ARCHIVED -  Decision CRTC 96-659

Decision

Ottawa, 3 October 1996

Decision CRTC 96-659

1146129 Ontario Inc.

Toronto, Ontario - 952751600

Acquisition of assets - approved

Following a Public Hearing in the National Capital Region beginning on 15 April 1996, the Commission approves the application for authority to acquire the assets of the (radio) programming undertaking CKYC Toronto (formerly CJCL) from Telemedia Communications Inc. (Telemedia), and for a broadcasting licence to continue the operation of this undertaking.

The Commission, upon surrender of the current licence, will issue a new licence expiring 31 August 1999. The licence will be subject to the same conditions as those in effect under the current licence, as well as to any other condition specified in this decision and in the licence to be issued.

The licence term granted herein, while less than the maximum of seven years permitted by the Broadcasting Act, will enable the Commission to consider renewal of the licence for this undertaking in accordance with the Commission's regional plan and to better distribute the workload within the Commission.

CKYC currently operates in a predominantly country music format, but also offers 18 hours per broadcast week of Chinese-language programming. The applicant proposes to change the station's format to one that will offer 122 hours per broadcast week of Type A and Type B ethnic programming directed to a minimum of 14 cultural groups in a minimum of 15 different languages. The cultural groups will include five that are currently unserved by existing ethnic broadcasters. According to the applicant, no more than 66 hours per broadcast week will be devoted to Chinese-language programming. Conditions of licence requiring adherence to these and other commitments are set out later in this decision.

The purchase price relating to this transaction is $1.8 million. Based on the evidence filed with the application, the Commission has no concerns with respect to the availability or the adequacy of the required financing.

Parties to the transaction and other background

The applicant is directly controlled by its sole shareholder, Y.B.C. Holdings Limited (Y.B.C.). Y.B.C. holds indirect ownership of 100% of Great Pacific Broadcasting Ltd. (Great Pacific), licensee of ethnic AM station CJVB Vancouver, and will also have direct ownership of 50% of a company to be incorporated, whose application to carry on a new ethnic FM station in Vancouver was approved in Decision CRTC 96-288 dated 29 July 1996. No single shareholder or other person holds effective control of Y.B.C.; its chairperson, Thomas Fung, has ultimate control of the national Chinese-language specialty programming undertaking, Fairchild Television Ltd. (Fairchild).

Telemedia, the vendor, has long owned and operated an AM station in Toronto on the frequency 1430 kHz. As authorized in Decision CRTC 94-928 dated 19 December 1994, Telemedia acquired ownership of a second Toronto AM station from Rogers Communications Inc. (RCI). The application pertaining to Telemedia's acquisition of this second AM station, operating on the more effective frequency of 590 kHz, was part of a much larger transaction involving a reorganization of various television and radio stations owned by RCI and other Canadian broadcasters. As a further part of the larger transaction, the Commission considered an application by Angelo Cremisio, on behalf of a company to be incorporated, for authority to have the assets of Telemedia's original Toronto AM station (1430 kHz) transferred immediately to its ownership; the applicant proposed to provide an ethnic radio service directed primarily to the Chinese community of Toronto, and to ten other cultural groups.

The Angelo Cremisio application was denied by the Commission in Decision CRTC 94-929, also dated 19 December 1994. In its decision, the Commission noted the concerns of interveners that the applicant's proposal to serve only eleven cultural groups in a total of twelve languages was inadequate, and that the licensing of a new ethnic radio station in Toronto would seriously impair the viability of existing ethnic services. Among its findings, the Commission stated that the applicant had failed to demonstrate the presence of adequate untapped advertising revenues or sufficient audience for the proposed service at that time, adding:

 The Commission therefore remains of the view that the licensing of a sixth ethnic radio station in the Toronto region could cause a negative impact on existing broadcasting services. In the absence of compelling evidence to the contrary, the Commission has denied the application.

This denial left Telemedia as owner of two AM radio stations in Toronto, a situation incompatible with the Commission's long-standing policy against the common ownership of two radio broadcasting undertakings of the same class serving the same market. Accordingly, the Commission directed Telemedia in Decision CRTC 94-928 to ensure, within twelve months of the decision's date, that an application was filed for authority to transfer effective ownership or control of its original AM station to a third party.

