Communications Monitoring Report 2019

Link directly to Broadcasting Overview Broadcasting Overview

Link directly to On this page On this page

1. Revenues and financial performance
2. Industry characteristics
   • Sector composition
3. Contributions to Canadian content
4. Internet-based audio and television services estimated revenues
5. Methodology
   • CRTC data collection
   • Media Technology Monitor (MTM)
   • Ovum
   • Numeris
   • Definitions

Long description

Total broadcasting revenues	Total broadcasting revenue growth 2017-2018	Total broadcasting contributions to Canadian content	Estimated revenues of Internet-based audio and video services
$17,105 M	-1.2%	$3,479 M	$4,751 M

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

Revenues of Internet-based services are over and above those of the traditional broadcasting services.

Total broadcasting revenues include revenues from private commercial and Canadian Broadcasting Corporation/Société Radio-Canada (CBC/SRC) radio services, private commercial and CBC/SRC conventional television services, discretionary and on-demand television, and broadcasting distribution undertakings (BDUs). 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.

CBC/SRC revenues include parliamentary appropriations for conventional television.

This Broadcasting Overview provides a glimpse into various aspects of broadcasting in Canada. For the purposes of this report, total broadcasting revenues include those from:

• private commercial and CBC/SRC radio services;
• private commercial and CBC/SRC conventional television services;
• discretionary (pay and specialty) and on-demand (pay-per-view (PPV) and video-on-demand (VOD)) services; and
• BDUs^{Footnote 1}, such as cable, satellite and Internet Protocol Television (IPTV) distributors.

In 2018, broadcasting services generated total revenues of $17.1 billion, a 1.2% decrease compared to 2017, and contributed approximately $3.5 billion (20% of total revenues) to Canadian radio and television content through their respective funding mechanisms. Out the of the $3,016 million made in Canadian programing expenditures, expenditures on news grew by 5% from 2017 to 2018, reaching $737 million or almost a quarter of the total CPE expenditures. (See the Television section for more details)

BDUs generated almost half of 2018 total broadcasting revenues, reporting $8.4 billion (49%). Television services followed with $6.9 billion (40%), and radio stations generated $1.8 billion (11%).

In comparison, Internet-based audio and video services were estimated to have generated revenues of $4.8 billion in Canada^{Footnote 2}, approximately 28% of the revenues of the traditional broadcasting services.

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

Long description

Sector	Service	2018 total revenues	Growth 2017-2018	PBIT/ Operating margin
Radio	Private commercial radio	$1.5 B	-0.5%	18.3% (PBIT)
	CBC/SRC radio	$0.3 B	10.9%	10.9% (Operating margin)
Conventional television	Private conventional television stations	$1.5 B	-4.2%	-8.7% (PBIT)
	CBC/SRC conventional television stations	$1.1 B	12.6%	11.0% (Operating margin)
Discretionary and on-demand television	Discretionary television services	$4.0 B	-1.8%	23.6% (PBIT)
	On-demand television services	$0.3 B	-14.5%	13.4% (PBIT)
Broadcasting distribution	Cable	$4.5 B	-3.4%	15.0% (Operating margin)
	IPTV	$2.1 B	4.5%	5.0% (Operating margin)
	DTH	$1.9 B	-5.0%	27.4% (Operating margin)

Source: CRTC data collection

PBIT refers to profit before interest and taxes; EBITDA to earnings before interest, taxes, depreciation and amortization; and DTH to national direct-to-home satellite service providers.

In 2018, television distribution via cable continued to generate the most revenues at $4.5 billion and reported strong profitability with an EBITDA of 15.0%. In regard to television services, discretionary services generated the most revenues at $4.0 billion and reported a PBIT of 23.6%. In fact, except for private conventional television stations (which collectively reported a -8.7% PBIT), all categories of broadcasting services were profitable in 2018.

That being noted, most services saw their revenues decline. Only CBC/SRC radio, CBC/SRC conventional television stations, and IPTV showed growth in their revenues. The increase in revenues of CBC/SRC radio, up $32 million (10.9%) compared to 2017, and CBC/SRC television, up $119 million (12.6%) compared to 2017, may be, in part, a result of an increase in parliamentary appropriations and an increase in television national advertisement sales resulting from the sports coverage of the 2018 Winter Olympics.

The majority of radio revenues came from commercial services (82%), which include both AM and FM radio stations broadcasting in French, English and third languages. Radio revenues have been declining; however, on average 83%^{Footnote 3} of Canadians still use traditional radio each month.

As is consistent with previous years, the majority of television revenues came from discretionary services (58%), which relied on subscriber revenues to generate most (66%) of their revenues.

Finally, among BDUs, IPTV still leads in terms of growth, reporting revenue growth of 4.5% from 2017 to 2018, while DTH services are still the most profitable distribution services, reporting a 27.4% EBITDA in 2018.

