Conventional Television

Future Viability: Decline

Still popular, but struggling to make ends meet.

The original form of TV delivery—free, local broadcasts
Declining audiences and lower revenues due to its dependency solely on advertising
Still captures some of the largest video audiences, particularly in the French-language market
Overall, the sector is unprofitable

To remain viable in the future—particularly in an environment where audiences are fragmenting across platforms and subscription revenue is increasingly important to finance content—this model must find ways to monetize its programming across platforms, including new revenue sources.

Read time: approx. 6 min

The Fundamentals

CTV, Global, CBC, CITY, OMNI, TVA, V, SRC… Conventional television refers to free television services operating over the air, including catch-up TV services and simulcasts online. These services are local/regional stations that often make up national networks. In total, Canada is home to 120 conventional television services—93 private, 27 public. Of the private services, 67 are English-language and 20 are French-language. Of the public services, 14 are English-language and 13 are French-language.Footnote 1

Broad reach, shrinking share, most popular shows. These broad-based, general-interest news and entertainment services have ensconced themselves in the daily lives of Canadians. Each week, conventional TV reaches 87% of the national audience, including 85% of the English-language audience and 94% of the French-language audience. Its share of the TV audience has gotten smaller as niche discretionary TV services have emerged. In 2017, conventional TV had a 37% share of the TV audience in the English-language market and a 49% share in the Quebec French-language market. Though its audience share has gotten smaller, conventional TV channels are still the primary home for top shows.

Single source of revenue in decline. Almost all of private conventional TV’s revenues come from advertising (93%). Conventional TV remains a very effective medium for marketers looking to promote their brands, but it is facing increasing competition from discretionary TV services and online advertisers and its advertising revenue is in decline. The Canadian Broadcasting Corporation (CBC) is also facing pressure on its advertising revenue but remains an exception since it receives most of its funding from parliamentary appropriations.

Dependence on BDU distribution. While conventional TV’s origins lie in free local broadcasting, the TV distribution market has significantly transformed. Conventional TV transmitters are typically now only available in urban markets. Most of the audience for conventional TV services comes from redistribution on cable, satellite and fibre TV services (82% in the English-language market; 88% in Quebec French-language market).

Canadian Contribution

Considered to be the cornerstone of the Canadian broadcasting system. Conventional television is a major contributor to Canadian content, particularly prime-time entertainment and local news. The majority of prime-time schedules are devoted to Canadian content. These broadcasters also have Canadian programming expenditure (CPE) requirements, which means they need to spend a minimum percentage of their revenues on Canadian content, including programs of national interest. In 2016, CPE from this sector amounted to $1.268 million.

The CBC and private conventional TV broadcasters in the English-language market meet their minimum regulatory requirements, while private conventional TV broadcasters in the French-language market tend to exceed them. The conventional TV sector also makes a significant contribution to linguistic duality, particularly the CBC in official language minority communities.

Consumer Profile

Large but declining audiences. Conventional TV’s reach is high at 87% of Canadians, including 85% of the English-language audience and 94% of the French-language audience, but has been declining slightly. Similarly, conventional TV viewers still spend significant amounts of time watching (10.2 hours/week), but these levels are in decline. At 8.6 hours/week, Anglophone viewers watch much less conventional TV than Francophones at 15.5 hours/week.

Audience trends for conventional TV

Source: Numeris

Financial

A pattern of declining revenues driven by losses in advertising revenues and shifting consumer behaviours. Conventional TV’s principal revenue source is advertising. Conventional TV revenues, and particularly advertising revenues, have seen significant declines since 2011. Changing consumer behaviour seem to lie behind this shift as viewers move to discretionary services and on-demand programming. The declines in revenue have also affected the profitability and market share of conventional TV. Although it has not been profitable since 2012, conventional TV is still an important part of the video ecosystem in Canada. When including the CBC’s parliamentary appropriations, conventional TV’s share of the video market in 2016 was 20%.

Though the same trends exist in the French-language market, French-language services have fared better. Their profitability is declining, but they have managed to remain slightly profitable and retain a higher market share, which was at 26% in 2016.

Financial trends for conventional TV

Source: CRTC estimates (CRTC data collection; Ovum; MTM consumer data)

Notes:

Unless specifically mentioned, CBC/SRC is included in the revenues, Canadian contributions and market share, but is excluded from profits.
English-language conventional TV figures include services that broadcast in third languages.
To avoid residual disclosure, programs of national interest (PNI) in the French-language market only includes SRC, Quebecor and Remstar. These groups account for the large majority of PNI expenditures in the French-language market. The remainder of the French-language conventional stations are included in English-language PNI expenditures.
PBIT and PBIT margin are the measures used for the profits of conventional TV.
Some figures may have been updated since the reference document.