5. Financial Performance of Cultural Domains
This chapter profiles the financial performance and health of businesses that operate within the six core cultural domains. This information is important in understanding the cultural labour market, as it directly affects the supply of and demand for workers in this sector, as well as the supply of cultural goods and services. These profiles are useful for organizations operating in the cultural sector, as well as for those who work, or plan to work, in the sector. For further details about the composition of each cultural domain, please refer to Appendix A.
The profiles include a brief overview of the financial performance of each domain, followed by a presentation of the latest key financial indicators available for each domain.
It should be noted that data challenges and gaps emerged while these profiles were being developed. As a result, there are inconsistencies in the amount of financial data presented for each domain. A detailed discussion of these gaps and challenges is presented in Chapter 9.
Table 5.1 Revenue Composition of Canada’s Cultural Sector
|
Domains |
Government support* |
Exports |
Domestic consumption and others |
|
Heritage and libraries** |
2.2% |
14.1% |
83.7% |
|
Live performance |
20.8% |
22.0% |
57.2% |
|
Visual and applied arts |
2.9% |
51.7% |
45.4% |
|
Written and published works |
3.1% |
10.6% |
86.3% |
|
Audio-visual and interactive media |
13.5% |
11.5% |
75.0% |
|
Sound recording |
5.3% |
38.5% |
56.2% |
|
Multidomain |
6.4% |
40.3% |
53.4% |
|
Total culture products |
16.8% |
18.6% |
64.6% |
|
Sources: Statistics Canada, Culture Satellite Account; Survey of Provincial/Territorial Government Expenditures on Culture; Survey of Federal Government Expenditures on Culture; Survey of Household Spending; Provincial and Territorial Gross Domestic Product by Income and by Expenditure Accounts, compiled by The Conference Board of Canada. * Government support was calculated based on the most recent data dated to fiscal 2009–10 and may not depict the full picture of government support on all domains. ** In conformity with the Culture Satellite Account, the heritage and libraries domain includes only private institutions. |
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5.1 Heritage and Libraries
Unfortunately, Statistics Canada discontinued the Annual Survey of Service Industries: Heritage Institutions in 2011, so the most recent financial data date back to 2010. Nonetheless, the data still help paint a picture of overall financial performance for businesses in this domain.
Excluding libraries and archives, total operating revenues for heritage establishments in Canada grew at an annual rate of 2.4 per cent between 2008 and 2010. Among the subdomains of heritage establishments, art museums and galleries clocked in the highest annual growth rate, at 4.2 per cent. Revenues of natural heritage (zoos and botanical gardens), on the other hand, remained almost flat. Profitability among subdomains was uneven, with only museums and natural heritage managing to keep their bottom line in the black between 2008 and 2010.
Table 5.1.1: Performance of Heritage Establishments
|
Indicator |
2008 |
2009 |
2010 |
|
Operating revenue ($ millions) |
1,195 |
1,232 |
1,282 |
|
Art museums and galleries |
256 |
281 |
290 |
|
Museums |
596 |
613 |
642 |
|
Historic and heritage sites |
88 |
85 |
92 |
|
Zoos and botanical gardens |
255 |
253 |
258 |
|
Operating expenses ($ millions) |
1,173 |
1,203 |
576 |
|
Art museums and galleries |
266 |
285 |
124 |
|
Museums |
575 |
590 |
293 |
|
Historic and heritage sites |
89 |
83 |
45 |
|
Zoos and botanical gardens |
244 |
245 |
114 |
|
Salaries, wages, and benefits ($ millions) |
521 |
547 |
1,242 |
|
Art museums and galleries |
111 |
123 |
287 |
|
Museums |
255 |
272 |
622 |
|
Historic and heritage sites |
41 |
40 |
90 |
|
Zoos and botanical gardens |
114 |
111 |
243 |
|
Operating profit margin |
|
|
|
|
Art museums and galleries |
-4.0% |
-1.2% |
0.9% |
|
Museums |
3.6% |
3.7% |
3.1% |
|
Historic and heritage sites |
-0.7% |
2.3% |
2.1% |
|
Zoos and botanical gardens |
4.6% |
3.1% |
5.9% |
|
Sources: Statistics Canada, Annual Survey of Service Industries: Heritage Institutions. Note: regularly captured usage and financial performance data for libraries and archives in Canada are currently not available. The survey was discontinued in 2011; 2010 was the last year with data available. |
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5.2 Live Performance
The live performance domain relies heavily on government support. In fiscal year 2009–10, close to 21 per cent of total revenues stemmed from government support, compared with 17 per cent for the overall cultural sector. All three levels of governments supported the live performing arts in 2009–10, with the federal government providing the largest portion of funding.
