Quebecor Inc. Class A · TSX:QBR.A
Quebecor Inc. Class A — Investor Presentation (May 2005)
36 slides from Quebecor Inc. Class A's investor presentation, May 2005
Slide 1: Investor Presentation
Investor Presentation Montreal May 2005
Slide 2: Safe Harbor Act
Safe Harbor Act Except for historical information contained herein, certain statements in this document may constitute forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and
Slide 3: Corporate Structure
Corporate Structure 35.3% (*) 54.7% Caisse de Dépôt et Public Placement du Québec 64.7% 45.3% One of the world’s largest commercial printers 3rd largest media company in Canada and the largest in Quebec Operating in 17 countries Leading market positions in cable, newspaper publishing, LTM
Slide 4: Managing Principles at Quebecor
Managing Principles at Quebecor Be market leaders in each of our businesses • Quebecor World (“IQW”), one of the world’s largest commercial printers • Quebecor Media (“QMI”), leading Canadian assets (Videotron, Sun Media, TVA, etc.) Driving growth at reasonable cost • Entrepreneurial management
Slide 5: Quebecor Media
SS © QUEBECOR MEDIA /5
Slide 6: Leading Market Positions
Leading Market Positions Quebecor Media can reach 60% of English Canadians in Major Canadian Markets and 95% of French Canadians in Quebec on a weekly basis Leading Market Position in Quebec #1 Newspaper publisher #1 Cable operator #1 High speed Internet service provider #1 Television broadcaster
Slide 7: QMI Strategic Focus
QMI Strategic Focus Generate Free Cash Flow Execute Residential Telephony Strategy Target Accretive Acquisitions in Core Business Segments Optimize Capital Structure /7
Slide 8: Driving Free Cash Flow Growth
Driving Free Cash Flow Growth New Products Cross Selling Residential Telephony Created dedicated QMI position to Video on Demand enhance cross selling opportunities (VP, Advertising Convergence) 24 Hours (Montreal, Toronto, Vancourer) Toronto 1 Channel Exploit content on all media platfo
Slide 9: Sun Media
SUN MEDIA CORPORATION A QUEBECOR MEDIA COMPANY
Slide 10: Nationwide Presence and Strategically Clustered
Nationwide Presence and Strategically Clustered Nationwide presence covering key markets offers national advertising solutions Clustering provides significant cost efficiencies and opportunities for bundled advertising packages 8 Paid Urban Dailies + 3 Free Commuter Dailies 193 Community Newspap
Slide 11: Sun Media Recent Developments
Sun Media Recent Developments In December 2004, Sun Media swapped its 29.9% interest in CP24, a local news channel in Toronto (and paid $2.8M cash), for a 25% interest in Toronto 1, a Toronto based conventional television station. The transaction was valued at $10.8M and Sun Media recorded a net g
Slide 12: Sun Media Key Priorities
Sun Media Key Priorities Defend Sun franchise vs. new free dailies (Dose, Metro) & other paid dailies •Reducing cover price at some locations •Expanding 24 Hours franchise •Increasing bulk and sample copies •Expanding home delivery Develop new revenue streams (to offset National advertising reve
Slide 13: Sun Media Key Priorities
Sun Media Key Priorities Pursue cost reduction opportunities aggressively •Centralization of Customer Service Call Centers (Kanata, Ontario) •Investment in new information systems (circulation and classified) •Investment in new presses, splicers, inserters (to reduce waste and labour costs) /13
Slide 14: Demonstrated Financial Performance
Demonstrated Financial Performance EBITDA has been growing at a 4.4% CAGR pace (5.4% excluding the impact of the recent start-up of free dailies) REVENUE* EBITDA* 925 240 900.5 227.8 229.8 224.8 900 888.1 219.4 215 875 201.5 845.9 197.9 850 831.6 190 183.2 % 826.1 4.4 = 825 814.9 GR CA 803.3 800 1
Slide 15: Maintained Strong Margins
Maintained Strong Margins Despite the launch of free dailies, stringent focus on costs has allowed Sun Media to consistently deliver industry leading margins EBITDA Margin Peer Comparison (LTM 03/31/05) 27% 26.6% 26.4% 30% 25.5% 25.7% 25.5% Publishing EBITDA Margin 26% 25% 22.2% 25% 24.4% 24.3% 18
Slide 16: Launch of Free Dailies
Launch of Free Dailies Remarkable market reception 24 Hours 24 Heures 24 Hours Toronto Montreal Vancouver Circulation (approx.) 225K 125K 145K Readership (Daily)* 308K 152K - Readership (Exclusive)* 45% 35% - Readership (18-49)* 81% 80% - Readership (Female)* 56% 49% - * Source: Nad Bank 2004 /16
Slide 17: Videotron
@ QUEBECOR MEDIA
Slide 18: Videotron Recent Developments
Videotron Recent Developments Fastest growing digital TV and cable internet service provider in Canada during the LTM and the last three years First major cable service provider in Canada to launch residential telephony service HSD download speeds increased to 5.1 Mbps and 6.5 Mbps for premium
Slide 19: Videotron Key Priorities
Videotron Key Priorities Continue driving growth by: Delivering the best experience possible to our customers • Superior products (VOD, SVOD, fastest HSD, speed on demand) • Low cost and reliable telephony service Increasing Internet penetration (80-100 K new customers per year) Telephony: THE
