Ladies and gentlemen, good morning, good afternoon, and evening. My name is Jake, and I will be your conference operator today. At this time, I would like to welcome everyone to the Corus Entertainment Q4 2022 analyst and investor conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star two. Thank you. As a reminder, this call is being recorded. I would now like to turn the call over to Mr. Doug Murphy, President and CEO of Corus Entertainment. Mr. Murphy, you may begin your conference.
Thank you, operator, and good morning, everyone. Welcome to Corus Entertainment's fiscal 2022 fourth quarter and year-end 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 two. We note that forward-looking statements may be made during this call. Actual results could differ materially from forecast projections or conclusions in these statements.
We'd 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' fourth quarter 2022 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. I will start on slide three. We end our fiscal year on a mixed note.
On the one hand, we are pleased with the progress we've made in advancing our long-term strategic plan and its priorities, which until this morning's result, had delivered five consecutive quarters of consolidated revenue growth. On the other hand, we now encounter a choppy advertising market with crosscurrent ebbing and flowing through all advertising categories, both goods and services. This is resulting in TV advertising revenue declines evident in Q4 and expected to persist into F 2023. Before we further address the outlook and the details of this quarter's result, I would like to spend a moment reviewing our plan and the progress made in the past year. Our long-term growth narrative remains unchanged. We are transforming how we sell media. We are putting more content in more places, and we are growing our own content studio business.
Highlights of our plan in action this past year include the ongoing expansion of premium digital video offerings as part of our emerging streaming portfolio, now including STACKTV, the Global TV app, the Global News over-the-top product, TELETOON+, and the pending launch of Pluto TV. The successful renewal of all our largest content supply deals with term extensions and broadened rights grants to support our growth initiatives in premium digital video. The delivery of our highest ever recurring subscriber revenue result, given the still meaningful linear channels business, further accentuated by the strength of STACKTV. The growth of our international content licensing business, led by Nelvana and Corus Studios, and now bolstered by the addition of Waterside Studios and Aircraft Pictures. The improved financial flexibility of our balance sheet as we termed out our bank debt with a second high yield offering and the extension of our bank facility.
The ongoing focus on providing an attractive shareholder yield, funding our dividend, a record number of share repurchases, and progress on repayment of bank debt. As we highlighted in our outlook update, excuse me, press release issued last month, we are in an advertising recession. All advertising across North America is being impacted, not just here at Corus. The Standard Media Index, SMI, a measurement the industry uses, reported a 12% decline in the entire ad economy in the U.S. in July and a 7% decline for July and August combined when compared to those same months a year earlier. These declines, as reported by SMI, are for what they refer to as cross-media or all media. That's television, radio, digital, out-of-home, and print combined.
This decrease in advertising demand is a logical result of companies trying to manage their profitability given inflation-induced cost increases and the revenue impact of supply disruptions on their businesses. One of the first choices many companies make to reduce costs is to cut discretionary spending, such as advertising. At this time, we do not know the depth nor the duration of this economic contraction. Historically, both Corus and the media industry experienced a quick decline in advertising revenues during the early stages of a recession, followed by an equally quick recovery when economic growth returns. On the Q3 call, I talked about a clear move by consumers away from the goods economy towards more service-based experiences given lifted COVID restrictions. For example, Canadians had pent-up demand for travel, and their outsized demand meant that airlines, accommodations, and direct-to-consumer travel intermediaries have not returned to pre-pandemic advertising spend levels.
Given that we are no longer spending all of our time at home, there are other interesting trends affecting advertising categories. Appliances, household supplies, food and beverages at home, furniture, and any items used in renovations are all seeing advertising spending down in step with reduced demand. Because Canadians are more actively enjoying their out-of-home experiences, there is understandably an increased demand for the fashion-related categories, attracting growing advertising expenditures by companies in the personal care, makeup, apparel, and accessories businesses. Supply chain issues in the automotive category persist, affecting demand throughout the year. That said, supply chains are easing as imports across the country, container ships are offloading, and inventories are on the move to warehouses for the coming holiday shopping season. This should attract advertising investments. Advertising categories that have been spending throughout the year are sustaining their momentum, such as financial services and gaming.
As you can see, these many ebbs and flows are affecting the advertising market in many different ways. At Corus, we've experienced advertising recessions and economic slowdowns before, and each time, we have quickly moved to tightly manage our expenses in response. We are confident in our ability to manage these headwinds while at the same time executing our strategic plan. Moving to slide four. Our consolidated revenues were up 4% for the year at almost CAD 1.6 billion, with everything growing, including advertising, subscriber, and our content business. Total consolidated segment profit was CAD 444 million for the year, with free cash flow of CAD 240 million.
Despite the impressive progress we made in the first three quarters of the year to improve our financial flexibility, our revenue declines, coupled with higher amortization of program rights in the fourth quarter, resulted in year-end leverage of 3.02 x net debt to segment profit. John will take you through the detail in his remarks. On to slide five. Let me take a moment to talk about Q1. Our fall schedule is off to a great start. On Global, returning hits Survivor, 9-1-1, and CSI: Vegas continue to rank as top choices for audiences, while the new series, So Help Me Todd, is the number one show so far this fall, new to the schedule. Over on specialty, Corus currently owns the three most-watched overall specialty entertainment series, Alone: Frozen, The Secret of Skinwalker Ranch, and of course, Rick and Morty.
New Peacock shows, The Resort and Vampire Academy, are proving to be audience drivers on our network and STACKTV. We continue to see success with our Corus Studios originals such as Island of Bryan and new series, Deadman's Curse. Over to slide six. There is a large addressable market for video that Corus is well-positioned to benefit from in the years ahead. It includes audiences who consume our premium content on both linear and nonlinear platforms. The audience trends are clear, as is the strong demand for premium video digital advertising. This market in Canada is large and growing, and Canadians have more ways than ever to consume premium video content, whether through their traditional set-top box, where two-thirds of Canadians enjoy their channel subscription, or through streaming and other nonlinear on-demand services. One thing is crystal clear. Canadians love their video.
In fact, in Canada, audiences are watching on average more than four hours of video content a day. Moving to slide seven. This year, we reached a company milestone. Recurring subscription revenue is now well over CAD 500 million, and the combined result of our large traditional channels business accentuated by the growth of STACKTV. In Canada, when compared to the U.S., our channels bundle is of great value, with Canadians paying roughly half of what our neighbors to the south pay. We're experiencing only modest cord cutting of 3% per year, in contrast to much higher rates in the U.S., in part a function of the cost of the bundle. Our most popular specialty services have an important role in the lives of Canadians, with big, highly differentiated channel brands such as HGTV, History, Showcase, Food Network Canada, and W Network.
