NEW YORK – Rogers Communications founder and CEO Ted Rogers told a pair of investor gatherings in New York this week what he thought of analog cable, how Internet usage metering is coming in 2007 and what succession at the top of his company could look like.
Rogers overviewed his company and its significant successes in 2006 for attendees at the UBS Global Media & Communications Conference and Credit Suisse Media & Telecom Week, both held Tuesday in New York.
Eight billion dollars of revenue and $2.5 billion worth of EBITDA, 10,000 new local phone customers per week, ongoing wireless growth – it’s a compelling quad-play story for U.S. investors because no American company has a similar collection of assets, especially when media is counted in. It’s like what a combination "of Comcast and Cingular would look like," in the U.S., said Rogers.
The media side and the baseball team has its serious advantages, too, added the CEO. "Sports loses money but it’s a tremendous brand-building opportunity." Of the Rogers Centre, which he bought for $25 million: "We would have paid that much for the signage for 10 years," he said.
But, when asked about cable bandwidth and the ability to add high definition channels to its cable lineups, Rogers said the company has more than enough room, especially since it plans to remove tier III from analog in just over two years.
"We plan to take tier III off in the second quarter of 2009," he said. "We must have at least 85% of that tier with one or more digital boxes. Our target is 90 to 95%. That would free up 16 analog channels – at 6 MHz each – and that would handle a great many high definition channels, which is the future of our industry."
That doesn’t mean, however, that basic cable is going to go away. "Analog is a great plus for the cable industry," said Rogers, pointing to the fact it’s difficult to find room in a kitchen for a set top box.
"My guess is we will gradually remove the tiers from analog and we will end up with a strong basic service on analog and all of the extra tiering will be done on digital… We do not have a vision of taking all of the analog band and converting it to digital.
"What I intend to do is take those services… transmitted in digital, and I’ll convert it back to analog and leave it on our analog service – and I think that will be very beneficial," explained Rogers.
Rogers and company CFO Bill Linton also addressed a nearer-term move which will see the company address Internet bandwidth consumption in 2007.
"We’ll be introducing an 18-meg service and what’s important about that is it’s faster than the other guy – but we are introducing a form of, or the beginning of, usage-based billing," said Linton. "So, we will be charging for high users over and above that, and that’s a good trend for cable Internet providers."
Internet usage is increases dramatically every year, added Linton, and annually the company spends tens of millions on boosting web performance for its customers, so it wants heavy users to pay for what they use, in comparison to the rest of the customer base. "We would like to get to some sort of metered billing basis somewhere down the road. So what are the interim steps? Step one was to take our service and segregate it into four speeds (from light to extreme) and then the second step was to charge usage over and above that amount of speed," he explained.
"Will we get a backlash from the customers? I don’t believe so because it’s pretty easy to figure out that there are a few people who use an inordinate amount of Internet bandwidth and it’s only reasonable that they should pay for it as opposed to everyone having to pay for it."
2007 will also be the year that Rogers makes a concerted push to sign up as many of the million or so households within its cable footprint which take no services at all from the communications giant, added Linton.
Finally, when asked about CEO succession, Rogers had this to say, and we’re paraphrasing: "I’m not going anywhere."
However, if he did retire? "I don’t think… that a member of the family will become CEO," he said. Strategic planning VP Melinda and cable president Edward – both in their 30s – are the Rogers children actively working for the company.
Ted Rogers’ open-ended contract with the board of directors requires one or the other to give six months notice before a change can be made, he said, adding later, "I’d like to be around for a bit longer."
