Statscan released figures this week show that operating revenue for Canadian cable and direct-to-home satellite television companies totalled $10.3 billion in 2008, up a whopping 14.4% from 2007.
Despite the fact that Canada was in a recession in 2008, the industry still managed to rack up it's third consecutive year of revenue growth in excess of 10%.
Once again in 2008, it was cable operators, dominated by Rogers Cable, Shaw Cable, Videotron, Cogeco and Eastlink, which accrued the big revenue increases and profits. While profit margins at wireless tv providers, primarily satellite providers (Bell TV and Shaw Direct), were a narrow 4.1% before interest and taxes, profit margins among cable operators profit margins were more than six times higher at 25.9%.
Statscan figures reveal the cable industry's profit margin before interest and taxes has been above 15% every year since the beginning of the decade and higher than 20% since 2004.
The huge increase in annual profits among cable operators is attributable to the ability to bundle additional services such as Internet access and digital phone services. Because cable subscribers pay for the bulk of the cable companies infrastructure, the bundled services have become huge cash cows with high rates of return.
On August 31, 2008, cable operators had almost as many telecommunications subscribers (Internet and telephone) as television subscribers.
Cable distributors had 15.7 million subscribers to their primary services (television, Internet access and telephony) on August 31, 2008, 1.4 million more than in 2007. More than half of the new customers were telephone service subscribers.
For a second consecutive year, cable television subscriptions grew faster than subscriptions to competing wireless services (+2.3% compared with +1.5%). Over the previous 10 years, wireless service providers had always succeeded in increasing their market share.
On August 31, 2008, there were 2.7 million wireless television (mainly satellite) subscribers, compared with 8.1 million cable television subscribers.
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