Mr. Pierre Peladeau reports

TVA GROUP ANNOUNCES MAJOR CHANGES TO SECURE ITS FUTURE

TVA Group Inc. has provided an update on major changes to secure its future at a time of crisis for the global media industry. The corporation will implement a reorganization plan that will refocus its mission exclusively on broadcasting and restructure its news division, combined with increased collaboration with Quebecor's media properties. The goal is to reduce the corporation's operating costs and streamline its work force. The changes are designed to safeguard TVA Group's core businesses so that it can continue providing the best local content and trusted, high-quality news coverage throughout Quebec.

The reorganization plan is necessary because of the challenging financial, economic and competitive environment affecting TVA Group and the entire industry. In the third quarter financial results released today, TVA Group reported a year-to-date loss of nearly $13-million for its broadcasting segment, compared with $1.6-million for the same period last year.

The audiovisual and media landscape throughout the West is undergoing profound and unprecedented changes as a result of the globalization of television viewing, driven by the proliferation of on-demand digital broadcasting platforms (Netflix, Amazon Prime, Disney+, Apple TV+, Crave, Tou.tv Extra, Peacock, Roku and Hulu) and the tectonic shift in advertising spending to the Web giants (Google, YouTube, Facebook, Instagram, TikTok and X). These are not short-term changes but a long-term trend that is reshaping the broadcasting ecosystem.

The traditional television business model has been disrupted on all sides: shrinking audiences, declining subscriptions, falling advertising revenues, fierce competition, and aggressive bidding for entertainment content and sports rights. The foreign platforms are also impacting news media by using the journalistic content they produce without paying a fair price for it. Their dominance is compounded by unfair competition from CBC/Radio-Canada, which behaves like a private broadcaster by competing for ratings and advertising dollars. Added to this are the anti-competitive practices of Bell TV, which, for years, has stubbornly refused to pay fair market value for TVA Group's specialty channels, particularly TVA Sports.

In an attempt to remedy the situation, TVA Group and Quebecor have relentlessly made representations and appeals to regulators and public authorities in recent years. TVA Group has also taken a number of difficult internal steps, including the elimination of 140 professional and managerial positions in February, 2023, reductions in content production costs, and the cancellation of some programs. However, these efforts have not been sufficient to bring the corporation to sustainability.

Reorganization plan

Given this situation, in the coming months, TVA Group will implement a three-pronged reorganization plan approved by its board of directors:

• Cessation of in-house production of entertainment content;
• Restructuring of the news division;
• Optimization real estate assets.

"The deficit TVA Group is currently running is simply no longer sustainable," said Pierre Karl Peladeau, acting president and chief executive officer of TVA Group and president and chief executive officer of Quebecor. "We have a responsibility to correct the situation. TVA has historically been an important vehicle for Quebec culture, language and news. We have a duty to preserve it and ensure its sustainability. The necessary measures we are taking today will change the way we do business in order to withstand the market pressures and face the competition. We will refocus our activities, reduce our operating costs, and concentrate on the strengths that set us apart and make TVA Quebec's favourite television network. Our goal is to be able to continue offering viewers original Quebec content, to continue investing, and to bring all Quebeckers reliable coverage of news and major sporting events."

1. Cessation of in-house production of entertainment content

As a first step, TVA Group has announced that it will focus on its role as a broadcaster and end in-house production of entertainment content by its TVA Productions subsidiary. The three audience-pleasing entertainment programs currently produced in-house -- Le Tricheur, La Poule aux oeufs d'or and Vlog -- will remain staples of TVA's schedule but will be outsourced to external independent producers. Only the morning shows Salut Bonjour and Salut Bonjour Week-end, the newscasts, the TVA and LCN public affairs programs, and some TVA Sports programs will continue to be produced by in-house teams. TVA Group's production division, which also provided crews to outside producers for some programs, will begin discussions with its partners to encourage them to hire employees affected by the announced measures, according to their needs.

Production activities will be phased out as they are transferred to outside suppliers, taking into account current program schedules.

2. Restructuring of the news division

The second measure concerns the news outlets of TVA Group and Quebecor: TVA, LCN, Le Journal de Montreal, Le Journal de Quebec, QUB radio, 24 heures, TVA Sports, TVA Publications magazines and the other digital brands. To ensure the quality of its news coverage in a precarious industry, TVA Group will reorganize its news crews based in Montreal and Quebec City and its local stations in the rest of Quebec. The situation also calls for closer collaboration among all of Quebecor's media properties to capitalize on the strengths of each, reach Quebeckers more effectively and compete with the Web giants for advertising dollars.

