As Siriux XM (NASDAQ:SIRI) Canada faces increasing losses and greater competition, the company now wants to renegotiate its licensing terms to save millions of dollars annually. The move should place it on more even ground with radio’s traditional industry, reported the Globe and Mail.
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Timing may be on the side of Sirius. Their licensing is up for renewal for the first time since its 2005 issuance, and the company will ask the Canadian Radio-television and Telecommunications Commission to cut its requisite contributions for artistic development funds by approximately 90 percent. Facing similar problems as newspapers and television broadcasters–free consumer content–Sirius has seen subscribers exiting as radio stations are enjoying one of their best years. In its filing with the CRTC, the unprofitable company said, “Sirius XM Canada has been losing money at a disturbing rate.”
How disturbing has it been?
The company formed in 2011 from a merger between Sirius Canada and XM Canada; it is owned by the publicly traded company, Canadian Satellite Radio Holdings Inc. (XSR).
At the start of its seven-year license, the company had expectations of a $100 million loss over the time period but a $65 million annual profit by the end of the licence; the company has said “the actual figures are much worse” and, looking at its recent quarter, the company reported a $2.6 million loss. This compares to AM and FM stations revenues at $1.6 billion with profits rising to $311 million, according to CRTC.
Draining money from the company is its seven-year payment to CRTC: $52 million. This is almost $20-million higher than what is paid by the 400-plus Canadian-commercial radio stations during the same time, reported The Globe and Mail. With the money it receives from radio broadcasters, the CRTC moves it to programming which assists recording artists in making content.
On Thursday, the company has a licensing hearing, which will bring a grim picture for its future: difficulty in finding and retaining subscribers, expensive content and competition from expanding Internet-based music services.
Sirius will continue to face stiff competition, as domestic stations introduce new options such as a CBC’s free music player and Stingray Digital’s paid version. International players have entered the fray in Canada and lucky for them, they don’t have to pay money into the country’s content fund.
The company said of the current landscape, “These competitors, using new technologies, pose an even greater challenge for Sirius XM Canada – which is national and subscription-based, not local and free – than for commercial radio. Internet radio and radio that is available on wireless devices are complementary services to commercial radio, but are substitutes for satellite radio.”
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