OTTAWA – Canada’s private radio broadcasters saw operating revenues of $1.6 billion (current dollars) for 2008, a 5.6% increase from 2007 totals, according to Statistics Canada.
Profits before interest and taxes increased 12.2% to $336.5 million, while the profit margin before interest and taxes of 21.1% realized in 2008 was almost identical to the industry’s best performance in the last 30 years, the 21.2 % margin achieved in 2005.
The report says that the private radio industry has been profitable in recent years due largely to two key factors. First, the industry’s large companies operate an increasing number of stations, especially in Canada’s biggest markets. This has allowed the industry to withstand competition from other media by improving the offer to advertisers, and to control its spending as a result of the economies of scale that come from operating several stations within the same market.
Second, the report says that the industry has been “rejuvenated” by the gradual transfer of stations from the AM band to the more popular and profitable FM band. This transition began in the early 1990s and is still continuing.
In 2008, AM stations generated a profit margin of 8.1% before interest and taxes, their best performance in the past 20 years. However, this is only a fraction of the 24.5% generated by FM radio. There were 159 AM stations in 2008, 15 fewer than in 2007.
Radio stations’ performance varied considerably depending on the broadcasting language. In 2008, Anglophone stations recorded the highest profit margin before interest and taxes at 23.0%, followed by Francophone stations at 13.8% and stations broadcasting in other languages at 4.2%. This ranking has remained unchanged since 1998.
The data used in the report is from the fiscal year ending August 31st, and does not reflect the impact on the television industry of the economic downturn that began in the final months of 2008.
