Corus Entertainment's CEO Hosts Investor Day Meeting (Transcript)

| About: Corus Entertainment, (CJREF)

Corus Entertainmt B (OTCPK:CJREF)

November 29, 2012 9:00 am ET


John M. Cassaday - Chief Executive Officer, President, Director and Member of Executive Committee

D. Scott Dyer - Chief Technology Officer, Head of Shared Services, Executive Vice President

Kathleen C. McNair - Executive Vice President of Human Resources & Corporate Communications

Gary Maavara - Executive Vice President, General Counsel and Corporate Secretary

Chris Pandoff - Executive Vice President and President of Corus Radio

Douglas D. Murphy - Executive Vice President and President of Corus Television

Thomas C. Peddie - Chief Financial Officer and Executive Vice President


David McFadgen - Cormark Securities Inc., Research Division

Unknown Executive

Good morning, ladies and gentlemen, welcome to Corus Entertainment's Investor Day 2012. Now we'd like to introduce John Cassaday, President and Chief Executive Officer, Corus Entertainment.

John M. Cassaday

Good morning, everyone, and welcome to Corus Entertainment's 11th Annual Investor Day.

We really appreciate the continued interest all of you are showing in our company. We'd like to thank you all for joining us, those of you who are with us today at Corus Quay and also those who are joining us on the webcast, your presence is very much appreciated.

I would also remind all of you that are here that we do have a number of exhibition or exhibits set up just outside of the meeting room, and we hope you get a chance to go and see some of the things. SoCast, our new social relationship management company; Toon Boom, an animation company that we bought 100% of this year. Also get a chance to see the Shaw Go demonstration, see what we're doing with our Kids Can Press business with some of our new game application and some of the new application work that we're doing on Nelvana.

We also have an exhibition, which shows you some of the activities that go on at MIDCOM, an annual trade show that we participate in. Hopefully each of these exhibits will give you a little bit greater insight into some of the things that go on behind the scenes at Corus and make this day even more valuable to you. To begin, we just would direct your attention to the standard cautionary statement, which is on the screen both on the webcast and here live at Corus Quay.

To kick things off this morning, we're going to begin with a review of the agenda. We'll then go on to remind you about some of the progress that we've made since our inception. We'll comment on our priorities for fiscal '13 and give you some particular insight into our activities in Q1, which of course is almost complete. We'll then concluded some general comments about the environment that we see for media companies in the immediate future.

Our agenda this morning will be as follows: Scott Dyer, our Chief Technology Officer, has largely put behind him the task of overseeing the building of Corus Quay, to move itself and the implementation of our investments in digital technology. Scott really did a great job on this project. We were on time, on budget. And we are today perhaps the most technologically advanced broadcast company in the world.

We're digitizing and encoding content in multiple languages for multiple platforms, some of which you were able to witness outside the room this morning. And in January, we will begin the distribution of the multitude of channels for our KidsCo joint venture. The KidsCo channels demonstrate the advanced broadcast capabilities of Corus. The content is ingested, prepared and programmed here at Corus Quay. Each signal contains multiple audio tracks, reporting a total of 18 languages.

The channels are sent by fiber to satellite uplink posts in the U.K. and Singapore, and then they're distributed across Europe, Africa and Asia-Pacific.

In Scott's remarks today, he will share with you our New Media strategy and give you additional insight into the underlying rationale for our activities in this area, including our investments in start-ups such as Fingerprints, again another company that we're demonstrating outside of the meeting room this morning.

He'll also talk about our social network initiative such as SoCast, which support our brands, and the rationale for some of the investments that we've made in incubators and private equity funds, which, of course, have been selected based on areas of interest, which align with our areas of interest at Corus. Kathleen McNair, our head of Human Resources will present at Investor Day for the first time this year.

We often describe ourselves as Canada's most -- best managed media company and Kathleen will give you some insight into our commitment to the development of our management talent and the number of awards and recognition that we've received for our efforts, including our efforts in recruiting, retaining and developing our diverse workforce. Gary Maavara, our General Counsel, Secretary and Head of Regulatory Affairs, will focus his remarks this morning on the current regulatory environment and our key initiatives for the fiscal year. Managing the regulatory challenges and opportunities is an important core competence of Corus Entertainment. Chris Pandoff, our President of Radio, will remind you of the important role and contribution of radio to Corus, and why we continue to see this as a relevant medium with continued growth potential.

To be successful in radio, you need to be in the right markets with differentiated formats and do a superb job on execution. Corus is at the top of its game currently with solid ratings across a portfolio of great brands in most of Canada's major markets; Doug Murphy, the President of our Television Group will highlight for you both the challenges and opportunities that he sees in leading our important Television division to yet another year of growth in fiscal '13.

Our investment in new TV brands will pay off once ad markets begin to improve. Our success in the exploitation of intellectual property and our proven ability to work well as a productive and collaborative partner will result in continued opportunities presenting themselves to Corus as they have done in the past with Beyblade and Bakugan as 2 examples.

We are confident that you will leave this meeting feeling even better about the prospects that Corus portfolio of brands is indeed a highly differentiated portfolio with continued growth potential. Tom Peddie, our Chief Financial Officer, will wrap things up for us with a review of our financial performance. He will also offer comments on our balance sheet, our valuation and our outstanding notes, which are callable in February. He will also provide you with our guidance for fiscal '13.

As we mentioned off the top, this is our 11th Annual Investor Day. A number of you have been covering Corus or have been invested in Corus since our inception in 1999. At that time, there were many skeptics who wondered how would we grow, but we have consistently found a way. Our compound annual growth rate in revenue and earnings since inception is 15% and 16%, respectively.

We did it by acquiring assets such as radio stations from numerous companies, including Wicks, Power, Blackburn and CanWest. We also secured TV assets from Wicks, Shaw and CTV. Startups were also an important part of our playbook. Cosmopolitan Television, HBO and Cartoon Network would be examples of this approach.

And then harvesting underperforming brands like CLT, DUSK and Drive-In Classics, and then transforming them into strong consumer brands like the Oprah Winfrey Network, ABC Spark and W Movies would be examples of this particular approach.

We also bought a content company, which while problematic initially, has been a source of growth and a catalyst for the creation of invaluable relationships with the likes of Mattel, Hasbro, Spin Master and NBC Universal.

Our market cap has increased from $600 million to almost $2 billion today, and we are ranked by Morningstar as one of Canada's top dividend stocks, a distinction which we plan to maintain.

We've very proud of our track record but the question you're all asking is, will the next 12 months be as positive as the last 12 years?

We remain optimistic that we will deliver top line and bottom line growth in fiscal '13 despite an uncertain economic environment. We also believe importantly that fiscal '13 will position us for more dramatic growth in fiscal '14 and beyond.

I think we, like every company today, have challenges. Specifically, our domestic Kids business is adjusting to societal concerns around obesity and continued softness in the toy category, which has received tremendous amount of publicity in the last few weeks leading up to the Christmas season.

Our Pay business has under-delivered quite frankly, at a time when we faced escalating costs for programming. Domestic growth opportunities are somewhat limited due to the radio multiple license ownership policy, linkage rules associated with vertical integration and a scarcity of assets.

And obviously the competitive landscape is changing with bigger, more aggressive, vertically integrated competitors that create challenges for us in securing content and maximizing distribution. However, we feel we are more than up to the task in confronting each of these challenges.

Our priorities for fiscal '13 are as follows: one, we are going to return the Kids business to growth domestically by driving ratings. Our early results are excellent. Our ratings for Kids 2-11 season to date are up 6%. We will also continue to leverage our scale with investments in programming that will help drive our domestic ratings but also assist us in building our international revenue and earnings growth.

We're also going to keep the pressure on in terms of rating growth on our important women's vertical. W Network and Oprah Winfrey Network are posting strong primetime growth rates this year of 20%.

So again, we are off to a great start. We're going to regain our trajectory on Pay TV through continued programming investments, rapid rollout importantly of HD subscription video on-demand and aggressive acquisition and retention campaigns. We are absolutely convinced, and you'll see demonstration of this in Q1, that Pay TV will grow in fiscal '13.

And finally, execution, execution, execution. We must grow our TV and radio ratings, we must optimize our sales opportunities and we must continue with our relentless focus on costs.

Q1 has continued to pace as we described on our analyst call in October. Radio and women's TV are pacing nicely ahead of year ago.

Kids ad sales remained soft, Pay TV has low visibility because we get the numbers on a lag basis from our distribution partners, but we expect to see solid growth in Q1.

Finally, our Beyblade sales are below year ago but about where we had planned.

In summary, the quarter will be solid, it will not be great, but it will be well within the range that we need it to be for us to make our full year numbers.

Importantly, we like what we see from a ratings perspective for both radio and TV. And again, we are confident that we will grow in fiscal '13.

So in closing, perhaps just a couple of the bigger picture items that we have in our sites over the next fiscal. Importantly, we believe our investment in content will continue to offer upside. So far, much of the market focus has been on the opportunity for us to sell content to new partners that are participating in the OTT space, but we believe traditional distributors will become far more aggressive in their nonlinear offerings in the future and this represents yet another growth opportunity for Corus.

We believe there will be M&A opportunities for Corus this year on numerous fronts, but we will be disciplined and we will stay focused on our core business.

Notwithstanding a recent regulatory decision, we believe that the government and the CRTC do not believe that big companies are bad. More productive Canadian companies are good for all Canadians. We will continue to push hard for a radio policy review, and we will argue for relaxation of the vertical integration policy as it relates to linkage.

And we will also push the government of Canada for a review on the restrictions that exist today for pharmaceutical advertising in Canada.

Corus will make further progress in expanding our international footprint in Kids programming. We are world-class in this area. We bring a unique set of advantages to the table, and we plan to exploit them further either alone or with a partner.

And finally, we continue to believe that our performance metrics over time of 5% to 8% compound annual growth on revenue and 8% to 12% compound annual growth rate in EBITDA and 30% margins overall for our corporation are achievable.

So thank you for listening to our opening remarks. And it's now my pleasure to introduce my colleague, Scott Dyer, our Head of Shared Services and our Chief Technology Officer, to give you an update on his exciting plans. Thank you.

D. Scott Dyer

Thank you, John. Good morning. It's a pleasure to welcome you to our Third Investor Day at Corus Quay here on Toronto's waterfront. Over the past 3 years, I'd focused my remarks on this facility design, construction and operation.

Today, I'd like to continue that tradition. But I also like to talk about the impact of technology and opportunities it is creating for Corus.

We should begin though with a check on the state of Canadian broadcast.

While the impact of technology on media and media consumption is significant, we do not believe the sky is falling. Our Radio and Television businesses are strong and are continuing to grow. Our Content business is seeing new value in the global digital marketplace.

New devices are creating smart connected viewers and listeners. Innovation is driving significant advances on the TV Everywhere platform, offered by the BDUs, which are challenging the pure OTT players.

Social media is connecting viewers to us and to each other, offering advertisers new avenues to reach their audiences. While there is no question that technology is disruptive, we also see it as additive, creating new ways to attract and engage our audiences.

We've characterized our focus on technology in 3 areas: support, innovation and investment.

Support is products and services that underpin the television and radio ecosystems. Innovation allows us to extend our brands beyond broadcast and complement our on-air content. Finally, investment, allows us to participate in entrepreneurial companies and funds that can shape the future of our media business.

Across these 3 areas, we have created the optimal organizational structure, hired the very best talent and instilled the right processes to drive success and growth. Using this framework, let me tell you more, but first, the obligatory update on Corus Quay. Three slides only, I promise.

We continue to drive cost savings across our operations and content groups. In some cases, by reductions in staff but more often by increased capacity without additional cost.

Our format conversion or transcoding cost has been reduced by 75% since 2010.

In fact, we are now providing 4x as many versions of our content today as we did in 2010. Our capital cost to launch new channels are now less than half what they were in 2010.

And by early 2013, all of Corus channels will be available to distributors in high definition. Corus Quay was built for growth.

Just a few facts to support my previous comments. I apologize for the busy slide. Think of this as our scorecard.

Our facility continues to grow, adding channels, content storage and delivering on our commitments to distributor and audiences. Our operational cost is falling. It now takes less computers, less energy and less people than it did just 2 years ago. And despite these substantial increases in output, we retained plenty of capacity for growth.

Let's return to the business impact of technology.

We've been clear and consistent about TV Everywhere. It belongs to the BDUs not with the broadcasters. We continue to partner with our distributors to enable robust, best-in-class, nonlinear experiences on the 4 screens.

The television value chain, as we had presented it last year, continues to define how content is valued and distributed, both traditionally and via these new and nonlinear platforms. Nowhere is the power this approach more evident than in Pay Television, previously seen as under siege by the OTT players.