Of course, our conventional network, Global TV, is a fan favorite yet again this fall, winning Monday, Tuesday, and Thursday nights in core prime time and gaining momentum week- over- week. We are working with the BDU ecosystem to sustain the channels business through investment in the Global TV app for authenticated users and by providing premium video on-demand offerings to enable binge viewing. As noted previously, we are also working very closely with our BDU partners, sharing data insights as we pursue opportunities in advanced advertising to improve targeting and effectiveness. The set-top box-delivered traditional BDUs channels business is a large, recurring, and resilient one, with smart industry collaboration that is enhancing the value proposition for both subscribers and advertisers alike.
Over the years, investors have questioned whether we could secure future access to content, given the launch of OTT services for many of the same companies that partner with Corus in our channels business. We have always been confident in our ability to secure premium video content, given our strong strategic relationships with the U.S. studio majors. We are pleased to share that we have done just that. In the last year, we have successfully renewed, extended, and expanded the content rights we acquire from our major content partners such as Paramount Global, Warner Bros. Discovery, The Walt Disney Company, and NBCUniversal. Not only have we ensured the viability of our largest networks well into the next licensing regime. We have also successfully acquired new rights to pursue the many premium digital video opportunities that we've identified in our plan. What does that mean?
Over to slide eight. As you know, Corus is the exclusive partner for Peacock in Canada, and this content drives audiences to our linear services and acquisitions on STACKTV. In recent years, we have made smart strategic moves to build a streaming portfolio, opening the door for Corus to participate in that large growing digital video market I just described. Today, we are pleased to make some exciting announcements. We will soon add the Disney suite of services to STACKTV, further enhancing its value proposition and driving new subscriber acquisitions. We have secured the modern library content stacks of several of our hit CBS shows on Global, such as FBI, NCIS, CSI: Vegas, and Ghosts, which will also be added to STACKTV to create more value to subscribers as well as to the Global TV app for authenticated subscribers to our channels business inside the BDU ecosystem.
This fall, we successfully rebranded Nick+ to TELETOON+, transforming a popular historic Corus cartoon channel brand into a powerhouse animation OTT streaming service. To accomplish this, we secured a groundbreaking multi-year all rights deal with Warner Bros. Studios and Cartoon Network, part of Warner Bros. Discovery. Much of this expanded offering of multi-platform content will window across all of our streaming services before landing on the newest platform, Pluto TV. Our recently announced plans to launch Pluto TV, the world's leading fast, free ad-supported streaming television service in Canada on December first with Paramount Global, is yet another way we are putting more content in more places while providing new opportunities for advertisers. Three years ago, we launched STACKTV, then the refreshed Global TV app, followed by the Global News OTT streams, all of which are now available across multiple platforms with further expansion opportunities ahead.
These, along with the addition of TELETOON+ and the soon to be launched Pluto TV, have enabled us to build a powerful streaming portfolio to participate in the rapidly growing premium digital video marketplace with the full support of our largest content partners. This is why we are so excited for the future growth prospects of our premium digital video offerings in Canada. Moving to slide nine. It's been a record year for our content business. We have made meaningful progress expanding our studio offerings with a strong slate of shows from Nelvana and Corus Studios and adding new and complementary genres with the addition of Aircraft Pictures and Waterside Studios.
This expanded slate of content has resulted in increased revenues in the international marketplace with major distribution partners such as Hulu, Netflix, and others, a nod to our creative talent with big multi-season orders of our hit shows. Over to slide 10. There are three large categories of costs I would like to address before turning it over to John to provide more further detail. The first category, as I've just discussed, is the smart investments we have made to renew, extend, and broaden programming deals with our U.S. content partners. These investments ensure the long-term viability of our channels business and enable us to pursue attractive new opportunities in the fast-growing premium digital video marketplace. They also result in some programming cost inflation, but these are smart investments that secure our strategic position as a multi-platform content intermediary.
The second cost category is most definitely not what I would characterize as strategic programming investments, but rather regulatory programming cost obligations. These result from the dated, regressive spending obligation that binds Corus, while our trillion-dollar market capitalized, foreign-owned internet media broadcasters and competitors enjoy unfettered and unregulated access to our market. As you'll recall, our broadcast regulator decided the summer before last that Corus would be required to make up the approximately CAD 50 million in Canadian production expenditures that we could not spend given the COVID-19 pandemic and related production shutdowns in 2020. This unexpected decision to make us spend more on Canadian programming in a challenging economic environment will result in ongoing margin pressure in fiscal 2023 and fiscal 2024, just as it has in fiscal 2022.
The final cost category that every company in every industry now must address is the challenging labor market, as well as the additional costs as we all return to work, which of course, we have described as the future of work. Our investments in flexible work arrangements, in travel to see our teams and our clients, and in the ongoing support of the well-being of our people remain paramount to our future success. Like other companies, we are seeing increases in these and related expenses as COVID-19 restrictions are relaxed. With that, I will now turn it over to John to discuss our Q4 and year-end results.
Thanks very much, Doug. Good morning, everyone. I'm starting on slide 11. As Doug mentioned earlier, the uncertain economic environment that emerged this past summer is impacting advertising demand, and that's contributing to lower consolidated revenue of CAD 340 million in our fourth quarter. For the year, we delivered consolidated revenue of almost CAD 1.6 billion, and that's a 4% increase from the prior year as a result of strong revenue momentum in the first three quarters of the year. Consolidated segment profit was CAD 56 million for the quarter and CAD 444 million for the year. As a reminder, in the prior year, we did benefit from over CAD 23 million in wage subsidy and regulatory fee relief that did not recur this year.
As Doug has just underscored, we are also incurring additional Canadian programming costs as a result of that negative CRTC decision in August of 2021, and this amounted to approximately CAD 19 million for the year and CAD 8 million for the quarter. The decision to catch up on approximately CAD 50 million of CPE underspend has been and will be a drag on our margins for F 2022 through to F 2024, but then it will pass. Consolidated segment profit margins were 17% for the quarter and 28% for the year. Given the current macroeconomic environment and as a result of annual impairment testing in the fourth quarter, we recorded a non-cash goodwill impairment charge of CAD 350 million in the television segment as detailed in our MD&A for the fourth quarter and year ended August 31, 2022.
