Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania...
Transcript of Wow Investor Deck - LD Micro · 2019-11-16 · Game of Thrones The Walking Dead Castlevania...
March 2018
A final base shelf prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in British Columbia, Alberta,and Ontario. A copy of the final base shelf prospectus, any amendment to the final base shelf prospectus and any applicable shelf prospectus supplement that has been filed is required to bedelivered with this document. Copies of the final base shelf prospectus, and any applicable shelf prospectus supplement, may be obtained from www.sedar.com, or via email [email protected]
No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. These securities have not been, and will not be, registered under the UnitedStates Securities Act of 1933, as amended (the "1933 Act") or any state securities laws and may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the1933 Act) except pursuant to an exemption from the registration requirements of those laws. This document does not provide full disclosure of all material facts relating to the securities offered.Investors should read the final base shelf prospectus, any amendment and any applicable shelf prospectus supplement for disclosure of those facts, especially risk factors relating to the securitiesoffered, before making an investment decision.
TSX:WOW.A
Forward-looking statementsConfidentiality, Cautionary Advice and Forward-Looking StatementsThisPresentationcontainscertainforward-lookingstatementsandforward-lookinginformation(collectivelyreferredtohereinas"forward-lookingstatements")withinthemeaningofapplicableCanadiansecuritieslaws.Allstatementsotherthanstatementsofhistoricalfactareforward-lookingstatements.Forward-lookingstatementsareoften,butnotalways,identifiedbytheuseofwordssuchas"anticipate","achieve","could","believe","plan","intend","continuous","ongoing","estimate","outlook","expect","may","will","project","should"orsimilarwords,includingnegativesthereof,suggestingfutureoutcomes.Thesestatementsrelatetofutureeventsorfutureperformanceandreflectmanagement’sexpectationsorbeliefsregardingfutureevents.Inparticular,thisPresentationcontainsforward-lookingstatementsrelatingto:(i)WOWUnlimitedMediaInc.’s("WOW!")businessstrategy;(ii)themarketinwhichWOW!operatesandthedemandforchildren’sentertainmentcontent;(iii)theabilityofWOW! tosuccessfullyintegrateitscomponentbusinessesandtorealizeonperceivedsynergies;(iv)WOW!’spotentialfuturerevenueandlong-termvision;(v)theabilityofWOW!toidentifysuitableacquisition/partnershiptargetsandtoacquire/partnerwithsuchtargetsonreasonabletermsandinatimelyfashion;(vi)theabilityofWOW!toexpandintopotentialmarketsandtocapitalizeonsuchexpansion;(vii)futureoperationalandfinancialperformance,includingproductioncapacity;(viii)expectationsregardingtheabilityofWOW!toraisecapitalandtoincreaseitsbusiness;(ix)WOW!’s proposedstrategiesforglobalrolloutandplatformgrowth;(x)thecompletionofthecompletionoftheacquisitionoftheCategoryBspecialtyservice,andtheCanadianRadio-televisionandTelecommunicationsbroadcastinglicence fromBellMediaInc.andtheformalizationofthestrategicpartnershipwithBellMediaInc.;(xi)WOW!’sproposedoperations for2018;(xii)thecontinuedaccesstoandstabilityofdistributionchannels;(xiii).Thereaderiscautionedthatsuchforward-lookingstatementsmayprovetobeincorrect.ThisPresentationdoesnotconstitutearecommendationregardingthesecuritiesofWOW!.Variousfactorsandassumptions,certainofwhicharebeyondWOW!'scontrol,areappliedindrawingconclusionsormakingtheforecastsorprojectionssetoutinforward-lookingstatements.ThosematerialfactorsandassumptionsarebasedoninformationcurrentlyavailabletoWOW!,includinginformationobtainedfromthirdpartyindustryanalystsandotherthirdpartysources.Insomeinstances,materialassumptionsandmaterialfactorsare