Commission Letter Addressed to Mr. Oliver Jaakkola (Sirius XM Canada Inc.)

Ottawa, 5 April 2017

BY EMAIL

Mr. Oliver Jaakkola
Senior Vice-President and General Counsel
Sirius XM Canada Inc.
590 King Street West, Suite 300
Toronto, Ontario  M5V 1M3
oliver.jaakkola@siriusxm.ca

Subject:  Audit of Sirius XM Canada Inc.’s (Sirius XM) Canadian content
development (CCD) contributions

Dear Mr. Jaakkola:

As you are aware, the Commission recently conducted an audit of Sirius XM’s CCD contributions for the broadcast year 2013-2014.  During that audit, Commission staff identified instances of apparent non-compliance with regards to Sirius XM’s CCD contributions.  You were notified of this apparent non-compliance by Commission staff letters dated 25 April 2016 and 9 August 2016 and responded by letters dated 16 June 2016, 26 August 2016, September 16, 2016, and 17 November 2016.

This letter is to inform you that the Commission finds Sirius in non-compliance with condition of license 13.(a) as stated in the Appendix to Broadcasting Decision CRTC 2012-629 as regards Sirius XM’s CCD contributions for broadcast year 2013-2014:

13.(a) During each broadcast year, the licensee shall contribute a minimum of 4% of gross revenues from its satellite subscription radio undertakings reported in its annual returns for the previous broadcast year to eligible initiatives for the development of Canadian content development (CCD).

Further information on CCD contributions and eligible initiatives can be found on the CRTC Website: http://www.crtc.gc.ca/ENG/GENERAL/ccdparties.htm

Below is a breakdown of this non-compliance by Sirius XM’s invoice:


      Recipient and Invoice #     

Issue

Amount

1.

 

Headspace Marketing Inc.
(#148)

 

Ineligible CCD contribution

 

$4,650

2.

 

Canadian Independent Recording Artists Association (#43)

 

Ineligible CCD contribution

Insufficient proof of eligibility

 

$33,100

3.

 

Pop Montreal
(#7)

 

Contribution not deemed well above and beyond promotional activities & contribution resulting in direct benefit to licencee

 

$70,000

4.


Comic Vision
(#66)

 

Contribution resulting in direct benefit to licensee

 

$5,000

5.


OMD Canada (#165)
Milestone Integrated Marketing (#68)

 

Contribution resulting in direct benefit to licensee

 

$51,674

6.

 

OMD Canada (#107, 111, 129)
Maxime Juneau (#33)

 

Contribution not deemed well above and beyond promotional activities

 

$42,984

7.

 

SOCAN Gala (#142)

 

Ineligible CCD contribution

 

 

 $20,000

8.

 

OMD Canada (#189)
Aflalo Communications Inc. (#124 & 145)

 

During the course of its correspondence with Commission’s staff, Sirius XM acknowledged it was $85,613 short on its CCD contributions for 2013-14

 

$85,613

Total

 

$313,021

The Commission does not necessarily dispute the eligibility of any of the above initiatives or CCD recipients; rather, the non-compliance stems from a variety of factors, including lack of supporting documentation, excessive promotional activities, direct benefit to the licensee, and specific ineligible expenditures within eligible initiatives.

The Commission directs Sirius XM to pay the total shortfall amount of $313,021 by 6 May 2017 as follows:

Proof of payment for the total CCD shortfall ($313,021) must be filed by 6 May 2017.

The Commission notes that the determinations set out in this letter address only the 2013-2014 broadcast year and do not relate to any subsequent broadcast years. 

The Commission further notes that failure to supply sufficient documentation to support the eligibility of Sirius XM’s contributions for future broadcast years may result in the Commission finding those contribution(s) ineligible and may affect the service’s compliance with its regulatory obligations. For instance, with respect to contributions to Just for Laughs and Francofolies de Montreal, the Commission reserves the right to revisit these initiatives during the course of future audits of Sirius XM.

Lastly, issues identified during Sirius XM’s last licence renewal process remain unresolved.  These issues, and generally how Sirius XM uses and might benefit from the large amounts it spends on discretionary CCD initiatives, is beyond the scope of this audit; however, these issues warrant a more fulsome discussion at licence renewal in 2018.
Yours Sincerely,

Original signed by

Danielle May-Cuconato
Secretary General

c.c.: Duncan.mckie@factor.ca, lchemail@musication.ca, amely@crfc-fcrc.ca

 

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