Archive

Posts Tagged ‘network media economy’

The Growth of the Network Media Economy in Canada, 1984-2012

Cross-posted from the Canadian Media Concentration Research Project blog.

Has the media economy in Canada become bigger or smaller over time? Does the answer to that question, one way or the other, apply across the board, or to only a few of the dozen or sectors that make up the network media economy: i.e. wireline and wireless telecoms; internet access; cable, satellite & IPTV; pay and specialty television; conventional television; radio; newspapers; magazines; music; search engines; social media; internet advertising and online news sources?

Which of these sectors are growing, which are stagnating and which are in decline? To illustrate these trends over the period from 1984 until 2012, this post hones in on rising new media services (IPTV), those that have seen their revenues stay relatively flat over the past few years (conventional television) and those that appear to be in long-term decline (newspapers). I also examine whether the media economy in Canada is big or small relative to global standards.

This post also aims to set down a baseline of data to underpin a series of posts to follow over the next few weeks. Similar to what I have done for the past two years, the next post examines trends within and across the TMI industries from 1984 until 2012 to see if they have become more concentrated over time, or less (for previous versions, see here and here). The post after that zooms in on the top sixteen or so companies with one percent or more market share across the network media in Canada. Such firms account for 86% of all telecom, media and internet revenues. Rank ordered on the basis of revenue, they are: BCE, Rogers, Telus, Shaw, Quebecor, the CBC, MTS, Cogeco, Google, Torstar, Sasktel, Postmedia, Astral, Eastlink, the Globe and Mail, Facebook and Netflix. You can see a past version this discussion here).

In addition to updating our analysis for a complete set of the 2012 data, our goal is to break new ground. This year we do so by adding a new post that examines the state of media, telecom and internet concentration in Canada relative to the preliminary results of a thirty country study by the International Media Concentration Research Project, in which I served as the lead Canadian researcher. There are some surprising results that that smash a few shibboleths while confirming other elements of what we know from past research.

Finally, another new dimension for this year is a break out of data and analysis for the English- and French-language telecom, media and internet (TMI) markets. For the most part, similar questions to those introduced above are addressed about media growth and concentration trends between 2000 and 2012, while the leading firms in both of these regions are profiled in terms of size, ownership, the media, telecom and internet sectors they operate in, and how they each fit into the Canadian mediascape overall. 1

While we cite our sources below, by and large, the following documents and data sets underpin the analysis in this post: Media Industry DataMedia Economy DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary.

Canada’s Network Media Economy in a Global Context

Canada’s network media economy has grown immensely over time. Between 1984 and 2012, it nearly quadrupled from $19.4 billion in revenue to $73.3 billion (current $). Adjusted for inflation, the rise was from $39 billion to $73.3 billion last year (2012 $).

While often cast as a dwarf amongst giants, the network media economy in Canada is large by international standards: tenth largest in the world as of 2012, as the overview in Table 1 below illustrates.

Table 1: Canada’s Ranking Amongst 12 Biggest Network Media Economies by Country, 1998 – 2012 (billions USD)

CDN NME Ranking Globally (2012)

Sources and Notes: OECD Communication Outlook 2013; ITU Revenues 2012. PriceWaterhouseCooper’s Global Entertainment and Media Outlook, 2012 – 2016 (plus 2011, 2010 and 2009 editions) for media and internet. P = preliminary estimate for countries, except Canada. See CMCRP Media Industry Data and methodology primer for Canadian data and analysis.

Canada’s network media economy is obviously small relative to the U.S., at one-twelfth the size. However, relative to the rest of the world, it is amongst the biggest, right after Australia, Italy and Brazil and just ahead of Spain and South Korea.

The growth of the network media economy was especially swift from the early-1990s well into the first decade of the 21st century but like most other countries on the list, it has slowed since 2008, mostly on account of the economic instability that has followed quick on the heels of the Anglo European financial crisis (2007ff). Indeed, worldwide network media revenues fell 5% between 2008 and 2009 and half of the countries listed in Table 1 saw their media economies actually shrink over the following years: the US, Germany, France, the UK, Italy and Spain.

Collectively, these countries’ media economies shrank by around $67.2 billion between 2008 and 2012. Some of this lost ground was regained by 2011, but only on account of increases in the US and France while the media economies in the other four countries (Germany, the UK, Italy and Spain) continued to be smaller than they were before the financial crisis.

In sharp contrast to much of Europe, the US and, less so, Canada, the media economies of Australia, South Korea, Brazil and China have been largely unscathed by the financial crisis. Indeed, these countries and a few others such as Turkey, India, Indonesia, South Africa, and Russia have been going through something of a ‘golden media age’ over the past decade, with most media, from internet access, to the press, television, film and so on undergoing an unprecedented phase of fast-paced development (OECD, 2010).

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

As noted above, the network media economy in Canada has grown enormously from $19.4 billion in 1984 to nearly $73.3 billion in 2012 (current $), or from $39 billion in 1984 to just over $73.3 billion last year (2012$). Figure 1 below charts the trends using current dollars.

Figure 1- Growth of the Network Media Economy 1984-2012

Source: see Media Economy DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary.

Entirely new sectors – wireless, internet access, pay and specialty tv services, internet advertising – have added immensely to the increase. The most significant source of growth is from the platform media elements (wireless, ISPs, IPTV, cable and satellite), especially after the mid-1990s, but television has also grown enormously regardless of where we start the time line.

Music has also grown slightly, at least once a full measure of all of its subsectors are included – recorded, live, digital/online and publishing – as shown below, while radio has stayed mostly flat. In contrast, wireline telecoms, newspapers and magazines have declined, the first very sharply since 2000 and the latter two gently since sometime between 2004 and 2008, depending on whether trends are looked at from the point of view of real dollars or current dollars.

Table 2 below summarizes the state of affairs across the network media economy as things stood at the end of 2012 in terms of whether each sector covered in this post appears to be growing, stagnating or in decline.

