OTTAWA – It was good to be a TV distributor in 2010.
That’s the message we see in the CRTC’s aggregate financial data recently posted on the Commission’s web site. Expenses are up (in some cases, way up), but then again, so was revenue, and profits.
• According to the data submitted to the Commission by the big cable and satellite companies for the 2010 broadcast year (ended August 31, 2010), the largest six companies (Shaw, Bell, Rogers, Videotron, Cogeco and Bragg) together earned $12.15 billion in revenue from their video, high speed internet and VOIP telephone services (the data does not include any wireless or traditional wireline telephony income).
• Just over 63% of that revenue ($7.68 billion) is earned from the sale of video services, with the rest coming from the sale of high speed internet and VOIP telephony.
• Quebecor’s Videotron is on a different side of that ratio compared to other distributors in that it makes more money selling what the data calls “non-programming services”, phone and Internet ($1.1 billion in 2010), than video ($982 million).
• The biggest expenditures the carriers have are affiliate payments made to specialty and pay channels. For most, those fees have risen dramatically over the past few years. Canadian and American specialty channels (but mostly Canadian) took in $2.67 billion in 2010, a 21% increase over what they were paid in 2008.
• At $665 million, Bell DTH pays the most and it and its customers have endured a 26% increase in the wholesale rates paid to programmers since 2008. Shaw Cable paid specialties $522 million in the past broadcast year, an increase of 28% over two years ago. Rogers paid $533 million, or 15% more than in 2008. Cogeco has seen this expense line rise 25% to $275 million and Videotron paid $321 million, a 17.5% increase.
• As for payments to foreign cable channels, just 16% of Rogers affiliate payments, for example, go outside of Canada.
• While wholesale fees rose, so did rates charged to customers, leading to increases in profits (in some cases, big jumps) before interest and taxes. Shaw Cable’s PBIT was $898.2 million, a 15% increase over 2009 and its DTH division Shaw Direct saw a 33% increase to $171.5 million. Videotron’s rose 17% to $780 million, to cite two examples.
• Along with these increases earned by carriers goes an increase in funds for Canadian content. Together the companies contributed $348 million for local expression and Cancon, a 5% increase over last year.
• For the most part, total subscribers continued to rise through 2010, at rates of 1-2%, except for Bell TV’s satellite division, which posted a 10% increase in paying customers.
• However, that was not so for Bragg Communications, which does business as EastLink. Its 2010 subscribers (which are spread around the country) came in at 453,075, a 4% drop from the end of 2009 – and a 18.2% drop from 2008.
• A CRTC decision in the fall forced Bragg, a privately-held company, to make its data public.
• Despite the drop off in customers, Bragg was still able to boost revenue in 2010 to $590 million, an increase of 19% from 2009 and 34% over 2008, when the company was still digesting its 2007 purchase of Persona Communications, a deal which doubled EastLink’s number of subscribers.
• Bragg also managed, despite the subscriber losses, to bounce back from a negative PBIT of -$33.1 million in 2008 to a positive line of $53.8 million in 2010. And this was also done in the face of a 32% jump in affiliate fees over the two years, to $124.2 million.
• And two facts that may only be of interest to me: Shaw Direct only spent $19.3 million on sales and promotion, $3.6 million less than Bragg, a company with half the number of subscribers as the DTH company. However Bragg has 1,469 employees, or 169 more than Shaw Direct reports.
All told, it was far more rewarding to be a carrier, than a broadcaster, in 2010.
– Greg O’Brien
