Broadcasting Procedural Letter Addressed to Various Parties

Ottawa, 11 May 2018

VIA E-MAIL

Ms. Nathalie Dorval
Vice President, Regulatory Affairs and Copyright
Cogeco Inc.
nathalie.dorval@cogeco.com

Ms. Peggy Tabet
Vice President, Regulatory Affairs, Broadcasting
Quebecor Media Inc., on behalf of Vidéotron GP
peggy.tabet@quebecor.com

Mr. Dean Shaikh
Vice President, Regulatory Affairs
Shaw Communications Inc.
dean.shaikh@sjrb.ca

Dear Sir and Madams,

Re: Broadcasting Notice of Consultation CRTC 2017-365 - Correction to reported BDU subscriber data

The study entitled Analysis of Services Requesting Wholesale Rate Increases prepared by Suzanne Blackwell of Giganomics Consulting Inc. for Cogeco Inc., Quebecor Media Inc., on behalf of Vidéotron GP, and Shaw Communications Inc. and filed as supporting evidence to each of these companies’ interventions in the process initiated by Broadcasting Notice of Consultation CRTC 2017-365 forecasts a tapering off in the rate of broadcasting distribution undertakings (BDU) subscribership decline.

The BDU subscriber data published on the CRTC website at the time the study was prepared indicated that the rate of BDU subscribership decline was lesser in broadcast year 2015-2016 than it was in broadcast year 2014-2015.

However, the Commission has recently received corrected data on indirect subscribersFootnote1 for past broadcast years from certain BDUs. The newly received data (appended) now show an overall rate of decline for broadcast year 2015-2016 that is greater than that reported for broadcast year 2014-2015 due to the change in data on indirect subscribers.  The revised data also affects the reported number of BDU subscribers for the most recent years.

Please comment on whether and, if so, how, the newly corrected information affects your assessment of appropriate wholesale rates for the services under consideration in the current proceeding. Your comments are to be submitted to the Commission, and copied to the applicants, by no later than 17 May 2018 and must form part of your final submissions. As the Commission stated in Broadcasting Notice of Consultation CRTC 2017-365-3, applicants will have until 24 May 2018 to file a reply.

Yours sincerely,

Claude Doucet
Secretary General

c.c. catherine.cano@cpac.ca, David.Errington@ami.ca, regulatory@pelmorex.com, marie-philippe.bouchard@tv5.ca, info@vuesetvoix.com, JLaRose@aptn.ca and jquirke@assembly.nu.ca


CRTC - FINANCIAL SUMMARY - BDU BASIC AND NON BASIC SERVICES - CABLE, IPTV AND DTH

Canada

Revenue ($000)
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Subscription 8,061,784 8,288,838 2.82 8,034,566 -3.07 8,014,888 -0.24 7,797,080 -2.71 -0.8
Connection 30,107 22,467 -25.38 41,130 83.07 46,646 13.41 55,901 19.84 16.7
Community Channel Sponsorship & Facilities Rental 5,457 4,321 -20.82 3,780 -12.52 3,619 -4.26 2,591 -28.41 -17.0
Set-top Box - Rental - - - 728,892 - 764,940 4.67 794,978 3.93 -
Set-top Box - Net Sales - - - 55,893 - 39,303 -21.82 39,004 -0.76 -
Other Revenue 463,430 478,289 3.21 65,730 - 49,347 -24.93 49,582 0.48 -
Total Revenue 8,560,779 8,793,915 2.72 8,929,991 1.55 8,918,743 -0.13 8,734,185 -2.01 0.5

Expenses ($000)
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Community Programming 122,174 140,785 15.23 151,703 7.75 152,620 0.60 150,923 -1.11 5.4
Affiliation Payments 3,007,235 3,103,720 3.21 3,304,773 6.48 3,424,532 3.62 3,479,728 1.61 3.7
Technical 1,504,720 1,560,914 3.73 1,608,594 3.05 1,643,603 2.18 1,522,687 -7.36 0.3
Sales and Promotion 587,380 583,498 -0.66 637,955 9.33 606,045 -5.00 615,116 1.50 1.2
Administration and General 1,360,646 1,323,614 -2.72 1,423,067 7.51 1,511,629 6.22 1,570,441 3.89 3.7
Total Expenses 6,582,155 6,712,531 1.98 7,126,091 6.16 7,338,428 2.98 7,338,895 0.01 2.8
Operating Income 1,978,624 2,081,384 - 1,803,900 - 1,580,314 - 1,400,891 - -
Local Programming Improvement Fund 111,818 75,157 - 39,928 - - - - - -

