Rogers Media Launches First Large-Scale Integrated Multiplatform Sales Service Model in North America
In a move that reinforces Rogers Media’s commitment to delivering best-in-class service to its advertising partners, the company today unveiled an innovative sales model – the first of its kind at a large-scale multiplatform media organization in North America – that will bring a new standard of service to the industry. Effective immediately, Rogers Media offers its clients an integrated and holistic sales approach that delivers audience solutions for the company’s suite of leading brands – all through one dedicated point of contact. Read More
Rogers Media Receives Final CRTC Approval to Acquire Score Media
Rogers Media today received final regulatory approval from the Canadian Radio-television and Telecommunications Commission (CRTC) to acquire Score Media Inc., which has been held in trust since October 19, 2012. With today’s approval, Rogers Media will integrate the operations and financial results of Score Media effective immediately.
The acquisition of Score Media includes The Score, Canada’s third largest specialty sports channel with 6.6 million television subscribers, closed captioning service Voice to Visual Inc., and mixed martial arts program The Score Fighting Series. As part of the transaction, Rogers Media’s parent company, Rogers Communications Inc., acquires an 11.8 per cent equity interest in theScore Inc. (Score Digital).
The total consideration paid by Rogers Media in October 2012 was $167 million.
“The Score delivers niche sports news and information programming, complementing Rogers Media’s robust multiplatform sports offerings and significant investment in sports content and experiences,” said Keith Pelley, President, Rogers Media. “Last year, we made the bold statement to make Sportsnet the #1 sports media brand in Canada, and together with The Score, we take another step forward in achieving this goal.”
The Score will be rebranded under the Sportsnet umbrella, which continues to experience double-digit audience growth year-over-year* and deliver award-winning content across five platforms. The rebrand will be unveiled on July 1.
Rogers Media received approval for its request to amend The Score’s condition of licence, allowing for an enhanced viewing experience for Canadians while upholding The Score’s nature of service as a headline sports news service. The changes to the condition of licence are an increase in the amount of analysis and interpretation programming to 15% from 10%, and flexibility to break into live sports event programming every hour to present sports results and video highlights, instead of every 15 minutes. Rogers Media plans for The Score to continue providing sports updates once every 15 minutes during live events when possible, as the nature of the game being played permits.
Rogers Media’s tangible benefits package of $17.1 million (representing 10% of the value of the transaction) will have a positive long-term impact on regional and national amateur sports in Canada, athletes, sports organizations, and sports fans. The funds, which will be directed over a five-year period, will be used to create new programming opportunities for the independent production sector and help foster skills development in multimedia and/or digital media production.
As part of its programing strategy, The Score will continue to deliver its own unique mix of programming and be the prime destination for breaking sports news, analysis and highlights. While some sports properties will be shared between The Score and the Sportsnet networks (Sportsnet, Sportsnet ONE, Sportsnet World), The Score will be the home of exclusive content in Canada, including WWE and the newly-created HOCKEY CENTRAL Playoff Extra, which debuts tonight at 5 p.m. ET and will air daily until the end of the Stanley Cup Playoffs. In addition, Tim and Sid, which currently airs on Sportsnet 590 The FAN, will be returning to The Score in simulcast, beginning tomorrow from 1 to 4 p.m. ET weekdays. Additional programming details will be announced in the coming weeks.
The Score will continue to operate out of the station’s studio on King St. in Toronto’s downtown core, with support from the extended Sportsnet and Rogers Media family.
*Source: BBM Canada, 2+ AMA, Jan. 1 to April 14, 2013 vs. Jan. 1 to April 15, 2012, Sportsnet Regional Networks + Sportsnet ONE, Total Canada
Rogers Communications Reports First Quarter 2013 Results
Rogers Communications Inc., a leading diversified Canadian communications and media company, announced its unaudited consolidated financial and operating results for the first quarter ended March 31, 2013, in accordance with International Financial Reporting Standards (“IFRS”).
Financial highlights from continuing operations are as follows(1):
“The record first quarter levels of both revenue and adjusted operating profit which Rogers reported represents a solid start to 2013,” said Nadir Mohamed, President and Chief Executive Officer of Rogers Communications Inc. “The positive operating trends which we achieved during 2012 are carrying into the new year as evidenced by the continued improvements in ARPU, data and Internet revenue, churn and margin profiles which we reported for the first quarter of 2013. This balanced growth across subscribers, revenue, margins and earnings reflects the combination of our superior asset mix, innovative product offerings, and successful ongoing efficiency gains, further supporting the 10% dividend increase we announced earlier in the quarter.”
