MONTREAL — Despite the ongoing Covid-19 crisis and its impact on live sports broadcasting and advertising revenue, Quebecor Media’s TVA Group reported late Monday afternoon a slight increase in its operating revenues and higher earnings for the first quarter of 2020.
However, TVA Group’s overall net loss was $712,000 in the first quarter of 2020, which is a significant improvement over the company’s net loss of $6.7 million in the first quarter of 2019. Q1 ended March 31st, so most of the quarter operated under much more normal times.
TVA Group’s consolidated revenues totalled $137.1 million in Q1 2020, a year-over-year increase of $3 million from the $134.1 million in revenues reported in Q1 2019. The company’s broadcasting segment accounted for $108.1 million of revenues in Q1 2020, which was a slight decrease from its $109.7 million in revenues in Q1 2019. TVA’s film production and audiovisual services segment, which includes its Mels Studios, reported $18 million in revenues in Q1 2020, up from $13 million in Q1 2019. The company’s new production and distribution business, launched after the April 2019 acquisition of the companies in the Incendo group, achieved $4.8 million in revenues in Q1 2020. TVA’s magazines segment saw its revenues decrease to $10.3 million in Q1 2020, down from $14.7 million in Q1 2019.
In terms of earnings, TVA’s consolidated adjusted EBITDA was $8.5 million for the first quarter of 2020, more than double its adjusted EBITDA of $4 million reported in the same quarter of 2019. Adjusted EBITDA in the broadcasting segment increased 54.4% to $3.8 million in Q1 2020, due primarily to an increase in adjusted EBITDA for the company’s specialty channels, in particular TVA Sports, where costs reflect a significant decrease in sporting events broadcast on the channel, partially offset by the increase in negative adjusted EBITDA for TVA Network, says the news release.
The company’s film production and audiovisual services segment had adjusted EBITDA of $3.2 million in Q1 2020, a $3.1-million increase from Q1 2019, caused primarily by an increase in profitability of soundstage, mobile and equipment rental services, says the release. The production and distribution segment reported adjusted EBITDA of $667,000 in Q1 2020, while the magazines segment’s adjusted EBITDA fell to $664,000 in the first quarter of 2020, down from $1.4 million in Q1 2019.
“Although the Covid-19 pandemic affecting us all right now had a limited impact on our first quarter 2020 results, the corporation had to scale down a number of its operations considerably toward the end of the quarter in response to the Quebec government’s directives,” said France Lauzière, president of TVA Group, in the news release. “Among other impacts, the Covid-19 virus and the measures to prevent its spread have led to a significant reduction in advertising revenues, a significant decrease of sporting events broadcast on the TVA Sports specialty channel, a reduction in the publication frequency of some periodicals and the suspension of most of our content production activities. TVA Group has however continued to provide essential services in order to inform in addition to entertain the population, while putting in place internal measures to safeguard the health and safety of its employees and the public.”
Providing an update on the impact of the Covid-19 pandemic on the company, TVA said in its release it anticipates greater financial impacts over the coming quarters, such as:
- significant reduction in advertising revenues, which will inevitably affect the broadcasting and magazines segments;
- increase in bad debts as a result of the difficult situation affecting some advertisers;
- suspension of all live broadcasting of sporting events held by professional leagues, which, whether postponed or not, could have a considerable impact on TVA’s content costs and revenues from such events;
- reduction in the publication frequency of some periodicals, which will affect revenues in the magazines segment; and
- suspension of most of TVA’s content production activities, which will have an impact on the MELS and production and distribution segments.
“With that in mind, on March 27, in order to adjust its cost structure for the lower volume of activities, the corporation reduced the work hours of approximately 25% of its workforce, while providing affected employees with supplemental benefits to top up the government emergency relief programs and minimize the impact on them,” reads the release.
“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,” continues the release,” however we believe that our current sound financial health, strong balance sheet and the steps we have taken will enable us to continue to deliver positive cash flow.
“TVA Group continues to take steps on a daily basis to implement the action plans necessary to ensure the continuity of its business operations and the pursuit of its long-term strategies. Our management team is working to ensure sound management of the current crisis while planning for a gradual resumption of the corporation’s activities once government directives allow,” says the release.
For the full details of TVA Group’s financial results for the first quarter ended March 31, 2020, please click here.
Its parent company, Quebecor, releases its Q1 results Thursday.
