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Media and Internet Concentration in Canada, 1984 – 2011

As my last post explained, the media economy in Canada has grown immensely and become far more complex in the past twenty-five years with the rise of the Internet and digital media. In this post, I ask whether the media have become more or less concentrated amidst all these changes?

While opinions are rife on the issue, as McMaster University professor Philip Savage (2008) observes, the debate over media concentration in Canada “largely occurs in a vacuum, lacking evidence to ground arguments or potential policy creation either way” (p. 295).

The need for good evidence on the question has been obvious over the past year in the context of Bell Canada’s bid to buy Astral Media, the ninth largest media company in Canada. Indeed, the CRTC’s decision to kill the deal in late October turned in a big way, although not entirely by any stretch of the imagination, on the evidence about media concentration.

The same question will be front-and-centre in Bell Astral Round Two. While nobody knows what version 2.0 of the deal looks like outside of the two companies’ inner sanctum, and the CRTC staff currently vetting it before it is opened for public interventions (probably in the new year), the issue of concentration will undoubtedly loom large in whatever discussions, and regulatory actions, do occur.

That said, however, we must make no mistake about it, studying media and internet concentration is not about Bell or Astral, or any specific transaction. In fact, the issue in the Bell Astral case is not if Bell is too big but whether telecom, media and internet markets in Canada are already too concentrated as a whole? How do we know one way or another? This post helps to address these questions.

Competing Views on Media Ownership and Concentration

Grappling with these issues is not just about remedying the ‘missing evidence’ problem, but thinking clearly about how the issues are framed.

Many critics point to media concentration as steadily going from bad to worse, but with little to no evidence to back up such claims. Perhaps the best known example of this is Ben Bagdikian, who claims that the number of media firms in the U.S. that account for the majority of revenues plunged from 50 in 1984 to just five by the mid-2000s. Similar views also exist in Canada, where critics decry what they see as the inexorable trend towards greater media concentration and its debilitating effects on “democracy’s oxygen”, for instance, or vilify the media moguls behind such trends who have, in these critic’s words, created “Canada’s most dangerous media company”.

A second group of scholars set out to debunk the critics by quantitatively analyzing reams of media content only to find the evidence about how changes in media ownership and market structure effect content to be mostly “mixed and inconclusive” (Soderlund, et. al al. 2005). The problem with this conclusion, however, is that it proceeds as if media concentration’s ‘impact on content’ is the only concern, or as if preserving the existing status quo might not be a significant problem in its own right (Gitlin, 1978). Undeterred, this line of scholarship trundles on so that, half a decade later, similar studies by many of the same authors, Cross-Media Ownership and Democratic Practice in Canada: Content-Sharing and the Impact of New Media, reach pretty much the same conclusions (Soderlund, Brin, Miljan & Hildebrandt, 2011).

A third school of thought mocks concern with media concentration altogether. According to this school, how could anyone believe that the media are still concentrated when there are thousands of news sources, social networking sites galore, pro-am journalists, user-created content and a cacophony of blogs at our finger tips, 700 television channels licensed by the CRTC, ninety-four newspapers publishing daily and smartphones in every pocket? Ben Compaine (2005), a media economist at MIT, has a one-word retort for those who think that concentration still matters amidst this sea of plenty: internet!

Those in this camp also argue that focusing on concentration when traditional media face the perilous onslaught of global digital media giants such as Google, Amazon, Netflix, Facebook, and so on is akin to rearranging the deck chairs on the Titanic – foolhardy and doomed to fail (Thierer & Eskelen, 2008; Dornan, 2012). Journalistic accounts often share this view, routinely invoking, in mantra-like fashion, the idea that media are more competitive than ever. Like their acdemic counterparts, such accounts offer little to no evidence to support such claims, other than pointing to the same roster of foreign digital media goliaths as if examples equals evidence. It does not.

While some might find it hard to fathom, there’s a fourth school of thought, and one that I largely subscribe to, that accepts that fundamental changes have occurred, but rejects claims that this renders concern with media consolidation obsolete. For all those who guffaw at charges of media concentration, it is easy to point, for example, to the fact that only about a third of the 94 daily newspapers said to exist are actually still publishing original content on a daily basis. Of the 700 television channels listed on the CRTC’s books, just over 200 actually filed a financial return last year. And half of those tv channels belong to just four companies — Bell (33), Shaw (46), Rogers (11) and QMI (12). Their share of the market, as we will see, is much higher yet. Keeping our eye on these facts also highlights, for example, how dominant incumbent players use price (usage-based billing) and bandwidth caps, for example and among other tactics, to protect their legacy television businesses (i.e. CTV, Global, CityTV, TVA), while hobbling rivals (Netflix) and limiting people’s choice as a result.

This school also suggests that core elements of the networked digital media – search engines (Google), Internet access (ISPs), music and book retailing (Apple and Amazon), social media (Facebook) and access devices (Apple, Google, Nokia, Samsung, RIM) – may actually be more prone to concentration because digitization magnifies economies of scale and network effects in some areas, while reducing barriers in others. If this is correct, then we may be witnessing the rise of a two-tiered digital media system, with many small niche players revolving around a few enormous “integrator firms” at the centre (Noam, 2009; Benkler, 2006; Wu, 2010).

The more that central elements of the networked digital media are concentrated, the easier it is to turn these nodal points — Facebook, Google, ISPs, Twitter, and so forth — into proxies that serve other interests in, for example, the preservation of dominant market power in ‘legacy’ media sectors (e.g. television and film), the copyright wars, efforts to block pornography, and in law enforcement and national security matters. In other words, the more concentrated such nodal points are, the more potential digital media giants have to:

  • set the terms for the distribution of income to musicians, newspapers and books (Google, Apple, Amazon);
  • turn market power into moral authority by regulating what content can be distributed via their ‘walled gardens’ (Apple),
  • set the terms of ownership and use of user created content and how it is sold in syndicated markets as well as to advertisers (Google and Facebook) (van Couvering, 2011; Fuchs, 2011);
  • and set defacto corporate policy norms governing the collection, retention and disclosure of personal information to commercial and government third parties.

Whilst we must adjust our analysis to new realities, it is also true that long-standing concerns have not disappeared either. To take just one case in point, consider the fact that during the 2011 election campaign, every single newspaper in Canada, except the Toronto Star, that editorially endorsed a candidatefor Prime Minister touted Harper – roughly three times his standing in opinion polls at the time and the results of the prior election. When 95 percent of editorial endorsements for PM across the nation stump for one man – Harper — something is amiss.

Ultimately, talk about media concentration is really a proxy for bigger conversations about consumer choice, freedom of expression as well as democracy. While such discussions must adapt to new realities, the advent of digital media does not mean that such conversations should fall silent. Politics, values and heated debates are endemic to the topic, and this is how things should be (Baker, 2007Noam, 2009; Peters, 1999).

Methodology

Discussions of media concentration will never turn on the numbers alone, and nor should they, but it is essential to be as clear as possible about the methods used to assess the issue. To begin, there is no naïve vantage point from which data about these issues can be innocently gathered and presented as if evidence is just out there laying in a state of nature, somewhere, waiting to be plucked like apples from a tree.

