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Broadcasting Decision CRTC 2005-246
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Ottawa, 16 June 2005
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Canadian Satellite Radio Inc.
Across Canada
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Application 2003-1081-3
Public Hearing in the National Capital Region
1 November 2004
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Satellite subscription radio undertaking
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The Commission approves the application by Canadian Satellite Radio Inc. (CSR) for a broadcasting licence to carry on a satellite subscription radio undertaking, subject to the conditions of licence set out in the appendix to this decision.
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CSR is wholly-owned by John Bitove, who is a citizen and resident of Canada.
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By condition of licence, the licensee must provide a minimum of eight original Canadian-produced channels at the beginning of operations, and may distribute, to any Canadian subscriber, a maximum of nine non-Canadian-produced channels for each original Canadian-produced channel that it distributes. A minimum of 85% of the musical selections broadcast on all Canadian-produced channels, considered together, must be Canadian selections.
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The licensee must also, by condition of licence, distribute a minimum of three French-language original Canadian produced channels at the beginning of operations and, at any time, not less than 25% of the original Canadian-produced channels offered by the undertaking must be French-language channels. A minimum of 65% of all category 2 (popular music) vocal musical selections broadcast on each French-language channel must be French-language selections.
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The CSR application was one of three applications for subscription radio undertakings considered at the 1 November 2004 public hearing. The Commission's general approach to these applications is set out in Introduction to Broadcasting Decisions CRTC 2005-246 to 2005-248: Licensing of new satellite and terrestrial subscription radio undertakings, Broadcasting Public Notice CRTC 2005-61, of today's date (Public Notice 2005-61).
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CSR must provide written confirmation, within 150 days of this decision, that it accepts the terms and conditions set out in this decision and in the licensing framework set out in Public Notice 2005-61, including any necessary revisions to its agreements with its American partner. Failure to provide such confirmation within the required timeframe shall render this decision null and void.
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Overview of the application
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1.
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The Commission received an application by Canadian Satellite Radio Inc. (CSR) for a broadcasting licence to carry on a satellite subscription radio undertaking.
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2.
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CSR is owned and controlled by John Bitove, a citizen and resident of Canada. A Memorandum of Agreement (MOA) dated 7 August 2003 was entered into on behalf of John Bitove, CSR, its parent companies and XM Satellite Radio Inc. (XM), an American corporation. Pursuant to the MOA, options have been granted to XM to acquire an ownership interest in the proposed licensee, CSR and/or its parent companies, all of which are controlled by John Bitove. The options would enable XM to acquire either
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a) 33% of the shares of Canadian Satellite Radio Holdings Inc. (CSRH), the parent company of CSR;
b) 16.66% of the shares of CSRH and 20% of the licensee, CSR.
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3.
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If option a) is exercised, the licensee would establish an independent programming committee to comply with the Direction to the CRTC (Ineligibility of Non-Canadians) under which neither CSRH nor its directors would be permitted to influence the programming decisions of CSR. The structure of the independent programming committee would be subject to prior approval by the Commission.
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4.
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The applicant indicated that the undertaking would deliver a package of radio channels to subscribers for a basic monthly fee of $12.99.
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5.
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CSR originally proposed to offer four Canadian-produced channels. These channels would include an English-language and a French-language music channel that would offer only Canadian musical selections, as well as an English-language comedy channel and a French-language news and talk channel. CSR further proposed to offer 97 channels provided by XM, one of two companies that provides satellite radio service in the United States.
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6.
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At the hearing, CSR indicated that it would launch its service with a fifth Canadian-produced channel that would offer multicultural and multilingual programming and would add three more Canadian-produced channels by the end of its fifth year of operation, if additional satellite bandwidth were available from XM. It further advised that the number of programming channels originating from its American partner had increased to 122.
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7.
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CSR also stated that 1,872 hours of original programming per year, or 36 hours per week of "lateral programming" would be broadcast on the channels originating from XM. The applicant defined lateral programming as Canadian-produced programs that feature Canadian artists. CSR also estimated that Canadian selections currently represent approximately 2.5% of all musical selections broadcast on XM's music channels. CSR made a commitment that, if licensed, it would ensure that 7% of all new musical selections added to the playlists of XM channels each week would be Canadian selections.
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8.