Slide 20: Basic Cable Subscriber Base
Basic Cable Subscriber Base Positive trend : 5 consecutive quarters of net adds on an LTM basis Net Change (LTM) in Cable TV Customers (000’s) 30 20 10 0 (10) (20) (30) (40) (50) (60) (70) (80) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2002 2003 2004 2005 Source: Vidéotron /20
Slide 21: Digital Services Subscriber Growth
Digital Services Subscriber Growth Fastest growing Cable DTV and HSD service provider Digital Customers High-Speed Internet Customers 300 220 280 Vidéotron Vidéotron Rogers 200 Rogers 260 240 Shaw 180 Shaw 3% 28 % 220 Cogeco =4 Cogeco = GR 160 AGR 200 CA C VL VL 180 140 160 140 120 120 100 100 80
Slide 22: Substantial Potential for Increased Penetration
Substantial Potential for Increased Penetration Digital Penetration of Basic Subscribers Internet Penetration of Homes Passed 60% 40% 50% 35% 34% 50% 45% 30% 30% 30% 40% 40% 38% 25% 24% 22% 32% 29% 19% 30% 27% 27% 20% 24% 17% 16% 15% 13% 20% 10% 10% 5% 0% 0% Cablevision Comcast Rogers Shaw Videotron
Slide 23: Residential Telephony – Strong Market Reception
Residential Telephony – Strong Market Reception End of Week Subscribers (in 000's) 25 Service launched January 22.8 24th on Montreal’s South Shore 20.8 (300K homes) 20 18.8 16.8 Service launched March 29th in 15 14.9 Laval (145K homes) 12.8 10.9 Strong consumer reception 10 9.1 7.5 Strong li
Slide 24: Bundling Reduces Churn
Bundling Reduces Churn The introduction of Videotron’s VoIP service to the TRIPLE PLAY BUNDLE, should help reduce churn further Monthly Churn 3.00% Internet Only 2.50% Cable Only Bundled Clients 2.00% 1.50% 1.00% 0.50% 0.00% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Note: Bundle
Slide 25: Growing ARPU
Growing ARPU 9.1% CAGR during the last 3 years Gross Total ARPU $60 $55 % = 9.1 G R $50 CA $45 $40 $35 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2001 2002 2003 2004 2005 Source: Vidéotron (ARPU is gross of programming credits and excludes accounting changes relating to installation revenu
Slide 26: VOD: Additional Opportunity to Increase ARPU
VOD: Additional Opportunity to Increase ARPU Recent agreement with two major studios that have added content to the library • Time Warner • Universal Quarterly Paid VOD Orders (000's) 445.0 324.8 VOD Orders (000s) 235.3 190.3 138.5 114.8 94.9 50.5 0 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004
Slide 27: TVA
Slide 28: TVA Recent Developments
TVA Recent Developments In December 2004, TVA paid $32.4M for a 75% interest in Toronto 1, a television station in Toronto In December 2004, TVA launched Mystère, a French language digital specialty channel focusing on mystery and science- fiction programming content In January 2005, TVA launc
Slide 29: TVA Key Priorities
TVA Key Priorities Maintain leading market share (and 25+ of top 30 shows) Implement new programming strategy at Toronto 1 Increase revenues • Rate increases on star products • Increase market penetration of home shopping network • Increase derivative products revenue streams Cost Control •
Slide 30: TVA – Leading Margins and Market Share
TVA – Leading Margins and Market Share Peer Comparison (LTM) French-language TV Market Share Industry leading margins Consistently delivering strong market share despite increased fragmentation – 27 of top 30 shows in Fall 2004 season 25% 23% Other Broadcasting EBITDA Margin (%) 14% 20% TVA 20% 18%
Slide 31: Financial Highlights
Financial Highlights
Slide 32: QMI – Financial Performance
QMI – Financial Performance Revenues ($ million) 2004 2003 YoY (%) Q1-05 Q1-04 YoY (%) Cable 871.6 805.0 8.3% 232.1 206.8 12.2% New spapers 888.1 845.9 5.0% 212.6 200.2 6.2% Broadcasting 358.0 340.9 5.0% 96.7 85.9 12.6% Leisure and Entertainment 241.7 205.0 17.9% 49.2 47.5 3.6% Business Telecom 78.6
Slide 33: QMI: A Free Cash Flow Powerhouse
QMI: A Free Cash Flow Powerhouse QMI’s intense focus on QMI Consolidated 225 profitable growth and cost 200 192 202 containment has resulted in 175 146 150 significant improvements in 125 120 EBITDA and Free Cash Flow 100 75 which will continue to drive 50 45 leverage reduction in the future 25 0
Slide 34: Accounting Practice Discrepancies
Accounting Practice Discrepancies Different accounting practices amongst Canadian cable companies make EBITDA comparisons difficult • Vidéotron and Rogers: Subscriber subsidies are expensed • Shaw and Cogeco: Subscriber subsidies are capitalized EBITDA must be adjusted to reflect these differenc
Slide 35: Favorable Tax Position
Favorable Tax Position QMI and its wholly-owned subsidiaries currently sit on a very favorable tax position QMI Tax Position (as of December 31, 2004) $ Net Operating Losses (NOL's) 628 Undepreciated Cost of Capital (UCC) ~856 As a result, QMI and its wholly-owned subsidiaries do not expect to p
Slide 36: Refinancing Opportunities
Refinancing Opportunities As of July 15, 2006, QMI will have the option to refinance its Senior Notes and Senior Discount Notes This should generate substantial interest savings, further driving free cash flow growth Current Situation Refinancing Interest Coupon Int. ($) * Coupon Int. ($) * Savi