We disagreed with this point last year and continue to believe that the future is bright for Pay Television. More content, available through new BDU nonlinear platforms will not only increases subscriber retention but will also drive subscriber growth for Movie Central.

Shaw Go Movie Central is a great example of innovation. This app is available on Apple devices today, for Movie Central subscribers through Shaw Cable and Shaw Direct. A fresh modern interface with quick access to content, parental controls and adaptive video provide the user experience that rivals the best video apps available today anywhere.

As the first app in the Shaw Go product line, Movie Central has enjoyed substantial uptake in usage in the short 2 months since its release. Other distributors are innovating as well. Consumers will be well served with TV Everywhere products in Canada.

Let me try to show you what I mean. This is Shaw Go. You can see it's got a fresh interface. We use all of the conventional operations you're used to on a tablet. The content is upfront, easily accessed, and the key is that you don't have to do much to get into watching great video. We can look at movies, as I am now, we can switch to TV series and we can go to a list of all the content that's available arranged A-Z. I happen to be a big fan of The Sopranos, I'm glad it came back for another view. So let's scroll down, and find The Sopranos. I'm really not ready to start watching season 6, I think I'm going to go back to season 1.

And now I'm just going to choose an episode, push the play button. This is the part where I'm most nervous. And here we go. It's that easy to get into watching some great content. And now if you'd like to watch it full screen, it's just a simple click. And here we are watching the show in very high resolution, very high quality and quick playback. We didn't spend much time to get to this and enjoy it. This is what creates new value for Movie Central.

We won't watch it at this time though. We can do that till later if you like. We believe this kind of product, and it will be available broadly across all of our distribution partners, will make a difference for Movie Central. We've always seen digital and interactive media as complementary to our traditional broadcast operations in television and radio. In 2011, I talked about the transition from core in [ph] explorer with 3 segment view: engagement, product and distribution.

In 2012, we are focused on aligning our structure, our strategy and our teams to address these 3 segments. This focus has included a strategic review, management shift, new experienced staff and new investment in companies that align with our markets and audiences.

In 2012, we merged our digital team with our distribution team, recognizing the importance of digital on-demand content through our BDU partners and a need for a consistent, integrated approach to valuing and distributing these digital products.

Maria Hale, previously our Head of Programming, is now leading the important strategic group for Corus. We've also extended our engagement strategy to include new unique content, complementary and within our core vertical markets.

Finally, we've honed our sales approach, both the technology to support our sales team and by joining our media partners Shaw, Rogers and the CBC to form a premium valued ad exchange. This will help us retain high value for our focused audiences in an increasingly crowded digital marketplace.

Engagement is about supporting our fans, about increasing tune in and viewers and about ensuring that our brands remain relevant and top of mind.

Products extend our Nelvana merchandising business and are focused on our best brands, such as Franklin, Max & Ruby and Scaredy Squirrel. Distribution is both domestic and international, as our VOD strategy matures, our digital sales grow and as we examine the OTT market internationally.

We are very active in the mobile games market with 14 apps launched to date and more in the way in early 2013. While the economic success is moderate, the exposure, the experience and the impact is great. The app market also provides an ideal launching pad for new IP. All less expensive than a television series, yet retaining great reach and immediate feedback. Our publishing and content groups are leveraging this opportunity to inspire our in-house creative talent.

Finally, Kids Can Press is leading the children's illustrated e-book market in Canada with more than 60 read-along titles available today.

Corus seeks opportunities to further its objectives by partnering with young companies. In August 2012, we saw just such a chance with Fingerprint Digital.

We were attracted to Fingerprint because they are trying to solve 2 key issues: discovery and parental involvement. By aggregating applications under the Fingerprint name and providing a technology link that permits parents to take an active role, we believe Fingerprint will be a leader in this space.

In late 2011, we acquired a stake in Supernova Interactive, a music promotions group. We became involved because they had a unique approach to social engagement.

Supernova, now renamed SoCast for social broadcast, is subsequently focused on social relationship management or SRM for both television and radio. Corus will deploy their technology across our radio stations in 2013. The platform not only provides engagement in community tools but also provides deep and detailed analytics. It allows Corus to make connections, using social media to further engage and involve our fans and to drive tune in ratings and revenue.

In 2012, as John mentioned, Corus acquired the remaining 50% of Toon Boom Animation from its minority shareholders. Toon Boom's animation software drives our production business and has substantially reduced our cost since our initial investment in 2004.

Let's watch a brief video, highlighting the animation process, featuring our studio and the Toon Boom products.


D. Scott Dyer

Demoing the product in the reception area. You might want to compliment him on his performance in that video, or you might not want to.

I'd note that Toon Boom's Storyboard Pro product was recently awarded a Primetime Engineering Emmy, an award which recognizes innovative engineering developments that materially affects the television media.

I hope you did have an opportunity to see the demonstrations in the reception area. We have the Nelvana apps, the KCP eBooks, Shaw Go, SoCast Fingerprint and Toon Boom. These demos will continue during the break and also after this morning's presentations are over. I encourage you to have a look.

In addition to direct investments in technology, Corus also invests in funds that support innovative early-stage enterprises. These investments are the best way to gain exposure and to seek opportunities across a broad spectrum of media and technology startups. Both Relay and Steamboat have excellent management of proven track records and an investment thesis that matches Corus' future view of the world.

In conclusion, I want to leave you with one simple fact: Corus is using technology to generate value for our shareholders.

Now it gives me pleasure to introduce Kathleen McNair, EVP, HR and Corporate Communications. She will provide an update on human capital.

Kathleen C. McNair

Thanks, Scott, and good morning, everyone. Scott walked us through the changing environment and how this building provides Corus with a technological advantage.

He also touched upon a number of efficiencies we've achieved to drive our business. I have the pleasure of delving a little deeper into our organizational design and explaining how we are aligning our workforce and human resources strategies to support our business. We believe that great companies need 3 things to succeed: product, people and capital. Chris and Doug will speak to you about our products; Tom will discuss our capital deployment; and I have the pleasure of focusing on our people and how, through effective management strategies, we have been able to generate returns for our shareholders.

So here's a roadmap for the next 10 to 15 minutes. We'll outline 3 key pillars of our human resources strategy: one, our commitment to optimizing organizational design to control costs while maintaining a highly engaged workforce; two, our commitment to learning and development for all employees; three, our commitment to pay for performance and rewarding superior results; and then we'll close with a few remarks on our corporate social responsibility commitment, which really resonate with our employee base.

When we were planning our state-of-the-art facility here at Corus Quay, we also examined our organizational structure to ensure that it, like our technology, was state-of-the-art. We engaged Boston Consulting Group to work with us on designing the optimal structure as we moved people from 11 locations into this facility.

The design we adopted resulted in a number of efficiencies that allowed us to reduce the number of full-time employees by more than 10% from fiscal 2009 to 2012. And just to be clear, this reduction excludes the impact of the divestiture of our Quebec radio station in 2011. This full-time headcount reductions, coupled with the reduction in overtime charges, have resulted in significantly lower labor cost, down by more than 15% from fiscal 2009 to fiscal 2012. And during this period, both our productivity and employee engagement levels have increased.

On a productivity front, we measure the EBITDA generated by the number of employees in our Radio and Television divisions. From fiscal '09 to fiscal '12, productivity for our Television and Radio division increased by over 10% and 13%, respectively.

We have also seen an increase in employee engagement. Every 18 to 24 months, we survey our employees and we're thrilled to see completion rates well above the norm, on average over 80%.

Our last survey was in the field in January, an engagement rose from a high level of 77% in 2010 to 83% in 2012. When compared to a benchmark norm of 70%, our engagement scores are very impressive.

So as Scott noted in his presentation, the right organizational design, coupled with the right technological infrastructure, allows for a reduction in labor costs while increasing output.

So how do we increase efficiencies, control labor costs and also drive productivity and engagement?

First and foremost, we focus on gaining clarity on individual roles and their contribution to Corus' overall performance.

As we note -- as we work on optimizing our organizational design, it became clear that in our collaborative environment, precision and clarity around the key accountabilities for each role, as well as the shared accountabilities, were essential for success.

Therefore, we replaced our job descriptions with role mandates which clearly outline all accountabilities to drive clarity throughout our organization; secondly, we believe our values are also key drivers of our success. Our values are a unifying elements that resonate with our employees. In a recent engagement survey, 86% of respondents agreed or strongly agreed that our values are relevant to them; and finally, communication. We believe we cannot over-communicate with our employees. Each quarter, we have company-wide town halls that webcast to all locations. John and members of our management team outline key accomplishments and respond to any questions. We issued flashes to all of our employees when important news or information needs to be communicated.

Our internal Intranet, Corus Central, provides our employees with news on a variety of items and also provides access to all company policies, as well as information on each of our services.

At Corus Quay, we've developed an internal news channel, Corus Connect, to keep our employees informed on items of interest throughout the day, while featuring one of our networks on the more than 200 screens throughout Corus Quay.

Additionally, senior management visit all locations across the country and hold localized townhalls to share information broadly but also gain an understanding of any local issues that need to be addressed.

And why is this important? It makes us an employer of choice in the media and entertainment industry. The recognition we receive, coupled with our repetition as a great employer, is a terrific retention and recruitment tool.

On the retention front, we are pleased to report that we have a very low voluntary turnover rate, less than 10% last year. We believe that our values-driven culture, respectful workplace and progressive HR policies, ensure that Corus is a place where people want to work. And on the recruitment front, we have made great successes in attracting key talent to our ranks.

Most recently, we repatriated John Macdonald, our Vice President and Head of Programming and Production back to Toronto from L.A.,

where he most recently was COO of OWN U.S., and previously held senior positions at Viacom, Scripps and Fox. We also recruited Andrew Kerr, who held executive roles at Classic Media and Ragdoll from the U.K. to become our Vice President Worldwide Home Entertainment and Licensing, the Americas.

Jerry Diaz, joined us from Miami to become Vice President Worldwide Sales and Distribution. As Scott mentioned, Maria Hale, is now Vice President, Head of Digital Content -- Head of Digital and Content Distribution for Corus Television; Helena Shelton, recently joined Corus Television as Vice President Sales for our Kids properties from a major agency. And Christina Litz, who has worked on the digital side at other major broadcasters, has started at Corus Television as our Vice President, Digital Content and Engagement. On the radio front, we were able to attract Brad Phillips, an experienced radio executive to our organization to become our General Manager of our Vancouver radio cluster.

Clearly, a number of great executives have chosen to join Corus as their employer of choice.

So turning to our commitment to learning and development. With the move to Corus Quay, we've been able to expand our learning and development offerings significantly in our new Corus U training facility. All of our training programs are branded under the umbrella of Corus U. And we offer courses to all levels of employees. In F '13, we are focusing on new manager training but courses will also be provided on a variety of topics. Last year, we provided over 7,000 hours of training, an increase of 190% from prior year.

We build our training curriculum to address the specific developmental needs that flow out of our succession planning session. Each year, we meet with business units to review the succession plans for senior managers and all critical roles in the organization.

We also identify high potential employees and create development plans to assist in their career development. These sessions allow the learning and development team to learn about the gaps or training needs of our staff, which then drive their curriculum development for the coming year.

In fiscal 2011, Corus' annual performance review process was fully automated and redesigned to align employee goals and development activities to business priorities. Cascading goals and objectives are developed for employees as part of our annual performance appraisal process.

For our senior leaders, who participate in our short-term incentive plan, the successful completion of personalized strategic business objectives spawns a portion of their incentive plan payouts, achievement of EBITDA, EPS and/or free cash flow targets also trigger step payments.

In addition to the short-term incentive plan, our senior leaders participate in our PSU or RSU incentive plan. Our PSU plan targets are directly linked to the achievement of TSR stock-based growth hurdles. This ensures our leaders are incented to deliver superior returns to our shareholders.

We believe our compensation plans strike the appropriate balance between fixed and variable comp. Our base salaries are established from market compensation data, and the additional variable component is linked directly to the achievement of annual financial results, as well as longer-term shareholder returns.

To reinforce our commitment to pay-for-performance, education sessions are offered annually to all managers who participate in our short-term and long-term compensation plans, and compensation summaries are forwarded to all participants outlining each individual's base and variable comp, including the financial targets that must be met for payout.

And finally, just a few words on our corporate social responsibility initiative. We want to highlight the new focused approach we've adopted around our philanthropic giving. In the New Year, we will be issuing a report on our broader corporate social responsibility initiative, including our commitments to the environment, our key stakeholders and employees. But today, we want to focus on corporate giving.

