Money-losing satellite radio provider SiriusXM Canada wants its mandatory contributions to Canadian content development slashed by the federal broadcast regulator to better compete with conventional radio stations.
The Toronto-based satellite radio company will appear before the Canadian Radio-television and Telecommunications Commission on Thursday to have its licence renewed, the first renewal since it was granted in 2005.
SiriusXM Canada will ask the CRTC to cut its yearly contribution from 5% of its gross revenues to 0.5% — the rate paid by commercial radio station operators.
“It’s just bringing us in line with what conventional radio pays,” said Mark Redmond, chief executive of parent company Canadian Satellite Radio Holdings Inc.
SiriusXM Canada will have paid $52 million to the CRTC for Canadian content development by the end of this fiscal year since 2005, the company said in documents filed to the regulator.
Redmond said when the satellite radio company launched, it was treated like a cable company when the CRTC determined how much it would contribute to the development of Canadian content. He noted that some conventional radio stations have had their contribution rates reduced when their licences have been renewed.
“All we’re requesting is to bring our expenditures in line with conventional radio — not lower — in line with what they pay.”
Redmond said SiriusXM Canada also has to compete against pay-for audio services and digital music services.
“If you look back seven years ago when we launched the business in Canada, the iPhone wasn’t even in the market nor were the multiple online music services,” he said. “We believe they are a threat to us moving forward.”
SiriusXM Canada also competes against digital music subscription services such as Rdio, Slacker Radio and Montreal-based Stingray Digital, a multi-platform music service provider, as well as free services such as Shoutcast.
SiriusXM Canada broadcasts more than 120 channels that are heard in cars, trucks and boats as well as on wireless devices, online and consumer electronics. It has about 1.4 million paying subscribers. Its programming includes shows by shock jock Howard Stern and homestyle maven Martha Stewart, Nascar Radio, Fox News radio and Canadian content such as the Laugh Attack comedy channel.
Professor Ken Wong of Queen’s University School of Business said the appeal for satellite radio is probably strongest outside large urban markets where there’s less choice and for people who frequently travel by car or boat.
Wong said SiriusXM Canada could increase subscribers by bundling its service with cable TV or partnering with concert ticket providers or sports teams.
But it also has to cast its net wider than just signing up people to pay for the service, said Wong, who teaches marketing at the Kingston, Ont., university.
“You could also make membership in Sirius that gives you entitlement to a wide range of entertainment services, maybe at a discounted price or with some preferential seating or access,” he said.
“There’s no reason why Sirius can’t get into the content production game the same way that Bell and Rogers get into it,” he said of the telecom giants’ move to buy up television stations and sports franchises.
“Now their model has to be the same model as telecommunications companies are following, which is ‘How do I get more revenue from the subscribers I’ve got?”’
In its most recent quarter, holding company Canadian Satellite Radio Holdings Inc. reported a net loss of $2.7 million for the quarter, which accounted for a number of one-time items, including a $10-million amortization charge. That compared to a loss of $5.7 million in the comparable period a year earlier.
“The profit picture for SiriusXM Canada has been unacceptable,” the company said its CRTC filing. “In contrast to the healthy performance of commercial radio and pay audio, SiriusXM Canada’s shareholders have not fared well.”
