Communications Monitoring Report 2018

Link directly to Broadcasting Overview Broadcasting Overview

Link directly to Infographic 7.1 Infographic 7.1

Source: CRTC data collection; Ovum for estimated revenues of Internet-based services

Internet-based audio and video services are not included in total broadcasting revenues.

Total broadcasting revenues include revenues from private commercial and CBC conventional television, discretionary and on-demand television, private commercial and CBC radio, as well as broadcasting distribution undertakings (BDU). Broadcasting contributions to Canadian content include Canadian content development (CCD) contributions, Canadian programming expenditures (CPE), contributions to the creation and production of Canadian programming from BDUs and tangible benefits from ownership transactions in the form of CCD contributions and CPE.

Long Description

Total broadcasting revenues	Total broadcasting revenue growth 2016-2017	Total broadcasting contributions to Canadian content	Estimated revenues in Canada of Internet-based audio and video services
$17,270 millionFootnote 1	-3.3%	$3,396 million	$2,748 million

The Broadcasting Overview provides a glimpse into various aspects of broadcasting in Canada. The Canadian broadcasting sector consists of radio (private and CBC), conventional television (private and CBC), discretionary and on-demand television services (pay, pay per view (PPV), video-on-demand (VOD) and specialty services) and broadcasting distribution undertakings (BDUs), such as cable, satellite and IPTV distributors.

In 2017, broadcasting services generated total revenues of $17.3 billion, a 3.3% decrease compared to 2016, and contributed approximately $3.4 billion or about 20% of total revenues to Canadian content across radio and television through their respective funding mechanisms.

BDUs generated the largest portion of the $17.3 billion total revenues, reporting $8.5 billion in 2017, almost half of the total broadcasting revenues, followed by television services ($6.9 billion, 40%) and radio stations ($1.8 billion, 11%).

In comparison, the revenues in Canada of Internet-based audio and video services were estimated to total $2.7 billion^{Footnote 2}, less than a sixth of the revenues of the traditional broadcasting services.

Link directly to i. Revenues and financial performance i. Revenues and financial performance

Link directly to Infographic 7.2 Infographic 7.2

Source: CRTC data collection

National direct-to-home (DTH) refers to satellite service providers, IPTV to Internet protocol television, PBIT to profit before interest and taxes and EBITDA to earnings before interest, taxes depreciation and amortization.

Long Description

Sector	Service	2017 total revenues	Growth 2016-2017	PBIT/EBITDA
Radio	Private commercial radio	$1.5B	-1.9%	18.7% (PBIT)
	CBC radio	$0.3B	1.6%	6.1% (EBITDA)
Television	Private conventional television stations	$1.6B	-4.1%	-6.3% (PBIT)
	CBC conventional television stations	$0.9B	-20.4%	7.1% (EBITDA)
	Discretionary television services	$4.0B	-1.26%	25.1% (PBIT)
	On-demand television services	$0.3B	-0.4%	10.9% (PBIT)
Broadcasting distribution	IPTV	$2.0B	10.3%	7.7% (EBITDA)
	Cable	$4.6B	-4.1%	18.6% (EBITDA)
	DTH	$2.0B	-8.9%	28.1% (EBITDA)

In 2017, television distribution via cable was still generating the most revenue at $4.6 billion, followed by discretionary services at $4.0 billion. Both of these type of services also reported strong profitability, with an EBITDA of 18.6% for cable services and a PBIT of 25.1% for discretionary services. In fact, all categories of broadcasting services were profitable in 2017, except for private conventional television stations, which collectively reported a -6.3% PBIT.

While all but one type of service were profitable in 2017, most services saw their revenues decline. The apparent decrease in revenues of CBC television, down 20.4% ($241 million) compared to 2016, was mainly a result of a change in CBC’s reporting methodology to exclude digital revenues and parliamentary appropriations related to digital activity. Part of the decrease was also attributable to a decrease in conventional television advertising revenues.

The majority of radio revenues came from commercial services (84%), which include both AM and FM radio stations broadcasting in English, French and ethnic languages. Although radio services have been declining in revenues, on average 88%^{Footnote 3} of Canadians still use radio each month.

Consistent with previous years, the majority of TV revenues came from discretionary services (59%), which relied on subscriber revenues to generate most (65%) of their revenues.

