CALGARY — Shaw Communications Inc. raised its monthly dividend by five per cent Thursday and reported a big profit increase, but the results fell shy of analyst expectations and the stock fell slightly.
The Calgary-based cable TV and broadcasting giant (TSX:SJR.B) said its first-quarter profits were $202 million, or 43 cents per share. Its dividend was raised by five cents on an annual basis to 97 cents per share.
Analysts polled by Thomson Reuters had on average expected earnings of 47 cents per share.
On the Toronto Stock Exchange, Shaw shares fell 28 cents at $20.20 on higher-than-normal volume of nearly 1.3 million shares at late midafternoon.
Shaw’s management team was called out Thursday at the company’s annual meeting by an investor who described himself as disappointed by the company’s stock performance.
“I’m just wondering why I should continue to be an investor,” Graham Berkhold told CEO Brad Shaw.
The shareholder of 12 years and customer of 20 said Shaw’s share price has fallen seven per cent over the past five years, while those of its competitors have risen.
“It’s a highly competitive environment we’re in,” Shaw responded, noting investments his company has made to improve its competitive edge against the likes of Vancouver-based Telus (TSX:T).
Shaw added his family — who control the company’s voting A-class shares — has skin in the game, too.
“In the last five years, for every after-tax dollar that JR, Jim and I have taken out of the company, we have doubled down on shares of Shaw,” he told reporters.
JR is executive chairman and Brad’s father. Jim, the CEO’s brother, retired as chief executive in 2010 and now serves as vice-chair.
“So there’s no doubt the family’s totally aligned with shareholder value and creating that, so I don’t see anywhere where the family’s out of sync with the shareholders,” said Brad Shaw.
Berkhold said Shaw’s reply was pretty much what he had expected, and that the meeting solidified his intention to sell his shares and move on.
“This is all about the Shaw family, which is fine. But it should be a private company,” he told reporters later.
“I can’t vote. They won’t let me vote here, even though it’s a public company. So the only way I can vote is to sell my shares and move my business.”
He said Shaw’s executive pay practices have also turned him off the company. Jim Shaw got a $25.5-million payout when he left the firm, and his brother was paid $15.85 million in 2011.
“These guys take so much money out the company and they can’t even move the needle up one per cent in five years,” said Berkhold.
Shaw told reporters the company has made its executive pay packages transparent, and has received outside counsel on what’s appropriate. He said Shaw has no intention of eliminating its dual-class share structure.
Shaw’s latest profits were more than 10 times the $17 million, or three cents per share, the Calgary company earned in the first quarter a year earlier.
In that period, the company booked charges related to new programming, digital transmission towers and other regulatory requirements linked to its $2 billion acquisition of Canwest Global Communications’ television business.
Filtering out non-operating items for both periods, Shaw said profits would have come in at $210 million compared to $164 million.
Quarterly revenues rose 19 per cent to $1.28 billion, roughly in line with analyst expectations and helped by price increases in its cable TV operations.
In a note to clients, Desjardins Securities analyst Maher Yaghi said Shaw had a weak quarter operationally, citing poorer than expected subscriber numbers in cable, Internet and telephone.
“Overall, we continue to recommend that investors stay on the sidelines for the time being,” Yaghi wrote.
“The losses in cable subs are accelerating, which is not a positive indicator. Shaw has been very aggressive on promotions, which could help subscriber numbers in the next quarter but could come with an associated decline in margins.”
“We will look for the operational trends to improve at Shaw before changing our view on the name,” he said.
On Wednesday, Shaw announced it filed an application with the Canadian Radio-television and Telecommunications Commission to launch a regional all-news speciality channel in British Columbia.
The station will bear the Global BC brand and provide local, national and international headlines 24-hours-a-day.
The station has yet to be named, but Shaw hopes to launch it by this summer.
Shaw gained control of the Global Television network when it bought the broadcasting assets of Canwest Global Communications in 2010. It acquired 11 conventional TV stations across the country and a group of specialty channels, including Showcase, MovieTime and HGTV, last year for $2 billion.
Last year, Shaw decided to retreat from its push into the cellphone business and write down the value of related assets.
The company announced on Sept. 1 it would drop its plan to use federally licensed radio spectrum to build a network for cellphones and other mobile devices.
Instead, it has opted to establish an extensive Wi-Fi network that will let customers use Shaw services outside the home — at coffee shops, shopping malls and other “hotspots.”
Shaw Communications is Western Canada’s biggest cable TV operator and also has a national satellite TV operations and specialty cable channels.