Mr. Pierre Peladeau reports

TVA GROUP REPORTS Q2 2023 RESULTS

TVA Group Inc. recorded revenues in the amount of $138.8-million for the second quarter of 2023, a year-over-year decrease of $8.7-million. Net loss attributable to shareholders was $7.8-million or 18 cents per share, compared with net loss attributable to shareholders of $3.2-million or seven cents per share for the same quarter of 2022.

Second quarter operating highlights:

• $3,843,000 in consolidated negative adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a $7,078,000 unfavourable variance from the same quarter of 2022;
• $4,539,000 in negative adjusted EBITDA in the broadcasting segment, a $4,390,000 unfavourable variance due mainly to lower traditional advertising revenues, partially offset by an increase in digital advertising revenues, mainly for TVA+, and savings generated by the restructuring plan;
• $413,000 in negative adjusted EBITDA in the film production and audiovisual services segment (MELS), a $2,585,000 unfavourable variance due mainly to lower activity volume in soundstage, mobile and equipment rental, postproduction and media accessibility, partially offset by the positive impact of the discontinuation of visual effects activities;
• $309,000 in adjusted EBITDA in the magazines segment, a $1,337,000 unfavourable variance due mainly to lower revenues, especially at newsstands, reduced government assistance and lower advertising revenues;
• $582,000 in adjusted EBITDA in the production and distribution segment, a favourable variance of $1,071,000, attributable mainly to higher gross margin on international distribution of films produced by companies in the Incendo Group, especially in the United States, in the second quarter of 2023 compared to the same period in 2022.

"Second quarter results continued to be impacted by declining profitability across all our segments and in the various industries in which we operate. The implementation of our restructuring plan, announced on Feb. 16, 2023, has not yet generated sufficient savings to offset the major challenges of a declining advertising market and the lack of foreign productions in our studios," said Pierre Karl Peladeau, acting president and chief executive officer of TVA Group.

"Results in the broadcasting segment were seriously impacted by the decline in our advertising revenues, which are the only source of revenues for our over-the-air network. Despite the challenging environment, we continued to invest in content to protect our market shares, both for TVA Network and for our specialty services. TVA Group's market share for the second quarter of 2023 was 42.7 per cent, up 0.4 points compared to the same period of 2022. TVA Network had four of the top five shows in Quebec in the second quarter. The daily series Indefendable, variety show La Voix and the new reality TV show Sortez-moi d'ici! all had an average audience of over 1.5 million viewers during the 2023 season.

"To continue to invest in programming and news content, it is vital that a legislative and regulatory framework be implemented to control the web giants and require them to contribute financially to the Canadian broadcasting system.

"With the act respecting on-line communications (Bill C-18) expected to come into effect by the end of the year, Meta decided to block news stories on its Facebook and Instagram platforms to avoid paying their fair share to use this news content. No one is above the law and, as such, we encourage organizations to express their disagreement with Meta's complete disregard for Canada's government policy and news industry by advertising elsewhere. It need hardly be repeated that the imbalance in the regulatory and legislative frameworks is highly damaging: foreign companies reap profits from the Canadian market and audience with no constraints, while broadcasters such as TVA Group are tangled in outdated, burdensome regulations.

"Another key measure that must be quickly applied is removing advertising on all Radio-Canada platforms. The public broadcaster is engaging in unfair competition with private broadcasters in its race for ratings and advertising revenues, despite the fact that it receives huge amounts of government funding to fulfill its mandate. We will also continue our efforts to ensure that distributor Bell TV ceases its highly prejudicial treatment of our specialty channels and pays fair-market fees.

"In the film production and audiovisual services segment, the corporation was particularly affected by a decrease in sound stage and equipment rental services, which continued to suffer from the lack of foreign productions this quarter. Although MELS did sign some major agreements with foreign producers for the coming months, the writers and actors strikes in the United States are fuelling uncertainty. Projects are being postponed and could be cancelled. In virtual production activities, MELS benefited from increased demand for its services and was able to generate additional profits in this growing segment.

"To keep our productions and film studios competitive and viable, when many other jurisdictions in the U.S. and Canada are offering producers more advantageous tax treatment, governments must quickly review tax credits for Quebec film and television productions, and for production services.

"In the magazines segment, results this quarter continued to be affected by lower revenues. The increase generated by our magazines' digital revenues was not enough to offset notably the substantial losses caused by the change to the Canada Periodical Fund's grant allocation method, which continues to have a serious negative impact on the sector amid numerous other challenges.

"Our production and distribution segment performed better in the second quarter of 2023 compared with the same period in 2022, with the delivery of two horror films to Tubi. We will be keeping a close eye on the strike situation in the United States, which may impact our order book for the coming months."

About TVA Group Inc.

TVA Group, a subsidiary of Quebecor Media, 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 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.

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