WildBrain is the latest Canadian company to announce it’s temporarily reducing salaries and furloughing some employees.
The children’s entertainment company, which formerly did business as DHX Media, is headquartered in Halifax, but has offices worldwide.
In releasing its Q3 2020 earnings, the company revealed it’s initiated $2.0 million in quarterly operating expense savings to preserve cash, including a temporary 20% reduction in salaries for senior management, who will receive new Restricted Share Units in lieu, and a temporary reduction in salaries at WildBrain Spark (its YouTube business) as well as furloughing some employees as part of the UK government’s funding support during the coronavirus crisis. WildBrain’s Board of Directors has also agreed to receive Deferred Share Units in lieu of cash fees. The company will also be suspending any new non-critical hiring, consulting agreements, travel, and non-critical spending, applying for government assistance where it can.
WildBrain’s preliminary Q3 revenue is estimated at between $96 and $100 million, down from $110 million in the same quarter last year. Aaron Ames, WildBrain’s CFO, acknowledged that advertising declines are having an impact.
“Third-quarter financial results reflect steady execution of our priorities to build our business for the long-run, although due to COVID-19 effects, advertising revenue declined further in our AVOD business in the latter part of the quarter,” Aames said in a release. “The global advertising industry has taken a significant hit, and based on industry estimates, we anticipate these conditions will persist into our Fiscal 2021. However, we do not expect this to have a material effect on our Canadian TV channel business, which derives approximately 90% of revenue from subscribers. We have taken early mitigating actions to preserve cash, reduce overhead and lower our operating expenses. Such measures, combined with initiatives taken in recent quarters to pay down debt and improve our financial position, will help safeguard our business. We monitor the situation regularly to assess if additional actions are warranted, while continuing to invest across initiatives that drive the long-term value and growth of our business.”
Revenue declined 60% in April to date, compared with the same period a year ago, which the company said is “consistent with a broad pull-back in media advertising and YouTube data-collection policies implemented in January.”
WildBrain said Family Channel is seeing strong viewership with ratings up more than 17% across kids and family demos in April and WildBrain Spark views up 34% with watch times increasing by 69% in the last 30 days versus the same period last year, averaging more than 3.5 billion views a month.
Production at 95 per cent
On the content side, Eric Ellenbogen, WildBrain CEO, said work-from-home solutions allowed 700 employees in its animation division to effectively transition with content being produced at nearly 95% efficiency. He said shows are expected to be delivered on budget with minimal delays with production ongoing on new WildBrain proprietary content, as well as LEGO, DreamWorks, Netflix, Mattel and Apple TV+.
With increased demand for kids and family content across all platforms, WildBrain expects to increase its production pipeline in the coming quarters.
“During this period of stay-at-home, our shows are experiencing unprecedented levels of viewership, providing hours of comfort, education and entertainment to our audiences. We are pleased to be an integral part of so many families’ solution to managing through this difficult time. Producing high-quality kids’ and family entertainment is the core of what we do at WildBrain, and we remain committed to and energized by this mission,” said Ellenbogen.
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