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Cogeco CEO Louis Audet speaks during a business luncheon in Montreal, Tuesday, January 28, 2014. (Graham Hughes/THE CANADIAN PRESS)
Cogeco CEO Louis Audet speaks during a business luncheon in Montreal, Tuesday, January 28, 2014. (Graham Hughes/THE CANADIAN PRESS)

Cogeco sees payoff with TiVo as rivals start launching new TV platforms Add to ...

As cable companies across the country scramble to offer more competitive television products, Cogeco Communications Inc. says it is already seeing the upside of licensing a next-generation platform.

The Montreal-based company scrapped plans to build its own Internet protocol television (IPTV) product in 2014 and said it would instead sell its customers in Ontario and Quebec the TiVo personal video recorder system.

The move helped Cogeco slow the pace of decline in its cable TV business as customers either cut the cord or switched to Bell Fibe TV, the Internet-based platform offered by rival BCE Inc.

“We have enjoyed the benefits [of TiVo] for the last three years, which has not been the case for other [cable] operators in Canada because they just made their decision recently or they’re about to make their decision,” Cogeco chief executive officer Louis Audet said in an interview Friday.

Telephone companies initially couldn’t offer television except through satellite services, but over the past decade they have invested in upgrades to their copper networks to improve speeds and support video services using IP-based technology.

Cable companies, which once dominated the TV market, lost their edge as telcos such as BCE and Telus Corp. found a way into the market with IPTV products. Cable operators have responded in part by using their own network advantage to offer higher-speed Internet services, but they have also recognized the need to improve their traditional cable product.

Calgary-based cable operator Shaw Communications Inc. also wrote off an investment in IPTV in 2015 and said it would license technology from U.S. cable giant Comcast Corp. Shaw began offering a companion TV app in 2016 and this year started rolling out the full premium home-television product, announcing this week that its BlueSky TV service is available to customers across its Western Canada coverage area.

Rogers Communications Inc. is further behind. After taking a $485-million writedown on its years-long in-house effort to build IPTV, the Toronto-based company also will launch a product based on Comcast technology, but that’s not coming until at least early 2018.

Meanwhile, Quebecor Inc.’s Videotron Ltd. has yet to even announce a next-generation platform and says it is still considering its options.

Mr. Audet said that while TiVo may not be superior to the Comcast platform, he thinks it “compares very well today to our competitors” and that’s good enough to stick with it for now. He said Cogeco could consider switching to a different product in the future but has no plans or reason to make a change at this point.

Cogeco’s shares climbed 4.6 per cent, or $3.25, closing at $74.10 Friday, the first trading day after the company reported its second-quarter financial results.

Its consolidated revenue grew 1.7 per cent in the quarter to $561-million. Cogeco reported a profit of $76.7-million or $1.56 per share, ahead of analyst estimates of $1.41 per share.

The company reported subscriber results that were in line or ahead of analyst projections for both its Canadian and U.S. cable operations as it gained new Internet customers and lost fewer TV subscribers than some expected.

Its Canadian results were boosted in part by price increases it implemented in December, which was earlier than the price hikes it imposed in the previous fiscal year. Cogeco also saw growth in Internet services and a move to higher-value packages. Revenue growth at its U.S. business was lower than in Canada because the value of the Canadian dollar was higher this year.

Cogeco reported a decline in revenue at its enterprise business unit, which Mr. Audet admitted has not performed as well as he’d like. But he said Cogeco has no current plans to sell the division and is focused on turning it around.

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