Quebecor Inc. Class A · TSX:QBR.A
Quebecor Inc. Class A — BMO Nesbitt Burns Media & Telecom Conference 2005
37 slides from Quebecor Inc. Class A's conference presentation, Sep 13, 2005
Slide 1: Investor Presentation - BMO Nesbitt Burns Media & Telecom Conference
Investor Presentation BMO Nesbitt Burns Media & Telecom Conference Toronto September 13, 2005
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements, which are subject to known and unknown risks and uncertainties that could cause the Company's actual results to differ materially from those set forth in the forward-looking statements. These risks include changes in c
Slide 3: Management Attendees
Management Attendees Pierre Francoeur President and Chief Operating Officer (QMI) and President and Chief Executive Officer (SUN) Mark D’Souza Vice President and Treasurer (QI / QMI) /3
Slide 4: Corporate Structure
Corporate Structure 35.9% (*) 54.7% Caisse de Dépôt et Public Placement du Québec 64.1% 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 5: 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 6: Quebecor Media
SS © QUEBECOR MEDIA /6
Slide 7: 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 8: QMI Strategic Focus
QMI Strategic Focus Generate Free Cash Flow Execute Residential Telephony Strategy Target Accretive Acquisitions in Core Business Segments Optimize Capital Structure /8
Slide 9: 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) Sun TV (formerly Toronto 1) Channel Exploit content o
Slide 10: Sun Media Corporation
SUN MEDIA CORPORATION A QUEBECOR MEDIA COMPANY
Slide 11: Nationwide Presence and Strategically Clustered
Nationwide Presence and Strategically Clustered Nationwide presence covering key markets offers national advertising and distribution solutions Clustering provides significant cost efficiencies and opportunities for bundled advertising packages 8 Paid Urban Dailies + 3 Free Commuter Dailies 194
Slide 12: Sun Media Recent Developments
Sun Media Recent Developments In December 2004, Sun Media swapped its 29.9% interest in CP24 (and paid $2.8M cash), for a 25% interest in Sun TV. The transaction was valued at $10.8M and Sun Media recorded a net gain of $8.0M on the disposal of CP24 In March 2005, Sun Media launched a third edit
Slide 13: 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 14: 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) • QMI
Slide 15: Demonstrated Financial Performance
Demonstrated Financial Performance EBITDA has been growing at a 3.9% CAGR pace (5.1% excluding the impact of the recent start-up of free dailies) REVENUE* EBITDA* 925 906.9 240 227.8 226.6 224.8 900 888.1 219.4 215 875 201.5 845.9 197.9 850 831.6 190 183.2 % 826.1 3.9 = 825 814.9 GR CA 803.3 800 1
Slide 16: Maintained Strong Margins
Maintained Strong Margins Despite the launch of three free dailies, stringent focus on costs has allowed Sun Media to consistently deliver industry leading margins EBITDA Margin Peer Comparison (LTM 06/30/05) 27% 26.6% 26.4% 30% 25.0% 25.7% Publishing EBITDA Margin 26% 25% 22.0% 25.0% 25% 24.4% 24
Slide 17: Launch of Free Dailies
Launch of Free Dailies Remarkable market reception 24 Hours 24 Heures 24 Hours Toronto Montreal Vancouver Circulation (approx.) 239K * 133K * 145K ** Readership (Daily) 308K 153K - Readership (Exclusive) 45% 35% - Readership (18-49) 81% 80% - Readership (Female) 56% 49% - Source: NADbank 2004 * CC
Slide 18: Vidéotron
@ QUEBECOR MEDIA
Slide 19: Leading Canadian Cable Operator
Leading Canadian Cable Operator Cable TV Internet Telephony Wireless - 1,459 K basic subs as - 572 K HSD subs as of - Launch in H1-2005 - Initiative currently of August 31 August 31 under study - Hybrid VoIP telephony - 411 K digital subs - Fastest growing cable service - Would pursue under a - Fast
Slide 20: Vidéotron Key Priorities
Vidéotron Key Priorities Disciplined Growth Cost Control • Maximize customer service through • Reduce costs and improve operating delivery of best experience efficiency and productivity - Superior, high-quality products • Vidéotron / VTL merger : $3M in savings - Exclusive entertainment content bein
Slide 21: Basic Cable Subscriber Base
