Needless to say, Corus Entertainment, Inc. is not having a good day. Early Wednesday, the stock found itself down 11%. Now, at press time, Corus Entertainment is down nearly 20% on the TSE market. Why, though? What happened to the media and content company? Well, the stock started its decline after the news of Corus Entertainment slashes dividend infiltrated the marketplace.
Corus Entertainment Slashes Dividend - But There's More
On June 27, Corus Entertainment made an announcement that sent investors into a frenzy. First, the media company disclosed a $935.9M loss, one that is linked to the devaluation of Corus' broadcast licenses.
Then, the news of the dividend slash hit us in the face. Corus Entertainment also announced that it cut its dividend—but why, you ask? Well, why else do companies do it? To speed up debt reduction, of course.
Now, it was only a matter of time until we saw the headlines 'Corus Entertainment slashes dividend'. In fact, analysts even forecasted Corus to make some sort of reduction. However, the cut was a little deeper than anticipated.
The dividend slash will divert roughly $150M per year to decreasing the company's debt. The figure wasn't expected to be $150M, and many are going to be affected, such as the founding Shaw family.
But Corus Entertainment is a company with a plan. In time, no one will be upset when they re-read headlines 'Corus Entertainment slashes dividend' because supposedly it's going to help in the long run.
Specifically, the Corus management team believes it will give the company more financial flexibility. Moreover, Corus Entertainment says it knows how to play this situation out, as the company has a long-term plan for rebuilding the media company during hard times.
The Corus Entertainment Stock (TSE:CJR.B)
It's not looking good. According to Google Finance, at 4:00 p.m., the company was trading at $5.13 on the TSE. This means the stock was down 17.92% at the time.
The company has a current market cap of 1.07B.
Corus Entertainment Slashes Dividend: The Takeaway
What do you think of the news? Do you think it's a smart decision in terms of long-term plans?
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