Total operating revenues for the live performance companies increased 5.8 per cent between 2014 and 2016. The highest rates of growth were for musical groups and artists (12 per cent) and dance companies (8.1 per cent). The operating profit margin of live performing arts industries increased slightly between 2014 and 2016, from 11.7 per cent to 12.0 per cent. The pattern, however, was mixed among different subdomains. In 2016, musical groups and artists retained the highest profit margin, whereas musical and theatre companies recorded losses in aggregate.
In addition, Statistics Canada’s Annual Survey of Service Industries: Spectator Sports, Event Promoters, Artists and Related Industries provides performance indicators for three industry segments that fall partly into the live performing arts domain: promoters of performing arts, sports, and similar events (NAICS 7113), agents and managers for artists, athletes, entertainers, and other public figures (NAICS 7114), and independent artists, writers, and performers (NAICS 7115).
The latest data suggest aggregate revenues for promoters (NAICS 7113) and agents (NAICS 7114) stayed relatively flat between 2013 and 2017. Operating revenues for independent artists, writers, and performers (NAICS 7115), on the other hand, have been growing at a healthy pace since 2013. While the operating profit margin floated around almost 40 per cent, it should be noted that unpaid hours spent on practice and preparation for independent artists and performers are often underreported and thus inflate the profitability.
Table 5.2.1: Performance of Live Performance Establishments
|
Financial indicator |
2014* |
2016 |
|
Total live performance companies |
|
|
|
Operating revenue ($ millions) |
2,038 |
2,157 |
|
Operating expenses ($ millions) |
1,800 |
1,897 |
|
Salaries, wages, commissions, and benefits ($ millions) |
514 |
490 |
|
Operating profit margin |
11.7% |
12.0% |
|
Theatre (except musical) companies |
||
|
Operating revenue ($ millions) |
511 |
546 |
|
Operating expenses ($ millions) |
499 |
537 |
|
Salaries, wages, commissions, and benefits ($ millions) |
170 |
176 |
|
Operating profit margin |
2% |
2% |
|
Musical theatre and opera companies |
||
|
Operating revenue ($ millions) |
171 |
173 |
|
Operating expenses ($ millions) |
165 |
175 |
|
Salaries, wages, commissions, and benefits ($ millions) |
54 |
56 |
|
Operating profit margin |
4% |
-2% |
|
Dance companies |
||
|
Operating revenue ($ millions) |
160 |
173 |
|
Operating expenses ($ millions) |
138 |
153 |
|
Salaries, wages, commissions, and benefits ($ millions) |
52 |
56 |
|
Operating profit margin |
13% |
12% |
|
Musical groups and artists |
||
|
Operating revenue ($ millions) |
785 |
879 |
|
Operating expenses ($ millions) |
616 |
673 |
|
Salaries, wages, commissions, and benefits ($ millions) |
121 |
121 |
|
Operating profit margin |
22% |
23% |
|
Sources: Statistics Canada, Survey of Service Industries: Performing Arts. * The survey runs every two years. |
||
Table 5.2.2: Performance of Promoters, Agents, and Independent Artists, Writers, and Performers
|
Financial indicator |
2013 |
2014 |
2015 |
2016 |
2017 |
|
Promoters (presenters) of performing arts, sports and similar events |
|||||
|
Operating revenue ($ millions) |
3,319 |
3,507 |
3,253 |
3,253 |
3,481 |
|
Operating expenses ($ millions) |
3,245 |
3,385 |
3,263 |
3,251 |
