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[OpenMike]

Private radio revenues grow
CP Aug 8/07


Today's marketsHighs and lowsMutual fund finderAug 08, 2007 09:19 AM
Canadian Press

OTTAWA – A new report says private radio's advertising revenue increased 5.3 per cent to $1.4 billion and profits were "substantial" in 2006, but it cautions the totals can be misleading.

Statistics Canada reports radio generated profits of $284 million before interest and taxes in 2006, up 0.4 per cent from 2005 – a 20 per cent profit margin, the third-highest in 40 years.

However, the agency says the balance sheet for the industry as a whole conceals some widely varying results based largely on broadcast language and market size.

At 22 per cent, English-language stations recorded the largest profit margins, followed by French-language stations (at 11.5 per cent) and ethnic stations (at 8.3).

That's been the industry story for five years now, largely because English-language stations spend a smaller percentage of their revenues on programming and administration.

The profit margin before interest and taxes was 26.9 per cent for stations in the country's five largest metropolitan areas, about double the profit margins for stations in other metropolitan areas (13.4) and stations operating outside metropolitan areas (13.9).

StatsCan notes that corporations can more readily reap the benefits of owning more than one station in larger markets.

AM radio profited for the fourth straight year after suffering losses between 1990 and 2002.

Its total profit before interest and taxes was $17.6 million in 2006, up 29.7 per cent from 2005. But nearly half of all stations did not break even, and the 5.5 per cent profit margin before interest and taxes is only a fraction of FM radio's 24.2.

The FM band's advertising revenues rose to $1.1 billion, up 5.6 per cent from 2005. Seven of every 10 FM stations profited in 2006 – slightly less than in 2005, largely due to an influx of new stations, which lost $4.9 million, or 28.5 cents for every dollar of revenue.