RiseStar
August 12th, 2003, 11:12 AM
Bitrove JR Bids to Ride new Wave in Radio
Deal will launch satellite broadasts here Canadian content could be an issue
M. COREY GOLDMAN
SPECIAL TO THE STAR
MONTREAL—Former Toronto Raptors owner and Olympic bid leader John Bitove Jr. is getting into the satellite radio business with plans to launch a Canadian joint venture with U.S.-based XM Satellite Radio Holdings Inc., @Biz has learned.
XM will announce this week that it is teaming with a group led by Bitove to bring a version of its U.S.-based satellite radio service to Canadian consumers, according to Stewart Lyons, one of the partners working with Bitove.
The new company, called Canadian Satellite Radio Inc. (CSR) is completing its application for a broadcast license to the Canadian Radio-Telecommunications Commission, which it plans to file this fall.
Existing Canadian broadcasters have for some time been adding digital beams that offer clearer signals for their local programming. However, as yet few consumers have the receiving equipment needed to make those signals work.
Satellite radio, broadcast from space on a subscription basis to another kind of digital receiver, would have the effect of creating a new parallel line of radio stations that can be received beyond the range of traditional broadcasters.
As already operating in the United States, satellite radio content consists of a mix of new and familiar media. Some content is rebroadcast from sources such as ABC News, National Public Radio and BBC World Service. But other programming is original, targeting fans of jazz or rock music or other specialized categories.
It is a very significant development that satellite radio is coming to Canada, said CRTC spokesperson Denis Carmel. Consumers will be getting a greater choice of what they want to listen to, which will have an impact on the entire broadcasting market.
Bitove is one of Canadas largest restaurateurs, with operations that include Kentucky Fried Chicken, Pizza Hut, and Taco Bell. He was instrumental in bringing the National Basketball Association to Canada and led Torontos latest bid to host the summer Olympics.
Satellite radios appeal is that it can be beamed across the country with CD-like quality, along with data like song titles and artists names. Traditional radio spectrum can only stretch so far and cant carry additional information.
In the United States, satellite radio has struggled, but is starting to catch on as XM and its only competitor, Sirius Satellite Radio Inc., sign up car makers, stereo manufacturers and other equipment producers to produce and install the technology consumers need to receive the radio signals.
XM and its Canadian partner expect a regulatory hearing from the CRTC early next year, and plan to begin offering services to Canadian subscribers shortly after. Additional details are expected to be made public this week when XM files its usual quarterly financial update, called a 10-Q, to the U.S. Securities and Exchange Commission.
Under the Broadcasting Act, a non-Canadian company interested in offering radio broadcast services in Canada must either establish a Canadian-based subsidiary or partner with a Canadian-owned and controlled company — 80 per cent owned at the operating level and more than two-thirds at the holding level.
XM chose the latter, forging an alliance with Bitoves CSR, which will have controlling interest.
Since we already have a satellite footprint that extends deep into Canada, this provides a great opportunity to expand our business, said XM spokesperson Chance Patterson.
As we move though the process with the CRTC theyll give us guidance as to the conditions of the license and other details.
Other rules under the Broadcasting Act as well as regulations imposed by Heritage Canada dictate that a broadcaster must satisfy Canadian content rules that require a certain percentage of programming to be made in Canada.
However in CSMs case how such rules will apply is less clear, since the CRTC does not yet have official guidelines for content broadcast via satellite. It doesnt really fit their guidelines for this particular kind of service, CSRs Lyons said.
When it comes to content, there are guidelines in place for a lot of other existing formats, but we are really breaking new ground here.
XM offers some 100 channels ranging from hip-hop to opera to bluegrass — channels that will likely also be available to Canadians.
At the same time, CSR is working on forging relationships with existing Canadian broadcasters, which means the satellite system may end up, as in the United States, carrying already-familiar programming. The company has been in talks with CBC Radio and its French-language sister SRC.
