Media Updates

Satellite/Subscription Radio

Paul Attallah
October 15 2005

Satellite or subscription radio was launched in the United States in 2001. There are two satellite radio suppliers in the United States, XM Radio and Sirius. Both have deals with auto manufacturers to install their radios in new cars. Purchasers of the cars then subscribe to the respective satellite radio service. Several factors explain the logic of this arrangement. First is the fact that most people listen to the radio while driving. Second, the sound quality of CDs has whetted the public appetite for high quality radio broadcasts. This combines with a generalized disinterest in standard over-the-air radio which many feel has become too generic and lacklustre. Third, as satellite radio is a digital service, it can offer hundreds of music and spoken word channels appealing to highly defined niche markets. Indeed, like satellite television, satellite radio can target niche markets widely dispersed across North America and aggregate them into a single larger and more profitable market. Satellite radio receivers can also be used indoors. The monthly subscription is approximately US$10 per month. XM Satellite Radio Inc. has approximately 6 million subscribers; Sirius Satellite Radio Inc. has approximately 2.5 million subscribers.
    As with satellite television, the signal of satellite radio spills into Canada. Many Canadians have eagerly subscribed to American satellite radio. It was feared that this ‘grey market’ (users who pay to receive an American service not otherwise available in Canada) would harm existing Canadian over-the-air radio services (AM and FM) and perhaps preclude the launch of a comparable Canadian satellite service. It also indicated, however, the existence of a pent-up demand for digital-quality niche radio delivered via satellite.
    As a result, three proposals were submitted to the CRTC for approval. The first came from Sirius Canada Inc., a partnership formed by two Canadian companies, the CBC and Standard Broadcasting, as well as by Sirius Satellite Radio Inc. of the United States. The second came from Canadian Satellite Radio Inc. (CSR), a partnership formed by John Bitove, a Canadian citizen residing in Toronto, and XM Satellite Radio Inc. of the United States. A third proposal – known as subscription radio -- came from CHUM, a partnership composed of two Canadian companies, CHUM and Astral Media Radio Inc. Unlike the other applicants, CHUM proposed to distribute its service via digital terrestrial transmitters.
    Discussion centred on whether or not the various applicants would provide a sufficient amount of Canadian content. In the end, the CRTC approved all three applicants but required the satellite-delivered services to provide at least 1 Canadian channel for every 9 non-Canadian channels or 12 Canadian-originated services for 120 channels overall. Of these, 25% must be in French. As CHUM had proposed 50 Canadian-originated channels, the CRTC approved its application as is.
    Sirius Canada and CSR were pleased with the decision but CHUM protested vigorously, claiming that it could not compete under such conditions. The decision was appealed to cabinet and the cultural community appeared split. Some wanted the decision revised on the grounds that it failed to conform to the Broadcasting Act; others wanted the decision approved on the grounds that the exposure which satellite radio would provide Canadian artists in the US market was the greatest benefit possible. It also seemed that cabinet itself was split with Heritage Minister Liza Frulla widely rumoured to favour a reversal of the decision.
    On September 14, 2005, however, cabinet upheld the CRTC decision. Service must begin within 24 months of that date.

Sources

CRTC. 2005. Broadcasting Decision 2005-247. Available at: http://www.crtc.gc.ca/archive/ENG/Decisions/2005/db2005-247.htm

CRTC. 2005. Broadcasting Public Notice 2005-61. Available at: http://www.crtc.gc.ca/archive/ENG/Notices/2005/pb2005-61.htm

www.skyreport.com