MONTRÉAL, Nov. 2, 2023
/CNW/ - TVA Group (TSX: TVA.B) is announcing 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
workforce. 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 Québec.
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, Hulu, etc.) and the tectonic shift in advertising spending to
the Web giants (Google, YouTube, Facebook, Instagram, Tik Tok, X, etc.). 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. (See the Appendix
for a more detailed picture of the state of the industry.)
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 (see the
Appendix for more details). 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 Péladeau, acting
President and CEO of TVA Group and President and CEO of Quebecor.
"We have a responsibility to correct the situation. TVA has
historically been an important vehicle for Québec 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 Québec's favourite television network.
Our goal is to be able to continue offering viewers original Québec
content, to continue investing, and to bring all Quebecers 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 œufs 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 Montréal,
Le Journal de Québec, 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
Montréal, Québec City and its local stations in the rest of Québec.
The situation also calls for closer collaboration among all of
Quebecor's media properties to capitalize on the strengths of each,
reach Quebecers more effectively and compete with the Web giants
for advertising dollars.
In Montréal, the teams from all of Quebecor's
conventional and digital news media will be brought together under
one roof at 4545 Frontenac Street 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, 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 coordination 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 Québec City, the Journal de Québec's teams will move
into TVA's Québec City offices. In addition, TVA's Québec 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 Québec,
Saguenay-Lac-Saint-Jean, Sherbrooke and Trois-Rivières. The TVA
affiliates in Carleton,
Gatineau, Rivière-du-Loup and
Rouyn are not affected by the announced plan.
The Corporation will reduce its real estate
holdings outside Montréal and Québec 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 above, 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 Street in Montréal
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. East and some of
its local stations' buildings. In view of the housing shortage,
management would like to discuss the possibility of converting the
Montréal building to social housing with Montréal municipal
authorities and the Québec government.
Workforce reductions and support
measures
Unfortunately, the reorganization will result in
the elimination of 547 positions or 31% of TVA Group's current
workforce, 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 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 Révolution, La Voix, Chanteurs
Masqués, Sortez-moi d'ici, Indéfendable,
Alertes, Sorcières 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. Péladeau. "They have helped
make TVA Québec's most popular network. I am grateful for their
dedication and I thank them sincerely.
"For over ten 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 Québec's media and television landscape. Its programs are
landmarks on Québec's distinctive cultural landscape. They bring
Quebecers 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. Péladeau concluded.
For more details, consult the Appendix below and the
presentation on the television industry in figures (in French
only).
Forward-looking information
disclaimer
The statements in this news release that are not
historical facts may be forward-looking statements and are subject
to important known and unknown risks, uncertainties and assumptions
which could cause the Corporation's actual results for future
periods to differ materially from those set forth in the
forward-looking statements. Forward-looking statements generally
can be identified by the use of the conditional, the use of
forward-looking terminology such as "propose," "will," "expect,"
"may," "anticipate," "intend," "estimate," "plan," "foresee,"
"believe" or the negative of these terms or variations of them or
similar terminology. Certain factors that may cause actual results
to differ from current expectations include the possibility that
the reorganization plan will not be carried out on schedule or at
all, the possibility that the Corporation will be unable to realize
the anticipated benefits of the reorganization plan in a timely
manner or at all, the possibility of unknown potential liabilities
or costs related to the reorganization plan, the possibility that
the Corporation will be unable to successfully implement its
business strategies, seasonality, operational risks (including
pricing actions by competitors and the risk of loss of key
customers in the Film Production & Audiovisual Services and
Production & Distribution segments), programming, content and
production cost risks, credit risk, government regulation risks,
government assistance risks, changes in economic conditions,
fragmentation of the media landscape, risk related to the
Corporation's ability to adapt to fast-paced technological change
and to new delivery and storage methods, labour relation risks, and
the risks related to public health emergencies, as well as any
emergency measures implemented by government.