In 2011, we established an internal working committee to review our philanthropic initiatives and to make recommendations on how Corus' contribution could be more impactful. Corus has a long history of giving. We are a strong contributor to the United Way and have a proud history of supporting numerous local initiatives. We have helped raise more than $200 million in donations through fund-raising drives, airtime and PSA campaigns to a variety of causes, building on Corus' great track record of supporting worthwhile causes.

The committee proposed the creation of an umbrella brand, Corus Cares, to house all of our philanthropic initiatives. This resulted in the creation of a new philanthropic focus and brand, Corus Feeds Kids, nourishing children's bodies and minds. Our goal is to raise $3 million and contribute 3,000 volunteer hours in 3 years. To this end, we will direct our corporate matching United Way contribution to agencies that fit our new philanthropic focus.

While we recognize the need to continue to support a number of causes that our stations have a long-standing association with, we believe a focused approach for future initiatives will allow us to make a difference to kids across the country. Corus Feeds Kids fits so well with our brands and resonates so deeply with our employees. We are confident that our new focused philanthropic approach will be a resounding success. To date, we have generated more than $1 million in cash, PSA and airtime contributions, and our staff has provided more than 740 volunteer hours.

Stay tuned. You'll be hearing a lot more about Corus Feeds Kids in the coming years. And now it is my pleasure to introduce Gary Maavara, EVP, General Counsel and Corporate Secretary. Gary?

Gary Maavara

Well, thank you, Kathleen, and good morning, everyone. I should say how flattered and happy I am to see so many of you here today to watch our presentation on the long [ph] regulation.

What I'm going to devote my time to is 3 key areas: first, the changes at the CRTC and what that means to us; secondly, the lessons from a decision of the CRTC that everybody was talking about and are still talking about, and that of course is Bell-Astral; and thirdly, I want to talk a little bit about some of the changes in our policy, particularly copyright that are on the horizon that will hopefully benefit us. And the key message that I want to leave with you today is that in fact, in the regulated realm, there still is a significant amount of opportunity for Corus.

So turning to the CRTC. Of course, we have a new Chairman of the CRTC, Jean-Pierre Blais, who was appointed in August, and he's already made an impact. But the CRTC is going to change dramatically in the next year because of terms ending. And you probably didn't think you're going to hear about the CRTC Act this morning, but the act provides that the CRTC is to be a maximum 13 full-time commissioners.

But inside of that group, there's only really 2 rules: one is that there has to be a chairman or a chair; and secondly, that there has to be regional commissioners. There are 5 regional offices across the country. It doesn't speak at all about any of the other roles. So theoretically, the CRTC can be a 6-member board. And in the next year, we have now a Vice Chair of Telecom vacancy, and Rita Cugini, who is the Ontario commissioner, her term ended and that seat's vacant. So that has to be replaced. But coming up in this new year, there are 5 other terms that are ending, 3 of which are national. So theoretically, the commission could shrink to as little as 8 commissioners.

So why should we care about that? The government of Canada is pursuing a policy of innovation, and there are a lot of CRTC policies which we think stand in the way of an innovation policy. This is an opportunity for Mr. Harper to appoint effectively a majority of commissioners, and by shrinking it, he doesn't need as many commissioners that will align to that policy of innovation. And I'll come back to what that means.

But the next question with respect to the CRTC is, is there going to be a change of direction? And what did the Chair mean at the International Institute of Communications speech when he said that we're going to put the consumer first? What does that mean in terms of the policy framework of innovation? Does it mean changes in the commission's perspectives on pricing issues, for example, or packaging issues. And as John said, all of the vertical integration and linkage policies are really about regulating the sandbox, but is that really where the government wants to go, or what we think is that the government really wants to go in the direction of sort of forget about the sandbox, we now need to peak on a global basis, which is something that Corus has been advocating for a long time.

Turning to the lessons from Bell-Astral. The first thing is that the CRTC decision did not establish a new paradigm. One has to look at that decision very much on the specific facts of that situation. We all know that Bell is going to be back. And effectively, what the decision says is that when you show up in front of the commission with any kind of a transaction, especially one that's as large as that, you have to be very specific.

First of all, what are you going to do with these assets? How are you going to take the assets that you have and take them to the next level? Which specific assets are you going to be disposing of? That's something you need to do. And finally, with respect to the specific benefits, they have to be specific and not self-serving and not necessarily aligned to the core business that you're operating. And we'll see, I think as early as January, that Bell will come back and do precisely that. Important thing for us, however, is that we are going to be able to continue to grow. The M&A environment is still an open door with respect to CRTC, and hopefully we'll be able to exploit that.

Some of you are aware that we have a hearing coming up on December 11 with respect to the Oprah Winfrey Network. This is a matter about compliance with the nature of service, and also about a policy called genre exclusivity, which is another one of those sandbox policies. The theory is that we're going to protect players in each genre against competition. So that ship has sailed. And when we arrive on the 11th, not only are we going to say that the Oprah Winfrey Network is in fact compliant and is in fact very educational. But we've got an exciting plan to show the commission and the viewers of Canada how we're going to take that to the next level.

So we're using this hearing as an opportunity. That hearing is also going to be kind of the first step in the commission's review of policies such as genre exclusivity. And they said, for example, that they're going to start with looking at the music genre, which will affect the CMT channel upcoming in 2013 and then later. Effectively, what that means is that we are all going to be competing in every genre. But Corus, with our brand lineup and some of the things that we have in the hopper, that's great news for us. That means that we can grow.

So as it says there, the opening up aligns with the government's innovation goal. Because it isn't saying to anybody, "Oh, you can't do that because somebody else is allegedly doing that. Go ahead and innovate. Let's start new things." And consumers want everything, so we can't keep a regulatory wall around that. We consider that an opportunity, and it's something that we've been advocating for at least the last 5 years.

John mentioned the radio ownership rules. We've already seen some changes. The rule, of course, in a large market like Toronto, is that you can own 2 FM and 2 AM at the maximum. We saw in the Cogeco purchase of the Corus stations in Montréal, the commission made an exemption for that, I think. And maybe you're hearing it here first, I'm relatively certain that Bell will come forward with another application for an exemption in Montréal as part of the Astral purchase. They might not, but they probably will.

But overall, we expect to see, starting in 2013, the review not only of this ownership rule, again, on the basis that we have to foster the development of the industry to be able to compete; and also, rules such as the local management agreement rules, which will allow companies to capture efficiencies by effectively saying allow companies to compete on content and brand and take the back office and manage that more efficiently. So we'll be seeing that discussion heavily through the next year.

As you know, copyright -- Bill C-11, the Copyright Modernization Act, was passed and came into -- most of the provisions came into effect on November 7. The copyright discussion has been fascinating because there's been enormous: press and blogs and heat from various commentators on subjects such as digital locks. Those who want to use copyright without compensation were screaming about the digital locks.

I have a question for you. First of all, a lot of people wonder what the heck is a digital lock? How many people used a password this morning to access something like their e-mail service? That's a digital lock. What the law has done, which is terrific for content creators and content users such as Corus, it says now that not only can you be found liable for an infringement of the copyright rights, rights that you have, the right to copy, to perform, et cetera, but there's also a liability established now effectively for hacking. Hackers don't like that, which is why we saw so much buzz about it. But it's going to assist us in our efforts to control piracy. It's a huge step for us.

Another huge step for the radio industry on the cost side is that the act, and something that we've been going after for literally a decade, the act is establishing exemptions for some of the silly tariffs that were put in place to effectively tax the process of getting music from the record label onto our air. We will continue to pay performing rights, but we will no longer be paying the mechanical rights, and that is a great opportunity for us to cut cost. So we're working on that to secure that tariff reduction now.

So to summarize, yes, there is opportunity. There are a lot -- there's going to be a lot new faces at the CRTC, and we hope that they bring with them the government's innovation attitude. The new policies that will grow out of that and some of the micro management policies, such as linkage and that sort of thing, we are hoping to start sweeping those away so we can compete. The new copyright legislation will certainly help us protect our content and cut costs of other operations.

Thank you. And I'm now going to introduce Chris Pandoff, who's our Executive Vice President and President of Radio.

Chris Pandoff

Thanks, Gary, and good morning, everyone. Over the next 20-or-so minutes, I'll spend time on 3 key areas: first, radio's role in Corus Entertainment overall; improvements we've made in the division's performance; and then finally, opportunities for growth.

And I really want you to take away 2 key thoughts from the presentation today. Number one, as John had pointed out earlier, we're working really hard at improving our ratings and going deeper with our customers to improve our business in a very specific set of metrics. And the second thing is, as Scott had mentioned, our investment in the digital and interactive world on the ability for us to grow our business and second of all, to experiment in the space, such that if there is a transition technology coming in the future, we'll be better prepared as a company and an industry to be able to make that transition.

So let me provide a little bit of context for the presentation today. These are -- this is an array of the 37 formats that we -- 37 stations across formats vertically that we operate across the country, and I just want to make 2 comments. First one is that in the news talk and information segment, we have 9 stations in 7 various markets, and this represents about 1/3 of our total business. So -- and I'll make some comment a little bit later with regard to where we think growth opportunities are from that segment.

And the other one is in the top left corner. We operate 2 country radio stations in the province of Alberta, Calgary and Edmonton specifically. The reason they're important is that you'll see a little bit later in the presentation how our ratings have improved fairly dramatically in both of those markets. They're both big drivers of revenue for the company and will contribute a huge amount of growth in this coming year in fiscal 2013.

So radio's kind of an in-the-moment medium that is live and local. And one of the things that you look for in your announcer staff is for them to be topical, talking about things that are in the news and of relevance to audiences. I can't imagine anybody here isn't aware of the MLSE valuation of the Toronto Maple Leafs. And John Oakley this morning on AM640 introduced the story out of Forbes with the following clip.


Chris Pandoff

So what we do is we aggregate those kinds of clips all the time. And the great thing about digital storage that Scott pointed out is there virtually is no finite amount of clips that we can aggregate. You never know when you're going to need something. But obviously, the story broke last night, was reported this morning and the clip was pretty relevant.

So where exactly does Corus Radio fit within the overall operation of Corus Entertainment? Well, in financial terms, it provides a consistent operating margin of 30%, and that's really a sort of a base that we've established to work off of and improve. We're working hard at maintaining that and improving as we go forward. I would make the comment that in the first quarter of this year, we've actually improved on the -- on our margin percentage versus last year. And the second thing is that Corus Radio adds steady cash flow that the company can use for investment purposes or returning cash to shareholders. So the question really becomes, is this sustainable, not only for the industry, but to Corus specifically?

So just looking at the industry revenue from 2006 to 2011, if you see in 2008, just before the downturn in the economy, the industry was just a touch under $1.6 billion in revenue to the radio industry. 2009 was a very significant drop for us and at that time, the assumption was, is it cyclical or secular. Well, in fact, by 2011, we returned to the $1.6 billion in industry revenue that we had at the time just before the recession in 2008. So fundamentally, the change was a cyclical change. It's not showing a terrifically robust growth on a go-forward basis, but that's really a function of the economy and consumer spending.

Second part of the sustainability lies in the number of new licenses that could potentially be launched in the future. Pretty much for the early part of the 2000s, a number of markets saw new entrants licensed by the commission, and the rate of new licensing has declined. So the barrier to entry in the radio industry is significantly better particularly in the top 4 markets.

So on this particular slide, Vancouver, virtually all of the best frequencies are exhausted in that market. We had a station launched there in 2009, has now been acquired by Astral Communications. Calgary is -- had an FM license to Pattison Broadcasting. We would anticipate them launching probably Q3 of 2013. Edmonton, I'll show you some data on Edmonton, the impact of the launch of the 3 FMs in that market in 2010. And Toronto has a license at the 88.1 frequency, that was licensed to an independent that we're estimating will be launched in Q3 of 2013 as well. Main point of this slide is that the ability to find new frequencies in large markets that can encumber either the unit return or the overall spend in the market for some of our major stations have slowed significantly.

So leveraging the use of radio assets, the Radio division also provides promotion exposure for the TV division. While we certainly wouldn't claim to be responsible for Doug's division's success, but using our asset in the megaphone of radio is a very good sense from the standpoint of leveraging that capability.

In the case of Undercover Boss, if you take a well-produced program idea that's a great idea, give it the extra exposure in airtime, announcer chatter and web presence, the ability for it to -- and its launch can be much more successful. And the fit from a communication standpoint is very good for us. And also because of our audience strength in Western Canada, Radio works pretty well for Movie Central. I mean, there's subscriber tactical opportunities that they have with our BDUs in Western Canada.

And finally, in terms of radio's contribution, we help connect our corporate social responsibility initiatives at the local level. With some 800 staff members across the country, it's easy to mobilize the activities that Kathleen talked about in her presentation. That added to the initiative that they have in the individual markets, really sort of strengthens Radio's local aspect. And when John and I talk about radio, the key sort thought here is that radio really is social media and has been for a very, very long time.

