Cable TV

Canada's cable industry touches 7.6 mn subscribers in 2004

MUMBAI: After four consecutive years of decline and steady erosion, Canada's cable industry saw a modest increase in subscribers in 2004.

Market research firm Statistics Canada states that this was due to the growing popularity of the digital cable market.

The number of subscribers to cable television in Canada reached 7.6 million at the end of August 2004, up 0.4 per cent from a year earlier. This modest increase followed four consecutive years of decline during which the industry lost a total of 442,000 multi-channel video services customers. Despite the turnaround, the market share of cable operators continued to decline last year.

Meanwhile, wireless competitors, principally direct-to-home satellite television providers, increased their market share to 23.4 per cent in 2004 from 22.5 per cent in 2003. This was the smallest year-over-year gain since the introduction of competition late in 1997.

As of 31 August, 2004, there were 2.3 million subscribers to satellite and wireless cable television, a 5.4 per cent increase compared to the previous year.

The total number of subscribers to multi-channel video services increased by 1.5 per cent to 9.9 million. This overall increase was about the same as the gain in the number of households. The increasing popularity of digital cable was certainly a factor behind the improved customer loyalty for the cable industry.

Digital cable was the fastest growing market segment for the industry last year. There were 1.8 million subscribers to this service on 31 August, 2004, a 33.5 per cent increase from a year earlier. Just over 24 per cent of subscribers to cable television had adopted digital cable at that date compared to 18 per cent in 2003.

High speed Internet continued to be a high growth market for cable operators. The number of subscribers to Internet by cable increased 20.1 per cent to 2.8 million between 31 August , 2003 and 31 August, 2004. This compares with gains of 26.1 per cent in 2003 and 35.4 per cent in 2002.

Last year's increase in subscriptions was robust in both large communities, where the gain was 19 per cent, and small- and medium-sized communities, where it was 25.3 per cent.

The financial performance of the cable industry improved significantly last year. Revenues rose by 7.4 per cent to $4.8 billion, while operating profits surged 39.2 per cent to $1.1 billion. Cable operators earned 23.2 cents of operating profits for every dollar of revenues in 2004, well above the 17.9 cents earned the previous year.

The financial performance of the wireless segment of the industry also improved, but the ink at the bottom of the income statement remained red.

Wireless competitors have incurred losses before interest and taxes every year since joining the industry, but are now approaching the break-even point. In 2004, wireless segment losses amounted to $92.9 million, down from $110.1 million in 2003 and $245.9 in 2002.

From 1998 to 2004, the segment's loss before interest and taxes totalled $1.5 billion, or 32.5 cents per dollar of revenue earned during that period.

Statiscs Canada goes on to note that in a few short years, the multi-channel video services market has changed drastically. In 2004, 42 per cent of the 11.2 million subscribers to multi-channel video services had chosen digital over analogue services. In 2000, that proportion was barely above 15 per cent.

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