Corus Entertainment Inc. (OTCPK:CJREF) Q2 2022 Results Conference Call April 8, 2022 8:00 AM ET
Company Participants
Doug Murphy – President, CEO
John Gossling – EVP, CFO
Conference Call Participants
Adam Shine – National Bank Financial
Aravinda Galappatthige – Canaccord Genuity
Drew McReynolds – RBC Capital Markets
Jeff Fan – Scotiabank
Vince Valentini – TD Securities
David McFadgen – Cormark Securities
Operator
Good morning. My name is Serge, and I’ll be your conference operator today. At this time, I would like to welcome everyone to Corus Entertainment Second Quarter 2022 Analyst and Investor Conference Call. [Operator Instructions] As a reminder, this call is being recorded.
I will now turn the call over to Mr. Doug Murphy, President and CEO of Corus Entertainment. Mr. Murphy, you may begin your conference.
Doug Murphy
Thank you, operator, and good morning, everyone. Welcome to Corus Entertainment’s Fiscal 2022 Second Quarter Earnings Call. I’m Doug Murphy, and joining me this morning is John Gossling, Executive Vice President and Chief Financial Officer.
Before I read the cautionary statement, I’d like to remind everyone that we have slides to accompany today’s call. You can find them on our website at www.corusent.com under the Investor Relations Events and Presentations section.
Now let’s move to the standard cautionary statement found on Slide 2. We note that forward-looking statements may be made during this call. Actual results could differ materially from forecasts, projections or conclusions in these statements. We would also like to remind those on our call today, in addition to disclosing results in accordance with IFRS, Corus also provides supplementary non-IFRS or non-GAAP measures as a method of evaluating the company’s performance and to provide a better understanding of how management views the company’s performance.
Today, we will be referring to certain non-GAAP measures in our remarks. Additional information on these non-GAAP financial measures, the company’s reported results and factors and assumptions related to forward-looking information can be found in Corus’ second quarter 2020 report to shareholders and the 2021 annual report which can be found on SEDAR or in the Investor Relations Financial Reports section of our website.
Good morning, everyone. I will now start on Slide 3. I am pleased that we delivered consolidated revenue growth in the second quarter, albeit modest as we encountered the impact of the Omicron variant on the economy and advertising investment accordingly. These results once again demonstrate the disciplined implementation of our strategic plan. Our team is delivering revenue diversity, building a portfolio of highly complementary businesses that continue to increase the resiliency of our business model. Above and beneath the surface, there is lots we are excited about.
Let me take a moment to unpack the sum of the parts. We are transforming how we sell television by providing improved targeting and automation. In Q2, we saw significant gains in audience segment selling as users increasingly adopt linear optimization strategies and leverage the efficiency of our automated since platform and their advertising buys. We are innovating as we seek to put more content in more places, increasing audience impressions across streaming platforms and driving impressive revenue growth, witnessed the subscriber revenue success we are having with a headline growth number of 7% in the quarter.
Our content business is growing meaningfully, and we anticipate strong revenue gains in the back half of our fiscal year. We have just recently secured landmark sales for our original content in the international market as evidenced by our strategic output deal with Hulu. Importantly, we significantly improved our capital structure and financial flexibility with the issuance of an additional $250 million of senior unsecured notes, and the extension of our bank credit facility for 5 years.
Moving to Slide 4. In our second quarter, we delivered modest growth in consolidated revenue. The Omicron variant and related restrictions impacted the momentum of certain advertising categories. In this context, we delivered the following results: consolidated revenues of $362 million, consolidated segment profit of $87 million and free cash flow of $88 million. The Canadian economy appears to be slowly recovering from the pandemic, but visibility in the advertising business remains limited. That said, we are starting to see signs of economic activity firming up, commensurate with the lifting of pandemic-related restrictions in recent weeks and with the arrival of spring.
Over to Slide 5. Advertising is the biggest business in our portfolio, and Corus is in the lead position as we transform how television is sold. Once again, this is evidenced in our results. Our 2 new produced 6 quarters ago to track our progress are trending impressively up and to the right. In fact, our second quarter represents the high watermark since we began sharing these metrics with you. Indeed, there are many green shoots springing up all over our portfolio as advertisers increasingly embrace our suite of ad tech offerings across our video, digital and audio platforms.
I’ve spoken in the past about Canada’s unique market structure and the industry-wide collaboration that meaningfully benefits our audiences and advertisers alike. Here at Corus, agencies and advertisers are increasingly optimizing their buys, integrating audience segment selling using the common industry standards and/or their own custom segments for their campaigns. Sinch has hit its stride and is scaling impressively, enabling advertisers to leverage the self-service automation platform to achieve better targeting.