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CSR originally committed to spend $4.1 million on Canadian talent development (CTD) initiatives in its first licence term. This commitment was increased in May 2004 to $19.75 million and, at the hearing, CSR committed to a minimum contribution of 4% of projected revenues and not less than $1.2 million per year. CSR also stated that, if it were unable to launch the three additional Canadian-produced channels, it would increase its CTD contributions by 1% of revenues in the fifth year of operation for each of the three channels. The applicant proposed to allocate its CTD contributions equally between initiatives for the development of Canadian English- and French-language talent.
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9.
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The CSR application was one of three applications for subscription radio undertakings considered at the 1 November 2004 public hearing. The Commission's general approach to these applications, including a licensing framework for satellite subscription radio undertakings, is set out in Introduction to Broadcasting Decisions CRTC 2005-246 to 2005-248: Licensing of new satellite and terrestrial subscription radio undertakings, Broadcasting Public Notice CRTC 2005-61, of today's date (Public Notice 2005-61).
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Interventions
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10.
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The Commission received more than 300 interventions in support of this application. Interventions raising concerns and addressing policy issues associated with the licensing of satellite subscription radio undertakings are discussed in Public Notice 2005-61.
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The Commission's analysis and determinations
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Canadian channels
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11.
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CSR originally proposed to offer the following four Canadian-produced channels at the beginning of operations.
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12.
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Laugh Canada: The primary goal of Laugh Canada would be to showcase Canadian comedy. The channel would be a collaborative effort of CSR and CTV's Comedy Network, which would supply Laugh Canada with about half of the programming broadcast on the channel and provide access to its archives of the work of Canadian stand-up comedians. The applicant indicated that at least 70% of the spoken word broadcast by the channel would be Canadian, and that at least 50% all Canadian spoken word would consist of original comedy programming.
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13.
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Canal À Propos: This channel would feature French-language spoken word programming and would target listeners aged 18-34. About half of the programming would be acquired from the conventional radio station CKAC Montréal. The rest of the programming would be produced by CSR and would provide information from the different regions of Canada. Some open-line programming would be included in the schedule.
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14.
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Northern Lights: This English-language channel would showcase Canadian music in up to fifty different genres. Less than 60% of the musical selections in any broadcast week would come from category 2 (popular music). Not less than 52% of all musical selections broadcast on the channel in any broadcast week would consist of musical selections that were released in Canada in the six months prior to broadcast.
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15.
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Lumières Nordiques: This French-language music-oriented channel would focus primarily on Canadian music. Less than 60% of the musical selections broadcast during each broadcast week would come from category 2. CSR indicated that at least 65% of the vocal musical selections broadcast on the channel each broadcast week would be French-language selections, and at least 80% of the musical selections aired during each broadcast week would be Canadian selections. Not less than 52% of all musical selections broadcast on the channel in any broadcast week would consist of musical selections that were released in Canada in the six months prior to broadcast.
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16.
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At the hearing, CSR committed to launch its service with a fifth Canadian-produced channel offering multicultural and multilingual programming, and to add three more Canadian-produced channels by the end of its fifth year of operation if additional satellite bandwidth is available from XM.
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17.
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In Public Notice 2005-61, the Commission set out a framework under which it would licence satellite subscription radio undertakings. In Public Notice 2005-61, the Commission indicated that it considered that the number of Canadian channels proposed by the applicants for satellite subscription radio undertakings at the 1 November 2004 public hearing was not sufficient, and that it was inappropriate for such undertakings to rebroadcast existing radio services in their entirety. Consequently, the Commission indicated that it would require licensees of such undertakings, including CSR, to distribute a minimum of eight original Canadian-produced channels from the outset of operations. An "original Canadian-produced channel" is defined as a channel produced in Canada that consists of programming not less than 50% of which is produced for and broadcast for the first time on that channel. The Commission further indicated that a satellite subscription radio undertaking would be permitted to distribute to any Canadian subscriber a maximum of nine non-Canadian produced channels for each original Canadian-produced channel that it distributes, and that no subscriber would be permitted to receive a package of channels where original Canadian-produced channels constituted less than 10% of the channels received. Conditions of licence to this effect are set out in the appendix to this decision. As well, the Commission indicated that it expects at least 60% of the original Canadian-produced channels distributed by satellite subscription radio undertakings to be music channels.
