Rogers 2011 Annual Report Download - page 67

MANAGEMENT’S DISCUSSION AND ANALYSIS
various health concerns, including cancer, and interference with
various medical devices, including hearing aids and pacemakers.
While there are no definitive reports or studies stating that such
health issues are directly attributable to radio frequency emissions,
concerns over radio frequency emissions may discourage the use of
wireless handsets or expose us to potential litigation. It is also
possible that future regulatory actions may result in the imposition of
more restrictive standards on radio frequency emissions from low
powered devices, such as wireless handsets. Wireless is unable to
predict the nature or extent of any such potential restrictions.
RISKS AND UNCERTAINTIES SPECIFIC TO CABLE
Changes in Technology Could Increase Competition.
Improvements in the quality of streaming video over the Internet
coupled with increasing availability of television shows and movies on
the Internet increases competition to Canadian cable television
systems. If changes in technology are made to any alternative
Canadian multi-channel broadcasting distribution system,
competition with our cable services may increase. In addition, as
improvements in technology are made with respect to wireless
Internet, it increasingly becomes a substitute for the traditional high-
speed Internet service.
Failure to Obtain Access to Support Structures and Municipal
Rights of Way Could Increase Cable’s Costs and Adversely Affect
Our Business.
Cable requires access to support structures and municipal rights of
way in order to deploy facilities. Where access to municipal rights of
way cannot be secured, Cable may apply to the CRTC to obtain a right
of access under the Telecommunications Act. However, the Supreme
Court of Canada ruled in 2003 that the CRTC does not have the
jurisdiction to establish the terms and conditions of access to the
poles of hydroelectric companies. As a result of this decision, Cable’s
access to hydroelectric company poles is obtained pursuant to orders
from the Ontario Energy Board and the New Brunswick Public Utilities
Board.
If Cable is Unable to Maintain Sustainable Security Measures to
Prevent Unauthorized Access to Digital Boxes or Internet
Modems, Cable Could Experience a Decline in Revenues.
Cable utilizes encryption technology to protect its cable signals from
unauthorized access and to control programming access based on
subscription packages. Cable also uses encryption and security
technologies to prevent unauthorized access to its internet service.
There can be no assurance that Cable will be able to effectively
prevent unauthorized decoding of television signals or internet access
in the future. If Cable is unable to control cable access with our
encryption technology, Cable’s subscription levels for digital
programming including, premium VOD and SVOD, as well as internet
service revenues, may decline, which could result in a decline in
Cable’s revenues.
Increasing Programming Costs Could Adversely Affect Cable’s
Results of Operations.
Cable’s single most significant purchasing commitment is the cost of
acquiring programming. Programming costs have increased
significantly in recent years, particularly in connection with the recent
growth in subscriptions to digital specialty channels. Increasing
programming costs within the industry could adversely affect Cable’s
operating results if Cable is unable to pass such programming costs on
to its subscribers.
Cable’s Business Telephony Operations are Highly Dependent on
Facilities and Services of the ILECs.
Cable’s out-of-territory business telephony operations are highly
dependent on the availability of facilities/services acquired from
incumbent telecom operators, pursuant to CRTC rules. Changes to
these rules could severely affect the cost of operating these
businesses.
Over-the-Air Television Station Licence Renewals Could Adversely
Affect Cable’s Results of Operations.
An imposition of a VFS regime would increase Rogers’ costs. See the
section entitled “Review of Broadcasting Regulations including
Fee-for-Carriage and Distant Signal Fees” under “Government
Regulation and Regulatory Developments”.
RISKS AND UNCERTAINTIES SPECIFIC TO MEDIA
Pressures Regarding Channel Placement Could Negatively Impact
the Tier Status of Certain of Media’s Channels.
Unfavourable channel placement could negatively affect the results
of The Shopping Channel, and our specialty channels, including
Sportsnet, Sportsnet ONE, Sportsnet World, G4 Canada, The
Biography Channel (Canada), Outdoor Life Network, and FX (Canada).
A Loss in Media’s Market Position in Radio, Television or
Magazine Readership Could Adversely Impact Media’s Sales
Volumes and Advertising Rates.
It is well established that advertising dollars migrate to media
properties that are leaders in their respective markets and categories
when advertising budgets are tightened. Although most of Media’s
radio, television and magazine properties currently perform well in
their respective markets, such performance may not continue in the
future. Advertisers base a substantial part of their purchasing
decisions on statistics such as ratings and readership generated by
industry associations and agencies. If Media’s radio and television
ratings or magazine readership levels were to decrease substantially,
Media’s advertising sales volumes and the rates which it charges
advertisers could be adversely affected.
Changes in Technology Could Increase Competition.
The increasing utilization of PVRs could influence Media’s capability
to generate television advertising revenues as viewers are provided
with the opportunity to skip advertising aired on the television
networks. The emergence of subscriber-based satellite and digital
radio products could change radio audience listening habits and
negatively impact the results of Media’s radio stations. Certain
audiences are also migrating to the Internet as more video becomes
available.
An Increase in Paper Prices, Printing Costs or Postage Could
Adversely Affect Media’s Results of Operations.
A significant portion of Publishing’s operating expenses consists of
paper, printing and postage expenses. Paper is Publishing’s single
largest raw material expense, representing approximately 9% of
Publishing’s operating expenses in 2011. Publishing depends upon
outside suppliers for all of its paper supplies, holds limited quantities
of paper in stock itself, and is unable to control paper prices, which
can fluctuate considerably. Moreover, Publishing is generally unable
to pass paper cost increases on to customers. Publishing relies on third
parties for all of its printing services. In addition, Publishing relies on
the Canadian Postal Service to distribute a large percentage of its
publications. Any disruption in printing or postage services could have
a material impact on Media’s results of operations or financial
condition. A material increase in paper prices, printing costs or
postage expenses to Publishing could have a materially adverse effect
on Media’s business, results of operations or financial condition.
2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 63