Oct 24, 2013
Executives
John Cassaday - President and CEO Tom Peddie - EVP and CFO Doug Murphy - EVP and COO
Analysts
Vince Valentini - TD Securities Equity Research Paul Steep - Scotia Capital Aravinda Galappatthige - Canaccord Genuity Adam Shine - National Bank Tim Casey - BMO Capital Markets Haran Posner - RBC Capital Markets David McFadgen - Cormark Securities
Operator
Welcome to the Corus Entertainment's fiscal 2013 fourth quarter and year end’s conference call. My name is Laurene and I will be your operator for today’s call.
At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session.
Please note that this conference is being recorded. I will now turn the call over to Mr.
John Cassaday, President and CEO at Corus Entertainment. Mr.
Cassaday, you may begin.
John Cassaday
Thank you, operator. Good afternoon, everyone.
I am John Cassaday and welcome to Corus Entertainment's Fiscal 2013 Fourth Quarter review and report and analyst call. And of course thank you for joining us today.
Before we read the cautionary statement, we would like to remind everyone that there are a series of PowerPoint slides that accompany this call. The slides can be found on our website at www.corusent.com in the Investor Relations section.
We will now run through the standard cautionary statement. This discussion contains forward-looking statements, which may involve risks and uncertainties.
Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company's filings with the Canadian Securities Administrators on SEDAR. Now we would like to introduce you to the Corus Entertainment team joining me on the call today.
First of all we have Tom Peddie, our Executive Vice President and Chief Financial Officer and secondly Doug Murphy, who is recently appointed Executive Vice President and Chief Operating Officer of Corus assuming over side both our Radio and Television Divisions. We will elaborate further on these leadership changes later in the call.
Turning to Slide 3 of the PowerPoint presentation, we did phase some headwinds in fiscal 2013 as result of the economy, but we also made good progress on a number of fronts. For example, our Television business saw an increase in specialty advertising revenue from the prior year and the momentum improved in Q4 with all of our core networks YTV, TELETOON, W Network, Oprah Winfrey Network, and ABC Spark showing positive year-over-year variances.
Consolidated revenue was down but this was due primarily to our expected drop in Beyblade sales and decline in our Radio business. Turning to Slide 4, consolidated segment profit was down 7% for the year.
A shortfall was due to top year-over-year comps in our merge business, softness in the radio ad market and higher corporate cost related to share based compensation and performance incentives. Turning to Slide 5 for review of the fourth quarter and full year, we also made progress in terms of our net income and basic earnings per share attributable to shareholders which were up 8% and 7% respectively full year basis.
In addition, we delivered very strong free cash flow of $154 million for the year outperforming our guidance. We were very pleased with our progress and refinancing our senior unsecured guaranteed notes during the year, which resulted in a 300 basis point reduction in our borrowing cost.
We also continue to deliver strong returns to our shareholders announcing a dividend increase of 6.25% in January 2013. Lots of progress in our television business as well.
The women’s portfolio had a great year from both the ratings and revenue perspective reinforcing the value of growing this vertical and our leadership position in the attractive women’s space. Importantly, we made significant progress on the acquisition front as well.
In March, Corus received clearance from the Competition Bureau to proceed with the transactions for the acquisition of two Ottawa radio stations as well as the 50% remaining ownership interest in the TELETOON channels and the 50% ownership interest in the French-language series, Historia and Séries+, from Bell, an important first step in the completion of this acquisition process. Additionally, we completed the acquisition of our remaining 49% interest in ABC Spark from Shaw Media, fully consolidating this service into our operations.
At the same time, we completed the divestiture of our non-controlling interest in Food Network Canada to Shaw Media resulting in a substantial gain of $55.4 million from this sale. And finally, we were very pleased with our strong segment profit margins of 40% for Television and 30% for Radio.
Turning to Slide 6 on a divisional basis, our Radio business had a disappointing year while our Vancouver and Calgary clusters performed well. Overall revenue and segment profit were both down 4% for the full year.
As mentioned earlier, our television division achieved solid advertising growth fueled by the rating success of our women services which resulted in specialty ad revenue increases of 6% for the quarter and 2% for the year. In addition to the excellent performance of our women’s networks which grew high single digits in Q4, our kid networks also experience strong high single digit advertising growth in the fourth quarter driven by our flagship stations YTV and TELETOON.
However, expected decrease in our Beyblade sales offset these gains resulting in a 5% decline in televisions overall revenues and segment profit for the year. However if we isolated our TV broadcast business, we delivered modest year-over-year segment profit growth as well.
We also made progress on the subscriber front; revenues were up 1% in the quarter largely driven by pay TV, as well as by the expanded distribution of ABC Spark. Movie Central finished the quarter with 996,000 subs, that's up 20,000 from the prior year.
These gains were driven by an exceptional line up of exclusive unmatched content, effective retention in acquisition campaign and an improved value proposition that offers subscribers access to more on demand content offered on multiple devices and screens. From the fourth quarter we were encouraged to see that revenues and segment profit for our television business increased 1% and 4% respectively.
So to recap while it was a challenging year the company made progress on a number of fronts that lay the foundation for future growth. Moving ahead to slide seven and our outlook for the first quarter, we’re optimistic about the new fiscal and we’re confident that the fundamentals are in place for an exciting year ahead.
In preparation for the integration of the pending acquisitions and to maximize opportunities in our key segments, we have reorganized our leadership around six distinct business units; Air Time Sales, Kids, Women and Family, Content, Distribution and Pay, and Corus Radio and then of course our newest edition Corus Media which is our Quebec based operating unit. These six business units will report to Doug Murphy in his new role as Chief Operating Officer, this structure will ensure greater focus on growth and enable us to leverage synergies across our businesses to drive financial results.
Importantly, we're excited about the growth potential that the integration of our pending acquisitions will bring to our business. In our radio business visibility remains limited and advertising softness continues in Q1.
To drive growth radio has launched a focused sales initiative to secure new direct business that is gaining traction across our major markets. And leadership changes have been made to stimulate fresh thinking and improved performance.
Turning to television, we expect continued ad growth from our specialty services led by our women's portfolio as well though as by YTV, TELETOON and ABC Spark. Outside of our pending acquisitions we believe that the Women and Family group will provide the greatest growth opportunity this fiscal.
The portfolio will continue to benefit from strong demand for that female demo. Additionally ratings momentum from the Oprah Winfrey Network as well as the expanded distribution of ABC Spark and W Movies will build audiences and bolster our television business.
We also anticipate ongoing progress from the success of our co-view sales and programming initiatives for YTV and TELETOON. Our core kids' television services closed the year with solid advertising growth across traditional and new categories.
The entertainment category was particularly strong in the backend of fiscal 2013 and we anticipate this trend will continue leading up to the holiday season. With the entrance of Target resulting in new retail competition in Canada, we expect to see an overall increase in spending on television from the retail sector.
We will also continue to explore opportunities to diversify our revenue mix across new categories. On the content side we are seeing significant OTT supplier interest in Nelvana's extensive library of kids' programming, as demand for kids' content in the digital space continues to grow in international markets.
With ongoing sales in multiple territories to Netflix and Amazon's international on demand service LoveFilm as well as other international offerings, these partners are emerging as an important window for Nelvana's content in creating additional streams for Corus. Domestically we will also continue to work with our cable, satellite and telco partners to enhance the value of our offerings with the rollout of more HD services and the deployment of more non-linear and on-demand content throughout the fiscal.
In conclusion as we head into the new fiscal the fundamentals of our core business are sound. Great brands, strong ratings and detailed plans in place to integrate our required assets.
The strength of our high profile brands and well defined television verticals combined with the benefits of our new leadership structure will drive organic growth for the company. Dovetailing with this the integration of the pending acquisitions from Bell will drive new growth opportunities and allow us to optimize synergies.
