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Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience.

 

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

 

 

                          SUBJECT:

 

 

 

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

 

May 17, 2006                          Le 17 mai 2006

 


 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.


               Canadian Radio‑television and

               Telecommunications Commission

 

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

 

 

                 Transcript / Transcription

 

 

 

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

 

 

 

 

BEFORE / DEVANT:

 

Charles Dalfen                    Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Andrée Noël                       Commissioner / Conseillère

Joan Pennefather                  Commissioner / Conseillère

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secrétaire

Peter Foster                      Hearing Manager /

Gérant de l'audience

Bernard Montigny                  General Counsel,

Broadcasting / Avocat

général, Radiodiffusion

Anne-Marie Murphy                 Legal Counsel /

Conseillère juridique

Robert Ramsey                     Senior Director, Radio

Policy and Applications /

Directeur principal,

Politiques et demandes

relatives à la radio

 

 

HELD AT:                          TENUE À:

 

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

 

May 17, 2006                      Le 17 mai 2006

 


           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

 

CBC/Radio Canada                                  957 / 5409

 

Corus                                             975 / 5519

 

CHUM Limited                                     1011 / 5731

 

Standard Radio Inc.                              1055 / 5979

 

Rawlco Radio Ltd.                                1086 / 6208

 

Blackburn Radio Inc.                             1108 / 6338

 

Jim Pattison Broadcast Group                     1123 / 6400

 

Rogers Media                                     1143 / 6514

 

Newcap Radio                                     1192 / 6784

 

Ontario Independent Radio Group                  1211 / 6875

 

Milestone Radio Inc.                             1237 / 7046

 

Radio CJVR Ltd.                                  1265 / 7227

 

1182743 Alberta Ltd.                             1278 / 7291

 

Rock 95 Broadcasting Ltd.                        1303 / 7428

 

Canadian Association of Ethnic (Radio)           1320 / 7541

  Broadcasters

 

British Columbia Institute of Technology         1337 / 7650

  on behalf of the Broadcast Educators

  Association of Canada

 

CKUA Radio                                       1357 / 7798

 

National Campus and Community Radio Association 1377 / 7909

 

Aboriginal Voices Radio Inc.                     1400 / 8012

 


                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Wednesday, May 17, 2006

    at 0905 / L'audience débute le mercredi

    17 mai 2006 à 0905

5403             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.  Good morning, everyone.

5404             Madame la Secrétaire.

5405             LA SECRÉTAIRE:  Merci, monsieur le Président.

5406             Good morning.  We will start this morning with the presentation of CBC/Radio‑Canada who are appearing at the request of the Hearing Panel.

5407             Mr. Ray Carnovale will be appearing for CBC/Radio‑Canada and will introduce his colleagues.

5408             You will then have 10 minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

5409             MR. CARNOVALE:  Thank you.

5410             Mr. Chair, Members of the Commission, I am Ray Carnovale, Vice President and Chief Technology Officer at CBC/Radio Canada.  It is a pleasure to appear before you today at this important proceeding to review the regulatory framework for commercial radio.


5411             With me are François Conway, Senior Director Strategy and Planning Technology, and Bev Kirshenblatt, Senior Director Regulatory Affairs.

5412             Consistent with our submission in this proceeding, our remarks today focus on the Commission's transitional digital radio policy.

5413             We have already set out in detail in our written submission in this proceeding, the comprehensive range of English and French‑language radio services we provide to Canadians and the numerous platforms over which we provide them.

5414             We are extremely proud of our programming and our services.  However, a number of dramatic changes are increasingly affecting the Canadian broadcasting environment and, as a result, we face a host of opportunities and challenges if we wish to continue to fulfil our role.

5415             You have heard from many participants in this proceeding how podcasting, streaming audio services and satellite radio have altered the broadcasting landscape and that the pace of change is accelerating.  We all agree that these developments present challenges.

5416             There is significant and ongoing fragmentation of the radio audience for conventional linear programming.


5417             The wide range of technological developments in content delivery, however, also presents extraordinary opportunities for broadcasters.  We think that new distribution technologies provide both new shelf space for Canadian programming, as well as new opportunities for innovative program development.

5418             These new platforms provide an opportunity for us to reach out to Canadians in totally new ways, capturing new audiences and revitalizing the relationship with existing audiences.

5419             We believe that this is an opportunity that cannot be missed.

5420             For CBC/Radio Canada, these changes reinforce the need to maintain a distinctive voice and a unique and ubiquitous presence across all platforms, old and new, so that Canadians will be able to easily find their national public broadcaster on whatever medium they choose to use.

5421             All broadcasters must respond to technological changes as they arise, and CBC/Radio Canada prides itself on being highly accessible and ahead of the curve with respect to emerging and new technology.


5422             In the case of radio, however, the transmission path to digital transmission for AM and Fm ratio stations remains unclear.  Based on the Commission's current transitional digital radio policy, the digital is a replacement technology.

5423             Broadcasters have made significant investment to build, maintain and operate digital radio broadcast infrastructure.  CBC/Radio Canada has invested in transmitters and the necessary connections in five major cities, as well as in production and programming facilities in Montréal and Vancouver.  Unfortunately, for a number of reasons, the rollout of digital radio broadcasting has stalled in Canada.

5424             Since the CRTC's transitional digital radio policy was first issued, other digital transmission technologies have emerged.  For example, in the United States a number of radio broadcasters are promoting HD radio as a response to satellite radio, despite the fact that HD radio is still in the experimental stages.

5425             However, we believe that there are a number of important issues, particularly technical issues, as well as consumer acceptance issues, that must be fully evaluated before this system can be adopted in Canada.  In fact, we will be conducting over‑the‑air transmission tests of HD radio in Toronto this summer.


5426             In preparation for these tests we visited national public radio laboratories in Washington, D.C. to hear of their experiences with HD radio.  They have kindly agreed to let us share their documents with you.

5427             Given the high degree of uncertainty with respect to these technologies, the only thing that is certain is that no one can accurately predict how digital radio will unfold in the future.  We think that it is too early to draw any definitive conclusions on any of these technologies.

5428             However, as stated in our written comments, CBC/Radio Canada remains committed to DRB.  We also believe that DRB should be treated as a complementary technology that will co‑exist with existing analog and other digital services.  DRB should no simply be seen as a replacement technology.

5429             So what will get Canadians interested in a new distribution technology like digital radio?

5430             We think that the first step is to permit broadcasters to innovate and experiment in the provision of digital radio services to Canadians.  For example, the delivery of multimedia content to mobile phones and other portable devices can now be offered using L‑band DRB technology.


5431             Permitting such innovation, experimentation and creativity must just help spark the success of DRB in Canada.  It makes sense to explore the potential that DRB offers us in improving our availability and service to Canadians.  We are currently exploring a number of uses for DRB in ways that could increase its attractiveness to Canadians.

5432             We want to be able to assess the needs and interests of Canadians.  The results of such experimentation could then provide the basis for a review of the current policy on digital radio.

5433             Thank you.  We would be pleased to answer any questions you may have.

5434             THE CHAIRPERSON:  Thank you very much.

5435             Mr. Arpin...?

5436             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.

5437             I will focus on the three real topics:  the transitional period, the one that the Commission created from 1995, say, up to today, particularly ‑‑ I will not discuss the non‑availability of receivers, but the various tests that you have done, particularly out of your Montréal and Vancouver studio facility.


5438             I know, and I think for the record it may be good to know, that you use those 14 hours that the Commission has allocated through its policy to do some different programming, to try to understand what were your conclusions about the use of the technology during that transitional period.

5439             I know that you, Mr. Carnovale, was here yesterday when Mr. Shuldiner from iBiquity appeared, so I will want to hear your comments on what we learned from iBiquity.  Did we learn something that is new?

5440             Following the discussions that we had, what they are proposing for Canada, is it more palatable than it was before the hearing?

5441             I heard that you are going to be testing HD in Toronto over the summer.  Mr. Shuldiner also mentioned that they were contemplating some tests here in Canada.  Are they the same ones or are they other tests that he was referring to?  I don't know where you are.


5442             You addressed somehow the future in your oral presentation, the future use of the L‑band.  Obviously it is going to be an Industry Canada decision, not a CRTC decision, but since we have an opportunity to discuss the matter and put on the record some reflection from the various broadcasters it may help down the road to have a better use of the L‑band.

5443             I also heard you that NPR has allowed you to share studies with the Commission?

5444             MR. CARNOVALE:  Yes.

5445             COMMISSIONER ARPIN:  Could you please make them available at some point in time?  I know that we have set a schedule that we need to have these documents by May 29th.

5446             MR. CARNOVALE:  Yes, we would be happy to.

5447             COMMISSIONER ARPIN:  You would be happy to do so?

5448             Then my first question will deal with the transitional digital period and the various experiments that were done, both in Montréal and in Vancouver, and what have you learned from these experiences?

5449             MR. CARNOVALE:  Well, first I will mention that the genesis of Radio 3, which was based in Vancouver, started out as an internet service, but we took advantage of the 14‑hour provision to transmit some of that programming over the Vancouver DRB transmitter.


5450             I will turn it over to François Conway to describe the ongoing experiments that we have in Montréal right now.

5451             M. CONWAY:  Merci, Ray.

5452             When we selected DRB as a technology several years ago, the reason was that we saw in this technology the potential to deal with the future environment of radio with fragmentation and multiple platforms arriving.

5453             So during these past years in the transitional stage, I can say that we practically tried  every possibility the technology and the regulatory and policy framework allowed us to do, and I will list them.

5454             The first one is, we experimented with transmitting our radio service at various bit rates to see how far we could go and what was the minimum bit rate required to reach CD quality, or near CD quality and people's acceptance or a reaction to it.

5455             The second one is, we experimented with program‑associated data in order to be able to send alphanumeric text messages to the displays of digital radio receivers.


5456             The fourth one is, we also experiment with the ability to dynamically reconfigure the multiplex to apportion the bits or the services.

5457             As you know, we can in fact configure this multiplex to provide 64 services.  Right now the regulation is that it is intended to provide four radio licences with some ancillary data capacity.

5458             We have also used the capacity to create sub‑channels.  Currently in Montreal we are broadcasting a sub‑channel which is a sub‑service transmitting news and traffic information during the morning show and the drive‑home show, so that people who want to immediately have some traffic information can tune on the sub‑channel of la Première Chaîne.  This is currently ongoing.

5459             It has been going on for two or three years and we did ask the CRTC for permission to do this.

5460             We have also used the ancillary data capacity to transmit multimedia content and other types of internet‑type content.  These were basically just technical trials because there was no public receiver to receive it.  So it was in order to be able to see if we can take some internet‑type content, IP‑encapsulated.


5461             In Montréal we have been able to encapsulate RDI clips that are currently available in the Metro and transmit it to fixed DRB receivers and display it on plasma displays.

5462             We also made use of the provision of the 14 hours of distinct programming we could do on the DRB channel.  We did it, as Ray mentioned, in Vancouver with Radio 3.

5463             We also did it in Montréal.  For one year we created a special show, a one‑hour show, daily show, that was broadcast only on one of our DRB services to see how we could exploit this different technology and its flexibility.

5464             MR. CARNOVALE:  I would add, we are currently in discussionS to try experiments with Korean‑manufactured cellphones which have CDMA and L‑band DRB receivers built in.  That for us is one of these breakthroughs, because we are now on the cusp of the availability of mass‑produced low‑cost products.

5465             COMMISSIONER ARPIN:  And available.

5466             Not only mass‑produced, but also available in the market.

5467             MR. CARNOVALE:  Yes.

5468             COMMISSIONER ARPIN:  Except the few initiés who had receivers, did you ever get any reaction from listeners about the various tests you did in Montreal?


5469             M. CONWAY : Oui.  Je pourrais dire que, bon, en ce qui concerne la programmation distincte et la diffusion simultanée de la même programmation analogue, les réactions qu'on a eues... on a fait des public forums, puis des focus groups, des choses comme ça.

5470             Une des premières choses qui est ressortie, c'est qu'il y aurait beaucoup plus d'intérêt pour la radio numérique si la programmation était différente, donc, s'il y avait quelque chose qui est disponible sur la bande numérique qui n'est pas disponible sur la bande analogue.

5471             Premier commentaire.  C'est ce qui supporte notre position que ça devrait être un nouveau service complémentaire au lieu d'un service de remplacement.

5472             Le deuxième commentaire, c'est justement les services spécialisés comme les sous‑canals qui diffusent seulement de l'information en bout continu, comme le trafic, sont très utiles.  Quand les gens, par exemple, sont prêts à prendre le Pont Mercier, puis ils se demandent s'ils vont prendre la 30 ou la 138, c'est très utile pour eux, puis la technologie permet de trouver le canal très rapidement sur la bande.


5473             Finalement, la disponibilité des récepteurs, évidemment, c'est quelque chose qui nous a empêché d'évoluer ou d'aller plus loin dans notre expérimentation.

5474             Donc, les commentaires qu'on a eu, c'est peut‑être de regarder le concept de... de s'éloigner du concept d'un récepteur dédié qui peut seulement recevoir de la radio numérique à des devices qui sont multipurpose devices.  Donc, c'est pour ça qu'on travaille maintenant à regarder ce que les Coréens ont fait avec les téléphones CDMA intégrés avec la réception des RBDMB.

5475             COMMISSAIRE ARPIN : Dans le Scientific American du mois de mars, on parle d'un cognitive receiver.  Je ne sais pas si vous avez vu l'article ou si vous avez entendu parler de... ça faisait partie du mémoire déposé par CHUM.  C'était vraiment sous forme d'une référence, mais je suis allé chercher l'article.

5476             Le cognitive receiver, c'est un récepteur intelligent qui s'habitue à nos usages et qui va chercher les fréquences où ils se trouvent, quel que soit le mode de transmission.

5477             C'est des choses de cette nature‑là que vous voyez dans l'avenir?


5478             M. CONWAY : Oui.  Finalement, ça fait partie du changement de paradigme qu'on voit dans...  L'ancien paradigme analogue, c'était un service, un signal analogique, une fréquence et un récepteur dédié.

5479             Dans le nouvel environnement numérique, on parle de pas seulement un type de média, on parle de multimédia, on parle de contenu disponible sur différentes plates‑formes, et on parle de récepteur programmable ou de devices qui ont plusieurs fonctions pour recevoir le contenu.

5480             Le cognitive radio où on peut appeler le récepteur programmable est vraiment clé, et c'est ce qu'on voit de plus en plus.  Il y a des devices qui ont des lecteurs MP3, qui ont des tuners FM, qui sont des téléphones, qui ont des caméras intégrés.

5481             Donc, c'est l'avenir, et c'est pour ça qu'on regarde la radio numérique sous un nouvel oeil avec ces types de récepteurs.

5482             COMMISSIONER ARPIN:  Mr. Carnovale, you heard Mr. Shuldiner yesterday about HD radio.

5483             Do you have any comments to make following that presentation?


5484             MR. CARNOVALE:  Actually, we do have several observations.  Some of these are based on our visit to National Public Radio, some of it on our own research.

5485             With regard to ‑‑ and first I will talk about FM and then we will move into the AM issues.

5486             One thing that we learned from NPR is that the analog FM coverage contours are not entirely replicated.  It comes close at the higher power levels.  The 100 kilowatt stations almost reach out to their analog protected coverage contour, which in the United States, by the way, is higher by 6 dB or a power factor of 4.

5487             So there is a difference between the definition of Canadian protected contours and the desired signal ratios that are allowed to interfere with these protected contours.

5488             They determined that for lower power stations ‑‑ and they had many of them because of being public radio ‑‑ that there is a non‑linear relationship in the coverage and that the lower power stations, what we know as Class A's at 3 kilowatts, have a significantly reduced digital service area.

5489             Indoor reception turned out to be really problematic and this was a real disappointment.


5490             First of all, with the primary HD channel, if the digital signal drops below a certain threshold you can fail over to the analog signal in the so‑called blend mode.  And that will happen fairly frequently in an indoor environment.

5491             What was interesting with the secondary tertiary channels, which is where they see a lot of potential, is in fact indoor reception was very spotty.  It would cut in and out.  Antenna placement was very critical.

5492             And the most annoying thing, of course, is when the signal cuts out it takes eight seconds for the buffer to fill up again.  So you end up with not just a momentary glitch in the signal but a loss for several seconds.

5493             We also experienced in drive tests in Washington that there was interference from first adjacent out‑of‑market transmitters.

5494             The analog blending can be annoying.  If you are in a car and you lose the digital signal, it blends to analog and then it reverts back.  If you are in a problematic service area, it is kind of annoying that it is going back and forth, back and forth from one mode to the other.


5495             With respect to the audio compression that is utilized, one of the things NPR did was a very extensive classic double‑blind test of perceived audio quality versus the bit rates.  The bottom line is there is no free ride.

5496             Compression can be impressive but in fact there are artifacts, especially with voices as opposed to music, which is not what you would normally expect.

5497             So the sense we had is that for us I think the real interest in the short term is a single primary channel with the full 96 kilobyte bit rate that has the ability to fail back to analog.

5498             COMMISSIONER ARPIN:  So there is a need for further enhancement of the system.

5499             With regard to AM now.

5500             MR. CARNOVALE:  With regard to AM, I just want to clarify the statements made by iBiquity yesterday were focusing on skywave interference to skywave coverage of what we know as the traditional clear channel stations.

5501             That isn't what we identify as the issue.  We are concerned about skywave interference to the groundwave coverage of AM stations which have traditionally had quite a low night time interference free contour.


5502             I am talking about of course the clear channel stations that CBC still operates, that other broadcasters in Canada are now utilizing, stations like CFRB in Toronto which has a very low night time interference free contour.

5503             There was no provision in the original North American Broadcast Agreement of the 1930s, nor in the Rio Accord of 1998, for skywave protection to adjacent channel stations.

5504             That flaw means that because the HD data is actually on the adjacent channel, you are transmitting on top of the adjacent channel.

5505             We are aware of iBiquity's tests with WLW and WOR in the States, Cincinnati vis‑à‑vis New York first adjacent channels.  Those were done over four days in August and four days in December of 2002.

5506             We don't think that that is a definitive study and we think that the same methodology that we use to determine skywave protection for co‑channel at night ought to be applied in analyses of interference to adjacent channels.

5507             COMMISSIONER ARPIN:  Thank you very much, Mr. Carnovale.

5508             For the matter of time, if you have further comments to make, we surely will be pleased to receive them in writing.

5509             I thank you for being here this morning.


5510             Those will be my questions for today.

5511             MR. CARNOVALE:  Thank you very much.

5512             THE CHAIRPERSON:  Thank you very much for appearing.

5513             Those are our questions.

5514             Madam Secretary.

5515             THE SECRETARY:  Thank you, Mr. Chairman.

5516             I would now invite the next participant, Corus Entertainment Inc., to come forward for their presentation.

‑‑‑ Pause

5517             THE SECRETARY:  Mr. John Cassaday is appearing on behalf of Corus.  He will introduce his colleagues.

5518             You will have ten minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

5519             MR. CASSADAY:  Good morning, Mr. Chairman, Commissioners, legal counsel and CRTC staff.

5520             My name is John Cassaday, and I am the President and Chief Executive Officer of Corus Entertainment.


5521             Before we begin our short remarks, allow me to introduce our panel.

5522             Some of our colleagues are less well‑known to you, so we will provide some brief background.

5523             Starting on my extreme left is J.J. Johnston, who recently returned to Vancouver as our new General Manager of the Corus Radio Vancouver cluster, which is comprised of CKMW, MOJO Sports Radio, Rock 101 and CFOX.

5524             J.J. has served on various industry boards throughout his radio career, including the BBM board, CARAS and several years at FACTOR, where he served as chairman of the board from 1997 to 1999.

5525             Kathleen McNair is Vice‑President and General Manager, Radio and Television, Peterborough‑Durham.  In this role, she manages two TV stations and two small market radio stations.  Kathleen also sits on the board of FACTOR.

5526             Ross Winter is our National Program Director and regularly visits our 51 radio stations.  He is located in Vancouver.  In his current role, Ross oversees the research that we do on music formats and consumer tastes, some of which was summarized in our submission.


5527             Gary Mavaara is Vice‑President and General Counsel of Corus Entertainment.

5528             On my right is John Hayes, who is President of Corus Radio.

5529             Pierre Arcand is President of Corus Québec and Pierre also oversees the work of the largest group of radio journalists in Quebec.  Pierre is also the President of the Quebec Radio Marketing Bureau and is also a member of Musique Action.

5530             Alan Cross is the Program Director of 102.1 The Edge in Toronto, Canada's most influential New Rock station.  Alan was named Canadian Program Director of the Year at the Canadian Music Industry Awards for the past two years.

5531             Alan is also a music historian who has hosted 500‑plus episodes of the nationally syndicated radio documentary programming "The Ongoing History of New Music", and Alan is the author of four books on music history.


5532             Doug Rutherford is the Corus National Vice‑President of News‑Talk Radio.  He is also General Manager of Corus Radio in Edmonton.  In this role he sets the standards for the massive amount of news coverage and public affairs programming that we do at some of Canada's best‑known heritage news stations, such as CKNW in Vancouver, CJOB in Winnipeg and CHED in Edmonton.  He served as a director of the Radio‑Television News Directors Association.

5533             Jack Hepner is our National Director of Engineering.  Jack has been involved with installations, maintenance and engineering supervision of radio stations over the past 40 years.  This has included assignments across Canada, Africa and Central America.

5534             As you can sense, this team has a deep understanding of radio, music and the tastes and interests of the Canadian listening community.  We brought this large group here today to answer any of the questions that you have about radio and how we do our job each day.

5535             Corus is Canada's largest radio operator in terms of ad revenue and audience reach.  We believe that radio's greatest strength is its ability to react instantly to the needs and interests of the local community.  To do this, we must be very much in tune with our listeners.


5536             Corus reaches one in three Canadians.  We have 51 stations operating primarily in urban centres, from Vancouver to Quebec City, in both English and French, with a range of formats.  We are also the largest operator of news‑talk formats in Canada, with 19 stations.

5537             MR. HAYES:  Mr. Chairman and Members of the Commission, Corus will concentrate only on a few themes in our remarks today, but each of these themes will speak to the 400‑pound gorilla who sits in the middle of this regulatory proceeding: the Canadian listener community.

5538             As the old joke goes:  What does the gorilla do?  And the punch line is:  Anything it wants.

5539             If we can't find a way to keep the listener happy, none of us, broadcasters, regulator or musician, will succeed.

5540             Our themes today:  Consumers are becoming agnostic about the delivery system and radio stations face dramatically increased competition, both from old sources such as other traditional radio stations on both sides of the border, and new sources such as MP3 players, the internet and satellite radio.

5541             Bits and bytes don't respect borders or national regulation, and we all need to get used to that fact.

5542             Paradoxically, in this digital world we also need to find a way to successfully introduce digital broadcasting to Canadians so that they will embrace it.


5543             We believe that in a changing world flexibility in regulation is everything.  We are not asking you to reduce Canadian content levels, just to make the rules more flexible so that we can serve listeners better.

5544             We need your help in saving the heritage new stock AM stations which are the predominant source of local programming, including emergency information for our listeners.  And we believe that our proposals, the goals of the Commission and the public interest are aligned.

5545             In our written brief, at paragraph 28, we used a graph to illustrate the evolution of the competition for radio from new digital platforms.  We also described how the traditional radio market has expanded due to the increase in new licences awarded by the CRTC over the past few years.

5546             So the media environment is changing rapidly.

5547             We can't predict how our markets will evolve, but we do believe that the CRTC should carefully consider the following real world facts.

5548             One, as the CRTC 2005 Monitoring Report states, tuning to radio continues to fall each year.


5549             Two, new media platforms seem to be introduced each week and Canadians are embracing them.  All of the statistics indicate that young Canadians, our future core audience, are using traditional media far less than the people in this hearing room.

5550             Three, the music industry has lost a significant revenue stream, almost half in six years, due to the use by Canadian consumers of new digital devices.

5551             Four, these new devices not only entice listeners away from traditional radio but they also make it more difficult for people to listen to us.

5552             We suggest that each member of the panel conduct a personal test.  Go to the nearest electronics store and have a look at the latest gadgets, such as iPods, satellite radios and cell phones that have MP3 players in them.  One of the key lessons you will learn is that these devices do not contain traditional radio receivers in them.  Some offer FM add‑ons but these are really difficult to find.  And you won't find AM devices on any of them.  So the reality is that the new devices don't only compete with radio, they also replace radio.


5553             Five, another aspect of the digital media explosion is simply that a bit stream of data can move globally.  Anyone can easily copy, change or redistribute content and each copy is as good as the first.

5554             The Commission is well aware of this, so we won't dwell on it.

5555             Meanwhile, digital broadcasting presents to Canadian radio system with a wonderful opportunity to participate in this change.  We can mount a successful digital transmission system only if we are very sensitive however to consumer needs and wants.

5556             DAB has languished due to a variety of factors, but frankly the main cause in our view is the lack about real and perceived consumer benefit.  It seems clear that a better sound quality is just not enough to generate interest and sales of receiver devices.

5557             We believe that the answer lies in distinctive content.  We don't know yet what that is, but we need to find it.  To do so, the industry needs maximum flexibility, which is why we recommended that digital broadcasting services have no content regulation until all analog transmissions cease.


5558             This distinctive content might be all Canadian, it might be all music or talk or drama or infomercials, we just don't know yet, but we do need to find out and the only way to do so is to start with a broad canvas fitted only by our creativity, financial resources and consumer demand.

5559             We are asking you to allow us to experiment, to foster consumer interest that will support the launch of digital broadcasting.

5560             M. ARCAND:  Aujourd'hui, nous avons une industrie et un système d'encouragement au talent canadien extrêmement valable.  Dans sa proposition écrite Corus n'a pas demandé une réduction des éléments importants des règlements de programmation.  Nous ne désirons pas réduire la quantité de musique canadienne que nous diffusons.

5561             Par contre, nous croyons que nous pourrions améliorer nos services si nous avions la flexibilité de diffuser un meilleur mélange de musique à travers nos groupes de stations par marché et sur les ondes AM et FM.


5562             Ceci dit, quelques‑unes de nos suggestions demandent le renforcement des règlements de programmation pour assurer par exemple, que la promesse du nouveau titulaire d'une licence d'ajouter de la diversité musicale aux ondes soit satisfaite pendant la première année de la licence.  Donc, nous ne demandons pas au Conseil d'écarter ces règlements, mais simplement de les adapter au contexte actuel.

5563             La situation de la fréquence AM devient dramatique, mais nous avons des solutions.  La radio AM en particulier, les radios dites Patrimoine ou Héritage ont des traditions d'influence dans les marchés qu'elles desservent.

5564             Des stations comme CKAC à Montréal, CJRC à Ottawa‑Gatineau et CHQR à Calgary sont reconnues.  Nous investissons énormément de ressources pour créer les éléments qui rendent cette programmation si persuasive auprès des auditeurs.  Ce sont ces stations que les auditeurs écoutent en période d'urgence et en période d'élection.

5565             Le Conseil est conscient du fait que le nombre d'auditeurs de la bande AM diminue plus rapidement que ceux de la fréquence FM.  Le paradoxe auquel la fréquence est confrontée et que les populations au centre‑ville qui comptent sur ces stations ont de la difficulté à recevoir le signal AM.

5566             Corus recommande donc que le Conseil permette à ces stations dites Patrimoine d'avoir accès aux fréquences FM afin de préserver et de mieux servir ses auditoires.


5567             Dans certains marchés, nous recommandons que le radiodiffuseur d'une station Am soit capable de changer la station en une fréquence FM disponible.  Dans ces circonstances, les limites propriétaires de ces marchés devraient être écartées pour permettre aux mêmes propriétaires d'avoir autant de fréquences FM qu'ils entretenaient avant le changement.

5568             Dans d'autres marchés comme ceux des prairies où le signal AM est plus fort, le radiodiffuseur devrait être autorisé à continuer avec la station AM, mais devrait aussi être autorisé à diffuser la programmation en duplex sur les ondes FM pour mieux servir les auditeurs des centre‑villes.

5569             La question est de savoir où trouver ces fréquences et nous recommandons que le Conseil et Industrie Canada considèrent les fréquences avoisinantes comme sources potentielles pour les demandes de changement du AM au FM.

5570             La nouvelle infrastructure numérique peut supporter un assouplissement des règles de séparation, surtout quand le propriétaire de la fréquence avoisinante demande d'utiliser son signal avoisinant.


5571             Corus croit que si nous n'agissons pas pour préserver la programmation des stations Patrimoines sur les ondes AM, nous risquons de les perdre complètement.

5572             MR. CASSADAY:  The proposals which Corus made in its written brief, some of which were repeated here today, are very much in the public interest.

5573             First of all, our proposals are designed to maintain and increase audiences for our services which by definition carry a preponderence of Canadian content.

5574             Secondly, we are not seeking to reduce the levels of Canadian music played on our stations or the amounts that we would contribute to the development of new Canadian talent.

5575             Thirdly, we believe that we can compete in the digital interactive world.  To do so successfully we need to continue to be financially viable to invest in the research, content, systems and people needed to hold our audiences in a very competitive world.


5576             For broadcasters, our environment over the next two years as new technologies take route is extraordinarily uncertain.  To increase the chance of surviving in the public's interest, the industry has to have the latitude to experiment not just with formats, but also with the best ways to deliver can. con. across and within formats.

5577             To sum up, Corus does not know with certainty where digital interactive technology will take the industry, but we do know that the impacts are being felt in a variety of ways.  No one would debate that.

5578             Corus is not backing away from its commitments and we are not asking the Commission to reduce our obligations.  We are simply recommending that you provide radio with flexibility or existing analog operations and room to experiment in digital to meet the interests of consumer.

5579             Thank you and we look forward to your questions.

5580             THE CHAIRPERSON:  Thank you.  Commissioner Cugini.

5581             COMMISSIONER CUGINI:  Thank you, Mr. Chairman.  Welcome gentlemen and Ms McNeer.  Good morning.

5582             I'm going to ask you a few questions and I would like to ask you to answer the questions only as they relate to Canadian content.


5583             In your written submission, you endorsed the CAB's proposal with regard to its bonus incentive plan and you introduced the market cloister approach to Canadian content.

5584             First question is:  are these two approaches mutually exclusive?

5585             MR. MAAVARA:  The answer is: no.  We could see how we could work with both elements to create a terrific service.

5586             COMMISSIONER CUGINI:  Because in your market cluster approach, I believe you say that a floor could be 15 per cent of Canadian content if we were to accept that approach.

5587             How would you then apply or then if you were to apply the incentive bonus plan as proposed by the CAB, what would happen to the Canadian content level on that 15 per cent station?

5588             MR. MAAVARA:  I think the important thing about our proposal is that it's really a combination of elements, the first element being that we would preserve the amount of Canadian content across the cluster and when you look at the proposals we made, such as the floors or the amount that you can carry on one particular station, you have to think about it in that context.


5589             But the way that we would see it is that if the broadcaster was intending to apply the CAB proposal, then that would overlay upon the cluster arrangement.

5590             COMMISSIONER CUGINI:  Now, your marker cluster approach obviously works for the six largest radio operators.

5591             Are you suggesting that we build a framework for the six largest and a separate framework for the independents to accommodate your marker cloister approach?

5592             MR. MAAVARA:  No, I don't think it's necessarily exclusive of the six.  What it simply does, the fundamental premise is that in that market, there would be the same amount of Canadian content music available to the listener and it really starts with the listener and trying to ensure that we get as much listening as we can to the Canadian content through this type of flexibility.

5593             So in the circumstances where you only for example would have one station, obviously there is not going to be an application of that, but at the end of the day, you are still going to be providing your Canadian content level.


5594             So, to the extent that other smaller operators acquire new stations or, for example, as we were suggesting with respect to the AM migration and, for example, if second agencies start to become more available, then you could see how the application of the cluster rule could expand.

5595             But at the end of the day, it's about getting the same amount of Canadian content out to hopefully a lot more listeners.

5596             MR. CASSADAY:  The only thing I would add, I don't think that we should be given too much credit for this as being a wholly original idea because I think the genesis of the idea was the ruling that came out of the satellite here and where there are, in fact, two distinct forms of regulations.

5597             So, I think it is possible that there could be a separate set of regulations for the big six and others if that was, in fact, felt to be the kind of flexibility that was going to allow us to achieve our objectives.

5598             COMMISSIONER CUGINI:  Have you discussed this approach with your peers at Standard or Rogers?

5599             MR. MAAVARA:  Not extensively.

5600             COMMISSIONER CUGINI:  Okay.  Perhaps in the interest of time, what I could ask you to do, I think it was you, Mr. Hayes who said "with real world facts", I like real world examples.


5601             Perhaps you could by May 29th, I believe, provide us with an analysis of what this approach will do in markets where Corus owns a cluster of services, of radio stations, what this would do for your stations and what would this do to the other radio stations in that market?

5602             MR. MAAVARA:  We would be delighted.

5603             COMMISSIONER CUGINI:  And now, just a couple of practical questions with regards to the CAB proposal and in particular, the use of the BDS list, and I don't know if either Mr. Winters or Mr. Cross would like to answer this question, but have you had an opportunity to analyze the approach, that is the top 40 up until 12 months from the time they reach the top 40?

5604             And if we were to apply that rule, how much of your current play list would be attributable to emerging artists according to the definition provided by the CAB?


5605             MR. CROSS:  Well, we have actually done a simulation already and we have determined that in our ‑‑ currently, we're playing forward what would be considered emerging artists right now and if the bonus system were to be adopted, we see that making room for another four, so we would be playing eight emerging artists that we would play throughout the day and of maximum quality exposure too.

5606             COMMISSIONER CUGINI:  And that compares to how many that you are playing now?

5607             MR. CROSS:  We are playing four right now.

5608             COMMISSIONER CUGINI:  Four right now?

5609             MR. CROSS:  Four right now and we are giving those four songs, if you look at a full broadcast week, we are playing 40, we are giving those songs 40 spins throughout a broadcast week.  Under the new rules, we would play ‑‑ we would give those songs 82 spins.

5610             COMMISSIONER CUGINI:  And is that just on CFNY or is that ‑‑

5611             MR. CROSS:  That is just on ours.  This is a real world example from the current age play list taken from some statistics that we gathered last week.

5612             COMMISSIONER CUGINI:  And what about your more mainstream formats?

5613             MR. WINTERS:  Well, I can speak to the country formats and I spoke to our program directors.


5614             What the proposed ruling is overlaid onto three days of programming at scheduled music programming at CKRI, Calgary for example, they would have played five unique emerging artists for a total of 21 spins in those three days, which would have been five less Canadian selections or over a full week, it would have been 40 to 50 spins of emerging artists and 10 to 11 less Canadian selections played.

5615             COMMISSIONER CUGINI:  Just one final question.  Mr. Cross, I know that you broadcast your show, the ongoing History of New Music.  Have you been able to relate any increase in listenership as a result of your broadcast to your radio station?

5616             MR. CROSS:  Not as of yet.  We can track how many people can download the show, but we have no idea how many people are actually listening to it.  We are getting anywhere from 1,500 to 2,000 downloads a week, which is not large in the grand scheme of things, but it is a step in the right direction.

5617             One of the things that we are finding is that because of the Copyright Regulations regarding the distribution of music, we cannot include any music in any of the broadcast, so it's strictly spoken word.


5618             It is a good bit of viral advertising and marketing for us because it does get us on Ipods in between songs that we are ‑‑ a place where we would otherwise not be.

5619             COMMISSIONER CUGINI:  Thank you and thank you, Mr. Chairman.  Those are my questions.

5620             THE CHAIRPERSON:  Thank you.  Commissioner Noël.

5621             CONSEILLÈRE NOËL:  Alors, monsieur Arcand, en rafale, pour le côté français.

5622             Je pense que dans votre texte de ce matin, vous avez une petite erreur.  Vous faites référence à la première année de licence au troisième paragraphe de votre intervention et dans le texte écrit du Mémoire de Corus, on parle du premier terme de licence pour garder le format après avoir obtenu une nouvelle licence.  Alors, je veux juste le souligner pour que vous nous disiez quelle est la bonne option : la première année ou le premier terme?

5623             Deuxièmement, sur la rentabilité de la radio française et la question de savoir si les frais généraux et d'administration pour ce qui est de la radio francophone, pourquoi sont‑ils plus haut ou que... en règle générale dans la radio anglophone?  En trois mots.

5624             M. ARCAND:  Bien, il y a un peu ce qui s'est produit hier.  Je sais qu'Astral a répondu à cette question‑là hier.


5625             Dans notre cas, c'est sûr qu'il y a moins de revenus et nous, entre autres, dans notre cas, on a plusieurs stations AM.  Quand on a plusieurs stations AM, on se retrouve, évidemment, avec des stations qui sont quand même assez... qui ont besoin de gestionnaires, qui ont quand même besoin... avoir une salle de nouvelles, ça prend des gestionnaires, et caetera.

5626             Donc, il faudrait faire une analyse détaillée, mais c'est sûr que c'est probablement en fonction des revenus et c'est sûr qu'à partir du moment où les stations anglophones, de façon générale, ont beaucoup plus de revenus, leurs frais généraux vont probablement diminuer en relation, évidemment, avec leurs revenus et c'est la même chose du côté francophone où, là, on a un peu moins de revenus et probablement que les frais généraux sont plus élevés, mais ça ne coût pas plus cher d'administrer une station francophone comme telle qu'une station anglophone.

5627             CONSEILLÈRE NOËL:  Ça coûte proportionnellement plus cher parce que les revenus n'y sont pas.

5628             M. ARCAND:  Parce que les revenus sont moindres; exact.


5629             CONSEILLÈRE NOËL:  D'accord.  Musique vocale de langue française, je vous ai entendu ce matin, les gens de Corus ont dit qu'on ne demandait pas de modification, sinon la prime de l'ACR.

5630             Qu'est‑ce que vous pensez de la demande de l'ADISQ, elle, d'imposer un quota pour les nouveautés?

5631             M. ARCAND:  Nous y sommes totalement opposés et farouchement..

5632             CONSEILLÈRE NOËL:  Merci.  Montage; madame Murphy a demandé aux gens d'Astral et de Cogeco de revenir par écrit le 29 mai.  Eset‑ce que vous pouvez faire la même chose?

5633             M. ARCAND:  Oui.

5634             CONSEILLÈRE NOËL:  Ça vient de régler un troisième point.

5635             Deux autres questions... trois autres questions; excusez‑moi.  Le Guide des droits et responsabilités de la presse mis de l'avant par le Conseil de presse, est‑ce que vous avez des problèmes à ce que le Conseil... le CRTC vous impose ce guide?

5636             M. ARCAND:  Écoutez; lorsqu'on a eu l'audience à Québec, on avait présenté, nous, notre Code de déontologie.  J'imagine que les mêmes termes doivent se ressembler.  Il faudrait quand même qu'on voit exactement dans le détail ce que ça implique.


5637             Mais, nous notre Code de déontologie nous paraissait, en tout cas, assez valable à ce moment‑là.

5638             CONSEILLÈRE NOËL:  Vous nous revenez au mois de juin avec vos répliques finales?

5639             M. ARCAND:  Oui.

5640             CONSEILLÈRE NOËL:  Merci.  Question de niveau de programmation locale pour les stations qui opèrent en réseau, est‑ce que vous croyez que le Conseil devrait augmenter le niveau de programmation locale pour les stations opérant en réseau?

