Piracy What? Good Times Continue to Roll, Rogers Revenue Up Drew Wilson | April 9, 2018 As major players continue to argue that piracy is killing the industry, Rogers financial statements suggests things are actually looking great. Canadian regulators are currently being asked to implement Internet censorship. A coalition of a group of corporations, known as Fairplay Canada, are saying that piracy is killing the TV and film industry. If nothing is done to block websites without court oversight, then the industry could be done for in the country. There is, of course, a tiny problem with that assertion. It seems things are actually looking very bright in the TV industry judging by various studies and financial statements. Last February, we brought you news of a study that suggests things are looking very bright for the film and TV industry. Employment is up and revenue continues to soar. This is in direct contradiction to the comments made which says revenue is plummeting and employment will suffer as a result. Of course, this is just one study. Some skeptics out there might still believe that the industry is really suffering from the scourge of piracy. So, we thought we’d look around the industry to see how things are looking. First, we looked at the Jim Pattison Group which operates a number of broadcast stations. According to statements made on their website, not only is employment and revenue up, but the organization is experiencing record breaking revenue. The group cracked the $10 billion mark for the first time in corporate history in 2017. Of course, skeptics might insist that this is just one organization. What if the study is wrong and we just happen to pick the one organization doing well? Well, that’s why we looked at Bell, one of the major proponents in the Fairplay Canada coalition. After all, if they are complaining times are tough, then maybe they really are falling on tough times. Not so much. After taking a look at Bell’s financial statements, it seems that not only is revenue is up, but Bell is in such a good financial standing, they are showing their shareholders with increased dividends. Still, for some truly dedicated to the cause of censoring the Internet, this might all be one massive fluke. There’s gotta be someone out there who is suffering financial hardship. Why create the coalition in the first place if someone isn’t suffering from all that alleged illegal streaming? OK, so we decided to look at how things are going with Rogers. According to Rogers official website, things are looking pretty good. From their fourth quarter 2017 financial results: “Our second quarter results reflect the strong efforts of our highly engaged and committed team, underpinned by an incredibly rich mix of business assets. We reported strong revenue and adjusted operating profit growth from continued momentum and operating leverage in our largest segment, Wireless,” said Joe Natale, President and CEO. “Our team delivered excellent Wireless results across the board, including substantially lower churn, and significantly grew adjusted operating profit and expanded margins. In Cable, we also grew adjusted operating profit and margins.” “I have been at Rogers for 13 weeks now and I am extremely excited about the prospects we have ahead of us. We have simplified our organizational structure for deeper end-to-end accountability for the customer experience and to drive further improvements in customer service and business performance. We are also intensifying our company-wide focus on cost efficiency to help generate further margin expansion. We will drive a deeper focus on delivering an outstanding customer experience while growing revenue and profitability to create more value for shareholders.” Revenue increased 4% this quarter, largely driven by Wireless service revenue growth of 8%. Wireless service revenue increased primarily as a result of a larger subscriber base and the continued adoption of higher-value Share Everything plans. Of course, a lot of that is talking about Internet related services. What about Television? Well… Media revenue increased 4% this quarter primarily as a result of the continued growth of sports-related revenue, increased sales at Today’s Shopping Choice (TSC, previously branded as The Shopping Channel), and higher conventional broadcast TV advertising revenue, partially offset by lower publishing-related advertising and circulation revenue due to the strategic shift to digital media announced late last year. In fact, things are going so well for the company, the debt leverage ratio is improving: This quarter, we continued to generate substantial cash flow from operating activities and free cash flow of $823 million and $626 million, respectively. Free cash flow growth was primarily driven by lower net additions to property, plant and equipment and increased adjusted operating profit. We ended the second quarter with a debt leverage ratio (adjusted net debt / adjusted operating profit) of 3.0, which improved from a ratio of 3.1 as at the end of the same period last year, despite the $184 million spectrum licence acquisition this quarter. See “Managing our Liquidity and Financial Resources” in our Second Quarter 2017 Management’s Discussion and Analysis for more information. So, it seems that the good times continue to roll for the corporation. Not only are things looking great for the corporation, but there wasn’t even mention of streaming or piracy in the report. It seems that revenue isn’t all that hard to come by these days. As a result, this puts the piracy comments into further question. Drew Wilson on Twitter: @icecube85 and Google+.