Some bright spots remain
CANADIAN SPECIALTY CHANNEL revenues took a hard hit in 2020, thanks to Covid-19, with independents taking bigger shots than vertically integrated (VI) companies.
The recently published CRTC 2020 Individual Discretionary and On-Demand Statistical and Financial Summaries for the year ended August 31, 2020 shows Canada’s VI companies, taken together, reported a 6.9% year-over-year decrease in total revenues to $2.9 billion in 2020. The CRTC considers VI companies to include Bell Media, Rogers Media, Quebecor Media, and Corus Entertainment.
These companies spent 36.2% of their total revenues on Canadian programming, but total expenditures on Canadian programming was down 8.1% to $1 billion. Driven by the Covid-19 pandemic, which led to lockdowns all around the country, national advertising was down for VI companies by 15.9% to $869 million and local advertising revenue was down 6.2% to $20.6 million. Sadly, pre-pandemic, the trend was in the opposite direction. In 2019 those numbers had grown 2.6% and 6.6% respectively over the previous year’s totals.
The rest of the companies (the independents, or non-vertically integrated companies), when taken together saw revenues decrease by 9.6% from 2019 to $783 million. National and local advertising were down by 21% and 85.7% respectively, although local advertising had also decreased by 50.2% in 2019 compared to 2018. Total Canadian programming expenditure for these companies was down by 13.8%, although these companies are still spending 55.6% of revenues on Canadian programming, far more than the VI companies.
The VI companies together reported a pre-tax profit of $543 million, while the independent specialty services reported a pre-tax profit of $70.2 million.
Terrestrial subscription revenue was up overall 0.3% for the VI broadcasters (driven by recent rate increases, since overall subscriber numbers have trended downwards), while it decreased by 3.5% for the independent specialties. Direct-to-home (DTH) subscription revenue declined by 10.4% for the VI channels and declined by 11.5% for the independents.
Both terrestrial and DTH subscriber revenue for the independents has fallen every year for the last four years. For the VI companies, terrestrial subscriber revenue has increased every year since at least 2015, while DTH subscriber revenue has fallen each year in the same time frame, with the exception of 2018 when it rose 4.9% over the previous year.
Total subscriber numbers for all channels that reported how many subscribers they had in 2020 fell by around 7%. Over 83% of channels that reported subscription numbers reported a decrease since 2019. Some of the higher decreases in subscription numbers include Super Écran (-20%), ESPN (-25.6%), Fashion Television Channel (-26.2%) and Book Television (-18.3%). Only 18 channels reported subscription numbers rose in 2020 compared to 2019 including Animal Planet (6.6%), Cooking Channel (18.5%), Discovery Science (15.3%) and the Weather Network (1.3%).
While the number of staff reported at the independents is slightly higher than at the VI companies, staff numbers took a big hit in 2020. The staff count at the independents fell 17.3% to 1,964 in 2020. Staff count at the VI companies fell by 2.5% to 1,913, which was a smaller drop than reported in 2019, at which time the VI companies reported an 8.6% drop from 2018 to 1,962.
Sportsnet and TSN
Sports broadcasting in Canada was still profitable, even though there was a significant lack of live sporting events to broadcast because of the pandemic. Sportsnet 360, Sportsnet (which includes Hockey Night in Canada), and Sportsnet One had total revenues of $627 million, and TSN recorded total revenues of $469 million in 2020. The Sportsnet channels’ combined PBIT (profit before interest and tax) in 2020 of $97.9 million, while TSN’s PBIT was $142 million.
Subscriber numbers for the three Sportsnets combined and for TSN were down in 2020 from 2019 but total subscriber revenue rose. (Ed note: Thanks to substantial wholesale rate increases.)
The three Sportsnet channels together saw a decline in subscriber numbers from 17.7 million in 2019 to 16.6 million in 2020. Total subscription revenue grew from $423 million in 2019 to $435.1 million in 2020. TSN’s subscribers decreased from 7.4 million in 2019 to 6.8 million in 2020. Total subscriber revenue however, increased from $356 million in 2019 to $368 million in 2020, or, from about $4/subscriber per month on a wholesale basis to $4.51/sub, a 13% increase, YoY.
Reaching five years back, TSN has seen a subscriber drop of 25% since August 31, 2016, while rates per subscriber have more than compensated for that, rising 39% over that time.
Sportsnet’s primary channel saw an even larger subscriber drop (-28%) over that time, to 6.3 million as of August 31, 2020, but also a bigger rate increase, rising to $4.25/subscriber/month, or 46% higher than 2016.
Of course, Sportsnet is in the middle of the largest Canadian programming rights deal ever – its 12-year $5.2 billion NHL contract – and its CRTC filings reflect that, too. Sportsnet shows much more spending on rights acquisition ($304 million) in 2020 as compared to TSN ($111 million). With that said, TSN spent 22% less on rights in 2020 over 2019, likely due to the pandemic and how several properties, such as Wimbledon and the CFL season, were cancelled altogether.