presentedelsewhereinthisPresentationinconnectionwiththeforward-lookingstatements.Readersarecautionedthatthefollowinglistofmaterialfactorsandassumptionsisnotexhaustive.Specificmaterialfactorsandassumptionsinclude,butarenotlimitedto:(i)theperformanceofWOW!'sbusiness,includingcurrentbusinessandeconomictrends;(ii)capitalexpenditureprogramsandotherexpendituresbyWOW!anditscustomers;(iii)theabilityofWOW!toretainandhirequalifiedpersonnel;(iv)theabilityofWOW!tomarketitscontentsuccessfullytoexistingandnewcustomers;(v)theabilityofWOW! to retaincustomers;(vi)theabilityofWOW!toobtaintimelyfinancingonacceptableterms;(vii)astablecompetitiveenvironment;(viii)WOW!’sabilitytoanticipateandadapttochangesintechnologyandproductconsumptionpatterns;and(ix)astableindustryregulatoryenvironment.Forward-lookingstatementsarenotaguaranteeoffutureperformanceandinvolveanumberofrisksanduncertainties,someofwhicharedescribedherein.Suchforward-lookingstatementsnecessarilyinvolveknownandunknownrisksanduncertainties,bothgenericandspecific,andanumberoffactorscouldcauseWOW!'sactualperformanceandfinancialresultstodiffermateriallyfromanyprojectionsoffutureperformanceorresultsexpressedorimpliedbysuchforward-lookingstatements.Theserisksanduncertaintiesinclude,butarenotlimitedto,thosecontainedhereinandthosecontainedinWOW!’sannualinformationformfortheyearendedDecember31,2016andthemanagement’sdiscussionandanalysisfortheyearendedDecember31,2016,bothofwhichareavailableonSEDARatwww.sedar.com.Anyforward-lookingstatementsaremadeasofthedatehereofand,exceptasrequiredbyapplicablesecuritieslaws,WOW!doesnotintend,anddoesnotassumeanyobligationtoupdatetheforward-lookingstatementscontainedherein.Certaininformationcontainedhereinisbasedon,orderivedfrom,informationprovidedbyindependentthird-partysources.WOW!believesthatsuchinformationisaccurateandthatthesourcesfromwhichithasbeenobtainedarereliable.WOW!cannotguaranteetheaccuracyofsuchinformation,however,andhasnotindependentlyverifiedtheassumptionsonwhichsuchinformationisbased.WOW!doesnotassumeanyresponsibilityfortheaccuracyorcompletenessofsuchinformation.Readersarecautionednottoplaceunduerelianceonforward-lookingstatements.WOW!’sfinancialdisclosureincludesnon-InternationalFinancialReportingStandards("IFRS")financialmeasuressuchas"AdjustedEBITDA" assupplementalindicatorsofWOW!’sfinancialandoperatingperformance.WOW!believesthesesupplementalfinancialmeasuresreflectWOW!’son-goingbusinessinamannerthatallowsformeaningfulperiod-to-periodcomparisonsandanalysesoftrendsinitsbusiness.Accordingly,WOW!believesthatsuchfinancialmeasuresmayalsobeusefultoprospectiveinvestorsinenhancingtheir understandingofWOW!’soperatingperformance.Thesenon-IFRSmeasuresarenotrecognizedunderIFRSanddonothavestandardizedmeaningsprescribedbyIFRS.Therefore,itisunlikelythatthesemeasureswillbecomparabletosimilarlytitledmeasuresreportedbyotherissuers.Non-IFRSfinancialmeasuresshouldbeconsideredinthecontextofWOW’sIFRSresults.WOW!cautionsreaderstoconsiderthesenon-IFRSfinancialmeasuresinadditionto,andnotasanalternativefor,measurescalculatedinaccordancewithIFRS.WOW!definesAdjustedEBITDAasearningsbeforeinterest,taxes,depreciationandamortization(excludingamortizationofinvestmentsinfilmandtelevisionproperties),adjustedforcertainitems.AdjustedEBITDAispresentedonabasisconsistentwithWOW!’sinternalmanagementreports.WOW!disclosesAdjustedEBITDAtocapturethe profitabilityofitsbusinessbeforetheimpactofitemsnotconsideredinmanagement'sevaluationofoperatingperformance.ThefinancialstatementsofWOW!arepreparedinaccordancewithIFRSandarereportedinCanadiandollars.Allcurrencyamounts inthispresentationareexpressedinandallreferencesinthispresentationto"$"toCanadiandollars,unlessotherwiseindicated.ThisPresentationdoesnotconstituteanoffertosellorasolicitationofanoffertobuynorshalltherebeanysaleofanyofthesecuritiesinanyjurisdictioninwhichsuchoffer,solicitationorsalewouldbeunlawful,includinganyofthesecuritiesintheUnitedStatesofAmerica.ThesecuritieshavenotbeenandwillnotberegisteredundertheUnitedStatesSecuritiesActof1933,asamended(the“1933Act”)oranystatesecuritieslawsandmaynotbeofferedorsoldwithintheUnitedStatesorto,orforaccountorbenefitof,U.S.Persons(asdefinedinRegulationSunderthe1933Act)unlessregisteredunderthe1933Actandapplicablestatesecuritieslaws,oranexemptionfromsuchregistrationrequirementsisavailable.
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Team
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Bob Ezrin, Vice Chairman • Co-founder and CEO of 7th level
(interactive animation / entertainment company) and Enigma Digital (internet broadcasting company)
• Canadian Walk of Fame and Canadian Music Hall of Fame inductee
Neil Chakravarti, President & COO• Tech, media, and telecom investment banking
for JP Morgan • Head of English Channels and Global Head of
Strategy and Biz Dev for Zee Entertainment• Co-founder of Corporate Storytellers and
Initium.tv
• First Creative Director of MTV, last President of Hanna-Barbera, founder of Next New Networks (acquired by YouTube)
• Producer for all-time hits on Nickelodeon and Cartoon Networks
• Founder and CEO of Frederator Networks• Early investor and board member of Tumblr
(acquired by Yahoo)
• One of the founders of the Canadian animation industry
• Founded Nelvana in 1971• Co-founder of Teletoon• Sold to Corus for ~$650mm in 2000• Founded Cookie Jar Entertainment in 2004
‒ Sold to DHX Media for ~$110mm in 2012
‒ DHX stock price increased approx. 5x while he was Executive Chairman
John Vandervelde, EVP & CFO• Audit and advisory – KPMG • VP Production & Finance, Nelvana• SVP, Business Development & Co-
production, Cookie Jar• Managing Director, TEAM Finance
Michael Hirsh, Chairman & CEO Fred Seibert, Chief Creative Officer
TSX:WOW.A
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Content explosion redux!
TSX:WOW.A
1980s:Creation of ‘new niche platforms’
(CABLE CHANNELS) provided massive opportunities to build content libraries
Present day:Creation of ‘new niche platforms’
(Over the top (OTT) PLATFORMS WORLDWIDE) provide unlimited shelf space to build content libraries
Tech/media giants are spending extraordinary amounts of capital, resulting in exponentially higher demand for content
THE GOAL:To super-serve an under-served audience with
WOW! – an audience focused media company
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THE AUDIENCE IS KING!