Table 2: The Network Media in Canada: Sectors Experiencing Growth, Stagnation or Decline

Table 2: The Network Media in Canada: Sectors Experiencing Growth, Stagnation or Decline

The Platform Media Industries

The platform media industries – the pipes, bandwidth and spectrum used to connect people to one another and to devices, content, the internet, and so on — of the network media economy grew from $13.8 billion to $51.5 billion between 1984 and 2012. In real dollar terms, revenue grew from $26.8 billion to $52.5 billion. Table 3 shows the trends.

Table 3: Revenues for the Platform Media Industries, 1984 – 2012

Platform Media Industries, 1984-2012

Sources: see Media Economy DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary.

Accounting for 72% of revenues, the platform media sectors are the fulcrum of the media economy, as is the case in most of the world. This is why Bell, Rogers, Shaw, Quebecor, Telus, SaskTel, MTS Allstream, Eastlink, Cogeco, etc. are so fundamental to the media economy.

While some might think that the over-sized weight of the platform media in the media economy is of recent vintage, their share of the network media economy in 2012 was basically the same as it was in 1984, i.e. 71-72%, albeit within the context of a vastly larger media economy. This is mostly because of the steep decline in wireline telecom revenues, from $21.2 billion at their peak in 2000 to $15.9 billion in 2012.

As plain old telephone service (POTS) has gone into decline, however, some pretty awesome new stuff (PANS) has come along to more than pick up the slack.  Wireless is the best example of this, with revenues skyrocketing after 1996, as Figure 1 and Table 2, above, demonstrate.

Indeed, wireless revenues have nearly quadrupled from $5.4 billion in 2000 to $20.3 billion last year. A corresponding rapid growth in mobile voice and data traffic reinforce the impression. Voice and data traffic were up in Canada 69% and 85% in 2012 over 2011, respectively, with the latter rising considerably faster than the worldwide average (70%)(sources cited here are silent on the other).

The growth in wireless is fast on account of the expanding array of devices that people use to connect to wireless networks: phones, smartphones, tablets, wifi connected PCs, and so on. In short, personal wireless mobile communications are quickly moving to the centre of the media universe. These are the social, economic and technological foundations underpinning the wireless wars that are now in full-swing in Canada.

Some have recently argued that the rate of wireless growth has slowed since 2008, arguing that this is mainly because it is becoming a mature market (Church and Wilkins, 2013, p. 40). Relative to the torrid pace of growth from the late-1990s through the most of the 2000s, this is true. However, it is well known that the pace set during the early commercialization of new technologies cannot be sustained forever. More than this, however, the flattening of growth coincides perfectly with the financial crisis.

This reality simply cannot be ignored. As indicated earlier, revenues for the network media economy worldwide declined between 2008 and 2009 and many of the world’s largest network media economies are still smaller today than they were five years ago (Germany, UK, Italy and Spain), have stalled (Japan and France) or are only modestly larger now than they were five years ago (US, Canada and Korea). Therefore, a modest let-up in the pace of wireless growth amidst such conditions is not surprising.

That said, wireless revenues have not been hit as hard as other media sectors by either the collapse of the dot.com bubble in 2000 or by the Anglo-European financial crisis (2007ff). Only the pace of development has slowed relative to past trends.

Internet access displays similar patterns of massive growth, albeit for not as long or to the same extent. Internet access revenues last year were $7.6 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 in the past two years is the rapid growth of the telephone companies’ Internet Protocol TV (IPTV) services, albeit from a low base.  IPTV is the incumbent telcos’ managed internet-based tv services: e.g. Telus, Bell, MTS Allstream, SaskTel, and Bell Aliant. Revenues have nearly tripled, from $231 million to $638 million, over the past two years. The number of IPTV subscribers has followed suit, rising sharply from 200,000 in 2008, to nearly a half-million at the end of 2010, to just under 1.2 million at the end of 2012.

These figures are slightly higher than those in the CRTC’s Communication Monitoring Report (pp. 110-111) because the CRTC’s figures for subscribers are taken from the end of August in each year as opposed to the end of the year. More importantly, the CRTC’s estimated revenues (ARPU) are lower than those the telcos cite in their annual reports (see CMR, pp. 110-111).

Tables 4 and 5 below show the trends for IPTV growth in terms of both subscribers and revenues, respectively.

Table 4: The Growth of IPTV Subscribers in Canada, 2004–2012

2004

2006

2008

2010

2011

2012

Bell Fibe TV

13,000

50,644

248,298

Bell Aliant

46,575

68,199

107,391

Telus

 63,000

266,000

453,000

637000

MTS Allstream

25,422

59,442

82,278

89,604

93,244

95,374

SaskTel

22,850

48,980

68,408

83,610

91,854

93507

Total IPTV Connections

48,272.0

108,422

 213,686

498,789

756,941

1,181,570

Sources: see Media Industry DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary.

Table 5: The Growth of IPTV Revenues in Canada, 2004–2012

 

2004

2006

2008

2010

2011

2012

Bell Fibe TV

8.9

22.7

120.2

Bell Aliant

14.9

27.6

55.7

Telus

14.3

101.6

202.2

314.7

MTS Allstream

8.4

29

50

59.0

70.6

78.5

SaskTel

7.6

23.9

37.1

51

63.7

74.3

Total IPTV $

16

52.9

97.2

231.3

380.0

638.1

Sources: see Media Industry DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary.

The growth of IPTV services is significant for many reasons. First, the telcos are finally making the investments needed to bring next generation, fiber-based internet networks closer to subscribers, mostly to neighbourhood nodes and sometimes right to people’s doorsteps. If the distribution of television is essential to the take-up of next generation networks, as I believe it is (for better or worse), IPTV will be a key part of the demand drivers for these networks (see below).

Second, the addition of IPTV as a new television distribution platform brings the telcos deeper into the cable companies’ dominion. IPTV services accounted for 7.5% of the TV distribution market in 2012 (the CRTC’s Communication Monitoring Report publishes a slightly lower number at 6.7%, p. 110 for reasons explained above). The competitive threat posed by IPTV services, however, is more prominent in the western provinces where Telus, SaskTel and MTS are deploying IPTV in direct rivalry with Shaw versus the provinces from Ontario to the Atlantic where Bell’s decision to manage the introduction of IPTV in ways that are as least disruptive to its existing satellite operations as possible has moderated the impact on Rogers, Quebecor and Cogeco.

