Blue Ant to make their presentation, and their company name is Blue Ant Media. Thank you. Okay, great.
Good afternoon, everyone. Great to be here. I will introduce myself first. Robb Chase, I am the CFO of Blue Ant. I have been there since day one. Prior to Blue Ant, I was the CEO of Famous Players Theatres, where we built the company from zero to CAD 60 million of EBITDA and then sold it in an auction, worked with Paramount Viacom on that, sold it to Cineplex eventually. Prior to that, I was a senior executive with PepsiCo International for about 10 years in various senior roles in Canada and the United States. That is my background.
Hello, and my name is Michael MacMillan. I am the CEO of Blue Ant. Here is some forward-looking information. You know what that says. Before we started Blue Ant, I have been around the media sphere one time before. Many years ago, I started a company that was called Atlantis Communications that became Alliance Atlantis. I started that company with CAD 300 of startup capital, and over the years, we grew a TV production company into an international TV distribution and broadcasting business. We navigated Alliance Atlantis through a lot of change in the industry, through the advent of DVDs and, of course, the dot-com boom of a quarter century ago.
I was a controlling shareholder of Alliance Atlantis, and we sold it eventually to Goldman Sachs and Canwest for CAD 2.3 billion, which is a very healthy return on the capital that we had received from our shareholders up till then.
I mention this just because Rob and I are very proud of what we have built at Blue Ant. We know the importance of building a business, but we also know the importance of harvesting value for shareholders. If you do not do that, you do not have anything. So I remind myself and this group of our history of being able to create and harvest value for shareholders. So Blue Ant, we started the company 15 years ago. We had not raised any equity in Blue Ant since 2016. So all of our growth from 2016 until last year, we financed with internally generated cash from operations and the sale of the occasional asset.
A year and a half ago, we decided we wanted to go public to have access to permanent capital, and because we saw that the growth opportunities in front of us were larger and more interesting than those we could afford only with the cash we are generating from operations each year. So last August, in August of 2025, we did an RTO, a reverse takeover, on the TSX of an existing public company. So when you go to the stock chart for Blue Ant on the TSX, the stock trading chart from before last summer is not us. We did an RTO of a company at that point. In the year since going public through the RTO, we have done two significant acquisitions. We acquired a company called Magellan, which is an international streaming company, so it streams media content to users around the world.
We also acquired another company, Thunderbird Entertainment, which was listed on the TSX Venture. We bought Thunderbird Entertainment in the early part of this year. Two significant transactions in the first half year of being public. Right now, Blue Ant is a producer, a distributor, and a streamer. That means that we develop and figure out what TV programs, what content to create. We actually manufacture, we make, we film, we edit, we make the programming. We also distribute that programming to other users, other streamers, other broadcasters, all around the world, and we operate our own streaming and broadcasting platforms. We run channels here in the U.S. and internationally. Some of the key investment considerations that we will put forward for you to think about when you're thinking about Blue Ant. We've got a strong balance sheet.
At Q3, our last quarter results that we put out a few months ago, we had CAD 59.9 million of cash and significant undrawn lines of credit on credit facilities. We're an internationally focused business. Yes, we're based here in Toronto, but our customers are international. The material majority of our customers, our clients, are in the U.S., Europe, the U.K., and in the other major democracies around the world. Also as a company, Blue Ant has been able to enthusiastically grab hold of the changes that the internet has delivered to the media space. We've embraced the advent of streaming. We're technology agnostic. How we deliver our content, our programming to viewers around the world, we don't care how it's technically delivered, via streaming, by cable, whatever.
We're technology agnostic, and if you are that, and if you've got a strong balance sheet, and if you've got experienced management, it's a great time to be in the media business, to be in the content business. Very quickly, TV consumption is as strong as ever. People say TV is dead. Nobody's watching it. They are dead wrong. The average use of TV, of watching video programming, is still three hours a day, the same it's been for decades. It's just that people are doing it in a different way. Streaming has become a huge new part of the TV landscape. If you think about how you consume your video content, you're doing it by premium services like Netflix or Amazon Prime or YouTube or FAST channels or AVOD. You are consuming TV, you're just getting it on your favorite viewing device via a different connectivity.