Data, in other words, does not serve as a one-to-one map of the reality it claims to describe. Nonetheless, there are good ways to make a good body of evidence and bad. An essential factor all down the line is the need for researchers to be open and reflexive about their methods and theoretical starting points.

A fuller discussion of the methodology that I use can be found here, here and here, but for now we can lay out the bare bones of the approach before turning to the analysis itself. I begin by selecting a dozen or so media sectors at the heart of the analysis: wired & wireless telecoms; cable, satellite & IPTV distributors; Internet access; broadcast tv; pay & subscription tv; radio; newspapers; magazines; search engines; social media sites; and online news services.

Data were collected for each of these sectors over a twenty-seven year period, 1984 – 2011, first at four-year intervals up until 2008 and annually since. For the DIYers among you, here’s a handy dandy list of sources.

Data for the revenues and market share for each ownership group in each of these sectors was then assembled. I then group each of the above sectors into three categories, assess the concentration level in each category, and then scaffold upward from there to examine the network media industries as a whole: (1) network infrastructure; (2) content: (3) online media.

I typically drop wired and wireless telecoms from the whole of what I call the network media industries because the size of these sectors means that they tend to overshadow everything else.

Lastly, I use two common tools — Concentration Ratios (CR) as well as the Herfindhahl – Hirschman Index (HHI) – to depict levels of competition and concentration over time. The CR method adds the shares of each firm in a market and makes judgments based on widely accepted standards, with four firms (CR4) having more than 50 percent market share and 8 firms (CR8) more than 75 percent considered to be indicators of highly levels of concentration.

The HHI method squares and sums the market share of each firm with more than a one percent share in each market to arrive at a total. If there are 100 firms, each with a 1% market share, then markets are highly competitive, while a monopoly prevails when one firm has 100% market share. The following thresholds are commonly used as guides:

HHI < 1000                                     Un-concentrated

HHI > 1000 but < 1,800             Moderately Concentrated

HHI > 1,800                                    Highly Concentrated

The Historical Record and Renewed Interest in Media Concentration in the 21st Century

There has always been, even if episodically, keen interest in media ownership and concentration in Canada and the world since the late-19th and early-20th centuries.

In 1910, for example, the Board of Railway Commissioners (BRC) broke up the three-way alliance between the two biggest telegraph companies — Canadian Pacific Telegraph Co. and the Great Northwestern Telegraph Co. (the latter an arm of the New York-based goliath, Western Union) – and the American-based Associated Press news wire service. Why?

In the face of much corporate bluster, the BRC did this because the two dominant telegraph companies were giving away the AP news service to the top newspaper in cities across Canada for free in order to bolster their stranglehold on the lucrative telegraph business. Allowing this to continue, stated the BRC matter-of-factly, would “put out of business every news-gathering agency that dared to enter the field of competition with them” (1910, p. 275).

Thus, in a conscious bid to use telecoms regulation to foster competition amongst newspapers, and to free up the flow of news on the wires, the BRC effectively dismantled the alliance. For upstarts such as Winnipeg-based Western Associated Press – which had initiated the case – it was a significant victory (Babe, 1990).

Media concentration issues arose episodically thereafter and came to a head again in the 1970s and beginning of the 1980s, when three inquiries were held: (1) the Special Senate Committee on Mass Media, The Uncertain Mirror (2 vols.)(Canada, 1970); (2) the Royal Commission on Corporate Concentration (1978); and (3) the Royal Commission on Newspapers (Canada, 1981).

Things lay dormant for more than two decades thereafter, but sprang to life again in the late-1990s and turn-of-the-21st century after a huge wave of consolidation thrust concerns about media concentration back into the spotlight. Three inquiries were held between 2003 and 2007 as a result: (1) the Standing Committee on Canadian Heritage, Our Cultural Sovereignty (2003); (2) the Standing Senate Committee on Transport and Communications, Final Report on the Canadian News Media(2006);[i] as well as (3) the Canadian Radio-Television and Telecommunications Commission’s Diversity of Voices inquiry in 2008.

Structural Transformation: Two (three?) Waves of Consolidation and the Rise of TMI Conglomerates

As I noted in my last post, for all sectors of the media economy in Canada, revenues grew immensely from $37.5 billion in 1984 to just under $70 billion last year (or from $12.1 billion to just under $34 billion when we exclude wiredline and wireless telecoms) (in inflation-adjusted “real dollars”). Between 1984 and 1996, new players meant more diversity in all sectors, except for newspapers as well as cable and satellite video distribution, where concentration climbed significantly.

Conventional as well as pay and subscription television channels were already expanding during this time. In terms of ownership, incumbents and a few newcomers – e.g. Allarcom and Netstar – cultivated the field, with their share of the market growing steadily in tandem with the number of services available (underlying data for these claims can be found here).

Concentration levels remained very high in wired line telecoms in the 1980s and early 1990s, while wireless was developed by two companies, Bell and Rogers. As had been the case in many countries, telecoms competition moved slowly from the ends of the network into services and then network infrastructure, with real competition emerging in the late-1990s before the trend was reversed and concentration levels again began to climb.

In the 1980s and early-1990s, consolidation took place mostly among players in single sectors. Conrad Black’s take-over of the Southam newspaper chain in 1996 symbolized the times. In broadcast television, amalgamation amongst local ownership groups created the large national companies that came to single-handedly own the leading commercial television networks – CTV, Global, TVA, CHUM, TQS – by the end of the 1990s.

While weighty in their own right, these amalgamations did not have a big impact across the media as a whole. There was still significant diversity within sectors and across the TMI sectors. The CBC remained prominent, but public television was being eclipsed by commercial television as the CBC’s share of all resources in the television ‘system’ slid from 46 percent in 1984 to half that amount by 2000 to just over twenty percent today (see the motion chart on CMCR website illustrating this point).

While gradual change defined the 1980s and early-1990s, things shifted dramatically by the mid-1990s and into the 21st century as two (and maybe three) waves of consolidation swept across the TMI industries. A few highlights help to illustrate the trend:

Wave 1 – 1994 to 2000: Rogers acquisition of Maclean-Hunter (1994). Peaks from 1998 to 2001: (1) BCE acquires CTV and the Globe & Mail ($2.3b); (2) Quebecor takes over Videotron, TVA and the Sun newspaper chain ($ 7.4b) (1997-2000); (3) Canwest buys Global TV ($800m) and Hollinger newspapers papers, including National Post ($3.2b).

Wave 2 – 2006-2007.  Bell Globe Media re-branded CTVglobemedia, as BCE exits media business. CTVglobemedia acquires CHUM assets (Much Music, City TV channels and A-Channel).  CRTC requires CTVglobemedia to sell City TV stations – acquired by Rogers (2007). Astral Media buys Standard Broadcasting. Quebecor acquires Osprey Media (mid-size newspaper chain)(2006). Canwest, with Goldman Sachs, buys Alliance Atlantis (2007) (Showcase, National Geographic, HGTV, BBC Canada, etc) – and biggest film distributor in Canada.

Wave 3 – 2010 – ? Canwest bankrupt. Newspapers acquired by Post Media Group, TV assets by Shaw.  BCE makes a comeback, re-buys CTV (2011) and bids for Astral Media in 2012, but fails to gain CRTC approval.