Here's an example of TV, radio and key talent working together to strengthen the Corus Feeds Kids initiative. Randy Bachman was in the studio last week with Beverley Mahood on an interview with Kim Mitchell, and together they released a Christmas version of Randy's Taking Care of Business, renamed, Taking Care of Christmas. This week, on Tuesday morning, we ran that song simultaneously across our chain at 7:10 a.m., really to kick off the download and revenue opportunity for Corus Feeds Kids for the download. I'll play a clip of it now.


Chris Pandoff

Opening of it was long as it was instrumentally before you actually get to the chorus. I wanted you to hear the chorus and their play on words. But it's a good example of a television personality -- a Corus television personality, a radio personality and the leveraging of communication that we can do that Doug's team and our team worked very well together with.

So in Ontario, actually we just flip back a bit here. This -- as John had pointed out earlier, we're working really hard at improving the ratings in our markets. And I think last year in our Investor Day presentation, I took you through a process that we had done with the repositioning of our station in Vancouver. Well, I'm happy to say that in the last 12 months, both of our stations on the FM side has improved fairly dramatically in Vancouver, up about 12% in audience from the spring of this year going into the fall, first quarter.

So that will have a direct impact on our revenues, not only on the 52-week business that we negotiate in the next 30 days, but also on the balance of our revenues through the end of Q3. The good news story in Calgary, part of it led by country music but also our strength on our classic rock there at Q107 that was repositioned this year with a new morning and a new afternoon show. And as you can see, it's in a trajectory of a 30% growth on the ratings side. And that will translate to revenue fairly quickly. That market in particular also has sprung back to life in terms of ad spend. So we've got 2 things going really well in that area.

Edmonton's been a bit of a turnaround for us. As I mentioned earlier, there were a number of new stations launched there in 2010. And so the compression in the market on rates and shares of tuning has really strengthened. It hasn't improved in terms of the ad spend in that particular market, still sitting at around $83 million in market revenue. But it's -- you'll see a little bit later that we have a strategy in place for a turnaround in that market on one of our FMs.

And I'm happy to say that Toronto is maintained its historical share in rank position. So it's a big engine for us. It represents almost 1/4 of our total revenue on the Radio division. And the key point here is that we're strongest where it matters most in the top 4 markets.

So in Ontario, I know there's been some questions with regard to the economy, and although it hasn't been robust, ratings and rank positions in the adult and youth demographics have maintained their current positions on our stations. So in Toronto, for example, we've maintained on our 2 FMs the #3 and #6 rank positions in a 21-plus market that participate in it. London, Kitchener and Hamilton each together aggregate to about 40% of the size of the spend in Toronto.

And so in London, we have the #1 and #2 stations out of an 11-station window. Kitchener, which has been a great market for us, is holding #3 and #4 among adult demographics and #1 and #4 in the young demographics out of an 8-station market. Really, the only market that's kind of challenged for us is Hamilton because it suffers the significant spill from the Toronto stations. And although our 2 FMs there ranked #2 and #3 out of 7 stations, the market is seeing some decline in terms of the ad spend going into it. And that's an area that certainly is one for us that we're working on.

So as mentioned earlier, we operate 2 country stations in Alberta, which are significant to the performance to the whole division. In the last 2 years, the country format has had a resurgence in its strength in the province, probably more significantly in Alberta than anyplace else north of the Mason-Dixon Line in the U.S.

Country 105 in Calgary has recaptured its #1 position in adult 25-54, and CISN FM has recaptured its top 3 in adult at #1 in females 25-54 on the female side. So these 2 stations are in fairly robust markets, that they sit anywhere between 15 to 18 stations competing for revenues. I'm happy to say that both stations lead in billing not only inside the market, but inside the Western division. And they had faltered over the early 2009, 2010 window. So with the return in the economy, return of these kinds of ratings, we're looking for some really strong growth out of those 2 stations.

So as Scott had mentioned earlier, our investment in the interactive side, one of the big, continuous initiatives in Radio, in our division, is the extension of our brands to the Web and to mobile platforms. So when you look at the ability for us to connect with listeners and try to find advocates, we have over 1.4 million club members who have actually joined to participate in promotions and opportunities for our radio stations, whether it'd be for tickets or prizing.

Of those people, just about 3/4 of 1 million have opted in for email communication on either monthly or weekly basis. So that has enormous opportunity for us, both from the standpoint of extending the reach of our brands, promoting ourselves, but also the connection with our advertisers to be able to go deeper to deliver audiences on-air, online and on-site.

And the other part that we work hard on is the expanded offerings in mobile through audio streams. We're still running about 6 million hours per month of encoded audios. So that's -- if it's a diary world, people obviously have access to the stream. But in the TTM [ph] world, if they're listening to the stream, it's an encoded signal and ultimately helps the ability for us to build our audiences a bit larger. And of the 6 million people who are actually streaming the station of these million hours, that's nearly 846,000 unique listeners. So enormous broad base reach for the medium.

So we're experimenting with some dashboards in terms of understanding our audiences better. And clearly, if we develop good content and we produce good content, people will seek it out. This is a quick 1-day representation on Q107 in Toronto showing the stream peaking out during the work hours. Clearly, on an FM station, the coverage or capability of the receiving side of a building like this is pretty good. But on the AM side, the AM station's tuning almost reflects exactly the same curve. And what that -- really the benefit to us is the accessibility for a news talk stations in 2 buildings, like this building, where the AM signal is not readily available. Clearly, people are reaching out and accessing the content because it's unique and local and has a very, very strong place in the markets that we serve.

So some of the things that are available in a test that we've been doing is the meta data that's available with regard to locations of tuning. And again, back to the point of the robust capability of our stream, we now are beginning to understand how our audiences are actually using our streams. And this gives us some level of insight in research in terms of our programming. It's interesting enough that it allows us to match up the IP address with registered IP addresses in businesses. And this is a test that we ran in Toronto on AM640 in July 24 through 31. And among the top 3 streamers that week were the TD Bank, Bank of Nova Scotia and CIBC World Markets.

Also included were Toronto Hydro and the York Regional Police Department. I'm not sure how the other 2 fit, but the key thing here is that if there's programming that people are accessing that they like and we know what companies and/or at least the profile that they are, we can tailor the content a little bit more effectively so that we can generate more time spent from those groups of people. And that literally could never been possible were it not for the capability of streaming on either handheld or desk devices.

So following along the learning about our listeners using the medium, the more we understand the responses to specific types of programming, the better we can prepare relevant content. So what you see here is on the left side is a stream of the Edge and a little bump that's actually identified with an impromptu interview with Billy Talent. So clearly, it was promoted on the air, and the people who couldn't receive it on the air got word of it, probably through social media, signed onto the web to be able to access to stream.

The gray band that you see is the daily sort of range of streaming historical, and the black line is the actual tuning for that particular date. On the new talk side, you can clearly see AM 770 news talk station in Calgary, the day of the Alberta election, the divergence here on the day's tuning was significant relative to the people that were accessing radio stations. So again, what this teaches us is that the programming we do supply is relevant to listeners, and this is now a feedback mechanism on a continues basis for us to be able to understand what forms of content actually work for us, and a very powerful technology.

So in New Media, higher levels of engagement in the overall ecosystem that we developed ultimately has the potential, as Scott had pointed out earlier, to build bigger, conventional audiences on the air. And the whole social media strategy is now central to programming execution as we work through how we execute that on our stations. And you're welcome to meet Elliott [ph] and Ira [ph], who are in the southwest corner, demonstrating the SoCast initiative that Scott talked about earlier.

What it really allows us to do is when an announcer creates a piece of content that he or she feels will have some impact on a go-forward basis, better than uploading to Twitter, Facebook, YouTube, Pinterest separately, you simply hit one button and it loads into the new media universe almost simultaneously. And so it allows our announcers to reach out more beyond -- well, actually while they're running commercial break, to be able to reach out and continue to market themselves to listeners. It's a great opportunity for us to align our brands with communities of like-minded listeners who can become advocates for the station, and a terrific way to drive marketing at a very low-cost level to build bigger, conventional ratings.

Now interestingly enough, according to, Peter Mansbridge has 41,500 followers. The Edge Morning Show at 102.1 here in our building has just over 37,000. So only about 4,000 less or 10% less. And when you think about the power of that, a local radio station, notwithstanding the fact that Toronto is a large market competing with a national presence of the network national and a person like Peter Mansbridge, really speaks to the power of new media and the way in which if you provide the content, people will sign up and connect. So we think there's really a big opportunity there that we need to continue to explore.

So changing a bit of a focus to more on the conventional media side, I think we have a big opportunity in capturing some of the dollars currently being shed by the newspaper industry. What you see here is a set of graphs that compare the time spent with share of media -- share of ad revenue, and both television and Internet do fairly well in terms of matching the 2.

Newspaper and radio ultimately are mirrors of each other, but people spend more time with newspaper than we actually get in terms of overall share, although that 14% has been relatively static over the last, certainly, decade. As newspapers become challenged and advertisers look for other opportunities, and Paul Godfrey was quoted as saying that for every $7 of newspaper that ad revenues that leaves, they're only able to repatriate $1 or $2 to the digital side of their platform. So that says there's $4 or $5 available in the world that we ultimately are going to be up for grabs in major media.

And so one of the things we regularly do with our sales department is continued training on how to consult with local advertisers on their newspaper usage. And while we would never predict the decline of newspaper or the elimination of newspaper, we do think there's an opportunity to take some of the newspaper dollars, add radio to it from a standpoint of connecting the ad budget to the same level, for a retailer it extends their reach, it increases their frequency, it's obviously cost efficient because there's no increased in ad budget. And it leverages the unique capabilities of the display side of newspaper and the immediacy of radio. And what both media do really well is they target both demographics and geographics really effectively. So this is a big opportunity for us on that 1/3 of business I talked about earlier in our direct retail advertisers.

So in that vein, as mentioned, we're the largest news talk commercial broadcaster in Canada. These 9 stations in the 7 markets that we operate have a much higher composition of their business in that direct retail portion. So although the overall portion for Corus might be somewhere in the area of 30% direct retail, in this station group, that composition of business could be as high as 50% or 60% because they're dealing with individual advertisers in their markets. The relationships are really important. They're strengthened by the spoken word that radio has, and they often transcend the ratings that each of the stations deliver.

I listed a quote here from some work Boston Consulting had done with us that they were identifying the 55-plus demographic in terms of the future spending and the impact that, that would have on the economy And they may maintain the case that in the next 20 years, it will be the single, biggest growing contributor to GDP, and they cited the fact that the United States and Japan are already between 50% and 60% of the impact in there.

And so with stations that have this kind of level of quality of audience, we think is a big opportunity for here. And as John had mentioned earlier that the pharmaceutical advertising, if it's allowed through Health Canada, represents a huge opportunity for us given the quality and the average demographics of this particular audience segment.

So in terms of turnaround, the -- as I'd mentioned earlier, we have some growth opportunities. On the left side is JOE FM in Edmonton. Station was hurt during the launch of the 3 or 4 stations within Edmonton in 2010. We've since repositioned the station with a new morning show, a new afternoon show, new brand manager, new management at the station; virtually have relaunched the station and looking for growth in that area.

And the second one is in Winnipeg, Fresh FM, which we acquired through a transaction with CanWest a couple of years ago. Last spring, we relaunched it out of the specialty format that was in a smooth jazz to a hot adult contemporary. And actually -- we already know how it is, I just haven't seen the ratings. We got our ratings, are out this morning at 9:00. So I'll hit my BlackBerry when we're done.

So anyway, these 2, if we're successful, by doing what we've done in Calgary and in Vancouver, could represent over the next couple of years incremental revenue of $7 million, 75% or 80% of which will stick to the bottom line.

So in closing, I just want to point out a couple of things. The radio ad spend has returned to its prerecession levels, so we're as healthy as we were in 2008. Cash flow and EBITDA really are a signature of the industry. The turnaround stations we've talked about in the West are well on their way to contributing greater revenue growth, and we're already seeing that in our results. The Ontario ratings are still strong in all of our key markets, although the economy is, at this point, there's not much visibility in Ontario. And the whole retail environment that I talked about in terms of us being able to control our future and develop advertisers above and beyond the ratings, represents a large opportunity for us on a retail as well as on a regional basis.

One additional thing I just want to add is that it's an exciting time to be in radio right now because we've got an industry that's healthy financially, relatively protected from a competitive standpoint and we're actually driving the learning curve in the digital world. We get to experiment with mobile technology, computer technology, social networking while our industry is continuing forward. And I think that the decisions we make today with regard to our programming and the way in which we develop those assets will be really key to the future, and it's great to be a part of it because it's an exciting time. Although a legacy industry, I think we've got a great chance of making the hyper jump to handheld devices.