Investors and others are cautioned that the
foregoing list of factors that may affect future results is not
exhaustive and that undue reliance should not be placed on any
forward-looking statements. For more information on the risks,
uncertainties and assumptions that could cause the Corporation's
actual results to differ from current expectations please refer to
the Corporation's public filings available at www.sedarplus.ca and
www.groupetva.ca, including, in particular, the "Risks and
Uncertainties" section of the Corporation's annual Management's
Discussion and Analysis for the year ended December 31, 2022.
The forward-looking statements in this news
release reflect the Corporation's expectations as of November 2, 2023, and are subject to change after
this date. The Corporation expressly disclaims any obligation or
intention to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
unless required to do so by the applicable securities laws.
APPENDIX
The conventional television
industry by the numbers
Audiences and subscriptions in decline
- Average television viewership in Canada fell by 23% from 2015 to
2022.1
- The penetration of broadcasting distribution undertakings
(BDUs) in Canada dropped 10
percentage point from 2018 to 2022.2
- Only 65% of Québec adults subscribed to a conventional cable TV
service in 2022, down 12 points since 2019. Over the same period,
the proportion who subscribed to at least one paid online streaming
service was up 15 points to 68%.3
- Among adults aged 25‑34, 49% subscribed to a conventional cable
TV service and 82% to at least one streaming service in
2022.4
Advertising revenue erosion
- The advertising revenues of conventional television
broadcasters in Canada declined by
25% from 2012 to 2021.5
- Facebook and Google account for almost 80% of Internet
advertising revenues. Between them, they took in $11.2 billion in advertising revenues in
Canada alone in
2022.6
Financial losses and programming expenditures
- All of Canada's conventional
private broadcasters are now operating at a loss. In 2022, their
losses totalled $289 million. To
return to 2011 income levels, Canada's private broadcasters would have to
make up a shortfall of over $431
million.7
TVA Group's impact on the industry
- In 2022, TVA Group spent over $330
million on programming, 88% of it on Canadian content,
including 96 original productions. This figure does not include
Quebecor's spending on content for its Club illico and Vrai
platforms.
- For comparison, total spending on local production by Québec's
audiovisual industry was $1 billion
in 2022, according to SODEC.
- In 2022, TVA Group's French‑language channels had a 40.8%
market share, more than double that of Radio‑Canada (19.9%) and
Bell Media (19.5%) combined.
Steps taken by TVA Group to
improve its financial position
- Eliminated 140 professional and managerial positions in
February 2023
- Reduced content production costs and cancelled some
programs
- Quebecor refinanced TVA Group to secure new credit
facilities
- Implemented new technologies to optimize operating costs
- Rationalized production resources, including the elimination of
the TVA helicopter and satellite trucks
- Closed MAtv Montréal to support TVA's local news coverage
- Made multiple appeals to the CRTC to ease burdensome and costly
administrative and regulatory requirements
- Advocated for the removal of advertising from all
CBC/Radio‑Canada platforms and a tightening of its mandate as a
public broadcaster to better complement the private sector
- Intervened extensively in legislative and regulatory
proceedings to regulate the Web giants and require financial
contributions to Canada's
broadcasting system (C‑11 and C‑18)
- Called for a review of tax credits for Quebec film and television productions, and
production services
- Called for revision of SODEC programs to make criteria more
flexible and increase funding
1Source: Numeris, Canada total, 2015 to 2022: January 1 to December 31, Mon-Sun 2am-2am, 2+.
2 Source: Convergence Research Group, 2022
forecasts.
3 Source: Académie de la transformation numérique,
Portrait numérique des foyers québécois (2022).
4 Source: Académie de la transformation numérique,
Portrait numérique des générations (2022).
5 Source: ThinkTV, 2021, Net Ad Volume,
February 2023.
6 Sources: Meta's advertising resources, Keipos Analysis
and Google's advertising resources (2023);
CBC News, "Online News Act could see Google, Meta pay combined
$234 million to Canadian media."
7Sources: Annual reports - Quebecor Media Inc., BCE
Inc., Remstar Diffusion inc., Rogers Communications Inc., Shaw
Communications Inc., Corus Entertainment Inc., 2011, 2021, 2022
SOURCE TVA Group