That the massive influx of capital investment drove consolidation across the telecom, media and Internet industries during these periods is illustrated in Figure 1 below.

Figure 1: Mergers and Acquisitions in Media and Telecoms, 1984 – 2011 (Mill$)

Sources: Thomson Financial, 2009; FPInformart, 2010; Bloomberg Professional; CRTC, Communication Monitoring Report.

Consolidation has yielded a fundamentally new type of media company at the centre of the network media ecology: i.e. the integrated media conglomerate. Extremely popular in the late-1990s in many countries around the world, many media conglomerates have since collapsed or been broken up (AOL Time Warner, AT&T, Vivendi, CBS-Viacom, and parts of NewsCorp, etc)(see, for example, Jin, 2011; Thierer & Eskelen, 2008; Waterman & Choi, 2010). The trend elsewhere has not, however, taken hold in Canada.

Indeed, in Canada, sprawling media conglomerates are still all the rage. Four such giants and a half-dozen other large but more specialized companies part their size make-up the core ‘big 10’ companies in the network media economy: Bell (CTV), Shaw (Global), Rogers (CityTV), QMI (TVA), CBC, Post Media, Cogeco, Telus, Astral, and Eastlink. A detailed chart of each by ownership, revenues, and sectors operated in is available here and will be addressed further in the next post.

Looking at media concentration from the vantage point of the ‘big ten’, the media have become more concentrated than ever. Their share of all revenues (excluding telecoms services) rose sharply in the 1990s and between 2000 and 2008 hovered steadily in the mid- to low-60 percent range. The big four’s share of the network media economy subsequently rose significantly to just under 68 percent in 2010 (after Shaw’s acquisition of Global) and rose again to just under 70 percent in 2011 (when Bell re-acquired CTV) — an all-time high and a substantial rise from 52% in 1992. The levels of media concentration in Canada are more than twice as high as those in the U.S., based on Noam’s analysis in Media Ownership and Concentration in America (2009).

Breaking the picture down into the following three categories and applying the CR and HHI tools provides an even better view of long-term trends:

  • ‘network infrastructure’ (wired and wireless telecom services, ISPs, cable, satellite and other OVDs);
  • ‘content’ (newspapers, tv, magazines, radio);
  • ‘online media’ (search, social, operating systems).

At the end of the post, I combine these again to complete the analysis of the network media industries as whole in a slightly different form.

The Network Infrastructure Industries

All sectors of the network infrastructure industries are highly concentrated and pretty much always have been, although Internet Access is a partial exception.

Table: CR and HHI Scores for the Network Infrastructure Industries, 1984 – 2011

CR & HHI Network Industries, 2011

Much the same can be said with respect to wireless services: they have consistently been highly concentrated, and still are until this day, despite the advent of four newcomers in just the past two years: Mobilicity, Wind Mobile, Public and Quebecor.CR4 and HHI measures for wired telecoms scores fell during the late-1990s as greater competition in wired line telecom services took hold. They reached their lowest level ever between 2000 and 2004 before after shocks from the collapse of the speculative dot.com bubble took out many of the new rivals (CRTC, 2002, p. 21). Competition grew more and more feeble for most of the rest of the decade before drifting modestly upwards since 2008. Concentration levels, however, still remain high by late-1990s, turn-of-the-century standards, as well as those of the CR and HHI measures.

Two competitors – Clearnet and Microcell – emerged in the late-1990s and managed to garner 12 percent of the market between them, but were then taken over by Telus and Rogers in 2000 and 2004, respectively. Whether the recent round of newcomers will fare any better it is still too early to tell, but with only 2.2 percent of the market as of 2011 they are a long way from the high tide of competition set a decade ago.

As the telecoms and Internet boom gathered steam in the latter half of the 1990s new players emerged to become significant competitors in Internet access, with four companies taking more than a third of the ISP market by 1996: AOL (12.1%), Istar, (7.2%), Hook-Up (7.2%) and Internet Direct (6.2 percent).

The early ‘competitive ISP era’, however, has yielded to more concentration since. Although the leading four ISPs accounted for a third of all revenues in 1996, by 2000 the big four’s (Bell, Shaw, Rogers & Quebecor) share had grown to 54 percent. Things stayed relatively steady at the level for most of the decade before inching upwards in the past few years to reach 57.1 percent in 2011.

HHI scores for internet access also moved upward between 1996 and 2000, but are still low relative to most other sectors. However, this is probably more an indicator of the limits of the HHI method in this particular case, since 93% of high-speed Internet subscribers rely on one or another of the incumbent cable or telecom companies’ ISPs to access the Internet, according to figures in the CRTC’s Communication Monitoring Report (p. 148).

ISP provision in Canada is effectively a duopoly, with the left over 6-7% of the market not dominated by the incumbents scattered among the 400 or so independent ISPs that still exist. This is a slight increase from last year, but it does not mark the return to competitive internet access.  Canada has relied on a framework of limited competition between incumbent telecom and cable companies for wiredline, wireless, internet access and video distribution markets and in all of these markets they dominate, with some other smaller rivals in each.

Cable, satellite and IPTV distribution is one of the only segments assessed where concentration has risen steadily from low levels in the 1980s (850) to the top of the scales in 1996 (2300), before drifting downwards by the turn-of-the-century to the low 2000s where it has remained ever since. It has dipped below that, to the 1900-range, for the last five years, but this is still at the very high end of the scale.

As I noted in the last post, the IPTV services of the incumbent telcos – Bell, MTS, Telus and SaskTel – are becoming a more significant factor in the distribution of television, after a slow and staggered start. By 2011, IPTV services accounted for 7.6 percent of the TV distribution market, based on my numbers, or 3.8 percent using CRTC data (see page 96).

While I have yet to get to the bottom of why this discrepancy exists, what can be said is that, on the basis of my figures, the growth of IPTV services has made small incursions into the incumbent cable and satellite service providers’ turf (i.e. Shaw, Rogers, Quebecor, Cogeco and Eastlink). However, this has done little more than nudge the CR and HHI scores, as the table above shows.

Over the last twenty-seven years, cable tv has become ubiquitous and new tv distribution infrastructures have been added to the fold – DTH in the 1990s, and now, slowly, IPTV. New players have emerged, but never have so few owned so much. New technologies have generally added to this and have not fundamentally disrupted the broad trajectory of development when it comes to tv distribution channels: more channels, and even some new players, but with more of the whole in the hands of the old. The wired society in Canada is probably the poorer for this.

The Content Industries

Until the mid-1990s, all aspects of the tv industry (i.e. conventional broadcast tv as well as pay and specialty channels) were moderately concentrated by HHI standards and significantly so by CR measures. Competition and diversity made some modest inroads from 1998 to 2004, but the trend abruptly reversed course and levels have climbed steadily and substantially since, and sharply in the last two years. Figure 2, below, shows the trend in terms of CR scores; Figure 3, in terms of the HHI.

Figure 2 CR Scores for the Content Industries, 1984 – 2011

 Figure 3 HHI Scores for the Content Industries, 1984 – 2011

The largest four commercial television providers control about 81% of all television revenues in 2011, up from 75% a year earlier. Levels of tv concentration were pushed to new extremes by

Shaw’s take-over of Canwest’s television assets in 2010 and Bell’s buy-back of CTV last year. The big four’s share of all tv revenue before these transactions in 2008 was 70%. A ten percent leap in concentration in two years is a lot.

