Specialty channels unseat conventional broadcasters as top earners in 2008: Statscan

The specialty television sector, for the first time ever, has dislodged private conventional broadcasters as the top revenue generator in the Canadian broadcast industry, according to an industry report released by Statistics Canada. In fact, every segment of the broadcasting sector earned more money in 2008 over 2007, except for private TV, which hadn’t yet hit the worst of the advertising slump when the numbers were compiled. The statistics are for the fiscal year ending Aug. 31, so do not reflect the impact on the television industry of the economic downturn that began in the final months of 2008. And while the recession has hit conventional broadcasters particularly hard over the past year, the numbers reflect a broader trend in which specialty services, pay TV and even public and non-commercial television have reported steady revenue increases over the past five years. In comparison, private TV has been slowly losing ground, showing losses in two of the past three years. The numbers will come as no surprise to conventional broadcasters, which have lobbied regulators and politicians for structural changes in the sector, saying the traditional model is broken. The industry scored a partial victory July 6 when the CRTC announced that broadcasters would receive $102 million over the next year for local programming, and that BDUs would have to start paying for the fee, or negotiate other concessions, for the right to carry local broadcast signals. Broadcasters have suggested carriage fees could generate up to $300 million annually for the industry. Taken as a whole, the broadcast industry fared relatively well in 2008. The sector earned $6.5 billion in revenue, a 5.4% increase over 2007. Private TV stations, however, recorded a 1.8% loss, on revenues of $2.1 billion last year. Statscan says the poor results are “mainly due to the loss of television advertising market shares to the specialty television segment”. Private conventional TV captured 58.8% of the $3.4 billion advertising market in 2008, compared with 68.1% five years earlier. Meanwhile, the specialty television segment continued to grow, albeit at a slower pace than in previous years. Its operating revenues rose 6.5% to $2.3 billion in 2008, with both subscription revenues (+5.4%) and advertising revenues (+8.1%) having contributed to the growth. The pay television segment also continued to advance, largely due to growing interest in on-demand television. Its operating revenues totaled $612 million in 2008, up 11.8% from 2007. Revenues from on-demand services climbed to $269.6 million in 2008, up 36.3% from 2007. The 5.4% increase in the sector's total operating revenues was partly due to a 13.2% advance in public and non-profit television revenues. The upturn was largely attributable to advertising revenues from the Summer Olympics and a substantial increase in grants. Private television broadcasters were less profitable in 2008 than in 2007, their profit before interests and taxes falling to $691 million from $763.6 million. Specialty and pay channels accounted for more than 99% of these profits. The profit margin before interests and taxes surpassed 20% for the fourth consecutive year for specialty channels and for the seventh straight year for pay television channels, states Statscan. Private conventional stations, on the other hand, generated a profit margin before interests and taxes of less than 1% in 2008, the lowest in 30 years. Nearly half of all private conventional stations posted losses before interests and taxes in 2008. For more information, or to enquire about the concepts, methods or data quality of this release, contact Daniel April (613-951-3177; daniel.april@statcan.gc.ca) or Sylvain Ouellet (613-951-2779; sylvain.ouellet@statcan.gc.ca), Business Special Surveys and Technology Statistics Division.

Specialty channels unseat conventional broadcasters as top earners in 2008: Statscan

Broadcast | July 16, 2009

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