Analysis

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Slight decline in revenue growth for the cable and satellite television industry

In 2009, the operating revenues of cable and satellite television companies rose 10.6% over 2008 to reach $11.4 billion (current dollars). It was the fourth consecutive year that revenue growth was in excess of 10%, despite somewhat slower growth between 2008 and 2009.

Cable operators posted an increase of 11.3% in their operating revenues in 2009, to reach $9.2 billion. Wireless providers, meanwhile, saw growth of 7.6% for the same year, and their operating revenues totalled $2.2 billion in 2009.

Since 2004, revenue growth for cable operators has surpassed that of wireless providers. The steady growth in the cable operators' services such as telephony and Internet account for a large part of this growth. In 2009, the revenues of cable operators from non-programming services such as telephony and Internet increased by 17.4%.

Telephone and Internet services of increasing importance to cable operators

The number of subscribers to the main services offered by cable operators (television, Internet access and telephony) reached 16.6 million on August 31, 2009, 1.0 million more than on the same date in 2008. Growth in subscriptions has been declining year over year since 2006, the year that saw the strongest growth in 30 years.

New subscribers to telephone services represent 61% of all new subscribers. For the first time, in 2009, cable operators' total number of subscribers to telecommunications services like telephony and Internet exceeded the number of television subscribers. Furthermore, subscription revenues from non-programming services, including Internet and telephony, have been constantly rising and represented 45.8% of cable operators' subscription revenues in 2009, compared with 43.2% in 2008 and 39.4% in 2007.

The diversification of cable operators' services has enabled them to offer multi-service bundles, among other things. This strategy serves to increase per-subscriber revenues in particular. In 2009, each basic service subscriber brought in an average of $1,130 per year, an increase of more than $100 for the third year in a row.

Some wireless providers also offer multi-service bundles, but in a different way. These services are often offered through a group of affiliated companies.

A majority of subscribers using digital television

For the first time in 2009, a majority of cable subscribers adopted digital technology for television services. As of August 31, 2009, 58.3% of cable television subscribers had chosen this technology.

The subscription television services market reached a certain level of maturity some years ago in terms of number of subscribers. Between 2008 and 2009, the total number of subscribers increased by 1.2% for cable operators. Since 2006, this growth has been declining year over year.

With the total number of television services subscribers increasing gradually in recent years, revenue growth experienced by cable operators for subscription television now comes from digital television. As of August 31, 2009, there were more than 4.7 million digital cable television subscribers (+20.4%). The absolute increase of 803,099 subscribers in 2009 is the highest ever recorded.

Wireless providers maintain their market share

Wireless television (mainly satellite) had 2.7 million subscribers on August 31, 2009, compared with 8.1 million for cable television. Market share remained relatively unchanged for a fourth consecutive year, with cable operators accounting for three out of four subscribers.

Wireless providers managed to maintain their market share, with an increase in the number of television subscribers (+2.5) slightly higher than that of cable operators (+1.2%).

Profitability increasing for cable operators

In 2009, cable operators earned $2.5 billion of profits before interest and taxes. This represents 27.5 cents of profit for each dollar of revenue. This is the highest profit margin posted since the beginning of the decade.

Wireless service providers posted profits before interest and taxes of $70.2 million, or 3.2 cents of profit for each dollar of revenue. While this is far from the profit margin of cable operators, this segment of the industry did generate profits for a third consecutive year, whereas it consistently suffered losses before interest and taxes between its launch in 1997 and 2006.