This is reflected in the consolidated net loss attributable to shareholders for the quarter of CAD 1.82 per share and CAD 1.19 per share for the year. Adjusting for this charge results in adjusted net income attributable to shareholders of CAD 17 million or CAD 0.08 per share for the year. We delivered strong free cash flow of CAD 45 million in the quarter, and that's an increase of 27% over the prior year quarter and CAD 240 million for the year. At current trading levels, this represents a free cash flow yield of over 50%. Net debt to segment profit was 3.02 x at August 31, 2022, and that compares to 2.76 x a year ago.
As we look forward into Q1, a reminder that our free cash flow benefited from a CAD 43.5 million distribution from a venture investment in the prior year first quarter. Now, let's turn to our TV results for the fourth quarter and year as detailed on slide 12. Overall, TV segment revenues were CAD 314 million for the quarter. That's down 6%, while for the year, revenues of CAD 1.5 billion were up 3%. Although TV advertising revenue was meaningfully lower in the fourth quarter, for both the full year, TV advertising revenue grew by 2%. We also experienced positive year-over-year uptake of our streaming services and delivered a substantial increase in content revenues for the quarter and the year, reflecting the revenue diversification benefits of our portfolio of businesses.
Q4, TV advertising revenue was down 14%, reflecting lower advertising demand throughout the summer months, as Doug has just discussed. Subscriber revenue increased 2% in the quarter and came in at a record CAD 518 million for the year. That's up 4% compared to last year. This impressive result was driven mainly by increased year-over-year demand for STACKTV. As mentioned last quarter, seasonality trends were evident in the demand for our streaming services over the summer. This trend has reversed in the fall, and our focused investments in streaming subscriber acquisition strategies and the launch of our strong fall schedule has resulted in an increase in trial and paying subscribers in recent weeks as we wrap up several weeks of premieres, and we remain focused on getting to our target of 1 million streaming subscribers.
Distribution, production, and other revenue increased 4% for the quarter and 8% compared to the prior full year. This growth primarily reflects the addition of Aircraft Pictures in February of this year. Given macroeconomic conditions and other risks, as well as a tough comparable of 16% TV advertising revenue growth in Q1 of last year, we currently anticipate some year-over-year softness in TV advertising revenue, including lower television advertising revenue for the first quarter of the new fiscal. While the duration of current macroeconomic conditions is uncertain, our team remains focused on adeptly managing through the challenging period, just as we have in the past, and positioning us for the eventual recovery. Direct cost of sales was up 15% for the quarter and 16% for the year.
As we've noted previously, this encompasses a significant increase in amortization of program rights, which was up 13% for both the quarter and the year. The increase reflects our purposeful investment in U.S. studio output deal renewals, which provide us with extended terms and broader rights to pursue attractive digital video growth opportunities, as well as increases in costs from the ramp-up of Canadian content production driven by the CRTC's catch-up decision, which represents approximately half of the higher cost in Q4. Investments in U.S. content support our longer-term strategy to drive top-line growth and revenue diversity by expanding our offerings for both audiences and advertisers. Looking ahead to fiscal 2023, we anticipate that programming costs will grow modestly on a full-year basis, with approximately half of this driven by the CRTC's catch-up decision.
We will seek to match audiences with advertiser demand whenever possible as part of our cost management efforts. Film investment amortization increased by CAD 2 million for the quarter and CAD 11 million for the year, and that's mainly as a result of the addition of Aircraft and an increase in episodic deliveries from in-house productions. Other costs of sales growth of CAD 3 million for the quarter and CAD 9 million for the year resulted from costs associated with certain sales initiatives, which are correlated to the associated revenues. TV G&A expenses were up CAD 9 million from the prior year quarter and CAD 53 million for the year. As a reminder, again, last year included CAD 20 million of federal wage subsidy and regulatory fee relief combined for the TV segment.
In addition, in the current quarter, G&A mainly reflects an increase in advertising and marketing investments to promote new program launches in STACKTV, some increased people costs and expenses related to streaming digital services, system initiatives, future of work, and other areas. Overall, TV segment profit was down in the fourth quarter and year. In the fourth quarter, this was primarily a result of the contraction of advertising demand, higher amortization costs for programming rights and film investments, and the G&A expense increases. TV segment profit margins were 19% in the current year quarter, 31% for the year. That compares to 33% and 38%, respectively, in prior year comparable periods. As detailed on slide 13, our new platform and optimized advertising revenues continue to grow as we deploy more content in new ways, and the adoption of advanced advertising solutions gains traction.
New platform revenue was 12% or CAD 33 million for total TV advertising and subscriber revenues in the fourth quarter, and 10% or CAD 142 million for the year. The continued growth reflects 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 also up significantly in Q4 and for the year, representing a new milestone of 50% or CAD 77 million of total television advertising revenue in the quarter and 43% or CAD 372 million for the year. This is an increase of 26% for the prior quarter and 41% from the last full year, reinforcing our leadership position in the transformation of how television advertising is sold.
Next, let's turn to our radio results, which are outlined on slide 14. Radio was relatively resilient in the fourth quarter despite the challenging advertising market, with the recovery continuing for the full year. Radio segment revenue is flat for the quarter and up 9% for the year, and that's a result of strong local revenues offset by the impact of broader macroeconomic conditions on national sales. Radio segment profits decreased CAD 2.6 million to CAD 1.7 million in the quarter and CAD 0.8 million to CAD 13.3 million for the year. The non-recurrence of government-related pandemic relief, along with some increased people costs and sports rights costs, are the primary drivers of increased expenses for the quarter and year. Radio segment profit margin was 7% in Q4 and 13% for the year. Over to slide 15.
Looking back on the year, we are pleased with the steps we've taken to strengthen our capital structure, which included a second high yield note offering in Q2 and the amendment and extension of our bank credit facility in early Q3. We built a strong financial foundation to support the advancement of our strategic plan while enhancing our focus on shareholder-friendly activities. Despite the macroeconomic challenges impacting advertising revenues, our goal to drive net debt to segment profit below 2.5 x over the longer term remains in focus. As a reminder, we have now paid down over CAD 735 million of total debt since the changes to our capital allocation policy took effect in September of 2018. With the amendment to our credit facility this past year, we no longer have mandatory bank debt repayments.