Finally, among broadcasting distribution undertakings (BDUs), IPTV still leads in terms of growth, reporting a 10.3% growth in revenues compared to 2016, while DTH services are still the most profitable distribution services with a 28.1% EBITDA in 2017.

In terms of the regional distribution of revenues, the most populous provinces, Ontario and Quebec, lead with 38% and 25% of broadcasting revenues in 2017 respectively, while according to the 2016 Census^{Footnote 4} their population represented 38% and 23% of the Canadian population.

Link directly to ii. Contributions to Canadian content ii. Contributions to Canadian content

Commercial radio stations typically contribute to Canadian content development (CCD) initiatives to support the development and promotion of Canadian musical and spoken word content for broadcast, while television services contribute portions of their broadcasting revenues to Canadian programming expenditures (CPE) and broadcasting distributing undertakings (BDUs) contribute a portion of their annual broadcasting related revenues to the creation and production of Canadian programming, ranging from contributions to production funds to contributions to community programming.

Link directly to Infographic 7.3 Infographic 7.3

Source: CRTC data collection, 2017 broadcasting year

Long Description

Radio Canadian content development	Television Canadian programming expenditures	BDU Contributions to the creation and production of Canadian programming	Total contributions to Canadian content
$43 million (1%)	$2,941 million (87%)	$412 million (12%)	$3,396 million

In 2017, broadcasters contributed a total of $3,396 million towards Canadian content. CPE represented the vast majority (87%) of the contributions to Canadian content, followed by contributions from BDUs (12%) and CCD (1%).

In addition to these contributions, Canadian broadcasters also support Canadian content in a variety of ways such as: exhibition of Canadian content, copyright and other programming expenditures as well producing Canadian radio programming.

Link directly to iii. Industry characteristics iii. Industry characteristics

Link directly to Infographic 7.4 Infographic 7.4

Source: CRTC data collection

Long Description

• In 2017, the top 5 companies in terms of revenues generated $14.0 billion in broadcasting revenues and accounted for approximately 81% of total broadcasting revenues.
• 65% of the total broadcasting revenues are generated by the 3 ownership groups operating in all broadcasting sectors.
• 5% of the total broadcasting revenues are generated by the 173 ownership groups operating in only 1 of the 4 broadcasting sectors.
• Canada’s 5 largest commercial radio broadcasters reported 65% of the sector’s total revenues in 2017.
• The six largest television broadcasters accounted for 91% of the sector’s total industry revenues in 2017.

In 2017 as in previous years, the broadcasting industry was largely dominated by a few entities. Together the top 5 entities generated approximately 81% of total broadcasting revenues. Entities operating radio stations, conventional television stations, discretionary/on-demand services and broadcasting distribution undertakings generated 65% of broadcasting revenues in 2017, while entities operating only one type of these services accounted for 5% of total broadcasting revenues.

Link directly to iv. Internet-based audio and television services estimated revenues iv. Internet-based audio and television services estimated revenues

Link directly to Infographic 7.5 Infographic 7.5

Source: Revenue estimates from Ovum

Long Description

Internet-based audio services estimated revenues in Canada	Internet-based video services estimated revenues in Canada	Total Internet-based services estimated revenues in Canada	Total Internet-based services estimated revenues in Canada as a percentage of the traditional broadcasting system’s revenues
$383 million	$2,365 million	$2,748 million	16%

Internet-based audio and television services, also known as over-the-top (OTT) services, are provided through Internet access. These services, according to the research firm Ovum, generated estimated revenues of $2.7 billion in Canada in 2017, surpassing 2017 radio revenues ($1.7B) and representing 16% of the total traditional broadcasting revenues.

Estimated revenues from Internet-based video content come in majority from subscription-based video-on-demand (SVOD) services such as Netflix, Amazon Prime Video and Crave TV, while streaming leads in terms of estimated revenues in the Internet-based audio content sector.

Even though Internet-based services are becoming more popular, a great majority of Canadians continue to use traditional TV and radio services. More specifically, in 2017, on average 94% of Canadians watched traditional television and 88% listened to radio in any given month. These penetration figures are far higher than those for their Internet-based counterparts, which stood at 63% for Internet television and 59% for streaming music content on YouTube.

Further details on Internet-based audio and video services, as well as methodology, can be found in the Radio and Television sections of this report.