ARCHIVED -  Decision CRTC 97-361

Decision

Ottawa, 23 July 1997

Decision CRTC 97-361

Larche Communications Inc.

Midland, Ontario - 199616728 - 199616736

Acquisition of assets and licence amendment for CICZ-FM

1. Following a Public Hearing in Toronto beginning 14 April 1997, the Commission approves the application for authority to acquire the assets of CICZ-FM Midland from Telemedia Communications Inc., and for a broadcasting licence to continue the operation of this undertaking.

2. The Commission notes that the acquisition of assets was contingent upon approval of the application for a power increase and transmitter relocation approved below.

3. Upon surrender of the current licence, the Commission will issue a licence to Larche Communications Inc. (LCI), expiring 31 August 2003, the current expiry date. 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.

4. The purchase price relating to this transaction is $490,000. 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.

5. Because the Commission does not solicit competing 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. As a first test, the applicant must demonstrate that the proposed transfer will yield 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.

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

7. The Commission notes that CICZ-FM has been unprofitable over the three years preceding filing of this application. Accordingly, the Commission is satisfied that the acquisition application meets the criteria to forego benefits requirements as 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.

8. Nevertheless, the Commission notes that the licensee, exceeding the levels in the Canadian Association of Broadcasters' (CAB) plan, has committed to increase its yearly direct costs for the development of Canadian talent from $400 per year to $5,000 per year.

9. In view of the serious financial situation of CICZ-FM, the Commission notes that the important benefit associated with this transaction is the maintenance of CICZ-FM as a viable, local radio service to Midland. Accordingly, the Commission is of the view that approval of this acquisition application is in the public interest.

10. The Commission also approves the applicant's request to amend the broadcasting licence for CICZ-FM Midland by increasing the effective radiated power from 1,550 watts to 9,170 watts, and to relocate its transmitter 37 kilometres south-east to a site near Edgar, Ontario.

11. The Commission hereby authorizes the licensee to operate the undertaking on the basis of the contours and particulars resulting from the above-mentioned changes.

12. The Commission notes that, as a result of these changes, CICZ-FM's coverage will be substantially improved and expanded such that Barrie and Orillia will be encompassed within the station's primary 3,000 microvolt per metre service contour.

13. The Commission acknowledges an opposing intervention submitted collecti-vely by Shaw Radio Ltd., licensee of CHAY-FM Barrie, by Power Broadcasting Inc., licensee of CIQB-FM Barrie, and by Rock 95 Broadcasting (Barrie-Orillia) Ltd., licensee of CFJB-FM Barrie, hereafter referred to as the Barrie Broadcasters.

14. The interveners opposed the proposed licence amendments which will significantly increase the coverage area of CICZ-FM and which they claim will, as a result, transform the station into a Barrie FM station, without being licensed to serve that market.

15. LCI claimed that the increase in power is necessary to make the station economically viable but that it will continue to focus its information and programming services on the Midland-Penetanguishene area.

16. With respect to the applicant's contention that the declining advertising revenues of CICZ-FM are due to competition from the Barrie stations, the Barrie Broadcasters note in their intervention that it is "equally plausible that ad revenues are leaving CICZ-FM for other media, not necessarily other radio stations".

17. LCI stated that the study used by the Barrie Broadcasters is not an accurate representation of advertising expenditures in central Ontario, and maintains that the power increase for CICZ-FM is essential to its survival.

18. In their intervention, the Barrie Broadcasters also indicated that based on the criteria set out in the Commission's Radio Market Policy, Public Notice CRTC 1991-74 dated 23 July 1991, the Barrie market fails the Commission's tests, showing negative results in group profitability and revenue growth, and suggest that it is clear that the Barrie market cannot sustain another station.

19. The Commission's analysis confirms that the Barrie market has failed two of the three tests for the period 1992 to 1996. The Commission notes, however, that retail sales projections available to the Commission show that significant increases are expected in the area over the next five years. In addition, CICZ-FM expects to extract, at, most, only 3% of total Barrie market radio advertising revenues over the projection period. The Commission is thus satisfied that approval of this application will not unduly affect the ability of existing commercial stations to discharge their programming responsibilities. Moreover, it is convinced that it will enable CICZ-FM to compete with regional Barrie stations which currently receive significant tuning in the Midland market.

20. LCI confirmed at the hearing that the station's primary mandate is to serve first and foremost the Midland market, and that its studios would remain in Midland. As announced in Public Notice CRTC 1992-72, A Review of the CRTC's Regulations and Policies for Radio, dated 2 November 1992, the Commission is not concerned with studio placement in most cases. However, in this case, the Commission is of the view that the studios of CICZ-FM should remain in the Midland community.

21. Accordingly, the Commission expects LCI to locate all of the on-air studio facilities of CICZ-FM in the immediate Midland-Penetanguishene area.

22. The Commission notes the licensee's proposal to increase local programming from 32 hours per week to 168 hours per week.

23. It is a condition of licence that the station not be operated in the Specialty format, as defined in Public Notice CRTC 1995-60, or as amended from time to time by the Commission.

24. The licensee is required, by condition of licence, to make payments to third parties involved in Canadian talent development at the level identified for it in the CAB's Distribution Guidelines For Canadian Talent Development, as set out in Public Notice CRTC 1995-196 or as amended from time to time and approved by the Commission, and to report the names of the third parties associated with Canadian talent development, together with the amounts paid to each, on its annual return. The payments required under this condition of licence are over and above any outstanding commitments to Canadian talent development offered as benefits in an application to acquire ownership or control of the undertaking.

25. It is a condition of licence that the licensee adhere to the guidelines on gender portrayal set out in the CAB's Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the Canadian Broadcast Standards Council.

26. 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.

27. 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.

28. The Commission acknowledges the interventions submitted in support of these applications.

This decision is to be appended to the licence.

Laura M. Talbot-Allan
Secretary General

This document is available in alternative format upon request.

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