OTTAWA – The revenues of the conventional television broadcasting industry edged up just 0.6% in 2005, well below the average growth of 2.3% over the past five years, says a report by Statistics Canada released today.
It was a particularly difficult year for public television broadcasters, whose revenues slumped 5.2% to $1.2 billion, mainly because of a 25.2% drop in air time sales. The cancellation of the National Hockey League season accounted for much of the decline in advertising revenue, says the report.
The operating revenues of the television broadcasting sector totaled $5.6 billion in 2005, up 2.8% from 2004. "That was the smallest year-over-year increase in the sector’s revenues since 1997," says the release.
The slowdown affected both conventional television and pay and specialty television.
Private conventional television broadcasters reported revenues of $2.2 billion in 2005, 4% more than in the previous year. This performance represents a recovery for the segment, which endured a year of very slow growth (+0.9%) in 2004. It is also higher than the average growth rate for the last five years (+3.2%).
Meanwhile, the revenues of pay and specialty channels rose 6.3% to $2.2 billion in 2005. This segment of the industry continued to expand its market share and its portion of television advertising revenues topped 25% in 2005, and now accounts for nearly 40% of the sector’s total revenues.
The slower growth in revenues in 2005 did not affect the profitability of private television broadcasters. The sector’s profit margin (before interest and taxes) jumped from 15.6% in 2004 to 18.1% in 2005, according to Statscan, which primarily counts CRTC data.
However, the overall results mask a trend that varies considerably across the major segments of the industry. The specialty channels’ profit margin climbed from 19.7% to 24.8% between 2004 and 2005, while that of conventional television broadcasters held steady at 11%.
Pay television remained the sector’s most profitable segment. It made more than 27 cents of operating profit for each dollar of revenue, compared with just under 24 cents in 2004.
Digital channels are slowly but surely carving out a niche for themselves in the Canadian television landscape. They reported revenues of $148.4 million in 2005, nearly three times more than in 2002, their first year on the air. Nevertheless, they have not yet achieved profitability. Before interest and taxes, the digital channels lost $53.4 million in 2005, or nearly 36 cents for every dollar of revenue. That is an improvement, though, compared with their 2004 losses of 42 cents per dollar of revenue.
