In an unexpected twist, Canadian communications giant Rogers Communications (TSE:RCI.B) set up a new deal for one of the greatest things in Canada: hockey. In fact, it set up a new rights deal with the National Hockey League (NHL), which will run for the next 12 years. The move was oddly rebuffed by investors, though, who sent Rogers shares down fractionally in Wednesday morning’s trading.
Rogers and the NHL set up that 12 year deal, valued at $11 billion—not even a billion dollars a year, oddly—that gives Rogers the national media rights to all NHL games on every platform in Canada. That is actually a massive premium over the deal set up 12 years ago, when Rogers paid $5.2 billion in the deal that will expire next season. But Rogers paid up, and now has the rights through the 2037-2038 season.
Rogers made it clear why it was shelling out that kind of money, in a statement from Rogers’ CEO, Tony Staffieri. Staffieri noted that hockey is “…Canada’s game, and we’re proud to be the home of hockey.” Further, Staffieri noted something that a growing number of media companies have been noting lately: “Sports are core to our company, and these rights are the most valuable sports rights in Canada.”
Declining Price Targets
So while Rogers is making its bones on the back of hockey action, there are some analysts who are oddly concerned about the stock as a whole. National Bank, reports noted, cut Rogers’ price target from C$54 per share to C$53. It left the Outperform rating in place, but still decided to mildly pare back the price target.
The biggest reason for this is a combination of two key factors: rising competition and slowing customer growth. This suggests that Rogers is losing ground to its competitors,a and is also likely part of the reason it was willing to shell out that kind of money for hockey rights. It needed a competitive advantage, and being pretty much the exclusive home of hockey in Canada is likely to go a long way therein.
Is Rogers Communications a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:RCI.B stock based on four Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 29.68% loss in its share price over the past year, the average TSE:RCI.B price target of C$52.25 per share implies 45.33% upside potential.
