TORONTO – Bell Canada had some strong words for the CRTC on the way it reported the financial results of Canadian broadcasting distributors and conventional television stations last month.
In a letter addressed to CRTC chair Konrad von Finckenstein dated March 29, Bell accused the Commission of not reporting the industry’s financial data “in a factual and complete manner”, and offered its recommendations on how to do so.
According to Bell, the primary profitability measure reported by the Commission, profit before interest and taxes (PBIT), does not take into account the yearly capital investments that BDUs make.
“Nowhere is it reported that DTH providers invested over half a billion dollars in capital investments and that this results in a highly unprofitable business for investors and a financial deficit far greater than that experienced by the conventional television stations”, reads the letter, which is signed by president of Bell’s residential services Kevin Crull. “This reporting deficiency has been identified to the Commission by Bell Canada on several occasions yet the omission persists.”
Crull also said that “misconceptions about the source of cable company profits must be remedied”, noting that the CRTC’s statistical and financial summaries do not report PBIT or pre-tax profit for the cable business alone “so the profitability of the cable business is indiscernible to interested parties”.
The letter also questions why the financial results for pay television, pay-per-view, video-on-demand and specialty services were not included, an omission that Crull called “profound”.
“As the Commission is well aware, specialty service revenues and profits have been growing rapidly for many years and most specialty services are owned by the same corporations that own conventional television stations”, the letter continues. “This joint ownership position allows these corporations to offset losses in their conventional broadcasting services with gains in specialty services.
"This fact is clearly relevant when assessing the financial health of the broadcasting industry but unfortunately is impossible to discern from the Commission’s recent media releases. While it is appropriate to isolate the performance of the cable companies’ broadcasting businesses from their non-broadcasting businesses (Internet and telephony) it is inappropriate and misleading to isolate the two broadcasting businesses (conventional and specialty) of the broadcasters.”
