Despite the Blue Jays’ 10-4 victory against the Arizona Diamondbacks on Wednesday, Rogers Communications Inc. may not be in the clear.
The telecommunications company bought control of the Toronto-based baseball team for $160 million in 2000. With their success on Wednesday, the company said its revenue increased by 6% from $3.245 billion in the last quarter ended March 31, to $3.455 billion in the three months ended June 30.
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However, their cable revenue suffered losses with a 7% decrease in television revenue and 15% decrease in phone revenue. They also lost 53% of television subscribers from 49,000 to 23,000 within the two quarters. While their Internet revenue rose by 15% this quarter mostly due to more subscribers to their broadband Internet services.
Though the media revenue increased by 6%, Rogers attribute some of their losses to lower advertising revenue with traditional media like television, radio and print.
Dr. Ramon Baltazar, a professor at Dalhousie’s Rowe School of Business said the numbers does not surprise him.
“The landscape in advertising has changed from the traditional media like cable television to the Internet,” said Baltazar. “A lot of the advertising is being done on the Internet as well as mobile.”
Jun Zhou, another professor at Dalhousie’s Rowe School of Business says mass advertising does not work any more.
“When you watch TV, it’s the same advertisement for thousands and millions of people,” said Zhou. “Facebook, for example, will give you types of advertisements by checking your personal data and try to figure out your interests. Then they put together very calculated advertisements so these adverts would be more effective than traditional television.”
Baltazar also points out that advertising setbacks is not the only reason why Rogers’ cable revenue is suffering. He emphasized that many people watch a small number of channels relative to the amount available in their cable package.
“A lot of people will watch two or three channels out of the 100 they’re given. I think the problem may be related less to advertising and more to the fact that there are changing cost benefits and preferences in the market that they are targeting,” he said. “There’s a changing landscape of entertainment from the traditional sources of media to streaming.”
Zhou adds to this and says, “People now have alternative ways to watch TV, like Netflix, instead of subscribing to a cable service. There are alternative ways of entertainment and this would naturally challenge cable providers because it gives people more flexibility to enjoy the same stuff they want to see instead of following traditional cable.”
Baltazar further explains that streaming and Internet service is where Rogers should focus on expanding but he admitted it would be hard for the company.
“For example, Google can’t just go out and compete in the cable business because they don’t know what they’re doing,” he said. “It’s the same thing with Rogers and other companies that started in the cable business; they are really good at it but relatively don’t know what they’re doing when it comes to the Internet. So if they continue to invest in that [streaming and internet], eventually they will develop that capability. But it’s not as if these streaming companies are standing still. They’re innovating everyday, so everyday Rogers has to try and catch up to what they’re doing.”