Communications Monitoring Report 2018

Link directly to Radio Sector Radio Sector

In 2017, private commercial and CBC radio stations reported $1.8 billion in revenues, the vast majority of which (84%) were for private commercial radio stations. In comparison, Internet-based audio services generated estimated revenues of $383 million in the same year, which is equal to 21% of the revenues reported by traditional radio stations (private commercial and CBC combined).

In 2017, on average, Canadians 18+ tuned in to 15 hours of radio content per week. This weekly tuning was supplemented, on average, by an additional 7.2 hours of audio streaming content, for a total of 22.2 hours of audio listening each week. These levels are the highest observed for the period from 2013 to 2017.

In 2017, the five largest radio operators, operating 282 commercial radio stations, reported 65% of total commercial radio revenues.

Link directly to i. Audience measurement i. Audience measurement

The average weekly number of hours that Canadians 18+ spent listening to traditional radio decreased slightly from 15.2 in 2016 to 15.0 in 2017, while the average weekly number of hours spent listening to streamed audio services grew from 5.2 in 2016 to 7.2 in 2017, a 38% increase. As such, the average weekly number of hours spent listening to all audio services increased from 20.4 in 2016 to 22.2 in 2017, the highest level of listening during the 2013-2017 period.

This demonstrates that Canadians are listening to increased amounts of audio content. Further, notwithstanding a shift from traditional radio, it suggests that the hours of listening to streamed audio content are complimentary to the hours of listening to traditional radio content.

In 2017, the vast majority of Canadians were still tuning in to traditional radio. When asked about their use of radio and audio services, 88% of Canadians 18+ reported having listened to the radio in any given month. While streaming music videos on YouTube and listening to personalized online music services continued their rise in popularity in 2017, reaching 59% and 32%, respectively, of Canadians 18+, both types of online services have yet to reach as many Canadians as traditional radio. However, these online services surpass satellite radio in terms of penetration. In 2017, 17% of Canadians reported having a satellite radio subscription, an increase of 1% percentage point from 2016.

Link directly to ii. Canadian content development ii. Canadian content development

Canadian Content Development (CCD) contributions are financial contributions made by radio broadcasters to support the development and promotion of Canadian musical and spoken word content for broadcast. In 2017, CCD contributions, including tangible benefits contributions, totaled $43.5 million, a 6.74% decrease from the previous year. There are three sources of CCD contributions: new stations during their first licence terms (4.5% of total CCD contributions), stations for which the licences have been renewed (49.1% of total CCD contributions), and stations for which there has been a change in ownership and effective control (46.4% of total CCD contributions).

In 2017, combined, the Radio Starmaker and RadioStar funds were the leading recipients of CCD contributions, receiving a total of $9.9 million (representing 23% of total CCD contributions). Next were local initiatives ($8.9 million) and FACTOR ($8.8 million). Together, these three recipients received 63% of all CCD contributions in 2017. MUSICACTION, received approximately $3.4 million in CCD contributions, the equivalent of 39% of the funds that FACTOR received.

Link directly to iii. Tangible benefits iii. Tangible benefits

In 2017, the Commission approved 9 ownership transactions for both English- and French-language services resulting in total tangible benefits of $30 million.

Link directly to iv. Commercial Radio iv. Commercial Radio

Link directly to Infographic 8.2 Infographic 8.2

Source: CRTC data collection, Numeris

Long Description

2017	Commercial radio (total)	AM radio stations	FM radio stations	English-language radio stations	French-language radio stations	Third-language radio stations
Number of reporting stations	712	121	591	589	98	25
Revenues	$1,520 M	$273 M	$1,247 M	$1,214 M	$258 M	$48 M
2016-2017 Revenue growth	-1.9%	-4.0%	-1.5%	-2.3%	-1.2%	2.7%
Local advertising revenues (% of total revenues)	64%	73%	63%	64%	59%	88%
National advertising revenues (% of total revenues)	34%	25%	36%	34%	39%	5%
PBIT margin	18.7%	6.0%	21.4%	18.7%	18.9%	16.1%
Tuning share	93.9%	15.8%	78.1%	73.8%	20.2%	N/A

In 2017, 712 reporting commercial radio stations reported $1.5 billion in revenues, a 1.9% decrease from 2016. This decrease is slightly higher than the annual average 1.6% decrease in revenues from 2013 to 2017. However, the overall profitability margin of those commercial radio stations remained steady, at 18.7%, compared to 18.6% for 2016.

