Toronto
June 10 2005

A ruling from the CRTC that could have a major impact on radio broadcasting
in Canada will be handed down next Thursday afternoon.

The Canadian Radio-television and Telecommunications Commission will
announce its decision on three licence applications before it for
subscription-based digital radio services.

Two satellite-delivered pay radio options have been operating in the U.S.
for several years and both have entered into partnerships with domestic
enterprises to apply for a similar service in Canada.

Canadian Satellite Radio (CSR) is a consortium involving former Toronto
Raptors owner John Bitove Jr. and Washington-based XM Satellite Radio
Holdings. The

CBC and Standard Radio, meanwhile, partnered with XM's American rival Sirius
Satellite Radio (to which shock jock Howard Stern is moving for its minimal
regulatory oversight).

A third option, from CHUM Ltd. and Montreal-based Astral Media, adds an
interesting twist. It would forgo satellite delivery for the time being and
proposes to deliver pay radio to consumers via a series of broadcast towers
instead.

The services would offer between 60 and 100 commercial-free channels of
music of various formats for a monthly fee, probably between $10 to $15.

Ian Morrison, spokesman for Friends of Canadian Broadcasting, says the
watchdog group supports the CHUM/Astral application because it is compliant
with the Broadcasting Act requirement for a significant level of Canadian
programming.

"CHUM can look the CRTC in the eye and say `We're doing what Parliament
intended,''' notes Morrison.

Kevin Shea, president and CEO of Sirius Canada, says if approved they could
be up and running this fall.

"Our application said we'd be a little over a million subscribers after
seven years and I wouldn't be at all surprised if we got to that number in
about four years,''
says Shea, noting that a satellite grey market for U.S. pay radio has
already sprung up in Canada.

Paul Ski, executive vice-president of radio for CHUM Ltd., says that unlike
the other applicants, CHUM will program all 100 of its own channels, with
each of them carrying between 20 and 35 per cent Canadian content.

"All of our channels, every one, will have Canadian content on it.''

Stephen Tapp, president of Canadian Satellite Radio, says a lot of great
artists aren't played on FM radio across the country.

"With our proposed service ... a number of independent and other
lesser-known Canadian artists who aren't currently getting airplay on
commercial radio in Canada will finally have access,'' says Tapp.

But the choices still pose a dilemma for the CRTC.

The two satellite services would cover all of North America, including
remote under-populated regions of Canada, while CHUM's land-based option
promises much more Canadian content but, for now, only to about 75 per cent
of the population via major urban markets (a satellite option is expected to
be available by 2010).

Because XM's satellite signal hits Canada at a sharp angle, though, they
would have to add some terrestrial towers of their own for repeater
transmitters in high-rise city areas.

Morrison suspects that whatever decision the CRTC makes -- and especially if
it tries to squeeze more Canadian content out of the Canada-U.S. satellite
services -- someone will be upset enough to launch an appeal to the federal
cabinet.

"If the bar is too low, we're upset, if the bar is too high, they're
upset.''

There is also the slippery slope aspect. If the CRTC approves a service that
delivers only five per cent Canadian content, the next time a conventional
radio applicant applies for a licence renewal, he will question why he is
still required to play 35 per cent -- a typical level for commercial radio.

On the other hand, some Canadian musicians like the idea of having their
songs played on satellite channels that are available throughout the U.S.

All of this comes along at a time when broadcasters and consumers face a
veritable soup of new audio broadcasting technologies. For years now, radio
stations in
major urban areas have been digitally simulcasting their regular AM and FM
signals on an experimental basis.

DAB, or digital audio broadcasting, however, has shown no signs of taking
off in the same way that high-definition television has. DAB tuners are
scarce and deals to have receivers installed in North American-built cars
have fallen through.

There's also music downloading, podcasting and Internet radio to consider as
rivals.

Still, conventional analogue broadcasting seems to be doing just fine.

In an annual report released in March, the CRTC said that from 1999 to 2003,
revenues for private, commercial radio rose by 7.8 per cent to almost $1.2
billion and net profits grew by 31 per cent.

John Hayes, president of Corus Radio, one of the country's largest radio
broadcasters, says the medium is hardly on the ropes at the expense of new
technologies, noting that last year industry revenues were up by between two
and 2½ per cent and that this year looks even better.

"The industry could be up in the seven, eight per cent area through the
third quarter, which we think is really strong growth,'' Hayes says. "Out in
the trenches, in the real world, audiences still use radio as much as they
ever did.''

And he doesn't see either pay radio or DAB replacing AM and FM anytime soon
and stresses that satellite radio cannot deliver local news, weather and
sports.
Still, Corus is hedging its bets when it comes to new transmission
technologies, supporting the Bitove-XM application with an option to buy
company shares if they choose.

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