It was a real honour to be asked to deliver the Key Note address at the Central Canada Broadcast Engineers (C.C.B.E.) conference at the beautiful King bridge Centre just North of Toronto last week (16 September, 2017).
I talked about how important Broadcast Technicians and Engineers are to our industry, how the business is performing, as well as some of the opportunities and concerns moving forward. Using the financial summary data for broadcasting from the C.R.T.C. website it is clear that radio is still a very profitable business to be in today. In 2015 there were 477 FM stations in Canada and they averaged a P.B.I.T. (profit before interest and tax) of 23.1% or $503,709 per station. If fact radio still offers better returns that many other industries.
Transport & Manufacturing 12%
Agriculture & forestry 18%
Let’s look at the top 12 best performing markets in Canada in 2015
Clearly, the big markets are where all the big profits are being made, and those operators who are able to consolidate and use scale to their advantage are doing better than the average. I have no way to determining the real profit per station as the data is not broken down to that level. So the column on the far right is an average per station. Some stations will be doing better than the average and others will be not doing so well, but you get the idea.
However, radio stations are fighting over a mere 12% of the advertising pie. TV gets 27%, newspaper 20%, and digital a whopping 33% based on the most recent figures. Radio should be going after more of the revenue spent on other media to grow top line profit and focus less on trying to lower costs to make the profit look good, as a lack of investment in the product, staff training and equipment will come back to haunt us all in the future.
Radio us still consumed by over 93% of Canadians who spend about 19.3 hours a week listening to the radio, which is more time than they spend with any other medium. In fact, Canadians spend more time listening to radio than their American cousins, but less time reading newspapers & magazines. By the way, newspaper readership in Canada is down 25% over the past 8 years and 73% of Canadians say they never read the newspaper ads in their daily newspaper. TV viewership is also down, and more and more Canadians are PVR’ing programs to watch later and avoiding the TV ads and endless station promos. So while Newspaper and TV are less effective as a medium to reach consumers, Radio is performing at about the same level as it always has over the past 10 years.
And by the way, Radio, according to the Music 360 Nielsen’s study of the tastes, habits, and preferences of music listeners, remains the top platform for music consumption. 59% of music listeners discover new music by listening to radio either over-the-air or online. And for all the publicity that Pandora has been getting in the press, it’s still behind a consumer’s music library at 48%, and on-demand streaming (Spotify, YouTube, or Vevo) at 41%. Curated streaming music such as Pandora or iTunes Radio sits at 36%, and most of these services have yet to make a profit.
Radio needs to do a better job of selling the benefits of the medium, because all the other shiny new products are out there knocking radio and other traditional media. We need to continue to innovate and look for new ways to connect with our listeners, be on all the platforms they are on and figure out how to get the FM chip activated in all cell phones.