Cogeco's decision to drop IPTV project cuts profit, analysts give mixed reviews
TORONTO - Cogeco Cable has abandoned an IPTV project after it failed to meet expectations, resulting in a $32.2-million writedown and a decision to bring the TiVo service to subscribers in Quebec and Ontario.
The Montreal-based company said its U.S. subsidiary Atlantic Broadband has had good experience with TiVo, which will allow viewers to get content across all screens inside and outside of the home.
A similar strategy also being pursued by other cable and phone companies with services that reach televisions, computers, smartphones, tablets and other mobile devices connected by wireless or online Internet.
Cogeco president and CEO Louis Audet told analysts Thursday that the company had worked for years on a promising IPTV technology for the cable system, but came to the conclusion that it was too complex.
"Of course, we were well aware of the good success that Atlantic Broadband is enjoying in the marketplace with the TiVo product. So it was relatively easy to re-arrange our strategy and go for the TiVo product," Audet said.
"All we're saying is, here is a superior product (TiVo) that is in use at Virgin Media the U.K., at ONO in Spain, at Com Hem in Sweden and one that is used by at least half a dozen mid-sized operators in the United States, including Atlantic Broadband (which Cogeco acquired last year)." Audet said.
Audet said Cogeco will start making TiVo available to its Canadian cable operations by next February.
"In terms of marketing and in terms of specific content, we think it's too early right now to discuss that and to discuss how we're going to proceed. But I would expect us to start gradually rolling out the TiVo service within the first half of fiscal 2015."
Cogeco's Canadian arm has already done a lot of the work required to put TiVo in place, as a result of the IPTV project, he said.
Nevertheless, Cogeco Cable's third-quarter profit dropped to $35.5 million, or 72 cents per diluted share, largely because of the IPTV impairment charge, as well as lower margins at two recent acquisitions that Cogeco said were temporary. The result was down from $48.1 million, or 98 cents per diluted share, in the same quarter last year.
Cogeco Cable's revenue for what was its third quarter was $496.4 million, up from $464.4 million.
Revenue from Cogeco's Canadian cable operations was $317 million, up 3.5 per cent from $306.4 million a year earlier. Atlantic Broadband's revenue was up 12.2 per cent from a year ago, rising to $101.4 million from $90.4 million due to operational improvements and favourable foreign exchange. Enterprise revenue from newly acquired Peer 1 Hosting and Cogeco Data Services was $78.6 million, up 15.3 per cent from $68.1 million a year earlier.
The Canadian cable operations continued to lose television and phone service customers during the quarter, but at a slower pace than in the previous two quarters â€” following a trend seen at Rogers (TSX:RCI.B) and Shaw (TSX:SJR.B).
Telecom companies such as BCE's Bell (TSX:BCE) , Bell Aliant (TSX:BA), Telus (TSX:T) and Manitoba Telecom (TSX:MBT), have been winning over thousands of cable subscribers for the past several years with their own television service offerings in addition to conventional phone, mobile phone and Internet.
For the parent company, Cogeco Inc. (TSX:CGO), third-quarter profit amounted to $35.6 million, or 69 cents per share, compared to profit of $50.0 million, or $1.03 per share, in the year-ago quarter. Revenue, primarily from the cable division, was $536 million, up from $504.4 million a year earlier.
"Advertising spending has been a little slower than anticipated in the third quarter in the province of Quebec but, nonetheless, we have managed to do well due to management's vigilance," Audet said.
Through Cogeco Diffusion, the company owns 13 radio stations in Quebec, a news agency and Metromedia, an advertising company focused on public transit.
Read more Business News
- 22,000 still in the darkWest Kelowna
- Power outage pastimesWest Kelowna
- Students rally for classmateVernon / N. Okanagan
- Garage goes up in flamesCentral Okanagan
|QHR Technologies Inc||1.22||-0.04|
|Anavex Life Sciences||0.1804||-0.0036|
|Copper Mountain Mining||2.29||-0.13|
|Sunrise Resources Ltd||0.065||+0.045|
|Mission Ready Services||0.31||-0.01|
Part 2 of 2 to read Part 1, click here. 5. Dial down your vacations. New York is out. Maybe Buffalo. For West coast, maybe Seattle instead of Hawaii. Use sites like Airbnb (aribnb.ca) to find ch...
Niche food producer “Sweets from the Earth” thrives using innovation, uniqueness and an unwavering focus on quality. A neighbour’s stew turned Ilana Kadonoff off meat at the age of s...
Recently I had the privilege of working alongside André Voskuil, a local guru in the world of Alternative Financing. André has quite the reputation in the world of direct investments as ...