Media down 12% for Rogers’ first quarterly since COVID

Cable and wireless stable, but cancellation of live sports has affected the company's media segment.
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Rogers Communications believes it is in a “strong financial position” in the COVID-19 environment.

The Canadian telco and media giant released its Q1 financial results, which span the first three months of the year – encapsulating the very beginning of the country’s strict lockdown measures. The immense changes to Canada’s social fabric have resulted in higher media consumption across the board, particularly for VOD platforms and radio platforms, but with advertisers tightening their purse strings, the ad spend has not been proportionate to the audience. And, two of Rogers’ most valuable media assets – Sportsnet and the Blue Jays – have seen massive overhauls to their spring and summer seasons.

Still, Rogers is boasting the health of its balance sheet with a solid liquidity position of $3.8 billion, a debt leverage ratio of 2.7x and a free cash flow of $462 million, up 14% year-over-year.

But media has not been the main driver of that financial health. Media dropped 12% year-over-year to $412 million, with an adjusted EBITDA of negative $85 million (down 1%). The drop, according to Rogers, is directly related to the suspension of live sporting events.

Although the bulk of the financial fallout of the suspended Jays season has yet to be seen – Major League Baseball was just entering Spring Training at the time of the pandemic – the cancellation of live sports sent a ripple effect through Sportsnet. The specialty net not only lost out on hockey, basketball and tennis matches, but also saw its programming beyond live broadcasts dwindle as commentators and analysts suddenly had no games on which to offer commentary. Replacement programming has included the re-broadcasting of classic hockey games, a re-run of the Raptors’ 2019 championship post-season and interview specials, such as the upcoming two-part interview series between Ron MacLean and Wayne Gretzky (sponsored by TD).

Cable revenue is flat at $973 million, with a slight rise (2%) in adjusted EBITDA ($453 million) thanks to an addition of 17,000 subscribers. Wireless service revenue was down slightly (down 2% to $1.7 billion) although adjusted EBITDA was up 1% (just over $1 billion). According to Rogers, COVID-19 caused a 13% reduction in gross post-paid customer additions.