Broadcasting Decision CRTC 2016-270

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Reference: Part 1 licence renewal application and Part 1 application posted on 25 February 2016

Ottawa, 18 July 2016

Torres Media Ottawa Inc.
Ottawa/Gatineau, Ontario

Applications 2015-0993-6 and 2015-0994-4

CIDG-FM Ottawa – Licence renewal and amendments

The Commission renews the broadcasting licence for the English-language commercial radio station CIDG-FM Ottawa from 1 September 2016 to 31 August 2023.

The Commission approves the licensee’s request to delete CIDG-FM’s condition of licence relating to the broadcast of special interest music, but denies the licensee’s request to delete CIDG-FM’s conditions of licence regarding the broadcast of Canadian popular music selections.

The Commission has also deleted CIDG-FM’s condition of licence relating to the broadcast of Canadian jazz and blues selections since a requirement in this regard is now set out in the Radio Regulations, 1986.

Introduction

1. Torres Media Ottawa Inc. (Torres) filed an application (2015-0993-6) to renew the broadcasting licence for the English-language commercial radio station CIDG-FM Ottawa, which expires 31 August 2016.
2. Torres also filed an application (2015-0994-4) to amend the broadcasting licence for CIDG-FM. Specifically, it requested the deletion of the conditions of licence set out in Appendix 3 to Broadcasting Decision 2009-481 requiring the station to devote:
   • 20% of its musical selections to special interest music; and
   • 40% of its popular music selections over the broadcast week and between 6 a.m. and 6 p.m. from Monday to Friday to Canadian music, rather than 35% as set out in sections 2.2(8) and 2.2(9) of the Radio Regulations, 1986 (the Regulations).
3. Torres also requested the deletion of the following conditions of licence relating to over-and-above Canadian content development (CCD) contributions:

   4. In addition to the required basic annual contribution to Canadian content development set out in section 15 of the Radio Regulations, 1986, as amended from time to time, the licensee shall, upon commencement of operations, make an annual contribution of $57,143 ($400,000 over seven consecutive broadcast years) to the promotion and development of Canadian content.
   
   Of this amount, the licensee shall remit to FACTOR the amount of $25,000 per broadcast year.
   
   The remaining amounts of this additional contribution shall be allocated to parties and initiatives fulfilling the definition of eligible initiatives set out in paragraph 108 of Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006.
   
   5. In addition to the amounts set out in condition of licence 4, the licensee shall contribute a minimum of $50,000 per broadcast year ($350,000 over seven consecutive broadcast years) to Radio de la communauté francophone d’Ottawa for the support and development of its French-language community FM radio station in Ottawa.

4. Torres stated that its proposal to delete these conditions of licence was based on financial need. Specifically, noting that CIDG-FM is a stand-alone FM radio station operating in a highly competitive market, it argued that it needed requirements equal to those of its competitors to better compete. Torres added that CIDG-FM was not able to fully serve the Ottawa/Gatineau radio market with its current signal and that as a result it was receiving less tuning than other stations, lowering the rates it can charge advertisers.
5. When the Commission posted the renewal application on its website, it noted that the licensee was in apparent non-compliance with CIDG-FM’s requirements relating to contributions to CCD. The Commission has since determined that the licensee has made all of its required contributions on time and therefore is in compliance with its CCD requirements.
6. The Commission received a comment on the licence renewal application from the Canadian Association of Broadcasters CEO Radio Council (CAB Radio Council).^{Footnote 1}
7. The Commission also received an intervention opposing the licence amendment application from the Canadian Independent Music Association (CIMA) and a joint opposing intervention from Rogers Media Inc., Corus Entertainment Inc. and Bell Media Inc. Torres replied to these interventions.
8. The public record for these applications can be found on the Commission’s website at www.crtc.gc.ca or by using the application numbers provided above.

Issues

9. After examining the public record for these applications in light of applicable regulations and policies, the Commission considers that the issues to be addressed prior to renewing the licence are the following:
   • whether the licensee has demonstrated an economic need to justify deleting the conditions of licence regarding the broadcast of special interest music and Canadian popular music on CIDG-FM;
   • the deletion of CIDG-FM’s conditions of licence relating to over-and-above CCD contributions; and
   • the deletion of CIDG-FM’s condition of licence relating to the broadcast of Canadian jazz and blues music.

