Term Facility, or the Notes with the accretion recognized within interest expense on the consolidated statements
of income (loss) and comprehensive income (loss) (note 19).
In fiscal 2021, the transactions noted above resulted in the Company recording net debt refinancing costs of
$1.9 million, which included the non-cash write-off of unamortized financing fees of $3.5 million, offset by the
refinancing gain recognized on the modification of the Credit Facility of $1.6 million.
In fiscal 2022, the repayment of the Term Facility from the net proceeds of the 2030 Notes resulted in the
Company recording net debt refinancing costs of $0.8 million for the non-cash write-off of unamortized
financing fees. The March 18, 2022 amendment and restatement of the Credit Facility resulted in the Company
recording a net debt refinancing gain of approximately $4.2 million.
Senior Unsecured Notes
The Notes are senior unsecured obligations guaranteed by certain of the Company’s subsidiaries and contain
covenants that limit the Company’s ability to incur additional debt, make certain restricted payments and
investments, create liens, enter into transactions with affiliates, and consolidate, merge, transfer or sell all or
substantially all of its property and assets. Interest on the Notes is paid semi-annually.
Corus Entertainment Annual Report 2022 | 77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
At any time prior to May 11, 2024 (first optional early redemption date for the 2028 Notes), the Company may
redeem all or part of the 2028 Notes at a make-whole price determined by discounting the future interest and
early redemption payments to the first optional early redemption date with reference to prevailing market
Government of Canada rates plus 1%, but in any case at a redemption price that is no less than 101% of the
principal amount of the 2028 Notes being redeemed, plus accrued and unpaid interest to the date of redemption.
On or after May 11, 2024, the Company may redeem all or part of the 2028 Notes at the redemption price of
102.5% to May 11, 2025, 101.25% to May 11, 2026 and 100% thereafter, plus accrued and unpaid interest to
the date of redemption.
At any time prior to February 28, 2025 (first optional early redemption date for the 2030 Notes), the Company
may redeem all or part of the 2030 Notes at a make-whole price determined by discounting the future interest
and early redemption payments to the first optional early redemption date with reference to prevailing market
Government of Canada rates plus 1%, but in any case at a redemption price that is no less than 101% of the
principal amount of the 2030 Notes being redeemed, plus accrued and unpaid interest to the date of redemption.
On or after February 28, 2025, the Company may redeem all or part of the 2030 Notes at the redemption price of
103% to February 28, 2026, 101.5% to February 28, 2027 and 100% thereafter, plus accrued and unpaid interest
to the date of redemption.
The prepayment options associated with the Notes were fair valued at the time of debt issuance. The initial
value of the prepayment options related to the Notes was $9.6 million which was bifurcated from the Notes. The
prepayment option is recorded at fair value and any change in the fair value is recognized in other expense, net
in the statements of income (loss) and comprehensive income (loss). As at August 31, 2022, the prepayment
options had a fair value of $2.4 million, with the change in fair value of $7.3 million recognized in other expense,
net in the statement of income (loss) and comprehensive income (loss). This liability has been subsequently
amortized using the effective interest rate method and as at August 31, 2022 was $8.6 million.
Term Facility
As at August 31, 2022, the Term Facility balance was $505.6 million (2021 – $865.5 million) with a maturity date
of March 18, 2027. Advances under the Term Facility may be outstanding in the form of either prime loans or
bankers’ acceptances and bear interest at the applicable reference rate plus an applicable margin depending on
the type of advance and Corus’ total debt to cash flow ratio.
Voluntary prepayments on the amount outstanding under the Term Facility are permitted at any time without
penalty, subject to payment of customary breakage costs, if applicable, and provided that advances in the form
of bankers’ acceptances may only be paid on their maturity.
Revolving Facility
The Revolving Facility matures on March 18, 2027. The Revolving Facility is available on a revolving basis to finance
permitted acquisitions and capital expenditures and for general corporate purposes. Amounts owing under the
Revolving Facility will be payable in full at maturity. The Revolving Facility permits full or partial cancellation of
the facility and, if applicable, concurrent prepayment of the amounts drawn thereunder at any time without
penalty, subject to payment of customary breakage costs, if applicable, and provided that advances in the form
of bankers’ acceptances may only be paid on their maturity.
Advances under the Revolving Facility may be drawn in Canadian dollars as either a prime rate loan, bankers’
acceptance or Canadian dollar denominated letters of credit (to a sub-limit of $50.0 million total), or in U.S. dollars
as either a base rate loan, Secured Overnight Financing Rate (“SOFR”) advance or U.S. dollar denominated letters
of credit (to a sub-limit of $50.0 million total). Amounts drawn under the Revolving Facility will bear interest at
the applicable reference rate plus an applicable margin depending on the type of advance and Corus’ total debt
to cash flow ratio. A standby fee will also be payable on the unutilized amount of the Revolving Facility. As at
August 31, 2022, all of the Revolving Facility was available and could be drawn.
Interim Production Financing
A non-wholly owned subsidiary of Corus has incurred revolving demand loans with certain financial institutions
as interim financing for film or television productions. As at August 31, 2022, three interim financing agreements
for television productions are drawn in the total amount of $15.6 million. Amounts drawn under these loans bear
interest at the prime rate plus an applicable margin. The financial institutions hold, as security, a first ranking
charge on the assets and undertakings, including receivables, of the productions.
78 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
INTEREST RATE SWAP AGREEMENTS
The Company had a Canadian interest rate swap agreement to fix the interest rate on a portion of its outstanding
term loan facilities, which expired on August 31, 2022. The counterparties of the swap agreement were highly
rated financial institutions and the Company did not experience any non-performance. The fair value of Level
2 financial instruments, such as interest rate swap agreements, is calculated by way of discounted cash flows,
using market interest rates and applicable credit spreads. In fiscal 2022, the Company had assessed that there
was no ineffectiveness in the hedge of its interest rate exposure. As an effective hedge, unrealized gains or
losses on the interest rate swap agreement were recognized in other comprehensive income (loss) (note 17).
The estimated fair value of these agreements as at August 31, 2022 was $nil ( 2021 – $6.7 million liability). The
effectiveness of the hedging relationship was reviewed on a quarterly basis.
TOTAL RETURN SWAPS
The Company has total return swap agreements on 3,597,500 share units to offset its exposure to changes
in the fair value of certain cash settled share-based compensation awards. The estimated fair value of these
Level 1 financial instruments will fluctuate with the market price of the Company’s shares. The counterparties
of these swap agreements are highly rated financial institutions and the Company does not anticipate any
non-performance. The estimated fair value of these agreements as at August 31, 2022 is a liability of $4.0 million
(2021 – an asset of $4.9 million), which has been recorded in the consolidated statements of financial position
as an other long-term liability and within employee costs in the consolidated statements of income (loss) and
comprehensive income (loss) (note 18).
FORWARD CONTRACTS
All foreign exchange forward contracts fix the foreign exchange rate and cash flows related to a portion of the
Company’s U.S. dollar denominated liabilities. As at August 31, 2022, the total amount of foreign exchange
forward contracts outstanding was $80.5 million U.S dollars. The forward contracts are not designated as hedges
for accounting purposes; they are measured at fair value at each reporting date. The counterparty of the forward
contracts is a highly rated financial institution and the Company does not anticipate any non-performance. The
estimated fair value of future cash flows of the U.S. dollar forward contract derivatives change with fluctuations
in the foreign exchange rate of U.S. dollars to Canadian dollars. The estimated fair value of these agreements
as at August 31, 2022 was an asset of $1.6 million (2021 – a liability of $2.6 million), which has been recorded
in the consolidated statements of financial position as investment and other assets (note 5), and within other
expense (income), net (note 20) , in the consolidated statements of income (loss) and comprehensive income
(loss) (note 17).
