MONTREAL – While its competitors in the telecom industry are becoming more vertically integrated, Cogeco president and CEO Louis Audet says his company is comfortable in its position as a mid-sized telecom and has no plans to copy companies like Bell and Rogers by acquiring TV specialty channels or building a wireless network.
Audet has a reason to be confident. Cogeco's first-quarter earnings, released Thursday morning before the annual shareholders' meetings of the company and subsidiary Cogeco Cable, shows its profit up 20% to $47.9 million from $39.8 million for the first quarter of last year, mainly due to a 13% increase in revenue.
The 2011 fiscal year was one of acquisitions, including Corus Entertainment's 11 Quebec radio stations (it had to sell or shut down three stations to get CRTC approval for the deal), the Metromedia CMR Plus transit advertising agency, and MTO Telecom and Quiettouch, which provide communications services for large businesses.
The acquisition of MTO gives Cogeco access to a 1,500-kilometre fibre-optic network that reaches to within 500 metres of office buildings across Montreal and connects it with Toronto. "We're now an important player," Audet said. The company, through Cogeco Business Solutions, has an extensive fibre optic network through Southern Ontario to Southern Quebec.
But he is categorical about the possibility of Cogeco Cable expanding into the Montreal market to compete on voice, video and data with Videotron. "Absolutely not," he said. Rather, he specified, "we're here to serve a clientele that is generally neglected by the big companies" and Cogeco has no interest in competing with the powerful Quebecor-owned incumbent in residential service.
Audet also said the company has no plans to set up a wireless telephone service, respecting a decision it made two years ago not to get into the market. Though, when pressed, he allowed that "it's a decision that could change" in the long term.
Audet was much less categorical about the future of Cabovisão, its Portuguese cable subsidiary, whose struggles (and a $225-million writedown in the third quarter) have weighed down Cogeco's otherwise very positive finances. Cabovisão showed a slight loss in subscriptions over the previous quarter, and its sale has long been rumoured. "We don't announce anything in advance," Audet said about the possibility of a sale. But he also said there's "a certain stabilization" in the Portuguese subsidiary, and its loss of customers has slowed.
Asked about the company's purchase of Metromedia CMR Plus, Audet pointed to the advantages such a company provides for existing advertising clients in radio. "We're searching for opportunities that work with our culture, our abilities," Audet said.
In radio, where the acquisition of the former Corus Quebec stations has resulted in an increase in revenue from $19.4 million to $30.6 million, Audet highlighted the latest ratings report showing that its news-talk station CHMP 98.5FM is the most listened-to station in Montreal and FM93 becoming the most listened-to station in Quebec City. He also said he's not worried by the prospect of new players in the francophone talk radio market in Montreal. Competitor RNC Media has applied to the CRTC to alter the license of CKLX 91.9FM to turn it from a jazz music station into a spoken word one, allowing it to use a format similar to its controversial Radio X stations in Quebec City and Saguenay.
Audet said he respects RNC and Cogeco has no plans to oppose the application to the CRTC.
CHMP will also face competition from a new AM news-talk station by Tietolman Tétrault Pancholy Media, set to launch next fall. That company beat out Cogeco for one of two vacant AM clear channels in Montreal. Cogeco had applied for an English-language all-traffic station, funded mainly by the Quebec government. It currently runs a French-language all-traffic station at 730 AM.
Cogeco Diffusion vice-president Richard Lachance, who manages the company's radio stations, said it's "always worrisome" when new competitors enter the market, but "competition or not, our goal is to offer the best content." Competition, he said, "forces us to be the best."
Lachance also confirmed to Cartt.ca that Cogeco will meet with the Quebec government next week to discuss new plans for an Anglophone all-traffic station, possibly using multiple frequencies to cover Anglophone areas of Montreal. If the plan is approved by the government, which would fund the station to the tune of $1.5 million a year, Cogeco would re-apply to the CRTC. Lachance said the goal is to have a station running by the fall of 2012.
