DHX mulls sale after shares plummet

Canada’s DHX Media is considering a company sale or a merger with another company after weak quarterly financials saw its share price plummet.

The Nova Scotia-based company told investors its board of directors “has commenced a process to explore and evaluate potential strategic alternatives focused on maximising shareholder value”.

Options include “the sale of part of all of the company”, an asset sale, “a merger or other business combination with another party, or other strategic transactions”.

This comes after shares of the Toronto-listed company nosedived after poor fourth quarter financials missed analysts’ lowest estimates, with revenue coming in at C$298.7 million (US$239 million) and adjusted earnings of C$87.3 million.

Last week, DHX CEO Dana Landry said: “Management was disappointed with the results for Q4 and fiscal 2017 overall.

“Teletubbies in the US market has underperformed, and execution on the content side of the business did not match the tremendous opportunity in the kids’ and family content market.”

Landry also revealed a “cost-reduction program” had been initiated with the aim of bringing down SG&A expenses C$6 million in a year, and “realigned the management team to streamline production, restructure licensing activities and to focus on projects with the potential to drive multiple revenue streams”.

He also claimed that following the acquisitions and subsequent integrations of the Peanuts and Strawberry Shortcake brands into the DHX business, “corrective actions” had taken place “to address the issues that contributed to the disappointing financial results”.

DHX owns the Teletubbies, Inspector Gadget, Degrassi, Caillou and In the Night Garden brands, plus Canada’s Family Channel and other kids networks, a stake in online content creator WildBrain, and operates large production and international distribution operations. Its library of children’s shows comprises 13,000 half-hours.

DHX was formed in 2006 with Decode Entertainment merged with Halifax Film Company.