ARCHIVED -  Decision CRTC 87-558

Decision

Ottawa, 10 July 1987

Decision CRTC 87-558

149178 Canada Inc. Rouyn-Noranda, Val d'Or, Quebec - 860889500 - 860890300

Radio-Nord Inc. Rouyn-Noranda, Val d'Or and Ville- Marie, Quebec - 863617700 - 863618500 - 863619300

Société Radio-Canada Rouyn-Noranda and Amos, Quebec - 870027000 - 870028800

Les Communications Nord-Média Inc. Val d'Or and Rouyn-Noranda, Quebec - 863600300 - 863601100

Normand Roy, representing a company to be incorporated Rouyn-Noranda and Malartic, Quebec - 860961200 - 860962000

Introduction

At a public hearing in Rouyn-Noranda on 12 May 1987, the Commission examined proposals submitted by the five applicants mentioned above regarding the provision of new French-language FM radio services in the Abitibi-Témiscamingue region. These applications were submitted in response to a call for applications issued by the Commission on 3 September 1986 (Public Notice CRTC 1986-215). The applicants submitted a total of eleven applications which were heard on a competing basis because of overlaps in the proposed coverage contours and in the markets to be served.

Radio-Nord Inc. (Radio-Nord and the Canadian Broadcasting Corporation (the CBC, the Corporation) submitted interdependent applications. Radio-Nord proposed to disaffiliate CHLM-FM Rouyn-Noranda and its rebroadcaster, CHLM-FM-1 Val d'Or, from the French-language AM radio network of the CBC, as well as certain changes in its Promise of Performance, according to which the stations would be operated in the Group I music format (pop and rock-softer). It also proposed to operate a new rebroadcasting station in Ville-Marie. For its part, the CBC proposed to operate a new FM station in Rouyn-Noranda and a rebroadcaster in Amos, in order to rebroadcast, on a part-time basis, the programming of CBF (AM) Montreal and 24 hours 35 minutes a week of programming produced locally by Radio-Nord, in accordance with the provisions of an agreement between the two parties. The CBC's applications were conditional upon approval of the applications submitted by Radio-Nord.

Les Communications Nord-Média Inc. (Nord-Média) and Mr. Normand Roy proposed to operate new FM stations in the Group I music format in Val d'Or and Rouyn-Noranda and in Rouyn-Noranda and Malartic respectively, while 149178 Canada Inc. (149178) proposed new FM stations to be operated in the Group IV (dance music) format in Rouyn- Noranda and Val d'Or.

Existing services

The Abitibi-Témiscamingue region is currently served by six AM and four FM radio stations. Six of these, CHLM-FM and CKRN Rouyn-Noranda, CHLM-FM-1 and CKVD Val d'Or, CHAD Amos and CKLS La Sarre, are owned by Radio-Nord and all are affiliated to the French-language AM network of the CBC. CKVD, CHAD and CKLS all rebroadcast the programming of CKRN along with 2 hours and 30 minutes per day of local programming. In addition to rebroadcasting CBC AM network programming, CHLM-FM broadcasts approximately 24 hours of local programming per week, although it is currently authorized to broadcast 47 hours per week of such programming (Decision CRTC 84-440 dated 28 May 1984). The other two FM stations, CIRC-FM Rouyn-Noranda and CIBO-FM Senneterre, are community radio stations, and the other AM station, CKVM Ville-Marie, and its rebroadcaster CKVT Témiscamingue, are also affiliated to the CBC AM network, and are owned by a broadcasting co-operative, Radio Témiscamingue Incorporée. They are the only sources of local programming in the Témiscamingue region. In addition, the CBC operates a number of low power radio stations which rebroadcast the programming of CBF Montreal at Matagami, Joutel and Lebel-sur-Quévillon.

The region's cable subscribers also have access to the signals of a number of distant FM stations originating in the Montreal or Ottawa/Hull areas. The Commission also notes that the region's television stations affiliated to the French-language CBC, TVA and Quatre Saisons networks are owned by Radio-Nord. There are no local daily newspapers serving the region, although there are five weeklies in Abitibi and one in Témiscaminque.

According to BBM survey results for the fall of 1986, taken together, Radio-Nord's Abitibi stations strongly dominate the principal market, with an 87% share of the total listening hours. CKVM Ville-Marie is in the same situation in Témiscamingue, having maintained a 70% audience share over the past few years. Nevertheless, when compared with other regions of the province of Quebec, the per capita audience data indicates that radio audiences in Abitibi-Témiscamingue are markedly smaller than elsewhere. This may be due, in part, to the limited number of radio services and the lack of diversity in music formats among these stations.

