David Reagan - IR Dana Landry - CEO Keith Abriel - CFO Michael Donovan - Executive Chairman

Aravinda Galappatthige - Canaccord Genuity Rob Goff - Euro Pacific Paul Steep - Scotiabank Capital Deepak Kaushal - GMP Securities Bentley Cross - TD Securities Rob Peter - Credit Suisse Haran Posner - RBC Capital Tony Rizi - CIBC World Markets

Thank you, operator and good morning everyone. And thank you for joining us on DHX Media fiscal 2015 second quarter analyst call.

To start off today, we’re going to have Michael Donovan, our Executive Chairman provide a high level summary of milestones achieved during the quarter, after that I’ll go into some greater detail on recent deals and corporate developments and then our Chief Executive Officer, Dana Landry will discuss some of the opportunities that are before us. Finally, we’ll have Chief Financial Officer, Keith Abriel providing the detail review with the numbers.

After that we’ll open it up to calls -- to questions from analysts. First the matters discussed on this forward-looking statements, such statements are subject to a number of risks and uncertainties, actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors including the risk factors as set forth in DHX Media’s MD&A and the company’s annual information form.

I’ll now turn the call over to Michael Donovan.

Thank you, David. This was a tremendous quarter for DHX Media.

This morning we reported double and triple-digit growth in many of our critical metrics reflecting strong performance across key business lines. Amongst other things, we were very excited this quarter by the positive reaction some consumer products licensees to our Teletubbies and Twirlywoos brands for which we announced multiple merchandising and licensing deals.

Dana will speak about this opportunity in greater detail, but I wanted to highlight this morning’s announcement of new deal for Teletubbies electronic toys with VTech, one of the top names in the industry. We’re all very enthusiastic about Teletubbies and Twirlywoos brands and see they hold tremendous potential for future growth.

Another trend we are seeing is the continued global growth in as thought that is subscription video on demand. This is one of the main drivers of our distribution business right now, more than two dozen SVoD services were either announced or launched in 2014 and this trend has continued into 2015.

In late December, we were happy to learn that the company was being added to both the S&P/TSX composite index and the S&P/TSX composite dividend index inclusion in these industries service to recognize DHX’s strong growth in recent years. And with that, I’ll turn it back over to David.

David?

Thanks Michael. Second quarter of fiscal ’15 was indeed an exceptional quarter for DHX as highlighted in our press release this morning, all key metric showed strong growth as compared to the comparable period last year.

But I’d like to for a moment zeroing on the 138% growth in proprietary production. Q2 was quite strong in terms of proprietary production deliveries of 58.5 hours being added to our library versus 21 for the same period last year.

This increase was in line with management expectations and highlights how production schedules do not necessarily had here to the fiscal calendar is the first quarter of 2015 only saw us deliver 21.5 hours versus Q2s 58.5 hours. We can now reiterate the proprietary production deliveries remain on track for 2015 overall consistent with our outlook, some of production delivery highlights for the second quarter included 9.5 hours of Season 14 of Degrassi, 13.5 hours of Season 2 of Hank Zipzer, 8.5 hours of the new animated series Looped, 9.5 hours of the new animated series Inspector Gadget and the 11.5 hours of This Hour Has 22 Minutes which is now celebrating its 22nd season.

For complete this deliveries in the quarter I would refer you to the MD&A. Also on December 23rd, we welcomed Nerd core entertainment into the DHX fold having just completed that acquisition for approximately 57 million on cash on shares.

This acquisition increases DHX operating leverage by adding five lines of production to our Vancouver operations and contributing more than 200.5 hours of children’s animated content to our library. One of the key brands acquired in this transaction was Slugterra, which is extremely with popular six to 11 years old.

It is broadcast on Disney XD in Canada and in the U.S. on Disney XD and has been seen in more than 150 territories worldwide.

This fun series also boost the line-up of more than 70 licensing partners. The quarter also saws complete our first debt offering of a bond for 175 million in senior unsecured notes with a BB minus rating from S&P.

Turning to DHX Media division, Q2 represented the first full quarter of ownership of a channels in that division, the family channel Disney Junior was publish in French and Disney XD. The division performed extremely well delivering $21.9 million in revenues, which was at the high end of management’s expectations.

Disney XD was particularly strong this quarter reporting its best season of ratings growth since the channel was launched in 2011. Our distribution division continued to show healthy growth this quarter.

