Earlier this week, we looked at the
share in hours of each media company in the largest markets in
Canada. Using those same share totals, we can figure out how
concentrated or competitive the Canadian radio markets are.
In each city or market, the
shares of all media companies, not the stations themselves, like
Astral, Bell, CBC, Corus, and Rogers are added. One would expect the
result to be 100%. However, this isn't the case since
community/campus radio stations don't participate in the studies and
neither do ones from other markets that happen to be picked up. (As a
reminder, the share is calculated by taking the the number of hours
tuned to a particular station, or in this case the media company, and
dividing it by the total number of hours listened to the radio.) So,
the problem with using the share values from the BBM data is that we
also have to include the other radio stations that help sum all the
shares to 100% and we don't have that information.
With the result of the
summation of each media player, we use can find the adjusted
percentage of hours tuned for each media company. Then, with the new
share value of the company, we square it and sum all the squares of
the media corporations. The result is an indicator of the level of
the market concentration called the Herfindahl-Hirschman Index or HHI. This index
has a range of 0 to 10 000. An index of 0 indicates, in theory, many
small firms of equal size in the industry which suggests a perfectly
competitive market, while an index of 10 000 (or 100²) indicates a
single large firm in the industry or a monopoly.
With that preamble in mind,
let's apply HHI to the English radio markets.
“Population” is defined
as the estimated population of the central market area according to
BBM Canada topline data and PPM, an abbreviation for Portable People
Meter, is a BBM tool to measure radio ratings.
Data sources: Shares of hours tuned and populations from BBM Canada topline data Fall 2012. Shares of hours tuned for Regina and
Saskatoon from Pugets Sound Radio forums.
The dark orange shows the markets or
metropolitan areas with a high market concentration, an HHI of at
least 2500 as defined by the U.S. Department of Justice. The yellow bands indicate moderate
market concentrations, an HHI of 1500 to 2500.
The more concentrated markets (higher
HHI) tend to have fewer media companies than the more competitive
ones which is consistent with the market concentration index. When
the number of firms decrease, the average share of each firm rises
and so does HHI.
The index shows, out of the English
radio markets, Windsor having the highest radio market concentration
with merely three media players: CBC Radio, Bell Media and Blackburn
Radio.
The data also shows that Calgary has a
slightly more competitive market than Toronto which may surprise
many. In fact, Edmonton and Vancouver markets are also somewhat more
competitive than Canada's largest city. The differences are miniscule
and since the data represents a population based on a sample, these
figures are merely estimates. If we were to take a different sample
of Calgary and Edmonton during the same period, Edmonton may have
appeared to be more competitive than Calgary.
While the estimates of the shares may
not be the true values, the estimated HHI indexes reveal a very
similar level of competitiveness in the Calgary, Edmonton, Vancouver
and Toronto markets.
Montreal is an unusual market whether
we are looking at the Anglophone or Francophone listeners. Over 90%of the hours tuned for Anglophones is concentrated within three
companies: Astral, Cogeco, and CBC. The
other media players seem of very little significance.
As for the diary markets, the data
suggests that Halifax is more competitive than Ottawa-Gatineau and
Winnipeg. This is unexpected since Ottawa-Gatineau has more radio
stations and owners than the Nova Scotia capital.
The markets measured using the more
accurate PPM technology are noted in order to distinguish them from
the other markets using the user-input paper diaries. A problem with
the diaries is that respondents tend to under report their listening
habits as they forget what stations they have listened to earlier in
the week and in which time block. The newer method and technology,
PPM, automatically records program and station information to the
minute. Because of these differences in methods of data collection,
comparing a PPM market with a diary market is difficult.
With the Bell-Astral merger proposal
re-emerging and even if Bell does auction off the Astral English
radio stations to the highest bidders, radio markets across Canada
will still increase in concentration as a single firm is removed from
each market and Bell's rivals snatch up those Astral properties.
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