Some suggest figures hide rebounding sales that keep industry healthy
Operating revenues for Canada’s private radio stations grew just 0.3% in 2012 according to new data released today by Statistics Canada. With the exception of a 5.3% decline in 2009, year-over-year revenue growth was the lowest it has been since 2000.
Nearly all of the industry’s $1.6 billion in operating revenues, 98%, came from advertising – which grew 0.6% to $1.59 billion last year. FM advertising revenues increased 1% to $1.3 billion, while AM revenues declined 1.4% to $296.5 million.
But Patrick Grierson, president of the Toronto-based radio sales firm Canadian Broadcast Sales (CBS), said the new data fails to reflect an advertising rebound in the first three quarters of the current broadcast year.
“Things have changed somewhat,” said Grierson. “Last year wasn’t a magical year, but I think things have gotten better and stronger.” The number of campaigns booked by CBS through the first three quarters has remained “remarkably consistent” with 2012 and “nicely ahead” of 2011 he said.
On a category-by-category basis, Grierson noted an approximate 10% increase in radio spending by automotive advertisers and “very strong” growth in the financial services sector (about 15% higher than 2012). Retail is flat but remains a key advertiser category, while telecommunications remains a “hot sector” and government spending is “way off” its peak levels.
“I think business is comparatively good,” said Grierson. “There’s the obvious churn in accounts that continues to happen and will always continue, but we’re clearly replacing it with more advertisers than last year. Last year was a softer year than we would have liked, but this year looks to be in better shape.”
Despite some speed bumps, Grierson said that radio has maintained its share of the total media spend, with annual investment in the medium hovering around 13.3% to 13.7%. “It’s still in astoundingly good shape and seems to weather the storm of what is euphemistically called digital media – although frankly there’s nothing much left that’s analogue,” said Grierson.
According to StatsCan, radio’s profits before interest and taxes increased 19.7% to $320 million, up from 19.4% in 2011, although the report notes that the industry has still not returned to the level of profitability it enjoyed prior to the 2008 economic slowdown.
Total revenues for the FM sector increased by 0.7% or $9 million to $1.3 billion in 2012, with the profit margin of 21.8% representing a slight uptick from 21.4% in 2011. The FM sector added 11 new stations in 2011, and has added 294 new stations since 2000.
However, there are now 110 fewer AM stations on the dial than there were in 2000, with many moving to the FM band and less profitable stations going out of business. Operating revenues for the AM sector were down 1.6% to $307 million last year, with the profit margin at 10.7%.
The AM dial has now been almost entirely abandoned by music formats said Grierson. Even country music, a mainstay of the AM band for years, has hightailed it to the higher fidelity pastures of FM – where Grierson says it is currently one of the hottest formats. “Country stations are doing better than the average station in most markets these days,” he said.
Grierson said that news and newstalk stations such as Toronto’s 680 News continue to flourish on the AM band. The stations offer “very hospitable” environments for advertisers because listeners are actively paying attention, he said.
The StatsCan data also spotlights some significant regional differences. Ontario broadcasters were the most profitable in the country last year, with profits before interest and taxes at their highest level in 12 years, 24.7%.
At the other end of the spectrum, profitability of stations in the Atlantic region continued a downward trend that began seven years ago. Profits for the region’s private stations were 14.6% last year, down from 27% in 2005.