In early 1995, Telemedia exchanged the call signs of its two Toronto AM stations. Thus, Telemedia's original station (CJCL on 1430 kHz) became CKYC; while CKYC (the former RCI station on 590 kHz) became CJCL. The current application by the numbered company to acquire the assets of the renamed CKYC was submitted in response to the requirement set out in Decision CRTC 94-928. It was received by the Commission on 23 November 1995 and was announced in Notice of Public Hearing CRTC 1996-2 dated 16 February 1996.

Concerns of interveners

Many of the interveners opposed to the current application at the April 1996 hearing were the same ethnic broadcasters serving the Toronto area who had intervened to the Angelo Cremisio proposal
19 months earlier, including CJMR 1320 Radio Limited and Radio 1540 Limited (CHIN and CHIN-FM). Mr. Cremisio also intervened as President of CKMW Radio Ltd., licensee of CIAO. The interveners' concern was for the negative impact that the proposed service could have on their existing and/or potential advertising revenues, principally as a consequence of the proposed amount of programming in Chinese, and in the Cantonese dialect in particular. Cantonese is the dialect spoken by the majority of Toronto's Chinese-language residents.

In the Commission's view, the interveners most potentially affected by the proposed service are the Canadian Chinese Broadcasting Corporation (CCBC) and the licensee of CIRV-FM Toronto. CCBC utilizes the SCMO facilities of CKFM-FM Toronto to provide a 24-hour-per-day Chinese programming service to those residents in the Greater Metropolitan Toronto area having SCMO receivers. The intervener argued that the fragmentation of advertising dollars caused by the introduction of more Chinese-language programming to an "already saturated market... will have a serious negative effect on CCBC's service."

The licensee of CIRV-FM Toronto was also concerned about the potential impact the proposed service could have on its operations. CIRV-FM has a brokerage contract with Seryna Investments Ltd. (Seryna), an affiliate of Fairchild. Under this contract, Seryna currently provides 31 hours per broadcast week of Chinese-language programming for broadcast on the station. The intervener stated that, given Fairchild's ownership ties to the applicant, approval of the application would remove any business reasons Seryna might otherwise have to continue to provide brokered programming to CIRV-FM:

 CIRV knows through experience that it will be very difficult, if not impossible, to find another experienced Chinese producer who will be willing to compete with the applicant and the other existing services for a share of the limited advertising dollars that ethnic broadcasters attract.

Although the proposed number of hours of programming specifically directed to the Chinese community in the current application is less than that proposed in the 1994 application by Angelo Cremisio, opposing interveners noted that the overall amount of such programming available in the Toronto market has expanded in the intervening period. They claimed that the onus thus lay with the applicant to demonstrate, both that there is a demand for the additional ethnic programming it proposed to offer, and that the new service will not cause undue harm to existing services.

Applicant's position

In responding to CCBC's intervention, the applicant submitted that any concern arising from the limitations of SCMO technology, and the implications these limitations may have for the viability of the intervener's Chinese-language service in face of competition from a new over-the-air service, should not be taken as grounds for denying the applicant's proposal to provide high-quality radio service, particularly service to language groups in Toronto who are currently unserved. It further
contended that the intervener had overstated the potential impact of the proposed service, arguing that CCBC "...has an established place with listeners [that] attracts substantial revenues from the market, and will continue to do so."

With regard to CIRV-FM's concern that Seryna might terminate its brokerage agreement with the FM station following approval of the application, the applicant stated that both it and Seryna viewed the existing FM and proposed AM services as being complementary to each other: while the FM is best suited to a music-oriented format attractive to younger listeners, the AM will be effective in providing an older audience with a mix of news, information, drama, as well as music. The applicant suggested that a further incentive for maintaining its relationship with CIRV-FM would be the efficiencies achievable "through joint operations between the FM brokerage and our station-produced programming..."

Although the applicant acknowledged that it might be obliged to rethink its arrangements with CIRV-FM should its revenue projections not be realized, Ken Kwan, the applicant's President, stated the following:

 At this particular point in time, I can say on the public record that I have no plan whatsoever to take the contract away from CIRV. In fact, in our whole formulation of this application, the FM brokerage arrangement supported us. It is an integral part of our whole approach.