Staff
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Total Remuneration ($) 2,396,298 2,403,728 0.31 2,503,466 4.15 2,309,861 -7.73 2,403,607 4.06 0.1
Total Staff Count (FTE) 28,757.04 28,894.17 0.48 29,085.59 0.66 27,243.67 -6.33 26,481.01 -2.80 -
Avg Remuneration ($) 83,329 83,191 -0.17 86,072 3.46 84,785 -1.50 90,767 7.06 2.2
Avg Remuneration excl. Benefits ($) 70,208 71,602 1.99 73,592 2.78 72,312 -1.74 76,943 6.40 2.3

Subscribers
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Subscribers 11,461,161 11,440,401 -0.18 11,295,912 -1.26 11,146,513 -1.32 10,907,362 -2.15 -1.2

Profitability (%)
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Operating Margin 23.1 23.7 - 20.2 - 17.7 - 16.0 - -

CRTC - FINANCIAL SUMMARY - BDU BASIC AND NON BASIC SERVICES - CABLE

Cable - Canada

Revenue ($000)
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Subscription 4,996,012 4,902,996 -1.86 4,779,658 -2.52 4,642,173 -2.88 4,360,018 -6.08 -3.4
Connection 29,285 21,662 -26.03 18,901 -12.75 20,472 8.31 20,352 -0.58 -8.7
Community Channel Sponsorship & Facilities Rental 5,457 4,321 -20.82 3,780 -12.52 3,619 -4.26 2,591 -28.41 -17.0
Other Revenue 448,981 461,332 2.75 428,492 -7.12 400,869 -6.45 406,416 1.38 -2.5
Total Revenue 5,479,735 5,390,313 -1.63 5,230,830 -2.96 5,067,133 -3.13 4,789,377 -5.48 -3.3

Expenses ($000)
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Community Programming 115,561 128,746 11.41 131,974 2.51 127,084 -3.71 121,277 -4.57 1.2
Affiliation Payments 1,915,863 1,901,770 -0.74 1,945,340 2.29 1,960,064 0.76 1,933,611 -1.35 0.2
Technical 790,918 812,930 2.78 791,793 -2.60 729,159 -7.91 755,167 3.57 -1.2
Sales and Promotion 290,743 291,155 0.14 321,830 10.54 320,621 -0.38 301,541 -5.95 0.9
Administration and General 884,258 727,246 -17.76 754,109 3.69 678,593 -10.01 630,211 -7.13 -8.1
Total Expenses 3,997,342 3,861,848 -3.39 3,945,046 2.15 3,815,522 -3.28 3,741,808 -1.93 -1.6
Operating Income 1,482,393 1,528,465 - 1,285,785 - 1,251,612 - 1,047,569 - -
Local Programming Improvement Fund 69,271 44,697 - 22,891 - - - - - -

Staff
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Total Remuneration ($) 1,950,292 1,876,062 -3.81 1,938,143 3.31 1,882,927 -2.85 1,964,861 4.35 0.2
Total Staff Count (FTE) 24,647.3 23,743.8 -3.67 23,856.9 0.48 22,736.1 -4.70 22,049.1 -3.02 -
Avg Remuneration ($) 79,128 79,013 -0.15 81,240 2.82 82,817 1.94 89,113 7.60 3.0
Avg Remuneration excl. Benefits ($) 66,177 66,226 0.07 67,561 2.02 68,958 2.07 73,438 6.50 2.6

Subscribers
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Direct Subscribers 7,181,879 6,899,118 -3.94 6,494,095 -5.87 6,142,045 -5.42 5,783,037 -5.85 -5.3
Indirect Subscribers 447,352 453,386 1.35 454,886 0.33 460,586 1.25 447,173 -2.91 0.0
Subscribers 7,629,231 7,352,504 -3.63 6,948,981 -5.49 6,602,631 -4.98 6,230,210 -5.64 -4.9

Profitability (%)
2012 2013 Var % 2014 Var % 2015 Var % 2016 Var % CAGR (%)
Operating Margin 27.1 28.4 - 24.6 - 24.7 - 21.9 - -

CAGR = Compound Annual Growth Rate

FTE = Full-Time Equivalents

Var = Variation

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