Parent company Corus declined to confirm how many jobs were affected by its decision to pause new productions at Nelvana.Tijana Martin/The Canadian Press
Debt-beleaguered Corus Entertainment Inc. has halted production at the storied animation studio Nelvana Ltd., potentially ending a more-than-five-decade run that helped transform Canada into a globally recognized exporter of cartoons.
The media company said in an e-mail Tuesday that it was not shutting down Nelvana entirely, but rather moving ahead with a previously announced plan to wind down its existing projects and to pause new productions “for the time being.”
The Nelvana brand will still exist, “focusing on distribution, merchandising, and managing existing properties,” said Melissa Eckersley, Corus’s head of corporate communications. The company declined to confirm how many jobs were affected as its production work came to a close over the past few months. “As always, we continue to review opportunities and priorities as part of our ongoing business operations.”
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Nelvana was long a giant of Canadian animation and helped popularize the country’s now-common business model of developing cartoons based on successful – or potentially successful – intellectual property. Founded in 1971 by Clive Smith, Michael Hirsh and Patrick Loubert, Nelvana shot to acclaim in the 1980s with The Care Bears Movie.
It spent the next 15 years becoming an animation powerhouse, producing or co-producing shows such as Franklin, Babar and The Magic School Bus. More recently, Nelvana’s work has included such series as Barney’s World and Thomas & Friends: All Engines Go. It has also produced live-action shows such as the 2020 Hardy Boys series.
Corus struck a deal to buy Nelvana in 2000, putting up $540-million to make the studio a key part of its plan for global expansion. But the media company had more than $1-billion in long-term debt when it last reported its finances in June, and management warned then that it “has taken and continues to take significant cost-cutting actions.” They’ve also been working to restructure its balance sheet.
The animation sector has undergone rapid changes since COVID-19 lockdowns paralyzed much of the world. The industry retooled quickly to deliver projects remotely, only to be side-swiped by increased costs a couple of years later with high inflation and subsequent boosts to interest rates – and then rattled again with the Hollywood strikes of 2023.
Canadian children’s programming took another hit last week when the entertainment company WildBrain Ltd. said it would shutter four channels, including the long-running Family Channel, after Rogers and Bell said they would stop distributing them.
Much of the animation service industry that Nelvana helped develop in Canada has been struggling, and layoffs have been widespread over the past two years.
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Parent company Corus has continued to see its ad revenue decline, dropping 15 per cent from the previous year in June, with executives expecting further declines in the next quarter. Revenue from distribution, production and other sources was down 5 per cent in June compared with the year prior, which Corus attributed to “fewer episode deliveries and reduced service work.”
Bank of Montreal analyst Tim Casey called the company’s revenue outlook “very precarious” in a June note to investors, saying he continued to be concerned about the company’s ability to pay back its debt.
Earlier this year, Corus’s lenders agreed to push back the maturity date of some of the company’s debt by one year, giving it more breathing room to meet its financial obligations. Corus now has until March, 2027, to pay back a $330-million credit agreement. Separately, Corus has $500-million in senior unsecured notes due in 2028, and a further $250-million due in 2030.
In its 2024 financial year, ended last Aug. 31, Corus paid $1.8-million in bonuses to five top executives, largely based on hitting targets for cash flow, although the company’s shares had fallen 90 per cent during that fiscal year, to 14 cents at the end of last August.
Corus stock was trading at nine cents a share on the Toronto Stock Exchange, as of Tuesday’s close.