TORONTO — Film and TV production and distribution company Kew Media Group reported lower revenues and profit in its third quarter of 2019, primarily due to the seasonal nature of production sales, plus the loss of a TV series buyer, Kew Media said late Thursday in a news release.
For the three months ended September 30, 2019, Kew Media’s quarterly revenue was $47.5 million, a 10% decrease from its $52.8 million in revenues in the third quarter of 2018. This revenue was comprised of $27.5 million from the company’s Production segment (a decrease of $8.5 million or 23.6% compared to Q3 2018) and $20.0 million from its Distribution segment (an increase of $3.2 million or 19.0% compared to Q3 2018).
Overall, Kew Media’s gross profit (revenue less cost of sales) for the third quarter was $13.2 million, down from $18.2 million in the third quarter of 2018. Its gross profit margin was 27.8%, down from 34.5% in Q3 2018. General and administrative (G&A) expenses for the third quarter of 2019 were $13.9 million, an increase from $12.5 million in G&A expenses in the same quarter last year. Adjusted EBITDA totalled $0.1 million in Q3 2019, compared to $6.4 million in Q3 2018. The company’s net loss for the third quarter this year was $6.4 million, a higher net loss than the loss of $2.3 million it reported in Q3 2018.
Kew Media said in its news release the company’s financial results can be affected by seasonality, with production typically occurring over the summer and starting to deliver in the fall and winter months, when the majority of the company’s revenues and profits are achieved.
Furthermore, the decrease in revenues in its Production segment was predominantly due to the performance of its wholly owned subsidiary Essential, the company said. With Discovery’s decision earlier this year to re-brand the DIY Network as the Magnolia Network — not expected to launch until the summer of 2020 — Kew Media’s Essential subsidiary lost some key series sales, including Texas Flip ’N Move, the company said. Although Essential expects to replace these lost sales with new show orders in the coming months, the timing for the delivery of these shows has now shifted into 2020, Kew Media explained.
Kew Media’s family of production companies produced the following titles in the third quarter of 2019: Essential’s Ghost Loop for the Travel Channel in the U.S. and Off the Grid on the Beach for HGTV in the U.S.; Jigsaw’s Death Row Stories Season 4 for CNN in the U.S. and Dirty Money Season 2 for Netflix; Architect’s Home to Win Season 4 and Fire Masters for Corus in Canada; and Our House Media’s Forbidden Love and Killer Affairs for Oxygen in the U.S. and Silent Witness for Discovery in the U.S.
On the distribution front, after the company’s third quarter ended, Kew Media says it launched 458 hours of content at MIPCOM this fall — 160 hours and 18 collaboration titles with Kew Media’s group of production companies from Kew Media Distribution, and 298 hours of content from its TCB Media Rights division. Year-to-date, TCB has completed bulk deals totalling more than 400 hours to numerous Australian and New Zealand broadcasters, as well as 175 hours to Bell Media, Viasat and BBC Studios Global Channels, the company said.
“We experienced strong momentum coming out of the MIPCOM sales market in Cannes, France and through the first few weeks of Q4,” said Steven Silver, CEO of Kew Media, in the news release. “While the loss of a key buyer due to a channel re-brand and delivery timing shifts have impacted our Q3 results and will negatively impact our full-year production group performance, we don’t believe this is indicative of our ongoing growth trend. We expect to realize the revenue associated with the delivery timing shifts in 2020. Our diverse portfolio of companies is healthy and showing impressive trading in the market.”
Peter Sussman, executive chairman of Kew Media, added: “There’s never been a better time to be in our business. Kew remains firmly positioned to take advantage of unprecedented growth in content spend. We have a global, diverse platform which continues to attract traditional and new buyers. Following a very busy production season and robust sales trading at the MIPCOM market, Kew remains nimble and focused on feeding buyers’ evolving needs as we enhance our position as one of the world’s most significant independent content companies.”
For the full details of Kew Media’s financial results for the three months and nine months ended September 30, 2019, click here.