15. OTHER LONG-TERM LIABILITIES
Program rights payable
Lease liabilities (note 6)
Trade mark liabilities
Long-term employee obligations
Unearned revenue
Post employment benefit plans
Aircraft Pictures Limited put option (note 27)
Software license liability
Intangibles liability
Derivative fair value
2022
147,671
119,737
45,687
31,419
15,856
12,624
1,828
1,748
—
—
376,570
2021
95,829
128,809
35,596
34,194
9,980
13,946
—
2,503
1,367
9,258
331,482
Corus Entertainment Annual Report 2022 | 79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
16. SHARE CAPITAL
AUTHORIZED
The Company is authorized to issue, upon approval of holders of no less than two-thirds of the existing Class
A shares, an unlimited number of Class A participating shares (“Class A Voting Shares”), as well as an unlimited
number of Class B Non-Voting Shares, Class A Preferred Shares, and Class 1 and Class 2 Preferred Shares.
Class A Voting Shares are convertible at any time into an equivalent number of Class B Non-Voting Shares.
The Class B Non-Voting Shares are convertible into an equivalent number of Class A Voting Shares in limited
circumstances.
The Class A Preferred Shares are redeemable at any time at the demand of Corus and retractable at any time at
the demand of a holder of a Class A Preferred Share for an amount equal to the consideration received by Corus
at the time of issuance of such Class A Preferred Shares. Holders of Class A Preferred Shares are entitled to
receive a non-cumulative dividend at such rate as Corus’ Board may determine on the redemption amount of the
Class A Preferred Shares. Each of the Class 1 Preferred Shares, the Class 2 Preferred Shares, the Class A Voting
Shares and the Class B Non-Voting Shares rank junior to and are subject in all respects to the preferences, rights,
conditions, restrictions, limitations and prohibitions attached to the Class A Preferred Shares in connection with
the payment of dividends.
The Class 1 and Class 2 Preferred Shares are issuable in one or more series with attributes designated by the
Board of Directors. The Class 1 Preferred Shares rank senior to the Class 2 Preferred Shares.
In the event of liquidation, dissolution or winding-up of the Company or other distribution of assets of the
Company for the purpose of winding up its affairs, the holders of Class A Preferred Shares are entitled to a
payment in priority to all other classes of shares of the Company to the extent of the redemption amount of the
Class A Preferred Shares, but will not be entitled to any surplus in excess of that amount. The remaining property
and assets will be available for distribution to the holders of the Class A Voting Shares and Class B Non-Voting
Shares, which shall be paid or distributed equally, share for share, between the holders of the Class A Voting
Shares and the Class B Non-Voting Shares, without preference or distinction.
No Class A Preferred Shares, Class 1 Preferred Shares or Class 2 Preferred Shares are outstanding as at August
31, 2022.
ISSUED AND OUTSTANDING
Balance – August 31, 2020 and 2021
Conversion of Class A Voting Shares to Class B
Non-Voting Shares
Shares repurchased under NCIB
Shares repurchase commitment under NCIB
Balance – August 31, 2022
Class A Voting Shares Class B Non-Voting Shares
Total
# $
# $
$
3,412,392
9,439 204,954,666
806,750
816,189
(40,866)
—
—
3,371,526
(113)
—
—
40,866
(8,141,900)
(565,000)
9,326 196,288,632
113
(32,047)
(2,224)
772,592
—
(32,047)
(2,224)
781,918
EARNINGS (LOSS) PER SHARE
The following is a reconciliation of the numerator and denominator (in thousands) used for the computation of
the basic and diluted earnings per share amounts:
Net income (loss) attributable to shareholders (numerator)
Weighted average number of shares outstanding (denominator)
Weighted average number of shares outstanding – basic
Effect of dilutive securities
Weighted average number of shares outstanding – diluted
2022
2021
(245,058)
172,550
205,905
337
206,242
208,367
288
208,655
80 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The calculation of diluted earnings (loss) per share for fiscal 2022 excluded 6,335 (2021 – 4,881) weighted
average Class B Non-Voting Shares issuable under the Company’s Stock Option Plan because these options
were anti-dilutive.
STOCK OPTION PLAN
Under the Company’s Stock Option Plan (the “Plan”), the Company may grant options to purchase Class B
Non-Voting Shares to eligible officers, directors and employees of or consultants to the Company. The number
of Class B Non-Voting Shares that the Company is authorized to issue under the Plan is 10% of the issued and
outstanding Class B Non-Voting Shares. All options granted are for terms not to exceed 10 years from the grant
date. The exercise price of each option equals the closing market price on the TSX of the Company’s stock on
the trading date immediately preceding the date of the grant. Options vest 25% on each of the first, second,
third and fourth anniversary dates of the date of grant.
A summary of the changes to the stock options outstanding is presented as follows:
Outstanding – August 31, 2020
Granted
Forfeited or expired
Outstanding – August 31, 2021
Granted
Forfeited or expired
Outstanding – August 31, 2022
Number of options
(#)
6,175,050
1,347,000
(296,400)
7,225,650
889,100
(531,650)
7,583,100
Weighted average
exercise price per share
($)
10.23
3.40
23.67
8.41
5.74
18.53
7.38
As at August 31, 2022, the options outstanding and exercisable consist of the following:
Range of exercise price ($)
3.38 – 4.51
4.52 – 5.34
5.35 – 5.89
5.90 – 10.99
11.00 – 17.58
Options outstanding
Weighted average
remaining
contractual life
(years)
5.6
3.5
5.6
1.7
1.9
3.7
Number
outstanding
(#)
1,347,000
1,241,900
1,859,000
1,062,200
2,073,000
7,583,100
Weighted
average
exercise price
($)
3.40
4.90
5.58
9.28
12.11
7.38
Options exercisable
Number
outstanding
(#)
336,750
918,150
529,600
994,825
2,073,000
4,852,325
Weighted
average
exercise price
($)
3.40
4.89
5.44
9.50
12.11
8.88
The fair value of each option granted has been estimated on the date of the grant using the Black-Scholes option
pricing model. The estimated fair value of the options is amortized to income over the options’ vesting period
on a straight-line basis. In fiscal 2022, the Company recorded share-based compensation expense of $1,265
(2021 – $1,106). This charge has been credited to contributed surplus. Unrecognized share-based compensation
expense at August 31, 2022 related to the Plan was $1,097 (2021 – $906).
The fair value of each option granted in fiscals 2022 and 2021 was estimated on the date of the grant using the
Black-Scholes option pricing model with the following assumptions:
Corus Entertainment Annual Report 2022 | 81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Grant date
Fair value
Risk-free interest rate
Expected dividend yield
Expected share price volatility
Expected time until exercise (years)
October
2021
$1.66
1.4%
4.3%
45.7%
6
November
2020
$1.05
0.5%
5.8%
48.2%
6
October
2020
$0.74
0.4%
6.5%
45.8%
6
The expected life of the options is based on historical data and current expectations and is not necessarily
indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical
volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily
be the actual outcome.
