There's a new player joining Canada's audio streaming market: iHeartRadio, a U.S.-based rising competitor in online music and live radio, is moving north through a partnership with Bell Media.
Under a long-term deal, Bell will treat the free streaming service, which has amassed more than 75 million registered users mostly in the United States, as a kind of Canadian franchise, handling licensing, legal and technology issues while adding content from its own stable of radio and television stations.
The deal gives iHeartRadio a helping hand in Canada to continue its international expansion, which already includes Australia and New Zealand. By joining forces, Bell gets both a ready-made digital platform to unite all its existing online radio feeds, and a foothold in the race to reach listeners on devices beyond traditional radios in people's homes, cars and workplaces.
With common roots in traditional radio, the two companies are hoping they've found kindred spirits – Bell Media, a division of BCE Inc., is Canada's largest owner of radio stations with 106 spread across 54 markets, while iHeartRadio's parent company, iHeartMedia Inc., is the largest U.S. radio operator with more than 850 stations.
"When we looked at their model in the U.S., we saw them with admiration as a previous terrestrial network … that had really evolved and progressed digitally," said Randy Lennox, Bell Media's president of entertainment production and broadcasting, who previously led Universal Music Canada.
Mr. Lennox said he has had a "cup of coffee" with several rival streaming services over the years, but kept a "laser focus" on iHeartRadio.
"I always thought, boy, that is a company I'd love to put our arms around and sort of be their Canadian franchise or rights-holder," he said in an interview.
The two companies are aiming for an early-summer launch, but will face stiff competition from established streaming services such as Spotify and Google Play Music, as well as satellite radio provider SiriusXM Canada.
Rogers Communications Inc. offers some wireless subscribers two years of free access to Spotify's $10-a-month premium service. And since September, Quebec-based Videotron Ltd. has allowed some customers to stream music from select providers such as Spotify without using any mobile data, though a coalition of consumer advocacy groups has challenged the promotion before federal regulators.
IHeartMedia Inc. was formerly known as Clear Channel Communications Inc. In 2008, it was acquired in a $17.9-billion (U.S.) leveraged buyout by two private equity firms – Bain Capital LLC, co-founded by former U.S. presidential candidate Mitt Romney, and Thomas H. Lee Partners LP – which left the company shouldering a heavy debt load.
That same year, the company launched the iHeartRadio app as an online hub for its hundreds of radio stations. But the company has since built the app into a growing force in the competitive streaming market, and added customized playlists and genre stations to compete with the sector's other heavyweights.
Bell and iHeartRadio believe the app has an edge because of the more than 1,000 radio stations it offers, and its access to exclusive content from TV and radio stations – live events on radio or TV, or material tied to Bell's Much Music Video Awards show, for example. Mr. Lennox also said iHeartRadio will remain free to use, supported by ads, in Canada.
"This new partnership will allow us to work with distribution partners, including auto and consumer electronics, to extend our brand and reach even further," said Michele Laven, iHeartMedia's president of business development and partnerships.
On Tuesday, at the Consumer Electronics Show in Las Vegas, iHeartMedia announced new deals to put iHeartRadio into a suite of digital products, including Apple TV and some Samsung devices. The push to new platforms may ultimately prove to be the long-term key to the alliance with Bell, as iHeartRadio aims to install its app in car dashboards, gaming consoles and wearable tech across North America.
"Because that's where music is going to live," Mr. Lennox said.