ARCHIVED -  Decision CRTC 88-489

Decision

Ottawa, 3 August 1988

Decision CRTC 88-489

Radio Fusion Inc.

Lachute, Quebec and Hawkesbury, Ontario -873281000 -873280200

Following a Public Hearing in the National Capital Region on 12 April 1988, the Commission approves the applications by Radio Fusion Inc., (RFI) for authority to acquire the assets of CJLA-FM Lachute and CHPR-1-FM Hawkesbury from Radio Lachute (Mirabel) Inc. and Radio Cornwall-Hawkesbury Inc. respectively (the vendors) and for broadcasting licences to continue the operation of these undertakings upon surrender of the current licences issued to the vendors, on the same terms and conditions as the current licences, except for proposed modifications to the existing Promises of Performance which are approved in part and addressed later in this decision.

Radio Fusion Inc. is owned by Jean-Pierre Major and Daniel Major, each of whom holds 50% of the voting shares of the company. Jean-Pierre Major, who will be responsible for the day-to-day operation of the stations, has been directly involved in radio broadcasting in the province of Quebec since 1977 and is the owner of Radio Consultant JPM which produces more than 25 hours per week of foreground programming for sale to radio stations in the province of Quebec. His brother, Daniel Major, has extensive financial and management experience and will have administrative responsibility for RFI. They first expressed interest in acquiring the stations in 1985.

In support of the application, Daniel Major stated at the hearing, that the Major family is from the region and has always been interested in promoting local radio. He also stated that RFI recognizes that this is a unique market and approaches the transaction on [TRANSLATION] "a solid basis and with tools rarely available to local and regional stations". The Commission notes that the two principals of RFI have been operating both stations as employees since 1 September 1987 by virtue of clauses contained in the sales agreement that was entered into with the vendors on 12 August 1987.

Radio Lachute (Mirabel) Inc. and Radio Cornwall-Hawkesbury Inc. are currently owned by Mr. Guy Vaillancourt. Prior to February 1986, the Lachute station, which was acquired by Mr. Vaillancourt in 1980 (Decision CRTC 80-541 dated 25 August 1980), was operated as an AM station. In Decision CRTC 83-499 dated 30 June 1983, the Commission approved Mr. Vaillancourt's acquisition of CFIX Cornwall and its rebroadcaster CHPR Hawkesbury, and Decision CRTC 85-491 (28 June 1985) authorized the Hawkesbury and Cornwall stations to receive programs from studios located in Lachute and in Hawkesbury. The licence for the Cornwall station expired in September 1985, the station having already ceased operation.

Both CJLA-FM and CHPR-1-FM currently broadcast 126 hours per week in the Group I (Pop and Rock-Softer) music format, with CHPR-1-FM producing 20 hours per week of local programming separate from CJLA-FM. Mr. Vaillancourt has indicated that he wishes to sell the stations for personal reasons and because of health considerations. The Commission notes that the proposed purchase price is $375,000 and, having reviewed the applications, it has no concerns with respect to the availability of the required financing.

As stated in a number of decisions relating to applications for author-ity to transfer ownership of broadcasting undertakings, and because the Commission does not solicit applications for such transfers, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature.

The first test any applicant must meet is that the proposed transfer of ownership yields significant and unequivocal benefits to the communities served by the broadcasting undertakings and to the Canadian broadcasting system as a whole, and that it is in the public interest.

In particular, the Commission must be satisfied that the benefits, both those that can be quantified in monetary terms and others which may not easily be measurable in terms of their dollar value, are commensurate with the size of the transaction and that they take into account the responsibilities to be assumed, the characteristics and viability of the broadcasting undertakings in question, and the scale of the programming, management, financial and technical resources available to the purchaser.

In assessing these particular appli-cations, the Commission has given consideration to the fact that, historically, these stations have been only marginally successful from a financial point of view and that operating results are below the industry average. Accordingly, the Commission has given particular weight to the non-quantifiable benefits in respect of these applications and to the experience and resources available to RFI.

In particular, the Commission has considered important that the present transaction ensures the maintenance and the improvement of the radio services in these relatively small communities. The Commission has also taken into consideration Mr. Jean-Pierre Major's experience in FM radio, particularly in the creation of foreground programming, which experience has resulted in improvements to the stations' programming.

A Commission analysis of the programming broadcast by CJLA-FM on 20 February 1987 revealed an absence of foreground programming; however, a subsequent analysis for the week of 15 to 21 November 1987 showed that the level of foreground programming was 7.2%. In January 1988, a new foreground program "Carrefour Hawkesbury" was introduced and the amount of enrichment programming was increased. Further, additional time was made available to individuals and community groups and associations for public service messages. At the public hearing, RFI stated that since March 1988, the weekly amount of foreground programming broadcast by the two stations complies with the 12% commitments set out in the Promises of Performance.

Although they cannot be considered to be benefits accruing from the transaction, the Commission considered the programming and technical improvements that have been put in place by the applicant since it began managing the stations in September 1987 as evidence of its intention to provide better service to the communities of Lachute and Hawkesbury.

In this respect, RFI indicated at the hearing that it had extended the number of broadcast hours on weekends and that it had implemented several other programming improvements, including the hiring of an experienced news journalist who had previously worked for Radio-Canada, Radio-Nord and the French-language Ottawa daily newspaper, Le Droit. RFI stated that it considers news and information to be of utmost importance and that its first priority would be to improve this aspect of the operation. The Commission also notes that since September 1987, the stations have been hiring staff who reside in the region served by the undertakings and thus have knowledge about local events, interests and issues.