The 591 reporting FM commercial stations reported revenues of $1.2 billion in 2017, equal to 82% of all commercial radio revenues. FM stations surpassed AM stations in terms of profitably, reporting a PBIT margin of 21.4%, compared to 6.0% for AM stations.

FM commercial stations relied less on local advertising revenues and more on national advertising revenues than AM stations. Whereas FM stations generated 63% of their revenues from local advertising and 36% from national advertising, AM stations generated 73% of their revenues from local advertising and 25% from national advertising.

Although the vast majority of revenues were generated by English language radio stations, profitability in terms of PBIT margins was somewhat similar between English-, French- and third-language stations. What sets third-language radio stations apart from English- and French-language radio stations is revenue composition: third-language stations generated 88% of their revenues from local advertising, compared to 64% and 59% for English- and French-language stations, respectively. In addition, third-language stations are mainly concentrated in major markets, and have a limited presence outside of those markets.

Link directly to Market composition Market composition

In 2017, the five largest radio ownership groups in Canada garnered 65% of total commercial radio revenues. The two largest groups, BCE (105 stations) and Rogers (54 stations) garnered close to 40% of total radio revenues from 2014 to 2017.

Link directly to Infographic 8.3 Infographic 8.3

Source: Public disclosure of aggregate annual returns for large ownership groups, Numeris

Long Description

2017	BCE	Rogers	Corus	Newcap	Cogeco	Total
Number of reporting stations	105	54	39	71	13	282
Revenues	$373 M	$220 M	$115 M	$159 M	$105 M	$970 M
Share of total commercial radio revenues	25%	14%	8%	10%	7%	64%
English language station revenues	$280 M	$220 M	$115 M	$159 M	n/a	$773 M
French language station revenues	$93 M	-	-	-	n/a	$93 M
Tuning share in the English-language market	18%	13%	12%	9%	n/a	52%
Tuning share in the French-language market	23%	-	-	-	32%	54%

For 2017, in addition to reporting the majority of the revenues of the radio sector, these 5 ownership groups garnered the majority of tuning in both official-language markets. In the English-language market, they together held 55% of the tuning, with BCE leading at 18%, followed by Rogers at 13% and Corus at 12%. In the French-language market, Cogeco and BCE together held 54% of weekly average tuning hours in 2017, with Cogeco leading at 32%, followed by BCE at 23%.

Link directly to Formats Formats

In 2017, radio tuning in the English language market was more fragmented than in the French language market.

The top 3 formats in the English-language market garnered approximately 44% of the tuning share, with talk radio (CBC Radio One) and news/talk formats leading with 22%, followed by the Country and Top 40 formats, each garnering approximately 11% of the tuning share.

The top 3 formats in the French-language market garnered approximately 73% of the tuning share, with the talk formats (News/talk and Radio Canada première combined) leading with 37%, followed by the Hot adult contemporary format at 29% and Mainstream Top 40/CHR at 7%.

Link directly to v. CBC Radio v. CBC Radio

Link directly to Infographic 8.4 Infographic 8.4

Source: CRTC data collection, Numeris

Long Description

2017	All CBC radio stations	CBC AM radio stations	CBC FM radio stations
Number of reporting stations	67	14	53
Revenues	$295 M	$50 M	$245 M
2016-2017 Revenue growth	1.6%	-1.8%	2.3%
Parliamentary appropriations (% of total revenues)	97%	98%	96%
EBITDA margin	6.1	6.0	6.1
Tuning share	16.2%	n/a	n/a

The Canadian Broadcasting Corporation (CBC) is Canada’s public broadcaster. Its 14 AM stations and 53 FM stations reported revenues of $295 million in 2017, an increase of 1.6% from 2016. This growth is mainly attributed to a similar rise in parliamentary appropriations which represent 97% of the CBC’s revenues.

Beginning in 2014, national advertising sales for CBC stations have represented a modest source of income. At its height in 2015, it represented 0.5% of the public broadcaster’s total revenues. In 2017, the CBC ceased receiving revenues from national advertising sales (notwithstanding revenues of $82,000).

CBC Radio One and its French counterpart ICI Radio-Canada Premiere are popular talk radio services. It is the most popular English-language radio format with 13% of English tuning shares while the French-language service has 17% of French audience tuning shares. Together, they represent 13.1% of all weekly average radio tuning hours. These talk radio formats generate 80.5% of CBC’s tuning across the four networks.

Link directly to vi. Non-Commercial Radio vi. Non-Commercial Radio

Link directly to Infographic 8.5 Infographic 8.5

Source: CRTC data collection, Numeris

Long Description

2017	Campus	Community	Indigenous	Religious	Total
Number of reporting stations	48	112	32	29	221
Revenues	$11.0M	$33.9M	$17.5M	$9.3M	$71.8M
Average revenues per station	$229,000	$303,000	$548,000	$321,000	$325,000
2016-2017 Revenue growth	-0.6%	-4.5%	16.8%	-3.1%	0.8%
2013-2017 Average annual revenue growth rate	4.5%	1.2%	2.3%	4.9%	2.4%
Advertising revenues (% of total revenues)	7%	46%	28%	32%	34%
Government/Corporate grants (% of total revenues)	16%	18%	19%	5%	16%
PBIT margin	3.3%	4.3%	-1.5%	5.0%	2.8%
Tuning share	0.3%	1.7%	0.3%	0.3%	2.7%

Non-commercial radio stations play an important role in the communities they serve and in the broadcasting sector as a whole. In 2017, there were 221 reporting non-commercial radio stations, falling under four categories: campus, community, Indigenous and religious. Total reported revenues of these stations in 2017 was $71.8 million, with community stations garnering almost half of those revenues (47%), while Indigenous stations garnered almost one quarter (24%).

Over 50% of Indigenous radio station revenues are derived from alternative sources and fundraising activities. In 2017, advertising revenues represented 28% of total revenues (89% of which were from local advertising) and government grants represented 19% of total revenues. Based on average revenues per station, of all non-commercial radio stations, Indigenous radios generate the most revenues per station. Conversely, their profitability margin is the lowest of all non-commercial radio stations.

Campus radio station revenues are mainly derived from alternative sources and fundraising activities. In 2017, government grants represented 16% of those stations’ revenues, while advertising revenues represented 7% (96% of which were from local advertising).

Although their mandates are similar, community radio stations differ from campus radio stations in regard to revenue sources. In 2017, advertising revenues represented 46% of community station revenues, with 79% coming from local advertising. Government grants represented 18% of community station revenues.

As is the case for other non-commercial radio stations, in 2017, alternative sources of funding were an important revenue source for religious radio stations (54% of total revenues). Advertising revenues represented 32% of total revenues (98% of which were from local advertising). Syndicated production sales represent 9% and government grants represented 5% of religious radio station revenues.

From 2013 to 2017, of all types of non-commercial radio stations, religious radio stations reported the highest average annual growth in revenues (4.9%), followed by campus radio stations (4.5%), and Indigenous radio stations (2.3%).

Link directly to Revenues Revenues

Although the number of stations decreased slightly from 2013 to 2017 (from 228 to 221 stations), revenues increased on average by 2.4% per year over the same period. Total revenues for each type of non-commercial radio station in 2017 were similar to that for the period 2013-2017, with community radio stations having the greatest share of total non-commercial radio revenues (community radio stations, 47%; campus radio stations, 15%; Indigenous radio stations, 24%, and religious radio stations, 13%).

