Multichannel and digital television are emerging as growing areas in the Canadian TV industry, according to a new report.

The study from Statistics Canada revealed that pay and speciality channels were the most profitable of all, with margins up 9% in 2004.

Profit for the terrestrial channels such as Global and CTV fell by 11% over the same period.

Digital cable homes rose 6.9% to 500,000, but remained a fraction of the 4.5 million analogue homes.

"Pay and specialty channels are gaining ground at the expense of conventional broadcasters," a spokesman told the Globe and Mail.

"They are getting a bit larger part of the audience and that translates into... part of the ad revenue and more subscriber revenue."