However, in Q4, we did continue to make optional repayments. In August, we announced an increase to the size of our normal course issuer bid to 10% of our public float, and that's up from 5% previously. This move was intended to create additional flexibility. At the end of September, we had repurchased approximately 8.6 million shares, representing 44% of the amended NCIB. This morning, we issued a press release declaring our December 2022 quarterly dividend of CAD 0.06 per share for Class B shareholders, providing a very compelling dividend yield of 11%. As a reminder, we paid out approximately CAD 50 million for the year, representing a dividend payout ratio of just over 20%. These shareholder-friendly activities of paying down debt, buying back shares, and paying an attractive dividend were an aggregate CAD 189 million for the year.
Since our new capital allocation strategy was introduced back in September 2018, this amounts to CAD 975 million. While we manage through this challenging economic environment, as we have successfully done many times before, we do so with a stronger balance sheet and a commitment to carefully managing our expenses and our cash. We have a strong record of prudently managing our business while maintaining focus on positioning Corus for the future by investing in the business, delevering, and providing attractive returns for our shareholders. We're confident in our long-term plan and in our team. With that, I will turn it back to you, Doug.
Thank you, John. Finally, over to slide 16. On today's call, we wanted to acknowledge the immediate realities of the advertising recession and provide some detail on costs. Our f ocus on expense control is resolute, as is our pursuit of the premium video multi-platform content opportunity in Canada. We have made smart investments to renew, extend, and broaden the content rights we acquire from our U.S. studio partners that will ensure the resiliency of our channels business well into the next regulatory regime. Importantly, it sets the stage for continuous growth as measured by our new platform revenue metric. Our streaming portfolio now includes STACKTV, the Global TV app, the Global News OTT offerings, the newly debuted TELETOON+, and soon the launch of Pluto TV. That is most certainly more content in more places.
Our efforts to transform how we sell media is evident, and our optimized advertising revenue metric now exceeding 50% for the first time this past quarter. That is another milestone achievement since we began reporting this metric almost two years ago. We have made measured, purposeful progress in expanding our own content offering, adding Aircraft Pictures and Waterside Studios alongside Corus Studios and Nelvana, as we remain focused on international opportunities licensing our content. We have demonstrated a focus on shareholder-friendly activities, given our company's substantial free cash flow, as evidenced with a free cash flow yield of over 50% based on yesterday's closing share price. Our leadership team at Corus and all our people have adeptly managed through difficult environments before. I'm confident we'll successfully do so again. Our immediate focus will be to balance the execution of our strategic plan as we tightly manage our expenses.
Thank you, and over to you, operator.
Ladies and gentlemen, if you would like to ask a question, you can signal by pressing star one on your telephone keypad. Do keep in mind if you are using a speakerphone, please make sure the mute is released so that signal can reach our equipment. Once again, for questions today, star one. We will begin with Adam Shine with National Bank of Canada.
Good morning. Maybe three quick questions. The first, Doug, this might be purely semantics, but back on the September 9 press release, you talked about, you know, a view of meaningful year-over-year softness in TV advertising. You and John on the call today, and also in the media day are talking more about sort of some softness. Again, you know, maybe it's just purely semantics, but curious if over the last six weeks or so anything has changed in terms of how you actually performed over the past six weeks and maybe how some of the evolving bookings are going. That's the first one.
Thanks, Adam, and nice to hear from you. I would say the ad economy is still very choppy. I tried to give some color on the many ebbs and flows within, you know, the various product and service categories. They're all over the place. I mean, I've talked to a number of CEOs whose businesses are just sort of rolling around right now given sort of the realities of the pandemic, supply chains, restrictions being lifted, consumer preferences, et cetera, et cetera. I would, you know, I'd be reluctant to give any sort of forward guidance other than to say the choppiness kind of remains.
We seem to have sort of leveled off and put it that way, where we've kind of found a sort of a stable kind of this type trend or a reset you might wanna say. From there I would just be somewhat sort of more on the choppy side going forward as a description.
Okay. One more for you, and then I'll save another one for John. Just for you, just in regards to, you know, two things. We can start maybe just in regards to Netflix ad supported tier coming next month. It's only about five minutes per hour. The company, by its own admission, is saying that, you know, obviously it's gonna be a slow sort of ramp. Maybe talk to sort of what you might be hearing out there in regards to receptivity from advertisers and at the same time juxtapose that with obviously your ongoing enthusiasm regarding the launch of Pluto TV early December.
Sure. First off, I would say that we've been competing with large foreign digital advertising giants for over a decade, and so this is just yet another one. Secondly, you know, these approaches that those big majors are applying are for, you know, global markets. It's a programmatic, you know, sort of approach. They have no ability to do advertiser integrations. They have no end-to-end sales functions or capabilities. They don't have 250, you know, awesome sales people like we do at Corus that can really manage relationships with all of our advertisers and agencies. I you know I'm obviously aware they're coming to the market. I'm also told they're trying to extract a premium CPM, which I don't think is gonna work very well for them.
I you know, I will watch them, Adam, but I'm not losing any sleep over it.
Okay. Do you want to talk at all incrementally on Pluto in terms of, you know, how early receptivity is going, or we'll just wait for that more on the Q1 call?
Well, I think the note I really wanted to hit, today we want to talk about the immediate challenges we're seeing and our confidence in managing through them. Really to set the table for our streaming portfolio, which is very massive. Like we're coming out of the chute for this year with a really strong, you know, expansion of STACKTV, with new, services being added as the Disney suite of services. TELETOON+ is a powerhouse animation service, which is really getting some great traction. We're adding a whole bunch of in-season STACKTV content from our partner CBS to both STACKTV to improve its value prop in addition to Disney+ plus a Global TV app. Then we're launching Pluto TV, which will benefit from both our content, at Corus and, you know, 20,000 hours from Paramount Global.
It's the suite of our streaming portfolio services that I think is the note here. Your specific question on Pluto, yes, very well received. I mean, you know, Canadian advertisers have been clamoring for premium digital video inventory for years now. The fact that we can sell our entire portfolio of media, you know, and add a big digital offering across five different streaming products, and let's not forget the Global News OTT app which continues to grow, is, I think, a great and very competitive offering. We're excited about the early appeal of Pluto. The key here is to think of the larger portfolio as opposed to just the Pluto TV launch in and of itself.
Okay. Maybe just for John then, cause I know you touched on it, John. Just in regards to the streaming services, specifically on the subscriber count. You didn't give that for Q4. I don't wanna put words into your mouth, but I'll presume that there might have been a bit of a decline at least Q- over- Q, but year- over- year growth nonetheless in Q4. I think there was a bit of a delay from Q3 into July in regard to a subscriber acquisition program. I don't know if you might have touched on that. I might have missed that earlier on the call. Can you maybe just touch on you know some of the cadence and the progress going into Q1?
