DHX MEDIA REPORTS IMPROVED PROFIT FOR FIRST-QUARTER

www.dhxmedia.com
TSX: DHX

HALIFAX, Nov. 15 /CNW/ - DHX Media Ltd. ("DHX Media" or the "Company") (TSX ticker: "DHX"), a leading independent international producer and distributor of mainly children's entertainment content, is pleased to announce the release of its unaudited consolidated financial results for the first fiscal quarter ended September 30, 2010.

Highlights of Q1 2011 Results:
(All amounts in Canadian dollars)

• Net income was $0.45 million, up from $0.01 million for Q1 2010;
  
• Gross profit increased 2% to $4.94 million, up from $4.86 million in Q1 2010;
• Gross Margin increased to 40%, up from 38% in Q1 2010;
• EBITDA¹ was $1.72 million, in line with $1.72 million for Q1 2010;
• Revenues decreased 5% to $12.25 million, down from $12.95 million in Q1 2010;

¹ EBITDA represents income of the Company before amortization, interest and other income (expense), taxes, non-controlling interest, equity income, development expenses, stock-based compensation expense, and impairment in value of certain investment in film and television programs.

Michael Donovan, Chairman and CEO, DHX Media commented, "Along with our improved operating environment, we are pleased to report this quarter's rebound in profitability, which has been a function of, among other contributing factors, an increase in the average license fee earned per half hour of content, as well as our internal cost-cutting efforts. We are also pleased by the contribution from our W!LDBRAIN Entertainment acquisition and specifically the strong ticket sales from our Yo Gabba Gabba! live show which is currently touring 60 cities across North America. The Yo Gabba Gabba! live touring show has reported robust sales in key markets, selling out five shows at New York City's Radio City Music Hall and adding shows in Los Angeles and Las Vegas, continuing to build awareness for this hit pre-school property."

Consolidated Statements of Income and Comprehensive Income Data
	Three Months Ended	Three Months Ended
	September 30, 2010	September 30, 2009
	($000)	($000)
	(except per share data)	(except per share data)
Revenues……………………………………………………………………….	12,247	12,948
Direct costs and amortization of film and television produced……………	7,315	8,091
Gross margin……………………………..…………………………………….	4,932	4,857
Selling, general, and administrative………………………………………….	3,366	3,440
Impairment in value of certain investment in film and television programs	100	159
Income before the following ………………………………..………………	1,138	946
Loss from strategic investments………………………………………………	(10)	(53)
Equity loss………………………………………………………………………	(71)	-
Foreign exchange gain (loss) ………………………………………………	146	(208)
Amortization, interest and other expenses, net…………………………….	(514)	(584)
Provision for income taxes……………………………………………………	(234)	(92)
Net income and comprehensive income ……………………………………	455	9
Basic earnings per common share…………………………………………..	0.01	0.00
Diluted earnings per common share………………………………………..	0.01	0.00
Weighted average common shares outstanding
Basic……………………………………………………………………………	61,627	44,335
Diluted………………………………………………………………………….	62,033	44,513
	As of	As of
Consolidated Balance Sheet Data:	September 30, 2010 ($000)	June 30, 2010 ($000)
Cash, restricted cash and short-term investments………………………….	21,398	22,018
Investment in film and television programs………...……………………….	37,635	29,892
Total assets……………………………………………………………………..	145,283	133,304
Total liabilites…………………………………………………………………	64,491	53,125
Shareholders' equity……………………………………………………………	80,792	80,179

Revenues

Revenues for Q1 2011 were $12.25 million, down slightly (5%) from $12.95 million for Q1 2010. The decrease in Q1 2011 was mainly due to fewer deliveries and lower Q1 2011 distribution revenues and was generally offset by increases in royalty and producer and service fee revenues.

For Q1 2011, the Company accounted for 29.0 half-hours - $4.26 million of proprietary film and television program production revenue, a 69% decrease versus the 95.0 half-hours for Q1 2010, where the programs have been delivered and the license periods have commenced for consolidated entities.

