TV and radio consumption down, but revenues stand firm

One hour: that's the average drop in the time Canadians spent enjoying television and broadcast radio combined in 2006 compared to 2005, according to the eighth edition of the CRTC's Broadcasting Policy Monitoring Report.However, the financial side of the industry converted the subtraction to addition as year-over-year revenues for private commercial radio stations, conventional television, pay/pay-per-view/video on demand services, and broadcast distribution were all up. Canadians listened to 18.6 hours of radio per week in 2006, down from 19.1 hours in 2005, and watched 27.6 hours of television per week last year, a decrease from 28.1 in 2005. Both statistics should come as no surprise to industry followers; average radio and television consumption time has been decreasing steadily this decade. Fortunately for the industry, this decrease has been inversely proportionate to the revenue path during that time.On the radio side, listening levels have decreased by 1.7 hours since 2000, with reductions in the teen and adults aged 18 to 34 demographics being closer to three hours over that time span. Revenues, however, increased from $1.03 billion in 2000 to $1.41 billion in 2006, including a jump of 5.7%, or $75.9 million, from 2005 to 2006. Similarly with television, average weekly viewing time dropped to its 2005-2006 season level of 27.6 hours from 28.6 hours in 2002-2003. But again, revenue has seemingly been immune to the decline. Overall television revenues increased to $5.08 billion in 2006, up from $4.71 billion in 2005 and $3.52 billion in 2000. The origin of the TV revenue increase is easily seen when looking at the industry's three segments. The majority of the overall growth was driven by the pay, pay-per-view and video-on-demand category, which increased by $227 million to $2.5 billion between 2005 and 2006. Conversely, the private conventional over-the-air television category saw revenue decrease from $2.198 billion in 2005 to $2.195 billion the next year. And after experiencing a decline from $375 million to $292 million between 2004 and 2005, the CBC and conventional OTA television category revenues rebounded to $392 million in 2006. And even though we are watching less TV on average, more Canadians than ever are accessing the airwaves through BDU subscriptions. While the number of cable TV subscribers declined consistently from 2002 (7.2 million) to 2005 (6.8 million), subscriptions increased to 7.4 million in 2006. Direct-to-home and multipoint distribution services on the other hand have been growing steadily since 2002, reaching 2.6 million in 2006, up 5.3% over the previous year. As well, subscriptions to digital television services overall rose by 10%, from 5.3 million to 5.8 million, between 2005 and 2006. Throughout this period cable revenues, as well as those for DTH and MDS, have maintained steady growth. Revenue from all BDU services, including Internet, topped $7.7 billion in 2006. This represents a $1.3 billion increase over 2005 and a $2.8 billion rise since 2002. But even though overall revenues are up across the board, broadcasters should still take note where that extra hour away from the TV and radio is being spent. A December 2006 survey from CyberTrends and BBM Analytics that was features in the CRTC report detailed Canadians' shifting media consumption habits. While the frequency of those reporting using the Internet for traditional activities such as surfing or browsing, emailing, visiting specific sites of interest, and searching for specific information all declined from December 2005 to December 2006, the frequency of those consuming broadcast media via the Internet tended to increase. Those who use the Internet to download TV programs rose from 3% to 4%, download movies increased from 3% to 5%, watch TV jumped from 0% to 6%, listen to radio increased from 21% to 22% and watch videos improved from 24% to 29%. Of course, the frequency of using the Internet for all of the aforementioned traditional activities was above 60%, but the perception of the home computer as a TV replacement is increasing. Advertisers have already recognized this: online advertising revenue increased dramatically, from $562 million to more than $1 billion, between 2005 and 2006. While this made up significant ground on TV ad revenues, which increased from $3.01 billion to $3.24 billion between 2005 and 2006, it has yet to send that sector into a decline.

TV and radio consumption down, but revenues stand firm

Broadcast | August 3, 2007

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