Radio still Tuned in to big profits Rita Trichur
Source : Toronto Star
Both local and national advertising revenue rises
July 24, 2008
Video killed the radio star? Not in Canada, according to a report from the federal broadcast regulator.
Once decried as a dying medium, commercial private radio stations recorded solid revenue growth in 2007 and remain a "major employer" across the country, said a report released yesterday by the Canadian Radio-television and Telecommunications Commission.
Citing "continued economic growth" for private radio, the CRTC said total revenues for Canada's AM and FM radio stations grew by 6.2 per cent to $1.5 billion in 2007. Profits, before interest and taxes, also remained plump, improving 5.5 per cent to $300.2 million.
"The profit margin of 19.99 per cent is slightly below last year's results of 20.11 per cent, which was the third highest profit margin according to Statistics Canada in the last 40 years," the CRTC said in its report. It noted that better results were only achieved in 2005 and 1971, when profit margins were 21.14 per cent and 20.5 per cent, respectively.
"The numbers aren't all that surprising given that the economy was in good shape in 2007. We may see a decline this year due to economic uncertainty," said Alan Sawyer, a media strategist at Two Solitudes Consulting.
The industry's continued profitability is being "directly linked" to more robust advertising revenues. Local ad revenues improved by 4.8 per cent to $1.087 billion on a year-over-year basis, while national sales grew 8.3 per cent to $380.6 million, the CRTC said.
"FM radio stations clearly dominate the Canadian marketplace with revenues totalling slightly over $1.1 billion as compared to $329.4 million for AM stations," it added. "Over the past five years, revenues have consistently risen for English-language FM stations."
AM stations, however, are reporting mixed results. While English AM stations and ethnic stations enjoyed steady revenue increases, revenues for French-language stations fell from the previous year.
With 23 new radio stations hitting the airwaves last year, Canada now boasts a roster of 619 stations across the country. The industry employs some 10,000 people and their collective salaries totalled about $606.9 million last year.
"So, at this point, it would appear that the more stations that are licensed, the more revenue flows into the system," said Sawyer. "We haven't reached an overall saturation point where advertising time supply exceeds demand."
While terrestrial radio continues to enjoy its status as a stable cash cow, the fortunes of conventional television stations don't appear so bright.
Earlier this month, Statistics Canada reported that revenues for over-the-air television stations declined for the first time in a decade in 2007, with public and non-commercial conventional television bearing the brunt of the losses.
Conventional stations are losing more and more viewers to pay and specialty channels and only accounted for about 55.9 per cent of all TV broadcast revenues in 2007.
© Toronto Star
Once decried as a dying medium, commercial private radio stations recorded solid revenue growth in 2007 and remain a "major employer" across the country, said a report released yesterday by the Canadian Radio-television and Telecommunications Commission.
Citing "continued economic growth" for private radio, the CRTC said total revenues for Canada's AM and FM radio stations grew by 6.2 per cent to $1.5 billion in 2007. Profits, before interest and taxes, also remained plump, improving 5.5 per cent to $300.2 million.
"The profit margin of 19.99 per cent is slightly below last year's results of 20.11 per cent, which was the third highest profit margin according to Statistics Canada in the last 40 years," the CRTC said in its report. It noted that better results were only achieved in 2005 and 1971, when profit margins were 21.14 per cent and 20.5 per cent, respectively.
"The numbers aren't all that surprising given that the economy was in good shape in 2007. We may see a decline this year due to economic uncertainty," said Alan Sawyer, a media strategist at Two Solitudes Consulting.
The industry's continued profitability is being "directly linked" to more robust advertising revenues. Local ad revenues improved by 4.8 per cent to $1.087 billion on a year-over-year basis, while national sales grew 8.3 per cent to $380.6 million, the CRTC said.
"FM radio stations clearly dominate the Canadian marketplace with revenues totalling slightly over $1.1 billion as compared to $329.4 million for AM stations," it added. "Over the past five years, revenues have consistently risen for English-language FM stations."
AM stations, however, are reporting mixed results. While English AM stations and ethnic stations enjoyed steady revenue increases, revenues for French-language stations fell from the previous year.
With 23 new radio stations hitting the airwaves last year, Canada now boasts a roster of 619 stations across the country. The industry employs some 10,000 people and their collective salaries totalled about $606.9 million last year.
"So, at this point, it would appear that the more stations that are licensed, the more revenue flows into the system," said Sawyer. "We haven't reached an overall saturation point where advertising time supply exceeds demand."
While terrestrial radio continues to enjoy its status as a stable cash cow, the fortunes of conventional television stations don't appear so bright.
Earlier this month, Statistics Canada reported that revenues for over-the-air television stations declined for the first time in a decade in 2007, with public and non-commercial conventional television bearing the brunt of the losses.
Conventional stations are losing more and more viewers to pay and specialty channels and only accounted for about 55.9 per cent of all TV broadcast revenues in 2007.
© Toronto Star
