DHX strategic review to conclude by June

At its annual shareholder meeting, CEO Michael Donovan discussed the importance of premium brands and offered insight into how the company arrived at its review.
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DHX has revealed that its ongoing strategic review is in its final stages and will be finished by the end of June.

“We are actively processing multiple opportunities,” said CEO Michael Donovan during the Halifax-based company’s annual shareholder meeting on March 23. “We believe these opportunities have the potential to unlock shareholder value and delever the balance sheet of DHX Media.” He added that the review process would be completed by its fiscal fourth quarter (June 30), but did not specify when the results of the review would be announced.

DHX first announced its strategic review in October 2017 following what it called “disappointing” financial results for fiscal 2017. Under the review, which is being stewarded by lead director Donald Wright, the company board is evaluating strategic alternatives to maximize shareholder value, including the sale of part, or all of the company. A merger with another party is also among a number of other options being explored.

Since DHX announced the review, the company has posted stronger financial results, led by revenue growth spurred by its USD$345 million acquisition of the Peanuts and Strawberry Shortcake brands in May.

As well, DHX has undergone a management reshuffle since the review was announced, with Dana Landry exiting as CEO and executive chair Donovan once again stepping into the role. Announced in February, the company also said that CFO Keith Abriel would exit after a short transition period and be replaced by Doug Lamb, who joins DHX from Postmedia, where he previously served as EVP and CFO.

During a Q&A period, Donovan was asked to comment on the reasoning behind the strategic review. “The Peanuts transaction took probably a year and a half from start to finish, maybe even longer and required everyone in management, because there are so many complicated parts to it,” he said.

“In this environment where you have Netflix, Amazon, Apple – they want premium brands. And though we have volume and some premium brands, the highest priority was to add more premium brands. So it became a priority to get [the Peanuts brand], and while all hands and eyes were focused on getting it, and not making any mistakes, the day-to-day of business was not sufficiently paid attention to, and that came out in the numbers. That’s my theory – I could be wrong, but that’s what I think,” added Donovan, who also reiterated his intention to remain as CEO.

The annual shareholder meeting also saw Elizabeth Beale, David Colville, Donovan, Deborah Drisdell, Alan Hibben, Geoffrey Machum, Robert Sobey, Catherine Tait and Wright elected as directors.

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