Quebecor says NHL deal adding subscribers but far from profitable

MONTREAL – Quebecor says its deal with Rogers Communications to broadcast NHL hockey games has been an early success even though the venture will take up to five years before it is profitable.

Since adding the games to its schedule this season, including the Montreal Canadiens matches on Saturday night, TVA Sports has increased its subscriber base to two million, up 25 per cent in a year.

“As a result, TVA Sports has quickly become a destination of choice for advertisers seeking to reach out to the French speaking sports fans,” Quebecor CEO Pierre Dion said Wednesday during a conference call after reporting 2014 results.

The Montreal-based company signed an $800 million deal in 2013 with Rogers (TSX:RCI.B) to broadcast NHL games over 12 years starting with the current season.

The Canadiens sit atop the NHL’s eastern conference and are tied with Nashville and Anaheim for the overall league lead, on track for a spot in the playoffs.

Dion said more subscribers will be drawn to the network as playoffs get underway in April. As the exclusive French-language playoff broadcaster, Quebecor sees TVA Sports attracting additional viewers to the 80 to 90 playoff games and 2016 World Cup soccer.

Until that subscriber base fills up however, the $65 million a year in programming costs will weigh on the earnings of Quebecor’s media business.

Overall, Quebecor (TSX:QBR.B) swung to a $59.5-million loss in the fourth quarter from a $300,000 profit a year earlier as it absorbed one-time charges and additional programming costs.

Excluding a series of one-time charges such as restructuring and the impairment of assets, its continuing operations earned $50.3 million of adjusted income in the three months ended Dec. 31, up 3.5 per cent from a year earlier. The results excluded its English-language daily newspapers and other businesses, mostly outside Quebec, that are being sold to Postmedia (TSX:PNC.B, TSX:PNC.A) for $316 million.

Quebecor said it expects a decision from the Competition Bureau on the sale in the next few weeks.

The adjusted profit amounted to 41 cents per basic share, up from 39 cents in the fourth quarter of 2013.

Overall revenue grew 2.9 per cent to $989.4 million.

However, Quebecor’s profit and revenue were below analyst estimates of 52 cents per share of earnings and $1.09 billion of revenue.

Dion said the decision to sell the English-language newspapers, 74 Quebec weeklies and abandon door-to-door distribution of community newspapers and flyers in Quebec helps Quebecor to gain credit from its telecommunications operations, including its expanding wireless network.

For the full year, Quebecor lost $30.1 million, down from a loss of $288.6 million in 2013. However, adjusted profits from continuing operations increased 14 per cent to $202.3 million or $1.64 per share, from $177.3 million or $1.43 per share a year earlier. Revenues were $3.72 billion.