The additional assets will provide us with access to new markets and with the consolidation of our interest in TELETOON and ABC Spark the opportunity to fully leverage our presence in the company's young, adult demographics. In addition to the accretive segment profit from our pending acquisitions our attractive financing will allow us to continue to drive incremental free cash flow for the coming year.
Before we turn the call over to you, some of you might have questions about the thrown speech and the reference to a pick and pay model. This week the CRTC is commencing a process to obtain Canadian views on television.
We understand that this process will run until December and that the commission will then conduct a formal policy review during the 2014 calendar year. We expect to see a policy announcement in calendar 2015.
In the meantime with our portfolio of popular brands and multiclass formal offerings Corus remains focused on delivering the same level of high caliber entertainment experiences to their audiences have come to respect. Looking ahead, there are some key dates coming up in our calendar that we would like to share with you.
First the CRTC hearing to consider Corus acquisition of the Bell assets will be held on November 5, 2013. The decision is expected within 35 days of that hearing.
We would also like to confirm that our annual general meeting would take place on Tuesday, January 14, 2014. And third that our investor day will take place on Wednesday, January 29; at which time we will update with investors on our fiscal 2014 priorities.
We will now be happy to take any questions that you may have. Operator over to you.
Operator
(Operator Instructions). And our first question comes from Vince Valentini from TD Securities, please go ahead.
Vince Valentini - TD Securities Equity Research
Two things guys, one, I think at a recent conference you talked about the merchandizing outlook being somewhat of a flatish year in 2014 and maybe some pickup thereafter, so well if you can just reiterate that here. And then second, just on radio, is this like a market thing, do you think with your revenues down so much in Q4 or there is some temporary market share shifts?
I believe Roger said that radio revenues were actually up slightly in their third quarter, but the time doesn’t match up exactly, but it is pretty close. So if you can just talk about market share versus a raw market in radio will be helpful.
John Cassaday
Thanks Vince. I will make a brief comment on merch and then comment on radio and then let Doug add some more color on the merch outlook for the year.
We are expecting further declines on Beyblade this year, obviously of a smaller base. As we said, we are kind of in a transitional year waiting for a couple of properties to be able to kick in for us Mike the Knight, Trucktown among others, and I am sure Doug will talk about, and we do have an exciting slate of new merchandising properties in the pipeline.
But as it relates to fiscal ’14, we are not anticipating that there is going to be anything to “replace” Beyblade. In the case of radio, our problems are, I would say, errors of omission as opposed to commission.
Radio market has slowed. No question about that.
It was basically flat, but we underperformed the radio market this year. And that underperformance was largely related to Edmonton and Toronto.
And that underperformance was largely related to some rating softness as opposed to sales execution. That’s an opinion.
Definitely the ratings were soft. Obviously, we can continue to do better on sales, but I think by and large we were competing effectively on that front.
Part of the issue, bit of a down cycle in rock music right now with two formats; contemporary hit radio or CHR, and country enjoying a resurgence, so if you happen to be in those two categories you are getting a better opportunity to take advantage of relatively soft market conditions. But we’ve made a number of changes on a number of fronts in our radio division.
We are confident that the rock music space is a good place to be. It has been for a long period of time.
There are peaks and flows in various formats. We are very confident with our talent and other formats that we are in across the country and expect that we will come out of this trough probably in midway through the year, if not even as early as the second quarter.
Doug would you like to comment on the Merch?
Douglas Murphy
Just a couple of other comments, John, thank you. You know Beyblade is -- in the last call, Vince, we characterized it as kind of resetting from the ties and I think we can expect continued sort of declines in fiscal ’14.
We do have in our plans, growth from Mike the Knight. You will see on shelf this year with special price whole range rolling into the Christmas season.
The show is a top five performer on Tree House. So all systems are go, one of the first full year on shelf for that brand and we have hopes for that to kind of grow continually over the coming year.
So I think, generally speaking Beyblade continues to kind of sort of reset. And we do have some other opportunities in the pipeline that are hitting retail.
