Rogers 2003 Annual Report Download - page 56

2003 Annual Report Rogers Communications Inc.
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Total operating profit margin:
($ millions) 2003 2002
Revenue $ 855.0 $ 810.8
Operating profit $ 106.7 $ 87.6
Operating profit margin – 2003 $106.7 divided by $855.0 = 12.5%
Operating profit margin – 2002 $87.6 divided by $810.8 = 10.8%
Media Operating Highlights and Significant Developments in 2003
• Revenue increased 5.5% and operating profit increased 21.8% compared to 2002. Media’s operating profit margin rose
by 170 basis points year-over-year to 12.5% as a result of these increases.
• Broadcasting successfully completed the reformatting of several of its radio stations during 2003 which has resulted in
significant ratings boosts in several of its key markets.
• Publishing announced it is preparing to launch Canada’s first paid circulation shopping magazine for young women
beginning in the summer of 2004.
• Media announced an investment by Broadcasting in 50% of CTV’s mobile production and distribution business, Dome
Productions. The partnership which will accelerate the production and distribution of HDTV content in Canada. The
transaction was successfully completed on January 2, 2004.
Media Revenue Overview
Total revenue for Media was $855.0 million in 2003, an increase of $44.2 million, or 5.5%, from $810.8 million in 2002.
Of the $44.2 million revenue growth, $26.7 million was generated by Television, Radio contributed $11.0 million of the
growth, and The Shopping Channel contributed $8.3 million, offset by a $1.7 million reduction in revenue at Publishing.
The growth in Television revenue was directly attributable to improved results at Rogers Sportsnet, combined with the
impact of the launch of Media’s second multicultural television operation, OMNI.2, late in 2002. Across all of Media’s divi-
sions combined, approximately 53.4% of the total 2003 revenue was advertising based, as opposed to subscription or
transaction based.
Media Operating Expense and Operating Profit Overview
(In millions of dollars)
Years Ended December 31, 2003 2002 % Chg
Publishing
Sales and marketing expenses $ 75.4 $ 84.9 (11.2)
Operating, general and administrative expenses 185.1 179.0 3.4
Total Publishing 260.5 263.9 (1.3)
Radio
Sales and marketing expenses 53.4 47.2 13.1
Operating, general and administrative expenses 85.1 77.0 10.5
Total Radio 138.5 124.2 11.5
Television
Sales and marketing expenses 14.2 13.8 2.9
Operating, general and administrative expenses 136.1 129.8 4.9
Total Television 150.3 143.6 4.7
The Shopping Channel
Cost of Sales 131.5 127.6 3.1
Sales and marketing expenses 32.6 30.6 6.5
Operating, general and administrative expenses 27.2 25.6 6.3
Total Shopping Channel 191.3 183.8 4.1
Corporate items, eliminations and other 7.7 7.7 –
Total operating expenses $ 748.3 $ 723.2 3.5
Total Media operating expenses were $748.3 million, up 3.5% or $25.1 million over 2002. This increase was driven in its
entirety by increased sales and marketing expenses across all the Media companies as efforts continued to focus on building
brand recognition and promoting the properties in the target demographics of each company’s respective marketplace.
Total operating profit was $106.7 million in 2003, resulting in a year-over-year increase of 21.8%, or $19.1 million,
which was primarily attributable to the results at Television. Details of operating expenses of each of the Media divisions
are discussed below.
Management’s Discussion and Analysis