CBC/Radio-Canada Annual Report 2017-2018

FINANCIAL SUSTAINABILITY

SEASONALITY AND QUARTERLY FINANCIAL INFORMATION

The following table shows condensed financial data for the previous eight quarters. This quarterly information is unaudited, but has been prepared on the same basis as the annual Consolidated Financial Statements. We discuss the factors that caused our results to vary over the past eight quarters in the next section.

	For the year ended March 31, 2018
	Q1	Q2	Q3	Q4
Revenue	113,208	119,194	139,852	200,821
Government funding	238,767	292,517	303,550	372,915
Expenses	(395,255)	(389,352)	(458,189)	(588,100)
Results before other gains and losses	(43,280)	22,359	(14,787)	(14,364)
Other gains and losses	53,658	(8,062)	577	(8,665)
Net results under IFRS for the period	10,378	14,297	(14,210)	(23,029)

Results on a Current Operating Basis	31,419	13,783	11,379	(7,887)

	For the year ended March 31, 2017
	Q1	Q2	Q3	Q4
Revenue	114,606	176,825	138,045	127,444
Government funding	223,126	256,063	288,777	331,119
Expenses	(354,271)	(430,286)	(445,132)	(494,722)
Results before other gains and losses	(16,539)	2,602	(18,310)	(36,159)
Other gains and losses	(1,402)	(719)	(93)	(148)
Net results under IFRS for the period	(17,941)	1,883	(18,403)	(36,307)

Results on a Current Operating Basis	(7,489)	2,018	8,757	(25,557)

Our operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results.

The seasonality of our revenue is reflective of general market, economic and viewership patterns affecting all conventional broadcasters. Revenue from our ongoing activities generated during the second quarter of the year is usually at its lowest level because the summer season attracts fewer viewers. In contrast, revenue from our ongoing activities in the third quarter is comparably higher as audiences are larger and more advertisers purchase airtime in anticipation of the holiday season.

Government funding is recognized in the Corporation’s income based on budgeted net expenses for the quarter. Monthly and quarterly budgets are established from the annual budget approved by the Board of Directors at the beginning of each year and reflect expected funding for the year and seasonal impacts on expenditures and self-generated revenue.

Expenses from our ongoing activities also tend to follow a seasonal pattern because they are influenced by the programming schedule. Operating costs tend to be higher in the fourth quarter as the Corporation incurs costs preparing for the fall broadcasting season and completes project deliverables due by the end of the fiscal year.

Other factors may impact net results from quarter to quarter. These may include foreign exchange gains or losses, changes to the fair value of derivative financial instruments, asset write-offs and sales. When appropriate, these are recorded as other gains and losses.

COMPARISON OF 2017-2018 AND 2016-2017 BY QUARTER

Quarter	Revenue	Expenses
Q1	Revenue Lower revenue compared to the same period in the prior year, primarily from the combined effect of lower content sales and lower subscription revenue on our speciality platforms. These decreases were partly mitigated by growth in our advertising revenue from our conventional television, mostly on ICI RADIO-CANADA TÉLÉ, and higher digital revenue.	Expenses Expenses are higher relative to the same period last year, in line with our plans to broadcast additional original content across our platforms. In particular, we aired more original Arts and Entertainment programming, invested in various Canada 150 initiatives, and continued building our digital capabilities.
Q2	Revenue Second quarter revenue in 2017-2018 was lower compared to the same period in 2016-2017, primarily because last year includes revenue from broadcasting the Rio 2016 Olympic Games. This overall decrease was partly offset by higher revenue from our ongoing activities, mostly driven by strong audience performance on Radio-Canada and growth in our digital advertising.	Expenses Expenses in the second quarter of 2017-2018 were lower than in the same period last year, primarily because last year includes event costs for broadcasting the Rio 2016 Olympic Games. This decrease was partly offset by an increase in our ongoing expenses as we broadcast more original content across our platforms during the summer. In particular, we aired more original Arts and Entertainment programming, covered Canada 150 events, and continued investing in our digital capabilities and local services.
Q3	Revenue Third quarter revenue was higher this year, mostly driven by higher Radio-Canada advertising revenue on all platforms. This growth is partly offset by lower subscriber fees as Canadians continue to reduce their subscription packages (cord-shaving trend).	Expenses Third quarter expenses in 2017-2018 were higher as we continued to broadcast more original content across our platforms. In particular, we aired more original Arts and Entertainment programming and provided more local services. In addition, we continued our investment in our digital capabilities.
Q4	Revenue Higher revenue compared to the same period last year, mainly due to our broadcast of the PyeongChang 2018 Olympic Winter Games.	Expenses Higher expenses compared to last year due to our broadcast rights and production costs for the PyeongChang 2018 Olympic Winter Games.

Quarter

Revenue

Expenses

Revenue

Lower revenue compared to the same period in the prior year, primarily from the combined effect of lower content sales and lower subscription revenue on our speciality platforms.

These decreases were partly mitigated by growth in our advertising revenue from our conventional television, mostly on ICI RADIO-CANADA TÉLÉ, and higher digital revenue.

Expenses

Expenses are higher relative to the same period last year, in line with our plans to broadcast additional original content across our platforms. In particular, we aired more original Arts and Entertainment programming, invested in various Canada 150 initiatives, and continued building our digital capabilities.

Revenue

Second quarter revenue in 2017-2018 was lower compared to the same period in 2016-2017, primarily because last year includes revenue from broadcasting the Rio 2016 Olympic Games.

This overall decrease was partly offset by higher revenue from our ongoing activities, mostly driven by strong audience performance on Radio-Canada and growth in our digital advertising.

Expenses

Expenses in the second quarter of 2017-2018 were lower than in the same period last year, primarily because last year includes event costs for broadcasting the Rio 2016 Olympic Games.

This decrease was partly offset by an increase in our ongoing expenses as we broadcast more original content across our platforms during the summer. In particular, we aired more original Arts and Entertainment programming, covered Canada 150 events, and continued investing in our digital capabilities and local services.

Revenue

Third quarter revenue was higher this year, mostly driven by higher Radio-Canada advertising revenue on all platforms.

This growth is partly offset by lower subscriber fees as Canadians continue to reduce their subscription packages (cord-shaving trend).

Expenses

Third quarter expenses in 2017-2018 were higher as we continued to broadcast more original content across our platforms. In particular, we aired more original Arts and Entertainment programming and provided more local services. In addition, we continued our investment in our digital capabilities.

Revenue

Higher revenue compared to the same period last year, mainly due to our broadcast of the PyeongChang 2018 Olympic Winter Games.

Expenses

Higher expenses compared to last year due to our broadcast rights and production costs for the PyeongChang 2018 Olympic Winter Games.

STRATEGY 2020 PERFORMANCE METRICS

FINANCIAL INDICATOR	Result 2016-2017	Target 2017-2018	Result 2017-2018	Performance against target	Target 2018-2019	Target 2020
Achieve cost reduction target ($ million)	$87.5	$93.1	$93.1		$104.0	$106.3¹

Refer to our Accountability Plan section for explanations about our financial results this year.

¹ Target updated to reflect the continuation of our broadcasting of Hockey Night in Canada on Saturday night and playoff hockey beyond 2020.