Just one more comment on radio, to John’s earlier notes, basically there are two key [indiscernible] we are pursuing now on the radio division. One is continuing to look at our program and strategies to ensure that we had the ratings results we need to secure our share of the national and the agency business.
That addresses some programming strategies of Western here in Toronto and we are working hard to make those changes as we speak, some of them made already. We’ve a new morning show at Rock 101 in Vancouver.
We’ve launched a new CHR station in Edmonton, Fresh FM is performing nicely as well as the legacy stations in those markets are having a nice year. We are also looking at local businesses and opportunity in the immediate sense to offset potentials and weakness on the national buy.
So we are confident. We have good plans in place to turn the business but it’s the challenging first quarter.
Operator
Thank you. And our next question comes from Paul Steep from Scotia Bank.
Please go ahead.
Paul Steep - Scotia Capital
Thanks. I guess the first one, I just want to make sure I’m reading into the comments right here what you guys talked in the slides about co-view and the contribution at a co-view.
Is it fair John or Doug to sort of read into that, that the kids’ ad market seems to have sort of stabilized or you’ve sort of substituted in enough other business that we think that’s on good footing in the next year?
John Cassaday
Both of those comments are true Paul. One, I think the way we would encourage you all to think about it is that how are the brands doing.
And if you look at YTV it is a combination of pure kid viewing and advertising and family advertising. So we have effectively segmented or diversified our offering within the YTV brand to continue to grow that business as we did this year.
If you look at TELETOON it’s really a combination of three things. It’s a kid brand, it’s a co-view brand and it’s also a young adult brand so TELETOON at Night is in fact quite provocative programming that’s competing against the likes of TSN and some of the rock music brands that you see on television.
It’s going after the candy bar business and the condom business and the beer businesses opposed to the toy business. So what we have is a portfolio of assets some are positioned within our kid segment but we’ve I think been very creative in building a broad array of segmented offerings within those services to keep them growing.
Paul Steep - Scotia Capital
Great, I guess the second one for me would be around OTT and with talking about a specific vendor relationship. I know couple of those I think were up for renewal.
If we think Nelvana and those numbers in the next year, will it actually get to a point where it contributes meaningfully in the ’14 or is this a ’15 and beyond phenomenon?
Doug Murphy
Paul, its Doug. The business of licensing our non-linear content OTT players both the bid using Canada and the larger players globally is already a meaningful contributor to our business.
And we I think we showed you some slides in last investors data that I’m sure you’ll recall this pretty much a hockey stick in terms of the growth trajectory and our expectation is that will continue in the coming year. There is obvious players, there has been in the news obviously given Netflix’s results earlier this week.
And they are building their business globally on a rapid basis. John mentioned the Amazon Instant Video and LoveFilm.
But there is a whole bunch of new players that are coming knocking on our door and we think we’re very well positioned to benefit from the growth in this new distribution platform around the world. So I think you’re going to expect some pretty consistent growth in ’14, ’15 and beyond from Nelvana’s library to the OTT players.
Paul Steep - Scotia Capital
Okay, great. The last one from me I guess John you touched on it in the comments about pick-and-pay.
If we come back to pick-and-pay and we think and we don’t maybe talk specific names here unless you want to would be if we think about the portfolio of ’13 existing channels you currently own, can you give us some sort of ranking? Is there much sort of rebranding you think needs to be done or has there been any thought internally in terms of if there is any risk to the portfolio it looks pretty strong overall.
John Cassaday
Thank you. Just as it relates to pick-and-pay, here is our thought process, if you will.
First of all, we and our distribution partners, whether it’s cable, telco or satellite, understand the importance of providing consumer choice. And most of our partners already do provide considerable consumer choice and options.
Secondly, this has been a topic that’s been discussed for many-many years now and I can assure you for us this will be felt between now and the time is ultimately resolution on this because there are many conflicting views as to how this should play out and the impact on the system. And as we mentioned in the opening remarks there is going to be a process and there may likely be some kind of determination by the end of ’15 as to what the nature of this pick-and-pay scenario might end up looking like.
