Radio revenues top $1 billion for first time, but industry still vulnerable, CAB warns

Increased copyright expenses and higher expenditures could easily offset increased revenues in Canada’s private radio industry, according to Richard Cavanagh, VP of radio at the Canadian Association of Broadcasters (CAB). He says radio stations could soon be paying for the right to music they currently stream over the Internet. He adds that a movement is afoot to have radio stations pay tariffs for music that they copy onto hard drives so they can program their schedules with the computer. "It looks like the copyright burden could increase. In a market that is still somewhat shaky in terms of its profitability and long-term growth, that’s a real challenge," Cavanagh notes. Private Radio Revenues ($ millions)Revenue200019991998Local time sales769.3717.8688.1National time sales229.3233.0229.7Network payments1.21.22.0Infomercials0.00.00.0Syndication-production10.49.610.0Other13.312.310.2Source: Private Radio Statistical and Financial Summaries 1996-2000, CRTC Broadcast Analysis Branch. Revenues topped $1 billion for FM and AM radio for the first time, according to industry statistics and financials released by the CRTC. The Private Radio Statistical and Financial Summaries 1996-2000, compiled yearly by the commission’s broadcast analysis branch, reveal that total revenues increased 5.1 per cent to $1.023 billion in 2000 from $973.8 million a year earlier. Total expenses rose 3.4 per cent to $820.4 million from $793.3 million, according to the CRTC statistics, based on the reporting of 493 radio stations. The largest increase in expenses was for programming, which jumped 6.1 per cent to $292.3 million in 2000 from $275.6 million a year earlier. Cavanagh anticipates that not only will copyright costs go up, but so will capital expenses as radio stations expand to multi-points of distribution. "There’s a real need for radio to get out there on multiple platforms, like the Internet, maybe satellite radio at some point in time, and digital radio is still rolling out. Those investments are really critical right now and radio’s going to have to be making those kinds of investments," he says, adding, "I still sense vulnerability on the part of the industry, although the picture does look like it’s going in the right direction." He notes growth has dipped somewhat, but that radio has maintained its share of the advertising pie, while that of other media has fallen with the economic downturn. In 2000, local advertising rose 7.2 per cent to $769.3 million, while syndication and production climbed 8.5 per cent to $10.4 million and other revenue rose 8.2 per cent to 13.3 million. National advertising was down 1.5 per cent to $229.3 million. Also on the positive side, Cavanagh sees the struggling AM market trying to reinvent itself to expand audience share. "Right, now you see more talk and sports formats. I think there is some hope there that by looking at some alternative formats, AM might be able to recover a bit more," he says, noting that the FM market continued to be strong. But Cavanagh is concerned about small-market radio stations, which he says far outnumber the major-market players. Small-market radio stations are more vulnerable to economic fluctuation, such as downturns in the economy, and to other media in the marketplace, and even to low-power stations, he adds. "Although low-power stations aren’t supposed to be competitive, they do eat away at revenues. There’s a limited threshold for revenue in smaller markets, so radio stations there are more susceptible to competition," he notes.

Radio revenues top $1 billion for first time, but industry still vulnerable, CAB warns

Broadcast | May 10, 2001

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Radio revenues top $1 billion for first time, but industry still vulnerable, CAB warns

Broadcast | May 10, 2001

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