3,500 |
|
Salaries, wages, commissions, and benefits ($ millions) |
673 |
719 |
705 |
715 |
772 |
|
Operating profit margin |
2% |
4% |
0% |
0% |
-1% |
|
Agents and managers for artists, athletes, entertainers, and other public figures |
|||||
|
Operating expenses ($ millions) |
337 |
331 |
336 |
325 |
367 |
|
Salaries, wages, commissions, and benefits ($ millions) |
112 |
106 |
99 |
93 |
104 |
|
Operating profit margin |
18% |
20% |
19% |
21% |
21% |
|
Independent artists, writers, and performers |
|
||||
|
Operating revenue ($ millions) |
1,628 |
1,652 |
1,788 |
2,086 |
2,140 |
|
Operating expenses ($ millions) |
1,004 |
1,008 |
1,115 |
1,278 |
1,297 |
|
Salaries, wages, commissions, and benefits ($ millions) |
200 |
195 |
224 |
268 |
274 |
|
Operating profit margin |
38% |
39% |
38% |
39% |
39% |
|
Sources: Statistics Canada, Annual Survey of Service Industries: Spectator Sports, Event Promoters, Artists and Related Industries. |
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5.3 Visual and Applied Arts
Canadian households spent on average $161 on visual and applied arts products in 2017, up from $130 the year before. Meanwhile, exports of visual and applied arts products registered one of the strongest growth rates in the cultural sector between 2012 and 2016, expanding at an annual rate of 9.4 per cent. In 2016, nearly $7.2 billion worth of Canadian visual and applied arts products were exported, consisting of more than half (52 per cent) of total exports of cultural products that year.
As is the case with many cultural domains, government support is not a major source of revenues for the visual and applied arts domain. In fiscal year 2009–10, only 2.9 per cent of total revenues in the domain stemmed from government support.
There is currently no comprehensive data from Statistics Canada on the financial performance of the establishments in the visual arts and crafts domain (thus the absence of data tables in this section). One reason for this is the domain is dominated by visual artists and craftspeople working in their own practice rather than in a small business or other enterprise.
5.4 Written and Published Works
Canadian household spending on written and published works has declined in recent years. In 2017, average household spending on books fell to $101, down from $120 in 2013. Average household spending on newspaper, magazines, and periodicals dropped to $36, down from $47 in 2013.
With household spending on a downward trend, exports of written and published works became the new source of growth. In 2016, exports of written and published works totalled $1.7 billion in Canada, up 31 per cent from 2012.
In general, the written and published works domain does not rely on government support. In fiscal 2009–10, only 3.1 per cent of total revenues generated in the domain stemmed from government support.
Operating revenues of book publishing, periodical publishing, and newspaper publishing industries have been on downward trajectory in recent years, although profitability has been steady. While reading is still one of the most popular leisure activities in Canada,[1] the decline in revenues is evidence of fast-changing consumer preferences. In addition, although conventional printed books remain the most popular form of books (74 per cent of all books shipped in 2016), sales of e-books and audiobook are on the rise.