But in the meantime as we sit and look at our business you have to look at it from two particular points of view; one is the subscriber revenues that we generate and secondly the ad revenues that we generate. First of all, as it relates to the subscriber revenues, most of our deals are in place through to the end of ’16 with our distribution partners.
And most of those deals have effectively make whole provisions and I wouldn’t want to give you the impression that they’re totally make whole but by enlarge they make whole. So what we have in fact anticipated is the possibility of some erosion and quite frankly as has been predicted or sort of anticipated in many of the commentaries on this, if you want less you’re going to pay more and these additional costs for individual channels will be reallocated amongst the services that get selected.
So we think that from a subscriber point of view there maybe some damage to some of our smaller brands but on our core brands we should largely be protected. As it relates to advertising the basic approach that we’re taking is that if you consider a brand like YTV, which currently has a subscriber base of 9 million, let's assume that we lose 10%, 15%, 20% of that subscriber base, the likelihood is that they're not watching that service now and as a result we're not going to lose any audience which is what we sell to our advertisers so there is another scenario which was an adage a couple of weeks ago which suggested there might even be a positive outcome and that is that if in fact there is less fragmentation and the viewing levels stay the same at about 24 hours a week, one of the consequences of that could be more time spent viewing fewer channels which could in fact result in incremental advertising for those fewer channels, so you know we will continue to spend a lot of time thinking about the consequences of this, we'll spend a lot of time continuing to talk to all of our constituents about how to execute this is a way that is both consumer friendly and in the best interest of the broadcasting system overall, but we look at this with the outlook that we'll find a way to cope with it effectively as we have with every other challenge that's faced us, since our inception.
Doug Murphy
And to add to that John and Paul this has been a key focus of Corus's television strategy now for a number of years and that is to be the best brand packager and steward of either our own brands like WITV or we brand stewards of powerful brands such as ABC Spark and the Oprah Winfrey network, so we feel like we're very well positioned in a potential pick pack universe because we have brands that have equity that are neatly differentiated with our agency partners and that have meaningful relationships with our audiences.
Operator
Thank you, and our next question comes from Aravinda Galappatthige from Canaccord Genuity.
Aravinda Galappatthige - Canaccord Genuity
Good afternoon, thanks very much, just a couple from me. I was wondering just to start out with whether you could just flush out the higher corporate cost, I know you've discussed higher performance incentives maybe you can touch on the structure of those programs and what drove that spike in Q4.
Tom Peddie
This is Tom, certainly the corporate number was higher than we'd guided to you at the Q3, Q3 we talked about a number of 27 to 29 and we said that it was totally dependent upon our share based performance and incentive plans. Our incentive plans are well articulated in our management information circular each year, as you know those incentive plans are based upon EBITDA performance for the divisional heads of radio and television so they would have been underperforming but when we look at our other plans are based on cash flow and earnings per share and in both cases we exceeded our targets by a fair margin, we'd given guidance on our free cash flow, we wound up with a number of about a 154 million through great cash management and our EPS number was certainly helped by the transaction so that was the real impact and your next question would probably be, talk to us a bit about what the number looks like for 2014, I think we would guide you to probably about $7.5 million a quarter therefore about $30 million but we should point out that when you look at Q1 this year, 2014 compared to Q1 last year.
Q1's corporate cost last year was fairly low, they were about $5 million, so just on that particular basis the Q1 costs this year will be up about 2, 2.5.
Aravinda Galappatthige - Canaccord Genuity
Hey great, that's great Tom, thanks for that. And then just on pay TV, you're doing well on a year-over-basis.
Is it fair to say that a lot of the discounts that you've been applying promotionally in the past has sort of come off the system now and you're running free of that now.
