Quebecor’s soaring profit fuels NHL ambitions
Quebecor Inc.’s plan to revitalize its media division has little to do with newspapers and television stations and everything to do with the National Hockey League.
While the Montreal-based media, cable and telecommunication company’s plans to lure an NHL team back to Quebec City is hardly a secret, the extent of its ambitions were laid bare Thursday as the company released earnings that blew past analysts’ expectations.
While the day’s focus was on the blowout numbers, chief executive officer Pierre Karl Péladeau couldn’t help slipping in a mention of the company’s NHL ambitions in the press release. And while the past year may have been difficult – the company cut 400 jobs in its Sun Media division – much of the restructuring has been done to prepare the media division for an NHL bid.
“Quebecor Media now has all the tools it needs to pursue its goals, which are to manage a world-class multipurpose centre and to bring a National Hockey League team to Quebec City,” he said.
Earlier this month, the company reached a deal for the naming rights of a yet-to-be-built $400-million arena in the city. Terms of the deal vary depending on the eventual tenant, but Quebecor could pay as much as $65-million for the rights. It would like to see a setup similar to that enjoyed by Rogers Communications, which owns both the Toronto Blue Jays and the rights to broadcast the team’s games on its specialty sports channels.
For the city to get a team, the league would need to uproot a franchise from an existing city, likely Phoenix.
“It’s good for them to be involved in sports,” Desjardins Securities Inc. analyst Maher Yaghi said. “They can use hockey games as a tool to bring in more cable subscribers. The idea is to use the team as leverage for their new TV channel [TVA Sports] and use the team as a tool to get the ancillary benefits of being involved in hockey for your marketing and in your publications.”
The company’s swagger has everything to do with its strong cable and telecom business, whose gains helped push the company’s profit to $85.4-million, or $1.34 a share, compared to $46.6-million, or 72 cents, a year ago. Analysts expected a per-share profit of 89 cents.
It’s been a year of transformation at Quebecor’s media division. The job cuts at Sun Media are expected to save the company $20-million a year. It’s already spending some of that money, having announced plans to launch four new community weekly papers in Ontario to compete more directly against Torstar Corp.’s rival Metroland Media Group.
It also added non-traditional holdings to the media group. It bought an interest in the Quebec Major Junior Hockey League team the Blainville-Boisbriand Armada, whose games will be made available across the company’s media holdings. It also bought a digital agency in San Francisco that specializes in brand promotion, and a video game company that focuses on the “occasional player” using mobile devices.
The company acknowledged in a conference call that the media division hasn’t figured out a way to take advantage of this broadening empire, which includes 36 daily newspapers across the country, 198 more weekly papers and the recently launched Sun News Network and TVA Sports, which the company would like to see broadcasting NHL games out of Quebec City.
It hopes to solve the problem by refining its advertising approach, bringing in new executives tasked with assuring advertisers the company can service all of their needs across the country, in any medium.
“We are convinced that we now have in place industry leaders who combine the experience, capability and track record to significantly improve our sales performance, and successfully combat the declining industry trends with major wins on the national front where we have yet to get our fair share of the global pie,” Mr. Péladeau said.
And while the company’s telecom division posted near-record subscriber growth and saw its operating income increase by $50-million, the news division saw its operating income fall by $40-million over the past year to $150-million. The broadcast side saw operating income drop by $24-million to $50.5-million, largely due to startup costs for the Sun News Network and TVA Sports.
Over all, the company posted $1.15-billion in revenue in the fourth quarter, up $59.8-million from last year’s quarter. Adjusted income from continuing operations was $55.6-million, or 87 cents per share. That compares with $58.2-million, or 90 cents, in the fourth quarter of 2010.