Dwayne Winseck October 31, 2012
Today’s release of data on the top telecom-media-internet (TMI) companies in Canada complements the “big 10 Canadian media companies” table that we released last week.
Last week’s chart identified the big 10 Canadian media companies based on revenues and market shares in all of the telecom, media and internet industries covered by the CMCR project, except the two biggest: wiredline and wireless telecom services (see our methodology primer for scope of coverage and other issues of method).
Today’s chart includes those sectors and expands the range of leading media companies covered. We also rank Google’s place in the network media economy.
Including wired and wireless telecom services in our definition of the relevant TMI sectors covered effectively doubles the size of the ‘total network media economy’ from $35 billion to $70.8 billion (2011). It also gives a more comprehensive view of the network media economy and the place of leading TMI companies within it.
Why different definitions of the relevant markets to begin with? It is important to analyze sectors one at a time and to scaffold upwards to higher levels of generality afterwards in order to generate both detailed and broad scale views of the network media industries. I often exclude wired line and wireless telecom services, as was the case in last week’s big 10 chart, because they are so big that they tend to eclipse everything else, i.e. pay and specialty television services, newspapers, radio, online advertising, music, etc. Setting the telecoms sectors aside brings these other areas into view, while aggregating everything altogether gives us a birds-eye view of the network media industries as a whole. Both approaches are essential.
The table below uses our ‘big picture’ definition to provide a snapshot of the leading telecoms, media and internet companies in 2004, 2010 and 2011, respectively. While we only show relevant sector data for 2011, data for 2004 and 2010 are available upon request.
* Bell first owned CTV between 2000 and 2006 before selling it off. It re-acquired CTV in 2011.** Based on estimate that Google accounts for half of online advertising spend in Canada (IAB, 2011).
As the chart shows, when we take the more expansive view, the list, not surprisingly, skews heavily to entities with big stakes in telecoms. The big three – Bell (27.6% market share), Rogers (16.5%) and Telus (14.3%) – are in a league of their own and massively larger than, for instance, Shaw (8.2%), Quebecor (5.1%), CBC (2.6%), Google (1.8%) and Postmedia (1.7%). Based on estimated Canadian revenues ($1.3 billion), Google would have been the eighth largest media company in Canada in 2011.
The chart also shows us a couple of other things. First, the size of the “total media economy” has grown substantially since 2004; from about $57.1 billion to $68.7 billion in 2010. The total size of the network media economy reached $70.8 billion by last year (current dollars).
The network media economy has also become more concentrated according to two of our tools: concentration ratios (CR4) and the Herfindhahl – Hirschman Index (HHI). The share of the top four TMI companies in Canada – Bell, Rogers, Telus and Shaw, in that order — has grown from 58% in 2005 to 66.7% in 2011.
If Bell had succeeded in its bid to acquire Astral, its share of the total network media industries would have risen from 27.6% to 28.9%. The CR4 score would rise upwards as well, to 68%.
The numbers just recited should raise eyebrows, and they have. They are one reason why the CRTC quashed Bell’s bid to acquire Astral Media, which is also on our list. It is not Bell’s market share all by itself that is, or should be the primary concern, although that is important, but the composition of the market as a whole and the share of the relevant market controlled by the leading players in it.
Looking at HHI scores, similar trends emerge, albeit perhaps not quite as pronounced. The network media industries are ‘moderately concentrated’ according to this method. In 2004, the HHI score was 1253.4. It declined slightly by 2010, but rose significantly thereafter to reach 1356.6 in 2011.
The network media industries as a whole are much more concentrated than our narrow measure of the network media. In some ways, this is not surprising. Network industries tend to be more concentrated than content and entertainment-oriented media.
Those are just some of the general findings that stand out from today’s chart. You can play around with the data and discover other neat things on your own.