For the second quarter, the company closed significant deals with Disney, Netflix, Turner Broadcasting amongst many others in various territories around the world resulting in revenues of 12.8 million which were up 35% over the comparable period last year. In early December, we announced Inspector Gadget have been licensed to Turner Broadcasting for their Boomerang channels throughout Europe the Middle East, Africa, Latin America and the Asia.

And just substance to the quarter end, we announced Dr. Dimensionpants, a series about a boy who gains superpowers by donning a pair of magical pants has been licensed to Turner Broadcasting across multiple countries in Latin America and Europe.

This series has also been licensed to France Television, ABC Australia, MBC in Middle East and the Noga in Israel. Our revolving advertising video on demand of ADVOD or AVOD business with Google’s YouTube continues to grow at a strong rate.

The net margin contribution from YouTube for the quarter was $1.76 million representing gross revenue of $3.2 million. This was an increase of approximately 155% over Q2 2014 in those metrics.

It’s clear that this relationship’s has become a highly beneficial and relatively low CapEx driver of revenue for us. We also want to provide an update on our new SVoD service we are developing in China with the State broadcaster CNTV.

This was announced just before Christmas and this platform has been dedicated delivering DHX content in China and has been launched in beta, its name is [indiscernible], which is roughly translated to advanced baby. DHX content will be leveraged of the more than 700 half hours of content we have across three dozen series and specials already dubbed into Chinese.

We expect the service will go fully live just after the Chinese New Year which falls this Thursday. Turning to merchandizing and licensing where we’ve seen great momentum.

We closed 14 Teletubbies licensing deals and seven Twirlywoos deals during the quarter. Dana is going to provide a more detailed update on those two brands in a moment.

We also closed a publishing deal for the quarter with Penguin Young Readers for the preschool brand Ella the Elephant which is expected to see books this fall in the U.S. and Canada.

I’ll now turn the call over to our CEO, Dana Landry.

Thank you very much David and thanks everyone for joining us in the call. As David mentioned I am Dana Landry, CEO of DHX Media.

We’re very pleased to be reporting our financial results today for Q2 2015. I’ll provide a brief overview of some of the numbers before getting into some of the business opportunities that lie ahead.

This was a very strong quarter for the company. Revenues for Q2 were up 112% to $64.25 million from $30.4 million in Q2 2014.

The increase was partially due to a 21.91 million contribution from DHX Television and also revenue growth from all other key divisions. Proprietary production delivered a very strong quarter with $12.36 million in revenues and distribution also saw healthy growth reporting 12.76 million of revenues.

In addition, producer and service fees were up 41% to $6.60 million and new media was up 53% to $890,000. In other metrics, adjusted EBITDA rose this quarter by 148% to $23.9 million normalized net income was 210% to 9.83 million or approximately $0.08 adjusted basic and diluted earnings per share.

Gross margin was also up 110% to $37.5 million. Keith will provide a more detailed look at the numbers shortly but I’d also like to mention that we’re pleased to announce that on February 13, 2015 the Board of Directors approved a dividend for the quarter of $0.14 on each common share of voting share and each variable voting share outstanding for the shareholders at record of close of business February 27, 2015 to be paid March 20, 2015 which I believe is approximately a 7% increase from last quarter.

Now I’d like to look at some of the exciting business opportunities that David and Michael eluded to that lie before us. Our DHX Brands and our CPLG teams are doing tremendous work signing merchandizing and licensing deals for Teletubbies and Twirlywoos.

As David noted in Q2, we closed 14 Teletubbies deals and seven Twirlywoos deals. Although merchandizing and licensing for the quarter was down slightly largely due to some expiring of existing licensing deals of Yo Gabba Gabba!

and Caillou what’s really important to remember is that DHX Brands our merchandizing and licensing division which is based in the UK is less than a year old and certainly gaining some tremendous momentum. Launched in June 2014 DHX Brands has been laying the groundwork for what we feel as potentially very significant future growth on the merchandize and licensing side.

Earlier this month in fact DHX Bands received notable recognition being named the industry -- in the industry leading trade magazine being licensed globally alongside some fairly heavy weight global peers as one of the five GE licensed or is to watch in 2015. Last June as you all recall we announced plans to produce 16 Teletubbies, with the CBBs the children arms of the BBC.

Since then we have signed a total of 16 licensing deals for the new Teletubbies, the complete list is too long to deliver here. But the range of products includes toys puzzles, greens cards, books, Candies, betting and as announced just this morning electronic toys from VTech.