In Montreal, the teams from all of Quebecor's conventional and digital news media will be brought together under one roof at 4545 Frontenac St. to form a media and digital production hub. Each media outlet will continue developing exclusive content and making its own editorial decisions while having access to content produced and distributed by QMI Agency. In accordance with the conditions of licence set by the CRTC (Canadian Radio-television and Telecommunications Commission), the TVA and LCN newsrooms will be managed separately and independently of Quebecor's newspapers and other media properties.

Bringing staff together will make it possible to provide employees with a state-of-the-art work environment, including newly constructed studios. The centralized location will facilitate co-ordination and work planning within the teams and promote the pooling of some expertise and news gathering.

To create a similar media and digital production hub in Quebec City, the Journal de Quebec's teams will move into TVA's Quebec City offices. In addition, TVA's Quebec City teams will now record the newscasts for all the other local stations. The local stations will continue to broadcast different newscasts, which will be delivered by a single anchor, to make their own editorial decisions and to produce their own content.

To continue providing strong local coverage that reflects local realities and issues, TVA Group will maintain teams of reporters in the field for its stations in Eastern Quebec, Saguenay-Lac-Saint-Jean, Sherbrooke and Trois-Rivieres. The TVA affiliates in Carleton, Gatineau, Riviere-du-Loup and Rouyn are not affected by the announced plan.

The corporation will reduce its real estate holdings outside Montreal and Quebec City to lower the operating costs of the local stations, which are currently running a deficit, while maintaining local coverage.

3. Optimization of real estate assets

The third measure concerns TVA Group's real estate holdings. Following the relocations resulting from the changes described herein, TVA Group's corporate services and the Quebecor content, Quebecor expertise media and Quebecor out-of-home teams will move into Quebecor's head office building.

The building at 4545 Frontenac St. in Montreal will undergo major renovations over the next few months to accommodate all of Quebecor's media teams, including Salut Bonjour, TVA Sports and TVA Publications magazines, by the summer of 2024.

TVA Group is currently considering the future use of its headquarters at 1600 De Maisonneuve Blvd. E and some of its local stations' buildings. In view of the housing shortage, management would like to discuss the possibility of converting the Montreal building to social housing with Montreal municipal authorities and the Quebec government.

Work force reductions and support measures

Unfortunately, the reorganization will result in the elimination of 547 positions, or 31 per cent of TVA Group's current work force, including 300 positions in in-house production, 98 positions related mainly to the operations of TVA's local stations and 149 positions in other departments. All affected employees will receive a minimum of 16 weeks of notice, from today, of the layoff.

To support all employees during this difficult time, TVA Group has established a transition committee, led by human resources and assisted by experts from the employee and family assistance program. The corporation will also put in place initiatives to enable affected employees who so wish to continue their careers elsewhere in the rest of the Quebecor family, depending on needs. Discussions will also be held with industry organizations and external producers to encourage them to hire affected employees.

In the coming weeks, TVA Group will begin negotiations with its employees' union representatives on the renewal of its collective agreements.

TVA's future

TVA plays a central role in the activities of Quebecor, whose business model revolves around the convergence of content and broadcasting platforms. The plan announced today springs from a desire to restore TVA Group to a position of strength and secure its future. Audiences will continue to be well served: the corporation will maintain its high-quality newscasts and programming that brings people together, including popular favourites such as Revolution, La Voix, Chanteurs Masques, Sortez-moi d'ici, Indefendable, Alertes, Sorcieres and Salut Bonjour, as well as major sports events.

"While the situation leaves us no choice but to make these major decisions, it is difficult to see such committed and talented people leave us," said Mr. Peladeau. "They have helped make TVA Quebec's most popular network. I am grateful for their dedication and I thank them sincerely.

"For over 10 years, TVA Group has been telling government bodies and regulators that the situation is urgent. Canada's private media companies must be able to operate in a modernized ecosystem that can adapt to a borderless digital world. More than ever, this demands regulatory relief, flexibility and tax credits that more adequately and equitably reflect the conditions facing broadcasters and producers in the television industry. The fact is that, not only has nothing changed, but the situation is now worse than ever. The lack of consideration for our industry, coupled with the mounting challenges it confronts, has forced us to take unprecedented action.

"There is no question of TVA Group disappearing from Quebec's media and television landscape. Its programs are landmarks on Quebec's distinctive cultural landscape. They bring Quebeckers together. We have always been able to innovate and adapt to major upheavals in the industry. Just as we rose to the challenges in print media, which were similarly disrupted by the Internet in 2000, I am confident that we will meet today's challenges in television," Mr. Peladeau concluded.

We seek Safe Harbor.