Toronto-based satellite radio service SiriusXM Canada Inc. is asking The Canadian Radio-Television Commission (CRTC) to significantly reduce its financial contribution to the development of Canadian content.
The hearings, held this week in Gatineau, Quebec, include applications from a number of broadcasters. The CRTC is the independent public organization that regulates and supervises the Canadian broadcasting and telecommunications systems.
SiriusXM Canada — listed in the public Broadcasting Notice of Consultation under a section noting licensees that have failed to comply with certain conditions of license or mandatory orders — is requesting several amendments for the next license term.
The current license, which was granted to the brand new Canadian service — then two separate companies, Sirius Canada and XM Canada — was granted in 2005 and expires August 31, 2012. The two companies merged in 2008.
“Sirius XM Canada Inc. indicated that it does not seek to renew a separate license for Sirius Canada and proposed to hold a single license covering both the Sirius Canada and XM Canada undertakings,” the notice states.
“Sirius XM Canada Inc. proposed to amend the condition of license requiring the licensee to contribute a minimum of 5% of gross revenues in each broadcast year to Canadian Content Development (CCD) by reducing the amount to 0.5% of gross revenues in each broadcast year.”
The report states that Canadian Satellite Radio Inc. (CSRI), the former licensee of XM Canada, “may have failed to comply with its conditions of licence relating to CCD for the 2009-2010 and 2010-2011 broadcast years.
“It also appears that subsequent to the Commission’s monitoring of the service in 2008, CSRI may have failed to comply with its conditions of license relating to Canadian music content and advertising.
“It further appears that Sirius Canada Inc., the former licensee of Sirius Canada, may have failed to comply with its conditions of license relating to CCD contributions for the 2006-2007 and 2007-2008 broadcast years and the level of new Canadian music.”
The public notice states that The Commission will broach the “apparent non-compliance” at the hearing as well as other topics such as:
“The future of satellite radio, the development of competing technologies, the business plans of the services, including channel line-ups; contributions to CCD; directives and other matters raised in Canadian Satellite Radio Inc. and Sirius Canada Inc. – Change in effective control, Broadcasting Decision CRTC 2011-240, 11 April 2011; and the length of the next licence term and the appropriateness of a three-year license term.”
The amount of 0.5% is the rate of gross revenue that radio stations holding a commercial radio license must pay towards CCD.
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.
“The profit picture for SiriusXM Canada has been unacceptable,” the satellite radio broadcaster wrote to the CRTC. “In contrast to the healthy performance of commercial radio and pay audio, SiriusXM Canada’s shareholders have not fared well.”
In an April 12, 2012 news release captioned “SiriusXM Canada Reports Continued Growth in Fiscal 2012 Second Quarter,” SiriusXM Canada president and CEO Mark Redmond, says:
“With another quarter of strong results, we continue to be one of the fastest growing media companies in Canada. In Q2, we expanded our subscriber base, delivered record revenue and realized further merger-related cost synergies. As a result, we more than doubled Adjusted EBITDA and generated significant cash from operations. In addition, we completed a secondary offering subsequent to quarter-end, substantially increasing the size and liquidity of the Company’s publicly traded float. Looking ahead, we expect to continue to report strong Adjusted EBITDA, which in combination with our low capital expenditure requirements, positions us to consistently deliver free cash flow.”