In terms of the regional distribution of revenues, the most populous provinces, Ontario and Quebec, lead with 38% and 26% of broadcasting revenues in 2018 respectively, while according to the 2016 Census^{Footnote 4} their population represented 38% and 23%, respectively, of the Canadian population.

Link directly to ii. Industry characteristics ii. Industry characteristics

Long description

In 2018…

• $13.8 billion (81%): broadcasting revenues generated by the top 5 entities (BCE, Corus/Shaw, Rogers, CBC/SRC, Québecor).
• 64%: total broadcasting revenues generated by 3 ownership groups operating (BCE, Corus/Shaw, Rogers) in all broadcasting sectors.
• 6%: total broadcasting revenues generated by 173 ownership groups operating in only 1 of the 4 broadcasting sectors.
• 65%: total radio revenues reported by 5 largest commercial radio broadcasters.
• 89%: total television revenues reported by the 6 largest television broadcasters.

Source: CRTC data collection

In 2018, 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 or on-demand services and BDUs generated 64% of broadcasting revenues in 2018. Entities operating only one type of these services accounted for 6% of total broadcasting revenues.

Link directly to iii. Contributions to Canadian content iii. Contributions to Canadian content

Commercial radio stations typically contribute to CCD initiatives to support the development and promotion of Canadian musical and spoken word content for broadcast. Television services contribute portions of their broadcasting revenues to CPE. 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.

Long description

Radio CCD	Television CPE	BDU Contributions to Canadian programming	Total contributions to Canadian content
$44 M	$3,013 M	$422 M	$3,479 M

Source: CRTC data collection, 2018 broadcasting year

Television CPE include expenditures from private conventional television, CBC conventional television, other (public and not-for-profit) conventional television, discretionary services, and on-demand services.

In 2018, broadcasters contributed a total of $3.479 billion towards Canadian content. CPE represented the vast majority (87%) of those contributions, followed by BDUs contributions (12%) and CCD contributions (1%).

Canadian broadcasters also support Canadian content in a variety of other ways, such as through the exhibition of Canadian content, copyright and other programming expenditures, and the production of Canadian radio programming.

Even though total broadcasting revenues have declined from 2017 to 2018, contributions to Canadian content have increased by 2.3%. In, fact, contributions to Canadian content have increased in the past ten years, by an average of 2.4% per year.

Although total broadcasting revenues have declined since 2015, total contributions to Canadian content have remained stable over the same period. In fact, they have varied in the $3.4 and $3.5 billion range since 2014. Contributions to Canadian content growth is measured at 2.4% on average, per year for the past ten years.

Only radio CCD contributions display negative growth, having declined by 1.7% per year for the past ten years. These contributions represent 1.3% of all contributions to Canadian content for the past three years.

Television CPE increased 2.5% per year for the past ten years, from $2.4 billion in 2009 to $3 billion in 2018. Over the same ten-year period, there has been an average decrease in contributions per year from CBC/SRC conventional television services (-1.3%), other (public and not-for-profit) conventional television (-3.8%), and on-demand services (-5.4%). There has, however, been an average increase in contributions per year from private conventional television (1.2%) and discretionary services (5.5%).

Although BDUs contributed to the LPIF (now defunct) and the ILNF, the majority of these contributions over the past ten years have been directed to local expression, Certified Independent Production funds and to the CMF (95% of BDU contributions, in 2018).

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

Long description

Sector	Estimated 2018 revenues	Growth 2017-2018	5-year compound annual growth rate (CAGR)
Audio services	$423 M	16.6%	20.7%
Video services	$4,328 M	43.8%	38.3%
Total	$4,751 M	40.8%	36.2%

Source: Revenue estimates from Ovum

Note: AVOD revenues in 2014 did not include "out of stream revenues" for Internet-based video services; they were, however, included in subsequent years. Nevertheless, 2014 data was used to calculate the five-year compound annual growth rate.

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 $4.8 billion in Canada in 2018, comparable to the 2018 cable revenues ($4.5 billion). These revenues compare to roughly one third of the traditional, regulated broadcasting revenues.

Internet-based video estimated growth is still on the rise, compared to last year, as revenues grew by an estimated 43.8%. The majority of estimated revenues from Internet-based video content come from subscription-based video-on-demand (SVOD) services such as Netflix, Amazon Prime Video and Crave TV.

For Internet-based audio, streaming is the method of accessing content that generates the most estimated revenues. The estimated growth for Internet-based audio services revenues, while significant at 16.6%, are less noteworthy than the average annual growth rate of 20.7% for the past 5 years.

SVOD refers to subscription-based video-on-demand service. This is an Internet-based service model in which a client pays a subscription fee to gain access to a library of content. This category includes services that air the content of the library according to a linear schedule (e.g., Sportsnet Now) and services that permit a user to choose from a catalogue of content that is available at any time (e.g., Netflix, Crave and Club Illico).

