CALGARY – The sale of French-language channels Historia and Séries+ to its corporate cousin Corus earlier this year helped to push up second quarter net income at Shaw Communications.
The company reported net income of $222 million for the quarter ended February 28, 2014, up from $182 million in the same period last year. The current period benefitted from a $49 million gain realized on the sale of the two channels, as well as lower interest expense and amortization, the total of which was partially offset by higher income taxes.
Consolidated revenue for the quarter of $1.27 billion increased 1.8% from $1.25 billion over last year, while total operating income before amortization of $528 million declined 1.9% year-over-year. Free cash flow for the three month period was $158 million, down from $161 million last year.
Revenue in the Shaw’s cable division of $839 million for the quarter improved 3.1% from $814 million. Operating income before amortization of $398 million increased 1.3% over the same quarter last year, and reflected a full quarter impact of the acquisition of Envision and disposition of Mountain Cable. The revenue growth, primarily driven by pricing adjustments and lower promotional activity, was partially reduced by various expense increases including employee related amounts and programming.
During the quarter, Shaw lost 20,758 video subscribers to end the quarter with 1,989,870. It added 12,767 new Internet customers to total 1,906,019, and increased Digital Phone lines by 8,075 to reach 1,369,386.
Satellite revenue increased 5.3% to $220 million from $209 million last year, while operating income before amortization dipped 5.5% to $69 million versus $73 million year-over-year. Revenue related growth, primarily due to pricing adjustments, was more than offset by higher expenses including operating costs related to the new Anik G1 satellite and programming expenses.
Shaw Direct lost 1,405 subscribers to end the quarter with 892,837 DTH customers.
Over at Shaw Media, revenue and operating income before amortization in the quarter of $239 million and $61 million, respectively, dropped 4% from $249 million and 15.3% from $72 million, compared to the same period last year. Media's revenue and operating income before amortization was down primarily due to reduced advertising revenues on Global, driven by the Sochi Winter Olympics, and partially offset by increased subscriber revenues on its Specialty services, as well as the favorable impact of a retroactive adjustment in the first quarter of the year related to distant signal retransmission royalties.
Within all segments, the comparable quarter benefitted from a one-time adjustment related to certain broadcast license fees totaling approximately $14 million. Excluding this adjustment, consolidated operating income before amortization improved 1% in the quarter.
CEO Brad Shaw said the company is focused on disciplined and sustainable growth, customer retention, and driving performance through continuous improvement.
"Our focus on leading technology, customer service and value leadership continued throughout the quarter”, he said in a statement. “We continue to leverage our leading network infrastructure and high quality content, driving profitability and long term growth."
Shaw also reiterated its financial outlook for fiscal 2014.
