All forms of broadcast media to keep growing – at different rates – until 2010

The annual Global Entertainment and Media Outlook report from consulting firm PricewaterhouseCoopers (PwC) predicts a mixed outlook, with moderate changes to growth rates for television broadcasters and distributors as well as radio broadcasters. But while two of the three will see slight declines in growth between now and 2010, one media format will grow considerably. The main trend woven throughout the report is "steady as you go," says Jerry Brown, director of the Canadian entertainment and media advisory practice at the firm’s Toronto offices. Special irregularly occurring events – such as the NHL lockout, the FIFA World Cup and the Olympics – hold considerable sway over television broadcaster’s fortunes, with the first of those events driving down television broadcasters’ revenues in 2005. "I was expecting it to slow down, but there’s sort of one-off distorting factors hidden in the way the numbers are calculated," Brown explains. Overall, PwC predicts a 4.3% compound annual rate of revenue growth between 2006 and 2010 for Canadian firms in the TV Networks: Broadcast and Cable category. The segment will start at 4.5% annual growth in the first of those five years, but will gradually fall off to 4% by 2010. Most of the slowdown will be due to declining revenues at conventional broadcast properties, which are predicted to average just a 1.9% growth rate over the fives years; specialty broadcasters, the report says, will grow 8.4% during the same period. Despite the modest decline, some broadcasters are already beginning to benefit from revenue recapture due to convergence, Brown says, pointing to the Home and Garden Television specialty channel operated by Cincinnati OH-based E.W. Scripps Co. "They have the TV program, they Shopzilla that enables you to do Internet pricing, and when IPTV is out there you’re going to be able to put the mouse while you’re watching the program on that sofa that catches your eye and lo and behold all the important information’s going to come onto the screen," he says. However, that American example doesn’t mean we lag our neighbours to the south. "I happened to pick on that one because it’s the most obvious and clearest and easiest to explain example, but I don’t think that necessarily means we’re behind the Americans," Brown says. New technology is also making an impact on the broadcast distribution front, which PwC predicts will post an annual compound growth rate of 6.4% from now until 2010. Broadcast distributors, Brown says, "are being very effective in the way they’re packaging product together, particularly for the cable guys in terms of investments in things like video on demand, where we’re going to see tremendous growth." How tremendous? The report believes VOD programming revenues will expand an incredible 33.8% on a compound annual basis, largely due to their low starting point: even with that impressive rate of growth, the VOD market in Canada will still only total $356 million by 2010. In the race to get to high-definition and video on demand first, the edge may just go to cable, Brown predicts. "The cable guys are really the guys who’ve got the big enough and fast enough pipeline to offer you a significant number of HD channels and VOD, because certainly with IPTV it’s not clear to me how many HD channels you’re going to be able to jam down that phone line," he says. Last but not least, radio will continue to post moderate growth in revenues, thanks to advertising. The report forecasts a five-year 8.8% compound annual growth rate – the strongest of the three broadcast revenue categories – with the pace accelerating from 2008 through to 2010 to hit 12.2% in that final year, the most impressive single-year growth level out of all three broadcast revenue types. While satellite and other subscription radio has definitely changed the game and accounts for much of the growth in radio’s financial fortunes, "equally conventional radio has done very well by focusing on its local interest," Brown says. "As long as they keep remembering that, they still are relevant to their audience, because the digital guys can’t do that. You can get the national news from CBC on Sirius , but you can’t get the local traffic report." While the old adage ‘content is king’ still applies – and might always do so – the various thrones on which content sits now come in all sizes and formats. "The content will obviously drive the audience, but it’s also how you manage your relationship with that audience to your maximum advantage – I think that’s the newer dimension," Brown says. Equally important, he adds, is "remembering audiences will want to be served in any format at any time that suits them. You can’t just own a TV audience for a particular thing – you need to own that audience in every way they want to access information." Projected growth in TV network and distribution markets (Canada versus global)Television Networks (in US $ millions)200620072008200920102006-10 CAGRCanada3,8494,0194,1934,3704,546 % change4.54.44.34.244.3Global51,67954,15856,51359,03961,662 % change5.24.84.34.54.44.7 Television Distribution (in US $ millions) Canada3,5343,7834,0244,2764,509 % change6.776.46.35.46.4Global135,692148,514162,564177,587193,122 % change9.49.49.59.28.79.3Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, Global Entertainment and Media Outlook: 2006-2010

All forms of broadcast media to keep growing – at different rates – until 2010

News | 07/20/2006 4:00 am EDT

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