Highlights of the first quarter of 2013 include the following:
Top Line Growth Continued
Continued Cost Efficiency Gains Drive Profit Growth and Margin Expansion
Continued to Enhance our Leading Networks to Monetize Rapid Data Growth
Customer Experience Further Enriched
Media Focus on Sports and Local Content
Balance Sheet Strength Further Reinforced with Continued Healthy Cash Flow Generation, Increased Liquidity and Lower Cost of Borrowing
Cash Returned to Shareholders Grows with Announcement of Further Dividend Increase
Announcement of CEO Succession
This earnings release, which is current as of April 22, 2013, is a summary of our first quarter 2013 results, and should be read in conjunction with our first quarter 2013 MD&A and our first quarter 2013 Unaudited Interim Condensed Consolidated Financial Statements and Notes thereto, our 2012 Annual MD&A and our 2012 Audited Annual Consolidated Financial Statements and Notes thereto, and our other recent filings with securities regulatory authorities which are available on SEDAR at sedar.com or EDGAR at sec.gov.
The financial information presented herein has been prepared on the basis of IFRS for interim financial statements and is expressed in Canadian dollars unless otherwise stated.
As this earnings release includes forward-looking statements and assumptions, readers should carefully review the section of this earnings release entitled “Caution Regarding Forward-Looking Statements, Risks and Assumptions”.
In this earnings release, the terms “we”, “us”, “our”, “Rogers”, “Rogers Communications” and “the Company” refer to Rogers Communications Inc. and our subsidiaries: Wireless, Cable, Business Solutions (“RBS”) and Media.
CONSOLIDATED FINANCIAL RESULTS
Summarized Wireless Financial Results
Summarized Wireless Subscriber Results
Wireless Subscribers and Network Revenue
For the three months ended March 31, 2013, Wireless activated and upgraded approximately 673,000 smartphones, compared to approximately 642,000 in the first quarter of 2012. This addition of smartphones increased the percentage of subscribers with smartphones to 71% of Wireless’ total postpaid subscriber base at March 31, 2013, compared to 60% as at March 31, 2012. These subscribers generally commit to multi-year term contracts and typically generate significantly higher ARPU than non-smartphone subscribers.
The increase in wireless network revenue for the three months ended March 31, 2013, compared to the corresponding period of 2012, reflects the continued growth of Wireless’ postpaid subscriber base and the increased adoption and usage of wireless data services.
For the three months ended March 31, 2013, wireless data revenue increased to $762 million, a 22% increase from the corresponding period of 2012. This growth in wireless data revenue reflects the continued penetration and growing usage of smartphones, tablet devices and wireless laptops, which drive increased usage of e-mail, wireless Internet access, text messaging, data roaming, and other wireless data services. A portion of this growth reflects enhancements to data roaming plans introduced in the third quarter of 2012. For the three months ended March 31, 2013, wireless data revenue represented approximately 45% of total network revenue, compared to approximately 39% in the corresponding period of 2012.
The 3.5% year-over-year increase in blended ARPU for the quarter ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects the aforementioned growth in wireless data revenue, partially offset by the continued decline of wireless voice ARPU. The wireless data component of blended ARPU increased by 20.5%, partially offset by a 7.3% decline in the wireless voice component as a result of a general shift in usage patterns from voice to data based wireless services and the general level of competition around wireless voice services.
Wireless Equipment Sales
The decrease in revenue from equipment sales for the three months ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects changes in device pricing and resultant subsidies driven by increased competition, partially offset by an increase in the mix of smartphones activated towards higher value devices versus the corresponding period in the prior year.
Wireless Operating Expenses
The increase in cost of equipment for the three months ended March 31, 2013, compared to the corresponding period of 2012, was primarily the result of the increased number of smartphone sales to new customers and upgrades for existing customers. During the three months ended March 31, 2013, we activated 5% more smartphones with a higher average cost per device than in the same period last year.
Total retention spending, including subsidies on handset upgrades, was $247 million in the three months ended March 31, 2013, compared to $208 million in the corresponding period of 2012. The increase primarily reflects a higher number of hardware upgrades by existing subscribers than during the same period last year, a shift in the mix of smartphones activated towards higher value devices, and a more competitive device pricing environment.