In Q2, optimized advertising revenue reached our highest result to date at 42% of total advertising revenue. This incredible growth of 49% over last year demonstrates that we are providing a compelling alternative as we transform how we sell television. Digital advertising is another bright spot in our portfolio, bolstered by investments in video streaming platforms.
Our launch of 2 new initiatives in recent years, STACKTV and the Global TV app leverage the additional content rights we have secured to increase value for subscribers, while, at the same time, creating new audience impressions as we drive digital advertising and subscriber revenue growth. More views means more inventory that we can monetize through direct and programmatic selling as well as dynamic ad insertion within video-on-demand viewing.
New platform revenue, which captures digital advertising and subscriber revenue growth, represented an all-time high of over 10% of our total television advertising and subscriber revenue, which is an increase of 38% over the prior year quarter. John will provide more details on this later in today’s call.
Moving to Slide 6 to discuss our resilient recurring annual subscriber revenue. The standout portfolio highlight for Q2 is the 7% growth in subscriber revenue. This is a record result, representing the highest quarter of subscriber revenue growth since we acquired Shaw Media in 2016. A key contributor to our resiliency is the tremendous appeal of STACKTV.
In February, we achieved a major milestone in our journey to reaggregate our channels business onto streaming platforms with the launch of STACKTV on Roger’s Ignite TV and Ignite SmartStream. This represents the first time that STACKTV is available to the statement a subscriber through a traditional distribution partner in Canada, and, as I mentioned on our last call, this is a game changer. We have a new exclusive content.
The recent addition of the Lifetime channel is a good example of how we can provide even more value in pursuit of our goal of 1 million paying STACKTV subscribers. Our STACKTV and Nick Plus subscriber count is closing in on 750,000 paying subs and contributing to the expected growth to more than $500 million of annual recurring subscriber revenue at Corus this fiscal year.
On to Slide 7. Corus remains Canada’s favorite home of leading entertainment and lifestyle programming, with great content available to our audiences across our traditional networks, STACKTV and other streaming platforms such as the Global TV app. Our spring schedule on Global is anchored by the return of fall’s number 1 survivor now in its 402nd season. Season 10 of locally produced perennial fan favorite, Big Brother Canada and the return of this fall’s number 2 show 911.
Our specialty networks feature a compelling spring lineup and popular Corus Studios series, including the return of Canada’s number 1 specialty series, Island Brian, now it’s fourth season; season 2 of core Studio’s megahit rock solid builds returning earlier this year as the number number 1 show on HGTV; season 3 of Scott’s Vacation House rules and his new spin-off, Scott’s Own Vacation House; Wall of Bakers, a new spin-off competition series from Wall of Chefs and the premier of renovation series got job.
Canadian fans love the characters and the storytelling that come from our Chorus Lifestyle originals. Corus Studios shows are huge drivers for some of our largest specialty networks, comprising 9 of our top 20 shows on HDTV so far this spring. Many of course, Studio’s top range originals are also performing well on STACKTV proving to be key audience and engagement drivers.
Over to Slide 8. We are always looking to optimize our portfolio of channels. Our most recent example is the Canadian launch of Magnolia Network, a rebrand of our DIY channel concurrent with the launch of this new channel in the U.S. Magnolia’s network’s exclusive content across food, home and design pairs perfectly with Corus suite of lifestyle programming, further enhancing our leadership in factual reality content. Corus exclusively debuted Magnolia Network on March 28, 2022, becoming the first broadcaster outside of the U.S. to launch the channel.
Moving to Slide 9. Our content portfolio delivered strong double-digit growth in fiscal 2021, and we expect to return to these trends in the second half of this fiscal year and beyond. Corus Studios is one of the businesses within our portfolio of businesses that is driving significant content revenue growth. This week, we announced our largest strategic output deal ever between Corus Studios and Hulu. Building on Corus Studio’s previously announced sale of 200 episodes last year, this new multiyear agreement Hulu acquire more than 400 episodes of our lifestyle renovation unscripted and crime content, including Rock Solid Builds, Wall of Chefs, Big Food Bucket List and the U.S. presale of Pamela’s Garden of Eden starring iconic Pamela Anderson. Importantly, this output deal sets the table for future revenue growth with the first look right to acquire shows Corus Studios will produce in the years ahead.
At Nelvana, we are investing in development in our coproduction frameworks and in the expansion of our production slate. We are thrilled with all of our core production frameworks, but I wanted to take just a moment to highlight our Nelvana and Discovery Kids joint venture, Red knot.
In a few short years, we have created 3 animated series, which we broadcast in Canada and Latin America and have sold them around the world. Two seasons of Red knot’s Dog and Pony are now delivered and the newest show Super Wish as well as Season 3 of popular 3D animated series, Agent Binky: Pets of the Universe, are now in production. And finally, in February, we announced the acquisition of a majority interest in Aircraft Pictures. We expect this to create new revenue opportunities in the international marketplace, supporting our growth ambitions and adding diversity and content genres to our slate.
