Rogers 2015 Annual Report Download - page 50

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MANAGEMENT’S DISCUSSION AND ANALYSIS
MEDIA
DIVERSIFIED CANADIAN MEDIA COMPANY
We have a broad portfolio of media properties, which most
significantly includes:
• sports media and entertainment, such as the Toronto Blue
Jays;
• our exclusive national 12-year NHL Agreement;
• category-leading television and radio broadcasting
properties;
• multi-platform televised and online shopping;
• publishing including Texture by Next Issue; and
• digital media.
MEDIA FINANCIAL RESULTS
Years ended December 31
(In millions of dollars, except margins) 2015 2014 % Chg
Operating revenue 2,079 1,826 14
Operating expenses 1,907 1,695 13
Adjusted operating profit 172 131 31
Adjusted operating profit margin 8.3% 7.2% 1.1 pts
Additions to property, plant and equipment 60 94 (36)
OPERATING REVENUE
Media generates revenue in five areas:
• advertising sales across its television, radio, publishing, and
digital media properties;
• subscriptions to televised products;
• retail product sales;
• circulation of published products; and
• ticket sales, receipts of MLB revenue sharing, and concession
sales associated with Sports Media and Entertainment.
(IN MILLIONS OF DOLLARS)
MEDIA OPERATING REVENUE
2015
2014
2013
$2,079
$1,826
$1,704
(%)
2015 MEDIA OPERATING REVENUE MIX
SPORTS 52%
BROADCASTING 26%
THE SHOPPING CHANNEL 13%
PUBLISHING 9%
$2.1
BILLION
2015
2014
2013
$1,106
$778
$634
52%
43%
37%
SPORTS REVENUE AND SPORTS REVENUE AS A PERCENTAGE
OF MEDIA OPERATING REVENUE (% or IN MILLIONS OF DOLLARS)
The 14% increase in operating revenue this year was a result of:
• higher subscription and advertising revenue generated by our
Sportsnet properties, including the NHL Agreement;
• higher Toronto Blue Jays game day and merchandise revenue as
a result of the success of the team; and
• higher revenue generated from Texture by Next Issue; partially
offset by
• continued softness in conventional television and print
advertising; and
• lower merchandise sales at TSC.
OPERATING EXPENSES
We assess Media operating expenses in four general areas:
• the cost of broadcast content (including sports programming
and production);
• the cost of retail products sold by TSC and Sports Media and
Entertainment;
• Toronto Blue Jays player payroll; and
• all other expenses involved in day-to-day operations.
The 13% increase in operating expenses this year was a result of:
• higher sports-related programming and other operating costs,
including our NHL Agreement, which started in the fourth
quarter of 2014; and
• higher costs related to the Toronto Blue Jays; partially offset by
• lower conventional broadcast TV programming costs;
• lower publishing costs; and
• lower merchandise costs at TSC.
ADJUSTED OPERATING PROFIT
The 31% increase in adjusted operating profit this year was a net
result of the success of the Toronto Blue Jays.
(IN MILLIONS OF DOLLARS)
MEDIA ADJUSTED OPERATING PROFIT
2015
2014
2013
$172
$131
$161
48 ROGERS COMMUNICATIONS INC. 2015 ANNUAL REPORT