Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) announced today that it recorded operating revenues totalling $150.7 million in the third quarter of 2021, a year-over-year increase of $31.2 million. Net income attributable to shareholders was $19.0 million or $0.44 per share, compared with net income attributable to shareholders of $8.4 million or $0.19 per share for the same quarter of 2020.
Third quarter operating highlights:
- Consolidated adjusted EBITDA of $35,504,000, a $12,141,000 favourable variance from the same quarter of 2020.
- $21,538,000 in adjusted EBITDA1 in the Broadcasting segment, a $4,600,000 favourable variance due to the increase in adjusted EBITDA1 at “TVA Sports,” which broadcast the 2019-2020 NHL playoffs in the third quarter of 2020 following the new broadcast schedule necessitated by the pandemic, partially offset by a decrease in adjusted EBITDA1 at TVA Network.
- $10,565,000 in adjusted EBITDA1 in the Film Production & Audiovisual Services segment (“MELS”), a $7,618,000 favourable variance due to increased profitability of soundstage, mobile and equipment rental activities, partially offset by the weaker performance of dubbing, subtitling and described video, as well as visual effects.
- $2,048,000 in adjusted EBITDA1 in the Magazines segment, a $951,000 unfavourable variance stemming from a resumption of activities amid reduced government support.
- $1,243,000 in adjusted EBITDA1 in the Production & Distribution segment (“Incendo”), an $816,000 favourable variance generated primarily by the international distribution of films produced by Incendo.
“We are pleased with the results for the third quarter of our financial year, which reflect growing activity in most of our segments. For the third straight quarter, advertising revenues at TVA Network and our specialty channels were up over the same quarter of last year, but they also rose 22% compared with the same quarter of 2019, which was not affected by the public health crisis. Based on this positive situation, we can continue and increase our investments in content, a strategy that is reflected in our fall programming, with a wealth of new shows, original productions and exclusive content for our digital platforms. TVA+ continues to grow and build on its popularity. Our array of content is broader and more diverse than ever and is available on multiple platforms to reach more Quebecers on a daily basis and bring them together for major television events,” said Pierre Karl Péladeau, acting President and CEO of TVA Group.
“With a consolidated market share of 38.2% for the third quarter of 2021, our shows are still among the most watched in Quebec and continued to perform strongly, particularly the hit family variety show Chanteurs masqués, which attracted over 1.6 million1 viewers. “TVA Sports” had the third most watched program in Quebec with an average audience of nearly 1.5 million1 viewers for certain games of the Stanley Cup finals, in addition to ranking third among all French language channels for both daytime and prime time viewing.
In the Film Production & Audiovisual Services segment, our services were in high demand during the quarter, particularly our soundstage and equipment rental activities. The shooting of Paramount Pictures' mega production Transformers: Rise of the Beast is now over, making way for a major online streaming player that will rent our studios in the coming months. MELS’ services are increasingly being recognized and used by international clients, placing us in the enviable position of being able to take advantage of the current market growth and plan our offering with MELS 4. Our virtual stage services continue to draw the attention of producers, with greater numbers using the technology to facilitate shooting certain scenes or for creative advertising. Also, MELS was awarded the prestigious EPIC MegaGrant by EPIC Games to support ongoing development of the services and it was able to acquire its own equipment for virtual stage activities to be used in our studios this fall,” continued Mr. Péladeau.
“The Magazines segment reported a decrease in profitability due to the difficult situation in an industry that has been in decline for a number of years, which was exacerbated by the reduced government support. Grants from the Canada Periodicals Fund’s regular program have decreased considerably due to program modifications. However, we welcome Heritage Canada's announcement this quarter confirming the extension of the enhanced grant until March 31, 2022 to help businesses in the segment recover from the effects of the pandemic. The significant decrease in profitability clearly demonstrates that government support is critical to the segment’s survival. Nevertheless, the most recent Vividata survey indicates that we remain the leader in the magazines market, confirming our position as the number 1 publisher of French-language monthlies in Quebec with nearly 3.1 million3 cross-platform readers.