With that, I will now turn it over to John to discuss the Q2 results.
John Gossling
Great. Thanks, Doug. Good morning, everyone. I’m starting on Slide 10. Over the past year, we have purposefully taken steps to retool and strengthen our capital structure. At the end of the second quarter last year, the weighted average maturity on our debt was just over 2.5 years. We saw an attractive window to introduce long-term fixed rate debt into our mix last May, and that resulted in the issue of $500 million of 5% senior unsecured notes due 2028.
We also extended our bank credit facility at that time. At the end of Q2 this year, we successfully completed a subsequent issue of CAD 250 million of 6% senior unsecured notes due 2030 and another extension of the bank facility to March 2027. The weighted average maturity on our debt has improved significantly to 6 years, providing us with a 60-month runway to our first maturity date in 2027.
We are pleased that investors recognize that significant long-term value Corus is creating as evidenced by this most recent note issue. We have a solid foundation as we make smart investments in our business to drive the advancement of our strategic plan and priorities. This quarter, we delivered significant free cash flow of $88 million.
Net debt to segment profit ticked up slightly to 2.70x at February 28, 2022, up from 2.66x at the end of Q1. Our goal to drive net debt to segment profit below 2.5x remains in focus as we pay down debt and to create additional financial flexibility. In fact, we’ve paid down almost $700 million of total debt since the changes to our capital allocation policy took effect in September of 2018.
In January, we commenced a normal Corus issuer bid for up to 5% of our public float as we see this as an attractive investment of our free cash flow. So far, we have repurchased nearly 1.8 million shares, with 1.25 million of those repurchased in Q2. We also issued a press release this morning declaring our June 2022 quarterly dividend of $0.06 per share for Class B shareholders, once again, providing a very compelling dividend yield of 5.1%. We are investing in the business, delivering and providing attractive returns to shareholders.
Now over to Slide 11. On our Q1 call, we outlined our expectations of modest consolidated revenue growth for the second quarter. We are pleased to have delivered consolidated revenue of $362 million in Q2, and that’s up 1% over the prior year quarter in this very challenging environment.
Consolidated segment profit was $87 million for the quarter. And as a reminder, in the prior year quarter, we benefited from approximately $12 million in wage subsidy and regulatory fee relief that did not recur this year. Consolidated segment profit margins were 24% for the quarter and consolidated net income attributable to shareholders for the quarter was $16 million or $0.08 per share.
Now let’s turn to our TV results for the second quarter on Slide number 12. Overall, TV segment revenues of $340 million for the quarter were consistent with the prior year, reflecting the significant year-over-year uptake of our streaming services, but offset by a challenging advertising market and a timing-related revenue decline in our content business.
TV advertising revenue was relatively consistent with the slight decline being a result of the reintroduction of temporary pandemic-related restrictions, ongoing supply chain issues and the impact of tent-pole sporting events aired on competitor networks. As we mentioned on our last call, we had an exceptionally strong December in 2020 and as advertisers heard to deploy unspent marketing budgets for calendar 2020 following a delayed fall schedule that year.
Over the last month, we have seen the easing of pandemic-related restrictions across the country and we are experiencing better momentum in advertising sales moving into Q3. Subscriber revenue was up an impressive 7% in the quarter compared to the prior year, and that was driven mainly by increased demand for STACKTV and Nick Plus as well as retroactive adjustments from BDU distribution agreement renewals.
We are seeing clear benefits from the reaggregation of our channels business on streaming platforms as subscribers discovered the appeal of our innovative live and on-demand approach. Merchandising, distribution and other revenue of $22 million was lower compared to Q2 last year, mainly due to $7 million in sales to 2 large streaming services in the prior year. We expect a significant improvement in this revenue line in our second half, as Doug outlined earlier.
Direct cost of sales was up 8%. On our last call, we highlighted the programming costs were expected to grow in the high single digits to low-double-digit percentage range in the second quarter, and this is mainly a result of a return to normal deliveries from our U.S. content partners and a required catch-up CPE investment according to the CRTC decision last summer. We’re advancing our plan to deploy these required investments in Canadian programming to accelerate our own content aspirations and related sales into the international marketplace.
Our G&A expenses were up 20% from the prior year quarter. And as a reminder, in Q2 last year, in TV, we recorded $4 million of Federal wage subsidy and $7 million in regulatory fee relief. In addition, in the current year quarter, G&A mainly reflects higher marketing costs to support the growth of STACKTV and trademark fees. Overall, TV segment profit was down 22% in the second quarter, primarily resulting from the Federal wage subsidy and relief fund regulatory fees in Q2 and last year and the impact of a normalized programming schedule. TV segment profit margins were 27% in the current year quarter compared to 35% a year ago.
