Sunday, January 15, 2017

What happened to Netflix's Competition in Canada?


       Shaw Communications Inc. is a Canadian communications company that provides internet, mobile, telephone and television services.  They operate mostly in Alberta and British Columbia but operate smaller systems in Saskatchewan, Manitoba and northern Ontario.  There main competitor is Telus Communications.

       Shaw added mobile capabilities only recently with their acquisition of Wind Mobile. Shaw since has changed the name of Wind Mobile to Freedom Mobile.  Telus Communications , Rogers Communications, and Bell Canada Enterprises are considered the big 3 in Canada in terms of providing communication services. The big 3 also have discount companies that operate using their mobile networks. With the latter, the services and coverage of these discount companies obviously are not as good as going directly with the main carrier.

        Shaw Communications and Roger Communications had teamed up to provide a video on demand service to compete with Netflix. This service was called Shomi, and was launched in November 2014.  Shomi did not take off, likely due to the fact people get set in their ways and decided to keep Netflix. Netflix's popularity speaks for itself and a Netflix Subscriber can have 5 profiles under their account and these profiles can watch Netflix from anywhere he or she chooses to and from any device.

        Shaw has not raised its dividend since the March 2015 payment , that was equivalent to 8% increase in the annual dividend.  Shaw has reported dividends for the next 3 months and there is no dividend increase.  Shaw pays a monthly dividend, in which I received a monthly dividend of $19.75 as I own 200 shares.

        Shaw Communications' partner in Shomi, as stated above, is Rogers Communications.  Rogers Communications has not raised its dividend since the April 2015 payment.  Unlike Shaw Communications that pays a monthly dividend, Rogers Communications pays a quarterly dividend.

        Recently, Shaw Communications and Rogers Communications decided to shut down the Shomi video on demand service at the end of November 2016.  Shaw Communications recently reported earnings and reported a profit of $89 Million or $0.18 per share in the 3 months that ended November 30.  This is down from 59.2% from $218 Million of $0.43 per share for the same period last year.

        With Shomi shut down, investors are hoping Shaw Communications and Rogers Communications start rewarding investors with dividend increases. With the slow down in western Canada due to the low oil prices, this might affect the chances of dividend increases not happening as quick as investors would like. 

 Please Note:  All my shares of Rogers Communications, Bell Canada Enterprises and Shaw Communications have been purchased on the Toronto Stock Exchange,

Do you own shares of Roger's Communications, Bell Canada Enterprises, Telus Communications, or Shaw Communications?

Disclosure (With TSX ticker symbols) :  Long RCI.B, SJR.B, BCE

Disclosure :  Do not own shares of Telus or Netflix at the time of this writing.

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.


1 comment:

  1. Netflix is just a juggernaut. It will be hard to beat them in the game of on-demand video. Companies may try, but I think Netflix will hold majority for quite some time.