Rogers 2007 Annual Report Download - page 24

20 ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OUR STRATEGY
Our business objective is to maximize subscribers, revenue, operating
profit and return on invested capital by enhancing our position as
one of Canada’s leading diversified communications and media
companies. Our strategy is to be the preferred provider of commu-
nications, entertainment and information services to Canadians.
We seek to take advantage of opportunities to leverage our
networks, infrastructure, sales channels, brand and marketing
resources across the Rogers group of companies by implementing
cross-selling and joint sales distribution initiatives as well as cost-
reduction initiatives through infrastructure sharing, to create value
for our customers and shareholders.
We help to identify and facilitate opportunities for Wireless,
Cable and Media to create bundled product and service offerings
at attractive prices, in addition to implementing cross-marketing
and cross-promotion of products and services to increase sales and
enhance subscriber loyalty. We also work to identify and imple-
ment areas of opportunity for our businesses that will enhance
operating efficiencies by sharing infrastructure, corporate services
and sales distribution channels. We continue to develop brand
awareness and promote the “Rogers” brand as a symbol of quality,
innovation and value and of a diversified Canadian media and com-
munications company.
ACQUISITIONS
Acquisition of OK Radio
On January 1, 2007, we acquired five Alberta radio stations for cash
consideration of $43 million including acquisition costs. The acquisi-
tion was accounted for using the purchase method, with $13 million
allocated to net tangible assets acquired, $29 million allocated to
broadcast licences acquired and $1 million allocated to goodwill,
which is tax deductible, within the Media reporting segment.
Acquisition of Futureway Communications Inc.
On June 22, 2007, we acquired the remaining 80% of the common
shares that we did not already own and the outstanding stock
options of Futureway Communications Inc. (“Futureway”) for cash
consideration of $38 million. In addition, we contributed $48 million
to Futureway to simultaneously repay obligations under capital
leases, advances from affiliated companies and to terminate a
services agreement. The total cash outlay for the acquisition was
$86 million. At the same time, Cable entered into a marketing
agreement with the former controlling shareholder of Futureway
that entitles us to preferred marketing arrangements in certain
new residential housing developments in the Greater Toronto
Area. The acquisition was accounted for using the purchase method
with the results of operations consolidated with ours effective
June 22, 2007.
Acquisition of Channel M
On July 6, 2007, we announced an agreement to acquire Vancouver
multicultural television station Channel M from Multivan Broadcast
Corporation. This transaction is subject to Canadian Radio-
television and Telecommunications Commission (“CRTC”) approval
and is expected to close early in 2008.
Acquisition of Citytv
On October 31, 2007, we acquired the Citytv network of five
television stations in Canada from CTVglobemedia Inc. for cash
consideration of $405 million including acquisition costs. The acquisi-
tion was accounted for using the purchase method, with the results
of operations consolidated with ours effective October 31, 2007.
The purchase price allocation is preliminary pending finalization of
valuations of the net identifiable assets acquired.
Acquisition of Outdoor Life Network
On November 16, 2007, we announced that we had reached an
agreement to acquire the remaining two-thirds ownership in
Outdoor Life Network to bring our ownership to 100%. This trans-
action has not yet closed pending CRTC approval, which is expected
in 2008.
Acquisition of Aurora Cable TV Limited
On February 13, 2008, we announced that we have entered into an
agreement to acquire Aurora Cable TV Limited (“Aurora Cable”).
This transaction has not yet closed pending CRTC approval, which is
expected in 2008. Aurora Cable provides cable television, Internet
and telephony services in the Town of Aurora and the community
of Oak Ridges, in Richmond Hill, Ontario.
Refer to “Critical Accounting Estimates – Purchase Price Allocations”
and Note 4 to the 2007 Audited Consolidated Financial Statements
for more details regarding these transactions.
CONSOLIDATED FINANCIAL AND OPERATING RESULTS
See the sections in this MD&A entitled “Critical Accounting Policies”,
“Critical Accounting Estimates” and “New Accounting Standards”
and also the Notes to the 2007 Audited Consolidated Financial
Statements for a discussion of critical and new accounting policies
and estimates as they relate to the discussion of our operating and
financial results below.
We measure the success of our strategies using a number of key
performance indicators as outlined in the section entitled “Key
Performance Indicators and Non-GAAP Measures”. These key per-
formance indicators are not measurements in accordance with
20072006
$1,796$1,712$1,355
ADDITIONS TO
CONSOLIDATED PP&E
(In millions of dollars)
2005
20072006
$15,325$14,105$13,834
CONSOLIDATED
TOTAL ASSETS
(In millions of dollars)
2006
2007
2005