Pay and specialty on more stable footing than OTA: Dalfen

In introducing the CRTC’s review of over-the-air television broadcasting at the Banff World Television Festival on June 12 (CCR, June 20/06), commission chair Charles Dalfen provided a snapshot of the state of Canada’s TV broadcasters today. Below is an edited excerpt from his speech. What is the situation of Canadian television drama today? We’re now into our second year of the drama incentives program introduced in 2004. The program was intended to stimulate improvements in three areas: spending on, broadcast hours of, and viewing to, original Canadian drama. It’s still too early to draw conclusions about whether the incentives are going to have a significant impact in any or all of those three areas. But I see grounds for cautious optimism….Having said that, I must also note that we haven’t observed any significant movement in spending on Canadian drama. While spending by conventional broadcasters on all Canadian programming grew by 14% between 2001 and 2005, spending on Canadian drama grew by only 3%. And all of the increase in drama spending was in French-language productions; spending on English productions actually declined during the period. On the other hand, viewing to Canadian English drama, as a percentage of viewing to all drama aired on private conventional services, rose from 9% in 2004 to 10% in 2005, a rate of increase in line with the targets we set for the five-year period covered by the incentive program… ...Viewing to Canadian drama on Canadian English-language pay and specialty services is relatively high and growing. Canadian drama captured one-third of viewing to all drama on English pay and specialty services last year, up from 28% the year before. And the record in terms of broadcast hours is also noteworthy….The pay and specialty sector’s spending on Canadian programming grew by nearly 40% from 2001 to 2005, rising to $725 million last year. Of that total, $163 million – not including CTF funding – went to Canadian drama… Let me return for a moment to the positive record of pay and specialty service in Canadian programming and Canadian drama. This strong performance mirrors the healthy economic situation of the pay and specialty sector. Revenue grew 40% to $2.1 billion between 2001 and 2005, while the sector-wide profit margin before interest and taxes, rose to 25%, from 18% in 2001. Meantime, we’ve seen a rapid increase in the number of operating pay and specialty services. In 2001, 61 services were operating; by the end of last year the number had more than doubled to 136. And growth in ethnic specialty services has occurred at an even faster pace....It’s hardly surprising, then, that the market share of pay and specialty services is expanding. The sector accounted for nearly 36% of all TV viewing by Canadians last year, up from 23% in 1999. The pay and specialty sector is obviously a success story for the Canadian broadcasting system. And looking ahead, the regulatory framework for digital migration issued by the commission early this year will support the sector in making the transition to fully digital distribution. Pay and specialty services are, in my view, well placed to make a substantial contribution to original Canadian programming and Canadian drama, and to generate demand for Canadian independent production. Having said that, it remains the case, today at least, that the primary driver of Canadian drama production is conventional television. And the conventional television sector, while certainly healthy, is not showing the kind of revenue growth or profitability seen in pay and specialty.

Pay and specialty on more stable footing than OTA: Dalfen

Broadcast | July 4, 2006

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