Shaw's operating profit rises despite cable weakness
(Reuters) - Canada's Shaw Communications Inc (SJRb.TO: Quote) reported improved operating results on Thursday as solid performances by its media and satellite businesses offset a further decline in cable subscribers.
Shaw, the dominant cable provider in Western Canada, posted a 4.2 percent rise in operating income before amortization to C$501 million ($505 million) for the fourth quarter to August 31.
The increase reflected strong contributions from Shaw's satellite business, where rate increases boosted revenue, and from its media segment, where programming costs fell. But net income fell as higher amortization, income tax expenses and other items more than offset gains from operations.
Canaccord Genuity analyst Dvai Ghose said the results were better than he expected.
"All things being equal, the expectations were low," Ghose said. "They beat the financial expectations, but I don't think the results were that stellar in themselves."
He pointed to the company's cable results, which showed declines of 16,474 to about 2.2 million in basic subscribers and 7,907 to 1.9 million in digital customers. Revenue rose 2 percent because of higher rates, but operating income before amortization was little changed.
In Western Canada, a resurgent Telus Corp (T.TO: Quote) is pushing an Internet-based television product to win over Shaw's cable customers. Shaw hit back with discounts, but is now easing back on promotions.
The Calgary-based company, which like Corus Entertainment Inc (CJRb.TO: Quote) is controlled by the Shaw family, forecast modest growth in revenue and operating income before amortization in the current fiscal year and said capital investment would decline marginally. It also said consolidated free cash flow would be in line with that of the last fiscal year.
Ghose called the cash flow guidance "underwhelming," and said it would make it very difficult to increase dividends. Continued...