Earnings sag at Shaw

CEO speaks of cautious expansion into mobile phones, while mending fences with Rogers.

The recession has put the brakes on earnings growth at Shaw Communications, but not on the cable giant’s appetite for acquisitions or expansion into the mobile phone market.

As Calgary-based Shaw rolled out its full-year 2009 results Friday, the cable operator revealed it paid around $300 million in cash and stock to purchase the Mountain Cablevision system in Hamilton, ON., deep in arch-rival Rogers Communications’ backyard.

During an analyst call, CEO Jim Shaw defended the purchase of Mountain Cablevision and its 41,000 subscribers after Rogers Communications passed on making its own bid. The CRTC approved the deal on Thursday. ‘It’s a really well-run operation. We already operate in Ontario. Rogers had passed on the acquisition, so we decided to go in there,’ Shaw argued.

He dismissed grumblings from Rogers, which earlier considered legal action to block the deal. ‘That’s their issue, not mine,’ he told analysts.

At the same time, Jim Shaw said his company is holding talks with top Rogers executives to mend fences and re-establish their business relationship after the death earlier this year of company founder Ted Rogers.

Shaw posted fourth quarter earnings of $124 million to Aug. 31, down 6.3% from $132.3 million in 2008. Full-year 2009 earnings fell 20% to $535.2 million, against a year-earlier $671.6 million profit. Shaw, with its diversified cable TV, Internet, digital phone and satellite TV portfolio, saw overall revenues rise on digital cable customer growth and rate increases of $3.00 per customer on average. Fourth quarter revenues jumped 8% to $872.9 million, while full-year 2009 revenues was up 9% to $3.39 billion.

Shaw’s cable unit saw its fourth-quarter revenue rise 10% to $682 million, and annual revenue jump 11% to $2.63 billion. The cable giant added 110,501 digital cable subscribers to get to 1.3 million customers in all at Aug. 31, and grew its Internet access customer base by 27,376 to 1.68 million at the year-end. Shaw also grew its digital phone line customer base by 55,708 to 829,717, and its satellite TV customer base by a modest 2,728 new subscribers to 900,941.

Stock in Shaw fell 65 cents, or 3%, to $19.95 on the Toronto Stock Exchange during afternoon trading Friday. Sensitive to investor nervousness, Shaw told analysts that his company is going slow as it considers possible entry into the mobile phone market after acquiring wireless spectrum.

‘We’re interested in expanding into that area on a really cautious basis. Having all those products will just make it [Shaw] stronger. But we’ll be cautious here to make sure we don’t lose any shareholder value,’ he said.

From Playback Daily