Other operating expenses for the three months ended March 31, 2013, excluding retention spending discussed above were relatively flat versus the same period of the prior year. Wireless incurred higher marketing costs, driven by increased promotional activities, which were offset by efficiency gains resulting from cost management and productivity initiatives across various functions. Wireless continues to focus on costs reduction and efficiency improvement initiatives.
Wireless Adjusted Operating Profit
The 4% year-over-year increase in adjusted operating profit and the 45.5% adjusted operating profit margin on network revenue (which excludes equipment sales revenue) for the three months ended March 31, 2013 primarily reflect the growth of network revenue in the period, coupled with cost management and efficiency improvements as discussed above.
Summarized Financial Results
Summarized Subscriber Results
Television revenue decreased for the three months ended March 31, 2013, compared to the corresponding period of 2012, from the 4% year-over-year decline in television subscribers combined with the impact of promotional and retention pricing activity associated with heightened competition, partially offset by pricing changes made in January 2013.
Our digital cable subscriber base represents 81% of our total television subscriber base as at March 31, 2013, compared to 78% as at March 31, 2012. A larger selection of digital content, video on-demand, HDTV and PVR equipment continues to contribute to the increasing penetration of the digital subscriber base as a percentage of our total television subscriber base.
Cable began a substantial conversion of the remaining analog cable customers onto its digital cable platform during 2012. This strategic migration will continue to further strengthen the customer experience, and once complete will enable the reclamation of significant amounts of network capacity, as well as reduce network operating and maintenance costs. The analog to digital migration, expected to be completed in 2015, entails incremental PP&E and operating costs as each of the remaining analog homes are fitted with digital converters and various analog filtering equipment is removed.
The year-over-year increase in Internet revenue for the three months ended March 31, 2013, compared to the corresponding period in 2012, reflects the increase in our Internet subscriber base, combined with a general movement to higher end speed and usage tiers, combined with Internet service pricing changes made during the previous twelve months.
With our Internet customer base at 1.9 million subscribers, Internet penetration is approximately 49% of the homes passed by our cable network and 86% of our television subscriber base as at March 31, 2013, compared to 48% and 79% as at March 31, 2012, respectively.
Home Phone Revenue
The increase in Phone revenues for the three months ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects the increase in our Phone customer base due to increased promotional activities.
Phone lines in service grew 4% from March 31, 2012 to March 31, 2013 and now represent 29% of the homes passed by our cable network and 50% of television subscribers, compared to 28% and 46% at March 31, 2012, respectively.
Cable Operating Expenses
Cable’s operating expenses decreased by 3% for the three months ended March 31, 2013, compared to the corresponding period of 2012. Excluding the positive impact resulting from an $8 million adjustment to licence fees payable to match the CRTC’s billing period in the current quarter of 2013, the decrease would be 1% year over year. The decrease was driven by cost reductions, efficiency initiatives and lower activity volumes. Cable continues to focus on cost reductions and efficiency improvement initiatives.
Cable Adjusted Operating Profit
The year-over-year increase in adjusted operating profit for the three months ended March 31, 2013 was driven principally by increased service revenue coupled with cost reductions as discussed above, resulting in expanded adjusted operating profit margin of 49.8% for the three months endedMarch 31, 2013, compared to 45.8% in the corresponding period of 2012.
Other Cable Developments
On January 14, 2013, we announced a multipart strategic transaction with Shaw to acquire Shaw’s cable system in Hamilton, Ontario and secure an option to purchase Shaw’s AWS spectrum holdings in 2014. We will also sell to Shaw our one-third equity interest in specialty channel TVtropolis. Rogers’ net cash investment is expected to total approximately $700 million if all aspects of the transactions are approved.
During the three months ended March 31, 2013, we paid net deposits of $241 million for these Shaw transactions. We have received regulatory approval on the purchase of Shaw’s cable system in Hamilton, Ontario and the other transactions are pending regulatory approval. The acquisition of Shaw’s cable system in Hamilton, Ontario and sale of TVtropolis are currently expected to close in the second quarter of 2013.
Summarized Financial Results
RBS revenue increased 7% for the three months ended March 31, 2013, compared to the corresponding period of 2012, due to the increased revenue from the next generation business as well as a non-recurring equipment sale, partially offset by decreased revenue from legacy business. RBS’ focus is primarily on IP-based services and increasingly on leveraging higher margin on-net and near-net revenue opportunities, utilizing existing network facilities to expand offerings to the medium and large-sized enterprise, public sector and carrier markets. Revenue from the declining lower margin off-net legacy business generally includes local and long-distance voice services and legacy data services. In contrast, revenue from the higher margin next generation business continues to grow, due to growth in customers and additional services sold to existing customers, and now represents 52% of total RBS service revenue.
