2015 Highlights - Pay, Pay-per-view, Video-on-demand and Specialty Services Statistical and Financial Summaries
Specialty, Pay, Pay-Per-View & Video-On-Demand Services
Figure 1: Key Indicators
- There were 228 specialty, pay and on-demand (pay-per-view (PPV) and video-on-demand (VOD)) services in 2015; they generated $4.3 billion in revenues, up of modest 0.5% ($19.0 million) from 2014.
- Revenue growth was hampered by a 1.5% ($19.0 million) decline in advertising revenue, which was offset by a 1.1% gain ($30.6 million) in subscriber revenues.
- This was the slowest pace of growth recorded since 2009 in that sector.
- The 4 largest ownership groups (BCE, Rogers, Shaw, and Corus) generated 77.1% of all revenues, a market share that was virtually unchanged from 2014.
- Total expenses increased by 4.3%, from $3.1 billion in 2014 to $3.3 billion in 2015.
- Programming and production expenses were the main driver with gains of $141.2 million (5.8%) in 2015. This category of expenses has increased by 27.8% ($560.0 million) since 2011.
- Specialty, pay and on-demand services reported an average profitability before interest and taxes margin of 20.8% in 2015, down 3 percentage points from 2014.
- These 228 services employed a total of 5,899 individuals in 2015. This represents a decrease of 4.8% (299 individuals) relative to 2014.
- In 2015, the breakdown of the 228 specialty, pay and on-demand services per language was as follows:
- English/Bilingual/No language*: 158 services
- French: 32 services
- Ethnic: 38 services
*”The Seasonal Channel”, operated by Stingray
- English, bilingual and “no language” services accounted for the majority of the total number of services (69.3%) as well as of revenues (80.4%). They also were the most profitable language group (average PBIT margin of 22.8%).
- Their revenues totalled $3.4 billion in 2015, which is a 1.1% ($36.7 million) decrease since 2014, mostly as a result of falling subscriber revenue (1.3% or -$30.0 million).
- Revenues of the French-language services rose by $57.8 million to $755.6 million in 2015 as a result of a $61.0 million gain in subscriber revenues.
- Expenditures of French-language services recorded the largest increase of all language groups (+20.6% or $111.1 million); this was largely as a result of higher spending by TV5 and TVA Sport.
- Over the last 5 years, average PBIT margin decreased for each language groups, but most significantly for French-language services: their PBIT margin went from 25.3% in 2011 to 11.8% in 2015.
- The third-language services’ revenues decreased by 2.6% (-$2.1 million) since 2014 and generated 1.9% ($78.5 million) of total revenues.
- Ethnic services recorded a 2.7% decrease in expenditures (-$1.7 million), which contributed to maintaining their profit margin just above the 17% mark.
Figure 2: Key Indicators – by Service Type
- In 2015, the breakdown of the number of specialty, pay and on-demand services per type of service was as follows:
- Specialty: 195 services (64 Category A; 121 Category B; 10 Category C)
- Pay: 9 services
- On-demand: 24 services (8 pay-per-view; 16 video-on-demand)
- Revenues for specialty services totalled $3.5 billion in 2015, an increase of $68.7 million (2.0%) relative to 2014 and a $623.8 million (21.6%) gain since 2011.
- There has been a shift in the relative importance of the different revenue sources for specialty services overtime:
- Advertising revenues, which totalled $1.2 billion in 2015, were virtually unchanged from 2011, while BDU subscribers’ revenues have grown by 10.2% a year, on average in the last five years. Consequently, BDU subscriber revenue’s share of total revenues has steadily increased from 38.7% in 2011 to 46.9% in 2015, while that of advertising revenues declined from 42.6% to 35.1% over the period.
- For the first time since 2009, category A specialty services reported a year-over-year decline in revenues (-1.7% or -29.0 million), partly attributable to a 5.8% decrease in advertising revenues. Yet, these services earned 49.1% of total specialty services’ revenues.
- Revenues of category C services continued to trend upward in 2015 with a 7.0% gain. This growth came from 3 sports-related service, namely TVA Sports, Sportsnet and Sportsnet One.
