DHX Media has licensed most episodes of shows such as the original Teletubbies non-exclusively, allowing it to sell the content again and again, boosting distribution revenue.The Associated Press
DHX Media Ltd. reported a 48-per-cent bump in revenue for its first quarter, beating analysts' expectations, fuelled in part by a continuing spike in digital sales to foreign markets made possible by the rise of online streaming services.
The Halifax-based company, which produces and distributes television content aimed at children, also announced two new deals to sell more than 700 half-hour episodes in total from its library to a pair of streaming platforms in China, iQiyi and LeTV, most of which are past episodes of the hit show Teletubbies dubbed in Mandarin.
Those sales are tapping a "surge in demand" from China, executive chairman Michael Donovan said. And as a growing number of streaming sites jockey for subscribers, both in North America and abroad, DHX sees an opportunity to cash in.
The company had previously struck distribution deals that licensed 2,500 half-hours of programming to Chinese online giant Alibaba Group Holding Ltd. in September, and another 700 to China National Television (CNTV), a broadcasting arm of the country's state broadcaster, last year.
"We see China, amongst other regions, as part of the great emerging market for our brands," Dana Landry, the company's chief executive officer, said in a conference call with analysts on Monday. "There are more deals to come."
As some U.S. distributors, including Walt Disney Co. and Twenty-First Century Fox Inc., have mused about dialling down the volume of shows they sell to competing streaming services such as Netflix, DHX also expects that content from independent producers such as itself will be in greater demand.
Profit at DHX was $7.5-million, or 6 cents a share, up from a loss of $7.7-million, or 6 cents, a year ago. But the swing was due almost entirely to a $14.2-million tangible benefits charge the company took in last year's first quarter.
Revenue was $63.9-million, up from $43-million in the first quarter last year. Of the 48-per-cent increase in revenue, 20 percentage points were from prior acquisitions, such as Nerd Corps Entertainment and Family Channel.
Distribution revenue was up 40 per cent, year-over-year, to $14-million. And the company has deliberately licensed most episodes of shows such as the original Teletubbies, Caillou and Paddington Bear non-exclusively, allowing it to sell the content again and again, in part because many emerging services can't pay the higher price tag to gain exclusivity.
But the deals may also give DHX access to a wider range of viewers in China and elsewhere, which can help create opportunities for its merchandising and licensing business, which turns popular TV shows into toys, costumes, books, clothing, and other products.
"There is a whole generation of young adults in China who grew up watching the original Teletubbies" who are now having children of their own, Mr. Landry said. And China's kids market could grow now that the state has relaxed its one-child policy.
DHX Media (DHX.B)
Close: $8.05, up 27¢
James Bradshaw