TVOD refers to transactional video-on-demand service. This is an Internet-based service model in which a client pays for specific content but generally does not pay to access the service itself (e.g., iTunes, Microsoft Movies & TV, and the PlayStation Network).

AVOD refers to advertising video-on-demand service. This is an Internet-based service model in which a client typically has free access to content but is exposed to advertisements (e.g., YouTube).

Although Internet-based services are becoming more popular, a great majority of Canadians continue to use traditional television and radio services. In 2018, on average, 80% of Canadians watched traditional television on any given week and 83% listened to traditional radio in any given month. These penetration figures are far higher than those for their Internet-based counterparts, which stood at 56% for Canadians watching Internet-based television services and 63% for Canadians streaming music content on YouTube.

Additional information concerning Internet-based audio and video services as well as methodology is provided in the Radio and Television sections of this report.

Link directly to v. Methodology v. Methodology

Link directly to CRTC data collection CRTC data collection

The CRTC data collection has sourced its statistical and financial data from the annual returns provided by commercial and CBC/SRC radio stations, conventional television stations, discretionary services, and on-demand services for the broadcast year which ended August 31, 2018.

CBC/SRC revenues include parliamentary appropriations for conventional television.

Annual returns for the broadcast year ending 31 August 2018 were required to be filed with the Commission by 30 November 2018. Data received subsequent to the compilation date is not reflected in this publication. The data reported for previous years has been updated to reflect any additional or adjusted information received by the Commission after the 31 August date for prior years' publications.

Pursuant to Broadcasting Regulatory Policy CRTC 2015-86, the term “discretionary services” now encompasses all currently licensed pay, specialty and discretionary services, while the term “on-demand service” now encompasses all licensed pay-per-view and video-on-demand services.

Link directly to Media Technology Monitor (MTM) Media Technology Monitor (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 have 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

SVOD services

Subscription-based (SVOD) services 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 among the estimated number of subscribers. The estimated average monthly subscription revenue per subscriber is then multiplied by the subscriber estimate.

TVOD services

Transactional (TVOD) services revenues are estimated based on publicly available data such as company annual reports in addition to the country’s other media revenues such as home video and pay TV revenues. These estimates are further refined using data about online video 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.

AVOD services

Advertising based (AVOD) services’ revenues are estimated based on publicly available and, where necessary, quantitatively modelled data (informed by analyst knowledge and assumptions) about advertising load, pricing, and market share. These are then applied to video traffic and digital advertising forecast models to derive revenue estimates. These estimates are further refined based on each entity’s performance in other video segments.

Ovum defines AVOD revenue as revenue generated through the sale of in-stream video advertising (i.e., pre-roll, mid-roll, post-roll and in-player overlays) delivered over the Internet. This excludes out-of-stream video advertising (i.e., video ads that play independently of video content, such as in-read and in-feed social video ad formats). This revenue is from advertiser spending.

Note: 2014 AVOD revenues did not include "out of stream revenues," which were included in subsequent years. The data was nevertheless used in the calculation of the five-year compound annual growth rate.

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.

Unless otherwise specified, audience measurement data sourced from Numeris was collected by portable people meter (PPM) devices.

The Numeris data presented by linguistic market divides Canada into two sections: (1) all of Canada, excluding Francophone respondents in Quebec; and (2) exclusively Francophones respondents in Quebec.

The television seasons used by Numeris were the following:

• 26 August 2013 to 31 August 2014, includes all persons 2+, Monday to Sunday, 2 a.m. to 2 a.m.
• 1 September 2014 to 30 August 2015, includes all persons 2+, Monday to Sunday, 2 a.m. to 2 a.m.
• 31 August 2015 to 28 August 2016, includes all persons 2+, Monday to Sunday, 2 a.m. to 2 a.m.
• 29 August 2016 to 27 August 2017, includes all persons 2+, Monday to Sunday, 2 a.m. to 2.a.m.
• 28 August 2017 to 26 August 2018, includes all persons 2+, Monday to Sunday, 2 a.m. to 2 a.m.

Link directly to Definitions Definitions

BDU revenues refer to revenues from basic and non-basic services and exclude Internet-based service revenues, such as Netflix and telecommunications service revenues such as Internet access or telephony, but include IPTV services such as Bell Fibe and Telus Optik TV.

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.

Direct-to-home (DTH) refers to satellite service providers.

IPTV refers to Internet protocol television such as Bell Fibe and Telus Optik TV, but excludes Internet-based services, such as Netflix, Crave and Club Illico.

Earnings before interest, taxes, depreciation and amortization (EBITDA) is a metric used to measure financial performance. It is expressed as a percentage of total revenues.

PBIT refers to profit before interest and taxes.

Total broadcasting revenues include revenues from private commercial and CBC/SRC conventional television, discretionary and on-demand television, private commercial and CBC/SRC radio, as well as broadcasting distribution undertakings (BDU). They do not include Internet-based services unless stated otherwise.