- Total expenses for specialty services increased by $97.8 million (4.0%) in the past year.
- Specialty services, notably category A services with a 32.4% PBIT margin, were the most profitable of all types of services in 2015.
- There were 9 pay services in operation in 2015:
- Their revenues decreased by 2.6% relative to 2014 to $424.0 million. Since 2011, pay services revenues have decreased by a total of $45.0 million, or by 9.6%.
- Expenses rose by $32.6 million (10.3%) to $349.9 million in the past year. Notably, Canadian Programming Expenditures (CPE) increased by $20.9 million (29.4%) since 2014 to $92.1 million in 2015.
- These services remained profitable in 2015 with an average PBIT margin of 15.0%.
On-Demand Services (PPV and VOD)
- On-demand services continued on their downward trend in 2015:
- The 24 on-demand services (8 PPV and 16 VOD) operating in 2015 reported revenues of $314.4 million, down $38.3 million (10.9%) from 2014, and $72.4 million (18.7%) from 2011.
- Expenses were up 1.6% ($5.5 million) to $353.2 million in 2015; CPE rose by 51.0% ($12.7 million) in the past year, and by 123.0% ($20.7 million) relative to 2011.
- On demand services reported a significant drop in profitability in 2015; their PBIT margin fell 14.8 percentage points between 2014 and 2015 to -21.4%.
Specialty, Pay, Pay-Per-View & Video-On-Demand Individual Services
Figure 3: Financial Performance of Top 10 Highest Grossing Individual Services
|Highest Grossing Services||Ownership Group||Revenue $ millions||P.B.I.T. Margin|
|The Sports Network (TSN)||BCE||442,840||26.2|
|Le Réseau des Sports||BCE||162,477||11.9|
|The Movie Network||BCE||120,564||3.4|
|CBC News Network||CBC||87,952||8.9|
|TVA Sports||Groupe TVA||81,786||-47.6|
- The 10 highest grossing services out of the 228 specialty, pay and on-demand services accounted for 37.7% of total revenues generated in 2015.
- Of those 10 highest grossing services:
- Five were sports related services; two owned by BCE, two owned by Rogers and one by Groupe TVA.
- Sportsnet One and TVA Sports were among the top 10 grossing services for the first time in 2015.
- Of note, TVA Sports saw a revenue increase of $65.2 million (almost 400%) compared to 2014, which is mostly attributable to its broadcast of NHL programming. However, acquisition costs of this programming contributed to an $85.4 million increase in total expenses, resulting in a -47.6% PBIT margin for the service in 2015.
Figure 4: Program Expenditures
- Specialty services reported program & production expenses of $2.0 billion in 2015, up by $107.6 million (5.7%) from 2014.
- Specialty services’ program and production expenses were composed of:
- $54.9 million in Production Expenditure;
- $434.2 million in Non-Canadian Programming Expenditure; and
- $1.5 billion in Canadian Programming Expenditure (CPE).
- Canadian Programming Expenditures (CPE) rose by $103.2 million (7.4%) to reach $1.5 billion in 2015. Of that amount:
- 27.2% ($409.9 million) of specialty services’ CPE was spent on acquisitions from independent producers, up $34.1 million (+9.1%) from 2014;
- $254.0 million was spend on programs of national interest (PNI) in 2015, down $27.6 million (-9.8%) compared to 2014;
- $689.4 million was spent on sports programming, an amount that represented 45.7% of total CPE in 2015. Of note, spending on that category of programming was up by $145.4 million (26.7%) in the past year, partly as a result of the acquisition of NHL programming rights by Rogers and Groupe TVA, notably.
- This year’s publication includes, for the first time, broadcasters’ programming spending for the Animation category, and children’s programming. In 2015, specialty services spent:
- $48.0 million on animation programming
- $114.8 million on children’s programming
- Non-Canadian programming expenditures increased by $45.0 million (11.6%) in 2015.
- Notably, expenditures on non-Canadian sports programming increased by $17.4 million (17.4%), while spending on drama, film and animation non-Canadian programming rose by a combined $18.8 million (12.4%).
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