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Broadcasting Sector Overview

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Total broadcasting revenues declined by 1.3% between 2018 and 2019. The biggest drop in revenue was from CBC conventional television, as it collectively reported a decrease of $116 million (or 12.2%).

Radio stations continue to report declining revenues in 2019. This year, commercial stations reported an annual growth rate of -3.9%, the largest year-over-year decrease in the past 5 years. This decline is also greater than the 5 year Cumulative Annual Growth Rate (CAGR) of -2.4%.

• Over 700 commercial radio stations reported revenues of $1,453 million in 2019, compared to $1,513 million in 2018. Ethnic radio stations outperformed all other stations with a reported 2.6% growth rate while both French-language stations (-3.3%) and English-language stations (-4.4%) reported declines in revenue.
• The most pronounced decline was reported by English-language AM stations (-7.0%), while the largest increase was reported by Ethnic FM stations (6.0%).
• In contrast to the trend in recent years, national time sale revenues declined by a greater percentage than revenues for local time sales (-5.0% and -3.6% respectively).

• The profitability margin for commercial radio has declined slightly with a profit before interest and taxes (PBIT) margin of 17.3% in 2019, down from 18.3% in 2018.
• Of note, radio stations in Atlantic Canada reported back-to-back declines of over 5%. None of the regions reported a positive growth rate in 2019.

• Non-designated markets, which are typically smaller markets with fewer than 3 ownership groups, reported a decrease of -3.8% from 2018 to 2019.
• Victoria was the only designated market to report a positive growth rate in all of Canada (1.2%).
• In contrast, markets in Southern and Central Alberta were the worst performing in all of Canada, with Lethbridge, Medicine Hat, and Red Deer posting negative growth rates of 15.9%, -13.6%, and -11.8% respectively.

Commercial stations

For the first time in eight years, conventional stations have shown annual revenue growth.

• Conventional stations reported revenues of $1,554 million in 2019, compared to $1,541 million in 2018. The year-over-year increase of 0.8% is mostly due to a 3.6% increase in national time sales.

• Quebec was the only region to post a year-over-year revenue decline (-4.4%) while the Atlantic region posted the highest growth (8.1%).
• Independently-owned stations received over $21 million in revenue from the Independent Local News Fund, which was created to support non-vertically-integrated conventional stations which provide local news. This represents a 2.1% decline from the previous year.
• While conventional television station revenues grew, and despite a 1.4% decrease in total programming and production expenses, overall expenses still exceeded total revenues for the fifth consecutive year. Conventional stations posted a negative PBIT of -$109 million in 2019, compared to -$134 million in 2018.
• Canadian programming expenditures (CPE) increased by 2.2% in 2019. Conventional television stations reported $670 million in CPE in 2019, compared to $655 million in 2018. The vast majority of the increase in CPE came from the Music and Entertainment program category, specifically the category increased by approximately $24 million in 2019.

CBC Conventional Television

• The public broadcaster reported a decrease of -10.9% in total revenues for its conventional television this year, declining from $1,063 million in 2018 to $947 million in 2019. The decrease can be partially attributed to the absence of revenues from the Olympic Games.
• Commensurately, CPE expenditures also decreased to $494 million this year from $580 million in 2018.

Educational stations

Together, 6 educational stations reported nearly $186 million in revenue and spent nearly $66 million in CPE in 2019. In 2019, government funding of educational television represented 79% of total revenues.

For the third consecutive year, discretionary and on-demand services reported declining revenues and reduced spending. These services spent over $1.6 billion on Canadian programming in 2019.

• Revenue growth rates of the nearly 300 discretionary and on-demand services varied by language of the services. French-language and Ethnic services reported negative revenue growth of -3.6% and -8.6%, respectively. However, for the first time since 2016, English/Bilingual services experienced a slight year-over-year revenue growth rate of 0.6%.

• Year-over-year revenue for discretionary services remains relatively stable, whereas on-demand services reported a negative growth rate of -4.9% in 2019.

• English/Bilingual services continue to be the most profitable services. This year, the English/Bilingual services reported a PBIT margin of 29%, while the French-language and Ethnic services reported margins of 9.6% and 6.7%, respectively.
• The profitability of discretionary services increased from 23.6% in 2018 to 26% in 2019. The profitability of on-demand services also increased from 13.4% in 2018 to 14.2% in 2019; in both cases, this increase was primarily caused by a decrease in expenses.
• Discretionary services reported nearly $1.64 billion in CPE in 2019. Over 50% of the CPE for discretionary services was spent on sports programming, followed by 15% on news programming.
  • Of the $331 million allocated to music and entertainment programming, $61 million was spent on reality television.

Television service providers (BDUs) continue their downward trend, albeit at a slightly slower rate than the previous year. The continued uptake in IPTV services is helping offset drops reported by cable and satellite providers (Direct-to-Home).

• Over each of the past four years, television service providers have reported negative revenue growth, although the decline of -0.8% in 2019 is the lowest since 2015. Overall revenues dropped by $67 million, from $8,421 million in 2018 to $8,354 million in 2019.
• Although cable and satellite service providers continue to report drops in revenue, declining by 2.1% and 3.0% respectively in 2019, this annual rate of decline is significantly lower when compared to the five-year average annual declines of -3.6% (cable) and -5.8% (satellite).
• The trend for IPTV revenues has continued in 2019, with a lower revenue growth in 2019 than in previous years. IPTV revenues grew by $86 million or 4.1% in 2019, compared to the five-year average annual growth rate of 8.4%.
• The average revenue per subscriber increased by 1.9% in 2019. The average subscriber paid $66 per month which is a 1.9% increase over 2018.

• The total number of subscribers decreased significantly in 2019. Total subscribers decreased by 2.6%, which is the largest decrease in the last 5 years. While cable and satellite providers continue to lose subscribers, IPTV continued adding to its subscriber base in 2019. Almost 3 million Canadian households now subscribe to IPTV, an increase of about 175,000 over 2018. This increase was, however, insufficient to offset losses of over 450,000 subscribers by cable and DTH operators in 2019.
• When Cable and IPTV subscribers are aggregated, the total number of subscribers decreased in all regions in 2019 with the Prairies (65K), Québec (26K) and Ontario (25K) reporting the greatest year over year losses.

• Operating margins for the industry were a healthy 16.5% in 2019, though this included declines of 1.4% over 2018 and 3.9% over 2017.
• DTH providers reported increased operating margins while Cable and IPTV providers’ operating margins declined in 2019. While IPTV providers continued to post positive operating margins, it is trending lower. 2019 is the third year wherein IPTV providers posted a positive operating margin.
• While satellite service providers have reported the largest drops in subscribership of the three television service provider segments, they continue to have the highest profitability of all three segments: 28.1% (satellite); 17.6% (cable); and 4.5% (IPTV).

• In 2019, BDUs contributed $412 million to the creation and production of Canadian programming, compared to $422 million in 2018.