Economic need for the deletion of conditions of licence regarding the broadcast of special interest music and Canadian popular music on CIDG-FM

Interventions and applicant’s reply

10. The interveners submitted that approving Torres’s requests would undermine the integrity of the licensing process, given that the original application for a broadcasting licence to operate the station was approved through a competitive process, with a commitment by the applicant to offer a specialty music format and ensure higher levels of Canadian content. They argued that Torres did not provide compelling evidence demonstrating the competitive challenges, economic or otherwise, that would be resolved if CIDG-FM was granted the requested relief.
11. The interveners added that approval of the amendments would transform CIDG-FM into a mainstream commercial radio station, reducing programming diversity in Ottawa and Gatineau. They questioned the need for such a station at this time and argued that introducing such a station into the Ottawa/Gatineau radio market would negatively impact sales and the financial health of the market.
12. In reply, Torres noted that approval to change CIDG-FM’s format was not required since it is currently not licensed as a specialty radio station. It argued that deleting the conditions of licence would not affect programming diversity and that CIDG-FM would continue to be a family-owned radio operator providing an independent news voice and unique programming to the market. Torres also submitted that approving the amendments in the station’s second licence term would have no effect on the integrity of the Commission’s licensing process.
13. Torres further argued that the Ottawa radio market remains healthy and would easily absorb the relatively small revenue increases that would result from these changes to CIDG-FM’s programming. It added that significant reductions in the station’s operating expenses did not keep it from experiencing heavy losses during its first licence term and that the station’s rankings have been consistently below forecast due to its impaired signal.

Commission’s analysis

14. Following a competitive licensing hearing, the Commission granted Torres a broadcasting licence to operate a commercial FM radio station in Ottawa (see Broadcasting Decision 2008-222). Since the launch of CIDG-FM on 7 June 2010, the Commission has approved applications for various technical changes to the station’s parameters, including an exchange of frequencies with CHIP-FM Fort-Coulonge, to improve CIDG-FM’s signal in the Ottawa/Gatineau market.^{Footnote 2}
15. The Commission notes that CIDG-FM’s revenues have increased since its first full year of operation in 2011 and that the station has been profitable since 2014. However, programming expenses have been decreasing and the station currently has a relatively low tuning share among English-language commercial FM stations in the Ottawa/Gatineau radio market.
16. In the Commission’s view, approval of the proposed deletions of CIDG-FM’s programming conditions of licence is not critical for the station’s financial health. However, as set out below, the Commission considers it appropriate to provide the station with greater programming flexibility to help it to compete on an equal footing with the other English-language commercial mainstream stations in the market.

Condition of licence relating to the broadcast of special interest music

17. The Commission generally expects the licensee of a radio station that was granted a licence following a competitive process to maintain its commitments for at least the first licence term. In this case, CIDG-FM is in its sixth year of operation. During the station’s first licence term, Torres has met all of its regulatory obligations and is in full compliance with all its conditions of licence, including that relating to the broadcast of special interest music.
18. In the Commission’s view, the competitive nature of the Ottawa/Gatineau radio market and the fact that CIDG-FM is a stand-alone music station operating under a blues/blues rock format present certain challenges for the service. However, since CIDG-FM is licensed as a mainstream radio station and does not operate under a specialty format, Torres is free to adopt a format for the station that is different from its current format and that may be more lucrative. Relieving CIDG-FM from the requirement to broadcast special interest music and thus allowing it to broadcast higher levels of popular music would provide the station with the flexibility it needs to increase its audience share, making it able to compete more efficiently with other stations in the market.
19. In light of the above, the Commission considers it appropriate to approve the licensee’s request to delete CIDG-FM’s current condition of licence 2 relating to the broadcast of content category 3 (Special Interest Music).

