Nancy Chan-Palmateer – Director, Investor Relations Michael Donovan – Executive Chairman and Chief Executive Officer Doug Lamb – Chief Financial Officer Josh Scherba – President Aaron Ames – Chief Operating Officer

Adam Shine – National Bank Financial Rob Goff – Echelon Wealth Partners Aravinda Galappatthige – Canaccord Jeff Fan – Scotiabank Bentley Cross – TD Securities David McFadgen – Cormark Securities Drew McReynolds – RBC Tim Casey – BMO

Thank you, operator. And thank you, everyone, for joining us today.

Speaking on the call today are Michael Donovan, our Executive Chairman and CEO; and Doug Lamb, our Chief Financial Officer. Also, with us and available during the question-and-answer session are Aaron Ames, our Chief Operating Officer; Josh Scherba, President; and David Regan, EVP, Strategy and Corporate Development.

Turning to Slide 2, we have some standard cautionary statement. The matters discussed on this call include forward-looking statements under applicable securities laws with respect to DHX Media, including, but not limited to, statements regarding the strategic review process and outcomes as a result of such process, including potential transactions.

The Sony transaction and expected benefits from such transaction, synergies from the Peanuts acquisition, cost-saving initiatives, financial and operating performance of the company and the business strategies and operating activities of the company. Such statements are based on information currently available and are subject to a number of risks and uncertainties.

Actual information currently available, actual results or events in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including regulatory risks, the ability of the company to execute on transactions and realize on synergies and cost savings and the risk factors set out in the company’s most recent MD&A and Annual Information Form. Before the question-and-answer session that will follow, we ask that each analyst keep to one question with one follow-up, so that everyone has a chance to ask questions.

If you would like to ask an additional question, please rejoin the queue. Turning to Slide 3, I’ll now hand the call over to our Executive Chairman and CEO, Michael Donovan.

Thank you, Nancy, and good morning, everyone. Before I ask Doug to cover our Q3 financial results, I’d like to update you on the progress of our strategic review.

First, the special committee continues its review, which is expected to wrap up on or before June 30. This, however, does not mean we are delaying taking action on opportunities that will advance the strategic direction of the review to create value for our shareholders.

For example, last night, as one outcome of the review, we announced a partnership with Peanuts on Sony, which I will speak more about in a moment. We are also in advanced discussion on large licensing deals that we believe could materially enhance shareholder value.

And the special committee continues to evaluate other opportunities such as potential dividend suspension and potential delisting from the NASDAQ to realize cost savings. The strategic review has been an important process in servicing value, and we look forward to providing additional update when appropriate.

Looking at Slide 4, last night, we announced a strengthened global partnership with Sony on Peanuts. We believe Sony, with its international world-leading entertainment and consumer products, rights, management, expertise, is ideally suited to help us continue to drive the growth of Peanuts.

As our territorial agent, Sony has grown Peanuts in Japan by 200% since 2010 and is currently rolling other out a range of licensing programs to celebrate Peanuts’ 50th anniversary in that country. Our confidence in the partnership is further reflected in our extending the term of Sony’s existing agency license agreement in Japan.

Moving to Slide 5. Let me give you an overview of the transaction.

We achieved our key objective with this agreement to delever, while maintaining majority control of Peanuts, and we’ll continue to consolidate its results in our financial statements. Sony is buying 49% of DHX’ 80% interest in Peanuts for CAD 237 million.

This is at a premium of 14 times compared to the 12 times EBITDA that we paid for Peanuts in June 2017, at approximately 25% or greater premium to our cost. The net proceeds from the transaction will be used to pay down debt, reducing our leverage by approximately one turn or greater.

We look forward to working – to continuing to work with Sony alongside the Shultz’ family to take Peanuts to greater heights on the global stage. We think they will be ideal company for that.

Doug?

Thanks, Michael. Let’s now turn to Slide 6.

