Rogers Communications (RCI) was up 7% yesterday on the news that its acquisition of Bell’s 37.5% stake in MLSE closed, bringing its total ownership to 75% and growing the financial contribution of the media segment.
The jump builds on RCI’s outperformance since it sold off 6% on leverage concerns following the $11B, 12-year extension of its existing NHL broadcasting rights…
… as Blackstone’s $7B equity investment calmed investors alongside the outlook for a partial monetization event for the sports media business.
Rogers will pursue the appropriate funding options for this transaction aligned with maintaining our investment-grade balance sheet, including, among other options, raising an equity investment in our Sports and Media holdings.
While bringing in equity partners is the near-term plan, Rogers is able to acquire the remaining 25% stake in MLSE from Kilmer Sports in 2026, making a full carve-out a possibility in the medium term.
We’ll continue to advance our strategy to surface value from our sports assets. The multibillion dollar value of our world-class sports assets is not reflected in our share price, and our priority is to change this.
Such an event would tell the market what RCI’s remaining stake in the would-be media entity is worth, which could drive a multiple re-rate off the lows - with sale proceeds directed towards leverage reduction, growth, and buybacks.
With sports team valuations continuing to climb a potential IPO could be well-received, though the reabsorption of Telus International (TIXT) by Telus (T) has likely hurt investor appetite for telecom spinouts in the near-term.
