Published On: Wed, Dec 6th, 2017

Why a Blue Jays sale may make sense for Rogers

Selling the Toronto Blue Jays could free up cash for Rogers Communications Inc. at a time when new capital expenditures loom, analysts said Wednesday, after a report that the company is considering the sale of media assets including the Major League Baseball franchise.

The wireless, cable TV and Internet giant had already signaled that it intends to ramp up spending on network improvements amid surging data use, and Rogers is also expected to participate in bidding as part of Ottawa’s auction of wireless spectrum licences in the 600 MHz band.

As well, the Toronto-based company last year suspended increases to its dividend as it focused on reducing long-term debt, a move that drew shareholder complaints at its most recent annual general meeting.

Analysts, who spoke on background since they have not issued comments to investors, said an expansion in values of MLB franchises, record amounts paid for stadium naming rights and increasing player costs may also be factors in Rogers’s considerations.

The Jays’ contribution to Rogers’s income is not segmented from Rogers Media earnings so it’s unclear if the team’s failure last year to make the playoffs had an impact on the bottom line, which has been bolstered by record attendance in recent seasons that included playoff runs.

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Rogers in its third-quarter earnings call in October had indicated an interest in focusing on core assets and in exploring ways to get more value from its portfolio — although comments from chief financial officer Tony Staffieri in New York on Tuesday were more specific.

In a speech to the UBS Global Media and Communications conference, he said the company is considering selling assets such as the Jays and a stake in media company Cogeco Inc. to free capital for other investments, though he said no deal is imminent.

Staffieri said the company still wants rights to sports programming but doesn’t have to own a team to have that, pointing to the company’s 12-year deal with the National Hockey League.

Rogers’ media business made up about 15 per cent of sales last year but only about 3 per cent of operating profit, according to data compiled by Bloomberg.

The company has been a longtime investor in Cogeco and now holds about a third of the media company and a fifth of its cable unit, Cogeco Communications Inc.

“There were some strategic benefits that we had hoped for with Cogeco and those seem to be further and further away,” Staffieri said. “As we think about an environment where interest rates start to go up and compare it to the yield that we’re getting on the asset today, we think there’s probably better use for that capital.”

With files from Star wires

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Why a Blue Jays sale may make sense for Rogers