Table 5.4.1: Performance of Book Publishing Establishments
|
Financial indicator |
2014 |
2016 |
|
Operating revenue ($ millions) |
1,659 |
1,649 |
|
Operating expenses ($ millions) |
1,500 |
1,480 |
|
Salaries, wages, commissions, and benefits ($ millions) |
387 |
380 |
|
Operating profit margin |
10% |
10% |
|
Sales channels (as a share of total sales) |
||
|
Internet sales of print titles |
11% |
12% |
|
Sales of e-books |
12% |
14% |
|
Sales of print titles (not on internet) |
76% |
74% |
|
Sources: Statistics Canada, Survey of Service Industries: Book Publishers. |
||
Table 5.4.2: Performance of Periodical Publishing Establishments
|
Financial indicator |
2013* |
2015 |
2017 |
|
Operating revenue ($ millions) |
1,968 |
1,591 |
1,307 |
|
Operating expenses ($ millions) |
1,791 |
1,388 |
1,172 |
|
Salaries, wages, commissions, and benefits ($ millions) |
581 |
456 |
401 |
|
Operating profit margin |
9% |
13% |
10% |
|
Sources: Statistics Canada, Survey of Service Industries: Periodical Publishers. * The survey runs every two years. |
|||
Table 5.4.3: Performance of Newspaper Publishing Establishments
|
Financial indicator |
2014* |
2016 |
|
Operating revenue ($ millions) |
3,964 |
3,180 |
|
Operating expenses ($ millions) |
3,596 |
3,001 |
|
Salaries, wages, commissions, and benefits ($ millions) |
1,319 |
1,126 |
|
Operating profit margin |
9% |
6% |
|
Detailed operating statistics |
||
|
Operating revenues |
||
|
Advertising sales |
64% |
63% |
|
Circulation sales |
21% |
23% |
|
Custom printing sales |
2% |
3% |
|
Distribution of flyers and inserts |
10% |
9% |
|
All other revenues |
3% |
3% |
|
Operating expenses |
||
|
Cost of goods sold |
13% |
13% |
|
Salaries, wages, commissions, and benefits |
37% |
38% |
|
Office and computer related expenses |
10% |
6% |
|
All other costs and expenses |
40% |
43% |
|
Sources: Statistics Canada, Survey of Service Industries: Newspaper Publishers. * The survey runs every two years. |
||
5.5 Audio-Visual and Interactive Media
The audio-visual and interactive media domain has grown at a steady pace in recent years, in both revenues and profitability. Indeed, Canada has achieved considerable success in the export of film and television production goods and services, through the sales of Canadian shows to international networks and the hosting of production of foreign movies and TV series in Canada (which count as exports). In addition, as the home of close to 600 gaming studios, many of which are top international video game developers, Canada exports a considerable amount of integrative digital media products every year.[2] Exports of audio-visual and interactive media products totalled nearly an estimated $3.3 billion in 2016.
Government support is another important source of revenues for this domain. An estimated 13.5 per cent of total revenues generated in this domain come from government support. Generally, around half of federal government spending on culture goes to the broadcasting subdomain every year, primarily to the Canadian Broadcasting Corporation. Federal, provincial, and territorial governments also support a wide variety of other programs, through direct investment and through a series of tax credits.
As a newer player in the cultural sector, the interactive media industry has received growing support from all levels of governments. A variety of government programs are in place to support Canadian interactive media ventures, including the federal government’s Canadian Media Fund and the Ontario government’s Ontario Creates Interactive Media Fund. In addition to public funding, some provincial governments also offer support through tax breaks.
The film, television, and video production and post-production industries saw strong growth in revenues in 2017 while maintaining profitability. Meanwhile, the film and video distribution industry had stronger growth in revenues in 2017, but its spending rose, eroding the industry’s operating margins.
With the advent of online streaming services, revenues of the television broadcasting industry have been on a steady decline since their peak in 2013. The shift in consumption patterns is forcing broadcasters to adopt new distribution strategies, either by making episodes of conventional programs available on the internet or by launching their own streaming platforms.
Meanwhile, similar trends have been seen in the radio broadcasting industry. Since their peak in 2013, both revenues and profitability have been on a steady downward slope. The number of radio stations, however, didn’t see such decline, signalling the resilient popularity of radio among Canadian listeners.