Conditions of licence relating to the broadcast of Canadian popular music

20. The level of Canadian content to be broadcast is a key factor in the Commission’s assessment of competitive applications for broadcasting licences to operate new radio stations. Since Torres’s commitment to exceed the regulatory minimum for the broadcast of Canadian popular music was made in the context of a competitive licensing process, it was an important factor in the Commission’s decision to grant Torres a broadcasting licence to operate CIDG-FM.
21. Further, other English-language commercial radio stations in the Ottawa/Gatineau market (specifically, CIHT-FM Ottawa and CILV-FM Ottawa, both operated by Newcap Inc., and CJOT-FM Ottawa, operated by 8324433 Canada Inc., a wholly owned subsidiary of Corus Entertainment Inc.) are also required by condition of licence to devote at least 40% of their popular music selections over the broadcast week and between 6 a.m. and 6 p.m. from Monday to Friday to Canadian music. In addition, Torres did not provide any evidence that its 40% Canadian content level places CIDG-FM at a competitive disadvantage in Ottawa.
22. Finally, although the Commission permits reduced levels of Canadian popular music (either through regulation or by condition of licence) where the availability of such music is limited (for example, instrumental music, pre-1956 music or pre-1981 music), the blues/blues rock music format does not suffer from such availability issues. Given that CIDG-FM’s music format falls primarily within the broad popular music category, Torres is free to broaden its existing music offering or transition to a different format.
23. In light of the above, the Commission does not consider it appropriate to approve the licensee’s request to delete CIDG-FM’s current conditions of licence 3(b) and 3(c) relating to the broadcast of Canadian content in category 2 (Popular Music) selections.

Deletion of conditions of licence regarding over-and-above contributions to Canadian content development

Intervention and applicant’s reply

24. CIMA opposed the applicant’s request to delete its requirements regarding over-and-above CCD contributions, stating that funding from private broadcasters is a vital component of the ecosystem for Canada’s domestic music industry. CIMA added that the proposed elimination of CCD funding for the Radio de la communauté francophone d’Ottawa would have a significant negative impact on that station.
25. In reply, Torres argued that it would be unprecedented to impose over-and-above CCD commitments over CIDG-FM’s second licence term.

Commission’s analysis

26. Torres is in full compliance with all of its CCD contribution requirements. Further, the licensee has indicated that it will fulfill all of its remaining CCD commitments, as well as the outstanding amount it owes for its first year of operations, by the end of the 2015-2016 broadcast year.
27. Commitments to over-and-above CCD contributions are typically made in applications for new broadcasting licences or in applications to transfer ownership or control of a radio station for a period of seven consecutive broadcast years from the beginning of operations. In regard to CIDG-FM, both conditions of licence 4 (over-and-above CCD contributions) and 5 (contribution to Radio de la communauté francophone d’Ottawa) were for the first seven years of operation of the station. As such, there is no basis for re-imposing these requirements beyond the 2015-2016 broadcast year, the station’s seventh year of operations.
28. Accordingly, the Commission considers it appropriate to approve Torres’s request to delete CIDG-FM’s conditions of licence 4 and 5. However, as set out in the appendix to this decision, the Commission has imposed a condition of licence requiring Torres to file proof of payment by 30 November 2016 of the remaining CCD contributions to be made for the broadcast year ending 31 August 2016.
29. The Commission notes that Torres will be required to adhere to the section 15 of the Regulations relating to basic CCD contributions.

CIDG-FM’s condition of licence relating to the broadcast of Canadian jazz and blues music

30. CIDG-FM is currently required to adhere to the following condition of licence:

    3. The licensee shall, as an exception to the percentage of Canadian musical selections set out in sections 2.2(3), 2.2(8) and 2.2(9) of the Radio Regulations, 1986 (the Regulations), in each broadcast week:

    a) devote a minimum of 20% of its musical selections drawn from content subcategory 34 (Jazz and Blues) to Canadian selections broadcast in their entirety.

31. In Broadcasting Public Notice 2006-158, the Commission announced that it would amend the Regulations to require that at least 25% of musical selections from subcategory 34 broadcast by commercial stations during each broadcast week be Canadian selections. In Broadcasting Public Notice 2008-67, the Commission announced that the amendments made to the Regulations would take effect 1 September 2008. In regard to CIDG-FM, the Commission imposed the above condition of licence to ensure that during the process to amend the Regulations, the licensee would implement the requirement relating to the broadcast of jazz and blues selections. Given that this requirement is now set out in the Regulations, the Commission considers it appropriate to delete this condition of licence for CIDG-FM.