Now as detailed on Slide 13, and outlined by Doug earlier, we are, once again, delivering significant growth in our new performance metrics. This quarter, we advanced our growth initiatives in streaming and digital video advertising as we put more content in more places and continue to gain traction on advanced advertising initiatives as we transform the way we sell television.
New platform revenue includes incremental subscriber revenue from streaming initiatives and advertising revenue from digital video platforms. New platform revenue was over 10% or $33 million of total TV advertising and subscriber revenues in the second quarter, and that’s up 38% or $9 million from last year. These excellent results reflect the disciplined execution of our strategic plan as we deploy our expanded content rights in new places and connect with audiences in new ways to drive additional sources of revenue.
Optimized advertising revenue was up significantly in Q2, representing 42% or $77 million of total advertising revenue. This is an increase of 49% or $25 million from the prior year quarter, once again reflecting our leadership in the transformation of how television advertising is sold. Included in this metric, our revenues contributed from audience segment selling as well as from Sinch, which is gaining significant traction.
I’d like to turn to our radio results now as outlined on Slide 14. Radio segue revenues were up 8% compared to the second quarter last year, reflecting improvement across certain key advertising categories as the economy reopens, but offset by ongoing supply chain issues for others. We’re encouraged by these trends heading into our seasonally stronger spring period. Radio segment profit decreased to $0.1 million in the quarter, primarily as a result of the return of sports programming costs in the current year and the nonrecurring federal wage subsidy and CRTC released in the prior year quarter.
And with that, I will turn it back to Doug.
Doug Murphy
Thank you, John. Finally, over to Slide 15. On today’s call, we have purposely wanted to spotlight the very complementary and synergistic portfolio of businesses at Corus that serve to improve the resiliency of our operating model with growing, diverse sources of revenue. We have described how the sum of these parts are working in concert and will continue to do so to deliver consolidated revenue growth in the years ahead. This portfolio of businesses is playing an important role in advancing our strategic plan and priorities to transform how television is sold, to put more content in more places and to grow our studio content business internationally.
Six quarters ago, we introduced our new revenue metrics to hold us accountable to this growth narrative, both of which are now at all-time highs, demonstrating the successful execution of our strategic plan. Our leadership and optimized advertising positions Corus for the future as it differentiates us in the industry and enables us to provide our advertisers leading, targeting and automation to improve the returns on their marketing investments. STACKTV, launched less than 3 years ago, is an outstanding example of our team’s strategic agility and is poised to enhance value for our subscribers with more content as we pursue the reaggregation of the channels business on our streaming platforms.
We expect our content business to return to stronger growth trend in the coming quarters, as evidenced by recent content licensing sales and strategic output deals. Production is in full swing at all our major studios south of the border, and we are looking forward to unveiling our content lineup for the new broadcast year during our June upfront.
And finally, our strengthened capital structure provides improved financial flexibility to pursue our strategic plan and its priorities. I would like to take a moment to thank our talented team at Corus for all their efforts and contributions during the COVID-19 pandemic as we advance our strategic plan and priorities, we said that we would emerge from the pandemic on a stronger strategic and financial footing, and we have done just that. We look forward to updating you on our progress in the quarters ahead.
Thank you, and back to you, operator.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from David McFadgen from Cormark Securities.
David McFadgen
A couple of questions. Maybe you could just comment on how the TV ad market or your TV ad revenue is trending so far in Q3, given years like we’re heading back somewhat back to normal? And then secondly, can you quantify what the retroactive subscriber payments were in the quarter?
Doug Murphy
Thanks, David. I’ll take the first one. We definitely saw a cooling in Q2, as evidenced by the numbers we just shared with you. But in the last 3 weeks, I would say, I think it’s concurrent with warmer weather as Canadians try to get outside and also the lifting of the restrictions, we have seen some firming. The big categories that are kind of leading the way in this firming are retail financial services, entertainment and communication, but we still haven’t seen the recovery of some of the categories that have been relatively dormant now for extended periods of time, including automotive and health and beauty, makeup, et cetera, sales remains down pretty significantly. We also add direct-to-consumer. There was a bit of a flurry of travel as people wanted to get away for their March break, but there’s a lot of business on the direct-to-consumer e-commerce platforms that transact accommodations, travel, a couple of packages interfere that we’re still waiting to come back and full forth. So that there’s a little color on the categories, David.
John Gossling
David, on your subscriber revenue question, the normalized number, the 7% reported, if we take out the adjustments for the retro payments, and there was a little bit actually last year, too, that growth is 4% in Q2.
David McFadgen
Okay. And then just on the odds, if I can just push it a little bit. When you say firming up, does that mean that it’s growing? Or still down, maybe just less?
