TVA Group posts a 47% net income jump
MONTREAL - TVA Group today reported net income of $17.6 million for the second quarter, ended June 30, 2003, an increase of $5.6 million, or 47%, over the same quarter of 2002.
Total net income since the start of the fiscal year is $26.6 million, compared with $18.5 million for the first half of 2002 for the Quebecor Media-owned broadcast and publishing company.
Consolidated operating revenues grew 15% for the second quarter of 2003, to reach $92.4 million, a 14.6% increase over the corresponding year-ago period. For the first half of 2003, operating revenues totaled $176.7 million, a 12% increase compared to 2002.
Operating income before interest, taxes, amortization and other items (EBITDA) was $26.7 million for the quarter, up or 23%, over Q2 2002.
"This increase comes mainly from the television sector, which benefited from very solid growth in its advertising revenues. EBITDA was $41.2 million for the first half of this year, compared with $35.1 million for the first six months of 2002, representing growth of 18%," said today's press release.
Operating revenues for the company's TV division totaled $65.7 million, against $58.9 million for the corresponding quarter of 2002. A major part of this revenue growth came from the TVA Network's increased viewing hours and from an advertising market that remains strong.
"Our programming investment strategy - and particularly our investments in 'reality TV' programming - has thus brought us the anticipated results," says the release. The popularity of Star Academie, TVA's American Idol, helped drive results across the company.
Operating expenses for the period were $44.5 million, a $3.1-million increase over the $41.4 million recorded for the same quarter a year earlier. The major share of the increased operating expenses are due to the additional investments in programming, and also to the inclusion of 100% of the operating costs of the home shopping operations following the first-quarter acquisition of HSS France S.A.'s interest in HSS Canada.
Previously, this partnership's operations were recorded at 50% using the proportionate consolidation method. As a result, EBITDA for the television sector rose nearly 22%, to reach $21.2 million for the quarter, compared with $17.4 million for the same period a year earlier.
On TVA's publishing side, operating revenues rose to $21.1 million from $14.1 million for the same quarter of 2002. Operating expenses were $15.8 million, compared with $9.8 million for the prior-year period. The magazines acquired from Quebecor Media in May 2002 are responsible in large part for the increases in both revenues and operating expenses. Newsstand sales also continued to benefit from the Star Academie phenomenon and advertising sales continue to progress as anticipated at the time of the acquisition of the Quebecor Media magazines.
EBITDA generated by this sector rose to $5.3 million for the quarter from $4.3 million for the corresponding 2002 period. As a result, the operating margin was 25% for the quarter, compared with about 30% for the same period last year. The lower operating margin is attributable to the smaller margins generated by the magazines acquired from Quebecor Media and to the slight decrease in newsstand sales of some other magazines, which also led to somewhat lower operating margins.
On the film distribution side, operating revenues dipped to $6 million for the quarter, compared with $7.8 million for the same period of 2002. This decline is entirely the result of the rationalization decisions taken in this sector in 2001, says the release. During the quarter, TVA Films released the films Together in theatres and The Pianist on video.
As a result, EBITDA was $100,000 for the quarter, compared with nil for the corresponding year-ago quarter.
Cash flow from operating activities were $26 million for the quarter, compared with $22.6 million for the same 2002 period.
"I am very pleased with our performance in these times of strong competition," said TVA Group president and CEO Raynald Brière in a release. "Our three business sectors - television, publishing and distribution - are all producing excellent results. We will continue to build on original and innovative content, such as Star Academie, and work is now ongoing on several new shows, including Star Academie 2."
"As for the radio business, the recent CRTC decision, though we found it surprising, should not affect our financial outlook. We remain poised to take advantage of opportunities that may arise in the market."
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