Telecommunications Service in Canada: An Industry Overview

Section 2: Market Segments

2.3 Broadcast Distribution

This section provides an overview of the Canadian broadcast distribution industry -- cable TV, satellite and multipoint distribution systems -- from 1997 to 2004, focussing on operating revenues, operating profits, employment, salaries and subscribers. (Footnote 1)

2.3.1 Operating Revenues

In 2004, operating revenues were approximately $5.9 billion, a 10 percent increase compared to 2003. Between 1997 and 2004, the industry's operating revenues increased at an average annual growth rate of approximately 13 percent. In 2004, cable operators accounted for 77 percent ($4.5 billion) of total operating revenues while Direct-to-Home (DTH) satellite and Multipoint Distribution System (MDS) operators combined to account for the remaining 23 percent ($1.4 billion) (Figure 2.3-1).

Figure 2.3-1
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2.3.2 Operating Profits - Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA)

In 2004, the broadcast distribution industry's operating profits were $2.1 billion or 35 percent of operating revenues. (Footnote 2) Figure 2.3-2 shows that the positive result can be attributed primarily to the cable operators, as their operating profit margin has remained relatively stable at an annual average of 40 percent between 1999 and 2004. DTH/MDS operators have seen their operating margin improve since 1999; it remained positive for the second consecutive year at 4.3 percent in 2004.

Figure 2.3-2
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2.3.3 Employment

The broadcast distribution industry employed 16,580 persons in 2004. On average, employment has increased 2.2 percent per year since 1997. This employment growth is due to the DTH/MDS industry as it has increased by 2,992 persons since 1997, although for the first time, DTH/MDS employment fell by 8.9 percent to 3,017 in 2004. Cable, on the other hand, has seen employment fall by 728 persons over the 1997 to 2004 time period, although in 2004 cable employment increased 10 percent to 13,563. In 2004, cable and DTH/MDS operators accounted for 82 percent and 18 percent respectively, of the employment total (Figure 2.3-3).

Figure 2.3-3
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2.3.4 Salaries

Between 1998 and 2004, average annual salaries in the cable broadcast distribution segment have been above the average annual salary in the Canadian economy as a whole. In 2004, the cable segment saw an average salary that was 24 percent higher than the total economy, increasing 0.8 percent to $45,379 when compared to the previous year. Average annual salaries in the DTH/MDS were 7.9 percent below that of the total economy in 2004, as average salaries decreased 15 percent to  $33,802 (Figure 2.3-4).

Figure 2.3-4
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2.3.5 Subscribers

Competition in broadcast distribution systems continued as incumbent cable companies, DTH satellite service providers and MDS competitors pursued aggressive customer acquisition strategies. Basic cable subscribers have fallen from nearly a 100 percent share of total subscribers in 1997, to 74 percent in 2004, as DTH/MDS subscribers have seen strong growth rates since 1997. Most recently, several incumbent telecommunications service providers have introduced television distribution via their DSL networks. This service is currently in its infancy, capturing less than one percent of the Canadian television distribution market.

Figure 2.3-5 shows that all the growth in subscriptions to basic programming services, which includes subscribers to cable, Direct-to-Home and Multipoint Distribution Systems, has been due to the introduction of DTH and MDS services in Canada in 1997. In 2004, there were approximately 8.9 million subscribers of the various broadcast distribution systems. Since 1997, total subscribers to broadcast distribution services have grown at an average annual growth rate of 3.2 percent. Subscribers to basic cable services increased for the first time since 1999, to 6.6 million at year-end 2004, an increase of 43,882 subscribers from 2003. DTH/MDS subscribers also increased, by 115,026 subscribers, to over 2.3 million in 2004.

Figure 2.3-5
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Footnotes

1. This report does not attempt to provide a full description of the broadcasting industry. The Canadian Radio-televison and Telecommunications Commission (CRTC) has a comprehensive document on broadcasting titled Broadcasting Policy Monitoring Report released in December 2004 available at: http://www.crtc.gc.ca (under Industries at a Glance, Broadcasting - Monitoring Reports).

2. Operating profits are defined as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA).