Report: Canadian radio did big biz in '06

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TORONTO -- Canadian private radio stations posted "substantial" profits in 2006 despite slowing growth and growing competition for the iPod generation's time, Statistics Canada reported Wednesday.

The government statistics agency reported advertising revenue for private radio stations here rose 5.3% to CAN$1.4 billion ($1.33 billion).

That growth, though down sharply from 2005's year-to-year growth rate of 8.7%, was just off an average growth rate of 5.7% for the last five years.

But despite the Internet vastly changing how young Canadians get their entertainment, private radio in Canada churned out pre-tax earnings of CAN$284 million ($270.5 million), up 0.4% from 2005 levels. And the sector's 20% profit margin in 2006 was just off a year-earlier 21%.

But Statscan cautioned that the Canadian radio industry's balance sheet in 2006 conceals "widely varying results" in terms of geography and market size that do not bode well for the future.

According to the survey, English-language radio stations posted an impressive 22% profit margin in 2006, compared with a profit margin of 11% in French-Canadian markets and 8.3% for ethnic radio stations.

"English-language stations' main competitive advantage is that they spend a smaller percentage of their revenue on programming and administration," Statscan reported.

Similarly, radio stations in Canada's five largest markets reported a profit margin of 26.9%, double the 13.4% profit margin for stations in smaller urban markets, as major players reaped the benefits of owning more than one station in major markets like Toronto, Montreal or Vancouver.

The continuing strength of conventional radio stations in major Canadian markets contrasts with the bleak picture radio station operators often paint for the country's regulator and federal government as they seek relief from emerging technologies like MP3 players, satellite radio and music-playing cellphones.

Statscan reported domestic AM radio posted a pre-tax profit for the fourth consecutive year of CAN$17.6 million ($16.7 million) in 2006, up 29.7% from 2005.

That said, the average profit margin of 5.5% for AM stations paled in comparison to FM radio's 24.2% margin.
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