SATELLITE RADIO HEAVYWEIGHTS GET THUMBS-UP RULING FROM CRTC Paul Vieira – Financial Post The two big U.S. satellite radio providers, XM and Sirius, will be allowed to sell their service in Canada but under onerous requirements governing how much Canadian content they air, the broadcasting regulator ruled in a landmark decision on the growing medium.
The ruling — seven months in the making — marks a setback for the all-Canadian bid led by CHUM Ltd., despite the fact that it, too, was given the green light to offer its service. A CHUM executive indicated yesterday it is unlikely it will proceed with its pay radio scheme under the framework envisaged by the Canadian Radio-television and Telecommunications Commission. CHUM was hoping to Delphi XM SkyFi radio land the sole licence in Canada to provide subscription radio in exchange for offering an all-Canadian lineup of 50 channels.
“We are shocked, stunned and quite surprised by the decision,” said Paul Ski, executive vice-president for CHUM’s radio division.
“We are going to have to review the decision to determine whether or not to launch given the conditions,” Mr. Ski added.
Charles Dalfen, the CRTC chairman, said the regulator imposed additional Canadian content conditions on XM-backed Canadian Satellite Radio Inc. and Sirius Canada Inc. because their applications “didn’t go the whole way” in promoting Canadian artists. So the CRTC stipulated 10% of the channels they offer must be Canadian-produced.
“I believe we’ve struck a balance. It is more onerous in terms of the channels that the satellite licensees are going to have to come up with,” Mr. Dalfen told reporters in defending his ruling. “We had to find a floor that we can agree to ... that would not be too high for [U.S. satellite providers].”
Among the conditions the CRTC imposed on CSR and Sirius:
CSR is backed by U.S. giant XM Satellite. John Bitove, CSR’s chief executive, was the most bullish of the three applicants about pressing ahead with providing satellite radio to Canadians, noting its service could be available by year-end.
“We applaud the CRTC because it was very difficult to balance all the various interests,” Mr. Bitove said. “It was important for the CRTC to license us, to regulate us, and do it the Canadian way.”
However, he said his group would have to go back and rework its business plan to see how the CRTC conditions affect the bottom line. For instance, it will have to renegotiate its deal with XM to get more spectrum space for the Canadian channels. For every Canadian channel added, one U.S. network will have to be dropped from the XM system, analysts say.
Mr. Bitove also suggested CSR may have to charge more per month than originally anticipated ($12.99) to finance additional Canadian programming.
Kevin Shea, president of Sirius Canada, was more guarded in his consortium’s next move.
“The commission has given us a framework to work toward, and now it is up to us as business people to see if we can make it work.”
Sirius Canada is backed by U.S.-based Sirius Satellite Radio Inc., which is most noted for signing disc jockey Howard Stern to a multimillion-dollar deal. Its Canadian partners are the public broadcaster CBC and Standard Radio.
Richard Cavanagh, an independent broadcasting consultant based in Ottawa, said he expected both CSR and Sirius to press ahead and offer satellite radio, despite the added costs imposed by the CRTC. “I think the business opportunity and artistic opportunity is too great for them to walk away.”
All three applicants have until mid-November to inform the CRTC whether they will take up a licence.
CHUM sounded the most pessimistic about launching. Mr. Ski said it would be difficult for CHUM to compete when only 10% of the channels offered by the U.S.-backed players are Canadian.
Mr. Cavanagh said he expects CHUM to appeal. |