Rogers 2011 Annual Report Download - page 47

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MANAGEMENT’S DISCUSSION AND ANALYSIS
Summarized Media Financial Results
Years ended December 31,
(In millions of dollars, except margin) 2011(1) 2010(1) % Chg
Operating revenue $ 1,611 $ 1,461 10
Operating expenses before the undernoted 1,431 1,330 8
Adjusted operating profit(2) 180131 37
Stock-based compensation expense(3) (9) (10) (10)
Settlement of pension obligations(4) (3) – n/m
Integration, restructuring and acquisition expenses(5) (14) (12) 17
Other items, net(6) –(4) n/m
Operating profit(2) $ 154 $ 105 47
Adjusted operating profit margin(2) 11.2%9.0%
Additions to PP&E(2) $61$38 61
(1) The operating results of BV! Media Inc. (“BV Media”), BOUNCE, and BOB-FM are included in Media’s results of operations from the dates of acquisition on October 1,
2010, January 31, 2011 and January 31, 2011, respectively.
(2) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”.
(3) See the section entitled “Stock-based Compensation”.
(4) Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity
purchases by the Company’s pension plans.
(5) Costs incurred relate to (i) severance costs resulting from the targeted restructuring of our employee base and (ii) acquisition transaction costs incurred and the integration of
acquired businesses.
(6) Relates to the resolution of obligations and accruals relating to prior periods.
Media Operating Highlights for the Year Ended December 31, 2011
• Media revenue increased by 10% from 2010 while adjusted
operating profit increased by 37% during the same period, with
margins for the year at 11.2%.
• Rogers Sportsnet and Tennis Canada announced a multi-year
agreement to broadcast the Rogers Cup that will also allow
Sportsnet to broadcast over 20 top tier ATP World Tour
Tournaments. Sportsnet also announced a multi-year agreement to
broadcast highly popular Ultimate Fighting Championship (“UFC”)
events in Canada.
• Media launched its CityNews Channel, a new 24-hour, interactive,
local news channel in Toronto leveraging trusted news brands
Citytv, 680News and Maclean’s.
• Media launched its reality TV competition series “Canada’s Got
Talent” and its new Sportsnet Magazine, Canada’s first national
biweekly sports magazine, leveraging the Rogers Sportsnet
franchise and brand to connect readers with the premier source for
sports features and opinion.
• FX (Canada) digital cable channel was launched, which delivers
acclaimed programming including FX original series and movies
together with original Canadian programming.
• Media acquired the remaining shares in Setanta Sports which it did
not already own and relaunched the Setanta Sports service as
Sportsnet World, providing Canadians with the world’s top
international sports events including professional soccer, rugby and
cricket.
• Media launched RDeals, a new e-mail and Internet based daily deal
offering that delivers local and national deals to Canadians with
significant discounts off original prices.
Media Revenue
The increase in Media’s revenue in 2011, compared to 2010, reflects
the result of our continued investments in prime time TV
programming, increased baseball attendance, new subscriber fees
generated from Sportsnet ONE and increased advertising sales, which
resulted in revenue increases at Radio, Sportsnet, Television, Sports
Entertainment, and Digital Media. This was partially offset by a
decline in Publishing, primarily due to the disposition of a portion of
the trade publication portfolio, and relatively flat year-over-year sales
at The Shopping Channel.
(In millions of dollars)
MEDIA REVENUE
$1,407 $1,461 $1,611
2009 20102011
Media Operating Expenses
Media’s operating costs increased 8% in 2011, compared to 2010. The
increased costs are primarily due to planned increases in
programming costs at Sportsnet and Television, the acquisition of BV
Media and 2 radio stations, partially offset by the disposition of a
portion of the trade publication portfolio and a focus on cost
management.
2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 43