Teletubbies products are expected to begin appearing in stores in autumn 2015 and winter 2016 starting in the UK with other territories to follow shortly and as broadcast deals are announced in these other territories we expect to be announcing additional Teletubbies merchandising and licensing announcement for those territories in the near future. Needless to say, we are very excited about potential Teletubbies as a global brand evidence of the enduring appeal of Teletubbies is the popularity of the original series on YouTube were it has averaged 50 million views per month through calendar 2015.

Now turning to be a little while we can unveil the new series but being an inside having seen what's been happening behind the scenes in our view it looks extraordinary and we are excited about our reimagining of this iconic brand. On the Twirlywoos side we're pleased to announce that this new series will premiere on CBBs this coming Monday February 23 and has begun to resonate with kids and families in the United Kingdom.

A week ago we unveil the series at a special party in London where kids and families were invited to watch the show and meet the costume characters. Twirlywoos for those of who that is not familiar with it is a pre-skill series about of a group of few birds like creatures.

It was created of the Teletubbies. And if the reaction of the kids that are party who are utterly transfixed by the Twirlywoos is any indication we think the series is going to be a great success.

And of course we hope it won't just be the series of the kids love back in January Twirlywoos master toy license Golden Bear toys unveil the Twirlywoos toy line up at the UK toy fair Golden Bear is one of the leading toy companies in UK and they have a tremendous success that has success with in the Night Garden one of our other pre-school brands. We don’t have the numbers in just yet on the Twirlywoos orders but reports from our DHX brands division are that Twirlywoos toys generate significant buzz in London and as subsequent trade fairs in other countries.

Golden Bear has now even moved up the launched take of the Twirlywoos toys from calendar 2016 to autumn 2015 to meet demand expected for the holiday season. In addition to toys from Golden Bear, other Twirlywoos products we can expect to eventually see in stores from other license fees including greeting cards, party wear, puzzle, games, betting outerwear and costumes.

As you can see we have great things in the work with our merchandizing and licensing division. So it is well worth staying tuned another area as Michael noted that we're very excited about is these SVoD space SVoD of course is subscription video on demand and set services are proving very eager to license DHX content.

What we are seeing right now is tremendous growth in that space worldwide SVoD services such as Netflix, Amazon and Hulu are well known of course and by themselves growing. But in addition to such established services new services are emerging all over the world.

In calendar 2014 more than two dozen SVoD services were announced or launched around the world and since January 1st we've counted seven more. The growth is still remarkable that we have other are taken to say that 2015 the year of the SVoD.

We were seeing new SVoD services in the United States, Canada, and Latin America Europe, Africa, Asia and Australia and we're selling our content often to multiple services in all of these territories. Earlier this month in back we announced distribution licensing deals to nine new SVoD services across seven territories representing more than 5000 half hour of DHX content.

As shown by such deals DHX’s scale and it's mark key brands has positioned us as a key player in providing content to SVoD services worldwide. We anticipate being able to announce more such deals as the year unfolds.

Before I hand it the call back over to Keith wanted to give a quick update on Live tour. As reported in Q2 2015, the company completed the Yo Gabba Gabba!

tour in which appeared in 30 cities and 58 shows which was a little bit softer than management's expectations. But having said that we're very excited about the next step lives on stage tour which has commenced a 28 city tour with 46 shows to date targeting smaller venues across Canada and for those of you who that are not aware of this property, this is Charlotte been commissioned by DHX televisions family channel at The Next Step is a highly rated dance drama which is produced by Temple Street Productions.

With that, I’ll turn the call over to our Chief Financial Officer, Keith Abriel to for a more detail look at this quarter’s numbers. Keith?

Thanks, Dana and thanks to everyone for dialing in today. I am Keith Abriel, CFO of DHX Media.

For Q2 2015, management is pleased to highlight very strong growth in revenues which are up 112% to $64.24 million from $30.36 million for Q2 2014. The increase was incurred due to the $21.91 million in revenues contributed by DHX Television for the quarter, approximately 83% or $18.23 million of the DHX Television revenues were subscriber based revenues, while advertising, promotional and digital revenues accounted for a combine 17% or $3.67 million of the total DHX Television revenues.

We also saw solid growth in proprietary production, which contributed $12.36 million in revenues for the quarter, up 138% over Q2 2014 $5.20 million. The experience was in line with management’s expectations based on delivery schedules for the quarter.

Distribution revenues for Q2 2015 were up 35% to $12.76 million from $9.48 million for Q2 2014. This included 2% or $0.2 million from Epitome and 33% or $3.04 million organic growth.

