year-to-date

Vision: We are building a healthy, connected community that empowers people and strengthens families by confronting the root causes of crisis and instability.


BUSINESS SEGMENTS
The Corporation's operations consist of the following segments:


The Broadcasting & Production segment, which includes the operations of TVA Network (including the TVA Productions Inc. subsidiary and the TVA Nouvelles division), specialty services, the marketing of digital products associated with the various televisual brands, commercial production services and distribution of audiovisual products.


The Magazines segment, which through its subsidiaries, notably TVA Publications Inc. and Les Publications Charron & Cie inc., publishes magazines in various fields including the arts, entertainment, television, fashion and decorating; markets digital products associated with the various magazine brands; and provides custom publishing, commercial print production and premedia services.


The Film Production & Audiovisual Services segment ("MELS"), which through its subsidiaries Mels Studios and Postproduction G.P. and Mels Dubbing Inc. provides soundstage, mobile unit and production equipment rental services, as well as dubbing, postproduction, visual effects and distribution services.

HIGHLIGHTS SINCE END OF FIRST QUARTER 2018
 On June 21, 2018, the union representing TVA employees in Montreal filed a request with the Federal Mediation and Conciliation Service for conciliation assistance in the renewal of the collective agreement that expired on December 31, 2016.


On May 16, 2018, an official application was filed with the Canadian Radio-Television and Telecommunications Commission ("CRTC") for authorization to transfer ultimate effective control over the broadcasting undertakings Évasion and Zeste to the Corporation.


On May 3, 2018, the Corporation announced that "TVA Sports" will be the official French-language broadcaster of the 2020 UEFA European Football Championship (Euro 2020).The agreement allows TVA Sports to broadcast all 51 games of the prestigious international soccer tournament, in which Europe's 24 best national men's teams will compete.

NON-IFRS FINANCIAL MEASURES
To evaluate its financial performance, the Corporation uses certain measures that are not calculated in accordance with or recognized under IFRS.The Corporation's method of calculating non-IFRS financial measures may differ from the methods used by other companies and, as a result, the financial measures presented in this Management's Discussion and Analysis may not be comparable to other similarly titled measures reported by other companies.

Adjusted EBITDA (previously adjusted operating income or loss)
In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs and others, income taxes and share of income of associated corporations.Adjusted EBITDA as defined above is not a measure of results that is consistent with IFRS.Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity.This measure should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS.This measure is used by management and the Board of Directors to evaluate the Corporation's consolidated results and the results of its segments.This measure eliminates the significant level of impairment, depreciation and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments.Adjusted EBITDA is also relevant because it is a significant component of the Corporation's annual incentive compensation programs.The Corporation's definition of adjusted EBITDA may not be identical to similarly titled measures reported by other companies.
Table 1 below presents a reconciliation of adjusted EBITDA to net loss attributable to shareholders as disclosed in the Corporation's condensed consolidated financial statements.
 $8,752,000 (-7.5%) decrease in the Broadcasting & Production segment (Table 2) essentially due to a 9.3% decrease in TVA Network's advertising revenues and a 15.1% decrease in the "TVA Sports" channel's operating revenues.
 $3,582,000 (-15.1%)decrease in the Magazines segment (Table 2) due mainly to a 29.8% decrease in advertising revenues (due in part to the sale of The Hockey News magazine in the first quarter of 2018) and an 11.4% decrease in newsstand sales, on a comparable basis.


$282,000 (2.0%) increase in the Film Production & Audiovisual Services segment (Table 2) due to the addition of the mobile unit rental activities of "Mobilimage" and growth in revenues from postproduction and from soundstage and equipment rental, partially offset by decreased visual effects revenues.Negative adjusted EBITDA: $3,902,000, a $14,974,000 unfavourable variance.


$13,421,000 unfavourable variance in the Broadcasting & Production segment (Table 3) caused mainly by a 60.2% increase in negative adjusted EBITDA from the "TVA Sports" channel and an 18.9% decrease in TVA Network's adjusted EBITDA.
 $1,506,000 unfavourable variance in the Magazines segment (Table 3), due mainly to the decrease in operating revenues, which was only partially offset by savings generated by the staff and expense rationalization plans implemented in recent quarters.


