Rogers 2010 Annual Report Download - page 38

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
42 ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT
MEDIA ACQUISITIONS
Acquisition of BV! Media Inc.
OnOctober1,2010,weacquired100%oftheoutstandingcommon
shares of BV! Media Inc. for cash consideration of $24 million. BV!
Media is a Canadian Internet advertising network and publisher of
news and information portals. The acquisition was accounted for using
the acquisition method with the results of operations consolidated
with those of ours effective October1,2010.
Acquisition of Radio Stations
On January 31, 2011, we acquired the assets of Edmonton, Alberta FM
radio station BOUNCE (CHBN-FM) to strengthen our presence in
this market.
On January 31, 2011, we acquired the assets of London, Ontario FM
radio station BOB-FM (CHST-FM). This acquisition of BOB-FM, which is
a continual ratings leader, represents our entry into the London,
Ontario market.
Media Additions to PP&E
Media’s PP&E additions during 2010 decreased from 2009 due primarily
to the completion of Television’s new Ontario broadcasting facility
in 2009.
20102009
2008
2008
201
0
2009
$1,501$1,407$1,496
MEDIA REVENUE
(In millions of dollars)
20102009
2008
200
8
201
0
2009
$147$119$142
MEDIA ADJUSTED
OPERATING PROFIT
(In millions of dollars)
Media Revenue
The increase in Media’s revenue in 2010, compared to 2009, reflects
continuous increases in Media’s prime time TV ratings, increased
subscriber fees and improvements in the advertising market, which
together are favourably impacting Television, Sportsnet, Radio, and
The Shopping Channel revenues. Publishing revenue was relatively
consistent with 2009, while Sports Entertainment reported revenue
declines associated with fluctuations in event attendance levels and
Major League Baseball revenue sharing. As Sportsnet ONE, Media’s new
national sports network, launched in the late part of 2010, limited
revenues were realized in 2010 but are expected to increase over the
course of 2011.
Media Operating Expenses
Media’s operating expenses increased slightly in 2010, compared to
2009. While a focus on managing costs across all of Media’s divisions
over the past year has resulted in reduced operating expenses, these
savings were offset by certain planned increases in programming costs
at Sportsnet and Television and the costs of new content for Sportsnet
ONE, which we expect to break even in the first quarter 2011 time
frame. Excluding the impact of Sportsnet ONE, operating expenses for
2010wouldhavegrownatarateof2%insteadofthe5%asreported,
compared to 2009.
Media Adjusted Operating Profit
The increase in Media’s adjusted operating profit for 2010, compared to
2009, primarily reflects the revenue and expense changes discussed
above. Excluding the impact of Sportsnet ONE, adjusted operating
protfor2010wouldhaveincreased48%comparedto2009.
Media Developments
Late in 2010, Media launched a new national sports network called
Sportsnet ONE, which features extensive live-event programming,
including professional hockey, basketball, baseball and soccer. Media
also announced a 10-year programming partnership with Alberta’s two
NHL teams, the Edmonton Oilers and Calgary Flames.