Basic Cable Subscriber Base Positive trend : 6 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 Q2 2002 2003 2004 2005 Source: Vidéotron /21
Slide 22: Digital Services Subscriber Growth
Digital Services Subscriber Growth Fastest growing Cable DTV and HSD service provider Bell’s recent anti-piracy measures (new smart cards) should help maintain the momentum for Vidéotron’s digital services Digital Customers High-Speed Internet Customers 325 225 Vidéotron Vidéotron 300 275 Rogers
Slide 23: Substantial Potential for Increased Penetration
Substantial Potential for Increased Penetration Digital Penetration of Basic Subscribers Internet Penetration of Homes Passed 70% 40% Vidéotron - Current Vidéotron - Current 35% Vidéotron - 1 year ago 35% 34% Vidéotron - 1 year ago 60% 58% 31% 30% 50% 27% 45% 43% 41% 25% 23% 40% 34% 19% 19% 31% 20%
Slide 24: Residential Telephony Subscribers
Residential Telephony Subscribers Telephony Subscribers (000s) Roll-out Progress Number of Territory Launch Date Homes (000s) 80 75.3 South Shore January 24 300 Laval March 29 145 60 West Island May 30 90 55.4 Quebec City July 11 268 Rest of Montreal August 17 825 41.8 40 Total 1,628 30.0 22.8 • Exc
Slide 25: Taking Care of Business and Customers
Taking Care of Business and Customers • Improved Quality of Service and Bundling Lead to Lower Churn Call Answer Rate vs. Cable TV Churn Monthly Churn (a) 100% Call Answer Rate 1.9% 3.00% Internet Only Churn - Cable TV (Total) Cable Only 95% 1.8% 2.50% Bundled Clients Call Answer Rate (%) 90% 1.6% 2
Slide 26: Growing ARPU
Growing ARPU 9.2% CAGR during the last 3 years Gross Total ARPU $60 $55 % = 9.2 G R $50 CA $45 $40 $35 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2001 2002 2003 2004 2005 Source: Vidéotron (ARPU gross of programming credits and excludes accounting changes relating to installation revenu
Slide 27: VOD: Additional Opportunity to Increase ARPU
VOD: Additional Opportunity to Increase ARPU Agreements with two major studios has improved content to the library • Time Warner • Universal Quarterly Paid VOD Orders (000's) (000’S) 500 476 445 400 325 300 235 190 200 139 115 95 100 51 0 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1
Slide 28: TVA
Slide 29: TVA Recent Developments
TVA Recent Developments In December 2004, TVA paid $32.4M for a 75% interest in Toronto 1 (renamed Sun TV), a television station in Toronto In December 2004, TVA launched Mystère, a French language digital specialty channel focusing on mystery and science-fiction programming content In January
Slide 30: TVA Key Priorities
TVA Key Priorities Maintain leading market share (and 25+ of top 30 shows) Implement new programming strategy at Sun TV (formerly Toronto 1) Increase revenues • Rate increases on star products • Increase market penetration of home shopping network • Increase derivative products revenue streams
Slide 31: TVA - Leading Margins and Market Share
TVA – Leading Margins and Market Share Peer Comparison (LTM) French-language TV Market Share Industry leading margins Consistently delivering strong market share despite increased fragmentation – 24 of top 30 shows in Spring 2005 season 25% 24% Other Broadcasting EBITDA Margin (%) 12% TVA 20% 20% 20
Slide 32: Financial Highlights
Financial Highlights
Slide 33: QMI - Financial Performance
QMI – Financial Performance Revenues ($ million) 2004 2003 YoY (%) H1-05 H1-04 YoY (%) Cable 871.6 805.0 8.3% 473.2 419.1 12.9% New spapers 888.1 845.9 5.0% 452.1 433.4 4.3% Broadcasting 358.0 340.9 5.0% 200.8 180.3 11.4% Leisure and Entertainment 241.7 205.0 17.9% 101.8 99.0 2.8% Business Telecom 7
Slide 34: QMI: A Free Cash Flow Powerhouse
QMI: A Free Cash Flow Powerhouse QMI Consolidated 225 200 QMI’s intense focus on 200 192 175 profitable growth and cost 150 146 120 containment has resulted in 125 100 significant improvements in 75 45 EBITDA and Free Cash Flow 50 25 0 2001 2002 2003 2004 LTM Vidéotron Sun Media 200 250 169 175 15
Slide 35: 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 36: 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 37: 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
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