TVA GROUP REPORTS CONSOLIDATED RESULTS FOR Q1 2024

MONTREAL, May 6, 2024 /CNW/ – TVA Group Inc. (TSX: TVA.B) (“TVA Group” or the “Corporation”) today reported its consolidated financial results for the first quarter of 2024.

Highlights

First quarter 2024

$129,161,000 in revenues, a $6,942,000 (-5.1%) decrease compared with the first quarter of 2023.$17,903,000 (-$0.41 per basic share) net loss attributable to shareholders, a $5,630,000 ($0.13 per basic share) favourable variance compared with the same quarter of 2023.$19,301,000 in consolidated negative adjusted EBITDA,1 a $4,676,000 favourable variance from the same quarter of 2023.$21,259,000 in negative adjusted EBITDA1 for the Broadcasting segment, a $1,547,000 favourable variance mainly due to savings in content costs, a decrease in CRTC Part II licence fees and savings stemming from the implementation of reorganization plans that slightly offset the decrease in revenues, particularly advertising revenues.$2,605,000 in adjusted EBITDA1 for the Film Production & Audiovisual Services segment (“MELS”), a $3,160,000 favourable variance, mainly due to higher volume of soundstage, mobile and equipment rental activities and the positive impact of the discontinuation of visual effects activities, partially offset by a lower volume of postproduction activities.$319,000 in negative adjusted EBITDA1 for the Magazines segment, a $48,000 favourable variance, mainly because cost savings were slightly higher than the decrease in revenues.$370,000 in negative adjusted EBITDA1 for the Production & Distribution segment, a $15,000 unfavourable variance, due mainly to lower adjusted EBITDA generated by TVA Films, as well as a decrease in gross margin for Incendo, partially offset by savings in administrative expenses.

Pierre Karl Péladeau, acting President and CEO of TVA Group, commented:

“While most segments showed improvement, our first-quarter results were still significantly impacted by lower revenues.

“Results in the Broadcasting segment continue to be adversely affected by the decline in our advertising revenues, which are the sole source of revenue for our over-the-air network, resulting in $21,259,000 in negative adjusted EBITDA1 for the first quarter of 2024.

“2024 will be a transitional year in which we will continue to implement the major reorganization plan announced on November 2, 2023, notably by refocusing on our mission as a broadcaster and optimizing our real estate holdings, in order to generate significant savings from these restructuring initiatives over the coming quarters. In this context, TVA Group is pleased to have reached agreements on the renewal of collective agreements for its employees in Montreal as well in Quebec City and the regions.

“Despite the many challenges facing the industry, TVA Group continues to hold the highest market share in Quebec, of nearly 41% for the first quarter. This winter, TVA Network remained the most popular channel every day of the week, with 7 of the top 10 shows in Quebec. This success is due to its many original productions, 8 of which reached the one million viewer mark. The reality show Sortez-moi d’ici! ranked first with an average audience of more than 1.6 million viewers, La Voix stood out with over 1.5 million viewers and was the regular program most watched live, the daily program Indéfendable had 1.4 million viewers, and the police drama Alertes attracted more than 1.1 million viewers. For its part, TVA Nouvelles remains the leader in all time slots, with 4.1 million viewers on a weekly basis.

“To better serve its customers, TVA Group has also revamped some of its specialty services, “Yoopa” and “MOI&CIE”, with the launch of “QUB”, the new TV channel for QUB radio, and “TÉMOIN”, a channel dedicated to crime and scandal content.

“The television industry plays a key role in our culture and society. And let’s not forget the importance of TV in keeping the public informed. That’s why it’s imperative that the governments of Quebec and Canada expand the tax credit to support print media so that it also applies to the television news sector. If we want to preserve the strong media coverage that is essential to our democracy, we must support the work of all journalists, regardless of the medium or distribution platform.

“In the Film Production & Audiovisual Services segment, our services were in high demand during the first quarter, particularly our soundstage and equipment rental activities. We are delighted to welcome two major foreign productions from Apple and Skydance to our studios.

“We also welcome the Quebec government’s decision to increase the film production services tax credit for foreign film shoots, which will help Montreal and Quebec as a whole remain attractive locations in the marketplace compared with major U.S. and Canadian cities. In addition, the increase in the cap on labour expenditures eligible for the tax credit will offset part of the increase in content costs, to the benefit of Quebec’s television and film industry.

