CRTC says private TV broadcasters saw profits drop 93 per cent last year
Tue Feb 10, 7:39 PM
By David Friend, The Canadian Press
http://ca.news.yahoo.com/s/capress/090210/business/crtc

TORONTO - Canada's biggest private TV broadcasters saw their profits plummet by almost 93 per cent last year as the industry coped with fallout from the U.S. writers' strike and sluggish ad sales because of the stalling economy, the federal broadcast regulator revealed.

In a report late Tuesday, the Canadian Radio-television and Telecommunications Commission said private-sector conventional TV stations - which include the likes of Global and CTV - saw profits before interest and taxes drop to a mere $8 million last year.

That compares with $112.9 million in 2007.

The CRTC also said that revenues fell by 1.5 per cent last year to $2.1 billion, partly on weaker orders for national advertising spots.

National ad sales decreased to $1.47 billion from $1.52 billion, partly due to the slumping economy.

However, the cost of running the TV operations grew by four per cent, with most of that money going to buy and produce programs.

Jeff Vidler, a broadcasting analyst at Angus Reid Strategies, says the full-year results were hurt by several factors, including the writers' strike in the U.S. which stalled the production of nearly every major network television show for several months.

"It has some quieter impact in the sense that it affects the loyalty to a show," he said.

Vidler also noted that the worst could be yet to come - once the recession fully eats into the results this year.

"What you aren't seeing here, which is truly the dark side of the moon, is what's happened since then. If profits have fallen this much in the previous year, what does it look like for this coming year?" he said.

Apart from the recession, many private broadcasters have seen the profitability of conventional TV stations squeezed by competition for advertisers and viewers from specialty channels and the Internet. [Emphasis added.]

Private broadcasters spent $775.2 million on foreign programming last year, up 7.4 per cent from a year earlier. Most of that money goes towards purchasing the airing rights for major network television shows like "Desperate Housewives" and "24."

Canadian programming investments were almost unchanged at $619.6 million.

"You need to have hits to really make money on conventional television," Vidler said.

"As expensive as it gets to keep paying the price for the American hits it's even more expensive, and a much riskier proposition, to develop the Canadian stuff."

The financial outlook for the conventional broadcast industry has been dimming in the last year or so, with job cuts and rising losses that threaten the future of some stations.

Last week, Canwest Global Communications Corp. (TSX:CGS) announced it is exploring the sale of five conventional television stations across Canada. [If I'm not mistaken, Canwest is largely owned/operated by the family of the late Israel "Izzy" Asper, the Canadian media baron who was caught issuing a written directive to his journalists forbidding them from portraying Israel negatively or the Palestinians positively. --IA]

The stations on the block are part of Canwest's E! network and include CJNT-TV in Montreal, CHCH-TV in Hamilton, CHCA-TV in Red Deer, Alta. CHBC-TV in Kelowna and CHEK-TV in Victoria. [If any of my fellow white nationalists have a few hundred million burning a hole through their pockets, here's the perfect opportunity to buy some TV stations on the cheap! *grin* --IA]

Canwest recently cut 560 jobs, or about five per cent of its workforce, including 210 at Global Television and its other TV operations.

CTV, a unit of CTVglobemedia (TSX:BCE), also recently cut jobs, as have other broadcasters.

In the CRTC report, the regulator noted that private conventional television stations employed 7,402 people last year, down from 7,873 people in 2007.

Last fall, the CRTC rejected a request by conventional broadcasters across Canada to charge cable and satellite distributors for carrying their channels.

The fee-for-carriage charge would have added anywhere from $2 to $10 to a subscriber's monthly bill, if passed through, and brought in an estimated $300 million in revenues to the broadcasters.

The federal regulator said conventional networks such as CTV, Global and CBC failed to prove they had enough economic need for the higher revenues.

Pierre Dion, president and chief executive of TVA Group Inc., said the latest numbers shows that general-interest broadcasters are in trouble and should be allowed to collect carriage fees.

"The CRTC must end this unfair situation and give the over-the-air broadcasters the oxygen they need to continue playing their role as the leading producers of original Canadian content," Dion said in statement.

"As a result of the current laws and regulations, general-interest broadcasters are now struggling to maintain the necessary levels of investment in the original content that draws audiences and generates significant economic benefits for Quebec and the rest of Canada."