The quarter-over-quarter increase was primarily attributable to the continued growth of new digital customers and territories such as those in the as far market that Dana just spoke about. M&L owned decrease 10% for Q2 2015 to 6.62 million as compared to $7.37 million in Q2 2014.

The 30 city, 58 show Yo Gabba Gabba! Live!

Tour generated revenues of $3.48 million during the quarter, up 39% from Q2 2014. Although Yo Gabba Gabba!

Live! revenues were up attendance and revenues for the live tour were at the low end of management’s expectations.

Despite these factors management remains confident M&L own revenues are on track to achieve the 2015 annual targets. M&L represented revenues were up 0.5 million for the quarter to $3.09 million compared to Q2 2014 at $3.05 million and were in line with expectations.

M&L represented revenues benefitted somewhat from tailwinds as a result of the weakening Canadian dollar compared to the pound sterling. The company earned $6.62 million for producer and service fee revenues for the quarter, an increase of 41% versus the $4.69 million for Q2 2014 and new media revenues were up $0.31 million to 53% of $0.89 million above the $0.58 million for Q2 2014.

Gross margin for Q2 2015 was $37.51 million, an increase in absolute dollars of $19.69 million or 110% compared to the $17.82 million for Q2 2014. Management is pleased to report the overall gross margin for Q2 2015 up 58% of revenue was at the top-end of our expectations.

This was a results of a strong quarter for digital distribution deals, overall distribution margin, production and service fee margin and DHX Television. Adjusted EBITDA for the quarter was $23.87 million, up $14.26 million or 148% over $9.61 million for Q2 2014.

For Q2 2015, net income was $5.54 million compared to net income of $2.81 million for Q2 2014 or an increase of $2.73 million in absolute dollars. Comprehensive income for the quarter was $3.22 million compared to a comprehensive income of $2.09 million for Q2 2014 or an increase of $1.13 in absolute dollars.

Turning to operating expenditures, SG&A costs for Q2 2015 increase 72% to $14.71 million, compared to 8.56 million for Q2 2014. For Q2 2015, SG&A includes $3.74 million for DHX Television, as well as the inclusion of Epitome, an increased level of SG&A at [Ragdoll] and nine days of activity for Nerd Corps totaling $1.52 million.

SG&A also reflects an increased level of activity at DHX Brands of $0.5 million as management has made a decision to add resources in this area to take advantage of Teletubbies and Twirlywoos’ M&A opportunities that Dave has spoken about earlier. SG&A also reflects costs associated with the company’s Toronto office relocation.

Finally SG&A includes $1.11 million of non-cash share based compensation for the quarter. When adjusted cash SG&A at $13.63 million was above management’s quarterly SG&A expectations.

Going forward, cash SG&A costs are expected to move back in line with management’s quarterly SG&A targets as the company’s recent acquisitions are further integrated. For further specifics of the Q2 results information on our outlook and other various information I would refer you to the company’s Q2 2015 MD&A which was posted on CEDAR this morning.

David?

Thanks Keith. Operator, we’d now be pleased to take any questions from analysts.

Good morning. Thanks very much taking my questions I’ll start with the merchandizing side of it obviously you gave some good color on the prospects of the Teletubbies and Twirlywoos I just wanted to drill down on the Teletubbies’ rollout obviously starting out in the UK I was wondering if you can talk to some of the other territories where you think this will be strong?

Is there may be a plan to sort of have the new season right in China as well and maybe have a product launch there as well?

Thanks Aravinda for your question yes absolutely I think that it’s difficult to play the crystal ball game but if we would look at his past history as to where the brand was strong certain China and the United States the brand is extraordinarily popular back in payday and certainly so far with the attraction that we’re receiving out of our conversations there I would say that that would be a fair bet as well. But beyond that the Twirlywoos -- the Teletubbies was a very well-known brand globally known by over 1 billion people so it’s not just those three territories.

I think what we’re seeing as critical is the reengagement in the UK the same way in the original series was launched there and really gained traction before launching in to the other territories.

Great, thanks Dana. And just switching gears to the digital distribution side particularly the YouTube component obviously sort of off to that sort of some appear you’re seeing a nice uptick again to $1.8 million.

I know in the past you talked about sort of curated channel and taking the business to the next level, any additional color that you want to add on that?

