TORONTO — If you thought iHeartMedia or the newly combined Disney-FOX TV and motion picture entity were too large in an era of the big getting eaten by the bigger, you’ve probably not paid close attention to the media giants in the Great White North.
Rogers Communications is a ubiquitous operator in Canada. Through its Rogers Media, it owns and operates 56 radio stations and 52 television stations. It is also a dominant provider of wireless voice and data services, and a leading MVPD operator. Oh, and Rogers also owns Canada’s Major League Baseball club, the Toronto Blue Jays and has 37.5% ownership of Maple Leaf Sports & Entertainment, a partnership with Bell Canada that includes the Toronto Raptors NBA franchise, the Toronto Maple Leafs NHL club, Major League Soccer club Toronto FC, the Toronto Argonauts Canadian Football League club, and Scotiabank Arena, formerly the Air Canada Centre.
Given its ownership of all of these properties, you’d expect a strong Q1 earnings story, right? Nope.
For the three months ending March 31, 2019, Rogers saw its total consolidated revenue fall by 1%, to $3.59 billion CDN. In U.S. dollars, that’s $2.7 billion — and $100 million less than what four analysts surveyed by Zacks Investment Research predicted.
Wireless revenue was flat, at $2.19 billion CDN; cable revenue grew by 1%, to $976 billion CDN.
The Rogers Media arm is where revenue declined sharply. A 12% year-over-year dip was seen, moving to $468 million CDN from $532 million CDN. But, the company explained that comps reflect a Q1 2018 distribution from Major League Baseball for the Blue Jays. Minus this income media revenue would have been “stable.”
For Rogers Media, adjusted EBITDA swung to a loss of $84 million CDN, from income of $23 million CDN.
This led to an overall net income decline for Rogers Communications of 8%, to $391 million CDN (76 cents per diluted share), from $425 million CDN (80 cents).
Excluding one-time items, Rogers earned $405 million (78 cents CDN per share) in the quarter. Analysts on an average predicted net income of 94 cents CDN, IBES data from Refinitiv show.
One Canadian dollar is equal to 74 U.S. cents, a steep year-over-year dip from 80 U.S. cents. Thus, Rogers net income in American currency dipped to $0.57 per share and, when adjusted for the Blue Jays 2018 MLB payment, was $0.59 per share. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of $0.70 USD.
With so many income sources, what’s driving Rogers? “Strong service revenue growth of 4% in Wireless” was seen, where blended ARPU continued to increase year on year for the twelfth consecutive quarter. Then, there is the Cable arm of Rogers, where Internet revenue growth of 7% continued to drive this segment.
Thus, it appears the struggling Blue Jays — with a roster lacking star power and ticket prices for Tuesday’s home game against the San Francisco Giants averaging $48 for field-level seats — are impacting Rogers, which said in December 2017 it would consider a possible sale of the ball club to free up capital for other investments. Rogers has not moved forward with any sale talk regarding the ball club.
Rogers’ radio assets are located in Ontario, British Columbia, Alberta, Manitoba and Nova Scotia. In Toronto, Rogers owns top-rated AC CHFI-FM 98.1, all-News cume monster CFTR-AM 680, Top 40 CKIS-FM “Kiss 92.5,” and SportsNet-branded CJCL-AM 590.
Its TV assets include Canada’s unique version of the FX, FXX and OLN cable networks, in addition to its over-the-air Citytv in Toronto, Vancouver, Calgary, Edmonton, Winnipeg, Montréal and both Regina and Saskatoon.
Even though Wall Street was sour on Rogers, the company’s Toronto-based board of directors declared a quarterly dividend of $0.50 CDN on each of its outstanding Class A and Class B shares. It is payable July 2 to shareholders of record on June 10.
Investor reaction to Rogers’ Q1 results was negative, with RCI-B shares falling 3.4% in early trading on the TSX, to $68.50 as of 9:54am Eastern.
— Carina Newton reported on this story from Toronto. Additional reporting by Adam Jacobson in West Palm Beach, Fla.
