STATSCAN REPORTS ON PRIVATE RADIO BROADCASTING FOR 2004 Broadcaster Magazine After a stellar performance in 2003, the air time sales of radio broadcasters increased at less than half the pace in 2004.
The air time sales of commercial radio broadcasters increased 3.3% to $1.2 billion in 2004, compared with an 8.4% advance the previous year. For the first time since 1999-2000, the advertising revenue of radio broadcasters grew at a slower pace than the overall advertising market (+5.4%).
Despite the loss of momentum, the grand dad of electronic media continued to generate healthy profits. Radio stations realized 17.9 cents of profits before interest and taxes for every dollar of revenue in 2004, slightly less than the 18.8 cents generated in 2003, but above the levels realized in the previous 10 years.
FM radio continued to be the locomotive that pulls the industry. The 4.9% increase of air time sales by FM stations in 2004 offset the 1.3% decline of air time sales by AM stations. FM radio also accounted for close to 98% of the $223.1 million of profits before interest and taxes generated by the industry in 2004.
The rationalization of AM radio continued in 2004. The number of AM stations and networks stood at 189 in 2004, down from 240 only five years earlier and there are signs that the rationalization is yielding results. Revenue per station surpassed the 1989 historical high of $1.45 million in 2003 and continued climbing in 2004 to reach $1.6 million. AM radio stations have also generated modest profit before interest and taxes in 2003 and 2004 (1.6% and 1.8% of revenues) after having incurred losses every year since 1990.
Radio broadcasters in larger markets continued to outperform those in smaller markets. The sale of air time by stations in the top five census metropolitan areas (CMAs) advanced 4.4% to $577.8 million. At the other end of the spectrum, the air time sales of stations operating outside CMAs reached $317.4 million, up a modest 1.1% compared to 2003.
Radio stations in larger markets were also more profitable. Their profit margin before interest and taxes was 21.9% in 2004, compared to 14.9% for stations in medium-sized markets and 13.4% for those in small-sized markets. Calgary took first place on the list of the most profitable large radio market for the seventh consecutive year. Its profit margin for 2004 stood at 26.6%. Toronto was a close second at 25.3%, moving ahead of Ottawa–Gatineau on the list of most profitable large radio markets.
The performance of radio varied considerably by language of broadcast. Ethnic and Native radio was the fastest growing segment of the industry in 2004 with a 5.2% increase in air time sales, followed by English (+4.0%) and French language broadcasters (-0.1%).
The Ethnic and Native radio segment was also the only one to improve its profit margin. From 6.9% of revenues in 2003, the profit before interest and taxes of this segment jumped to 10.6% of revenues in 2004, a result comparable to the 11.0% margin achieved by the French language segment. The profitability of Ethnic and Native radio however remained well below that of its English language counterpart (19.6%). |