MONTREAL – Cogeco Cable Inc’s net income fell to $44.9 million in the last quarter from $70.1 million a year earlier. Revenue increased by 7.7% to $356.7 million in the quarter up from $331 million, and for the year 11% to reach $1.41 billion. Cogeco blamed the lower profit on an increase in corporate taxes in Ontario and faster depreciation periods.
It attributed the revenue increases to the cable segment, the recent acquisition of Metromedia and the full year impact of its acquisition of the Quebec radio stations held by Corus.
Cogeco added that the drop in profit stemmed "primarily from the increase in income taxes from the change in the corporate income tax rate recently announced by the Ontario government and the increase of depreciation and amortization expense due to the reduction of the depreciation period of certain property, plant and equipment."
Operating income before depreciation and amortization increased by 7.3% to $163.6 million compared to the fourth quarter of fiscal 2011, and by 8.4% to $606.8 million compared to prior fiscal year.
Cable segment revenue increased by $93 million, or 7.9%, when compared to last year, primarily by PSU growth, rate increases as well as the acquisitions of MTO and QTI during the fourth quarter of fiscal 2011.
Revenue from the radio and advertising representation house activities improved by $46.1 million, or 55.8%, when compared to last year, mainly as a result of the recent acquisition of Metromedia and the Quebec radio stations acquisition.
Cable segment operating expenses increased by $49 million, or 7.8%, when compared to last year. The increase in operating expenses is mainly attributable to servicing additional PSU, the launch of new HD channels, additional programming costs, deployment and support costs related to the migration of television service customers from analogue to digital and the acquisitions of MTO and QTI.
Operating expenses from the radio, advertising representation house and head office activities grew by $42.8 million, or 55.2%, when compared to prior year. It said the increase in operating expenses is mainly attributable to the recent acquisition of Metromedia and its Quebec radio stations acquisition.
Fourth quarter net customer losses for television service customers continued to climb, with 5,758 (even after factoring in an additional 5,918 digital television service customers) when compared to 1,369 for the same period of the prior year. Cogeco said this was “due to the end of the school year for college and university students as well as the intense competition driving the telecommunications industry.”
Growth in telephony service customers also slowed, down to 7,035 compared to 13,363 for the same period last year, and the number of net additions to the HSI service stood at 5,682 compared to 7,746 the prior year.
"The 2012 fiscal year was indelibly marked by major integration and consolidation activities in all our sectors. Results of our focus on effectively responding to our customers constantly growing expectations. Despite the considerable challenges we face in a highly competitive industry, Cogeco Cable reached most of its objectives including PSU growth along with the continuous improvement of our networks and processes," said Louis Audet, President and Chief Executive Officer of COGECO Inc.
"Regarding radio, our media subsidiary, Cogeco Diffusion Inc., was very successful in consolidating its leadership position in the Quebec radio market. Based on the success of our talk radio stations in Montreal and Quebec City, Cogeco Diffusion extended this promising format to Trois-Rivieres, Gatineau and Sherbrooke in August, creating Quebec's largest private network of talk radio stations. I am pleased to report that the integration of our new transit system advertising representation house, Metromedia, is well on its way. With our new radio-transit advertising offering, Cogeco is well positioned to fulfill the needs of its advertising partners."
He explained that Cogeco’s primary focus in fiscal 2013 will be to continue to improve its processes, strengthen competitive positioning and integrate Atlantic, the “acquisition of which marks our entry in the United States.”
“We look forward to the closing of this transaction, so that Cogeco can put its expertise to work for Atlantic's 251,000 Television service customers and fully develops its great potential," added Audet.
