Television broadcasting

View the most recent version.

The statistics presented in this publication are for the fiscal year ending August 31 and cover the period from 2004 to 2008. The analysis below includes references to earlier periods when it is useful to put the industry’s recent performance in historical context.

Steady growth in television broadcasters’ revenues

The operating revenues of the television broadcasting sector ¹  totalled $6.5 billion in 2008, up 5.4% from 2007. The increase came after a year of slower growth, revenues having risen 3.0% between 2006 and 2007. The revenue gain between 2007 and 2008 is close to the average growth of 5.6% ²  since 1999. However, the overall picture for the television broadcasting sector does not describe some substantial differences between the various industries.

A tough year for private conventional television

Revenues for private conventional television totalled $2.1 billion in 2008, down 1.8% from 2007. It is this industry’s largest annual decline in revenues in more than 30 years and the second year-over-year decrease in three years.

Private conventional television has been going through a difficult period financially in recent years because of the loss of television advertising market share to the specialty television segment. It captured 58.8% of that $3.4 billion market in 2008, compared with 68.1% five years earlier, in 2003. The advertising market is particularly important to private conventional television since it is the source of virtually all its revenues.

The combined effect of the 1.8% decline in operating revenues and the 3.4% increase in operating expenses was a substantial decline in private conventional television broadcasters’ profits before interest and taxes. The latter fell from $116.0 million in 2007 to $4.8 million in 2008, a 95.8% drop. It is the lowest profit before interest and taxes in the last 30 years, and it is only the second time in 15 years that this segment has generated less than $100 million in profits before interest and taxes. In 2006, profits before interest and taxes were $90.9 million.

Private conventional stations had a profit margin before interest and taxes of less than 1% in 2008. Nearly half of all private conventional stations suffered losses before interest and taxes in 2008.

Quebec’s private conventional television industry was the only one that posted an increase in profits in 2008 compared with 2007 (+8.1%). For the first time in nearly 15 years, Ontario’s private conventional stations suffered losses ($22.5 million). The situation is also difficult in the Atlantic provinces, as private conventional stations have not turned a profit before interest and taxes since 1999. In Western Canada, profits fell 68.3% in the space of one year.

Continued growth for pay ³  and specialty ⁴  television

The specialty and pay television segments enjoyed operating revenue gains of 6.5% and 11.8% respectively in 2008 compared with the previous year. Those are, however, the segments’ lowest year-over-year increases in three years. For specialty television, the growth was attributable to both subscription revenues (+5.4%) and advertising revenue (+8.1%). Growing interest in television on demand is responsible for the pay television industry’s gain. Revenues from on-demand services reached $269.6 million in 2008, up 36.3% from 2007.

As yet another indication of the fundamental changes occurring in television broadcasting, specialty television led the sector in revenues in 2008 ($2.3 billion), dislodging private conventional television from the top spot it had held for many years. In fact, 10 years earlier, in 1998, specialty television accounted for 19.0% of total television revenues, third behind private conventional television (48.2%) and public television (29.5%). In 2008, specialty television generated 35.7% of the Canadian television industry’s revenues, compared with 32.9% for private conventional television and 22.0% for public television. Pay television ranked fourth with 9.4% of total revenues ($612.0 million).

The profits before interest and taxes of pay and specialty television totalled $686.1 million in 2008 accounting for more than 99% of the private television industry’s profits.

The profit margin before interest and taxes surpassed 20.0% for the fourth consecutive year for specialty channels and for the seventh straight year for pay television channels.

Public television rebounds

The 5.4% rise in the television broadcasting sector’s total operating revenues was partly due to an ad hoc 13.2% increase in public and non-commercial television revenues, following a 5.3% decline between 2006 and 2007. The upturn was attributable to advertising revenues from the Summer Olympics and a substantial increase in grants.

The revenue gain was accompanied by a 14.5% jump in operating expenses, a larger increase than in any other segment. Programming expenses were largely responsible for the increase, rising 17.1%.

The restructuring of the television advertising market continues

Advertising revenue continued to shift from private conventional television to specialty television. Private conventional television’s share of the television advertising market was 58.8% in 2008, down from 68.1% five years before. During that five year period, the share held by specialty television went from 21.4% to 30% while the share of public television remained almost unchanged at nearly 11%.

The television advertising market advanced 2.8% in 2008 to $3.4 billion, nearly double the previous year’s 1.8% growth.

Programming and production expenses also affected by competition

The competition for advertising between the various segments of the television industry is reflected in their battle to attract audiences and, ultimately, in their programming and production expenses. As a result, broadcasters spent 10.2% more on programming and production in 2008 than in 2007, surpassing revenue growth by a significant margin.

For private conventional television, programming and production expenses rose 3.8% between 2007 and 2008, despite the decline in revenue. In fact, programming and production expenses were 68.8% of the channels’ operating revenues, compared with 56.8% five years earlier, in 2003.

For specialty and pay television, programming expenses grew in tandem with revenues. They increased by 13.1% and 8.6% respectively between 2007 and 2008. For both segments combined, programming expenses were 54.5% of revenues in 2008. That ratio has been steady for the last five years.