Tom Peddie
That is fair to say, we're kind of coming off the summer promotions and preparing to reload in the end of the first quarter and second quarter. So we expect to have a little bit of a down stroke off of our coming into the Q1 and then we have a plan to add some meaningful growth to the back half of the year, it's all part of a new and much more innovative and aggressive plan with our VDU partners which looks to deploy much more targeted customer acquisition campaigns that really speak that said in the past Aravinda to the exceptional value proposition that pay television brings to Western Canada across all platforms.
Aravinda Galappatthige - Canaccord Genuity
Hey great again and just the last one for me, just to go back to the over-the-top sales and the digital sales that you touched on or I think John touched on, you know the sort of what you indicated in your investor day last year was that you're looking to go from sort of 4 million to about 9 million, are you able to disclose where you ended up for fiscal 2013.
Tom Peddie
Pretty much nailed that.
Aravinda Galappatthige - Canaccord Genuity
Okay great, thanks John, I'll leave it there.
Operator
And our next question comes from Adam Shine from National Bank, please go ahead.
Adam Shine - National Bank
Oh hi, thanks a lot, John you gave us some good color earlier I guess just in terms of Toronto, Edmonton as you talked about earlier in the year on radio, can you maybe talk a little bit about more of a regional context, little more detailed what transpired into Q4 and sort of any slight deviations heading into early Q1 trends not withstanding what you said earlier.
John Cassaday
Well, first of all our overall market have slowed so we ended up the quarter was pretty much flat for the total industry and from an operating point of view Vancouver has been good and largely due to range requirement was suppose to be remarkable market recovery and Calgary had a spectacular year. Edmonton’s problems were largely share related as Doug mentioned, we changed out of a format we ran sort of a greatest hits format and we moved that into CHR with the new fresh brand so it takes a bit for that get attraction in the last PPM the four-week period we saw some nice growth amongst that young female demo which is what we’re seeking out there.
But the bottom line is in this business you got to be great in Edmonton, Calgary, Vancouver and Ontario and we were great in Calgary, we were on par in Vancouver and we underperformed in Toronto and Edmonton, we got to get those two areas as Doug mentioned. Format changes, talent changes, management changes that flipped solidly on the gaps here to get this thing turned around we’re confident we will, it’s just a matter of time.
And in Q1 really it looks above like same traction we had in Q4 and as I said I’m expecting that we’re going to start to see some uptick as a result and various changes that we’ve made.
Adam Shine - National Bank Financial
As we anticipate the CTRC review next month and foreign tax purposes expecting approval should we be anticipating I guess number one, obviously some of it potential integration restructuring charge maybe not necessarily particularly as it relates to TELETOON I guess but any potential synergies or savings heading into the first half of the year potentially.
John Cassaday
What our plan Adam is to give you good color on this at our January Investor Day we may even provide some color at our Analyst Call, we’re reluctant to do is to make any commitments until we know whether we; A get a approval and B whether there are any condition of license changes requested by the commission. As you said, we are not expecting any, but we’ve got a pretty good flavor for how this thing is going to unfold based on the various correspondence that all the parties have had over the last couple of weeks in particular but we would really just like to reserve comment.
I can tell you that we’re spending a lot of time right now making sure that we can hit the pavement running there is a tremendous amount of work being done on integration activities and contemplation or system changes and anticipation of those approvals but until they happen we’re really just having a pleasant conversation amongst ourselves. So, we need to get the definitive word from the commission which we are hoping to get prior to the end of December and as we mentioned in our opening remarks there is a period of about 35 days after the hearing concludes so where the commission were delivering and we’re hoping that given the length of time it’s taken to get to this point that they give us a quick decision to run around that time frame.
Tom Peddie
There will be noise around that transaction because from a accounting point of view the CRTC benefits that we are required to expand those get a expands now in the quarter and as a pose to being part of the purchase price and then spread. So, you get items like that that certainly you’ll see in our quarterly results.
Operator
(Operator Instructions). And our question comes from Tim Casey from BMO Capital Markets.
Please go ahead.
Tim Casey - BMO Capital Markets
Just returning to the regulatory issues, is it your expectation that there will be some sort of policy directive with respect to bundling or do you think it’ll be forborne on that issue?