We continue to grow organically, with Q3 2018 revenue up 49% to $116.5 million, of which 3% was organic growth and 46% acquisitive growth, largely from Peanuts and Strawberry Shortcake. Year-to-date, revenue was up 60% to $337 million, 7% of this increase was organic.

Third quarter adjusted EBITDA was $26.7 up from $24.9 million a year ago, while year-to-date adjusted EBITDA of $81.5 million rose 28% over the prior year period. Over to Slide 7, revenue in certain businesses continued to perform well, including traditional distribution, WildBrain and Peanuts, while other areas are not meeting our targets.

These included our preschool brands and our consumer products represented business, which is rebuilding following the tapering off of a large contract. I’d like to highlight WildBrain revenue, which grew 71%, underscoring our ability to monetize our content on YouTube.

The first nine months of fiscal 2018 has seen almost 94 billion minutes of videos watched on WildBrain, up 71% over the last fiscal year and some 20 billion views, up 79%. We also continue to see positive returns from our Mattel partnership, which generated about $5 million in distribution and consumer products royalties in the quarter and $20 million year-to-date.

From a margin perspective, lower margins reflected our new mix of business, including Peanuts, third-party brands, driving growth at WildBrain and higher proportion of service work in our studios. Finally, our target of realizing $11 million in annual synergies on Peanuts and company-wide cost reductions by the end of fiscal 2019 is in sight.

We expect to recognize $5 million to $6 million in these savings by the end of fiscal 2018. However, these synergies were offset by investments in our growth areas.

Moving to Slide 8, I’d like to address guidance for the fiscal year 2018. As Michael has mentioned, through the ongoing strategic review process, a number of large licensing opportunities have been identified and are currently at an advanced stage of negotiations.

In the event that an opportunity is completed prior to year-end, we believe this will contribute to achieving our full year adjusted EBITDA guidance as provided in previous quarters. However, in the absence of one of these opportunities, we do not expect to achieve previous guidance.

Since there are no assurances that additional transactions will ultimately be completed or that they will be completed by fiscal year-end, there is a high degree of potential variability with respect to financial results for the remainder of the current fiscal year. Accordingly the company has decided to terminate the practice of providing forward-looking guidance at this time.

And we’ll not be providing an updated outlook for fiscal 2018. Going forward, we’ll look to operating cash flow as a measure of cash generation.

The Q3 year-to-date period has seen an improvement with $5 million in positive operating cash flow or almost $30 million if we add back $24 million in non-recurring items related to the Peanuts acquisition. We will continue to focus on improving cash flow as we move forward.

Turning to Slide 9, I’ll hand the call back to Michael.

Thank you, Doug. Content continues to be our strength and the core of our business.

We have restructured our management team to leverage our strengths and have added the experience we need, we believe, to capitalize on our significant IP. We continue to improve our operational and financial discipline, streamline cost and focus on creating compelling cross platform shows that earn global distribution to generate consumer product royalties.

We are optimistic about our future and committed to realizing on the market opportunities for monetizing our kids content and brands. We are pleased to take questions now.

Thanks a lot. Good morning.

Michael, I guess, I want to go to the guidance or non-guidance, just as it relates to how things are tracking year-to-date. I mean, you were very bullish back in September when the guidance was given, with a context that this was deemed to be pretty conservative and upside potential.

When we look to what’s transpiring here, can you speak at all to where there might be some missing pieces to the prior anticipated results? Was there always an anticipation that some of these IP-related opportunities would backfill in the back half to drive the guidance or were these more opportunities that arose within the context of the strategic review?

And then I’ll do a follow-up just with Doug.

Okay. So, yes, with the environment, the key is that the environment continues to be unusually positive.

And as we are evolving our business and developing a refocus, particularly, on the digital and that’s what a lot of the strategic review is, we are recalibrating how to optimize and leverage our IP assets to produce the greatest benefit. And that’s created a number of – how we’ve done that is through a number of operational changes, including executive changes.