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18.
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In accordance with the licensing framework set out in Public Notice 2005-61, the Commission is also imposing conditions of licence requiring CSR to devote a minimum of 85% of the total musical selections broadcast on all Canadian-produced channels, considered together, to Canadian selections, and to devote a minimum of 85% of the total spoken word programming broadcast on all Canadian-produced channels, considered together, to Canadian spoken word programming. These conditions are also set out in the appendix to this decision.
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19.
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The Commission also acknowledges CSR's commitment that 7% of all new musical selections added to the playlists of XM channels each week will be Canadian selections, and intends to review CSR's success in fulfilling this commitment when the licence renewal for CSR is considered.
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French-language channels
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20.
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As indicated above, the applicant originally proposed to offer two French-language channels. Canal À Propos would be devoted to spoken word programming. CSR proposed that at least 65% of the vocal musical selections broadcast each week on the other French-language service, Lumières Nordiques, would be devoted to French-language vocal musical selections, a level that is the same as that required of French-language conventional radio stations.
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21.
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In Public Notice 2005-61, the Commission determined that it was appropriate to require each satellite subscription radio undertaking to distribute a minimum of three French-language original Canadian-produced channels from the outset of operations and to require that not less than 25% of the original Canadian-produced channels are French-language original Canadian-produced channels. Conditions of licence to this effect are set out in the appendix to this decision.
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22.
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Further, in accordance with the licensing framework set out in Public Notice 2005-61, the Commission is imposing a condition of licence requiring the licensee to ensure that at least 65% of the category 2 vocal musical selections broadcast on each Canadian-produced French-language channel during each week are French-language selections. This condition of licence is also set out in the appendix to this decision.
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New Canadian music and emerging talent
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23.
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CSR submitted that one of the benefits of approving its application is that its proposed undertaking would provide exposure for new Canadian music that receives little or no airplay on conventional radio stations. CSR made commitment that at least 52% of all musical selections distributed on its Northern Lights and Lumières Nordiques channels would be selections released in the previous six months.
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24.
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In Public Notice 2005-61, the Commission stated that it considered that it was appropriate to require each satellite subscription radio undertaking to ensure that, between 6 a.m. and midnight each week on each Canadian music channel, a minimum of 25% of the musical selections broadcast will be new Canadian musical selections, and a minimum of 25% will be Canadian selections by artists who have not had a musical selection that has reached a position on one or more of the charts identified in the list set out in Circular 445, 14 August 2001, as may be amended from time to time. A condition of licence to this effect is set out in the appendix to this decision.
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25.
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For the purposes of this condition, a "new Canadian musical selection" is a Canadian selection that has been released in the 6 months prior to the date that the musical selection is broadcast. The Eastern time zone will be used when determining compliance with this condition of licence. The licensee will also be responsible for specifying on the music lists it provides to the Commission, the release date of all musical selections it broadcasts.
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Canadian talent development
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26.
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The applicant proposed to allocate its CTD expenditures of $19.75 million over the first seven years as follows:
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Initiatives to support Canadian English-language artists
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- Fund to Assist Canadian Talent on Recored (FACTOR) ($6,300,000)
- CTD coordinator ($525,000)
- Canadian Independent Music Awards ($420,000)
- Indie Pool - support for independent recording artists ($420,000)
- US showcases for Canadian artists ($700,000)
- Talent contest ($525,000)
- Canadian radio - development of student talent ($210,000)
- Scholarships ($70,000)
- CARAS Band-Aid - instruments for school music programs ($140,000)
- CSR theatre and spoken word events ($140,000)
- Comedy initiatives ($1,120,000)
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Initiatives to support Canadian French-language artists
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- MusicAction ($6,300,000)
- Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ) - support for the annual Gala ($420,000)
- New music concert series ($535,000)
- Talent contest ($525,000)
- Theatre and spoken word initiatives ($175,000)
- French-language radio - development of student talent ($280,000)
- Scholarships ($350,000)
- CARAS Band-Aid - instruments for school music programs ($140,000)
- Encoding of CDs to facilitate on-line sales ($140,000)
- US showcases for French-language artists ($350,000)
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27.
