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by Paul Brent
The National Post
Jun 29, 2005
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Cable companies' profit soared 45% in 2004
thanks to more subscribers switching to higher-cost digital services,
while their high-flying satellite rivals continue to lose money.
Cable-industry profit before interest and taxes jumped 44.9% to $1.05-billion
in 2004 from $728.2-million, while revenue rose 9.4% to $4.55-billion
last year from $4.16-billion the year before, the Canadian Radio-television
and Telecommunications Commission reported yesterday. The figures also
show pre-tax profit nearly doubled to $567.3-million from $269.4-million
in 2004.
The spike in cable-company profits has been driven by the steady conversion
of subscribers from analog services to more expensive digital services,
an industry observer said.
"For major cable [companies], somewhere between 20% and 30% of
a major cable-company's base is now digital and those households are
spending $20 to $30 more per month on average," said Kaan Yigit,
president of technology consultancy Solutions Research Group. "And
they are reaping the benefits they have made over the years. Even your
typical analog subscriber pays something like $45 to $50 on average
and most of it is gravy to the cable companies. It's a good business
to be in, definitely."
The number of basic cable subscribers increased slightly to 6.6 million
in 2004, and 10.2 million Canadian households had access to cable in
2004, slightly more than a year earlier.
Figures for direct-to-home satellite providers (Bell ExpressVu and Star
Choice), which includes such multipoint distribution systems as Look
Communications Inc., saw a loss before interest and taxes of $127-million
in 2004, a slight improvement over a loss of $128.5-million the year
before. The group reported a pre-tax loss of $190.4-million, an improvement
over a loss of $223.6-million in 2003.
"[Satellite] is an inherently more expensive business and I think
they maxed-out in non-cable markets, those markets have gone satellite
already anyway," Mr. Yigit said.
"They are flatlining really this year in terms of possible growth.
Our research shows intent to consider satellite TV has started dropping
for the past two years among cable subscribers."
BCE's ExpressVu will have a more convincing argument to persuade consumers
to go with satellite when it rolls out telephone-delivered television
next year, he said.
DTH and MDS had 2.3-million basic-tier subscribers in 2004, a 5.2% increase
from 2.2-million in 2003. They employed 2,621 and paid out $109.6 million
in salaries. |
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