BCE Sees Earnings Dip Ahead of CTV Takeover
Third quarter earnings down 5.4% to $528 million
TORONTO -- Phone giant BCE is feeling the heat from wireless competition ahead of acquiring Canadian broadcaster CTV and its stable of hit shows like Jersey Shore and The Big Bang Theory.
Montreal-based BCE on Thursday posted third quarter earnings at $528 million, down 5.4% from a profit of $558 million in 2009, due to a higher income tax charge and Canadians flocking to new mobile market-entrants.
Total revenue rose 1.8% to $3.85 billion, as higher wireless, TV, and wireline data revenue offset falls in local and access, long distance and equipment and other revenue.
BCE, like market rivals Rogers Communications and Telus Corp., has had to pay more in marketing expenses and subsidies to maintain its wireless phone customer base.
BCE chief executive officer George Cope told analysts during a morning call that the phone giant faced an "increasingly competitive communications marketplace."
To diversify, BCE in September proposed acquiring the CTV network as part of a $3.2 billion deal to feed content down its expanding TV, mobile phone and Internet access pipelines.
Satellite TV and other video content now accounts for around 40% of BCE's residential revenues, surpassing landline phone revenue.
BCE, which already has a 15% stake in CTV and until 2005 had a majority stake in the broadcaster, is to acquire the remaining 85% stake in the Canadian broadcaster from The Woodbridge Company Ltd, the Ontario Teachers Pension Plan and newspaper publisher Torstar Corp.
CTV is still bleeding losses, despite an industry-wide ad recovery, according to Torstar, which has a 20% stake in CTV-parent CTVglobemedia and reported its latest financial results on Wednesday.
Torstar said its share of CTVglobemedia's net loss was $17.9 million in the third quarter of 2010, against a loss of $13.6 million in the same period of 2009.
Year to date, Torstar's share of CTVglobemedia's net loss was $29.1 million in 2010, compared to a loss of $48.1 million in 2009.