HALIFAX – Kids and family content maker and broadcaster DHX Media said late Monday it has concluded its strategic review, announcing that the company has signed a multi-million-dollar agency agreement for Peanuts in China and Asia with CAA Global Brand Management Group LLP.
This follows the previously announced sale of a minority stake in Peanuts to Sony for $235.6 million. This new multi-million-dollar agreement for Asia is expected to contribute to an approximately 35% increase in revenue for company division Peanuts Worldwide from this region over its term, reads the press release.
The company also announced that it has refocused its content strategy to prioritize investment in its online video, educational, arts and music portal WildBrain, and the development of premium content for major streaming services and broadcasters. DHX says it will invest in more short-form content to deliver “rapid returns on investment by leveraging data from WildBrain's 2.4 billion monthly views and over 50 million subscribers, to create and develop global brands. WildBrain continues to offer outsized growth potential, and we will prioritize investment to drive its growth,” adds the statement.
Additionally, as an outcome of the strategic review, DHX Media's board has suspended the company's quarterly dividend to shareholders, effective immediately. This will free up approximately $10 million in annual funds, to invest in WildBrain and to continue paying down debt, added the release.
"The strategic review marked the end of an important stage in the evolution of DHX Media," said Michael Donovan, executive chair and CEO, in the release. "In the first stage of the company, we grew rapidly by acquisition to assemble a world-leading library of children's and family content. In the second stage, we began to upgrade the necessary team, systems and processes to monetize that portfolio in the global market.
"We are well positioned to enter our next stage of growth, focused on what we identified during the strategic review as the two largest opportunities for kids' and family content: accelerating investment in our WildBrain network to capitalize on the rising popularity of kids' content on YouTube; and better leveraging our IP portfolio to produce premium originals for major streaming services. We believe this refocusing of our strategy will allow us to deliver significant growth, while generating free cash flow to pay down debt,” added Donovan.
During the review, DHX’s leadership also undertook a comprehensive internal review of its management team, operational processes and structures, and its content strategy, reads the release. The combined strategic and internal review process, once fully implemented, is expected to generate $11 million in annualized operating savings.
DHX (which also owns and operates specialty services Family, Family Junior, Télémagino, and Family CHRGD) also reported its fiscal 2018 results Monday night.
For the year ended June 30, 2018, revenue grew to $434.4 million vs $298.7 million in fiscal 2017 (mostly driven by the Peanuts sale). WildBrain revenue grew to $57.3 million vs $34 million last year, thanks to a 136% increase in watch time to over 129 billion minutes
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) grew to $97.5 million vs $87.3 million last year.
Positive operating cash flow was $37.8 million, excluding acquisition and related refinancing payments was $24.4 million, vs $6.5 million outflow in fiscal 2017
Its net loss was $14.1 million versus a net loss of $3.6 million last year. Debt leverage ratio (debt to equity) at June 30, 2018 was 6.1x and is reduced to 4.7x on a pro forma basis after giving effect to the Sony transaction.
Click here for the full quarterly release.
