Cogeco radio feels COVID hit, but overall revenues increase

In its first quarterly report to include the impact of the COVID-19 pandemic, Cogeco Inc.’s radio revenues fell by one-third, though its overall revenue beat analyst expectations. In the results released Thursday, revenues were up to $626 million, a 1.4 per cent increase on the same quarter a year before. RBC analyst Drew McReynolds and Canaccord Genuity analyst Aravinda Galappatthige both said the revenue figure beat expectations, with Galappatthige noting the quarter’s results were “particularly impressive given the uncertainties around COVID-19.” The quarter, which ended May 31, was the first to include the full impact of the pandemic. Profit was down 47.3 per cent to $97.5 million, which the company said was mainly due to the increase in profit it saw in the same quarter a year earlier with the sale of its Peer 1 data centre division. Cogeco’s media results were hit significantly by COVID-19, with a 33 per cent fall in radio revenues, the “bulk” of which, the company noted, comes from the retail industry. “As most retail stores in Quebec were forced to close temporarily by government decree during the months of March, April and May, they significantly reduced or completely stopped their media spending,” Cogeco said in its quarterly report. The 33 per cent decline it disclosed was lower than the 52 per cent dive Corus Entertainment Inc. reported in its radio division last month. Canada’s other large broadcasters are scheduled to report their first quarterly results reflecting the pandemic in the coming weeks. Overall, Cogeco’s telecom division was only “modestly” affected by the pandemic, CEO Phillipe Jetté said on a call with analysts. “We experienced strong demand for our internet product and a lower level of customer activations and disconnections, which contributed to lower operating costs,” he said. “On a positive note, we are seeing modestly improving trends in the radio sector with the gradual easing of confinement measures, helping the retail sector and the economy.” Jetté noted the company expects to see further declines in ad revenue in the next quarter, given that lockdown measures were only gradually eased in Montreal in June. “However, we are currently seeing modestly improving trends in our advance bookings,” he said. Cogeco’s telecom division reported $605.8 million in revenue, up 3.1 per cent from a year earlier. That was driven by its U.S. segment, where revenues were up 9.1 per cent to $285.3 million, while its Canadian telecom operations were down by 1.6 per cent, to $320.5 million. The company added 17,631 internet customers in the quarter, up from the 14,833 it added in the same quarter last year. It lost fewer TV customers, at 10,924 compared to 11,369. Cogeco ended the quarter with 1.8 million Canadian subscribers — 803,073 Internet customers and 627,608 TV subscribers, and 937,272 American customers. Galappatthige said in a Thursday afternoon note that “with increased broadband usage and the need for capacity in the current environment, there is a genuine opportunity for Cogeco Connexion to more substantially exploit its meaningful speed advantage in its territories,” referring to areas where the alternative provider offers only DSL connections. The financial results also showed Cogeco is paying a preliminary price of $16 million for Quebec telecom iTéract Inc., the acquisition of which it announced in May. The company reinstated financial guidelines for the last quarter of this fiscal year, but not for 2021. Executives also gave an update on the reinstatement of overage fees, which were suspended when the pandemic first began, saying the company was bringing them back gradually and doing so differently in various regions. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Adam Langenberg at alangenberg@thewirereport.ca

Cogeco radio feels COVID hit, but overall revenues increase

News | July 16, 2020

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Cogeco radio feels COVID hit, but overall revenues increase

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