Table 5.5.1: Performance of Film, Television, and Video Production Establishments
|
Financial indicator |
2013* |
2015 |
2017 |
|
Operating revenue ($ millions) |
5,217 |
6,738 |
8,262 |
|
Operating expenses ($ millions) |
4,905 |
6,164 |
7,536 |
|
Salaries, wages, and benefits ($ millions) |
1,720 |
2,045 |
2,661 |
|
Operating profit margin |
6.0% |
8.5% |
8.8% |
|
Sources: Statistics Canada, Survey of Service Industries: Film, Television and Video Production. * The survey runs every two years. |
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Table 5.5.2: Performance of Film and Video Distribution Establishments
|
Financial indicator |
2013* |
2015 |
2017 |
|
Operating revenue ($ millions) |
1,912 |
2,151 |
2,269 |
|
Operating expenses ($ millions) |
1,547 |
1,787 |
1,974 |
|
Salaries, wages, commissions, and benefits ($ millions) |
116 |
118 |
136 |
|
Operating profit margin |
19% |
17% |
13% |
|
Breakdown of operating statistics |
|||
|
Operating revenues |
|||
|
Revenue from distribution of film and video titles |
75% |
82% |
87% |
|
Wholesaling of pre-recorded videos |
24% |
17% |
13% |
|
All other operating revenue |
1% |
1% |
1% |
|
Operating expenses |
|||
|
Cost of goods sold |
27% |
26% |
24% |
|
Salaries, wages, commissions, and benefits |
8% |
7% |
7% |
|
Royalties franchise fees and memberships |
31% |
35% |
39% |
|
Advertising, marketing, promotions, meals, and entertainment |
19% |
18% |
20% |
|
All other costs and expenses |
17% |
15% |
11% |
|
Sources: Statistics Canada, Survey of Service Industries: Film and Video Distribution. * The survey runs every two years. |
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Table 5.5.3: Performance of Film, Television, and Video Post-Production Establishments
|
Financial indicator |
2013* |
2015 |
2017 |
|
Operating revenue ($ millions) |
832 |
1,107 |
1,403 |
|
Operating expenses ($ millions) |
755 |
996 |
1,260 |
|
Salaries, wages, commissions, and benefits ($ millions) |
364 |
525 |
717 |
|
Operating profit margin |
9% |
10% |
10% |
|
Breakdown of operating statistics |
|||
|
Operating revenues |
|||
|
Editing services for audiovisual works |
9% |
6% |
8% |
|
Visual effects and animation services for audiovisual works |
45% |
54% |
59% |
|
3D Visual effects and animation services for audiovisual works |
10% |
11% |
11% |
|
Subtitling, titling, and captioning services |
3% |
2% |
1% |
|
Sound editing and design services |
5% |
5% |
3% |
|
All other operating revenue |
27% |
21% |
18% |
|
Operating expenses |
|||
|
Cost of goods sold |
11% |
7% |
8% |
|
Salaries, wages, commissions, and benefits |
48% |
53% |
57% |
|
All other costs and expenses |
41% |
40% |
35% |
|
Sources: Statistics Canada, Survey of Service Industries: Film and Video Post-Production. * The survey runs every two years. |
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Table 5.5.4: Performance of Television Broadcasting Establishments
|
Financial indicator |
2013 |
2014 |
2015 |
2016 |
2017 |
|
Operating revenue ($ millions) |
7,593 |
7,569 |
7,421 |
7,485 |
7,123 |
|
Operating expenses ($ millions) |
6,521 |
6,733 |
6,688 |
6,634 |
6,183 |
|
Salaries and other staff benefits ($ millions) |
1,675 |
1,653 |
1,591 |
1,527 |
1,356 |
|
Net operating income ($ millions) |
955 |
729 |
575 |
672 |
777 |
|
Sources: Statistics Canada, Radio and Television Broadcasting Survey. |
|||||
Table 5.5.5: Performance of Radio Establishments
|
Financial indicator |
2013 |
2014 |
2015 |
2016 |
2017 |
|
Operating revenue ($ millions) |
2,000 |
1,968 |
1,951 |
1,916 |
1,892 |
|
Operating expenses ($ millions) |
1,669 |
1,681 |
1,653 |
1,619 |
1,613 |
|
Net operating income ($ millions) |
