Rogers 2011 Annual Report Download - page 46

MANAGEMENT’S DISCUSSION AND ANALYSIS
Media’s publishing group produces 54 consumer, trade and
professional publications.
Media’s digital group provides digital advertising solutions to over
1,000 websites.
Media’s sports entertainment group (“Sports Entertainment”) owns
the Toronto Blue Jays, a Major League Baseball (“MLB”) club, and the
Rogers Centre sports and entertainment venue.
(%)
2011 MEDIA REVENUE MIX
TELEVISION 41%
PUBLISHING 17%
THE SHOPPING
CHANNEL 16%
RADIO 16%
SPORTS ENTERTAINMENT 10%
MEDIA’S STRATEGY
Media seeks to maximize revenues, operating profit and return on
invested capital across its portfolio of businesses. Media’s strategies to
achieve this objective include:
• Continuing to leverage our strong media brands and content across
multiple platforms to offer advertising clients more comprehensive
audience solutions and reach;
• Driving revenue share increases by continually improving audience
ratings in key demographics on conventional, sports and specialty
channels and on digital platforms by securing the rights to, and
promoting, premium and exclusive content;
• Working with Wireless and Cable to provide exclusive and premium
content to our customers over advanced network and distribution
platforms and in association with the Rogers brand;
• Growing and building audiences by focusing on producing unique
and quality content on our radio, TV, publishing and digital
properties;
• Continuing to invest in technology and new digital experiences to
capture the migration of audiences to digital platforms; and
• Enhancing the Sports Entertainment fan experience by continuing
to invest in the Blue Jays and in upgrades to the Rogers Centre.
RECENT MEDIA INDUSTRY TRENDS
Migration to Digital Media
The media landscape continues to evolve driven by the following
major forces impacting audience and advertiser behaviour:
• Digitization and delivery of content;
• Increased availability of high-speed broadband networks;
• The proliferation of international and Canadian content available
to Canadian consumers has significantly fragmented audiences;
• The explosion of easily available free and pirated content has
challenged the monetization of content;
• Marketers searching for higher-ROI media vehicles; and
• The availability and lower costs of social media marketing tools.
The impact of the foregoing is that audiences are shifting a portion
of their time and attention from traditional broadcast and print to
digital properties. As a result, advertisers are following this trend by
shifting a portion of their spending from traditional to digital media
formats.
Consolidation and Ownership of Industry Competitors
Ownership of Canadian radio and TV stations has consolidated
through several large acquisitions in the sector by other media and
telecommunications companies. This has resulted in the Canadian
media sector being composed of fewer owners but larger competitors
with more financial resources to compete in the media marketplace
which is driving up content costs.
MEDIA OPERATING AND FINANCIAL RESULTS
Media’s revenues primarily consist of:
• Advertising revenues;
• Circulation revenues;
• Subscription revenues;
• Retail product sales; and
• Ticket sales, receipts of MLB revenue sharing and concession sales
associated with Rogers Sports Entertainment.
Media’s operating expenses consist of:
• Merchandise for resale, which is primarily comprised of the cost of
retail products sold by The Shopping Channel;
• Other operating expenses, which include all other expenses
incurred to operate the business on a day-to-day basis. These
include:
• employee salaries and benefits, such as remuneration, bonuses,
pension, employee benefits, stock-based compensation and Blue
Jays player salaries; and
• other external purchases, such as sales and marketing related
expenses, and operating, general and administrative related
expenses, which include programming costs, printing and
production costs, circulation expenses, and other back-office
support functions.
42 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT