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Broadcasting Sector Overview

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The 2019-2020 (referred to as 2020 throughout the document for brevity) broadcast year was marked by the COVID-19 pandemic which impacted all of the Canadian broadcasting industry but most severely affected the sectors that heavily rely on advertising revenues. Total broadcasting revenues in 2020 declined overall by -6.6%, with the commercial radio (-20.9%) and private conventional television (-14.3%) sectors being most impacted.

Commercial stations

Significant declines in advertising revenue due to the various impacts of the COVID-19 pandemic in the second half of the 2020 broadcast year have resulted in a significant decline of commercial radio station revenues in 2020. The -20.9% year over year decline in radio revenues is more than eight times the 5 year Compound Annual Growth Rate (CAGR) of -2.4% reported from 2015 to 2019.

• Over 700 commercial radio stations reported combined revenues of $1,149 million in 2020, compared to $1,453 million in 2019. French-language radio stations reported the smallest decline in revenues (-15.4%) followed by Ethnic stations (-18.1%) and then English-language stations (-22.2%).
• Generally, larger markets fared worse than smaller markets. Whereas radio stations in Toronto, Montreal and Vancouver reported revenue declines of -25.2%, stations in other designated markets declined by -21.8% and stations in non-designated markets declined by -14.0%. The list of designated markets can be found in the commercial radio financial summary.

• Consistent with the decrease in revenues, the profitability margin for commercial radio declined significantly in 2020. Overall, the profit before interest and taxes margin (PBIT margin) declined from 17.3% in 2019 to 5.5% in 2020. English-radio stations appear to have most suffered, with PBIT margins declining by -13.5% percentage points to 3.6% compared to Ethnic stations declining by -6.7% percentage points to 6.3% and French-language station only falling by -5.8% percentage points to 13.2%. Of note, AM radio station’s PBIT margin in 2020 was -11.2%.
• No designated market reported positive revenue growth in 2020. Medicine Hat (-0.01%), Lethbridge (-8.2%) and the Montreal French-language AM stations (-7.7%) were the only designated markets with less than double digit declines in year-over-year revenue growth.
• Toronto English-language AM stations (-31.3%) and the Kitchener Waterloo market (-30.4%) were the worst performing designated markets in Canada in 2020, though there were several other designated markets that registered declines in revenue exceeding 25%.

CBC Radio

In contrast to commercial radio, CBC radio which has no reliance on advertising revenues, did not suffer the same impacts from COVID-19.

• In 2020, CBC Radio saw revenues increase by 3.6% over 2019, mainly due to a larger allocation of CBC’s parliamentary appropriation.

Private commercial stations

The PBIT for commercial television stations declined from -$109 million in 2019 to more than -$247 million in 2020, or a PBIT margin of -18.6%. This was mostly due to significant reductions in advertising revenues resulting from the effects of the COVID-19 pandemic on the broadcasting industry.

• Revenues for commercial stations decreased by $222 million, from $1,554 million in 2019 to $1,332 million in 2020, a decline of -14.3%, which by far exceeds the 5 year CAGR of -3.0% reported from 2015 to 2019.

• No region avoided the decreases in advertising revenues. However, the Atlantic region fared the best with a decline of only -6.4%, with the Prairies faring the worst with a -20.2% decline.
• Despite an increase in revenues in 2019, Canadian programing expenditures (CPE) in 2020 decreased -6.7% to $625 million in 2020 from $670 million in 2019, the first decline in CPE for private commercial stations since 2017.
• While CPE increased from 2016 to 2019, spending on non-Canadian programming by this sector has declined by on average -2.5% annually during the same period of time, further decreasing by -2.6% in 2020.

CBC Conventional Television

CBC conventional television, which derive the vast majority of its revenues from both advertising and the parliamentary appropriations, fared better than commercial television stations during the pandemic, posting reduced revenues of -2.2%, which is less than the -10.9% reduction in revenues reported in 2019 (note that Olympic games were held in 2018).

• CPE levels were also lower, declining from $494 million in 2019 to $454 million in 2020, or -8.1%.

Educational stations

Contrary to the other conventional television stations, educational stations reported an increase in CPE in 2020. With revenues totalling $189 million, the educational stations spent $69 million on CPE, an increase of 4.6% over 2019.

With less reliance on advertising revenues than private commercial stations, discretionary and on-demand services were better able to adjust to the impacts of the COVID-19 pandemic even, in some cases, reporting increased profitability. For example, French-language services improved their PBIT margin from 9.6% in 2019 to 10.6% in 2020 and Ethnic services from 6.6% to 7.8%.

• Revenue for discretionary and on-demand services declined in 2020 by -7.2%. English-language services had the largest decline of -7.6% followed by French-language and Ethnic services declining by -5.5% and -5.7%, respectively.

• Year-over-year revenues for discretionary services declined -7.1%, whereas on-demand services reported a decrease of -9.2% in 2020.
• Within on-demand services, pay-per-view revenues remained relatively stable experiencing a -0.2% decline. However, video on-demand (VOD) services reported a -12.3% decline in revenues.

• Consistent with the trend, the revenues for the top 10 discretionary and on-demand services by total revenue were also down, but declined at a greater rate than the rest of discretionary and on-demand services: the top 10 service revenues declined by -8.3% vs -6.3% for the remaining services.
• English/bilingual services continue to be the most profitable services. This year, the English/bilingual services reported a PBIT margin of 27.6%, while the French-language and Ethnic services reported margins of 10.6% and 7.8%, respectively.
• However, the PBIT margin for English/bilingual services decreased by -1.4% percentage points from 2019 whereas, as noted earlier, the PBIT margins for French-language and Ethnic services both increased.
• Discretionary services reported nearly $1,485 million in CPE in 2020 - a decrease of $152 million from 2019. Sports programming services accounted for 54% and news services accounted for 16% of total CPE.
• Since 2018, spending by discretionary services on non-Canadian programming has been relatively flat, fluctuating between $677M and $688M per year.

• In 2020, music and entertainment programming saw the largest decrease in CPE spending (-21.2%), to $261 million from $331 million in 2019. Information programming saw the smallest decrease (-3.1%) to $410 million from $423 in 2019.

The consistent erosion of cable and Direct-to-Home (DTH) subscribers combined with a slowdown in the uptake by subscribers of IPTV television services and the impacts the COVID-19 pandemic had on consumer consumption habits, has resulted in a significant year-over-year decline in television service providers’ subscribership and revenue growth.

• Overall revenues dropped by $270 million, from $8,364 million in 2019 to $8,094 million in 2020.
• Year-over-year DTH revenues declined the most (-5.6%), followed by cable revenues (-4.4%), while IPTV revenues rose slightly (1.2%). The IPTV revenue growth was much lower slower than the 5 year CAGR (5.1%) reported from 2016 to 2020.

• BDU subscribers decreased by-3.2% in 2020. By service type, DTH lost over 130,000 subscribers (-7.4%), cable lost almost 300,000 subscribers (-5.1%) while IPTV gained 85,000 subscribers (2.8%), not enough to offset declines by DTH and cable.
• By region, Atlantic Canada has fared best gaining almost 3,000 cable and IPTV subscribers since 2016, with the Prairies faring worst, losing just over 100,000 cable and IPTV subscribers during the same time period.

• Operating margins for the television service providers were healthy in 2020, though the 15.0% level is the lowest reported in the past five years.
• DTH providers have reported the largest subscribership declines. Despite this, the service remains by far the most profitable. In 2020, DTH providers reported an operating margin of 33.8% compared to cable at 13.4% and IPTV at 3.2%.
• In 2020, of the subscribers to entities that had at least one licensed undertaking, about 10.6% paid $25 or less per month for their television services (not counting equipment and taxes), 22.9% paid between $25-$50, 49.9% between $50-$100 and 16.6% over $100. The average monthly subscription revenue for 2020 was $58.16, up 0.4% from 2019.

• In 2020, BDUs contributed $397 million to the creation and production of Canadian programming, compared to $413 million in 2019. Overall, the reported BDU contributions are down $34 million or -7.9% overall since 2016.

CPE requirements are based on the previous years’ revenues from broadcasting activities. In 2020 total CPE over all service types is down by -7.9% when compared 2019 and -13.2% since 2016.

• The 2020 over 2019 change is driven mostly by reductions in CPE by the Discretionary and On-demand segment (-9.3%) and CBC conventional Television (-8.1%).

• Spending on Information programming by commercial television was slightly up in 2020 (1.2%) while spending on Music and Entertainment was down approximately -20%. Since 2016, commercial television CPE is down only -1.3%.

• Since 2016, CBC conventional television CPE is down significantly (-28.5%). Note, however, that 2016 and 2018 were Olympic years, when CBC CPE is usually higher than in non-Olympic years. Not including sports, CPE for the same period is down -14.0%.

• Since 2016, Discretionary and On-Demand spending on CPE is down -7.6%, with spending on Information programing suffering the largest decline in that period (-$51 million).

The second half of the 2019-2020 broadcast year was severely impacted by the COVID-19 pandemic that prompted varying levels of business and service shutdowns. As a result most of the broadcasting industry suffered unprecedented advertising revenue declines.

• To offset some of the impacts of this unprecedented event, similar to other industries and businesses in Canada, various levels of government provided options for impacted broadcasters to obtain assistance. In the 2020 annual returns, the Commission requested that this assistance be reported regardless of whether the assistance was included in the reported revenues or expenses of the broadcasting undertakings. Provided below is some information on the amounts that were included and excluded by each broadcasting sector. In some instances, undertakings chose to include the amounts reported as COVID-related assistance in the annual return forms used to produce the financial summaries. The majority of COVID-related assistance was, as noted by the table below, excluded from the annual returns forms that are used to populate the financial summaries.
• The figures and graphs in this section exclusively report direct government assistance received in the form of subsidies or grants by Canadian broadcasters. In addition to this assistance, Canadian broadcasters were also provided with relief from the Department of Canadian Heritage with the waiving of Part I and Part II broadcasting licence fees in 2020-21. In total, this saved the broadcasting industry an extra $68 million, which is not reflected in the figures outlined below.

• The table below outlines the amounts by assistance type reported by all broadcasters

• In instances where undertakings chose to include the assistance as part of their financial summaries, some reported the assistance as revenues while others reported the assistance as a reduction in expenses. For example, some undertakings reported the Canada Emergency Wage Subsidy as a reduction in wage expenses, rather than as a revenue.
• While the total quantity of COVID-19 relief (both industry and government) was collected by the CRTC as part of its annual returns process, the inclusion of said amounts towards a financial line in the annual returns of each broadcaster may differ due to their basis of accounting. The inclusion or exclusion of the COVID-related assistance in the main annual return forms will have an effect on the reported profitability of the undertakings and the broadcasting industry overall.