If the CRTC had approved Bell’s acquisition of Astral Media – the fifth largest television company in Canada, ahead of Quebecor – the all-time high levels of concentration set in 2011 would have been surpassed by an even higher 89.5%. In contrast, the big four accounted for 61% of the tv biz in 2004, a time before major players such as Alliance Atlantis and CHUM were bought out by the now defunct Canwest and Bell/CTV 1 (circa 2000-2006), respectively.

The CR and HHI measures for tv were at all time lows in the 1990s. This was a time when newcomers emerged (Netstar, Allarcom), yet before the time when the multiple ownership groups that had stood behind CTV and Global for decades combined into single groups. The period was also significantly more diverse because the CBC no longer stood as a central pillar in tv and radio, while pay and specialty television channels were finally making their mark. Today, the latter are the crown-jewel in the tv crown.

Today the largest four tv providers after Bell and Shaw are: the CBC, Rogers, Astral, and QMI, respectively, and in that order. By 2011, these six entities accounted for ninety-five percent of the entire television industry. Similar patterns are replicated in each of the sub-components of the ‘total television’ measure (conventional television, pay and specialty channels), as the chart above illustrates.

In contrast, in 2004, the six largest players accounted for a little over three-quarters of all revenues. The run of HHI scores reinforces the view that the television industry is highly concentrated and has become markedly more so in just the past two years.

Like the cable industries, there has never been a moment when diversity and competition has flourished in the newspaper sector. Consolidation rose steadily from 1984, when the top four groups accounted for two-thirds of all revenues, to 1996, when they accounted for nearly three-quarters – a level that has stayed fairly steady since, despite periodic shuffling amongst the main players at the top. Levels declined slightly in 2011 from 2010, from 77% to 75%, likely on account of Postmedia’s decision to sell some of its newspapers (Victoria Times Colonist) and to cut publishing schedules at others.

Of all media sectors, magazines are least concentrated, with concentration levels falling by one-half on the basis of CR scores and two-thirds for the HHI over time. I have not been able to update the data for this sector for 2011, but there is little to suggest a need to change this view.

Radio is also amongst the most diverse media sectors according to HHI scores, but slightly concentrated by the C4 measure. In fact, in 2011, it became moreso, likely because of a shuffling of several radio stations between Shaw/Corus and Cogeco. Bell’s take-over bid for Astral – the largest radio broadcaster in Canada with 17.5% market share – would also have further pushed radio in the direction of concentration had it been approved last month by the CRTC. Had that scenario come to pass, levels of concentration would have still remained well-beneath the CRTC’s self-defined thresholds, but high by the CR measure and just moderately high by the HHI.

Online Media

So far, there’s little reason to believe that trends are any different in the online realm, as measures of the ISP segment showed. But what about other core elements of the increasingly Internet-centric media universe, such as search engines, social media, online news sources, browsers, and smartphone operating systems?

The trends are clear. Concentration in the search engine market continued to grow between 2010 and 2011, with the CR4 score rising from 94% to 97.6%. Google’s share of the market, however, seems to have plateaued, at just over 81 percent of this domain. Microsoft (8.6%), Yahoo! (4.2%), and Ask.com (3.7%) trail far behind, yielding a CR4 of 97.6% and an off-the-charts HHI of 6,683.

Figure 3: C4 Scores for the Search Engines, 2004 – 2011

Source: Experien Hitwise Canada. “Main Data Centre: Top 20 Sites & Engines.” last Accessed October 11, 2012.  http://www.hitwise.com/ca/datacenter/main/dashboard-10557.htm

Social media sites display a similar but not quite as pronounced trend, with Facebook accounting for 63.2% of time spent on such sites in 2010, trailed by Google’s YouTube (20.4%), Microsoft (1.2%), Twitter (0.7%), and News Corp.’s MySpace (.6%) (Experien Hitwise Canada, 2010). Again, the CR4 score of 86% and HHI score of 4426 reveal that social networking sites are highly concentrated.

Similar patterns also hold for other layers of the media ecology. The top four web browsers in Canada – Microsoft’s Explorer (52.8%), Google’s Chrome (17.7%), Firefox (17.1%) and Apple’s Safari (3%) – have a market share of over 90 percent (Comscore, 2011).  There is no data available for Canada with respect to smartphone operating systems, but US data shows that the top four players in 2010 accounted for 93 percent of all revenues: Google’s Android OS (29%), Apple’s iOS (27%), RIM (27%) and Microsoft’s Windows 7 (10%) (Nielsen, 2011).

However, not all areas of the internet and digital media environment, of course, display such patterns. The picture with respect to online news services, for instance, is significantly different. Between 2003 and 2008, the amount of time spent on online news sites nearly doubled from 20 to 38 percent, with most of the leading 15 online news sites simply being the extensions of well-established media companies: cbc.ca, Quebecor, CTV, Globe & Mail, Radio Canada, Toronto Star, Post Media, Power Corp. The other major sources included CNN, BBC, Reuters, MSN, Google and Yahoo! (Comscore, 2009; Zamaria & Fletcher, 2008, p. 176).

While that trend meant that attention was consolidating around a few online news sites, and those of traditional journalistic outlets in particular, it nonetheless seems clear that Canadians have diversified their news sources relative to the traditional news environment (newspapers, tv, radio, magazines).  On either the CR or HHI measure, online news fall under the concentration thresholds and are diverse relative to any of the other sectors, except magazines.

However, the fact that concentration levels edged upwards between 2004 and 2007, after the rapid “pooling of attention” that took place between 2003 and 2007 (see immediately above), suggests that a certain plateau might have been reached in terms of the range of sources people are using. Nonetheless, online news sources are not concentrated on the basis of the measures used here. The following table shows the results.

Table: Online News Sources, 2004 – 2011

News website 2004 (N=1482) 2007 (N =1306 ) 2011 (N=1651 )
CBC 10.6 18.3 13.8
Google 5.3 9.2 10.4
MSN / Sympatico 18.2 11 14.7
Yahoo 9.3 7.4 6.5
CNN 9.3 9.4 6.1
CTV 6.2 2.9
Canoe 2.4 7.6 2.9
Cyberpresse 3.5 3.3 3.9
Globe and Mail 4.1 5.9 3.6
BBC 4.9 2.8
Toronto Star 2.6 2.4 1.5
Global 2
Other 32.6 14.4 31.1
CR4 43.4 45.9 45.4
HHI
97.9 100 100.2

Source: Table calculated by Fred Fletcher, York University, from the Canadian Internet Project Data sets (Charles Zamaria, Director).  Reports on the 2004 and 2007 surveys are available at http://www.ciponline.ca.

The Network Media Industries as a Whole (excluding wired and wireless telecoms)

Combining all the elements together yields a birds-eye view of long-term trends for the network media as a whole. As Figure 4 below shows, the HHI score across all of the network media industries is not high by the criteria set out earlier, but the long-term upward trend is clear and significant.

