Shaw Communications execs say growth plans unaffected by Corus dividend cut

TORONTO — Shaw Communications Inc. reported a third-quarter loss Thursday, after booking a nearly $300-million impairment charge related to its stake in Corus Entertainment Inc., but its senior executives said Shaw’s growth plans and dividends won’t be affected by troubles at Corus.

The Calgary-based cable, internet and wireless company, which owns about 38 per cent of Corus equity, said it hasn’t depended on the $90 million a year in dividends it had been receiving from the Toronto-based media company.

Corus announced Wednesday that it will reduce its dividends by about 80 per cent for the 2019 financial year starting Sept. 1, and divert the savings to debt reduction.

The company also said it was writing down the value of its television assets by $1 billion amid uncertain future earnings due to intense competition for advertising dollars and viewers.

The announcements pushed down the Corus share price by about 27 per cent over two days, setting record lows on Wednesday and Thursday. The stock closed at $4.63 on Thursday, down 10 per cent from the previous close.

The decline in Shaw stock was less dramatic but the shares were down 98 cents, or about 3.5 per cent, at $26.76 at the close on Thursday — about the mid point of its 52-week price range — after the company announced weaker-than-expected earnings that included a $284-million impairment charge on the Corus assets.

Shaw executives declined to comment Thursday on news reports that they may be considering the sale of Corus shares but said the reduction in dividends from Corus won’t affect their communications business.

Cash from the sale of Shaw Media to Corus largely funded its purchase of Wind Mobile, now called Freedom Mobile, which is a key component of the company’s strategic growth and investment plans.

The Freedom Mobile wireless division added 54,000 postpaid subscribers — ahead of analyst estimates — and ended the quarter with a total of 1.32 million pre-paid and post-paid wireless subscribers as of May 31.

Chief executive Brad Shaw said the company is moving ahead with investments in fifth-generation wireless technology — an industry trend that’s expected to enable faster wireless networks capable of powering emerging technologies such as self-driving cars.

Shaw said the company looks forward to participating in the consultation process set up by the federal government, which is preparing to auction wireless spectrum for 5G networks in coming years, and said the company has been taking steps to ensure its networks will be ready.

“In May, we completed some initial 5G technical trials, and it’s clear that this new technology will transform the industry through faster wireless speeds that will enable future technologies. Both wireline infrastructure and spectrum allocation will play a critical role in 5G deployment.”

The company generated $1.3 billion of revenue in the quarter ended May 31, up from $1.22 billion a year earlier, with the growth coming from its wireless, residential internet and business wireline products and services.

Shaw’s wireless revenue for the quarter was $237 million, up 54 per cent from a year earlier, due to a combination of equipment sales and service revenue.

Revenue from Shaw’s business wireline unit increased six per cent to $141 million.

But Shaw’s consumer wireline business — which includes Western Canada’s biggest cable TV network — was down slightly at $923 million, as declines in video and phone services offset a gain in internet.

Shaw executives said they weren’t satisfied with wireline sales performance, attributing some softness to price competition from its major rival, which is Telus Corp., and some to seasonal weakness.

“Even after considering these factors, we’re not pleased with the overall execution within our wireline business,” Brad Shaw said.

Shaw reported a loss of $91 million, or 18 cents per share, for the third quarter ended May 31. That contrasted with a year-earlier profit of $133 million or 27 cents per share and analysts’ expectations for net income of 36 cents per share, according the Thomson Reuters Eikon.

Shaw Communications acquired nearly 71.4 million Corus non-voting shares, representing 37 per cent of the Toronto company’s equity, when it sold Shaw Media, but the number had grown to 80.6 million shares or 38 per cent of the total as of May 31 as a result of investing dividends in additional Corus stock.

The founding Shaw family controls both companies through class A voting shares but Corus had been completely separate from Shaw Communications from late 1999 until early 2016, when the Shaw Media deal closed.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Trudeau cancels Caribbean trip amid pipeline protests

OTTAWA — Prime Minister Justin Trudeau is cancelling his planned trip to… Continue reading

Town of Ponoka facing lawsuit from pair of local residents

Ponoka town council members and administration have been served with a lawsuit… Continue reading

Trudeau confers with cabinet ministers as rail blockades continue

The Trudeau government has been criticized for not doing more to end the blockades

Minister reports ‘modest progress’ after blockade talks with First Nation

TYENDINAGA, Ont. — Hours of talks between the federal government and representatives… Continue reading

Red Deer County investing in fibre optics

County investing $7 million over two years to improve Internet connections

Fashion Fridays: Apple body types: What you need to know

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Your community calendar

Feb. 6 A Perogie Supper is being held Thursday, Feb. 6 from… Continue reading

Woman loses 50 pairs of shoes after boyfriend accidentally donates them to thrift store

Cassandra Converse can’t wait to go shoe shopping. Last month, Converse’s boyfriend… Continue reading

RDC Queens fall in double OT to MacEwan University Griffins

Griffins 4 Queens 3 (2OT) The RDC Queens managed to salvage a… Continue reading

Trump takes Daytona 500 warmup lap in presidential limousine

DAYTONA BEACH, Fla. — President Donald Trump gave an election-year embrace to… Continue reading

Canada expected to support heavy fuel ban in Arctic despite costs to northerners

The federal government is expected to support international measures that would reduce… Continue reading

Nurses’ unions warn national standards for coronavirus protection too low

OTTAWA — The Canadian Federation of Nurses Unions is warning that the… Continue reading

‘Sonic’ speeds to $57M debut; ‘Parasite’ sees big Oscar bump

NEW YORK — The redesigned “Sonic the Hedgehog” showed plenty of teeth… Continue reading

Justin Timberlake on ‘trauma’ of being pelted with bottles at SARS concert

TORONTO — Justin Timberlake is still haunted by being pelted with what… Continue reading

Most Read