The market

The Commission examined a number of factors and indicators for this market in order to determine whether it could sustain the introduction of new FM radio stations and possibly a new element of competition.

According to the preliminary findings of a Statistics Canada census, the total population of Abitibi-Témiscamingue was almost 150,000 in 1986, with approximately 95,000 residing in Abitibi and 53,000 in Témiscamingue. Generally speaking, the population is younger than the provincial average. According to the demographic growth projections of the Bureau de la Statistique du Québec for the period 1986 to 2001, it appears that Abitibi, which constitutes the applicants' principal market, will grow markedly faster than will the province as a whole, particularly between the years 1986 and 1996. This is likely to have a positive impact on retail sales in the region. The population of Témiscamingue, on the other hand, according to these same projections, is expected to continue its gradual decline over the same period.

The Commission has also noted that, even though the growth in retail sales has decreased significantly over the past five years, the local revenue of the market's radio stations has continued to grow at the same rate as that of stations elsewhere in the province. This situation may be attributable, in part, to the absence of a local daily newspaper in the region, which may be causing advertisers to make greater use of radio and weekly newspapers, a situation which broadens the revenue base available for these media.

A key factor in the Commission's examination was the financial status of Radio-Nord which, as demonstrated above, clearly dominates the radio and television broadcasting markets in this region. Further, Radio-Nord played a pioneering role in the region when it lacked even basic radio services.

In Decision CRTC 86-350 dated 11 April 1986, the Commission recognized Radio-Nord's special status and the relevance of its arguments concerning possible adverse effects if its advertising base were fragmented. In this decision, the Commission authorized Radio-Nord to operate two affiliates of the Quatre-Saisons television network in Abitibi-Témiscamingue because of the remoteness and size of the market served as well as the prevailing economic conditions. At the 12 May 1987 hearing, Radio-Nord put forward a similar argument in support of its plan to disaffiliate CHLM-FM and to justify its opposition to three of the competing applications.

The Commission notes that the purpose of Decision CRTC 86-350 was to prevent a decline in Radio-Nord's television income which was attributable to the company having experienced a difficult period from 1981 to 1984. In its deliberations at that time, the Commission also took into account the fact that the Abitibi television stations generated 60% of the profits, before interest and taxes, of Radio-Nord's entire operation. This percentage rose to 74% in 1986. The Commission also pointed out that no competing applications had been submitted prior to the deadline.

In 1985 and 1986, Radio-Nord's overall financial situation was stable and generally very good, according to figures provided to the Commission by the applicant. However, with respect to the radio operations, the Commission noted that there was a sudden and marked decreased in their profitability beginning in 1985, which was accompanied by an equally sudden increase in administrative expenditures. When asked to provide an explanation at the hearing, Radio-Nord attributed this change to the fact that, in 1985, it had adopted a new method of distributing its administrative expenditures among the various components of the group. It was, however, unable to explain to the Commission's satisfaction why this reallocation of expenditures was not proportionately reflected in its television operations, nor was this change explained through additional information submitted at the hearing. The Commission notes that had it not been for this major increase in administrative expenditures, the profitability of the applicant's radio operations would have remained at levels comparable to those in the period prior to 1985.

The financial situation of RadioTémiscamingue Inc., licensee of CKVM Ville-Marie, is stable but highly fragile given the very low rate of growth of its total revenue which is well below the rate of inflation between 1981 and 1986. The two community radio stations, CIRC-FM Rouyn-Noranda and CIBO-FM Senneterre, are both being affected by reductions in government grants and are therefore attempting to diversify their sources of income.

The Decision

The need to diversify radio services and to increase competition in Abitibi-Témiscamingue was repeatedly addressed by regional organizations and interveners at previous public hearings, and was again expressed by a number of interveners present at the 12 May 1987 hearing.

In light of the above and according to the evidence on file relating to these applications, including the various analyses carried out by the applicants and the arguments put forward at the hearing, the Commission has concluded that the need for new radio broadcasting services in Abitibi-Témiscamingue is no longer in doubt, given the lack of diversity of current services and the under-development of radio audiences in the region compared with other parts of Quebec. The Commission also considers that the introduction of a new competitive element will not threaten the survival of broadcasting companies operating in Abitibi, which is the principal market to be served by the applicants, and that it may even give rise to a new dynamism that could increase radio listening with a resulting increase in available advertising revenue.

