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WildBrain’s potential grows at DHX, revenue up 49%

In its Q1 2019 report, the media company reported revenues of US$78.6 million driven by its Peanuts brand and YouTube net WildBrain.
November 13, 2018

In DHX’s first financial report since the conclusion of its strategic review, the company has reported revenue of US$78.6 million, driven by strong performances from its Peanuts brand and WildBrain AVOD network.

Overall, revenue climbed 5.5% in Q1 2019, compared to US$74.5 million a year ago; and adjusted EBITDA fell to US$13 million, from US$17.2 million 12 months prior. During the quarter, the company also paid down US$162 million on its debt, reducing the total owed by 31% to US$380 million.

The Peanuts brand “continued to perform ahead of plan,” according to DHX, contributing to 12% growth in the company’s consumer products business. Meanwhile, WildBrain revenue jumped 49% to US$12.2 million, from US$8.1 million a year ago.

In September, DHX concluded a year-long review and refocused its content strategy on premium brands such as Peanuts, and shorter-form content that can incubate on the Wildbrain YouTube channel.

During Tuesday’s conference call, executive chair and CEO Michael Donovan shared that the reach of WildBrain may be greater than the company first realized. “We are just beginning to scratch the surface of this unique and strategic asset,” he said in the report, pointing to new YouTube data showing that around one-third of the 830 million children who have access to YouTube globally watched at least one WildBrain video in Q1. As a result, monthly watch time increased to a total of 13 billion minutes for Q1, compared with eight billion minutes a year ago.

Donovan added that the scale and data points it can mine from WildBrain also gives DHX a leg up when it comes to bringing titles to market quickly, in particular projects with consumer products planned.

“Whereas in the past it would take two or three years to build a TV series, what we’re finding is that we can fast-forward a production program on WildBrain in months, weeks even, and have the new show [released there] to tie in with toy launches,” he said.

Outside of WildBrain, DHX also touted its growing partnership with Netflix and a range of DHX series being distributed via the streamer. In addition to 2D preschool series Chip and Potato, which launches next year on Netflix, DHX is also going into season three on The Deep (produced alongside Australia’s A Stark Production and Paris-based Technicolor). And Creeped Out, a co-pro between the CBBC in the UK and DHX’s Family Channel, launched on Netflix in October.

Donovan also said DHX is exploring new ways to optimize the monetization of its IP library, which includes more than 13,000 half hours of content. Among the ideas currently being explored, he noted, is packaging its library content in channel offerings for new markets, including the US. While Donovan did not expand on exactly what those offerings might look like, he said DHX was exploring the idea of packaging content using a variety of models, including SVOD and legacy channels.

Elsewhere, DHX expanded on last week’s announcement about the sale of its animation studio in Halifax. Donovan said the strategy is part of DHX’s ongoing initiative to focus on its premium brands. “What we’re doing is concentrating on one central animation studio in Vancouver, where we think we can get the most appropriate level of scale,” he said.

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