I mean that is absolutely right I think what we’ve decided to is spend a little bit of internal resources in terms of trying to expand our minds with respect the prospects of our relationship with the YouTube but others as a whole and certainly we would expect that we will be ramping up plans with respect to new ADVOD opportunities in the near future and we certainly feel that this is a tremendous area for growth for us. And it’s still relatively early days with respect to ADVOD as we think about SVoD in a similar sort of trend where we would view ADVOD is sort of where SVoD was two-three years ago.

And as the next couple of years unfold we think that our brands are tremendously positioned to be able to realize some great growth going forward.

Thanks Dana. And just with respect to the proprietary production revenue obviously a guiding place about 0.5 million you’re up to about 18 million thus far.

I know the seasonality tends to be somewhat unpredictable. I was wondering if you could remind us on the, what you expect in the back half of the year in terms of proprietary production are we expecting a sort of a spike in Q3 and then an easing in Q4?

And related to that I was wondering to the extent that you can maybe discuss the contribution of the Epitome in that line item?

So as you know as we said last time when we published Q1 numbers expect the deliveries it is a quarter by quarter there is a lumpiness there and what we said then same thing we’re saying now is although we had a great quarter this second quarter we very much have to look at the annual and I think we’re up 17% overall for the year and tracking towards our expectations and certainly Q3 looks like to be a solid quarter for us in terms of deliveries and the titles that we would be levering there continue deliver there would be OPEN HEART for the Degrassi series additional 22 minutes amongst that and many other kids’ series as well. And as I mentioned the second part of your question again there indicative of remind me.

I just wondering the contribution of Epitome in the proprietary production piece in Q2?

Right, so it would have the -- it’s hard to estimate probably about 20% to 25% of that.

Okay that’s great. Thanks.

Last question for me, just maybe for Keith or Dana, just wondering if you can give us a quick summary of the impact of the FX changes that we’ve seeing versus the Canadian dollar just so that we kind of have a sense of it as we model forward, I live there thank you?

Yes, sir, I’ll give it maybe a summary comment and then Keith can get into detail, I mean, essentially as you are aware we do have some U.S. dollar denominated debt which provides a bit of natural hedge against the Q2 revenues.

By having said that really where it bears out is in the margin wherein if you like in the costs of goods sold because we’re translating current dollar revenues on a net basis in the quarter, and so as a really higher level, we probably have somewhere between $5 million to $7 million of net U.S. dollar let’s say positive over Canadian dollar for the quarter, which results in as we’ve mentioned tailwinds for the current quarter.

But it’s probably somewhere in the range of 50 to 75 grand for every 1% of currency [Fox] and of course would sort of translate through the costs to goods sold and as a result in core whether it’s a tailwind, the margin would be slightly higher in the quarter where there is perhaps the headwind, it would be slightly lower. But we still would be well within in the range that we’ve posted in our guidance.

Could you give us any additional color on the sport business in terms of the pricing dynamics of the newly signed contracts or perhaps when you’re seeing renewals of existing contracts, is there any change in dynamics or the complexion of the pricing?

I mean in terms of the new deals what’s really I think that highlights our is that so far it’s sticking with the trend of the exiting one which are more or less nonexclusive larger deals a bit of land grab within respect of those new -- those new territories. On the second part of your question for deals that have sort of rolled out, what you’d expect is that if you -- let’s say for argument sake you had a thousand-half hour deal with anyone digital cuff servers and it rolls over.

They’re not going to net sales renew of 100% of those sales they’ll probably renew 60% or 70%. They are not going to renew the one that’s one that have obviously performed very well.

Having said that because we’ve never licensed all of our librarians to anyone customer they tend to rollout and swap new content into try it out, so overall the number of half hours are going up and because they know that 60% or 70% of the library that has been viewed heavily is performing for them they will pay a higher price. So on average we’ve seen per half hour go up on renewals.

Thank you and perhaps more difficult question, could you talk the startup cost in the revenue ramp that one might look for in China?

Yes, it’s a difficult one. There is really not a whole startup cost for us other than some support on the marketing side and obviously some SG&A to travel and a little bit of resources along to support the launch.

Having said that it’s such early days in terms of where that goes, I think that we’re encouraged at which the level of speed that they’re launching the service and how they’re engaging with this opportunity. I think they feel like we do that there is a tremendous opportunity and certainly there they’re welcome to see that and they’re not wasting anytime.

So I think within 90 days say that by the next time we get together we should have some real interesting information to share.

On SVoD, Dana, can you maybe just give us a sense of how much of distribution revenues actually from SVoD and what that sort of growing to maybe relative to sort of year ago to give us the pace of change there?