While the telcos’ IPTV services appear to have cut into the revenues of some cable companies, they have also contributed to a substantial expansion of BDU revenues from $8.1 billion in 2010 to $8.7 billion last year. Growth in 2012, however, was slow. Against the hew and cry about cord-cutting in industry pleadings for regulatory favours, and in so much of the journalistic coverage that uncritically repeats such claims, the losses of a few incumbent cable providers should not be mistaken with an industry in peril. Even if it was, growing competition is to be encouraged rather than something to shed tears over.

While IPTV services finally appear to be taking off, we must remember several things. First, the small prairie telcos, followed by Telus, have taken the lead in deploying IPTV. For Sasktel, MTS and Telus, IPTV now make up a significant 13.9 percent, 6.6 percent and 5.9 percent, respectively, of their revenues from wireline network access services (Wiredline + ISP + Cable). Bell lags far behind, with 1.5 percent of its revenues coming from IPTV services, including Bell Aliant, in 2012 (see Table 5).

Indeed, Bell launched IPTV late via its affiliate Bell Aliant in 2009. It slowly rolled out service for the next two years in the high-end districts of Montreal and Toronto, half-a-decade after MTS and SaskTel began doing so in the prairies. More cities were added in 2012 and subscriber numbers for the Bell Fibe service grew as a result from just under 120,000 the year before to about 356,000.

Innovation and investment in Canada came first from small telcos on the margins and Telus, not Bell. This replays a long-standing practice for new services to start out as luxuries for the rich before a mixture of public, political and competitive pressures turn them into affordable and available necessities for the public generally (see Richard John with respect to the US, Robert Babe for Canada). From the telegraph to next generation fibre Internet infrastructure, the tendencies, conflicts and lessons have remained much the same. The wireless wars that are now in full-swing are just the latest iteration of an old, old story (Winseck ReconvergenceWinseck and PikeJohn or Babe).

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 wire line network access revenues (i.e. wireline+BDUs+ISPs) (see Table 3 above). Less than two percent of broadband connections in Canada use fiber-to-the-home (see CMR, p. 142). The OECD average is 15 percent. In countries at the high end of the scale (Sweden, Slovak Rep., Korea, Japan), thirty to sixty percent of all broadband connections are fiber-based. The OECD ranks Canada 24 out of 34 countries in terms of fiber-connections out of the total number of subscribers as of December 2012. The following figure illustrates the point.

Figure 2: Percentage of Fibre Connections Out of Total Broadband Subscriptions (December 2012)

Figure 2: Percentage of Fibre Connections Out of Total Broadband Subscriptions (December 2012)

Source: OECD (2013). Broadband Portal.

For those who might be dismissive of such figures, it is useful to remember that the data presented in Tables 4 and 5 about IPTV are based on the Canadian telcos’ own audited numbers from their annual reports. While it has become something of a sport in Canada to cast aspersions on the OECD data (see herehere and here), the UK regulator Ofcom comes to similar conclusions: 5% of Canadian households subscribed to IPTV in 2011 versus France (28%), the Netherlands and Sweden (11%), Germany and the US (6%) and Spain (4%) as of 2011 (p. 136). The prairie telcos and Telus are part way to the OECD average, but in many ways, especially given its size and presence from Ontario to the Atlantic, it is Bell’s poor performance over the past half-decade that has dragged Canada down in the global league tables.

The Content Media Industries

The remainder of this post looks at the content media industries (broadcast tv, specialty and pay tv, radio, newspapers, magazines, music and internet advertising). For the most part, they too have grown substantially, although the picture has become murkier for a few sectors in the past few years.

In 1984, total revenue for the content industries was $5.6 billion; in 2012, it was $20.8 billion in 2012. In inflation-adjusted dollars, the revenues basically doubled from $11.3 billion to $20.8 billion over this span of time. Growth was steady throughout this period, with no discernible major uptick or downturn at any given point in time except for the years between 2008 and 2010, for reasons discussed above. Figure 3 depicts the trends.

Figure 3: Revenues for the Content Industries, 1984 – 2012 (Millions $)
Content Media Industries, 1984-2012

Sources: Media Economy DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary.

The rise of the internet and the confluence of its impact with the advertising downturn after the Anglo European financial crisis led many to claim that conventional TV is in a death spiral. Over-the-top services such as Netflix and supposedly rampant cord-cutting further compound the woes, or at least so the story goes.

Such doomsday scenarios, however, have been wide of their mark. Advertising revenue has gyrated in lockstep with state of the economy: plummeting by 8.5% from 2008 to 2009 followed by substantial increases of 9.2% and 7.7% in 2011. Things, however, stalled in 2012 amid ongoing economic uncertainty (-2%), fitting the patterns described earlier perfectly (on economic recessions, advertising revenue and the media economy see PicardGarnham or Miege).

Beyond advertising, the picture is clearer. The amount of time people watch television has stayed remarkably steady across all age groups and outstrips time with other media — the internet, radio, newspapers or other media – by a considerable margin, according to the most recent Canadian Media Usage Study. Ofcom’s latest international monitoring report shows that TV viewing was up in 13 of the 16 countries it surveyed, including Canada (p. 162).

In “Why the Internet Won’t Kill TV”, Sanford C. Bernstein & Co. senior analyst Todd Juenger writes, “so far teens are following historical patterns, and in fact, their usage of traditional TV is increasing”. Their use of computers, smart phones and tablets to do so is adding to, rather than taking away from, how much they watch television, he states.

Internet equipment manufacturers Cisco and Sandvine suggest that television and online video are driving the evolution and architecture of the internet. The proliferation of devices is expanding the time and space for television in people’s lives, not taking away from it. Elsewhere, I have called this the rise of the prime time internet. The fact that Netflix is engineered to be viewed on 800 devices helps illustrate the point.(2)

Conventional broadcast TV revenues have been basically flat since 2008. In real dollar terms, they have slid from $3,562 million to $3,407 in 2012 – a 4% decline. The real growth has been in subscriber fees and the pay-per model of TV (Mosco), as has been the case around the world – a point returned to immediately below.

