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As Rogers Communications Inc. zeroes in on hiring a new leader, the company’s media division is likely to feature prominently in any discussions with would-be successors.Gloria Nieto/The Globe and Mail

As Rogers Communications Inc. zeroes in on hiring a new leader, the company's media division is likely to feature prominently in any discussions with a would-be successor despite its relatively small place in the firm's empire.

Only about a quarter of Rogers' revenue is generated by the company's wide-ranging stable of media properties, and profits have been declining. But the division plays a key role at the company, because family members who control the voting shares have never forgotten it was built by Edward "Ted" Rogers Sr. in 1927 after he founded CFRB in Toronto and gradually expanded his empire, which later blossomed under his son Ted Rogers.

"It's an emotional issue for the family," said Canaccord Genuity's director of research Dvai Ghose. "Rogers started as a content company and I'd be very surprised if you ever saw a wholesale shutdown in its media division."

Still, whoever is tapped to lead Rogers will see the company's many challenges lined up, which may help explain why its shortlist of candidates is led by Vodafone UK president Guy Laurence, whose experience includes years working with content companies before leading a turnaround at the wireless giant. Rogers declined to comment on its CEO hiring process Tuesday.

Rogers' conventional television networks City and Omni piled up a $30-million loss last year as Rogers spent big on content and stations in a bid to steal market share from its rivals as the new programming season gets under way. Its largely profitable speciality channels face competition from a slew of online competitors that offer the same programming at a fraction of the cost and with more viewing flexibility.

Rogers Media president Keith Pelley has brought in Boston Consulting Group to review efficiencies in the division, a move that could mean layoffs just as the company prepares to launch a tightly guarded digital subscription plan for its stable of high profile magazines that include Maclean's and Chatelaine.

"We're now looking at the migration to digital as an incredible opportunity for subscription based services," Mr. Pelley said. "The media business has transformed over the weeks, months and years and we're trying to adapt to changes in the advertising market and spending a lot of time getting to know more about our customers."

The next several months could prove transformational for the media division, for better or worse. Details about the secretive magazine plan are expected early in the fall, while the expensive new shows that drove the conventional networks into the red such as Once Upon A Time In Wonderland and Quest will be expected to deliver big ratings and bigger advertising dollars on the now-national City network. Rogers is considering possible joint-venture opportunities for City and Omni, according to one source.

A new CEO will also have to have a good understanding of the rapidly expanding and increasingly profitable sports television empire, along with the Toronto Blue Jays, which are also part of the media division. All told, there are 24 television properties, 55 radio stations, 58 publishing brands and 90 digital sites.

The goal is to use each property to promote the other, and increasingly convert readers and viewers into customers for its shopping television channel and other online sales initiatives that allow the company to mine its vast trove of data to target products to specific customers.

"In today's hyper competitive landscape we believe that brands compete with content that resonates with consumers on any platform at any time on any device will be the winners," Mr. Pelley said. "Our breadth of assets is unmatched when it comes to brands, and you're going to start to see what we're able to do with them in the merchandising space."

A recent example is the re-branding of The Shopping Channel last week, he said, which was accompanied by an ad blitz across all of its media properties and led to the channel's best weekend of sales in its history.

While there are challenges at the media division, Rogers also faces challenges on other fronts. BCE Inc. is rolling out its Fibe television and internet service in Ontario and Quebec. In doing so, its Bell division is targeting key urban markets, such as Toronto, that were formerly a cable stronghold. Competition is also fierce in the smartphone market. It has been years since Bell and Telus Corp., which share a national network, broke Rogers's exclusivity on the iPhone.

Given that Rogers is Canada's largest wireless carrier with more than 9 million subscribers, the spectre of smartphone saturation is raising questions about the future growth of ARPU (average revenue per user) – a key metric that reflects the average monthly consumer bill.

"At 72 per cent of postpaid subs, smartphone maturity is becoming a greater challenge," wrote Greg MacDonald, an analyst with Macquarie Capital Markets Canada Ltd. in a note to clients following the release of the company's second-quarter results.