Despite being awash in red ink, analysts note that XM has a lot going for it in terms building its subscriber base and forging relationships with the likes of General Motors, Hughes Electronics, Honda and radio station owner ClearChannel Communications.
Adding Canada to the listening mix will only help boost sales, they say.
XM has already proven that people will pay for radio, said Steve Mather, an analyst with brokerage Sanders Morris Harris in Los Angeles. Its not unheard of to pay for stuff that you used to get for free, particularly if youre getting something better.
XM has about $346 million in cash in its coffers, much of which will be needed to maintain its two satellites, launch a third next year and pay other costs.
While financial terms of XMs joint venture with Bitove werent disclosed, XMs Patterson said the costs would be relatively low since XM already has satellites in orbit that beam signals well beyond the U.S. border.
It also already has a studio in Washington D.C. that can program and send content to Canadian subscribers, and its third satellite will be able to handle additional Canadian channels that could be available to subscribers in the United States too.
Sirius has stated that it is also interested in offering its service in Canada, though hasnt yet moved forward with any plans, according to company spokesman Thomas Meyer.
One concern with XMs foray into Canada is local programming, which some fear will fall by the wayside if local stations cant compete with coast-to-coast satellite radio in hundreds of formats.
People have been interested in this for a number of years, and many people have approached us and spoken to us about establishing a presence in Canada, said Fernand Leger, director of spectrum policy with Industry Canada. I dont think it is something they would have pursued if they did not think there was an opportunity there.
But it is still a question whether Canadians will fork out the dough for satellite radio when they can get radio entertainment and information, including high-quality commercial-free CBC , through conventional AM, FM and digital receivers when finally widespread.
Mather didnt think that satellite radio will make ordinary radio stations and their localized programming irrelevant.
People will still listen to Bob and Cathy in the morning in their local market; that is not going away, he said. There will be AM, there will be FM and there will be satellite as a third subscriber-based option, just like pay-per-view is available on cable channels now.
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Deal will launch satellite broadasts here Canadian content could be an issue
M. COREY GOLDMAN
SPECIAL TO THE STAR
MONTREAL—Former Toronto Raptors owner and Olympic bid leader John Bitove Jr. is getting into the satellite radio business with plans to launch a Canadian joint venture with U.S.-based XM Satellite Radio Holdings Inc., @Biz has learned.
XM will announce this week that it is teaming with a group led by Bitove to bring a version of its U.S.-based satellite radio service to Canadian consumers, according to Stewart Lyons, one of the partners working with Bitove.
The new company, called Canadian Satellite Radio Inc. (CSR) is completing its application for a broadcast license to the Canadian Radio-Telecommunications Commission, which it plans to file this fall.
Existing Canadian broadcasters have for some time been adding digital beams that offer clearer signals for their local programming. However, as yet few consumers have the receiving equipment needed to make those signals work.
Satellite radio, broadcast from space on a subscription basis to another kind of digital receiver, would have the effect of creating a new parallel line of radio stations that can be received beyond the range of traditional broadcasters.
As already operating in the United States, satellite radio content consists of a mix of new and familiar media. Some content is rebroadcast from sources such as ABC News, National Public Radio and BBC World Service. But other programming is original, targeting fans of jazz or rock music or other specialized categories.
It is a very significant development that satellite radio is coming to Canada, said CRTC spokesperson Denis Carmel. Consumers will be getting a greater choice of what they want to listen to, which will have an impact on the entire broadcasting market.
Bitove is one of Canadas largest restaurateurs, with operations that include Kentucky Fried Chicken, Pizza Hut, and Taco Bell. He was instrumental in bringing the National Basketball Association to Canada and led Torontos latest bid to host the summer Olympics.
Satellite radios appeal is that it can be beamed across the country with CD-like quality, along with data like song titles and artists names. Traditional radio spectrum can only stretch so far and cant carry additional information.