Commission analyses demonstrate that the stations have also increased the levels of Canadian content in category 5 music and French-language vocal music. During the week of 15 to 21 November 1987 CJLA-FM's programming contained a Canadian content level in category 5 music of 40.8%, more than double the Commission's minimum guidelines for Group I stations. The level of French-language vocal music during this same week was 66.5%, a significant improvement over the 54.7% level broadcast during the week of 16 to 22 February 1987.

At the hearing, the applicant identified a number of technical improvements that have been undertaken at CJLA-FM including the conversion of the production studio to stereo and, in consultation with the Department of Communications, the correction of sporadic transmission problems. RFI was also involved in the re-building of the CHPR-1-FM transmitter when the station switched to FM broadcasting in late 1987. Daniel Major undertook at the hearing to spend "whatever is necessary to maintain the quality of sound that we have right now" and explained that RFI is committed to expenditures of $25,000 per annum for the purchase of new equipment for the stations.

In this regard Mr. Vaillancourt stated [TRANSLATION] "...I hadn't planned on spending more than $10,000. So there's a difference of $15,000 a year for new equipment expenditures." The Commission considers the incremental annual expenditure commitment of $15,000 a tangible benefit arising from this transaction.

The Commission reaffirms the particular importance it attaches to the support, development and on-air exposure of Canadian talent and notes that, at the hearing and in a letter dated 22 April 1988, the applicant identified several initiatives in this area. RFI has stated that although financial constraints preclude budgetary allocations at this time, it will ensure that all foreground programs will be produced by Canadians; that the majority of artists interviewed for its "Focus" program will be Canadian; that nearly 70% of the artists featured in its program "Quart d'heure Country" will be Canadian; that approximately half of the artists who participate in its program "L'Astrologie" will be from the region; and that the interview portion of its magazine format program "Vision" will feature Canadians, particularly Canadians from the region.

Having reviewed all of the information available to it, the Commission is satisfied that RFI has demon-strated that the proposed transaction will yield benefits to the communities served and to the Canadian broadcasting system commensurate with the size and nature of the transaction. Accordingly, the Commission has concluded that approval of the applications is in the public interest in order to ensure the maintenance of francophone radio services in these relatively small communities, one of which is located in the province of Ontario.

The Commission will issue broadcasting licences to Radio Fusion Inc. to continue the operation of CJLA-FM and CHPR-1-FM upon surrender of the current licences issued to the vendors. The licences will expire 31 August 1991 and will be subject to the conditions specified in this decision and in the licences to be issued. This term will enable the Commission to review, within an appropriate period, the applicant's performance and the implementation of its commitments.

In its application, RFI proposed certain modifications to the stations' Promises of Performance, including the elimination of English-language programming and reductions in the weekly amounts of news.

The Commission approves the request to eliminate the seven hours per week of English-language programming which, under the current Promises of Performance, was to consist of a daily one-hour program aimed at the anglophone population. At the public hearing, Mr. Vaillancourt stated that such programming has not been broadcast for the past two years and RFI indicated that there has been no demand for English-language programs. Further, the Commission notes that both stations operate in predominately francophone markets and that no interventions were filed opposing this modification.

The Commission also approves the proposal to reduce the amount of news programming from 9 hours 30 minutes to 6 hours 44 minutes. In this regard, the Commission reminds the applicant of its responsibility to provide a complete and satisfactory news service by ensuring the provision, wherever possible, of complementary human interest and background information. The Commission notes that the applicant proposes to broadcast 72 national and international and 47 local and regional newscasts each week. The Commission has also noted RFI's commitment that [TRANSLATION] "the 6 hours 44 minutes that we promise will be done and will be done well, and that's a minimum". RFI also stated that it would broadcast community announcements four times daily.

The applicant also proposed to reduce the level of French-language vocal music on both stations from 65% to 60%, stating that this would allow it to better withstand competition from out-of-market stations located in Montreal and Ottawa. To compensate for this decrease RFI proposed, in its application, to increase to 30% its commitment in respect of Canadian content in its popular music selections and at the public hearing, it proposed to raise the level of Canadian content to 35%.

Since 1973, the Commission has required that at least 65% of the popular music vocal selections broadcast on French-language stations be in French. In Public Notice CRTC 1986-67 dated 19 March 1986, the Commission reaffirmed that the level of 65% remains its objective as the minimum percentage for French-language stations. However, in response to problems that certain radio stations were experiencing in obtaining suitable recordings, the Commission agreed that for a two-year experimental period it would reduce the requirement to 55% for AM stations and that it would consider similar applications from FM licensees on a case-by-case basis. In Public Notice CRTC 1988-84, dated 26 May 1988, this two-year experimen-tal period was extended to 31 August 1989.

In assessing RFI's proposal to reduce its level of French-language vocal music, the Commission has considered the non-monetary commitments made with respect to the support and development of Canadian talent. It has also noted the applicant's statement that it intended to reduce its use of foreign French-language musical selections and that, regardless of the Commission's decision with respect to French-language vocal music, it would maintain a minimum level of 30% Canadian content in its musical selections.

Nevertheless, the Commission considers that the applicant has not provided sufficient justification to warrant an exception to its long-standing objective with respect to French-language vocal music and, therefore, it denies the licensee's proposal.

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

The Commission acknowledges the interventions received from Mr. Denis Laberge and from the Association Canadienne-Française de l'Ontario de Prescott-Russell in support of these applications.

In view of the approval granted herein, the Commission need not proceed with the applications to renew the licences of CJLA-FM Lachute (880162300) and CHPR-1-FM Hawkesbury (880163100) which were also considered at the 12 April 1987 public hearing.

Fernand Bélisle
Secretary General