And in the upcoming quarters, you will see, I believe, those results of all the hard work that our team has done over the last nine months. And inside these numbers, although the headlines are not positive, as you dig in, you will see that there is a great deal of positive momentum occurring, particularly around our digital, but also our core IP, our distribution.

This is what it’s important. And a lot of the negativity is just noise on the side, which we’re in the process of restructuring around.

And so – and also, the bringing in of Sony as a key partner and that’s an unbelievably important company worldwide in the rights management business, their focus increasingly, we understand is, IP, and attaching them as a partner and obtaining a premium over what we paid, I think, is the beginning of a number of initiatives over the – that you will see over the next couple of weeks and months where we are starting to – where the market will see the underlying value of our assets and the opportunities. Doug, do you want to add to that?

No, I’d just say, I mean, Adam, I think, that the main factors contributing to what we’re seeing from an EBITDA perspective is just, I mean, there’s really three factors. We’ve got a much higher mix of service business in the studios, which is at a lower margin, but is also responsible for the improvement we’re seeing in cash flow.

We’ve got agency business that essentially is going through a bit of a rebuilding phase, and you’re seeing ongoing erosion from TV. Outside of those factors, as Michael said, I think, the core of the business actually is performing fairly well.

But those – the negative impact from those is obviously affecting results.

Okay. And just as a follow-up, Michael alluded to the consolidated of Peanuts.

Maybe, Doug, can you remind us how you were currently accounting for Peanuts. I believe, it was like a net of the Shultz’ family ownership and how you might be accounting for it going forward, will we see a minority interest line for the Sony ownership going forward?

Yes, that’s actually right – that’s exactly right, Adam. Essentially, we consolidated the Peanuts results – the full Peanuts results into our consolidated statements and then you see a non-controlling interest line related to the family of Charles Schultz.

That non-controlling interest line will go up significantly now with Sony owning a proportion of Peanuts. And essentially, the reason we’re still being able to control Peanuts is because Sony has bought 49% of our 80%, so we still have 51% control of that 80% interest.

Okay. I’ll leave it there.

I’ll queue up again. Thank you.

Thank you very much for taking my question and congratulations on the deal. The deal was described as a partnership.

Could you talk to what perspective additional partnership considerations there might be in terms of things such as distribution to other regions, rights or transfer of ownership, or perhaps, production opportunities?

I’ll answer that. This is Michael.

Sony is the agent for Japan. Japan is an extremely important market for Peanuts where it’s perhaps the leading family brand in the country.

And so what we’ve done is deepen that relationship for Japan, which we see as a driver. But also the success that Sony has had is remarkable and the engagement.

And so by forming this partnership, first of all, we feel that – one of the opportunities is to strength the going forward in Japan with Sony leveraging its considerable power in that market. But also its success in that market provides a template for success in other markets, particularly, other Asian markets, particularly, China.

And so that’s what we see that the advantage of this that we can draw from their skill and expertise in developing this brand in that market. However, their rights are entirely confined to that one territory, Japan.

Thank you.

Thanks for taking that question. One of the other areas that obviously we’re seeing some variances is sort of the legacy-owned merch revenues, the owned consumer products revenue area.

Obviously, I know that last year, there was – there were those sort of guaranteed payments coming on Teletubbies et cetera. I was wondering, number one, can you just talk about how you see that trending going forward?

And Michael, maybe, sort of your plans to sort of develop the ex Peanuts, I mean your legacy brands and try to take that to the next level and try to develop some genuine licensable hits. What are your plans on that front?

And also, can you just touch on sort of obviously your managing cash flow as well as production, allocating sort of the service side of the business with proprietary. I was wondering how you’re looking to kind of balance that going forward as well.

Thanks.

So I’ll turn that over to Josh Scherba, our President, newly-appointed President. And for the second part, cash flow, Doug, if you could answer that.

