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Corus CEO ‘not losing any sleep’ over Netflix’s arrival in Canadian AVoD market

Doug Murphy, the president and CEO of Toronto-based private broadcasting group Corus Entertainment, says he is “not losing any sleep” over the impending arrival of Netflix in the Canadian advertising market.

Doug Murphy

The streaming giant is set to go live with its AVoD tier in Canada and Mexico on November 1, before rolling it out in 10 other territories including the US and UK two days later. The AVoD tier will have between four and five minutes of ads per hour, each lasting between 15 and 30 seconds and playing before, during and after shows.

Ever since Netflix and Disney+ announced plans to bring advertising to their platforms, industry watchers have been keen to understand the degree to which their presence in the ad market could eat into the ad revenue of traditional linear broadcasting companies.

Murphy played down these concerns, noting that Corus has been competing with “large, foreign, digital advertising giants for over a decade,” including Google, Facebook and Instagram.

He added that Corus holds an advantage with its local ad sales teams and the ability to tailor its advertising offering to brands.

“They have no ability to do advertiser integrations. They have no end-to-end sales functions or sales capabilities. They don’t have 250 awesome sales people like we do at Corus that can really manage relationships with all of our advertisers and agencies,” he said during an investor call on Friday.

The Corus head also took aim at the reported CPM (cost per 1,000 ad impressions) of Netflix’s AVoD tier. According to reports in the US, the streamer is charging a CPM of around US$65 for every 1,000 viewers reached – a relatively high number by industry standards. “I’m also told they’re trying to extract premium CPM, which I don’t think is going to work very well for them,” said Murphy.

Corus executive VP and chief financial officer John Gossling added: “Netflix is priced at that much of a premium, it makes linear television actually very cost-effective.”

When asked if they were concerned that ad buyers would shift their spending from linear channels to Netflix, Corus execs said the diversity of their advertising offering puts them in a good position to compete with new market entrants.

Part of Murphy’s confidence comes from the wide range of ad-supported digital offerings that Corus already has, such as SVoD service StackTV, and the upcoming launch of Pluto TV in partnership with Paramount Global.

During the call, Murphy revealed that Corus has expanded its licensing agreements with Disney and CBS for StackTV.

Corus has a long-running deal with Disney through which it licenses the Disney Junior, Disney Channel and Disney XD brands in Canada, along with a raft of programming from those brands (excluding Disney+ originals). Previously, the output deals only covered linear pay TV, but on Friday Murphy announced plans to expand the agreements to also cover Corus’s digital product StackTV.

In addition, Corus has acquired an expanded suite of digital rights for CBS projects and franchises such as FBI, NCIS, CSI: Vegas and Ghosts.

The topic of how Netflix’s entry to the AVoD market will change the streaming business was also a major talking point at Mipcom in Cannes last week.

Lionsgate’s president of worldwide TV distribution, Jim Packer, questioned whether brands will feel comfortable placing their ads alongside some of the darker scripted fare that has come to dominate global streaming.

“The part I’m really curious about with Netflix and Disney is: where’s the advertiser threshold on some of the content? There’s a lot of edgy content out there, and I see it with our licensing to various AVoDs – everybody has a different tolerance,” said Packer. “When these advertisers start spending really big money on Netflix, are they going to be comfortable [with a show like] Orange is the New Black? It’s going to be really interesting to see.”

Netflix’s AVoD tier will be priced at C$5.99 (US$4.37) a month in Canada, £4.99 (US$5.65) in the UK and US$6.99 in the US.

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