Absolutely, you are probably doing it three hours a day because that's the average, and it's been the average for a long time. At Blue Ant, as I said, we're very internationally focused. This little slide depicts the fact that we earn our revenue from renting programming or selling programming to users all around the world. You can probably read most or many of the logos on that page, and you probably know most of them, and you probably are consuming many of them. We license our programming to users around the world, we sell subscriptions to our channels, and we sell ads also on our channels. We've got three reporting segments, and these are our reporting segments that existed as of Q3, our most recent quarterly results announced.
We've changed our reporting segments just a few weeks ago to better reflect how we're actually conducting our business in order to better deal with our customers. But these are the reporting segments that existed up until August 31st, which is our year-end. Our historical numbers are all couched and revealed according to these three reporting segments. Global Channels and Streaming consists of a number of subscription channels that we run around the world. So channels you subscribe to and pay a subscription fee. And many other channels that are free to view. So they're free to the viewer and they contain advertising, so that advertising revenue is what pays for those channels. And also a smart TV ad sales business.
Every TV that's manufactured today in North America is a smart TV, and that means when you bring it home from the TV shop, you plug it in, it's connected to the internet. And it knows a lot about you, just like your cell phone knows an awful lot about you. Therefore, advertisements that are embedded via a smart TV are a very fertile ad purchase for the advertiser because they know a lot about you. So we're in the smart TV ad sales business also. So those are the component parts of Global Channels and Streaming. The second part of our reporting segment is Production and Distribution, and that business is exactly what those words sound like. It's producing TV shows and selling them around the world.
As I said, we're headquartered in Toronto, but we have operations in Vancouver, Ottawa, Miami, New York, L.A., London, Sydney, and Singapore. So we're on the ground in major markets distributing our programming to users around the world. We're selling our own programs and we're also distributing programs produced by others, other terrific production companies around the world that don't have the same distribution infrastructure that we do, and they hire us to distribute, to exploit their programming on their behalf. And the third reporting segment is Canadian Media. It's a simple business. It's seven Canadian TV channels and 10 Canadian consumer shows, including all the Cottage Life shows, the Toronto Home shows, and so on. Quickly, before Rob talks a bit more about the financials, a few examples of our business model at work. Remember, we produce programming, we distribute it around the world, and we also broadcast it.
We don't do all three functions on every single show, but here are two examples. Crew Girl is a new TV series that we just finished producing. It launched on Netflix in September, so last month, actually. It's a young adult show, and very quickly after we delivered it to Netflix in September, it soared to number one on all of Netflix. Pretty cool. I like saying that. That's fun. And Netflix immediately renewed it for season two, four days after commencing season one. And Crew Girl is a great example of us starting a new franchise, starting a new brand, and hopefully now that season two's been ordered, that series and that brand will go on for quite some time.
Another example is Kim's Convenience. That is a TV series that was finished producing probably seven years ago, and we just licensed every episode of Kim's Convenience to Peacock, the U.S.-based streaming service, and they just bought all of Kim's Convenience a few weeks ago, and there are many more sales of Kim's Convenience to come in the future, we believe. That is a good example of one of our business ideas is producing great programming that goes into our library, that it can be used and reused and re-exploited in different ways as time goes by. Another example of our model at work is the Mike Holmes library. Mike Holmes is a Canadian and U.S. TV personality in kind of the home repair, the home fix-it business. We did not produce any of his shows, but we bought his whole library from him about three years ago.
We own his life's work, visually speaking, and we exploit that, we sell that, we use that on our Homeful channel. It is one of our free streaming channels that we have around the world. We also have been re-licensing his programming to HGTV and so on. But it is another good example of owning content, whether we produce it or whether we acquire it does not matter, and using it and reusing it on different uses around the world. I am going to hand it over to Robb.
