DTH subscribers help ignite continued growth of pay and specialty services

Direct-to-home satellite services are bringing new customers to Canada’s healthy pay and specialty channel sector, according to figures released last week by the CRTC. The Pay and Specialty Statistical and Financial Summaries 1996-2000, compiled annually by the commission’s broadcast analysis branch, show that DTH revenues jumped 125 per cent to $127.5 million in 2000 from $56.7 million in 1999, while cable revenues rose 12.3 per cent to $731.2 million from $650.9 million. Pay and Specialty Television Revenues ($ millions)Revenue200019991998Cable subscriber revenue731.2650.9566.4DTH subscriber revenue127.556.711.9Local advertising11.09.48.2National advertising369.7295.0232.3Other30.825.323.3Source: Pay and Specialty Television Statistical and Financial Summaries 1996-2000, CRTC Broadcast Analysis Branch. "The biggest growth for any of the services was in DTH revenues. It has provided a whole new set of customers for these channels, giving a new push to the marketing of specialty," notes broadcast consultant Peter Fleming. "Whether or not DTH is at the end of bringing in new customers (not reached by cable) rather than stealing customers, we’ll see what happens as we go along. So far it’s pretty exciting for these services." Total revenues for the industry overall rose 22.5 per cent to $1.27 billion in 2000 from the previous year, while profits before interest and taxes jumped 48.4 per cent to $221.9 million, according to the CRTC figures. In part, revenues were boosted by the launch of eight new specialty channels in 2000, compared with three the year before. "It was pretty impressive increases all across the board, in both advertising and subscriptions," says Fleming. DTH also boosted the pay sector, with 60 to 80 per cent of those customers opting for pay channels, according to Fleming. "That’s a huge benefit for pay. The initial customers for DTH had little or no television because they’re out in the country. So they’re buying everything and they’re staying with it," he says. He adds, "The other thing is the unheard secret that it’s a lot harder to steal pay-per-view services from DTH than it is from cable because digital has better encryption." For the combined pay and specialty sector, local advertising rose 27.1 per cent to about 11 million in 2000 from 9.4 million the year before, while national advertising jumped 25.3 percent to about $369.7 million from $295 million, according to the CRTC statistics. Fleming notes that the pay and specialty services still have room to grow as "their share of advertising revenue still isn’t as high as their share of audience." He also points out that the ethnic channels, which he considers the weakest segment of the specialty channel industry, have started to make some headway. Those services that seem to be fairing the best are those which have been able to create synergies with affiliated channels, he adds. Fleming doesn’t anticipate that existing specialty channels will be harmed by an influx of new digital specialty channels this September. "These channels are very well established. And a lot of the new channels are owned by players who will be able to create synergies with their existing services. There will be some competition for audiences, but I don’t expect to see a huge loss for these channels (due to the digital launch)," he notes.

DTH subscribers help ignite continued growth of pay and specialty services

Broadcast | April 11, 2001

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