5641             M. ARCAND:  Écoutez; nous dans la décision que nous avons eue lorsque nous avons acheté les stations de Astral, on avait quand même des conditions de licence déjà pour avoir un minimum de contenu local que nous avons accepté d'ailleurs.

5642             Nous croyons donc pour l'instant que ça devrait...

5643             CONSEILLÈRE NOËL:  C'est assez?

5644             M. ARCAND:  ... ça devrait être le statu quoi à ce moment‑ci.

5645             CONSEILLÈRE NOËL:  Merci.  Et pour la définition de la programmation locale, avez‑vous quelque chose à ajouter à ce que les gens de Cogeco et de Astral ont dit hier?


5646             M. ARCAND:  Qu'est‑ce que vous voulez dire exactement?

5647             CONSEILLÈRE NOËL:  Ils ont dit qu'ils étaient parfaitement satisfaits de la définition actuelle de la programmation locale.

5648             M. ARCAND:  Oui, moi aussi.

5649             CONSEILLÈRE NOËL:  Vous autres aussi?

5650             M. ARCAND:  Oui.

5651             CONSEILLÈRE NOËL:  Et une dernière question, monsieur Arcand, et c'est pour votre idée de transférer les stations AM au FM.  J'ai compté 22 stations AM dans votre écurie, sur 51 stations au total.

5652             Est‑ce que ce que vous nous demandez, cette flexibilité pour transformer les AM en FM, c'est pour les 22 stations AM ou c'est seulement pour les stations dites Patrimoine que vous avez nommées, soit CKAC, attendez un peu là, je les ai en quelque part.

5653             M. ARCAND:  Oui;, les stations de Calgary.

5654             CONSEILLÈRE NOËL:  Oui, c'est CKAC, CJRC et CHQR?


5655             M. ARCAND:  Non.  C'est pour un plus grand nombre de stations.  Je pense que, nous, dans l'esprit qui nous guide actuellement et pour avoir vécu l'expérience, entre autres, de la transaction d'Astral où on s'est retrouvé... moi, je n'ai pas vécu l'expérience ailleurs, mais on s'est retrouvé avec des stations qui avaient des difficultés sur le plan financier, mais qui avaient vraiment un impact déterminant dans leur communauté.

5656             Alors, on a beaucoup parlé du système français lors de ces audiences jusqu'ici et toutes les stations dites d'influence ou d'Héritage comme Europe 1, comme RTL en France et France Inter qui étaient sur des fréquences dites *ondes longues+ pendant des années en France se sont toutes retrouvées à un moment donné à la fois sur les ondes longues et à la fois sur la bande FM parce qu'ils avaient un rôle d'information et d'affaires publiques particulièrement important.

5657             Alors, nous, on pense que les stations, et ce sera au Conseil de juger, mais il y a des stations qui sont particulièrement importantes dans des marchés... dans la plupart des marchés et qui jouent un rôle, je pense encore plus grand qu'une station qui est purement musicale.


5658             Et on pense donc, nous, pour les mêmes raisons qu'il y a environ dix ans on avait dit, bien, il faut que Radio Canada même au niveau de ses émissions d'affaires publiques ait droit à des fréquences FM, on pense que, nous, les stations qui ont vraiment un service important, qui ont des salles de nouvelles, qui ont des coûts quand même probablement plus élevés qu'une station musicale devraient quand même avoir accès à des stations à des fréquences FM.

5659             CONSEILLÈRE NOËL:  C'est‑à‑dire, maintenir la programmation sur les deux bandes à ce moment‑là, en même temps?

5660             M. ARCAND:  C'est‑à‑dire qu'il y a des cas où c'est carrément des transferts sur la bande FM, mais peut‑être que dans l'ouest, entre autres, là où il y a de grandes étendues, la radio AM pourrait être à ce moment‑là importante de faire les deux pendant une période de temps.

5661             CONSEILLÈRE NOËL:  Vous étiez ici hier soir... en fait, on était presque rendu dans la nuit, je dirais, et les gens de Cogeco, monsieur Mayrand a fait une intervention à l'effet de ne pas modifier la situation de propriétés dans les marchés en permettant, par exemple, la conversion... la règle de propriété sur le nombre de AM et de FM qu'on peut détenir dans un même marché, dans une même langue.

5662             Avez‑vous des commentaires à faire là‑dessus?


5663             M. ARCAND:  C'est‑à‑dire que je pense que je demanderais peut‑être à monsieur Cassaday de faire le commentaire sur cette question‑là, sur la question des règles de propriété.

5664             MR. CASSADAY:  The question of profitability is one that has come up a couple of times and I would just like to make a couple of quick comments.

5665             First of all, I think that we should be proud that the Canadian Radio Industry is strong at a time when we're facing intense new competition and I think the reasons for the strength of radio are really two fold:

5666             1) good public policy.  I think the decision that was made to allow multiple ownership was pivotal to the success that radio is now enjoying.

5667             And the second reason is good management.  With less owners in markets, we are becoming much more externally focused,

5668             In the past, radio turned the guns inside and competed against each other for share and now what we are doing is we are trying to expand our market by going after other ‑‑ for other medias within our industry, the question of the Competition Bureau definition of radio being a unique market we totally disagree with.


5669             We have been very successful in getting money from newspaper and outdoor and other mediums that we compete with on a local basis.

5670             There are two other factors, a couple of other factors that I would like to mention when we think about profitability for radio.  We have gone on record as saying that we believe that the appropriate level of profitability for Canadian radio is in the 30 to 35 per cent margin level.  That is higher than we are today, but it's based on a comparison of the U.S. market where we compete for capital.

5671             In U.S. radio stations are operating with margins in the 40 to 45 per cent level.  We don't believe that we can achieve that level of profitability in Canada because of the scale issues that Pierre talked about earlier, but also because of our higher obligations in terms of performing rights payments and regulatory expenses.

5672             But we do believe that radio in Canada is strong and we think we should celebrate that because in the absence of that, I think we would have a very difficult time competing.


5673             COMMISSIONER NOËL:  If I could just interject.  I think maybe you've got the translation wrong from ‑‑ but I was asking Pierre about the ‑‑ Pierre Arcand about the ownership, propriété, the fact that you could ‑‑ the fact that yesterday we heard Cogeco oppose the proposal of Astral that you could convert an AM into more than ‑‑

5674             MR. CASSADAY:  Oh! I'm sorry.

5675             COMMISSIONER NOËL:  Yes.  Well, propriété and profitability can resemble themselves from one language to the next.

5676             MR. CASSADAY:  You're right.  I apologize for that.  Mostly that was an interesting side by our comment.

5677             COMMISSIONER NOËL:  It's okay.

5678             MR. MAAVARA:  But Commissioner, if I could respond to your question directly and also speak to your earlier question with respect to whether our perspective is only related to the Heritage news talk stations and I think the Commission, as part of this process, is going to have to take a hard look at the AM frequency generally and the first reason for that is because of the listener.


5679             The listener does not really differentiate between AM and FM in kind of a fundamental sense.  For them it's a button or a dial on the receive device and they are just looking for terrific content.  And our challenge on AM is to ensure that we can continue to deliver the audiences to news talk.

5680             But in looking at the broader question and going directly to the points made by Cogeco, in that context of the public service that we are giving to listeners and the listener's interest in receiving the service, it's our view that the Commission is going to have to in fact look at the ownership limits in some markets.

5681             And in markets where, for example, an existing AM owner is already at the FM limit, then there will have to be a review as to the public interest aspects of expanding that and obviously there will be markets where the issue doesn't arise.

5682             But our view is that the existing ownership levels as between AM and FM should probably be reviewed with the idea of allowing the AM operators to assume either a nesting position or a flip in order to continue providing the service to the listener.

5683             COMMISSIONER NOËL:  It would be important in terms of talk radio mainly?

5684             MR. MAAVARA:  Well, that's our first concern.

5685             COMMISSIONER NOËL:  Would you accept a specialty format in those categories?


5686             MR. MAAVARA:  We would, but the other recommendation that we have made with respect to the FM rules is that FM operators have more flexibility to move across that threshold of specialty without having to go through a formal application process.

5687             And what that would do is give us the opportunity again in the context of the listener to meet the listener's need and if we have to cross over that line, then we would do it on ‑‑ we will report to the Commission basis, as opposed to applying to the Commission for permission to do that.

5688             COMMISSIONER NOËL:  You mean going from general to specialty?

5689             MR. MAAVARA:  Yes.

5690             COMMISSIONER NOËL:  Which locks you in for a full licence term, as you know?


5691             MR. MAAVARA:  Well, not to the extent if the rule was relaxed, that would allow for movement across, that is the kind of flexibility that we are looking for and I'll balance that with the notion that if a new applicant comes along and manages to determine to the Commission's satisfaction that a new licence is called for in the market, that over that first term and you astutely picked up the mistake.  We had all read this document, you can imagine, 50 times and I never noticed that it said *any+ as opposed *to term+, but we meant to term, and over that first term, that new applicant would be required to adhere to that format.

5692             COMMISSIONER NOËL:  Uh‑huh!  But, no, the sense of my question is once you ‑‑ if we take Montreal for example, you have how many AM stations, Mr. Arcand, in Montreal?  You have a few.

5693             MR. ARCAND:  Three AMs.

5694             COMMISSIONER NOËL:  Three AMs; trois AMs, oui.

5695             CONSEILLÈRE NOËL:  Un en anglais puis deux en français?

5696             M. ARCAND:  Exact.

5697             CONSEILLÈRE NOËL:  Et vous avez deux stations FM en français, deux stations AM en français, ce qui est le maximum pour le marché.

5698             M. ARCAND:  C'est ça : une station AM en anglais et deux stations AM et on a deux FM en français et un FM en anglais qui sont des marchés séparés, comme vous le savez.

5699             CONSEILLÈRE NOËL:  Qui sont des marchés séparés, c'est d'accord.  Si vous étiez pour... si vous trouviez des fréquences pour faire un flip de vos trois fréquences AM, vous dépasseriez la limite de propriété à Montréal.


5700             M. ARCAND:  Oui.

5701             CONSEILLÈRE NOËL:  Dans le marché francophone et dans le marché anglophone.

5702             M. ARCAND:  C'est pour ça.

5703             CONSEILLÈRE NOËL:  Est‑ce que... moi, ce que je veux savoir, c'est si vous faites ça, parce que vos formats AM, ce sont des formats talk, hein!  Ce sont des formats... une formule parlée.

5704             Est‑ce que vous vous engageriez en faisant ça à conserver le format de spécialité plutôt que de vous ouvrir une porte grande comme une porte de grande pour devenir une autre formule musicale quelconque?

5705             M. ARCAND:  Vous savez, madame Noël, oui, parce qu'on pense, nous, que la formule news and talk ou, enfin, la formule parlée est une formule qui est très valable.


5706             D'ailleurs, je peux vous dire parce que tout à l'heure je vous écoutais et j'ai écouté tout au long de l'audience et une des choses qui m'a frappé, c'est qu'on a eu des discussions même entre radiodiffuseurs, non seulement de la radio mais aussi de la télévision et vous savez, le commentaire qui a été fait par la Ministre des communications du Québec à l'effet qu'il fallait former des journalistes et créer des fonds et... c'est quelque chose qui vient vraiment de nous.

5707             On s'est rendu compte que dans certains marchés du Québec par exemple, que ce soit en télévision ou en radio, il n'y a presque pas de journalistes les fins de semaine.  Dans un cas, en tout cas, on était les seuls à avoir des journalistes qui couvraient les événements.

5708             S'il y avait eu un événement grave, par exemple, dans certaines régions, il y avait juste Corus qui était là.  Il n'y avait même pas de gens de la télévision qui étaient disponibles à ce moment‑là pour des raisons, évidemment, de rentabilité.

5709             Alors, nous, on a dit : on parle sans arrêt de l'importance d'aider les artistes, la musique, l'industrie de la musique puis on est tous d'accord avec ça, mais je pense qu'au niveau journalistique, il y a un effort important à faire et on devrait se pencher sur cet aspect‑là au cours des prochaines années et donc, d'avoir des stations d'information et d'affaires publiques qui sont fortes m'apparaît important et c'est aussi partagé par, semble‑t‑il, le Gouvernement du Québec.


5710             CONSEILLÈRE NOËL:  Oui, avec... en règlement du déséquilibre fiscal, si je comprends bien, ça serait des frais de la partie 2 qui s'en iraient pour financer ça.

5711             Merci, monsieur, messieurs.

5712             LE PRÉSIDENT:  Madame Pennefather.

5713             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.  Good morning, madame McNeer and gentlemen.

5714             I just wanted to ‑‑ I had a request and I had a question, but Mr. Arcand probably just answered the question.

5715             The request is regarding your intervention at paragraph 156, CTD and significant benefits.  Here, you maintain a position of keeping the six per cent, but you propose a scale, a sliding scale and my request is: could you table with the Commission the impact of your sliding scale as you see it and we could perhaps do that in terms of the CAB proposal wherein we are looking at two years if the new frame would amount to approximately 5.48 million and I think you know the model I am referring to and the ADISQ model.

5716             So, if you took your sliding scale and you applied it, what would happen to the numbers in terms of even within the two‑year time frame or transition period proposed by the CAB?


5717             And that was of interest because, of course, the 5.48 is considered in the CAB plan appropriate because of the relation to the demand on a historic basis.  So, if you could provide that to us, it would be very helpful.

5718             MR. MAAVARA:  We would be delighted.

5719             COMMISSIONER PENNEFATHER:  And my other point was the ‑‑ you did place an emphasis on CTD funding eligibility rules expanded to include capital and operating grants to provincially established post‑secondary education.

5720             I am assuming that some of the rationale behind that was the comment Mr. Arcand has just made.  But also, just in terms of regulatory procedure, under the eligibility rules of 195‑196 such grants would be eligible.

5721             So, are we to assume here that you are proposing that this eligibility rule apply across all forms of CTD and that we make that clear?  Is that why this is here?

5722             MR. MAAVARA:  Yes.

5723             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.


5724             THE CHAIRPERSON:  Thank you very much gentlemen.  Those are our questions.  Thank you very much for appearing and bearing with us as we kind of move through the hearing and build up our record.

5725             If there are comments that you feel that you wanted to add, of course, in response to other interveners of course, you can do that in the June 12 submission.

5726             Thank you.  We will take a short break now.

5727             Nous reprendrons à 10 h 20 with the next item.

‑‑‑ Upon recessing at 1012 / Suspension à 1012

‑‑‑ Upon resuming at 1023 / Reprise à 1023

5728             THE CHAIRPERSON: Madame la Secrétaire.

5729             THE SECRETARY: Merci, Monsieur le Président.

5730             I would now invite the next participant to make their presentation, CHUM Limited.  Mr. Paul Ski is appearing for the participant who will introduce his colleagues and you will have 10 minutes for your presentation.  Mr. Ski.

PRESENTATION / PRÉSENTATION

5731             MR. SKI: Thank you very much.


5732             Good morning, Mr. Chair, Mr. Vice‑Chair and members of the Commission.  I am Paul Ski, Executive Vice‑President of CHUM Radio overseeing our 33 radio stations from Halifax to Victoria.

5733             To my right, your left, is Kerry French, Director of Research for CHUM Radio.  To Kerry's right is Duff Roman, Vice‑President, Industry Affairs, CHUM Radio.  To my left, your right, is Rob Farina, Program Director for CHUM FM and a member of both the FACTOR and Radio Starmaker Fund boards.  To Rob's left is Sarah Crawford, Vice‑President of Public Affairs for CHUM Limited.  And to Sarah's left is David Goldstein, Vice‑President of Government and Regulatory Affairs for CHUM.  We are also joined by several CHUM Radio managers who are in the room today.  We will now begin our formal presentation.

5734             Radio is an intensely personal medium.  Radio entertains, informs, supports.  Radio stations connect to their listeners and connect listeners to each other.  Radio continues to be a powerful force.  One only has to look back to the 2003 blackout to illustrate this fact.  When the lights went out radio was the medium that told us what was happening both at a local and national level and where we could go to get water, food or gas.


5735             As the thread that helps to knit local communities together, it is vital that through the era of rapid technological change Canadian radio remains relevant, vibrant and financially healthy enough to provide all of the services Canadians expect.  At CHUM we believe this will only be possible with a regulatory regime that is flexible, consistent and forward‑looking.

5736             MR. ROMAN: For 50 years radio has been a part of CHUM's daily passion and it is a critical part of our plans for the future.  However, what was once a highly controlled marketplace has become fragmented with an unprecedented array of regulated and unregulated media options for listeners.  More importantly, radio's role as an intermediary is being undermined.  Until recently, radio was the primary link between artists and the Canadian public, it no longer is.


5737             The music industry has already faced a dramatic breakdown of the value chain and the ramifications are now beginning to impact radio programming.  Since 2001, radio has experienced a steady decline in tuning, a decline that has been more acute among younger Canadians.  With the myriad listening choices now available, MP3 players, satellite, internet and the like, it is evident that the environment in which radio operates has changed radically.

5738             On Monday and Tuesday there were those who had found this change difficult to quantify.  In fact, recently BBM data from January to March 2006 found that in Kamloops, for example, SIRIUS Satellite Radio which just launched in December has already achieved a 5 share with all listeners 12 plus and a 9 share with men.  Clearly, the old business model is dead.  The radio industry must evolve or risk being left behind.

5739             In this process the Commission will hear from several parties with varied self‑interests.  Radio broadcasters are the ones at this hearing that are licensed and regulated by the Commission and responsible for fulfilling the objectives of the Broadcasting Act.  The broadcasting policy for Canada set out in section 3.1 of the Act recognizes that, above all else, broadcasters provide a public service essential to the maintenance and enhancement of national identity and cultural sovereignty.  Radio does this everyday by providing our listeners with music they want to hear from at home and abroad, as well as news and entertainment features presented by top Canadian talent.


5740             MS FRENCH: From the time CHUM purchased CKPT Peterborough in 1960 we have been committed to serving smaller markets.  Though sometimes challenging and less profitable than stations in larger centres, smaller markets benefit from having stations owned by larger broadcasters like CHUM.  In many situations these markets may require a different, more flexible regulatory approach, especially those markets that are located close to the U.S. border.  Some have advocated different rules for smaller companies operating in these markets.  However, CHUM believes that any flexibility that the Commission grants should be applied equally to all licensees.

5741             The next area we would like to comment on is the Commission's common ownership policy.  CHUM firmly believes that the Commission achieved the right balance in its multiple license ownership policy in 1998, specifically in large markets.  The introduction of the MLO policy was the right decision at the right time and helped an industry that was struggling financially.


5742             While some may now be advocating loosening the MLO restrictions by allowing ownership of more stations, CHUM believes that would lead to much less diversity of formats and news voices.  Furthermore, any policy change that would effectively allow one operator to own more than two FM stations in a market would create a competitive imbalance in many markets.  Altering an MLO policy that has worked so well since 1998 and has strengthened the basis of the Canadian Broadcasting System does not serve the public interest.

5743             MR. FARNIA: We would like to now turn to what we believe is the central issue at this proceeding, what radio's contribution should be to the Canadian music industry.  Two very divergent views have emerged.  The first view being advocated by certain representatives of the music industry, including CIRPA and SOCAN is that the Commission should significantly increase the amount of Canadian music radio must broadcast.  The second view being presented by CHUM and other radio broadcasters is an enhanced 35 per cent solution.  An incentive system designed to help develop the careers of emerging Canadian artists as opposed to one that focuses simply on quantity.  We believe this makes more sense for radio, the music industry and, most importantly, the public.


5744             Proponents of the first approach believe that mandating radio to broadcast dramatically more Canadian music will increase the variety of Canadian music on air and further develop the Canadian music industry.  This is simply wrong.  As Program Director of CHUM FM, I work on the frontlines programming the music that airs on one of Canada's top radio stations.  My love of music was why I got into broadcasting and I have worked throughout my career to help Canadian artists find an audience.  These proposals will not benefit Canadian artists.  Moreover, they will impair radio's ability to provide the highest quality programming to Canadians, therefore driving more listeners to unregulated media that plays little or no Canadian music.

5745             Here is the reality about programming music for radio.  People will not listen to radio stations that do not give them the music they want, regardless of cultural objectives.  And while radio once had a relatively captive audience, the array of listening options now available to Canadians means that if radio does not give them what they want they have many many other places to go and get it.


5746             Due to fragmentation, programming radio stations is now not just an art, but a science as well.  Every successful radio station undergoes regular music testing with its respective audience.  A statistically valid number of participants rate the music based on their personal tastes.  In the CHUM FM Toronto music test results from April 20 of this year over 70 per cent of the Canadian music tested was below the 50 per cent positive score threshold.  Furthermore, out of all the Canadian music that tested above the 50 per cent positive threshold only one of those songs came from a domestically‑signed Canadian artist, in this case Bedouin Soundclash.

5747             Over the years we have developed music testing criteria to help us program our stations. In general, we would not air a song that has lower than a 60 per cent positive score.  However, with Canadian music, songs that have as low as a 10 per cent positive score remain in regular rotation on our play lists.  Now, why do we continue to play songs that nine out of 10 audience members tell us they don't like, songs that risk that audience moving to other entertainment platforms?  We play it because we have to.


5748             As in any field of creative expression, only a small amount of music reaches mass acceptance and radio is a mass medium.  And let me be clear, these statements are not a criticism of Canada music, which stands among the best the world has to offer, the problem is there just isn't enough of it.  In 1998 the Commission increased Canadian content from 30 per cent to 35 per cent in an effort to expand the exposure given to Canadian artists on radio.

5749             While radio stations now play more Canadian music, they do not play a wider range of Canadian music.  As we just explained, this is because a sufficient supply of Canadian music that is suitable for radio did not exist then, does not exist now and will not miraculously exist at 40 per cent.  Radio stations must now play Canadian songs for a longer period of time and many stations have moved towards gold‑based formats so they can draw on Canadian music from a number of decades.  This has resulted in music from top Canadian artists becoming burned out.

5750             Increasing Canadian content requirements above their current levels will only compound this problem.  In fact, mandated increases in Canadian content with a one‑size‑fits‑all approach to radio formats will not create more Canadian music that people want to hear.  Similarly, any system that forces all broadcasters in all formats to commit to a percentage of inde artists as part of their CanCon compliment will serious limit our ability to create radio that our audiences want to listen to. 


5751             MR. SKI: Almost 25 years ago CHUM lead the creation of FACTOR and Duff Roman was its first President.  That was the right response at that time to a need to develop more Canadian music for radio.  What is required today is a comprehensive strategy to increase the amount of quality Canadian music available to Canadian radio stations.

5752             In CHUM's view, a key part of this strategy is the incentive‑based enhanced 35 per cent solution which would encourage radio stations to take risks on unknown artists without causing tune‑out.  And to be clear, we define an emerging artist as any Canadian artist that is not charted on the top 40 on either the Nielson BDS or media‑based national airplay charts.

5753             Because of the time it takes to establish and artist to the consumer, we believe the qualifying window should be 12 months.  CHUM firmly believes that public policy must remain relevant in light of the changing media environment in which Canadians' radio broadcasters operate.  That is why we have developed our recommendations to help position radio for future success and ensure that the sector continues to make a substantial contribution to the fulfillment of the objectives of the Broadcasting Act.


5754             We are not afraid of competition.  We have a 50‑year history of responding to changes in technology, changes in the media landscape, listener tastes and economic conditions.  Radio can continue to be a strong medium that serves communities, advertisers and the need of Canadians to fine Canadian expression.  Despite the plethora of new and largely unregulated entrants radio can compete, given a relevant forward‑looking radio policy that gives radio broadcasters the flexibility to adapt to urgent challenges facing the industry.

5755             We thank you for your time and we welcome your questions.

5756             THE CHAIRPERSON: Thank you very much, Mr. Ski.


5757             I guess the first question I have is triggered by the statement, we play it because we have to.  And I guess what we are all involved in in the Canadian Broadcasting System is, and have been I suppose for 75 ‑ 80 years, is combating market forces that alone would in all likelihood lower the level of Canadian content on our airwaves, radio, television and elsewhere dramatically.  Canada itself is a battle against market forces that would otherwise be north/south and we live with that on an ongoing basis.  And part of what we are all involved in is part of the regulatory bargain and the social contract of being in this system is trying to combat those forces as best we can and promote the Canadian music on radio or stories on television with a view to continuing to reaffirm our identity as a country on an ongoing basis.

5758             So I take it that when you say you play it because you have to you are trying to make a regulatory point, because I know that the CHUM group, in effect, embraces Canadian artists and tries to promote them.  So as a sound bite it is a bit of a sour tone and I want to give you an opportunity to explain that that is what it is and that that doesn't sound as badly as when you hear it in the cold light of day.


5759             MR. SKI: Well, and we didn't certainly mean it to be that way.  I think ‑‑ and I will let Rob give you a bit more information on that ‑‑ I think our point was that to try to give you some perspective, in that if we are to compete I guess in the future and hopefully we will have a chance as you had asked for yesterday, go through some of the technological challenges that CHUM sees certainly that we are going to be faced with, that if we are not able to provide our listeners with the music that they want to hear ‑‑ and that is really what it is, it even gets away from hits or non‑hits, it is really what the listeners want to hear.

5760             And for over 20 years now CHUM has been going to the market to research our listeners on various elements of our programming and I think it is one of the reasons that we have managed to be successful in many of our markets is because we are not only a reflection of the community and from our spoken word standpoint, but from the delivery of the music that we provide to the people too.  And sometimes I think that is forgotten, it is forgotten that all of certainly our radio stations and many others are operated autonomously in their market.  So the music that is chosen for Vancouver is very different than what Rob decides to choose for Toronto, because they are different markets and while there may be some similarities, there are many differences.


5761             So I guess what we are trying to say is that when we are moving to add that additional layer of Canadian, between what we would normally play and what we are required to play, that is where it becomes just a little bit challenging for us, because we know that many of our listeners may not necessarily want to hear those songs or, if they do, they are pockets of listeners.  So that you might have somebody ‑‑ I mean, not all songs are bad songs, obviously, as some people have said and if you have eclectic music taste you can hear a lot of different songs, but we are delivering an audience, a mass audience, that is the kind of media that we are in.  And so, as a result, we have to play songs that obviously appeal to the most number of people within our particular format.

5762             Rob may want to..

5763             THE CHAIRPERSON: Well, I take those points and I am not in any way suggesting that you don't try and play what your listeners want.  I guess one of the questions we put forward for comment in this proceeding is at paragraph 119 where we said:

"A number of conventional radio broadcasters have established a presence on the internet as a means of extending their brand and providing value‑added services to their listeners."  (As read)

5764             And we asked the question:


"How can conventional radio licensees utilize new technologies and incorporate new platforms into their strategies in a manner that furthers the objectives of the Act."  (As read)

5765             From our perspective, that is the Act we administer and that is the question we asked.

5766             But I would expect that your own goals, obviously, of giving listeners what they want are also paramount.

5767             So I wonder whether you can address here, or perhaps in your subsequent filings, an answer to that, how you can use these new technologies to further your goals as well as to further the objectives of the Act.  Because that is the Act under which you are licensed, that is the Act under which we operate, and as long as that holds it is going to be a feature of your environment.

5768             MR. SKI:  We wish we had the answer to that today and we may not have the answer by the 29th.  I think it's something that we are all searching for an answer to.


5769             But there is a sea change ‑‑ and you have heard this already ‑‑ that we are going through which is a little different.  Once we start to swim in that ocean ‑‑ and it is an ocean that is very different from the pond that we're in today I think is maybe a good analogy ‑‑ we are moving from broadcast media to connected media.  This is a little different.  Also, we are moving from radios ‑‑ and that has been the primary device, certainly for the broadcast media, for our broadcast media ‑‑ we are now moving to computers and other devices that people listen to music.

5770             So our intermediary role between ourselves and our listeners is changing dramatically.

5771             I wish we had the answer to how we would use that technology?

5772             THE CHAIRPERSON:  Oh, no.  I don't expect that you do, but this is a collective challenge we have to meet, and probably a greater challenge qualitatively and quantitatively than we have had to meet over the past 75 or 80 years.  I don't think there is any question about that.

5773             So it means the bookends are we just simply throw up our hands on the one hand, and I don't think we want to do that; and the other one is, we try to figure out answers that may not be perfect but that achieve the bulk of the objectives that we can manage to do.


5774             Again, I'm not expecting that you have answers or that any of us have answers today, but part of what we are doing at this proceeding is trying to figure out ways collectively where we can address that issue.

5775             Most of the proposals, I think it is fair to say, that we are hearing from the industry, is relax of the rules, lower the thresholds, border, Canadian content, incentives for new artists, Smart regulation, all of which have the effect of providing ‑‑ I guess the operative word is "flexibility" that we are hearing from most broadcasters, and we hear you about that.

5776             But that is a one‑way direction.  That is sort of lowering the existing requirements.  Again, we hear you and we will consider what you are saying.

5777             But I guess the problem will still remain, because at whatever level you have, unless you assume that the objectives are going to disappear, you are probably going to still be combatting market forces to some extent.  So the challenge will remain at whatever level you are, where you are now, higher or lower, and again we have to try to work towards those objectives.

5778             I appreciate that you don't want to take the time before us to do other than get your message across, which is for the moment you think you need the flexibility.


5779             MR. SKI:  Well, we would certainly be pleased to add more if we had the answers for you today.  Unfortunately, this hearing is coming at a time when we don't have the answers, when I think we are all searching for the answers.

5780             I think, as I said, the people certainly on this panel have been in the radio business for many, many years ‑‑ it's our passion.  It's why we get up every morning ‑‑ and we are very optimistic about the radio business, but we are very cautiously optimistic too, because we just don't know what's around the corner.

5781             We see all these things coming before us that we just have never seen before.  We have known what we have been up against.

5782             But when you can go to something like ‑‑ you may have seen pandora.com, the Music Genome Project, where you now can go to the internet, you can log on, and through this particular process, by logging on, you can create 100 radio stations that the Music Genome Project creates for you, something that you can do.  So suddenly you have 100 radio stations that are streaming stations.


5783             So how do we compete with that?  Those are the things that I can tell you there are some sleepless nights and many long days and meetings while we try to figure this out.

5784             And it's not easy, because every day there is something like pandora that is coming along.

5785             THE CHAIRPERSON:  Sure.

5786             MR. SKI:  It's not as if it's one thing comes along that we have to deal with, like we had to deal with television many years ago obviously and recreate our business plan, our business model.

5787             Now what we have to do is, one day it's this, one day it's the internet, the next day it's satellite radio, the next day it's a change for instance in the methodology for measuring our media, the personal people meter, which is going to change the way our business model again is managed.

5788             So it's all of these things that are coming at us.

5789             THE CHAIRPERSON:  And there is going to be a lot of trial and error.  The good news is that you are coming off some very healthy years which are continuing financially and that now is the time to make the investments, both in the expertise for the ideas and in the technological know‑how, so that you can not just treat them as competitive to you but that you can actually harness them for your own promotion.


5790             Because you still do maintain powerful brands in this country and powerful listener identification which works in your favour in addition to your balance sheets and I'm sure that you are doing that as well.

5791             MR. SKI:  Well, the brands are important certainly.  It's a little different.

5792             I heard your comment the other day about Desperate Housewives, and that is a little different than radio in that not everybody can play Desperate Housewives; everybody can play Britney Spears if they want to.

5793             THE CHAIRPERSON:  Right.

5794             MR. SKI:  So we don't operate in that vacuum either, even within our own industry.

5795             I would just like to comment, too, on the fact that we have had some good years, there is no question, and we are quite proud of that.  But it was only a few short years ago that CHUM embarked on another experiment to try to recreate AM radio and do some things differently which dramatically affected the profits of the company.


5796             We see going through that kind of a phase again.  You obviously have our numbers.  You know that when you try to do different things they don't always work.  We have had some successes and some failures and we think that is going to continue to happen.

5797             THE CHAIRPERSON:  Right.  I think the whole industry is, and the industry as it is ever more broadly being defined.

5798             Let me ask you just a few specifics on other parts of your brief, which we have read.

5799             One is on LMAs and LSAs.

5800             We set out in the Public Notice at paragraph 37 the concerns that the Commission has had with LMAs and LSAs, and yet CHUM is, particularly in its brief, making a pitch for their utilization.

5801             If I could I will ask you just a few points of information about LSAs at this point, because I think the issues pro and con are fairly clear.

5802             One question I have is the financial impact that you think it would make on your stations operating in a market in quantitative terms.

5803             How would you estimate the financial benefit to you of using an LSA as distinct from not using an LSA in a given market?  I appreciate it will vary from market to market, but what is it worth to you in dollar terms?


5804             MR. SKI:  I think that it might be difficult to give you an exact number or a percentage.  Kerry may be able to comment on that.

5805             What it allows us to do, especially given the fact ‑‑ and I know it has been chatted about here ‑‑ that radio swims in its own pond again, and it really doesn't.  When our salespeople go out every day, they are competing against all media, not just the other radio stations in the market.  In fact, we would rather not compete against the other stations in the market.  We think there needs to be a more holistic approach.

5806             But the key with an LSA is in part to try to increase the share of market, increase radio's share.  I think we all know that while radio commands 30 percent, roughly, of media usage, our share of market remains less than 10 percent.  It is something that we have had real challenges in growing.

5807             We think LSAs will help that, because what it does, it ‑‑

5808             THE CHAIRPERSON:  Excuse me, Mr. Ski.

5809             MR. SKI:  Yes?

5810             THE CHAIRPERSON:  You say your share of market remains less than 10 percent.

5811             What are you referring to there?


5812             MR. SKI:  Referring just to our share of media revenue, advertising revenue.

5813             THE CHAIRPERSON:  Well, the numbers we have are closer to 14, 15 percent.  I'm looking at the Carat expert table that we have here that I'm sure we could show you which basically show that the share of radio, of total media, including billboards, weeklies, and so forth, has remained pretty constant at about 14.5 percent from 1996 through '05.

5814             Is it you are rounding that to 10 percent?

5815             MR. SKI:  Rounding down to 10, no.

‑‑‑ Laughter / Rires

5816             MR. SKI:  No.  No.

5817             I will ask Kerry to comment on that

5818             MS FRENCH:  I think there are several media ‑‑ radio share of total Ad Spend figures out there and they range between 9 and 15.  It really depends on which media are included in the total number of advertising dollars.

5819             Quite often ‑‑ I don't know about the specific figures that you are referring to ‑‑ they might not include internet advertising or many of the new ‑‑


5820             THE CHAIRPERSON:  No, Well, these purport to do ‑‑ I think the best thing is, we will make that chart available to you.

5821             I don't believe it's confidential, is it, the Carat expert table that we have here?

5822             No.  So we will make that available to you, but you will see a number that runs across pretty well at 14.5 percent, almost constant, whereas newspapers are declining quite clearly, and internet is increasing.  Radio remains pretty constant, a total $9 billion total media ad budget in '05 up from 5.5 in '96.  The 14.5 percent seems to be like an iron law running through it as radio's share.

5823             But go ahead, Mr. Ski.

5824             MR. SKI:  We would be happy to see those numbers.

5825             THE CHAIRPERSON:  Yes.

5826             MR. SKI:  I think our point too, as you have mentioned, is the share has been fairly stable.  Despite the fact that we command 30 percent of media usage we are obviously trying to get that shared market up.

5827             THE CHAIRPERSON:  Yes.


5828             So I guess if you can think about showing us some financial impact, one way or the other.  Because I guess what it comes down to when you read the Competition Bureau's brief ‑‑ I mean quite apart from the fact that we debated is this a substitute or not, and I know your answer to that ‑‑ but what they come down to at the end is, they say even if you assume that it isn't, for those advertisers who wish to use radio in a given market, to the extent that they have no choice, that lessens competition.

5829             Whether or not that is sufficient to outweigh the other considerations, they don't say it is, but that's basically what they ‑‑ there will always be a core of people who, whatever their mix, will still want to use radio and to the extent that there is an LSA or LMA on the market their choice is either totally or partially curtailed and hence that, in their view, lessens competition, which they propose we provide reasons for offsetting if we choose to offset that consideration.

5830             I don't know whether you want to address that comment or not?

5831             MR. SKI:  Yes, we would.

5832             We obviously disagree with that, because of some of the comments we have made ‑‑ I will ask David to comment on this.


5833             But I think, too, what we are asking for really is that stations are allowed to enter into an LSA up to the number of stations they would normally be allowed under the MLO policy, which obviously the Commission reviewed and felt was appropriate at the time.

5834             So we are not asking to go above that number, we are saying based on he multiple licence ownership policy we be allowed to have that same number of radio stations under an LSA.

5835             David...?

5836             MR. GOLDSTEIN:  Thanks, Paul.

5837             Only to reiterate that again our position is that it would be consistent with the MLO policy which we think has already stood the test of the competitive analysis that was done in 1998.  It's only one tool in the toolbox that the Commission has to in fact allow continued diversity of ownership in certain markets given certain parameters.

5838             THE CHAIRPERSON:  All right.

5839             Do you concur with the CAB proposal in regard to the criteria that you would adhere to under LSAs?  Paragraph 199 of their brief.

5840             Use it for local advertising only, maintain distinct and separate programming services, distinct and separate news voices, and otherwise maintain distinct stations operations of the criteria?

5841             Is that what you ‑‑


5842             MR. SKI:  I didn't remember every part of that, but the answer is yes.

‑‑‑ Laughter / Rires

5843             THE CHAIRPERSON:  All right.

5844             MR. SKI:  Thank you.

5845             It was a late night.

5846             THE CHAIRPERSON:  All right.  I think I have your position on that.

5847             The elements on your own profit and loss statements that would be affected with an LSA, then, are what?  Promotional expenses, administrative expenses?

5848             Where would you find savings in your own operations?

5849             MR. SKI:  LSAs, unlike LMAs, the primary reason for them is not necessarily to find savings, although there are some.

5850             You have obviously a saving if you have a sales manager who is responsible for a series of radio stations as except for just one station.

5851             THE CHAIRPERSON:  Right.


5852             MR. SKI:  The other part of it is that what it enables you to do is to have salespeople who are better trained.  CHUM obviously has been a big proponent of our CHUM client solutions where we think that the differentiating point between our sales people, our ales process and others in all media is going to be the salesperson.

5853             We have research that shows that the top three reasons that advertisers buy has nothing to do with rate ‑‑ which might challenge the Competition Bureau's comment ‑‑ and everything to do with the quality of the salesperson.

5854             So it is not necessarily a saving so much as it using our resources in a better way.

5855             THE CHAIRPERSON:  Right.  What is the formula for allocating revenues from those sales?

5856             MR. SKI:  The revenues in an LSA, as we see it, are allocated based on two things.

5857             One, first of all, in an LSA not all stations are bought at the same time.  At a previous hearing we mentioned I think 80 percent of those who bought the radio station under an LSA bought one station.  Those who do buy a multiple number of stations, the revenue is allocated based on share of market relative to the buy.  So if you have a 10‑share or a 5‑share it is allocated proportionately.