So, Josh, please.

Hey, Aravinda. So as it relates to brands and what we’re going to be doing moving forward.

I think that first and foremost, we’re going to be focusing on our key IP. That really does present opportunities for additional upside.

So I think, in the next year, you’ll see that starting to come through on a couple of properties, in particular, Mega Man, which is going to launch on Cartoon Network late summer or early fall, as well as Polly Pocket, which we partnered with Mattel on ground-floor development that we’re really excited about the launch of that, which is coming up later this year as well. But we think that this renewed focus on key titles that have upside is what really is going to drive moving forward.

And that’s not to mention, of course, the excitement that we have around Peanuts and Strawberry Shortcake and our content plans around those IP, which we really think will drive growth in the future.

And I think the second part of the question was regarding the proportion – sort of the mix in the studios between service and proprietary. And I think – as Josh has said, we’re going to focus – I think, prioritize sort of our key IP in terms of investment from a proprietary perspective.

And I think the other part – the other side of that is for WildBrain, where content – we can develop fairly – actually very inexpensively, is another area of focus because we want to obviously support the exceptional growth we are seeing there as well as supporting our key brands. So I think, you will see sort of a mix that’s closer to what you have been seeing this year than in the past, i.e., reduced kind of proprietary investment and yes, in our view that will result in – continued to result in improved cash flow, which obviously debt repayment is in addition to the investment on those key titles.

Debt repayment remains a top priority going forward.

And if I could just add, the focus – the idea to shift the proprietary into – and focus it on the shows where we think we can get the most return on investment, which are our leading brands, like Peanuts, like Strawberry Shortcake, like Mega Man, like Polly Pocket, Fireman Sam, that is these are KIU and that is our priority. Whereas in the past, we’ve done 12, 14 shows.

A lot of that were noodles on the wall. As we’ve gone through these review process, we are increasingly realizing that our opportunities are in our leading brands and to leverage our considerable production capacity into those brands and critically focusing on cash flow going forward.

That is our – increasingly our key metric. And you can see from our results this quarter that, that dial has moved materially with – on the cash flow front.

Josh?

The only thing I’d add is that the, what we are really uniquely positioned to take advantage of is this combination of being able to do high-end Temple series, along with lower-cost content through WildBrain. And we think that WildBrain becomes a really important tool in terms of building brands moving forward and that’s something that we haven’t – that is evolving and new and sets us out for the future to be able to build brands that we weren’t able to – we were not able to in the past.

If I may just follow-up on that. I mean, so, I guess, from a financial perspective, what I hear is that in terms of the overall production budget and the production spend, can we expect sort of a continued decline going into like in the next several quarters as well?

Because you’re sort of really stripping away sort of the number of brands that’s kind of going through your production process.

No. The general thinking is to keep production spend constant.

But as Josh said, to focus it on high end. That’s our goal here.

To focus – the goal is cash generation. We feel that, that is achieved best by narrowing our production titles to our leading brands, which are – for which we’re getting much higher prices, and we can – and much higher sales.

So the basic thinking is the number stays the same, but the goal is that, that will cause, we believe, cash generation to materially move forward. Doug, do you have anything to add?

No, no. I think you’ve summarized it well.

Great, thank you. I’ll pass the line.

If I can just focus on the transaction and the impact on the balance sheet, just for a second. What is the pro forma leverage if you were to close a transaction today?

I know you mentioned that there is a one term benefit, but wondering if you can just give us the actual leverage number from where you were versus where you think you’re going to be with this deal?

Sure Jeff, it’s Doug. As we disclosed in the MD&A base, our net total leverage ratio as defined in the credit agreement was 5.7 for Q3.

Pro forma the transaction over that same period, it would have been 4.7. And the senior leverage, if you just took the revolver and the term loan, would have been 3.4 pro forma.