SHARE-BASED COMPENSATION
The following table provides a summary of the changes in the number of units for the PSUs, DSUs and RSUs
as follows:
Balance – August 31, 2020
Additions
Deemed dividend equivalents
Forfeitures
Payments
Balance – August 31, 2021
Additions
Deemed dividend equivalents
Forfeitures
Payments
Balance – August 31, 2022
PSUs
2,091,412
1,275,848
138,727
(389,891)
—
3,116,096
762,350
143,010
(19,200)
(1,005,603)
2,996,653
DSUs
2,080,411
181,979
112,944
—
(79,352)
2,295,982
148,811
122,508
—
(119,132)
2,448,169
RSUs
1,014,439
1,085,479
81,344
(20,180)
(164,233)
1,996,849
634,810
101,834
(54,906)
(473,154)
2,205,433
Share-based compensation expense recorded for the fiscal year in respect of these plans was $2,931 (2021
– $16,629). As at August 31, 2022, the carrying value of the liability for PSU, DSU and RSU units was $16,949
(2021 – $33,908).
DIVIDENDS
The holders of Class A Voting Shares and Class B Non-Voting Shares are entitled to receive such dividends as the
Board of Directors determines to declare on a share-for-share basis, as and when any such dividends are declared
or paid. The holders of Class B Non-Voting Shares are entitled to receive, during each dividend period, in priority
to the payment of dividends on the Class A Voting Shares, a dividend which is $0.005 per share per annum higher
than that received on the Class A Voting Shares. This higher dividend rate is subject to proportionate adjustment
in the event of future consolidations or subdivisions of shares and in the event of any issue of shares by way of
stock dividend. After payment or setting aside for payment of the additional non-cumulative dividends on the
Class B Non-Voting Shares, holders of Class A Voting Shares and Class B Non-Voting Shares participate equally,
on a share-for-share basis, on all subsequent dividends declared.
The total amount of dividends declared in fiscal 2022 was $49,561 (2021 – $49,991).
DIVIDEND REINVESTMENT PLAN (“DRIP”)
There is a DRIP that does not currently provide for a discount for the Class B Non-Voting Shares. Shares are
purchased in the open market to satisfy the Company’s delivery obligations pursuant to its DRIP.
82 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
NORMAL COURSE ISSUER BID (“NCIB”)
On January 13, 2022, the Company announced that the TSX had accepted the notice filed by the Company for
the renewal of an NCIB for its Class B Non-Voting Participating Shares through the facilities of the TSX, and/
or other alternative Canadian trading systems. The Company may purchase for cancellation a maximum of
9,669,705 Class B Non-Voting Participating Shares during the period from January 17, 2022 through January
16, 2023.
On August 9, 2022, the Company announced that the TSX had accepted the notice filed by the Company
to amend its NCIB for its Class B Non-Voting Participating Shares. The principle amendment increases the
maximum number of Class B Non-Voting Shares that may be repurchased from 9,669,705 Class B Non-Voting
Shares to 19,339,410 Class B Non-Voting Shares.
On August 31, 2022, the Company entered into an automatic share purchase plan (“ASPP”) with a designated
broker for the purpose of permitting the Company to purchase its Common Shares under the NCIB during
self-imposed quarterly trading blackout periods. The volume of the purchases is determined by the broker
based on share price and maximum volume parameters established by the Company under the ASPP prior to
the commencement of the black-out period. As of August 31, 2022, the Company had committed to purchase
and cancel Class B Non-Voting Participating Shares of approximately $1,720. This amount was recognized
in share capital, contributed surplus and accounts payable and accrued liabilities in the interim condensed
consolidated statements of financial position on August 31, 2022, however actual amounts settled in the
subsequent quarter will differ based on the share price and maximum volume parameters under the ASPP.
The shares purchased for cancellation are as follows:
January 2022
February 2022
March 2022
April 2022
May 2022
June 2022
July 2022
August 2022
September 2022 (1)
#
300,000
949,600
395,000
500,000
3,223,000
1,454,600
874,700
445,000
565,000
8,706,900
Average per
share
$
4.93
5.14
4.98
4.55
4.15
4.04
3.64
3.87
3.04
4.19
$
1,480
4,878
1,967
2,275
13,379
5,882
3,184
1,721
1,720
36,486
(1) Amount estimated under ASPP commitment. Actual amount will differ due to actual shares purchased and average per share price.
During fiscal 2022, the total cash consideration paid exceeded the carrying value of the shares repurchased by
$2,719 (2021 – $nil), which was charged to contributed surplus.
Corus Entertainment Annual Report 2022 | 83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified to income (loss):
Balance – August 31, 2020
Items that may be subsequently
reclassified to income (loss):
Amount
Income tax
Amount
Income tax
Transfer to retained earnings
Balance – August 31, 2021
Items that may be subsequently
reclassified to income (loss):
Amount
Income tax
Unrealized change in fair value of
cash flow hedges
Prior period
gains (losses)
transferred
to net income
Total
Unrealized
foreign
currency
translation
adjustment
Unrealized
change in
fair value
of financial
assets
Actuarial
gains (losses)
on defined
benefit plans
Total
—
(17,211)
7,399
7,554
—
(2,258)
Gains
(losses)
arising
—
(517)
—
6,882
—
—
—
—
—
—
7,554
14,538
(2,272)
12,266
— 16,244
—
(4,441)
—
9,545
26,339 40,877
(6,980)
(9,252)
19,359 31,625
—
(19,359) (19,359)
—
(4,891)
6,882
19,820
— 21,811
19,614
(5,197)
14,417
(2,853) 16,761
756
(4,441)
(2,097)
(4,891)
—
—
—
—
—
—
—
—
—
—
—
—
—
6,655
(1,764)
4,891
—
—
—
6,655
(1,764)
—
1,296
—
8,178
—
—
—
—
—
—
19,820
6,655
(1,653)
5,002
—
—
7,951
—
(1,764)
— 27,998
6,076 12,731
(1,610)
(3,263)
4,466
9,468
(4,466)
(4,466)
—
8,178
24,822
— 33,000
Items that will not be reclassified to income (loss):
Amount
Income tax
Transfer to retained earnings
Balance – August 31, 2022
—
—
—
—
—
—
—
—
—
—
—
—
—
—
18. DIRECT COST OF SALES, GENERAL AND ADMINISTRATIVE EXPENSES
Direct cost of sales
Amortization of program rights (note 7)
Amortization of film investments (note 8)
Other cost of sales
General and administrative expenses
Employee costs (note 26) (1)
Other general and administrative
2022
2021
559,810
23,929
43,488
341,565
186,151
493,598
12,927
33,861
322,842
155,637
1,018,865
(1) No claims for the CEWS have been made in fiscal 2022. For the year ended August 31, 2021, the estimated CEWS of approximately $13.5
1,154,943
million was recorded principally as a reduction of employee costs.