5858             THE CHAIRPERSON:  Right.  You don't have a ballpark figure for the impact that an LSA has on your own financials?


5859             MR. SKI:  We don't at this time, but we would be happy to possibly do a work‑up for you on that and come back with a number.

5860             THE CHAIRPERSON:  Thank you.

5861             Commissioner Cugini...?

5862             COMMISSIONER CUGINI:  Thank you.

5863             Good morning.  You heard me tell Corus that I like real‑world examples, so Mr. Farina, perhaps you could clarify for me, or elaborate for me rather,on the emerging artist test and the bonuses that you would claim by applying the test.  And thank you for simplifying the definition for me.

5864             How much do you think the CanCon percentage will fluctuate from week to week, on CHUM‑FM for example, when claiming the emerging artist bonus?

5865             MR. FARINA:  Right, okay.

5866             First of all, we should clarify that on radio stations ‑‑ and I know the CAB report alluded to this ‑‑ that when attracting a mass audience familiarity is really important in a radio station.  An audience wants to know what they are getting from the radio station and they want to count on the fact that they are going to get their favourite song or favourite songs when they tune that radio station in.


5867             So the idea of broadcasters using this quota to completely overhaul all their established Canadian artists for an entirely unknown, unfamiliar emerging artist to try to bring their CanCon down is a little misguided because it is bad business sense for us.

5868             We actually did a study, a three‑day study on a 6:00 a.m. to 6:00 p.m. based on CHUM‑FM alone in Toronto where we currently run at about the 35.5, 36, 36.5 range.  Our percentage changed to an average of about 38.5, 39 with emerging artists.

5869             I should say that as a Hot AC station we are probably one of the most aggressive stations in Canada in terms of airing emerging artists.  We are obviously not up at the level that a station like a Modern rock would be who, you know, their music base is based a lot more on new artists.  So it doesn't really offer a real bottom level of Canadian content happening on our radio station.


5870             What it does do is, I think it incents broadcasters to be able to take a chance on new and emerging artists.  I think when we went from 30 to 35 percent, because being able to do a specified format to a mass market playing contemporary music, it's really hard.  I know you are going to be hearing from some other broadcasters that are at higher thresholds, 40 percent.

5871             So what we saw with the move to 35 percent ‑‑ and we saw many broadcasters, CHUM included, moving to Gold‑based formats.

5872             One of the reasons for that is, it allowed them to fulfil their commitment by playing familiar titles from a number of different decades, and what happened to the music industry was it lost many avenues on terrestrial radio for its new and emerging artists to be heard.

5873             Top 40 is a problem in Canada right now.  There are not a lot of Top 40 stations.  The Urban market has really bottomed out in this country.  We have seen the rise of the Jacks, the Bobs, the Daves, and as well as the continuing growth of Classic Rock throughout Canada, none of which offer platforms for emerging artists.

5874             COMMISSIONER CUGINI:  But your bottom line is that it is a gold based format.  Nonetheless, it is enough of an incentive for you to take the risk to play more emerging artists.

5875             MR. FARINA:  Well, we are not a gold based format.  We are a current based format.


5876             I will give you an example.  One of our recurrent records, which is a record that is not in a current rotation any more but one of the records that is in heavy rotation, is Arcade Fire.

5877             Arcade Fire is hardly who we would classify as a gold based act.  So we are a current based format.

5878             And it is hard to say whether stations in current gold based formats are going to be doing huge overhauls.  But with an incentive in place, I think we will see more opportunities for new emerging artists on the radio and we may see a shift in the amount of format diversity available on the airwaves now because it may be easier to fulfil the CanCon commitments while providing a real focused format to our audiences.

5879             COMMISSIONER CUGINI:  Thank you.

5880             Thank you, Mr. Chairman.

5881             THE CHAIRPERSON:  Thank you.

5882             Commissioner Pennefather?

5883             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

5884             Good morning.

5885             I just wanted to question you a little bit more about your CTD comments, your recommendations.


5886             You have four bullets on page 24 and it is very clearly presented.

5887             The last bullet:

"Applicants for new licences should be allowed to propose initiatives that benefit the broadcasting system and further the objectives of the broadcast policy of Canada."

5888             And your example is the AVR.

5889             That being said, my assumption is that goes beyond the list presented in the CAB proposal, which refers to cultural organizations, education, mentorship, scholarship, outreach.  It would go beyond that.

5890             Is that correct?

5891             MR. SKI:  I will ask David Goldstein to respond to that question.

5892             MR. GOLDSTEIN:  Thank you.  The short answer to that is yes, because we think that the Act provides for several forms of diversity.  And frankly, it is something that CHUM has been doing, as we believe we have pushed the envelope in these areas over time.

5893             Sarah could talk to some of those initiatives.


5894             Obviously I think there is room for some experimentation and some pushing of the limits in order to benefit what the Act, we believe, provided for.

5895             COMMISSIONER PENNEFATHER:  No.  I think I take that point.

5896             Obviously, as you know, during this hearing and in the submissions we have there are various proposals for various funds which of course base their rationale on exactly those points: policy and public interest.

5897             Let me ask you, though:  Considering the discussion with the Chairman earlier and a little bit of the chicken and egg problem of "I'll follow it if I hear it; if I don't hear it, I won't know it" in terms of Canadian music, this brings to mind CTD.

5898             As Mr. Roman knows, that is part of the picture.

5899             What would be your comment on this sector of CTD: namely, the discretionary voluntary sector in new applications of the Commission looking at a percentage or a component of that which would be for emerging artists?

5900             Would you care to comment on that?

5901             MR. ROMAN:  We are talking about discretionary CD.


5902             COMMISSIONER PENNEFATHER:  That's right.

5903             MR. ROMAN:  Are we talking about that in connection with significant benefits, that 1 percent or are we talking ‑‑

5904             COMMISSIONER PENNEFATHER:  No.  I am talking about, just to be clear, your four points.

5905             MR. ROMAN:  Yes.

5906             COMMISSIONER PENNEFATHER:  You have covered the significant benefits, the CAB plan and all other spending.

5907             But you have this section on applicants for new licences allowed to propose initiatives.

5908             So it is really in the new licensing context, where there is a fair amount of discretion.  In your view, would it be interesting to have a component or going forward a percentage for emerging artists: in other words, smart CTD?

5909             MR. ROMAN:  That is an interesting proposition, smart CTD.


5910             Essentially, we would tend to resist firm quotas, I think, on this.  I think there are certain CTDs that lend themselves to a particular market or a particular licence application and that kind of flexibility would show as responding creatively to preparing a new CTD initiative.

5911             On that area, I haven't fully arrived at any kind of quota or percentage.

5912             MR. SKI:  But it is an interesting concept and one I think we would look at.  I think as Duff said, we have to look at obviously when we look at the market.

5913             But it is something we would think about.

5914             COMMISSIONER PENNEFATHER:  If you could get back to us ‑‑ as you expand on your four points, the first three are crystal clear and they connect to the CAB proposal, but the fourth point leaves a little more room for discussion.

5915             So if you could get back to us on that, that would be appreciated.

5916             MR. SKI:  Certainly.

5917             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

5918             THE CHAIRPERSON:  Thank you.

5919             Monsieur Arpin?

5920             COMMISSIONER ARPIN:  Thank you very much, Mr. Chairman.


5921             I cannot miss the opportunity to ask you a few questions on DAB.  I will refrain myself for the time being for the transitional digital period that have gone through from 1995 until to date.

5922             I know Mr. Roman personally, you have been quite involved through that period.  But I want to learn more about what CHUM did during that as an alternative programming with ancillary data.

5923             If you could in a few strokes let us understand how you use the DAB technology to try to develop something for the marketplace.

5924             We won't raise the issue of receivers.  I think we are all well aware there has been only a limited number of receivers available.

5925             The question also could be ‑‑ and let's see if you can address it:  Did you get any feedback from listeners, other than the ones who had one or more receiver?

5926             MR. ROMAN:  Thank you, Mr. Vice‑Chair.

5927             It has been an interesting ride.  And as you so politely noted, I have been involved at the forefront, involved through digital radio research and then digital radio roll‑out since 1995.

5928             I will give you a quick capsule.


5929             At its height we had 62 digital services operating in Canada.  We achieved a population penetration of about 35 percent, or about 11 million people, that would be at reach of those digital signals.

5930             We still are operating 25 DAB signals in Toronto.  I think our 15 signals are still up ‑‑ 13 signals are up in Montreal.  We continue to operate CHUM signals in both Montreal and Toronto.

5931             The CBC was in co‑operation with us in Windsor and they have removed some equipment that has taken the signal down in Windsor.

5932             We operated a trial of more than five services in a pod in Halifax and had very successful results with that.

5933             And I believe the CBC continues to operate DAB in Ottawa.

5934             So essentially that's the background.

5935             Over the course of those years, I would say that CHUM through my representation on DRI made a huge commitment, both time and effort and essentially visibility.

5936             The key there was to achieve the mandates of DRI:  the promotion of publicity of DRI; the testing of the technology; the liaison with the automotive industry.


5937             And to a large degree we did all of those things.

5938             I am going to get to the point of the ancillary data and the 14 hours, but I just want to make a couple of things clear.

5939             When I received my marching orders to liaise with the automotive industry, I am really sure in hindsight that our stakeholders at DRI and the industry did not really dream of achieving any success with the largest auto player in North America at that time, and that's General Motors.

5940             As you are well aware, Mr. Vice‑Chair, Canadian‑born Maureen Kempston Darkes appeared at the CAB and made the commitment on behalf of General Motors to put DAB in 26 models across the line.

5941             What they had asked for, because of the nature of their business, is a firm commitment from the broadcasters as to when we would be bringing DAB to those cities that reside between Windsor in the east and Vancouver in the west.

5942             We simply couldn't give them the answers for Winnipeg, for Calgary, for Edmonton, for Saskatoon, for Regina.


5943             Initially, as our discussions went on, and as we more and more were aware that the U.S. was not going to follow our lead, that they were taking a totally different DAB track, eventually General Motors, who have a limited window in which new electronics can be fitted into their telematics and schematics for the way they build the electronic harnesses for radio, had to move on.

5944             I just want to make the point that General Motors was there for us and that the cost of disengaging from our initiative was $13 million in cash from General Motors due to their commitment with Siemens in Germany for the radios.

5945             So to that end, we missed a great opportunity there.

5946             But to get to the point.  We used sub‑channels at two Canadian auto shows, demonstrating that the DAB pods, which in Canada approximately five services are run, we did sub‑divide those into specialized music channels that we displayed in fact at the General Motors booth at the auto shows.


5947             We didn't spend a lot of time on the 14 hours.  I and my company, with their backing, were spending a lot more time on the macro picture, on the work that DRI was doing, on keeping our membership enthused and positive and involved in DRI, as you well know, essentially trying to carry out that mandate.

5948             We had a very, very successful test, though, of broadband transmission technology.  And that is that we successfully produced 12 services in a pod that normally has five services.

5949             And we operated a 72‑service test facility from 1331 Yonge Street for a number of months, using equipment from stakeholders who are basically the manufacturers of that technology.

5950             It went to question that had been raised at other discussions that we have had with the Chair and with other Members of this Commission regarding spectrum.

5951             There is 40 megahertz of spectrum out there.  Compression technologies will make it even more efficient to be used.

5952             COMMISSIONER ARPIN:  Thank you.

5953             Regarding the future there are various assumptions that are made.  I think you talk about more compression.  Others are talking about other technology than DAB per se.

5954             Do you think, based on your experience, that eventually there will be receivers for the Canadian market?


5955             I know that in your own submission you are talking about software‑defined radio receivers.  You referred us to an article that is called "Cognitive Radio Receivers".

5956             Do you foresee that that is the avenue that should be pursued?

5957             MR. ROMAN:  Well, absolutely.  I see that but I also see a very fundamental point that goes to the heart of the transition policy that we have now, and that was our move to DAB was based on it being a replacement technology.

5958             I think what we have learned is it has to be a policy that encompasses flexibility, unique and distinctive programming.

5959             In other words, the entire marketing proposition of having an FM or an AM station sounding better was a little like AM stereo.  It didn't offer enough.

5960             We think that the business proposition can be found in those sub‑channels, in those multiplexing channels, in those areas where we can bring a different listening experience to our listeners and consumers.  And for that, we are really going to require flexibility.


5961             There should be fewer restrictions.  There should be an effort, I think, to encourage in every way possible our viability as digital operators in the new reality.  We must go digital eventually.

5962             But I don't think we should constrict ourselves now to be picking a standard.  I think it's early in the game with IBOC.  I think there is enough encouragement with the use of L‑Band in the U.K. and in Asia that there will be receivers on the market.  There are 31 different models of receivers in the U.K. today.

5963             I was very heartened to hear Ray Carnovale for the CBC, that again using a Eureka based technology, DMB, Digital Multimedia Broadcasting, that already in Korea Samsung, and not far behind are LG, Sony, Erickson and Nokia with DMB receivers, which are essentially cell phones with a DAB over‑the‑air component.

5964             We are very excited about that.

5965             Receivers will arrive once you have the infrastructure built and once you have made a permanent commitment to be there in the long haul.  That is what the manufacturers want.

5966             We had receivers distributed nationally by Radio Shack, produced in Korea by Perstel, but when they realized that they couldn't hear anything between Windsor and Vancouver, they got less than excited about the proposal.


5967             And even within our cities, unless we are fully rolled out with all the gap fillers, all of the ground repeaters, similar to what even the satellite operators need in order to get their signals into the urban area, you can't really say that DAB was ever launched in Canada.  We are still at the implementation and experimentation stage.

5968             COMMISSIONER ARPIN:  Thank you very much.

5969             THE CHAIRPERSON:  Thank you very much, ladies and gentlemen.  Those are our questions.

5970             MR. SKI:  Thank you.

5971             THE CHAIRPERSON:  Madam Secretary.

5972             LA SECRÉTAIRE:  Merci, monsieur le Président.

5973             I would now invite the next participant, Standard Radio Inc., to come forward for their presentation.

‑‑‑ Pause

5974             THE SECRETARY:  Mr. Rob Braide is appearing for the participant.

5975             I would ask that you introduce your colleague.  You will have ten minutes for your presentation.  Thank you.


5976             THE CHAIRPERSON:  Less Mr. Kim's time.

5977             MR. BRAIDE:  I'm sorry?

5978             THE CHAIRPERSON:  Less Mr. Kim's time.

‑‑‑ Laughter / Rires

PRESENTATION / PRÉSENTATION

5979             MR. BRAIDE:  Thank you, Madam Secretary.

5980             Good morning, Mr. Chair, Vice‑Chair, Members of the Commission.  It's a pleasure to be in front of you again, in a slightly smaller number this morning.

5981             I would like to start off by introducing, on my left, Grant Buchanan, who is our counsel from McCarthy Tétrault in Toronto; and on my right, Jean‑Marie Heimrath, who is the President of Standard Interactive, a division of Standard Radio, which, Mr. Dolfen, you made reference to in the CAB's presentation the other day.

5982             Let me start off by conveying an apology on behalf of our fearless leader Gary Slaight.  I know that he has communicated directly with the Chair regarding this matter.  He has had a significant family crisis and has not been able to leave Toronto.

5983             He sends his regrets.


5984             Another small change in our presentation is that Andy Kim, thank you to our friends at UDA, was able to appear yesterday.  So we have a considerably condensed presentation.  So I will speak slowly.

‑‑‑ Laughter / Rires

5985             MR. BRAIDE:  As the Commission knows, Standard Radio is owned by Standard Broadcasting Corporation Limited, which is Canada's largest privately owned multimedia company.

5986             Standard is an active member of the CAB and we are pleased to endorse the submission made by the CAB in this proceeding.

5987             In our short time here today, we will speak primarily about how to best support emerging Canadian artists, both as regards airplay and funding.

5988             Finally, we will close with our thoughts about the hit/non‑hit rule and our recommendation that they be eliminated.

5989             Given the understandable time limitations, we won't cover Standard's new media investments, such as Sirius Canada and Iceberg Media, in our main presentation.  But as I mentioned, Mr. Heimrath is here today to respond to your questions in particular in regard to Iceberg Media.


5990             Despite the proliferation of new media, Canadian radio has played and will continue to play a pivotal role in getting new Canadian artists launched.  Standard performs a significant role in that process in terms of airplay, the funding of FACTOR, Musique Action, the Radio Starmaker Fund and Fonds RadioStar, and makes significant copyright payments.

5991             In the five‑year period from 2002 to 2006 Standard will have expended over $20 million for Canadian Talent Development support.

5992             Standard also runs free 30‑second promotional spots for newly released albums by Canadian artists on its music stations across Canada.

5993             The value of this plan in terms of free airtime for Canadian artists is about $2 million a year.

5994             Based on our experience, we feel that what is needed is an enhanced 35 percent policy that provides an incentive for stations to play new Canadian music, and in that regard Standard also supports the CAB proposal.


5995             Everyone in this room understands that Canadian private radio is vital to the breaking of new and emerging Canadian artists.  Standard understands the motivations of each of the industry groups that champions different approaches.  Nevertheless, it supports the CAB's proposed policy framework that incents both the airing of new music and the targeting of CTD contributions.

5996             As the Commission has already heard, sales levels for Canadian music are far lower than the current Canadian quota level of 35 percent, and they are only slightly higher than when the quota was at 30 percent.

5997             If the 35 percent quota were increased, this would simply increase the already large discrepancy between what radio stations are required to play and what the reality of the marketplace wants to purchase.

5998             Like many others in the room yesterday, we were surprised to hear CRIA's about‑face, first explaining why they changed their position, then explaining that they had not really changed it at all.

5999             Two comments are in order.

6000             First, nothing is impossible for the person who doesn't have to do it.


6001             Second, it is too bad that the Commission didn't have the power to regulate CRIA's multinational members.  If they had to produce 35 percent Canadian content, maybe it would be easier for all of us.

6002             They suggest that we only get a bonus in AM and PM drive.  Broadcasters know that the universe is changing.  We need to do everything we can to maintain audience, and that means playing familiar music in drive periods.

6003             The bottom line is that CanCon test below the mean.  We need all the tools available to us while satisfying the imperatives of the Act.

6004             As regards funding, CAB has proposed that there be a movement away from the funding of FACTOR and Musique Action by Canadian radio and instead toward the funding of Starmaker, Fonds RadioStar.  Perhaps this idea requires some clarification.

6005             It is not our desire to see FACTOR, Musique Action anything but strong.  We will be recommending to the CAB that the current level of $1.8 million flowing from broadcasters be maintained.

6006             However, of primary importance to us is that all monies should be spent in a transparent fashion with full accountability.

6007             This is the prime reason that these dollars must flow through a commercial fund.


6008             Let's also remember that the two satellite companies have committed approximately $22 million to FACTOR/Musique Action over the next seven years of licence, or the first seven years.

6009             In conclusion, Standard believes that there is sufficient real indicators of future concerns for radio that the CAB proposals make a lot of sense.

‑‑‑ Pause

6010             MR. BRAIDE:  While we are missing a section of the written presentation that we have submitted to you, we also wanted to refer to our position on the elimination of the hit/non‑hit policy.

6011             We feel very strongly that over the past few years while the francophone broadcasters have seen a light diminution in pbits, their successes are not dissimilar to the successes seen by English Canadian radio broadcasters and particularly those in Montreal.

6012             We feel that the CRTC has created an ecology in Montreal radio.  That ecology ‑‑ and I will say Montreal radio.  Sorry, I'm a Montreal operator.  But in terms of the Montreal‑Ottawa‑Gatineau marketplaces.


6013             We feel that that ecology is defined by 65 percent ‑‑ 55 percent in certain day parts ‑‑ French vocal music and the requirement for English broadcasters in those two markets to continue to maintain the hit/non‑hit policy, which the Commission has in its wisdom eliminated in all parts of the country except for Montreal‑Ottawa‑Hull.

6014             We believe that if there is a decrease, as requested by the francophone broadcasters, in the 65 percent vocal music system that that changes the ecology of the English marketplace.  We feel strongly that if there is a change in that ecology, there should be an elimination of the hit/non‑hit requirement.

6015             I think, summing up that concept, is that the CAB and many other broadcasters, and now Standard Broadcasting as well, have said over and over again that this is a changing environment.  We need all the tools available to us in order to compete with things that are not of our control, nor of the Commission's control.

6016             We ask the Commission that we not be forced to compete with one arm tied behind our backs.

6017             In conclusion, we believe that there are sufficient real indicators of future concerns for radio that the CAB proposals do make a lot of sense.  There are lots of ways for listeners to receive music, and there seem to be more each day.


6018             Standard understands and accepts the bargain that it has with the regulators in exchange for its use of public spectrum.  It pays CTD, plays Canadian content and it pays significant copyright fees.

6019             It does all kinds of things that its unregulated competitors do not do, and we are proud of the contributions that we make and the success enjoyed by the artists that we promote.

6020             We hope and trust that you will give radio the tools to continue to play its key role and that you will approve the plan the CAB has put in front of you.

6021             We would be pleased to respond to your questions.  Thank you.

6022             THE CHAIRPERSON:  Thank you, Mr. Braide.  I did receive the communication from Mr. Slaight.  Please convey our best wishes to him and his mother.

6023             MR. BRAIDE:  I will do.  Thank you, sir.

6024             THE CHAIRPERSON:  Commissioner Cugini.

6025             COMMISSIONER CUGINI:  Thank you.  Good morning.


6026             Just some practical questions with regard to the CAB bonus incentive plan.

6027             As you said, you are an owner of 51 stations across Canada.  How many of those stations will be able to take advantage of that bonus incentive plan if we approve it?

6028             MR. BRAIDE:  I don't have a specific number, Madam Commissioner, but certainly it would be virtually all of our FM radio stations.

6029             COMMISSIONER CUGINI:  All of your FM radio stations.

6030             MR. BRAIDE:  Virtually all.

6031             COMMISSIONER CUGINI:  Okay.

6032             This is going to create ‑‑ or maybe create is the wrong word.  But there is going to be a reliance on that BDS list for radio stations to program their play lists so they can identify who is an emerging artist and who isn't.

6033             How much reliance do your stations currently have on that list to come up with a play list?

6034             MR. BRAIDE:  We actually use Media Base, which is a company that we have an interest in.

6035             COMMISSIONER CUGINI:  It's an either/or.  Right?  It's either Media Base or BDS.


6036             MR. BRAIDE:  Absolutely.  Either Media Base or BDS.

6037             COMMISSIONER CUGINI:  Yes.

6038             MR. BRAIDE:  We tend ‑‑ our programmers use those databases or Media Base quite a lot.  I think you would be hard pressed to find a Standard programmer in the group who didn't have Media Base up on his or her screen, I would say virtually daily.

6039             COMMISSIONER CUGINI:  And have you done an analysis as to ‑‑ this is similar to the question that I asked Corus this morning.

6040             Based on this new definition of an emerging artist, by how much will that increase the broadcast of emerging artists on your stations?

6041             Pick a couple to use as examples.

6042             MR. BRAIDE:  I think that the CAB's evaluation is approximately correct, that an extra six plays per day would lead to, I believe, 30 spins per week.

6043             I think that perhaps I could answer you by going in the opposite direction ‑‑

6044             COMMISSIONER CUGINI:  Sure.

6045             MR. BRAIDE:  ‑‑ in an analysis that we did on the application of the bonus system as regards emerging artists.


6046             It has been said many times, Madam Commissioner, that 35 percent is considered a maximum by Canadian radio.  That is just not the case.

6047             I have three days of our CJFM Mix 96 in Montreal from just a couple of weeks ago, and each day we are between 36 and 37 percent.

6048             If we apply the emerging artist bonus using the .25 credit, the first day we landed 31.9 percent.  The second day, based upon 36.2 percent, it is 31.4 percent effective Canadian content.  And then 32 percent.

6049             The CAB says between 2 and 3 percent decrease in CanCon.  We see maybe a point more in this particular example.

6050             I hope that answers your question.

6051             COMMISSIONER CUGINI:  And in terms of numbers of emerging artists, did you do that kind of analysis?

6052             MR. BRAIDE:  I notice that Corus came up with ‑‑ I think they said they were playing on CFNY four per day.  That varies from format to format, clearly.

6053             COMMISSIONER CUGINI:  Right.


6054             MR. BRAIDE:  I would be surprised if we were playing less than that on, for example, our current based radio stations right now.

6055             And interestingly enough, we tend to be playing a great deal of that music, for example, on CHOM‑FM in Montreal, a Classic Rock radio station, because there tend to be a lot of emerging artists in the sort of Rock genre.

6056             And our trade‑off between Classic Rock and Canadian content is a discussion we can have, if you want, regarding library formats.  But that may be for another moment.

6057             COMMISSIONER CUGINI:  Well, you did mention your higher levels of Canadian content.  And you happen to be part owner, I believe, of the Urban Rhythm radio station in Calgary that was licensed in 2001 at 40 percent Canadian content.

6058             If we apply the bonus incentive program, we know the CAB plan is 35 percent Canadian content with a floor of 30, what will your floor be on this 40 percent Canadian content station?

6059             MR. BRAIDE:  I can't answer that question directly, but we would undertake to get back to you with that number.

6060             Specifically regarding the Calgary radio station?


6061             COMMISSIONER CUGINI:  It is the only one that is at 40 percent.

6062             MR. BRAIDE:  Yes.

6063             COMMISSIONER CUGINI:  As per condition of licence.

6064             MR. BRAIDE:  Yes.

6065             COMMISSIONER CUGINI:  Then yes, in regard to that.

6066             MR. BRAIDE:  We would undertake to respond to you on that.

6067             COMMISSIONER CUGINI:  Thank you.

6068             And thank you very much, Mr. Chairman.  Those are my questions.

6069             THE CHAIRPERSON:  Thank you very much.

6070             Vice‑Chair Arpin?

6071             COMMISSIONER ARPIN:  Thank you.

6072             Mr. Braide, both Astral and Cogeco mention in their submission that the three FM Montreal radio stations have increased significantly their listenership of francophone.

6073             If you agree with that statement, to what factor do you attribute that increase?

6074             Is this factor to be taken into consideration in assessing the ecology of the Montreal and Ottawa‑Gatineau markets?


6075             MR. BRAIDE:  Mr. Vice‑Chair, I am deeply confused by their perspective.

6076             I have worked in Montreal radio.  I started off as a disc jockey at CHOM in 1977 and I have been fortunate enough to ply my entire career in that lovely city.

6077             One thing that I knew the day I started at CHOM was that 70 percent of its audience was francophone.

6078             Another thing I know today, some 30 years later, is that 70 percent of its audience is francophone.

6079             There has been no demonstrable change in percentages of francophone tuning to any of the three English FM stations that I believe they would be referring to: our CHOM‑FM, our CJFM Mix 96 and Corus' Q92.

6080             And believe me, I watch this stuff like a hawk because we don't get a lot of credit for our bilingual tuning, as I believe you well know, and only sell our anglo tuning.

6081             For example, CHOM only has 30 percent of its cumulative audience available for sale, because again we don't get credit.


6082             So we watch very, very closely what percentage of our audience is francophone.

6083             That number hasn't changed and I don't understand where they got their figures.

6084             Believe me, I've been in that seat for over 30 years in that marketplace and the needle has not moved.

6085             COMMISSIONER ARPIN:  Well, obviously they have taken their figures out of BBM.

6086             It has slipped over the years somehow and now it is coming back.  I think CHOM is probably a big factor in it because when you purchased it from CHUM you moved it back to its more Classic Rock format, and that surely brought more focus toward the francophone since there was no such format available in the French market.

6087             MR. BRAIDE:  I think, Mr. Arpin, what actually happened is that a lot of tire kickers came in, a lot of francophone tire kickers came in, if I can use that expression, and checked out the format.  There was great concern in the French market at the time because CHOM's tuning amongst the combined English and French market went significantly up.  But the numbers also show that within two books it started coming back down again in the total market but continued to grow in the English market.


6088             And at the same time the percentage of tuning by francophones to that radio station never changed substantially.

6089             In fact, francophone radio stations ‑‑ for example, Énergie, changed their status or their strategy and launched a Classic Rock semi‑format on Montreal CKMF to program almost exclusively anglophone Classic Rock in the afternoon drive period.

6090             And you know what?  Their tuning went up in that area.  CHOM's tuning went back down to its habitual level in the total Montreal market but continued to grow in the anglophone market, which I think was everybody's objective in that transfer of ownership.

6091             So again, Mr. Arpin, the ecology has not changed in terms of transfer of tuning.  Our numbers have remained static.

6092             I would love to see how they have worked out their logic.

6093             COMMISSIONER ARPIN:  Well, I am sure that you have various platforms to meet with them, so you will be able to discuss that with them further.

6094             Thank you very much.

6095             THE CHAIRPERSON:  Thank you.


6096             I have a few questions on Iceberg Radio.  Thank you for being here, Mr. Heimrath.

6097             First of all, is icebergradio.com roughly the channel that is on the satellite, the subscription radio service?

6098             MR. HEIMRATH:  No.  Not to be confused, there is a channel on Sirius Satellite called Iceberg 95, which happens to be the channel it is on.

6099             icebergradio.com does not have any programming on Sirius satellite.  They are two separate entities.

6100             THE CHAIRPERSON:  I see.  So are you in charge of programming the satellite channel?

6101             MR. HEIMRATH:  No.

6102             THE CHAIRPERSON:  I see.

6103             MR. HEIMRATH:  I am only responsible for the internet portion.

6104             THE CHAIRPERSON:  It says on your website that you currently have over 100 channels streaming commercial‑free music 24/7.

6105             MR. HEIMRATH:  That is correct.  There is approximately 15 genres.

6106             THE CHAIRPERSON:  Where do you source this music?


6107             MR. HEIMRATH:  Well, it is sourced from the record labels.  Any type of music that is available worldwide, that is where the music comes from.

6108             THE CHAIRPERSON:  And what is the rights situation with respect to that music?

6109             We heard earlier that there are rights issues with regard to ‑‑

6110             MR. HEIMRATH:  Well, there are several rights issues.

6111             We have licensing agreements with labels where we give them a percentage of revenues.

6112             Outside of that there is pending legislation now on copyright and SOCAN, and so forth, which is still pending.

6113             It is kept on the side.

6114             THE CHAIRPERSON:  Do you have a sense in your mix on those 100 channels what percentage of Canadian content there is?

6115             MR. HEIMRATH:  We don't program that way.  Essentially, we have several programmers, some fulltime, some part‑time, whose mandate is to find the best possible music in the world and it is programmed that way.


6116             Within the database there is no field that indicates where it comes from in terms of nationality.  We don't program that way.

6117             We simply do that because we are competing in an open market.  There are several ‑‑ I can give you several examples as to an internet broadcaster out of Chicago.

6118             ACU Radio, for example; 15 percent of their audience comes from Canada.

6119             LAUNCH, which is part of the Yahoo music offering, has 1.2 million Canadian listeners.

6120             So it is no longer a situation where we program for Canada.  Those borders don't exist any more.  They are gone, never to return.  So you are competing with quite a bit.

6121             THE CHAIRPERSON:  Right.  So you don't track ‑‑

6122             MR. HEIMRATH:  No.

6123             THE CHAIRPERSON:  ‑‑ what is Canadian when you do that.

6124             MR. HEIMRATH:  No.

6125             THE CHAIRPERSON:  And you don't have an estimate.  Do you use the Iceberg vehicle in order to promote artists that you carry on your regulated radio stations or on Sirius?


6126             MR. HEIMRATH:  We just don't program that way.  We will play anything that we believe, and our programmers believe, is solid good music.  If it's Canadian, good for the Canadian artist.

6127             THE CHAIRPERSON:  Right.  So it is an entirely independent operation in that sense.

6128             MR. HEIMRATH:  Yes.

6129             THE CHAIRPERSON:  And Mr. Braide, perhaps a question to you.

6130             So Iceberg Radio then really isn't part of a strategy of extending into the internet your radio services.  It is an effort to meet the requirements of that service, pure and simple.

6131             MR. BRAIDE:  Mr. Chair, we are very much a content oriented company and we feel that we are pretty good content providers and generators of content.

6132             I think the Slaight family has decided some years ago that it wanted to be present on as many platforms as possible.  That's why we entered the internet space.

6133             We see that our programming expertise is lent to a new medium by engaging in the internet space.


6134             The programmers from the radio group don't sit around with the programmers from Mr. Heimrath's group.  They act independently of each other.

6135             We just see it as another place to exercise what we think is an expertise in content generation, if that answers your question.

6136             THE CHAIRPERSON:  Yes.  I guess I'm a little surprised, in view of your mandate under the Broadcasting Act, that you wouldn't attempt to use that vehicle in a way to promote Canadian artists, without being required to do so of course.

6137             MR. BRAIDE:  No, listen, let me make something clear:  We use the internet space to promote Canadian artists by virtue of the websites attached to the individual radio operations.  We have very sophisticated back‑end operations ‑‑ again all of which have been developed by Mr. Heimrath's division ‑‑ which provide pretty remarkable access to information on artists of both Canadian and international stature.

6138             It is important that we differentiate the iceberg.com portal and the websites of individual radio stations.

6139             I believe I would speak for Mr. Slaight in saying we see these as two separate businesses which enjoy some synergies.


6140             I would say that if you were to look at the activities of iceberg ‑‑ and Mr. Heimrath can correct me if he feels I'm wrong ‑‑ that you would see a significant amount of Canadian expression on those sites, simply by virtue of the fact that there is a whole bunch of good Canadian music out there in those genres.

6141             THE CHAIRPERSON:  What would you say the synergies were?

6142             MR. BRAIDE:  Well, again, this is not part of the operation that I am involved in on a day‑to‑day basis so I will freelance a little bit here.

6143             But I think it wouldn't be dissimilar to the way we would look at the synergies between our three radio stations in Montréal.  Perhaps CJAD would not be as healthy financially if it had to pick up all the costs of doing business on its own, billing and invoices and sales management and administration and traffic and those kinds of elements.

6144             Certainly within a corporation as large as Standard there are opportunities to share resources between the various operating units and divisions.  I suspect that would be the most significant synergy, certainly on a business level.


6145             MR. HEIMRATH:  Just to add to that, some of the synergies that Rob was speaking of, Standard Interactive has developed for the radio stations a content management system that allows the radio stations to operate in that space in a more efficient way.  In the past, and in a lot of cases, radio station website are operating on an independent basis with no real comprehensive content management system which we have developed for Iceberg Radio to operate.  So that is a piece of software, if you wish, that we have been able to hand off to the radio stations so they can operate a little bit more efficiently.

6146             THE CHAIRPERSON:  Right.  In terms of managing their websites, for example?

6147             MR. HEIMRATH:  Yes.  The tools that have been given to the radio stations are basically functionality tools.

6148             In terms of operating on a content level, it is still at the discretion of the local radio station to insert and to remove content on an ongoing basis.  We don't influence that at all.

6149             THE CHAIRPERSON:  So it says on your website that ‑‑ network sites, it includes 28 radio station websites across Canada.  Sites cater to specific geo and demo targets.

6150             MR. HEIMRATH:  Yes.


6151             THE CHAIRPERSON:  Those are not entirely Standard stations.  Those are other stations as well?

6152             MR. HEIMRATH:  Well, the stations I think ‑‑ I'm not familiar with that particular piece of information, but I think that is making reference specifically to Standard‑owned and operated stations.

6153             THE CHAIRPERSON:  So those are Standard?

6154             MR. HEIMRATH:  Yes.

6155             THE CHAIRPERSON:  It says that you represent advertising on 80‑plus music and entertainment‑related websites, which I think that would presumably go beyond ‑‑

6156             MR. HEIMRATH:  Yes, to some degree.

6157             Well, the way that works is, as you may know, Iceberg Radio has been around for 10 years under two different names, one Virtually Canadian, which was the original name, and then while it was still a public company it moved to Iceberg Radio.


6158             The idea was that Iceberg Radio had a relatively small audience comparatively speaking in the grand scheme of things.  In order to compete in the marketplace, numbers in the area of, say, 150,000 unique visitors on a monthly basis is extremely small.  As a matter of fact, you are not even on the radar screen when it comes to the advertising community.

6159             The idea here is that if one was to compete in the marketplace, at least in that particular space, one has to be within the top 10 performing sites to even be on the buy.  So in order to do that, one must look at some strategy in terms of aggregating as much as you can to get those numbers up.

6160             It still takes an enormous amount of time and an enormous investment to build audiences, as everyone knows.  So the initial strategy was to take these radio stations collectively, bundle them, and then go back into the marketplace and offer something that is a little bit more palatable.

6161             THE CHAIRPERSON:  The study by Mr. Osborne in the CAB brief suggested that a number of people he interviewed suggested that one way to try to reach a younger demographic ‑‑ which the general sense is abandoning radio for some of these other platforms ‑‑ was to use these platforms to re‑attract them back to radio.

6162             Is that part of your marching orders, or is it again so separate that ‑‑

‑‑‑ Laughter / Rires


6163             MR. HEIMRATH:  Well, once again here is some perspective.

6164             Iceberg Radio, in spite of what people might think, the primary audience of Iceberg Radio is 25‑54.  It is not a young skewing audience.

6165             THE CHAIRPERSON:  I see.

6166             MR. HEIMRATH:  As a matter of fact, that audience ‑‑ and we can provide this to you if you would like it ‑‑ is that the Bell curve is the peak listening is at 3:00 p.m. in the afternoon.  It is at work.  People are listening more and more at work.

6167             MR. HEIMRATH:  Whether they are doing any work, I don't know.

6168             THE CHAIRPERSON:  You use the term "work" loosely here.

‑‑‑ Laughter / Rires

6169             MR. HEIMRATH:  Right.  In terms of the younger skewing audience, as you probably know as well, there are tremendous forces currently in the marketplace.  You have obviously heard of MySpace, Pitchfork, which garner huge audiences.  Even in Canada a community called Nexopia has in the area of 850,000 young teenagers.


6170             So in terms of radio trying to attract a younger skewing audience, it is going to be quite the challenge to try to bring them back.  I don't think it's going to happen.

6171             MR. BRAIDE:  If I could interject, Mr. Chair.  As has been mentioned already during these proceedings, the drop in youth tuning is not dissimilar to the drop that newspapers have seen and television has seen.  This seems to be a broad demographic trend as opposed to something just specifically related to radio, however radio is asking the Commission the ability to work a little bit more flexibly in order to respond to some of the technologies which are pulling these younger people away from it.

6172             THE CHAIRPERSON:  Right.  And the overall solution that's being transmitted to us is a reduction essentially in content levels or flexibility in respect of those levels.

6173             MR. BRAIDE:  I don't think you are seeing a request for a great deal of reduction in content levels.  I think I speak wearing my CAB Chair hat as much as my Standard hat here.

6174             What we are asking for ‑‑ I think if you examine the documents ‑‑ is pretty much a status quo situation, but what we find onerous is an increased level of quotas or something in contrast to a bonus system which allows us to be more flexible in terms of how we respond to these things.


6175             Again, we are not crying that the sky is falling here, but we are saying that there are storm clouds and that is how we would like the Commission to respond.

6176             I want it to be very clear that we are not asking to throw out all the regulations.  We feel comfortable in a regulated environment.

