TVA Group (TSX: TVA.B)

I’ve been thinking about writing here a bit more often. After some failed attempts, I found I don’t really want to spend the time putting my notes together, so I ask my dear friend Claude.

I enjoy the idea of working analog and AI doing the digital work for me.

Why I like TVA Group - written by AI (Claude Fable 5)

The situation

TVA Group is the leading French language broadcaster in North America, based in Montreal and roughly 65 to 68 percent owned by Quebecor, the C$15bn Quebec telecom and media group, which holds all voting shares. The minority trades as non voting Class B stock. At C$1.98 the market values the company at about C$86mn, or 0.25 times book equity of C$348mn, against C$110mn to C$165mn of net cash, pension surplus and real estate alone, and a sum of the parts between roughly C$3.90 and C$6.50 per share depending on how aggressively the pieces are marked. The thesis rests on three pillars: a hard asset base worth more than the entire market cap independent of operations, a regulatory reset that could structurally lift broadcasting profitability, and a controlling shareholder with clear economic logic to buy in the minority. The stock has risen roughly 130 percent over the past year and sits near its 52 week high, so the market has begun to recognize the value; the question at this price is how much of the remaining return depends on the controlling shareholder actually acting.

The business

TVA’s durability comes from language. Quebec is a market of about nine million French speakers where global streamers command far less cultural share than in anglophone markets, and TVA’s network and specialty channels hold roughly 39 percent of provincial viewership. Broadcasting, about C$460mn of revenue, monetizes that audience through advertising and carriage fees, the per subscriber payments distributors remit for carrying its channels. The segment produced roughly C$9mn of adjusted EBITDA in 2025 excluding one time items, moving to a run rate near C$16mn after an arbitration victory over Bell repriced carriage fees upward by C$7.5mn annually and delivered a C$36mn retroactive payment. The first quarter of 2026 was the segment’s first profitable Q1 since 2021, though results were helped by a one off tax reversal and restructuring savings that will not repeat, and advertising continues its secular decline. MELS rents 20 soundstages, production equipment and post production services across more than 500,000 square feet of Montreal area property; it earned C$7.4mn of EBITDA in 2025 but is currently EBITDA negative on weak production volumes, so its value is best anchored to a real estate floor of roughly C$38mn. Magazines contributes about C$4mn of EBITDA in structural decline and is treated as residual.

The asset base

As of Q1 2026 the company held C$26.7mn of cash with no debt drawn on its C$120mn Quebecor facility, and generated C$12.1mn of operating cash flow in the quarter. The pension plan is overfunded, with a gross surplus of approximately C$83mn per the audited notes, carried on the balance sheet at only C$48.8mn because of the IAS 19 asset ceiling test. Quebec law allows a sponsor to extract such a surplus by purchasing annuities that guarantee all member benefits, waiting through a three year discharge period, and keeping the remainder, with TVA’s tax losses available to shelter the income. The company also owns its vacated 285,000 square foot former headquarters occupying a full Montreal city block, under study for residential conversion, plus an estimated 344,000 square feet of legacy property around the province whose last full disclosure dates from 2001. Marked conservatively for annuity friction, a likely social housing conversion and disclosure uncertainty, the non operating assets total about C$109mn, or C$2.52 per share; marked at face, they approach C$165mn, or C$3.82.

The catalysts and where they stand

The regulatory catalyst is live but suspended. Canadian broadcasters have long been required to spend roughly 30 percent of revenue producing Canadian content while foreign streamers escaped the obligation entirely. In May 2026 the CRTC, the federal broadcast regulator, cut traditional broadcasters to 25 percent with added flexibility and imposed 15 percent on streamers. For TVA the relief is worth roughly C$20mn annually, most of it falling straight to EBITDA, enough to triple the segment’s run rate. In June the federal government directed the CRTC to reconsider the framework amid trade friction with the United States, substituting C$600mn per year of direct sector funding and explicitly committing to protect French language production. Policy direction remains favorable; the final form is unresolved, and a full rescission could revert obligations higher.