Figure 4: HHI Scores for the Network Media Industries, 1984 – 2010

 

While the HHI for the network media fell in the 1980s and early-1990s, by 1996 trends had reversed and levels were higher than they were a dozen years earlier. Thereafter, the number rose steadily to close to 600 in 2000, where it hovered for several years before falling again in 2008. Since then, however, the HHI score has shot upwards, rising from 510 in 2008 to 623 after Shaw acquired Global and then to 739 once Bell re-acquired CTV after having sold down its majority stake a few years earlier.

The effect of the Bell Astral deal would have been significant in terms of the network media as a whole, raising the HHI score to over 800 – an all time high. This is still low by HHI standards, but we must bear in mind that we are talking about concentration across the entire sweep of the network media industries, not just a random assortment of a few sectors.

The CR4 standard, as shown in Figure 5 below, reveals the trend even more starkly, with the big four media conglomerates – Bell, Shaw, Rogers & QMI – accounting for more than half of all revenues in 2011, a significant rise in a vastly larger media universe from just under forty percent held by the big four twenty-seven years earlier in what was a Lilliputian pond by comparison. While still only moderately concentrated by the CR4 standard, this is for all media combined.

In each and every single sector of the media that the big four operate, they dominate, as the earlier review of CR and HHI scores illustrated. Moreover, the trend in both scores is up, significantly so in the past three years from a CR4 of around 40% to its current level of just over 50%. If this really was a golden digital media age, as some like to contend, that number should be going firmly in the opposite direction.

Figure 5: CR 4 Score for the Network Media Industries, 1984 – 2010

Concluding Thoughts 

Several things stand out from this exercise. First, we are far from a time when studies of media and internet concentration are no longer needed. Indeed, theoretically-informed and empirically-driven research is badly needed because there is a dearth of quality data available and because, one after another, the press of events and specific transactions – Bell Astral in 2012, but Bell’s re-acquisition of CTV the year before and Shaw’s acquisition of Global in 2010 – demands that we have a good body of long-term, comprehensive and systematic evidence ready-to-hand.

This kind of data is still very hard to come by and data collection for 2011 reconfirmed that at every step of the way. The CRTC still needs a dramatic overhaul of how it releases information and of its website, as David Ellis has recently argued so eloquently. The underlying data sets it includes in seminal publications like the Communications Monitoring Report, Aggregate Annual Returns, and Financial Summaries needs to be made available in a downloadable, open format that allows people and researchers to use it as they see best. The regulated companies themselves must also be made to be more forthcoming with data relevant to the issues, and not less, as they so strongly desire.

The trajectory of events in Canada is somewhat similar to patterns in the United States. Concentration levels declined in the 1980s, rose sharply in the late-1990s until peaking around 2000. However, it would appear that whereas in the U.S. a process of deconsolidation set in thereafter, with the obvious exception of Comcast’s blockbuster acquisition of NBC-Universal last year, concentration levels in Canada have climbed, and steeply so, in the past three or so years.

Current media concentration levels in Canada are roughly two-and-a-half times those in the U.S. and high by global standards (Noam, 2009). Moreover, large media conglomerates straddle the terrain in Canada in a manner that is far greater than in any of the other thirty countries studied by the IMCR project, including the U.S., Germany, Japan, Australia, the UK, and so on, where media conglomerates are no longer all the rage as they once were a decade ago.

The assets from the bankrupt Canwest have been shuffled in recent years, and some significant new entities have emerged (e.g. Channel Zero, Post Media, Remstar, Teksavvy, Netflix, The Mark, Tyee, Rabble.ca, Huffington Post). The overall consequnence is that we have a set of bigger and structurally more complicated and diverse media industries, but these industries have generally become far more concentrated, not less.

There is a great deal more that can and will be said about what all this means, but in my eyes it means that concentration in no less relevant in the “digital media age” of the 21st century than it was during the industrial media era of centuries’ past.

The Growth of the Network Media Economy in Canada, 1984 – 2011

Has the media economy in Canada become bigger or smaller over time? Which sectors are growing, which are stagnating and which are in decline? These are the questions addressed by this post.

To answer these questions, I will examine the following key sectors of the network media economy: wired line & wireless telecoms; broadcast TV; subscription and pay TV; cable, satellite & IPTV distribution; newspapers; magazines; radio; music; Internet access and internet advertising? I will also hone in on rising new segments (IPTV) and others that appear to be in long-term decline (newspapers). I will also examine whether the media economy in Canada is big or small relative to global standards.

The post kicks-off a three part series that I’ll unfold over the next few weeks. Similar to what I did last year, the next post will examine telecom, media and internet (TMI) concentration, while the third will look at who owns the leading telecom-media-internet TMI companies in Canada. The goal is to offer an empirically and theoretically-grounded, and historically informed, portrait of the development and current trends in the network media economy over the period from 1984 until 2011.

Canada’s Network Media Economy in a Global Context

While often cast as a dwarf amongst giants, the network media economy in Canada is in fact the ninth largest in the world, with revenues of just over $35 billion in 2011 (excluding wired and wireless telecoms). The media economy in Canada has also grown fast relative to other media economies. The twelve largest national media economies worldwide and their development over time are depicted in Table 1 below.

Table 1: Canada’s Ranking Amongst 12 Biggest Network Media, Entertainment and Internet Markets by Country, 2000 – 2011 (millions USD) [i]

 

The media economy in Canada is obviously small relative to the U.S., at one-tenth the size, but amongst the twelve biggest media economies in the world, as the above table shows, falling right after Brazil and just before Australia, South Korea and Spain. The media economy in Canada, like those in Germany, the UK, and Australia, largely stagnated for two years following on the heels of the Anglo European financial crisis (2007ff), but for the most part things have turned around since 2010. In contrast, media economies in the U.S., Japan, Italy and Spain actually shrunk during this time before once again picking up in 2010, except in Japan and Spain. Overall, the network media economy in Canada has fared well during the economic downturn years.

In sharp contrast to much of Europe and North America, the media economies of China, Brazil and South Korea continued to grow at a fast pace. Indeed, the media economies in these countries and a few others such as Turkey and Russia have been going through something of a ‘golden media age’, with most media, from internet access, to the press, television, film and so on undergoing an unprecedented and extended period of fast-paced development (OECD, 2010).

The Network Media Economy in Canada: Growth, Stagnation or Decline?

Turning our attention solely to Canada, the figure below shows that the network media economy has grown enormously over the past few decades, from $19.4 billion in 1984 to nearly $71 billion in 2011 (current $). In inflation-adjusted dollars, the network media economy grew from $37.5 billion in 1984 to just under $70 billion last year (2010$). The figure below charts the trends (you can access the underlying data sets by clicking on the Media Industry Data tab at the Canadian Media Concentration Research Project).

Figure 1: The Growth of the Network Media Economy in Canada, 1984 – 2011 (Mill$ unadjusted for inflation)

Sources: see the CMCR Project’s methodology primary.

The vast expansion of the media economy has been driven by the addition of new media – wireless, internet access, pay and specialty tv services, internet advertising. The most significant source of growth is from the network connectivity elements (e.g. wireless, ISPs, IPTV, cable and satellite), especially after the mid-1990s.