6177             THE CHAIRPERSON:  All right.  Okay, thank you for that.

6178             Commissioner Pennefather...?

6179             COMMISSIONER PENNEFATHER:  Just a quick question, Mr. Braide.  Put the Standard hat back on.

6180             MR. BRAIDE:  Firmly screwed on.

‑‑‑ Laughter / Rires

6181             COMMISSIONER PENNEFATHER:  Not too tight.  I'm going to ask you to take it off again after.

6182             You will be recommending to the CAB that the current level of $1.8 million flowing from broadcasters be maintained.

6183             By that do you mean that that would go directly to FACTOR or do you maintain that it would still go to the commercial fund, then back to FACTOR?


6184             MR. BRAIDE:  Thank you for asking that question.

6185             There has been a great deal of confusion surrounding this issue over the past few days and you have given me an opportunity perhaps once again to clarify, certainly Standard's position, and I think that one may be more clear on the part of the CAB by the deadline for filing of materials in Phase III.

6186             What we are saying is that we see ‑‑ again let's use the living marsh, the ecosystem of the MEC and the strongly funded FACTOR and the commercial fund.

6187             I think what the broadcasters are looking for is greater accountability, a greater transparency, the ability to identify a Canadian as a Canadian, that an individual who is either a landed immigrant or carries a Canadian passport can access funding.  We want a system which maintains a healthy FACTOR and we feel that by flowing monies through Starmaker and Fond Radiostar we can continue to satisfy FACTOR's requirements ‑‑ again, the $1.8 million is I think the 1998 number ‑‑

6188             COMMISSIONER PENNEFATHER:  It's the minimum?  It has actually the ‑‑

6189             MR. BRAIDE:  Precisely.


6190             COMMISSIONER PENNEFATHER:  It has actually been more, as you ‑‑

6191             MR. BRAIDE:  Precisely.  And I think we have to remind ourselves that there may be another $22 million coming from satellite radio and there may be other benefits falling from transactions and new licensing and licence renewals.  We are talking about minimums here.  We understand what you are saying.

6192             We want to be able to have a little bit more control and influence over where our monies go inside FACTOR.  Perhaps we have to set up a Chinese wall inside the organization to make sure that Heritage's imperatives are satisfied.  As we all know, Heritage is not able to advance funds to artists, rather they have to pay upon receipt effectively, and one of the broadcaster's roles inside FACTOR is effectively to advance money.

6193             If that could be done, if we could continue to keep FACTOR healthy by doing that, all the better.


6194             All we want is to be able to see a three‑tiered system whereby MEC looks after Indie royalty, FACTOR goes out and Musicaction and looks after la bourse à l'éleve, and then the commercial fund independently and through FACTOR is able to take artists who are signed and take them to the next level so they become superstars.

6195             COMMISSIONER PENNEFATHER:  So the answer was yes and the reporting would turn up in an annual report of Starmaker Fund.

6196             Thank you.

6197             MR. BRAIDE:  Yes, it would.

6198             THE CHAIRPERSON:  Thank you very much.  Those are our questions.

6199             MR. BRAIDE:  Thank you very much.

6200             THE CHAIRPERSON:  Thank you.

6201             We will take a quick break as we change to the next item.

6202             Do you want to call the next item, Madam Secretary, and they can set up.  We will be back in five minutes.

6203             THE SECRETARY:  Thank you.

6204             I would now invite the next participants, Rawlco Radio Ltd. to come forward and prepare for their presentation.

6205             Thank you.

‑‑‑ Upon recessing at 1152 / Suspension à 1152

‑‑‑ Upon resuming at 1200 / Reprise à 1200

6206             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.


6207             Whenever you are ready, Mr. Rawlinson.

PRESENTATION / PRÉSENTATION

6208             MS LEYLAND:  Good afternoon, Mr. Dalfen, Monsieur Arpin, Ms Pennefather, Ms Noël, Ms Cugina and Commission staff.

6209             I would like to take a moment to introduce you to the members of our panel.

6210             To my far left is Doug Rawlinson, the Executive Vice President of Rawlco Radio.  On my immediate left is Gordon Rawlinson, I always like to say the most challenging person I have to manage.

6211             And on my right ‑‑

6212             THE CHAIRPERSON:  Which Rawlinson was that?

‑‑‑ Laughter / Rires

6213             MS LEYLAND:  That would be Gordon, Mr. Dalfen.

6214             THE CHAIRPERSON:  I see.

6215             MS LEYLAND:  Doug can be kind of tough too.

6216             On my right is Doug Pringle, Rawlco's Director of Programming.

6217             My name is Pam Leyland and I run Rawlco Radio.


6218             Rawlco was started by Gordon and Doug's father, the late E.A. Rawlinson, in 1946 in Prince Albert, Saskatchewan.  Gord and Doug have been in radio for over 35 years and Doug Pringle and I have been with Rawlco for over 25 years.

6219             I have been President for five years.  I am the first woman president of a radio company in Canada.

6220             I am very proud of Rawlco Radio.  We run full‑service radio stations that super serve their communities, and we run excellent news talk stations.  We have won 10 CAB gold ribbons for community service in the past 13 years.

6221             The music on our FM stations is not as tightly formatted as it would be in a major market, and we air music by local Saskatchewan artists many times a day as a company policy.

6222             Because of the success we have had with project 10k20 in Edmonton we have brought it to Saskatchewan and are currently providing $10,000 to each of 20 artists from all over our province to produce their own CD.


6223             We are leaders in First Nations programming and employment, and our owners, Gordon and Doug, have donated over $4 million to the E.A. Rawlinson Centre for the Arts in Prince Albert, the Rawlco Resource Centre to assist aboriginal students at the College of Commerce, at the University of Saskatchewan in Saskatoon, and the Rawlco Centre for mother‑baby care at the Regina General Hospital.

6224             At Rawlco we have always been in compliance and kept our promises.  We are only in radio and we love radio.

6225             Big picture stuff like the review of radio is Gord's area, so Gord..."?

6226             MR. G. RAWLINSON:  Thanks, Pam.

6227             Pam is a great President.  You know, Rawlco Radio is a better run company since she took over from me.

6228             Over the years, I think the CRTC has had great policy and great execution.  We think the CRTC is very good for Canada.  Broadcasters look at it as a business; the CRTC looks at what is best for all Canadians.  Canada is the best radioed country in the world.


6229             You know, everyone appearing before you at this review comes from a point of self‑interest, as we do.  We certainly have self‑interest, too.  But I want to make one point very strongly:  I have tried to step back and realize that what we are talking about is the future of radio in Canada and the people it affects most.  It's not the broadcasters, it's not the music business, and it's not the CRTC, but it is the listeners, the public and the community.  They are ultimately why we do what we do:  the listeners.

6230             We all need to worry and care more about the listener and the community.

6231             One of the joys of operating radio stations in smaller markets is the focus on the listener and the community and not on fighting other radio stations.  But if we look at the United States, each market there has many more radio stations than cities of equal size in Canada.

6232             Let me give you an example.  In Saskatoon all stations in the market are well‑staffed, fully involved in the community, locally programmed, and there is even a news talk station, all in a smaller city of just over 200,000 people.  You will never find that in the United States.

6233             Why?  In the States there are too many stations for the available revenue.  More stations doesn't mean more revenue, it just spreads the revenue thinner to each owner, and pretty soon staff, services and quality suffer and we end up with jukebox radio.


6234             American stations have become glorified jukeboxes and vehicles for syndicated programming, with little or no local relevance.  They have far fewer staff, less community involvement and almost non‑existent newsroom.

6235             I hate jukebox radio. I don't want to own jukebox radio stations.  One of the incredibly great things about Canada is the quality of our radio stations.  Right now in most smaller markets in Canada the CRTC has awarded the proper number of licences to permit high quality service to the public.

6236             So when is a smaller city capable of supporting additional new radio services?  There are several points to consider.

6237             First of all, by major market standards smaller city stations are over staffed.  Community involvement and community service requires people and these additional costs are not optional.

6238             Not surprisingly, then, smaller market stations are much less profitable than their major market counterparts.  The average PBIT for stations in big cities with a population larger than 250,000 is 18 to 20 percent and for the smaller cities it is only 13 percent or less.


6239             The argument in favour of licensing new music‑based radio stations is that they will add musical diversity.  However, the ramifications of applying this policy to smaller cities are very serious.

6240             As everyone knows, the world has been rapidly changing.  It wasn't long ago there wasn't such a thing as an iPod or radio station on the internet or blogs or satellite radio.  For someone living in smaller markets in Canada there is not so much choice it's amazing.  You can hear any kind of music and information you want, anywhere you want and in any order you want from multiple sources all in stereo quality.

6241             The impact of licensing additional new radio stations in smaller cities is dramatic.  The existing full‑service stations lose audience and lose advertising revenues.  At the same time, they have to increase their costs for station promotion and marketing.  The end result is that they lay off staff and they too become only music stations, just like their new competitors.

6242             More stations doesn't mean better quality radio; it means far worse radio, lowest common denominator radio, jukebox radio, radio done on the cheap.


6243             Radio station owners will find a way to make a profit, and if the revenue isn't there then the only way to make a profit is to run radio cheap.

6244             If there are the right number of radio stations in a market, stations are able to maximize profit by really serving the audience, local information, community service, a lot more than just a narrow music service.

6245             If there are too many stations licensed, in order to maximize profit you must do substantially less news, less community service and do a narrow music service.

6246             I think the CRTC's job is to make sure the system is set up to best serve the public.  Radio owner's job is to maximize profits, which usually, but not always, means to best serve the public.  We can make a profit by providing lots of local service or by running a lean and mean music service.

6247             So my question for the Commission today is this:  Are the people in these smaller cities better served as a result of the licensing of these additional radio stations?  My answer is that in many instances they are not.


6248             MS LEYLAND:  I mentioned a few of the things that we do to serve our listeners.  We do all of these things because it solidifies our role in these communities.  Because we do these things, community leaders, advertisers and listeners support our stations.  Clearly the people of Saskatchewan benefit from this radio environment and should it be changed to a multi‑music service environment something valuable would be lost.

6249             MR. G. RAWLINSON:  So I guess just to try and sum it up, today with the dramatic increases in diversity that technology allows, and the continued limiting of licences in smaller cities, the listener, the public, gets the best of both worlds, great diversity of choice and full service community‑minded local radio, the best of both worlds.

6250             That is our presentation and we would be pleased to answer any questions.

6251             THE CHAIRPERSON:  All right.

6252             Mr. Rawlinson and Ms Leyland, both your brief and your oral presentation were fairly clear so I don't really have any follow‑up questions for you in that regard, but one or two of my colleagues may.

6253             Commissioner Cugina...?

6254             COMMISSIONER CUGINI:  Good morning.

6255             In your written submission you say that generally you support the CAB's proposal.

6256             Go ahead.


6257             MR. G. RAWLINSON:  Yes.  Yes.

6258             COMMISSIONER CUGINI:  Does that mean you will avail yourself of the bonus incentive plan for emerging artists on your radio stations?

6259             MR. G. RAWLINSON:  Yes.  But could I ask Doug Pringle to just talk to Canadian music for one second?

6260             COMMISSIONER CUGINI:  Sure.

6261             MR. PRINGLE:  When you say "avail yourself", that means sort of it's a way to play less CanCon.  That is a different question to:  Will the incentive to play emerging artists be there if we can play less CanCon?

6262             I can only speak for myself.  I can't imagine why I would use that incentive to make my radio station sound less good.  I mean, to me the reason why you play new music is because that is the format that you have chosen to do and my decisions would always be based on that.  An incentive would make no difference to me at all.

6263             COMMISSIONER CUGINI:  That is very clear.

‑‑‑ Laughter / Rires


6264             COMMISSIONER CUGINI:  Do you currently use either BDS or MediaBase?  Do you use those services?

6265             MR. PRINGLE:  Absolutely.  I'm aware of BDS, yes.  There are many different sources that you use.

6266             COMMISSIONER CUGINI:  Right.  Based on your previous answer, then, it would be your preference that ‑‑ no.  It is an incentive program, you can opt in or out of using it, so whether we put it in the regulations or in the conditions of licence it will be up to the individual radio broadcasters to apply it or not.

6267             MR. PRINGLE:  Yes.  I think we have a fabulous system in place right now.  I mean, one of the huge successes has been the whole Canadian content ruling.  I mean, I think in terms of what has happened to Canadian music since CanCon came in to now is absolutely staggering, not just in terms of the quantity of music that is available ‑‑ I mean, there is so much good CanCon that is out there to play ‑‑ but also the quality of the music is extraordinary.  I just don't mean in it terms of I like it or you like it, I mean it in terms of not just people in Canada but outside of Canada buying this.


6268             I mean, we are up there with the U.S. and Britain.  In fact, I read last year we sold more dollars worldwide than Britain did.  I mean, that's outrageous, you know, when you think about it, 30 million people, and we don't have the reputation like England does.  So I think it has been a huge success.

6269             I just want to make sure that this success continues.  I hate to see a diminishment of what we have built up up to this point in time.

6270             COMMISSIONER CUGINI:  Thank you for your candour.

6271             I'm sorry...?

6272             MR. G. RAWLINSON:  I would like to just add one thing, though, that we have actually ‑‑ when the CanCon rules changed from 30 to 35 percent, quite frankly we didn't mind at all.  We thought that was just fine.  You have to stay well ahead of what the actual market is or you don't make any impact.

6273             But the world is a new ‑‑ it is becoming a new world and so we are a little unsure of what is going to happen in the future.


6274             We have, as a company, been not broadcasters that are concerned about Canadian content because our competitors had to play the same percentage, and while it was ahead of the percentage of music sales, as I said, you have to do that or else what good is it doing.

6275             Quite frankly, in the radio station business we don't have much regulation.  We have to play Canadian music and we have to keep logger tapes.  That's it really.  So it's a pretty good contract.

6276             But we are apprehensive about the future with all of this unregulated stuff coming in and just don't know where that is going to go.

6277             COMMISSIONER CUGINI:  Thank you for your candour.

6278             Thank you, Mr. Chair.  Those are my questions.

6279             THE CHAIRPERSON:  Thank you.

6280             Vice Chair Arpin...?

6281             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.

6282             I don't know if you were here yesterday when the Francophone Independent Radio Operators appeared, and later today we will hear also the Ontario Independent Radio Group, they both are making the same argument that is in another direction than the one you have made in your oral presentation this morning and that we can find in your paragraph 28 of your submission.


6283             They are making the point that in small markets in order to provide the listeners with a better music choice the Commission shall contemplate allowing a single operate to operate up to three FM services in a small market at benefit of the synergies.

6284             Do you have any specific views and comments to make on those recommendations that have been made to us by the smaller operator groups?

6285             MR. G. RAWLINSON:  Yes.  I think they are actually quite creative ideas.

6286             Radio, when there is just one owner in a market, whether the owner has one or two or three stations, is, quite frankly, the best radio there is in Canada.  It is the closest to the community and it is the most valuable service.  As you get bigger cities and more competition the focus becomes on other radio stations.

6287             So if you are in a small community where it is unlikely there is going to be somebody else going to want to have another station, or where it doesn't make a lot of sense, and I would say that is ‑‑ I don't know whether it's 50,000 or 100,000 people, but where you are best off for the service to the public to have just one owner, then why not give that person an additional licence if they want to do it and they can operate it.


6288             We currently, for example, have a situation where we have just recently filed an application in a place called North Battleford, Saskatchewan where we have an AM licence and two FMs.  The AM, through history, is in the wrong location.  It is north of the city because that's where it was for many, many years and the signal really is poor at night.  So we are asking for an exception, saying "Could we have three FMs because we have 15,000 people in the market, I think maybe a total of 18,000 ‑‑ I'm sorry, 18,000 is the correct number."

6289             To have another owner come in there when there is already three radio stations is just really never going to happen.  I mean, the city would have to be ‑‑ and it isn't really growing.  So we are saying could there be an exception like that to have three FMs instead of an AM and two FMs, just for coverage matters and for technical reasons.

6290             So that's not quite on point, but I think there are opportunities for exceptions in these smaller markets, so you will just get better service for the listener, which again is our whole thrust.

6291             So I think it is quite a creative idea.


6292             COMMISSIONER ARPIN:  I think your answer is giving me an opportunity to ask a subsidiary question.

6293             The CAB has defined a small market as being 250,000 or less listeners.  Obviously you were talking about Saskatoon being 200,000 people, but you are making a comparison using North Battleford as your example.

6294             What is your own definition of "small market"?

6295             MR. G. RAWLINSON:  I'm going to ask Pam to answer that.

6296             MS LEYLAND:  If I can take that question first, Monsieur Arpin, and then Gord will probably jump in after.

6297             I suggest that the biggest reason why ‑‑ and we suggest the threshold would be 250,000 ‑‑ is clearly shown in the study that was done by Ken Goldstein for the CAB.  It showed PBIT in markets with populations of 100,000 or less to be 12.9 percent and in markets from 100,000 to 250,000 population it was 13.1 percent compared to PBIT in centres over 250,000 of in the range of 18 to 20 percent.

6298             So PBIT is essentially the same for communities up to 250,000 and then it takes a significant jump.


6299             I do have some other thoughts too if you wouldn't mind just listening for a moment.

6300             COMMISSIONER ARPIN: Well, I think ‑‑ sure, yes because ‑‑

6301             MS LEYLAD: The other differences, the other ‑‑ the realities.

6302             COMMISSIONER ARPIN: ‑‑ obviously you just gave us the CAB point of view ‑‑

6303             MS LEYLAD: Okay.

6304             COMMISSIONER ARPIN: ‑‑ and I want to hear the Rawlco view.

6305             MS LEYLAD: You bet.  Okay, well let us talk practical examples then, because I heard Commissioner Cugini says that she likes to hear practical stories and I live in the practical world running Rawlco, so..


6306             In markets of 250,000 or less there are no traffic reports, effectively there is no traffic, it is one of the great things about living in a smaller centre.  You can be anywhere in 20 minutes or less and that includes a city the size of Saskatoon of just over 200,000 people.  In Prince Albert, Saskatchewan, population of what 40,000 people, we like to say you can be anywhere in a sportscast and a 30, which means that you can get home during a two or three minute sportscast and a 30‑second commercial.

6307             More than 80 per cent of our revenue in a smaller market comes from the businesses in our community.  It is very very labour intensive.  These businesses don't have advertising agencies, they don't employ an advertising agency to come up with their creative, to place their buy.  I always like to say that we, in effect, are their advertising agency.

6308             Our advertising consultants go out ‑‑ I mean, it is feet on the street ‑‑ they go out and meet with clients.  One of our sales managers calls it belly to belly, belly of the advertising consultant with a belly of the client.  Our writers and producers develop the creative concepts for each client.  You will find more writers and more producers in smaller markets than you will find in larger ones, because we develop the creative, we are their agency.


6309             Running a radio station in a smaller community ‑‑ and talking about our stations, thinking mostly of Saskatoon and Regina at this point ‑‑ are no less expensive than running radio stations in larger centres because of the number of people we have to employ to superserve our clients and our listeners, because of the fact that we need to pay competitive salaries in order to retain our people and keep them with us for a full career in Saskatchewan.

6310             In smaller communities, another example, is everybody knows where the radio station is, they know where the building is that the radio station's located in.

6311             Announcers go out regularly and broadcast throughout the community doing morning shows and other live broadcasts and listeners can stop by and meet the people that they hear on the radio.  And in Saskatchewan too, just a final as a final point, you know our population unfortunately presently is declining, that is the trend and any growth in our two largest urban centres, so Saskatoon and Regina, is population redistribution from rural to urban, which is quite different, I think, from a population that is growing because things are exceedingly vibrant.


6312             MR. G. RAWLINSON: So it is interesting if you actually take a look at the cities that would be over or under the 250,000 and I am going to do this really quickly.  So there is, I think, 16 cities that would be more than 250,000 population and obviously the biggest, Toronto, Montreal, Vancouver, Ottawa, Calgary, Edmonton, Quebec, Hamilton, Winnipeg.  Then you get into London, Kitchener, Waterloo, St. Catharines, Niagara, Halifax, Victoria, Oshawa, Whitby and Windsor.  That is the top 16 cities.

6313             It is interesting, there are no cities between 250,000 and 300,000 population, so those are all over 300,000.  If you get into under 250,000 you have Saskatoon, Sherbrooke, Regina, St. John's, St. Jerome, Saguenay, Kelowna, Barrie, Sudbury, Abbotsford, Kingston, Trois‑Rivières, Moncton, Saint‑Jean, Sarnia and on and on.  Those sound to me too ‑‑ I mean, it just sounds like those are smaller cities versus the other ones that are bigger cities.  It just seems to be a natural fit.  So there is some statistical arguments for this, there is some, you know, about profitability, there is all of these kind of non‑statistical things and then if you just look at the population.

6314             So we think 250,000 is approximately right.  You could say 300,000 and it wouldn't make any difference, there is nobody in between.  We only round up in sales.  A salesman comes in and said they just sold $1,000 and it is usually $650, but..

6315             COMMISSIONER ARPIN: Thank you very much, Mr. Chairman.  Thank you, Mr. Rawlinson.

6316             THE CHAIRPERSON:  Thank you.  Commissioner Noël.


6317             COMMISSIONER NOEL: Well, I guess Mr. Arpin took the mic a little too soon and he asked a question I was looking forward, that is what about the idea of the ARPIF of licensing a second or a third radio station, but to the same owner in a very small market, and you have answered.

6318             But on the 100,000 threshold, do you have separate data to indicate that in Quebec, for example, under the threshold of $100,000 there would be much less profitability?  That is what the people of ARPIF have demonstrated or tried to demonstrate to us yesterday and that is why they are asking for added flexibility for communities of less than 100,000 or your definition of a very small market, as opposed to a small market.

6319             MR. G. RAWLINSON: Yes.  I think that the CAB's position supports that too, that they had a different definition for English Canada than for French Canada or English radio and that they ‑‑ I think the CAB also said that it should be 250,000 for English radio and 100,000 for French radio, because that is where the main difference seems to ‑‑

6320             COMMISSIONER NOEL: And the Broadcasting Act would allow us to do some reasonable accommodation between the French and English markets.  Thank you.


6321             MR. G. RAWLINSON: Could I just make one more comment?

6322             THE CHAIRPERSON: All right.

6323             MR. G. RAWLINSON: And this is something that I just realized that we should have had in our oral, but it is just one more point, if I may.

6324             We would like to suggest that there should be some kind of a process or a test to be able to decide, when the CRTC receives an application for a new station, and given when the market is not very profitable, so that there doesn't have to be a call issued every time.

6325             It seems to me that there has been some instances in the past where the Commission is required to make or feels obligated to make a call if there is an application being filed and there is a whole lot of work done by applicants and a whole lot of work done by the CRTC and the market clearly can't afford to support another station and it would be better if there were some process.


6326             And if we might, we would like to suggest a possible threshold, which could be something like averaging the PBIT over the previous three years for all markets.  Again, we are only talking small markets here, so again under 250,000 population.  If you took the average PBIT for all of those markets across Canada and then you said okay what is this market compared to the average?  And if it didn't meet the average, then perhaps that would be an opportunity to say we won't have a call at this time.  That is a suggestion as to ‑‑ I think it is a fairly low threshold and it wouldn't, even if the market were higher than that, it wouldn't necessarily mean there would be another station, but at least then there would be a call.

6327             So I just throw that out as a possible solution to something which I think could save a lot of people a lot of extra effort.

6328             THE CHAIRPERSON: You are aware of the market entry test that the CAB has proposed?

6329             MR. G. RAWLINSON: Yes, but they are not very precise on what it should be, just saying that there should be a market entry test as I understand it.

6330             THE CHAIRPERSON: Well, they are apparently going to get back to us on that and you may want to feed your idea in with them if you can get consensus there.  Because you are basically talking not only about a licensing threshold but a call threshold.

6331             MR. G. RAWLINSON: Yes.

6332             THE CHAIRPERSON: So you may want to talk to them or submit something on your own.


6333             Thank you very kindly.

6334             MR. G. RAWLINSON: Thank you.

6335             THE CHAIRPERSON: Madam Secretary.

6336             THE SECRETARY: Thank you, Mr. Chairman.

6337             We would now call on the next participant, which is Blackburn Radio Inc. to come forward for their presentation.

PRESENTATION / PRÉSENTATION

6338             MR. COSTLEY‑WHITE: Thank you very much.

6339             Mr. Chairman, Mr. Vice‑Chairman and commissioners and Commission staff, my name is Richard Costley‑White, I am Chairman of the Blackburn Radio Group.  To my right is Sandy Green, President of Blackburn Radio.  To my left is Ron Dann, General Manager of our Sarnia, Ontario‑based stations.

6340             Blackburn has appeared before this body on many occasions, including the last review of radio policy in 1998.  We are pleased to participate once again in the Commissions review of the policies affecting commercial radio and we are grateful for this opportunity to address you today at the risk of message burn.

6341             Blackburn Radio operates ‑‑


6342             THE CHAIRPERSON: That's the Blackburn message?

6343             MR. COSTLEY‑WHITE: Blackburn Radio operates 10 radio stations in small Ontario markets.  In Southwestern Ontario we serve Sarnia, Chatham and Leamington and their surrounding counties and we simulcast one of our Chatham FM signals in Windsor.  From the Town of Wingham, Ontario we serve the numerous communities of mid‑Western Ontario, which is the broad five‑county region below the Bruce Peninsula.  We have attached a map of our service areas as Appendix A to this presentation for your reference.

6344             We are proud of the role our stations play in their communities and we are committed to building on our past successes.  As the Davey Committee noted in 1970, after my grandfather's appearance there:

6345                      "The Blackburn media are providing good service to their community we suggest, because their owner wants them to provide good service and is willing to spend to get it."


6346             Our approach has not changed.  I think a good illustration of this is the number of fulltime news personnel in our stations.  Sarnia, with a CMA population of 117,000 has seven fulltime news staff.

6347             I am proud to say that just this past weekend our News Director in Sarnia, Larry Gordon, accepted one of the most prestigious journalism awards in Canadian Broadcasting, the Gord Sinclair Award for Live Special Events at the Central Canada Meeting of the Canadian Radio‑Television News Directors Association in Sudbury.  And just as a note, the station's entry, Travelling with Heroes, is detailed report Jennifer Johnson's experiences while travelling with Canadian war veterans during the 2005 anniversary of the Liberation of Holland.  Jennifer's reports were heard on 1070 CHOK and we are enormously proud of Larry and his team.


6348             Turning to our Chatham‑Windsor operations we have 10 fulltime and two part‑time news staff and Cheer‑FM in Leamington with a CMA population of 63,000 has three fulltime news staff on a county stringer.  Wingham has a the compliment of eight fulltime news staff, including our news director and a dedicated farm news director overseeing a full agricultural reporting service and, in addition, we have six correspondents covering our counties.  On top of this, two of our Wingham program directors are, themselves, award‑winning news journalists.

6349             It was a Wingham correspondent who broke the story of the Walkerton water disaster from its origins and CKNX follows the story to this day.  Across all of our branches we continue to build our regional farm reporting capability as this is an area from which television has largely retreated in our area.

6350             If there is one overriding theme to this radio review it is transformation.  To survive, our industry must adapt to a much more consumer‑driven technologically complex marketplace and to adapt requires flexibility.

6351             We believe that the Commission can assist our industry in meeting its challenges.  The exciting thing is that none of us knows how it is all going to workout before we sit down together again for the next radio review.

6352             I am now going to turn to Sandy Green who will outline some of the continuing challenges Blackburn faces in maintaining a high level of service our communities have come to expect.

6353             MR. GREEN: Thank you, Richard.


6354             The CAB and other parties to this process have extensively researched and documented the challenge and burdens that radio faces generally, so we won't recite them again, thankfully.

6355             Blackburn faces all of these and we have some special challenges as well.  However, we would first like to re‑emphasize a general point and we have heard it this morning a number of times, I don't think I have to emphasize it too much, but we operate in small markets, we are a small‑market operator.  The fact of the matter is we are small business and, as a result, our overall profitability is much less than it would be for the standard radio operations in Canada.  Blackburn stations receive significant spill from large Ontario markets such as Toronto, Kitchener, London and Windsor.  Many of these business solicit local advertising revenue against us and run promotions in our markets.  This spill particularly affects our access to national advertising dollars.  Sarnia is the 32 size market in Canada and Chatham is number 33.


6356             Many national advertisers will buy London thinking they will cover the whole of Southwestern Ontario.  So, as an example, in the period 1997 to 2005 an average of 10 per cent of Blackburn's revenues was derived from national advertisers as compared with, for all English‑language radio, just under 25 per cent.  What this means is we are highly dependant on local revenue for our survival.  Our stations also feel the impact of powerful American signals.  Sarnia, for example, has 126 different listed stations that showed up in the last BBM survey.

6357             Detroit is a radio behemoth with 65 radio stations alone that offer every possible format choice.  Detroit also has a huge impact on Chatham and Leamington with powerful signals reaching into these markets as well.  In Sarnia, the Port Huron stations across the river also actively solicit foreign ‑‑ attract listeners to their stations and have active sales teams in our market.

6358             So as far as the immediate choices, along with our stations, there are more than 70 different stations in every conceivable format that can be listened to in our Southwestern Ontario market area.  The American signals provide most recognizable music in each of their formats.  Sarnia, Chatham and Leamington have many listeners that tune in for our local news packages and then switch back to U.S. stations for music.


6359             We are competing in heavily‑serviced markets against well‑resourced competition and we don't have the luxury of isolation.  As a result, Blackburn faces far higher out‑of‑market tuning to U.S. stations than the national average.  Specifically, I refer you to Appendix B in our report, which provides further data on this.  You will note that in the case of Sarnia, U.S. stations have a reach of 47 per cent of our central market and a nearly 20 share.  In Chatham, U.S. reach is 43 per cent with a 17 share in Leamington is exposed to a 60 percent reach with a 41 per cent share of tuning to U.S. stations.

6360             We want to bring as many of these listeners as possible back to local Canadian radio.  Our Wingham‑based stations also face very unique challenges.  CKNX and CIBU are unique enterprises, can only be viable with the collective support of listeners and advertisers throughout the market area Richard spoke about, the large five‑county region south of the Bruce Peninsula, which we refer to as mid‑Western Ontario.


6361             In this unique situation we have no one centre large enough to support a station, but rely on multiple service centres, towns like ‑‑ and I am sure you have all heard of these ‑‑ Listowel, Hanover, Goderich, Walkerton, Kincardine, Mount Forest and others, including Wingham itself.  In fact, the top 10 communities in our Wingham market area account for less than 60 per cent of our revenue, the rest comes from a constellation of smaller communities as well as some national and agency.

6362             So the big concern for Wingham is the licensing of low‑power and other FM stations, which would undercut our ability to serve this market which we have served for more than 80 years.  As an example, a low‑power FM station was recently approved in our market for Kincardine, which has resulted in a staffing level of three people at that new station.  With our experience, we know that this will not add meaningful substantive contributions to the community in the areas of news and local involvement.

6363             I am now going to turn it back to Peter ‑‑ or to Richard Costley‑White.

6364             MR. COSTLEY‑WHITE: Peter was my father ‑‑ is my father, he still is.

6365             MR. GREEN: He is still alive.

6366             MR. COSTLEY‑WHITE: He is still alive, yes, but he is not here.


6367             Mr. Chairman, we have reviewed the CAB proposals for Canadian content and we think they make sense, so we are pleased to endorse them, because we feel that the evidence shows that really a one‑size‑fits‑all approach to that tends to inhibit format diversity to a certain extent and so our endorsement of the CAB proposal is consistent with our support of the more flexible approach.

6368             With respect to our heavily‑impacted border stations, we would like to propose that the Commission include Sarnia, Leamington and Chatham in the exception to Canadian content accorded to Windsor.  This flexibility will strengthen us vis à vis U.S. signals against which we must fight and compete on a listener by listener, quarter hour by quarter hour basis as my colleague has pointed out.  And in many ways in this area we are a precursor to the effect of satellite radio, in effect Detroit has a giant satellite orbiting us and they are beaming down all manner of signals into our market.

6369             With respect to Canadian talent development, like most small market broadcasters, our commitment goes beyond the fees that we remit.  We hold local talent contests, concerts featuring Canadian artists, on‑air promotion of local and national talent and broadcasting scholarships, including the Martha Blackburn Scholarship at Fanshawe College in London, to name just a few of our initiatives.


6370             We hope the Commission will take these expenditures into account, allowing more local initiatives to count as CTD and the bonus fees based on the substantial effort and initiative we put in beyond just cutting a cheque and sending it to Toronto.

6371             With respect to common ownership, and this echoes the comments and the discussion that happened with Mr. Rawlinson and his colleagues, we believe that there may be exceptions where an operator in a small market with a proven commitment to community service should be permitted to acquire more than the currently mandated number of stations.

6372             This will improve and broaden local service while enhancing local economies of scale and we feel this will be the benefit of our audience.  We therefore propose that any revision in the common ownership policy should permit small‑market radio to consolidate or to apply for additional licenses if available in our markets.


6373             Finally, we urge the Commission to give careful examination to low‑power and other seemingly low‑impact applications for their affect on small markets.  We believe that the Commission needs to place emphasis on market capacity.  Over‑licensing leading to over‑supply of advertising availabilities is a threat to all of Blackburn's stations.  And, as we have seen in the case of Wingham, low‑power FMs could, town by town, undercut and 80‑year broadcasting legacy.

6374             For the benefit of your reference, I would summarize what I have just said, but I will just pass over that.  To conclude, Mr. Chairman, like Rawlco and other small‑market broadcasters, we are committed to providing radio that isn't just a mirror or a jukebox, we believe it is our role to play a multifaceted and dynamic function strengthening the vital linkages and providing leadership in our communities.  We believe that greater flexibility will enable us to respond more effectively to the many pressures that we face and that we will continue to face during this process of transformation.

6375             In partnership with the Commission, we believe that we can maintain a meaningful presence and that our audiences will continue to be served well.  Thank you.

6376             THE CHAIRPERSON: Thank you very much for your presentation.


6377             Now, I had one question ‑‑ I had a number that your oral presentation have actually answered ‑‑ but I do have one remaining question and that is in your written submissions at paragraph 14 of the executive summary  and you repeat it later on, you say that this not the time for the Commission to increase CanCon levels to 40 per cent, maintaining the 35 per cent status quo is acceptable and then you add, "But much preferable would be a gradual rolling back of CanCon levels for broadcasters as more effective methods for developing Canadian music are pursued."  I was wondering what you meant by that and how you would elaborate on that?

6378             MR. DANN: In our market, simply because of the amount of out‑of‑market tuning that we have to deal with and, as Richard refers to it as the behemoth of U.S. programming, we have found that we have had to be very careful in the introduction of new Canadian music into our formats, although we do do it, we do it on a consistent level.  In fact, at any given time there is four emerging artists on both of our FM music formats that we are dealing with.

6379             I think, more than anything, what we need to have in our market specifically is the flexibility to at least address it as we go.  We have done well with 35 per cent over the last couple of years.  It took us seven years to build our market share to the point where actually in‑market tuning to our three stations was on the positive side of the ledger for the Canadian radio ‑‑


6380             THE CHAIRPERSON: But, Mr. Dann, I don't mean to interrupt you, but I get that part, the rolling back part.  The part I was wondering about is the phrase, "as more effective methods for developing Canadian music are pursued."  It is that part that I wonder if you could elaborate.

6381             MR. DANN: Certainly one of the things that we think is advantageous that we certainly heard from, you know, the record companies that we deal with is the internet.  We have been very active in working with record companies in their promotion of new Canadian talent on the internet.  We think that is one of the emerging technologies, and certainly it has been echoed very much this morning, on the number of new Canadian acts that are being introduced on the internet.  We have worked with Canadian record companies to make sure that that access is available to our listeners and we do actively promote internet sources that allow them to listen to new Canadian music.

6382             THE CHAIRPERSON:  Can you point to any?  I don't think you will find the information is there on Iceberg, for example.


6383             MR. DANN: We do it on an artist by artist basis.  For example, Sam Roberts, who is an emerging Canadian talent, we directed people to his website for an opportunity to listen to the new album in its entirety.  While we feature the new individual singles themselves, we also encourage people by giving Sam Roberts actually air time to promote his active website.  We have done that with the band Mobile, we have done that with a couple of Canadian acts that have expressed an interest in having people checkout their website not only for the individual music itself, but for whether touring, their background information, those kinds of things.

6384             One of the things that we have actively done in Sarnia ‑‑ and I am sure Canadian broadcasters across the country do the same thing ‑‑ is when a new act comes out that we think is strong we will actually do interviews with them and do one hour of programming based on their actual album.  This coming June our radio station, CHKS, is celebrating a seventh anniversary.  We have Mobile and Stabilo, two emerging Canadian acts, that we are going to bring into our market at no charge to our listeners to expose them to their music.  We have 800 people ‑‑

6385             THE CHAIRPERSON: But you been doing that presumably for a long time, like Blackburn has been promoting those kinds of artists ‑‑


6386             MR. DANN: Not as aggressively as we have on the rock station over the last seven years.  Yes, that has been a ‑‑

6387             THE CHAIRPERSON: Last seven years ‑‑

6388             MR. DANN: ‑‑ changing dynamic with our ability to program a rock radio station.

6389             THE CHAIRPERSON: Okay, thank you very much.  Commissioner Pennefather.

6390             COMMISSIONER PENNEFATHER: Just a quick question.  I noticed in both your written presentation and today you mention a bonus system related to Canadian talent development.  Now, I understand completely the theme here is the recognition of local initiatives.  Would it be possible for you to get back to the Commission with some concrete examples of how the bonus system that you propose here would work?

6391             MR. COSTLEY‑WHITE: Yes, absolutely.  Yes, happy to do that.  Thank you, Commissioner.

6392             COMMISSIONER PENNEFATHER: Thank you.

6393             THE CHAIRPERSON: Thank you very much, gentlemen, for appearing before us and answering our questions.

6394             We will break now and resume at 1:45.  Nous reprendrons à 1h45.

‑‑‑ Upon recessing at 1246 / Suspension à 1246


‑‑‑ Upon resuming at 1348 / Reprise à 1348

6395             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

6396             Madame la Secrétaire.

6397             LA SECRÉTAIRE:  Merci, monsieur le Président.

6398             We would now call on the next participant, The Jim Pattison Broadcast Group, to make their presentation.

6399             Mr. Arnish, you have ten minutes for your presentation after introducing your colleagues.

PRESENTATION / PRÉSENTATION

6400             MR. ARNISH:  Thank you, Madam Secretary.

6401             Good afternoon, Mr. Chair, Members of the Commission and Commission staff.

6402             My name is Rick Arnish.  I am President of The Jim Pattison Broadcast Group Limited Partnership.


6403             With me today here in Gatineau is our outside legal counsel Chris Weafer from the Vancouver law firm of Owen Bird.  Chris has also served as an adjunct professor at the University of British Columbia Faculty of Law and at Simon Fraser University teaching in the areas of communications law and broadcasting policy.

6404             Our broadcast group has been an active participant with the Canadian Association of Broadcasters and endorses the written submissions filed by the CAB in this proceeding.

