Communiqués

Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) announced today that it recorded operating revenues in the amount of $140.8 million in the first quarter of 2021, a year-over-year increase of $3.7 million. The net loss attributable to shareholders was $4.5 million or $0.10 per share, compared with a net loss attributable to shareholders of $0.7 million or $0.02 per share for the same quarter of 2020.

First quarter operating highlights:

• Consolidated adjusted EBITDA[1] of $2,136,000, a $6,371,000 unfavourable variance from the same quarter of 2020.

• $3,421,000 in negative adjusted EBITDA¹ in the Broadcasting segment, a $7,250,000 unfavourable variance due primarily to a decrease in profitability at “TVA Sports,” which recorded a significant increase in costs as a result of the change in the broadcast schedule for the National Hockey League (“NHL”) 2020-2021 season, partially offset by increased profitability at TVA Network and commercial production activities.
• $3,628,000 in adjusted EBITDA¹ in the Film Production & Audiovisual Services segment (“MELS”), a $456,000 favourable variance mainly due to increased profitability of all segment activities, with the exception of visual effects, partially offset by the start-up of virtual stage activities, which have not yet reached their full revenue potential.

• $1,763,000 in adjusted EBITDA¹ in the Magazines segment, a $1,099,000 favourable variance resulting mainly from the additional government assistance received during the public health crisis, as well as various cost savings that offset the decrease in newsstand and advertising revenues.
• $113,000 in adjusted EBITDA¹ in the Production & Distribution segment (“Incendo”), a $554,000 negative variance, a direct result of the pandemic, which caused a delay in distribution of films produced in 2020.
• During the quarter, some of our segments again qualified for the Canada Emergency Wage Subsidy (“CEWS”). In all, $2,373,000 was recognized to support employment levels, which were still affected by the continuing public health crisis.

“Although the decrease in adjusted EBITDA¹ this quarter was mainly due to higher costs at “TVA Sports” as a result of the NHL’s condensed 2020-2021 season, our business volume is gradually recovering and is approaching normal levels. Thanks to the continued application of stringent health measures, adaptation of our work environments and methods, and our teams’ motivation, we are slowly but surely mitigating the impacts that the current crisis has had and will continue to have. That said, conditions remain fragile and our activities continue to depend on a number of evolving factors such as the government measures implemented to control the spread of COVID-19 and the difficult situation faced by some of our customers and advertisers,” said Pierre Karl Péladeau, acting President and CEO of TVA Group.

“Despite these conditions, we see encouraging signs, particularly in the advertising market for the Broadcasting segment, which posted growth from the same quarter of 2020, at both TVA Network and our specialty channels. Our digital platforms, particularly our new destination, TVA+, continue to increase in popularity and are thus driving growth of our non-traditional advertising revenues. With a consolidated market share of 39.4%[2] for the first quarter of 2021, our programs are still among the most-watched in Quebec and continued to perform strongly, particularly with the highly awaited return of the series Les Beaux malaises 2.0 and the variety show Star Académie, which attracted average audiences of nearly 1.7 million and 1.4 million viewers respectively.

“In the Film Production & Audiovisual Services segment, the volume of activities has picked up and is above last year's levels in most areas. Thanks to an extremely safe work environment that complies with the new public health measures, we are very pleased to welcome Paramount Pictures’ mega-production, Transformers, to our studios, with filming slated to start next quarter. Once again this year, production of international TV series will be significant at MELS, which is well positioned as a destination of choice for this growing industry segment. Moreover, our new virtual stage service continues to attract a great deal of interest from our customers, who have begun using the technology for both film productions and advertising," continued Mr. Péladeau.

“Although operating revenues in the Magazines segment continued to decrease, exacerbated by current conditions, the additional government assistance received to support our activities, combined with our efforts to find operational synergies, made it possible to deliver higher adjusted EBITDA[3] and a profit margin of nearly 17%. Once again, we are pleased to report that, according to the latest Vividata survey, TVA held its position as the top publisher of French‑language magazines in Quebec[4] with more than 3.4 million multi-platform readers of its French monthlies.

“Our content production activities continued at Incendo, through both local productions and co-productions with New Zealand. Despite the impact of the lockdown last spring on our ability to distribute our films at the usual pace, distribution of the first romantic comedies produced in 2020 will begin in the United States and internationally next quarter, thus solidifying production efforts of the past several months. This business segment is perfectly aligned to enable us to take advantage of the upsurge in demand for original content, in addition to diversifying our revenue streams and expanding our presence in English-language markets.

“In closing, I sincerely thank all our employees in all our segments and all regions of Quebec, who have made it possible for us to continue our mission of informing and entertaining Quebecers during this period of continued difficulty,” concluded Mr. Péladeau.

Update on the COVID-19 situation

First quarter results must be viewed in the context of the COVID-19 pandemic, which continues to have major consequences for the economic environment in Canada and around the globe. Despite the constraints created by the pandemic, the Corporation has continued and will continue to provide essential services in order to inform in addition to entertain the public, while safeguarding the health and safety of its employees and the public. The Corporation is providing television viewers with continuous coverage of the public health crisis on TVA Network and the “LCN” specialty channel.

We expect 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;
• significant 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, many of the entities in the Corporation’s various business segments qualified for the CEWS, enabling the Corporation to mitigate some of the impacts of the crisis.

Given the uncertainty surrounding the duration of the pandemic and its potential impacts, we are currently unable to predict the overall effect it will have on our operating and financial results. However, 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.

The Corporation’s executive management team and its Board of Directors are continuously monitoring the impact of the public health crisis on the Corporation’s business segments, employees, customers and business partners, as well as on the population of Quebec, in order to take appropriate action to maintain business continuity and the pursuit of its long‑term strategies.

Definition

Adjusted EBITDA

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 May 10, 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

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, with notes, and the interim Management’s Discussion and Analysis for the three-month period ended March 31, 2021, can be consulted on the Corporation’s website at www.groupetva.ca.