Canadian Cable Giant Continues to Lose TV Customers

Shaw Communications managed cable and satellite TV price increases during the latest quarter but still shed subscribers.

TORONTO -- Shaw Communications' reliance on a volatile TV business is hurting the bottom line.

The western Canadian cable giant, opening the earning season here on Thursday, posted lower third-quarter profits as it continues to lose video and satellite TV subscribers.

Calgary-based Shaw recorded earnings of $228 million for the three months to May 31, down 8.8 percent from a profit of $250 million in 2013.

Overall revenue was up 1.2 percent to $1.34 billion, owing to price increases at its Shaw Cable and the Shaw Direct satellite TV divisions.

At the same time, Shaw lost 12,075 video subscribers during the latest quarter, down from a loss of 26,578 customers in the third quarter of 2013. It also shed 5,608 satellite TV customers during the latest quarter, up from 2,930 subscribers lost in the same period last year.

That reduced customer base was offset in Shaw's financial results Thursday with talk of progress on an array of strategic initiatives that aim at consistent results going forward.

But analysts see Shaw exposed as young Canadians increasingly eschew cable TV, satellite TV and home phones, and also due to an inability to recover lost revenues by offering wireless phone services like its Canadian rivals.

In an investors note that preceded Shaw's third-quarter results, Macquarie Capital Markets analyst Greg MacDonald said the cable giant had an above-average risk "due to the structural shift in viewership patterns from traditional TV to Internet."

Shaw also owns and operates the Global Television conventional TV network here, as well as a string of cable channels.

That media division saw third quarter revenue fall to $301 million from a year-earlier $307 million.

That decline was down to the impact of selling two channels, Historia and Series+, and falling TV ad sales, offset by increased subscriber revenues.