Rogers Communications Inc. is considering the sale of assets such as baseball鈥檚 Toronto Blue Jays and its stake in a smaller cable and media company to free up capital for its main communications businesses.
The media giant鈥檚 chief financial officer Tony Staffieri said Tuesday at an industry conference that the company is looking for ways to 鈥渟urface value鈥� from the Blue Jays 鈥� which he said is a 鈥渧ery valuable asset for us that we don鈥檛 get full credit for.鈥�
He didn鈥檛 discuss who might buy the team, or if a deal would include the Rogers Centre, or what they would be worth.
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鈥淭o be clear, there isn鈥檛 anything imminent that we are about to announce, but we鈥檙e certainly looking at the alternatives. Again, would like to get the content without necessarily having the capital tied up on our balance sheet,鈥� Staffieri said.
Aravinda Galappatthige, an analyst who covers Rogers for Canaccord Genuity, writes that the issue of assets sales has been raised before but Staffieri鈥檚 comments are the most explicit to date.
He estimates that the Blue Jays would be worth about $3.20 per share of Rogers, based on an estimated value of $1.65 billion for the team.
But Galappatthige notes that Rogers has other non-core assets including a 37.5 per cent interest in Maple Leaf Sports and Entertainment, which owns the Toronto Maple Leafs hockey team and Toronto Raptors basketball team, and the Rogers Centre 鈥� worth $200 million to $400 million.
In total, he estimates Rogers has non-core assets that could be worth close to $5 billion or $9.70 per Rogers share.
鈥淗owever, we highlight that while asset sales are being considered at a high level, we do not believe there any imminent deals in place at this time,鈥� Galappatthige writes.
Staffieri said the company is currently going through its budgeting process for 2018 and the focus will be on revenue growth and better margins at its wireless and cable divisions.
Staffieri made the comments during an onstage interview at the UBS Global Media and Communications conference in New York, according to transcripts of the event provided by Thomson Reuters.
Rogers (TSX:RCI.B) has previously indicated it is exploring ways to get more value from its portfolio of assets, including the Jays, but Staffieri鈥檚 comments in New York were more specific.
He said the company still wants rights to sports programming 鈥� which is core to the company鈥檚 media business 鈥� but doesn鈥檛 need to own a team to have that, pointing to the company鈥檚 12-year deal with the National Hockey League.
鈥淩elative to our overall asset portfolio, media is small,鈥� Staffieri said.
But he said sports content continues to have 鈥渉ealthy鈥� margins and can complement the Rogers wireless and cable operations as well.
鈥淥ur focus in media will continue to be on the sports side of it. So don鈥檛 expect any type of expansion on the media side, other than continue to monetize the sports assets that we have,鈥� Staffieri said.
As for the company鈥檚 investment in Montreal-based Cogeco (TSX:CGO) and Cogeco Communications Inc. (TSX:CCA), a smaller cable and media company based in Montreal, Staffieri鈥檚 said there鈥檚 鈥減robably better use鈥� for that capital.
鈥淭here were some strategic benefits that we had hoped for with Cogeco and those seem to be further and further away,鈥� Staffieri told the UBS conference.
Galappatthige said Rogers鈥� share in the two Cogecos would be worth about $2.98 per share, for about $1.53 billion.
鈥淲hile we would expect an orderly sell-down in its Cogeco holdings, this could put pressure on Cogeco Inc.鈥檚 and Cogeco Communications鈥� share prices and serve to remove any takeout premium currently imbedded in their stock prices,鈥� he concluded.
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