So I'm going to leave you with one last video. One of the benefits that we have working at Corus Quay is that this building allows us to showcase it for our 3 stations in the building. And what you'll see is sort of a montage of clips of concerts we've done on Edge 102 using the studio downstairs and Sugar Beach. And I think it really is a testament to the design, the impact of this building. And from a competitive standpoint, as they say, it's a terrific marketing tool for a very dynamic station.


Chris Pandoff

The best part about my job is I get to go to work with young creative people who essentially have fun on air every day, and it's great. So we're going to break now for I think 10, 15 minutes. I would encourage you to, as Scott had pointed out earlier, visit some of the exhibits outside. There's an interesting technology and marketing assets to the company that are showcased for you.


Unknown Executive

Please welcome Doug Murphy, President of Corus Television.

Douglas D. Murphy

So how are we doing? It's been 2 hours. Did you enjoy the showcase out there? David, what was the highlight? Did you have a chance to go to see Shaw Go?

Unknown Attendee


Douglas D. Murphy

Pretty amazing. Okay. So before I start my presentation, I thought it was appropriate to invite an old friend, who just turned 80, to ring the bell and get me started.


Douglas D. Murphy

[indiscernible] last Friday and celebrated his 80th anniversary birthday. And you'll probably notice if you got to the merchandise cabinet that we have an exclusive program at Saks Fifth Avenue and at [indiscernible] for Babar now in store. So if you haven't done your shopping yet, I'm certain that most of the men in this room haven't done any shopping yet, there's an opportunity for you.

Anyway, Doug Murphy is my name, and I'm delighted to have a chance to speak with you.

Investor's Day is a wonderful chance once a year to showcase Corus Television and also to spend some time together one-on-one or on mass as opposed to over the phone during analyst calls or on marketing trips. So I personally thank you for being here.

Today, we're going to reaffirm why we have a deeply held view that Corus Entertainment is a strong investment opportunity. If you're a holder, we are certain that you will leave here today reaffirmed and confident in our story. Why? Because Corus Entertainment provides you with 3 revenue streams.

You have the 2 revenue streams of specialty channels in Canada, but you'll also participate in the global business, increasingly growing, increasingly important to our company.

These characteristics we believe set us apart from your other alternative investment opportunities in the Canadian media and entertainment space.

My presentation today will lead off with an overview of how Corus TV has delivered steady growth in revenue and earnings by leveraging our unique portfolio of businesses. We will then discuss our Canadian business and how we remain confident that despite a very competitive and vertically integrated world that we can win in our competition because we have powerful brands and exclusive content.

There is an enormous $25 billion global kids market, and we're going to continue to deploy our Corus Advantage to win share and win revenue in that market. We're going to talk to you more about that today. We are committed to growing our Kids business globally.

So let's review our performance. Despite a challenging year last year, Corus Television delivered record results. In fact, we have demonstrated a consistent winning track record of annual growth in revenue and earnings in good times and in bad.

The Corus TV management team is agile, and we have a proven ability to pursue and acquire quickly when opportunities present ourselves. Our relentless pursuit of new business development and investment opportunities has and will continue to set course for future growth both domestically and beyond.

How many of you were here in 2009? Show hands. Oh, good. There's a lot of you. Okay, some of you heard of this story before. We introduced the concept of the 3 thirds back in 2009, 3 discrete distinct but equally important business segments that we committed to grow then. As you can see, from this slide on the chart here, we have done what we've said what we would do. One of our values at Corus, as Kathleen shared with you earlier, is accountability.

There has been remarkable growth in our Nelvana international business both through film [ph] sales and merchandise licensing, that's the purple chart. Our advertising growth in Canada has been fueled by new channel launches and audience share gains, that is the green. These new channels along with the transition from analog to digital has resulted in growth in our affiliate revenues over this timeframe. That is the yellow. We are really excited to talk about all the promising growth stories in Corus Television today. But before we do that, we thought it important to answer some of the questions that you have about potential headwinds in the year ahead.

Last year at Investors Day, we identified 2 challenges which remains in our site this year. Our Kids network continue to experience challenges both in ratings and in demand because the spending of our 3 key categories, toys, entertainment and food, are down year-over-year.

Now we have seen some very promising improvement in ratings in this most recent first quarter. So we're hopeful we'll have a turnaround in the back half of the year, and I'll address that further this morning in my conversation with you all. We also predicted a year ago that the BDUs will be increasingly focused on managing their costs, as their digesting their acquisitions and becoming vertically integrated, and that had been a reality this year past and we expect it to continue going forward.

But we still have growth opportunities in the affiliate world, principally through growing our Pay business, and we'll also address that later this morning as well.

Beyblade was a massive hit for us last year, and we expect it to be remain a large and a vital part of our business. But alas, trees cannot grow to the sky, and we expect this business to ease somewhat in the coming years.

That said, and you'll see more on this later, we are working extremely hard to generate a variety new content strategies to offset any potential decline in the Beyblade business this year and further.

So those are our anticipated challenges in the year ahead. But we have had challenges before, and Corus TV has demonstrated that we can overcome those. In fact, every time I've had the chance to stand in front of all of you, we've faced some challenges within the portfolio. And in each and every case, we have demonstrated a capacity to achieve steady growth in earnings and in revenues in all market conditions by plumbing the depths of those 3 thirds. An actual effect, Corus Television have grown our earnings every year in a row for 8 years.

So let's shift gears and discuss the many exciting developments in our network business here in Canada. Our business in Canada, as you will see, is very strong and it is well positioned to deliver growth we believe in excess of GDP once the macroeconomic situation improves.

Our impressive array of networks has been built and assembled to ensure continued growth in our key audience verticals. These are the ones that we sell to. I'll speak about that more in a moment. We have demonstrated a relentless pursuit of network investment that leverage both our operating know-how and our focus on our chosen demos.

This graphic has been updated to include our most recent new channel, the Cartoon Network. And it's a powerful representation of Corus' proud claim that we have launched more new channels in Canada in the last 10 years than the entire industry combined.

Corus builds great brands, and they enhance our reach in the key verticals. These new brands are all additive, and they ensure that Corus TV's networks reach more and more of the audiences that we and our advertisers covet. We are really focused on these segments.

This slide shows how comprehensively Corus covers

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in Canada. And with the recent launches of Cartoon Network and the Adult Swim on Cartoon Network's night-time -- on TELETOON's night-time block, excuse me, as well as ABC Spark, we've recently expanded our segment at selling to include young adults and teens.

This disciplined approach to launching new channels is delivering the most valuable audiences. This chart shows -- this is our increasingly female and larger family size. So we have 25% more households that are 5 people or more than the competition. Moms that spend more money have bigger homes. That is the sweet spot for advertisers. So we as we've been aggregating these channels and building our reach and building our assets, we are increasingly living in a very great part of the universe where we reach the moms and spend the most money, and that's where advertisers want to talk to.

What's particularly thrilling about our valuable women's vertical is that our overall audience just keeps on growing.

This slide describes how we have maintained momentum in our Women's business for 10 years in a row now by launching new services but also and importantly by gaining share at the expense of conventional television or our specialty channel competition.

Some of you may recognize this from last year. The trend continues, Tim, I saw you looking at that.

Shifting gears again, we were the first to recognize that co-viewing represented a real opportunity. How many of you have kids in your home? Just curious? Okay. A good portion of you do. Our research indicated that when the kids and parents watching TV together is the second most common pastime other than family meals. And our research also told us that the recall rate of parents when they're watching TV with her children is 2x are 3x than it is when they're watching TV on their own.

That presented in our mind a huge opportunity to focus on the notion of co-view. And as I said before, we've been dining out on the co-view opportunity. We've seen impressive growth from our pioneering insight some 4 years ago, averaging of CAGR in the revenue growth of just a little shy of 15%.

We remain very bullish on co-view as a source of future revenue growth for Corus in Canada.

In my opening remarks, I referred to some recent meaningful improvements in the kids and adults ratings on YTV, and John addressed them as well. Let's go a little deeper on that at this time.

Our total day audience in the first quarter of this fiscal year, so this is just in the last 12 weeks, has returned the growth in kids plus 6% but it's exploding in adults, plus 31%. Why? Well, the new slate of Nickelodeon programming and you've all read about Viacom and Nickelodeon channels in the U.S., they've doubled down in their content 18 months ago. They're delivering it to us now. It's working very, very well.

The final season of iCarly, it's paired with a sitcom block, the victorious Big Time Rush. Other great shows. They relaunched Teenage Mutant Ninja Turtles in CG, that's working very well. We're also proud to report that Nelvana's 2 live-action shows, Life With Boys and Mr. Young, are top 10 performers right now on YTV.

So all the content -- the new content we're delivering is working and driving audiences to our network.

Furthermore, beginning in December, YTV enters into a very strong seasonal period. And we schedule family features everyday at 6:00 p.m., right through the holiday season. These are big blockbuster features. So we typically build on momentum rolling into that December timeframe into the holidays. So we expect that again. So with audience growth such as this in kids and in adults, we feel very positive that revenue growth in Kids should return in the back of the year.

In fact, speaking of the first quarter, so far this year, Corus TV is experiencing systemwide audience share growth when compared to the competition. This slide shows that looking at the universe of specialty English language channels in Canada that Corus has built the most share vis-à-vis the competition. We're very proud of that, and I think actually it probably ticked up another notch in the last week or 2 because our audience trend continues to be very strong.

So let's look deeper into the women's vertical.

Last week, we announced W's winter schedule, a schedule meant to warm you up with a mix of fan favorites new series and homegrown talent. That was a total lift off the press release, as you can [indiscernible]. We made the all commitment a year ago that we're going to make our -- we called it then our Cancon, work harder. But now we're defining it as a Corus Original Programming, work harder. And we're happy to report to you today that it had. Our audiences love Corus Original Programming on W. So we're producing new seasons of returning favorites, spinoffs and a lot of new shows. Returning back to W are more episodes of Undercover Boss Canada. Chris mentioned that in his -- and I want to thank the radio team at Corus for the synergy. We'll sidebar for a moment.

We set a goal over a year ago to really leverage our synergy opportunities across the divisions and there's been great wins this year. That's just one of them, Undercover Boss. There was probably 15 of them both ways that we could speak to. So we're just beginning to scratch the surface in that. Undercover Boss Canada, Love It Or List It, Candice Tells All, and then we have a new show called Majumder Manor with Shaun Majumder, the comedian, which we think is going to be quite funny. So let's take a quick look at some of the new programming coming on W.


Douglas D. Murphy

Corus' Original programming on W, and all these shows were produced for the weekday primetime block that was a part of the schedule where we wanted to build audience we thought we could win against the competition. And lo and behold, we're up 53% in audience delivery year-over-year with these great new shows, which is a fantastic outcome, and one that we hope to continue to build on.

Also as I mentioned in the movies strategy, other than just these great originals coming back in the wintertime, W also has a seasonal holiday strategy, holiday movie strategy, so we've began to run 2 movies a day starting at 7:00 p.m. in December all through the holiday season, and these are holiday titles standard to the W audience. So we bring features out strategically to complement our series to build audience during this holiday season.

There's other good news in the women's vertical I want to talk to you about. Two years ago, at this time, we announced the launch of the Oprah Winfrey Network, OWN. And as we all know, the network got off to a bit of a slow start. But in its sophomore year, we believe that OWN certainly is living it's best life.

OWN has benefited from a lot of great new shows this year. Of course, Oprah, herself has been much more prominent on the network with Oprah's Lifeclass, The Oprah Winfrey Show: Where Are They Now?, which I personally found remarkably entertaining, Oprah's Next Chapter, plus some new OWN shows without Oprah, Iyanla: Fix My Life, and I finally pronounced that right because I've been making errors in all my rehearsals in that one, and Ghostly Encounters.

And lo and behold, when you look on the screen here, you see on the far -- on your far left, is the total day audience on OWN, which is up 47% year-over-year. And closer to me, on my right, is the valuable primetime, which is up 39%.

So those are some of the remarkable and encouraging results on OWN. And we know that we have a lot of good shows coming from our OWN friends in the U.S. So this is a trend we expect to continue. And when we first launched OWN, we always felt that OWN could one day become as big as W, and that's still our aspiration, to build out our women's vertical with this great brand.

We also aggressively promote all of the OWN originals in transmedia, because Oprah is so active on Twitter, in Facebook. So all of these shows have a very, very deep strategy to drive audiences from the web onto the linear service, and that's clearly in our view impacting some of the ratings results we've seen this year.

