Private TV companies lost 10% of their sales last year: CRTC report

Source: Toronto Star

Canada's television broadcasters continue to struggle under the weight of the economic recession, losing 10 per cent of their advertising revenue last year, according to a new report from the Canadian Radio-television and Telecommunications Commission.

"These numbers show that it is not just a problem, it is a crisis and the CRTC needs to move fast on coming up with a solution that suits everybody," said Carmi Levy, an independent technology and media analyst.

"We can't afford more years of acrimonious debate and high profile marketing from both sides," he said.

Thursday's report contains information on the sector's profitability, revenues and expenditures for the period of Sept. 1, 2008, to Aug. 31, 2009.

Total revenue for private broadcasters in 2009 was $1.97 billion, compared to $2.14 billion in 2008 or a decline of 7.9 per cent.

Private conventional television stations experienced a 10 per cent drop in local and national advertising revenue, with local advertising revenue reported at $348 million in 2009, down from $387 million in 2008 and national advertising revenue reported at $1.32 billion, down from $1.47 billion in 2008.

Despite an increasingly fractured consumer market Canadians will focus their attention en masse on specific offerings, said Levy, citing as an example Corner Gas, a Canadian-produced situation comedy that has aired on CTV and the Comedy Network.

"It is a national phenomenon and proves Canadians are capable of producing televised content that appeals to a mass audience," he said.

The advertising-reliant industry has appealed to the CRTC multiple times to approve fee-for-carriage, charging the cable and satellite companies a fee to carry the signals of over-the-air broadcasters.

"The industry has been very profitable without fees-for-carriage, so it does make sense to question if this needs to be a structural solution," said Levy.

"But at the same time things have changed irrevocably. The audience is more fractured than ever before."

"Carriage fees would be a bandage on a patient that is hemorrhaging," said Iain Grant, managing director of research company The SeaBoard Group. "Broadcasters have to readjust their thinking if they are going to survive."

Re-examining how much they spend exclusively broadcasting on television compared to options like the Internet is one step, he said.

"If the eyeballs are turning away from the television sets the advertisers are following with their wallets as well."

The report showed that three quarters of all reported expenses were related to acquisition and production of programs, reported at $2 billion, down from $2.1 billion in 2008. Private broadcasters invested $599 million in Canadian programming, compared to $619 million in 2008, or a decline of 3.3 per cent. Spending on foreign programming accounted for 59 per cent of all programming expenses, or $846 million, the highest level to date, according to the report.

About $846 million was spent on foreign programming, a 9.2 per cent increase from the $775 million spent in 2008.

Levy said while the lower revenue and loss in advertising "bolsters or reinforces the broadcaster's argument that the playing field is tipped in the favour of the distributors and not the broadcasters," the industry has failed to keep pace with consumer behaviour.

"If you wait too long to respond to tectonic change you run the risk of being swallowed in the process and unfortunately this is where most broadcasters find themselves now."

In a related report released yesterday, the CRTC said cable companies saw their revenue grow by 11.9 per cent last year after having increased by more than 16 per cent in both 2007 and 2008. Total revenues climbed from $8.2 billion in 2008 to $9.2 billion in 2009.

Profits before interest and taxes for the industry improved from $2.1 billion to $2.3 billion in one year, the CRTC said.

© Toronto Star