As profit margins rise for BDUs, calls for carriage fees persist

In the wake of a CRTC report showing strong growth in revenues for the broadcast distribution industry, conventional broadcasters have renewed calls for a restructuring of broadcast regulations, including the implementation of a fee-for-carriage regime.On Wednesday, the CRTC announced "substantial growth" in revenues for the direct-to-home satellite TV (DTH) and multipoint distribution systems (MDS) companies. DTH and MDS companies increased their revenues from $1.7 billion to $1.85 billion between 2006 and 2007, an 11.4% growth, according to the CRTC. However, the number of DTH and MDS subscribers increased only slightly-0.1%-to 2.6 million.Cablecos generated a total of $7.1 billion for 2007 - a $1-billion increase over 2006, or 16.1%. As revenues rise, so has the number of basic-cable subscribers, which increased from 7.48 million to 7.65 million, a 2.3% increase.Paul Sparkes, CTVglobemedia executive VP, corporate affairs, calls the revenue growth "unprecedented" and says it confirms the need to rebalance broadcasting regulations in Canada and the need for a fee-for-carriage regime. CTVglobemedia has long been a vocal advocate for carriage fees, calling on BDUs to reimburse over-the-air broadcasters for their signals."Given these unprecedented profits, it is clear that cable and satellite companies can afford to pay to carry our local TV stations without passing on any increases to Canadian consumers," said Sparkes in a statement.The increase in profit margins, means that cablecos rank among the most profitable sectors in the Canadian economy, says Steven Guiton, CBC's executive director, strategy and government relations."The significant growth in cable and satellite TV revenues also demonstrate the flaw in the CRTC's approach to changing the structure of the Canadian Television Fund (CTV)."Guiton says last year, CTF contributions from cable and satellite TV companies rose by 12%. But Guiton says regulations put forward by the CRTC to restructure the fund, would mean that the growth in revenues will only be applied to one stream of CTF-funded programs."The other half of the fund would receive no revenue growth at all."By the time of going to press, the Canadian Cable Systems Alliance (CCSA), which represents cable and satellite companies, was not able to respond to inquiries from Canadian Communication Reports. However, in the past, the CCSA has criticized calls for a carriage fee, saying it is an unnecessary burden which forces BDU clients to pay for a service that non BDU customers get for free.Other highlights of the CRTC report• Profit margins for cablecos before interest and taxes jumped from $1.4 billion in 2006 to $1.5 billion in 2007, an increase of 10%.• Cableco expenditures increased by 19.1% within the same period, reducing the profit before interest and taxes (PBIT) margin from 22.34% in 2006 to 21.17% in 2007.• Last year, 17, 900 people were employed by cablecos• Those employees received $1.7 billion in salaries. In 2006, the number was 15, 271 people, who were paid $933.1 million in salaries.• In 2006, DTH and MDS companies posted a loss of $32 million. PBIT margin grew significantly for DTH and MDS companies, more than 153.6% to $17 million.• PBIT margins for DTH and MDS companies increased from 1.93% in 2006 to 0.93% in 2007.• Last year, DTH and MDS companies employed 2,884 people, paying $191 million in salaries.• In 2006, DTH and MDS companies employed 2, 813 people, paying them $138.2 million in salaries.• Broadcast distribution companies' contributions to Canadian programming totalled $296.7 million in 2007, an increase of 8.4% compared to the previous year.• Of this year's total revenue, $155.3 million was channelled to the CTF.• $38.4 of this money was directed to independent funds and $103 million went to community channels.

As profit margins rise for BDUs, calls for carriage fees persist

Broadcast | June 19, 2008

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us