Shaw’s consumer, media divisions pulling in less money

Shaw Communications Inc.'s first-quarter financial figures showed its consumer network and media businesses bringing in less money than a year earlier, while there was some growth in its business-services operations. The company said in a press release Wednesday it had overall revenue of $1.39 billion in the three months ended Nov. 30, up two per cent from a year earlier. There would have been a fall in revenue had it not been for the contribution of $55 million from the company’s new business infrastructure division, created from the acquisition of ViaWest Inc., which closed on Sept. 2. Shaw said this division, which operates several data centres in the United States, is on track for annual revenue growth in the low-to-mid teens, percentage-wise. Net earnings for the quarter were $227 million, down from $245 million a year earlier. Contributing to the profit decline was a $13-million equity loss Shaw factored in for its 50 per cent stake in the Shomi video-streaming services, a venture shared equally with Rogers Communications Inc. It did say it received $2 million in airtime revenue and $3 million in content sublicensing fees from Shomi, which was launched on Nov. 4. Consumer network services revenue of $927 million was down 1.9 per cent from a year ago, business-network revenue was up 6.7 per cent to $127 million and media revenue dropped 5.5 per cent to $307 million. There was a combined 1.94 million cable-TV subscribers — consumer and business — at the end of the first quarter, down 15,591 during the three-month period. Satellite-TV subscribers were down 17,980 to 862,643. Internet customers were up 14,048 to 1.94 million, while landline phone customers were down 599 to 1.37 million. Canaccord Genuity telecom analyst Dvai Ghose said in a research note that Shaw's results were "surprisingly weak," adding that while there was not as big a decline in cable subscribers as he expected, satellite operations lost more customers than anticipated and that media results were "well below expectations." Jeff Fan, an analyst of this sector for Scotia Capital, said in a research note that Shaw's overall performance was worse than anticipated, though subscriber numbers, particularly with Internet, were stronger than expected. He gave credit to Shaw's WiFi hotspots that are available throughout its markets for Internet subscribers for this success. Speaking on a media conference call Wednesday, Shaw CEO Brad Shaw agreed that the company’s WiFi network — which now includes 55,000 hotspots, according to its earnings release — has proven to be an asset for subscriber attraction and retention. He added that there is potential for the company to leverage its WiFi network even further for the benefit of the business. "It's very strategic for us," Shaw said. He said there are opportunities to utilize WiFi hotspots for providing links for cellphone services, pay-per-day usage and as outlets for local advertising. Shaw did not rule out expanding its network of hotspots into residential areas through the use of dual-mode routers in people's homes, a practice known as home spotting, though he suggested it's not a priority right now. "We're very focused on high-traffic areas and we're very focused on making sure that people get the most value from that," he said. However, he added: "If we can potentially turn two million customers into part of the network, I think there's great value in that." Cogeco Cable Inc. CEO Louis Audet told The Wire Report in an interview Wednesday that his company started home spotting in recent months. Shaw added that there could be further losses taken from Shomi as the business develops. He said talks are ongoing with other TV service providers to expand the availability of Shomi beyond just TV or Internet customers of Shaw and Rogers. He said it's possible Shaw customers might eventually be able to access BCE Inc.'s rival streaming service, CraveTV, which is carried by Telus Corp. in the markets Shaw operates. "Don't you want to be a provider that has all those, and be able to have people who are able to choose and select?" Shaw said. "I think over time here you're going to see us look at the other options working with Bell on Crave and what that opportunity is. Because, you know, our customers are going to want that, and if it's a differential in competition, than for sure you're going to make the moves to be able to have people enjoy that." — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Shaw’s consumer, media divisions pulling in less money

Broadcast | January 14, 2015

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