WildBrain CEO says ad-supported video streaming remains big opportunity

By Canadian Press

HALIFAX — WildBrain Ltd. continues to see advertising-supported video streaming to be a big part of its future growth despite current conditions affecting the company and industry, chief executive Eric Ellenbogen told analysts Thursday.

Those conditions prompted WildBrain to record a $184.5-million writedown of goodwill and a third-quarter loss, due to the impact on advertising revenue from YouTube’s changes to targeted ads as well as potential impacts of the COVID-19 economic slowdown.

The one-time charge resulted in WildBrain reporting a loss of $221.7 million or $1.30 per share. That compared with a year-earlier net loss of $18.4 million or 14 cents per share.

Revenue for what was WildBrain’s third quarter was $98.3 million, down from $110.0 million a year earlier, due largely to a new YouTube policy for advertising directed at children. 

Ellenbogen acknowledged that advertising revenue at WildBrain Spark was down 37 per cent year-over-year for the quarter ended March 31, because of changes to YouTube algorithms that went into effect at the beginning of the year.

“However, we actually began to see evidence of a recovery in February and March before the impact of COVID-19,” Ellenbogen said.

Besides WildBrain Spark, the animation and entertainment company has a large library of acquired and produced programs based on characters from Peanuts, Teletubbies, Caillou, Inspector Gadget and Johnny Test.

Excluding the writedown, financing costs, and other expenses, WildBrain reported $17.9 million in adjusted EBITDA in the quarter compared with $20.1 million in the same quarter a year ago.

Ellenbogen said the company’s WildBrain Spark unit — which provides advertising-supported online content geared to children — continued to see its audience mount in the early months of 2020.

Views of WildBrain content were up 36 per cent in April, compared with the same month last year, while watch times were up 71 per cent, he said.

Ellenbogen predicted that advertising dollars will follow the audience, at some time in the future, to support advertising-supported video.

He added that other platforms — such as linear television channels and subscriber-funded video streaming services — also continued to buy WildBrain content to fill gaps left by other forms of entertainment such as scripted and live-action programming.

WildBrain also announced after the markets closed Wednesday that it has signed a $25-million financing agreement with its largest shareholder, Fine Capital, that will be used to fund growth.  

— By David Paddon in Toronto

This report by The Canadian Press was first published May 14, 2020.

Companies in this story: (TSX:WILD)

The Canadian Press

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