6405             That said, we believe that it is important for the Commission to be able to get direct access to broadcasters in a public forum, to ensure full, open and transparent dialogue on the issues that are of importance to the Commission and to licensees.

6406             We generally believe the existing regulatory framework for commercial radio is effective and working well for both the industry and Canadian artists.  While we value the partnership that we as broadcasters have with the recording industry, we fundamentally believe that a healthy radio industry is critical to the success of a healthy Canadian recording industry.

6407             Changes to the regulatory structure which on the face appear to be beneficial to Canadian artists, if harmful to the Canadian radio industry will also be harmful to Canadian artists.


6408             We will focus on four primary topics today raised by the Commission in the Public Notice calling this proceeding to review the state of commercial radio in Canada.

6409             The Commission asked the question:

Is it in the public interest to ensure a healthy independent sector in radio; that is, radio stations operated by the licensees other than the six largest radio groups in Canada?

6410             We find ourselves in a rather unique position in responding to this question in that we have emerged from a small independent radio player to become western Canada's largest privately‑owned radio broadcast group.

6411             In our process of growth, we in many cases acquired independent operators which were struggling and unable to respond to either difficult economic or operational challenges.

6412             We firmly believe and we believe our audience and the Canadian music sector would confirm that we have in all cases increased the level of management expertise, financial commitment and enthusiasm to the operation of the stations which we acquired from independent operators.


6413             It is our submission that it is fundamentally wrong for there to be an assumption that an independent operator may operate a better or more unique radio service than would a large company.

6414             The Commission should not conclude that because an entity is an independent operator, they will somehow have a better or unique model which would somehow add unanticipated benefits to the Canadian broadcast system.  At the end of the day, we are all in a creative business seeking to attract audience in an increasingly competitive market.

6415             The market is particularly competitive when it comes to the delivery of music services.  The strength of larger players and their ability to rely on experience and resources to improve the quality of radio in a market is something which should take, at a minimum, equal consideration to criteria around supporting independent ownership.

6416             If we were talking about the news business or newspapers, clearly a distinct editorial voice may play an important role.  In most applications for a radio station licence, applicants are not filing applications to create new editorial voices but rather new formats in the delivery of music.


6417             We do not believe that independent radio station ownership in and of itself is a criteria which should be considered by the Commission in assessing new licences to a market.  We submit that in all circumstances the best application should be what is approved by the Commission taking into account all factors.

6418             The next issue which we will respond to is the Commission's comment on small market radio stations and specifically the question asked:

What particular challenges are faced by small market stations, both those owned by independent operators and larger station groups?

6419             As has been discussed in this proceeding, generally speaking, small market stations are not as profitable as large market stations.

6420             We as a company have had the good fortune in recent years of being in small markets that have generally seen economic growth and success.  We are pleased that we are now participating in a positive economic cycle in western Canada.  However, it was not that long ago that the resource‑based economy in British Columbia and some of the agricultural areas of Alberta were struggling.


6421             In central Canada less positive economic indicators are impacting regional and national advertising revenues in 2006.

6422             As the Commission is aware, the tide has turned in western Canada and as a result we are seeing more applications for new licences in smaller western Canadian cities.  The Commission has generally chosen to issue new licences in those markets, and we have had to adapt and compete with those new services.

6423             The Commission needs to understand that in competing, one of the key challenges we face is maintaining our news and spoken word programming in those smaller communities.  We believe strongly in the importance of a news and information voice in a local market.  We also believe that it is in effect what creates the unique position for radio and the new world of iPods, file sharing and satellite radio.

6424             Local presence and local news and information is fundamentally key to the unique platform of local commercial radio.  However, that is not an inexpensive platform.

6425             We are challenged with maintaining acceptable levels of profitability against balancing the cost of the most expensive aspect of our operations, news and information services.


6426             We have been concerned with the trend towards increased numbers of licences in smaller markets, which may result in a temporary increase and a diversity of formats to a market but equally increasing pressure on the ability to deliver the more expensive programming, spoken word.

6427             In many cases diversity of format is not maintained as the new player struggles to achieve profitability.  We believe that this is a fundamental public policy issue for the Commission that needs to be considered.

6428             In this area of consolidated news voices, the decline of local news and information on radio has been significant in western Canada.  We work to maintain that presence and we will continue to do so, but the Commission needs to understand that increased music formats in a market resulting in more owners splitting a revenue pool amongst more players will inevitably result in an impact on the amount of news and information programming in those smaller communities.

6429             We would ask that the Commission take that matter into consideration when looking at the licensing of new services into smaller markets.


6430             We would also request that the Commission take a longer term view in reviewing the economics of a market before adding new services to take into account the cyclical nature of many smaller communities.

6431             Clearly one measure which we strongly agree with, which would assist local small market broadcasters fulfil their public service obligations with respect to news and spoken word programming, would be to lessen the restrictions on the number of licences which may be held by a company within a small market.

6432             We submit that there should be less restrictions on the number of licences held in a smaller market, which would enable incumbent players to add more diversity of music to a market while not reducing the revenue and thereby increasing the possibility of maintaining spoken word programming in those markets.

6433             We submit that in a market of less than 150,000 people the Commission should give a priority to incumbent licensees over new applicants to apply for the opportunity to service the market with new formats.  In markets of this size the primary concern for the Commission should be around adding diversity of format to the market and not necessarily the number of owners in a market.


6434             Clearly an incumbent operator will not duplicate existing formats in a market if awarded a licence to service the market.  This is clearly an effective way to ensure increased diversity of Canadian music on radio in different formats in smaller markets, thereby assisting the competitiveness of radio as against satellite radio, internet radio and iPod tuning.

6435             Allowing an incumbent operator in a small market multiple licences will create a better opportunity to maintain the competitive nature of  Canadian radio and therefore Canadian music in these communities, as well as preserve employment opportunities in the industry.

6436             The next issue I would like to address is the Commission's question:

Would an increase in the minimum Canadian content requirement for Category 2 Popular music to 40 percent result in the broadening of the play list for Canadian artists, or are there other more effective ways of achieving this objective?

6437             Members of the Commission, you are not in the Canadian radio industry if you do not support Canadian music.


6438             Notwithstanding the long‑standing discussions around the appropriate percentages level of Canadian artists aired on Canadian radio, the Canadian radio industry and the Canadian music industry are partners, which can only achieve success by supporting each other's success.

6439             Clearly it is not in the interest of Canadian radio to have levels of Canadian content which lessen our ability to compete against unregulated audio services.

6440             The phenomenal success of the iPod product and the potential loss of a significant sector of the Canadian youth population from radio is an issue of material concern to broadcasters and the music industry alike.

6441             There is no other medium that delivers music service which has the programming challenges which says 35 percent of what you need to play has to come from this music catalogue.  We do not believe that an increase to 40 percent will be in the interest of the Canadian music industry of the Canadian broadcasting industry, as further constraining the flexibility of programming in Canadian radio is not in the interest of increasing the attractiveness of Canadian radio to existing and new audience.


6442             In our view, this approach will potentially result in a decline of the competitiveness of radio as against unregulated audio services.

6443             Finally, the next area we would like to comment on is the CTD commitments made when applying for new radio licences.

6444             We believe that the Commission should not place a cap on the amount of CTD contributions that applicants are expected to make when applying for a new licence as proponents should be able to afford their best application which delivers the maximum benefits to the Canadian broadcasting system in all areas the Commission considers when looking at new licences.

6445             With respect to whether benefit should be directed to the regions or markets in which a station is being applied for, as a regional western Canadian player we have taken particular pride in attempting to deliver CTD benefits in the region in which we operate.

6446             We know that this has been a source of frustration for western artists; that they have perceived, whether correctly or not, that a disproportionate level of CTD contributions have gone to central Canadian based funds, which do not always distribute monies equitably across the country.


6447             While we do not believe the Commission should involve itself in allocating funds to regions, we do believe the Commission should be responsive to applicants who show a sensitivity and a commitment to the region in which they intend to provide service.

6448             Mr. Chair and Members of the Commission, thank you for your time today.  We appreciate being in front of you and look forward to responding to any questions you may have.

6449             THE CHAIRPERSON:  Thank you.

6450             Commissioner Pennefather.

6451             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

6452             Good afternoon, gentlemen.

6453             I am going to just clarify some of your comments on Canadian Talent Development and I had one in the similar point that you make about benefits in the region.

6454             Let me start with your written intervention which on page 5, in the context of talking about CTD commitments when applying for a new radio licence, at the very bottom of the page:


We do not understand why these types of tangible benefits aren't considered eligible where transfer of ownership occurs but not where a new licence is issued.

6455             I was assuming from that that what you were getting at was to apply the same criteria in both instances.

6456             MR. ARNISH:  That is correct.

6457             COMMISSIONER PENNEFATHER:  So the criteria you are referring to, the 1995‑196 description, is that still what you think should apply as benefits?

6458             MR. ARNISH:  We are very happy in the regulations as they are set out today, in regard to either applying for new licences or in the case of acquisitions.

6459             We think certainly that as the world changes and evolves, there are always going to be new opportunities that are going to come upon us.

6460             I can give you an example of something that we talked about with the Commission when we applied for a licence in Calgary at the hearing recently.


6461             We have created this new fund under the Pattison umbrella called Save the Music Foundation.  The monies that we wish to allocate, if we are successful in being granted a licence, are destined to go toward making the best of the best in high school music; have the resources and the access to funding to certainly help them become new and emerging Canadian artists.

6462             And that is certainly the dialogue that we have here at the hearing in Gatineau this week.  We are talking about new and emerging artists.

6463             Mr. Weaver may want to have a comment on this as well.

6464             We certainly believe these types of new initiatives need to be looked upon by the Commission as something that is exciting, good for Canada's future and good for Canada's youth.

6465             COMMISSIONER PENNEFATHER:  I think that is clear and I think, as you say, there are a number of examples.  One of them is that: in other words, that that description, which includes education, scholarships, not necessarily music related, are included as acceptable in the benefits.


6466             MR. WEAFER:  In this specific example that we are referring to here, the issue is around employment equity initiatives that have been put forward and whether those get categorized as tangible benefits.

6467             COMMISSIONER PENNEFATHER:  Yes.

6468             MR. WEAFER:  The position being that if they are investments that benefit the industry, they should be considered in that category.

6469             The Act has a broad number of objectives for the Commission to pursue, and we think we should be able to pursue those benefits in what is put forward in an application for transfer of ownership or a new licence.

6470             COMMISSIONER PENNEFATHER:  I think that is clear.  Your rationale is clear.

6471             Obviously there are some who would say no, it must be more specifically music related.

6472             The other aspect of your comment which you say today, I think I can summarize as saying you should be given credit or benefits should count where they are in the regions, and it has been frustrating for western artists; that they perceived, whether correctly or not, that a disproportionate level of CTD contributions have gone to central Canadian based funds.


6473             Let me start by asking:  Are you comfortable with or are you in agreement with the CAB proposal that in fact all contributions to CTD go to a consolidated fund, called the Radio Starmaker Fund, and then be reimbursed via FACTOR, Musique Action, if that is the case, and that 1 percent would be left as discretionary?

6474             MR. ARNISH:  We don't have any particular concern over that.  We would agree with the CAB's presentation on that.

6475             I always look at it this way.  If there is some way that you can cut out administrative costs ‑‑ I do a lot of volunteer work with a lot of boards in the interior of British Columbia, particular Kamloops where I am from, and it is always on fund raising.

6476             We are always concerned about the issue of what are the administration costs when you go out to collect a dollar.  Is it 20 cents on the dollar or is it 10 cents on the dollar, or whatever the case may be.

6477             If there is any way that we can reduce the administration costs in both these funds and that means it goes back into the system, I think that is a real positive for Canadian talent and the funds that they need to then get to that next level as well.


6478             COMMISSIONER PENNEFATHER:  I ask just because you raise the point about western artists' concern.  And this would bring more funds to a central fund, let's say for the sake of argument a central Canadian fund.

6479             MR. ARNISH:  We were talking about this when we were looking at everything related to this hearing, and we certainly would like to have that opportunity, as perhaps other western Canadian broadcast groups may as well, in establishing other funds that western Canadian artists can have access to.

6480             I guess the frustration that we hear from some western Canadian artists ‑‑ it is certainly not from all of them ‑‑ they are saying that they have no access.  They can't get this access to the FACTOR funds, to the Starmaker Fund at times as well, because they may perhaps not meet the criteria that is set down by FACTOR and by the Starmaker Fund or Radio Fonds.

6481             We think if there is another opportunity for companies like ourselves to perhaps contribute to the Starmaker Fund and FACTOR as well, but also create our own fund in these areas, again that is something else that is certainly going to enhance and improve the Canadian music system.

6482             COMMISSIONER PENNEFATHER:  Okay, I take your point on that.


6483             Just one last comment, then, back to the point of local initiatives and, as you just said, create your own funds.

6484             There has been discussion during the hearing and certainly in the submissions regarding transparency, accountability and monitoring.

6485             In the case of the local initiative, if that component was in fact well defined by the Commission as to what is eligible, do you have any comment on what kind of reporting or what kind of accountability would be required?

6486             MR. ARNISH:  Well, personally ‑‑ and others may be have different comments ‑‑ I don't think that the system has to be reinvented.  We have to report annually our CTD contributions and our annual returns to the Commission.

6487             I could see that maybe there is an addition in that area, where if you have your own established fund for artists, that you have a very straightforward component to that as far as the reporting structure goes:  This is how much money is in the fund for this year, over a seven‑year period.  This is the money that was dispenses.  Here is who it went to.


6488             I don't have any problem having a straightforward accountability process to make sure that the Commission is satisfied that this money has gone to where it should go.

6489             And as we follow through on our commitments, we would definitely dispense that money as we said we would.

6490             COMMISSIONER PENNEFATHER:  Thank you very much, Mr. Arnish.

6491             MR. ARNISH:  Thank you.

6492             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

6493             THE CHAIRPERSON:  Monsieur Arpin?

6494             COMMISSIONER ARPIN:  Could I pick up on your last sentence.

6495             I think the concern that we have is not that you haven't sent the money and you are not accountable for it.  It is the recipient.  Have they used the money for the purpose for which the money has been given?

6496             We don't have any type of documentation regarding the CTD commitments that are made by the broadcasters.  The broadcasters pay out, but what happens next?

6497             Has it achieved the goal that it was supposed to have achieved?

6498             That is what is of concern here.


6499             MR. ARNISH:  I clearly understand where you are coming from, Commissioner Arpin.

6500             As I say, we are hearing from artists in western Canada that they don't have easy access to these funds.  And there is a lot of money in the pool, there's no doubt about it.

6501             Maybe they have to do a better job of accessing the funds themselves.  It shouldn't just all fall against Starmaker or FACTOR.  Some of these artists have to do their work as well to get access to these funds.

6502             MR. WEAFER:  Commissioner Arpin, I think it is not like there are a lot of funds available.  I think broadcasters, in my experience, are very selective in terms of who the money goes to because there is a long list of people who want it.

6503             In receiving those funds, they are generally quite anxious to please the broadcaster and meet the criteria the broadcaster has to meet.

6504             So I think it is a bit of a red herring.  I do think that people are accountable.  When a broadcaster is funding an entity that needs funds, they generally wish to use those funds appropriately.


6505             So to create more review or another level of oversight I don't think would be that efficient.  I think broadcasters make sure the money gets spent properly by the entity that receives it.

6506             COMMISSIONER ARPIN:  Thank you very much.

6507             THE CHAIRPERSON:  Thank you very much, gentlemen.  Those are our questions.

6508             MR. ARNISH:  Thank you.

6509             THE CHAIRPERSON:  Madam Secretary.

6510             THE SECRETARY:  Thank you, Mr. Chairman.

6511             I would now call on the next participant, Rogers Media, to come forward to make their presentation.

‑‑‑ Pause

6512             THE SECRETARY:  Mr. L. Merson is representing Rogers.

6513             I would ask if you could introduce your colleagues, and you will have ten minutes for your presentation.

PRESENTATION / PRÉSENTATION

6514             MR. MERSON:  Thank you very much.

6515             Good afternoon, Mr. Chair, fellow Commissioners and Commission staff.

6516             I am Rael Merson, President of Rogers Broadcasting Limited.


6517             Thank you very much for the opportunity to appear before you as part of this important proceeding reviewing the Commission's commercial radio policy and examining the public policy objectives for our industry.

6518             Before I get to the key themes of our presentation, allow first to introduce our panel.

6519             Beginning from your far left and my far right is David Neal.  David is Vice‑President of Services Development for Rogers Communications.  David is responsible for the content and all the new digital services that run across all of the Rogers networks.

6520             Jackie Donaldson.  Jackie is News Director at News 1130, our all news radio station in Vancouver.

6521             Sitting next to me is Chuck McCoy, Executive Vice‑President of Programming.  Chuck is responsible for the programming and marketing at all 46 of our radio stations across the country.

6522             On my left is Gary Miles, Chief Executive Officer of Rogers Radio.

6523             On his left is Linda McErlain, General Sales Manager at 680 News, our all news radio station in Toronto.


6524             Next to Linda is Kirk Nesbitt, Vice‑President of Radio Engineering.

6525             On his left is Tony Viner, President and Chief Executive Officer of Rogers Media.

6526             And on his left is Alain Strati, Vice‑President of Business and Regulatory Affairs at Rogers Media.

6527             Thank you again for allowing us to appear.

6528             The purpose of our presentation today is not to repeat many of the points we have already made in our written submission but rather to focus on what we believe are the three key themes.

6529             First, further increases to Canadian content we believe are not effective public policy.

6530             Second, we believe a more important aspect of public policy is the nurturing of emerging Canadian talent.

6531             Third, we believe radio needs a digital future.

6532             We believe Canadian content at 35 percent has created ineffective radio programming patterns and emphasis on the sheer volume of Canadian music has not generated a broader array of Canadian stars and emerging artists.


6533             First, it has contributed to a sameness of sound as broadcasters programming different formats often play the same Canadian songs in order to meet the higher requirement.

6534             Second, it has led to the burning of highly popular Canadian songs, harming both the artists and the broadcasters.

6535             And third, it has not resulted in an increase in Canadian music sales, which have remained constant about 16 percent throughout the period.

6536             Any further increase in Canadian content would only exacerbate these concerns.  Stations would carry more of the same Canadian artists and Canadian songs across an even wider range of formats.  The burn effect would only intensify and Canadian music sales would remain at their seemingly constant level.

6537             It is not that our listeners don't want Canadian music.  They do.  It is just that the Canadian content levels are inflated in relation to the level that is otherwise expected by our listeners when they tune into our stations.

6538             Canadian music represents about 16 percent of music sales.  As a result, shelf space reserved for Canadian content already represents more than double the demonstrated demand for Canadian music at the retail level.


6539             As successful radio programmers, we have the expertise and knowledge of what our listeners want to hear.  We find it very hard to expand current play lists.

6540             Today's new media challenges are for the first time eroding the long‑held core advantages of radio.  Radio is no longer the sole source for music or local content.  Audio content is now easily deliverable over a growing array of platforms, devices and receivers, allowing users to time shift and play shift their audio content and to easily share it with others they know or have not yet met.

6541             As radio programmers, the test of the health of our relationship with the public is time spent listening, and by that test we are failing.

6542             We know with certainty the time spent listening to radio has declined in every single demographic group over the last four years.

6543             The more we tie the hands of our programmers' ability to respond to the needs of their audience, the more certain we are that that decline will continue and accelerate.


6544             In this context, with the advent of unregulated parallel competition we are alarmed by thoughts of a further increase to Canadian content on radio.  We believe that the focus must shift away from strict consideration of Canadian content levels.  The real question is not simply whether Canadian radio stations can afford an increase to 40 percent.  Specific levels for Canadian content are not ends in and of themselves.

6545             We believe that a re‑examination of the radio policy suggests that providing shelf space for new and emerging talent is much more important than providing shelf space for well‑established talent.  We are highly supportive of the industry's plan to provide incentives for emerging Canadian talent and believe that they are more consistent for the public's interest.

6546             Gary.

6547             MR. MILES:  These are the underlying motivations behind our Smart 35 Canadian content proposal.

6548             With incentives in place, the Commission will engage and challenge radio programmers, harnessing their creativity and effort to promoting emerging Canadian talent.


6549             Smart 35 will also provide radio with the necessary degree of programming flexibility and adaptability.  The reality is that most radio formats would not be able to take full advantage of any significant reduction in Canadian content.  To do so, these stations would have to devote at least 20 percent of their play lists to emerging Canadian artists.

6550             Many, given their library format, such our JACK format, would likely continue to focus on established artists and past releases.  For them, Smart 35 will likely mean maintaining Canadian content at their current 35 percent level.

6551             For others, though, the Smart 35 proposal will provide the motivation and impetus to carry more emerging Canadian artists.

6552             We also believe Smart 35 is not enough.  In conjunction with regulatory incentives for emerging artists, we believe we need to support Canadian music with funding at the grassroots level and we need to do this in a way that includes targets and measures of success and accountability.

6553             As we stated in our submission, we also recommend that FACTOR funding remain at its current levels.


6554             More CTD money is preferable to more CanCon airplay.  CTD funding has provided a very real and tangible benefit for emerging Canadian artists and additional resources will put money directly into their hands.

6555             Its positive impact is also not limited to radio, as is the case with more CanCon.  CTD funding is platform agnostic, allowing Canadian artists to promote and distribute their music across any and all media platforms.

6556             Taken together, we believe that regulatory incentives for radio airplay and CTD funding will more specifically target the business imperatives of the music industry and the policy objectives of the Commission.

6557             Rael.

6558             MR. MERSON:  Radio does need a digital future.

6559             At the last radio review we stood before you and told you that radio needed a digital plan.  We were right.  We did need a digital plan.  What we failed to understand at the time was that technology was unfolding more quickly and that it would provide listeners with many more options for the receipt of audio content.


6560             The predominant position held by radio on its listeners in the analog world has been broken by wired and wireless broadband delivery.  Streams, downloads, podcasts, pier‑to‑pier, DVBH, MobyTV and satellite radio were terms which we had never heard before.  We never anticipated that iPods, cell phones and organizers might supplant radio as the receivers of choice.

6561             And satellite radio has turned radio's basic business model upside down by subsidizing the roll‑out of receivers.

6562             The word radio might well be consigned to the scrap heap of history as we embrace the notion of audio content being delivered in streams or by download and debate whether that broadband content should be received wirelessly or by wire.

6563             So what is our view of the future?  We don't have the answers but we do have a view.

6564             It is shaped by three fundamental beliefs.

6565             The first is that all communications will converge on the internet protocol.  In a post‑IP world the barriers that insulate each medium will disappear.

6566             Second, multimedia capable devices will emerge sooner rather than later, operating much like today's PCs with separate operating systems and application software.  Application drivers will simply be downloaded on an as‑needed basis.


6567             Third, we believe that wireless will become ubiquitous as coverage expands and as spectrum utilization improves.

6568             How can we marry these beliefs with the notion of DAB, HD radio and satellite radio?  Probably not very well.

6569             By definition, these are closed proprietary systems that use proprietary devices.  It will likely not be possible for the radio industry in the digital world to replicate the market and the audience share that it holds in the analog world.

6570             We are making some progress by developing our web platforms, by building communities of interest around our stations and brands and by making our offerings available on multiple media.  But we also need to stake our claim in the digital world.

6571             What is key at this stage of the digital revolution is that we experiment with differentiated content in the new medium.  We need to expand our relationship with Canadian audiences by rolling out new services now so that when the technology catches up, they continue to listen to Canadian voices and Canadian content.


6572             The L‑Band spectrum may be a big part of staking our claim.  While it might in the future not be used for the broadcast of DAB, it might well become the spectrum to which radio evolves in this post‑IP multimedia world.

6573             We support the CAB's position for the need for a very light regulatory hand in the digital world and are committed to the need for sustained efforts to experiment with new formats and to continue to try to reach Canadian audiences within this new environment.

6574             In conclusion, increasing Canadian content levels in radio will only deliver diminishing marginal returns for the Canadian music industry.  It will do very little to tackle the number one problem facing industry, that of providing support to emerging Canadian artists.

6575             These decreasing marginal benefits must be weighed against the increased constraints that higher levels place on the ability of radio operators to provide attractive programming for our listeners and these constraints come at a moment when new technologies and new platforms create risks and uncertainties for the radio industry.


6576             The music industry states that because the radio industry has been profitable we should increase the exhibition of Canadian music and asks you to ignore the listeners.

6577             We think we should instead creatively find ways to ensure that our profitability can best be deployed to assist new and emerging talent while ensuring that the radio industry can respond to listeners' expectations.

6578             The relationship between the Canadian radio and music industries has never been so important.  The increasing availability and use of other digital options and other non‑regulated competitors means that we must more than ever work together to ensure that both of our industries remain strong supporters and suppliers of Canadian music and Canadian culture.

6579             Thank you very much for your time and attention and we welcome any questions that you may have.

6580             THE CHAIRPERSON:  Thank you, Mr. Merson, ladies and gentlemen.

6581             We will start with Commissioner Pennefather.

6582             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.


6583             Good afternoon.  I am going to ask you to clarify your comments on Canadian talent development if possible and I guess I will start with the written intervention.  It may have been clarified in today's comments but I guess I will have to pick a little bit at it.

6584             You say existing FACTOR funding could be reallocated back to FACTOR.  So we start at the beginning with the Radiostar Fund and the existing FACTOR funding is reallocated back to FACTOR.

6585             I think you have reiterated that today.  You used the term "current level."  The 2005 FACTOR Annual Report indicates closer to $5 million.  Are you talking about that as the current level?

6586             MR. MERSON:  Thank you, Commissioner.

6587             We were speaking mostly about the annual licence base contributions to FACTOR.

6588             Our view of the business really is ‑‑ and I think you have heard over the last couple of days about an ecosystem that really governs the music industry as well as the radio industry ‑‑ in the sense that there is a need for grassroots intervention perhaps, there is a need for commercial support perhaps, and then there is the question of an industrial policy.


6589             We are proud of FACTOR.  We are not ‑‑ FACTOR was created in the Rogers boardroom 25 years ago and we feel like it is going through a little bit of a midlife crisis and probably could stand a reexamination of its ambitions and its mandate and its accountabilities.  But fundamentally we do see a role in this environment for the support of a grassroots initiative.

6590             So we, both in our written submission and orally today, sort of wanted to reemphasize a basic belief that said there is a role for grassroots support in this environment.  We think it is very consistent with a focus on developing and nurturing emerging Canadian talent and we think FACTOR in a reconstituted form could supply that support.

6591             COMMISSIONER PENNEFATHER:  Well, as you say, I think we have had this conversation with other commentators, that if it ain't broken, don't fix it.  It has been doing a job.  It is a grassroots fund with a very different mandate.


6592             As you have so well said, the three components are important.  They are there.  It is not as grassroots as some commentators would like but it is a grassroots fund.  It receives significant funding from the government as well as from broadcasters, which brings with it a different form of planning and accountability and so on, as we just discussed, to western and eastern and central and northern Canadian artists.

6593             So I take your point that you ‑‑ I think what I see here is that your concern is to maintain support for FACTOR, bottom line, is that correct?

6594             MR. MERSON:  Absolutely.  It is to retain support for grassroots support of emerging Canadian talent.  We think FACTOR as an institution has done an admirable job of doing it.

6595             We think it is going through a bit of a midlife crisis and, as any other business, could stand a little reexamination of its mandate, its accountabilities, its reporting structure.  But our intent is to go back in, spend a bit of time and try to see if we can redefine those accountabilities and those mandates hand in hand with FACTOR.

6596             COMMISSIONER PENNEFATHER:  And perhaps ‑‑ CRIA mentioned a working group to look at accountability monitoring.  Perhaps that is a solution as opposed to necessarily consolidating everything in one and then back to FACTOR again.  Perhaps that is another approach; would you agree?


6597             MR. MERSON:  We would support the notion of review completely.  I would have to sort of count out any possible solution at this point in time because we have had some discussions with the music industry and they are open to some rethinking of their mandates and some repositioning of what it is that they are doing.

6598             So I do think there is a lot of goodwill on both sides.  There is demonstrated interest in a redefinition of the mandate and I think we would be highly supportive of it.

6599             COMMISSIONER PENNEFATHER:  There was a ‑‑

6600             MR. MILES:  Commissioner, if I may just ‑‑ sorry ‑‑

6601             COMMISSIONER PENNEFATHER:  Sorry, Mr. Miles.

6602             MR. MILES:  ‑‑ talk for a second on this one.

6603             I think we have given well over $6 million to FACTOR since we began.  We have got sort of the plaques.  But the issue is that when we first started I think the funding was about $1.8 million.  I think it is up to about $2.5 now.  We have had new licences come onstream and things like that.  So that is sort of the part off of the CAB decision.


6604             But the perception, unfortunately, amongst the broadcasters ‑‑ programmers, and Chuck may want to speak to this ‑‑ is that there appears to be a rash of material that comes into the radio station that, to be quite frank about it, is not of any material use at all.

6605             And I think it is a bit of that disconnect that the new accountability and things that we get back in will help provide a whole big catchment area and then some other artists that are more suitable to moving along and then the artists that are funded by Starmaker.

6606             COMMISSIONER PENNEFATHER:  No, I take that point.  You can look at different structures but I think keeping our eye on the fact that we seem to all agree, we meaning the way the current system is against the proposals I have seen, that there are three different levels and those three different levels seem to be necessary.  Whether each has its mandate clear, whether the annual reports demonstrate what we wish, I think I am hearing you.

6607             There is another sentence in your written submission here:


"While still difficult to predict or project the shortfalls, meaning shortfalls to FACTOR as we look at the transition as proposed by the CAB, we still firmly believe that radio broadcasters should consider as an objective of our overall CTD plan additional funding commitments to alleviate the likelihood or impact of any such shortfalls."  (As read)

6608             What are we to take from that?

6609             MR. MERSON:  I don't have it before me but I think in the material is a really good chart that the CAB prepared that really describes the sources of funding for FACTOR and the sources of funding for Starmaker and it makes an estimate of their uses based on their prior allotments and their prior commitments.

6610             They then went on and projected forward what the level of benefit coming to both organizations was over the next couple of years and what the required funding shortfall might actually be and I think concluded as part of that analysis that sufficient funds existed in both organizations over the course of the next three years to fully fund any commitments that they might make.


6611             So what we wanted to say is if, as a result of a re‑analysis of the mandate of both FACTOR and Starmaker and for Radiostar and Musicaction, we found that there was an additional objective that we might come up with which might sort of fit within the mandate of the radio industry and fit within our objectives of the radio industry, we believe we should go back and re‑test the funding availabilities, and if there is a shortfall and if there is a demonstrated genuine objective that we wanted to achieve, we thought we should step up and provide the funding for it.

6612             We don't have it and we think it should be part of this mandate re‑evaluation.

6613             COMMISSIONER PENNEFATHER:  I think I follow you.  You are looking (a) at the transition plan as proposed and a report back; or (b) as you know, there has been different analyses of (a) what has been contributed by broadcasters and (b) what the demand has been.

6614             So as we reassess that perhaps, you are saying that you would step up to the plate to keep things as they are?


6615             MR. MERSON:  Yes.  And it is a difficult debate.  I mean the debate is when we look at the Starmaker numbers, over 90 per cent of all applicants are being funded, and we look at the FACTOR numbers and much less a proportion, as you can well expect in a grassroots, spreading the seed among a large lawn.  So you get different targets.

6616             But we thought the debate needed to have a framework.  We needed to go back in, re‑examine what the objectives were, rebuild the accountabilities.  We would then have a better sense of what the true objective was and what the true ability to fund might be.  We don't have it because it isn't there.

6617             COMMISSIONER PENNEFATHER:  Okay.  I am sure there is ‑‑

6618             MR. MERSON:  But we wanted to say we think there is a role for us to play if they decide to expand the mandate.

6619             COMMISSIONER PENNEFATHER:  Okay.  My last point is at this point in time I have been to a few hearings and I certainly have heard much discussion about the importance of airplay.

6620             Earlier either today, last night or yesterday noon, I also discussed with another group whether ‑‑ that is a good one.

‑‑‑ Laughter / Rires

6621             COMMISSIONER PENNEFATHER:  For the record, it was a cellphone.

‑‑‑ Laughter / Rires


6622             MR. MERSON:  It wasn't mine because I don't know how to download those things.

‑‑‑ Laughter / Rires

6623             COMMISSIONER PENNEFATHER:  Saved!

6624             The importance of airplay versus CTD money, and I did pick up, I thought, in an early discussion that in fact CTD money, and let's take it as the Starmaker‑type fund where marketing and promotion is its mandate, to quote you, "is preferable to more Canadian airplay."

6625             Now, that seems to be a shift.  Can you comment on that?

6626             MR. MERSON:  I think our starting premise really is a decline in tuning in every demographic group and we see in front of us an environment that really suggests further declines to come.

6627             We know we will evolve.  We know we will evolve and we know we will sort of try to sort of spread our interests out and redo our organizations and find a way to sort of find our way in this new digital world.


6628             So ultimately, I guess we asked ourselves the question.  If at this point somebody said to us it was a choice between whether you could afford increased support of Canadian emerging talent which you have already said is an important part of your vision of the future or absorbing any further increases in Canadian content, we would have to say the former rather than the latter.

6629             COMMISSIONER PENNEFATHER:  Well, not that I would want to engage in a tradeoff discussion but I take your point.  It is more a question too of trying to understand the role of radio and the exposure of the actual song or the actual music and the role of radio in promotion and the mix going forward of those two.

6630             Those are my questions, Mr. Chairman.  Thank you very much.

6631             THE CHAIRPERSON:  Mr. Arpin.

6632             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.

6633             On your page 9, you are looking forward regarding the future of radio and you are making a good number of statements such as:

"All communications will converge on the IP Protocol.  Multimedia‑capable devices will emerge sooner than later.  Wireless will become ubiquitous."  (As read)


6634             I think those are very interesting statements but what do you see in your crystal ball?

6635             MR. MERSON:  Well, thank you very much.  We wanted to be a little bit provocative.

6636             We know there are no answers out there, but to be fair, we do have a vision and that is a vision that we have of the future, and as you go down the path of analyzing what IP might be and what wireless ubiquity might mean and what multimedia‑capable devices might mean, you do end up with a vision that sends you down a certain path.

6637             But among the cast of thousands we have here today, we have real experts rather than me.  So I thought I would pass on to David Neale who really is responsible at Rogers for all of the content that we have and the application of that content across whatever mediums are both owned by Rogers and not owned by Rogers and has a real good insight into ‑‑ and besides that has a real interest in the music industry and a real insight into where this might go.

6638             So, David, did you want to take it?

6639             MR. NEALE:  Sure, thank you, Rael.


6640             I think the best way to try and describe this is that as we move into the digital world, the content assumes the same shape and form.  It is all 1s and 0s.  So the difference from our point of view when it comes to delivery between audio files, movie files, document files, et cetera, they become as one.

6641             So as we move towards a common type of transport, and this is based on something called internet protocol, IP, it allows us to actually take these common file types and literally we can deliver the same content over each of the different bearer networks.

6642             For instance, you are already aware of broadband services over cable and broadband internet services over DSL.  To that we are now adding wireless technologies like, for instance, the new cellular networks which are equally broadband, et cetera.

6643             Essentially, it allows us to take the same content and deliver it over different networks to different target devices and it is really a function of context.  For instance, this is a commercial multimedia terminal.  It is available in Europe.  It can be used both to listen to streaming audio, watch streaming video and download those files.


6644             So essentially, the vision that we see is increasingly the same content will be available in the context relevant to the target device of the different networks over the coming years.

6645             COMMISSIONER ARPIN:  And by content, do you mean radio broadcasting or you mean music files or content specifically produced for that very purpose?

6646             MR. NEALE:  In reality, it could be any and all, Commissioner.  It is really a function of what you choose to do.  You can actually take an existing real radio broadcast today, as you know, and listen to it over the internet.  What you have done is you have converted it to a streaming file.  That same file could be delivered over different types of networks.

6647             In principle, there is nothing to stop you listening to the radio now on your BlackBerry.  You can actually buy software which will load on your BlackBerry, allow you to stream audio and convert it so you can actually listen to it.

6648             COMMISSIONER ARPIN:  Could we use the L band for that very purpose?

6649             MR. NEALE:  The L band is another part of the spectrum that might be used for an appropriate technology.  There are a number of different new digital technologies that might be used in the L band or the S band.


6650             Interestingly enough, those same technologies can also be used in the UHF.

6651             COMMISSIONER ARPIN:  So on the FM band?

6652             MR. NEALE:  Yes.

6653             MR. MERSON:  Perhaps I can just add a quick addendum to it.

6654             I have been part of the DRI consortium and what is our fundamental vision of what the L band might ultimately become, and if you do believe in this IP‑based world ‑‑ and what IP really means is that the barriers, the proprietariness that sort of separates one radio spectrum from the other, from the this, from the that, essentially disappears because all the content goes down using one protocol and the only differentiating point at that point is which frequency band that you actually transmit in.  And the simplicity of adding a frequency band to a receiver that can read IP is not that complicated.

6655             So in the U.S. you see Crown Castle accumulating spectrum.  I think of the 2.2 GHz, David.

6656             MR. NEALE:  Actually, it is 1670 to 1675, just north of the L band.


6657             MR. MERSON:  So just north of the L band, very close to where we are, and you see QUALLCOMM who have sewn up some spectrum in the old UHF spectrum seeking to do exactly that, which is take a portion of spectrum, build an infrastructure that can support the delivery of audio and video programming within those frequency bands, but those frequency bands could as easily have been the L band.

6658             COMMISSIONER ARPIN:  Where do you see a radio in that new framework?  I know that in your submission you are not suggesting the demise of radio but you are surely questioning yourself about where you are going to be ending up.

6659             MR. MERSON:  You know, my fundamental belief is we need to be platform‑agnostic.  I mean we have to rethink what it is we do in order to ensure that whatever content we produce finds its way to the consumer whichever way the consumer seeks to get that content.

6660             So ultimately if you ask the question will the radio industry as a whole develop the L band or might a consortium of a number of radio players come in to develop the L band and try to provide some space for all the other radio broadcasters within the L band, I think it is all likely.


6661             I think the reason you haven't seen that happen yet is because the technology is still so much up in the air.  It is difficult to place a bet because you just don't know where it might go from there.

6662             COMMISSIONER ARPIN:  Since you are looking into your crystal ball, when do you think that all that will happen?

6663             MR. MERSON:  I do think we will be followers rather than leaders ‑‑ and David, perhaps you can answer.

6664             I think we will be followers rather than leaders.  We have learned that from our DAB experience, that alone we can't drive the production and the rollout of receivers.

6665             I do think what happens in the U.S. will be very instructive.  You discussed this morning with the iBiquity people that iBiquity really is putting the pressure on the radio broadcasters to roll out and is making a pitch because it sees DVB‑H and it sees Flow coming at it and needs to get out there as quickly as it possibly can.

6666             So I think we have got the latitude and I do think it will be a lot more manifest within the next couple of years.  I don't think we are talking seven years here.  I think we are talking one or two years to really see which way it goes.