The Best Content
The Most Engaging Platforms
and
1
2
TSX:WOW.A
$0.0 $5.0 $10.0
2012
2016
Billions
Our Core Audience – ‘Kidults’ (Kids and Youth)
6(1) Source: Childwise Connected Kids Report(2) Source: Morgan Stanley(3) Business Insider Dec, 2015: “More than 70% of internet traffic during peak hours now comes from video and music streaming”
$3 B
$10 B
9.7% 5.2%
6.0%
6.2%
11.3%61.6%
Other
Marketplace
Social Networking
Tunneling/Encrypted
Web Browsing
Video
Global Kids Content Spend (US$ BB)(2) Video - 2/3rds of Mobile Usage(3)
• Kids 5 to 16 years old averaged 6.5 hours a day screen-time in 2015(1)
‒ Compared to 3.0 hours in 1995(1)
‒ Current viewership primarily through OTT and Mobile Platforms
Castlevania
The Handmaid’sTale
Orange is theNew Black
StrangerThings
13 ReasonsWhy
House ofCards
GLOW
29.8
17.8
16.4
14.1
11.5
9.3
9.1
Game ofThrones
The WalkingDead
Castlevania
AmericanGods
Preacher
Fear theWalking Dead
Power
60.1
46.4
29.8
27.3
26.3
25.4
22.7
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• High social media engagement
• Second season in production
• First video game adaption to get a “Fresh” rating of >60% on Rotten Tomatoes
US Audience Demand (July 9 – July 15, 2017)
Overall Demand (MM) Digital Originals Demand (MM)
Castevania Success
WOW!: First Content Release in 2017 – Castlevania
Source: Parrot Analytics - https://www.parrotanalytics.com/insights/top-10-most-in-demand-shows-in-the-us-july-9-july-15-2017/Rotten Tomatoes - https://editorial.rottentomatoes.com/article/netflix-castlevania-broke-rotten-tomatoes-record/
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Notable content/IP activity within first year
TSX:WOW.A
• Most funded animation and fourth most funded film/video on Kickstarter
• Raised ~$900K from 18,000 contributors
• Game adapted for series by Frederator
• Currently in production for Amazon Studio
• 1st CGI TV series, produced by Rainmaker
• Picked up by Netflix
• 2013 Best Web Show Shorty Award Winner
• Annecy International and Webby Award nominated
• Picked up by VRV
Content growth plans
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Type Current Volume
Target Volume
Average Cost
Financing / Risk Management
SHORT FORM –THIRD PARTY 200,000+ videos 1,000,000 videos Negligible Revenue share per deal, typically
no mg to content owners
SHORT FORM YOUTUBE–OWNED 2,000 videos 10,000 videos $1,000-$2,000
per videoSupported by YouTube advertising + CAVCO
TOP END ANIMATION (Books/ Internal projects)(1) 5 series 20 series
$300,000-$500,000 per
half hr.
Presales + Tax credits + channel commissioning covers all out of pocket costs upfront
DIGITAL ANIMATION(1)
(short + long form)Anticipated to
Begin Q4 201725 series
500 episodes
$25,000-$75,000 per half
hour
Covered by VRV + WOW! TV budgets(2); plus CAVCO eligibility
LIVE STUDIO FORMAT Anticipated to Begin Q1 2018 TBD TBD Covered by WOW! TV budget(2)
Ongoing focus on content acquisitions
LIBRARY WITH GLOBAL DISTRIBUTION
3,000 – 6,000 half hours
(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined
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Platforms – finding audiences
>1,000
0
200
400
600
800
1,000
Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Mon
thly
Vie
ws
(in m
illio
ns)
1 billion monthly YouTube views reached in October 2017
Historical Monthly YouTube Views 1 Billion Views Milestone
2013 2014 2015 2016 Oct-2017
Merger of Rainmaker Entertainment Inc.,
Frederator Networks, Inc. and Ezrin Hirsh
Entertainment Inc.