Now Oprah's Favorite Things is an annual show that Oprah does where she identifies her favorite products for the coming year, and she typically selects a surprise audience. This year, it was the military wives. We aired this show about 10 days ago, it was the second highest rated show in our history of the telecast in Canada for OWN, so we thought we'd air a little clip for you to see it for yourself.


Douglas D. Murphy

In addition to building audience through competitive scheduling and great new shows, in the coming year, 2 of our very, very important channels we believe will get added distribution and reach more households. Now I want to talk about that for a moment.

Nickelodeon. Our slate of new Nick programming as we've discussed, is really helping our Kids Network turn the corner from a ratings point of view, and we're very encouraged by that.

In the coming year on the Nickelodeon Channel itself, we expect to increase our distribution by 46%.

And this will further leverage our Nickelodeon output deal but also provide us with some strategic scheduling opportunities. We're looking at building a Nick at Nite block on the Nick Channel itself so we could build more of a co-view audience there and build our co-view inventory to tailor this co-view opportunity.

So great -- it's pretty intuitive, but great original and exclusive content in more households means more audiences. And as we've talked in the past, audiences lead revenues. So this we think sets up for our future revenue growth on this service. Let's take a look at some of the great new content from Nickelodeon.


Douglas D. Murphy

So the distribution in the coming year is ABC Spark. ABC Spark is already the #1 digital channel in Canada for millennial women aged 12 to 34, the target for that service. It's because its original exclusive programming is so immensely popular with our audiences. Some of the ratings we've had have been just unbelievable given the distribution we have at the moment.

In the new year, January, is when the new season premieres come for ABC Spark, and they're going to return with a big hit shows Switched at Birth, Lying Game and Bunheads. Does anyone know what Bunheads is about? Quick survey. I know you do. Any non-Corus folks that know what Bunheads is about? Just checking. All right, you'll see in the clip. Again, it's a great -- it's the same story as the Nick Channel, great original and exclusive content available in more homes means more audience, which means more revenues over time.

So let's take a look at the great ABC Spark content. Thank you.


Douglas D. Murphy

It's about ballerinas. [indiscernible] there. Okay, so I think we've given you a pretty healthy commercial network and why we feel the business in Canada is in a very, very solid footing going forward. I want to shift gears now and talk about Pay Television. And I'm sure that every single one of you in the audience has asked John or myself over the last couple of years about Netflix and the demise of Pay TV. And we've always held a very strong perspective, deeply held a very strong perspective that Pay TV is a growth business. What we lack was a barrage of stimuli. In other words, we talked about not having HDTV, On Demand, deployed. We talked about needing to launch TV Everywhere. We knew we had exclusive best-in-class content, but we're waiting to get the pieces put together till we could come forward with aggressive marketing campaigns and achieve some results.

And given that we're talking about movies and Pay, I thought I would borrow loosely from Pulp Fiction and Samuel Jackson because Corus was committed to strike down upon them with great vengeance and furious anger those that attempt to poison and destroy our Pay business, read Netflix.

This slide is to delight and to surprise you, okay? And there's new information, so I can see your pens going. We've been successful in really kicking up our subscriber base since the end of the fourth quarter. Why? Because we've been bringing on the stimuli that we needed to do.

Great season premieres of fantastically popular shows, Game of Thrones, Newsroom, Boardwalk Empire followed up by HD On Demand and the launch of TV Everywhere. You saw the Shaw Go display out there.

So first of all, now what we have is we have super content, and we've really improved the value proposition. Okay. So you can get all that show HD On Demand. You can get it now on your iPad, on your cellphone. You can it wirelessly in your home.

But now all, of a sudden, that the amount of money that you're paying: number one, terms have reduced; number two, with a series of very aggressive, best-in-class marketing campaigns throughout all [indiscernible] blue, our view is we're going to have some real great traction in Pay. And we're already pleased to tell you that we did hit 1 million sub-mark as of the end of the last quarter. So that's new information and our expectation is that our sub-base will continue to grow beyond 1 million and who knows to where in the quarters to come. So good news, it's what we always believed would be true, and we're pleased to see the results and share it through the demos with you today.

And let us just also share a little clip that we use to market Movie Central that once we got all of HD On Demand and TV Everywhere launch, this is a kind of clip that's been in the market right now promoting the value proposition of Pay TV.


Douglas D. Murphy

So that kind of concludes the review of Canada.

I'd now like to talk about international business. And I think you'll agree that Canada, the Canadian part of our business is in very solid footing and ready for growth as the economy returns and great upside in the pay part of the business.

So let's look at the international business and what we're doing to build on our Corus Advantage. For those of you that have been with us before, you've heard about the Corus Advantage, but forgive me for re-educating all of you once again, because I know there are a few new folks in the room, and this is a critically important part of our company we want you to understand.

We enjoy a very real competitive advantage as an integrated broadcaster, producer and distributor of Kids content. In fact, we're a pretty rare company. we're the only company in Canada that can claim this. But outside of Canada, we're in a company of Disney, Viacom and Warner Bros., and I'll explain why in a second.

It starts at the top. When you get, obviously, the regulatory license from the CRTC, it comes with it a commitment to spend money on Canadian content. We are allowed and it's based off of prior year revenues, we're allowed to spend a portion of that money on our selves. That's the affiliated versus the nonaffiliated distinction.

So then, we spend money on intellectual property that we own, either in the library already such as like relaunching Babar, relaunching Franklin, more episodes of Max & Ruby, or shows that we create, like Sidekick, the great video that Scott showed you earlier.

Then what we do is we launch the shows that we have invested in on our own networks and secure great ratings results. As of course, we only make the best shows. We have the best team with the best technology. Get the great rating results. When we go MIPCOM -- I hope you have a chance to look at the screen up there that shows the pictures of MIPCOM, to give you a sense of all the meetings. Yes, it is nice and sunny there, I agree. But it's a lot of hard work.

We go to MIPCOM, but we don't speak as an independent producer to try to pitch you, "Everybody, this show great." We speak as a broadcaster. And we'll go there and we'll say, "this show was aired at 8:00 a.m. Monday to Friday. Here is how we schedule at lead in and lead out. Here is the digital assets we employed to promote it on the website. Here is a couple of the games we made, and you can have all of that."

And then what we found is the credibility we have gained as a broadcaster selling this content is unparalleled, and it's really helped us to place our shows around the world. So when you're successful in placing the shows with the biggest broadcasters, which tend to happen because of our credibility as a broadcaster and a producer, in the biggest markets, then we have a crackerjack consumer products team here at Nelvana Enterprises that goes to work and appoints agents to manage our business in certain countries or manages it directly through the licensing basis.

Final point, if we structured the economics right on these deals, we can finance 2/3 to 90% of the cost by using license fees that we would spend anyways on and triggering tax credits and subsidies at over [indiscernible]. So this is a pretty powerful opportunity and it's one that we think is going to give us a chance to keep growing. It's been significant in our past success, and we think we've just got a lot more opportunity to grow this going forward. So before I talk to you about the Corus Advantage in action, let's show you a bit of a clip of our most recent Corus Advantage show the preschool hit, Mike the Knight.


Douglas D. Murphy

So let's tell a little story about how this came to pass, because it sets up the next slide after this one. Corus identified HIT Entertainment as a partner that we wanted to work with. So we reached out specifically and targeted HIT to pitch what we could offer. HIT realized that we could be a very good partner. We've got refinancing, we've got promotional expertise, we've got creative expertise. And they were desirous of building a new preschool brand to kind of pair up with their Thomas the Tank Engine, which is a massive, massive global brand.

So we negotiated a business model wherein Corus and HIT effectively co-own the property for a financial commitment, and then we looked at a deal across services and territories. So we basically said Nelvana is going to sell the TV and the home video and the consumer products in certain territories. HIT, you can do the other territories. So we structured a deal where we leveraged off of each organization's sort of core competencies.

So it was a -- it was a win from a financial point of view. It was a win from a creative point of view because we put both our teams together to build this show. It was a win from an execution point of view. And then, of course, we're started working hand-in-hand to go promote the show. And what's been really excellent about this is we launched it on Treehouse. The ratings were off the chart, took it to the market, had huge success selling it in. And then the real tipping point was getting it on Nickelodeon, which was our job as part of our arrangement in this partnership. And it was good fortune, of course, that Mattel bought HIT. You take those breaks when it happens. And we've been negotiating with Fisher-Price for a massive toy deal before that happened. And when that happened, as Mattel says, now Mike the Knight -- they bought HIT for Thomas the Tank Engine, but they say Mike the Knight was a gift with purchase, because they're very enthusiastic about it.

So we've also now signed up about 42 licensees, at the top bar, around the real big ones like Simon & Schuster, Fisher-Price, iTunes and others. And we're beginning to launch the brand. We'll have product on-shelf this year and getting real momentum in the coming years.

The merchandise you'll see outside in the vignette, the toys are from the U.K., but Mattel's and Fisher-Price's products start rolling out this spring and then in full force in the fall in North America and other markets globally.

That gives you a sense of what can happen when we take a tailored and targeted approach to building our business, leveraging our Corus Advantage.

And it's been happening for many, many years now. All these shows we have done this way. It started out many years ago with the very first launch of Beyblade, where we launched it in Canada first. The toys were launched by Hasbro, purchased back in 2003, there is great sell-through. Walmart in the U.S. woke up to "Hey, what's happening at Walmart in Canada?" And that began the roll out of that brand worldwide.

When we look at Bakugan and boys action we, employed the same strategy very effectively. The relaunch of Beyblade most recently, same strategy, very effectively. And all the other bands up there are -- have been launched the same way.

So the Corus Advantage really is a brand-building machine. It really is an opportunity for us to play with the big guys out there around the world, and bring proven and demonstrated success. It's quite apparent Nickelodeon calls us the Pixar of television. That is what they've called the studio, which is a real feather in the studio's cap and well deserved.

So we looked at this great success and we looked at the financial returns that have come with this success. And we asked ourselves, in the never-ending need to keep growing, how do we make this bigger? What can we do to make this a much bigger business? So we decided, before we went MIPCOM last October to challenge our team, everybody that was going to Cannes [ph] has an assignment to find either a really strong broadcast partner, a strong animation studio that we wanted to work with and hadn't worked with before, a great creator, so we could generate a list of targets again that come after and try to build businesses with.

And I'm very pleased to report that we had huge, huge success, and we've been working extremely hard since then kind of developing these relationships.

And what's important to understand is that there are 50 countries around the world that have coproduction treaties. And a treaty coproduction means that we can work with a company in Spain or in Ireland or in Brazil or in Japan. And if we follow the treaty structure appropriately, it effectively is deemed to be Cancon. So if it's Cancon, it means that we can maximize our license fees on an affiliated spend basis to go into that investment, and we can get the best exhibitions because Cancon get more airtime in primetime.

So these are the -- this is a list of studios that we're currently sort of dating. In fact in some cases, we're married. We're doing a coproduction with Studio Moshi in Australia with our property from Scholastic called The Day My Butt Went Psycho. And I kid you not. That's the name of the -- it's a book series. It looks great. It's this butt running around on feet and all its friends. And stay tuned for that one. I'm sure you all want to get a copy.

We're working with some partners in Germany. Germany is a very great market by the way. ZDF is a big broadcaster in Germany and M4e is our merchandise agent partner and a content producer on Beyblade and Babar. So we got a deep relationship with them.

HIT Entertainment, now owned by Fisher-Price, we're in discussion in about what more can we do with them. They've got a bunch of brands in the HIT purchase that we think we can help them reimagine. There could also be some service work coming from that relationship, so that's fantastic.

Brown Bag is this rock and roll Irish CG shop, and they've got a couple of shows, one on Disney Channel called Doc McStuffins and they did Octonauts also for Chorion. And they've typically been doing service work but now they're branching in their own IP. So we're in deep discussions and are working with them.

Televisa is the only game in town in Mexico. They're 90% of the kids share. We have an output deal with them -- by the way, Nelvana does -- and they're talking to us about doing something. Who am I forgetting as a highlight? I think that's it -- the Factory is a little shop. It's a stop-motion animation shop, so the old Bob the Builders that were kind of -- they're kind moving around, take a picture of every frame kind of thing. They're looking to build CG effects into their stop motion. So the long and the short of this is that we are building now a new wave of content that we think will be the future growth story on top of what we already have.

And these things take time. But one of the nice things about the success we've had so far with our Corus Advantage production in Nelvana is that success kind of begets success in this game. People want to come work with us. So we're having people approaching us. They'll fly in. We take them to the studio. We showcase Corus Quay. And it really helps us build these business relationships and secure new revenues for growth in the future.

So that's a little bit about what we're doing on co-production. So that will give you a sense of the growth in the Kids side on the co-pro content strategy bases.

There's also 2 other things I want to talk to you about in terms of growth strategies, and one is leveraging technology.

