Shaw Communications reported this morning that its first quarter profits were down year-over-year, partially due to the start up cost associated with its streaming service that launched in November.
Shaw and Rogers Communications both own a 50 percent stake in shomi, which is a new subscription VOD service that was designed to compete against Netflix, but Shaw lost $13 million on the joint venture in the first quarter.
Calgary-based Shaw saw its net income drop to $227 million, or 46 cents per share, in the first quarter that ended Nov. 30. Net income a year ago was $245 million, or 51 cents a share. Shaw said the loss was also partially due to higher amortization.
Shaw’s revenue was up 2 percent from $1.36 billion a year ago to $1.39 billion.
Shaw lost close to 18,000 satellite video subscribers in the quarter in its consumer and business units, as well as 15,591 cable video customers. Typical of most cable operators over the past several years, Shaw did post an increase in broadband subscribers in the first quarter, which increased by more than 14,000.
Back in September, Shaw’s cable and satellite business segments were realigned into Consumer and Business Network Services in order to improve overall efficiency, Shaw said. Revenue and operating income before amortization in the consumer division were down $927 million and $405 million, respectively, compared to $945 million and $413 million for the same quarter a year ago.
During the first quarter, Shaw closed on its $830 million deal to buy U.S. data center services provider ViaWest, which led to the formation of the Business Network Services division.
Business Network Services posted revenue of $127 million for the three-month period while Business Infrastructure Services revenue and operating income before amortization was $55 million and $21 million, respectively, for the quarter. Quarterly revenue in the media division was down to $307 million compared to $325 million last year.
“We are off to a solid start in fiscal 2015 with positive operating momentum across our businesses,” said Shaw CEO Brad Shaw. “The positive change in Consumer Video – Cable and Internet net growth year-over-year reflects the shift in the competitive dynamic in Western Canada. We continue to make decisions and launch initiatives driven by the imperative to bring quality, reliability, innovation and value to the customer and viewer experience. During the quarter we expanded our Wi-Fi hotspots to 55,000 and in November launched shomi, a subscription VOD service with the most popular movies and TV shows available OTT and on set top boxes.
“During the quarter we remained focused on disciplined and sustainable growth, customer retention and driving performance through continuous improvement. We are on track to achieve our fiscal 2015 financial guidance and our Board of Directors has approved an 8 percent increase in our annual dividend rate to $1.185 affirming our commitment to continue to return value to our shareholders.”