Because obviously, you know, I think you've had Fubo in the mix basically since early August, I believe.
Yeah, we have, and that's been doing quite well actually out of the gate. I'd say the way I describe it as is, and we talked about this even on the Q3 call, you know, there's definitely subscription seasonality in what we see in STACKTV now. I think the good news is, you know, it's not that there's a big uptick in churn. In fact, churn has been going down through the summer. It's not that there's a decline in the conversions from, you know, preview to paid. What we really saw, I'd say for the last four or five months was
A decline in gross ads and a bit of a decline in win backs, which is, you know, very related to gross ads in a way, because that tells us about the appeal of the content offering and what new content we have. I wouldn't say we're at a point now where we're declining at all. In fact, really, since the fall launch, starting with some of the specialty content and now, you know, a full slate on Global, we're seeing actually very strong weekly growth in STACKTV, and that's weekly paid growth as well as a nice number of preview customers with us as well. You know, yes, it has been a slower period through the summer, but we're getting, you know, definitely some good momentum right now.
Super. Thanks for that.
Thanks.
Thanks, Adam.
We will now move to our next question, which will come from Vince Valentini with TD Securities.
Yeah, thanks very much. Let's start, just pick up on the Netflix question from Adam. If you can refer back to your slide six in your presentation. Obviously, digital video advertising is now a substantial category and growing faster than linear TV, obviously. Do you actually view Netflix as a competitor for your linear TV advertising, sort of, inventory? Or is this just expanding the pie and whatever Netflix or Disney+ get on advertising really is just part of that overall digital category and ebbs and flows from social media and Internet giants already take, which is dramatically higher ad spend in Canada than linear TV.
Yeah. I mean, digital, I think is 66% of the media mix, right? Netflix. I don't see them. I see us competing with Netflix in digital premium video inventory. Yes. We're both going after that larger upward sloping line where there's massive growth and a huge market with a lot of demand for the difference between user generated. You know, people aren't so sure they wanna put their content next to cat videos, but they would love to put their content, you know, next to Peacock or some of the CBS hit dramas. That's where we're going, that's where Netflix is going, that's where Disney+ is going, and that's where Discovery+ is going, because that's where the demand and the money is.
That's how I would look at that, Vince.
If AVOD works well, it's working well. What if it continues to work well and the inventory of AVOD for media buyers increases, is it not logical to assume that there's gonna be some share shift from other forms of digital, whether it's just banner ads or more traditional web advertising shifting to something that's far more premium and targeted in a CTV or AVOD world?
Totally. I mean, I think banner ads and, you know, even social media advertising, I think is clearly gonna be under some pretty significant pressure. I mean, look at Snap's print, you know? So yeah, no, I think that's why I love our shape. I love our shape here with having, you know, acquired all this great premium video content and our ability now to put it on all these great streaming platforms, really positions us to fish where the fish are. In addition to, of course, offering a full suite of advertising solutions across all of our media assets, right?
That's because we still want you. You might have heard P&G, you know, their CEO this week talking about how, you know, he's redirecting advertising to wide reach and frequency media, that means television, because they see the value in having the top of the funnel presence. What we're doing at Corus is being able to build on what we already have a massive top of the funnel footprint, you know, plus we're building out the bottom or the digital piece of the funnel, too. I think it's a very strong addition to our kinda advertising solutions base, and I think the demand is gonna remain pretty strong. I know that for digital, and even now we're seeing from one of the world's biggest advertisers a nod to the importance of television.
Okay. Just back on advertising demand for Q1 to revisit that question. Are you saying we should expect things to be as bad as the fourth quarter, like -14% or potentially even worse temporarily? I just wanna make sure I'm reading your commentary clearly.
Yeah, no. Thanks for asking the question cause as I was reflecting upon my answer to Adam, I would have probably added another note, so I'll do it here. No, we've stabilized, and I would say we'll be better in Q1. It looks like if we look out for the year, you know, things will slowly sort of be on the improve. It appears at this point in time. You know, it's very volatile. You know, when you're a CMO, when you're looking to pull back on your ad spending, you typically cancel digital first because it's easy to cancel. The bookings are better in Q1, relatively speaking, than we saw in Q4. I'll say that.
Of course, I have to caveat that, Vince, with we're just about halfway through the quarter.
Exactly.
From where we sit today, that's what we see.
Okay. Then on costs, I think you said you wanted to provide some clarity on cost optimization, but I'm not really sure we got any from the presentation. You identified some buckets, but I mean, can you quantify anything? Is there some discretionary costs, you know, whether it's travel and entertainment or certain areas of headcount that you can maybe start to address? For sure, if you can talk about content spend. The CPE, I think you've well identified, but what about, you know, U.S. suppliers?
Are you seeing any reduction in the amount of new episodes you may have to pay for, or is there anything else you can do on a discretionary basis to To attack those costs. I mean, if you have no visibility on ad revenue and, you know, things could be down circa 10% for the year, I assume there needs to be some effort to try to get costs down.
Yeah, absolutely. A lot of categories in there, Vince, let me just go through them. TV programming is obviously our biggest expense by a lot. Some of those things you mentioned in terms of we call foreign, but U.S. content, in terms of timing. Right now, volumes aren't indicating that they're going to be reduced, not from our major suppliers anyway. And of course, you know, a lot of our content, particularly on specialty, comes on long-term output deals. And because they're multi-year deals, the way those run through the P&L, you know, that gets set at the beginning of the deal, and that will just amortize through. That's a time-based amortization. Things that are more on a per-play or a per-show basis, yes, there's potentially some opportunity there on reduced volume or on timing.
We're looking at all of those things for sure. Again, as I said, you know, we're trying to match our supply of ratings with the demand for those ratings. You know, that gets into the whole timing question. I'd say on some of our other costs, the G&A side of things, I think we're leaving no stone unturned there. We're engaging the whole team to cut everything we possibly can right now, just given what you mentioned on the advertising environment. You know, our goal is to have every category other than programming down year-over-year. You know, that's not gonna play out exactly the same way every quarter, nor is programming gonna play out the same way every quarter.
