The mantra "If you build it, they will come" doesn't just apply to building a ballpark in the cornfields of Iowa.

Rogers Communications (NYSE:RCI) proved that this quarter after the company built a playoff baseball team that electrified a starving fan base, causing fans to come out of the woodwork and support their on-field success. That support helped to more than double the profit in the company's media division this quarter. In fact, that success was nearly the sole reason why Rogers Communications third-quarter results, which were reported Thursday morning before the market opened, showed a low-single-digit increase in revenue and adjusted operating profit over last year's third quarter.

Rogers Communications results: The raw numbers


Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)


$3.4 billion

$3.3 billion


Adjusted Operating Profit

$1.35 billion

$1.31 billion


Adjusted EPS




Image source: Rogers Communications.

What happened with Rogers this quarter?
Rogers' media division stole the show this quarter:

  • Revenue in the media segment increased 8% year over year to $473 million, led by higher Toronto Blue Jays revenue and strong subscription and advertising revenue at its Sportsnet properties. This fueled a 152% surge in adjusted operating profit to $58 million.
  • The company's key wireless segment also delivered a strong quarter with revenue up 5% to nearly $2 billion thanks to the continued adoption of the Rogers Share Everything plan and higher equipment sales. However, adjusted operating profit slipped 1% to $879 million due to a shift in sales toward higher cost smartphones.
  • Revenue in the company's cable division eked higher by 1% to $871 million, led by a strong 11% increase in Internet sales, offsetting decreases in both television and phone sales. Adjusted operating profit was also slightly higher, up 2% to $416 million after higher sales were offset by flat costs.
  • Free cash flow generation was robust in the quarter after increasing 78% year over year to $660 million.

What management had to say
CEO Guy Laurence noted in the earnings release that Rogers had a "busy and productive quarter." Not only did the company deliver solid financial and operating metrics, but it also delivered a number of important new services. Laurence highlighted the "enhancement to our residential proposition by introducing a 1-gigabit Internet service" as the "need for speed" is becoming evident with a majority of its new customers moving to higher speed services. This is one reason why Internet sales were so strong in the quarter.

Laurence also highlighted the success its baseball team is having not just on the company's financial results but on its brand. According to him, "To top it all, the Toronto Blue Jays made it to the American League Championship Series. It's been amazing to see the city and the country rally behind Canada's baseball team." Furthermore, in rallying behind the team, they are also rallying behind, and giving credit to, its owner, which is boosting Rogers' brand image in Canada.  

This is becoming a key differentiator between Rogers and rival BCE (NYSE:BCE). Both companies compete in many of the same television and communication markets, but Rogers has a clear edge over BCE when it comes to sports media because it owns not just the Blue Jays, but has exclusive broadcasting rights for both Blue Jays baseball and NHL hockey in Canada. It's why Rogers' Sportnet properties have become the No. 1 sports brand in Canada surpassing BCE's TSN for the lead.

Looking forward
In light of the Roger Communications' solid third-quarter results, it is reiterating its full-year guidance. It expects its operating profit to be in the $5 billion-$5.2 billion range and free cash flow between $1.5 billion to $1.7 billion. This guidance clearly suggests that the company's dividend is safe and sound.

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