One Canadian media company makes money during pandemic despite absorbing a hit on a cannabis stock
This has been a challenging year for many Canadian media and entertainment companies.
Corus Entertainment, owner of the Global TV network and 39 radio stations, recorded a stunning $752-million loss from March 1 to May 31. This was mainly because of goodwill impairment and a drop in the value of its broadcast licences.
Over the same period, Postmedia also took an "impairment expense"—$12.5 million— in reporting a quarterly net loss of $13.8 million.
Glacier Media was another media company that absorbed an impairment charge—$10.9 million. That contributed to a $12.2-million loss from January 1 to March 31.
More recently, Glacier revealed that its consolidated revenues fell 36 percent in April and May.
And Cineplex Inc. endured a whopping $178.4-million loss in the first quarter.
But one Canadian media company still appears to be in the black.
ZoomerMedia's unaudited interim financial statements released today show net quarterly income of $834,201 for the three months ending on May 31.
That was on revenues of $12.4 million.
Over the same quarter last year, ZoomerMedia lost $75,909.
The founder, chairman, president, and CEO of ZoomerMedia is well-known Toronto media pioneer Moses Znaimer. He's also president of CARP (Canadian Association for Retired Persons).
Among ZoomerMedia's properties are the multifaith specialty channel Vision TV, the religiously oriented JoyTV, and FAITH TV.
ZoomerMedia's cannabis shares fell in value
But it wasn't entirely mannas from heaven over the past year for the company, which serves the over-45 Zoomer demographic.
Unbeknownst to most of its TV viewers, ZoomerMedia is also a shareholder in a major Canadian cannabis company.
And that stock took a nose dive over the year.
Back in 2018, ZoomerMedia reached two agreements with Canopy Growth Corporation.
One involved placing CARP and Zoomer seals of approval on Canopy Growth's medical and recreational brands, respectively.
"As part of this agreement, Canopy has committed to an annual minimum spend of $300,000 with ZoomerMedia through its various media properties and television production facilities," ZoomerMedia reported.
These agreements lasted two years with an option to renew for one year.
In addition, Canopy Growth planned to cooperate with Zoomer and CARP to release cannabis products by April 2020.
"This exclusive brand licensing agreement also has a two-year term commencing October 17, 2018 with a one-year renewal option," ZoomerMedia stated.
"As part of this agreement, ZoomerMedia received 16,147 common shares of Canopy."
Here's the problem. ZoomerMedia valued those shares at $1 million in the second quarter of 2019. Now, they're worth far less.
Therefore, ZoomerMedia reported an $851,964 reduction in royalty revenue from Canopy Growth through the first nine months of this fiscal year, ending on May 31.
Meanwhile, ZoomerMedia has acknowledged receiving nearly $196,000 under the Canada Emergency Wage Subsidy in the most recent quarter.
"The duration and impact of COVID-19 is unknown at this time, including measures implemented by governments and central banks," ZoomerMedia stated. "The impact of COVID-19 on the Company to date include a decline in commercial advertising and postponement of ideaCity conference to 2021."
Today, ZoomerMedia shares closed at $0.60 on the TSX Venture Exchange, down 7.69 percent.