With respect to the concerns of ethnic broadcasters as a group, the applicant emphasized that its program schedule had been designed with particular sensitivity to their misgivings about the impact of the proposed service. It noted that, wherever possible, its non-Chinese-language programming would be scheduled at times other than when such programming is being broadcast on other stations. The applicant stated further:

 We have also deliberately scheduled our main block of Cantonese programming from noon to 8:00 p.m., Monday to Friday, leaving the important morning drive to the other ethnic radio stations in the market who are now offering Cantonese at that time.

 Overall, we have arranged our Cantonese programming to ensure that, at times during the broadcast day when we are broadcasting Cantonese, there will not be more than one other station in the market offering Cantonese programming during the same time block.

Commission findings

In its deliberations with respect to the current application, the Commission has been mindful of the issues raised in Decision CRTC 94-929, and has taken into account the views of opposing interveners.

Based on the available evidence, including the applicant's market research, the Commission is satisfied that there is a clear demand for the proposed service. The Commission also considers that the applicant, through its commitments to provide programming in 15 different languages to serve 14 different ethno-cultural groups, including five groups that are currently without service, meets the requirements of the Commission's ethnic policy and will contribute significantly to the diversity of radio programming in the Toronto area, and that approval of this application is in the public interest.

The Commission acknowledges that the proposed service will have an impact on the audiences and advertising revenues of existing ethnic services. Such impact, however, will be mitigated by a number of factors, including the conditions of licence set out in this decision reflecting the applicant's commitment to minimize scheduling conflicts with existing ethnic services, and its willingness to accept a cap of 66 hours per week on the amount of its Chinese-language programming (no more than 56 hours of which will be in Cantonese and scheduled outside the peak morning period). The Commission also expects that the other ethnic broadcasters will be able to respond to the new service through their individual efforts either to enhance the attractiveness of their existing programming or to alter their programming and seek out revenues in other ethnic markets.

With respect to CCBC, the Commission recognizes the quality of this SCMO service and its appeal to Toronto's Chinese-language community. Nevertheless, it is convinced that the public interest to be served by licensing a new, over-the-air ethnic service, one that will provide new or increased service to far more than just a single ethnic group, outweighs the intervener's concerns.

Conditions of licence

As discussed above, it is a condition of licence that the licensee provide service to a minimum of 14 ethno-cultural groups in a minimum of 15 different languages.

It is also a condition of licence that the licensee provide a minimum of 122 hours per broadcast week of ethnic programming in Types A and B.

The licensee shall, by condition of licence, broadcast a maximum of 66 hours per broadcast week of ethnic programming directed to the Chinese community.

Further, by condition of licence, the licensee shall restrict the hours during which programming is broadcast in Mandarin and Cantonese to the following:

(a)  Mandarin - between 6:00 a.m. and 8:00 a.m. on weekdays, and;

(b)  Cantonese - between noon and 8:00 p.m. Monday through Sunday.

It is a condition of licence that the applicant adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB) "Sex-Role Portrayal Code for Television and Radio Programming", as amended from time to time and accepted by the Commission.

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 accepted by the Commission.

Expectations and other matters

  Benefits

CKYC has been unprofitable over the three year period that preceded the filing of this application. Accordingly, the Commission is satisfied that the application meets the criteria set out in Public Notice CRTC 1993-68 entitled "Application of the Benefits Test at the Time of Transfers of Ownership or Control of Broadcasting Undertakings". Specifically, the Commission notes the overriding benefit associated with this transaction, that being the maintenance of CKYC as a viable, local radio service in the Toronto market. For this, and for the other reasons noted earlier in this decision, the Commission is of the view that approval of this application is in the public interest.

The Commission notes the applicant's commitment, as part of this transaction, and notwithstanding the station's record of unprofitability, to make direct expenditures of $150,000 over five years, earmarked principally for scholarship funds to be administered by the School of Radio and Television Arts at Ryerson Polytechnic University.

  Canadian talent development

The Commission reaffirms the particular importance it attaches to the development of Canadian talent and is satisfied with the annual budgets and initiatives proposed by the applicant in this respect. It encourages the applicant, during the licence term, to continue its efforts towards the support, development and exposure of local and regional talent.

  Employment equity

In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled "Implementation of an Employment Equity Policy", the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. In this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

The Commission acknowledges the many interventions submitted in support of this application.

This decision is to be appended to the licence.

Allan J. Darling
Secretary General