6667             Over to you, David.


6668             MR. NEALE:  If I can actually be very specific, of the number of different technologies, there are both production and evaluation trials going on literally around the world.  But in production today, DVB‑H receivers are available in France and Finland.  There have been trials throughout Europe, also parts of Asia Pacific.

6669             MediaFLO, which we thought would be a uniquely North American technology is starting to appear in a trial which is about to take place in the U.K.  MediaFLO is actually a technology that is somewhat related to DVB‑H.  It is just proprietary from a company called QUALLCOMM.

6670             There is a technology called DMB, which I think you have already heard about.  Digital mobile broadcasting is currently in place in Korea, in Japan, is currently being likely the technology of choice for both China and for India, and our past experience would usually indicate that wherever you get a fairly massive uptake of the technology, obviously, you will get the widest range of consumer devices.


6671             So to Rael's point, the difficulty is that you have got equal activities being taken by different groups of vendors and carriers on the different technologies.  It is too soon to say which will win but it is safe to say that it is happening today.  By 2007 certainly, in the U.S., I expect to see MediaFLO services.

6672             COMMISSIONER ARPIN:  And we are not the one who is making the decision between Beta and VHS?

6673             MR. NEALE:  Yes.  The disappointment is that although the Canadian market is vibrant, it is not large enough for a technology with this degree of sophistication to be built uniquely for it.

6674             In fact, we had that experience ourselves in the wireless world.  We used to operate a technology called TDMA, a very good digital technology but it was uniquely North American and we re‑evaluated in 2000 and deployed GSM, which, as you know, is now the world standard, and again, it was done for that simple reason, the widest range of devices, economies of scale and the chance to be on the cutting edge.

6675             So essentially we would always be looking for what we think is the dominant technology.

6676             COMMISSIONER ARPIN:  Thank you very much.

6677             Thank you, Mr. Chairman.

6678             THE CHAIRPERSON:  Thank you.


6679             Picking up on that, I found your submission interesting.  You used the word "thought‑provoking," maybe "provocative."  I will say thought‑provoking.

6680             Looking at page 14 of the submission where you discuss the fact that you are in the third camp, which is the world is too unclear and too premature to place a bet, you make a number of statements that I would hope you can elaborate on.

6681             You say here that:

"For its part, Rogers intends to continue its strategy of investing in both platforms and content that provide Canadians with the services they want while building capability for the future."  (As read)

6682             If I focus on the content, could you discuss your investments and strategies in the content there?

6683             MR. MERSON:  Thank you, Mr. Chair.

6684             We ‑‑ I feel like I am hogging the mic here.  So if anybody would like to hop in, with pleasure.


6685             It was interesting ‑‑ you know, I heard the discussion this morning about whether one can ‑‑ the discussion about Canadian content on music streams on the internet and whether there was a viable business building differentiated content but finding a way for Canadian content to find its way into those streams.

6686             Our focus on the internet really has not been content ‑‑ has not been music at least.  It really has been ‑‑ what we see happening on the internet in a very big way are differentiated services, community and everything that comes along with those things.

6687             So if you had to ask me now what are the biggest investments we are making in adjuncts on our websites, we are speaking about adding search capabilities.  We know the vast bulk of the revenue that occurs on the internet is, in fact, in search.  So we are looking at trying to find a way to do what it is that we do best, which is localized search.


6688             Now, you never gain to outGoogle Google but to some extent you can out‑editorialize Google and that is what the magazine industry has learned how to do.  So you can go in and you can add recommendations and add the value so that the data that you get on a search isn't simply the data that comes out by a random algorithm of some sort.  So we are looking at search.

6689             We are looking at traffic.  680 News ‑‑ and Linda is here in case we had some questions on 680 News and its success ‑‑ really has built a lot of its success around very current low shelf‑life reporting like traffic, like weather, like breaking news, those types of things.  So we are looking at how it is we can replicate traffic and traffic reporting in an enhanced way on the internet.

6690             We have all see the success of myspace and myspace isn't sophisticated.  It is one big chat room with peer‑to‑peer personalization of content but you would say to yourself ‑‑ you really think if you are ‑‑ CHFI has a very loyal following.  These are people who have listened to the station for years, large communities of interest.  They think alike.  They do similar the things.  That somehow you could build a community for them on the internet that might resonate, that might find some place for them to speak to each other.


6691             So it is more where we have really placed our resources rather than replicating music, because iTunes does an awfully good job, iceberg does a pretty good job, and they are not unique.  It is very difficult to differentiate yourself based on music on the internet which will be very widely available.

6692             I didn't know if anybody else wanted to jump in.  I feel like I am hogging the mic here a bit.

6693             MR. NESBITT:  Well, if I could add to that a little bit.

6694             In a more traditional radio sense, we have also continued to make investments in enhanced services that surround radio.  As many of our radio stations stream audio on the internet, we have provided platforms to augment that with text to display the song title and artist.

6695             And in fact, one of the initiatives that we took was to create a common server so that that information could be distributed on multiple platforms because that is exactly the theme of what we have been saying, of how the content has to be distributed over multiple platforms.  So this server provides the same content on the internet, over DAB on our DAB stations, and on FM RBDS.

6696             THE CHAIRPERSON:  Okay.  Moving along to the next paragraph, you say:


"Rogers' core analog radio stations are intentionally focused on older demographics as traditional radio serves them best.  Our wireless content applications are focused on younger demographics as befits their early adopter status, text messaging, ringtones, graphic, music and video downloads."

(As read)

6697             And then further down you say that:

"Brand, content and on‑demand strategies aimed at serving under 35 demographic to encourage this demo to sample radio offerings and hopefully come to radio when entering radio's core 35‑54 demographic."

(As read)

6698             So that suggests that ‑‑ it mentions wireless and on‑demand.  I assume you are talking internet as well.  How are you doing that to, in effect, appeal to the younger demographic with a view to bringing them back to radio at the 35‑54 phase?

6699             MR. MERSON:  Chuck, perhaps I will ask you to sort of add a couple of comments.


6700             But, as I say, it isn't as much music‑based as it is content‑based.  The most popular thing we do on the internet by a long shot is the podcast of Bob McCowan.  Bob McCowan is The Fan, you know, does appeal to a younger demographic.

6701             We recognized fairly early on that Bob had appeal across media and found a way to essentially get his radio show onto SportsNet.  We podcast ‑‑ I know I will get the statistic wrong ‑‑ but I think it is 10,000 hits a day.  Is that correct?

6702             MR. McCOY:  10,000 downloads a week...

6703             MR. MERSON:  A week.

6704             MR. McCOY:  ...from The Fan.

6705             MR. MERSON:  From The Fan.

6706             So somehow what we have to do is get to them in other ways.  You know, they do ‑‑ and Chuck can speak to the social phenomenon but it is going to be difficult to get them back.

6707             We hope that when they get into their cars, they are going to pick up the habits that we all picked up but it really is a generation that has grown up without the same affinity for radio that we had.  It does speak to us in a different way than it speaks to them.


6708             THE CHAIRPERSON:  The sampling ‑‑ and "hopefully" is the operative word here.

6709             MR. MERSON:  Yes, it is hopefully.  I mean we are trying to find a way.

6710             The only point I really wanted to make is that it is going to be difficult to differentiate on the basis of music.  We are going to have to find communities of interest, editorialization points of some sort, blogs, podcasts, those kinds of things to really drag them into our own milieu.

6711             I don't know if you want to add anything at this point.

6712             MR. McCOY:  It speaks to the competitors for ears that are coming upon us as competitors for radio.

6713             I was just recently out in Vancouver and got in the car with my son who is 18 years old and was listening to music.  The music was okay to listen to but because I am responsible for programming on four stations in Vancouver, I asked him ‑‑ I said, could we just listen to the radio just for a bit, you know, I need a half hour of the radio.  And he said, oh yeah, sure.


6714             So I went to his radio.  I said, how do I go off the MP3 and how do I click on the FM?  And he has had this car for a year and he said, I don't know.

‑‑‑ Laughter / Rires

6715             MR. McCOY:  I have never had to do that before.

‑‑‑ Laughter / Rires

6716             MR. McCOY:  I never actually turned the radio on in the car before.  And this is ‑‑

6717             THE CHAIRPERSON:  So what gives you hope then, Mr. McCoy?

‑‑‑ Laughter / Rires

6718             MR. McCOY:  Well, I hope that we can learn.  I think that what ‑‑ one piece of advice that we were given in terms of our websites that we put up for all of our stations regardless of the demo, the advice in the test and the research is ask a 12‑year‑old to sit down and dial up your website and see how difficult it is for that 12‑year‑old to navigate through that website, and if it is tough for them, nobody else is ever going to get it.

6719             These people have ‑‑ these people ‑‑ it sounds like another country.  Younger people have figured this all out and we are going to have to determine better ways to reach them.  They still are clearly reachable by radio.


6720             I think that ‑‑ and I am sort of skipping off into another area here but it is an area that has been discussed many times throughout the past few days in terms of this review, and that is emerging artists and the opportunity for people to listen to emerging artists.

6721             If there is one thing that is unique about young people, they have an insatiable desire to explore and they are exploring music and exploring new music.  Sometimes the music they explore isn't that new but it is new to them.

6722             I think that when we talk about the incentive plan that has been put in place, that we support, for new and emerging artists, it will have an effect on a lot of radio stations, not all but a lot of radio stations.

6723             But I think there is another benefit that I know the music industry agrees with and that is in the sheer number of radio stations that might program directly to the youth and to people that are actively looking for new emerging artists.


6724             If you think of it, there are new licences being applied for all the time, there are stations that are changing format, and I think that with the opportunity to take advantage of an incentive to play new artists, the idea of putting an entire radio station on the air that plays new music has become more appealing.

6725             I think that if you really add up the number of songs and the impact of new music and new and emerging artists for the industry, you would find that three radio stations in Canada that became targeted to youth in their entirety would likely have as much or more impact than 25 stations or more simply playing a few records within their existing format.

6726             So I think there are ways and I think ‑‑

6727             THE CHAIRPERSON:  Is this the prelude to an application?

‑‑‑ Laughter / Rires

6728             MR. McCOY:  Well, if you don't stop me, I probably will.

‑‑‑ Laughter / Rires

6729             MR. MERSON:  Before we leave it, Jackie wanted to just add a couple of points.

6730             MS DONALDSON:  I just wanted to add something about the younger audience and transitioning them as they get to that magic 35 number and become radio listeners again, hopefully.


6731             AM radio had to focus in on its audience needs in order to survive when FM became the big dog and one of the ways that we have done that is our news operation, 680 News in Toronto and News 1130 in Vancouver, and our own version of Canadian content is local, local, local content.  It is what we do.

6732             One of the ways that we are delivering that already to people who use new technology is the use of news alerts and we are just starting to use traffic alerts on their cellphones.  So they go online, they sign up and when we have "The Lions Gate Bridge is closed," we can let those people on our sign‑up list know immediately that "Do not go that route today."  So hopefully, those people then will realize the service we provide and will turn to the radio in order to get more of that.

6733             The other thing that we are just in the starting process of is citizen journalism.  It sounds a lot like blogging but it is a little more controlled.  So people who are out, on the way somewhere, who see something that is newsworthy can text us and let us know and we can then follow through on that from a bigger perspective.

6734             But if those people at that age using that technology can become involved at one level, we are hoping that that will transition them to becoming radio listeners as they get older.


6735             THE CHAIRPERSON:  Thank you.

6736             The final digital strategy, Mr. Merson, that I wanted to explore with you is you mention the launch of new always‑on‑tap streaming audio services to ensure that if radio is going to be fragmented, it fragments itself rather than getting fragmented by others.

6737             Now, do you offer these streaming services?

6738             MR. MERSON:  We have not gone down that path in a very big way yet.  I mean all we have streamed right now are our existing radio stations.  We have not attempted any other full streams of audio content.

6739             THE CHAIRPERSON:  Right.  Because it raises the issue of why would you want to fragment yourself if you don't have a business model for the on‑demand fragmentation and I take it you are not there yet and haven't found such a model?


6740             MR. MERSON:  We have found it in the content world, in the rich media world rather than in the music world.  So we very much ‑‑ as I said, I mean we think about sort of traffic, for example, and how it is you can expand your traffic capabilities using radio perhaps as a barker channel but building a separate channel that has traffic information permanently on, customizable to your own route if you deliver it.

6741             Without giving the game away too much, we have been working with our wireless counterparts to look at a way, and there is technology out there that really tracks ‑‑

6742             THE CHAIRPERSON:  Intracorporate consultation.  How unique.

‑‑‑ Laughter / Rires

6743             MR. MERSON:  These are things we couldn't afford to do by ourselves.  It is one of the advantages of being part of a bigger company.

6744             That track wireless probes and allow you thereby to sort of add richness to the traffic content that you have.

6745             But simply doing music is going to be difficult to monetize on the internet.

6746             THE CHAIRPERSON:  Okay, thank you.

6747             I guess the fourth point, the need for radio to consider multimedia, not just radio, it is presumably all your media that need to think multimedia, again, more intracorporate consultation in doing this.


6748             When you say "rather than merely audio‑based content approaches," and Mr. Neale addressed that and I think ‑‑

6749             MR. MERSON:  More than that.  I mean there really is ‑‑ there is a seed change in our thinking.  We don't speak in terms ‑‑ as I said the other day, I mean our vernacular really has changed.  We talk about content factories and the notion that you might sort of log content in a central repository of some sort that might then be put out into multiple different platforms.

6750             It is the operating philosophy of most of the television stations out there now and it is a philosophy that radio will have to embrace.

6751             MR. NEALE:  If I might add, one of the things that you note when you look how younger people are actually discovering music, for instance, when they hear a piece of music, it is not just that is a good piece of music, they are also very interested in who are the people, what do they look like, where do they come from.  In the digital world, it is actually possible, as you know, using search engines like Google to actually answer those questions all at the same time.


6752             Increasingly more, we have people who have actually had broadband internet access all of their, shall we say, more adult or certainly late teens, early adult.  So for them, it is second nature to actually do music discovery in this fashion.

6753             So that is one of the reasons why we have to think all the time about broadening how we offer to address these younger groups.

6754             THE CHAIRPERSON:  Do you think ‑‑ I mean overall you mentioned as one of the strategies to try and capture the local local from Google but, as you know, you can go to Google and look down on your house.  That is pretty local.

6755             Do you think you stand a chance coming from where you are coming and actually doing that given the momentum that they have and their ability to keep leaping ahead?

6756             MR. MERSON:  You know, the key to us really will be editorialization, which really is what we do by and large in the spoken word content on every medium from The Fan to News 1130.  The notion is making sense to the world.  What we ask and what we power particularly our news gatherers to do is to act as a navigator.


6757             There is no point replicating the news.  It is available by news alerts on your cellphone, it is available all over the place, CNN and News World are very good purveyors of news.  But they come to trust a local source and they come to trust somebody who can editorialize and make some sense of that world for them and these are the directions we give to our news gatherers and our news readers.

6758             MR. MILES:  And it is one where ‑‑ I am sorry.

6759             THE CHAIRPERSON:  So video and on‑demand is more difficult to reach in the car.  That is where audio has a lead.

6760             I mean it is the old will G3 work because people aren't likely to watch television in the car.  I am not sure about that but certainly in the back seats they are likely to watch television and maybe the driver will have some little device at the corner of his glasses to distract him.  Who knows?

6761             None of these old assumptions are really safe, are they?

6762             MR. NEALE:  I think that is true but the basic premise of radio has been local to the point that you just made and what has been the real core of it has been personalities and strong brands, and personalities not just necessarily in the morning show but that is a very integral part of it.


6763             We are never going to lose that one.  What I think we have to do is figure out how to transfer that down without losing the business model.

6764             We had occasion to celebrate a 75‑year anniversary of one of our radio stations in North Bay and it was really the first station that the Thompson family developed.  They thought it was in Timmins but it was in North Bay.

6765             So we turned out the city, literally turned out the city, and they did the broadcast from the back of the theatre that was the original broadcast, which started at 11 o'clock at night so people from Toronto could get on the train and come down and sit in the theatre and watch the show actually go on the air.

6766             Seventy‑five years later we are doing the shows with the personalities from the theatre on the stage at 11:00 in the morning, because I don't stay awake until 11:00 at night, but it was 11:00 in the morning.  And not much as changed because the town turned out to meet the personalities.  It is that kind of content that we have to figure out how to get down through these multi‑platforms.  It has more to do with that than it has to do with the music.

6767             THE CHAIRPERSON:  Yes.  I guess the issue always comes back to the Canadian place.


6768             How many radio stations are there in Toronto, licensed Canadian radio stations?  What is it, 35, 30, somewhere in that ballpark?

6769             We heard today that in Detroit there is 65.  I guess the reason there are 35 in Toronto is because there is the onus on you to, in effect, tell the Canadian stories and to carry the Canadian music.  I guess that regulatory bargain will continue, and I guess it's one that we have to continue to figure out, using you as the vanguard moving into these new technologies, to ensure that that isn't what is sacrificed in all of this.

6770             MR. MILES:  Without editorializing, I think it is more fragile now than it ever has been before, that ability to make sure that we enforce public policy and Canadianism and yet still have a business model that allows us to reinvest back in the product.

6771             Because it has not just been reinvestment in terms of Canadian content at Rogers.  We have reinvested back in our news content and 680 News.


6772             Tony, who could speak for himself, when he went to the Board and said "How would we like to turn this music station into an all news station" everybody laughed.  But this is the kind of reinvestment that our companies and the rest of the Canadian companies have to continue to do.

6773             THE CHAIRPERSON:  Thank you.

6774             MR. VINER:  Mr. Chairman, I think the concept is not flawed.  I mean clearly we have a responsibility as being part of the Canadian broadcasting system to do as you described earlier this morning.  We can't just perfectly reflect the market and go to 16 percent Canadian content.

6775             THE CHAIRPERSON:  Right.

6776             MR. VINER:  I think the question is a matter of balance, as it always is, and with the emergence of these new unregulated media competitors we are concerned that the balance will tip too far.  So that's why our position is that we should go forward with a Smart 35 as described.

6777             THE CHAIRPERSON:  Thank you very much.

6778             MR. VINER:  Thank you very much.

6779             THE CHAIRPERSON:  Those are our questions.  Thank you kindly.  Very helpful.

6780             Madam Secretary...?

6781             THE SECRETARY:  Thank you, Mr. Chairman.


6782             I would now invite the next participant, Newcap Radio, to come forward for their presentation.

‑‑‑ Pause

6783             THE CHAIRPERSON:  Any time you are ready, Mr. Maheu.

PRESENTATION / PRÉSENTATION

6784             MR. MAHEU:  Thank you.

6785             Good afternoon, Mr. Chair, Mr. Vice‑Chair, Members of the Commission, staff.  Thanks for hearing us this afternoon.

6786             I am Mark Maheu, I am the Executive Vice President, Chief Operating Officer of Newfoundland Capital Corporation.  You know us better as Newcap Radio.

6787             I have to apologize, my colleague Mr. Steele was unfortunately not able to stay through the afternoon due to the changes in the schedule, but our remarks are brief and I am certainly prepared to answer any questions you might have.

6788             Our oral remarks are relatively short, in keeping with moving the pace along.


6789             We thank you for this opportunity to present our thoughts and our suggestions during this review of our radio policies.  Newcap Radio is primarily a radio broadcasting company, as you may know.  We hold 73 licences throughout Canada, along with serving one small television market.

6790             With Newcap we believe we bring a unique perspective to these proceedings by virtue of the fact that we are one of the only companies operating in the smallest and the largest markets in this country.

6791             You have heard many relevant and important points of view over the past couple of days from a variety of presenters and we hope our presentation today will provide you with additional real‑world issues to consider as you shape our industry's future.

6792             We share the concerns outlined by the CAB that radio has already reached a crossroads with the evolution of two systems of audio programming, the regulated radio industry and the many unregulated forums of programming.

6793             We don't intend to rehash the issues that you explored with the CAB, but we do have some comments in a number of areas, including a few they did not include.


6794             Despite the obvious and emerging challenges radio is facing, Newcap is very much committed to this business.  We continue to make plans to grow our radio company and to expand.  We have several applications before you for new stations in a number of markets and we are bullish on radio's future within a regulatory environment that recognizes the accelerated pace of change in our industry.

6795             To this end, we have made significant investments in capital upgrades and improvements to our company over the past several years, and we have made these investments in order to provide a higher level of service and improved programming to the communities that we serve.

6796             In our written brief to you we raised four main points:  a proposed change to the rules concerning ownership; local sales collaboration in smaller markets; the need to streamline the regulatory process; and radio broadcasting; and audio services on cellphones and other wireless devices.

6797             On the issue of ownership limits, presently the rules allow a maximum of four stations in the larger markets, with only two permitted to be on the AM or the FM band.  In smaller markets the maximum number of stations is three, with only two per band permitted.


6798             We understand the Commission's wish to maintain some diversity and competition in radio markets and we don't suggest that the number of radio stations allowed be changed.  But we do believe in an increasingly wireless world, with Canadian satellite licences providing hundreds of different formats in digital stereo, that it might be time to reconsider the limits of two stations per band.

6799             While we believe that there is some future for the AM formats, particularly in spoken word formats like news sports and news talk, we don't believe that most markets can support more than one or two of these types of radio stations.

6800             What we have seen, and what we see in even the largest markets, is that the third or fourth AM radio station in the market cannot effectively compete for an audience, whether they are in a spoken word or a music format.

6801             Therefore, we believe that the Commission should permit a single owner to hold up to four FM licences in a market or, if they choose to specialize in AM, four AM licences.  In the case of AM, the synergies that might be derived from multiple talk formats or spoken word formats might make that effort economically worthwhile.

6802             But our proposal is much more oriented towards the FM band.


6803             In the music radio business today in Canada FM stereo sound is the minimum price of admission to attract an audience of any size.  Listeners demand the best quality sound possible, and even FM at times presents some challenges, but it is vastly superior to AM for music programming, obviously.

6804             In many markets, the existing broadcasters can find additional FM frequencies on a second adjacency that no one else can use without their permission.  The Commission has recently recognized this in its licensing of a new FM licence to the Evanov Group in Toronto.  We believe that such an approach, or permitting us to apply for additional FM stations and conversions in markets where there are frequencies available, will help the radio industry in general be more competitive against satellite, internet radio and against other media.

6805             On the subject of local sales collaboration in smaller markets, it was discussed as part of the CAB presentation yesterday.  We would only, on that issue, like to underscore that allowing small market radio stations to cooperate on local sales we believe is an important issue.


6806             We vehemently disagree with the Competition Bureau's submission stating that radio is a separate and distinct offering.

6807             Radio is only one of many and varied forms of media competing for advertising dollars.  We know that through our experience dealing with thousands of small businesses in dozens of small communities throughout this country that radio competes for shares of advertising budgets, not shares of radio budgets.

6808             So this end, radio in small market faces unique challenges fighting for its share of advertising budgets against unregulated newspapers, outdoor advertising, yellow pages, et cetera.  This competition, combined with local television's limited competition, large reach and relatively lower rates in small markets puts radio broadcasters in a tenuous position at times.

6809             Allowing small market radio operators to provide a consolidated radio offering to advertisers increases radio's chance of growing revenues.  These increased revenues lead to a more stable ownership environment and higher levels of reinvestment in these stations into the communities that they serve.


6810             In our brief we expressed our concerns about some regulatory lags.  In particular, we are concerned about delays in dealing with transfers of ownership and in processing applications for new radio station licences.  While we understand and support the Commission's due diligence process, we remain concerned about the length of time it takes to process these applications.

6811             In the case of transfers, the cost of delay is uncertainty for the owner trying to exit the business often because of the reasons of health or financial pressures.  This not only affects the owner but the level of service that could be provided as managers are reluctant to make decisions or investments to hire people with new owners in the picture.

6812             Delays also ‑‑ and we know this from practical experience ‑‑ has a profound negative impact on the people who are working in the radio stations that have been purchased, because they spend a lot of time during that delay wondering what is going to happen and what is my future all about and what will happen to me.

6813             So in the case of applications for new stations the concern also is timeliness of research.  Format and other market research is done and can quickly become stale‑dated and delays at the regulatory end can necessitate additional spending in this area.  It has happened to us a number of times.


6814             Our suggestions for expediting the process ‑‑ we wouldn't want to come here without at least a couple of suggestions, and they are quite simple.

6815             One of the suggestions would be the hiring of addition staff to handle the increasing file and caseload.  We know that on your end things are piling up and it's hard to keep up, and there is an explosion of new ideas and new applications.  Could the hiring of additional staff to take the burden off the existing staff help?

6816             We might also suggest streamlining the deficiency process in new applications by holding applicants to a somewhat higher standard on original applications for completeness, accuracy and detail.  This could potentially reduce the regulatory burden and put the responsibility back on the applicant where it likely belongs.

6817             Finally, I would like to bring to your attention a new development which presents a challenge to our industry in general, well beyond that of the iPod or any new unregulated technology.

6818             In our submission to you we outlined the new technology being provided by Motorola whereby cellular telephones could access 400‑plus radio stations, streams and listening‑on‑demand.


6819             You might be reluctant to license such activities, but we do believe that this technology provides the equivalent of a wireless audio BDU.  As such, we believe that it is important to require that at a minimum ‑‑ at a very minimum ‑‑ that they provide carriage for local radio stations, as well as meeting the predominantly Canadian requirements that BDUs must meet for video channels, very similar to the must‑carry provisions for cable television and local television stations.

6820             This could be done either through licensing or through an exemption order.  Frankly, we would prefer that it be a licensing process where carriage issues and contributions to the development of Canadian talent are required, much like what was done by the Commission with the satellite radio decision.

6821             Those are our comments and we would be pleased to answer any questions that you might have.

6822             THE CHAIRPERSON:  Thank you, Mr. Maheu.

6823             I actually in reading your brief had thought that I didn't have any questions because it was so clear, but hearing you today I have quite a few.

‑‑‑ Laughter / Rires


6824             MR. MAHEU:  I don't know if that is a good thing.  I will take that as a real good thing.

6825             THE CHAIRPERSON:  As Mr. Merson said, being thought‑provoking is always interesting.

6826             First of all, I would endorse what you say on the top of page 7, that we are in fact streamlining the deficiency process by holding applicants to a higher standard on original applications for completeness, accuracy and detail and will intend to put that into effect increasingly over the next while.

6827             It is a good suggestion.  We probably became a little too forgiving in terms of the original information and we are certainly going to take that on‑board.

6828             MR. MAHEU:  Great.

6829             THE CHAIRPERSON:  On the last paragraph on page 7, I guess you saw our decision on mobile licensing for the time being.  As with new media, these are always subject to changing facts and impacts.  We are trying to balance in an effort to not chill out new technologies and experimentation, but to monitor the situation such as hat when there is an impact on listeners we are open to reviewing it and I guess that holds.


6830             So that's the state of play with this new Motorola device that you mention.  I expect that if it does have legs and have an impact that there will be applications for us to examine it.  I guess that is the simplest answer to that.

6831             MR. MAHEU:  If I may, Mr. Chair, I'm not asking you to make a commitment obviously, but what about the idea that if there are going to be wireless services that are going to be made available to the public and they have radio options, and so on, on them, their own radio stations or their internet radio stations being broadcast on a wireless basis through these devices, that local broadcasters in communities have the opportunity through the Commission to have that must‑carry provision.  In other words, if you want to do business in these marketplaces that offer these services that the local radio stations get a chance to get on that platform.


6832             THE CHAIRPERSON:  Well, you know, these and other proposals I suppose can be put forward in due course, but the balancing act ‑‑ I think Mr. Viner mentioned that regulation is, as always, a balancing act and one of the things we are trying to balance here is being adaptable to scientific and technological change on the one hand, letting Canadians take advantage of new technologies and technological experiments, and of course the major thrust of our goals on the Act.

6833             So it's a matter of monitoring it and your association and individual broadcast continue to do that with us.

6834             MR. MAHEU:  Right.

6835             THE CHAIRPERSON:  The question I had on page 5 relates to what you referred to as "local sales collaboration".

6836             Shall we call it LSC?

‑‑‑ Laughter / Rires

6837             MR. MAHEU:  We thought maybe a new label might ‑‑

6838             THE CHAIRPERSON:  The next step is LSD.

‑‑‑ Laughter / Rires

6839             THE CHAIRPERSON:  You say here:

"...allowing small market radio operators to provide a consolidated radio offering to advertisers increases radio's chance of growing revenues."


6840             Can you give me any sense of quantification on that in your experience?  In markets where you have had LMAs and LSAs, what would you say a ballpark figure for that would be?

6841             MR. MAHEU:  I will try to quantify it as best I can.

6842             Just before I get into that, Mr. Chair, I should say your wording is correct.  Where we did have sales agreements and an LMA we don't any more, obviously.  That all changed last year.

6843             Probably I would have been even more accurate if I had written in there "revenues and profits" because the two go hand‑in‑hand.

6844             What ends up happening in some of these cases in smaller markets ‑‑ and I was listening with interest to the Rawlco presentation in terms of small markets and how they are different, and I think their definition and our definition of a small market is somewhat different.

6845             So when Newcap is here talking about smaller markets, we are talking about marketplaces that are, you know, in the 50,000, in some cases 100,000, or smaller.  In most cases the spirit of what we were trying to propose here would be really in cases in markets where there is just two operators and no more.


6846             So what you end up having here, is when you have a combined or consolidated radio offering, there is a little more critical mass that the radio stations can bring to an advertiser.  So if there are three or four stations in small market and two operators, in many cases when you look at it they both have about the same size audience.

6847             It's funny how that works out based on the formats, but a lot of times that's pretty close.  And neither one in terms of audience size has an edge on the other and they end up competing against each other and they also end up competing against all the other media.

6848             By kind of splitting the radio pie they don't really have enough reach in some cases to compete with smaller market TV or the local newspaper or the Outdoor Company or the yellow pages, or whatever it may be.

6849             First of all, that combined offering brings radio up in terms of what it can deliver to advertisers in the market.  That's step one.


6850             In terms of its impact on growing revenues, we have seen in our previous history ‑‑ in virtually every case, because we have before and after results right now.  We know what we did in a sales agreement and we saw what happened after the sales agreement.  You have all our annual returns and it wouldn't take you very long to go to those markets where we has sales agreements, and in one case an LMA that was approved by the Commission, and take a look at the stark difference.

6851             We went from being profitable in every one of those markets to being cashflow negative in every one of those markets.  In one case we went from being very profitable to losing money, and we are talking about millions of dollars just in profitability and even more so in revenue.  So it was pretty significant.

6852             Now we are taking steps ‑‑ obviously if you look at the reports from the last reporting period, things since then are better.  We have invested more money, we are making changes, we are doing all sorts of things in these markets.  In some cases we applied for an extra licence and you were good enough to grant it and we are going to work to get those stations on, those types of things.


6853             But just in those small market situations it can many times be the difference between making money and not making money, and I could easily see a situation in smaller markets where you have two operators, both really just kind of on the cusp on just breaking even, and if they are able to work together on sales and bring a consolidated offering to the marketplace to advertisers that that could change in a hurry where they could both be more profitable than they were.

6854             It goes back to the idea that if we are making money as a commercial business in small markets, that that money allows that service to continue in the market, it allows us to continue to reinvest and do more things, because as ‑‑

6855             THE CHAIRPERSON:  So it is a function of both increased revenues and the combined offering and saving in and costs of duplicate representation.

6856             MR. MAHEU:  Yes, you do, Mr. Chair.  You do get some costs savings, but I think for the record we need to draw the distinction on that, that the editorial control of a radio station is still with the licensee and we are not proposing anything different here under allowing sales agreements to small markets.

6857             THE CHAIRPERSON:  No, I understand that.

6858             So the savings would be in ‑‑

6859             MR. MAHEU:  Sales management and sales promotion, probably commission rates, et cetera, that could be pretty significant in a smaller market.


6860             THE CHAIRPERSON:  Right.  I guess just to complete the picture ‑‑ and I know your position on the view of the Competition Bureau, but I suppose their point would be that that increase in profitability is at the expense of those who, while they may be using other media as well for their advertising campaign, for the part of it that requires radio they are now going to have to pay more because you are getting the more revenues out of the combined offering.

6861             I think their point also is ‑‑ and that isn't necessarily the end of the matter.  The end of the matter is the Commission then balances that against other objectives such as ones that you put forward.

6862             Would you think that is a fair approach or do you think you don't have to go that far?

6863             MR. MAHEU:  No.  Let me give you an alternative view of that in the real world, and that is that we deal with advertisers all the time on this basis where we talk to them.


6864             As many radio stations do, it's not just our company, when you are prospecting for advertisers, first you talk with an advertiser "Why advertise?  What is the benefit of advertising in general?"  We don't go in pitching our radio station right away by any stretch.  We get to know what their needs and wants are, but we talk about advertising and the value of advertising and then we talk about, you know, "Why radio" and talk to them about the benefits of using the medium.  And then we talk about us.  That's last.

6865             But here is what happens:  Most advertisers have an advertising budget, as we have talked about before.  It's amazing what happens, though, in a small market where you have a local newspaper and maybe one local television station and four local radio stations owned by two owners.

6866             If the advertiser historically has used newspaper and the newspaper is effectively a monopoly in that market, there is one newspaper and you either pay the rate or you don't get on.  That's all there is to it.

6867             If you can bring a consolidated offering to that advertiser and show them how they can get reach and some frequency and do some creative things with radio, they will then ‑‑ they don't leave newspaper, but if they decide to leave the newspaper it's amazing what happens.  Newspaper then comes back an wants to lower their rate. to try to keep them on or keep part of the buy.


6868             So if there is an increase in what it costs to be on radio, there is a subsequent decrease in another media, so the net spend is the same.  And I guess we are held to a bit of a different standard by the Competition Bureau because we are a regulated industry and there are multiple options.  But when there is only one newspaper in the market, or one TV station in the market, or one billboard Outdoor company, they effectively set the rates and can charge whatever they want.

6869             THE CHAIRPERSON:  Thank you for that.  Thank you very much.

6870             MR. MAHEU:  Thank you very much.  I appreciate it.

6871             THE CHAIRPERSON:  So that brings us to the end of Tuesday.

‑‑‑ Laughter / Rires

6872             THE CHAIRPERSON:  Madam Secretary, would you call the next item, please?

6873             THE SECRETARY:  Good morning everyone ‑‑

‑‑‑ Laughter / Rires


6874             THE SECRETARY:  ‑‑ I would now call the next participant, the Ontario Independent Radio Group, if they could come forward for their presentation.

‑‑‑ Pause

PRESENTATION / PRÉSENTATION

6875             MS SHAW:  Good afternoon, Chairman Dalfen, Commissioners and staff.

6876             My name is Deb Shaw from Bayshore Broadcasting Corporation and I am the Executive Director of the Ontario Independent Radio Group.  We are pleased to be here today and I would like to introduce to you our panel.

6877             Presenting today, we will go from my left, your right, John Wright from K Rock 105.7 in Kingston; Doug Kirk from Durham Radio Inc. in Oshawa; and Burlingham Communications Inc. in Hamilton.

6878             Also with us today and available for questions, Ross Kentner, a newbie, 45 years at Bayshore Broadcasting in Owen Sound.

6879             And behind us, Dave Hughes from Pineridge Broadcasting in Cobourg, Jon Pole from myFM in Renfrew, Arnprior and Pembroke, and Blair Daggett from CHCD in Simcoe.


6880             A total of 27 radio stations and 13 different owner groups make up the membership of the Ontario Independent Radio Group.  We formally formed in 1999 to provide networking opportunities for smaller independent broadcasters.  We combine resources for staff training, share programming and best sales practices, share technical experiences and general business problems and solutions, and now we have evolved to also provide comments concerning regulatory issues of importance to our group.

6881             Now I will turn it over to Doug.

6882             MR. KIRK:  Thanks, Deb.

6883             As the Commission well knows, the radio industry has consolidated significantly since the last review of radio held in these quarters in late 1997.  Today, six major groups have 77 percent of the large market licences in Canada.

6884             We are broadcasters but, as we will point out in a moment, our members are very different from the Big Six.

6885             On page 2 of the handout to illustrate the point, we have combined in the same format, the same financial format as the CRTC statistics, the statistics for 17 reporting stations of the OIRG group, constituting all the stations and a few more that are represented here.


6886             The comparison is striking.  As you look through, OIRG stations get almost 86 percent of their total revenue from local sales, where the Canadian average is 75 percent.  This contributes to heavier spending on sales.  OIRG group stations spend 34 percent more per dollar of sales to generate revenue in their sales departments.

6887             OIRG reporting stations spend, on average, 14.2 percent more than the Canadian average on programming, which reflects our high level of service to the communities we represent.  Also, OIRG stations at the bottom line generate 270 percent less profit before interest and taxes than the Canadian average.  Our OIRG PBIT is 6.2 percent versus 23 percent for the industry.

6888             So this illustrates the very stark comparison and we have to take very seriously our threats and opportunities for the future.

6889             We strongly recommend that the Commission use this review of radio to balance growth possibilities and the profitability potential of radio operators who operate outside of the Big Six and, by implication, outside of the 14 large markets.

6890             John.


6891             MR. WRIGHT:  After you have had a look at those numbers you can understand why we can wake up in the middle of the night with major concerns about the threats that are out there.  We have identified those as:

6892             One, competing with new unregulated media, cellphones, internet iPods, satellite radio.  Our low margins don't really allow us the resources to fight this war.

6893             Two, increasingly regulatory burdens and copyright fees versus our unregulated predators.

6894             Three, increased number of competing licensees or signals in our markets which already have subsistent level margins.

6895             Four, transparency in the licence application process.

6896             As we and many of the other organizations represented in this review I have detailed, we are now competing with technology changes we have never faced before:  one million iPods per day were sold in the weeks leading up to Christmas 2005; double digit hours per week spend on the internet by the average Canadian; cellphones with audio and video; satellite radio delivering the hundred channels to our cars and homes.

6897             The common thread amongst these new predators is that you can choose to listen or to watch them with no Canadian content, while Canadian commercial radio, the incumbent, must play 35 percent.


6898             Perhaps I can offer a sports analogy ‑‑ pardon me for the term ‑‑ to think about this.  Two teams compete in a sport, team one is from City A, team two is from City B.  City A can recruit players from anywhere in the world.  City B must have 35 percent of their players come from City B.  City A is totally unregulated, City B is regulated.

6899             If we were betting people, who do we think would win that match up?

6900             Copyright fees have increased from about 8.5 percent of program expenses to approximately 18.5 percent of program expenses in 10 years.  That's 117 percent increase.  For the OIRG group, copyright fees are now equivalent to our PBIT, are 100 percent the same as our PBIT expense or margin.  To put this into perspective, for large market stations copyright fees would be about maybe 20 percent of PBIT.

6901             The point of this is that increases in copyright fees have a much larger impact on OIRG stations than on the Canadian stations in average.

6902             So while we understand the CRTC is not responsible for copyright fees, this increased burden has a direct effect on our ability to compete with new media and provide the service our local listeners expect of us.