Sure, I am just going to give you a broad snapshot here because -- so see if I can reverse engineer this off of head, so about 50% of the revenue would still be linear deals, 50% would digital of that 50% digital, so sorry -- let’s say 40% linear, 60% digital of that 60% digital I would say probably a third of that is the SVoD in the past it would have been 20% of it probably. The other thing to remember of course is that not all the deal that we have announced, would have necessarily been in this quarter would been based on deliveries of course we can recognize those evidence until there deliver those half hour.

So those would be in future around this.

And then I guess the second one from would be just how you're thinking with the pace of M&A post fee high yield financing. And were you sort of see things pacing out here for the remainder of this year whether it's take a pause or whether you going it's all team ahead.

Thanks.

Thanks Paul I mean it's posting ahead in the respective opportunities for us. We still see great opportunities out there.

Obviously there is nothing to announce right now. I would say that probably look at our past average as an indication for the future.

I just wanted to ask about the live shows. I know you mentioned some stuff on your Yo Gabba Gabba!

In terms of expectations and how you guys did. What can we expect more for that franchise?

I don’t what you can shed in terms of future shows and prospect for this year and next year.

Gabba Gabba is a great show it’s still today has about 0.5 million friends on Facebook. Over the last year or so the broadcast schedule with Nickelodeon in the U.S in particular has been a little bit in consistent.

And so we've been certainly working with them to try to improve that. But having said that we are definitely committed to the brand we're very bullish on the prospect of new content man we've got 66 back catalogue episodes as well that which we're looking for jury licensing.

And we're its early days where we certainly are discussing a potential in house move for that tour along the lines of what we just did with the next step. And so stay tuned certainly still very bullish having said that like all shows and kids are not much different there is peaks and valleys and I would say that this one is certainly is not at his peak but we're optimistic that it can get back there.

Okay so your target for this year that’s kind of coming on next step going in a bit of that valley is that fair to assume.

Yes that’s fair to say.

Okay then in terms of next step your involvement in the next step given Temple Streets producing it. Is that on a different level from your Gabba Gabba and while we see the revenue profile different from margin profile there.

Yes absolutely it is I mean just for clarification all lag towards tend be on a cash margin basis at best 15% to 20% mainly because that cost of these stores are fairly significant and to be frank although the revenue is nice the margins are relatively there is smaller what we've typically have. But it does a number of things and of course the biggest one is launching the brand and supporting the family channel and it sort of commitment to that brand and we're certainly involve contingence they involve and we look for other opportunities.

But it's a lower margin business.

Okay and then just a follow that up more a big picture question. When we look at M&A I was just wondering if could maybe shed some light into what you're thinking of in terms of new genres in terms of kids are beyond whether its live or animated and geographically if you can offer some thoughts on that.

Well geographically its global its brands that were like Teletubbies once big and we feel like we can remake them. Or brands like Degrassi which are still big but don’t have that distribution so critical in the new world of digital.

And so we'll looked to really there is really no specific I would say sections of the library where we're feeling particularly vulnerable. I guess if I had pick off to top of my head perhaps some girl’s properties would be interesting around of the offering.

But generally its global brand that we think we can either re-launch or once that we can use our infrastructure and the leverage the revenue synergies that we've been able to experience on Degrassi and many other tiles.

Okay I do have a one final modeling question if I may in terms of cash flow for the year cash flow expectations. What are you guys expecting in terms of working capital usage versus net general cash from upside?

Are we expecting about 50% reinvestment back in the working capital or expecting to get some contribution from that this year. I'm talking about investment in film and television programs and other working capital items?

Yes I think generally the trend of working capital used is driven by the cycle and because we were ramping production you could assume that there will be a use of working capital really into that. And I would say not only the rest of this year but for the next couple of year.

Okay thanks that are really helpful appreciate it.

I just wanted to dig down little bit more into Teletubbies, obviously you guys have had some great success gains from licensing deals lined up, but I have been a little bit surprise not to see distribution agreement internationally outside UK, obviously you can’t tip your hand too much here, but can you maybe certainly share little bit of color as to what’s been hold up here?

Yes, I mean it's very much -- there is -- wouldn’t read and I just want to say that there is a lot of opportunities to expect to tell us at least on both the linear and the digital side, really were it boil down to is if history repeat itself typically particularly in the U.S. you want to go with a linear service based on historical and that’s because as we discussed in the past retail is very much still driven by people going into stores and as a result of that in limited shelf space universe and then those retailers will generally want the shows to be viewed in as they usually like to say in 100 million or so homes in the United States.

