Cogeco Cable CEO says TV industry should have moved faster on channel choice

MONTREAL – Cogeco Cable plans to follow other Canadian TV providers by offering Internet-protocol television, although the company has yet to set a launch date.

CEO Louis Audet said Thursday that Cogeco is now testing IPTV and is keen to capitalize on the growth of online television.

“Either we embrace change and succeed or we resist change and we fail,” Audet said, after Cogeco Cable and parent company Cogeco Inc. both reported slightly lower fourth-quarter profits.

“It’s Netflix today and it will be others tomorrow,” Audet said in an interview, referring to the surge in the popularity of the video streaming subscription service.

Cogeco Cable, Canada’s fourth-largest cable company, didn’t put a price tag on the move and would only say it’s working with another company to develop it.

Audet said IPTV will be a more efficient way to deliver TV programming, via the Internet, over its cable system.

TV providers including Bell (TSX:BCE), Telus (TSXT) and Manitoba Telephone Service (TSX:MB) already offer IPTV, aiming to stem the loss of TV subscribers.

But Audet said he isn’t convinced that consumers will pull their subscriptions, noting that not all programming can come via the Internet without added cost. Offering services, such as Netflix, will require customers to upgrade to higher Internet speeds, which offers revenue opportunities.

The Cogeco CEO also criticized the industry for moving too slow in meeting the consumer demand for more choice in the selection of their TV channels. Last month’s speech from the throne outlined how the government wants Canadians to be able to choose the channels they want to watch, without having to pay for those they don’t.

“The fact that the government is stepping in is going to help us,” said Audet.

“It’s going way too slow, in our opinion. But, in principal, this should not have had to happen. We as an industry should have had the sufficient brains to skate a little faster and make the adjustments that were required.”

Also on Thursday, telecommunications and media company Cogeco Inc. (TSX:CGO) and its main subsidiary, Cogeco Cable Inc. (TSX:CCA) said they will raise their respective dividends by about 15 per cent.

Cogeco Inc. said its quarterly dividend will increase three cents to 22 cents per share. For shareholders of Cogeco Cable, the dividend is rising to 30 cents per share from the 26 cents paid in the fiscal fourth quarter.

Both companies recorded slightly lower profits but higher revenues in the fiscal fourth quarter ended Aug. 31 as a result of the Atlantic Broadband acquisition and a $526-million deal last December to buy Peer 1 Network Enterprises, a Vancouver-based Internet infrastructure provider to businesses.

Cogeco bought the U.S. Atlantic Broadband cable company in 2012, for US$1.36 billion. Atlantic Broadband operates primarily in Florida, Maryland and Delaware, South Carolina and Central Pennsylvania and is the 12th largest American cable company, offering Internet and home phone service.

Cogeco Inc. reported that its profit was $43.8 million or 82 cents per diluted share, down from a profit of $44.9 million, or 83 cents per diluted share, a year earlier. Revenue in the fourth quarter increased by 41.5 per cent to $504.7 million year-over-year.

Cogeco Cable reported a lower profit of $43.9 million, or 90 cents per share diluted — down from $45.7 million, or 93 cents per share, a year earlier. Revenues in the cable division increased by 45 per cent to $470.4 million, the company said.

It had a net loss of more than 10,000 cable customers in the quarter, which Audet said was partly due to “intense” competition and tighter credit checks for its customers to weed out non-paying customers.

The Montreal company also owns 13 radio stations in Quebec.