Thanks, Mike. Just a few financial facts. Our year-end is August 31st, and typically and traditionally, our earnings are very back-end weighted to the second half Q3 and Q4, so the periods from May through to August, and this year, particularly so. In our current year, we have had to the end of three quarters, end of May, we had CAD 276 million of revenue for that period. That compares to CAD 140 million in the prior year in FY 2025, and strong adjusted EBITDA. Great liquidity, and Mike mentioned, I think, our cash of CAD 59.9 million and undrawn credit facilities of roughly CAD 74 million. We had only CAD 10 million of total corporate debt at the end of the third quarter.
Also historically, from the six-year period, 2020 through 2025, very strong performance in compound growth rates in both revenue and earnings, and that is a period that included the pandemic, which was tough, shut down our consumer shows and made production very difficult. In terms of organic growth, there are a number of things we are focused on to grow the existing businesses. Increasing production of our owned content, the Crew Girl example that Mike gave, we see that as a path to improve production margins in the studios. Expanding our digital brands around the world, including YouTube. Growing our scripted business. It is a new, diversified area for us, both young adult and in animation. Then expanding our catalog by acquiring other shows like the Mike Holmes series and then growing our, or increasing our international content sales, all the organic growth opportunities.
Then we continue to focus on M&A. We mentioned that we have done a few transactions. These are our criteria that we look for. There is nothing particularly revolutionary on that chart, but we are quite disciplined in evaluating and adhering to those criteria, and we target a 20%+ internal rate of return on our investments. We did the go public transaction last August, MagellanTV in October, and the Thunderbird acquisition late in January. Each of those very much fit the acquisition criteria that we have set for ourselves and all have contributed nicely, both strategically and financially, to the company. Back to you.
You may have heard of this thing called AI. I do not know if it has come across your desks at all. In any event, at Blue Ant and in the TV industry, like the rest of the economy and society, we are looking at what AI will mean for us, and our strategy at Blue Ant is to be open-minded to it. Our plan is not to be on the cutting edge. We are experimenting with it in all the easy and the obvious stuff of back office functioning and so on. But we are looking at it for doing some tasks, especially in post-production, and our minds are open to what it really means to us long run, but we are going with some care. We do imagine that it has an opportunity for us to reduce our costs and become more efficient.
But at the very end of the day, we are in the creative business. We are in the business of imagining things, and I believe that no matter what, humans will be the people that sing songs and tell stories and imagine and fall in love and do all the things that the creative industries and creative people need to do in order to continue to, for example, create TV shows. Our approach to AI is to be open-minded to it and to use it where it makes sense, but make it in support of the creative process that is at the heart and soul of what we are doing. I will come back to some of the investment highlights. Rob and I have talked about our strong balance sheet. We do not think that a company in our industry or perhaps any company should be heavily levered.
We are allergic to having significant leverage or significant debt. We are very much internationally focused. I said it before a couple of times, but I will just underline it again. Most of our clients, most of our customers are not Canadian. They are American, they are European, British, Australian, New Zealand, Japanese, South Korean, et cetera. That is our market. Those are our territories. And the genres of programming that we focus on are also very much with the international market in mind. We like to be in genres that will travel well and have a long shelf life. One of our best categories or our best genres is wildlife and natural history. We have a brand called Love Nature, which is a channel in about 100 countries around the world. We own the programming on Love Nature, and it is available in most countries. But think about it.
Natural history and wildlife travels very well. It's easy to make foreign language versions of it. It's family-friendly. It doesn't go out of date next year compared to what it looked like last year. So that's an example of our strategy of being in categories that travels well. Also, categories like young adult, kids, and animation, and lots of other areas of unscripted, like science, history, mystery, and so on. They also travel well. We're not in the business of making $15 million per hour expensive, dramatic narrative series for Apple TV. Somebody else can do that, and hopefully, they'll do that well. We're not doing that. We're focused on our genres and genres that we believe, that we know can travel well.