“In the Magazines segment, results for all titles were affected by a decline in revenues, offset by cost savings. This segment has been operating in a declining market for several years. That’s why we’re all the more concerned about the significant reduction in government support from the Canada Periodical Fund. We will of course continue our efforts to convince Canadian Heritage to take action in this precarious situation.

“The Production & Distribution segment had a similar first quarter to last year. Although the segment continues to be affected by a slowdown in orders in the U.S. market, Incendo has begun production of a Christmas movie for the Roku platform.

“At a time when we are operating in an uncertain environment that is affecting the entire industry, we would like to highlight the dedication of all our employees, who are committed to contributing to TVA Group’s success. We are actively pursuing the implementation of our reorganization plan, continuing to make the necessary efforts and decisions to meet the challenges of the new media reality and ensure the sustainability of our business.

“In closing, following Jean-Marc Léger’s decision not to seek another term as a director, I would like to thank him, on behalf of the Board of Directors of TVA Group, for his dedication and important contribution as a director since 2007. Jean-Marc has been a key associate and it is a privilege for TVA Group to be able to continue to benefit from his expertise as an on-air analyst, particularly during election campaigns.”

Definition

Adjusted EBITDA

In its analysis of operating results, the Corporation defines adjusted EBITDA, as reconciled to net income (loss) under IFRS, as net income (loss) before depreciation and amortization, financial expenses, operational restructuring costs and other, income tax expense (recovery) and share of income of associates. Adjusted EBITDA as defined above is not a measure of results that is consistent with 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 depreciation and amortization of tangible and intangible assets, including any asset impairment charges, as well as the cost associated with one-time restructuring measures, 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 EBITDA may not be the same as 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 the possibility that the reorganization plan announced on November 2, 2023 will not be carried out on schedule or at all, the possibility that the Corporation will be unable to realize the anticipated benefits of the reorganization plan on schedule or at all, the possibility that unknown potential liabilities or costs will be associated with the reorganization plan, the possibility that the Corporation will be unable to successfully implement its business strategies, 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, as well as any urgent steps taken by government.

The forward-looking statements in this document are made to give investors and the public a better understanding of the Corporation’s circumstances and are based on assumptions it believes to be reasonable as of the day on which they were made. 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.sedarplus.ca 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, 2023.

The forward-looking statements in this news release reflect the Corporation’s expectations as of May 6, 2024, 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, 2024, can be consulted on the Corporation’s website at www.groupetva.ca.

TVA GROUP INC.
Consolidated statements of loss

(unaudited)
(in thousands of Canadian dollars, except per-share amounts)

See accompanying notes to condensed consolidated financial statements.

TVA GROUP INC.
Consolidated statements of comprehensive loss

(unaudited)
(in thousands of Canadian dollars)

See accompanying notes to condensed consolidated financial statements.

TVA GROUP INC.
Consolidated statements of equity 

(unaudited)
(in thousands of Canadian dollars)

See accompanying notes to condensed consolidated financial statements.

TVA GROUP INC.
Consolidated balance sheets

(unaudited)
(in thousands of Canadian dollars)

TVA GROUP INC. 
Consolidated balance sheets (continued)

(unaudited)
(in thousands of Canadian dollars)

See accompanying notes to condensed consolidated financial statements.

TVA GROUP INC.
Consolidated statements of cash flows

(unaudited)
(in thousands of Canadian dollars)

See accompanying notes to condensed consolidated financial statements.

TVA GROUP INC.
Notes to condensed consolidated financial statements

Three-month periods ended March 31, 2024 and 2023 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

TVA Group Inc. (“TVA Group” or the “Corporation”) is governed by the Quebec Business Corporations Act. TVA Group is a communications company engaged in broadcasting, film production & audiovisual services, international production & distribution of television content, and magazine publishing (note 9). The Corporation is a subsidiary of Quebecor Media Inc. (“Quebecor Media” or the “parent corporation”) and its ultimate parent corporation is Quebecor Inc. (“Quebecor”). The Corporation’s head office is located at 612 Saint-Jacques St., Montreal, Quebec, Canada.

