DETROIT -- Canadian restrictions on language and programming are giving U.S. satellite radio companies the blues.
XM Satellite Radio Inc. is rethinking whether it wants to enter the Canadian market in light of the additional costs and complications of meeting government content requirements.
Sirius Radio Inc. is committed to moving forward but has concerns.
"We are spending most of our time with our Canadian partner trying to determine if this is the right thing to do, given the restrictions," says XM Chairman Gary Parsons.
Options "include not going forward at all," Parsons said
Last week the Canadian Radio-Television and Telecommunication Commission approved applications for the companies to broadcast. The hitch is that the companies must guarantee a certain level of French-language and Canadian music programming. Canada officially is a bilingual country using French and English.
For example, at least eight original channels must be produced in Canada and a maximum of nine foreign channels may be offered for each Canadian channel. At least 25 percent of Canadian channels must be in French.
The requirements are leaving both companies with questions:
"We have to ensure this does not diminish the American listening experience," Parsons said. "We have to have a set of channels and programming that is highly attractive to the U.S. market."
Parsons made his comments after speaking with journalists at the Automotive Press Association lunch in Detroit on Tuesday, June 21.
Both XM and Sirius put stakes in the game before the commission approved their applications.
XM is partnered with newly created and independently owned Canadian Satellite Radio, but it has not exercised its option to buy as much as 30 percent of the company.
Canadian Satellite Radio has not begun service and has no subscribers.
Sirius owns 20 percent of Sirius Canada Inc. The rest of the ownership is split between the Canadian Broadcasting Corp. and Standard Broadcasting Inc.
General Motors is XM's biggest customer in North America.
Sirius supplies satellite radio for Ford Motor Co.
GM and Ford's Canadian subsidiaries said they are ready to start selling vehicles equipped with satellite radio.
"We are very eager to get this into our 2006 models," said GM Canada spokeswoman Pam McLaughlin. GM had expected approval this spring, McLaughlin said. The company had hoped to begin offering XM on the same models available in the United States in the 2006 model year. Now the uncertainty caused by the government's requirements may initially limit GM's ability to offer a wider choice of vehicles equipped with satellite radio.
"There are still some gray areas here," McLaughlin said. "But our country is bilingual, so we understand it is important that Canadian and French-Canadian is represented."
About 1.5 million new cars and light trucks are sold in Canada annually.
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