In the United States, satellite radio has struggled, but is starting to catch on as XM and its only competitor, Sirius Satellite Radio Inc., sign up car makers, stereo manufacturers and other equipment producers to produce and install the technology consumers need to receive the radio signals.
XM and its Canadian partner expect a regulatory hearing from the CRTC early next year, and plan to begin offering services to Canadian subscribers shortly after. Additional details are expected to be made public this week when XM files its usual quarterly financial update, called a 10-Q, to the U.S. Securities and Exchange Commission.
Under the Broadcasting Act, a non-Canadian company interested in offering radio broadcast services in Canada must either establish a Canadian-based subsidiary or partner with a Canadian-owned and controlled company — 80 per cent owned at the operating level and more than two-thirds at the holding level.
XM chose the latter, forging an alliance with Bitoves CSR, which will have controlling interest.
Since we already have a satellite footprint that extends deep into Canada, this provides a great opportunity to expand our business, said XM spokesperson Chance Patterson.
As we move though the process with the CRTC theyll give us guidance as to the conditions of the license and other details.
Other rules under the Broadcasting Act as well as regulations imposed by Heritage Canada dictate that a broadcaster must satisfy Canadian content rules that require a certain percentage of programming to be made in Canada.
However in CSMs case how such rules will apply is less clear, since the CRTC does not yet have official guidelines for content broadcast via satellite. It doesnt really fit their guidelines for this particular kind of service, CSRs Lyons said.
When it comes to content, there are guidelines in place for a lot of other existing formats, but we are really breaking new ground here.
XM offers some 100 channels ranging from hip-hop to opera to bluegrass — channels that will likely also be available to Canadians.
At the same time, CSR is working on forging relationships with existing Canadian broadcasters, which means the satellite system may end up, as in the United States, carrying already-familiar programming. The company has been in talks with CBC Radio and its French-language sister SRC.
Despite being awash in red ink, analysts note that XM has a lot going for it in terms building its subscriber base and forging relationships with the likes of General Motors, Hughes Electronics, Honda and radio station owner ClearChannel Communications.
Adding Canada to the listening mix will only help boost sales, they say.
XM has already proven that people will pay for radio, said Steve Mather, an analyst with brokerage Sanders Morris Harris in Los Angeles. Its not unheard of to pay for stuff that you used to get for free, particularly if youre getting something better.
XM has about $346 million in cash in its coffers, much of which will be needed to maintain its two satellites, launch a third next year and pay other costs.
While financial terms of XMs joint venture with Bitove werent disclosed, XMs Patterson said the costs would be relatively low since XM already has satellites in orbit that beam signals well beyond the U.S. border.
It also already has a studio in Washington D.C. that can program and send content to Canadian subscribers, and its third satellite will be able to handle additional Canadian channels that could be available to subscribers in the United States too.
Sirius has stated that it is also interested in offering its service in Canada, though hasnt yet moved forward with any plans, according to company spokesman Thomas Meyer.
One concern with XMs foray into Canada is local programming, which some fear will fall by the wayside if local stations cant compete with coast-to-coast satellite radio in hundreds of formats.
People have been interested in this for a number of years, and many people have approached us and spoken to us about establishing a presence in Canada, said Fernand Leger, director of spectrum policy with Industry Canada. I dont think it is something they would have pursued if they did not think there was an opportunity there.
But it is still a question whether Canadians will fork out the dough for satellite radio when they can get radio entertainment and information, including high-quality commercial-free CBC , through conventional AM, FM and digital receivers when finally widespread.
Mather didnt think that satellite radio will make ordinary radio stations and their localized programming irrelevant.
People will still listen to Bob and Cathy in the morning in their local market; that is not going away, he said. There will be AM, there will be FM and there will be satellite as a third subscriber-based option, just like pay-per-view is available on cable channels now.
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1060554905664&call_pageid=968350072197&col=969048863851