RBS Operating Expenses
Operating expenses increased modestly for the three months ended March 31, 2013, compared to the corresponding period in 2012 due to the cost of equipment sales. Operating expenses declined 9% year-over-year excluding the impact of the non-recurring equipment sale. This decline was driven by a decrease in the legacy service-related costs due to lower volumes, as well as ongoing initiatives to improve costs and productivity. RBS has continued to focus on implementing a program of cost reduction and efficiency improvement initiatives to control the overall growth in operating expenses and to increase adjusted operating profit margin.
RBS Adjusted Operating Profit
The year-over-year increase in adjusted operating profit for the three months ended March 31, 2013 reflects growth in the higher margin next generation business coupled with cost efficiencies, resulting in the increase of RBS’ adjusted operating profit margin to 24.7% from 20.7%.
Other RBS Developments
On April 17, 2013, we announced that we purchased 100% of the shares of BLACKIRON Data ULC (“Blackiron”) from Primus Telecommunications Canada Inc. for cash consideration of $200 million. Blackiron is a provider of data centre and cloud computing services in Canada with approximately 4,000 customers. The purchase of Blackiron enables RBS to enhance its suite of enterprise-level data centre and cloud computing services.
Summarized Media Financial Results
The decrease in Media’s revenue for the three months ended March 31, 2013, compared to the corresponding period of 2012, reflects the continued impact of a soft advertising market, which continues to suppress growth in most of Media’s divisions, along with residual impacts from the 2012 NHL lockout. This was partially offset by increased distribution revenue generated by Sportsnet and other specialty channels. Adjusting for the impact of the NHL lockout and other non-recurring items that occurred in 2012, Media’s revenue for the three months ended March 31, 2013 is relatively unchanged compared to the same period in the prior year.
Media Operating Expenses
The decrease in Media’s operating expenses for the three months ended March 31, 2013, compared to the corresponding period of 2012, reflects Media’s reduced sports programming costs associated with the NHL player lockout, lower programming expenses due to broadcast scheduling changes, a positive impact resulting from an adjustment to licence fees payable to match the CRTC’s billing period in the current quarter of 2013, and overall cost containment efforts.
Media Adjusted Operating Loss
The improvement in Media’s adjusted operating loss for the three months ended March 31, 2013, compared to the corresponding period of 2012, primarily reflects the revenue and expense changes discussed above.
Other Media Developments
In February 2013, Media completed the purchase of the Metro14 Montreal broadcast license and re-launched the station as City Montreal in this key Quebec market. The purchase of this broadcast license, along with other acquisitions and agreements put in place during 2012, has increased City’s reach by more than 20% to over 80% of Canadian households.
ADDITIONS TO PP&E
Wireless Additions to PP&E
The increase in Wireless additions to PP&E for the three months ended March 31, 2013, compared to the corresponding period in 2012, was attributable to the continued deployment of our LTE network as well as ongoing upgrades to the network to improve the LTE and HSPA+ user experience, and initiatives to improve network reliability and service platforms.
Cable Additions to PP&E
The decrease in Cable additions to PP&E for the three months ended March 31, 2013, compared to the corresponding period in 2012, reflects lower network investments on capacity and the timing of certain initiatives related to service enhancements on our video and data platforms, partially offset by investments in customer premise equipment related to the continued rollout of Next Box 2.0 set-top boxes and analog to digital subscriber migration activities.
RBS Additions to PP&E
RBS’ PP&E additions for the three months ended March 31, 2013 remained flat compared to the corresponding period in 2012, and were comprised principally of expenditures on customer specific network expansions and support capital.
Media Additions to PP&E
Media’s PP&E additions during the three months ended March 31, 2013 reflect expenditures on digital and broadcast systems, as well as upgrades for Sports Entertainment facilities.
2013 FINANCIAL AND OPERATING GUIDANCE
We have no specific revisions at this time to the 2013 annual consolidated guidance ranges that we provided on February 14, 2013. See the section entitled “Caution Regarding Forward-Looking Statements, Risks and Assumptions” below.
Rogers Communications Inc.
Rogers Communications Inc.
Rogers Communications Inc.