For now, however, four points can be highlighted to explain the stalled growth of conventional TV when measured in current dollars or slight decline when ‘real dollars’ are used:

  1. dip in TV advertising in 2012;
  2. budget cuts to the CBC (p. 8);
  3. the phasing out of the LPIF between 2012 and 2014;
  4. the big four commercial TV providers – Shaw, Bell, Rogers and Quebecor –backing of the rapidly growing pay, specialty and other subscriber-based forms of TV (i.e. mobile, IPTV), while edging away from broadcast TV (see the CRTC’s CMR, pp. 100-102 and Individual Financial Summaries for a list of the 116 pay and specialty channels the big four, in total, own 2012).

That the TV in crises choir is wide of the mark is clearer yet 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, Food Network, etc), mobile TV, and television distribution. Pay and specialty television services have been fast growing segments since the mid-1990s and especially so during the past decade. Their revenues eclipsed those of conventional broadcasting in 2010, when revenues reached $3,474.6 million. Last year, that figure was half-a-billion dollars higher at $3,967.5 million.

Adding conventional as well as specialty and pay tv services together to get a sense of ‘total television’ revenue as a whole yields an unmistakable picture: total TV revenues quadrupled from $1,842 million in 1984 to $7,375 million in 2012; using ‘real dollars’, total TV revenues doubled from $3.7 billion to $7.4 billion last year — hardly the image of a media sector in crisis. The fact that such trends persisted steadfast in the face of the economic downturn also points to a crucial point: the importance of the direct pay-per model (Mosco) and its relative imperviousness to economic shocks in comparison to the hyper-twitchy character of advertising revenue.

Add 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 by IPTV in the past few years, plus steady growth in cable TV, means that TV distribution has grown immensely. Indeed, revenues for these sectors expanded twelve-fold from $716.3 million in 1984 to $8,695.7 million in 2012 (in current dollars).

“Total TV” and TV distribution revenues accounted for just over $16.1 billion in 2012. To put this another way, in 1984, all segments of the TV industry accounted for just 7% of revenues in the network media economy. That figure rose to 14% in 2000; by 2012, it was 22%. Table 6 illustrates the trends.

Table 6: Television Moves to the Centre of the Network Media Universe, 1984 – 2012 (millions current $)

Television Moves to the Centre1Sources: see Media Economy DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary.

Television is not dead or dying. It is thriving, and remains at the core of the internet- and wireless-centric media universe. Moreover, television and online video are driving the development and use of wireless and internet services. This is why Rogers, Telus and Bell are all using television to drive the take-up of 4G wireless services, and IPTV for the latter two. To paraphrase Mark Twain, rumors of television’s demise are greatly exaggerated.

Of course, this does not mean that that life is easy for those in the television business. 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, notably p. 22), OTT services have not cannibalized the revenues of the industry. They have added to the size of the pie. Based on an estimated 1.6 million subscribers at the end of 2012, Netflix’s Canadian revenues were an estimated $134 million – about 1.8 percent of “Total TV” revenues. Reports by Media Technology Monitor and 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 2012, internet advertising revenue grew to $3.1 billion, up from just over $2.7 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. Similar to wireless services, however, internet advertising revenues continue to grow fast, although even here the pace has slowed appreciably since the onset of the Euro American financial crisis.

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 that Google takes about half of all internet advertising revenues, the search engine giant’s revenues in Canada in 2012 were in the neighbourhood of $1,542.5 million.(3) This is significant. It is enough to rank Google as the eighth largest media company operating in Canada, just after the CBC and MTS, but ahead of, in rank order: Cogeco, Torstar, Sasktel Postmedia, Astral, Eastlink, Power Corporation (Gesca) and the Globe and Mail.

For its part, Facebook had an estimated 18.1 million users in Canada at the end of 2012. With each Canadian user worth about $12.70 to the company a year, it’s revenue can be estimated as having been $229.7 million in 2012, or 7.5% of online advertising revenue – an amount that gives it a modest place in the media economy in Canada and near the bottom of the list of the top twenty 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 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 except for three areas where they are likely quite significant: music, magazines and newspapers.  For the latter two, this is because of the direct impact on advertising revenues, while for music it is not advertising that is at issue, but how online distribution and the culture of linking is affecting the music industry. The following and concluding sections of this post sketch out trends in each of these domains.

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. The picture over time, however, is mixed but getting better from a commercial standpoint.

Using current dollars, the sum of all of the main components of the music industry – i.e. recorded music, digital sales, concerts and publishing royalties – the music industry has grown modestly from $1,214 million in 1998 to $1,523.2 million in 2012. The current trend is slightly up, but the trend over the past decade-and-a-half has been unsteady, with considerable oscillation between record highs and contemporary lows.

Revenue dropped after the collapse of the dot.com bubble between 2000 and 2002, for instance, but then rose again until hitting a peak in 2004 of $1,379.3 million where they stayed flat for the next four years, when they began once again to climb. By 2010, music industry revenues had grown to $1,458.2 million; they have edged upwards from there ever since: to $1,480.4 million in 2011 and to $1,523.2 million last year – an all time high. Figure 4 illustrates the trends over time based on current dollars.

Figure 4: Total Music Revenues, 2000, 2006 & 2012 (millions$)

Music Industry Revenues in Canada (2000)

Music Industry Revenues in Canada (2006)

Music Industry Revenues in Canada (2012)

Sources: Recorded Music from Statistics Canada, Sound Recording and Music Publishing, Summary Statistics CANSIM TABLE 361-0005; Stats Can., Sound Recording: data tables, October 2005, catalogue no. 87F0008XIE; Stats Can, Sound Recording and Music Publishing, Cat. 87F0008X, 2009; except for 2012, from PriceWaterhouseCooper,  Global Media and Entertainment Outlook, 13th ed., 2012; Concerts from Stats Can, Spectator sports, event promoters, agents, managers, and artists for 2007, 2008, and 2009; Publishing from Socan,  Financial Report (various years); Internet from PriceWaterhouseCooper, Global Media and Entertainment Outlook, 13th ed (various yrs).

