BDU revenue losses accelerate to 2.1%: CRTC

Canadian TV providers’ revenues dropped 2.1 per cent in 2016 — a marked increase from the 0.1 per cent fall a year earlier, which was the first such decline in a decade. The CRTC released its financial summaries for the broadcast sector Thursday, which showed that broadcasting distribution revenues fell by almost $185 million over that year, going from $8.92 billion in 2015 to $8.73 billion in 2016. It seems like part of the reason is that subscribers are paying less for their TV service, given that providers lost fewer subscribers in 2016, at 1.1 per cent, than they did in the previous year, when they lost 1.4 per cent. Greg MacDonald, an analyst with Macquarie Capital Markets, said in an email the trend is due to various factors. “Skinny TV, cord-shaving and price discounts to stay subscribed are all at play here,” he said, adding that because many Canadian carriers are vertically integrated they “have an incentive to discount subscription prices to maintain subscribers.” He added that TV providers are now focusing on improving economics around user interfaces and program storage through PVRs and platforms like Comcast Corp.’s X1, as well as “in maintaining the double play to assure the broadband sell-through.” MacDonald said that broadband has the highest, and growing, return on investment, while TV distribution has a much lower — and shrinking — return. The CRTC’s data also showed that satellite and cable providers continued “their downward trend by posting decreases in both revenues and subscribers.” Cable providers’ revenue fell 5.5 per cent to $4.79 billion, while subscribers declined 3.8 per cent to 6.4 million. Satellite revenue fell 6.1 per cent to $2.15 billion, while subscribers were down by 7.1 per cent to 2.2 million. There were 2.5 million IPTV subscribers in 2016. While IPTV revenues increased by almost 15 per cent to 1.79 billion, that was half the 32-per-cent average annual growth reported since 2012. The same trend was apparent in IPTV subscriber numbers, with the CRTC noting that despite “IPTV’s continued double-digit subscriber growth, the rate at which Canadian households are subscribing to IPTV is showing signs of slowing down. IPTV service providers reported subscriber growth at 13.8 in 2016, down from 21.3 in 2015.” Broadcast distributors’ contributions to the “creation and production of Canadian programming” fell slightly as well, to $428 million from $437 million a year earlier, the CRTC said. Revenues for the conventional TV broadcasting sector continued their downward trend, falling 4.5 per cent during the last broadcast year to $1.7 million in 2016. “This is the fifth consecutive year that conventional television services have reported revenue declines due to continued decreases in advertising dollars,” the CRTC said, noting that the decline is “consistent with the average annual growth rate of -4.8% from 2012 to 2016.” Conventional TV stations in Quebec did better than those in other parts of the country, with a 2.6 per cent decline, the CRTC noted. Conventional TV stations’ Canadian Programming Expenditures (CPE) also fell, by 3.4 per cent, to $633 million. However, specialty channels were in better shape, with the 307 discretionary and on-demand services reporting $4.42 billion in revenues, a slight increase from the $4.29 billion in 2015, which the CRTC said was “mainly due to revenue increases reported by sports and movie-oriented services.” Their CPE expenditures increased by 5.9 per cent, from 2015’s $1.6 million to $1.7 million the following year. The report noted that sports channels — BCE Inc.’s TSN and RDS, Rogers Communications Inc.’s Sportsnet and Sportsnet One, and Quebecor Inc.’s TVA Sports — “remain among the biggest revenue generators and enjoy above-average profitability margins.” It added that other genres included among the top 10 highest-grossing services include Bell’s Discovery Channel and the Movie Network, Corus Entertainment Inc.’s W Network and History Television, as well as CBC/Radio-Canada’s CBC News Network. Commercial radio revenues also dropped 3.2 per cent from 2015 to 2016, reporting revenues of $1.55 billion, compared to $1.6 billion a year earlier, the CRTC said, noting that was a return to 2010 levels. It added that while local advertising fell 5.4 per cent, “national advertising continues to rise but at a more modest rate” of 1.2 per cent. CORRECTION: A previous version of this story reported radio revenues as $1.55 and $1.6 million. — With reporting Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

BDU revenue losses accelerate to 2.1%: CRTC

Broadcast | July 27, 2017

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BDU revenue losses accelerate to 2.1%: CRTC

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