financial sustainability
year in review – our results
OPERATING EXPENSES
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Our operating expenses increased by 6.5% ($104.8 million) compared to last year, with the main variances noted below.
Television, radio and digital services costs (7.0%)
Television, radio and digital services costs depend on the different events of importance we cover throughout the year and on our ongoing programming schedule. They represent the costs we incur in relation to the production of our programs, including the cost of our technical labour and facilities.
The 7.0% ($105.9 million) increase in Television, radio and digital services costs resulted from:
Events
Higher expenses from events this year resulted from programming rights and production costs to broadcast the Rio 2016 Olympic Games. In 2015-2016, our cost of events included the costs to broadcast the Toronto 2015 Pan Am and Parapan Am Games.
Ongoing activities
Our ongoing operating costs increased this year by 3.2%, primarily as we continued to invest in new content and our technical capabilities, consistent with Strategy 2020:
- TV programming: additional costs incurred for new comedy and drama series;
- News and Current Affairs: higher expenses for enhanced digital and international coverage;
- Technical capabilities: additional costs from the digitization of our archives to further support our digital shift and new technology initiatives.
This year, we also incurred higher expenses in relation to a municipal tax settlement for the Toronto Broadcasting Centre, promoting our digital and specialty services, and strengthening our cybersecurity.
These increases were partially offset by:
- Lower pension expenses by approximately $19.0 million due to a change in actuarial assumptions; and
- The effect of cost-saving initiatives.
Other operating expenses (1.1%)
Other operating expenses include costs related to the broadcasting of the Corporation's programs ("transmission, distribution and collection" and "payments to private stations"), corporate management costs, finance costs and the recognition of our share in the results of SiriusXM.
Other operating expenses decreased by $1.1 million (1.1%), with the main variances highlighted below:
- Decrease in our finance costs by $2.2 million (7.9%) consistent with our expectations;
- Lower transmission, distribution and collection costs of $2.6 million (3.7%), mostly due to lower satellite expenses; and
- Lower payments to private stations of $0.8 million (54.9%) mostly due to the end of an agreement related to two affiliate stations in August 2015.
This was partially offset by lower income from our share of results in associate by $4.6 million (57.9%) relative to last year. This year, we only received two quarterly dividends from SiriusXM due to the pending privatization of the company. For more details about our investment in associate, see Note 12 of our Consolidated Financial Statements.
Penny Oleksiak, CBC Sports