Revenue sources for non-commercial radio stations range from air-time advertisement sales, syndicated production, government/corporate grants, and other, non-radio related revenues. In 2017, revenues from government/corporate grants represented just over 16% of total revenues. These contributions decreased at a rate of 4.1% each year from 2013 to 2017. Revenues from syndicated productions represented a negligible amount of total revenues.

Advertising revenues represented approximately 34% of total revenues. Advertising revenues can be broken down based on local and national advertising revenues. Non-commercial radio stations share the distinction of being hyperlocal, with 84% of their total advertising revenues coming from local advertising revenues (compared to 65% for commercial radio stations).

Link directly to vii. Internet-Based Audio Services vii. Internet-Based Audio Services

Internet-based audio services are a growing means by which Canadians access audio content. Different types of services are available, which can be categorized under two main types of business model:

• Download-based audio services are offerings that allow consumers to download audio files in exchange for a one-time fee (for example, iTunes).
• Streaming audio services refer to Internet-based services that allow users to stream audio content that either contains adverting, or that is done in exchange for a subscription fee (for example, Spotify).

Link directly to Infographic 8.6 Infographic 8.6

Source: Revenue estimates from Ovum

Long Description

	Download-based audio services	Streaming audio services	Total
2017 Estimated revenues in Canada	$109 M	$274 M	$383 M
2016-2017 revenue growth	-19%	61%	25.9%
Share of the estimated revenues of Internet-based audio services	28%	72%	100%

Estimated revenues in Canada for Internet-based audio services grew by 25.9% from 2016 to 2017, reaching $383 million. Compared to the $1.8 billion in revenues of Commercial and CBC radio stations, Internet-based audio services still only represent 21% of the regulated radio sector revenues.

Whereas estimated revenues of streaming audio services increased, those of download-based audio services declined. In 2017, streaming audio services garnered 72% of the estimated Internet-based revenues in 2017, while download-based services garnered 28%.

In 2013, the revenues of Internet-based audio services were driven by download-based audio services, which garnered 87% of estimated revenues. Since then, download-related revenues declined on average by 18.8% each year, while revenues garnered by streaming-based services rapidly increased over the same period, with an average year-over-year growth of 78.4%. Streaming services garnered estimated revenues of $274 million in 2017, suggesting that Canadians are shifting from downloading audio content to streaming such content.

Link directly to viii. Availability of radio services and other audio services viii. Availability of radio services and other audio services

The following table lists the type and number of radio services and audio services that were authorized to broadcast in Canada in 2016 and 2017. The list includes commercial AM and FM radio stations, non-commercial AM and FM radio stations, satellite subscription radio services, specialty audio services and pay audio services.

In 2017, 1,121 radio services and audio services were authorized to broadcast in Canada, which includes 9 more over-the-air radio services compared to 2016. Private commercial radio stations accounted for almost two thirds of all radio services and audio services in Canada, while community stations, the second most numerous type of radio service, represented 12% of all radio services and audio services in 2017.

Link directly to ix. Programming of High Standard ix. Programming of High Standard

The Broadcasting Act sets out that programming provided by broadcasting undertakings should be of high standard. In addition to the CRTC, two bodies deal with complaints relating to the programming provided by broadcasters – the Canadian Broadcast Standards Council (CBSC) and Advertising Standards Canada (ASC) The CRTC also deals with issues that are outside the parameters of the codes administered by the CBSC.

Link directly to Canadian Broadcast Standards Council Canadian Broadcast Standards Council

The CBSC is an independent organization created by the Canadian Association of Broadcasters (CAB) to administer codes established by Canada’s private broadcasters. The CBSC’s membership includes more than 790 private-sector radio and television stations, specialty services, pay services, and networks across Canada. Membership includes broadcasters broadcasting in English, French, and third languages. For more information, visit www.cbsc.ca.