December 2016
TSX:WOW.A
Over 50 million subscribers
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Platforms – content discovery
TSX:WOW.A
Industry Acclaim
“How Frederator’s Bee and PuppyCat Became One of YouTube’s Most Anticipated Shows” – Wall Street Journal
“Frederator’s Female Animation Project Raises Nearly $800K on Kickstarter” – Adweek
“Bravest Warriors is my favorite thing on the planet” –Robert Lloyd, LA Times
Data on audience needs and desires helps to:
• (1) create better content and
• (2) respond quicker to audience tastes
WOW brands discovered and developed from YouTube audience
Learnings
Platform – growth driversLaunching 5 Major Initiatives in 2018
WOW! ON WOW! ON
12
3 4 5
Linear OTT Platform Mobile
Currently on
2
Linear / OTT Platform (H1/18 Launch)
1
OTT Platform
OWNED BY
Partnership Possibilities
(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined
(2)
(2)
(1)
(1)
(1) (1)
Platforms – leveraging content
Independent, Short Form
WOW! Broadcast Studios
Syndicated Content
Top-end Animation
Live Action, Packaged
Animation, Live Action
✔ ✔ ✔✔
✔✔✔ ✔
✔ ✔ ✔ ✔
✔ ✔ ✔ ✔✔
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Linear OTT Platforms Mobile
Multiple other distribution channels for WOW! to place content in the future
Content Source & Type 2018 Distribution Platform Launches
(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined
(1)
(1)(2) (1)(2)
(1)(1)
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Triple Play Synergistic Platform Rollout
Linear
Deal Summary(1)
OTT Mobile
To Leverage Core Competencies
PROGRAMMING
BRAND
DISTRIBUTION
TRANSMISSION
INFRASTRUCTURE STUDIO
AD SALES
• WOW! to acquire specialty Bell channel to be rebranded as WOW! Channel
• Bell Media becomes a shareholder in WOW!
• WOW! Channel to be run using Bell Studio and infrastructure
Consideration
• ~12% shares of WOW!, 24 month lock-up(3)
• Valued at $6.8 MM at $2.00/share
• Bell also participated in Dec raise
PRODUCTION
Bell Canada strategic partnership
(2)
(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to the closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined(3) Based on issued and outstanding shares as at the date hereof, subject to receipt of regulatory approval completion of the Bell Transaction.
“We are very excited about our strategic partnership with WOW! and the opportunity to work with them in realizing their strategy
of becoming a best in class international producer of kids and youth content” - Randy Lennox, President of Bell Media
WOW! Ecosystem –Leveraging Assets for Content & Platforms
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No cost audience validation (1 BN+ monthly views) DISCOVERY
1
25+ year track record of top end production CREATION
3
Low cost through partnerships, crowd-funding DEVELOPMENT
2
SHORTS
DISTRIBUTION /MONETIZATION
4PARTNER
PLATFORMS(1)
OWNED CHANNEL & PLATFORMS
(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017(2) WOW! TV brand name still to be determined
(2) (2)
Revenue model
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A. IP Generation Revenue
A. YouTube Advertising On Demand
Animation Production
Networks and Platforms
B. Work For Hire Service Revenue
B. New Launches – WOW Unlimited TV
Selling owned & produced content to platforms/channels worldwide
Production services for clients
YouTube Advertising (Ad) revenue share
Subscription revenue from cable cos in US/Canada + Ad revenue
B. New Launches – VRV Subscription revenue from consumers + Ad revenue + production revenue
Financial overview
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Animation Production
Networks and Platforms
Illustrative Economics(1)
Subscriptions 3mm 6mm 9mm
Annual revenue @20¢/ sub
$7.2mm
$14.4mm
$21.6mm
(1) The information presented is illustrative only in nature and there is no guarantee as to actual range of subscribers or subscription rates
*Allfinancialdisclosuresavailableonwww.sedar.comAllfigureinC$
2017 Q1-Q3
2016 full year pro-forma
19.7mm
18.5mm
2017 Q1-Q3 7.0mm
8.0mm2016 full year pro-forma
Upcoming Platforms
Subscriptions 50k 100k 200k
Annual revenue @$3.99/ sub
$2.4mm
$4.8mm
$9.6mm
39%
38%
12%
11%
Insiders
Institutional
Bell
Retail
Capitalization and Ownership
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Capitalization Pro-Forma Ownership (Basic)(1)
(1) Partnership with Bell Media Inc. (and its properties and platforms) is subject to closing of the Bell Transaction, as such term is defined in WOW!’s Annual Information Form dated September 26, 2017; shares outstanding in capitalization chart includes shares to be issued to Bell Media Inc. at closing of Bell Transaction
(2) TMX website
(1)
(1)
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Recap
TSX:WOW.A
There’s an ’arms race’ for content by tech and media majors, and investments will only grow as competition heats up
There’s never been a better time to build a large content library and niche-audience focused platforms
Thank you
TSX:WOW.A