For Q1 2011, distribution revenues were down 21% to $2.95 million from $3.75 million for Q1 2010, generally due to timing of license periods for existing contracts on hand. For Q1 2011, the Company slightly experienced the lagging effect on distribution revenues of fewer Fiscal 2010 deliveries. For Q1 2011, the Company recognized revenue on several contracts throughout its existing library and delivered episodes of newer titles. Some of the more significant sales were on the following titles: The Latest Buzz Seasons I-III, Animal Mechanicals Seasons I and II, Grandpa in my Pocket Seasons I and II, Super Why! Season I, Kid vs. Kat Season II, How to be Indie Season I, and Waybuloo Season I.

Producer and Service Fee Revenues - for Q1 2011, Management was pleased with the growth in this category as the Company earned $2.55 million for producer and service fee revenues, an increase of 54% over the $1.66 million for Q1 2010.

For Q1 2011, music and royalty revenues, including M&L, increased 943% to $2.19 million (Q1 2010-$0.21 million). Overall, music and royalty revenues, including M&L, were up 943% mainly due to the addition of W!ILDBRAIN which has significant licensing revenue, specifically for Yo Gabba Gabba. The breakdown for this category was $0.13 million for traditional DHX music and royalty revenues, including M&L, $1.95 million for gross Yo Gabba Gabba Live! revenues, and $0.11 for other M&L on Yo Gabba Gabba.

Gross Margin

Gross margin for Q1 2011 was $4.93 million, an increase in absolute dollars of 2% compared to $4.86 million for Q1 2010. Management was pleased with the overall margin at 40% of revenue for Q1 2011 which was at the high end of Management's expectations.

Operating Expenses

Operating expenses for Q1 2011 were $3.79 million compared to $3.91 million for Q1 2010, a decrease of 2%. SG&A costs for Q1 2011 were down 2% at $3.37 million compared to $3.44 million for Q1 2010. Specifically, SG&A costs for W!ILDBRAIN for the 16 days from date of acquisition to September 30, 2010 were $0.28 million. Management was pleased that SG&A costs were down especially given the addition of W!ILDBRAIN. Management was also pleased with Q1 2011 SG&A costs excluding W!ILDBRAIN at $3.09 million, down 10% (ahead of expected reductions at 5%) as compared to Q1 2010.

EBITDA

In Q1 2011, EBITDA was $1.72 million, in line with Management's expectations and Q1 2010. For Q1 2011, this was generally due to the increase in gross margin dollars of $0.07 million and a decrease in SG&A of $0.80 million, offset by a $0.15 million decrease in non-cash stock based compensation. 

Net Income and Comprehensive Income

Net income and comprehensive income for Q1 2011 was $0.45 million, compared to $0.01 million for Q1 2010, or an improvement of $0.44 million in absolute dollars.

DHX Media's complete financial statements and Management Discussion & Analysis are available at www.dhxmedia.com or on www.sedar.com.

About DHX Media Ltd.

DHX Media Ltd. is a leading international producer and distributor of television programming and interactive content with an emphasis on children, family and youth markets. DHX Media Ltd. shares are listed on the TSX, the Toronto Stock Exchange.  DHX Media produces or co-produces 8 original television series and theatrical releases currently commissioned for production and maintains a growing library of over 2,300 half-hours of mostly children and youth-oriented television productions. 

www.dhxmedia.com

Disclaimer

This press release contains forward looking statements with respect to the Company. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, such statements involve risks and uncertainties and are based on information currently available to the Company. Actual results may differ materially from those expressed or implied by such forward looking statements. Factors that could cause actual results or events to differ materially from current expectations, among other things, include risks related to market factors, customer contract interpretation, application of accounting policies and principles, and production related risks, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time including matters discussed under "Risk Factors" in the Company's short form prospectus dated April 9, 2010 and in the Company's Amended Annual Information Form incorporated by reference therein. These forward-looking statements are made as of the date hereof, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

%SEDAR: 00023380E

For further information:

Enquiries:

DHX Media Ltd.                     [phone]

David A. Regan - EVP, Corporate Development & IR