Having said that with digital and services Netflix coming on at great pace, there the lines are becoming blurred and certainly as Netflix looks to or some of that starts to take it out there in terms of number of views and they call themselves either the number two or number three kids platform in the United States behind the big two Disney and Nickelodeon as those stats starts to partly through the ability to launch a show like Teletubbies on digital service I would say increases. But it's very much in -- it's hardly contested and I would stay tuned we’ll hope to have announcement in the very near future.

And then just on the distribution gross margin in the quarter was very strong -- much stronger than I was expecting, wonder if you could just provide a little color here and we’re able to find some of the [seller] that it’s been completely written-off to sell or is it just digital or what’s going on there that drives the extremely strong quarter?

Yes, exactly lot of library deals are we’re doing with the or even the ones that we’re doing on SVoD, lot of this is over library titles and the lot of them have been more or less written off. So that’s really the power of library that’s as large as we have which has properties brand new properties but also properties that are classic iconic properties and in this day of digital we need both scale and drivers, we’re able to deliver those that library to multiple services than reasonable prices to them but very good margin stuffs.

And just one last one, going forward what could we think about in terms of total capacity for deliveries in a quarter?

Well, I think that the we publish some of our outlook to say that we’ve -- where our goal is to sort of increase our library by 1% to 2% from the new contents side and that’s would equate to sort of somewhere between 100 to 200 top hours, so to say 150, where did that go to, it probably grow at let's call it 15% to 20% for the next couple of years and beyond that we would have to look at whether there is cannibalization of our existing brands, but certainly we can grow for that anytime.

Just wanted to touch base, you saw good solid contribution from the family channel business this quarter, just wondering how we should kind of think about that for the remainder of the year if it's kind of similar to what we see in Q2? And then maybe if you can just give an update on the synergies related to the transaction and how those are kind of shaping out this year?

Yes, so the first question is similar to Q2 other than I would say that -- and if you look at the specifics in the quarter of I think 83% or so was on the subscriber side, so that’s very much consistent. The flux if there is any Rob here is where the -- on the advertising side obviously that will be stronger in the holiday season, so there is probably a bit of a uptick there, but more or less relatively consistent to Q2.

In terms of synergies, in terms of actual high level stuff we’ve all moved into our brand new location here in that [indiscernible] is around November or so and so very much looking forward to seeing four quarter and the balance of the year having some of those synergies, but bear out just as a reminder the synergies that we would had that we expected from the channel and this is really driven by the fact that DHX wasn’t in the traditional linear channel business was really more along the lines of absolute redundancies which were relatively small and also the facility side of the business. And so I think we posted in our guidance somewhere in the range of 1-ish million of expectations going forward.

So it’s a couple of 150,000, 300,000 maybe a quarter is what you’d expect so it’s important and we’re focusing on it but relative small.

Perfect, thank you. And then maybe just to touch on the distribution side of things, I think you said that digital was up to 60% of that segment now.

And I was just kind of wondering I mean obviously we’ve seen strong pick on the SVoD side of things with a number of deals that have been announced recently but additionally you’ve had some deals on the linear side kind of just how do you guys think about the mix of that going forward and where do you guys kind of focus your attention?

I mean we focus our attention on distributing our library and that includes linear services and also to the digital services what we actually call them our existing customers and our new customers we don’t really split them up. But going forward certainly a lot of growth is driven by the digital but much it is a situation where very hard cycle for content and it’s also driving the linear up as well and really this is evidenced and I think in the past I’ve used this as an example we’ve had some of our properties where the linear has competed has to had with the digital and a lot of cases have increased their pricing by 2x or 3x over what they were in the past.

And so it would be improper to assume that the linear is not increasing, it is, it’s just increasing at a let’s say a more relatively slower pace than the digital is.

Thanks very much. Good morning guys.

Maybe starting with your guidance a few puts and takes in there I guess just two questions from me on that first on the SG&A side. If I am doing the math right I think about 6 million increase for the full year.

Keith I think you mentioned some sort of one-time cost related to the office moves. I am wondering if you can maybe help us separate that from the rest and what do you expect to I guess to go down to the lower end of that guidance on a quarterly basis?

And then just on the gross margin side for distribution I think there was a question earlier on the quarter, the gross margins for distribution for the full year again your guidance is up nicely. So just wondering how high can this go from your perspective?