The picture is less rosy when we switch the metric to ‘real dollars’, which results in revenues reaching a high of $1.6 billion in 2004 before dropping to their lowest point in over a decade: $1, 455 million in 2008. Yet, since then, revenues have once again been on the rise and in 2012 reached $1523.2 million – less that 4% off their peak in 2004.

This is a slight decline since the all-time high in 2004, of course, but certainly not a calamity. Moreover, the trend from 2008, whether measured in current or real dollars is all in one direction: up! One reason for this might be because of all the media covered by the network media concept, the music industries embraced digital/internet sources of revenue earlier and more extensively than any other. Worldwide, by 2012, the industry obtained about 15% of its revenues from online, mobile and digital sources.

There is and has been no crisis in the music industry. In fact, conditions in Canada now mirror those in the music industry worldwide. To be sure, certain elements within the music industry – recorded music, for instance – have suffered badly, but publishing has plugged steadily along with modest increases and digital/online/mobile have exploded. Even recorded music now appears to be holding steady. Moreover, whereas recorded music has long been the centre of the industry that place has now been usurped by live concerts, as shown above. Even the music industry’s main lobby group, the International Federation of Phonographic Industries states in its most recent Digital Music Report that in 2012 “the music industry achieved its best year-on-year performance since 1998” (p. 5).

Radio

Radio stands in a similar position to the music industries a few years ago. Revenues grew until reaching a peak in 2008: $1,990 million (includes CBC annual appropriation), a level at which they have basically remained ever since. Revenues in 2012 were $1,946 (current dollars). Change the measurement from current dollars to inflation-adjusted, real dollars, however, and the picture changes, with revenue declining from $2,088.3 million in 2008 to $1,946 million in 2012 – a fall of 6.8%.

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 either 2011 or 2012. Yet, extrapolating from trends between 2008 and 2010 to obtain an estimate for 2012, revenues have declined slightly on the basis of current dollars (from 2,394 million in 2008 to $2,100 in 2012). PriceWaterhouseCooper, in contrast, shows a slight uptick in revenues between 2011 and 2012. Back to estimates using Statistics Canada and the drop of nearly 17 percent from $2,522.4 million in 2008 to $2,071.1 last year seems pronounced.  The Internet Advertising Bureau shows a net drop in advertising between 2011 and 2012 of 3%. In other words, the evidence is mixed but leans toward the ‘media in decline’ side of the ledger.

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 this post, and other posts, I have been skeptical of claims that journalism is in crisis. I still am. Generally, I agree with Yochai Benkler who argues that that we are in a period of heightened flux, but with the emergence of a new crop of 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 signs that journalism is not moribund or 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 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 in a way that is all out of proportion to the weight of the press in the media economy. In other words, the press originates far more stories and attention that the rest of the media pick up, whether television, radio or via the linking culture of the blogosphere, than its weight suggests. Thus, problems in the traditional 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. I also believe that many of the wounds suffered by the newspaper business have been self-inflicted out of a mixture of hubris and badly conceived bouts of consolidation. Nonetheless, I began to change my tune last year and the results this year offer no reason to change course now.

The revenue figures for the newspaper industry, as one industry insider who tallies up the data told me, are  “a mess”. The problems are mostly terminological in nature, such as how to define a daily, community or weekly newspaper while allocating revenue to each category accordingly. They also reflect concerns with how to present the industry in the least damaging light but without sugar-coating harsh realities. That said, using a mixture of data from Newspaper Canada and Statistics Canada allows us to arrive at good portrait of the newspaper industry over time and its main players, although it’s also important to point out that the Statistics Canada data for 2011 and 2012 are preliminary estimates that must wait until next year when it releases newspaper industry revenues for these years.

The data I use is drawn mostly from Statistics Canada, but Table 7 below shows both Newspaper Canada and Statistics Canada data so that readers can see the difference and also to reveal online revenues. Further discussion of why these differences exist can be seen in the relevant sections of the documents here and here.

Regardless of differences, both sources show that newspaper revenues have plummeted. In current dollar terms, Statistics Canada shows that newspaper revenues peaked at $5,482.3 million in 2008, and have fallen substantially since to an estimated $4,978 million last year. They fell another $180.7 million in 2012 – 3.6% — a decline of 12.5% since 2008. Table 7 illustrates the trends over time since 2004, while the full data set based on Statistics Canada data from 1984 can be seen under the relevant heading here.

Table 7: Newspaper Revenue — Newspapers Canada vs Statistics Canada, 2004-2012

($ million CND) 2004 2008 2009 2010 2011

2012

Daily Newspaper (Adv$)

2,611

2,489

2,030 2,102 1,971

2,019

Daily Newspaper (Circ$)

745.1

808.3

867.2 836.9 829.5

829.5

Community Newspaper ((Adv$)

961

1,211

1,186 1,143 1,167

1,253

Community Newspaper (Circ$)

Total

42.6 42.9

42.9p

Online Newspaper*

180.7

212.7 246.0 289.3

277.3

Newspaper Canada

4,317

4,689

4,509 4,616 4,589

4,422

Statistics Canada Total $

5033.9

5482.3

4,938.5 5009.8 4978.5

4797.8

Sources: see Media Economy DataSources and Explanatory Notes and the CMCR Project’s Methodology Primary. Online Newspaper revenues includes daily and community papers. 2012 data for Community Newspaper circulation revenue based on estimate of flat year-over-year growth.

In real dollar terms, the fall is more pronounced, with the decline setting in earlier and the drop being steeper. According to this measure, newspaper revenues basically flatlined between 2000 and 2008, with a small drop, but have shrunk greatly since by just under $1 billion – or 17%. This is the most clear cut case of a medium in decline out of the sectors of the network media economy reviewed in this post.

