Annual Reports

1999-2000

Corporate Overview | Programming | Financial Report | Appendices

The Media Environment

A Fast Changing Environment

The Canadian broadcasting industry continued to experience profound change over the last year.

Competitive pressures have grown as a result of the increased number of specialty television services available in Canada and have stimulated significant structural changes in the industry.

Technological developments and accelerated deployment of digital technology will rapidly eliminate bandwidth scarcity and open the door to numerous new services. The Internet is growing exponentially and may become a significant alternative to conventional program delivery in the foreseeable future. These changes will bring both opportunities and challenges.

Increasing Choice and Fragmentation

Despite the explosion of new channels, the average Canadian's television viewing time has scarcely wavered above or below 22 hours per week for more than two decades, while the average per capita listenership to radio has declined slightly to 20 hours per week in the last decade. The combination of added viewing choices and stable hours of viewing has significantly diminished market share for conventional television.

Specialty services have continued to grow at a very rapid pace but have also eroded the audience share of conventional broadcasters. This is true in terms of both viewing share and share of television advertising revenue. Between 1996 and 1999, the number of specialty television services and their advertising revenue have almost doubled. For instance, the advertising revenue for Canadian specialty services rose to more than $300 million in 1999 from $155 million in 1996; the share of television advertising captured by the same services nearly doubled, increasing from 7 per cent in 1996 to 13 per cent in 1999.

A Fast-changing Industry Structure

The last few years have been dramatic in terms of changes to the industry structure as well.

In radio, the CRTC's 1998 Radio Policy allows radio broadcasters to own up to two AM and two FM stations in most urban markets. This policy has had a noticeable impact on the current market structure as smaller broadcasters have been amalgamated into larger radio groups. This has resulted in fewer but stronger players on the national stage. The radio ownership policy has also stimulated industry revenues, with total private radio revenue rising by 8.2 per cent between 1997 and 1998, and by 3.4 per cent between 1998 and 1999.

In television, several important transactions have altered or soon may alter the broadcasting landscape. In particular:

• The CTV acquisition of NetStar, approved by the CRTC in March 2000, has authorized CTV to acquire control of NetStar Communications, the parent company of TSN, The Discovery Channel and RDS. However, CTV must divest itself of its specialty sports service, SportsNet, to maintain a competitive sports programming environment in Canada.
• Shaw Communications and Corus have concluded an agreement over the division of Western International Communications (WIC) assets. If approved, CanWest Global Communications will operate television stations across Canada.
• BCE has proposed the acquisition of the CTV Television Network.
• Rogers Communications made a bid to purchase Vidéotron. At this time, this bid is being challenged by Québecor and La Caisse de dépôt et placements du Québec.
• In the United States, America On Line purchase of Time Warner signals the unstoppable trend toward convergence.

New Distribution Platforms

There are also several developments in the area of distribution:

• All cable distributors continued to develop their infrastructures and most of the key players now offer a digital tier package. The CRTC's new policy to licence digital-only specialty services is expected to spur the deployment of digital services in the next several years.
• Rogers recently concluded a significant deal with Microsoft to use and distribute Microsoft's CE operating platform for interactive television services that Rogers will deploy in Canada.
• In March 1999, BCE launched BCE Media to ensure the development of BCE's facilities-based satellite networks and to become the main engine for BCE's presence in the broadcast distribution, multimedia and programming sectors.
• LookTV, Bell ExpressVu and StarChoice have also engaged in aggressive marketing programs to improve their competitiveness vis-à-vis cable distributors. Their optional packages, competitive pricing and promotion strategies presented a new alternative to traditional service delivery.