Radio Broadcasting

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The statistics presented in this publication are for the fiscal year ending August 31 and cover the period from 2005 to 2009. The text below includes references to earlier periods when it is useful to put the industry's recent performance in a historical context.

The following analysis concerns commercial radio. A commercial station is one where advertising revenue ¹  represents more than half of total revenue. Stations that do not meet this criterion are classified as “public and non-commercial”. This segment's operating results are presented in a separate table.

Difficult year financially for commercial radio

In 2009, private radio broadcasters’ operating revenues decreased 5.2% compared to 2008 to reach 1.5 billion dollars. This was the first time since 1993 that these revenues have dropped from one year to the next. This drop in operating revenues occurred despite an increase in the number of commercial radio stations between 2008 (650) and 2009 (663).

Almost all of the private radio broadcasting operating revenues (97.5%) are generated from advertising revenues. The year 2009 was therefore characterized by a significant drop in private radio broadcasters’ advertising revenues (-5.5%). This decline in advertising revenues was due to the general economic downturn in 2009 that affected other media industries. By comparison, Canadian television broadcasters’ advertising revenues fell 8.4% in 2009.

Effects of the economic downturn on profitability

The general economic downturn in 2009 affected the profitability of the commercial radio industry. In 2009, private radio broadcasters earned 17.9 cents of profits before interest and taxes per dollar of revenue. This was the worst performance since 2002. The economic downturn that began in 2008 and continued into 2009 curtailed a financially favourable period for private radio broadcasters.

From the late 1990s to 2008, commercial radio in Canada managed to increase its performance substantially after many years in which the performance had been relatively weak. The industry’s financial success during that time can be partially explained by strong economic growth and industry reorganization. In addition, changes made to the regulations in 1998 sanctioned greater concentration of ownership which allowed radio to better compete with other media. The industry also rationalized its operations by transferring AM stations to the generally more popular and more profitable FM band. However, although the financial benefits of the reorganization are still being felt, the economic downturn in 2009 slowed that trend.

The economic downturn and radio broadcasters’ reaction on operating expenses

Since the mid 1990s, private radio broadcasters’ operating expenses have been increasing annually. However, 2009 saw a 1.4% drop in those expenses compared to 2008. Private radio broadcasters reacted to the economic downturn mainly by reducing their sales and promotion (-3.5%) and administration and general expenses (-4.1%). Programming and technical services expenses continued to grow between 2008 and 2009.

Fewer profitable AM stations

The AM radio rationalization begun in the early 1990s continued in 2009 but at a slower pace than in 2008. There were 151 AM stations in 2009, 7 less than in 2008. In 2007, 174 of them were on the air. Although both AM and FM stations were affected by the 2009 economic downturn, the proportion of AM stations showing a profit declined in 2009 compared to 2008. In 2009, 51% of AM stations were profitable compared to 58% in 2008. As for FM stations, 68% were profitable in 2009 – the same percentage as in 2008.

Only Francophone radio revenues increased

Francophone radio stations were the only ones to increase their operating revenues in 2009, posting a +1.7% growth compared to drops of 6.6% for Anglophone stations and 1.1% for Ethnic stations.

Anglophone stations continued to earn the highest profit margin before interest and taxes (19.0%), followed by Francophone stations (14.8%) and Ethnic stations (5.4%). However, the gap between Anglophone and Francophone stations narrowed in 2009. In 2008, the profit margins for Anglophone stations were 23.0% while those for Francophone stations were 13.8%.

Only Francophone stations increased their operating expenses in 2009 compared to 2008. The fact that they were the only ones to also increase their operating revenues allowed them to narrow the gap in regards to the profit margin before interest and taxes with Anglophone stations.

Operating revenues grew in Saskatchewan and Quebec

Radio broadcaster performance varied considerably from region to region in 2009. Operating revenues increased annually in Saskatchewan (6.7%) and Quebec (1.1%). In all other regions, the operating revenues decreased. The most important decreases in operating revenues in 2009 were registered in Ontario (-9.3%), British Columbia and the Territories (-7.8%) and Alberta (-6.3%). In the Atlantic provinces and Manitoba, the decreases in operating revenues were less significant (-1.9% and -1.4% respectively).

For several years, Alberta radio broadcasters were the most profitable. However, in 2009, profits before interest and taxes of 19.5 cents per dollar of revenue constituted the worst result for that province since 1998. Although profits before interest and taxes of radio broadcasters in Ontario also declined in 2009, radio broadcasters in that province were the most profitable in 2009 with 21.7 cents of profit before interest and taxes per dollar of revenue.

Radio broadcasters elsewhere in the country showed smaller profit margins before interest and taxes than in Ontario and Alberta but the radio broadcasters in some provinces managed to increase their profitability slightly. Thus, the profit margins before interest and taxes for Quebec, Manitoba and Saskatchewan radio broadcasters were higher in 2009 than in 2008. Profit margins before interest and taxes for British Columbia and the Territories and in the Atlantic provinces were declining. In British Columbia and the Territories, this profit margin has not been that low since 2004 while in the Atlantic provinces such low margins have not been seen since 1997.

Greater decline in operating revenues in large markets

In 2009, the drop in operating revenues in large markets (-8.3%) exceeded that in both medium (-3.7%) and small (-1.3%) markets. ² 

On the other hand, radio broadcasters in the large markets also reduced their operating expenses the most between 2008 and 2009 (-6.0%). Radio broadcasters in medium markets reduced their operating expenses by 0.8% while small market stations increased theirs by 5.0%. Thus radio broadcasters in all size markets saw their profit margins before interest and taxes fall in 2009. However, the decrease in the profit margins before interest and taxes for radio broadcasters in large markets was less severe than in other size markets.

Job losses

The industry had a weekly average of 10,301 employees in 2009, down 1.7% from the previous year, and it spent 41.9% of its revenues, or $633.6 million, on salaries and benefits. This was the first time since 2002 that the average number of employees dropped year over year and the first time since 1995 that salaries and benefits posted an annual decline.

Air time sales per employee totalled $143,042, down 3.9% from 2008.