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In addition, the applicant committed, at the hearing, to spend $400,000 per year on two international showcases of French-language Canadian artists.
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28.
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At the hearing, CSR also indicated that it would also be "favourably inclined to designate community and campus radio stations as eligible third party participants to CTD funding."
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29.
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The Commission considers that CSR has proposed valuable initiatives for CTD. However, in accordance with the licensing framework for satellite subscription radio undertakings set out in Public Notice 2005-61, the Commission requires the applicant to contribute 5% of gross annual revenues to CTD, with 50% of the total contribution allocated to the development of Canadian French-language talent and 50% allocated to the development of Canadian English-language talent. Conditions of licence to this effect are set out in the appendix to this decision.
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30.
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Given that CSR proposed to devote only 4% of gross revenues to CTD, the Commission requires the applicant to file for approval by the Commission, before it commences operations, a plan setting out all initiatives for CTD that it will undertake in order to fulfil the 5% requirement. Further, the Commission is imposing a condition of licence that requires CSR to file a report on the fulfilment of its CTD commitments with each annual return. This condition is set out in the appendix to this decision.
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Advertising and local programming
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31.
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CSR indicated that it would not broadcast local programming, including local advertising, on its Canadian-produced channels, but proposed to broadcast six minutes per hour of national advertising.
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32.
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In Public Notice 2005-61, the Commission indicated that it considered it appropriate to require satellite subscription radio undertakings not to broadcast any programming that targets a particular geographic community, including local commercial messages. However, the Commission determined that it would allow such undertakings to broadcast up to six minutes of national commercial messages per hour on each channel. Conditions of licence to this effect are set out in the appendix to this decision.
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Adherence to regulations and industry codes
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33.
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CSR committed to be accountable for the content of all programming broadcast on all Canadian-produced and non-Canadian-produced channels distributed by the proposed undertaking. It undertook not to broadcast anything in contravention of the law, any abusive comment, or any obscene or profane language. CSR also committed to adhere to the Canadian Association of Broadcasters' (CAB) Sex-role Portrayal Code for Television and Radio Programming and the Broadcast Code for Advertising to Children.
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34.
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CSR further indicated that it would designate channels intended for mature audiences as "XL channels" in order that listeners may easily identify channels that may carry potentially offensive programming.
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35.
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In accordance with the licensing framework for satellite subscription radio undertakings set out in Public Notice 2005-61, the Commission will require CSR, by condition of licence, to adhere to relevant provisions of the Radio Regulations, 1986,as well as to the CAB Sex-role Portrayal Code for Television and Radio Programming and the Broadcast Code for Advertising to Children. It will also require CSR to maintain program logs for all Canadian-produced channels, logger tapes for all Canadian-produced channels and any non-Canadian-produced channels that the Commission may designate from time to time, and music lists for all channels that it distributes.
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36.
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The Commission directs CSR to file, within 150 days of the release of this decision, internal guidelines for dealing with complaints from listeners for the Commission's approval. Once these guidelines have been approved, the Commission expects the applicant to apply these guidelines to the consideration of any complaint that is received.
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37.
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The Commission also expects CSR to adhere to the Commission's Policy regarding open-line programming, Public Notice CRTC 1988-213, 23 December 1988.
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Employment equity
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38.
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At the public hearing, CSR made a commitment to develop an employment equity policy. The Commission expects CSR to file this plan with the Commission.
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39.
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In accordance with Implementation of an employment equity policy, Public Notice CRTC 1992-59, 1 September 1992, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.
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Cultural diversity
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40.
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The Commission expects CSR to reflect the cultural diversity of Canada in its programming, and encourages it to promote those channels that are targeted to specific cultural groups.
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Conclusion
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The Commission approves the application by Canadian Satellite Radio Inc. and, consistent with the approach set out in Public Notice 2005-61, will issue a broadcasting licence to carry on a satellite subscription radio undertaking. The licence will expire on 31 August 2011 and will be subject to the conditions of licence set out in the appendix to this decision.
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42.