In this context, the Commission is of the opinion that approval of the applications submitted by Radio-Nord and the CBC, which are interdependent, would not significantly increase the diversity of broadcasting services in this region. Rather, it would perpetuate the status quo and Radio-Nord's quasi-monopoly in this market. According to the agreement reached by the two parties, the local portion of the programming of the new station proposed by the CBC would be produced by Radio-Nord. Further, a representative of the CBC confirmed at the hearing that the programming of the proposed FM station would be [TRANSLATION] "exactly the same" as that currently broadcast by CHLM-FM. The Commission also notes that Radio-Nord proposes to operate CHLM-FM in the Group I music format, which encompasses its current MOR format and which is the same as the current formats of a majority of the radio stations in the region.

The Commission has also taken into account the fact that Radio-Nord is not currently operating CHLM-FM to its full potential. It considers that this applicant already has the necessary flexibility within its authorized Promise of Performance to increase local programming from the current 24 hours to the 47 hours a week approved in 1984. The broadening of the station's commercial inventory, through the optimal use of its assets, could help minimize any loss of revenue Radio-Nord might incur as a result of new competition.

The Commission has, therefore, decided to deny the applications by Radio-Nord Inc. to amend the licences of CHLM-FM Rouyn-Noranda and CHLM-FM-1 Val d'Or by deleting the condition of licence stipulating that these stations be operated as affiliates of the CBC French-language AM network, as well as its application to operate a new rebroadcasting station in Ville-Marie which was conditional upon the approval of the other applications. As discussed at the hearing, and given the indivisibility of the applications submitted by Radio-Nord, the Commission denies the amendments to the Promise of Performance which would have resulted from the proposed disaffiliation.

As the CBC stated at the hearing, its applications were conditional upon approval of those submitted by Radio-Nord. Therefore, the Commission denies the applications submitted by the Corporation for licences to operate a new FM station in Rouyn-Noranda and a rebroadcasting station in Amos.

Radio-Nord stated at the hearing that its affiliation agreement with the CBC expires in 1988 and that it has the option of renewing the agreement for a further three years. For its part, the CBC stated that it is generally satisfied with the current agreement and that, as a result of budget considerations, its plan to replace affiliated stations with its own stations has been postponed indefinitely.

The Commission has also examined carefully the proposals submitted by the three other applicants in terms of local involvement, the inherent diversity of the proposed programming, financial stability and additional resources at their disposal, as well as the general viability of the overall plans. In light of the available information, the Commission considers that the applications submitted by 149178 Canada Inc. best meet these criteria.

Therefore, the Commission approves the applications by 149178 Canada Inc. for broadcasting licences to operate new French-language radio services in Rouyn-Noranda on the frequency 99.1 MHz (channel 256A) with an effective radiated power of 1,000 watts, and in Val d'Or on the frequency 102.7 MHz with an effective radiated power of 49,400 watts. The Commission will issue licences expiring 31 August 1991, subject to the conditions specified in this decision and in the licences to be issued.

The competing applications by Communications Nord-Média Inc. and by Mr. Normand Roy, representing a company to be incorporated, are denied.

149178 is owned equally by a corporation controlled by Mr. Yvon Larivière of Rouyn-Noranda and by Radiomutuel (1985) Limited (Radiomutuel). Mr. Larivière has more than twenty-five years' experience in broadcasting, almost twenty of which were acquired in the Abitibi-Témiscamingue region. At the hearing, Mr. Larivière stated that he intends to work at the new station on a full-time basis as President and General Manager. Radiomutuel, for its part, is one of the largest broadcasting companies in Quebec. Most notably, it operates radio stations CKMF-FM Montreal and CHIK-FM Quebec City. It was also recently authorized to operate a new French-language FM station in the National Capital Region (Decision CRTC 87-377 dated 2 June 1987). The Commission considers that Mr. Larivière's in-depth knowledge of the region and the extensive radio experience of both partners, will greatly increase the chances of the success of this endeavour.

The two stations will serve, in addition to the major municipalities of Rouyn-Noranda and Val d'Or, a number of smaller communities such as Amos, Barraute, Cadillac, Malartic and Senneterre. The Commission has taken note of the applicant's commitment to construct studios in Rouyn-Noranda immediately and in Val d'Or [TRANSLATION] "no later than the beginning of the third year of operation". It has also committed to produce 48 hours 30 minutes per week of distinct programming in Val d'Or, commencing with its third year of operation, to be broadcast separately from the programming of the Rouyn-Noranda station. The Commission considers this commitment with respect to Val d'Or to be one of the major advantages of this proposal in terms of local service. It, therefore, imposes a condition of licence that this commitment be fully respected. The Commission also notes that, as soon as the stations begin broadcasting, the licensee intends to provide staff and a mobile studio in Val d'Or and the surrounding area in order to ensure an adequate news service.