Okay. I guess, if I look at the value that you got from this transaction at 14 times, which is a great valuation and a premium, but I’d have thought at 14 times, it would have at least brought your leverage down a lot more.

And so I’m just wondering what – am I missing anything in the calculation? I thought it was close to $240 million.

Yes, I mean, you have to bear in mind that essentially from a covenant – a pro forma covenant perspective, you’re giving up half of the EBITDA associated that we currently generate from Peanuts. So I think, if you back out that, you got to consider the EBITDA as well as the debt repayment.

And it’s not the full proceeds, I mean, there is some taxes and transaction fees, but…

Okay. Maybe, we can follow that up offline.

Just a follow-up on the Sony transaction as well on the ongoing agreement that you have with them. What was the plan when you first acquired Peanuts from Iconix with respect to the Japanese market?

Were you going to take that distribution in-house too and was that part of the synergies? Just wondering what the plan was and whether there are changes now going forward?

I guess, you’ve changed with this extended agreement, but just wondering what the plan was going in when you first made that acquisition with respect to Japan?

Yes, so that’s a good question. Now, our consolidation of the agency business on the ground, which was part of the thinking behind the Peanuts transaction, was never to include Japan in our calculations and assumptions were ex – always ex Japan.

So that – because, clearly Sony has done a tremendous job and also our agency, CPLG, had no presence in Japan. So it would never make any sense for us to monetize that part of the equation.

What – and just finally, what percentage of the business – of the Peanuts business is in Japan right now?

40% approximately.

40%. Okay.

Our – the way we look at it is that Japan is the template for how the business can and should roll out, in the rest of the world. Japan is kicking even above The United States in terms of the impact.

And so, what they’ve done there, particularly, in digital areas and with very creative programs is the potential. Because Peanuts is a unique brand.

It’s one of the top 10 brands literally in the world. It’s one of the top in family, if not the top.

And how to bring that into the next 20 years, we believe that what Sony has done in Japan shows the way critically the template for the rest of Asia where it is – has unusual providence, particularly in countries like China.

Yes, and that’s my final question is, with respect to China. It sounds like the percentage of business for Peanuts in China is relatively small today.

What are the assets that you have in place in China with respect to distribution that you think you have that you can grow with? I guess, what I’m asking is, what kind of work you need to do to achieve and address that opportunity?

No, that’s a key question. That’s not – in my opinion, the key question because China has been the opportunity, in my opinion, and in our collective – in our strategizing and plans around Peanuts.

Because we know that it has tremendous providence in the country. Yet, the monetization from China is de minimis.

The key there is to create the right partnership. And that has been a priority for this company and through our strategic review.

And we are – we feel near the end of that process. And we see China as the game changer for both this company and for that brand.

Okay. Thanks, Michael.

I first wanted to ask just on the transaction following on Jeff’s question earlier. Are there significant fees or taxes because I was having similar issues kind of tracing out the numbers as well?

No. But Doug…

No. I don’t.

So I’m not sure – yes, I mean, I can’t see your numbers. So – I’m just saying, my calculations are based on the specific calculations in the credit agreement, which you have to remember, you don’t have the information because there is unrestricted and restricted subs and it’s a little more complicated than doing the EBITDA calculation through that agreement than just of the financial statements.

So it may be related to that. But obviously, I can’t see your calculations, I’m not sure.

But I’m confident that the reduction is about a turn in total leverage.

Okay. Well, then, maybe I’ll just stick to the core business for now.

Based on both the multiple cited and kind of historical Peanuts, Strawberry Shortcake margins. It seems that EBITDA is unfortunately going the wrong way as much as Michael has suggested that things are looking good.

Just wondering if you can kind of further explain that dichotomy?

Well, I think – again, I think there is – it’s going the wrong way, but it’s going, as you say, in some sense, but not in – like, it depends how you define the core business. So when we look at it, we look at that as our content library, obviously including Peanuts and WildBrain being one of our most optimistic distribution channels for that content.