Doug Murphy
Tim, are you thinking about as part of the hearing that we have in November or you talking about subsequent to that?
Tim Casey - BMO Capital Markets
No. The more broader policy review, that’s expected in 2014.
Doug Murphy
I really don’t know, I’ll have to say the answer is maybe. Obviously, there has been a trial balloon floated in the speech from the throne but I remind you of the caveat which the government also included which is subject to the impact that it has on jobs.
And clearly from a broadcaster point of view it would be opportune of us to protest too profusely on this front clearly consumers want more choice. On the other hand the impact to independent producers of such an action if it should take place, I think they will be heard and I think they’ll be heard loudly.
So, we don’t know as I said, we don’t think anything will happen before 2015. We think that whatever does happen will be as a result and after considerable consultation and a good understanding of facts but clearly there will be more choice the question is how much it would cost.
Tim Casey - BMO Capital Markets
You have deals with every distributor, every BDO in the country and many of them approach it in different way some of them are much more pick and pay and some of them don’t. Is there any difference in, I guess relative profitability not based on volume but just on a per BDU basis the way you structured your deals or have you been able to get your fare share no matter how the BDU approaches the packaging process?
Tom Peddie
Yes, we basically and most of the industry does this well, operate on the basis of MFMs where we have to treat everybody fairly, you know, in a world that’s subject to as much consolidation as us then, first of all we’re very value driven company, so we want to be able to assure each of our distribution partners that they’re being treated fair and equitably. There is also good reason for that because with consolidation chances are pretty good.
They’re going to have an opportunity to look at the deal. We have somebody else once they acquire them and as a result I have to say the answer is again subject to different levels of penetration and commitment to how much tonnage they take from us.
Everybody is being treated the same and all of our deals are the same.
Operator
Thank you. And our next question comes from Haran Posner from RBC Capital Markets.
Please go ahead.
Haran Posner - RBC Capital Markets
Yes, thanks very much, couple of questions for me. First on the television side on Pay TV, I think there is a couple of your studio output deals that are coming up for renewals over the next year.
I was just wondering if you could comment on perhaps who those studios are and then just your expectations around those renewals?
John Cassaday
I guess the one that’s most close at hand is Warner. That’s up at the end of this year.
We’re beginning to have conversations with them. That deal is contiguous with the Bell, formerly Astral deal as well, so there is mutuality of interest to try to get something sorted out with them.
Everything else is longer term. I think the next one that comes up would be show time, Doug help me, I think 2015.
We have got a fare bit of comfort and terms that we have with our various programs suppliers at this point in time.
Haran Posner - RBC Capital Markets
That’s great and maybe an associated question with respect to television margins in general. Last two years very strong margins performance from you guys and historically I think you’ve said TV margins in total should be in the range of 35% to 40%, I think the last two years in the row you were slightly over 40, I just curious if there is any change to your thinking around that?
John Cassaday
No, not at this point in time where we’re very committed to holding our margins, we have made some very tough decisions on our cost to do that. We also continue as we’ve indicated in this to be optimistic about the outlook for ad sales growth in our key kid and women vertical over the next year.
So our expectation is that we will be okay for the foreseeable future.
Haran Posner - RBC Capital Markets
That’s great John, maybe just last one for me on the radio front, you gave us good color in terms of the Q1, I guess still been challenging, I am wondering if any of that is do you expect any impact associated with CBC? I guess being allowed to advertise on some of their services or is that supposed to be a fairly minimal impact?
John Cassaday
Very minimal, CBC is a service that gives to older MOs first of all. Secondly, there is a limited amount of inventory and third they have received very little traction to date.
So our issues are really our own to slow, we just need to get our ratings back up on track. And the good news about major market ratings is that we get a report card every four weeks, so we can basically leverage the improvements that we made today in a very short period of time and really the success of radio next year is entirely in our hands.
Haran Posner - RBC Capital Markets
Thanks very much.
Operator
Thank you. (Operator instructions).