$47,000 unfavourable variance in the Film Production & Audiovisual Services segment (Table 3), mainly because of lower volume of activities in visual effects, dubbing, subtitling and distribution.Those decreases were partially offset by increased adjusted EBITDA from soundstage, mobile unit and production equipment rental services, and the lower negative adjusted EBITDA generated by postproduction services.


In the second quarter of 2018, the effective tax rate was slightly lower than the Corporation's statutory tax rate of 26.7% because of, among other things, permanent differences related to non-deductible items.


In the second quarter of 2017, the effective tax rate was lower than the Corporation's statutory tax rate of 26.8%, also because of permanent differences related to non-deductible items.
Share of income of associated corporations: $368,000 in the second quarter of 2018, compared with $265,000 in the same period of 2017; the $103,000 increase was essentially due to the improved financial results of an associated corporation.
Non-controlling interest: -$38,000 in the second quarter of 2018, compared with $128,000 in the same period of 2017.The -$166,000 difference was due to the lower financial results of a corporation in which a subsidiary of the Corporation holds a 51% interest.
 $12,372,000 (-5.4%) decrease in the Broadcasting & Production segment (Table 2) essentially due to a 7.2% decrease in TVA Network's advertising revenues and a 10.8% decrease in the "TVA Sports" channel's operating revenues.
 $6,551,000 (-14.5%)decrease in the Magazines segment (Table 2) due mainly to a 28.1% decrease in advertising revenues (due in part to the sale of The Hockey News magazine in the first quarter of 2018) and a 13.1% decrease in subscription revenues, on a comparable basis.
 $187,000 (0.7%) increase in the Film Production & Audiovisual Services segment (Table 2) essentially due to a 20.3% increase in soundstage and equipment rental revenues and the addition of mobile unit rental activities in the first half of 2018, partially offset by a decrease in the combined revenues of the segment's other services.
 $11,672,000 unfavourable variance in the Broadcasting & Production segment (Table 3) caused mainly by a 31.7%decrease in TVA Network's adjusted EBITDA resulting from lower revenues, and a 24.1% increase in the "TVA Sports" channel's negative adjusted EBITDA.
 $1,015,000 unfavourable variance in the Magazines segment (Table 3), due mainly to the decrease in operating revenues, which outweighed the savings generated by staff and expense rationalization plans implemented in recent quarters.
 $600,000 favourable variance in the Film Production & Audiovisual Services segment (Table 3), due primarily to an increase in adjusted EBITDA from soundstage, equipment and mobile unit rental, partially offset by lower adjusted EBITDA from the segment's other activities as a result of decreased volume of activities.
Net loss attributable to shareholders: $14,697,000 (-$0.34 per basic and diluted share) in the first six months of 2018, compared with $9,902,000 (-$0.23 per basic and diluted share) in the same period of 2017.


The $4,795,000 (-$0.11 per basic and diluted share) unfavourable variance was essentially due to: o $12,087,000 decrease in adjusted EBITDA; partially offset by: o $4,014,000 favourable variance in operational restructuring costs and others; o $2,181,000 favourable variance in income tax recovery; and o $635,000 favourable variance in depreciation and amortization expenses.


The calculation of loss per share was based on a weighted average of 43,205,535 outstanding diluted shares for the six-month periods ended June 30, 2018 and 2017.
Depreciation of property, plant and equipment and amortization of intangible assets: $17,107,000, a slight $635,000 decrease essentially caused by a reduction in the amortization charge due to the write-off of certain intangible assets in the third quarter of 2017, partially offset by an increase in depreciation generated by new equipment acquired for rental purposes during the last year.
Operational restructuring costs and others: $936,000 in the first six months of 2018, compared with $4,950,000 in the same period of 2017.


In addition to the factors noted in the 2018/2017 second-quarter comparison above, the Corporation recorded the following items in the first quarter of 2018: o $1,000,000 gain on the sale of The Hockey News magazine; o $877,000 in operational restructuring costs in connection with the elimination of positions, including $63,000 in the Broadcasting & Production segment, $708,000 in the Magazines segment, and $106,000 in the Film Production & Audiovisual Services segment ($752,000 in the first quarter of 2017, including $472,000 in the Broadcasting & Production segment, $146,000 in the Magazines segment, and $134,000 in the Film Production & Audiovisual Services segment); and o $119,000 upward adjustment to the provision for onerous leases in the Magazines segment.
Income tax recovery: $5,378,000 (effective tax rate of 25.7%) in the first six months of 2018, compared with $3,197,000 (effective tax rate of 23.7%) in the same period of 2017.