The results of these trends in 2012 were clear:

  • Postmedia cut the Sunday edition at three of its papers (the Calgary HeraldEdmonton Journal and Ottawa Citizen) adding to those where such measures had already been taken in the past few years (e.g. the National Post);
  • Postmedia also made deep cuts to journalistic staff across its chain;
  • the Globe and Mail adopted a voluntary program with the hope that sixty of its journalists would take the hint and leave (and here);
  • Quebecor’s Sun newspapers cut 500 jobs and centralized its printing operations in a smaller number of locations;
  • Glacier and Black swapped a number of smaller papers to consolidate their own operations.

Perhaps the most significant change to take place in 2012 is the extent to which dailies were put behind paywalls in Canada. Prior to 2011 there were no dailies with paywalls; in 2011 there were 5 covering under 1/5th of daily circulation; by 2012 the number had grown to 11 dailies and more than half of daily circulation. By August 2013, the number had grown 26 dailies accounting for more than two-thirds of daily circulation – a rate that is considerably higher than either the US or the UK (see Picard and Toughill). Table 8 illustrates the point.

Table 8: The Rise of the Great Paywalls of Canadian Newspapers, 2011-2013

Newspaper Lang Paywall Owner

Weekly Total

Daily Avg.

Times Colonist, Victoria English May 2011 Glacier Media

168,003

28,000

Daily Gleaner, Fredericton English Nov 2011 Brunswick News Inc.

33,042

5,507

Times-Transcript, Moncton English Nov 2011 Brunswick News Inc.

1,813,141

302,190

New Brunswick Telegraph Journal English Nov 2011 Brunswick News Inc.

1,017,394

169,566

Gazette Montreal English May 2011 Postmedia

288,639

48,107

% Circ behind Paywall (2011)

17.9

19.2

Vancouver Sun English Aug 2012 Postmedia

103,106

17,184

Province, Vancouver English Aug 2012 Postmedia

184,485

30,747

Ottawa Citizen* English Aug 2012 Postmedia

313,017

52,169

Journal de Montréal French Sept 2012 Quebecor/Sun Media

987,040

164,507

Journal de Québec French Sept 2012 Quebecor/Sun Media

853,800

142,300

Globe and Mail English Oct 2012 Globemedia Inc.

1,184,530

169,219

Ottawa Sun English Dec 2012 Quebecor/Sun Media

106,343

17,724

Toronto Sun English Dec 2012 Quebecor/Sun Media

683,327

113,888

Winnipeg Sun English Dec 2012 Quebecor/Sun Media

764,473

109,210

Calgary Sun English Dec 2012 Quebecor/Sun Media

853,800

142,300

Edmonton Sun English Dec 2012 Quebecor/Sun Media

358,018

51,145

% of Circ behind Paywall (2012)

52.3

54.4

National Post English May 2013 Postmedia

2,503,284

357,612

Calgary Herald English May 2013 Postmedia

987,040

164,507

Edmonton Journal English May 2013 Postmedia

337,021

56,170

Windsor Star English May 2013 Postmedia

1,015,625

145,089

Guardian, Charlottetown English May 2013 TC Media

249,589

41,598

Leader-Post, Regina English May 2013 Postmedia

337,021

56,170

StarPhoenix, Saskatoon English May 2013 Postmedia

358,018

51,145

The Daily News, Truro English July 2013 TC Media

290,101

41,443

Toronto Star English Aug 2013 Torstar Corporation

2,014,592

287,799

Chronicle-Herald, Halifax English Aug 2013 Halifax Herald Ltd.

770,132

110,019

Total Circulation

18,574,648

2,875,390

% of Circ behind Paywall (8/2013)

68.8

68.3

Source: Newspaper Canada 2012 Daily Circulation Report.

Some Concluding Comments and Observations

Several observations and conclusions stand out from this analysis.

First, the network media economy has grown immensely over time, whether we look at things in the short-, medium- or long-term. In the short- to medium-term (1-5 years), however, things have been less rosy. The effects of the economic downturn in the wake of the Euro-American centred financial crisis have hit every sector, except, it would appear, and ironically, music, which began to recover shortly afterwards. Otherwise, the effect has been to slow the rate of growth in the fastest growing sectors (wireless, ISPs, internet advertising, television) and to compound the problem in those media already under stress (newspapers, magazines and radio).

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 tenth 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 complex on account of the rise of new segments of the media, a few segments have stagnated in the past few years (broadcast TV, radio and music, with apparent light at the end of the tunnel in the last few years with respect to the latter). It is now safe to say that two sectors appear to be in long-term decline: the traditional newspaper industry and wiredline telecoms.  Magazines probably fit the latter designation but it may still be too early to tell, with some good sources suggesting that it too, like the music sector, might be poised for a turn-around.

These ambiguities give good reason for why the CMCR project will continue to update our research on these matters annually. As we have said before, we can know of few better ways to gain an intimate understanding of our objects of analysis – the network media and all of its constituent elements – than to peer deeply and systematically into the data, while providing a theoretically and historically informed analysis of the data and trends that emerge over as long a period of time as we reasonably can.


1 Brazil telecom estimated at 12.5 percent growth from 2004 to 2008, and 5 percent per annum for 2010 through 201; China’s revenue estimated for 2010-2012 based http://www.cmcrp.org/wp-content/uploads/2013/10/Sources-and-Explanatory-Notes.docxon 10 percent per annum growth rates. Internet access revenues before 2004 are estimated for each country, except Australia and Canada, based on the prevailing CAGR for this sector within each country at the time.

2 Corey Wright, Director of Global Public Policy, Netflix, guest lecture given at School of Journalism and Communication, Carleton University, September 2013.

3 The Globe and Mail’s publisher, Phillip Crawley told the World Publishing Expo in Berlin that Google takes 60% of internet advertising in Canada. Evidence for this claim do not seem to have been presented, but I am all ears if a good case can be made for revising the estimates upwards to this figure.

Advertisements

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.

Who Owns the Telecom-Media-Internet in Canada, 1984-2010?

This post has been sitting in the wings for a while waiting for me to finish the mad scramble that is the beginning of the school term and to catch my breath after a whirlwind tour to New Zealand. Yes, I have violated the first cardinal rule of blogging — i.e. pick a frequency for your posts and stick to it no matter what — but I hope that you and the blog-Gods-that-be will forgive me.

