Corus Entertainment (B) (CJR.B.TO)

He loves the sustainable dividend. The Shaw media acquisition is a huge plus for CJR.B-T. You are going to see the company having pretty strong pricing power this fall on advertising.

This has managed a minor rally, but is now rolling over. Overhead supply from the past, and holders will be taking their losses and Selling. The roll over in the chart is definite evidence of that.

Had some challenges last winter with a negative transaction with Shaw, initially not liked by the street, but it seems to have come off the low since then. This has improving price momentum and reasonable valuation. Free cash flow yield is trading at around 6.8X and right around BV, so cheap on those metrics. Also, cheap on a PE, which raises the question where is the growth coming from. 9% dividend yield, and as long as that is sustainable, the story looks pretty good.

It is hard to be positive on this one. The model price is $19, or a 50% upside, but it just had a negative transit to EBV. He wonders if the dividend is safe.

The easy money has been made. It is up since Jan. about 9%. It is a unique story in terms of the restructuring. The concern is that worries with pick and pay were over blown. The dividend is safe, although there is some restructuring that has to happen. They sold off HBO and are now focusing on kids and family. Don’t expect another 8% like the previous 8 months.

A tough sector to be in. There was a downtrend through much of 2015, and it does appear to be breaking that trend at a very significant level now at around $12.70. It is no longer making lower highs, but you need to see this break above $12.70, which could be very constructive.

On a long-term perspective, a large part of their business is really challenged because there are fewer and fewer listeners to radio. Also the TV side has viewers going more towards streaming. A good thing is that they own a lot of intellectual property. The question is, will the declining side decline faster than the creation side, and will people pay up for the creation side. Advertising is slowly ebbing away from traditional media.

Did a very interesting acquisition of the Shaw Media assets, but had a relatively weak quarter with those acquired assets. The acquisition was a really good financial one and really improved the dividend payout ratio, so the dividend looks safe for quite some time. However, operationally, it is not the kind of quarter that is going to make analysts raise their numbers and target prices. Expects it will be in a holding pattern until there is more clarity on the direction of advertising trends.

The 1-year chart shows an inverted head and shoulders base formation, giving support at around $11.40. The 5-year chart shows resistance at around $16. It might go a little bit higher in the short run, but you are running into a mountain of overhead supply of people owning stocks. He would not be that bullish on this. The dividend of almost 10% is a warning sign.

The decline is a result of a disappointing first quarter. The analysts are all over the map. They like the story. Regardless of ‘Pick and Pay’, they will be in the packages offered by cable companies. Leverage is substantial in the company so they will have to get some cost cutting into the company.

They report in the next couple of weeks and expects it will be focused on the integration of Shaw Communication. Thinks the acquisition will be positive for them in the long-term.

(Market Call Minute.)

One of his largest positions. Loaded up the truck at $9. Still very, very cheap, and it is a cash cow. A traditional broadcaster that is facing some secular challenges, but with the acquisition of Shaw Media it is now really the only game in town for women’s, children’s and family advertising on TV, which still has the biggest viewership. Thinks they will squeeze a lot of costs out from the merger, more than anticipated. Expects they will renegotiate advertiser rates this fall, so you will be able to see them start to grow again. Also, doing great things with Nelvana on the content creation side. Generates a lot of cash, so the dividend is safe.

A lot of their declines last year was because of an overblown scare for the pick-and-pay which is now underway. If it has a material impact on earnings and their ability to generate ad revenue, there is a small chance the dividend will be at risk, but doesn’t believe that it is a material risk at this point. If you are patient, you might be able to buy this on a pullback. Dividend yield of 8.5%.

Has wanted to own this, because it has come down so much off the peak. Valuation is low on an earnings basis. However, consumers’ behaviour has changed and have moved to a lot of areas of products where this company is not very well represented. The company levered up recently to add assets in the Shaw deal, so the balance sheet is a little stretched. If you own, continue to hold. He just questions if there is much growth anymore.