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Broadcaster

Private, profitable, radio

7/6/2004

OTTAWA - In the era of music downloading and Internet radio, conventional radio continues to thrive, says a report released yesterday by Statistics Canada.

In 2003, air time sales by private radio broadcasters jumped 8.4% to $1.2 billion, the second largest year-over-year increase in the last 15 years.

Say what you will about TV and the Internet but radio - the oldest of all electronic media - generated the best profits on record in 2003, thanks largely to cost containment. The operating expenses of private radio broadcasters grew 3.7%, less than half the revenue increase of 8.2%. As a result, profits before interest and taxes represented 19.1% of their revenues, up from 15.6% in 2002. In the last six years, private radio has generated a higher profit margin than private television.

However, as most in the industry know, FM is the engine driving the radio bus. FM stations continued to account for most of the growth and profits in the industry, says the Statcan report. The 9.8% increase of air time sales in 2003 was the highest since 1998. The robust 25.2% profit margin (before interest and taxes) realized in 2003 was consistent with the returns achieved in the previous five years.

The performance of AM stations paled by comparison, but do show a bit of a turnaround. Their air time sales grew by a more modest 4.5%, and their profit margin was a mere 1.6%. Modest as those numbers may appear in comparison to their FM sisters, the 2003 results represent a significant turnaround for AM radio. This segment of the industry has sustained losses before interest and taxes every year since 1990. Air time sales by AM stations declined every year during that period with the exception of 1997 and 1998.

Radio stations in large markets continued to outperform those operating in smaller markets in 2003. The profit margin for stations operating in the five largest census metropolitan areas was 23.3%, compared with 15.4% for stations in other census metropolitan areas and 15.3% for those operating outside census metropolitan areas. For the third consecutive year Calgary and Ottawa-Gatineau were the most profitable large markets. The 2003 profit margin in those two markets stood at 29.2% and 27.2% respectively.

French language stations had stronger growth of air time sales (+11.9%) than their English language counterparts (+7.8%) in 2003. Ethnic stations lagged behind with a 5.2% increase. English language stations however generated the highest profit margin (+20.3%), followed by French language (+15.2%) and ethnic (+6.9%) stations.

The industry had a weekly average of 9,009 employees in 2003, a small increase from 8,934 employees in 2002.

For more, go to www.statcan.ca.

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