CALGARY – Shaw Communications says its placing a "significant focus" on customer service and pricing as it reported that net income from continuing operations fell 20% to $133 million in the fourth quarter, from $167 million a year earlier. Revenue rose about 3% to $1.21 billion for the quarter compared to $1.81 billion year-over-year.
"We have applied more rigour and discipline to our pricing, customer acquisition strategies and marketing activities," said CEO Brad Shaw during a conference call.
The cable and media company said the numbers were due in part by higher amortization and income tax expenses, even as operating results improved. Total operating income before amortization for the quarter and annual period of $501 million and $2.13 billion, respectively, each improved 4% over the comparable periods. The improved operating income before amortization was more than offset by increased capital investment, CRTC benefit funding, and cash taxes explained Shaw.
"Our financial performance in the quarter was solid as we balanced subscriber growth and profitability. The competitive environment continues to be intense and we remain focused on strengthening our core business through technology, customer service and value leadership," added Shaw.
"We continue to leverage our advanced network rolling out a number of new products and services this year bringing innovation, choice and value to our customers. Our investments in technology include the ongoing expansion of the WiFi network footprint, our Digital Network Upgrade (DNU), broader offers of leading internet speeds, and the first phase of our TV Everywhere service, with the launches of Movie Central Go and NFL Sunday Ticket Go. A significant focus was also improved customer service with investment in our Canadian call centres, additional staffing, and customer care tool enhancements to ensure an exceptional customer experience."
The prior annual period included a charge of $139 million for the discounted value of the CRTC benefit obligation related to the acquisition of Shaw Media, as well as business acquisition, integration and restructuring expenses of $91 million. Shaw added that excluding the non-operating items, net income from continuing operations for the three and twelve month periods ended August 31, 2012 would have been $153 million and $760 million, respectively, compared to $153 million and $717 million in the same periods last year.
Revenue in the cable division of $803 million and $3.19 billion for the current three and twelve month periods increased 2% and 3%, respectively, over the comparable periods. Operating income before amortization for the quarter of $396 million was comparable to last year. The annual operating income before amortization of $1.5 billion was down marginally from $1.51 billion in the prior year. Quarterly financial results improved compared to the second and third quarters with margins increasing from 44% to 47% to 49%, respectively. Shaw attributed this mainly to improved revenues combined with operational cost controls and disciplined promotional activity.
Satellite revenue of $213 million and $844 million for the three and twelve month periods, respectively, was up 3% and 2%, respectively, compared to the same periods last year. Operating income before amortization for the current quarter and annual period of $77 million and $293 million improved 5% and 1%, respectively.
Revenue in the Media division was up 3% for the quarter to $217 million and operating income before amortization was $28 million compared to $12 million last year. Media revenues for the full twelve month period were down 2% and operating income before amortization was up 2%. The revenue decline said Shaw was due to lower conventional advertising revenues while the improvement in operating income before amortization was due to lower programming costs year-over-year.
"As we enter the new fiscal year we expect growth in consolidated revenue and operating income before amortization. Capital investment is expected to marginally decline from 2012 spend levels as we continue to enhance our network, provide innovative product offerings, and launch the new Anik G1 satellite. Combined with higher cash taxes, we expect free cash flow to be comparable to fiscal 2012,” explained Shaw.
Shaw concluded that "The business is dynamic and continually evolving. Our growth oriented asset mix, solid investment grade balance sheet and committed employee base position us well to meet the challenges and leverage the opportunities in the year ahead delivering value to all of our stakeholders."