And our next question comes from David McFadgen from Cormark Securities. Please go ahead.
David McFadgen - Cormark Securities
A couple of questions, so John just on the Bell transactions, so is that you hope than that the CRTC will make its decision either way by the end of December, I just want to clarify that?
John Cassaday
That is our hope, Davis. Unfortunately, I can’t give you anything definitive on that, but that is our hope and that is our planning assumption at this particular point in time, but all we know for sure right now is that there will be a bunch of us in hall on November 5th making our case and we’re hopeful that it’s well received and expected will be.
David McFadgen - Cormark Securities
And while you’re in front of the CRTC in November, are they also going to review the Oprah Winfrey license and the programming that’s on the network. Where you stand with respect to that?
John Cassaday
We had a hearing on that issue several months ago. We satisfy them, maintain our category license, made commitments to undertake certain educational programs into the schedule.
We are reporting on a regular basis. There will be no discussion about the Winfrey in November and we will comply with everything that we were asked to do and I don’t expect this is a subject that will raise its head again.
David McFadgen - Cormark Securities
Okay, so just on the channel, I mean we see in the United States that the ratings have picked up quite a bit, apparently it’s profitable now, can you tell us what the delta was in terms of ratings performance this year on Oprah and what the EBITDA growth was, I know you wanted to disclose the actual EBITDA, but it you could disclose what the growth was that would be helpful.
Doug Murphy
David this is Doug, we won't disclose the EBITDA in particular but as you know we have always said that revenues follow ratings and the businesses are pretty highly levered to operating income. So we grew our ratings last year for the full year was 30%, which was very strong outcome.
We have a number of programming strategies in the coming year which we expect to deploy which will result in continued growth. But over that hype of deliverance last year you wouldn't expect to have the very same growth again.
But expect double digit ratings in '14 and very, very strong year in '13.
David McFadgen - Cormark Securities
And then just if you may one more; so when you look at Movie Central subs, so it doesn't look like there is any [indiscernible] impacting that channel from Netflix. I see stuff that says keep the same on the pay TV side, any comments on that?
Doug Murphy
That's exactly our perspective, we have said it in the past that we’re very attentive to research in the field, and we have a very strong sense of what our subscriber based values with our services in terms of content, movies, series, platforms. It's our view that if anything, behavior is called cord cobbling, where consumers can't get enough great content, it's a golden age of television.
Some of the most compelling and script dramas now are available on pay. And so we think that that is not a threat to our business pay.
In our opinion is a growth opportunity for us and that's why we're so excited about the future, we have got great brands, great content and fully engaged distribution partners to continue to move this service forward.
John Cassaday
And by cobbling we mean not cutting but adding, so if you got pay add on Netflix, if you got pay and Netflix then you don't to add on [indiscernible] so it's just these people seem undoubtedly they have an insatiable appetite for the consumption of media particularly these first straight dramas that are being introduced by HBO and Showtime on a regular basis.
David McFadgen - Cormark Securities
And do you think that your pay TV business is outperforming your competition? I guess that would be super channel.
John Cassaday
Well obviously we got hugely different basis, so it depends on the term. I mean the bottom line is that we are absolutely convinced that there is an opportunity to improve the penetration of our pay business.
We believe that there are opportunities inherent in the new partnership with Bell to do that. They are motivated distributor as well as programmers, so we think the opportunity for greater experimentation is there, we think the opportunity for greater promotion across their national sports networks is there.
So net-net we think we can take our penetration up, and all of our plans both tactically for next year and strategically are based on the premise that penetration rate will improve and that's a critical planning assumption for us David.
Operator
Thank you. We have no further questions at this time.
I would now turn the call back to Mr. Cassaday for closing remarks.
John Cassaday
Well thank you very much for your interest again in this quarter and for fiscal '13 we look forward to seeing you all in January if not before. Have a great afternoon.
Bye for now.
Operator
Thank you ladies and gentleman. This concludes today's conference, thank you for participating.
You may now disconnect.