In the latest chapter in the challenging history of satellite
radio in Canada, the CRTC recently approved the long-pending
merger of Canada's two satellite radio services, Sirius
Canada Inc. (Sirius Canada) and XM Satellite Radio Canada (XM
Canada), effectively creating a monopoly for Satellite Subscription
Radio (SSR) services in Canada.
Under the terms of the deal, both Sirius Canada and XM Canada
will be wholly owned by Canadian Satellite Radio Holding Inc.
(CSRHI), currently the holding company for the licensee of Sirius
For those just tuning in, the Canadian transaction is part of a
larger initiative, commencing in 2007, between XM Satellite Radio
Inc. and Sirius Satellite Radio Inc., the operators of the
eponymous services in the United States, to merge their
operations. Each of these U.S. companies held minority
interests in their Canadian counterparts. Following Federal Communications
Commission and Department of Justice Antitrust
Division approval, the two U.S. companies merged in
July 2008 to form Sirius XM Radio Inc., with the result that the
new merged company held interests in each of the Canadian SSR
In their joint application for the merger, the Canadian SSR
service providers noted that the 2008 merger of the U.S. services
has created significant operational challenges for their Canadian
counterparts, each of which relies for signal delivery on its
corresponding U.S. service. The applicants submitted that as
the U.S. services progressed with their merger, including
rationalizing programming channels, the maintenance of two
distinct, viable, competing Canadian services was becoming more
The applicants also argued that the merger was essential to the
viability of their business, noting that since the commencement of
operations of their respective business they have been losing
money. The merger, it was argued, would spark the
companies' profitability and help them achieve a long-term
positive cash flow.
Notwithstanding the effective monopolization of SSR in Canada,
the CRTC ultimately determined that the transaction as a whole was
highly beneficial to consumers and the Canadian broadcasting
system, effectively defining the market in which SSR operates as a
very broad one. In this latter regard, the Commission noted
that the potential public detriment stemming from the merger was
mitigated by the availability of alternative sources of audio
programming and content, including pre-recorded digital audio,
radio, and audio streamed through the internet to various network
It remains to be seen whether this type of market definition
might be applied in future by the CRTC to other types of services
that may effectively compete with alternative retail and Internet
delivered content, such as competition between licensed television
broadcasting services and distribution undertakings and unregulated
Internet-based streaming and on-demand services.
To balance the dominant market position that will be gained by
CSRHI as a result of the merger, the applicants made several
commitments that they agreed to implement before the expiry of
their current license term. These include: ensuring substantial
amount of Aboriginal programming, implementing a rate freeze for
new and existing customers, expanding consumer access by offering
programming from both online services and via radio, and making
available interoperable radios to facilitate access to SSR
services. Apart from slight modifications, the Commission approved
these proposed commitments.
Given that both Sirius Canada and XM Canada had been
consistently operating in the red since their launch at the end of
2005, the companies were not required to pay "tangible
benefits", in the form of additional incremental spending
toward Canadian programming, consistent with the
Commission's approach to unprofitable radio
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