TVA Group Inc

TSX:TVA.B

Earnings Call Transcript 2020-Q4

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Fiscal 2020 Fourth Quarter Results Conference Call. Your hosts for today will be Mrs. Anick Dubois, Vice President, Finances, TVA Group Inc.; and Mrs. France Lauzière, President and Chief Executive Officer. Mrs. Dubois, please go ahead.

[Anick Dubois, Vice President of Finance]

Good morning, ladies and gentlemen. Thank you for taking part in our call today. [Foreign Language]Let me remind you that certain statements made on the call today may be considered forward-looking statements, and we would refer you to the risk factors outlined in yesterday's press release and report filed by the company with regulatory authorities. I will now turn the call over to Mrs. Lauzière.

[France Lauzière, President & CEO]

Thank you, Anick. Hello, everyone, and good morning. The positive results we've reported are due in large part to 3 factors: first, the result of TVA Sports, where costs were down substantially because of the postponement of the NHL 2020-2021 season; second, the assistance received under various government support programs; and third, the many efforts our segments have made to mitigate the impact of the crisis on the corporation. Although all our activities had resumed by the quarter, volume was still down in all our segments because of the economic slowdown. Advertising revenues were especially hard hit. Not surprisingly, the crisis is continuing, and we are still facing multiple challenges. Despite the challenging environment, TVA Group continued adjusting to market transformation. In November, we unveiled an updated TVA brand and launched TVA+, a new digital platform that reaches even more consumers who are looking for new ways to access content. The early numbers are very positive. The revamped platform logged 39% more views than in the previous year and generated 59% more revenue. Our consolidated market share was 38.6% in the fourth quarter of 2020, up 1.8 points from the same quarter last year. The growth was driven by the LCN channel, which was up 2.6 points. LCN remains the most watched specialty channel in the -- in Québec with a 7.4% market share. LCN and TVA will remain the trusted sources Quebecers turn to for information about the crisis. The combined audience for the 6 p.m. newscast, which is simulcast on LCN and TVA, topped 1 million on 51 days in Q4, more than 1 night out of 2. At TVA Network, market share was up almost 1 point driven by shows such as La Voix. TVA Sports revenues and ratings were impacted in Q4 by the postponement of the hockey season. We were very happy to see the excitement about the return of NHL hockey in January, sorry. So far, the average audience for Canadian game is 768,000 viewers. TVA Sports is focusing more on live sports and has transformed its traditional sportscast into a 100% digital offering. The pandemic continues to affect volume for most of the services offered by the Film Production & Audiovisual Services segment. However, we were able to fully resume our soundstage, mobile and equipment rental activities in the fourth quarter of 2020. Disney was able to complete the filming of the latest installment in the Home Alone franchise during the quarter. And another blockbuster will be in production at our facility soon, but we cannot disclose any details at this time. There has been no COVID outbreaks on any of our shoots, which is giving producers confidence in our studio. In the publishing segment, our ongoing efforts to capture operational synergies, combined with additional government assistance during the pandemic, enabled the Magazines segment to continue making a positive contribution to our results. TVA Publications held its position as the top publisher of French-language magazines in Québec, with 3.4 million cross-platform readers and a leading player in the Canadian magazine market with a total of 7.9 million readers on all platforms. During the last 2 quarters of the year, Incendo was able to accelerate their resumption of its activity with the production of 7 films. However, it was affected by the industry slowdown, and the sale of the film could not be completed during the year. Incendo's agility during the crisis deserves to be underscored. Among other things, we managed to make 2 co-production with New Zealand. So we were well positioned to distribute our film in the coming year as original content in -- is in strong demand. As you know, Incendo is diversifying our revenue streams and expanding our international presence. In conclusion, our ability to recover our business volume in the coming quarters and the speed with which we are able to do so will depend on factors such as how the public health crisis develop, the government measures put in place to curb the spread of COVID-19 and the difficulties experienced by some of our customers and advertisers. Now over to Anick for our financial results.

[Anick Dubois, Vice President of Finance]

Thank you, France. I would like to outline the main following financial highlights for the fourth quarter results. TVA Group recorded operating revenue of $148 million, a year-over-year decrease of $16 million or 10%. Broadcasting revenues decreased by 7% essentially due to a 22% decrease in TVA Sports revenue as a result of the postponement of the NHL 2020-2021 season, a 22% decrease in commercial production activity and a 2% decrease in TVA Network's advertising revenue. MELS revenues decreased 9% due to the current health crisis, which has reduced the volume of activity in postproduction, soundstage and equipment rental as well as visual effects. Those variances were partially offset by a 14% increase in dubbing and described video revenue due to increased demand for those services. Magazine publishing revenues declined 2% due to the -- due to continued decrease in advertising, subscription and newsstand revenues, mostly attributable to the COVID-19 situation but partially offset by an increase in financial assistance from the Canada Periodical Fund. Production & Distribution revenue decreased by 72% due primarily to a decrease in revenue from film produced by Incendo in 2020 and further, the distribution was delayed as a result of the pandemic situation. Since all our business segments are still affected by the health crisis, we were able to benefit again this quarter from the Canada Emergency Wage Subsidy in the amount of $3 million in order to support the level of employment. Thanks to this program, we provided assistance of almost $30 million over the year to support the large revenue decrease of 11% or $62 million we faced. TVA Group's EBITDA reached $46.1 million for the fourth quarter, an increase of $12.5 million compared to the same quarter last year. The Broadcasting segment posted EBITDA of $36.7 million, a positive variance of $15 million mainly due to TVA Sports, which recorded a significant decrease in costs from the NHL season. MELS segment posted EBITDA of $7.5 million, $0.4 million lower than last year due to the lower level of activities during the quarter. The Magazine segment recorded EBITDA of $2.1 million, up by $0.5 million, while the Production & Distribution segment recorded a loss of $0.4 million, down by $2.6 million. Finally, the corporation declared a net income attributable to the shareholder of $27.4 million or $0.63 per share compared with a net income of $16 million or $0.37 per share for fourth quarter of 2019. This concludes the official portion of our conference call. We will now be pleased to answer your questions. Operator?

[Operator]

Yes. [Operator Instructions] And we don't seem to have any questions in the queue at this time. [Operator Instructions] All right. It doesn't seem that we have any questions at this point.

[France Lauzière, President & CEO]

Okay. So I guess it was clear, clear.

[Anick Dubois, Vice President of Finance]

Yes.

[France Lauzière, President & CEO]

So talk to you next quarter. Thank you very much.

[Anick Dubois, Vice President of Finance]

Thank you.