The hockey question is unresolved and near term. TVA Sports’ NHL sublicense expired with the 2025-26 season, and national rights holder Rogers renewed its league deal at C$11bn, two and a half times the prior contract. TVA was paying about C$73mn a year for programming rights and was still negotiating renewal as of April, with a credible report suggesting it remains an NHL broadcaster. Renewal at the new benchmark would impair broadcasting economics for years; losing the rights would undermine the channel and the newly won carriage fees.

The privatization logic is straightforward. Quebecor has resolved the leverage constraints that once argued against spending, keeps integrating TVA functions through related party transactions, most recently transferring the TVA Films distribution assets to itself for C$2mn in January 2026, and could acquire the roughly 35 percent minority for C$45mn to C$75mn at plausible offer levels, more than half funded by TVA’s own cash upon consolidation. Canadian minority protection rules under MI 61-101 require an independent formal valuation and majority of the minority approval for any insider buyout, which constrains a lowball offer. A parent buy in of an already controlled subsidiary should not trigger CRTC change of control review, removing a common friction in broadcast deals. The window logic favors moving before the repriced carriage fees and any content spending relief are fully visible in reported results, though Quebecor’s attention is partly occupied by its pursuit of Corus Entertainment.

Return potential at C$1.98

Scenario analysis across combinations of NHL and CRTC outcomes keeps the sum of the parts between roughly C$4.50 and C$7.25 per share in every cell, because the non operating assets dominate the total. The operating variable that matters is Broadcasting EBITDA, which ranges from roughly zero, if the NHL is renewed at benchmark pricing while content obligations revert, to about C$30mn if relief holds and hockey is renewed on sustainable terms. What varies far more is the fraction of intrinsic value the market pays for a non voting, controlled stub. A privatization between C$2.75 and C$4.25, spanning an opportunistic offer up to the non operating asset value alone, returns 39 to 115 percent, with a C$3.50 midpoint returning 77 percent. Absent a deal, a favorable stub scenario with visible C$30mn broadcasting EBITDA supports a re rating toward C$3.25, about 65 percent upside, while a muddle through scenario sits near C$1.80, slightly below today. The bear case, combining an adverse hockey outcome, regulatory reversion, conservative asset marks and continued transfers to the parent, points toward C$0.85, a loss of roughly 55 percent. Weighting a deal within two years at 40 percent produces an expected value around C$2.50, or about 28 percent above the current price. The distribution is still favorable, but at this level the buyout is the trade; recognition alone no longer carries the return.

Risks

Quebecor has no obligation to bid, already captures most benefits of full ownership, and can transfer assets piecemeal below materiality thresholds without minority approval, as the TVA Films sale demonstrated. The NHL renewal is a binary near term event with negative tails in both directions. The CRTC relief may be diluted or rescinded on reconsideration. The pension surplus is interest rate sensitive, slow to extract, exposed to annuity pricing and potential legal contest, and accrues to minorities in a buyout only through the formal valuation. Legacy real estate square footage is unverified since 2001, and a social housing conversion of the headquarters would likely realize below market residential value. Shares carry no votes and no dividend, a single analyst covers the name, and the same individual serves as chief executive of both companies. Entry near the 52 week high offers less cushion than at any point in the past year.

What to watch

Second quarter results around July 30 provide the first clean post carriage adjustment quarter and should confirm renewal of the Quebecor credit facility that came due June 30. The NHL French rights announcement is expected before the fall season. The Cabinet and CRTC reconsideration of the content spending framework, and the allocation of the C$600mn federal fund, land in the second half of 2026. Every quarterly related party disclosure deserves close reading.

Conclusion

At C$1.98 the market pays roughly a third of a base sum of the parts, and about half of even the most conservative marks, for a debt free, cash generative company with a single well capitalized natural acquirer. The downside is protected by assets rather than earnings; the upside requires the controlling shareholder’s incentives to convert into action on a timeline no minority holder controls. It is an attractive asymmetric special situation, appropriately sized as such rather than as a core position