April 13, 2012 / 1:27 PM / 5 years ago

UPDATE 1-Shaw Communications sees weakness at cable unit

* Q2 profit C$178 mln vs C$172 mln last year

* Q2 rev rises 3 pct

* Sees 'marginal decline' in 2012 cable oper income

* Cuts 2012 cash flow outlook

April 13 (Reuters) - Shaw Communications Inc's quarterly earnings rose more than 3 percent on strength at its cable and satellite businesses, but the company said it expected a marginal decline in profit at the cable unit this year.

The cable division's operating margin was down 2.2 percent in the second quarter, compared with last year.

Shaw, the dominant cable company in Western Canada, said the fall in margins at the unit and a weakness in the advertising market have put "short-term" pressure on the company.

For the year, the company now expects a marginal decline in its cable operating income before amortization, modest growth at the satellite unit and flat operating income before amortization at its media business.

The company was earlier expecting continued growth in operating income before amortization across all its divisions.

Shaw also cut its 2012 cash flow outlook to C$450 million ($451.6 million) from C$550 million.

The Calgary-based company is fighting a difficult battle against Vancouver-based telecoms company Telus Corp, which is aggressively promoting a rival TV service. Shaw has canceled plans for a cellular network, giving it one less weapon to fight Telus.

Analysts have said that Shaw's TV losses should stabilize as Telus has completed its Optik TV rollout and Shaw is tweaking its product offering to retain customers.

December-February net profit from continuing operations was C$178 million, or 38 Canadian cents a share. A year earlier, it earned C$172 million, or 38 Canadian cents a share.

Revenue rose 3 percent to C$1.23 billion.

The company lost 9,946 basic cable subscribers in the quarter despite digital customer additions of 46,564. Internet customers rose by 18,681 and digital phone lines were up by 54,407.

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