TVA Group Rated 'Sector Perform'

On Wednesday, Scotia Capital’s John Henderson initiated coverage of the TVA Group Inc. (TVAGF.PK). The subsidiary of Quebecor Media, itself a division of Quebecor Inc.  (QBCRF.PK) is best known as the owner of Quebec’s main private broadcaster TVA, as well as Toronto’s Sun TV. The company is also involved in publishing and film distribution.

The majority of TVA Group’s EBITDA – about 85% – comes from television.

While acknowledging that TVA benefited from woes at its major competitor (Quebec public broadcaster TQS, which filed for CCAA protection), Mr. Henderson said he “remains concerned about the longer term prospects of the company, given its asset mix that is highly dependent on conventional TV,” at about 65% of 2007 revenue.

He starts coverage with a ‘sector perform’ rating and a target price of C$17. His forecast includes a 50% probability that the CRTC will award over-the-air broadcasters the right to charge cable and satellite companies a fee for providing their signal.