The Network Connectivity Segments

The connectivity segments – the pipes, bandwidth and spectrum used to connect people to one another and to devices, content, the internet, and so forth — grew from $13.9 billion to $51.5 billion between 1984 and 2011. In real dollar terms, revenue grew from $26.8 billion to $50.5 billion. The following table shows the trends.

Table 2: Revenues for the Network Connectivity Industries, 1984 – 2011 (mill$)

Accounting for just under three-quarters of revenues across the media economy as a whole, the network connectivity sectors are the real fulcrum of the media economy in Canada, as is the case generally in most of the world. This is why Bell, Rogers, Shaw, Quebecor, Telus, SaskTel, MTS Allstream, Eastlink, Cogeco, etc. are so central to the media economy, to say nothing of the holdings that the biggest among them have in the media content sectors of the network media ecology.

While some might think that the over-sized weight of these sectors is of recent vintage, this is not true. In fact, the connectivity sectors’ share of the network media economy in 2011 was not even two percentage points more than twenty-seven years ago: 72.8 percent versus 71.2 percent, albeit within the context of a vastly larger media economy.

Why? One reason is TV, which is still very much at the centre of the network media universe (see below).

Not all network connectivity segments have grown and this is especially true of plain old wiredline telephone services. Wiredline telecom revenues peaked in 2000 at $21.2 billion and have fallen steadily ever since to reach $16.4 billion in 2011. The decline, as both figure 1 and the data in Table 2 above show, has been steep and unrelenting.

As plain old telephone services (POTS) has gone into decline, however, some pretty awesome new stuff (PANS) has come along to more than pick up the slack.  The best example is wireless cell phone services. Wireless revenues were $19.3 billion in 2011 – three-and-a-half times revenues at the beginning of the decade ($5.4 billion), and up significantly from $18 billion in 2010 and $16.2 billion in 2008. Unlike a few other areas (see below), wireless revenues did not suffer from the economic downtown either after the collapse of the dot.com bubble in 2000 or in the face of the Anglo-European financial crisis (2007ff).

Internet access displays similar patterns but for not as long or to the same extent. Internet access revenues last year were $7.2 billion, up substantially from $6.2 billion in 2008 and quadruple what they were at the turn-of-the-21st century ($1.8 billion).

The most notable development over the past year is the growth of Internet Protocol TV (IPTV) services, which are essentially the incumbent telcos’ managed internet-based tv services: e.g. Telus, Bell, MTS Allstream, SaskTel, and Bell Aliant.

IPTV services are often seen as important because the entry of the telcos into tv distribution promises more competition for incumbent cable companies and because IPTV is often associated with efforts to bring next generation, fiber-based internet networks closer to subscribers, either to their doorstep or nearby neighbourhood nodes. If the distribution of television is essential to the take-up of next generation networks, as I believe it is, then IPTV will be part of the demand drivers for these networks.

According to the CRTC, IPTV revenues were $322.3 million in 2011, up greatly from $207.8 million a year earlier and triple the amount of 2008.  The CRTC also states that there were 657,300 IPTV subscribers in 2011 versus 416,900 in 2010 and 225,000 in 2008. By any standard, this would appear to be impressive growth.

These numbers, however, still seem low.  For example, published data from Telus, MTS Allstream, SaskTel, and Bell Aliant show that they have substantially more subscribers than the CRTC identifies (775,000 vs 657,300), and this is without including Bell. Add another estimated 128,000 subscribers for Bell’s Montreal and Toronto-centric IPTV service and the number of subscribers rises to approximately 903,000. Table 3 below shows the trends in terms of subscribers.

Table 3: The Growth of IPTV Subscribers in Canada, 2004 – 2011[ii]

2004 2006 2008 2010 2011
Bell Fibe TV (1) 83,000 127,644
Bell Aliant (2)   49,000 77,000
Telus (3)  78,000 314,000 509,000
MTS Allstream (4) 32,578 66,093 84,544 89,967 95,476
SaskTel (5) 25800 51277 70463 85537 93,960
Total IPTV Connections 58,378.0 117,370  233,007 621,504 903,080

I explain some reasons for this large discrepancy in the endnote to Table 3 and will write another post to examine the issues more thoroughly. For now, however, I want to note that, not surprisingly, given that my estimate for subscribers is much higher than the CRTC’s, that my estimate for IPTV revenues is also much higher than the figure the Commission states. I estimate that IPTV revenues in 2011 were $650.6 million — more than four times the amount in 2008 ($142.7 million) — and up greatly from $423 million the previous year. Table 3 below illustrates the trends.

Table 4: The Growth of IPTV Revenues in Canada, 2004 – 2011 (mill$)[iii]

2004 2006 2008 2010 2011
Bell Fibe TV (1) 60.2 91.0
Bell Aliant (2) 33.6 54.9
Telus (3) 50.1 215.3 364.8
MTS Allstream (4) 10.8 32.2 50.6 59.0 71.5
SaskTel (5) 8.6 25 42 55.1 70.3
19.4 57.2 142.7 423.2 650.6

The growth of the IPTV services is significant for many reasons. First, it suggests that the telcos are finally making the investments needed to bring fiber networks closer to their subscribers, at least on a large enough scale that their efforts can be measured, despite being hemmed in by opaque reporting measures in some cases (Bell Aliant, Telus) and a complete lack of disclosure in others (Bell).

Second, the addition of IPTV as a new television distribution platform expands the size of the “BDU sector” (cable, satellite and IPTV), while bringing the telcos deeper into the cable companies’ dominion. By 2011, IPTV services accounted for 7.6 percent of the TV distribution market, based on my numbers, or 3.8 percent using CRTC data. I’ll address whether or not this has significantly increased competition and lessened concentration in the next post.

While IPTV services finally appear to be taking off, we must remember several things. First, it has been the small prairie telcos, followed by Telus, which have taken the lead in deploying IPTV. For Sasktel, Telus and MTSAllstream, IPTV revenues now make up a significant 11.9 percent, 8.5 percent and 6.6 percent, respectively, of their revenues from fixed network access services (Wiredline + ISP + Cable).

Bell lags far behind, with only 1.4 percent of its revenues coming from IPTV services, including Bell Aliant, in 2011. Indeed, Bell only launched IPTV via its affiliate Bell Aliant in 2009, before targeting high-end districts of Montreal and Toronto the next year, half-a-decade after MTS Allstream and SaskTel began doing so in the prairies.

In other words, innovation and investment is coming from small telcos on the margins and Telus, not Bell. This replays a long-standing practice in telecoms for new services to start out as luxuries for the rich and well-to-do before a mixture of public, political and competitive pressures turn them into affordable and available necessities for the masses. From the telegraph to fiber-based next generation Internet, the tendencies, conflicts and lessons have remained much the same.

Generally speaking, IPTV remains under-developed as a critical part of the network infrastructure in Canada, accounting for only 2 percent of the $32.2 billion in fixed network access revenues (see Table 2).  OECD data confirm the point, with Canada ranked 20 out of 29 countries in terms of fiber-based connections to the premises as a proportion of all broadband connections available.

In Canada, just over one percent of broadband connections use fiber, while the OECD average is 10 percent (similar to levels at Sasktel and Telus). In many ways, the poor performance of Bell over the past half-decade has dragged Canada down in the global league tables as a whole. In countries at the high end of the scale (Sweden, Slovak Rep., Korea, Japan), thirty to sixty-plus percent of all broadband connections are fiber-based. The following figure illustrates the point.

