OTTAWA – Total broadcasting revenues dropped 3.3% from 2016 to 2017 as television service providers (BDUs) posted negative growth for the third consecutive year, according to the CRTC’s statistical and financial results for the industry released Monday.
The Commission's 2017 Broadcasting Financial Summaries Highlights reported that overall BDU revenues dropped by 2.3% (or $202 million), falling from $8.74 billion in 2016 to $8.54 billion for the broadcast year ended August 31, 2017. IPTV revenues grew by over 10% to $2 billion in 2017, outperforming satellite for the first time since its introduction into the Canadian marketplace. Satellite (DTH) service providers reported total revenues of $1.9 billion, which dropped by nearly 9% in the last year, while cable posted revenues of $4.6 billion, down from $4.8 billion in 2016.
The total number of TV service subscribers decreased by 1.9% in 2017, similar to the decrease of 2.2% reported in 2016, continues the report. While cable and IPTV aggregated subscribers decreased in Ontario and Quebec, cable and IPTV total revenues increased in each of those regions. Conversely, total cable and IPTV subscribers increased in the Prairies, BC and the territories, and the Atlantic region while total revenues fell.
Cable and DTH providers saw their operating margins fall below the 20% and 30% mark, respectively. Conversely, IPTV providers posted their first ever positive operating margin, mostly due to continued revenue growth and a reduction of 13% in overall expenses.
In 2017, BDUs contributed approximately $412 million to the creation and production of Canadian programming, down from last year’s figure of $428 million. Of this amount, $206 was directed to the Canada Media Fund, $149 million went to local expression and $57 million to independent funds.
Conventional Television
Conventional television station revenues fell 4.1% during the last broadcast year, from $1.68 million in 2016 to $1.61 million in 2017. While this marks the sixth consecutive year that conventional television services have reported revenue declines due to continued decreases in overall advertising dollars, this decline is slightly lower than the average annual growth rate of -4.6% from 2013 to 2017.
Despite efforts to reduce spending, overall expenses of $1.64 million exceeded total revenues. However, conventional stations reported a slightly smaller loss in 2017 with a slightly higher PBIT of -$101 million compared to -$113 million in 2016.
Canadian programming expenditures (CPE) dropped for the second consecutive year, with a decrease of 2.4%. Conventional television stations reported $618 million in CPE this year, compared to $634 million in 2016, and approximately 60% of the expenditures reported by commercial conventional television were allocated to news programming.
CBC conventional stations reported a decrease of over 20% in total revenues, going from $1.19 million in 2016 to $944 million in 2017. The change in revenue was prompted by reporting changes by the public broadcaster whereby all results for television now exclude revenue and expenses from digital services.
Discretionary and On-Demand
After over four consecutive years of moderate growth, discretionary and on-demand services reported a slight decline in revenues from $4.42 million in 2016 to $4.36 million in 2017. Total revenues by language were English/Bilingual at $3.52 million, French at $767,000 and Ethnic at $75,000.
Despite the declines, the $1.64 million spent on Canadian programming remained stable, increasing only 0.8%.
Over 50% of Canadian Programming Expenses for specialty services was spent on sports programming with $853 million in 2017, $32 million more than in 2016.
Radio
Canada’s more than 700 commercial radio stations reported revenues of $1.52 million, down 1.9% from $1.55 million in 2016.
Local advertising dropped 3.2% over the last year, while national advertising continued to rise modestly at a rate of 0.4%. The shift from local advertising to national advertising is becoming more widespread among larger broadcasters as it helps them achieve some cost-saving synergies, adds the report.
The profitability margin for commercial radio has remained stable with profits before interest and taxes (PBIT) margin between 18.5% and 18.9% in each of the last four years.
Total revenues for French and English language stations reported moderate declines with respect to 2016. Conversely, total revenues for third language stations reported a moderate increase compared to the previous year. Notably, the Vancouver ethnic radio market total revenues increased by over 5%.
Total expenses for commercial radio stations declined by $26 million between 2016 and 2017, mostly within administration and general expenses, which decreased by $19 million.