This is an area of Corus where we're all pretty familiar with. Digital revenue continues to grow at a rapid pace for us as we just begin to monetize in force Nelvana's 4,000 episodes. And we're at the forefront of every launch that Netflix does. So as much as we're competing with them vociferously in Canada we're their best partner in foreign markets, so it's a little bit of a sleeping with the enemy situation, but they're good friends of ours outside of Canada. And -- so we are always with them and everything. We're currently negotiating and/or concluding negotiations with a lot of big players such as iTunes, Xbox, Hulu and Blockbuster. But also as everybody imagines, there's a lot of regional players out there in South America or in Europe or in Asia. Everybody is getting into the over-the-top content distribution game, and they all have venture capital or private [ph] refinancing, so we're happy to license our content. These license deals are nonexclusive. They're typically 2-year deals, so you can license them over and over and over again, which is a fantastic business opportunity for us.

So what you see on this slide here is this is our forecast for 2013. -- I'm sorry, yes, a forecast, a budget, actually.

And it looks pretty onerous from a year-over-year growth point of view. But then if you look at 2012 versus 2011, well, it's no more onerous than the results of last year. So this is one where is it 9 or is it 19 or I don't know it's a big number, but we need to continue to focus and bear down on this and take advantage of this great and thriving and lucrative business. And the other piece of it is we've begun to do some licensing of our foreign language versions, but we just scratched the surface. So most of the revenues you're seeing there is English language version. So as we begin to deploy our vast library, which is versioned in many cases 30 different languages, we think we've got a lot of potential.

So in addition to co-productions and new technologies, how are we going to grow our Kids business internationally? Well, we're very excited about our strength and partnership with NBC Universal on KidsCo. KidsCo is now in 96 countries, 15 million homes and 18 languages. It's still a fledgling start up, let's be candid. But there is we believe huge potential here because we've recast the business model, NBC Universal is now 51%, so they're the control partner. We've increased our equity to 49%. NBC U's accountability is negotiating the distribution agreements around the world. So they're going out now with their -- with Syfy and all -- there is Bravo and all their channels globally and KidsCo within tow, which is great leverage for us to help get added distribution.

What's our role? Our role is the programming, the marketing. And we're also managing the broadcast operations and we migrate all of the operations of KidsCo. I'm looking at Eric Flaherty -- infrastructure team over here. He's doing, he's saying, "Oh my God, KidsCo." All those channels are going to come over here on January 8. So we'll be broadcasting this to Mauritius and Turkey and all these great countries, [indiscernible] which is another feather in the Corus Quay's cap.

There's a new management team in place based out of London, and they have a new vision and a new business plan, which we are endorsing and enthusiastic about. We've recently licensed some freshened library content. We used to have some pretty old stuff there, but now they've got the Babar series, Beyblade, Grossology, Future is Wild. We're trying to improve the offering to the consumers around the world. But this is a business we think has got huge potential long-term promise. The key way to think about this is we're doing licensing where we can get revenues in Europe. Europe is highly competitive from a kid's channel point of view, but there's still opportunities for us to displace other more expensive channels. And we're taking those revenues in a subscriber basis and we're investing them in dubs to go after emerging markets. And then we think this is an emerging market play. We don't think it's going to -- the win here is Latin America, Asia-Pacific, those markets. We may well do very well in Western Europe as well, but we think that there's a lot more blue ocean in those emerging markets.

So Corus TV, I think you will agree is doing it right. We've discuss our impressive track record of delivering steady growth in the earnings and revenue in good times and bad and indeed 8 years in a row. We do what we say we would do. In Canada, we're the only sort of pure play broadcaster remaining. We believe we have the best brands in the business that will pivot with the economy as it returns to growth. We're Canada's only media and entertainment company with a large and expanding international business, and we believe that we are Canada's best managed media company with the proven fiscal discipline to make smart growth investments, such as we've described today, and return back to our shareholders via dividends. I'd now like to conclude by inviting a little friend of mine to say a few last words.


Douglas D. Murphy

We've got Tom Peddie, our EVP and Chief Financial Officer to the stand.

Thomas C. Peddie

It's certainly going to be a hard act to follow with not having any video to support my financial presentation. But, first off, good morning. John started the day with his comments on the long-term outlook for Corus, and then you heard from Doug and Chris about the challenges and opportunities in television and radio, and why we're still excited about our portfolio of assets. You've also heard from Gary about the changes at the CRTC and its regulatory challenges in an ever-changing media landscape. And you heard from Scott on the power and the capability of our investment and infrastructure. And finally, you've heard from Kathleen about the power and the commitment of our people to drive growth and increase the shareholder value of Corus Entertainment.

I will now review our financial strength and share with you why we continue to believe Corus is one of the preeminent companies in the media sector. 2012 was a tough economic environment and although we missed our original EBITDA guidance, we maintained our excellent margins of 30% at radio, 40% at television and we delivered where it matters most, free cash flow of CAD $155 million, up from CAD $135 million last year. Just as a reminder, our definition of free cash flow is cash that is available after working capital and capital expenditures, so it is a true free cash flow number. As you can see, our 3-year compound annual growth rate on EBITDA has been 6% and revenue has been 5%. We are continuing to strengthen our balance sheet with our debt-to-EBITDA leverage dropping to 1.7x in 2012, and we expect that our leverage will continue to remain low, even with increased M&A activity.

As John mentioned in his comments, we have a CAD $500 million fixed rate financing in place with our first call option in February 2013 at 1.03%, and again, in 2014 at 1.01%. Current interest rates are at historic low levels and there is a significant demand for quality debt, like Corus, at very attractive rates. We are continuing to assess the economic benefits of calling those notes on the call date, as the potential interest savings is in the range of $12 million to $14 million per year. We will make a decision at the appropriate time based on our overall financial needs and our strategy. We should also mention that Corus continues to be rated as investment grade by DBRS and one notch down by Standard & Poor's. These agencies have clearly recognized our commitment to strong free cash flow and our low leverage.

Now, this chart builds on my earlier comments about record free cash flow and reinforces the sustainability of that cash flow. In 2009 and 2010, we invested significant capital in our new state-of-the-art facility, and you heard from Scott, earlier today, on how that investment in infrastructure is literally paying dividends to our shareholders. As you know, we have completed that investment and our annual capital expenditure program for the next few years will be in the $15 million range. We are, therefore, in the position to redeploy our cash for increased dividends, share buybacks, organic growth and tuck-in acquisitions without increasing our leverage.

Corus continues to return, on a historical basis, approximately 50% of our free cash flow to our shareholders. We do not have a specific target but our payout ratio has made Corus one of the best companies in Canada from a dividend point of view. Paying dividends to our shareholders is important to Corus, as is a dividend yield in excess of 4%. This makes us very attractive as an investment for those shareholders who are looking for yield and for growth. We will review our monthly dividend at our Annual General Meeting, which will be in Toronto next month or in January. And as mentioned, returning cash to our shareholders is a priority for Corus. However, it will be balanced by our need to invest and grow the business either organically or through M&A.

This chart shows that since 2009, Corus has delivered a total shareholder return in excess of 20%, significantly outperforming the TSX and the consumer discretionary index. We picked 2009 as the starting point as we were coming out of the recession that year, and unfortunately, the global economy has still not recovered, yet Corus was able to continue to deliver great value to our shareholders, with strong margins, earnings growth and excellent free cash flow.

As an investor, you have many choices as to where to invest your funds. Typically, the Street looks at a multiple of EBITDA. The multiple is based on the confidence that the company will continue to deliver solid financial results. However, we believe that the truest measure of shareholder value is sustainable free cash flow because it's the cash that you could return to your shareholders. In this chart, you can see that if Corus can continue to deliver free cash flow in excess of $140 million, Corus' true share value, at varying multiples of 14x to 18x, is $24 to $30. So if you believe in this financial model, you would not be surprised that, based on these financial fundamentals, we believe Corus is undervalued and continues to be a great investment with a bright future, just as Mike the Knight has already told you.

Let's now turn to our financial guidance for 2013. Providing financial guidance is always a challenge because it's based on your current view of the future, both from an economic and a competitive point of view. At Corus, we are in the business of selling advertising and we like to say that advertising is in the confidence business. Confidence changes daily, weekly, monthly and quarterly.

As we stand here today, as the economy is focused on the U.S. fiscal cliff, the troubles in Europe and the Middle East, and slower growth in Asia and Canada. However, at Corus, we have demonstrated our ability to grow in tough conditions, and you've seen that we some of the slides that Doug and Chris have put up, while we've been able to maintain our margins and our cash flow. As a result, we are providing EBITDA guidance, this year, of $293 million to $303 million.

You'll also notice that we have provided a target for free cash flow. Last year, our target was $125 million-plus and we delivered $155 million. So, therefore, you could say that we are very conservative or we're really good operators. However, we did have some one-time items -- one-time working capital items in last year's number, totaling about $17 million, which drove us to $155 million level. As you know, our free cash flow is dependent on how we manage our working capital and that is dependent on the timing of the programming investments to drive rating and increase revenues. As a result, our guidance for this year will be $140 million-plus.

So in conclusion, the message that we'd like to leave you with today is that Corus has a great portfolio of assets. We're powered by a strong management team, Corus is an excellent operator, delivering superior margins and a strong balance sheet with sustainable free cash flow. Corus clearly has the firepower to grow. And Corus can continue to deliver value to our shareholders through dividends, share buybacks, organic growth and strategic acquisitions.

That concludes our formal presentation this morning, and I will now turn the podium back to John for his closing comments and Q&A.

John M. Cassaday

Thank you, Tom, and thank you, all, for your patience here and on our webcast today. I just want to close with, really, 2 basic thoughts. One is just to suggest, perhaps, the headlines from today's presentation and then talk about a couple of themes that have emerged. In terms of headlines as it relates to Scott's presentation, clearly, competitive advantage as it relates to technology; Kathleen, headline, people are aligned and talented; Gary, headline, opportunity exists to shape the agenda; headline for Chris, radio is evolving, still relevant; headline from Doug, segment focus with great brands and the Corus Advantage; and the headline from Tom, continued growth in fiscal '13 and a renewed commitment to returning money to our shareholders.

As I think about the themes that emerged, for me, listening to this again today, pride. Certainly we feel it in the management team we have and in our ability to work together successfully for so many years. Pride in the engagement of our people and pride in the quality of the work that we're doing, and hopefully you sense that in the demonstration this morning.

The second theme still lots of big opportunities M&A being one, ABC Spark being another. Developing our talk radio stations, watching OWN continue to reach its potential, and the activity that we've been initiated in our new ventures.

The third theme is that this is a values-driven company with the 2 that we talked about, most specifically, today being accountability. We do what we say we'll do, and innovation, which you saw in the screen and hopefully in the demonstrations that we provided to each of you outside of the room.

The fourth theme is -- really revolves around partnerships. And one of the things that we consider to be a core competency of ours is our ability to work well with others, and that is attracting companies, globally, to work with us. NBC Universal, Doug talked about, we had a fifth year anniversary cocktail with our friends at Hearst earlier this week. It is a real source of competitive advantage for us and one that we think that we can continue to leverage going forward.

So, again, thank you for your participation in this. And now we'd like to open it up to you, to any questions that you have for me or any of my colleagues. We have some roving mics that we can make available to you. Also, before I forget, I would add, many of you mentioned to me, during the break, that you'd like to get a tour of the building. So we will have tour guides available after the presentation and we encourage, also, you to have another look at any of the exhibits that you didn't get a chance to see. So I just want to make sure I didn't forget about that. So any questions that anyone has? Please feel free to -- David?

David McFadgen - Cormark Securities Inc., Research Division

I was looking at the chart that you provided on the viewership or audience for the women channels, and I noticed that W's audience has been flat since 2008, but yet the advertising revenue continues to grow every year, in some cases by double digits. Obviously, you're getting price increases. I'm just wondering how long you can keep doing that. How sustainable is that?

John M. Cassaday

Well, you can't keep doing it very long, which is why we really put in place a major initiative, 2 years ago now, which we call W 2.0, and we realized that we had to go back and relook at how we were operating the business. Doug talked about one the big focal points, which was to rejuvenate our prime time schedule with our domestic content, our original programming. And that has resulted in a significant turnaround in the ratings in fiscal '12, the year we just finished. And that has continued again in fiscal '13. So, again, Doug made the point, a couple of times, that revenue follows ratings. Our ratings had been declining on W. We got that turned around again and we now feel that, with the momentum we have with some of these brands, which we're now extending, like Love It Or List It, which is now -- got a Vancouver extension; Come Dine with Me Canada, and again, another city extension. So these are brands that we think we can continue to grow and we're very confident that W's back on track and that, that revenue will continue to grow. We mentioned that, in Q1, our pacing, our women's network, revenue-wise, is again very strong. W and Oprah Winfrey are both doing very well in Q1. W movies is another big opportunity we have. We're really working hard to try to increase the distribution of that particular service.

