Rogers earnings dip on slow ad revenue
Rogers Communications Inc. reported a first-quarter profit Monday that was 2.75 per cent lower than the previous year, despite increasing operating revenue thanks to growth in its wireless and business solutions divisions.
It reported net income of $248 million, or $0.48 per share, in the three months ending March 31, compared to $255 million ($0.50) during the same period the a year ago. The company said restructuring costs and a tough advertising environment affecting its traditional broadcast and print advertising divisions were a drag on profits.
Rogers chief executive Guy Laurence said sports are still performing well and now account for more than half of the media division’s revenue. But the company’s television channels, radio stations and magazines are facing the same challenges from fragmented online audiences as the rest of the legacy media industry, with revenue dropping three per cent year over year to $448 million in the first quarter.
Rogers Media announced plans to cut four per cent of its workforce in January. Laurence said the company doesn’t have any immediate plans to shut down or sell legacy media assets, preferring to shift investment toward areas like sports that are doing well.
“As we see advertising revenues starting to vaporize in conventional TV and publishing, we start to double down and invest in sports and digital,” Laurence said. “We need to follow the money.”
Meanwhile, revenue from the telecommunications company’s wireless and business solutions divisions grew by five per cent and two per cent, respectively, compared with the first quarter of the previous year. Overall, operating revenue grew two per cent year over year to $3.245 billion during the first three months of 2016.
Rogers credited gains in postpaid subscribers and success switching customers to its higher-revenue Share Everything plans for wireless revenue growth. The company said it’s on track to meet its financial targets for 2016.
It credited significant investments to improve service to its wireless customers for lowering its postpaid subscriber churn rate to 1.17 per cent during the quarter, which the company said was its best result in the past seven quarters and its best first quarter result since 2010.
Rogers added 14,000 wireless postpaid subscribers during the first three months of 2016, 40,000 more than the same period the previous year.
Laurence said he’s not worried about wireless growth slowing once investments in customer service and pushes to switch customers to Share Everything plans have run their course.
“We just keep inventing new parts to the service and adding value,” he said. “It never really ends. I’m not sure there is a point at which you run out of low-hanging fruit and it gets harder.
Rogers said it is on track to roll out faster Internet speeds of one gigabit to its four million subscriber homes by the end of the year. The company added 16,000 cable Internet subscribers during the first quarter, 23,000 more than during the same quarter the previous year.
The company recently launched the “Internet of Things as a Service,” with products that help businesses monitor things like fuel tank levels and food temperatures through sensors that transmit the information to the cloud.
Rogers will hold its annual general meeting Tuesday.