Rogers Media Completes Acquisition of Score Media
Rogers Media Inc. today announced it has closed the previously announced acquisition of all of the issued and outstanding shares of Score Media Inc. (the Transaction). The Transaction received shareholder and court approvals earlier this week. Read More
Rogers Media to Acquire theScore Television Network
Rogers Media Inc. today announced it is acquiring all of the outstanding shares of Score Media Inc., and will wholly own theScore Television Network and related television assets. Read More
Corus Entertainment Joins Other Leading Media Companies in the Canadian Premium Audience Exchange
Corus Entertainment Inc. announced today that it has joined the Canadian Premium Audience Exchange (CPAX), a new online, real-time bidding exchange service that provides advertisers and agencies with access to premium digital inventory. Through CPAX, Corus has partnered with Shaw Media, Rogers Media and CBC/Radio-Canada to deliver targeted, best-in-class online advertising offerings to advertisers and users. Read More
John Hinnen Appointed Vice-President of News for Rogers Media Television and Radio
Rogers Media announced the appointment of John Hinnen to Vice-President of News for Rogers Media Television and Radio, effective immediately. In this newly created position, Hinnen assumes expanded duties to oversee the direction for all Rogers Media television and radio news brands nationally.
Previously, Hinnen was Vice-President of News for Rogers Radio and Vice-President & General Manager of 680News, Canada’s #1 news radio station. He will continue to oversee 680News and all news content for the 55 Rogers Radio stations, including the four all-news radio stations and four news-talk stations, and will now also oversee CityNews and CityNews Channel.
Hinnen has led all newsgathering efforts for the Rogers Radio brands across Canada since 1999.
“John is one of the industry’s most well-respected news leaders, and under his management our Rogers Radio news brands have become synonymous with excellence,” said Scott Moore, President, Broadcast, Rogers Media. “United under one vision, John will lead our suite of television and radio news brands into the next generation of news coverage to create an unparalleled audience experience.”
This move will allow Rogers Media to leverage the power of its television and radio news brands to deliver world-class, award-winning news content. CityNews and Rogers Radio will continue to operate as separate newsrooms, but will be aligned under Hinnen’s leadership.
“I am thrilled to have this opportunity to work with the outstanding news teams at Citytv, while at the same time continuing my long and special relationship with all of my radio colleagues,” said Hinnen.
A 40-year industry veteran, Hinnen has held a variety of senior positions within Rogers Radio, including Vice-President of News at CHFI, News and Sports Director at CFTR, and Chairman of the Rogers Multimedia Content Committee, where he spearheaded creative content synergies for news coverage across Rogers Media’s suite of assets. Hinnen joined Rogers Media in 1974 as a sports announcer for CFTR.
Under Hinnen’s leadership, Rogers Radio brands have won hundreds of awards, including the recently announced international Edward R. Murrow award for 680News and News1130, and 13 Radio-Television Digital News Association (RTDNA) awards in 2012 for news excellence in large and medium markets across Canada.
A personal multiple-award winner, Hinnen is the recipient of the RTDNA’s President’s Award (2012 and 2011), the association’s highest honour.
A graduate of the Humber College Broadcast Journalism program, Hinnen was born in the Netherlands and moved to Toronto at the age of seven. He is an active member of the broadcast community and currently sits on the Board of Directors at six professional associations, including the Ontario Association of Broadcasters as Vice-President.
Citytv Expands to Quebec; Rogers Media to Acquire Métro14 Montréal from Channel Zero
Rogers Broadcasting Limited, a division of Rogers Media Inc., today announced its intent to acquire Métro14 Montréal (CJNT), enabling Citytv to expand its footprint in the key Quebec market and provide its premium programming to new audiences. Read More
Citytv and Jim Pattison Broadcast Group Sign Affiliate Agreement for Three Key Markets in Western Canada
Continuing the momentum of expanding its footprint in key Canadian markets, Citytv announced today an affiliate agreement with the Jim Pattison Broadcast Group that will deliver Citytv programming to new audiences on a long-term basis on all three of Pattison’s television stations in Western Canada. Read More
CBC, Rogers Media and Shaw Media form Canadian Premium Audience Exchange delivering private real-time bidding to Canadian advertisers
In their ongoing efforts to deliver targeted, best-in-class offerings to advertisers and users, CBC/Radio-Canada, Rogers Media and Shaw Media have partnered to create the Canadian Premium Audience Exchange (CPAX) – a private real-time bidding exchange that provides valuable digital inventory from three of Canada’s leading media companies. Read More
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