6903             Increased number of signals in our markets.  Fragmentation of our listenership continues to be one of our biggest fears or threats.  Our listeners time spent with our stations is not only being eroded by time spent with various new media competitors, but also for more signals from new radio licensees, both in our markets and in adjacent markets.  Out‑of‑market tuning and tuning to local non‑commercial stations reduces the economic viability of existing commercial stations.

6904             And we believe there has to be more transparency in the licence application process.  It is important that broadcast applicants and the public are fully aware of the licensing criteria and each applicant is assessed on a level playing field.

6905             So those are our threats.

6906             On the opportunity side, we look at multiple program streams from the same plant as a big opportunity, as well as internet/websites.


6907             Allowing multiple program streams from the same plant will allow independent operators to infill formats in smaller communities, perhaps a move to IBOC or HD radio, and allow us to offer additional program streams on the side bands and, in markets where we have multiple owners allow LMAs or LSAs so small independents can get the cluster advantage that the Big Six enjoy in many of their markets.

6908             And on websites.  Many of us are experimenting with program content on our websites.  We are increasing the audio/video content, experimenting with podcasts, loyalty clubs, limited video content, streaming audio.

6909             We have had some pretty good success increasing page views and online tuning to our stations, but I must say we have had very poor results trying to generate any revenue to kind of pay for these costs.  For many of us it is a high priority and we are allocating resources to improve that revenue generation.

6910             MR. KIRK:  To conclude our remarks, we are looking ahead to the future with obviously some fear, but with a generous portion of optimism just because this is what we do.


6911             We need to become much more efficient regarding costs so we have the resources to continue to evolve our business and serve our listeners.  No longer can the Canadian radio broadcasters be assumed to increase our contribution to the Canadian music industry without long‑term consequences.  Killing or crippling the broadcast industry golden goose serves neither Canadian radio or the music industry in the long run.  We need to get smarter and work together with our music partners to develop plans that will work for us all.

6912             Our recommendations, in summary, are:

6913             One, to have a comprehensive strategic plan for radio support of the music industry.

6914             Two, until the process is complete we recommend a reduction in CanCon levels to 30 percent, and in concert with single letter MAPL qualification for Canadian music selections.

6915             Three, we advocate no awarding of new licences without a market call.

6916             Four, we recommend adoption of IBOC, the U.S. digital broadcasting standard, and have it automatically applicable to current licensees, and including the ability in that to program side bands for increased diversity of formats within the markets.

6917             Five, we advocate allowing LMAs and LSAs on a case‑by‑case basis to improve small market PBIT.  Sharing back room costs such as traffic, accounting and engineering gives small market stations the same opportunity as large market clustered operations.


6918             Six, we advocate a level playing field for new licence applications to address the CTD cross‑subsidy and transparency of criteria such as quality of business plan in the new application process.

6919             Seven, we advocate multiple licences or stations in a single band in single operator markets.

6920             The OIRG stations are looking forward to the future with optimism, but we are cognizant of the new challenges ahead.  We believe that we are entering a whole new level of competition here.  We have to anticipate the effects of this new competitive landscape now before us.

6921             Continuing the status quo for another five, seven or eight years so we can wait and see to determine the effects of the new competition is strategically wrong.  Once it is clear that the model is broken it will be too late to fix it.

6922             We thank you for the opportunity to share our thoughts with you and we would be happy to take questions.

6923             Thank you.

6924             THE CHAIRPERSON:  Thank you.

6925             We appreciated the thoughtfulness of your brief and it was fairly clear.


6926             Just a couple of questions that flow from your presentation today on copyright, and you rightly point out that this is not something we are responsible for but that it impacts your ability to compete with other media.

6927             We heard from one or two of the other intervenors of course that that inequality may change and that rights holders are now withholding new media rights and trying, as intellectual property holders, to monetize their property there too.  So that imbalance, that may be the good news and the bad news, that it may become more expensive for everybody.

6928             MR. KIRK:  I think the good news is that that might become a revenue stream in the future, and the bad news is that it might be in the future.

6929             THE CHAIRPERSON:  Yes.

6930             MR. KIRK:  So immediately it ‑‑

6931             THE CHAIRPERSON:  That was really my other question, which was your mention on page 4 that you have been experimenting and yet you haven't been able to figure out ways of generating revenue.

6932             So that when you increase page views ‑‑ that is presumably your home page ‑‑

6933             MR. KIRK:  yes.


6934             THE CHAIRPERSON:  ‑‑ and you expect that listeners or viewers at the computer will click on your radio signal and get your service, the service is your normal service.  It carries the commercials I presume?

6935             MR. WRIGHT:  Yes.

6936             MR. KIRK:  Yes, it does.

6937             THE CHAIRPERSON:  But of course you can't stop the listener from then moving on to other pages and doing other business on the internet.

6938             MR. KIRK:  Yes.

6939             THE CHAIRPERSON:  So are you saying that you haven't been able to attract banner advertising in any great number on your own home page?

6940             MR. WRIGHT:  Yes.  In our particular case our website for the market size is, I'm told, quite busy.  We do about 125,000 page views a month.

6941             But converting that to advertising revenue has been a real challenge.  We haven't been successful in getting our advertisers to buy into our websites.


6942             MR. KIRK:  If I could just supplement John's comment, we view the websites as a very strategic part of what we are doing.  They are supplementary in nature to the radio service.  It allows people to continue to interact with the service if they are out of the market.  Maybe they are at the office, whatever, they can connect it.

6943             We stream all four stations, those are the three in Oshawa and the one in Hamilton.  The streaming is very, very well accepted.  People like to listen in spaces.  Maybe not in the car or at home, but some other place where they have a computer.

6944             But I agree fully with John, that from an advertising point of view there is just not enough impact yet for that to be a primary vehicle for advertising.  You might add it onto a radio buy, for example and include the website as part of it, but there are very few people that have a lot of interest in just buying the website as a primary vehicle without the radio.

6945             THE CHAIRPERSON:  Do you use it as a promotional vehicle for, say, music artists?


6946             MR. KIRK:  Oh, absolutely.  We have long lists of connected websites, linked websites for ‑‑ well, the station in Hamilton which is an NAC smooth jazz format, we probably have 250 artist links to that site.  People access the site and then find out a lot more information about the artist by going through and then linking back.  We have questions left all the time on the website, additional artist information, song information.

6947             So it is a very good supplementary experience for the radio station to have that resource available.  I think it's sort of in the rougher way maybe getting to where the people from Rogers were saying.  We are coming at it a little differently because we are smaller and it is kind of learn by doing and we don't have that intercorporate connected resource platform that Rogers has.  But it is all part of how the listener is interacting with the radio station and wanting more from the experience.

6948             THE CHAIRPERSON:  Of the artists that are linked to you on that station, what percentage of them would actually sell albums on their websites using it as a distribution medium?

6949             Do you have any sense of that?

6950             MR. KIRK:  Oh, yes.  Most of the independent artist websites will have ‑‑ if you get to their website there is a way to get music.

6951             As well, a section of our website at The Wave in Hamilton, we operate a record store in the radio station where we rack about 35 titles ‑‑ these are independent Canadian artists ‑‑ and you can find the list and the order form on our website.


6952             THE CHAIRPERSON:  And then you deliver it?

6953             MR. KIRK:  They can send us a cheque, we can take a credit card, we can mail it out to them.  Some of them walk in and buy it right across the front counter.

6954             MR. WRIGHT:  And get a Starbucks.

6955             MR. KIRK:  We haven't had an affinity program with Starbucks yet, John.

6956             MR. WRIGHT:  Mr. Chairman, we have a comment from one of our other members who would like to ‑‑ Jon?

6957             MR. POLE:  Yes.

6958             I think just one point to add as well is, based on the majority of the OIRG size markets and you look at the revenue that we generate being so high to the local advertiser, where the Big Six have the opportunity is if you look at a lot of their stations where they are generating revenue on their website it's coming from national advertisers and the fact is our advertisers, we have some that don't even have a computer because they are just not at that level.


6959             So to get them to buy advertising is very high‑tech in some cases.  To talk to them about web‑streaming is sometimes beyond their personal grasp.  Just because we are operated in smaller markets we don't have the opportunity to get some of the larger nationals involved on our platforms.

6960             THE CHAIRPERSON:  Thank you.

6961             Commissioner Pennefather...?

6962             COMMISSIONER PENNEFATHER:  Just a quick question.

6963             You have a recommendation in the area of what you called the CTD cross‑subsidy and what you called the bidding process.  I understand the point.

6964             Just on the recommendation, if you could provide us with a little bit of an analysis of what you thought the impact would be of your proposal that would be very helpful.

6965             Okay?  Thank you.

6966             Thank you, Mr. Chairman.

6967             THE CHAIRPERSON:  Mr. Kirk, in view of your own background. I wonder whether you have any comments on the Competition Bureau's submission on LSAs and LMAs?

6968             MR. KIRK:  I briefly reviewed their submission and I have heard some of the commentary on it.  I can't say that I went through it line by line.

6969             I think I would agree with some of the other operator's conclusions on this, that radio operates in a competitive advertising market.


6970             John should supplement this comment, but from our experience radio operates in a very competitive landscape within Kingston or Oshawa or Renfrew or Owen Sound with all sorts of other media.

6971             The benefits of an LSA or an LMA ‑‑ John should speak to that as well ‑‑ are very significant when you can sell the product better and more efficiently for the radio industry.

6972             THE CHAIRPERSON:  Right.  I think we have your position on that.  I don't know whether any of your members can offer information on quantifying those benefits in a market.

6973             We had Mr. Maheu previously saying several millions.  I mean, is there any sense you can give us of the percentage of revenues increase that represents ‑‑ or profits increase, including cost savings?

6974             MR. WRIGHT:  I don't believe any of our current members are in an LSA right now, but they were certainly numbers that were being contemplated before that avenue seemed to be closed.


6975             MR. KENTNER:  Mr. Chairman, when you are speaking number, though, I do think that the numbers that OIRG has presented here today reinforces the fundamental finding of this entire hearing, that small market radio is entirely different from medium and major market radio.

6976             We had the CHUM organization today asking you not to treat small market broadcasters any differently, and yet I think there has been an excellent suggestion that markets of about 250,000 and lower are the markets that ought to be approached differently from a regulatory standpoint.

6977             These are the ones ‑‑ and we have told you here, our profitability is 6 percent vis‑à‑vis 23 percent ‑‑ and I think here we have discovered the tipping point maybe at about communities or markets of 250,000 there is a sound rational for some differentiation in applying the regulatory burden.

6978             THE CHAIRPERSON:  Right.

6979             As I understood the CHUM point, it wasn't so much small versus large, it was ownership.  It was small market independents versus small market ‑‑

6980             MR. KENTNER:  I agree.

6981             THE CHAIRPERSON:  ‑‑ large MSOs so to speak.

6982             Was that your understanding?

6983             MR. KENTNER:  Yes.


6984             THE CHAIRPERSON:  Are you suggesting there should be differential treatment between those two categories, within the small market category?

6985             MR. KENTNER:  Well, I guess what I'm suggesting is that the way around the difficulty between the independent and larger broadcasters is to treat it on a market basis and where markets, are 250,000 and less that would be a simple way of applying an even hand.

6986             THE CHAIRPERSON:  Irrespective of ownership?

6987             MR. KENTNER:  Yes.

6988             MR. KIRK:  Yes, I think that's right.  We are not advocating any symmetrical regulatory system applicable to independent owners versus ‑‑

6989             The economics apply more by market size in those dynamics, whether it's a group of stations owned by CHUM or Rawlco or John Wright or Bayshore Broadcasting.  So I think it is the market structure that really will make the regulatory proposition.

6990             THE CHAIRPERSON:  Right.

6991             You are a diverse group and a number of you have spoken.

6992             Do any of your members wish to add anything, because you are all independent operators?


6993             COMMISSIONER ARPIN:  I noticed in both in your written presentation ‑‑

6994             THE CHAIRPERSON:  Just before you do that, I was giving the panel an opportunity.

‑‑‑ Laughter / Rires

6995             THE CHAIRPERSON:  You will have your opportunity next.

6996             MR. KENTNER:  Could I submit that it was difficult to come to the table, all of us, on many issues, and on the music issue I would really appreciate an opportunity to say that I believe that many of us actually are quite close to 40 percent CanCon on a day‑to‑day basis and that if we had single letter MAPL probably this would even out at about 35 percent.

6997             So that I don't think that ‑‑ I was therefore able to line up with these fellows and agree to a rollback to 30 percent, because I think it would in fact, with a single letter MAPL, end up being about status quo 35 percent.

6998             THE CHAIRPERSON:  With a single letter MAPL?

6999             MR. KENTNER:  Yes.

7000             THE CHAIRPERSON:  All right.  I hear that.

7001             Mr. Arpin...?


7002             COMMISSIONER ARPIN:  In both your submission and your oral presentation you seem to be a proponent of the introduction of IBOC in Canada.

7003             As you surely know, the CRTC is not responsible for spectrum management and that decision will have to be made by Industry Canada.

7004             I don't know if you were here yesterday when the gentlemen from iBiquity appeared, and this morning the CBC came early in the morning to comment on the iBiquity submission and the issues that they are seeing, but I was wondering if you have any further comments to make regarding IBOC?

7005             MR. KIRK:  I would make to make the one comment on why we recommended it.

7006             In the context of the CBC's position and the seller of the technology, iBiquity, I don't think any of these systems yet have all the problems worked out, whether it is ‑‑ the applicability of IBOC to AM certainly is still a large question overall for the whole system.  Certainly the FM seems to work.


7007             Our conclusion in recommending IBOC for Canada is primarily because of the relationship in North America with the United States.  A lot of our markets are close to the border.  IBOC has seemed to get a lot of interest from major broadcast groups in the U.S. such as Clear channel and CBS Radio, Entercom and others who have actually created the egg, if you will ‑‑ if there has to be a chicken and an egg, you have to start somewhere ‑‑ and they have put the bet down to create the egg and start the process by getting stations converted to the format and there will actually be product out there.

7008             From that I think the pressure to install in the auto channel, which seems to be quick channel to diffuse the new product to the mass market.

7009             So that was really our read of what is going on down there.  I know there are still technical issues to be worked out.

7010             But in our case we have the DAB spectrum.  We don't have to change anything there, we can leave it, but adopting IBOC will at least keep us on a level playing field in the North American context.

7011             It may be more applicable to companies like Blackburn who are operating along the border.  Would your high quality HD radio system work in Detroit and you drove across the bridge and it didn't work in Windsor, and that would further exacerbate the problem of tuning to border stations.


7012             So it's really the specific case, but in the larger context, sharing technology across the border and having the auto channel, it looked like a possibility for DAB back about five or six years ago, but because of lack of receiver penetration and everything else it just didn't happen.

7013             This probably does have a good chance of happening.  You have conversions of hundreds of stations in the U.S. to that new digital format.  I think it is a low‑cost way to do it.  I know it's not your trigger here to say, "Do it", but a letter to Industry Canada could probably move things along quite well.

‑‑‑ Laughter / Rires

7014             COMMISSIONER ARPIN:  That was my question.  Thank you very much.

7015             THE CHAIRPERSON:  Thank you.  Thank you very much.

7016             MR. WRIGHT:  Could I make one last comment, please?

7017             THE CHAIRPERSON:  Go ahead.


7018             MR. WRIGHT:  I know the group of us spent a fair amount of time on the whole issue of CanCon and Canadian Talent Development and we are the small market folks so we are not in the boardrooms and meeting with the music industry, but one of the things that came across to us while we have been here is that there doesn't seem to be agreement yet on a plan.

7019             Our question is sort of:  What is the goal?  What are we trying to accomplish with our support of the Canadian music industry?  Do we know what the goal is?  Is it to try and make the Canadian music industry profitable?  Is it to try and make the sales greater than 16 percent?

7020             What are we spending our money and allowing our airtime to do?

7021             I think we would feel a lot better if we were informed on the goals and then we could help support whatever plan was there to achieve these goals.

7022             I think that's one of our biggest concerns.  We don't see that there is a common goal.  We see that there is a music industry on the one side, there is a radio industry on the other side, and it always seems to be that the music industry wants more and the radio industry wants less, but we don't know what we are trying to achieve.

7023             This is one of our big concerns.  We would like to see a plan where it is laid out that we want to get to a goal.


7024             Then when we get to that goal we may not have to do further funding.  The funding may not always need to increase.  We may be able to achieve a goal and have a level of funding that then would level off because we have achieved our objectives and the industry is healthy and the artists are improving and doing well on a worldwide basis, so we may not have to constantly be looking at increased funding in that case.

7025             THE CHAIRPERSON:  Those are interesting questions ‑‑

‑‑‑ Laughter / Rires

7026             THE CHAIRPERSON:  ‑‑ and the ones we wrestle with all the time under the umbrella of the Broadcasting Act.  But if you, in your later submission, can answer some of those questions or help us with answers to those, that would be very constructive.

7027             MR. KIRK:  Could I end with a little anecdote?  Commissioner Cugini always would like to see some real‑world examples.

‑‑‑ Laughter / Rires

7028             MR. KIRK:  Are you regretting saying that?

7029             COMMISSIONER CUGINI:  No, actually I'm not.

7030             THE CHAIRPERSON:  It is still taking second place to "we need more flexibility".


‑‑‑ Laughter / Rires

7031             MR. KIRK:  Just a quick example of how some of this works.  And this was without subsidies, without changing regulations, whatever.

7032             We bought the stations in Oshawa just coming up on three years and one of the stations to serve the market better should be in the rock format.  There was a lot of local interest in that.  We designed the format, but we contemplated a little bit of flexibility in the evening hours, okay.

7033             We hired a young guy who was actually finished a broadcast program.  This was just a wild card hire, we were just staffing up a new station.  This guy was terrific.  He was in the band, very passionate about music.

7034             And he asked us, you know, "Well, I want to do some stuff with new music".  So we said, "Sure, Matt.  Go ahead," and he created the show.

7035             So, Monday, Tuesday and Wednesday nights at nine o'clock he does half an hour of new music.  This is all inde music.


7036             And I was out at the radio station one night and there were these people lined up in the hallway waiting to get in and he was interviewing them on the air and playing their records and they'd never had a spin before.

7037             You know, we didn't tell him to do it, it just made sense for the market and he's getting a great following in the younger parts of the market just playing this new music.

7038             And he said:  Well, maybe that's the way it should work, right, let it go and it is fulfilling all the things that we think should be happening there and getting some new music on the air, getting the bands familiar with what it takes to get on the radio.

7039             THE CHAIRPERSON:  And how are his

numbers?

‑‑‑ Laughter/Rires

7040             MR. KIRK:  His numbers are okay.  They tend to be quite high in the 18‑24 demo section.

7041             THE CHAIRPERSON:  Thank you very much.  We will break now for 15 minutes and rependron at quatre quinze, 4:15.

‑‑‑ Recessed at 1600 / Suspension à 1600

‑‑‑ Resumed at 1616 / Reprise à 1616

7042             LE PRESIDENT:  Madame.

7043             LA SECRETAIRE:  Merci Monsieur Président.


7044             I would now call on the next participant, Milestone Radio Inc. to make their presentation and after you have made your introductions you'll have 10 minutes for your presentation.

7045             Thank you.

PRESENTATION / PRÉSENTATION

7046             MR. JOLLY:  Thank you, Madam, Commissioner.

7047             I would like to thank the Commission for the opportunity to appear at these proceedings.  My name is Denham Jolly and I am President and CEO of Milestone Radio Incorporated.

7048             Joining me for this presentation on my left is Nicole Jolly, Vice‑President Operations at FLOW, on my right is Program Director Wayne Williams and at the far left is Ayeisha Wickham, Manager of Canadian Talent Development.

7049             In addition to managing FLOW's CTD initiatives, Ayeisha is the Executive Director of the Urban Music Association of Canada.

7050             I believe you will have read the submission she wrote on UMAC's behalf.  Ayeisha has been part of the Milestone team since the beginning.  She is a graduate of radio and television arts program at Ryerson University.


7051             Wayne, a Canadian, a graduate of University of Houston and has been our program director for three years.  He has over 15 years radio experience, both on air and in management.  Wayne was one of the founders of Energy Radio.

7052             Nicole was instrumental in setting up FLOW and managed its launch in 2001.  Her role has since expanded and she has been managing the station for the past three years.

7053             She is also a member of the CAB's diversity working group.  Her resume includes having been a Vice‑President at Goldfarb Consultants in Toronto and we have found her research expertise an invaluable asset for the station.  Nicole is a graduate of McGill University in Montreal and a Masters from the London School of Economics.

7054             In 2001, Milestone Radio pioneered the urban format in Canada with the launch of FLOW, a stand‑alone FM station in Toronto.  We're proud of the fact that FLOW has provided a commercial radio outlet for the urban format which had previously been unavailable to urban artists.

7055             As you may know, the urban format can be defined as a genre that encompasses such sub‑genres as R&B, Hip Hop, Reggae, Soul, Funk, House and others.


7056             Milestone is a partner with CHUM Limited in the Edmonton Vibe Partnership which operates Edmonton's 91.7, The Bounce.  The Bounce is an urban‑based radio station, however it isn't exclusively urban.

7057             The Milestone Radio Company was founded on shared economic and social imperatives.  Economically we are a fully commercial enterprise with financial goals, however, we feel it is equally as important to elevate the urban music genre.  Although we measure success financially, we also measure success through our ability to propagate urban music and build Canada's urban music industry.

7058             In fact, at last year's Canadian Music Week, FLOW was voted CHR's station of the year by its peers.  We also won the CAB gold ribbon award for community service and the Ontario Association of Broadcasters Community Service Award.

7059             In our 10‑minute presentation we will illustrate how the supply of commercially viable urban music is not sufficient for urban formatted stations to compete with rock and pop stations.  That is to say, current Canadian content minimums are preventing FLOW from reaching its full potential.


7060             We will show how an increase beyond 35 per cent would be detrimental.  We will endorse the CAB's recommendation for Smart 35 and introduce a proposal for Smart 35 plus that will benefit our station specifically and independent artists in general.

7061             Nicole.

7062             MS JOLLY:  Thank you.

7063             Since the 1970s the Canadian music industry has developed considerably.  As we're all aware, Canadian content regulations were originally born out of a need to ensure that Canadian music was adequately represented on Canadian air waves.

7064             The CANCON strategy achieved its original intended goal, however, the benefits that have been afforded to artists in rock and pop genres have get to manifest in the Canadian urban music industry.

7065             International urban music has long been popular in Canada.  Artists such as LL Cool J, Run DMC, TLC and Boys II Men had commercial success here in the 80s and 90s without significant radio air play.

7066             Canadian urban music first entered the mainstream in the late 1980s when Maestro Fresh Wes achieved hit record status with Let Your Backbone Slide, making him a platinum‑selling Canadian hip hop artist.


7067             However, the first commercial radio outlet to exclusively feature urban music was FLOW‑93.5 which launched over a decade later in 2001.

7068             FLOW would be the first of a handful of stations to feature an urban or heavily rhythmic playlist.

7069             As you can see, although five stations signed on with urban or nearly urban formats between 2001 and 2004, four of those five have since abandoned the format and gone to contemporary hip radio or urban rock hybrid formats.

7070             Lack of commercially ready Canadian urban music is one of the main reasons given by four of the four stations for having switched.  They all felt as if they had to use music from other formats in order to meet their CANCON quotas.

7071             The other major consideration is that a majority of independent Canadian material is not available at a retail level.

7072             As you know, most commercial stations will not play music that has no distribution.


7073             Canadian urban stations basically have two options in meeting 35 per cent CANCON minimums, either they break format by playing Canadian artists from other genres like Nickelback or Avril Lavigne, or they play unfamiliar music from unsigned artists whose product is typically not available in stores.

7074             Both choices limit urban stations from reaching their full audience potential and discourage format diversity on Canadian air waves.

7075             To help explain why the supply of Canadian urban music is so short one only has to look at how Canadian labels sign acts.  Canadian labels are limited by their budgets in the number of artists they can sign per year.  Signings aren't assigned by genre, they sign acts from whichever genre of music makes the most business sense.

7076             Now, record labels depend on radio to create exposure for their artists.  The more spins an artist receives on radio, the more likely their product is to succeed commercially.

7077             Urban acts come with a built‑in handicap, there are only a small handful of rhythmic stations in the country that can support an album release, while a rock act has over 200 stations to support a release.

7078             We found that major record labels in Canada are encouraged by the system to sign rock and pop acts at the expense of urban artist signings.


7079             Over the past five years, Universal Music has signed three urban artists to its label out of 33 signings.  Warner Music Canada has signed five artists directly to its label over the past several years, none of whom are urban artists.

7080             Out of EMI Virgin Music Canada's more than 700 domestic sub‑label album releases since 2001, 45 per cent were from the pop and rock genres and only nine per cent represented the hip hop, R&B and reggae genres.

7081             In 2001, Sony BMG had eight urban artists signed to their domestic roster, only three are signed today.

7082             To help explain our situation, we've categorized the industry into three tiers.  Tier 1 consists of major label signed artists.  This category would include artists such as KAOS, Nickelback, Keisha Chante and Avril Lavigne.

7083             Tier 2 we categorize as being artists signed to independent labels, artists such as Bedouin Soundclash, Arcade Fire, Massari and the Broken Social Scene.


7084             Tier 3 consists of unsigned independent artists.  These artists are unfamiliar to our listeners, likely unfamiliar to the Commission, and typically do not have distribution for their product.  Listeners cannot buy this music at retail, period.

7085             The majority of commercial radio stations feature music from well‑established Tier 1 artists exclusively.  In fact, many would not play any music from Tier 2 or Tier 3 artists for fear of alienating their listeners.

7086             I'd like to show you a breakdown of all the Canadian music played at FLOW in 2005.  You'll notice that only one in four Canadian tracks played on FLOW were by artists signed to a major label.

7087             Nearly three in four Canadian tracks are from a category of artists that most stations would not play under any circumstance.  We can report that this lack of familiar product from which to program the station has hurt us from a competitive standpoint.  We find ourselves trying to play on an extremely uneven playing field.

7088             Just to highlight the difference, I'll ask you to look at one more chart.

7089             We've categorized the CANCON spins of another commercial station in Toronto.  The station features an alternative rock format and it could be argued is one of our main competitors.


7090             This station prides itself on its support of up and coming and independent artists so we should expect that this station would play considerably more Tier 2 and Tier 3 artists than most other commercial stations.

7091             We believe this slide illustrates exactly how wide the product gap is among available Canadian urban product and Canadian product in other genres.  The station that we've categorized gets 58 per cent of its CANCON from the Tier 1 category.  Nearly six in 10 Canadian songs are by major label artists, where for FLOW fewer than three in 10 Canadian songs are by major label artists.

7092             We feel strongly that the CAB's recommendation of Smart 35 would be helpful for all radio stations.  It would help FLOW as we would be given credit for music we are already playing; likewise, it would help artists in Tier 2 and Tier 3.

7093             We would also propose a plus to the Smart 35.  Smart 35 has been developed with Tier 1 and Tier 2 artists in mind.  As the majority of stations would never play music from Tier 2 or Tier 3, those artists have fundamentally been left out of the equation.


7094             We would like to propose that in addition to offering bonuses for playing music by new and emerging artists in Tier 2, a further bonus is offered for playing music by unsigned artists or those in Tier 3.

7095             So, the CAB has asked for a Smart 35 proposal.  In their proposal, stations that play new and emerging artists would be given a bonus, that's to say they would receive a 125 per cent CANCON credit for playing the record.

7096             In our proposal we would ask that an additional credit be given for unsigned artists or those in Tier 3.  We propose that a 150 per cent CANCON credit be offered for playing tracks by unsigned artists.  This will reward stations willing to expose new talent to their audiences and develop the burgeoning independent music sector for all music genres, not only for urban artists.

7097             Ayeisha?

7098             MS WICKHAM:  Thank you.

7099             The volume of Tier 2 and Tier 3 artists in the urban genre demonstrates the need for funding at the grassroots and independent artist development level.  This is the reason why we support continued and stable CTD funding for new and emerging artists, particularly those at the grassroots level.


7100             Because of its social imperative, Milestone is motivated to be part of the development of the urban music industry in Canada.

7101             We recognize that this is one of the most popular genres among youth.  If we had a purely economic agenda, we may have already chosen to temporarily abandon the format and wait until the Canadian urban music industry matures and becomes more lucrative.

7102             However, understanding that supporting a broad range of formats is a priority for the CRTC, we feel that the preservation of stations with niche formats such as FLOW will help ensure that Canadian terrestrial radio listeners have a broad range of formats from which to choose.

7103             As echoed in many of the submissions, year‑over‑year trend data reveals that youth are fleeing the medium in droves.  With media choices that have grown exponentially since the last review of radio in 1998, youth are developing media habits that decreasingly involve terrestrial radio.

7104             It is the responsibility of the radio industry, including the regulators, to ensure that we do not abandon the customers of our future.


7105             With most stations being programmed for mature audiences and the many alternative media that have been discussed at length throughout these proceedings, today's 13‑year‑old has not been given a reason to embrace terrestrial radio.  It simply is not relevant.

7106             Out there somewhere is that 13‑year‑old who has never had the need or desire to turn on the radio.  When his generation turns 25 and doesn't inherently adopt the medium, we will then begin to see the full impact of their media defection.

7107             We share the CAB's concern that in the longer term, especially if youth are not repatriated back into using the medium, the future of radio is in jeopardy.

7108             FLOW‑93.5 is committed to the urban format and is appealing for a regulatory framework that will support our efforts to further develop this viable genre in Canada which is critically important to reaching younger audiences.

7109             Through a combination of a Smart 35 plus bonus system for CANCON, increased infrastructure support for urban artists through CTD investments, as well as a healthy commercial radio sector that embraces a diversity of formats, radio in Canada will continue to be relevant to youth audiences for generations to come.


7110             This concludes our comments and we would now be pleased to answer any questions.

7111             Thank you.

7112             THE CHAIRPERSON:  Thank you very much.

7113             Commissioner Pennefather.

7114             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

7115             Good afternoon, Mr. Jolly, good afternoon, Madam, good afternoon.

7116             Thank you for your presentation.  Very interesting, very clear and I want to talk about Canadian talent development.  It's not a surprise.

7117             MR. JOLLY:  Good afternoon, Commissioner.

7118             COMMISSIONER PENNEFATHER: I have in front of me your written submission and I am looking at this afternoon's comments.  The Tier 2/Tier 3 artists in your (inaudible), that ‑‑ I was going to ask which tier you think needs the support at the grassroots level, so it is Tier 2 and Tier 3.

7119             MS WICKHAM:  That's correct.

7120             COMMISSIONER PENNEFATHER:  Not just the unsigned artists?

7121             MS JOLLY:  Correct.


7122             MS WICKHAM:  Independent and unsigned artists as well as new and emerging artists, that are new in Tier 1.

7123             COMMISSIONER PENNEFATHER:  So, the grassroots level, when you discuss grassroots, it's both inde and it's unsigned, inde label and unsigned artists?

7124             MS WICKHAM:  That's correct.

7125             COMMISSIONER PENNEFATHER:  Is there any priority in your view?  Is there more need in one tier or the other, I'm talking just Canadian talent development funding for the moment.  I'm sure we'll talk about CANCON, but is there more need ‑‑ as you know, there has been a definition of grassroots that is just unsigned and there is grassroots if FACTOR is considered by some in itself to be a grassroots fund but it sounds more Tier 2 in terms of inde labels.

7126             Is there a priority?

7127             MS WICKHAM:  I think as it specifically relates to urban genre formats that the Tier 2 artist levels ‑‑ level of artists are those who are closer to being commercially ready for air play and require a significant amount of support.


7128             From a need perspective, the artists at Tier 3 are in need of the most support but are less commercially ready for air play than those in Tier 2.  So, while we support funding for artists at all level of the artist development chain, in terms of the farm team that's been discussed before, artists at level Tier 2 certainly are closer to being prepared for the commercial radio market.

7129             COMMISSIONER PENNEFATHER:  So, when you refer in your submission to a commercial radio fund, what fund are you talking about there?

7130             MS WICKHAM:  We're referring to the fund referred to in the CAB proposal, the Radio Star Maker Fund.

7131             COMMISSIONER PENNEFATHER:  Ah.

7132             MS WICKHAM:  Which we are not opposed to at all, it's been very beneficial to urban artists in Tier 1, many have benefitted from that; however, some of the sales figures that are required to qualify for those have prevented certain artists in Tier 2 from accessing those funds.  So, that's why it's important to us that support continue for artists in Tier 2 and Tier 3.


7133             COMMISSIONER PENNEFATHER:  If we take the proposal of all funding going to the Star Maker Fund, how would you then suggest that it be assured that Tier 2 and Tier 3 artists would be supported since the ‑‑ as I read it, and maybe putting it too simply ‑‑ the Radio Star Maker Fund marketing promotion is really for more than just commercial radio, it's artists who are launched essentially.

7134             How would you assure that the money would get to Tier 2 and Tier 3 if it's all coming out of Radio Star Maker Fund?

7135             MS WICKHAM:  Perhaps I could clarify.  We're not necessarily supporting all of the funding going to the Star Maker Fund.  We understand there are a number of different proposals for ‑‑

7136             COMMISSIONER PENNEFATHER:  Right.

7137             MS WICKHAM:  ‑‑ the way the funding can continue.  It's important to us that whatever the model is, that Tier 2 and Tier 3 artists be included in that equation.

7138             Whether the CAB's proposal is going to be the right solution is something that would be discovered in the evaluation process.

7139             COMMISSIONER PENNEFATHER:  Okay.

7140             MS WICKHAM:  However, we're not necessarily supporting that exact model.

7141             COMMISSIONER PENNEFATHER:  But in principle, as you contribute to that process, you say here:


"A percentage of funds must be reserved for programs with a grassroots focus."  (As read)

7142             Do you have a sense of what you mean by that percentage?  Do you have any...

7143             MS WICKHAM:  In terms of exact numbers?

7144             COMMISSIONER PENNEFATHER:  Yes.

7145             MS WICKHAM:  We haven't necessarily fully developed a position on what percentage.  Certainly artists in Tier 1 deserve a larger percentage in terms of them being at the forefront and being more ready for the exposure, but artists in Tier 2 and Tier 3 must be as equally accessible ‑‑ those funds must be equally accessible to artists in Tier 2 and Tier 3.

7146             COMMISSIONER PENNEFATHER:  I think that is clear.  I guess what you are talking about then is getting in on the process of the design of a model and seeing that guidelines and governance also is established so that you can see to that direction.

7147             You also say in paragraph 48:


"Rock, pop and AC formats already have a solid infrastructure.  A higher proportion of Canadian talent development funds need to be directed towards initiatives that will develop other music formats infrastructure, specifically urban."  (As read)

7148             So, is that different?  Are we talking about different funds there, or specific to infrastructure?

7149             MS WICKHAM:  We're not talking about different funds, what we're talking about within the funds that exist we would like to see ‑‑ certainly as proponents as a pioneering format in Canada, we'd like to see the urban music industry have the opportunity to grow and develop the way the rock and pop genres have and that's certainly going to take an increased amount of investment and air play.

7150             Currently one outlet, maybe four or five outlets are available to urban artists.  That certainly isn't enough to develop the infrastructure in the way the rock and pop industries have been able to develop.


7151             So, in our statement we're basically referring to the fact that CTD funds in terms of developing artists will help them get more exposure through existing stations and through talent development programs such as marketing and workshops and conferences, et cetera.

7152             MR. JOLLY:  If I could just add.  As Ayeisha said, the urban stations don't get the exposure.  She mentioned possibly four stations, whereas rock and pop have up to 200 stations they can be exposed to.

7153             COMMISSIONER PENNEFATHER:  I think that is partly what I am trying to get at is how you see going forward that you would influence the guidelines and choices that are made by the proposed Star Maker Fund where the monies would be funnelled out back again and so on.

7154             Just my final question.  In the urban music area when we talk about the younger audiences, and I guess we can make an assumption that you would have a younger demographic ‑‑ what is the demographic of FLOW?

7155             MR. JOLLY:  18‑34.

7156             COMMISSIONER PENNEFATHER:  Right.  In terms of digital music, iPods, that whole side of things, are you losing audiences, are you bringing the young audiences back?  How does it work in the urban format?  Is there any particular points you want to make?


7157             You have heard our discussions all day.

7158             MR. JOLLY:  Our listeners are obviously very proactive when it comes to sourcing out new music, dealing with the Internet, some cellular phones, downloading music from there as well.  Very active in general.

7159             The format itself is obviously a very new format in Canada in terms of commercial radio, it being in its infancy stages and it's very intriguing to a lot of our audience, our young audience and they're obviously looking for the newest and the hottest tracks out there.

7160             Radio is becoming ‑‑ it's almost a bit of old school that, you know, the tracks that you're hearing on radio have already been out on the Internet for a considerable amount of time by the time that radio starts to play those particular songs.

7161             That being said, you know, a lot of the record labels have their own marketing plans and radio does follow those plans from the different labels and so forth and so on.


7162             But our youth and our listeners are out there sourcing out material prior to the agendas of some of the record labels out there and, of course, being a commercial radio station sometimes, you know, you follow the agendas of some of the labels and, you know, what's hot and what's not, so to speak.

7163             That being on that international level, in terms of Canadian music, every time that we play an unfamiliar artist to our younger audience, an artist that isn't necessarily ‑‑ doesn't necessarily have that marketing plan, that distribution plan where they can find it available in any retail outlets that they're familiar with, it gives them an opportunity to go somewhere else.

7164             And we're obviously not just competing against other radio stations any more, we're competing against so many other mediums out there.

7165             So, it definitely does affect us in terms of ratings and time spent listening and so forth.

7166             MS WICKHAM:  Excuse me, I'd like to add.  Our research has told us that we've lost some of our listeners, especially in the younger end to other platforms.


7167             One of the things that was interesting about our station, when we first signed on with an urban format, there were many people who had always listened to urban music and had never been able to find it on their radio before, so we found that we were bringing people into the medium because it was people who liked urban music, there had always been sales of urban music in Canada but they'd never had a commercial outlet with which to listen.

7168             So, when we first signed on we had listeners who we weren't ‑‑ who were new to the format, who were new to FM radio, and that's one of the things that some of our data suggests, our high level of exclusivity, people who only listen to FLO because they can't really find the music on other stations.

7169             And in doing that, in kind of bringing some people in, we know that when we lose them we're not necessarily losing them to other FM formats, they're going back to their other platforms.

7170             A lot of our listeners are people who always had to source their own music because it was never available.

7171             So, if that helps answer your question a little bit.

7172             COMMISSIONER PENNEFATHER:  That helps.  I mean you made the comment that today's 13‑year‑old has not been given a reason to embrace terrestrial radio, it's simply not relevant, and that is one of those comments that ‑‑


7173             MS WICKHAM:  The music they like isn't played on the radio.

7174             COMMISSIONER PENNEFATHER:  Played on the radio.

7175             MS WICKHAM:  They don't ‑‑ the radio kind of programs for 35 and up and they can't find it on radio, so...

7176             COMMISSIONER PENNEFATHER:  Well, it is interesting to hear how you are picking up on that challenge.

7177             Thank you, Mr. Chairman.

7178             THE CHAIRPERSON:  Thank you.

7179             Commissioner Cugini.

7180             COMMISSIONER CUGINI:  Good afternoon.

7181             Your tier 2 artists, would you generally agree that they essentially fit the definition of emerging artists as proposed by the CAB?