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The Commission notes that, while CSR will provide national service by satellite, it has also proposed to establish a number of terrestrial transmitters to fill in areas where coverage is deficient. The Commission's approval of the terrestrial transmitters is based on the technical submissions filed with the application. The applicant must also obtain technical certification from the Department of Industry (the Department) on the basis of requirements set out in Annex 1 of the Department's letter to the Commission and copied to the applicant entitled Issuance of technical broadcasting certificates for applications authorized to provide subscription radio services, 21 September 2004. CSR must also provide the Commission with a copy of all technical submissions, including coverage maps, that it sends to the Department.
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43.
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The Commission reminds the applicant that, pursuant to section 22(1) of the Broadcasting Act, no licence may be issued until the Department notifies the Commission that its technical requirements have been met, and that a broadcasting certificate will be issued.
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44.
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The licence for this undertaking will only be issued when:
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a) the applicant has informed the Commission in writing that it is prepared to commence operations; and
b) the applicant has filed, to the Commission's satisfaction, copies of all final and binding agreements (the Agreements) between John Bitove, CSR, its parent companies and XM. The Agreements include, but are not limited to, the programming agreement, trademark agreement and licence agreement.
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45.
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The undertaking must be operational at the earliest possible date and in any event no later than 24 months from the date of this decision, unless a request for an extension of time is approved by the Commission before 16 June 1007. In order to ensure that such a request is processed in a timely manner, it should be submitted at least 60 days before this date.
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Confirmation required
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46.
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CSR must provide written confirmation, within 150 days of this decision, that it accepts the terms and conditions set out in this decision and in the licensing framework set out in Public Notice 2005-61, including any necessary revisions to its agreements with its American partner. Failure to provide such confirmation within the required timeframe shall render this decision null and void.
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Secretary General
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This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined in PDF format or in HTML at the following Internet site: http://www.crtc.gc.ca
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Appendix to Broadcasting Decision CRTC 2005-246
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Conditions of licence for the satellite subscription radio undertaking licensed to Canadian Satellite Radio Inc.
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1 (a) The licensee shall provide a national satellite subscription radio undertaking consisting of original Canadian-produced channels and non-Canadian channels. The licensee is authorized to distribute the services of XM Satellite Radio Inc. in accordance with the terms of the conditions of licence set out below.
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(b) The licensee shall distribute a minimum of eight original Canadian-produced channels.
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(c) The licensee may distribute, to any Canadian subscriber, a maximum of nine non-Canadian-produced channels for each original Canadian-produced channel that it distributes.
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(d) In no case may a subscriber receive a package of channels where original Canadian-produced-channels constitute less than 10 percent of total channels received.
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For purposes of this condition of licence, an "original Canadian-produced channel" is a channel produced in Canada that consists of programming not less than 50% of which is produced for and broadcast for the first time on that channel.
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2. The licensee shall, in a week, devote a minimum of 85% of the total musical selections broadcast on all Canadian-produced channels, considered together, to Canadian selections as defined in section 2.2(2) of the Radio Regulations, 1986.
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3. The licensee shall, in a week, devote at least 85% of the total spoken word programming broadcast on all Canadian-produced channels, considered together, to Canadian spoken word programming.
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For purposes of this condition of licence "Canadian spoken word programming" means programming other than musical selections or commercial messages that is produced in Canada and where a Canadian is the primary performer or speaker.
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4. (a) The licensee shall distribute a minimum of three French-language original Canadian-produced channels.
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(b) Not less than 25% of the original Canadian-produced channels distributed by the licensee shall consist of French-language original Canadian-produced channels.
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For purposes of this condition of licence, an "original Canadian-produced channel" is a channel produced in Canada that consists of programming not less than 50% of which is produced for and broadcast for the first time on that channel.
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5. The licensee shall, during a week, on each French-language channel, devote 65% or more of its vocal musical selections from content category 2 to musical selections in the French language and schedule them in a reasonable manner throughout each day.
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6. The licensee shall devote, between 6 a.m. and midnight each week on each Canadian music channel, a minimum of 25% of the musical selections broadcast to new Canadian musical selections, and a minimum of 25% of the musical selections broadcast to Canadian selections by artists who have not had a musical selection that has reached a position on one or more of the charts identified in the list set out in Circular 445, 14 August 2001, as may be amended from time to time.
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For the purposes of this condition of licence, a "new Canadian musical selection" is a Canadian selection that has been released in the 6 months prior to the date that the musical selection is broadcast. The Eastern time zone will be used for purposes of determining compliance with this condition of licence. The licensee will also be responsible for specifying on the music lists it provides to the Commission, the release date of all musical selections it broadcasts.