84 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
19. INTEREST EXPENSE
Interest on long-term debt
Imputed interest on long-term liabilities
Amortization of deferred gain on settled interest rate swap (note 17)
Other expense
20. OTHER EXPENSE (INCOME), NET
Foreign exchange loss (gain) (notes 14 and 24)
Fair value loss on Notes prepayment options (note 14)
Trademark intangible write-off (note 9)
Equity gain of associates
Other income
21. INCOME TAXES
The significant components of income tax expense are as follows:
Current income tax expense
Deferred income tax expense (recovery)
Resulting from temporary differences
Resulting from the utilization of tax losses
Resulting from tax rate changes
Resulting from the creation of various future tax reserves
Other
2022
58,481
46,201
—
2,426
2021
62,967
42,288
(2,853)
1,676
107,108
104,078
2022
9,821
7,301
2,204
(41)
(2,438)
16,847
2022
50,793
(12,732)
1,662
(1)
890
(257)
2021
(5,059)
—
—
(40)
(3,098)
(8,197)
2021
90,795
(25,379)
1,914
55
381
994
Income tax expense reported in the consolidated statements of income (loss) and
comprehensive income (loss)
40,355
68,760
A reconciliation of income tax computed at the statutory tax rates to income tax expense is as follows:
Income tax at combined federal and provincial rates
Differences from statutory rates relating to:
Goodwill impairment
Increase / (reduction) in deferred income taxes resulting from rate
changes
Miscellaneous differences
Non-taxable (non-deductible) portion of capital gains (losses)
Transaction costs
Increase in / (recovery of) various income tax reserves
Income subject to tax at less than statutory rates
($)
(50,665)
2022
(%)
26.4
($)
69,496
2021
(%)
26.4
91,003
(47.4)
—
—
(1)
227
(4)
(57)
771
—
(0.1)
—
—
(0.4)
55
345
313
(194)
(339)
(919)
40,355
0.5
(21.0)
(916)
68,760
—
0.1
0.1
(0.1)
(0.1)
(0.3)
26.1
Corus Entertainment Annual Report 2022 | 85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The movement in the net deferred income tax asset (liability) was as follows:
Broadcast
Accrued
Fixed
Non-capital
Financing
licences and
compen-
assets and
Program
loss carry-
Invest-
and debt
other intangibles
sation
film assets
rights
forwards
ments
retirement
Other
Total
Balance – August 31, 2020
(442,888)
6,979
18,692
13,770
9,337
(1,205)
3,622
4,438
(387,255)
Recognized in profit or loss
17,668
11,362
(1,913)
(3,348)
(1,914)
38
75
Recognized in OCI
—
(6,980)
—
—
—
(2,272)
(4,441)
67
—
22,035
(13,693)
Balance – August 31, 2021
(425,220)
11,361
16,779
10,422
7,423
(3,439)
(744)
4,505
(378,913)
Recognized in profit or loss
17,509
(3,192)
(1,959)
(1,913)
(1,662)
Recognized in OCI
—
(1,610)
—
—
Balance – August 31, 2022
(407,711)
6,559
14,820
8,509
—
5,761
1,266
7,141
4,968
1,796
(1,408)
10,437
(1,764)
—
3,767
(712)
3,097
(364,709)
At August 31, 2022, the Company had approximately $26,047 (2021 – $31,756) of non-capital loss carryforwards
available, which expire between the years 2027 and 2042. A deferred income tax asset of $5,761 (2021 – $7,423)
has been recognized in respect of these losses and an income tax benefit of $1,084 (2021 – $946) has not been
recognized.
At August 31, 2022, the Company had approximately $40,882 (2021 – $43,246) of capital loss carryforwards
available, which have no expiry date. No income tax benefit has been recognized in respect of these losses.
The Company has taxable temporary differences associated with its investments in its subsidiaries. No deferred
income tax liabilities have been provided with respect to such temporary differences as the Company is able to
control the timing of the reversal and such reversal is not probable in the foreseeable future.
There are no income tax consequences to the Company attached to the payment of dividends, in either 2022
or 2021, by the Company to its shareholders.
22. BUSINESS SEGMENT INFORMATION
The Company’s business activities are conducted through two segments: Television and Radio.
TELEVISION
The Television segment is comprised of 33 specialty television networks (34 services prior to December 31,
2020), 15 conventional television stations, streaming services, a social media digital agency, a social media
creator network, technology and media services, and the Corus content business, which includes the production
and distribution of films and television programs, merchandise licensing, book publishing, and animation
software. Revenue is generated from advertising, subscribers and the licensing of proprietary films and television
programs, merchandise licensing, book publishing, and animation software.
RADIO
The Radio segment comprises 39 radio stations across Canada, situated primarily in urban centres in English
Canada, with a concentration in the densely populated area of Southern Ontario. Revenue is derived from
advertising aired over these stations.
CORPORATE
Corporate results represent the incremental cost of corporate overhead in excess of the amount allocated to
the other operating segments.
Management evaluates each division’s performance based on revenue less direct cost of sales, general and
administrative expenses. Segment profit (loss) excludes depreciation and amortization, interest expense, debt
refinancing costs, restructuring and other costs, impairments, gains or losses on dispositions, and certain other
income and expenses.
The accounting policies of the segments are the same as those described in the summary of significant
accounting policies in note 3.
86 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
REVENUE AND SEGMENT PROFIT
Year ended August 31, 2022
Revenue
Television
Radio Corporate Consolidated
1,492,708
105,878
—
1,598,586
Direct cost of sales, general and administrative expenses
1,034,563
92,611
27,769
1,154,943
Segment profit (loss)
Depreciation and amortization
Interest expense
Goodwill impairment
Debt refinancing
Restructuring and other costs
Other expense, net
Loss before income taxes
Year ended August 31, 2021
Revenue
Direct cost of sales, general and administrative expenses
Segment profit (loss)
Depreciation and amortization
Interest expense
Debt refinancing
Restructuring and other costs
Other income, net
Income before income taxes
458,145
13,267
(27,769)
Television
1,446,287
897,128
549,159
Radio
97,196
83,045
14,151
Corporate
—
38,692
(38,692)
443,643
156,937
107,108
350,000
(3,428)
8,062
16,847
(191,883)
Consolidated
1,543,483
1,018,865
524,618
152,255
104,078
1,885
11,264
(8,197)
263,333
The following tables present further details on revenue composition, location and timing of recognition in the
Television and Radio segments.
Revenue is derived from the following areas:
Advertising
Subscriber fees
Distribution, production and other
2022
960,192
518,483
119,911
2021
934,151
498,049
111,283
1,598,586
1,543,483
Revenue is derived from the following geographical sources, by location of customer:
Canada
International
International revenue pertains to customers in the Television segment only.
2022
1,519,216
79,370
1,598,586
2021
1,472,943
70,540
1,543,483
Corus Entertainment Annual Report 2022 | 87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The following table includes revenue from contracts disaggregated by the timing of revenue recognition:
Products transferred at a point in time
Products and services transferred over time
SEGMENT ASSETS AND LIABILITIES
Assets
Television
Corporate
Radio
Liabilities
Television
Corporate
Radio
CAPITAL EXPENDITURES BY SEGMENT
Television
Corporate
Radio
2022
1,045,852
552,734
1,598,586
2021
1,018,244
525,239
1,543,483
2022
2021
3,124,315
254,213
123,952
3,502,480
1,090,061
1,438,328
70,110
2,598,499
2022
10,871
4,795
2,144
17,810
3,427,767
297,680
131,170
3,856,617
980,991
1,585,654
69,609
2,636,254
2021
14,311
3,944
1,299
19,554
Property, plant and equipment are located primarily within Canada.
23. CAPITAL MANAGEMENT
The Company’s capital management objectives are to maintain financial flexibility in order to pursue its strategy
of organic growth combined with strategic acquisitions and to provide returns to its shareholders. The Company
defines capital as the aggregate of its shareholders’ equity and long-term debt less cash and cash equivalents.
Total managed capital is as follows:
Total debt, net of unamortized financing fees (note 14)
Lease liabilities (notes 12 and 15)
Cash and cash equivalents
Net debt
Equity
2022
1,261,650
134,369
(54,912)
1,341,107
903,981
2,245,088
2021
1,349,293
143,546
(43,685)
1,449,154
1,220,363
2,669,517
The Company manages its capital structure in accordance with changes in economic conditions. In order to
maintain or adjust its capital structure, the Company may elect to issue or repay long-term debt, issue shares,
repurchase shares through a normal course issuer bid, pay dividends or undertake any other activities as deemed
appropriate under the specific circumstances.
