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Why I Am Long Rogers and Bell

Three things astonish me when I review the Rogers and Bell sports, media and entertainment stables:

  1. It almost makes the primary revenue generators, such as wireless and cable, appear insignificant going forward.
  2. Given the scope of these two companies, I always tend to leave something out (e.g., Bell's recent acquisition of Astral Media).
  3. There is no way any company could pull this off in the U.S. And I heard some guy on Fox News call Canada "socialist." Go figure.

Have another look at the five criteria I present at the beginning of this article. You can put a checkmark next to each point. Revenue are already massive, diverse, synergized and growing with potential for factors like continued smartphone (or, as Bell calls them, "superphones") adoption, increased wireless data use and the MLSE deal to provide an even bigger boost to revenue going forward. Both companies have embraced the notion of TV Everywhere, providing access to their customers on a wide range of digital devices.

As Rogers notes in its annual report, it looks to take control of Canada's most valuable content. Bell shares that goal and is firmly planted, to the loose and far extent the law will allow, on the same page with its apparent "rival" Rogers. Between the two of them, these companies directly own or control countless products, services and experiences Canadian consumers use and take part in every single day.

Millions of Canadians get their phones, cable service, Internet service, news, sports, weather and entertainment from Rogers and Bell. They watch sports in venues either owned or sponsored heavily by the two companies. And there's a good chance that Rogers or Bell own the teams Canadians watch in those arenas, particularly in Toronto and Montreal. Regulators would simply not allow anything even close to that size and scale to take place in America.

Both RCI and BCE continue to flirt with the 40.00 level. Rogers reports earnings later this month. Bell is on deck in early May. If each can settle and sustain above 40.00 between now and earnings, I expect considerable upside through the first half of the year, provided favorable earnings and guidance.

I view both as long-term plays. Therefore, if earnings trigger near-term weakness, I will step up my already regular-scheduled buying activity.

At the time of publication the author was long RCI and BCE. Positions may change at any time.

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