And so those three parts. When we say, the core is performing well, I think if you look at our distribution revenue of the library, the growth in WildBrain and the performance of Peanuts, we’re very happy with all of that.

I think, where we have challenges is in the agency business, which is going through a transition. Obviously, TV continues to erode, but we’re able to continue to do at lower cost and it’s producing a lot of cash flow from investment in our content.

So I think, still an important element of the mix. And then, of course, the studio mix of business, one of the impacts of shifting a little more to service although it improves cash flow, it does reduce EBITDA margins because the proprietary tends to be at a higher margin.

So I think those are the key factors.

I’m going to get Aaron Ames to also add to that.

Yes. Hi, Bentley.

What we’re focused on now is, as Josh had talked about earlier, is monetizing our IP and brands and focusing our investments where our live is the highest and cash flow from operations as well as, I think, the big opportunity here is really integrating – finally, really integrating these various acquisitions that we’ve done in order to get them really working together well. And that’s what we are focusing on and that’s were really the opportunity is.

As well as some extreme and important cost management, so we focus on where we can – we focus on investments on where the ROI is big and watch our cost.

Okay. And just following on from that.

I mean, obviously, everybody wants to maximize ROI, but it’s extremely difficult to kind of predict some of these hits in advance. How are you gauging kind of the ROI before the effect?

I mean, I think, everybody thought Teletubbies would be a big ROI investment, but, unfortunately, it’s been a little bit quieter than expected. So just wondering how you guys are thinking about the perspective of ROI, I guess?

Aaron, why don’t you answer that and Josh, if you could add.

Yes, I think, you always want to focus on the opportunities on our brands that are our biggest brands and most well-known brands is the biggest opportunity. It doesn’t always work out.

That’s the reality. But that’s where you have the highest likelihood of success.

And that’s where we’re focused. Josh?

That’s exactly it. And as I mentioned earlier, an increasing focus on WildBrain to help build these brands is a competitive advantage that we have in the market.

Thank you, gentlemen. Much appreciated.

Thank you.

Yeah. I was just wondering when you’re calculating the organic growth, is that factoring in the sale of Peanuts right now or that’s just the way it is with Peanuts all in, I guess – I believe that wouldn’t change much, would it?

In terms of the revenue growth, I think you’re talking about David, there’s actually tables in the MD&A for the year-to-date period and Q3 separately that breakout exactly what’s organic and what’s acquired growth in there.

Okay. Sorry, I’m traveling, I haven’t had time to

Yeah. No, no, no.

It’s fine. We’ve added those this quarter just so it’s pretty clear in terms of what – in the acquired growth obviously, the majority of that is Peanuts.

There are some acquisitions related to WildBrain, but those would be relatively small.

Okay. And is the adjusted EBITDA, the prior CFO said that, that was always just your share of the Peanuts EBITDA?

Is that indeed the case and what happens to this going forward?

That’s correct.

Yeah. Okay.

And just last one if I may, I know you’re getting any more guidance, but it would be very helpful as you could maybe just give us a range on what you think the net investment in the content would be this year? Just so we can get an idea on the cash flow, because it’s very hard to predict that.

Yeah. I mean, David, we’re not going to provide forward-looking kind of information any more.

I people would like it, but at this time, we’re just not providing that.

Okay. All right.

Thanks.

Thanks very much for taking my questions. A couple of follow-ups.

First, back to the Peanuts transaction. Nice to see the multiple on that one.

Michael or Doug, can you just point to how DHX’s rights or access to free cash flow from Peanuts is structured now with Sony in there? You alluded to still controlling this asset effectively enough consolidated.

So maybe, flush that out for us. And second question, just with respect to clarifying the focus on key IP and brands to monetize.

Just want to get your sense, Michael. It seems fairly, kind of common sense and a great strategy, just wondering why that wasn’t the case a year ago or two years ago under kind of the older management team or maybe put some context or color around that would be very helpful?