At the hearing, the applicant stressed that the proposed service will differ from and complement existing services in terms of news sources as well as spoken word content and music format

In addition to receiving alternate sources of local and regional information, which will represent 60% of the news material to be broadcast, the audience will gain access to Radiomutuel's news service which provides provincial, national and international news currently unavailable in this region. The applicant is also committed to broadcasting 12% foreground programming and 40% combined foreground/mosaic programming. Sixty-seven percent of the total amount of foreground programs will be produced locally, with a regional orientation, while the balance will be obtained through exchanges with other Radiomutuel FM stations.

The stations will be operated in the Group IV dance music format with equal representation from categories 51 and 52 (pop and rock-softer and pop and rock-harder). The applicant emphasized that this is a new alternative for a major segment of the audience in the 12-to-34 age group, which is inadequately served at present and which constitutes 53% of the total population in the central coverage area of the proposed stations.

With respect to Radiomutuel's program for the promotion of Canadian talent, "Opération Talcan", the applicant is committed to establishing an annual local talent contest in co-operation with Abitibi-Témiscamingue producers. The three semi-finals and the final will be broadcast by the new stations and the winner will be awarded $5,000 for the purpose of recording a demonstration tape. The applicant will allocate a total of $70,000 for this contest over five years, $30,000 of which represents direct costs. Moreover, the applicant is committed to contributing 1% of its annual air-time revenue to Musicaction, provided its annual revenue is at least $750,000. The applicant estimated that the contribution for this purpose will amount to $32,000 over five years. Overall, the applicant estimated that it would spend $382,000 in direct and indirect costs over five years for the development of Canadian talent. The Commission expects the applicant to submit annual reports in this regard during the licence period.

The Commission notes that the applicant proposed to broadcast 55% French-language vocal music. It has examined this proposal in light of the above-mentioned commitment to promote Canadian talent and the proposed Group IV music format. Given these factors, the Commission approves, by condition of licence, the broadcast of a level of French-language vocal music of 55% for the period expiring 31 March 1989 and of 65% for the balance of the term of licence. In this regard, the Commission refers to Public Notice CRTC 1986-67 dated 19 March 1986, entitled "French-language Popular Music", where the Commission stated its intention to examine the availability of French-language recordings after a two-year trial period, i.e. in 1988, and it wishes to remind the licensee that "the 55% level is a minimum to be surpassed if possible and that 65% remains the objective".

It is a condition of each licence that the licensee adhere to the CAB self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.

The Commission notes that, at the time of the hearing, the applicant had not yet completed its negotiations with Radio-Nord and the CBC regarding access to, and sharing of, antenna sites. At the hearing, however, the parties concerned described the progress of these negotiations and, accordingly, the Commission expects the licensee to file a report on the results achieved within three months of the date of this decision.

The Commision notes that the Department of Communications (DOC) had stated that the proposal to locate a transmitter at Lithium Mines (the Val d'Or station) is [TRANSLATION] "a special case acceptable under certain conditions". The Commission therefore expects the licensee to take all necessary measures to comply with DOC regulations and to obtain the required Technical Construction and Operating Certificate within three months of the date of this decision.

No licence will be issued if the Commission does not receive this notification within said period, or such further period as the Commission may, upon receipt of a request for extension before the expiry of the said three months, deem appropriate under the circumstances.

It is a condition of licence that construction of the stations be completed and that they be in operation within twelve months of the date of receipt of written notification from the DOC that it will issue a Technical Construction and Operating Certificate or such further period as the Commission may, upon receipt of request for extension before the expiry of the said twelve months, deem appropriate under the circumstances.

The Commission received numerous interventions with regard to these applications and wishes to express its sincere thanks to all those who submitted their comments, particularly those who appeared at the public hearing in order to present their briefs and respond to questions. Once again, the Commission was able to observe firsthand the enthusiasm for and profound interest of regional groups and organizations in the development of broadcasting in the Abitibi-Témiscamingue region. The Commission was reminded of the need to introduce new broadcasting services accessible in all parts of Abitibi and Témiscamingue, as well as in Matagami, Joutel and Lebel-sur-Quévillon. The Commission has already explained its concerns in this regard in previous decisions. In a Public Notice issued today (CRTC 1987-163), it invites all interested parties to submit their suggestions for increasing the availability of radio broadcasting services in these regions. The Commission hopes that the parties involved in this decision, specifically Radio-Nord, the CBC, 149178 and Radiomutuel, will take an active part in this consultation.

Fernand Bélisle
Secretary General