I started this series of posts a month-and-a-half ago by outlining the growth of the network media economy in Canada and in a second post that examined concentration trends within the network media. Both covered the period from 1984 until 2010, and so too does this post by setting out the top 10 telecom-media-Internet (TMI) companies in Canada, their ownership, revenues, market capitalization, profits and debt over the past quarter-of-a-century.

Just to quickly recap, the first post argued that the network media economy grew immensely from $12.1 billion in revenues in 1984, to $23 billion in 2000, to $33.8 billion last year (in real dollars) (excluding wired and wireless telecoms services). The second that the network media industries became more concentrated during the same period, with the ten largest media companies’ share of entire network media economy rising from a little over 50% in 1984 to just over 70% in 2010. This third post extends the analysis by identifying the rise of media conglomerates in Canada since the mid-1990s and giving a snapshot profile of the “big ten” TMI companies as of 2010.

The Post-1995 Ascent and Triumph of the Media Conglomerate

The mid- to late-1990s marked a watershed in media history in Canada and many other countries around the world. It was the point in time in which media conglomerates – i.e. media companies with stakes in markets across many different kinds of media – went from being the exception to the norm.

If we look back to the late-1980s, we can see the difference. The media environment was much smaller and neither the growth of pay-television nor the Internet had taken-off. TV and the press were still the dominant core of the media, the CBC was the biggest single entity of them all, with about 14 percent of all media revenues, and most companies still focused on just one or two media sectors.

Media conglomerates had begun to emerge – Maclean-Hunter, Videotron, Rogers – but they cut a far less imposing figure. Their reach covered two or three media sectors and their combined share was only slightly greater than that of the CBC at the time, i.e. 14.4 percent versus 14 percent, respectively.

The ‘Big 10’ Media Companies in Canada, 1988 (millions$, real dollars) (excluding wired line and wireless telecoms)

 

TV

Cable

Press/Mags

Radio

Total Rev (Mill$)

Mrkt Share

CBC

846

282

1128

13.9

Southam

789.9

789.9

9.7

Thomson

599.6

599.6

7.4

M-H

104.2

83.5

321.8

509.5

6.3

Videotron/TVA

97.8

245

342.8

4.2

Rogers

36.4

277.8

314.2

3.9

Torstar

286.7

286.7

3.5

Toronto Sun

248.6

248.6

3.1

 Power Corp

 169.70

 169.7

2.1

Baton/CTV

144.6

144.6

1.8

Total $/Sector

2176.4

1242.9

3699.5

1005.6

8,124.4

Amalgamation amongst television ownership groups in the late-1980s and early-1990s produced the large national companies that came to single-handedly own the leading commercial television networks – e.g. CTV, Global, TVA, CHUM, TQS – by the late-1990s. While weighty in their own right, however, these amalgamations did not have a huge impact across the media as a whole.

That changed dramatically in the late-1990s as investment poured into a wave of mergers and acquisitions, yielding massive media conglomerates with unheard of capitalization levels and debts. A second wave of consolidation followed from 2003 until 2007, albeit not nearly on the same scale.

By 2000, the ‘big 10 media enterprises’ in Canada – the first five of which were massive media conglomerates towering over the industry as whole — included: Bell Globemedia, Canwest, Quebecor, Shaw, Rogers, CBC, Torstar, Cogeco, Hollinger, Power Corp/Gesca.

Consolidation sealed the media conglomerate as a defining feature of the TMI industries in Canada, while pushing concentration levels to new heights. Although still significant, the CBC was already occupying a much reduced place within the mediascape.

Since that time, some firms have crashed and burned (Canwest, Hollinger), others have slid off the ranks of the top ten (Power Corp) and yet other new entities have emerged (Post Media). After its failed Bell Globemedia venture (2000-2006), Bell renewed its gambit to make convergence work by buying-back CTV ($3.2 billion) in 2011.

Bell is now at the top of the heap, commanding a sprawling TMI empire that spans: wired and wireless telephone, satellite TV, Internet access, CTV and the A-channel network (now rebranded CTV2), 31 satellite and cable television channels, 28 local television stations and 33 radio stations.

Excluding its wired and wireless telecom revenues, Bell now single-handedly accounts for 16 percent of all revenues across the TMI industries – an extraordinarily high number only paralleled in the era before the mid-1980s when the CBC stood as a central institution peering out across the nation. Bell and the rest, too, are only to eager to assume the mantel, relentlessly and shamelessly wrapping themselves in the flag whenever it suits.

The main difference between now and ten years ago when Bell first trotted out its vertical integration, media convergence strategy is that it has scaled back its stake in the Globe & Mail (15 percent) and that in most developed capitalist economies media conglomerates have fallen from grace (albeit with the exception of the Comcast/NBC-Universal merger approved in the United States in 2011). Not so in Canada, however, where the novel role carved out by the emergence of the media conglomerate at the core of the network media ecology has been more deeply cemented into place with the passage of time, aided and abetted by permissive government policy and a complicit regulator, the CRTC.

Altogether, as of 2010, four massive media conglomerates and a half-dozen large but more specialized companies which are half their size constitute the ‘big 10’ media firms in Canada, as the following table shows.

The ‘Big 10’ Media Companies in Canada, 2010 (millions$) (excluding wired line and wireless telecoms)

Companies & Owners

Mrkt Cap (mills)

Total $

Cable & Sat Dist

ISP

Total TV

Radio

Press/ Mags

Mrkt Share – All Media (%)

Bell/CTVDiversified

6,910*

5175

1676

1408

1801

290

16

Shaw(Family)

9495

4957

2332

916

1469

240

15.2

Rogers(Family)

19785

3826

1830

842

802

213

139

11.7

QMI(Péladeau)

2,421

3028

982

644

345

1056

9.3

CBC

NA

1593

1235

358

4.9

Post Media (Godfrey,et. al.)

