Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) announced today that it recorded a net loss attributable to shareholders in the amount of $1.9 million or $0.04 per share in the second quarter of 2017, compared with a net loss attributable to shareholders of $5.7 million or $0.13 per share in the same quarter of 2016.
Second quarter operating highlights:
- Consolidated adjusted operating income1 of $11,072,000, a favourable variance of $8,645,000 from the same quarter of 2016.
- $5,076,000 adjusted operating income1 in the Broadcasting & Production segment, a favourable variance of $7,507,000 caused mainly by a 30.2% decrease in the adjusted operating loss1 of “TVA Sports” due to increased advertising and subscription revenues.
- $3,965,000 adjusted operating income1 in the Magazines segment, a favourable variance of $45,000 due primarily to the savings generated by rationalization plans implemented in recent quarters.
- $2,031,000 adjusted operating income1 in the Film Production & Audiovisual Services segment (“MELS”), a favourable variance of $1,093,000 essentially because of increased adjusted operating income1 from soundstage and equipment rental due to higher volume of activities.
“We are satisfied with our second quarter of 2017 results, particularly in the Broadcasting & Production segment, which grew its advertising revenues for the third consecutive quarter, with year-over-year increases of 77.6% at “TVA Sports”, 4.2% at the other specialty services, and 6.7% at TVA Network.
TVA Group’s total market share increased by 3.5 points to 39.8% in the second quarter of 2017 compared with 36.3% in the same period of 2016. “TVA Sports” increased its market share by 1.8 points to 5.4% as a result of large audiences for the Stanley Cup playoffs. The channel set a new record by registering the best ratings for the Stanley Cup finals since 2008. The news and public affairs channel “LCN” grew its market share by 0.8 points to 4.5% and TVA Network by 0.5 points to 23.9%. TVA Network also had the top 3 most-watched programs in Quebec during the period,” commented Julie Tremblay, President and CEO of the Corporation.
“The Magazines segment’s adjusted operating income1 was stable in the second quarter of 2017 compared with the same quarter of 2016 despite an 11.0% decrease in its operating revenues. The savings generated by the expense rationalization and reduction plans implemented in recent quarters have offset the decline in the segment’s operating revenues,” added Julie Tremblay.
“Lastly, the arrival of major new productions, including the Hollywood movie X-Men and the television series The Bold Type, in the second quarter, helped boost the Film Production & Audiovisual Services segment’s adjusted operating income,1 which more than doubled compared with the same quarter of 2016. The growing demand for film and TV serie production services, combined with the drawing power of Canada and of Montreal in particular and the reputation of our facilities and services in this field, have led us to submit to the Corporation’s Board of Directors a project to expand our existing complex,” concluded Ms. Tremblay.
MELS studios enlargement project
The Corporation’s Board of Directors today approved the plan to expand the MELS production complex in the Technoparc, near the Bonaventure Autoroute. The project involves construction of a 160,000 square-foot building which will include a 60,000-square-foot soundstage with 50-foot vertical clearance and adjacent multi-use spaces. The Corporation is in the process of obtaining the required permits. It hopes to break ground in the fall and have the facility ready to welcome its first productions in the summer of 2018.
Adjusted operating income (loss)(“Adjusted operating results”)
In its analysis of operating results, the Corporation defines adjusted operating income (loss) as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs and others, income taxes and share of income of associated corporations.
Adjusted operating income (loss) as defined above is not a measure of results that is consistent with International Financial Reporting Standards (“IFRS”). Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS. This measure is used by management and the Board of Directors to evaluate the Corporation’s consolidated results and the results of its segments. This measure eliminates the significant level of impairment, depreciation and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments. Adjusted operating income (loss) is also relevant because it is a significant component of the Corporation’s annual incentive compensation programs. The Corporation’s definition of adjusted operating income (loss) may not be identical to similarly titled measures reported by other companies.
Forward-looking information disclaimer
The statements in this news release that are not historical facts may be forward-looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Corporation’s actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements generally can be identified by the use of the conditional, the use of forward-looking terminology such as “propose,” “will,” “expect,” “may,” “anticipate,” “intend,” “estimate,” “plan,” “foresee,” “believe” or the negative of these terms or variations of them or similar terminology. Certain factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors and the risk of loss of key customers in the Film Production & Audiovisual Services segment), programming, content and production cost risks, credit risk, government regulation risks, government assistance risks, changes in economic conditions, fragmentation of the media landscape, risk related to the Corporation’s ability to adapt to fast-paced technological change and to new delivery and storage methods, and labour relation risks.
Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause the Corporation’s actual results to differ from current expectations, please refer to the Corporation’s public filings, available at www.sedar.com and http://groupetva.ca, including in particular the “Risks and Uncertainties” section of the Corporation’s annual Management’s Discussion and Analysis for the year ended December 31, 2016 and the “Risk Factors” section in the Corporation’s 2016 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of August 4, 2017 and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the applicable securities laws.
TVA Group Inc., a subsidiary of Quebecor Media Inc., is a communications company engaged in the broadcasting, film and audiovisual production, and magazine publishing industries. TVA Group Inc. is North America’s largest broadcaster of French-language entertainment, information and public affairs programming and one of the largest private-sector producers of French-language content. It is also the largest publisher of French-language magazines and publishes some of the most popular English-language titles in Canada. The Corporation’s Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.
Denis Rozon, CPA, CA
Vice President and Chief Financial Officer