GATINEAU – While Canadian private broadcasters are increasingly spending big on American programming, their profitability took a huge hit in the 2008 broadcast year, ended August 31st, CRTC numbers show.
When compared with 2007, revenues for private conventional television stations decreased by 1.5% last year while expenses increased by 4%. This resulted in profits before interest and taxes (PBIT) of just $8 million, well off the $112.9 million reported in 2007.
In 2008, private broadcasters generated $2.1 billion in total revenue, with $387.3 million from local advertising remained – about the same level as last year. National advertising sales, however, decreased from $1.52 billion to $1.47 billion.
These results, which don’t reflect the economic downturn since the end of August, shows that conventional broadcasters must be allowed to collect a subscriber fee from carriers, say the broadcasters.
TVA and Videotron cable owner Quebecor Media repeated its call for the CRTC to act quickly “to secure the future of Canada’s general-interest broadcasters,” it said in a release, which also referenced what it views as the “straight-jacket of obsolete regulations.”
“Private general-interest broadcasters should be allowed to collect carriage fees, but consumers should not be the ones who have to pay for the system’s glaring inability to adapt to the new media environment.”
"The fact that they cannot collect both carriage fees and advertising revenues, as the specialty channels can, has pushed private general-interest broadcasters to the edge of the abyss," said Pierre Dion, president and CEO of TVA Group. "The CRTC must end this unfair situation and give the over-the-air broadcasters the oxygen they need to continue playing their role as the leading producers of original Canadian content."
But while profitability took a huge hit (and layoffs have since been undertaken at all broadcasters) operating expenses show a marked increase, to $2.1 billion, in 2008, with the acquisition and production of programming representing 71.5% of all expenses. Private broadcasters (primarily CTV, Global TV, Citytv and TVA) spent $775.2 million on foreign programming in 2008, up 7.4% from $721.9 million in 2007.
Investments in Canadian programming remained essentially unchanged at $620 million, of which $146 million was paid to independent producers. Spending on home-grown programming included $88.3 million for drama, $90.4 million for general interest programming, $323 million for news programs, $67.2 million for other information programs, $24.7 million for musical and variety shows, $7.5 million for sports programs, and $16.6 million for game shows.
In 2008, private conventional television stations employed 7,402 people and paid a total of $576.9 million in salaries. In comparison, this sector employed 7,873 people and paid a total of $594.2 million in salaries in 2007. And the ’08 number is already obsolete as hundreds were let go from just CTV and Canwest Global in the fall.
Added Dion: "As we have noted in every available forum, the legislation governing broadcasting dates from an era when the television market was dominated by three over-the-air networks, the specialty channels had minuscule audiences, there was a clear dividing line between television and telecommunications, and the Internet was virtually unknown.
“The industry has changed considerably but the regulatory framework has not. As a result of the current laws and regulations, general-interest broadcasters are now struggling to maintain the necessary levels of investment in the original content that draws audiences and generates significant economic benefits for Québec and the rest of Canada, while the specialty channels are piling up spectacular profits while merely meet their regulatory obligations and generating few benefits for producers of Canadian content,” he said.
Over the last three financial years, adds the Quebecor release, the profit margins of the general-interest broadcasters have plunged from 4.24% to 0.38% while those of Astral’s television division have increased from 35% to 36.1% and those of Corus’ television division have increased from 41% to 42.6%.
“In the Canadian broadcasting system, it is up to general-interest broadcasters to provide the bulk of Canadian content in the form of complete news and current affairs programming, high-budget drama and a diverse range of other programming. In Quebecor Media’s view, it is precisely because of this mandate that the general-interest broadcasters must also have access to carriage fees,” Dion added.
– Greg O’Brien
