DHX to ease up on con­tent spend­ing, fo­cus on costs

The Globe and Mail Metro (Ontario Edition) - - Report On Business - DAVID PAD­DON

DHX Me­dia Ltd. is be­gin­ning to see re­turns from its in­vest­ments over the past three years to build its li­brary and now ex­pects spend­ing to be more mod­er­ate, chief ex­ec­u­tive Dana Landry said on Tues­day.

He said ac­quir­ing the Peanuts fran­chise – in a $345-mil­lion (U.S.) debt­fi­nanced deal that closed at the end of June – has cre­ated a more di­ver­si­fied, sta­ble busi­ness for DHX.

“Over 40 per cent of our rev­enues now come from li­cens­ing con­sumer prod­ucts, com­pared with 18 per cent dur­ing the same pe­riod last year,” Mr. Landry said.

The Hal­i­fax-based com­pany has a three-pronged strat­egy: cre­ate or ac­quire child- and fam­ily-ori­ented con­tent, gen­er­ate rev­enue glob­ally from its con­tent and li­cense mer­chan­dise based on its char­ac­ters.

“The plan is to lever­age our ex­per­tise to grow our ex­ist­ing brands through new orig­i­nal con­tent,” Mr. Landry said. “This will al­low us to add new cat­e­gories and new ter­ri­to­ries in our con­sumer-prod­ucts port­fo­lio.”

But he also said the com­pany is plac­ing high pri­or­ity on im­prov­ing its free cash flow and is on track to re­duce op­er­at­ing costs and lever­age while im­prov­ing rev­enue.

The com­pany said it will re­al­ize its tar­get of $11-mil­lion in to­tal an­nu­al­ized ac­qui­si­tion-re­lated syn­er­gies and cost re­duc­tions by the end of its 2019 fi­nan­cial year.

The com­ments came as DHX re­ported it earned $8.1-mil­lion, or six cents a share, com­pared with a profit of $1.4-mil­lion, or one cent a share, a year ago.

Rev­enue for the three months ended Sept. 30 – for the first quar­ter of its 2018 fi­nan­cial year – grew to $98.6-mil­lion, com­pared with $53.8mil­lion in the same quar­ter last year, in part be­cause of its ac­qui­si­tion of the Peanuts and Straw­berry

Short­cake char­ac­ters ear­lier this year.

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