In the first half of 2018, the effective tax rate was lower than the Corporation's statutory tax rate of 26.7%, mainly because of permanent differences related to non-deductible items.


In the first half of 2017, the effective tax rate was lower than the Corporation's statutory tax rate of 26.8%, also because of permanent differences related to non-deductible items.
Share of income of associated corporations: $652,000 in the first half of 2018, compared with $467,000 in the same period of 2017; the $185,000 increase was essentially due to the improved financial results of an associated corporation.

Non-controlling interest:
-$194,000 in the first half of 2018 compared with $80,000 in the same period of 2017.The -$274,000 variance was due to the increased net loss of a corporation in which a subsidiary of the Corporation holds a 51% interest.

SEGMENTED ANALYSIS
Broadcasting & Production

2018/2017 second quarter comparison
Operating revenues: $108,500,000, an $8,752,000 (-7.5%) decrease due primarily to: o 9.3% decrease in TVA Network's advertising revenues; o 35.7% decrease in the "TVA Sports" channel's advertising revenues, in large part because the Montreal Canadiens were not in the National Hockey League ("NHL") playoffs in the spring of 2018; and o 3.6% decrease in the "TVA Sports" channel's subscription revenues and 0.8% decrease in the subscription revenues of the other specialty channels; partially offset by: o 8.9% increase in the advertising revenues of the entertainment specialty channels and of "LCN." French-language audience share TVA Group's specialty services had a combined market share of 16.4% in the second quarter of 2018, compared with 15.9% in the same period of 2017, a 0.5-point increase.The "LCN" news and public affairs channel, which rose an impressive 1.2 points, was mainly responsible for the increase.The "Prise 2" channel also gained 0.3 points and "Addik TV " and "Casa" 0.2 points each.Those increases were partially offset by "TVA Sports," which was adversely affected by the fact that the Montreal Canadiens were not in the Stanley Cup playoffs and lost 1.1 points during the period.
TVA Network was relatively stable compared with the same period of 2017 at a 23.8% market share, more than its two main over-the-air rivals combined.TVA Network carried three of the top five programs in Quebec during the second quarter of 2018; once again, La Voix was a standout, occupying the top position with an average audience approaching 2.0 million.
Operating expenses: $116,845,000, a $4,669,000 (4.2%) increase due primarily to: o 10.6% increase in the operating expenses of "TVA Sports" related mainly to programming costs and due essentially to recognition in income of broadcast rights to NHL games based on the broadcast schedule; and o 22.9% increase in the operating expenses of "Addik TV " due to spending on programming; partially offset by: o 3.3% decrease in TVA Network's operating expenses because of savings in variable costs related to lower advertising revenues and the favourable impact of various operating expense reduction initiatives.
Negative adjusted EBITDA: $8,345,000, a $13,421,000 unfavourable variance primarily due to: o 60.2% increase in negative adjusted EBITDA from "TVA Sports"; o 18.9% decrease in TVA Network's adjusted EBITDA; and o 13.0% decrease in adjusted EBITDA from the specialty channels other than "TVA Sports," particularly "Addik TV ." Analysis of cost/revenue ratio: Employee costs and the cost of purchases of goods and services for the Broadcasting & Production segment's activities (expressed as a percentage of revenues) increased from 95.7% in the second quarter of 2017 to 107.7% in the same period of 2018.The "TVA Sports" channel was mainly responsible for the increase, as its operating revenues decreased while its operating expenses rose.