We don’t do I’ll do a general comment on the SG&A and the margin and if there is specifics that I’ve missed maybe Keith can jump in. And so on the SG&A I think yes there were some things in the quarter that were spiked a little bit related to office relocations stuff and we’re always hesitant to throw things into one time cost but so there is probably let’s say some SG&A slightly lower of what we were expecting last quarter.

Having said that I think if you take kind of the mid-point of our revised quarterly I think you will find that it’s probably only up above a couple of million dollars on an annualized basis so maybe say 0.5 million each quarter up. We certainly think that this is going to be easily covered by increasing in the margins that we’re experiencing and really that leads into your question on margining as we did, we did increased the guidance this quarter up I think 65% to 75% is our new target and it’s really along the lines of my answer earlier Haran which is that what we’re seeing is a consistent trend of deals that include a significant portion of the LIBOR rate where the vast majority of those costs are written off.

And so margin is pacing ahead of expectation to the point where now having being six months in we’re comfortable and moving that upwards.

Okay, that’s great color Dana thanks for that. And then maybe sticking with margins a little bit I guess your first call since the Nerd Corps acquisition and so when you look at the trailing numbers for that asset very healthy margins I think it was 50% and probably start to say that that’s roughly double what you would normally get in production.

So I guess I just wanted to make sure that that’s a number that you think is sustainable going forward?

Yes, I think on the series that they have in production because of course as you a lot of the proprietary side takes couple of years to develop. And so certainly the margins are consistent with the recent history.

Having said that like all margins there as you’ve seen in the past that the proprietary ranging where from the low end of maybe as low as 20% to the high end as high end 70% so on the proprietary side there is big swing that I think overall when you factor that into the greater DHX equation it’s relatively insignificance of you might get some anomalies of a point or two here or there from a quarter, but I don’t it’s going to be that significant around.

Okay that’s very helpful, Dana, and then just maybe lastly wondering if you have any comment of I guess Netflix in their last quarter sort of made some comments on sort of efficiency of what they original series relative to license content and I think on the both sides there is an opportunity for you but just wondering if you have any thoughts on that?

Yes, absolutely, I think that some of the stat that they’ve released is that about 35% of all reviewing is on kids and a number their series which includes some of ours series have multimillion views and so you can assume that we being an excellent partner for Netflix is we’re definitely having conversations along the lines of original. We’re definitely optimistic obviously nothing to announce today but we feel pretty bullish on ourselves and we certainly fee that they have a strong interest in expanding the relationships within.

Just on the CRTC without the first few ruling trickling through on the future TV obviously this one as relevant for you but any initial thoughts perhaps on that decisions around the tone from the CRTC and what my mean for your one important element for pick-and-pay and skinny basic?

Thanks for question, Tony, I mean your guess probably as good as ours and you have [indiscernible] you’ll be happy to hear it, we’ve heard all kinds interesting rumors and innuendos but I would say they are more or less exactly what they are and we really don’t have any more color other than what the commissioner had said which is that I think is going to release the announcements over series of different talks or press release and we’ve heard from everything from things that things are going to be change relatively small some tinkering to right to the level of skinny basic, so it’s hard for us too. It’s not my job to particularly play that game so what we’ve focused on delivering our content we are very bullish on our content and if it’s a world is any evidence as to how what’s our content is in demand on all levels, new content and old contents, we feel that in any regulatory environment we’ll do well particularly where kids is still very much in each programming and still in the top 3 on most household dials when you have kids in the household.

Okay fair and then maybe just one for me on the dividend, you have a formal dividend payout range targeted and if not, how is the board if I think about the dividend should we still be kind of anticipating on a couple to be bumped pre-year for the near term?

Yes, our so stated policy is that we review annually our history has been every six months, we’ve been able to be fortunate in a position because of our growing been able to grow the dividend, certainly it’s something that we think is interesting and important and provides a nice solid base for the share, but certainly as a yield it’s relatively low. I think we think that we want to communicate the whole things there wanted that we’re producing cash as growing and we’re confident.

Going forward I would say that if you look at the history I think in terms of an adjusted free cash metric now that’s always dangerous because everything’s version of free cash flow is different but it is their use I’d say a reasonable definition it stands in the range of sort of 20% to 25% what we paid out and I would say that we’ll try to keep that relatively consistent and so you could assume that as free cash flow increases we’ll keep that ratio in place.

Thank you operator and thank you everyone for joining us today on the second quarter of fiscal 2015 conference call for the DHX Media. If you have further questions, please feel free to get into touch with us or consult our Investor Relations section of our Web site at dhxmedia.com thank you.