In a period of uncertainty involving new CRTC broadcast regulations and the recent loss of its Disney license to Toronto’s Corus Entertainment, Canada’s DHX Media posted record Q3 fiscal results driven by its digital distribution business.
The entertainment company generated US$71.61 million in revenues this quarter, an increase of 195% from US$24.29 million for Q3 2014. Of that 195%, distribution growth accounts for 71%, subscription revenues from last year’s purchase of the Astral Media channels (now DHX Television) makes up 70%, while proprietary production (31%), merchandising and licensing (12%), and producer and service fee revenue (9%) round out the numbers.
Profit for the quarter also saw a big increase of 902% from US$1.5 million for Q3 2014 to US$15.09 million this year.
Marking its strongest-ever quarter, overall distribution revenues rose 210% to US$25.5 million from US$8.23 million versus the same quarter last year.
In today’s earnings call, DHX CEO Dana Landry said the company recognized approximately US$10.8 million in revenues from Amazon in Q3 alone. “Amazon is a huge interest to us going forward. Hopefully, this will start to emerge as our ‘this year’s YouTube story’ as an opportunity for continued growth,” he said.
Looking at series, long-running hit Degrassi pulled in US$10.69 million in streaming revenues, a portion of which represents catch-up from 2014.
In the AVOD space, revenues were up by 7% over Q2 2015, buoyed by an 88% jump in DHX’s YouTube revenue to US$1.57 million this quarter. Other significant VOD deals with Hulu, Netflix and The Orchard were also noted for their contribution to DHX’s digital distribution growth.
Of DHX’s US$17.08 million in television revenues, approximately US$15.3 million came from cable subscriptions, while advertising, promotion and digital revenues accounted for US$1.79 million.
With its Disney Junior and Disney XD specialty channels set to rebrand as Family Junior (English)/Famille Junior (French) and Family XTRM by November 30, DHX remained optimistic for the future of its TV business, despite the transition. “We’re very energized about the plan to extend our industry-leading Family brand across the TV channels,” said Landry. “The core strategy behind the rebrand will be to leverage the DHX library, produce more original independent shows, and explore alternative content models such as working with YouTube celebrities, as well as fill in the channels with third-party content.”
As for whether or not it will change the licenses of the Family brand to include opportunities for advertising, Landry said DHX is leaving its options open. “One of the key aspects to Family is it’s commercial-free, so at the moment we want to emphasize that. But at the same time, if we see the subscriber revenue start to decline, we can make decisions on whether we want to change that idea,” he said.
On the original programming side, Landry and executive chairman Michael Donovan pointed to the early success and future potential of video game-inspired Gaming Show and its new tween sitcom Make It Pop, which was just greenlit by Nickelodeon for a second season.
With the Q3 2015 success of its The Next Step Live on Stage tour, which generated US$1.71 million in licensing revenue, Landry said DHX could potentially launch a similar tour for Make It Pop.
In terms of its animated offerings, hit series including Inspector Gadget, Looped, Dr. Dimension Pants and Slugterra were recognized for their sales success.
Q3 2015 also marked the first full quarter that DHX has owned US$50-million acquisition Nerd Corps and its animation studio, which helped to account for the 45% (US$6.87 million) increase realized in producer and service fee revenues, along with a noted rising global demand for children’s content.