The Corporation’s businesses experience significant seasonality due to, among other factors, seasonal advertising patterns, consumers’ viewing, reading and listening habits, demand for production services from international and local producers, and demand for content from global broadcasters. Because the Corporation depends on the sale of advertising for a significant portion of its revenues, operating results are also sensitive to prevailing economic conditions, including changes in local, regional and national economic conditions, particularly as they may affect advertising spending. In view of the seasonal nature of some of the Corporation’s activities, the results of operations for interim periods should not necessarily be considered indicative of full-year results.

TVA GROUP INC.
Notes to condensed consolidated financial statements (continued)

Three-month periods ended March 31, 2024 and 2023 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

1.   Basis of presentation

These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), except that they do not include all disclosures required under IFRS for annual consolidated financial statements. In particular, these consolidated financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, and accordingly are condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the Corporation’s 2023 annual consolidated financial statements, which describe the material accounting policies used to prepare these financial statements.

These condensed consolidated financial statements were approved by the Corporation’s Board of Directors on May 6, 2024.

Certain comparative figures for the three-month period ended March 31, 2023 have been restated to conform to the presentation adopted for the three-month period ended March 31, 2024.

2.   Revenues

TVA GROUP INC.
Notes to condensed consolidated financial statements (continued)

Three-month periods ended March 31, 2024 and 2023 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

3.   Purchases of goods and services

4.   Financial expenses (income)

TVA GROUP INC.
Notes to condensed consolidated financial statements (continued)

Three-month periods ended March 31, 2024 and 2023 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

5.   Operational restructuring costs and other

Operational restructuring costs

For the three-month periods ended March 31, 2024 and 2023, the Corporation recorded a charge for operational restructuring in connection with the elimination of positions and the implementation of cost reduction initiatives. The segment breakdown is as follows:

Gain on disposal of fixed assets

During the three-month period ended March 31, 2024, the Corporation closed the sale of a building in Saguenay to the parent corporation for proceeds on disposal of $2,600,000. The transaction gave rise to the recognition of a $2,309,000 gain on disposal.

6.   Capital stock

(a) Authorized capital stock

An unlimited number of Class A common shares, participating, voting, without par value.
An unlimited number of Class B shares, participating, non-voting, without par value.
An unlimited number of preferred shares, non–participating, non-voting, with a par value of $10 each, issuable in series.

TVA GROUP INC.
Notes to condensed consolidated financial statements (continued)

Three-month periods ended March 31, 2024 and 2023 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

6.   Capital stock (continued)

(b) Issued and outstanding capital stock

7.   Stock-based compensation and other stock-based payments

(a) Stock option plans

 (b) Deferred stock unit (“DSU”) plan for directors

TVA GROUP INC.
Notes to condensed consolidated financial statements (continued)

Three-month periods ended March 31, 2024 and 2023 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

7.   Stock-based compensation and other stock-based payments (continued)

(c) Stock-based compensation expense

For the three-month period ended March 31, 2024, an $86,000 compensation charge was recorded in respect of all stock-based compensation plans ($566,000 for the same period of 2023).

8.   Pension plans and postretirement benefits

The gain on remeasurement of defined benefit plans recognized in the consolidated statement of comprehensive loss for the three-month period ended March 31, 2024 mainly reflects the increase in the discount rate.     

9.   Segmented information

The Corporation’s operations consist of the following segments:

The Broadcasting segment, which includes the operations of TVA Network, specialty services, the marketing of digital products associated with the various televisual brands, and commercial production and custom publishing services, including those of its Communications Qolab inc. subsidiary;The Film Production & Audiovisual Services segment, which through its subsidiaries Mels Studios and Postproduction G.P. and Mels Dubbing Inc. provides soundstage, mobile and production equipment rental services, as well as dubbing and described video (“media accessibility services”), postproduction and virtual production services;The Magazines segment, which through its TVA Publications inc. subsidiary publishes magazines in various fields including the arts, entertainment, television, fashion and decorating, and markets digital products associated with the various magazine brands;The Production & Distribution segment, which through the companies in the Incendo group and the TVA Films division produces and distributes television shows, movies and television series for the world market.

TVA GROUP INC.
Notes to condensed consolidated financial statements (continued)

Three-month periods ended March 31, 2024 and 2023 (unaudited)
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)

9.   Segmented information (continued)

The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation’s business segments.

SOURCE TVA Group