Chris Pandoff

We sell our women's vertical as a grouping of channels, right? So we sell W, W Movies, Oprah Winfrey and Cosmo, en masse. And then some buyers will want to buy isolation around a certain show or a certain network. Other buyers set their buys around the vertical. So part of the art and science of maximizing revenue and profits is what we call yield management, and how to work the inventory against the demands of the client. We're very good at that. This is where you come up in front of these presentations. So you got to drive the audience, and once you have the audience then you go to town on cutting your deals and then you make sure that you manage your inventory to the best of your ability. So John's answer was right on, but I just want to also add that we've also done a really good job maximizing inventory for maximum yield.

Unknown Analyst

Great, thanks John. I guess, first off, on the M&A opportunity. How should we think about where Corus is going to go in terms of maximum leverage, dependent on what those opportunities are out there this year? And if those don't emerge, how would you think about redeploying free cash flow back to shareholders in terms of those priorities?

John M. Cassaday

I think, regardless of what happens on the M&A side, the general framework that we talked about for redeploying cash flow back to the shareholders remains, as Tom suggested. So about 50% to dividends and about 60% of free cash flow, overall, in a combination of dividends and share buybacks. On the M&A side, obviously it's impossible to predict, with any certainty, what will happen. But we do feel that there will be some fallout coming out of the Bell-Astral transaction, as they reconfigure their proposal or their applications to the CRTC. I suspect that, sometime within the next 60 days, there will be good visibility as to what, if any, assets are available or what they choose to shake out of the bag within their existing assets or retain assets that they desire coming out of Astral. So we're looking at that. We are also -- feel somewhat confident that the industry is realizing that this is a good time to sort of redefine or reshape the industry. There are a lot of joint venture pieces that are out there. There are assets that can potentially be more leverage-able in the hands of others. So we've been talking, for years, about possibility of swaps as a way of increasing shareholder value for everyone. We're finding that there is greater receptivity to that notion, today, than there has been historically. I think, really, as people as look at this particular opportunity, in time, as a way of kind of reshaping with. I think there's also going to be, potentially, some radio.

Unknown Attendee

And then 2 quick follow-ups. One for Chris, one for Doug. Chris, if you can maybe talk to just the timing of the turnaround, on Edmonton and Winnipeg, if you need ratings this year. And then for Doug, if you could talk maybe on TV with digital. What that deployment looks like to the BDUs. That revenue opportunity talks largely about the outside-Canada opportunity.

Chris Pandoff

Sure. First on the radio side. Actually, coincidentally enough, this morning the ratings were released for the fall, in Diary, which -- Winnipeg is a Diary market and Fresh had a really nice strong move upwards, with females 25-54. So, probably middle of the pack now. Not, certainly, our final resting place but we're well above where we were yesterday at this time. And in terms of Edmonton, Edmonton will take a little bit longer. We've seen the first weeks -- first 8 weeks of PPM. I would say not before the -- our 2 book [ph] which would be end of June when it gets released on Edmonton. So, most likely, the revenue uptick will be last quarter of '13 going in to the first quarter of '14.

Douglas D. Murphy

Just so I reframe your question. So the question is, looking in Canada, what's the digital opportunity with the BDU ecosystem? We think it's pretty promising. But we've been kind of cutting our teeth on, what the product offerings are for internationally, had a look at pricing, had look at deal structures. So that's one of our opportunities in the coming year. So won't put a number on it, but I would, directionally, tell you that it's part of my comment about, is it 9 or is it 19? I think it's a big opportunity for us. I think it's a 2-year, probably, rollout to be honest.

John M. Cassaday

Any other questions or comments? Yes? Talked about day 1, you're one of those, right?

Unknown Attendee

I am, John, it's been thrilling.

John M. Cassaday

Good. Maybe you want to let us see your first report on -- I'd love to see that again, go back, if still have your first report on Corus back in...

Unknown Attendee

I'm sure it's there somewhere. I have it in PDF, but we'll dig it out. No, it's been a great ride. Congratulations. I notice, in terms of your overall strategic comments, nowhere did you talk about pursuing another genre, other than women's and kids. Can you talk about that? And just regarding some more specific M&A opportunities. Do you have a rofer [ph], on the other half of TELETOON? And do you have any contractual advantages, if I can put it that way, with regard to any Pay assets or Astral Pay assets in your assets? Two totally separate totally separate legal entities, and wouldn't have any advantages on those.

John M. Cassaday

Let me comment on the second question first. Yes, we do have certain provisions within the shareholders agreement that give a certain rights in the event that TELETOON were to become an asset that was for sale. As it relates to Pay, we have no contractual rights. Obviously, we've a great relationship in working together with Astral. If you were to ask me, today, is there one English asset that is most strategically important, that I would think they would never sell under any circumstance. My guess is that Bell will do everything in their power to Pay TV asset. We do believe that there are opportunities for us to work even more closely together, in the future, to enhance the business system. I think we could do more marketing together. I think we could do even a better job on the distribution side together, taking advantage of opportunities like TV Everywhere, with all of our customers. I think it could be facilitated with even a closer relationship between whoever ends up owning that asset. So we think the Pay business is really a great business. We've said that for quite a number of years but we don't believe, at this point in time, that, that's going to be an opportunity for us to take advantage of. As it relates to your first question about, potentially, new verticals. One that we were going to put into the agenda today, and we decided not to, simply because of time, was Telelatino. And what we're doing with Telelatino -- it's is a little -- let's call it a little bit of a crown jewel, if you will. It's a business that we control 53% of. And we see an opportunity to take advantage of an in-culture, potentially, growth opportunity for the Hispanic lifestyle. So what we've done now is we've flanked Telelatino with 2 services. One is an all-Spanish service, the other is an all-Italian service media set and TLN en Español, which gives us the opportunity to put more in-culture programming on TLN. So if any of you watched the service recently, you'll see a lot of Latin lifestyle programming in English, a lot of Latin in movies in English. And by Latin I mean programs featuring Latin protagonists. So we think that's the big opportunity there. We also have a couple of sports licenses through TLN, which would allow us to take advantage, in English, of Latin sporting properties. And that's another potential play but it would be done, in all likelihood, through that particular infrastructure, in those license. But we do see that as a significant growth opportunity because we think that this whole Latin culture is going to sweep America. We're seeing signs of significant growth but not to the extent that it would even come close just to matching just the feeling that people have about Latin music and Latin lifestyle. So I think that's a good play for it.

Unknown Attendee

With respect to the international, and the content creation and the partnerships you're doing. Is that somewhere that you want to invest, potentially, and go beyond commercial relationships and potentially look at buying some assets internationally?

John M. Cassaday

We did a lot of work this year, on trying to understand the global OTT marketplace. We thought there might be an opportunity to go direct with kid flicks. We were quite surprised at just how rapidly that businesses has developed. So there's a huge opportunity to begin to deploy our content amongst a wide variety of OTT players globally. And as Doug said, we're just know, potentially, kind of restoring all of the language rights within our library. So we've been selling English-language rights, but we've got Portuguese, Spanish, Italian, French. That represents a big opportunity. And then, of course, the focus that we put on KidsCo, today, is just an indication of what we think we can do with that channel now that we have and NBC fully engaged. With them as a minority player I think it was something that they did not have a whole lot of interest in developing. We were happy to see them at 51 and us at 49 to ensure that we got their full attention. So that would be the biggest strategic relationship opportunity that we see.

Unknown Executive

The other areas that we are working on is, obviously, Dreamworks bought Classic Media. A fairly richly-valued transaction. Multiples that have occurred, most recently, in the consolidation of content companies are fairly impressive. Which, I think, reflects well on the assets we're building on Nelvana. There are opportunities there for strategic acquisitions, small ones, on IP, when they show up. And so we're -- Nelvana Enterprises is a team that does their -- looking internationally, are always on the hunt for book property or some property -- prior to Surgical Strike [ph] or some other animation house that's got a great asset we like. So those are sort of tuck-ins in our vernacular, but they're clearly on our list and looking for those.

Unknown Attendee

Good morning. Congratulations on your financial success, and also, congratulations on all the fine work you're doing in the area of philanthropy. I applaud you for that. I have a few questions. The first question is, how should we think about the growth profile of your organization going forward? In terms of the blend between organic growth and external growth, mergers and acquisitions. And also, in the area of acquisitions, what business opportunities exist between yourselves and Shaw, in terms asset swap possibilities there? Another question I have relates to a previous question on leverage. You've talked about the opportunity to call your bond offering early, to harvest the benefit of $12 million to $14 million in savings. Currently, you have a split rated organization. S&P still has you in non-investment grade. How are you focused on maintaining credit metrics to eventually see that rating go up to investment-grade, to further yourself along the path of products, people, and capital, and benefiting from a broader pool of capital, and obviously cost savings?

John M. Cassaday

Okay. On the latter one, Tom talked about our ability to continue to generate significant free cash flow, and as a result, our belief that we can maintain our leverage at a comfortable level. Notwithstanding our commitment to do tuck-in acquisitions and invest in programming. We think it's highly unlikely that we will be investment-grade anytime soon. Notwithstanding the quality of our assets and the cash flow we're generating. Simply because the rating agencies are pointing to potentially a size deficiency. They would like to see us quite a bit bigger than we are, potentially $1 billion bigger than we are, before we were investment-grade. On the part of at least 2 of the agencies. As Tom said, one already has us at that particular rating. Notwithstanding that, we're hopeful, confident, that we will be able to get a very attractive rate on a high-yield bond. If, in fact, we move ahead on this us, as Tom has suggested, we're looking at, point in time. In terms of the Shaw relationship. We are structurally separate companies with interests that differ on the part of our shareholder groups. There is some cross share ownership between the 2 companies but there's none, actually, between Shaw Communications and Corus. So the family has an interest in both companies. So what we have to, obviously, be very conscious of is that nothing in either of us do compromises the interest of any particular shareholder group. So we have looked at some things. So, for example, we have, to good effect, looked that some program buying in concert. That's been effective, particularly as it relates to movies. We've also engaged in some sharing of contra-advertising. We have a radio network that can be very supportive of their local TV stations, they have local TV stations that can be very supportive of our local radio stations. We've had some good success in newsgathering and the cross-promotion of personalities on our respective services. So those are the kinds of things that we're doing right now. I think you'd characterize them as a around-the-edges. From a technology point of view, we've been very active partners in the development of Shaw Go and the plant that we have here has, I think, significant advantages for them a number of fronts. And I think that will be explored in more detail as we move forward. In terms of portfolio mix. We talked a little bit about what we think the company is capable of doing. But, certainly, we believe that both our television and radio assets are well positioned. We think specialty segment is an area of good growth. We think radio is an area of growth and we think both of those have the potential of growing, at least, a point above GDP. So, depending on what your view is about GDP, I think adding 100 basis points above that should give you some sense of what we think our baseline organic growth potential is going forward. And then we said, longer-term, that goal of 5% to 6% revenue growth and 8% to 10% earnings growth are targets that, in our strategic plan, we've identified for our board as targets that we think are still achievable.

Unknown Attendee

Two questions if I may, on the digital side. Right now with the OTTP on a nonexclusive basis, how long a window do you see there before it goes to exclusivity? And somewhat related, can you discuss opportunities such as a Google channel down the road?

John M. Cassaday

On what channel?

Unknown Attendee

Google channel, down the road, on digital?

John M. Cassaday

Yes. Generally speaking, I think we're going to hold out as long as humanly as possible, to contractual relationships that are nonexclusive. I think there's too much uncertainty as to how the market's going to evolve and who the dominant players are going to be. We really don't want to get ourselves into a situation where we have long-term exclusive relationships. And quite frankly, the way the market has evolved, it's been very receptive to this, there's enough content to be able to pick and choose, that people can differentiate themselves quite well. As it relates to the possibility of a Google channel, is that what you're suggesting? I think we've all read, with interest, the activities that Google and Apple are involved in. But I think the view that we've expressed, quite consistently for so many years, that protecting the ecosystems is so important to us as an industry, that -- I don't think there's going to be a big movement away from the traditional carriers that represents such a substantial portion of the revenue base for major media companies in North America, over the Google or Apple, in a way that disrupts that system anytime soon.

I see no more questions. We were really conscious of trying to get you all back to whatever you had to do by 12. We thank you, once again, for coming today. Thank you for your interest in the company, and again, we invite any of you, we still have the time, that want to take advantage of a tour. That will be arranged for you outside, and we hope you enjoy it. Bye for now.

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