Doug Murphy
I would say it’s looking like it’s beginning to kind of grow. We definitely are optimistic that we should continue to have a bit of a momentum shift. But this pandemic has given us a whole bunch of head fakes, hasn’t it? So we’re just being, I think, appropriately measured in our comments.
David McFadgen
Okay. And then I noticed that you added lifetime to the STACKTV bundle. Does that result in incremental revenue for you given you now have additional channel there?
Doug Murphy
It’s helpful basically in the whole mechanics of churn management and acquisition. We have a whole bunch of work we’re doing right now on new iterations of our offering on STACK, both in terms of content and channels. So I think you can expect to see more interesting plays in the coming quarters. STACKTV is a real focus for our company as we discussed now for a number of quarters. And the addition of Lifetime, I think, is but 1 example of more to come in terms of how we’re going to improve the value proposition of that service.
Operator
Adam Shine, National Bank Financial.
Adam Shine
Maybe 1 for you, Doug. Just on the Rogers stack deal. It’s been, I guess, now a couple of months. Can you talk about specific traction there? I know you don’t necessarily want to talk too much about a specific contract. But to the extent that you’re seeing any traction in that new distribution outlet?
Doug Murphy
Yes. I would just say it’s very, very early, Adam. And at this point in time, I would characterize it as sort of a soft launch. There is more pressing priorities, Rogers at the moment. So our teams are working together to kind of spin up sort of more of a campaign in the coming quarters, and that’s going to be a priority of ours. But I think, at the moment, we’re just in the soft launch phase.
Adam Shine
Okay. Fair enough. And any particular comment on pricing? I mean, it’s held notwithstanding occasional appropriate promotion activity, and I know there’s some nuances in terms of how the Rogers pricing is subject to an Ignite TV customer, but anything to add on the pricing front?
Doug Murphy
No, not really. We think that STACK provides a compelling value as entertainment and lifestyle programming bundle, both with live viewing and full in-season stacks for binge viewing and that is part of the compelling proposition that has resulted in such an impressive new business for us.
Adam Shine
Okay. And maybe just for you, John. Just in terms of the cash flow, free cash flow was particularly strong in the Q2, measured up pretty well against last year. Obviously, you do have the evolving programming spend, and I think you noted the fact that you might make some moves in the H2, whether it’s catch-up or just coping with the catch-up CanCon dynamic. Can you speak at all to any particular trends and/or perhaps the opportunity where, once again, as per last year, you might actually end up spending a little bit less than otherwise expected?
John Gossling
Yes. It’s a good point. I think you’ve hit it actually. If you look at our year-to-date even on programming, so if you compare what the amortization has been through segment profit versus what the cash has been, there’s quite a difference there with the cash running quite a bit lower. That’s not normal in any year. And certainly, given that we got the CP catch up coming at us, I think that, that’s going to put a fair bit of pressure in the back half on the programming cash. So at the very least, I would expect us to catch up where [more] cash would typically be pretty close to the same. And then even a little bit more perhaps as Canadian production starts to really roll out really starting now. So it’s definitely timing related. And I think we’ve seen a good benefit so far in the first half, but that’s not going to continue in the second half.
Operator
Vince Valentini, TD Securities.
Vince Valentini
Let me start with the composition of STACK that you’ve been talking about a bit. you’ve added Magnolia on the linear side. Despite Discovery Plus being offered in Canada, you seem to have access to a lot of their shows on other channels on STACK. I’m just wondering technically the Magnolia deal, are you allowed to add to stack in the future if you decide that’s a good addition?
Doug Murphy
I’d just say, Vince, without getting into the specifics of our individual channel deals that our discovery deal is multifaceted, multiyear and pretty comprehensive in terms of our ability and flexibility to take the content and put it on various platforms. Discovery Plus is obviously their direct-to-consumer product in this market, but we have access to the vast majority of their content on the platforms that we choose to exploit it on. And we will consider how and what to add the STACKTV in the coming quarters based upon the rates we’ve secured. So I’ll just kind of leave it at that and not talk to the specific channel itself.
Vince Valentini
Fair enough. Turning to your own content, I mean $7 million in Q2 last year to, I think, Netflix and Hulu combined. It seems like you’ve doubled what you’re selling to Hulu, but I’m not sure. Does that just mean that you’re not selling stuff to Netflix and it’s all the rights are going to Hulu instead? So doubling really means you maybe just replicate that $7 million as opposed to increasing it, and that 7%, I guess, shows up in Q3 instead of Q2 last year?