That's our goal right now, is just to continue to mine every single opportunity we have, as you know, as we continue to see the advertising picture. Once, you know, it perhaps improves, then we'll be able to invest a little bit more in hopefully further improvements in advertising. Right now we're in that mode of really just looking at everything. I know that's not the exact detail you want, but there's 20 categories of cost reductions that are either now happening or well on their way.
I'll just cover a little bit. We, you know, began to see some of the softness, you know, in the late summer, and that's why we put that media advisory out. You know, weeks before the advisory, we were in, you know, all hands on deck, you know, basically, you know, taking every piece of discretionary expense out, and balancing a very aggressive cost position with the realities of some costs we can't address. You know, the foreign programming is an investment, not a cost, and the nuance I think you got, Vince, was the CPE is a complete cost.
We want to make sure that the future of work that we provide for our people with flexible work arrangements and the related costs in that regard. With that said, you know, we've been very aggressive. We don't guide on revenue, really won't guide on expenses, but we will tell you that we're leaving no stone unturned. We're very focused on launching the streaming business 'cause we know there's growth there, right? That's sort of the balancing act that we've taken on.
Thanks, Doug and John. The sub-question on programming costs is Disney product being added to STACKTV. Correct me if I'm wrong, but you initially did not have digital rights in Canada to be able to do that. Is that something new that you've negotiated for? Therefore, in some places you're actually strategically increasing programming investments deliberately, even with the macro backdrop?
Yes, 100%. I think this is something. Vince, you know, we've talked about this before, right? One of the investor worries is, well, why won't one of these guys just take all their content one day and just put it on their own platforms? I've always said, "No, it's never gonna happen because the content licensing business is important." The fact that, you know, we're able to strategically align with Disney to put their channels in our STACKTV, you know, which we've described as a reaggregation of our channels package on a streaming platform, I think is a real win. It's a real testament to the fact that our business model is very resilient. It's got a long tail in Canada. It did come with some investment.
At the same time, it opens up the opportunity to kinda get a leg up on our STACKTV growth because now, you know, Disney's got such a strong brand awareness, and our subscribers will, you know, benefit from that. That's but one example. I named a couple others of smart investments that bring with it some inflation. It also not only does it renew and extend our term well into the next licensing or regime, but it also gives us a sort of open door to go after that digital video market that we just talked about on page six.
Great. I have one last two-part question. Sorry for so many questions, but, you know, a lot of.
It's okay.
A lot of concerns from investors these days given what the share price has been doing. Wanna make sure I get this on the record. The dividend, is there any risk that you cut the dividend this year, either cause the yield is too high or because of the challenging revenue and advertising market? Part B of that is, have buybacks stopped temporarily until you see some relief in the ad market, or do you expect to continue buying opportunistically?
Vince, on the dividend, as I mentioned, we did declare the December end of December payment. It's always subject to board approval every quarter. I guess the way I look at it is the payout ratio is under 20% or 20-point-something percent, just over 20%. The free cash flow you see for the year was very strong.
You know, that's sort of the always position on the dividend is that it's subject to board approval. The metrics certainly, you know, point to a, you know, a very strong position in that regard. On the buyback, we're still in a blackout period, which means we're in a automatic buying mode. When we come out of that, we'll look at it obviously almost day-to-day, just managing our cash position and what we're seeing, as you mentioned, on advertising. You know, the one thing that we've struggled with a little bit from a cash perspective, it's actually helped us, is the programming costs.
You know, even though we were basically flat on a cash basis in Q4, we're still running a little behind on cash out the door on programming, and that's simply a case of how the studios in the U.S. invoice us, so you can read that as being quite late and quite, again, choppy. We're seeing a bit of catch up on that now in Q1, so we just have to watch that as well.
Thank you.
Thanks, Vince.
Our next question will come from Maher Yaghi with Scotiabank.
Yes. Good morning, gentlemen. Thank you for taking my question. I wanna go back to, sorry to belabor this, but, on the Netflix question. Doug, you mentioned that you are not worried about advertising dollars going from linear to Netflix. I'm kind of trying to understand a little bit this concept because when I look at the spread. You know, Netflix, when they launched their product, they said the pricing for the ad-supported tranche reflects the demand that they're seeing in the marketplace.
When I look at the Canadian pricing for the ad-supported version, it's the widest versus all the other countries, or one of the widest versus all the other countries that they're launching in, which implies that they're seeing a lot of demand in the Canadian marketplace for this product. When I look at the number of, you know, individuals watching TV, why would an advertiser who is currently putting ads on linear TV not move dollars to Netflix when it's the same customer who is switching and watching Netflix on his couch and sometimes watching linear TV? Why would an advertiser not switch their advertising dollars to target that exactly same customer?
My answer to your question, Maher, is that we've been contending with competing in the media model mix for our entire 15 years at Corus. You know, the digital piece. There's digital, there's radio, there's television. You know, we don't have outdoor, we don't have print. But the fact of the matter is every media mix model or every CMO runs you know his or her ROI calculation, and television is always in the mix. It's not an either/or, it's always an and.
Our job is to provide added value to their buys on linear television, and that includes such things as integrations, you know, the ability for us to provide a social digital agency like so.da, which is, by the way, nominated as one of Canada's best social digital agencies just five years after we launched it. We have 115,000 kin YouTube influencers we add to the mix. It's a suite of advertising solutions we provide. Netflix is, you know, they're just gonna have one offering. It's gonna be a programmatic offering. That doesn't necessarily provide the wide reach and frequency that television does, and they don't trade on an industry acknowledged currency. I think, you know, yeah, sure. I don't doubt that CMOs are gonna trial Netflix, sure.
This is no different than us competing with Google or Facebook or Instagram or any of the other digital media advertising platforms. It's just another competitor. You know, we continue to improve our offerings now with a very impressive suite of streaming portfolio services to compete with Netflix for ad dollars.
I think, Maher, also in your commentary, I think you partly answered your own question because if Netflix is priced at that much of a premium, it makes linear television actually very cost effective. It's on us to prove that it's as effective, you know, a form of advertising in terms of its ability to convert, advertising spend into revenue dollars for our clients. You know, I think by pricing at such a premium, that in itself will contain some of the movement just, again, because of cost efficiency of an overall campaign, as Doug mentioned.
Okay. Is there a view? Can you share your views on how the CPM market for TV advertising on linear channels is behaving these days? Are you seeing any pressure on CPM right now?
