High development costs for its high-profile digital products and less advertising on its television station pushed Score Media Inc. to a loss, even as the number of sports fans using its apps around the world increased sharply.
The company's earnings report illustrates the difficulty facing media companies in the digital space. Users around the world are using the Score's mobile apps to track their favourite teams in several different languages, but the Toronto-based broadcaster is struggling to wring enough money from them to offset the cost of development.
While the company's television station is its key asset, it has focused much of its effort on its apps and website, which are heavy on the type of data and analysis favoured by sports fans.
Its ScoreMobile app averaged 3.5-million unique users in the last quarter, a 45-per-cent jump from a year ago. Its website saw a 38-per-cent boost in the number in visitors, averaging 1.4-million unique visitors a month. The growth hasn't come cheap – the company spent $2.9-million in the quarter on the staff, technology and marketing to produce the products. But they only brought in $1.1-million in revenue.
It must now find a way to wring money out of the users it has attracted.
"The digital media segment recognizes revenue based on the sale and delivery of advertising impressions on the company's website and mobile apps," it said as it reported its quarterly results. "The company is currently expanding its sales execution strategy across North America to drive revenue growth associated with increased audience"
The company's television station – which relies heavily on talk shows and highlights packages and live broadcasts of U.S. college sports and professional wrestling - saw revenue decrease by $500,000 to $11.5-million as it received less money from its live broadcasts and pulled in fewer advertising dollars as it noted "recent softness in the overall television advertising market."
The company posted a $1.5-million loss for the third quarter, compared to a $608,000 profit in the same quarter last year. Revenue fell 3 per cent to $12.7-million, compared to $13.1-million. Broadcast revenue fell 6.5 per cent to $11.5-million in the quarter, while digital revenue increased by 27 per cent to $1.1-million.
The company prefers to focus on earnings before interest, taxes, depreciation, and amortization to measure its performance, because it strips out some non-cash charges. It posted a $453,000 profit in the last quarter, down 78 per cent from the same quarter last year