Despite a drop in second quarter profit associated with expenses relating to restructuring efforts, Shaw Communications CEO Brad Shaw says the Calgary-based company is “on track” to deliver on its fiscal 2015 guidance of annual free cash flow of more than $650 million and EBITDA growth between 5-7%.
The communications giant on Tuesday reported earnings of $168 million for the three months ended Feb. 28, down from $224 million in the corresponding year-earlier period, when it benefited from a one-time gain on the sale of specialty TV channels.
Speaking during a conference call announcing Shaw’s second quarter earnings Tuesday, Shaw said the new regulatory environment created by decisions stemming from the CRTC’s “Let’s Talk TV” hearings “will not be without its challenges,” but said the company supports the federal regulator’s commitment to maximizing choice for Canadian consumers.
The company said the CRTC’s recent decision to eliminate the 30-day cancellation policy for service providers resulted in a one-time loss of approximately 35,000 subscribers in the quarter, as consumers found it easier to switch to a competitive service.
The company’s media segment, which includes the Global Television network and several specialty TV channels including HGTV and Food Network Canada, recorded operating income of $58 million for the quarter, down 4.9% from $61 million in 2014.
Media revenues for the quarter were $238 million, essentially flat from $239 million in the year-earlier period, with the company attributing the slight decline to “general market softness” combined with the impact of selling its stake in the French specialty services Historia and Series+ to Corus Entertainment earlier this year.
The earnings report came just days after the company’s media division announced a major restructuring that resulted in about 90 job losses. Barb Williams, Shaw’s executive vice-president and Shaw Media president, described the re-organization to analysts as a “tightening down” of the company’s traditional broadcast operations.
“We know we need to be even tighter on cost,” she said. “So part of the 90-plus exits was about just continuing to manage costs very, very tightly on our broadcast business.”
Williams said the changes are designed to help transform Shaw from a broadcaster to a media organization, and noted the company has created approximately 40 new positions comprised of a new “skillset” around new content, new platforms and new kinds of advertising products.
She described the reorganization as “partly battening down the hatches on the traditional business and partly repositioning to play more successfully in a wider media space.”
