Without a Canadian satellite capable of delivering pay radio, Canada's broadcast regulator on June 16 licensed U.S. rivals XM Satellite Radio Holdings and Sirius Satellite Radio to launch subscription

TORONTO (The Hollywood Reporter) -- Without a Canadian satellite capable of delivering pay radio, Canada's broadcast regulator on June 16 licensed U.S. rivals XM Satellite Radio Holdings and Sirius Satellite Radio to launch subscription-based radio services here with Canadian partners.

The Canadian Radio-television and Telecommunications Commission also licensed a homegrown terrestrial service that will see domestic broadcasters CHUM Ltd. and Astral Media Inc. use broadcast towers rather than a satellite to launch a competing pay-radio service.

But the decision to allow XM and Sirius into Canada will have implications on how the CRTC can ensure Canadian content remains on the air here in the digital era.

"These decisions foster the objectives of the Broadcasting Act and balance the interests of Canadian consumers, the radio industry and the music industry," CRTC chairman Charles Dalfen said after the release of his licensing decision.

While greenlighting the two U.S. services, the CRTC imposed strict Canadian-content quotas on XM Satellite Radio, which will partner with Canadian John Bitove Jr., former owner of the Toronto Raptors, and Sirius, which has tied up with the Canadian Broadcasting Corp. and Toronto-based Standard Radio.

Both the Canadianized XM and Sirius pay-radio services must have at least eight Canadian-produced channels and a maximum of nine foreign channels for each Canadian channel.

Those conditions are more stringent than those proposed by XM and Sirius when they made their original applications to the CRTC.

XM's Canadian Satellite Radio consortium proposed 101 XM channels, of which only five would be produced in Canada.

The Sirius group in its bid proposed four Canadian channels among 78 Sirius channels.

Looking to bolster homegrown talent, the CRTC also ordered that at least 85% of music and spoken-word programming airing on the Canadian channels must be indigenous content, and 25% of the Canadian channels must be in French.

The CRTC further required the U.S. services to ensure 25% of music on the Canadian channels represents new talent. Both the XM and Sirius-led consortiums also must contribute 5% of their gross annual revenue to developing young Canadian talent.

XM and Sirius have 150 days to weigh whether they can live with the Canadian-content conditions imposed on their licenses.

In a statement, XM president/CEO Hugh Panero said his company already features Canadian artists in its U.S. service, and that XM would work with its Canadian partner "to address the differences between the Canadian content standards described in the broadcasting license and what was proposed in the license application."

"We now have to sit down with our partner XM to discuss the new and incremental programming conditions of this license, which were not contemplated in our original application," XM partner John Bitove added.

The responses to the CRTC from XM and Sirius will have implications for all Canadian broadcasters; the federal Broadcasting Act, which governs domestic radio and TV stations here, demands that all authorized broadcasters have "predominantly" homegrown content on the air.

Both the Canadianized XM and Sirius licenses, on the other hand, will have mostly American fare should they choose to launch.

Allowing both U.S. pay-radio services into Canada with mostly American content would open the way for other broadcasters here to demand the same treatment.

The CRTC insisted that it had no alternative to allowing XM and Sirius into Canada because the country has yet to launch its own satellite capable of offering a homegrown pay-radio service.

The Canadian terrestrial pay-radio service from Chum and Astral proposes 50 channels produced entirely in Canada, with 35% of all music chosen being Canadian content. The CRTC imposed no content quota for spoken-word programming on the Canadian pay-radio license.