2018/2017 year-to-date comparison
Operating revenues: $215,651,000, a $12,372,000 (-5.4%) decrease due primarily to: o 7.2% decrease in TVA Network's advertising revenues; o 27.7% decrease in the advertising revenues of "TVA Sports," due in large part to its performance in the second quarter of 2018; and o 3.0% decrease in the subscription revenues of "TVA Sports"; partially offset by: o 13.4% increase in the combined advertising revenues of the other specialty channels, including increases of 11.1% for "LCN" and 44.3% for "Prise 2." Operating expenses: $221,590,000, a $700,000 (-0.3%) decrease due primarily to: o 1.6% decrease in TVA Network's operating expenses caused by the following factors:  lower sales commissions as a result of decreased advertising revenues;  lower expenses related to commercial production due to lower volume of activities; and  operating cost savings; and o 1.1% decrease in the operating expenses of "TVA Sports" related mainly to programming costs and due essentially to the NHL schedule, which contained fewer games in the first half of 2018 than in the same period of 2017; partially offset by: o 6.7% increase in the operating expenses of the specialty channels other than "TVA Sports," mainly because of higher program spending at the "Addik TV " and "MOI&cie" channels.
Negative adjusted EBITDA: $5,939,000, an $11,672,000 unfavourable variance primarily due to: o 31.7% decrease in TVA Network's adjusted EBITDA; and o 24.1% increase in negative adjusted EBITDA from "TVA Sports" due to the significant decrease in its operating revenues.
Analysis of cost/revenue ratio: Employee costs and the cost of purchases of goods and services for the Broadcasting & Production segment's activities (expressed as a percentage of revenues) increased from 97.5% in the first half of 2017 to 102.8% in the same period of 2018, essentially because of the decrease in the segment's operating revenues and the difficulty of reducing operating expenses by the same proportion.

2018/2017 second quarter comparison
Operating revenues: $20,127,000, a $3,582,000 (-15.1%)decrease due mainly to: o 28.4% decrease in the magazines' advertising revenues, on a comparable basis, essentially in the women's magazines and in digital advertising, partly because of less frequent publication of some monthly titles; o 11.4% decrease in the magazines' newsstand revenues, on a comparable basis, mainly in the entertainment magazines; and o the sale of The Hockey News magazine.

Canada Periodical Fund
The Government of Canada created the Canada Periodical Fund ("CPF") on April 1, 2010.The CPF provides financial assistance to the Canadian magazine and non-daily newspaper industries so they can continue to produce and distribute Canadian content.All assistance related to this program is fully recorded under operating revenues.It amounted to 15.0% of the segment's operating revenues for the three-month period ended June 30, 2018 (12.6% in the same period of 2017).

Readership and market share statistics
TVA Group is the top publisher of French-language magazines in Quebec with 2.9 million readers across all platforms for its French titles and a leading player in the Canadian magazine market with 9.1 million cross-platform readers.
7 Jours is the leading entertainment and celebrity news magazine with 512,000 readers on all platforms per week.
Canada's lifestyle standard-setter Canadian Living has 3.7 million cross-platform readers.Its French-language counterpart Coup de pouce is the most-read French-language lifestyle magazine with 1.3 million readers on all platforms.
Elle Canada was the country's top fashion and beauty magazine with 1.8 million readers on all platforms while Clin d'oeil was Quebec's most popular fashion and beauty magazine with 601,000 cross-platform readers.
Operating expenses: $17,668,000, a $2,076,000 (-10.5%)decrease due primarily to: o cost savings resulting from both decreased volume of activities and the expense rationalization plans implemented in recent months; o decrease in operating expenses resulting from the sale of The Hockey News magazine; and o 10.8% decrease attributable to subscription cost savings, largely in distribution and in recruiting campaigns, on a comparable basis.
Adjusted EBITDA: $2,459,000, a $1,506,000 unfavourable variance due mainly to the decrease in operating revenues, which outweighed the savings generated by the staff and expense rationalization plans.
Analysis of cost/revenue ratio: Employee costs and the cost of purchases of goods and services for the Magazines segment's activities (expressed as a percentage of revenues) increased from 83.3% in the second quarter of 2017 to 87.8% in the same period of 2018, mainly because of the decrease in the segment's operating revenues, which outweighed the decrease in operating expenses.

