OTTAWA – While operating revenues for TV broadcasting companies continue to rise, profits fell sharply last year according to Statistics Canada.
Overall, revenues for the television broadcasting industry just topped $6 billion in the 2006 broadcast year, ended August 31, 2006. That’s a gain of 8.2% over 2005 and was the third largest year-over-year revenue increase in the past decade.
Ad revenue for the whole Canadian TV industry rose 7.6% to $3.3 billion, while subscription revenues jumped 11.3% to $1.6 billion, continues the Statscan report.
However, profits before interest and taxes for private conventional television fell 62.5% from $242.7 million in 2005 to $90.9 million in 2006. It was the first time in 15 years that this segment generated less than $100 million in profits and the 4.1% profit margin was the smallest posted in the last 30 years.
The numbers this year rather plainly reveal the difference between the mass of specialty services and their performance versus the very few number of private over the air broadcasters (who do all own specialties in various numbers, of course).
Specialty television made $447.8 million in profits before interest and taxes, slightly less than the $449.2 million they earned in 2005. However, the segment’s 22.2% profit margin was the second best recorded in 10 years.
Private conventional television broadcasters reported revenues of $2.2 billion in 2006, which is unchanged from the previous year. This segment still ranked first in terms of revenues, but the gap between it and the specialty television segment has closed. Advertising sales accounted for almost 92% of private conventional television revenues.
On the other hand, specialty television revenues increased 11.2% to just over $2 billion. This segment’s advertising revenues jumped 14.7% to $900 million, while its subscription revenues totaled $1.1 billion, 8.9% more than in the previous year, say the Statscan numbers.
The pay television segment, however, had the strongest growth in 2006, with revenues climbing 17.7% to $482.3 million. This is largely due to the growing popularity of video-on-demand and pay-per-view. Revenues from those services soared 41% to $157.4 million in 2006. For a fifth consecutive year, the pay television segment had the best profit margin of the industry, generating for its owners more than 25 cents in profits before interest and taxes for every dollar of revenue.
After falling 5.2% in 2005, revenues for the public and non-profit television segment (CBC, TVO, et al) rose 15.6% in 2006 to $1.4 billion. The resumption of activities in the National Hockey League had a positive effect on advertising revenues, which climbed 44.2% to $351.1 million.
