Montreal, Canada - TVA Group Inc. ('TVA Group' or the 'Corporation') announced today that it recorded operating revenues in the amount of $147.6 million in the fourth quarter of 2020, a year-over-year decrease of $16.6 million. Net income attributable to shareholders was $27.4 million for earnings of $0.63 per share, compared with net income attributable to shareholders of $16,0 million for earnings of $0.37 per share for the same quarter of 2019.
Fourth quarter operating highlights:
Consolidated adjusted EBITDA of $46,070,000, a $12,502,000 favourable variance from the same quarter of 2019.
$36,739,000 in adjusted EBITDA1 in the Broadcasting segment, a $15,014,000 favourable variance due to a 78.4% increase in the adjusted EBITDA1 of the specialty channels, particularly that of 'TVA Sports,' whose significant cost reductions were a reflection of the postponement of the start of the National Hockey League ('NHL') 2020‑2021 season, as well as a 62.0% increase in TVA Network's adjusted EBITDA.1
$7,453,000 in adjusted EBITDA1 in the Film Production & Audiovisual Services segment ('MELS'), a $375,000 unfavourable variance caused primarily by the decreased profitability of soundstage, mobile and equipment rental and visual effects services, while postproduction posted an increase in adjusted EBITDA.1
$2,122,000 in adjusted EBITDA1 in the Magazines segment, a $519,000 favourable variance resulting largely from the additional government assistance received during the public health crisis, which offset the poorer performance of all titles.
$369,000 in negative adjusted EBITDA1 in the Production & Distribution segment ('Incendo'), a $2,567,000 negative variance, a direct result of the public health crisis, which caused a delay in distribution of films produced during the year.
During the quarter, all of our segments again qualified for the Canada Emergency Wage Subsidy ('CEWS'). In all, $3,300,000 was received to support employment levels in view of the almost 11% decrease in our consolidated revenues, which were still affected by the continuing public health crisis.
'Although growth in adjusted EBITDA1 this quarter was mainly due to the exceptional situation at 'TVA Sports,' as well as the various government assistance measures, it was also the result of efforts made at multiple levels to mitigate the major impacts of the crisis on the Corporation. That said, the COVID-19 pandemic continued to have impacts on our activities, including a decline in advertising revenues, a large reduction in the sporting events, a delay in our distribution activities and the need to continually adapt our work environments and methods in order to safeguard the health and safety of our employees and the public. Although all of our activities resumed during the fourth quarter, the volume in every segment continued to decrease significantly. Our ability to recover business volume over the coming quarters and the speed with which we can do so remain dependent on such factors as how the public health crisis evolves, the government measures implemented to control the spread of COVID-19 and the difficult situation faced by some of our customers and advertisers,' said France Lauzière, President and CEO of TVA Group.
'Despite the difficult conditions, TVA Group continues to evolve and adapt to the changing market. In this respect, I'm particularly proud of TVA's strategic brand repositioning in the fall, as well as our new digital destination, TVA+, a new platform designed to reach even more Quebecers and attract them to the content that will be offered. Furthermore, our viewers continue to be loyal, as demonstrated by our consolidated market share, which reached 38.6% for the fourth quarter of 2020, an increase of 1.8 points1 over the same quarter of 2019. The growth is attributable to the 2.6‑point1 increase at 'LCN,' which maintained its status as Quebec's most-watched specialty channel with a 7.4% market share1.
'In the Film Production & Audiovisual Services segment, the pandemic continues to affect the volume of business in most of the segment's services. However, a full resumption of soundstage, mobile and equipment rental activities in the fourth quarter of 2020 made it possible to return to a near normal level of activity, as employees and customers were able to adjust to the new public health measures and work methods. The reopening also enabled the Disney team to complete filming Home Alone during the quarter, thus allowing another major production to start up in our facilities in early 2021. In addition, our new virtual stage service announced last quarter is generating a great deal of interest in the market and we have successfully initiated some productions using this technology,' continued the TVA Group president.
'In the Magazines segment, continued efforts to find operational synergies, combined with the additional government assistance received amid the ongoing pandemic, allowed this segment to continue delivering higher adjusted EBITDA and a profit margin of 16%, despite a decrease in revenues. Once again, we are pleased to report that TVA held its position as the top publisher of French-language magazines in Quebec and the segment is making a positive contribution to the Corporation's earnings.
'Despite the accelerated resumption of its activities and the production of seven films over the last two quarters of the year, Incendo was unable to finalize the sale of those films in the current year, a direct result of the slowdown in activities caused by the public health crisis. As noted previously, Incendo has performed strongly by stepping up its production capacity, including the completion of two co-productions with New Zealand. This strategy puts us in a good position for the coming year to distribute our films and take advantage of the strong demand for original content, while continuing to diversify our revenue streams and expand our presence internationally.
'In closing, I want to underscore once again the hard work of all of our employees throughout Quebec. Their mobilization and ability to adapt and excel has allowed us to continue our mission to inform and entertain Quebecers. I want to thank them for their outstanding work during these unprecedented times,' concluded Ms. Lauzière.
Fiscal 2020 results
For the fiscal year ended December 31, 2020, the Corporation's consolidated adjusted EBITDA was $85,306,000, compared with $72,440,000 for the previous year, a 17.8% increase. The Broadcasting and Magazines segments grew their adjusted EBITDA1 by 37.0% and 0.4% respectively, while the Film Production & Audiovisual Services and Production & Distribution segments posted 13.4% and 59.4% decreases respectively, as activities shut down completely for the two segments in the second quarter. TVA Group has qualified for the CEWS since the outbreak of the public health crisis. An amount of $28,958,000 is recorded as a reduction of operating expenses in our various segments.
