Youth content wins out over news-Another banner year for specialty and pay television services in Canada

The launch of new channels has once again boosted overall revenues for the specialty television sector, particularly those targeted at young Canadians. According to the statistical and financial summaries for pay and specialty channels released by the CRTC, the industry reported pre-tax profits of $126.7 million on revenues of $1 billion in 1999, an increase of 111.1 per cent. Fifty companies reported, up three from the 1998 figures. The new players are MuchMore Music, CTV Sports Net and TreeHouse. "It's a big milestone for us to top the one billion dollar mark," Jane Logan, president and CEO of the Specialty and Premium Television Association told CCR. "There are a couple of factors. We've seen a real impact from the growth of satellite services. We're also basically comparing the year previous where a number of services were in their first year of operation and therefore they had free periods, a slow ramp up for subscriber fees, and experimental advertising. They have converted that to stronger subscriber levels." The 38 specialty services listed pre-tax profits of $95.7 million, up 135. 7 per cent from the previous year, when only 35 were in operation. Revenues also increased 22.8 per cent, from $717.1 million in 1998 to $880.6 million last year. The dozen pay services saw a 59.6 per cent jump in profits from year to year, bringing in $31 million in 1999, up from $19.4 million previously. No new pay channels joined the tier. Last year all 50 services reported a combined total of 153,148,048 subscribers, up 14.2 per cent from the previous year's numbers. The vast majority, 146.8 million, was for the specialty channels, while pay TV recorded 6.2 million, a hike of 33.6 per cent. Young people appear to be the engine driving the profitability of the specialty services. The most profitable companies last year were the ones providing youth programming, cartoons and rock videos (see box). In contrast, channels specializing in news and sports recorded high losses, as did CanWest Global's Prime TV, which is skewed to an older demographic. Logan couldn't speculate on how profitable these services will be in the future. "It's hard to draw a straight line for growth with specialty television," she explains. "A lot of the growth is driven by the addition of new networks so it's not a step function. Advertising generally continues strongly as new services mature and the advertisers are more comfortable with the real value and benefits and as the networks gain the experience of how best to pitch themselves." Spending on the Canadian programming also jumped from the 1998 figures. In that year, the 47 channels spent a total of $302.7 million; last year the outlay was $393.2 million. This represents an increase of nearly 30 per cent. The CRTC's numbers were released before it approved CTV's takeover of NetStar Communications Inc, the operator of TSN, RDS and Discovery. The head of the SPTV group expects to see more mergers in the future. "I think consolidation in the industry is a natural," says Logan. "The specialty networks are attractive properties and we're seeing a need for economies of scale."

Youth content wins out over news-Another banner year for specialty and pay television services in Canada

News | 03/30/2000 5:00 am EST

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