The CPM, we, as an industry, have seen generally increasing CPMs the last number of years, and that kinda trend continues. Again, I just come back to my other comment. Top of the funnel, wide reach and frequency impressions are of great value. And, and, we provide. Again, the other thing I would just note also in terms of, when you're buying television is you're buying that whole mass of 55 + audience that isn't necessarily measured in the metric, but it's out there, and that's where a lot of the wealth is, right? So that's kind of the piece of the puzzle that we provide a gift with purchase, if you would, with advertising. So the CPM markets is remaining healthy here in Canada.
Okay. Maybe my last question on radio. Have you heard or do you have any expectations that the CRTC will, you know, finish reviewing or start even reviewing the radio market in Canada in possibility to change some of the policy and regulations there? I know it's been taking a long time. Have you heard any development on that?
Maher, I've only heard what you heard. Is it soon? Is what we've all heard. How to characterize what that is your guess as good as mine.
Sometime soon is not soon enough.
Yeah, well. Yeah, I'll make no comment on that because I know our friends at the commissioner are likely on the phone. Yeah, who knows? We'll wait.
Okay. Thank you.
Thank you very much.
We'll now take a question from David McFadgen with Cormark Securities.
Oh, hi, guys. Just a couple of quick questions. Just following on the outlook for Q1. I know you said that you expect it to be down, but not as down as Q4. Is it a reasonable probability that the advertising revenue could be down double digits in Q1, or is it just too early to say right now?
Yeah, I think it's too early to call that. We've tried to be more precise in the past. It's never turned out well. I think we'll leave it with what Doug mentioned.
Okay. You know, you had a large goodwill write-off there. Was that related to any specific assets or is that just a general charge against TV overall?
Yeah, it's just TV overall. It's. You'll see it's on the goodwill, so it's not specific to any particular license or station or anything like that. It's just an overall value.
Okay. Lastly, just on the programming spend. I think you indicated earlier on the call that about half of the increase on programming spend is the CPE catch up, and then half is the U.S. investment spending increase. Is that correct?
Yes.
Okay. If the CPE catch up isn't or the amount there, isn't that gonna be about CAD 25 million or is it gonna be more towards CAD 30 million?
For 2023?
Yeah.
No, it won't. Well, look, as I said, this year, sorry, 2022, the year just finished was just under CAD 20 million, so it's probably similar to that. It's gonna get spread a little more now because the license got extended for two years, so it's likely around the 20 zone again, maybe a little more.
Okay. We should expect a programming increase overall for the year, something like 40-45 in that zone?
A little high.
Okay.
Again, subject to, you know, some of the earlier discussion about timing of deliveries and quantity of deliveries and all those things. I mean, that's all at this time of year, that's always the wild card that we have in terms of the year-over-year. Right now between Canadian and foreign, that's why we say, you know, sort of in the middle of that. But not as high as 2022 because in 2022 we had the big ramp in Global in Q1.
Okay. If I can just ask one more. What's your outlook on the merchandising distribution and production business for fiscal 2023? Are you expecting continued growth? Could it be double digit?
I think yes to both. Just, you know, given some of the things we've done and what we see on the slate. Again, it's lumpy between quarters. You know, this quarter just reported was a bit lower. We had a big quarter in Q3 last year. You'll see it'll be different quarters potentially this coming year, but it's going to be, you know, a full year of aircraft and a lumpy pattern as we always seem to have based on deliveries. That's just the fact of life in the content business.
Okay.
Just maybe if I could just add some more color to that answer. Just the fact that we're really excited about the portfolio there too. We're trying across the company to build the video capabilities both domestically but also internationally. Very carefully slotting in specific sort of genres and slates to address hotly demanded product, you know, is I think a smart play. You know, we're just positioning our business for the future so that we can, you know, once we understand, you know, what the new regime looks like from a spend level, we'll then be able to, you know, more smartly pursue the studio content revenue opportunities internationally.
Okay. All right. Thank you.
Thank you, David.
Next, we'll hear from Aravinda Galappatthige with Canaccord Genuity.
Good morning. Thanks for taking my questions. I'll start with just to finish off on programming. You know, you indicated sort of modest growth in programming cost in 2023. Can you maybe just talk to that. I think, John, in a previous point you made, you kind of alluded to the distribution a little bit. What the cadence of that could be. Obviously, it depends a bit on the CPE catch up shape as well. Any kind of commentary on that you can share?
Sure. I mean, again, let's just look at 2022, what happened. Big Q1, that was predominantly because the prior year in 2021 had almost no new fall shows on Global because of the whole pandemic shutdown that was going on through that summer. But, you know, if you take that out of the mix, we ran, I think for the back three quarters of 2022, we were up 8%. I think after Q1 we said, you know, think 10%. Yes, Q4 was higher. A bunch of that's Canadian and that, you know, typically we do spend more of our Canadian in the fourth quarter. You know, it's going to be, again, a little lumpy. I think Q1 tends to be a little higher.
You know, it's not gonna be an exact, you know, straight line across the whole year. That modest number, if you think of that overall, you're gonna be probably ±3% or 4% in any given quarter from that midpoint for the year.
Okay. Just on the streaming platforms, I mean, you've talked about sort of all those initiatives and the trends in terms of subs and so forth. I mean, at a certain point, I guess, Doug or John, I mean, do you plan to give the Street some sort of indication as to the profitability, not just at the gross level, but below that line item? I mean, there's obviously some sort of allocation you'd have to do in terms of programming. You know, of course, as a company that's assessed based on EBITDA, so you know, I think investors wanna know what kind of profitability or kind of potential profitability can be accrued from these streaming assets. Do you plan to provide any kind of color on that down the road?
I realize that maybe it's still early days, but at some point, I guess that might be an expectation. I just wanted to get your thoughts on that.
No, that's a good question. A couple of comments on that. I mean, one of the, I think smart things we've been able to do is leverage our core business, you know, to acquire these adjacent rights for digital businesses. We would probably never get to the table on any of these new streaming opportunities if it hadn't been for the fact that we had a substantive linear business, you know, already with meaningful, you know, strategic business partnerships and monies flowing back and forth across the border with our U.S. partners. It is hard to necessarily show a direct P&L on it because, you know, we leverage the existing spend levels to acquire incremental rights.
That's when you look at our EBITDA margins, you know, compare us to our U.S. peers, we're top quartile compared to any of the U.S. majors. EBITDA margins are. I'm very proud of those margins, and that's because the way we, you know, we take advantage of our linear scale to participate in the digital. Whether or not I don't know if we'll ever report profitability. You know, we know that, you know, of course in the States, those folks going direct to consumer need to do that, and those are not good-looking businesses right now, and we're pleased to not be in a hemorrhaging situation on that type of a model. We're smartly leveraging the core to participate in the new digital in a very cost-effective manner.
