Rogers Communications Inc. RCI-B-T +1.76%increase has slightly lowered its revenue expectations for 2024, blaming weaker performance in its media business during the final months of the year.
The telecom company now expects its service revenue will grow 7 per cent this year, down from initial guidance of 8 to 10 per cent, it said in a news release Friday morning.
The guidance reduction reflects a difficult year for the sector, with mounting competition, high debt levels and slowing growth putting pressure on company valuations. Shares of Rogers on the Toronto Stock Exchange finished 2024 down 29 per cent.
Rogers’s media business, which includes sports, television and radio programming, accounts for about 10 per cent of the company’s overall revenue, which was up 11 per cent in the third quarter. Higher revenues from subscribers and the Toronto Blue Jays were offset by costs related to renovations at the Rogers Centre stadium in Toronto.
The guidance drop likely represents a reduction of $50-million to $75-million in media revenue, translating to generally flat growth year-over-year, said Royal Bank of Canada analyst Drew McReynolds. Meanwhile, the company’s other business lines – wireless and cable – held steady.
“Bigger picture, we continue to believe improved wireless and cable pricing discipline by Rogers and all operators will be the key to delivering positive revenue growth in 2025,” Mr. McReynolds said in a Friday morning note to investors.
Rogers has invested in building up its digital television offerings as Canadians increasingly turn to streaming platforms for their content.
Last year, the company signed deals with Warner Bros. to license television content and with U.S. cable giant Comcast Corp. to run its television programming aggregator on Rogers devices. Comcast itself said in November that it planned to spin off most of its cable television networks into a separate publicly traded company, in what analysts saw as a reaction to the long-term pressures of cord-cutting.
Rogers also doubled down on sports content last year, entering a $4.7-billion agreement to buy BCE Inc.’s 37.5-per-cent stake in Maple Leaf Sports & Entertainment and become the company’s majority shareholder.
In its last quarter, BCE BCE-T posted a $2.1-billion writedown of its television and radio properties, which it said reflected a further decline in advertising demand. Speaking to analysts, chief executive officer Mirko Bibic said the company was diligently managing declining segments and instead investing in growth markets, such as fibre internet in the U.S. Last February, Bell sold 45 radio stations and made television newscast cuts as part of a company-wide restructuring that slashed a total of 4,800 jobs.
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“You’ve got to align your cost structure in those segments that are declining to align the cost to the revenues,” Mr. Bibic said. “If some assets are going to perpetually decline, we might shed those lines of business.”
While retail internet is expected to remain a revenue driver for all telecom companies, Tim Casey, an analyst for the Bank of Montreal, expects that growth rate to decline. Internet revenues have grown about 7 per cent annually over past two decades, he said in a December note to investors, but he expects that to fall to 5 per cent in the coming years.
In October, RBC’s Mr. McReynolds told investors that television cord-cutting remains a meaningful drag on wireline revenue for the sector. He estimated that Rogers’s satellite television in particular – reported under the company’s cable division – likely constituted the majority of the company’s 2-per-cent cable revenue decline in its second quarter last year.