So, Doug, if you could answer the question, I’ll answer the back-end.

Yeah. So, Drew from the perspective of cash from the Peanuts, not much will change right now.

We distribute cash pretty much on a monthly basis. Excess cash before this transaction on an 80-20 basis, now it will be kind of – our share will be half of the 80 essentially, but it will still be – its – writing the operating agreements, we will continue to distribute on a monthly basis.

Okay. And the second question, I can’t answer completely.

We’ve done a rigorous review of the last 5 years – over the last 6 months and increasingly have realized that, first of all, we are in this incredible environment and the question is, why have we not succeeded sufficiently in leveraging? And I believe because our strategy was focused on acquiring as many assets as possible.

We are – we have achieved the acquisition of our portfolio, which is the leading one in the world in the independent states that is outside the studio. So that’s been a positive.

But now, the focus needs to shift and has been shifting over the last six months to leveraging the opportunity of those. And as we dig in, we see the greatest return is on our leading .

And so we have these, as I said, incredible production capacities. That’s one of our core competencies, if you will.

And so by using that to focus on our key brands is the game changer for this company. And that includes Peanuts that includes Strawberry Shortcake.

We have active development plans that include a number of other shows that I can’t remember, which ones we’ve announced and which ones we’ve been working on for a year. So I’m certainly pausing before mentioning any names.

But Josh, do you want to add?

Well, certainly, I’ve mentioned Mega Man previously, we’re excited about that, and we’re also excited about Polly Pocket. And again, just to reiterate the value of investing in content for WildBrain associated with these brands and continuing to drive views via this distribution platform, which undoubtedly is where most kids are watching – most kids’ consumption of content is happening in the world.

And just to repeat, if you don’t mind, a point that Josh made earlier, that what we’re seeing is the market moving in two different directions. There is one market for the top brands and those prices are moving up quite a bit and that’s particularly driven by the air spot.

But, however, there’s another market for a much, much more volume and much lower price point. And that’s driven by AVOD.

So the market is bifurcating into two. And we see that we need to restructure our strategy, around those two.

We find ourselves in great position for both opportunities. First of all, we have the brands for the higher end and – but we also have leadership, world leadership in the AVOD.

And we’re producing thousand minutes a month now on WildBrain. And we intend to move that up, dial that up considerably going forward.

That’s helpful. And Michael, thank you for that maybe, a quick one, real quick for Doug, just in terms of getting where you need to on your balance sheet or leverage based on your free cash flow calculations and EBITDA growth, et cetera, do you feel you need to do further asset sales like we saw just now with Sony to get there or is there enough in the existing asset base and mix to get you there?

Well, I mean we are still in the strategic review process and so as part of that process, obviously, the committee and board will be considering opportunities as they come in and that’s a little hard to predict. But based on what we currently see, I don’t think there will be right sales of additional assets.

But, again, I can’t prejudice the work of the special committee, and can’t see into the future. The one thing I would say on leverage is we remain committed to getting it down to 3.5 or less going forward and that will potentially – hopefully, that will be through signing some of these potential licensing transactions that Michael alluded to earlier in the call and generally, improving the performance of the business.

Thank you.

A couple from me. Michael, how should we think about the creative direction and major creative control implications of the new Sony deal?

Because obviously, you brought the asset, but the family retained an equity stake and presumably has still a major say in how the IP is developed going forward. Now we’re going to have three people at the table, so to speak.

Can you talk about how those decisions are going to be made and – or is there a – as part of the deal, is there some sort of a committee setup or how will you work that going forward?

That’s an excellent question and the key question. No, what’s beautiful about the Sony partnership is that we remain 100% in control.

That was nonnegotiable. We had to be 100% in control.

And it’s a minority position, and we make the final decisions really on everything. I mean, they have minority rights protection, which, I understand, are legitimate.

