TV TOKYO : Q2 FY2022 Results Briefing Scripts

TV TOKYO Holdings Corporation

Q2 Financial Results Briefing for the Fiscal Year Ending March 2023

November 10, 2022

Event Summary

[Company Name]	TV TOKYO Holdings Corporation
[Company ID]	9413-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Q2 Financial Results Briefing for the Fiscal Year Ending March 2023
[Fiscal Period]	FY2022 Q2
[Date]	November 10, 2022
[Number of Pages]	21
[Time]	14:00 - 14:31
	(Total: 31 minutes, Presentation: 31 minutes)
[Venue]	Webcast
[Venue Size]
[Participants]
[Number of Speakers]	4
	Ichiro Ishikawa	CEO, President
	Hiroko Kitsunezaki	Senior Managing Director
	Hiroshi Yoshitsugu	Managing Director
	Takeshi Kozawa	Managing Executive Officer

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Japan	050.5212.7790	North America	1.800.674.8375
Tollfree	0120.966.744	Email Support	[e-mail]

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Presentation

Kozawa: Thank you for joining us today at TV TOKYO Holdings Corporation, Q2 financial results briefing for the fiscal year ending March 2023.

First, I would like to introduce today's speakers. Ichiro Ishikawa , CEO, President of TV TOKYO Holdings.

Ishikawa: Hello, everyone.

Kozawa: Hiroko Kitsunezaki, Senior Managing Director. Hiroshi Yoshitsugu, Managing Director. My name is Takeshi Kozawa, Managing Director and the facilitator today. Thank you.

Now, Managing Director, Mr. Yoshitsugu will begin with an overview of the financial results for Q2 of the fiscal year ending March 31, 2023.

Yoshitsugu: My name is Yoshitsugu, Managing Director. I will now provide a summary of the results for Q2 of the fiscal year ending March 31, 2023. Please see a table and listen to me.

The overview of H1 shows that although there was a reactionary decline from the Tokyo Olympic and Paralympic Games held in the same period of the previous year in the mainstay broadcasting division, animation businesses and streaming businesses sales in the division derived from secondary use of content, which TV TOKYO calls the rights businesses, grew significantly.

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As a result, consolidated net sales increased 0.6% YoY to JPY71,320 million. This is the second consecutive year of net sales growth. Even taking into account the impact of the change in revenue recognition standard in the fiscal year ended March 31, 2022, net sales in H1 were virtually a record high for H1.

Consolidated operating income increased 5.1% YoY to JPY4,737 million. Ordinary income increased 3% to JPY4,939 million, and profit attributable to owners of parent increased 8.4% to JPY3,292 million. Two incomes and one profit all increased for the third consecutive year, and H1 marked a record high.

Although there have been some headwinds for the broadcasting industry, such as declining viewer ratings since April of this fiscal year, we believe that our record-high net sales and profits are the result of steady progress in our efforts to shift to a profit structure that does not rely solely on the broadcasting businesses.

Please, see the next page, we will break down the factors behind the increase in operating income by division.

Please see a chart. The leftmost blue bar graph shows consolidated operating income of JPY4,508 million for the same period of the previous fiscal year. The consolidated operating income obtained by adding the upward factors and subtracting the downward factors from it is the consolidated operating income for the current fiscal year, and the operating income for H1 is JPY4,737 million on the far right.

Here is a specific explanation by division.

First of all, in the core division, TV TOKYO on a non-consolidated basis, the broadcasting businesses have been facing somewhat stronger headwinds since the beginning of the current fiscal year. Broadcasting net sales declined in reaction to the Tokyo Olympic and Paralympic Games held in the same period of the previous year.

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However, program production expenses also decreased due to no Olympic Games, as so both net sales and expenses decreased. As for income of net sales minus expenses, income of the broadcasting businesses in H1 was JPY195 million-plus.

On the right side to that, the large upward pointing arrow is the rights division of TV TOKYO, which is positioned as a growth engine. As a feature, the animation business saw a large increase in overseas sales, and at the same time the streaming business, AVOD, and SVOD also performed well, contributing JPY1,568 million-plus to income.

On the other hand, compared to the period of COVID-19, various activities throughout the Company have normalized and become more active. Since we have set a management goal of All CONTENT and ALL STREAMING, personnel and SG&A expenses related to this have increased, resulting in an increase of less than JPY1 billion in indirect expenses, which is a factor that pushed down income.

One of the factors that contributed to this increase in indirect expenses was an increase in employee bonuses in response to the good performance of the previous year.

On the other hand, each of the Group's businesses showed positive or negative results. Although TV TOKYO Communications Corporation, which has been performing well with its video advertising, posted positive results, operating income from broadcasting peripheral businesses, such as BS TV TOKYO and TV shopping, which is experiencing a rebound in demand from stay-at-home consumption, was lower than the same period of the previous year.

When these figures are added or subtracted, consolidated operating income increased JPY229 million over the same period last year to JPY4,737 million, as explained earlier.

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