THINK TANK: Canadian Radio is a Billion Dollar Industry

From where we sit on the music industry side of things (chasing adds, spins, concert presents and the like) it’s easy to forget that radio is actually an entirely separate industry in its own right. There are legions of people beyond the music department that make the whole machine run, to the tune of $1.62 billion in gross revenue, $369 million in pre-tax profits, and average salaries of $67,759 (in Canada.)

The CRTC recently rolled out their 2012 financial summaries (which is where I pulled the above numbers from), and needless to say, despite rumours to the contrary, the radio business is booming. It’s the intrinsic part that we all know to be true on our side of the business: radio play = sales. Why is that? Well, advertising works, and that’s how radio stations make their money (and how spins turn into records sold.) Brands pay big bucks to dominate the airwaves because it makes their cash registers ring. And that’s because, again despite rumours to the contrary, the general public listens to a hell of a lot of radio.

Delving into it the CRTC findings a bit more, the ‘big’ numbers help to give a broad overview, but they become rather meaningless without some sort of context. And some of the stats, things like average salaries, create more harm than good, as the calculated ‘average’ is heavily skewed upwards, thanks to the inclusion of a handful of ‘superstar’ salaries, which renders a number that is far from being realistic.

We slogged through the 88-pages of mind-numbing spreadsheets that comprise the report in order to find some of the other more-pertinent stats that can give a better sense of what’s actually happening on the ground.

For commercial radio as a whole, revenues were pretty much flat from the previous year, seeing just a 0.40% gain. Breaking things down to the local level, one can see that there are a number of markets across the country that are experiencing economic challenges. The main culprit appears to be with local advertising (car dealerships, discount shoe outlets, etc), which was relatively stagnant or down in most markets.

Individual Market Revenues – 2012 (compared to 2011)
Toronto $270-million (down 0.57%)
Montreal $160-million (up 1.58%)
Vancouver $126-million (up 4.33%)
Calgary $95.7-million (up 2.79%)
Edmonton $91-million (up 3.40%)
Ottawa/Gatineau $65.9-million (down 2.83%)
Quebec City $44.7-million (down 0.09%)
Winnipeg $42.7-million (up 2.50%)
London $25.6-million (up 2.75%)
Kitchener/Waterloo $24-million (down 7.26%)
Oshawa/Windsor $21.9-million (down 1.56%)
Halifax $21.7-million (down 0.27%)
Hamilton $19.8-million (down 9.21%)
Victoria $17-million (down 1.86%)
St. Catharines/Niagara $12.9-million (down 2.45%)

Spanning the years of 2008-2012, the CRTC report allows for some historical perspective on the data. It’s quite apparent that — for a number of markets — the effects of the 2008 economic meltdown are still being felt, with total revenues in Vancouver, Victoria, Calgary, Hamilton, Halifax, and Kitchener/Waterloo all yet to recover to their pre-crisis levels.

For those in the industry, or at least with an awareness of it, it should come as no surprise that employment numbers, which saw an upwards bump in 2011, declined in 2012, with the report showing a loss of 465 positions nationally. While a percentage of these would have been on-air staff, the figure also includes creative, administrative, technical and sales jobs, with the greatest losses occurring in Montreal (-61), Ottawa/Gatineau (-42), Quebec City (-40), Edmonton (-32) and Vancouver (-27). On the plus side, there was employment growth in Toronto (+33 jobs) and Winnipeg (+43).

Eyeing the smaller markets, where the CRTC combines the data and reports it on a province-by-province basis, the revenue story follows a similar pattern:

Small Market Revenues, by Province – 2012 (compared to 2011)
Ontario $129.9-million (down 3.48%)
Alberta $94-million (up 5.83%)
Saskatchewan $90-million (up 2.65%)
Quebec $81.8-million (down 1.43%)
BC & Territories $68.8-million (down 3.31%)
New Brunswick $31.6-million (up 1.64%)
NFLD & PEI $30.6-million (up 0.85%)
Nova Scotia $20-million (up 2.60%)
Manitoba $18.6-million (up 0.26%)

Employment erosion continues in the small-markets, with Quebec losing 112 positions, Alberta 43, Ontario 40 and Manitoba 19. The only bright-spot was in BC & Territories, where there was a net gain of 9 jobs.

So what does it all mean?

Despite the flat revenues and job losses, commercial radio in Canada is still an incredibly healthy business, delivering solid profits for the various owners and shareholders, and employment for over 10,000 people. Yes, there are new entries to the “music listening” landscape seemingly on a monthly basis and it will be interesting to see how things like Pandora being available in cars will affect things, but for the time it’s hard to argue with the math. The radio business is healthy, and it’s tough to see them going down without one hell of a fight.