Canadian broadcasters' profits take a dive

Writers strike, soft ad sales to blame for 93% decline

TORONTO -- Canadian broadcasters suffered a profit meltdown in 2008, and are still cleaning up a recessionary mess.

Canada's TV watchdog on Wednesday reported that private Canadian broadcasters saw profits slide 93% last year from soft ad sales and the fallout of the Hollywood writers strike, which severely disrupted primetime schedules here.

The Canadian Radio-television and Telecommunications Commission said private free, over-the-air stations recorded pretax profits of CAN$8 million ($6.5 million) in 2008, down from a year-earlier CAN$112.9 million.

Overall revenue for OTA stations slipped 1.5% to CAN$2.1 billion ($1.7 billion) in 2008 on slowing national advertising sales in a worsening economy.

But while revenue eased and profits evaporated, private TV networks spent more on U.S. programming last year to bring hits to domestic advertisers.

In all, CAN$775.2 million ($628.4 million) was spent on U.S. network series such as Fox's "American Idol" and ABC's "Desperate Housewives" last year, or 7.4% more than 2007 levels.

Spending on Canadian dramas remained static at CAN$88 million ($71.5 million).

ACTRA, Canada's actors union, urged the CRTC on Wednesday to order domestic broadcasters to spend more on homegrown dramas, and less on American fare, not least as an economic stimulus.

"Buying shows like 'Access Hollywood' and 'Entertainment Tonight' does not help Canada's economy. Private broadcasters are already spending almost 10 times more on foreign programs than on Canadian dramas," ACTRA national president Richard Hardacre argued.

Canadian broadcasters also face OTA audiences continuing to migrate to cable channels and the Internet, a trend that has only quickened pace as the current recession has produced advertising revenue collapse.

Pierre Dion, president and CEO of TVA Group, Quebec's largest private broadcaster, called on the CRTC to ease regulatory obligations for OTA TV stations as they restructure a broken business model and fend off competition from new digital platforms.

"The CRTC must end this unfair situation and give the over-the-air broadcasters the oxygen they need to continue playing their role as the leading producers of original Canadian content," he said.

Rival broadcaster CanWest Global Communications last week said it was putting up for sale five OTA TV stations that are part of its E!-branded national network as raises cash to pay off a mounting CAN$3.6 billion ($2.9 billion) debt burden.

And CanWest Global, like rival domestic broadcasters, has also issued a call for less of a regulatory burden in hard times.

The CRTC next Monday is expected to announce that it will reduce its focus on regulatory obligations this spring when it holds public hearings to possibly renew the broadcast licenses for CTV and Global Television, the country's two largest OTA networks.