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DHX Shifts Los Angeles Work-for-Hire Ops to Canada

Following its acquisition of Cookie Jar Entertainment for $112 million last year, the Canadian producer anticipates bigger margins from more favorable film tax credits in Vancouver.

TORONTO –

Canadian indie producer DHX Media is shifting its U.S. work-for-hire production from Los Angeles to Canada, according to a report by The Hollywood Reporter.

The Halifax-based company, which is seeking cost savings after its acquisition of Care Bears owner Cookie Jar Entertainment for $112 million last year, said on Thursday it is “winding down” low-margin Los Angeles service studio work.

Over the next year, DHX Media will shift that work up to higher-margin animation studios in Canada, likely in Vancouver, where it enjoys more favorable film and digital production tax credits.

Last year, the Canadian producer did around $20 million in production on four series as part of its work-for-hire load, including HBO’s Ricky Gervais Show and DreamWorks’ Dragons: Riders of Berk.

As it revealed its Q2 2013 results Thursday, DHX Media indicated that both its work-for-hire and proprietary production slates were down, while distribution revenue was up sharply after the Cookie Jar acquisition.

DHX Media saw net income for the three months to December 31, 2012 fall sharply to $287,000, against a profit of $1.83 million in fiscal 2012, on overall revenue up 7% to $26.3 million.