Demise of Shomi, sale of media unit take bite out of Shaw Communications profit
Q1 profit cut to less than half what it was a year ago
The CEO of Shaw Communications Inc. says the cable TV giant will look to grow organically after a "transformative" year in which it sold its media division, bought a wireless network and closed down its video streaming service.
"Our competition is tough and is going to get tougher," Brad Shaw told investors at the company's annual general meeting Thursday.
"But we have several advantages in our favour, including an outstanding team, the best product and service roadmap we've ever had and a clear connectivity strategy that will enable us to effectively manage our legacy businesses while capitalizing on future opportunities."
He told reporters later that he doesn't anticipate any major transactions in the near term. Rather, the company will attempt to grow by improving its existing businesses to attract more customers.
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"We're very comfortable with where we are and with the products that we have," Shaw said.
Shaw Communications reported profit for the quarter ended Nov. 30 fell 59 per cent compared with the same period a year ago due mainly to a $107-million provision for the demise of Shomi in November.
The two-year-old video streaming service was intended to compete with Netflix, but was shut down by Shaw and partner Rogers Communications due to lower-than-expected subscriber interest.
'Choppy' results
Shaw earned $89 million or 18 cents per share in the first quarter of its financial year, down from a profit of $218 million or 43 cents per share a year ago.
The company said the results also reflected a decrease of about $80 million due to the sale of Shaw Media to Corus Entertainment for $2.65-billion last year, offset partially by income of $27 million from its equity investment in Corus.
Revenue grew to $1.31 billion from $1.14 billion in the quarter.
Analysts were disappointed in subscriber growth for Freedom Mobile, the new name Shaw gave to Wind Mobile after buying the company last year. It added 9,400 subscribers, missing expectations of about 33,600, according to a note from Desjardins analyst Maher Yaghi.
Shaw explained the company held back on sales during the quarter because it was launching a new LTE network.
He said he expects numbers to climb as the network is completed and as the company introduces new handsets over the next six months.
Analyst Drew McReynolds of RBC Dominion Securities Inc. said Shaw's results were "choppy" and missed his expectations on revenue and adjusted earnings mainly because of the lower-than-expected wireless returns.
He said Internet customer additions of about 17,000, along with cable customer losses of 13,000, telephony losses of 18,000 and satellite losses of 16,000 were in line with his estimates.
On Wednesday, the company introduced a premium IPTV product called BlueSky TV. Among other features, it will allow customers to search for programming using voice commands.
Shaw told investors at the meeting he considers the move more significant for the company than when founder JR Shaw, his father and the executive chairman, connected its first customers more than 45 years ago.