Our Production & Distribution activities continued with the completion of nine new romantic comedies that will be ready for distribution in the next few months, particularly international distribution, thus maintaining the growth of this segment. The growing popularity of streaming platforms also enabled the segment to increase its presence on this type of platform and to improve its profitability. Sales growth at Incendo continues to help diversify our revenue streams and expand our presence in English-language markets.
In closing, although the quarterly results are encouraging and indicate the Corporation is gradually recovering from the impacts of the public health crisis, the economic situation remains fragile and we continue to exercise caution in managing our activities. I want to thank our employees for their outstanding work and for helping us every day to fulfill our mission to inform and entertain Quebecers,” concluded Mr. Péladeau.
On April 14, 2021, France Lauzière decided to take time off from her professional duties for family reasons. Ms. Lauzière is now resigning from her position as President and Chief Executive Officer of TVA Group, for the same reasons. However, she remains available to work with the company on strategic projects content. Pierre Karl Péladeau will continue to serve as acting President of TVA Group.
“I had the privilege of working with France for 20 years. At every stage of her career, she always impressed me with her devotion to the company’s success. Since joining TVA Group in 2001, France has helped strengthen TVA's dominant position as Québec's television leader. She paved the way for some major innovations in content creation, content acquisition and multiplatform distribution. Flagship programs such as Star Académie, La Voix, Révolution, La Tour, Les beaux malaises, Fugueuse and Pour Sarah, produced under her leadership, gave our artists and crews a chance to shine and showcased Québec culture. From the bottom of my heart, I thank France for her immense contribution,” said Mr. Péladeau.
Update on the COVID-19 situation
Third quarter results must be viewed in the context of the COVID-19 pandemic, which had major consequences for the economic environment in Canada and around the globe. Despite the constraints created by the pandemic, the Corporation has maintained its operations, while safeguarding the health and safety of its employees and the public.
It is possible that the financial impacts of this crisis will continue to be felt in the coming quarters, including:
• significant variability in our revenues and content costs related to live broadcasts of sporting events organized by professional leagues as they resume their activities while cancelling some events and making significant changes to formats and broadcast schedules;
• reduction in advertising revenues in markets or sectors still affected by the public health crisis, which will inevitably affect the Broadcasting and Magazines segments;
• variance in the level of activity at MELS and in the Production & Distribution segment resulting from the stoppage or a slow and complex resumption of our content production and distribution activities due to factors such as the need to comply with health precautions and physical distancing rules on the set, the closing of borders with some countries, and production insurance challenges.
• possible reduction in the publication frequency of some periodicals, which would affect revenues in the Magazines segment.
Because of the decrease in their revenues, some of the entities in the Corporation’s various business segments qualified for the Canada Emergency Wage Subsidy, enabling the Corporation to mitigate some of the impacts of the crisis.
Given the uncertainty about the future evolution of the pandemic, including a possible new wave, we cannot determine the full impact of the crisis with certainty. We believe that our current sound financial health, our strong balance sheet and the steps we have taken will enable us to continue to deliver positive cash flows.
In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation and amortization, financial expenses, operational restructuring costs and other, income taxes and share of income of associated corporations. Adjusted EBITDA as defined above is not a measure of results that is consistent with International Financial Reporting Standards (“IFRS”). It is not intended to be regarded as an alternative to other financial operating 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 EBITDA is also relevant because it is a significant component of the Corporation’s annual incentive compensation programs. The Corporation’s definition of adjusted EBITDA 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 and Production & Distribution segments), 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, labour relation risks, and the risks related to public health emergencies, including COVID-19, as well as any emergency measures implemented by government.
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 www.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, 2020 and the “Risk Factors” section in the Corporation’s 2020 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of October 28, 2021 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 production and audiovisual services, international production and distribution of television content, 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.
The Condensed Consolidated Financial Statements dated September 30, 2021, with notes, and the interim Management’s Discussion and Analysis for the three-month and nine-month periods ended September 30, 2021, can be consulted on the Corporation’s website at www.groupetva.ca.
Anick Dubois, CPA, CA
email@example.com / (514) 598-3987