MONTREAL – Cogeco Inc. doesn’t think it can expand its territory through acquiring other Canadian cable companies, and it doesn’t want to start building its network out to compete directly with its neighbours, so its strategy for stopping its losses in TV subscribers in Canada comes down to one word: TiVo.
The company started offering the advanced set-top box to its Atlantic Broadband customers in the United States last year, and in Ontario in November, and will start offering it in Quebec starting this spring. The TiVo box is a whole-home DVR capable of recording six channels at once, streaming recorded programming to iPhones and iPads, and accessing online services like YouTube and Netflix.
“We’re very enthusiastic about our TiVo service,” CEO Louis Audet told reporters before the company’s annual shareholders meeting in Montreal on Wednesday. “We introduced TiVo to reduce the erosion (of television customers) and if possible, reverse it.”
Quarterly results released Tuesday show a continuing loss of television service subscribers of about one per cent in the quarter, though it was offset by larger gains in high-speed Internet subscribers which helped push overall profits higher. “Television service customer net losses are mainly due to the promotional offers of competitors for the video service, service category maturity and the expansion of IPTV footprint of competitors,” the report says, in reference to offerings of Bell and Telus.
Launching TiVo on Atlantic Broadband has cut the net loss of TV subscribers in half, Audet said. It’s still too early to tell if the same thing is happening in Canada. But Audet said he wants to increase its penetration rate — right now it passes 1.6 million homes in Canada, and about 800,000 are Cogeco subscribers. “Our job is to knock on those doors and convince them to change,” he said.
Where the company is looking to grow its footprint is in the U.S., potentially with more acquisitions, though “assuring that we don’t bite off more than we can chew,” Audet said. Cogeco’s foreign acquisition history has been mixed, and some investors are nervous after the acquisition of Portugal’s Cabovisao years ago cost hundreds of millions of dollars.
Audet says Cogeco is looking for companies that are “well managed, have networks in good condition, and that we can see that they can operate in more efficient ways.”
In Cogeco’s other segments, there are no immediate indications of new acquisitions. “We’d like to give ourselves some quarters of organic growth before looking at other acquisitions,” Audet said about the enterprise segment, which provides data transfer and hosting services in Montreal and Toronto.
On the media side, little has changed recently, though Cogeco’s Rythme FM radio network in Quebec has grown thanks to new affiliates in Abitibi and Saguenay owned by RNC Media and Attraction Radio, respectively. The network of seven stations is now in Quebec’s largest markets except Quebec City, where Cogeco sold its Rythme FM station as a condition of buying Corus Quebec in 2011.
Audet also said he was surprised and disappointed by last month’s decision by Quebec’s consumer protection bureau to go after the company over illegal terms of its contract.
“It’s not in line with our usual behaviour,” he said. “We consider it a duty to be a good corporate citizen, to have open and frank discussions with our clients. But I don’t want to contradict the (bureau). If we made mistakes, we’ll correct them.”
Audet said the contracts are being changed to conform with the bureau’s demands.
The shareholders meetings of Cogeco and subsidiary Cogeco Cable were uneventful, except for motions presented by MEDAC, a non-profit shareholders’ rights organization. It warned about executive pay that’s 49 times the average salary of Cogeco employees (but said it supported the executive compensation plan because that’s still much more equitable than other companies in the same industry).
It also warned about excessively high voting power of multiple-vote shares, and proposed motions to call for more directors with experience in environmental issues and social responsibility, and for better disclosure of directors’ competencies. Its motions were voted down at the meeting.
Coordinator Willie Gagnon said he was annoyed that “they refused things that were easy to do. That shocks me more than refusing things that are hard to do.”