88 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The Company monitors capital using several key performance metrics, including: net debt to segment profit
ratio and dividend yield. The Company’s stated long-term objectives are a leverage target (net debt to segment
profit ratio) of below 2.5 times and to maintain a dividend yield in excess of 2.5%. In the short term, the Company
may permit the long-term range to be exceeded (for long-term investment opportunities), but endeavours
to return to the leverage target range as the Company believes that these objectives provide a reasonable
framework for providing a return to shareholders and is supportive of maintaining the Company’s credit ratings.
As at August 31, 2022, the Company’s leverage ratio was 3.02 times net debt to segment profit, up from 2.76
times at August 31, 2021.
24. FINANCIAL INSTRUMENTS
The following tables set out the classification of financial and non-financial assets and liabilities.
As at August 31, 2022
Fair value
through profit
or loss
Amortized
cost
Fair value
through
OCI with no
reclassification
to net income
Fair value
through
OCI with
reclassification
to net income Non-financial
Total carrying
amount
Cash and cash equivalents
54,912
—
Accounts receivable
—
311,015
Investments and other assets
4,189
Deferred income tax liabilities
—
—
Total liabilities
29,156
2,123,590
Goodwill and intangibles
Other assets
Total assets
Accounts payable, accrued
liabilities and provisions
Long-term debt
Other long-term liabilities and
provisions
As at August 31, 2021
Cash and cash equivalents
Accounts receivable
Investments and other assets
Goodwill and intangibles
Other assets
Total assets
Accounts payable, accrued
liabilities and provisions
Long-term debt
Other long-term liabilities and
provisions
Deferred income tax liabilities
Total liabilities
—
—
59,742
—
—
—
—
30,743
—
30,743
—
—
92,176
—
—
—
—
91,866
—
—
59,101
402,881
59,742
—
—
535,439
1,261,650
29,156
326,501
43,685
—
—
325,587
6,491
—
—
—
—
64,233
50,176
389,820
92,176
—
—
517,019
1,349,293
21,656
282,214
—
—
21,656
2,148,526
—
—
30,454
—
30,454
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,655
—
—
—
54,912
311,015
63,931
1,937,104
1,937,104
1,043,652
1,135,518
2,980,756
3,502,480
—
—
—
415,010
535,439
1,261,650
386,400
415,010
415,010
2,598,499
—
—
—
43,685
325,587
98,667
2,352,390
2,352,390
972,055
1,036,288
3,324,445
3,856,617
—
—
—
517,019
1,349,293
340,979
428,963
—
428,963
6,655
428,963
2,636,254
Corus Entertainment Annual Report 2022 | 89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
FAIR VALUES
The fair values of financial instruments included in current assets and current liabilities approximate their
carrying values due to their short-term nature.
The fair value of publicly traded shares included in investments is determined by quoted share prices in active
markets. The fair value of other financial instruments included in this category is determined using other
valuation techniques.
The fair value of bank loans is estimated based on discounted cash flows using year-end market yields, adjusted
to take into account the Company’s own credit risk. The long-term debt is regularly repriced to floating market
interest rates and as such, the carrying value of the Company’s bank loans approximate their fair value.
The fair value of the Company’s Notes is based on the trading price of the Notes, which takes into account the
Company’s own credit risk. As at August 31, 2022, the Company has estimated the fair value of its Notes to be
approximately $632,188 (2021 – $503,125).
Periodically, the Company enters into Canadian dollar interest rate swap agreements. The fair value of the
interest rate swap agreements is calculated by way of discounted cash flows, using market interest rates and
applicable credit spreads.
Periodically, the Company enters into U.S. dollar foreign currency forward contracts. The fair value of the foreign
currency forward contracts is calculated by way of discounted cash flows, using market foreign exchange rates
and applicable discount factors.
Periodically, the Company enters into total return swaps. The fair value of these equity instruments is based on
the quoted share price in the active market at the period end.
The fair values of financial instruments in other long-term liabilities approximate their carrying values as they
are recorded at the net present values of their future cash flows, using an appropriate discount rate.
Fair value estimates are made at a specific point in time, based on relevant market information and information
about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
The following tables present information related to the Company’s financial assets measured at fair value on a
recurring basis and the level within the guidance hierarchy in which the fair value measurements fall as at August
31 as follows:
Quoted prices in active markets
for identical assets or liabilities
Significant other
observable inputs
Significant
unobservable inputs
(Level 3)
(Level 2)
—
2,333
1,594
—
3,927
—
—
—
—
—
30,862
30,862
—
—
As at August 31, 2022
Assets
Cash and cash equivalents
Prepayment option of Notes
Foreign exchange forward contracts
Investments in venture funds
Assets carried at fair value
Liabilities
Total return swap
Liabilities carried at fair value
(Level 1)
54,912
—
—
—
54,912
4,005
4,005
90 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Quoted prices in active markets
for identical assets or liabilities
Significant other
observable inputs
Significant
unobservable inputs
(Level 3)
(Level 2)
As at August 31, 2021
Assets
Cash and cash equivalents
Total return swap
Investments in venture funds
Assets carried at fair value
Liabilities
Interest rate swap
Foreign exchange forward contracts
Liabilities carried at fair value
(Level 1)
43,685
4,918
—
48,603
—
—
—
—
—
—
—
6,655
2,603
9,258
—
—
61,320
61,320
—
—
—
RISK MANAGEMENT
The Company is exposed to various risks related to its financial assets and liabilities. These risk exposures are
managed on an ongoing basis.
Credit risk
In the normal course of business, the Company is exposed to credit risk from its accounts receivable from
customers. The carrying amounts for accounts receivable are net of applicable allowances for doubtful accounts,
which are estimated based on past experience, specific risks associated with the customer and other relevant
information. The maximum exposure to credit risk is the carrying amount of the financial assets.
The following tables set out the details of the aging for accounts receivable and allowance for doubtful accounts
as at August 31 as follows:
Trade
Current
One to three months past due
Over three months past due
Other
Less allowance for doubtful accounts
Balance, beginning of year
Reversal for doubtful accounts
Write-off of bad debts
Balance, end of year
2022
2021
140,117
97,295
53,763
291,175
23,000
314,175
3,160
311,015
2022
3,948
(652)
(136)
3,160
162,371
105,779
43,709
311,859
17,676
329,535
3,948
325,587
2021
5,730
(222)
(1,560)
3,948
The Company earned 9% of its revenue from one related party (2021 – 9%). This related party comprises 7% of
the accounts receivable balance as at August 31, 2022 (2021 – 7%) (note 30).
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments
associated with financial obligations. The Company manages liquidity risk primarily by maintaining sufficient
unused capacity within its long-term debt facility, and by continuously monitoring forecast and actual cash flows.
The unused capacity as at August 31, 2022 was $300,000 (2021 – $300,000). Further information with respect
to the Company’s long-term debt facility is provided in note 14.
Corus Entertainment Annual Report 2022 | 91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The following table sets out the undiscounted contractual obligations as at August 31, 2022:
Total
Less than one year
One to three years
Total debt (1)
Accounts payable
Other obligations (2)
(1) Principal and interest payments.
(2) Other obligations included financial liabilities, trade marks, other intangibles and U.S. dollar forward currency swaps.
1,547,049
526,899
303,938
55,574
526,899
120,550
160,562
80,000
—
Beyond three years
1,411,475
—
22,826
In fiscal 2022, the Company incurred interest on bank loans, Notes and swaps on credit facilities of $58,481
(2021 – $62,967).