Sportsnet’s total rights costs filed for its primary service in 2020 are almost double its 2015 numbers, which was its final year before the start of the national NHL contract.
National advertising declined for all channels as well in 2020 from 2019. The three Sportsnets combined saw a decrease from $257 million in 2019 to $173 million in 2020. TSN’s national ad revenue decreased from $144 million to $98.3 million.
None of the figures here include over-the-top (OTT) subscribers or revenue because brands like TSN Direct, Sportsnet Now and the online portion of Crave, for example, are exempt from regulation
Rogers and Bell both declined to comment on this story.
Hollywood Suite
Some of the independent channels have been able to weather the pandemic better than others. Hollywood Suite, which has four movie channels – Hollywood Suite 2000s, Hollywood Suite 70s, Hollywood Suite 80s and Hollywood Suite 90s – reported total revenue for each channel was up just over 29%. The company’s revenue comes almost completely from subscriber revenue as they do not run ads.
“We started 10 years ago… we started at zero, literally zero and we have a had to claw and fight for every subscriber since then and we think we have a good product that has great value,” David Kines, president and co-founder of Hollywood Suite, told Cartt.ca.
“It slowly but surely resonated with customers and when they’re looking for entertainment alternatives, especially during Covid, they’ve selected us,” he said. And it’s not “something they have been force-fed in a package.” The cost of subscribing to all four channels is “a nice small number, it’s perhaps not as big a number on your cable bill that you might target when you’re trying to shave a few pennies.” More than that, Kines pointed out “a lot of the shrinkage that you see at other channels is people are downsizing packages.”
OUTtv
OUTtv is likely indicative of what Kines is getting at. The LGBTQ+ channel saw a 9.3% decrease and 12.7% decrease in terrestrial and DTH subscribers respectively in 2020. OUTtv’s national advertising, however, was up by 17.1% despite national advertising revenue for the independents as a group being down 9.6% from 2019. OUTtv also has OTT subscribers and revenue, which are not included in these numbers as those services are unregulated.
“The areas of the business over which we have control we’ve been growing,” said Brad Danks, OUTtv’s CEO. “The thing that is important to understand is that there is no way to raise your subscriber fees within the system because you have no control over packaging and marketing of your services – this is the core issue for the independent sector.” OUTtv is currently waiting for a decision from the CRTC on its licence renewal application, in which it asked for a distribution order that would require BDUs to carry the channel on a stand-alone basis and on each BDU’s best available discretionary package consistent with the service’s theme, programming and language.
Blue Ant
Blue Ant has eight discretionary services: A. Side, BBC Earth, BBC First, Cottage Life, Love Nature, Makeful, Smithsonian Channel and Travel + Escape. In total, the channels generated $38.1 million in revenue in 2020 compared to $37.7 million in 2019. Five of the channels had an increase in total revenues in 2020 compared to 2019, however A. Side, BBC First and Love Nature each reported decreases in total revenue of 9.8%, 6.8% and 14.8% respectively.
The pandemic has not been inconsequential to these numbers. “Last spring, so Spring 2020, the real first impact for us was on the advertising side,” said Jamie Schouela, president of global channels and media at Blue Ant. “From what I understand this is true across the industry, where if you go back to last March, as businesses as industries were shut down and put into stay-at-home it caused a lot of cancellations from our clients… their businesses were not open, so they were naturally pulling back on their advertising.” Last summer, as businesses began to reopen, “that ad number and that ad demand grew back fairly quickly,” Schouela said.
Corus
Food Network Canada, History Television and HGTV Canada, all owned by Corus, each reported increases in total subscription revenue in 2020. Food’s total subscription revenue rose from $20.3 million in 2019 to $22.1 million in 2020. The channel, however, had a 3.2% reduction in subscribers. National advertising was also down at Food by 10.7% and total revenue was down by 3.6%.
History reported an increase in total subscriber revenue from $31.8 million to $32.3 million. The channel had a 4.4% decrease in subscribers and reported a 24.6% decrease in its national ad revenue. History’s total revenue was down by 11.9% in 2020 from 2019.
HGTV Canada’s total subscriber revenue increased from $22 million in 2019 to $23.7 million in 2020. Subscriptions, however, were down by 3%. National advertising revenue was also down for the channel, by 16.7%, and total revenue was down 9.5%.
Corus declined to comment on this story “for reasons of confidentiality,” a spokesperson explained in an email to Cartt.ca, although the spokesperson did note the pandemic had a significant impact on advertising.
For the full CRTC 2020 Individual Discretionary and On-Demand Statistical and Financial Summaries for 2016-2020, please click here.
