Television broadcasting
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Operating revenues in the television broadcasting sector totalled $7.6 billion in 2012, an increase of 1.8% from 2011.
This moderate annual growth follows two years of expansion, especially in the pay and specialty television segment, which was not affected as much by the economic downturn of 2008.
Operating revenues for private conventional television have fallen below the level of 2008, the year of the economic downturn, after two years of growth in 2010 and 2011.
Pay and specialty television continue to climb
Pay and specialty television maintained their upward trend, with operating revenues increasing 5.9% from 2011 to 2012 to $4.0 billion. Operating revenues of private conventional television fell 5.2% to $2.0 billion in 2012. Operating revenues for public and non-commercial television rose 1.7% to $1.6 billion.
Both subscription revenues and advertising revenues contributed to the growth of pay and specialty television in 2012. Subscription revenues were up 8.4% while advertising revenues advanced 2.4%. Subscription revenues accounted for 66.1% of operating revenues.
Advertising revenues down
In 2012, advertising revenues for the television broadcasting sector declined 2.3% to $3.5 billion. Private conventional television saw its advertising revenues decrease 5.9% to $1.8 billion. This segment has always captured the biggest market share of advertising revenues in the television broadcasting sector (52.7%), though the share has been continually decreasing since 2005.
By comparison, the share of total advertising revenues of pay and specialty television rose from 25.4% in 2005 to 36.1% in 2012, amounting to $1.3 billion.
Surplus for public and non-commercial television
For the first time since 1996, public and non-commercial television had a surplus of $8.7 million in 2012 with a profit margin before interest and taxes of 0.5%. The Local Programming Improvement Fund (LPIF) contributed to this segment’s strong performance with contributions of $47.1 million in 2012, an increase of 15.7% over 2011. The LPIF’s contribution was almost on par with local air time sales ($47.6 million).
In 2012, the profit margin for private conventional television was 0.7%, while its profits before interest and taxes were $13.9 million. Pay and specialty television posted a profit margin before interest and taxes of 23.1%, slightly down from 2011 (24.9%). Their profits before interest and taxes amounted to $916.6 million.
Programming expenses up
In 2012, programming and production expenses for the entire industry rose 8.2% to $4.7 billion. For the second straight year, specialty television had the highest programming and production expenses at $1.7 billion (+14.7%), followed by conventional television at $1.5 billion (+6.1%). For the first time, the public and non-commercial television segments spent $1.0 billion on programming and production.
Programming and production expenses had the largest impact on the profitability of the different television industry segments. The programming and production expenses for private conventional television increased by $84 million in 2012. By comparison, in 2011, these expenses for this segment decreased $174 million. The contributions of the Local Programming Improvement Fund, which had a hand in the strong performance of private conventional television in the past two years, fell 1.5% in 2012 to $64.5 million. This amount was set to decrease as of September 1, 2012 from 1.5% to 1.0% to 0.5% annually and will eventually be eliminated, as the LPIF is set to be phased out in 2014 following a review by the CRTC. The regulating authority concluded that after 2014, the fund will have played its role to help local television maintain and improve its programming.
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