Source: OECD (2011a). Broadband Portal. www.oecd.org/…/0,3746,en_2649_34225_38690102_1_1_1_1,00.html.

The Network Content Industries

In the remainder of this post I will turn my attention to the content industries (broadcast tv, pay and specialty tv, radio, newspapers, magazines, music and internet advertising). For the most part, they too have grown substantially, although the picture has become more mixed than in the network connectivity sectors in the past few years.

In 1984, total revenue for the content industries was $5.6 billion; it was $19 billion in 2011. The growth overall appears to have been steady throughout this period, with no discernible major uptick or downturn at any given point in time. Table 4, below, depicts the trends.

Table 4: Revenues for the Content Industries, 1984 – 2011 (mill$)

Despite much hand-wringing to the contrary, television remains at the very centre of the increasingly internet-centric media environment. Indeed, this is true of all three of the main components of the television industries: conventional broadcast tv, specialty and pay tv services as well as the cable, satellite and IPTV services that underpin TV distribution for the vast majority of Canadians.

Many have argued that television is dying as audiences shrink and advertising revenues is diverted to the internet. Indeed, the dreaded “TV tax” (local programming improvement fund, or LPIF) was put into place by the CRTC in 2008 precisely on the basis of such arguments, before being rescinded by the regulator in 2012 and to be phased out completely by 2014. The rise of over-the-top services such as Netflix only further compounded the woes, so the story goes.

Yet, the evidence suggests that television is, for the most part, not struggling to survive but actually thriving. Broadcast television revenues did decline between 2008 and 2009, but only modestly, and were quickly restored and on the rise again by 2010. In 2008, broadcast TV revenues were roughly $3,381.4 million (including the CBC annual appropriation). They fell in 2009, but by 2010 had risen to $3,405.6 million. Revenues were just under $3,500 million last year.

Focusing solely on inflation-adjusted dollars changes the picture somewhat, but only slightly. Seen from this angle, broadcast television revenues were roughly $3,454.7 million in 2000, peaked at $3,518 million in 2005 and have drifted down slightly since, where they have stayed fairly steady around $3,400 million since 2008.

Small decline? Yes. But a calamity? Hardly.

That the TV in crises choir is wide of the mark becomes even clearer once we widen the lens to look at the fastest growing areas of television: i.e. specialty and pay tv services (HBO, TSN, Comedy Central, etc.) and television distribution. In terms of specialty and pay television services, these have been fast growing segments since the mid-1990s and especially so over the past decade. Specialty and pay-tv services eclipsed conventional broadcasting as the largest piece of the TV pie in 2010, when revenues reached $3,459.4 million. Last year, that figure grew to $3,732.1 million.

Adding both conventional as well as specialty and pay tv services together to get a sense of ‘total television’ revenues as a whole yields an unmistakable picture: with revenues of $7,224 million in 2011, television is not dead or dying. It is thriving.

TV remains at the centre of the internet-centric media universe and is growing fast. In fact, Total TV revenues quadrupled from $1.8 billion in 1984 to $7.2 billion in 2007; using ‘real dollars’, total TV revenues doubled from $3.5 billion in 1984 to just over $7 billion last year — hardly the image of a media sector in crisis.

Add to this, cable, satellite and IPTV distribution and the trend is more undeniable. In these domains, as indicated earlier, the addition of new services, first DTH in the 1990s, followed recently by IPTV, and steady growth in cable TV, means that TV distribution has grown immensely, in essence expanding ten-fold from revenues of $716.3 million in 1984 to $8,588.3 million in 2011 (in current dollars).

Altogether, adding “Total TV” and TV distribution revenues together, these segments of the network media industries accounted for just over $15.8 billion in 2011. As a matter of fact, the weight of all television segments in the network media economy has risen considerably over time, from accounting for 13.2 percent of all revenues in 1984, to 18.4 percent in 2000 and to 22.3 percent in 2011.

Of course, this does not mean that that life is easy for those in the television industries. Indeed, all of these sectors continue to have to come to terms with an environment that is becoming structurally more differentiated because of new media, notably IPTV and over-the-top (OTT) services such as Netflix, as well as significant changes in how people use the multiplying media at their disposal.

While incumbent television providers have leaned heavily on the CRTC and Parliament to change the rules to bring OTT services into the regulatory fold, or to weaken the rules governing their own services (see Bell’s submission in its bid to take over Astral Media, for a recent example), OTT services are still minor fixtures in the media economy. For example, based on roughly 1.2 million subscribers , Netflix’s annual revenues were an estimated $115 million in 2011 – about 1.6 percent of “Total TV” revenues.  Recent reports by Media Technology Monitor and the CBC as well as the CRTC’s (2011) Results of the Fact Finding Exercise on Over-the-Top Programming Services lead to a similar conclusion.

Part of the more structurally differentiated network media economy is also illustrated by the rapid growth of internet advertising. In 2011, internet advertising revenue grew to $2.6 billion, up from just over $2.2 billion a year earlier and $1.6 billion in 2008. At the beginning of the decade, internet advertising accounted for a comparably paltry $110 million, but has shot upwards since to reach current levels, demonstrating both fast growth as well as the fact that, like wireless services, internet advertising has not been significantly affected by downturns in the general economy.

To be sure, these trends have given rise to important new actors on the media scene in Canada, notably Google and Facebook, among others, who account for the lion’s share of internet advertising revenues. Indeed, based on common estimates of Google’s share of internet advertising revenues, the internet giant’s revenues in Canada in 2011 were in the neighbourhood of $1,300 million. This is indeed significant, enough to rank Google as the eighth largest media company operating in Canada by revenues, just after the CBC and SaskTel but ahead of Postmedia and MTS Allstream.

For its part, Facebook had an estimated 17.1 million users in Canada at the end of 2011. Based on estimated revenues of $9.51 per user, Facebook’s advertising revenue can be estimated at $162.6 million in 2011, or 6.3% of online advertising revenue – an amount that give it a modest place in the media economy in Canada but which would not put it even close to being on the list of the top twenty or so TMI companies in this country.

While it is commonplace to throw digital media giants into the mix of woes that are, erroneously, trotted out as bedeviling many of the traditional media such as television in Canada, the fact of the matter is that Netflix’s impact on television revenues is negligible, while those of Google and Facebook are mostly irrelevant.

Where they may be more important, however, is in three other areas where the portrait is not so rosy: music, magazines and newspapers.  With respect to music, it is not advertising that is at issue, but rather the manner in which online digital distribution, legal and illicit, as well the culture of linking is affecting the music industry. At some point I will write a full-length post on each of these sectors, but for now a simple sketch will have to do.

Music

While many have held up the music industry as a poster child of the woes besetting ‘traditional media’ at the hands of digital media, the music industry in Canada is not in crisis, although the picture is mixed. Using current dollars, the sum of all of the main components of the music industry – recorded music, digital sales, concerts and publishing royalties – the music industry grew from $1,181.9 million in 2000 to a high of $1,373.7 in 2008.

Music industry revenues across these four segments have generally stayed remarkably steady around the 2008 level, up to and including 2011, when revenues were $1357.7 million. There is no crisis.