Market risk
Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market
prices, whether those changes are caused by factors specific to the individual instrument or its issuers or factors
affecting all instruments traded in the market.
The Company is exposed to foreign exchange risk through its international content distribution operations
and U.S. dollar denominated programming purchasing. The most significant foreign currency exposure is to
movements in the U.S. dollar to Canadian dollar exchange rate and the U.S. dollar to euro exchange rate. The
impact of foreign exchange on income before income taxes and non-controlling interest is detailed in the table
below:
Direct cost of sales, general and administrative expenses
Other expense (income), net (note 20)
2022
100
9,821
9,921
2021
203
(5,059)
(4,856)
An assumed 10% increase or decrease in exchange rates as at August 31, 2022 would have an impact of
approximately $26,500 (2021 – $22,400) on net income (loss) or OCI for the year. As a result of the Company’s
exposure to this risk, it has entered into a series of foreign exchange forward contracts, as described in note
14, to fix the foreign exchange rate and therefore cash flows related to a portion of the Company’s U.S. dollar
denominated liabilities.
The Company is exposed to interest rate risk on the bankers’ acceptances issued at floating rates under its bank
loan facility. An assumed 1% increase or decrease in short-term interest rates during the year ended August
31, 2022 would have had a significant impact on net income (loss) for the year. As a result of the Company’s
exposure to this risk, it had entered into interest rate swap agreements, which had expired on August 31, 2022,
as described in note 14, to reduce its exposure to changes in floating rates on bankers’ acceptances.
Other considerations
The Company does not engage in trading or other speculative activities with respect to derivative financial
instruments.
25. CONSOLIDATED STATEMENTS OF CASH FLOWS
Net change in non-cash working capital balances related to operations consists of the following:
Accounts receivable
Prepaid expenses and other
Accounts payable and accrued liabilities
Provisions
Income taxes recoverable
Other long-term liabilities
Other
92 | Corus Entertainment Annual Report 2022
2022
23,575
3,959
(48,821)
1,338
(20,436)
(32,052)
(5,013)
(77,450)
2021
(28,158)
(6,919)
44,448
(1,419)
(18,295)
(46,773)
6,855
(50,261)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Interest paid, interest received and income taxes paid and classified as operating activities are as follows:
Interest paid
Interest received
Income taxes paid
2022
61,235
518
64,257
2021
56,890
634
107,362
26. GOVERNMENT FINANCING AND ASSISTANCE
General and administrative expenses include $nil (2021 – $13,514) as a reduction of employee expenses for the
CEWS for periods in which the Company qualified and relief on Canadian Radio-television and Telecommunications
Commission (“CRTC”) regulatory fees of $nil (2021 – $9,463).
Revenue includes $2,672 (2021 – $2,665) of production financing obtained from government programs. This
financing provides a supplement to a production series’ Canadian license fees and is not repayable.
As well, revenue includes $1,308 (2021 – $1,227) of government grants relating to the marketing of books in
both Canada and international markets. The majority of the grants are repayable if the average profit margin for
the three-year period following receipt of the funds equals or is greater than 15%.
27. BUSINESS COMBINATIONS AND DIVESTITURES
Acquisition of 51% interest in Aircraft Pictures Limited (“Aircraft”)
On February 1, 2022, the Company acquired a 51% interest in Aircraft for cash consideration of $2.2 million. The
purchase was accounted for using the purchase method. This business is included in the Television segment
effective February 1, 2022.
In connection with this business acquisition, the Company has established a liability for put options in respect
of non-controlling interests. The Company has provided put options to the selling shareholders under which
they could require the Company to acquire a further 29% of the non-controlling interests at, or after, a specified
date. As at August 31, 2022, the fair value of the puttable shares held by the non-controlling shareholders are
recorded as an other long-term liability in the amount of $1.8 million.
The Company has made an accounting policy choice to account for these put options as if exercised by the
holders of the non-controlling interest. In accordance with IFRS 10 – Consolidated Financial Statements, any
changes in the fair value of the put option, net of the 29% non-controlling interest is reflected as a reallocation
of equity interest at each period end.
Goodwill of $1.4 million, arising principally from the ability to leverage production content, the reputation of the
principal employees and future growth, has been recorded in relation to this transaction.
28. COMMITMENTS, CONTINGENCIES AND GUARANTEES
The Company has the following commitments as at August 31, 2022 as detailed in the following table:
Total Within 1 year
4 - 5 years More than 5 years
Purchase obligations (1)
—
156,236
Lease liabilities
Other obligations (2)
—
Total contractual obligations
156,236
(1) Purchase obligations are contractual obligations under contracts relating to program rights, satellite costs and various other operating
1,208,855
304,548
303,938
1,817,341
27,973
55,472
22,826
106,271
763,983
32,302
120,550
916,835
416,899
60,538
160,562
637,999
2 - 3 years
expenditures that the Company has committed to, for periods ranging from 1 to 5 years.
(2) Other obligations included financial liabilities, trade marks, other intangibles, and forward foreign exchange contracts.
Generally, it is not the Company’s policy to issue guarantees to non-controlled affiliates or third parties, with
limited exceptions.
Corus Entertainment Annual Report 2022 | 93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
LITIGATION
The Company, its subsidiaries and joint ventures are involved in litigation matters arising out of the ordinary
course and conduct of its business. Although such matters cannot be predicted with certainty, management
does not consider the Company’s exposure to litigation to be material to these consolidated financial statements.
OTHER MATTERS
Many of the Company’s agreements, specifically those related to acquisitions and dispositions of business
assets, include indemnification provisions where the Company may be required to make payments to a vendor
or purchaser for breach of fundamental representation and warranty terms in the agreements with respect
to matters such as corporate status, title of assets, environmental issues, consents to transfer, employment
matters, litigation, taxes payable and other potential material liabilities. The maximum potential amount of
future payments that the Company could be required to make under these indemnification provisions is not
reasonably quantifiable, as certain indemnifications are not subject to a monetary limitation. As at August 31,
2022, management believed there was only a remote possibility that the indemnification provisions would
require any material cash payment.
The Company indemnifies its directors and officers against any and all claims or losses reasonably incurred in
the performance of their service to the Company to the extent permitted by law. The Company has acquired
and maintains liability insurance for directors and officers of the Company and its subsidiaries.
29. EMPLOYEE BENEFIT PLANS
DEFINED CONTRIBUTION PENSION PLANS
The Company has various defined contribution plans for qualifying full-time employees. Under these plans, the
Company contributes up to 6% (2021 – 6%) of an employee’s earnings, not exceeding the limits set by the Income
Tax Act (Canada). The amount contributed in fiscal 2022 related to the defined contribution plans was $9,237
(2021 – $8,710). The amount contributed is approximately the same as the expense included in the consolidated
statements of income (loss) and comprehensive income (loss).
NON-REGISTERED DEFINED BENEFIT PENSION PLANS
The Company provides supplemental executive retirement plans (“SERP”), which are non-contributory,
unfunded defined benefit pension plans for certain of its senior executives that are included in long-term
employee obligations (note 15). Benefits under these plans are generally based on the employee’s length of
service and their highest three-year average rate of pay during their most recent 10 years of service, accrued
starting from the date of the implementation of the plan, and currently includes a benefit for past service for
certain senior executives, as applicable under the terms of the plan.
The table below shows the change in the benefit obligation for these plans.