2018/2017 year-to-date comparison
Operating revenues: $38,607,000, a $6,551,000 (-14.5%)decrease due mainly to: o 27.0% decrease in the magazines' advertising revenues, on a comparable basis, essentially in the women's magazines and in digital advertising, partly because of less frequent publication of some monthly titles; o the sale of The Hockey News magazine; o 13.1% decrease in the magazines' subscription revenues, on a comparable basis, essentially in the women's magazines, particularly Canadian Living; and o 5.0% decrease in the magazines' newsstand revenues, on a comparable basis.
Operating expenses: $35,273,000, a $5,536,000 (-13.6%)decrease due mainly to: o savings generated by the decrease in volume of activities and the staff and expense rationalization plans implemented in recent quarters; o decrease in operating expenses resulting from the sale of The Hockey News magazine; and o 11.3% decrease attributable to subscription cost savings, largely in distribution and in recruiting campaigns, on a comparable basis.
Adjusted EBITDA: $3,334,000, a $1,015,000 unfavourable variance due mainly to the decrease in operating revenues, which outweighed the savings generated by staff and expense rationalization plans.
Analysis of cost/revenue ratio: Employee costs and the cost of purchases of goods and services for the Magazines segment's activities (expressed as a percentage of revenues) were relatively stable, increasing from 90.4% in the six-month period ended June 30, 2017 to 91.4% in the same period of 2018.Adjusted EBITDA: $1,984,000, a slight $47,000 unfavourable variance due mainly to an increase in negative adjusted EBITDA from visual effects and a decrease in adjusted EBITDA from dubbing.Those variances were partially offset by the increased profitability of soundstage, mobile unit and production equipment rental services and of postproduction services.

Film
Analysis of cost/revenue ratio: Employee costs and the cost of purchases of goods and services for the Film Production & Audiovisual Services segment's activities (expressed as a percentage of revenues) were relatively stable, increasing from 85.7% in the second quarter of 2017 to 86.3% in the second quarter of 2018.

2018/2017 year-to-date comparison
Operating revenues: $25,965,000, a $187,000 (0.7%) increase due mainly to: o addition of operating expenses related to mobile unit rental.
Adjusted EBITDA: $996,000, a $600,000 favourable variance due primarily to: o increase in adjusted EBITDA from soundstage and equipment rental due to higher volume of activities; partially offset by: o decrease in adjusted EBITDA from the segment's other activities due to lower volume of activities, particularly in visual effects.

Analysis of cost/revenue ratio:
Employee costs and the cost of purchases of goods and services for the Film Production & Audiovisual Services segment's activities (expressed as a percentage of revenues) decreased from 98.5% in the first half of 2017 to 96.2% in the first half of 2018.The reduction was due essentially to soundstage, mobile unit and production equipment rental activities.

Acquisition of the assets of Mobilimage inc.
On January 22, 2018, Mels Studios and Postproduction G.P. acquired the assets of Mobilimage inc., consisting mainly of mobile production vehicles and equipment, for a cash purchase price of $2,705,000, consisting of the agreed price of $2,750,000 less a $45,000 adjustment related to a pre-established working capital target agreed to by the parties.The results of the HD and 4K mobile unit rental and operation business have been included in the Film Production & Audiovisual Services segment's results since the acquisition date.The acquisition was consistent with the Corporation's strategic objective of offering an array of production equipment and services in order to meet producers' needs and reduce the use of outsourced services for its own production needs.

Operating activities
Cash flows provided by operating activities: $8,945,000, a $2,448,000 increase in the three-month period ended June 30, 2018 compared with the second quarter of 2017, due mainly to: o favourable net variances of $12,834,000 in rights payable and 4,908,000 in accounts receivable; partially offset by: o $14,974,000 decrease in adjusted EBITDA.
Cash flows provided by operating activities: $621,000, a $15,538,000 increase in the six-month period ended June 30, 2018 compared with the first half of 2017, due mainly to: o favourable net variances of $16,397,000 in accounts receivable and $10,918,000 in rights payable; partially offset by: o $12,087,000 decrease in adjusted EBITDA.
Working capital: $12,989,000 as of June 30, 2018, compared with $32,368,000 at December 31, 2017.The $19,379,000 unfavourable variance was mainly due to: o decrease in cash resulting in part from repayment of a portion of the term loan; and o decrease in programs, broadcast rights and inventories; partially offset by: o decrease in accounts payable and accrued liabilities, current tax liabilities and deferred revenues.

Investing activities
Additions to property, plant and equipment and to intangible assets: $3,108,000 for the second quarter of 2018 compared with $5,836,000 in the same period of 2017.The $2,728,000 (-46.7%)decrease was essentially due to a decrease in budgeted capital projects for the current year.
During the three-month period ended June 30, 2018, the Corporation made investments in technical equipment, production equipment for rental, and its technological infrastructure.
Additions to property, plant and equipment and to intangible assets: $8,289,000 for the first half of 2018 compared with $11,924,000 in the same period of 2017.The $3,635,000 (-30.5%)decrease was essentially due to the same factor as the one noted above in the 2018/2017 second quarter comparison.
Business acquisition: $2,705,000 in the first half of 2018 (see "Acquisition of the assets of Mobilimage inc." above).

