CBC misjudged ad market, analyst says
Broadcaster fell well short of its revenue projections
CBC/Radio-Canada’s poor numbers from its experiment with paid commercials on Radio 2 and Espace Musique show that the public broadcaster “clearly” misjudged the market for national advertising on its music-focused radio channels, one industry watcher says.
The CBC raised $1.1 million in revenue from ad sales on the two musicfocused networks in the 2014 broadcast year, according to the CRTC’s annual report on the financial results of Canadian commercial radio stations. That’s well below the $10 million the CBC hoped for when the CRTC approved its plan to air ads on the two channels.
Canadian Media Research Inc. president Barry Kiefl said the broadcaster assumed there would be much more demand for the four minutes of ads per hour dictated by the CRTC.
“It raises the question of why they did it in the first place,” Kiefl said. “They clearly had not gauged the marketplace for national advertising very accurately.” The new ad money also wasn’t nearly enough to cover an $18.2-million decline in government funding for the 2014 broadcast year, according to the CRTC report. Total revenue for the CBC’s 82 radio stations fell 5.6 per cent to $287.6 million for the 12 months ending Aug. 31, 2014.
“(The CBC) clearly had not gauged the marketplace for national advertising very accurately.” BARRY KIEFL CANADIAN MEDIA RESEARCH INC. PRESIDENT
The CBC began airing ads at the beginning of October 2013, and the $1.1 million represents 11 months of ad sales from October to the end of August.
Kiefl said that given the cost of selling advertising, CBC may be losing money by selling ads on its music stations even though the broadcaster already had an advertising sales group for its television operations.
“They’ll say that it costs them nothing to do it,” he said. “But somebody’s got to get out there and knock on doors and make deals. That takes a lot of time and therefore money.”
CBC spokeswoman Carole Breton said in an email Monday that the broadcaster was disappointed by the radio revenues. “We will continue to look for ways of generating more national ad revenues from our music services,” she said.
The CBC originally asked the regulator for permission to air paid advertisements on Radio 2 and Espace Musique as part of its licence-renewal process in 2013, saying that the new revenue would help offset future declines in its public subsidy and could reach up to $10 million.
In a majority decision in May 2013, the federal broadcast regulator approved the CBC’s request to air paid advertising on the two networks for a three-year trial period.
In a dissenting opinion, CRTC commissioner Tom Pentefountas called the decision “crazy.”
According to the CRTC report released Monday, parliamentary funding for CBC Radio, which makes up nearly all of the division’s budget, fell from $295.5 million in 2013 to $277.3 million in 2014 and has shrunk by nearly one-fifth since 2010.
CBC Radio’s expenses have fallen by a similar amount as the broadcaster has aggressively cut costs.