939 |
927 |
910 |
877 |
870 |
|
Salaries and other staff benefits ($ millions) |
315 |
266 |
273 |
272 |
253 |
|
Number of stations |
941 |
924 |
929 |
939 |
952 |
|
Sources: Statistics Canada, Radio and Television Broadcasting Survey. |
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5.6 Sound Recording
While almost every Canadian (93 per cent) listened to recorded music in 2017, household spending on sound recording products dropped dramatically between 2013 and 2017. Canadians spent less than half on music content in 2017 than in 2012. The downfall in spending coincided with the rise of music streaming services, which offer a wider selection of music for a monthly fee. Meanwhile, increasing number of Canadians are using YouTube to listen to music: 84 per cent of Canadian YouTube users access music content according to an International Federation of the Phonographic Industry (IFPI) report.[3]
Despite the overall downward trend in spending among Canadians, exports of sound recording products have been on a steady upward trajectory. Exports of sound recording products totalled close to $470 million in 2016, up from $390 million five years prior. Meanwhile, support from various levels of governments has remained stable.
Operating revenues of the Canadian record production (and integrated production and distribution) industry surged to $577 million in 2017, up 28 per cent from 2015. At the same time, profitability remained stable.
Canada’s music publishing industry has been growing at a healthy clip, registering $329 million in revenues in 2017. Between 2013 and 2017, operating revenues grew at an annual rate of 4.9 per cent.
Healthy growth was seen in the sound recording industry as well. Operating revenues rose steadily between 2013 and 2017. With operating expenses increasing at a slower pace, profit margins were pushed up to 17 per cent in 2017.
Table 5.6.1: Performance of Record Production and Integrated Record Production and Distribution Establishments
|
Financial indicator |
2013* |
2015 |
2017 |
|
Operating revenue ($ millions) |
510 |
451 |
577 |
|
Operating expenses ($ millions) |
488 |
426 |
540 |
|
Salaries, wages, commissions, and benefits ($ millions) |
64 |
61 |
78 |
|
Operating profit margin |
4% |
6% |
6% |
|
Sources: Statistics Canada, Survey of Service Industries: Sound Recording and Music Publishing. * The survey runs every two years. |
|||
Table 5.6.2: Performance of Music Publishing Establishments
|
Financial indicator |
2013* |
2015 |
2017 |
|
Operating revenue ($ millions) |
259 |
281 |
329 |
|
Operating expenses ($ millions) |
230 |
249 |
294 |
|
Salaries, wages, commissions, and benefits ($ millions) |
50 |
54 |
62 |
|
Operating profit margin |
11% |
11% |
11% |
|
Sources: Statistics Canada, Survey of Service Industries: Sound Recording and Music Publishing. * The survey runs every two years. |
|||
Table 5.6.3: Performance of Sound Recording Establishments
|
Financial indicator |
2013* |
2015 |
2017 |
|
Operating revenue ($ millions) |
121 |
131 |
140 |
|
Operating expenses ($ millions) |
105 |
112 |
115 |
|
Salaries, wages, commissions, and benefits ($ millions) |
33 |
36 |
35 |
|
Operating profit margin |
14% |
14% |
17% |
|
Sources: Statistics Canada, Survey of Service Industries: Sound Recording and Music Publishing. * The survey runs every two years. |
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[1] BookNet Canada, “What Are Canadians up to in Their Free Time?”
[2] Entertainment Software Association of Canada, Canada’s Video Game Industry 2017.
[3] International Federation of the Phonographic Industry, 2017 Music Consumer Insight Report.