By Jamie Sturgeon | Global News BC | Jan. 13TORONTO — Shaw Communications Inc. formally introduced Bradley Shaw, the second son of company founder JR as its new chief executive on Thursday, roughly two months after the abrupt departure of older sibling and former CEO Jim Shaw.
Serving as the highlight of the cable giant’s annual meeting in Calgary, the new chief executive inherits a company with an enviable market position as the incumbent television and broadband provider in Western Canada as well as the still-growing insurgent operator in the home-phone market, something Telus Corp. has had to endure for more than half a decade now.
But make no mistake, Mr. Shaw, 46, is taking on a business confronting its share of obstacles in the coming quarters, a period that will see its rivalry with its major telco competitor in the West only intensify and for the first time see Shaw play the role of legacy incumbent.
“We all recognize the challenges we face with respect to the competitive environment,” the new CEO said during a conference call. “But we’re excited about the year ahead and the future.”
To start, Shaw is facing stronger headwinds to growth in its core cable and Internet businesses as the market matures and as Telus, armed with a new TV service and broadband capabilities, takes aim at Shaw’s most important customer base.
The effects showed in the company’s latest quarter with Shaw losing a worse-than-expected 7,500 basic subscribers. More, Internet and digital TV customer additions were also below expectations.
“Cable results were far from stellar,” Dvai Ghose, analyst at Canaccord Genuity said.
Shaw posted a net profit of $20 million, or 4 cents a share, on revenue of $1.08 billion. The Calgary-based company had a profit of 26 cents a share a year ago on revenue of $905.6 million.
The company’s first-quarter performance was buoyed by the new addition of Shaw Media, the extensive broadcast assets Shaw acquired for $2-billion from Canwest Global Communications Corp., now winding its operations up.
One-time charges including the $139-million regulatory “benefits package” Shaw paid to the CRTC as well as a $58-million hit on integration expenses bit deeply into profits for the quarter. But overall revenues and earnings excluding those items were better than expected owing to the addition of the Canwest assets.
Shaw will be looking to its media unit to drive earnings as the economy recovers, with early financial indicators suggesting the business is rebounding from the recession comfortably — revenues, cash flows and EBITDA all came in well ahead of Bay Street expectations.
The company is also eyeing the division to drive subscriber revenues through “creative ways to enhance and build new revenues streams,” Mr. Shaw said, a nod toward using Shaw Media content in a variety methods across Internet, cable and wireless products. Such a vertical integration model is being pursued by other carriers, such as BCE Inc.
The Canwest deal however dragged on through much of 2010, leading to suggestions the firm let its plans for a wireless launch slip from focus, a sentiment not aided by the departure of wireless head Laurence Cooke last week.
Several analysts suggest the deployment of a mobile business should be Shaw’s main bulwark against seeing competitive erosion in its main lines of business.
Although Shaw executives said they were “excited” about the opportunity Thursday, the company will push back its launch date to early 2012, and only on a very limited geography.
“We believe its best to take a disciplined approach,” Mr. Shaw said.
In the interim, the firm will focus energy on its media integration effort as well as customer additions in other areas, such as small- to medium-sized business telephony.
“At a high level, it’s something we’ve probably been lagging behind in,” Mr. Shaw said. “It’s a real growth opportunity for us, there’s good margins and we think its the next focus for us for growth.”
Financial Post
jasturgeon@nationalpost.com
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