The $16,480,000 favourable variance in the adjusted EBITDA1 in the Broadcasting segment was mainly attributable to 'TVA Sports,' which achieved significant one-time cost savings as a result of the reduction in sporting events broadcast by the channel. TVA Network, for its part, managed to increase its adjusted EBITDA1 by 15.0% despite a 13.7% decrease in advertising revenues, thanks to lower labour costs due to temporary layoffs and recognition of the emergency wage subsidy, as well as savings on content costs. The strong performance was partially offset by the 11.5% decrease in adjusted EBITDA1 at the other specialty channels.
MELS' adjusted EBITDA1 decreased by 13.4%, mainly because of a 26.4% decrease in adjusted EBITDA1 from soundstage, mobile and equipment rental, partially offset by the 107.5% increase in adjusted EBITDA1 generated by dubbing and described video, in light of the growing demand and the regulatory requirements for the services.
The Magazines segment was able to maintain its adjusted EBITDA1 with a slight favourable variance of $36,000 despite an 18.2% decrease in revenues. The continued rationalization plans implemented in recent years and the additional government assistance available during the public health crisis allowed the segment to offset the entire decrease in its volume of activities.
The Production & Distribution posted a significant 59.4% decrease in its adjusted EBITDA1,a direct result of the suspension of production activities last spring, which led to a delay in delivery of films produced during the year.
Consolidated operating revenues amounted to $508,144,000 for fiscal 2020 compared with $569,910,000 for the previous year, a 10.8% decrease. The Corporation recorded net income attributable to shareholders in the amount of $32,317,000, for earnings per share of $0.75, compared with net income attributable to shareholders of $16,452,000 and earnings per share of $0.38 for 2019.
Update on the COVID-19 situation
The annual results, including those of the fourth quarter, must be viewed in the context of the COVID-19 pandemic, an unprecedented situation with major consequences for Canadians and indeed the global economy. As an essential services provider, our priority is to continue our mission of informing and entertaining the public. We kept our 24/7 news services available to all on our various broadcasting platforms and provided free access to our 'LCN' all-news specialty channel at critical points in the crisis. TVA Group has taken and will continue to take all necessary measures to safeguard its employees' health and safety by delivering services remotely whenever possible, applying physical distancing rules in the workplace, and implementing stringent health precautions at its facilities.
We expect the financial impacts of this crisis will continue to be felt in the coming quarters, including:
significant variability in our revenues and content costs related to live broadcasts of sporting events organized by professional leagues, as they resume their activities while cancelling some events and making significant changes to formats and broadcast schedules;
significant reduction in advertising revenues, which will inevitably affect the Broadcasting and Magazines segments;
variance in the level of activity at MELS and in the Production & Distribution segment resulting from the stoppage or resumption of our content production activities due to factors such as the need to comply with health precautions and physical distancing rules on the set, the closing of borders with some countries, and production insurance challenges;
possible reduction in the publication frequency of some periodicals, which would affect revenues in the Magazines segment.
Because of the slowdown in the economy, approximately 25% of TVA Group's workforce received benefits during the year under the Corporation's assistance program while on stand‑by. During the health crisis, this program provides financial assistance in addition to the Canada Emergency Wage Subsidy or Canada Emergency Response Benefit programs. Many of the entities in the Corporation's various business segments qualified for the Emergency Wage Subsidy, enabling the Corporation to mitigate some of the impacts of the crisis.
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. However, we believe that our current sound financial health, our strong balance sheet and the steps we have taken will enable us to continue to deliver positive cash flows.
The Corporation's executive management team and its Board of Directors are continuously monitoring the impact of the public health crisis on the Corporation's business segments, employees, customers and business partners, as well as on the population of Quebec, in order to take appropriate action to maintain business continuity and the pursuit of its long‑term strategies.
In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation and amortization, financial expenses, operational restructuring costs and other, income taxes and share of income of associates. Adjusted EBITDA as defined above is not a measure of results that is consistent with International Financial Reporting Standards ('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 impairment, depreciation and amortization of tangible and intangible assets 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 adjusted EBITDA may not be identical to similarly titled measures reported by other companies.
Conference call for investors
TVA Group will hold a conference call to discuss its fourth quarter 2020 results on February 19, 2021, at 9:00 a.m. EST. There will be a question period reserved for financial analysts. To access the call, please dial 1-877-293-8052, followed by access code for participants #14876. A tape recording of the call will be available from February 19 to March 19, 2021 by dialling 1-877-293-8133 followed by conference access code #14876 and recording access code #14876.
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 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, including COVID-19, as well as any emergency measures implemented by government.
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.sedar.com 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, 2020 and the 'Risk Factors' section in the Corporation's 2020 annual information form.
The forward-looking statements in this news release reflect the Corporation's expectations as of February 18, 2021, 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 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 audited consolidated financial statements, with notes, and the annual Management's Discussion and Analysis, can be consulted on the Corporation's website at www.groupetva.ca.
 See definition of adjusted EBITDA below.
 Source: Numeris - Quebec Franco, October 1 to December 31, 2020 and 2019, Mo-Su, 2a-2a, t2+
 See definition of adjusted EBITDA below.
 Source: Vividata, Winter 2021, Total Canada, 14+, October 1, 2019 to September 30, 2020
 See definition of adjusted EBITDA below.