Rogers picks Comcast for internet protocol television, to take big writedown

Rogers Communications won't release its next-generation video platform this year as planned, triggering a writedown worth about half a billion dollars.

Instead, the company has decided to partner with a U.S. provider to offer its customers IPTV in early 2018.

As a result of the change, Rogers said Friday it will record a non-cash asset impairment charge in the range of $475 million to $525 million in its fourth quarter, which ends Dec. 31.

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Rogers has been conducting research and development on its so-called Internet protocol television service, which allows customers to stream shows through an Internet connection on a number of devices, and planned to make it available to customers before the end of the year.

But instead of launching a built in-house system, Rogers said Friday it will use technology developed by Comcast, one of the biggest cable and Internet service providers in the United States.

The company said it switched to ensure it can keep up with the pace of IPTV innovation.

The change will be good for customers because they will have access to the most advanced features on the market with the Comcast technology, Rogers chairman Alan Horn, who is also serving as interim chief executive, said in a statement.

Other Canadian firms using Comcast

Drew McReynolds, an RBC Dominion Securities Inc. analyst, wrote in a report that the decision has some positive implications including lower execution risk and the ability to stay competitive within the IPTV realm at a reasonable cost.

Rogers' decision to partner with another company isn't unique.

Shaw Communications Inc. made a similar announcement last year, shelving development of its IPTV platform in favour of Comcast's X1 service. The company took a $55 million writedown due to the news.

Shaw's FreeRange TV service, which uses Comcast's technology, launched in January.

Telus Corp. and BCE Inc. also offer IPTV services.

To fill the more-than-a-year long gap before Rogers can offer a similar option, the company said it will continue to enhance its existing TV platform, including more high-resolution 4K content.