Shaw Communications hurt by softer advertising
By Alastair Sharp
(Reuters) - Canada's Shaw Communications (SJRb.TO: Quote) posted a quarterly profit that fell short of forecasts as a softening advertising market hurt its media division and its cable arm lost subscribers, sending its shares lower.
Shares of the Calgary-based company slipped 2 percent on Thursday after profit and sales figures missed analyst expectations. The company later announced a 5 percent increase to its dividend, which pared some of the stock's decline.
Shaw, whose operations are concentrated in Western Canada, is fending off aggressive competition from Telus, an ambitious telecom rival encroaching on Shaw's traditional television market with an Internet-based alternative.
Shaw lost 22,768 basic cable subscribers in the quarter, despite digital customers additions of 59,566. Internet customers rose by 10,685 and digital phone lines were up by 22,969.
"The losses in cable subs are accelerating, which is not a positive indicator," Desjardins analyst Maher Yaghi said. "Shaw has been very aggressive on promotions, which could help subscriber numbers in the next quarter but could come with an associated decline in margins."
RBC Capital Markets analyst Drew McReynolds had forecast that Shaw would lose 10,000 basic cable customers. He expected the company to add some 50,000 digital customers, 13,000 Internet accounts and 32,000 telephone lines.
"Subscriber growth reflects intense competition but all things considered is holding up," McReynolds said in a note.
The company had free cash flow of C$119 million, down from C$154 million in the prior quarter. Continued...