- CBC/Radio-Canada today issued its third quarter financial report for 2013–2014. The report highlights significant business and financial developments occurring in the third quarter ended December 31, 2013.
- Revenue and expenses increased by 19% and 6% respectively, compared to the same quarter last year, largely resulting from the return of Hockey Night in Canada following the NHL lock-out last year. A weakening advertising market has somewhat offset the increase in revenue.
- Year-to-date expenses decreased 3.8% reflecting the implementation of cost reduction initiatives following funding reductions under Federal Budget 2012 and the Local Programming Improvement Fund (LPIF).
- Results under IFRS and on a Current Operating Basis were lower than the same quarter last year, while improving on a year-to-date basis relative to the prior year.
Results for the third quarter ended December 31, 2013
“With successful efforts to reduce expenses across the Corporation achieved, we recognize that we are operating in an advertising market and industry dynamics that are in transition, which makes our outlook challenging. We are carefully assessing and optimizing our business model to address this shifting landscape.” said Suzanne Morris, Vice-President and Chief Financial Officer.
Changes in revenue, expense and funding were as follows:
- Revenue increased by $30.2 million and expenses were higher by $26.0 million, largely resulting from advertising revenue and associated production costs from Hockey Night in Canada (HNIC). Last season’s NHL lockout resulted in limited HNIC advertising revenue as well as HNIC production costs in the third quarter. A weakening advertising market has somewhat offset this increase.
- Government funding recognized for accounting purposes this quarter was $10.7 million lower compared to the same period last year. This reflects the matching of operating funding recognized as income with our quarterly budgetary costs, as well as the amortization of deferred capital funding. By year-end, parliamentary appropriations received are expected to be $23.9 million lower compared to 2012–2013. This will reflect the $41.8 million funding reduction announced in Federal Budget 2012, offset partially by salary inflation funding received for 2013-2014 for the first time since 2009-2010.
CBC/Radio-Canada continued to achieve several tangible programming successes. Throughout the quarter, Olympic promotions and programming helped lay the groundwork for Canadians’ Olympic viewing experience. Preliminary results for Olympic programming engagement are positive with CBC/Radio-Canada and its partners reaching more than 32 million Canadians (or 95% of the population) with our Olympic coverage across French and English Platforms.
In television, market share for ICI Radio-Canada Télé grew compared to the same period in 2012, while CBC Television also achieved strong results with more than one million viewers for a number of prime-time programs. In Radio, both ICI Radio-Canada Première and Espace musique increased market share while CBC Radio One achieved its highest-ever fall survey audience share. Regionally, we continued delivering coverage and analysis of locally relevant events across Canada, while expanding our presence with new shows in several key regions. Digitally, CBC/Radio- Canada launched new initiatives, including Canada’s largest educational content website Curio, as well as several new web applications to enhance audience experience.
With success in many areas of the business, we are nonetheless projecting significant financial challenges starting in the next fiscal year, including a weaker advertising market across the industry, lower than expected advertising revenue performance and the loss of the NHL contract . These challenges are in addition to the last year of reductions announced from Federal Budget 2012, the elimination of the LPIF and another two-year government-wide salary inflation funding freeze.
“We face a number of challenges as we move forward,” said Hubert T. Lacroix, President and CEO. “Our financial picture is complex, but one thing is clear: as we craft our next strategic plan, we are focused on creating a long-term, sustainable business and financial model that will allow us to weather future storms”.
Reconciliation of Results on a Current Operating Basis
CBC/Radio-Canada defines Results on a Current Operating Basis as Net Results under IFRS, less the adjustments for non-cash expenses that will not require operating funds within one year and non-cash revenues that will not generate operating funds within one year. This measure is used by management to help monitor performance and balance the Corporation’s budget consistent with government funding methodology.
While this measure does not have a standard meaning under IFRS and is not likely comparable with measures presented by private companies, the Corporation believes it provides useful additional information to readers about the Corporation’s performance.
A reconciliation between Results on a Current Operating Basis and Net Results under IFRS for the third quarter of 2013–2014 follows.
CBC/Radio-Canada’s 2013–2014 third quarter financial report can be found here.Read More →