1,266

1350

1350

4.1

Cogeco(Audet – 60%; Rogers – 40%)

525

939

594.9

282

62

2.9

Astral (Greenberg)

2051

888

550

338

2.7

TelusDiversified

1,000*

679

60

619

2.1

Torstar (Atkinson, Thall Hindmarsh, Campbell, Honderich)

966

490

490

1.5

Big 10Total $

22926

7475

4712

6265

1430

3035

Total NMI $

32,360

8,100

6,800

6848

1,910

6,502

71

* estimate based on proportion of total revenue accounted for by segments other than BCE and Telus’ wired and wireless telecom services.

So, what stands out from the above table? First, that the “really big four” telecom-media-Internet conglomerates are in a league unto their own, with dominant stakes spanning the media versus the greater focus of second-tier players on just one or two media: CBC, Postmedia, Astral, Telus, Torstar (Cogeco is an exception, being a second-tier player but with the media conglomerate form). The revenues and capitalization levels of the ‘big four’ media conglomerates also dwarf those of the second-tier players, to say nothing of the multitude of other players that fill the nooks and crannies of the media system.

Second, the ‘big 10’ media firms’ share of all revenues (excluding telecoms services), as I noted in the second post in this series, rose to all-time highs in 2000 and have hovered rather steadily around 71-75% ever since — a substantial rise from 61% in 1996 and bigger yet from 56% in 1992. In other words, while the telecom-media-Internet ecology has grown far larger and more structurally differentiated over time, the ‘big 10’ players’ share of it has become bigger still.

Third, as the big ten, and in particular the four major media conglomerates, gained in scale, their capitalization levels soared. During the boom years of the late-1990s, the market capitalization of the largest eight publicly-traded companies tripled from $8.5 billion to $26.8 billion.

The collapse of the TMT bubble cut these figures down to size, but during the mini-boom of 2003 – 2007 capitalization levels rose steeply to reach an all time high of $55.4 billion. Things have fallen from those heights in the face of the global financial crisis but capitalization levels in the TMI industries are at a very high level even relative to the excesses associated with the dot.com bubble.

Figure Big 8 media companies’ market capitalization (millions$), 1990-2010

Fourth, the media business is still a highly profitable one. The eight largest publicly traded media companies for which data is available show that these firms profits stayed steady between 16-17% in the late-1990s, nearly double the rate of profit for all other industries in Canada as a whole.

Operating profits at Rogers, Shaw and Quebecor plunged at the end of the 1990s and during the crash of the dot.com bubble in 2000/1. Downward trends took hold across the media industries as a whole during this time as well, but more modestly so.

By 2002, however, pre-crash profit levels were regained and surpassed, with operating profits for every year except 2006 in the 18-22% range – although the fortunes of individual firms did vary. Last year, they were nearly 19%, or more than double the estimated profits for all industries in Canada. Indeed, since 2008, things have been better than ever for Bell, Shaw, Rogers, QMI and Astral, with operating profits in the 20-30% range – despite the global financial crisis (and versus an average of 9.2 percent in 2009, according to Statistics Canada, for all industries as a whole).

Figure: Big 8 media companies’ operating profits, 1995-2010

Fifth, the big ten media companies in Canada are bloated with debt.  During the rah-rah days of the TMT boom, debt levels across the big eight publicly traded media players soared nearly five-fold. In 1996, total debt for these companies was $8.8 billion; by 2001, and after the orgy of acquisitions described in the previous post, total debt was closing in on $43 billion. Things have turned around since, and in 2010 debt levels were just over a half of what they’d been a decade earlier – still high by historical standards, but a significant decrease nonetheless.

Figure: Big 8 media companies’ debt (millions$), 1990-2010

QMI, Rogers and Shaw continue to labour under high-levels of debt, while at the opposite end of the spectrum, those who have stuck to their knitting – i.e. Astral, Torstar, notably – have never carried the massive debt loads that their counterparts used to buy their way into the centre of the network media economy.

Thus, at a time when these players should have been plowing resources into coming to terms with pervasive digitization, the rise of the Internet, development of broadband networks, more quality content and good journalism, most dominant players in the media industry were mired in debt. Handsome profits and increased market capitalization served owners and investors well, while dealing with the mountain of debt has had devastating effects on media workers and journalists and likely in terms of under-development of the network infrastructure and media content with resources siphoned off into paying the cost of debt rather than innovation.

The sixth and final thing that I want to observe from the listing of the ‘big ten’ is the fact that, despite the sweeping changes that have occurred, a peculiar form of ownership has been left intact across much of the TMI industries in Canada. As I have indicated elsewhere, several scholars have pointed to how the hothouse of innovation required in the communication and media industries has led to the rise of firms that are not only more capital intensive, but share-holder owned and managerially controlled as well.

According to Noam (2009), owner-controlled media firms in the U.S. fell from 35 percent to just 20 percent between 1984 and 2005 (p. 6). Demers and Merskins (2000) also argue that the managerial revolution has signaled the demise of the media baron – a figure reviled and revered in equal measure. They argue that this is a good thing as well, because media managers do not have ideological axes to grind, but do have the deep pockets and expertise needed to support technological innovation and higher quality journalism than owner-controlled companies.

Yet, the situation in Canada clearly does not conform to such a portrait given the fact that all of the ‘big 10’ media firms, except Bell, Telus and the CBC, are owner-controlled. If observers of the “managerial revolution” are correct, then we are the sorrier for it. Essentially, in Canada the sharp and dramatic bout of consolidation that occurred in the last half of the 1990s and again in the mid-2000s simultaneously transformed the structure of media companies and led to a sharp rise in concentration but without altering the structure of media ownership.

In Canada, the media mogul lives. Given their standing in terms of wealth and, often times, political ambition, the structure of ownership alone smacks of oligarchy. The fact that the boards of the big 10 TMI companies are stacked with ex-government and political figures drawn from the Conservative and Liberal parties alike only compounds the image (see Crony Capitalism for details).

This peculiar form of ownership (outside Russia, Latin America and the Arab world) will also continue to make media moguls in Canada a magnet of attention by both those who wish to sing them paeans of praise and others who see the conjunction between personal ambitions, media control and political power as being supremely unhealthy in relation to the values of a network free press and democracy.

%d bloggers like this: