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Decision
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Ottawa, 5 August 1988
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Decision CRTC 88-497
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Balsa Broadcasting Corporation
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St. Albert, Alberta -880293600
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Following a Public Hearing in Calgary on 1 June 1988, a majority of the Commission approves the application by Balsa Broadcasting Corporation (Balsa) for authority to acquire the assets, and for a licence to continue the operation, of CKST St. Albert, upon surrender of the current licence issued to Balsa Broadcasting Limited Partnership (the partnership).
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The Commission also approves the applicant's proposal to change the station's frequency from 1,070 kHz to 1,200 kHz and to increase its transmitter power from 10,000 watts to 25,000 watts day and night.
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The Commission will issue a broadcasting licence to Balsa expiring 31 August 1991. This term will enable the Commission to consider the renewal of this licence at the same time as that of other radio stations in the area. The new licence will be subject to the conditions specified in this decision and in the licence to be issued.
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With respect to the proposed technical changes, however, in accordance with paragraph 22(1)(b) of the Broadcasting Act, the authority granted herein may only be implemented at such time as written notification is received from the Department of Communications that it will issue a Technical Construction and Operating Certificate.
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Parties to the Transaction
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CKST was first licenced to serve St. Albert in 1978. To date, despite the efforts of three different owners, the station has yet to achieve profitability. The current owner of CKST, Balsa Broadcasting Limited Partnership, acquired the station's assets from QCTV Ltd. in 1985. The partnership consists of one general partner and seven limited partners, many of whom have other broadcasting interests in Western Canada. Their interests in the partnership are in direct proportion to their financial investment in CKST; the partner with the largest interest is Saskatoon Telecable Ltd. (STL) with 33%.
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The purchaser, Balsa, is a corporation controlled by Western World Communications Ltd. which, in turn, is a wholly-owned subsidiary of STL, a company controlled by Mr. Clint Forster of Saskatoon. Mr. Forster has long been active in broadcasting; his holdings include the indirect ownership of cable television undertakings serving Saskatoon and 13 other Saskatchewan communities, as well as of radio station CJWW Saskatoon and 80% of City and Country Radio Ltd., licensee of CJUP Langley, British Columbia. Under the terms of the proposed transaction, Balsa will purchase the assets of CKST for the sum of $ 1,415,032. The Commission, having reviewed the application, has no concerns with respect to the availability of the required financing.
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At the hearing, Mr. Forster noted that CKST continues in operation today only because of the willingness and capacity of the different partners to absorb the station's financial losses. He also emphasized that in order to make the service more attractive to listeners, the partners have made various capital improvements and have increased programming expenses to levels well in excess of the original commitments made at the time the partnership acquired ownership of CKST in 1985 (Decision CRTC 85-354 dated 21 May 1985). As a result, CKST has progressed from an almost wholly automated station to its current status as a fully-staffed undertaking employing some 25 people. According to Mr. Forster, however, "a significant weakness [of the partnership] lay in the fact that no one particular partner could be entirely responsible for the station operation". For this reason, the partnership has concluded "that it would be best for one of the partners to buy out the others."
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Mr. Forster indicated that the purchase of this station fits into his long-range plans for the development of a new broadcasting group in Western Canada, one with "major market management experience" and access to the economies of scale that will allow for future "joint programming and networking opportunities" between stations.
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Proposed Benefits
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According to the applicant, a major cause of the station's inability to overcome its financial difficulties has been the deteriorating reception quality of CKST's signal brought about by increased interference problems in the area. The applicant noted that the proposed technical changes, representing capital expenditures of approximately $400,000, will extend the station's coverage to encompass potential audiences of 766,000 people during the day and 663,000 people at night, when interference from distant stations is much stronger, amounting to increases of 20% and 33% respectively, over current audience levels. The applicant claimed that the ability to provide a consistent signal to the entire Edmonton area will enable the station to attract more listeners and, ultimately, to achieve profitability.
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At the hearing, Balsa made a commitment to provide support to Canadian talent by contributing a sum equal to 3% of its annual pre-tax profits to the FACTOR organization. It also promised to sponsor an annual talent contest during the next five years whereby area vocalists, instrumentalists, dancers and other performing artists would be selected to compete for cash grants totalling $3,000 per year. The cash grants would be complemented by additional annual expenditures of $7,000 for promotion, equipment rental and the hiring of part-time personnel in connection with the talent contest.
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Balsa argued that approval of its application would ensure that the quality of CKST's program service, including the quality of the station's news coverage, is maintained and improved in the future. It stressed that the service currently provided by CKST is more comprehensive than that which the partnership had committed to provide in 1985. It also indicated that there is potential for future improvement through co-operative programming efforts between the stations owned by Mr. Forster. According to the applicant, however, a denial of its application would lead to the following result:
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If we can't proceed with these initiatives, there really is no option for us but to return CKST to its state of an almost wholly automated low-cost operation and to find some way to rid ourselves of this heavy financial burden.
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Conclusion
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Because the Commission does not solicit applications for authority to transfer effective control of broadcasting undertakings, 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.
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The Commission reaffirms that the first test any applicant must meet is that the proposed transfer of ownership or control yields significant and unequivocal benefits to the community served by the broadcasting undertaking and to the Canadian broadcasting system as a whole, and that it is in the public interest.
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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 and nature of the transaction and that they take into account the responsibilities to be assumed, the characteristics and viability of the broadcasting undertaking in question, and the scale of programming, management, financial and technical resources available to the purchaser.
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Among other criteria, the Commission has assessed the current transaction against the background of CKST's troubled financial history. It notes in this regard that, although the losses incurred by the partnership have been less than those encountered by the previous owner, they have still amounted to more than $1.3 million over three years. Moreover, according to the applicant's projections, CKST will not begin to earn a profit until 1992, the fifth year of operation.
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The Commission notes Balsa's commitment at the hearing that, although its future economic viability is dependent upon its ability to attract listeners from the entire metropoli-tan Edmonton area, this would not be at the expense of the station's existing St. Albert orientation:
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We have been programming with emphasis on St. Albert. The listener to that radio station will realize and does realize that there is something different about it; it has got a St. Albert or a non-Edmonton sound, if you like, through the news emphasis and through the features emphasis, and so on. That is what ... we propose to continue to do: give those people in St. Albert a feeling that there is a station in their backyard ... We know [that we have] a special responsibility to the people of the St. Albert/Morinville/Stony Plain area.
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The Commission places particular importance on this commitment by Balsa, and expects the applicant to ensure that CKST maintains its St. Albert orientation. In this regard, the Commission requires Balsa to submit a report within 60 days of the date of this decision, and at yearly intervals thereafter, outlining details of how the St. Albert orientation is being maintained in its programming, particularly its news, local public affairs and community access programs. Specifically, the applicant should explain in its first report how it intends to meet, and then on an annual basis, how it is complying with the Commission's expectation in each of these programming areas.
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Taking into account the financial situation of this station, the Commission is satisfied that the $400,000 to be allocated for technical improvements intended to enable the applicant to place the station in an economically viable position, combined with Mr. Forster's broadcasting experience and the $10,000 annual expenditure on the local talent contest, are significant and unequivocal benefits, commensurate with the size and nature of the transaction and, accordingly, that approval of the application is in the public interest.
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With respect to the proposed talent contest, the Commission has frequently emphasized the importance it attaches to the development of Canadian talent, and to the unique role that broadcasters can play in this area. It therefore expects the applicant to produce and broadcast each year pro-grams featuring the performances of contestants entered in its annual talent contest. The Commission will review the applicant's performance in this regard at licence renewal time with a view to determining how this initiative may be subsequently expanded or improved.
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The Commission notes that, although Balsa has met the first test referred to earlier in this decision, not all of those items put forth by the applicant as significant and unequivocal benefits have been accepted as such. The applicant's plans for future co-operation with other radio stations owned by Mr. Forster may represent, as the applicant states, "the possibility down the road" of an improved radio service. In the Commission's view, however, these plans are not sufficiently developed to be acceptable at this time as an unequivocal benefit. Similarly, although the Commission expects the applicant to adhere to its commitment with respect to FACTOR funding, it notes that this undertaking is tied to the realization of net profits and thus does not represent an unequivocal commitment.
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While, the applicant's commitment to "maintain" the CKST program service at the same level of quality that currently exists cannot be considered as providing any new or incremental benefit to listeners resulting form the present transaction, the Commission acknowledges the efforts of the partners to upgrade the level of service provided by CKST through the introduction of improvements over and above those contemplated under their original commitments. The Commission also acknowledges Balsa's commitment to maintain and improve this level of service in the future and will monitor the applicant's performance in this regard.
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It is a condition of licence that Balsa adhere to the CAB's self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.
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Fernand Bélisle
Secretary General
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DISSENTING OPINION OF COMMISSIONNER MONIQUE COUPAL
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I would not approve the request for a new frequency because it will provide a new radio service to the city of Edmonton for which the applicant has not provided the details that are normally required by the CRTC. Moreover, in the circumstances, I think that there should have been a call for applications for a new FM service to serve Edmonton.
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