FM radio in the black


OTTAWA - At a time when digital television networks, direct-to-home satellite service providers and new media companies are struggling to make ends meet, an old electronic medium is steadily generating profits, says a Statistics Canada report released today.

The profits before interest and taxes of private radio broadcasters represented 15.9% of their revenues in 2002, essentially unchanged from the previous two years.

However, the performance of FM stations is at the root of the sustained level of profits for the radio industry in recent years. In 2002, FM stations achieved a robust 24.3% profit margin, and 70% of stations realized a profit.

In contrast, AM stations have consistently suffered losses since 1990. In 2002, these losses represented 6.8% of their revenues, compared with 4.6% in 2001.

English language stations continued to generate higher profits than French language stations in 2002, but the gap is closing. The profit margin was 16.4% for English stations and 15.2% for French stations.

Radio stations in large markets maintained its historical out-performance over those operating in smaller markets. The profit margin for stations operating in the five largest census metropolitan areas was 18.8%, compared with 13.2% for stations outside these markets.

Calgary and Ottawa-Gatineau were the most profitable large markets in 2001 and 2002.

"The radio industry achieved these relatively good financial results in 2002 despite a marked slowdown in the growth of its revenues," says the report. "These revenues were up 2.7%, compared with 4.4% in 2001 and 5.3% in 2000. The slowdown affected AM and FM stations, and stations in large and small markets.

Overall, the private radio industry posted $1.103 billion in revenue in 2002, a 16.6% increase over 2001. Operating expenses in 2002 came in at $966 million, a $12 million increase, salaries and other staff benefits in '02 rose 3.4% over 2001 to $482 million and the net profit before taxes jumped 63% in 2002 over 2001, after falling 10.8% between 2000 and '01.

The industry's employment level increased marginally to 9,410 in 2002, after two years of strong growth that saw staffing levels jump by 8.3% between 1999 and 2001.

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