Illustration of Mark Redmond, chief executive officer of Sirius XM Canada Holdings Inc.Anthony Jenkins/The Globe and Mail
Mark Redmond has something that a lot of media executives around the world wish they could create: a profitable business, funded by the loyalty of hundreds of thousands of subscribers.
When satellite radio services were granted Canadian licences in 2005, many people scoffed at the idea that listeners would reach into their pockets to pay for something they have received free ever since New York's Metropolitan Opera House first experimented with public transmissions in 1910.
"People were getting free radio forever and, of course, they questioned why somebody would pay," says Mr. Redmond, chief executive officer of Sirius XM Canada Holdings Inc.
The skeptics had a point. In the United States and Canada, satellite radio services became popular – just not popular enough to make a buck. The enormous cost of fighting for attention overwhelmed the business. Nothing epitomized the satellite radio industry's penchant for financial self-destruction more than the $500-million (U.S.) cash-and-stock contract that Sirius Satellite Radio signed to secure Howard Stern in 2005.
Faced with a debt crisis, the two U.S. rivals, Sirius and XM Satellite Radio, merged, and their Canadian affiliates soon followed, in 2011. The slow turnaround of the business in this country is led by Mr. Redmond, 52, a man who is as quiet and careful with words as Mr. Stern is loud and provocative.
Not that you are ever likely to hear the King of All Media on the dial in Mr. Redmond's vehicle. The radio controls were long ago handed over to his teenaged boys. When they were younger, Mr. Redmond put up with the saccharine optimism of Radio Disney as he shuttled them to and from hockey practices. Now, "they're more into the hits. The older guy listens to some hip hop channels, but what's interesting is he also falls back to the stuff that I grew up listening to like Neil Young. For me, I'm either looking for news and sports updates when I'm stuck in traffic, or maybe some comedy if I need to laugh."
The Halifax-born Mr. Redmond laughs easily for a guy who made it to the corner office the hard way, selling electronics and driving a forklift at Sears to pay for his college marketing diploma. He went on to spend 17 years at Thomson Multimedia, a European electronics supplier best known for its Technicolor and RCA brands.
He helped the company launch its digital audio and MP3 businesses, a task that helped him move to the U.S.-based Sirius as vice-president of special operations prior to his installation at the Canadian company.
Mr. Redmond's low-key manner is reflected in his choice of restaurant. The Spoke Club is the type of restaurant that's hard to find – there's a tiny sign on the building's façade and you need to ring a bell to be let in. XM Canada's offices used to be next door, and the annual $800 membership comes with the right to use the restaurant's boardrooms should business break out spontaneously during the meal.
"I like it here," he offers as he carefully picks at a turkey pot pie. "It's relatively quiet most of the time."
He has good reason to be cautious at the moment. While Sirius XM Canada has generally enjoyed a good relationship with its subscribers, the company has been under siege, particularly in social media, over its decision to charge listeners an additional $4 a month to listen to its stations from their computers and smartphones. The move was part of an overhaul of its subscription packages, which finally gave subscribers the ability to listen to channels from both of the merged services for a little extra money each month.
"Any time you look at pricing, you've got to balance between what you think is right and what the value might be for the customer," said Mr. Redmond, adding the U.S. service already charges for online access. "We made the decision because costs are continuing to rise. … Like anything, when you make a change you're going to piss some people off, but we think we're making the right decision and we'll do everything we can to make sure we don't lose a customer because of it."
The company is making money; in the most recent quarter, it posted a $3.2-million profit compared with a $3.4-million loss a year earlier, and its stock price has more than doubled in the past year. Still, it went into licence renewal hearings late last year warning that its future was dire without concessions from the federal broadcast regulator. As a condition of its first licence, the Canadian Radio-television and Telecommunications Commission demanded that 5 per cent of its revenue go toward developing Canadian talent.
The combined Canadian services paid $52-million in the past seven years, with the money going toward programs that support the creation of Canadian content – $20-million more than Canada's 400-plus commercial radio stations paid, combined, over the same period. Sirius XM Canada asked to slash the rate to 0.5 per cent of revenue (what terrestrial stations pay), but the CRTC lowered it only a little, to 4 per cent.
Mr. Redmond said he doesn't mind spending the money. But he doesn't understand why his company should be forced to pay fees and meet Canadian content requirements when Internet-based competitors such as Songza or Slacker sell subscription music services in this country, but don't contribute to the domestic broadcasting system.
It's a refrain often heard from the country's television providers, who face similar threats from services such as Netflix. But the CRTC has decided to keep its hands off Internet-only services, leaving companies such as Sirius XM Canada to fight competitors "with both hands tied back" while being told by regulators that these online services aren't a threat to their existence.
"They keep saying it hasn't materially affected our business," he says. "My point to them would be, 'Yeah, and MP3s didn't have any effect on record labels right away but look what happened 10 years later.' I'm good either way – regulate everyone or don't regulate anyone. Let's get into a fair fight."
Mr. Redmond also spends a lot of time thinking about technology. The company has always been perceived as a tech company, he says, even though those within the company prefer to think of it as a content company.
"One of the debates I have around here every now and then is 'Are we a cable provider or are we HBO?'" he says. "I'd like to think of us more as an HBO."
But even the best content needs to be delivered somehow, and Sirius XM Canada is convinced the way to build subscriber rates and profit is to remain focused on the car market. There are 23 million registered vehicles in Canada, with another 1.7 million sold each year. Sirius XM Canada radios will be factory-installed in about 55 per cent of those new ones.
While having radios preinstalled gives the company a head start, each new model presents new challenges. A satellite unit used to be considered a state-of-the-art feature, but manufacturers are jamming more functions than ever into a dashboard. Some cars now come with large, Internet-enabled screens that come with free apps that bundle radio services from around the world as well as enhanced GPS features.
"The car guys are at a point where they need to start asking how much you can throw into a screen on the dashboard without sending people off the road," he says.
It's the closest he has come to a joke in the two-hour lunch, but he's quickly back to his serious self when I ask about the danger of embedded electronics in vehicles. If there's one thing he's learned from running a radio company, it seems, it's how to change the channel.
CURRICULUM VITAE
Personal:
Born Aug. 22, 1960
Graduated from Humber College with a marketing diploma in 1982.
Married to Melissa; two sons, Kyle, 17, and Cameron, 13.
Career:
Spent his teenage years caddying at Toronto's St. George's Golf and Country Club, where he is now a member.
Worked through college, selling electronics at Six Points TV and driving a forklift at Sears.
Spent 17 years at Thomson Multimedia in Canada, the United States and Singapore, rising to vice-president of worldwide audio and video products.
Appointed senior vice-president of special projects with U.S.-based Sirius Satellite Radio.
Named president and CEO of Sirius Canada in 2005.
Took over the merged Sirius XM Canada in 2011.
From his bio:
"When not at work, Mark can usually be found in a hockey rink with one of his boys, on a golf course, or at the cottage and on the water … for entertainment, aside from listening to SiriusXM's great content, Mark is currently enjoying the Showtime/Bravo series Homeland."
Verbatim:
On the future of satellite radio: "We're looking at taking channels you are accustomed to listening to and letting you customize them when you're listening online. So you will have slider bars you can toggle – maybe you want more live performances from that channel, or more stuff from later in a decade."
On a Web-only model: "The U.S. has sold a standalone Web subscription at the same price as their core subscriptions, but they've had minimal uptake. We've played around with some price points, but the problem when we do that is then we're competing on the Internet and getting compared directly to things that are free. That's not our business model."
A colleague's opinion:
"His style is an unrelenting focus on the bottom line. He has no interest in showmanship, just delivering on results."
– Phil Evershed, managing director at Canaccord Genuity and Sirius XM Canada board member