Financing activities
Long-term debt (excluding deferred financing costs): $58,113,000 as of June 30, 2018, compared with $62,839,000 as of December 31, 2017.The difference is essentially due to capital repayments on the term loan in the last two quarters.

Financial position as at June 30, 2018
Net available liquid assets: $155,371,000, consisting of a $150,000,000 unused and available revolving credit facility and $5,371,000 in cash.
As at June 30, 2018, minimum principal debt payments in the coming 12-month periods were as follows: The weighted average term of TVA Group's debt was approximately 1.2 years as of June 30, 2018 (1.6 years as of December 31, 2017).The debt consisted entirely of floating-rate debt as of June 30, 2018 and December 31, 2017.
The Corporation also has a $150,000,000 revolving credit facility, which was renewed on November 3, 2014 and matures on February 24, 2019.No amounts were drawn on the facility as of June 30, 2018 and December 31, 2017.
The Corporation's management believes that the cash flows generated on an annual basis by continuing operating activities and by available sources of financing should be sufficient to meet future cash requirements in regard to capital investments, working capital, interest payments, income tax payments, debt repayment, pension plan contributions, share redemptions and dividend payments (or distribution of capital), and to meet its commitments and guarantees.
Under its credit agreements, the Corporation is subject to certain covenants, including maintenance of certain financial ratios.As at June 30, 2018, the Corporation was in compliance with all the terms of its credit agreements.
Analysis of consolidated balance sheet as at June 30, 2018  In 2013, QMI and TVA Group reached a 12-year agreement with Rogers Communications Inc. for Canadian French-language broadcast rights to NHL games.Operating expenses related to that contract are recognized in the Corporation's operating expenses and total commitments related to the contract have been included in the Corporation's commitments.

Related party transactions
The Corporation entered into the following transactions with related parties in the normal course of business.These transactions were accounted for at the consideration agreed between parties.
In the second quarter of 2018, the Corporation sold advertising space and broadcast rights to, recognized subscription revenues from, and provided production, postproduction and other services to corporations under common control and associated corporations in the aggregate amount of $25,216,000 ($26,042,000 in the second quarter of 2017).
In the second quarter of 2018, the Corporation recorded telecommunications service costs, advertising space acquisition costs, professional service fees, commissions on sales and newsgathering costs arising from transactions with corporations under common control and associated corporations totalling $14,838,000 ($12,904,000 in the second quarter of 2017).
In the second quarter of 2018, the Corporation also billed management fees to corporations under common control in the amount of $2,760,000 ($1,015,000 in the second quarter of 2017).These fees are recorded as a reduction of operating expenses.
The Corporation also recorded management fees to the parent corporation in the amount of $855,000 in the second quarter of 2018 ($855,000 in the second quarter of 2017).
In the first six months of 2018, the Corporation sold advertising space and broadcast rights to, recognized subscription revenues from, and provided production, postproduction and other services to corporations under common control and associated corporations in the aggregate amount of $51,060,000 ($49,398,000 in the first six months of 2017).
In the first six months of 2018, the Corporation recorded telecommunications service costs, advertising space acquisition costs, professional service fees, commissions on sales and newsgathering costs arising from transactions with corporations under common control and associated corporations totalling $29,919,000 ($24,896,000 in the first six months of 2017).
In the first half of 2018, the Corporation also billed management fees to corporations under common control in the amount of $5,453,000 ($1,850,000 in the first half of 2017).
As well, the Corporation recorded management fees to the parent corporation in the amount of $1,710,000 in the first six months of 2018 ($1,710,000 in the first six months of 2017).

ROC Television
Since the announcement on February 13, 2015 of the discontinuation of the "SUN News" specialty service, operated by ROC Television, in which TVA Group holds a 49% interest, the Corporation has made capital contributions to ROC Television to cover its operating losses up to the closure date as well as costs related to the discontinuation of operations.
In the second quarter of 2018, the partners made a capital contribution of $200,000, including $98,000 from TVA Group to cover costs for which an allowance had already been made at the end of fiscal 2017.Following that contribution, the balance of the allowance recorded in accounts payable and accrued liabilities to cover future payments was $100,000 as of June 30, 2018($198,000 at December 31, 2017).

