With a promise to boost Canadian content, Canadian Satellite Radio and Sirius Canada, the Canadian satellite partners of XM Satellite Radio and Sirius Satellite Radio, respectively, had their licenses to operate in Canada upheld by a government panel.

The Canadian government announced Sept. 9 it upheld a June decision by the Canadian Radio-television Communications Commission (CRTC) to license the satellite radio services, along with terrestrial-based competitor Chum-Astral. The licensing decision drew criticism from groups representing Canadian artists, claiming the license did not require sufficient Canadian content for the subscription services compared to requirements imposed on other media licenses by the CRTC.

“We think it’s a dark day for Canadian programming,” Jim Thompson, spokesman for watchdog group Friends of Canadian Broadcasting, told Satellite News. “We think there will be a cascading effect arising from this ruling that starts with lower Canadian content requirements for the subscription radio services that have been licensed by the CRTC and will next go to the conventional radio stations when private broadcasters who own those conventional stations will ask CRTC for the same treatment.” Thompson also expressed concern that this ruling will push down content requirements for television and future technologies, including mobile video services.

Boosting Local Content

In a move to appease those who challenged the licenses claiming they did not require enough Canadian and French-language content, both Canadian Satellite Radio and Sirius Canada pledged to increase their Canadian and French-language content.

“I am pleased that our discussion on the issues of Canadian and French-language content on satellite radio has resonated with Canadians and led to an intense dialogue in recent weeks,” Minister of Canadian Heritage and Minister responsible for Status of Women Liza Fuller said in a statement. “The proposals put forward by Canadian Satellite Radio and Sirius [Canada] will raise the level of Canadian and French-language content higher than was required in the original CRTC decisions and ensure a variety of Canadian choices for the benefit of all Canadians.”

What is unclear is how much more Canadian content the companies will be required to broadcast. At the time the licenses were approved, the CRTC required the companies to meet a wide range of baselines for Canadian content, including: at least eight satellite radio channels must be produced in Canada; a maximum of nine foreign channels may be offered for each Canadian channel; at least 85 percent of the musical selections and spoken word programming broadcast on the Canadian channels must be originated in Canada and at least 25 percent of the Canadian channels must be in French. The licensees also must contribute at least 5 percent of their gross revenues to initiatives for the development of Canadian talent.

The CRTC will issue for public comment in the coming days or weeks the amendments to the original licenses that would detail how much more Canadian and French-language content needs to be added by Canadian Satellite Radio and Sirius Canada.

Even with the pledge to offer more content, Thompson was not satisfied. “They promised to boost it only a small amount from what was a very small starting point,” he said, noting that the original license called for about 8 percent of the content offered to be homegrown. He expects the final content requirement to rise to about 10 percent. “The commitments to do more are not very meaningful from our point of view,” he said.

Little Recourse

For those challenging the licenses, there is little left for them to do to prevent satellite radio from moving forward in Canada. Given that the license was approved with the original Canadian content requirements, the likelihood of running into problems when the content requirements are increased is extremely low. The only other option would be challenging the licenses in federal court.

“There is that federal court option, but it’s expensive and the chances of a successful outcome from our point of view are unknown,” Thompson said. “It is not something that has been completely rejected, but we are not ready to announce that we are going to do that. The door is still open a crack, but I would say it is unlikely that we would pursue that.”

Friends of Canadian Broadcasting will continue in its watchdog role, Thompson said. “Friends will be working to try and mitigate what it would consider to be the negative consequences of this decision across the rest of the broadcasting system in Canada by stepping up the watchdog function to show the impact of these sorts of things on the broadcasting system and the audience here in Canada,” he said.

The Next Step

With all the regulatory challenges out of the way, Sirius Canada and Canadian Satellite Radio can focus on the task at hand: competing head-to-head for subscribers. Unlike in the U.S. market, where XM had a significant first-to-market advantage, the battle in the Canadian market begins with the companies on a more-or-less level playing field.

Details on the respective rollout plans and pricing schemes are extremely limited. Sirius announced that it is looking to bring its service to market by the end of the year, though nothing specific has been announced. “There just isn’t much I can give you in terms of real specifics as to exact date of launch, exact number of channels, that kind of stuff at this point,” Sirius spokesman Jim Collins told Satellite News.

Collins did point to a number of program offerings that were highlighted on the company’s press release the praised the decision of the Canadian government, including coverage of the National Hockey League through the end of the 2006-2007 regular season and Stanley Cup playoffs and other sports coverage and a host of other sports that Sirius broadcasts. One programming note not mentioned in the Sirius announcement is the availability of Howard Stern, which could be related to the CRTC maintaining decency oversight of satellite radio, a call the U.S. Federal Communications Commission has rejected thus far.

Collins also noted that Sirius’s automobile manufacturing partners have expressed interest in offering Sirius in Canada. “We would leave it up to them to announce what their plans are in terms of including Sirius in their cars,” he said. He also noted that Sirius has been “talking to our Canadian retail partners,” including Circuit City, Best Buy and Radio Shack. “Obviously it is anticipated that Sirius will be available at those venues as well.”

A spokesperson from Canadian Satellite Radio was not available to talk to Satellite News, and XM did not return calls for comment. The XM press release offered no specific information regarding when service would be ready. However, XM could have its own ace in the hole when it comes to competition in Canada after reaching a 10-year, $100 million agreement to be the exclusive satellite radio network of the NHL beginning in the 2007-2008 season.

–Gregory Twachtman