Rogers profit cools, Bell feud heats up, as NHL...
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Oct 23, 2014  |  Vote 0    0

Rogers profit cools, Bell feud heats up, as NHL deal affects quarterly numbers

The start of Rogers’ $5.2 billion broadcast deal with the NHL affected this quarter’s numbers but will also strengthen results in subsequent quarters, CFO says

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Two days after Bell filed a complaint with the CRTC over the exclusive NHL content available to Rogers customers, Rogers issued its third-quarter earnings statement and a message to its media rival.

Quit whining and start innovating.

“With respect to crybaby Bell, what can I say?” said chief executive officer Guy Laurence during a conference call Thursday to discuss the company’s third-quarter earnings. “When they presented their pitch to the NHL to win the rights, they didn’t have an innovation component, whereas we had a very high innovation component. One can only theorize that’s maybe why they didn’t win the deal. . . Having lost it here, they are complaining and trying to stifle innovation in hockey.”

On Thursday morning, Rogers announced it had generated $3.252 billion in revenue for the quarter ended Sept. 30, along with $1.312 billion in profit while earning 78 cents per share.

Before Rogers released the numbers, analysts from the National Bank had expected the firm to bring in $3.233 billion in revenue, $1.339 billion in profit and earn 86 cents per share.

In a report issued before the conference call, Rogers explained that while overall revenue had risen two per cent compared with the previous quarter, revenue from cable had declined one per cent due to a loss of subscribers.

On the call, Laurence and chief financial officer Tony Staffieri explained that the start of Rogers’ 12-year, $5.2 billion broadcast deal with the NHL affected this quarter’s numbers but will also strengthen results in subsequent quarters when income from advertising and other aspects of the deal begins rolling in.

The various ways Rogers plans to wring revenue from its NHL contract are at the heart of Bell’s complaint, which alleges that in making aspects of Rogers’ GameCentre and GamePlus app available only to Rogers subscribers, the company violates CRTC rules governing vertical integration and competition.

For Bell and GameCentre customers who get their Internet access from companies other than Rogers, the enhanced version of the app, which costs $199 for the season, is an attempt to nudge hockey fans into dropping their wireless and Internet carriers and subscribing to Rogers.

“These consumers pay for GameCentre just like Rogers customers, so why are they denied access to features available on regular broadcast TV anyway?” said Bell spokesperson Mark Langton in a statement issued Wednesday. “It breaks the CRTC’s digital media rules, and it impacts all GameCentre consumers across Canada who love hockey but aren’t Rogers customers.”

Of course, Laurence disagrees.

Rogers has until Nov. 20 to respond to the complaint, but Laurence is confident the CRTC will rule in his company’s favour.

During Thursday’s call, he said Rogers GameCentre and GamePlus, which are available to Rogers subscribers for free until the end of the year, aren’t designed to generate massive revenue – even in 2015 when Rogers customers start paying for it.

Instead, he compared the GameCentre and GamePlus programs to a passenger plane – signing up through Bell or Shaw is like flying coach, while Rogers subscribers ride first-class.

“Our strategy is to benefit our higher-value customers,” he said. “If you’ve ever flown business class, you know you get better-quality food, you get a better seat, and you get treated better. . . We’re not stopping our coach customers if they want to upgrade, but we’re actually providing a two-tiered service.”

After closing at $43.38 on Wednesday afternoon, Rogers shares were worth $42.25 by the start of trading on Thursday. By late morning, the price had rebounded to $43.12.

Toronto Star

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