Media & Telecom:

A Canadian Perspective

October 24, 2013

ABOUT CORUS

Corus Entertainment is a Canadian media company• Very successful – focused on specialty broadcast• Valuable audiences – Women & Kids• Canadian ecosystem is protected and profitable

But … we are in a period of unprecedented change• Technology• Consumer consumption patterns• Deluge of content

New broadcast models (for example Netflix) threaten to upend and destroy the old model before the ecosystem can react and change

Content consumption anywhere, anytime has become a consumer requirement

How do broadcasters react? 2

Broadcasting in Canada, both radio and television, is highly highly regulated

• Canadian Radio-Television Telecommunications Commission (CRTC)

• Recently in the news with hearings (and decision) on Bell’s acquisition of Astral

Among other things, CRTC regulations focus on the creation and broadcast of Canadian content

• Rules define what is Canadian – creators, funding, producers• Most broadcasters have both significant spend and exhibition obligations

Canadian Content (Cancon) enjoys significant benefits• Access to higher tax credits• Access to CMF (Canadian Media Fund) and other funding• Better broadcast placement

3

THE CANADIAN ADVANTAGE

THE CANADIAN DISADVANTAGE

4

✘ Complex and occasionally arcane rules; compliance essential to achieving Canadian advantages

✘ Canadian Content regulations protect small producers; negotiated Terms of Trade are difficult for producers and broadcasters alike

✘ Canada is a small market• Good content of any form is difficult to exploit/profit (Canada = 10% of

U.S)• Regulations prevent entry of some US content; Terms of Trade make it

difficult to export content south

✘ CRTC regulates spectrum – important for OTA TV, Radio, phone service but meaningless to the internet• Canadians compete on a level playing field against global entities far

larger than domestic players• Netflix commands significant viewership but is NOT regulated in Canada

WHO IS OUR AUDIENCE?

30% 40% 50% 60% 70% 80%

10

20

30

40

50

60

ABC Spark

Cartoon Network

CHEX Peterborough

CHXD (CHEX Durham)CKWS

CMT

Cosmo TV

Encore Ave 2

Encore AveHBO Canada West

Movie Central 1

Movie Central 2Movie Central 3

Nickelodeon

OWN

Sundance Channel

TLN

Teletoon E*

Teletoon Retro E

Treehouse

W Movies

W Network

YTV*YTV Family

TSN

Average Ageof Viewers

Male Female

Source: BBM Canada TV Meter – 2012/2013 BY, Total Canada, M-Su 2a-2a. Teletoon*=M-Su 3:30a-9p, TAN=M-Su 9p-3:30a, YTV*=M-F 6a-6p, S-Su 6a-4p, YTV Family= M-F 6p-6a, S-Su 4p-6a.Bubble Size=Ind.2+ AMA, X Axis= Gender Skew (F2+ AMA of Ind. 2+ AMA), Y Axis = Weighted Average Age (Ind. 2+). 5

WHO IS OUR AUDIENCE?

30% 40% 50% 60% 70% 80%

10

20

30

40

50

60

ABC Spark

Cartoon Network

CHEX Peterborough

CHXD (CHEX Durham)CKWS

CMT

Cosmo TV

Encore Ave 2

Encore AveHBO Canada West

Movie Central 1

Movie Central 2Movie Central 3

Nickelodeon

OWN

Sundance Channel

TLN

Teletoon E*

Teletoon Retro E

Treehouse

W Movies

W Network

YTV*YTV Family

TSN

Average Ageof Viewers

Male Female

Source: BBM Canada TV Meter – 2012/2013 BY, Total Canada, M-Su 2a-2a. Teletoon*=M-Su 3:30a-9p, TAN=M-Su 9p-3:30a, YTV*=M-F 6a-6p, S-Su 6a-4p, YTV Family= M-F 6p-6a, S-Su 4p-6a.Bubble Size=Ind.2+ AMA, X Axis= Gender Skew (F2+ AMA of Ind. 2+ AMA), Y Axis = Weighted Average Age (Ind. 2+). 6

Kids

Women

HOW IS OUR AUDIENCE CHANGING?

Sources: BBM Canada TV Meter, Total Canada, * Netflix tuning based on MTM spring ‘13 survey: Netflix average wkly hrs Total Pop (A18-64) converted to AMA.

7

Bell Including Conventional

Shaw Including Conventional

Rogers Including Conventional

Corus CBC & CDN Conv/Spec Other

US Services Netflix*0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0634.2

433.7

198.1224.6

302.3

257.0

577.8

441.6

175.4216.5

267.7 260.0

159.0

F'10 F'13

AMA

Cum

e 18

-54

-9%

+2%

-11% -4%

-11% +1%

TOTAL TUNING BY OWNERSHIP INCLUDING CONVENTIONAL (18-54)

WHAT IS OUR CONTENT?

Most broadcast content is licensed from Canadian or international producers, limiting our ability to exploit beyond our television services… but Corus owns Nelvana Limited, an integrated kids entertainment company

• 40+ year history as a producer of animated content for kids• Content library of 4,000+ half-hour episodes• Merchandising success with brands like Beyblade and Bakugan• Content is sold in 100+ countries in dozens of languages

8

CORUS & THE INTERNET

New Media is where the action is ….• Fastest growing “consumer” segment (time spent, impact, reach, analyst

coverage)• Advertising dollars are moving online• The change is even more pronounced amongst younger audiences• The rise of “Big Data”

… but Corus is a small player in New Media• Total revenues less than 5%; total profit less than 1%• Mixed bag of assets – websites, apps, social media, streaming• Category grouping (ie kids, family, women) to create scale and relevance

New Media strategy attempts to serve multiple interests• Are we driving viewers to traditional media OR driving new revenue?• Do we want a direct relationship with consumers OR support traditional

partners digital expansions (i.e. MSO TVE)?

We want everything.9

WHAT IS THE INTERNET FOR?

ENGAGEMENT

DISTRIBUTIONPRODUCTS

Video Apps MSO VODVideo Games

MSO Broadband

Website Video Streaming

Network Websites

Facebook

Game Apps

eBooks

Show apps for TV Networks

Twitter

10

IP Experiments

OPPORTUNITIES

11

Digital-first brands to test audiences• Advantage of using shorts and a strong digital campaign to test audience interest in a

brand before developing a TV series

“Hot housing” product and marketing strategies in Canada before launching internationally with key partners• Product strategies (pricing, promotion, game balancing) can be ironed out in 1 territory

before key market distribution like the US and UK

Owning the relationship with the audience• Canada is catching up to US and UK models where broadcasters manage channel apps and

users can authenticate into their MSO • During 2014, multiple MSO authentication will likely be available, resulting in the growth

of video TV-Everywhere options in Canada.

Analytics drives the content and product strategy• The content offering and available platforms change based on how kids watch or play the

games. Compiling provider data and analyzing results has been a challenge.• It has required changing our team culture from manufacturing to servicing, from product

publishing to product iteration