Capital stock
Table 9 below presents information on the Corporation's capital stock.In addition, 60,000 Class B stock options of the Corporation were outstanding as of July 18, 2018.

Carrying amount
Class A common shares 4,320,000 $ 0.02 Class B shares 38,885,535 $ 5.33

IFRS 9 -Financial Instruments
On January 1, 2018, the Corporation adopted the new rules under IFRS 9, which simplifies the measurement and classification of financial assets by reducing the number of measurement categories in IAS 39, Financial Instruments: Recognition and Measurement.The new standard also provides for a fair value option in the designation of a non-derivative financial liability and its related classification and measurement, as well as for a new hedge accounting model more closely aligned with risk management activities undertaken by entities.
Under the new rules, financial assets and liabilities are now all classified as subsequently measured at amortized cost.The Corporation also uses the expected credit losses method in IFRS 9 to estimate the allowance for expected credit losses on its financial assets.
The adoption of IFRS 9 by the Corporation had no impact on the consolidated financial statements.

IFRS 15 -Revenue from Contracts with Customers
On January 1, 2018, the Corporation also adopted on a fully retrospective basis the new rules under IFRS 15 which specifies how and when an entity should recognize revenue as well as requiring such entities to provide users of financial statements with more informative disclosures.
The standard provides a single, principles-based five-step model to be applied to all contracts with customers.Accordingly, the Corporation now recognizes a contract with a customer only when all of the following criteria are satisfied:  the parties to the contract have approved the contract -in writing, orally or in accordance with other customary business practices -and are committed to performing their respective obligations;  the entity can identify each party's rights regarding the goods or services to be transferred;  the entity can identify the payment terms for the goods or services to be transferred;  the contract has commercial substance (i.e. the risk, timing or amount of the entity's future cash flows is expected to change as a result of the contract); and  it is highly probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
The adoption of IFRS 15 by the Corporation had no impact on the consolidated financial statements.

Disclosure controls and procedures
The purpose of internal controls over financial reporting is to provide reasonable assurance as to the reliability of the Corporation's financial reporting and the preparation of its financial statements in accordance with IFRS.Management has identified no changes in internal control over financial reporting during the three-month period ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.
made.Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements.
For more information on the risks, uncertainties and assumptions that could cause the Corporation's actual results to differ from current expectations, please refer to the Corporation's public filings, available at www.sedar.comand http://groupetva.ca,including in particular the "Risks and Uncertainties" section of the Corporation's annual Management's Discussion and Analysis for the year ended December 31, 2017 and the "Risk Factors" section in the Corporation's 2017 annual information form.
The forward-looking statements in this Management's Discussion and Analysis reflect the Corporation's expectations as of August 2, 2018, and are subject to change after that date.The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the applicable securities laws.

Montreal, Quebec
August 2, 2018  The Corporation's businesses experience significant seasonality due to, among other factors, seasonal advertising patterns, consumers' viewing, reading and listening habits, and demand for production services from international and local producers.Because the Corporation depends on the sale of advertising for a significant portion of its revenues, operating results are also sensitive to prevailing economic conditions, including changes in local, regional and national economic conditions, particularly as they may affect advertising expenditures.


Operating expenses in the Broadcasting & Production segment vary, mainly as a result of programming costs, which are directly related to programming strategies and to live sports broadcasts, while in the Magazines segment operating costs fluctuate according to publication schedules, which may vary from quarter to quarter.In the Film Production & Audiovisual Services segment, operating expenses vary according to demand for production services from international and local producers.
Accordingly, adjusted EBITDA for interim periods may vary from one quarter to the next.
1% decrease in visual effects revenues due to lower volume of activities; o 10.8% decrease in postproduction revenues due to lower volume of activities in the first quarter of 2018; and o 8.9% decrease in dubbing and subtitling revenues.
3% increase in soundstage and production equipment rental revenues due to increased volume of activities in the first half of 2018; and o addition of mobile unit rental activities since the first quarter of 2018; partially offset by: o 44.
Table 5 below shows a summary of cash flows related to operating activities, investing activities and financing activities:

Table 9 Number of shares outstanding as at July 18, 2018
(in shares and dollars)

Table 10 SELECTED
QUARTERLY FINANCIAL DATA (in thousands of dollars, except for per-share data)