We think that in the long run, that's how we're going to create value for our shareholders, much like we did at Alliance Atlantis back in the day. So happy to have you here in the room and allowing us to chat to you, and Rob and I are happy to take your questions. Thank you. First question right here.
Just a question. Two, if I can. Short form video, do you have any thoughts on that rise? Then Netflix has been under a lot of pressure this year. They've been scraping content from bigger streamers. Have you noticed in your dealing with a company like that it's more competitive and you have more options than you used to?
Take the first question first. Short form, also called vertical drama. I think it's nonsense. I don't get it.
So equivocal.
Sorry, yeah, I'm wishy-washy on that. But look, that's why they invented social media. Go to TikTok. I don't mean to dismiss it entirely, but we are not pursuing it. We used to have a channel years ago called Bite TV, and it was little short dramas. We shut it down. Anyway, that's my view on that. On Netflix, well, one of the things about Netflix, and I'll sort of answer your question, I think, or reply to it. About 10 years ago, the streamers, being Netflix and Amazon Prime and Disney+ and Paramount+, all collectively lost their minds and decided that they wanted to acquire programming to which they paid the whole production cost and for which they could own the whole world forever in all territories, period. They paid the whole thing.
It was like they got drunk and fell into the punch bowl and forgot to get out. After about seven or eight years of that, they sobered up and they realized, Uh-oh, we're going to run out of money. We, as a small competitor to them, but also as a significant supplier to them, we didn't like that business model. It was very wasteful on their part. What's happening with Netflix and those other large streamers in their new sobriety, sometimes they're buying the whole world, but as often as not, they're not buying the whole world. They're buying the uses that they can make the best use of. That means more often than not, they're not financing the whole show anymore.
Instead, we have a new series that we're making, this almost finished production right now called Camped Out. It's a quasi young adult, just younger than young-- Anyway, it's a series. Netflix bought the international rights first run, CBC bought the Canadian rights first run, and BBC bought the British rights first run. We're in the middle. We're at the hub of the financing of that project. We far prefer when Netflix or Paramount or Disney doesn't buy the whole world. They're doing it because they're cutting back on acquiring the whole world because it didn't make any financial sense. We love it because it allows us to more likely hang on to more of the copyright, to more of the IP, and more of the use rights, and owning the IP is at the heart and soul of our business model.
I am not commenting on where Netflix's market share is, but I think that Netflix and others with their new sobriety are making smarter choices than they were five years ago. Question.
Two-part question. One, how do you determine which IP is valuable enough to either produce or buy, given that you hear stories of people offering Thunderbird to you, shop around, nobody wanting to buy it, and it ended up being very successful? The second question, I think, someone mentioned yesterday that there was large selling pressure after you acquired Thunderbird. Was that their company?
Yeah.
Can you comment on that? Why is there a buyer there?
Sure. First question first, how do you know when it is going to be a hit? Well, you really do not. If anybody tells you that they know how to get a hit, they do not know this industry. You do try to apply your knowledge of history and of the market. We have got a deep and broad sales force on the ground in most large territories in the world. That is useful. To mitigate the uncertainty of what really will take off, you pre-sell each project before you make it. You make sure it has been tested in the market and that customers or co-producers or other streamers are writing significant checks to validate your hunch. That also allows one to, like any portfolio approach, I would much rather be only partially financing or, say, one-third financing 30 shows than wholly financing 10.
We never wholly financed anything anyway. If one does that and has a broad enough portfolio, applying the market knowledge that one has, there's a better chance of getting a hit show. An example of that is at my previous company, Alliance Atlantis. We were the ones that co-produced and co-owned worldwide a series called CSI: Crime Scene Investigation in all of its versions. It became, at the time, in those years, the most successful TV show on the planet. We didn't know it was going to be a hit. We had no idea. We applied our market knowledge and our market thinking, and it turned out to be a big hit, but we weren't financing it by ourselves. We jointly did it with CBS, for example.
