Rogers Stands to Raise $2.2 Billion Unloading Blue Jays, Cogeco

(Bloomberg) -- Rogers Communications Inc. could raise about $2.2 billion if decides to sell the Toronto Blue Jays baseball team and a minority stake in media company Cogeco, freeing up capital for its wireless expansion.

The Toronto-based telecommunications giant is considering selling the Major League Baseball team and the Cogeco stakes though no deal is imminent, Chief Financial Officer Tony Staffieri said at the UBS Global Media and Communications conference in New York Tuesday. The Jays are worth about $1.3 billion, according to the latest Forbes Ranking. Rogers' stakes in Cogeco Communications Inc. and its cable unit are valued at about C$1.2 billion ($940 million) based on the current share price, according to data compiled by Bloomberg.

Rogers has said before that it's exploring ways to get more value from its portfolio of assets, including the Blue Jays, though Staffieri's comments were more specific. Rogers still wants rights to sports programming but doesn't have to own a team to have that, he said, pointing to the company's 12-year deal with the National Hockey League.

“Don't expect any type of expansion on the media side other than continuing to monetize the sports assets that we have,” he said. 

Rogers plans to increase investments in its wireless network as part of a plan to capture a surge in data usage, Chief Executive Officer Joe Natale told the Globe & Mail this week. Rogers shares have soared 27 percent this year, outpacing rivals Telus Corp. and BCE Inc. by more than double, as wireless revenue soared and customer retention improved.

MLSE Teams

Rogers and BCE are among investors in Maple Leaf Sports & Entertainment, the owner of the Toronto Maple Leafs NHL team and Toronto Raptors of the National Basketball Association. The company's media business made up about 15 percent of sales last year but only about 3 percent of operating profit, according to data compiled by Bloomberg.

Edward Jones & Co. analyst David Heger said in a phone interview that selling off some media assets makes sense for Rogers. The media unit's profit trails that of rival BCE, in part due to rising payrolls for baseball players, he said.

Marc Ganis, president of the consulting firm Sportscorp Ltd., disagrees, pointing to other sales of sports assets that have resulted in lost premiums and broadcasting deals. Fox Entertainment Group Inc. sold the Los Angeles Dodgers for $2 billion, leading to a costly lawsuit for broadcast rights. Rupert Murdoch sold the Dodgers through News Corp. for just $430 million a few years earlier.

“Were I advising Rogers, I would tell them ‘do not sell this asset.' I'd assure them that the day will come that they regret having done so,” Ganis said. “I do see the values going higher. They're high now so if they sell now they would sell at a high water mark but not the final water mark.”

‘Further Away'

Rogers has been a long-time investor in Cogeco and now holds about a third of the media company. Montreal-based Cogeco Communications fell 2.6 percent to C$87.44 in Toronto, while Rogers jumped almost 1 percent.

“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.”

Roger's media business has been challenged in recent years with slow advertising revenue growth, changing cable TV habits and as publishing sales dropped in the shift to digital platforms. Last week, Rogers announced that it plans to drop its financial support for the Viceland television channel in Canada, which launched in early 2016 as a joint venture between Rogers Media and Vice.

“I would think Natale is looking closely at the media business, what should we be in, what should we not be in,” Heger said. “It wouldn't surprise me if there were other actions in the future in that part of the business to try to improve that side of it.”

--With assistance from Maciej Onoszko

To contact the reporter on this story: Natalie Wong in Toronto at nwong133@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, David Scanlan, Steven Frank

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