Conclusion

32. In light of all of the above, the Commission approves the request by Torres Media Ottawa Inc. to delete CIDG-FM’s condition of licence 2 relating to the broadcast of content category 3 (Special Interest Music) musical selections.
33. The Commission denies the licensee’s request to delete CIDG-FM’s conditions of licence 3(b) and 3(c) relating to the broadcast of Canadian content in category 2 (Popular Music) musical selections.
34. The Commission approves the licensee’s request to delete CIDG-FM’s conditions of licence 4 and 5 relating to over-and-above CCD contributions. As noted above, the Commission has imposed a new condition of licence requiring Torres to file proof of payment of the remaining CCD contribution commitments for the station for the 2015-2016 broadcast year.
35. In addition, the Commission deletes CIDG-FM’s condition of licence 3(a) relating to the broadcast of Canadian jazz and blues selections.
36. Finally, the Commission renews the broadcasting licence for the English-language radio programming undertaking CIDG-FM Ottawa from 1 September 2016 to 31 August 2023. The conditions of licence are set out in the appendix to this decision.

Reminder

37. Pursuant to section 22 of the Broadcasting Act, the broadcasting licence renewed in this decision will cease to have any force or effect if the broadcasting certificate issued by the Department of Industry lapses.

Secretary General

Related documents

• CIDG-FM Ottawa and CHIP-FM Fort-Coulonge – Licence amendments and technical changes, Broadcasting Decision CRTC 2015-575, 22 December 2015
• CIDG-FM Ottawa – Technical change, Broadcasting Decision CRTC 2011-262, 19 April 2011
• Revised content categories and subcategories for radio, Broadcasting Regulatory Policy CRTC 2010-819, 5 November 2010
• CIDG-FM Ottawa/Gatineau – Technical change, Broadcasting Decision CRTC 2010-203, 8 April 2010
• Reconsideration of Broadcasting Decision 2008-222 pursuant to Orders in Council P.C. 2008-1769 and P.C. 2008-1770, Broadcasting Decision CRTC 2009-481, 11 August 2009
• Licensing of new radio stations to serve Ottawa and Gatineau, Broadcasting Decision CRTC 2008-222, 26 August 2008
• Amendments to the Radio Regulations, 1986 – Implementation of the Commercial Radio Policy 2006 and the Digital Radio Policy – Regulatory Policy, Broadcasting Public Notice CRTC 2008-67, 23 July 2008
• Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006

*This decision is to be appended to the licence.

Appendix to Broadcasting Decision CRTC 2016-270

Conditions of licence, expectation and encouragement for the English-language commercial radio programming undertaking CIDG-FM Ottawa

Conditions of licence

1. The licensee shall adhere to the conditions of licence set out in Conditions of licence for commercial AM and FM radio stations, Broadcasting Regulatory Policy CRTC 2009-62, 11 February 2009, as well as to the conditions set out in the broadcasting licence for the undertaking.
2. As an exception to the percentage of Canadian musical selections set out in sections 2.2(8) and 2.2(9) of the Radio Regulations, 1986 (the Regulations), the licensee shall devote at least 40% of its musical selections from content category 2 (Popular Music) in each broadcast week and between 6 a.m. and 6 p.m. from Monday to Friday to Canadian selections broadcast in their entirety.

   For the purposes of this condition, the terms “broadcast week,” “Canadian selection,” “content category” and “musical selection” shall have the same meanings as set out in the Regulations.

3. In order to fulfill its outstanding commitments to Canadian content development (CCD) set out in conditions of licence 4 and 5 of Appendix 3 to Reconsideration of Broadcasting Decision 2008-222 pursuant to Orders in Council P.C. 2008-1769 and P.C. 2008-1770, Broadcasting Decision CRTC 2009-481, 11 August 2009, the licensee shall file, by 30 November 2016 and in a form deemed acceptable by the Commission, proof of payment of the required CCD contributions to be made in the broadcast year ending the previous 31 August in addition to the required basic annual CCD contribution set out in section 15 of the Radio Regulations, 1986, as follows:
   1. $57,143 (condition of licence 4); and
   2. $50,000 to Radio de la communauté francophone d’Ottawa (condition of licence 5).

   The licensee shall allocate no less than $25,000 of the amount specified in a) above to FACTOR. The remainder shall be allocated to parties and initiatives fulfilling the definition of eligible initiatives set out in paragraph 108 of Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006.

Expectation

The Commission expects the licensee to reflect the cultural diversity of Canada in its programming and employment practices.

Encouragement

In accordance with Implementation of an employment equity policy, Public Notice CRTC 1992-59, 1 September 1992, the Commission encourages the licensee to consider employment equity practices in its hiring practices and in all other aspects of its management of human resources.

Date modified:

2016-07-18