Doug Murphy
Yes, Vince, there are actually 2 very different things. The Netflix sale related to kids’ content that was part of the Nick deal. So that’s a completely different animal and different timing. The Hulu sale, I think, yes, that’s more comparable. We do — it’s a multiyear deal, and that means shows are getting delivered over multiple periods. So we will definitely see uptick in Q3 and Q4 this year and also into next year, spread out through all the quarters next year. So I wouldn’t say it’s a direct replacement and not all in Q3, but certainly, it makes the back half very strong for us on that line.
Vince Valentini
And do you have — you’re down 12% obviously year-to-date on merchandising, distribution and other. Do you you think you can get back to your normal target range of sort of at least high single-digit growth for the full year? Or are you just saying you can get to that for the second half, but for the full year, it’s still going to come out closer to flat?
Doug Murphy
I think for the full year, that’s definitely still in the cards.
Vince Valentini
High single digit for the full year is still in the cards?
John Gossling
Or double.
Vince Valentini
Or double. Okay.
John Gossling
Yes. I think the core Studios deal, I think is 1 of the concepts of today’s call was to discuss it but the portfolio of business has been in the core Studios business is part of the portfolio of studio business that we have, and that’s a real big sale. Basically, recognition that the lifestyle and factual reality programming that we’re producing has got a lot of appeal in international markets, not just here in Canada, as I mentioned, it does drive significant audiences in our networks, but it also really is a strategic output deal. So when we made — we’ve talked to you guys before about the value in building multiple seasons and creating franchise — and when you have a big partner in a big market that is basically going to be on the bid for series of producing going forward. I think that’s a good setup for continued growth at Corus Studios.
Vince Valentini
Excellent. And I just want to make sure I clear when you give those expectations. You’re not including any potential windfall in that from from merchandising sales from Bakugan yet? I think that’s still going to develop over time. You wouldn’t be assuming a double digit for the full year because of a big windfall in the next 6 months?
John Gossling
No, no. I mean it would be great if it happened, but it’s not — that’s not part of our conversation. We’re talking specifically about Corus Studios.
Vince Valentini
My last question is on the improvements in the capital structure and balance sheet and relating that to dividends. So you’ve now – as you said, you’ve got a 16-month runway. You’ve termed out your debt seems to be a much stronger foundation, plus debt leverage is just on an absolute basis lower than where it had been a year or 2 ago. That, combined with a 20%, at most 25% payout ratio on free cash flow for your dividend, given the balance sheet stability in terming out, is this something at the Board level you may start to think about inching up the dividend even by a small amount as we head into fiscal ‘23?
Doug Murphy
I think our our priority is to invest to grow the company. So and there’s no shortage of ideas that our teams are bringing forward for discussion in terms of internal capital allocation investment opportunities. So that remains sort of job 1. And we will be – we are and we’ll continue to discuss with the Board what uses of cash flow are optimal once we have exhausted our internal investment ideas. But at the moment, there’s a long list of compelling opportunities that we’re working on. So the dividend of 5.1% is compelling by any measure. You’re right, it is well supported by a very low payout ratio accordingly. And so I think, at the moment, as John mentioned, we are active repurchasing shares, which we think is a smart investment. But the priority remains in investing to get to consolidated revenue growth as we’ve committed in our growth narrative.
Operator
Aravinda Galappatthige from Canaccord Genuity.
Aravinda Galappatthige
I’ll actually start where you left off there, Doug, with respect to the I mean you’ve kept a fairly decent rate of buybacks, $1.6 million thus far. You still have sort of, I guess, almost $8 million more to go. Is it your intention, assuming the share price doesn’t move dramatically to sort of go all the way up to that 9.7%? Or is that sort of just sort of the general allocation that you’re thinking about?
Doug Murphy
I mean, obviously, that’s the limit, as you point out, we could go back and ask for more, I guess. At this point, we’re on a pretty steady program. Of course, that can be changed at any time as long as we’re on blackout. So I wouldn’t probably tell you that we’re absolutely going to buy the whole thing. It does depend on what the share price is going to be. It depends on what our cash situation is as well. So I think, for now, probably stay tuned is the best way to think of it. But yes, we are active. And you can see, or you will see from our March filing and what I said in the prepared remarks, that we continue to buy at a pretty steady pace.
Aravinda Galappatthige
Awesome. And then I had a question on TV OpEx. I mean even if you kind of back out or adjust for some of these items, the nonrecurring items, there’s a little bit of inflation. I guess on 1 hand, you’re investing in your video streaming assets and then your ad tech on the other hand, obviously, there that would be cost reductions. How should we think of the G&A portion of inflation? Because — I mean, depending on the ad environment, obviously, it still has a significant impact on your profitability and margins.