The CBSC administers specific codes of broadcast conduct and provides a means of recourse for members of the public regarding the application of the standards set out in the following codes:

• the Canadian Association of Broadcasters Code of Ethics;
• the CAB’s CAB Violence Code;
• the CAB’s Equitable Portrayal Code; and
• the Radio Television Digital News Association of Canada Code of Journalistic Ethics.

Link directly to Advertising Standards Canada Advertising Standards Canada

ASC is a national, not-for-profit advertising self-regulatory body that responds to complaints by consumers and special interest groups regarding advertising with respect to all media subject to the Canadian Code of Advertising Standards, the principal instrument of advertising self-regulation. ASC also undertakes pre-clearance functions in five industry categories, which consist of reviewing advertisements based on applicable legislation, regulations, and/or industry codes and guidelines. Additional information on ASC can be found at: www.adstandards.com/en/

Link directly to x. Methodology x. Methodology

Link directly to Media Technology Monitoring (MTM) Media Technology Monitoring (MTM)

MTM measures Canadians’ media technology adoption and use at two points in time to monitor changes in media penetration and use over the year. Telephone interviews are conducted with a regionally representative sample of Canadians who have a landline telephone service and those who rely solely on cell phone service. The fall survey includes 8,000 Canadian adults (4,000 Anglophones and 4,000 Francophones). Of those 8,000 respondents, 2,976 also completed an online survey introduced in the fall. An independent sample of 4,000 Canadians (2,000 Anglophones and 2,000 Francophones) is surveyed in the spring.

www.mtm-otm.ca

The CMR uses data collected from the fall survey unless stated otherwise.

Link directly to Ovum Ovum

Download-based audio services

Revenues of download-based audio services are estimated based on publicly available data such as company annual reports in addition to the country’s other media revenues such as physical music album sales and live music attendance revenues. These estimates are further refined using data about online audio subscriptions in the market as a benchmark.

In some cases where information is unavailable, Ovum based its revenue estimations on the service provider’s market shares and revenues in a country similar to the one subject to analysis.

Streaming audio services

Streaming audio services comprise different business models where different methodologies apply. The total revenues of Subscription-based digital streaming, advertisement-based digital streaming, and video (audio) streams are added to determine total streaming audio services revenues.

• Subscription-based digital streaming services (such as Spotify) revenues are estimated based on publicly available data on the number of subscribers and services rates/pricing such as company annual reports and news articles. These are then used to estimate an average monthly subscription revenue per subscriber considering all available service plans from a given provider and distributed on the estimated number of subscribers. The estimated average monthly subscription revenue per subscriber is then multiplied by the subscriber estimate.
• Advertisement-based digital streaming and video streams revenues are estimated based on publicly available data about traffic, advertising load and pricing as well as video traffic and digital advertising forecasts. These estimates are further refined based on each entity’s performance in other video segments.

Link directly to Numeris Numeris

Audience measurement data is important not only to industry stakeholders, who use the data to help sell air time to advertisers, but also to the CRTC, which uses the data to assess the effectiveness of its policies by understanding the reach of programming across the country and across various demographics.

• Audience measurement data is compiled by Numeris through the use of portable people meters (electronic devices that records listenership data) and diary surveys (written logs of listenership). National figures are based on diary surveys only. All Numeris-related data for previous years have been restated to align with methodological changes.
• Audience measurement data is based on Numeris radio diary data from the fall surveys across Canada, Monday to Sunday from 5 am to 1am, with participants aged 12 or older.

NEW TO FALL 2016: Online Radio Diary (ORD) was implemented in all radio diary markets^{Footnote 1}. For the first time, participating households were provided the choice of completing the day diary by using either the traditional paper form or the new online form. The introduction of ORD affects the data collection methodology and therefore, fall 2016 results may not be comparable to previous years with high precision.