Mr. Pierre Peladeau reports

TVA GROUP REPORTS Q3 2023 RESULTS

TVA Group Inc. had revenues in the amount of $118.6-million for the third quarter of 2023, a year-over-year decrease of $11.9-million. Net loss attributable to shareholders was $600,000 or one cent per share, compared with net income attributable to shareholders of $7.6-million or 18 cents per share for the same period of 2022. For the nine-month period ended Sept. 30, 2023, the net loss attributable to shareholders was $32-million, or 74 cents per share, compared with $8.6-million, or 20 cents per share, for the same period of 2022.

Operating highlights for the third quarter and first nine months of the year:

• $16,485,000 in consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the third quarter, a $1.71-million unfavourable variance compared with the same quarter of 2022, and $11,335,000 in negative adjusted EBITDA for the first nine months of the year, a $23,044,000 unfavourable variance from the same period of 2022;
• $14,456,000 in adjusted EBITDA for the third quarter in the broadcasting segment, a $389,000 favourable variance mainly due to higher adjusted EBITDA at Communications Qolab Inc. TVA Network's negative adjusted EBITDA continued to deteriorate and the specialty channels continued to suffer from the effects of a shrinking advertising market and a reduction in the number of cable subscribers;
• $12,889,000 in negative adjusted EBITDA in the broadcasting segment for the first nine months of 2023, compared with $1.55-million in negative adjusted EBITDA for the same period of 2022. Last February's restructuring plan enabled the corporation to achieve some savings, but insufficient to offset the significant drop in revenues, both from traditional advertising and specialty channel subscriptions, or to sustain the required investments in content to maintain its market share and its audience in the face of foreign digital on-demand platforms, among other things;
• $669,000 in adjusted EBITDA in the film production and audiovisual services segment (MELS) for the third quarter of 2023, a $1,916,000 unfavourable variance compared with the same quarter of 2022, due mainly to lower activity volume in soundstage, mobile and equipment rental, postproduction, and media accessibility services, partially offset by the positive impact of the discontinuation of visual effects activities. For the first nine months of 2023, MELS posted $299,000 in negative adjusted EBITDA, compared with $8,601,000 in adjusted EBITDA for the same period of 2022, an unfavourable variance explained by the same factors as for the quarter;
• $1,288,000 in adjusted EBITDA in the magazines segment for the third quarter, a $66,000 favourable variance compared with the same quarter of 2022, mainly because cost-savings were slightly higher than the decrease in revenues, particularly in newsstand and subscription revenues. For the first nine months of the year, adjusted EBITDA for the magazines segment was $1.23-million, compared with $3,308,000 in adjusted EBITDA for the same period of 2022;
• $146,000 in negative adjusted EBITDA in the production and distribution segment for the third quarter, a $195,000 unfavourable variance compared with the same quarter of 2022, due mainly to a lower gross margin on the international distribution of films produced by Incendo, as well as lower profitability at TVA Films, partially offset by savings on administrative expenses and a higher gross margin on Canadian distribution for Incendo. For the first nine months of 2023, adjusted EBITDA in the production and distribution segment was $81,000, compared with $1,113,000 in adjusted EBITDA for the same period of 2022;
• During the third quarter of 2023, challenging market conditions and changes in the television industry ecosystem led the corporation to record a goodwill impairment charge of $4,813,000 and an impairment charge of $2.85-million on certain trademarks in the broadcasting segment.

Pierre Karl Peladeau, acting president and chief executive officer of TVA Group, had this to say:

"Looking at our results over the last few quarters, which show a negative adjusted EBITDA of nearly $13-million in the broadcasting segment, it's clear that the broadcasting ecosystem no longer provides the conditions necessary for our conventional television activities to be viable. Even though TVA Group increased its market share by 0.5 points to 40.6 per cent during the quarter, traditional advertising revenues continued their sharp decline of recent years. These factors led the corporation to conclude that a $7,663,000 non-cash charge for impairment of goodwill and certain trademarks was necessary.

"The crisis in the media industry has affected results more than ever, with competition from web giants and Radio-Canada monopolizing advertising revenues. For too long, TVA Group has been calling for regulatory relief to give private broadcasters greater flexibility. Moreover, despite TVA Group's extensive efforts to stabilize its financial situation, including the elimination of 140 positions in February, 2023, the decline in advertising revenues is now an unfortunate fact of life with which we have to contend. Consequently, we are announcing today major changes to our organizational structure in order to secure the future of our business. Our goal is clear, to continue offering our viewers and our advertisers the best original content produced in Quebec, providing reliable, high-quality news coverage throughout Quebec, and presenting major sporting events live. The corporation will therefore implement a reorganization plan that will refocus its mission on broadcasting, restructure its news division and optimize its real estate holdings. The goal is to reduce the corporation's operating costs. The plan will reduce the corporation's work force by 547 employees. Most of the costs associated with the elimination of positions will be recognized in the next quarter.

"TVA Group's third quarter results were affected by lower revenues across all business segments, particularly at MELS, which continues to suffer from the lack of foreign productions. Although the writers' strike has been resolved, the actors' strike in the U.S. continues, prolonging the absence of foreign producers at our studios. The appointment of Patrick Jutras as president of MELS will strengthen the company's local and international business ties, attract more large-scale productions and accelerate growth.

"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 for all our titles were affected by a decline in revenues, offset by cost-savings. The significant reduction in government assistance from the Canada Periodical Fund remains a cause for concern for this segment, which has been operating in a sharply declining market for several years.

"Our production and distribution segment suffered a decrease in adjusted EBITDA primarily due to the negative impact of strikes on the order book in the U.S. industry. Incendo is currently starting its first film shoot of 2023 for Tubi."

About TVA Group Inc.

TVA Group, 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 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.

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