But in terms of control, we make the final decision. Vis-à-vis, the family, yes, there is a shared management of the brand.

And the family are very invested, very much invested in it, and have been excellent. It’s been, what – I have many, many years in this business and creative partnerships are often fraught.

This is the best one that I’ve experienced. We did a lot of due diligence on that.

That was our own experience because we at CPLG represented the brand in Spain, and of all our various entities that we dealt with, the Schultz’ family had proven to be the best. That has continued now that we are partners.

And we hope towards that but I can assure you that has proven to be a truly excellent partnership, a collaborative one. Because the family is focused on developing the brand throughout the world in the same way that it has been so successful in Japan.

The shows, for example, continue to win their nights on television throughout the world, but particularly in countries like The United States and certain other countries in Asia. And that is a unique brand, 70 years old, and stronger today than ever, growing traditionally at a 7% compounded rate, which we expect to expand.

I may be not completely answering your question, sorry. But there are not three people at the table, there are two.

Okay. And just, for Doug, this is a point of clarification.

Could you let us know what we should use as net proceeds on that payment given tax and fee leakage? And then for you Doug, do you think you will generate any free cash flow this fiscal?

Well, just in terms of the actual net proceeds, Tim, we’re still sort of working at it. There’s a few tax issues.

But I would not – I would think of it as in the range of 165 to 170. And that includes fees and taxes.

In terms of free cash flow, I’d just reiterate that, so far, this year from – cash flow from operations, which we believe is the key metric for the business that’s what we’re actually managing as leaders of the business, year-to-date, has been $5 million, but you got to remember that, that includes $24 million of transaction costs related to the Peanuts transaction last year. That was really closer to $30 million, if you adjust for those.

And we expect to see positive cash flow in Q4, so…

Okay, thank you. And what is the timing on when you’ll inform The Street with respect to delisting and the decision on the dividend and couple of other items you mentioned?

So those decisions are not made, either delisting or dividend. But they’re being considered seriously by the strategic committee.

So as I indicated in the previous quarter and in this one that we expect to be complete that process before – on or before June 30. But I want to repeat, those decisions are not made they’re being considered.

Thank you.

Thank you very much for the follow-up. With reference to the large licensing deals where you’re currently in negotiations, could you talk to what large might mean, and I appreciate the sensitivity here, but with large, does that mean the number of hours involved, the geographic regions perhaps or the duration of the licensing?

And I know you can’t say that much, but where you can give additional color would be very much appreciated.

I think they’re very exciting, they’re – it relates to various territories, but really we can’t really provide any more information than what we’ve already provided.

Okay. Thank you.

if I may, it sounds a little bit like DHX TV is more, perhaps, strategic than some might have thought in the past with reference to the operational synergies noted in your release?

That’s the TV has been – it’s an important – it’s not a coincidence that the major studios all have major broadcast subsidiaries. It’s part of the equation in terms of brand building and has been traditionally.

And so that helped. Since our goal is brand building and IP building creation, the channels are not only positive from a cash flow point of view, they’re also – and this is the reason for acquiring the channels in the first place, critical to the brand building and IP creation process.

It’s a key component in a series of stack of components. And that is a great strategic advantage to us.

Its problem is that it’s in a business that’s not growing. But we’re managing it in a way, which involves the reduction of costs as it slowly declines.

And I actually personally think that, that business will continue much longer than is generally appreciated and stabilize. Josh, do you have anything to add?

No, that’s an exact way.

Very good. Thank you.

Two quick follow-ups. Just in 165 to 170 number recorded, is that Canadian Dollars or US dollars?

Sorry. That’s U.S.

Perfect. And then lastly, the 3.5 target, I just wanted to clarify that’s still is the goal for 2019?

Yes. It is the goal.

Perfect. Thank you.

Thank you everyone for joining us this morning and we look forward to updating you in the next quarter. Thank you.

Have a good day.