The picture is a little more troubling, however, when we switch the metric to ‘real dollars’, which results in revenues reaching a high of $1.5 billion in 2004 and a decline from there to $1.316 billion last year — a significant decline, yes, but not a calamity, and with the trend clearly towards a floor being in place below which further declines in the future will be unlikely or very modest.

Radio

Radio stands in much the same position as the music industries. Revenues continued to grow until reaching a peak in 2008 of $1,990 (including CBC annual appropriation), a level at which they have stayed relatively flat since, with revenues of $1,949.5 in 2011 (current dollars). Change the measurement from current dollars to inflation-adjusted, real dollars, however, and the picture changes slightly, with a gradual decline from just over $2 billion in 2008 to roughly $1.9 billion in 2011.

Magazines

Magazines appear to stand in the same position as the music and radio sectors as well, although I have not been able to update my revenue data for the sector for 2011. Yet, extrapolating from trends between 2008 and 2010 to obtain an estimate for 2011, revenues have declined slightly on the basis of current dollars (from 2,394 million in 2008 to $2,135 in 2011). The drop is more pronounced when using real dollars, with a significant drop of about sixteen percent from $2,457.8 million in 2008 to $2,071.1 last year.

Newspapers

Perhaps the most dramatic tale of doom and gloom within the network media economy, at least in terms of revenues, is from the experience of newspapers. Readers of this blog will know that in earlier versions of the “Network Media Economy in Canada” post, and other posts, I have been skeptical of claims that journalism is in crisis. I still am, and believe, much along the lines of scholars such as Yochai Benkler, that we are in a period of heightened flux, but with the emergence of new commercial internet-based members of the press (the Tyee and Huffington Post, for example), the revival of the partisan press (e.g. Blogging Tories, Rabble.ca) as well as non-profits and cooperatives (e.g. the Dominion) and the rise of an important role for citizen journalists indicating that journalism is not moribund or necessarily in a death spiral. In fact, these changes may herald a huge opportunity to improve the conditions of a free and responsible press.

At the same time, however, I also believe that traditional newspapers, whether the Globe and Mail, the Toronto Star or Ottawa Citizen are important engines in the overall network media economy, serving as the content factories that produce news, opinion, gossip and cultural style markers that have the ability to set the agenda and whose stories cascade across the media as a whole in a way that is all out of proportion to the weight of the press in the media economy. In other words, the press still originates far more stories and attention that the rest of the media pick up, whether television or via the linking culture of the blogosphere, than their weight suggests. Thus, problems in the press could pose significant problems for the media, citizens and audiences as a whole.

While I have been reluctant to see newspapers as being in crisis, mostly because in previous years I have felt that the trends had not been long enough in the making to draw that conclusion, and also because I think many of the wounds being suffered by the newspaper business, have been self-inflicted out of a mixture of hubris and badly conceived bouts of consolidation, I’m now ready to change my tune when it comes to the state of newspaper revenues.

Newspaper revenues have plummeted. In current dollar terms, newspaper revenues peaked in the years between 2000 and 2006 at between $5.5 and $5.7 billion. They have fallen substantially since to just under $4 billion last year – a decline of 30 percent or so. Indeed, revenues fell by 9 percent just between 2010 and 2011.

In real dollar terms, the fall is more pronounced yet. Newspaper revenues, on the basis of this measure, shrunk by about $1.7 billion – or almost a third (30.7 percent) – in the five-year period between 2006 and 2011. This is the most clear cut case of a medium in decline out of the ten sectors of the network media economy reviewed in this post.

Some Concluding Comments and Observations

Several observations and conclusions stand out from the preceding analysis. First, the network media economy has grown significantly over time, whether we look at things in the short-, medium- or long-term.

Second, while the network media economy in Canada may be small relative to the U.S., it is large relative to global standards. In fact, it is the ninth biggest media economy in the world.

Third, while most sectors of the media have grown substantially, and the network media economy has become structurally more differentiated and complex on account of the rise of new segments of the media, a few segments have stagnated in the past few years (music, radio, magazines). It is also now safe to say that two sectors appear to be in long-term decline: the traditional newspaper industry and wiredline telecoms.

The next and last table of this post gives a snapshot of the state of affairs across the network media economy as things stood at the end 2011 by placing each of the sectors covered in this post in one of three categories: growth, stagnation and decline.

Table 5: The Network Media in Canada: Sectors Experiencing Growth, Stagnation or Decline

Growth Stagnation Decline
Wireless Telecoms Broadcast TV Wiredline Telecoms
Internet Access Music Newspapers
Cable & Satellite Radio
IPTV Magazines.
Pay & Specialty TV
Internet Advertising

[i] Sources:  PWC (2012), Global Entertainment and Media Outlook for all countries and for all segments, except the subcomponents of publishing rights and live concerts for the music sector, which is based on IDATE DigiWorld Yearbook 2009. I have excluded video games, book publishing, and business-to-business sectors from the PWC figures to make the country profiles correspond to the definition of the network media economy in Canada used here and by the Canadian Media Concentration Research Project. Canadian sources as listed in the CMCR project’s methodology primary, but generally based on the CRTC’s Communications Monitoring Report as well as Statistics Canada’s Cansim tables and publications for the sectors that make up the network media economy.

[ii] I use BDU ARPU because the CRTC’s estimate for IPTV ARPU of $40.86 appears too low alongside its estimates for BDUs ($59.41). with which IPTV services compete, as well as figures published by MTS Allstream in its Annual Reports that set their IPTV ARPU at $62.38. Sources: (1) Bell’s revenues are based on the CRTC’s Aggregate Annual Return. Dividing this number by the CRTC’s annual ARPU estimates for BDUs of $59.41/month in the 2011 Communications Monitoring Report (p. 96) yields 127.6 thousand subscribers for 2011. (2) Bell Aliant’s subscriber numbers are from its Annual Report (p. 2). Revenue figures arrived at by multiplying subscriber numbers by ARPU estimates for BDUs ($59.41/month in 2011) stated in the CRTC’s 2011 Communications Monitoring Report (p. 96); (3) Telus‘ subscriber numbers are from its 2011 Annual Report (p. 10) and 2010 Annual Report (p. 5). Revenue figures arrived at through same method as above. This number probably inflates the Telus figures slightly because it includes the company’s DTH satellite TV service that it resells for Bell, but Telus officials I have spoken to assure me that true IPTV subscribers are the vast majority; (4) MTS Allstream’s subscriber and ARPU figures from its 2011 Annual Report (pp. 3, 16) and multiplied by an ARPU of $62.38, as per its Annual Report. Its 2008 Annual Report lists subscriber numbers from 2004 (p. 62); (5) Sasktel’s data from its 2011 Annual Report (pp. 14, 29). Previous years from 2010 Annual Report (p. 45) and 2006 Annual Report(p. 49). SaskTel ubscriber numbers, except for 2008, are multiplied by MTS ARPU to arrive at total revenues because SaskTel does not present revenue figures for its IPTV service on a stand-alone basis and because MTS is most comparable to SaskTel vs CRTC’s average ARPU. Note: SaskTel revenue figures for this table revised on November 19th. 

[iii] Ibid.

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