It's more likely in the future we'll think about reporting, you know, maybe time spent or other things like that. Right now, the key metric to look at is new platform revenue that captures that, and that, then that's been consistently growing over the years. You should expect that to leg up as we launch more of these streaming services in the coming years.
Yeah. I mean, Aravinda, we have talked in the past about the fact that on the new streaming products there are some incremental costs that come with it directly, but they're relatively small. The contribution of those additional revenues tends to be very high.
Thanks, John. Just last question on working capital. I mean, I know we've talked about individual quarters instead of the ups and downs, but if we just take a step back, when I look at 2022 fiscal 2021, I mean, the working capital used in 2022, CAD 77 million or CAD 50 million in 2021, and then you need to throw in the variance between your program amort and the actual cash spend. I mean, that goes up to like CAD 100 million in 2020 just under CAD 100 million in 2022, and then CAD 85 or something like that in 2021.
That's a lot of working capital use for, y ou know, in a top line challenged backdrop. I mean, I'm trying to get at, is there some kind of recovery that we should expect rather than, I'm not talking individual quarters, but over the next couple of years in general?
It's a very good point and something that I find extremely challenging. When you look at the biggest swings in 2022 over 2021, we did a good job in receivables and mining some cash out of the receivables portfolio. Our DSO is as low as I've seen it since I've been at Corus. That's a place where we always look to, you know, turn that working capital investment into cash. But the other big swing was on the payables and accruals line, and that's as much about what was going on in 2021. Actually, it's all about what was going on in 2021 versus what was going on in 2022.
By that I mean, we had some fairly large accruals at the end of 2021 that became, you know, cash out the door in early 2022. You know, that's always possible to happen. I don't feel like that's going to happen in 2023. I think we might be a little bit better positioned in 2023 on the kinda liability side of things. You know, it's hard from quarter to quarter to really predict that. My earlier comment about, you know, we're totally at the mercy of how we get invoiced by the U.S. studios. I'm not gonna pay a bill I don't have.
At the end of the day, you pointed out exactly, Aravinda, like on that programming cash versus programming amort line, that's the one that we have a hard time predicting the cash side of that. That's, you know, up to us to manage as well. Yes, it's frustrating, but, you know, we're always focused on how we can, you know, maximize the conversion of our working capital into cash, for sure.
Okay. Thank you. I'll pass the line.
Thanks. Thank you.
We have time for one final question, which will come from Drew McReynolds with RBC Capital Markets.
Thanks very much. Good morning. John, just wanted to drill a little bit more into the TV programming side and your ability to manage the timing or volume. I'm just trying to get a good sense of what the delta is here in your ability to do that. Obviously, you know, Doug's gone over a lot of amazing strategic initiatives. I don't think The Street has any doubt that you can manage your costs where you have that ability. But what I'm unclear is just, you know, given the margin pressure that we saw on TV in Q4, and inevitably some year-over-year margin pressure coming in fiscal 2023, it's such a big delta here for leverage, which feeds through to everything else.
Can you give us any greater sense of, you know, how sizable that ability on timing or volume is?
Sure. You're right, Drew. There are a lot of moving pieces in it. You know what? The thing that is the most under our control is Canadian, obviously, because we commission a lot of that directly and that we don't have to worry about simulcast 99% of the time, et cetera. That's an area we can look at, but we've got the catch-ups that we have, you know, have got the other eye on, right? There's always some flow there. Frankly, Canadian typically doesn't really ever come in exactly on the timing that we expect, i.e., it can be delayed. That's nothing to do with catch-up or COVID.
On the sort of components of, you know, what's really within our control in terms of timing, you know, the output deals, as I said, they're set at the start and they run. There's really not an opportunity there. On the prime time stuff we get for Global, when it runs, we're gonna run it because we want it in simulcast and we're going to pay for it. The opportunity really there is that, you know, just the delivery pattern or reduced episode counts, which, you know, isn't really within our control. You know, we know what we've you know, put our hand up for, and that's going to come. It's just a question of when and how much.
There's a handful of things that we buy more a la carte or more show by show. They might be on fixed price output deals, but some of those things we also can control the timing to some extent. I'd say that that's you know a relatively small number. It's less than 10% of the total programming cost is in that category. So yeah, it's limited, but you know to the extent we can do it, we're gonna do it.
Yeah, maybe I'll just add a few things. I mean, we certainly have some, you know, some costs that are variable to revenue. The CPE is one based on this, the downstroke in Q4 that there's some CPE immediate reductions we can roll through the system for fiscal 2023. There's a bunch of variable revenue-related costs, commissions, et cetera that will immediately pick up as well. The other thing I would say is, to the extent to which this recession persists south of the border, our suppliers on simulcast may themselves decide to match demand with supply.
Oftentimes in the past recessions, cause we've gone back and looked at a number of different recessions over the last 15 years, and there are some evident patterns. One of them is if it's the U.S., and none of us wants the U.S. to slide into recession, let's be clear. If the U.S. does enter into a recession, then they will also be managing their programming costs accordingly. If we're on a simulcast end of that deal, we'll benefit.
Got it. Okay, that's incredibly helpful. Thank you for that. One last one for me on just the interest rate exposure maybe for you, John. I know subsequent to the quarter you did an interest rate swap, but just can you give us a sense of just higher rates here, how that just flows through?
Our rate at the end of the year, all in with the two high yield notes was 5.6% weighted. We have locked in hedged around half of the bank debt. Of course, the notes are naturally hedged because of fixed rate. You know, that's the position we take. We always like to leave ourselves a little bit of room for repayment on the term loan because it's very flexible. You know, we're typically not highly hedged on that. That's where we've landed in terms of our hedging strategy. You know, to the extent I guess that there are some continued movements in those shorter term rates, then we'll have some exposure on, I'd say about half of the term loan.
Okay, perfect. Thank you very much.
Thank you.
Ladies and gentlemen, this does conclude your question and answer session. Turning the call back to Doug Murphy for closing remarks.
Thanks, Jake, and thank you, everybody. We're pleased to spend more time with you if you'd like. Feel free to reach out to John or myself for more color on the quarter, and we hope you have a fantastic weekend. Take care now.
Ladies and gentlemen, this does conclude your conference for today. We do thank you for your participation, and you may now disconnect.