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Decision
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Ottawa, 9 November 1989
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Decision CRTC 89-833
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Rawlco Communications Ltd.
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Ottawa, Ontario - 883354300Robert E. Redmond, representing a company to be incorporatedOttawa, Ontario - 883355000
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Standard Radio Inc.
Ottawa, Ontario - 883365900
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Robert Keith Whyte, representing a company to be incorporated
Ottawa, Ontario - 883353500
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At a Public Hearing commencing 27 June 1989 in the National Capital Region, the Commission heard applications by the four parties named above, each seeking a licence to carry on an English-language FM radio broadcasting transmitting undertaking at Ottawa, operating in the Group 1 (Pop and Rock-Softer) format. These competing applications were submitted in response to a call issued by the Commission on 30 September 1988 (Public Notice CRTC 1988-164). The Commission, for the reasons set out below, approves the application by Rawlco Communications Ltd. (Rawlco), and will issue a joint FM licence expiring 31 August 1994, subject to the conditions specified in this decision and in the licence to be issued. The three other applications noted above are denied. A key factor in the Commission's consideration of whether to authorize the introduction of a new radio service in any market is the extent to which the service might draw advertising dollars away from existing stations and affect their ability to fulfill their programming responsibilities. The Ottawa metropolitan area is the fourth largest market in Canada by population. There are a total of 17 over-the-air radio stations licensed to serve the market; this number includes 12 commercial stations, of which 8 (4 AM, 4 FM) broadcast in English and 4 (2 AM, 2 FM) broadcast in French.
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During the five-year period ending in 1988, radio revenue growth in the market has been steady, averaging 9.2% annually. This is significantly greater than the annual growth rate of 7.8% attained by the radio industry in Ontario over the same period. Together, the commercial stations in the Ottawa market earned revenues totalling more than $30 million in 1988, making it the fifth largest radio revenue producing market in the country, after Toronto, Montreal, Vancouver and Edmonton. The Ottawa market in general has performed extremely well in recent years, with rates of growth in population size, income level and spending greater than those experienced in most other Canadian markets. Indications are that the market will remain robust, although growth during the next five years is expected to be somewhat slower than in the past.
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At the hearing, the four applicants provided documentation to assure the Commission that the Ottawa market is strong enough to support a new English-language Group 1 FM station without creating undue harm or hardship for existing stations in the market. This view went virtually unchallenged by the licensees of any radio stations authorized to serve that market, other than CHEZ-FM Inc. CHEZ-FM Inc., licensee of CHEZ-FM Ottawa, as well as of CJET and CHEQ-FM Smiths Falls, intervened in opposition to all four of the above-noted applications. Although the intervener questioned the ability of the Ottawa market to withstand the impact of a new commercial Group 1 FM station, it made clear that it was particularly concerned by the extent to which such a station in Ottawa would reduce the audience and revenues of its Group 1 FM station in Smiths Falls.
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The Commission notes that, according to figures published by Statistics Canada, 50% of all radio listening across Canada is to stations with pop and softer rock music formats (including adult contemporary and middle of the road stations), featuring predominantly vocal selections. The English-language radio market in Ottawa represents an anomaly among Canada's larger cities in that it is currently unserved by any local Group 1 FM station operating in that format. In fact, the only English-language Group I FM station in Ottawa is CFMO-FM, an easy listening station which broadcasts a minimum of 50% instrumental music.
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Accordingly, the Commission is satisfied that a Group 1 FM format emphasizing vocal selections, as selected by all four applicants, is the most appropriate format for the expansion of listener choice in the Ottawa market, and that such a format is most likely to succeed financially.
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Moreover, based on all of the available data concerning the strength of the local radio market, the Commission is convinced that such success should be achieved without creating any undue harm or hardship for existing radio stations licensed to serve Ottawa.
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With regard to the intervention by CHEZ-FM Inc., the Commission notes that CHEQ-FM has, as its principal responsibility, the provision of a distinct programming service oriented to the Ottawa Valley and, in particular, to the Smiths Falls region. Rawlco referred to the mandate of the Smiths Falls FM station in replying to CHEZ-FM Inc.'s intervention. Specifically, Rawlco noted that, at the hearing of the intervener's applications to purchase the Smiths Falls stations in 1983, CHEZ-FM Inc. clearly acknowledged that CHEQ-FM's operation as a Group 1 station would not prevent the future introduction of an FM station with a similar format in Ottawa.
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Consistent with its practice in considering any set of competing proposals, the Commission examined the present applications from a variety of perspectives. In each case, it assessed the preparation and originality evident in the proposals for the musical and spoken word components of the service, the consistency of the applicant's programming plans with the goals of the FM policy, the adequacy of the staff and other resources allocated to the realization of these programming plans, and the overall relevance of the proposed service to Ottawa residents. Further, it assessed each applicant's proposed initiatives for the support of local musical talent and the potential for effectiveness of such initiatives.
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The Commission also examined such factors as the quality of the market analysis performed by the applicants, the thoroughness of their respective business plans, including strategies for station launch and promotion, and the reasonableness of their financial projections. In addition, the Commission looked at the managerial and financial resources available to each applicant and, in the case of those applicants who already have ownership of radio broadcasting undertakings (all except Robert Keith Whyte), their record in fulfilling commitments and operating in compliance.
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Based on all of the evidence before it, including the results of its assessment in the various areas noted above, the Commission is convinced that Rawlco's proposal for a new Group 1 FM station at Ottawa, overall, is superior to the other three considered at the June 1989 public hearing and has accordingly approved Rawlco's application.
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The Commission notes Rawlco's extensive broadcast experience acquired through its operation of several radio stations across Canada, including CFGO Ottawa. The market analysis and business plan submitted by Rawlco offers a sound foundation for the establishment of a new station. Moreover, Rawlco's ownership of CFGO has given the applicant a strong understanding of the local community and a good knowledge of the local advertising market. Rawlco's programming proposals include a commitment to broadcast a minimum of 26 hours 45 minutes of foreground programming weekly. The applicant's plans for foreground programming, strongly oriented to the local community and evenly distributed throughout the weekly schedule, are well developed and will be adequately supported by staff and financial resources.
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With respect to the musical component of the proposed service, Rawlco has chosen an Adult Contemporary Gold format, in which 40% of all selections will be from the current repertoire. Although targeted to a fairly broad age group of adults between the ages of 25 and 54, the proposed station will have a much more contemporary sound than the service offered by CFMO-FM.
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The Commission's guidelines for FM stations operating in the format proposed by Rawlco specify a minimum level for Canadian content of 20% and a level of less than 50% hits. At the hearing, Rawlco emphasized that its actual performance with respect to Canadian content would be greater than the minimum requirement of 20%, while its reliance on hits would, in all likelihood, be less than the 49% specified in its Promise of Performance. Specifically, it stated:
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Internally, at all our radio stations, we program them with a fairly significant margin of error, so it is our intention to program this radio station at a 25% Canadian content level... The same thing happens to things like hits... We are going to do it as close as we can to the Promise of Performance, but we program our FM stations currently at 45%.
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The Commission also notes Rawlco's commitments, contained in its application, to expend a minimum of $200,000 per year on initiatives to be undertaken by the new station and by CFGO in support of Canadian talent. This sum will be supplemented by a further $15,000 per year, which amount represents CFGO's existing commitment for Canadian talent development. The Commission expects the applicant to adhere to its commitments and to maximize the proportion of these expenditures that go each year directly to Canadian artists.
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Taking into account Rawlco's past performance in honouring commitments made in previous applications to the Commission, and particularly those made at the time it acquired the assets of CFGO in 1987, the Commission is confident that the commitments made by Rawlco in the context of the present application will be met or exceeded by the applicant.
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Rawlco had proposed to use the frequency 92.1 MHz to broadcast its proposed service in the Ottawa area. As noted in an intervention by the CBC, however, the use of this frequency is technically mutually exclusive with use of the frequency 91.5 MHz proposed by the Corporation in its application for a new English-language FM station at Ottawa, also considered at the June hearing. The CBC's application is approved by the Commission in Decision CRTC 89-835 of today's date.
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In view of the above, although the Commission has approved Rawlco's application, it does not approve the proposed technical parameters. As discussed with the applicant at the hearing, Rawlco must, within three months of today's date, apply to the Commission for authority to make use of other technical parameters for the operation of its proposed FM station.
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Rawlco must also obtain confirmation from the Department of Communications (DOC) that its proposed new parameters are technically acceptable and that the DOC will issue a Technical Construction and Operating Certificate.
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As was also discussed with Rawlco at the hearing, it shall be a condition of licence that construction of this undertaking be completed and that it be in operation within twelve months of the date of Commission authorization of acceptable technical parameters or, where the applicant applies to the Commission within this period and satisfies the Commission that it cannot complete implementation before the expiry of this period and that an extension is in the public interest, within such further period of time as is approved in writing by the Commission.
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It is a condition of licence that the licensee adhere to the Canadian Association of Broadcasters' (CAB) self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.
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It is also a condition of licence that the licensee adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.
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The Commission authorizes Rawlco to make use of the Subsidiary Communications Multiplex Operation. The Commission expects the applicant to adhere to the guidelines set out in Appendix A to Public Notice CRTC 1989-23 dated 23 March 1989 entitled Services Using the Vertical Blanking Interval (Television) or Subsidiary Communications Multiplex Operation (FM). This authority may only be implemented when the DOC gives the technical approval required by the Radio Act and regulations made thereunder.
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A total of 578 written interventions were submitted in respect of the four applications that are the subject of this decision, all but a few of which expressed support for one or other of the proposals. In addition, many individuals appeared at the June hearing to present their interventions to the Commission. The Commission has taken the views of all interveners into account in reaching its decision and thanks them for their participation in the public process.
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Fernand Bélisle
Secretary General
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