Accrued benefit obligation and plan deficit, beginning of year
Current service costs
Past service cost
Interest cost
Payment of benefits
Remeasurements:
Effect of changes in financial assumptions
Effect of experience adjustments
Accrued benefit obligation and liability, end of year
2022
17,611
955
—
553
(326)
(4,087)
619
15,325
2021
25,601
1,155
—
637
(7,508)
(1,187)
(1,087)
17,611
The weighted average duration of the defined benefit obligation of the SERP as at August 31, 2022 is 13.7 years.
The tables below show the significant weighted-average assumptions used to measure the pension obligation
and costs for this plan.
94 | Corus Entertainment Annual Report 2022
Accrued benefit obligation
Discount rate
Rate of compensation increase
Benefit cost for the year
Discount rate
Rate of compensation increase
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
2022
(%)
4.80
2.00
2022
(%)
3.00
2.00
2021
(%)
3.00
2.00
2022
(%)
2.60
2.00
The following table illustrates the incremental impact on the defined benefit obligation as at August 31, 2022
and the pension expense for the fiscal year then ended, with respect to the three key factors in determining
the benefit obligation:
Sensitivity analysis
Discount rate – 1% decrease
Salary increase – 1% increase
Mortality – one-year increase in the expected future lifetime
Benefit obligation
at August 31, 2022
2,093
338
Pension expense
for fiscal 2022
87
70
301
32
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the
present value of the defined benefit obligation has been calculated using the projected benefit method, which
is the same method that is applied in calculating the defined benefit liability recognized in the consolidated
statements of financial position. The sensitivity analysis presented above may not be representative of the
actual change in the accrued benefit obligation as it is unlikely that the change in assumptions would occur in
isolation of one another as some assumptions may be correlated.
The net pension benefit plan expense, which is included in employee costs, is comprised of the following
components:
Current service cost
Interest cost
Pension expense
2022
955
553
1,508
2021
1,155
637
1,792
REGISTERED PENSION PLANS
The Company has a number of funded defined benefit pension plans that provide pension benefits to certain
unionized and non-unionized employees in its conventional television operations. Benefits under these plans
are based on the employee’s length of service and final average salary. These plans are regulated by the Office
of the Superintendent of Financial Institutions, Canada in accordance with the provisions of the Pension Benefits
Standards Act and regulations. The regulations set out minimum standards for funding the plans.
The following table shows the change in the benefit obligations, change in fair value of plan assets and the funded
status of these defined benefit plans:
Corus Entertainment Annual Report 2022 | 95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
Accrued benefit obligation, beginning of year
Current service cost
Interest cost
Employee contributions
Payment of benefits
Effect of changes in financial assumptions
Effect of experience adjustments
Accrued benefit obligation, end of year
Fair value of plan assets, beginning of year
Employer contributions
Employee contributions
Interest income
Payment of benefits
Administrative expenses paid from plan assets
Return on plan assets, excluding interest income
Fair value of plan assets, end of year
Effect of asset ceiling limit
Fair value of plan assets, end of year, net of asset ceiling limit
Accrued benefit asset and plan surplus, end of year
2022
238,655
5,841
7,364
750
(9,262)
(53,231)
(430)
189,687
270,396
2,908
750
8,163
(9,262)
(871)
(51,744)
220,340
(1,768)
218,572
28,885
The weighted average duration of the defined benefit obligation as at August 31, 2022 is 14.8 years.
The plan assets as at August 31, are comprised of investments in pooled funds as follows:
Equity – Canadian
Equity – Foreign
Fixed income – Canadian
2022
25,870
81,568
112,902
220,340
2021
244,961
6,629
6,793
809
(9,676)
(12,472)
1,611
238,655
256,068
4,695
809
6,943
(9,676)
(1,030)
12,587
270,396
(885)
269,511
30,856
2021
28,386
96,711
145,299
270,396
The underlying securities in the pooled funds have quoted prices in an active market.
The significant weighted average assumptions used to measure the pension obligation and cost for these
plans are as follows:
Accrued benefit obligation
Discount rate
Rate of compensation increase
Benefit cost for the year
Discount rate
Rate of compensation increase
96 | Corus Entertainment Annual Report 2022
2022
(%)
4.80
2.00
2022
(%)
3.10
2.00
2021
(%)
3.10
2.00
2021
(%)
2.70
2.00
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The following table illustrates the incremental impact on the defined benefit obligation at August 31, 2022 and
the pension expense for the fiscal year then ended, with respect to the three key factors in determining the
benefit obligation:
Sensitivity analysis
Discount rate – 1% decrease
Salary – 1% increase
Weighted average duration of defined benefit obligation in years
Effective discount rate 1% decrease
Benefit obligation
at August 31, 2022
28,042
5,057
Fiscal 2022
benefit cost
2,950
828
14.8
n/a
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the
present value of the defined benefit obligation has been calculated using the projected benefit method, which
is the same method that is applied in calculating the defined benefit liability recognized in the consolidated
statements of financial position. The sensitivity analysis presented above may not be representative of the
actual change in the accrued benefit obligation as it is unlikely that the change in assumptions would occur in
isolation of one another as some assumptions may be correlated.
The net pension benefit plan expense, which is included in employee costs, is comprised of the following
components:
Current service cost
Pension expense
2022
6,712
6,712
2021
7,659
7,659
OTHER BENEFIT PLANS
The Company provides supplemental post-retirement non-pension benefit plans that provide post-retirement
health and life insurance coverage to certain employees and are funded on a pay-as-you-go basis. The table
below shows the change in the accrued post-retirement obligation, which is recognized in the consolidated
statements of financial position.
The change in the benefit obligation for these plans is as follows:
Accrued benefit obligation and plan deficit, beginning of year
Current service costs
Interest cost
Payment of benefits
Remeasurements:
Effect of demographic assumptions
Effect of changes in financial assumptions
Effect of experience adjustments
Accrued benefit obligation and liability, end of year
2022
13,960
151
392
(538)
259
(3,534)
2,018
12,708
2021
14,488
102
367
(498)
—
(569)
70
13,960
The weighted average duration of the defined benefit obligation of the post-retirement plans as at August 31,
2022 is 14.6 years.
Corus Entertainment Annual Report 2022 | 97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
The significant weighted-average assumptions used to measure the pension obligation and costs for this plan
are as follows:
Accrued benefit obligation
Discount rate
Salary increase
Benefit cost for the year
Discount rate
Salary increase
2022
(%)
4.80
2.00
2022
(%)
2.98
2.00
2021
(%)
2.98
2.00
2022
(%)
2.68
2.00
The following table illustrates the incremental impact on the defined benefit obligation as at August 31, 2022
and the pension expense for the fiscal year then ended, with respect to the two key factors in determining the
benefit obligation:
Sensitivity analysis
Discount rate – 1% decrease
Trend rate – 1% increase
Benefit
obligation at
August 31, 2022
2,013
1,808
Service and
interest costs
fiscal 2022
(8)
73
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the
present value of the defined benefit obligation has been calculated using the projected benefit method, which
is the same method that is applied in calculating the defined benefit liability recognized in the consolidated
statements of financial position. The sensitivity analysis presented above may not be representative of the
actual change in the accrued benefit obligation as it is unlikely that the change in assumptions would occur in
isolation of one another as some assumptions may be correlated.
