CTV: operating profits and job losses

Kelly Toughill

Kelly ToughillCTV is crying the blues to the CRTC these days, but documents filed with federal securities regulators show the media company had a healthy operating profit last year.

The company that owns The Globe and Mail, the CTV network, a radio chain and a string of specialty networks has been laying off workers, shutting down programs and threatening to close local stations. CTVglobemedia executive vice president Paul Sparkes told the Canadian Radio-television and Telecommunications Commission that the company lost $100 million on conventional television last year.

But figures buried in the financial statements of Torstar show that CTVglobemedia had an operating profit of 9.7 per cent in 2008, before the cost of interest, taxes and non-cash items like impairment of goodwill. And a CRTC report says that CTV’s local news operations showed a “healthy overall profit” in 2008.

Conventional network television has suffered across the continent for several years as advertisers switched to the Internet and to specialty channels that target niche markets. In recent months conventional broadcast television has also been hammered by a recession that seen advertising budgets slashed around the globe.

CTVglobemedia does not file audited financial statements with securities regulators because it is privately owned.

CTVglobemedia spokesperson Bonnie Brownlee did not return calls from j-source.ca.

CTVglobemedia is owned by BCE Inc., the Woodbridge Company Ltd., the Ontario Teachers’ Pension Plan, and Torstar. A small summary of its financial report is included in the annual financial statements filed by Torstar. The Torstar report offers a glimpse into the overall health of CTVglobemedia, but does not separate out the performance of The Globe and Mail, the television network or other parts of the company.

According to Torstar’s audited statements, CTVglobemedia had a net loss of roughly $1 billion in 2008. But the loss was caused by a general decline in the perceived value of the company, not because operating expenses exceeded income. In fact, CTVglobemedia earned an operating profit of $214 million on revenues of $2.2 billion – a margin of 9.7 per cent.

The difference between the profit of $214 million and the loss of $1 billion are two accounting categories known as goodwill and intangible assets. Those categories measure things like the value of a broadcast license, the value of a customer list or the value of a brand. The income statements of media companies around the world have been hit by impairment of goodwill and intangible assets in recent years. The write-offs have fueled huge net losses at most media companies in the United States and Canada, and driven down stock prices of almost all media organizations.

Financial losses are key to CTV’s demand that cable companies begin paying fees to carry the basic network broadcast. The CRTC has rejected that idea, but may reconsider it later this year. The federal government has said that it wants to help private broadcasters weather what many consider a perfect economic storm in which the industry is trying to both restructure and simultaneously survive a major recession.

In the meantime, CTVglobemedia has started cutting in virtually every part of its operation. About 90 jobs were cut at
the Globe in January. In late February, CTV announced plans to abandon local stations in Wingham and Windsor. The next day it announced the company was killing 40 jobs at CTV’s CHUM Radio subsidiary. The cuts were immediate, with 23 positions left unfilled and 17 people out the door at nine stations across the country. The following Wednesday, CTV killed the local morning shows in Victoria, London and Barrie, and the 6 p.m., 11 p.m. and weekend newscast in Ottawa, ending 78 more jobs. One week later, CTV cut the early morning newscast in Montreal.

Kelly Toughill is an associate professor in the School of Journalism at the University of King’s College, Halifax and a contributing editor for the J-Source Business of Journalism J-Topic.