Doug Murphy
No, absolutely. So there are a certain level of revenue-based costs that very much attached directly to that G&A line. For sure, the biggest parts of what you mentioned, the loss of wage subsidies and that’s going to be actually a little bit higher next quarter. That’s about $4 million next quarter. CRTC fee release next quarter is about $1 million. So there’s going to be that pressure and then it tails off pretty dramatically in Q4. I guess the other couple of categories that we’re seeing that are driving it, one is, and we’ve mentioned this the last couple of calls, we are spending more on marketing particularly aimed at new shows and within that also couples in STACK.
So that, we think, is important to keep the momentum going there. We’ve got some inflationary pressure for sure on the salary and benefit line. I think probably everybody in the economy is seeing that right now. And then there’s other small things. So we’re managing carefully. We don’t mind variable costs when revenue is going in the right direction. But there’s definitely pressure there, as you know, and we’re certainly on it.
Aravinda Galappatthige
Okay. Great. And my last question, I guess, John, again, you gave us a good indication as to that sort of the ratio between the program [indiscernible] and spend. There’s still a fair bit of movement on the other — on the general working capital excluding that. Should we still anticipate a fairly notable outflow from working capital as you think I said at the full year number?
John Gossling
Well, it really depends, Arvinda, on how we end the year in terms of revenue growth. So I think in a growth back half, to me, that says we’re going to be investing in working capital and of course, very seasonal. But Q4 is a pretty good ending point for the year in terms of getting as much working capital converted to cash as we possibly can. For the whole year, I think based on that and the outlook for the back half, I think there’s some investment in working capital full year. I don’t think it’s huge, like it’s not $50 million or $100 million or anything like that. The big swing just going back to the big swing you mentioned is the programming line for sure.
Operator
Drew McReynolds, RBC Capital Markets.
Drew McReynolds
Just shifting to radio here. Certainly, across the rest of the industry is seeing a little bit of an uptick here in recovery. You mentioned a little bit of that in your opening remarks. Just wondering, Doug or John, can just drill down into that? And in terms of radio profitability, has there really been any change from your perspective versus pre-COVID levels? And then I have a couple of others.
Doug Murphy
Dew, it’s Doug. I’ll take the first part of that, and John can take the second. Yes. Radio is certainly showing strong green shoots, as I referred to in my comments, is bouncing back nicely from obviously a pretty dire low mark. There’s some good category growth. We’re seeing from prior year, retail and entertainment, again, seem to be strong on a local basis. Automotive is not, again, that’s not surprising. Restaurants have been still a little lagging because of various stages of restrictions certainly in Q2.
They look to be firming up now going forward. People want to get out again and, in most markets, there’s no longer any restrictions. So I would expect that to be an improving category. Government is very strong. Services, financial services, in particular, in telecommunications, has been strong. So I would say it’s still a bit of a mixed bag and not dissimilar to the category trends we’re seeing in television, to be honest with you.
John Gossling
Yes. I’d say kind of margin levels. And obviously, it’s flow through of revenue even probably more so on radio. So as we get the revenue levels back up to a more normalized place, I don’t know if we get back to prepandemic levels immediately, but that will certainly help. Again, similar to TV, wage subsidies, CRTC fees are a big swing factor this quarter and there’s some sports programming costs. But as the revenue starts to really kick in, I think we’ll start to see that margin line grow.
Drew McReynolds
Okay. Okay. Got it. And then 2 other, I guess, bigger picture. One, just on the M&A environment. So obviously, we saw a little bit of a tuck-in there in February with the Aircraft. Just wondering the environment overall, whether it’s the equity markets or broader environment pretty choppy relative to kind of 6, 12, 18 months ago. Just wondering if you’re seeing any new opportunities emerge on the M&A side?
And then second question, just on the CRTC decision on the Rogers Shaw transaction, just treating Corus as an independent no longer affiliated with Shaw, I guess, is my interpretation of all of that. Any obvious implications for Corus from your perspective?
Doug Murphy
Okay. Good. Happy to field that one. So the first is M&A. So we’re still very much of the view that the best use of our capital, as I said earlier, absent internal investment is buying back our own stock. The multiples that we see on M&A targets still appear to us to be extremely inflated. We look at cash as the real sort of definition of the value of any company. And I just don’t see the valuations ascribed to certainly publicly traded companies that may be strategically of interest, they just don’t pencil from a valuation perspective.
So the answer quickly would be no in M&A at this time. Aircraft was a very smart tuck-in. It accelerated our strategic priorities and plans. It was an acqui-hire of a couple of really bright producers who are infamous both in Canada and the States, and it gives us an immediate slate of development to invest in to really ramp our content licensing ambitions internationally. That was a great tuck-in. And to extent to which we can identify other tuck-ins like that, that certainly would be something that we’ll be talking to our board about in terms of longer-range capital allocation strategies. But there’s nothing big on the horizon.
We remain really focused on investing in the organic growth profile, funding the dividend, deleveraging to the net debt to segment profit target of 2.5x and buying shares back at this price where we think that’s a great investment. As far as the Shaw Rogers and the filings and the news and such, we were very pleased to see the new bill C18, which is the Online News Act introduced this week. We welcome that. We’re pleased with the government moved forward. We were aware that they were doing some studies on the Australian model and it really recognizes the value of news content, all news content. So it was nice to see the broadcasting community included in that bill.
Yes, as you know, from a definitional perspective, we will be an independent upon the closure of the Rogers Shaw deal. And we will work with the government to better understand implications for us there. So in the meantime, our news, Global News still is the number 1 viewed online new service in Canada. The growth we’re seeing on a revenue basis is impressive. The team continues to do innovative things. We’ve got 14 fast channels now providing global news based on all of our 14 markets where we produce news. Our news teams are covering the tragedy we’re seeing in Europe at the moment. So news is and remains, in our opinion, 1 of the most important things that regulated broadcasters deliver to Canadians in Canada. And I’m pleased to see the federal government recognizing that the miss and disinformation out there is hurtful and that Canadian license broadcasters have an important role in society.
Operator
[Operator Instructions] Jeff Fan, Scotiabank.
Jeff Fan
Just a couple of follow-ups and then the bigger picture question. A quick follow-up on the Hulu deal. Was this an exclusive deal with Hulu? And then on the revenue growth, consolidated revenue growth that Doug, you mentioned, I know you said multiyear. Are you still comfortable about getting that consolidated revenue growth in the second half given the Hulu deal you just signed?
And then the final question is just on SVOD, the discussion around them shifting their business model from subscription or adding advertising potentially to it. I guess my question is, how do you think, Doug, that impacts Canada potentially? If SVOD starts to go into the advertising group to try to compensate for all the content spend that continues to rise. Is that going to become a threat for Corus and your ability to get at that advertising revenue pie, especially with some of the initiatives that you’re doing with Sinch, et cetera?
Doug Murphy
Okay. There’s a lot in there, Jeffery, good to hear from her. So let me sort of break it down. number 1, the strategic output deal with Hulu is not exclusive in the market. It’s exclusive to the titles as part of the deal, I would say. So we have opportunities to sell other potential titles, but they do have a first look on the future slate. So I would say I’d answer that question that way. The big picture question, and I think it’s very notable, I don’t take some time just to kind of comment. The question about SVOD going — looking at advertising as a way to fund it, I think really — it really validates Corus’ over the last number of years that the SOI business straight up is a very tough business to pencil. I mean, SVOD is basically pay TV all over again. We have to be in that business back with movie network, [indiscernible] central, so I can’t remember now. And it was a tough business, and it’s still a tough business. It just happens to be on streaming platforms. So the fact that they’re looking at letting advertising, to me, is not surprising whatsoever and quite honestly, was expected. And it just comes back to what’s old is new again.
Basically, we have the same television model, with commercially supported services and/or pay TV now just delivered on the streaming platform as opposed to through over-the-air signals or the set-top blocks. News flash. We’re doing that with STACKTV 2. So from my perspective, we’re just competing for audiences and we’re competing to create inventory and to provide better advertising solutions to our clients and agencies alike. And to me, it’s just another example of the sort of the dynamic space that we’re in. But I don’t see it as any major ground change.
We’re already growing our digital business significantly. We’re creatively, innovatively, putting more content in more places. We know that there’s a massive demand out there for premium video, AVOD supported content, and that’s where we’re growing our Global TV app. And we’ll continue to pursue opportunities in that space.
Jeff Fan
And the second half revenue growth, consolidated revenue growth.
Doug Murphy
Okay. No, no. Listen, that’s our commitment. We are — our whole growth narrative is to deliver consolidated revenue growth year-over-year over year as the pandemic proceeds hopefully soon. And that’s where we talked about the portfolio of businesses and how is the sum of the parts. And I’m super pleased with the contributions we’re seeing from all of our businesses, and it just showed you when we have an Omicron quarter that put a little bit of a headwind against our television advertising business and our radio local advertising business, we can offset that with impressive growth with our subscriber revenues, the STACKTV, with Corus Studios, with digital video advertising business. So that’s, I think, an important takeaway is just the fact that the operating model is becoming more and more resilient as we diversify our sources of revenues.
Operator
Thank you all. And there are no further questions in the queue. I’d like to hand the call back over to Doug Murphy for any additional or closing remarks. Over to you, Mr. Murphy.
Doug Murphy
Thank you very much, operator, and thank you very much, everyone, who joined us today. As ever, John and I are always available for follow-up conversations and questions should you have any — in the meantime, have a wonderful weekend and enjoy what hopefully will be some lovely spring weather soon and stay safe and be well. Talk to you soon.
Operator
Thank you. This concludes today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.
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