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7. (a) During each broadcast year, the licensee shall contribute a minimum of 5% of gross revenues from its satellite subscription radio undertaking to eligible third parties directly connected to the development of Canadian musical and other artistic talent or other initiatives approved by the Commission. For purposes of this condition of licence, "eligible third parties" shall have the definition set out in Contributions by radio stations to Canadian talent development - A new approach, Public Notice CRTC 1995-196, 17 November 1995, as amended from time to time by the Commission.
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(b) Fifty per cent of the licensee's total annual contribution to Canadian talent development shall be allocated to initiatives for the development of Canadian French-language talent, and fifty percent shall be allocated to initiatives for the development of Canadian English-language talent.
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(c) The licensee shall file a report on the fulfilment of its commitments with respect to Canadian talent development with each annual return. The report shall set out the initiatives that the licensee has supported, the amount spent on each initiative, as well as the total amounts devoted to initiatives for the development of French-language and English-language talent.
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8. The licensee shall not broadcast any original local programming on a Canadian-produced channel. For the purposes of this condition of licence "original local programming" means programming produced by the licensee for broadcast on the satellite subscription radio undertaking that targets a particular geographic community and includes, but is not limited to, commercial messages, news, weather and traffic information.
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9. The licensee shall broadcast no more than six minutes of national commercial messages during any clock hour on any Canadian-produced channel. For purposes of this condition of licence a "national commercial message" is a commercial message that is purchased at a national rate and receives national distribution on the service.
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10. The licensee shall adhere to sections 3, 4, 6,10.1 (with respect to its terrestrial transmitters) and 11 of the Radio Regulations, 1986.
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11. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB) Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and approved by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council.
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12. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.
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13. The licensee shall, for each Canadian-produced channel, adhere to the provisions of sections 8(1), (2), (3), (4), (5) and (6) of the Radio Regulations, 1986.
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14. The licensee shall, for any non-Canadian-produced channel that may be identified by the Commission from time to time, adhere to the provisions of sections 8(5) and (6) of the Radio Regulations, 1986.
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15. (1) For the purposes of this condition of licence,
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"Canadian musical selection" means a musical selection that meets the criteria set out in subsection 2.2(2) of the Radio Regulations, 1986.
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(2) On or before November 30 of each year, the licensee shall submit to the Commission a statement of accounts, on the annual return of broadcasting licensee form, for the year ending on the previous August 31.
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(3) For any Canadian-produced channel, the licensee shall, at the request of the Commission, submit for any period specified by the Commission in its request
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(a) the information required by the most recent Station Self-assessment Report form issued by the Commission; and
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(b) a list of the musical selections in the order in which they are broadcast by the licensee during that period that includes the title and performer of each musical selection and a legend that identifies
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(i) any Canadian musical selection,
(ii) any instrumental selection,
(iii) any category 3 musical selection within the meaning of Public Notice CRTC 1991-19 of 14 February 1991 entitled Implementation of the FM Policy and published in the Canada Gazette Part I on 23 February 1991, and
(iv) the language of the musical selection, where the musical selection is not an instrumental selection.
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(4) For any non-Canadian produced channel, the licensee shall, at the request of the Commission, submit for any period specified by the Commission in its request, the following information for each musical selection broadcast:
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(i) the name of the artist;
(ii) the name of the album from which the musical selection is taken and the number of the track;
(iii) the year that the musical selection was released; and
(iv) the version of the track, where multiple versions exist
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(5) At the request of the Commission, the licensee shall provide the Commission with a response to any inquiry regarding the licensee's programming, ownership or any other matter within the Commission's jurisdiction that relates to the licensee's undertaking.
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16. For the purposes of all the conditions of licence set out above, the terms "broadcast day," "broadcast week," "commercial message," "content category," "content subcategory," "ethnic program," "licensed," and "musical selection," shall have the meaning set out in section 1 of the Radio Regulations, 1986. "Day" means the total number of hours devoted to broadcasting for a period beginning at 12:00 in the forenoon and ending at midnight of the same day. "Week" means seven consecutive days beginning on Sunday.
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Date Modified: 2005-06-16
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