There’s a sense of unease around Canadian entertainment giant Corus Entertainment (CJREF) today as the company announced it may be in financial trouble due to the loss of content from Warner Bros Discovery (WBD). The news hit shareholders like a bus had dropped off low-rail, with Corus shares falling more than 23% in morning trading on Tuesday.
The news for Chorus was a disaster: advertising revenues were apparently declining, the company was found to be soon in breach of its debt covenants, and the company was planning further “restructuring” measures to combat the current storm of losses that had temporarily sent Chorus shares to an all-time low.
Corus even issued a “going concern” warning after reporting its most recent quarterly earnings, which likely won’t help given the loss of several Warner properties, including The Food Network and HGTV (both of which are set to move to Rogers Communications (RCI) in January), though that was unlikely to improve anyway given the fragile state of linear TV overall.
“Restructuring” means “large-scale staff reductions”
Such a warning means many people will lose their jobs. In fact, Corus plans to lay off another 300 employees over the next six weeks, bringing the total to about 800, or a quarter of its workforce. Reports say this will result in the closure of two AM radio stations, one in Edmonton and one in Vancouver.
Again, given the state of broadcast TV and linear cable these days, it’s no surprise that these issues arise. Always disappointing, but never surprising. From Fox (FOXA) to Paramount (PARA), the decline of TV advertising is well-known and widely recognized. Corus is no exception in this regard.
Is Corus a good stock to buy?
Turning to Wall Street, analysts have given CJREF stock a Moderate Sell consensus rating, based on 3 Holds and 3 Sells in the past three months, as shown in the chart below: The average price target for CJREF is $0.22 per share, indicating an upside potential of 158.82%, after the stock price fell 92.48% over the past year.
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