The net pension benefit plan expense, which is included in employee costs, is comprised of the following
components:
Current service cost
Interest cost
Pension expense
2022
151
392
543
2021
102
367
469
98 | Corus Entertainment Annual Report 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
30. RELATED PARTY TRANSACTIONS
CONTROLLING SHAREHOLDER
A majority of the outstanding Class A Voting Shares of the Company are held by entities owned by the Shaw
Family Living Trust (“SFLT”) and its subsidiaries. As at August 31, 2022, SFLT and its subsidiaries hold 2,885,530
Class A Voting Shares, representing approximately 86% of the outstanding Class A Voting Shares, for the
benefit of the descendants of the late JR Shaw and Carol Shaw. The sole trustee of SFLT is a private company
controlled by a board comprised of seven directors, including as at August 31, 2022, Heather Shaw, Julie Shaw,
three other members of their family and two independent directors. The Class A Voting Shares are the only
shares entitled to vote in all shareholder matters, except in limited circumstances as described in the Company’s
Annual Information Form. Accordingly, SFLT is, and as long as it holds a majority of the Class A Voting Shares,
will continue to be able to elect a majority of the Board of Corus and to control the vote on matters submitted
to a vote of Corus’ Class A shareholders.
SFLT is the controlling shareholder of Shaw Communications Inc. (“Shaw”), and as a result, Shaw and Corus are
subject to common voting control.
NORMAL COURSE TRANSACTIONS
The Company has transacted business in the normal course with Shaw and with entities over which the Company
exercises significant influence and joint control. These transactions are measured at the exchange amount,
which is the amount of consideration established and agreed to by the related parties and having normal trade
terms.
(thousands of Canadian dollars)
Revenue
Advertising
Subscriber
Distribution, production and other
Expenses
Cable and satellite system distribution access fees
Administrative and other fees
Advertising
Accounts receivable from Shaw
Accounts payable to Shaw
SIGNIFICANT SUBSIDIARIES
The following table includes the significant subsidiaries of the Company:
Name
Corus Television Limited Partnership
Corus Media Holdings Inc.
Corus Radio Inc.
Corus Sales Inc.
Food Network Canada Inc.
HGTV Canada Inc.
History Television Inc.
Nelvana Limited
Showcase Television Inc.
TELETOON Canada Inc.
W Network Inc.
YTV Canada, Inc.
Jurisdiction
Manitoba
Alberta
Canada
Canada
Canada
Canada
Canada
Ontario
Canada
Canada
Canada
Canada
2022
2021
28,772
107,171
3,673
8,510
1,762
4,009
20,793
2,292
24,882
113,684
3,629
8,492
1,965
3,542
21,790
1,956
2022
(%)
100
100
100
100
71
67
100
100
100
100
100
100
Equity interest
2021
(%)
100
100
100
100
71
67
100
100
100
100
100
100
Corus Entertainment Annual Report 2022 | 99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Canadian dollars, except per share information)
KEY MANAGEMENT PERSONNEL
Key management personnel consists of the Board and the Executive Leadership Team (“ELT”), who have
the authority and responsibility for planning, directing and controlling the activities of the Company. Several
members of the ELT are also officers of the Company.
Salaries and benefits
Post-employment benefits
Share-based compensation expense (recovery) (note 16)
2022
8,736
1,508
(4,130)
6,114
2021
9,074
1,792
16,156
27,022
Except for the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer,
no member of the ELT has an employment agreement or any other contractual arrangement in place with the
Company in connection with any termination or change of control event, other than the conditions provided in
the compensation plans of the Company. Generally, severance entitlements, including short-term incentives
payable to the ELT and officers of the Company, other than the President and Chief Executive Officer and the
Executive Vice President and Chief Financial Officer, under their employment agreements with the Company,
would be determined in accordance with applicable common law requirements. Long-term incentive plans, such
as stock options, are exercisable if vested, while DSUs, PSUs, RSUs and SERP would be payable if vested pursuant
to the terms of the plans.
31. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS
The comparative consolidated financial statements have been reclassified from statements previously
presented to conform to the presentation of the 2022 consolidated financial statements.
32. SUBSEQUENT EVENTS
The Company has entered into $250.0 million of interest rate swap agreements effective November 30, 2022
to fix the interest rate on a portion of its outstanding term loan facilities, which expire on February 26, 2027.
The counterparties of the swap agreement are highly rated financial institutions and the Company does not
anticipate any non-performance.
100 | Corus Entertainment Annual Report 2022
CORUS ENTERTAINMENT INC.
Stock Exchange Listing and
Trading Symbol
Toronto Stock Exchange
TSX: CJR.B
Registered Office
1500, 850-2nd Street SW
Calgary, Alberta T2P 0R5
Executive Office
Corus Quay
25 Dockside Drive
Toronto, Ontario M5A 0B5
Telephone: 416.479.7000
Facsimile: 416.479.7007
Website
www.corusent.com
Auditors
Ernst & Young LLP
Shareholder Services
For assistance with the following:
• Change of address or account updates
• Transfer or replace share certi�cates
• Dividend payments or direct deposit
of dividends
• Dividend Reinvestment Plan
• Enrol in e-delivery to receive
corporate documents electronically
please contact our Transfer Agent
and Registrar:
TSX Trust Company
PO Box 700, Station B
Montreal, Quebec H3B 3K3
Telephone:
North America: 1.800.387.0825
International: 1.416.682.3860
Email Inquiries:
shareholderinquiries@tmx.com
Facsimile:
1.888.249.6189 (in North America)
1.514.985.8843 (outside North America)
www.tsxtrust.com
Dividend Information
Corus Entertainment pays its dividend
on a quarterly basis, subject to Board
approval, and all dividends are “eligible”
dividends for Canadian tax purposes
unless indicated otherwise.
For further information, including the
latest approved dividends and
historical dividend information, please
visit the Investor Relations - Dividends
& Stock Information section of
Corus Entertainment’s website
(www.corusent.com).
Dividend Reinvestment Plan (“DRIP”)
TSX Trust Company acts as
administrator of Corus
Entertainment’s Dividend
Reinvestment Plan, which is available to
the Company’s registered Class A and
Class B Shareholders residing in
Canada.
To review the full text of the Plan and
obtain an enrolment form, please visit
the Plan Administrator’s website at
www.tsxtrust.com or contact them
at 1.800.387.0825.
Sustainability
Corus Entertainment has broadened
the scope of its sustainability e�orts
with an expanded environmental,
social and governance (ESG) program.
Further information about the
Company’s ESG program and goals,
related activities, and the Sustainability
Report are available in the
Sustainability section of Corus
Entertainment’s website
(www.corusent.com). To receive a copy
of the Sustainability Report, please
email your request to
sustainability@corusent.com.
Corporate Governance
The Board of Directors of the Company
endorses the principles that sound
corporate governance practices are
important to the proper functioning
of the Company and the enhancement
of the interests of its shareholders. For
further information, please visit the
Investor Relations - Corporate
Governance section of Corus
Entertainment’s website
(www.corusent.com).
Further Information
Financial analysts, portfolio managers,
other investors and interested parties
may contact Corus Entertainment at
416.479.7000 or visit the Company’s
website (www.corusent.com).
Corus Entertainment’s Annual
Reports, Annual Information Forms,
Management Information Circulars,
quarterly �nancial reports, press
releases, investor presentations and
other relevant materials are available
in the Investor Relations section of
Corus Entertainment’s website
(www.corusent.com).
To receive additional copies of
Corus Entertainment’s Annual Report,
please email your request to
investor.relations@corusent.com.
Copyright and Sources
© Corus® Entertainment Inc.
All rights reserved.
Trademarks appearing in this
Annual Report are Trademarks of
Corus® Entertainment Inc., or a
subsidiary thereof which might be
used under license.
For speci�c copyright information on
any images used in this Annual Report,
or speci�c source information for any
media research used in this Annual
Report, please contact the Director,
Corporate Communications at
416.479.7000.
Corus Entertainment Annual Report 2022 | 101