We would always make sure we're doing anything in partnership with other industry players. In terms of Thunderbird, there was some selling pressure. We bought Thunderbird at the end of January of this year, and they had gone through a process, and their company had been under some pressure from some shareholders who wanted to see changes. I think that they had a shareholder base with varying opinions of what they'd been doing and frankly, of our company buying them, and there was some criticism that we had underpaid for their Business. Robb, my job is to look after Blue Ant shareholders, so we felt we paid the proper price.
At Blue Ant, I should say, in our going public through the RTO last August, we had much of the stock in the company that we bought and in Blue Ant held up so that it couldn't be traded, partly until February of this year and partly until May.
The release of a lot of the old Blue Ant shares coming into free trading ability happened by chance to coincide with the closing of the Thunderbird transaction at the end of January. I think those two things played together and there was selling pressure, and there has been. Question.
Talk a little bit about how your revenues and profits come from your revenue segments as we think about how and what is the relative profitability of all of those.
Sure, and I'll maybe let Robb get a word in edgewise here briefly. The largest growth potential. I'll start with the smallest growth potential, first of all, is our Canadian Media business. It's not growing. We're harvesting value and that's fine, but it's not growing.
By far and away, the largest growth area that will bring the most profit is our international exploitation of our channels and our programs. That comes from program license contracts as well as subscription and ad revenue on our international channels. The second part of our growth in the past year or so has been with the acquisition of Thunderbird. A good chunk of the production that Thunderbird has been doing, and thus that we are now also doing in the animation area, is service work, where we're servicing. We're producing a program as a work for hire made for a customer, but they own the program and we don't. The margins there are not as good as proprietary production where you own the output. The difference, though, is in service work, you're not tying up any working capital. So it's working capital that uses basically zilch.
The margins are less, which is a fair trade for no tied-up working capital. This area has grown a lot after the acquisition of Thunderbird. But longer term, we would hope and expect that the largest single source of growth is international licensing of our programming and international licensing of our channels. But Robb, do you want to say something?
I guess the one thing I would add to that in terms of where we are going is we have made a couple of huge acquisitions. There is a lot of integration work. The idea of buying libraries and buying content is very simple. They integrate. You simply bring in the content, and you sell it through the existing distribution system that we have and sales teams that we have. One of the things in particular we are looking to do is buy, Mike mentioned we represent other third parties in their content, is going to them and trying to acquire those libraries that we are already selling. So we know the product, we know who the customers are, we know what the potential is. We have got very good visibility on what it will do through our system. And generally, oftentimes those are very affordable in terms of valuations.
Those types of investments is where we are focused probably most going forward, and we think those are the best returns that are available to us.
Question back there.
Can you help a public marketing investor try and think like, earnings obviously and we are out of time, but thanks very much for your attendance and interest. Thank you. Thank you. How are you?
Media companies often mention the number of hours of content that we have. When we did that in the deck, we mentioned 10,000 hours. I mean, the problem with that is, which hours, and what rates are available, uh, you know? So, for Kim's Convenience, for example, I mean, those rights came reopen the American streaming rites came reopen in the market about six months ago. And we sold them to peacock immediately. But if those rites did not come open for the market. They would have been worth zero for a few more years, so I very much depends exactly what countries are available or and what, um, what territories and what, what media are available, you know?
Pay TV or free TV, or YouTube, or whatever, so you can't know that by looking at the number of hours. I would say that the two best ways are a combo of EBITDA and cash like old fashioned you know is never a bad proxy. One thing if you look at Blue Ant income statement and cash flows is that we are investing net in new content. I mean the single best place for us to allocate capital is in finishing the financing for the third party financials where we can get most of the international use rates for modest distribution advance. It is probably the sing most effective way for us to get a great return on capital but you are not going to see that by looking at our income statement, but I think the combo of EBITDA old fashion cash.
And we are out of time but thanks very much for your attendance.
Good. How are you?