7182             I know that this slide did not provide an exhaustive list of artists, of course, but in looking at the BDS list, for example, I find many of them are on the list at 41 and up, including others that would fit the format.

7183             Is that generally what your position is on those tier 2 artists?

7184             MR. WILLIAMS:  Tier 2 artists, yes, definitely do fit that description.


7185             COMMISSIONER CUGINI:  Your tier 3 artists credit, is that something that you would want to see applied to any radio station that plays unsigned artists, or only those radio stations with an urban format?

7186             MS JOLLY:  All radio stations.

7187             COMMISSIONER CUGINI:  And just one final question.  Have you ‑‑ well, it is a two parter, though ‑‑ have you identified markets outside of the ones where you currently operate a radio station that could support an urban format station?

7188             MS JOLLY:  It's a hard question to answer because urban music is definitely popular, however, for the reasons that we outlined, we find that urban radio doesn't achieve the full ‑‑ the data and the share ‑‑ the ratings of urban stations don't really represent the popularity of urban music, and I think part of that reason is because we're fighting with the medium a little bit.

7189             Radio is a mass appeal medium, people like familiar product.  We're playing product by artists, they make it in their basement, there's no distribution.


7190             People like a song that they hear, a song comes on, it makes them move, they call us up and they say, where can I get this?  Is it at HMV?  I've never heard of JD Era.  And we say, well, actually no, sorry, you can't get it anywhere.

7191             So, it's really hard to assess.  I mean, I think that there are ‑‑ there would be markets that could support strictly urban music, but when you throw in this kind of handicap of having to play unfamiliar music that's not available at retail, it gives you spurious results a little bit.

7192             And if I may elaborate a little bit.

7193             COMMISSIONER CUGINI:  Of course.

7194             MS JOLLY:  I'd like to talk about one of the ways that we try to kind of solve the distribution problem a little bit.

7195             COMMISSIONER CUGINI:  That was the second part of my question.

7196             MS JOLLY:  Oh, okay.

7197             COMMISSIONER CUGINI:  In the sense that if we apply the credit and radio stations do play music that is not available at a retail level and your listeners become familiar with that music, it is ‑‑

7198             MS JOLLY:  It creates a market for it.


7199             COMMISSIONER CUGINI:  Well, you know, you are between a rock and a hard place.  You create familiarity for your listeners but then they can't get the music anywhere, perhaps other than the Internet.

7200             MS JOLLY:  Exactly.  Well, we tried to solve that problem a little bit by ‑‑ we put up a download page on our website and the page ‑‑ we put it up in late September and we had the consent of the artists, we did not charge any money, downloads were available for free.  So that when listeners called up and said, you know, where do I get that song, we could direct them to our download page.

7201             Without any promotion at all we had 13,000 downloads in the first month and that was without any promotion on our air waves.  And in the second month in November we had 20,000 downloads.  It was going up exponentially.

7202             So, we expected that we might be helping to solve our own distribution problems, however, I understand very well that the Commission has no jurisdiction over copyright issues, but because of some tariff proposals that are in front of the Copyright Board at the moment, we had to take the download page down and we're not able to offer that any more.


7203             And these were downloads that the artists were excited about participating in because it was a way for people to access their music and they'd never had any access before.  Even though there were no profits being made we ‑‑ it cost us money to host the site, you know, for the broad band et cetera, it was not a revenue centre for us at all, it was a cost centre, but it was a service that we thought would help us make the product more familiar.

7204             But it's one of the ‑‑ you know, we had to take it down basically.

7205             COMMISSIONER CUGINI:  Well, I applaud your dedication for sure.

7206             MS JOLLY:  Thank you.

7207             COMMISSIONER CUGINI:  Thank you.

7208             Thank you, Mr. Chairman.  Those are my questions.

7209             THE CHAIRPERSON:  Counsel?

7210             MS MURPHY:  Yes.  We have questions that relate more to implementation.

7211             If the Commission was to accept such a bonus system and were to offer it to (inaudible) and others, it ‑‑ such a system would be imposed ‑‑ would be allowed by way of condition of licence.


7212             Now, in order to ensure that the system is used fairly, the Commission would need means of verifying that it is properly used and properly calculated.

7213             And our question, you may not want or need to, or you may not be able to answer the question today, but perhaps think about it and provide us this information by May 29th prior to the final argument stage.

7214             But our questions relate to the definition of tier 2.  How would ‑‑ what is an independent label?  Are there lists?  Can we verify that anywhere?  How would we verify that the musical selection actually qualifies under MAPLE that the artist is Canadian?

7215             So, those are the kinds of questions that come to mind in terms of ensuring fairness in the system.

7216             MR. WILLIAMS:  We'd be very happy to supply that by May 29th.

7217             MS MURPHY:  Thank you very much.  Those are my questions.

7218             THE CHAIRPERSON:  Thank you very much.

7219             MR. WILLIAMS:  Thank you, sir.

7220             THE CHAIRPERSON:  Would you call the next item, please, Madam Secretary.

7221             THE SECRETARY:  Thank you.


7222             MR. WILLIAMS:  Thank you, Commissioners.

7223             THE CHAIRPERSON:  Thank you.

7224             THE SECRETARY:  I would now invite the next participant, Radio CJVR Ltd., Mr. Ken Singer, to come forward for his presentation.

7225             THE CHAIRPERSON:  For the information of participants, we will sit for approximately another hour and then resume at 7:30 p.m., estimated time of ending, still unknown.

‑‑‑ Laughter/Rires

7226             THE SECRETARY:  Mr. Singer, you will have 10 minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

7227             MR. SINGER:  Good afternoon, Mr. Chair, Vice‑Chair, Members of the Commission and staff.  I'm delighted that Wednesday morning has arrived.

7228             My name is Ken Singer, I'm Vice‑President and General Manager of Radio CJVR Ltd. of Melfort, Saskatchewan and I wish to thank the Commission for this opportunity to appear and comment on policy issues relevant to Canada's private commercial radio sector.


7229             CJVR is a small market independent broadcaster with two Saskatchewan stations, CKJH‑AM and CJVR‑FM with two repeaters providing continuous broadcasting service to 100 small rural communities in Northeastern Saskatchewan for four decades.

7230             We have also just been approved for a transfer of ownership for a third small market station in Alberta.

7231             CJVR congratulates the Commission for undertaking this all important policy review as Canada's broadcasting landscape has changed dramatically since the Commercial Radio Policy 1998 came into effect.

7232             The challenge now facing the Commission and broadcasters is to build a new regulatory framework that is balanced and sufficiently nimble to adapt more readily to a constantly changing radio broadcast environment.

7233             As an independent career broadcaster, CJVR, like its radio peers, is highly vulnerable to all of the mentioned competitive elements.


7234             What is also of paramount concern to CJVR, however, is the rapid growth of low power and lower power commercial radio stations and the unfair manner in which they are changing the dynamics of the licensing process in the competitive marketplace to the detriment of small market broadcasters and their listening audiences.

7235             CJVR as a small market broadcaster has sustained significant fiscal damage from such low power entities with the threat of more to come.  Like many of our small market peers, our stations fulfil a vitally important role in the lives of the residents, 100 communities we serve, many of whom have grown up with the daily news, weather, sports and other locally relevant community‑driven programming provided by CJVR.

7236             The first indication of potential trouble for CJVR's small market stations at the hands of a low power undertaking occurred in the fall of 2001 when we applied to establish a first FM regional service for Northeastern Saskatchewan.

7237             An application for a 14,000 watt FM station for the Town of Nipawin just 90 kilometres from Melfort and other communities in our immediate coverage area also appeared on the scene and ultimately was licensed.


7238             An intervention against the low power proposal submitted by ourselves cautioned that the applicant's targeted market area of 4,000 residents within the Northeastern Region of Saskatchewan could not support a third local service without causing undue harm to CJVR‑AM and the proposed new regional FM service.

7239             Regrettably what CJVR had earlier identified as potential trouble soon transformed into the real thing as the net effect of this new low power operation being added to the Nipawin/Tisdale market was that CJVR's combined AM‑FM revenues for that sector of our coverage area dropped by over 41 per cent.

7240             Adding further insult to injury was the quality of the application which left much to be desired.

7241             Beyond its incompleteness and glaring deficiencies, the bare bones application offered very little programming, minimum Canadian talent development initiatives or any of the other important ingredients that go into properly serving the community and its residents.

7242             By comparison, CJVR invested over $2‑million in its new regional FM station, provided employment for 32 broadcast professionals, committed to a minimum of $252,000 in direct and indirect expenditures to Canadian talent development initiatives and delivered two unique AM and FM programming services that are second to none for the benefit of the many small rural communities and their residents.


7243             CJVR recently experienced a case of deja vu as another lower power application was filed under the name of a different family member of the same operators of the Nipawin station, this time to serve 3,000 residents of Tisdale located less than 30 minutes down the road from Melfort.  A poorly constructed application with a business plan that included an annual expenditure for programming totalling a mere $2,400 was thankfully denied by the CRTC just a few weeks ago.

7244             While we thank the Commission for its decision on this application, we wish to respectfully point out that, in our opinion, the applicant's very back‑of‑the‑envelope application should never have reached the public process as it was blatantly incomplete, lacking a viable business plan and obviously thrown together with little or no research, including a qualified technical brief.

7245             Having said that and fearing the approval of yet another lower power operation and the resulting impact on our revenues in this small community of Tisdale, Radio CJVR incurred considerable expense in intervening against this application, expenditures amounting to five figures.


7246             The purpose in referencing the above is a preamble to our comments today concerning conventional lower power radio stations is that it provides hard empirical data as to the financial impact and dislocation that such operations can impose on small market broadcasters like CJVR, results that are predicated on fact rather than theory.

7247             Based on CJVR's experience to date and its ongoing trepidation over future losses and fragmentation that will occur should other low power undertakings be licensed within our mandated coverage area, we strongly suggest the Commission needs to reconstruct its policy framework relative to lower power commercial stations proposing to offer mainstream programming because the policy, as it currently exists, is not working in the best interests of the public or the Canadian broadcasting system.

7248             In the Broadcasting Public Notice of October, 2002, the Commission expected applicants for low power radio services to show how their programming proposals would fulfil the following objectives:

7249             The contribution of an additional diverse voice to the market served, the presentation of programming, the complements to that of existing licensees in the market and the fulfilment of demonstrated community needs.


7250             Beyond attracting a flood of new applicants for low power commercial stations, it is questionable as to whether the Commission's other hoped for objectives for low power undertakings have in fact been achieved.

7251             In the Notice of Public Hearing 2006‑1, the Commission stated it had heard concern from broadcasters regarding applications that have been received for low power licences.

7252             It went on to say that a number of small market broadcasters have voiced concern that some applications seem to be using applications for low power radio as a back door entry into the mainstream commercial radio sector.

7253             Others have expressed concern about the light‑handed approach the Commission has taken with the low power applicants in terms of the information and documentation that must be provided with the applications.

7254             Close to home we have witnessed first hand an example of these very concerns.  In August of 2005, the CRTC licensed a low power operation in the market of Blucher (ph), Saskatchewan, located just 10 kilometres from Saskatoon.  The operators in their application indicated they propose to serve the small town's less than 1,500 residents.


7255             In the past few weeks, the station has begun testing its transmitter, offering music and Ids that can be heard pretty well anywhere in the City of Saskatoon.

7256             On a recent trip through that City I listened to this new low power operation operating out of and licensed to serve Blucher (ph) and this is what I heard:  You're listening to Saskatoon's new Christian Rock station.  There's no mention of Blucher (ph), only that they clearly intend to position themself as a Saskatoon radio station.

7257             This back door approach to gain access to more lucrative mainstream broadcasting, I fear, will have a serious implication on smaller market broadcasters throughout Canada.

7258             This is but one example of a two‑system structure in which lightly regulated groups of low power commercial radio stations have competitive access to the same markets as the highly regulated small market conventional broadcaster is mandated to serve.


7259             There are stark differences between low power commercial radio operators and small market broadcasters in terms of commitment, regulatory responsibilities, financial obligations, human resources, Canadian talent development, frequency utilization, serving the public area ‑‑ interest, rather, overall accountability and furthering the goals and objectives of the Broadcasting Act.

7260             By way of example, the lower power operation licensed to serve the community of Nipawin and area employs a staff of three, two of which are the owners.  Their daily news service consists of logging on to the Saskatchewan CBC's website and reading word‑for‑word the provincial, regional and national stories created by CBC news staff.  The 7:00 a.m. newscast is ripped off, recorded and repeated throughout the broadcast day under the guise of local news coverage.

7261             THE SECRETARY:  Excuse me, Mr. Singer, you have 30 seconds to complete your remarks.

7262             MR. SINGER:  We ask the Commission, why should a low power commercial application with a financial outlay of a few thousand dollars and minimal commitments as per the examples given be able to compete in the same market for the same listeners and advertising revenue that a small market broadcaster like CJVR?


7263             As I'm out of time, you have my notes.  I appreciate the opportunity and would be happy to answer any questions.

7264             Thank you.

7265             THE CHAIRPERSON:  Thank you, Mr. Singer.

7266             I appreciate your coming here.  There is, however, a problem I have with the fact that your written submission didn't cite these examples of specific broadcasters who, of course, hadn't had an opportunity to read the complaints you are now bringing in your written submission and now are not present to answer these claims.

7267             So, there is an element of fairness here that gives me a bit of concern.  So, I suspect that what we will do is take the transcript pages on which you have made these comments and forward them to the applicants so that they, if they wish, can respond to them.  It is in the form basically of a complaint rather than of the submission that you made.

7268             I guess the only question I have emerging from your presentation, your written presentation and your oral one as well, is I guess you are not making the point that the regulations don't apply equally to both.


7269             It's that the procedures and the licensing appears to create an unlevelled playing field because as one reads the regulations, they don't appear to be any start differences in what they're required to comply with.  It's more the process of entry and the nature of their operations.

7270             MR. SINGER:  I do understand that, you know, there are regulations for both low power and conventional that are similar, but I guess in our experience ‑‑ I guess I am questioning more the process rather than the regulation in terms of, you know, obvious deficiencies example of suggesting that radio stations to be operated for $36,000.00 a year and no questions asked in the deficiency statements in terms of how you propose to do this.

7271             And I know if we were to apply and we are applying in several markets and submit such an application, it certainly would be questioned.  And I think because perhaps my point of view is that the suggested revenue is fairly minimal that these matters are kind of looked over and in terms of the business plan.


7272             THE CHAIRPERSON:  O.k.  Well, we have your comments and it is a subject that has been raised in a number of forms by broadcasters operating in small markets and it is something that we will review in the course of this proceeding and hopefully come up with a solution in our decision here.

7273             So, thank you for those comments.  Questions?  Vice‑chair Arpin.

7274             COMMISSIONER ARPIN:  It's in your submission, it's also in your written ‑‑ well, the oral presentation that you didn't read, but it's the section that deals with "oldies" format regulations, so I am ‑‑

7275             You are suggesting that we, the Commission, contemplate a revision of the actual wording of the regulation that deals with "oldies" and you're suggesting that we, rather than have a specific starting date with music release before January 1st 1981, that we made it selection release more than 20 years ago.

7276             Now, obviously, in the case of music that is below January 1981, the Commission has allowed a reduction to Canadian content.  It's my understanding in reading your submission that you also are requesting the same reduction of Canadian content, even if after January 1st of 1981 there was, well, more production made available for Canadian material.

7277             And so, what are your justifications to ask us to first, change the regulation and second, to keep the threshold at 30 per cent?


7278             MR. SINGER:  That's a very good question.  I guess one of the ‑‑ the major point I want to make in the rewording of that definition is that rather than freeze an actual date, being January 1st 1981, that, you know, I do understand there likely is more Canadian material available after that date.

7279             But I guess what I would like to do is have the Commission or I suggest is to have the Commission consider rewording that so we do have some type of an ongoing measurement rather than a specific date.

7280             As time changes, I mean our format evolves on *oldy+ base radio station and we play newer and newer music as the years go by.  So, the ratio of the ‑‑ I guess call it the "oldies" versus the ‑‑

7281             COMMISSIONER ARPIN:  You are becoming more and more a classic rock radio station I would say, I would suggest.

7282             MR. SINGER:  I would think if you have an "oldy" radio station on the market and a classic rock station, the "oldy" station will still be identified as definitely catering to an older demographic than the classic rock station is.

7283             So, it's merely a suggestion in the wording of that particular section of the regulations.


7284             COMMISSIONER ARPIN:  Thank you very much.

7285             MR. SINGER:  Thank you.

7286             THE CHAIRPERSON:  Thank you very much.

7287             MR. SINGER:  Thank you again for this opportunity.  Madam Secretary.

7288             THE SECRETARY:  Thank you, Mr. Chairman.

7289             I would now call on Mr. Paul Larsen, numbered company 1182743 Alberta Limited to come forward for his presentation.

7290             Mr. Larsen, you'll have ten minutes for your presentation.

PRESENTATION / PRÉSENTATION

7291             MR. LARSEN:  Thank you, madam Secretary.

7292             Chairman Dalfen, Vice‑Chair Arpin, commissioners and CRTC staff, good afternoon.

7293             My name is Paul Larsen and I am very honoured that you've asked me to present my thoughts on the radio review in person as a follow‑up to the written comments that I submitted as part of the process and I look forward to any questions that you may have following my presentation.


7294             Before I get started, I would just like to give a short background on myself as you don't know me that well and also to give you an idea of my experience and qualifications to offer comments at this proceeding.

7295             This is my twentieth year in radio.  I started at age 16 at CKNLA in Fort St. John B.C. as a part‑time announcer while completing high school.  Over the past 20 years, I've worked my way up from announcer to music director, program director, general manager and most recently president of six radio stations on Vancouver Island.

7296             I've worked in markets as small as Weslock Alberta and as large as Vancouver and Calgary.  I was presented the Easy Asper. Broadcast Entrepreneur of the Future Award at the 1997 CAB convention and just last week was named one of Vancouver Island's top 40 under 40.

7297             Almost since day one, my goal has been to own and operate my own radio company and last summer I formed a new company, 1182743 Alberta Limited with that goal in mind.


7298             While we do not hold any broadcast radio licences today, we do have four applications currently before the Commission for new FM radio stations to serve Calgary, Lethbridge, Fort McMurray and Medicine Hat, Alberta.

7299             I am president and 50 per cent shareholder of 1182743 Alberta Limited along with my partner Norscott Holdings Limited.

7300             I am here participating in this process because I do feel that it's very important to be engaged in the industry and also, I'm hopeful to play important role in helping shape the future of our business.

7301             My written comments touched on several issues that I feel are important for the future of our industry.  Due to time constraints today, however, I'll focus my oral presentation on the two issues that I see as most critical to my future and to that of other aspiring young owners and broadcasters and those two issues are: independent ownership and new technologies, including digital radio.

7302             Starting with independent ownership, obviously I believe that maintaining and strengthening the independent sector and radio ownership is very important and I also believe that the public shares this view.


7303             As more and more media has become consolidated in Canada with some companies operating radio, television, newspaper and internet in a single market, it's vital that there be balancing and opposing views presented on radio.

7304             Independent owners have been a crucial component of the ownership fabric in Canadian radio since the beginning.  Our industry was built on independent and entrepreneurial spirit.

7305             Allan Water started CHUM with the purchase of a single radio station.  Ted Rogers started Rogers Radio Broadcasting Limited with the purchase of a single radio station, CHFI‑FM.  Allan Slaight started Standard with two radio stations and those stories go on and on and for each of those very well‑known individuals there have been countless other independent owners in markets of all sizes which helped shape our industry over the years.

7306             Some of Canada's most progressive and innovative radio stations of their time were independents.  To name just a few, Harvey Glatt who brought progressive rock to Ottawa with SHAA.  Bob Redmond brought Easy Listening Music to Toronto with CJEZ‑FM.  Bob McCorr brought country music to FM‑Radio in Edmonton with Kissen.


7307             And my point is only that independent owners have played a significant role in the history of our medium and I believe should continue to play a significant role in its future as well.

7308             The last generation of independent owners have been selling their radio stations, not because they can't compete with the big companies they have competed very well for many years.  They are simply selling because they are reaching retirement age and no longer wish to work every day and realize the fruits of their labour.

7309             In the past two weeks in British Columbia and Alberta two of the last remaining independent companies, the O.K. Radio Group and Nick Frost at CILK‑FM in Colowna announced their intentions to sell their radio stations subject to CRTC approval.

7310             In both cases, if approved, these stations will go to big companies: Rogers Paterson and Standard.

7311             With the last generation of independents reaching retirement age, now is the time for the Commission to begin licensing the next generation of independent ownership.  At the multiples that exist in radio stations are trading at today, small companies and new entrance cannot afford to buy our way into the system like the big companies.


7312             The only way to bring young new owners into the system is through new applications and new applications will ultimately be of more benefit to the system in any case, bringing exciting new formats, more service, new editorial voices and a youthful and modern approach to our radio broadcasting business in markets of all sizes.

7313             Independents are entrepreneurial by nature.  We often pioneer new business practices, adopt new technologies faster, create compelling new formats, we encourage creative and dynamic work environments, simply we think and operate differently from the large corporations and that is healthy for our business.

7314             Independent companies tend to be more closely tied to the communities they serve simply by having a more personal interest in the community with ownership often residing in the city of licence and this often results in much faster response time to community needs and issues.


7315             Let me be clear though that I am not advocating licensing independents simply because they are independent.  However, when the Commission is presented an application by an independent company that is well‑financed, offers significant and tangible benefits to the community and the Broadcasting Act, proposes a format that will fill a void and presents an application and a business plan that is as strong or stronger than that presented by a larger established corporation, then the Commission should give serious consideration to that application, as you do, and at the same time also consider the benefits of bringing a fresh new ownership perspective into the broadcasting system.  

7316             That said, I do not believe that regulatory measures are required to ensure a fair balance of independent representation in the Canadian Broadcasting system.  From my observation in many cases smaller independent companies are presenting compelling creative and beneficial applications and continue to be awarded licences in competitive environments when presenting the best overall application.

7317             As long as the Commission continues to give independent applications the same consideration as those from large companies and not listen to rhetoric suggesting that independents are unable to compete in today's environment, then we will continue to see a healthy and fair independent representation and I also believe we will see more new players step up and apply when there are calls in markets of all sizes.


7318             Turning now to the transition to digital transmission and new technologies, this is the area of the review and our future that excites me the most.  I really view technology as a huge opportunity for terrestrial radio stations to leverage to our benefit and to the benefit of the objectives of the Broadcasting Act.

7319             The delivery method is becoming less and less important and content is becoming the valuable commodity.  We really need to quit thinking of radio as AM or FM and start thinking of radio as a product that comes out of the speakers regardless of whether those speakers are attached to an AM or FM radio, an Ipod, a computer, the internet, a cell phone, satellite radio, HD radio or who knows what devices the future holds in store.

7320             Who is better suited to provide content for these new technologies than radio broadcasters who already create compelling made in Canada audio content every day.  We have the infrastructure, we have the talent and we have the resources.  Take pod casting for example, while it's true that anyone who has access to a microphone, computer and music can create a pod cast, the reality is the quality of that pod cast will not likely be to the standards that most consumers are used to get in from media outlets.


7321             If radio broadcasters embraces technology and become the content provider, we are now able to extend our brands, our personalities, our programming and our unique Canadian perspective to these other devices, devices that younger generations are adopting as their primary sources of audio and entertainment.

7322             Studies are beginning to emerge that show fatigue developing with Ipods and other MP3 players, there is no question that these have proliferated society quietly.  However, they do require work and maintenance and it is one thing to download thousands of songs to your Ipod and quite another to keep those songs organized and accessible.

7323             Apple recently introduced a remote add‑on for Ipods that contains an FM radio tuner, meaning terrestrial radio can be one of the listening options on your Ipod.  Tivoli recently introduced a stereo system that includes a port for your Ipod, but also maintains AM and FM radio as part of the tuning options.


7324             Why?  Because consumers continue to demand terrestrial radio as an important choice in these new electronic products and I am confident if we remain proactive, creative and adaptive to new technology, terrestrial radio will continue to have a viable and vibrant future.

7325             While music sales have certainly declined in the face of file sharing MP3 players, et cetera.  I believe the music industry itself most accept some of the responsibility for those declining sales.

7326             Early on, the music industry viewed these new delivery modes as a threat and rather than adapt and embrace digital delivery and own that medium with legal digital downloads, instead they fought the inevitable technological advances ultimately losing that battle.

7327             The radio industry has hopefully had an opportunity to learn from the music industries mistakes and rather than fight for protection and regulation radio, in my opinion, will be much better served to adapt and embrace new technology and use it to our competitive advantage and to strengthen radio overall.

7328             Some believe radio will lose advertising revenue in the face of these new technologies, so why then would radio not immediately put itself in that space and hire young tech savy staff who know how to leverage and monetize this technology.


7329             THE SECRETARY:  Excuse me, Mr. Larsen, almost of your time is up, if you could conclude, please.

7330             MR. LARSEN:  Thank you.   I did talk about Iboc in my oral presentation too, I do believe that it's a technology that Industry Canada should continue as a ‑‑ consider as a option for us.  I did address that in my written comments as well.

7331             In my written submission I touched on several other issues, including Canadian content, Canadian talent development, cultural diversity, diversity of music formats in spoken word and news programming on FM radio and I would greatly welcome any questions that you may have, either in my oral presentation or my written comments submitted on March 15th.

7332             Thank you for your time and attention and that took less than ten minutes when I practised earlier, so ‑‑

7333             THE CHAIRPERSON:  Thank you, Mr. Larsen.

7334             MR. LARSEN:  But I started the clock after my perhaps too lengthy introduction of myself, but thought that was important as most of you have not had the opportunity to see me before, so thank you again.


7335             THE CHAIRPERSON:  Commissioner Cugini.

7336             COMMISSIONER CUGINI:  Well, good afternoon.  I do have to say that your enthusiasm is quite infectious and much appreciated.  I also would venture to guess that much of what you've said here today will form part of your oral presentation when you are before us in those markets with those applications.

7337             But since you did mention in your written submission and as you have been sitting in the room these past two, three, four days ‑‑

7338             MR. LARSEN:  So it seems like two weeks, but ‑‑

7339             COMMISSIONER CUGINI:  ‑‑ you will know that I will be asking  you questions that relate to Canadian content.

7340             MR. LARSEN:  Yes.

7341             COMMISSIONER CUGINI:  And specifically emerging artists.


7342             In your original submission in paragraph 15 you say that the approach would create four categories of Canadian artists: international, established, national and developing, where the air play of developing artists would carry incentive of .5 extra spins, national .25 and established would remain at one spin, with international it would count as .75.

7343             Is that still your position based on what you've heard so far in these proceedings?

7344             MR. LARSEN:  If I could just talk about that paragraph in particular.

7345             COMMISSIONER CUGINI:  Yes.

7346             MR. LARSEN:  It's not a concept that I developed.  It's a concept that I came across on the internet, on a radio web site rather called "let'sfix cancon.ca".  That initiative was ruled out by the Canadian Independent Recording Artists Association or the CIRAA.

7347             COMMISSIONER CUGINI:  Yes.

7348             MR. LARSEN:  They presented here earlier this week and have since decided to abandon their original position, which is the one I have in my letter and take on a quota system for emerging artists.


7349             What really excited me abut let'sfixcancon.ca or that concept that you just ruled out was the fact that the music industry itself, or at least this component of the music industry, was being proactive in coming up with a creative way to modernize and make can.con. work to better the music industry, but still realize that radio is a critical part and come up with a system that radio could live with as well.

7350             This system is a little more extensive than the one that CAB ruled out in that it creates four categories of artists as you indicated and the credits range depending on the ‑‑ so, it's almost like what Flo was talking about a few minutes ago in terms of the smart 35 plus.

7351             This would give the most credit for the artists that need it the most, those that are developing and a good amount of credit for a national artist to perhaps referred of as it receives some air play and even credit for an established artist and maybe a .75 spin for an international Canadian song, like a Céline Dion or a Bryan Adams that currently counts as one Canadian spin.  So while we are taking it out to 1.5 on the really need spins, we are making it up on the other end by almost putting a deficiency on some of the really international superstars.

7352             So I thought it was a creative approach.  It was one that caught my eye and one that I thought would be a valuable contribution to the discussion.


7353             If there is one thing that I hope comes out of this hearing is that the Commission takes this opportunity to really examine Canadian content, which it's obvious it has been the topic of discussion at this review.  But take the opportunity to modernize and be bold and make some changes that are going to benefit new and emerging artists without seriously impacting and hurting the radio side.

7354             I think there is a middle ground there that can work for everybody.

7355             COMMISSIONER CUGINI:  If I can just sum up, this would be your preferred scenario.  But provided the Commission comes up with something that recognizes emerging artists and the investment, so to speak, that radio makes in playing emerging artists, you would be happy.

7356             MR. LARSEN:  I would be happy with that.  I think the point being when we moved from 30 percent to 35 percent it has not had a dramatic impact on benefiting new and emerging artists, or Canadian record sales for that matter.

7357             So by coming up with a new modernized way and a bonus system of some sort, I believe we will move toward that by actually exposing some new and emerging artists on the radio and at the same time giving radio a little bit of flexibility in terms of how we can program our music.


7358             I think it will encourage us to take chances on some of these artists that we haven't heard, because there is an incentive for us to do so.

7359             So right now, if I have one open Canadian slot on my play list, inevitably it goes to a well‑known established Canadian artist.

7360             If, though, I know I am going to get a bonus point, or a point and a half or 1.25 to play the unknown artist or the emerging artist, I may lean toward that.  Or better yet, I may play both because I will get the added spins and exposure of the new artist and still satisfy the audience need to hear the established artist.

7361             So I think it is beneficial to everybody.

7362             COMMISSIONER CUGINI:  Thank you.

7363             Thank you, Mr. Chairman.

7364             THE CHAIRPERSON:  Vice‑Chair Arpin?

7365             COMMISSIONER ARPIN:  I will have a question for you on IBOC.

7366             I don't know if you are aware, but IBOC is a proprietary system for which you pay a licence fee, and also IBOC, if you use their multicasting opportunity you will have to either share in the profit or share in the revenues.


7367             Is it a concern for you or do you have any comment regarding a proprietary system?

7368             MR. LARSEN:  First off, I was happy to see that iBiquity made the effort to come up here and present for us, and I have enjoyed the comments of the CBC on the other side.

7369             I understand that it is not a perfect technology.

7370             I am only suggesting that IBOC be made one of the options available for Canadian broadcasters to pursue the transition to digital.  We can keep the L‑Band and Eureka 147, and whatever other technologies come down the pipe.  But IBOC would be a nice option for us to have, given how it has taken a foothold in the United States and could become the North American standard.

7371             What I understood from iBiquity was that there is a one‑time flat licence fee regardless of your market size.  At least this is the model they use in the United States, $7,500.  And then a percentage of revenue gains or profit, I think profitability even, on your multicast or side channels.


7372             I would be more than happy to share that revenue if I had the opportunity to now program one or maybe two additional channels in addition to my mainstream channel, because I think I can make some revenue by offering listeners these new compelling channels.

7373             The question that has come up when anybody is talking about side channels and the transition to digital is:  How do we regulate this new part of our medium?

7374             I think that is going to be an interesting discussion.

7375             I think for the sake of letting it gain a foothold and get some traction in Canada, at least in its infancy, the least amount of regulation the better.

7376             I think you will find that some of us will be encouraged to go out and try an all‑Canadian version of our channel just to experiment and see if there is an audience for that out there.

7377             If I can make money with it, I would surely share 3 percent.  It's a lot less than the cost on some of our other programming.

7378             COMMISSIONER ARPIN:  Thank you very much, Mr. Chairman.

7379             THE CHAIRPERSON:  Mr. Larsen, just one question emerging from your oral comments here.


7380             You say:  Why then would radio not immediately put itself in that space and hire young, tech‑savvy staff who know how to leverage and monetize this technology?

7381             Other than the two owners of Google, can you think of other candidates who are available for those jobs?

‑‑‑ Laughter / Rires

7382             MR. LARSEN:  Chairman Dalfen, I'm glad you asked the question.

7383             In the reality of radio ownership, I'm a really young guy.  I'm 36 years old trying to become a radio owner, and I'm a young guy in that sphere.

7384             In the reality of new media, I'm an old guy.  I'm at the other end of the spectrum.  I could be a senior citizen, in that realm.

7385             What really interested me out of the CAB proposal, particularly on day one, was the fact that in listening to it I found it to be really anti proactive on technology.  It's almost like a fear thing.

7386             And that's what reminded me of the music industry when pier‑to‑pier, file sharing and downloads and all this sort of thing first came out.  They started suing those companies and everything else.


7387             I think the problem that radio has, why radio hasn't been able to monetize their new media attempts is because radio is not hiring people who understand new media to go sell new media.

7388             Radio stations are sending out radio station sales reps who are used to selling 30‑second commercials and creating an internet add‑on, maybe a $400 package to tag on a banner ad to your radio campaign.  And that's how they are attempting to monetize this new medium.

7389             The fact is that when people listen to digital media, whether it be an internet stream or their iPod device, or whatever, they don't want to hear 30‑second commercials.  That is why they are going to the internet in the first place.

7390             I think we need to hire and create divisions within our companies that understand the technology, that know how it works, that know what the measurement systems are and know how to apply that, and almost have two sales forces: one selling traditional radio and one selling our internet property side by side.


7391             The CAB said that radio is going to lose millions of dollars going forward, and that may be true; that in the radio side of our business we may lose revenue.  I think we can make it up on the other end if we attack it in the proper manner and hire the experts that know how to go out and monetize that.

7392             The dollars are shifting from radio to new media.  That's what they are saying.  So somebody out there has figured out how to monetize new media.

7393             I am only suggesting that I would love to go out and find one or two of these people and bring them into my company so they can help me monetize new media.

7394             I am aware of a couple of radio operators that are operating internet properties, but they are operating them as true separate divisions.  And they are generating revenue in the hundreds of thousands of dollars.

7395             It is also costing them in the hundreds of thousands of dollars, so they are not yet breaking even.  But they have clearly found that there is a way to generate an additional stream of revenue with a separate division.

7396             I think that as online revenue continues to grow, the profits will come there because the expenses are relatively static.  They go up with your bandwidth and whatnot.


7397             THE CHAIRPERSON:  Yes.  Well we have heard from a number of industry players who are doing just that, who have separate divisions with small markets, large markets.

7398             Surely isn't the challenge also not just to see the radio sector dwindle and to move over to the internet but rather to keep both healthy and to in effect attract listeners back to conventional radio by using the benefits of digital technology, high demand services and all that?

7399             MR. LARSEN:  Absolutely, sir.

7400             And I didn't say that I buy into their argument that the sky is falling and we are going to lose all this money five or ten years down the road, because I do believe that it is possible that radio can grow at least at the same ‑‑ you said earlier that radio's percentage of advertising has been a constant 14 percent, roughly, over the years.

7401             If we can maintain that or grow that a little bit, but also get into the new media or the internet business in some small way and earn additional revenue on that side, our companies will get stronger.


7402             I don't operate a publicly traded company so I don't have the same pressures to perform and the same risk factor that some of the larger companies have.  So obviously I am coming at it from a different perspective.

7403             I don't mean to sit up here and sound glib, and I hope I don't, because I don't think it is easy.  I think that the larger companies have made some attempts to go down this road and explore.

7404             The Rogers presentation earlier was particularly interesting to me and what Standard has done with Iceberg and their involvement in Sirius, and what the CBC has done.  Radio Three was an internet stream for a long, long time before anybody was even talking about streaming and podcasting and download.

7405             So I think there are good examples out there.

7406             I think radio companies are focused on radio, and rightly so.  But if they fear what is out here on the edge of the peripheral of the entertainment medium, then maybe we should look over here and play in that field.

7407             I would rather kind of be part of it than fear it and put up a big wall.


7408             THE CHAIRPERSON:  I think probably most of the broadcasters would agree with you.  The trick is finding the young tech‑savvy people who can monetize the internet and who can then repatriate listeners back to conventional radio and create a virtual circle from their point of view, and perhaps from the point of view of the Broadcasting Act.

7409             MR. LARSEN:  And that's how I sort of perceive how radio can use the internet or iPods, or whatnot.

7410             In our particular case ‑‑ and I don't want to enter into an area concerning our application, so if I go off track, please just bring me back.

7411             In our case we have developed a brand called The Lounge.  That is what our whole radio terrestrial applications are based on.  I think it is a really exciting brand.  We are going to put personalities on it ‑‑

7412             THE CHAIRPERSON:  I think you are starting down that track.

7413             MR. LARSEN:  Okay.  Then I should maybe more genericize it; sorry.

7414             I think radio has an opportunity to take brands and personalities that we own or that are employed by us and put those brands and personalities onto other media platforms, is what I was trying to say.


7415             I think radio, and I think all the companies, own some really exceptional brands that have some great equity and some of the companies have some exceptional personalities that have a lot of leverage in terms of attracting listeners.

7416             So if we can take our brands and our personalities and our unique Canadian programming and put it on other platforms, the platform becomes irrelevant even if we are just duplicating the same programming on multiple platforms.

7417             I know we have taken a lot of time and I don't want to take up more than than I should.

7418             THE CHAIRPERSON:  I think that is probably wise.

7419             MR. LARSEN:  Okay.

7420             THE CHAIRPERSON:  I think most broadcasters are there.

7421             MR. LARSEN:  Yes.

7422             THE CHAIRPERSON:  Thank you very much for your intervention today.

7423             MR. LARSEN:  Thank you.

7424             THE CHAIRPERSON:  Would you call the next item, Madam Secretary.

7425             THE SECRETARY:  Thank you, Mr. Chairman.

7426             The next three participants in the agenda have exchanged positions.


7427             I will now call on Rock 95 Broadcasting Ltd., Mr. Doug Bingley, to come forward for his presentation.

PRESENTATION / PRÉSENTATION

7428             MR. BINGLEY:  While we are waiting, before I begin my presentation, I would like to point out I was 36 years old myself when I first appeared before the Commission.  You see the sad aftermath of 18 years in this industry.

7429             COMMISSIONER ARPIN:  We will wait for the Chairman to come back.

7430             MR. BINGLEY:  My pleasure, sir.

‑‑‑ Pause

7431             THE SECRETARY:  Mr. Bingley, you can go ahead.  After introducing your colleague, you will have ten minutes for your presentation.

7432             MR. BINGLEY:  Thank you very much.

7433             Good afternoon, Mr. Chairman, Vice‑Chairman and Members of the Commission.

7434             My name is Doug Bingley.  I am President and General Manager of Rock 95 Broadcasting Ltd.  We own and operate two radio stations in Barrie, Ontario, and also one radio station in St. Petersburg, Russia.


7435             I would like to now introduce two very talented Canadians, Deborah Raynard and Randy Quinn.

7436             Randy, to my left, started his broadcast career in Belleville.  He has worked at radio stations, including markets such as Hamilton and Calgary, Kitchener and Barrie, and he is a graduate of the broadcasting program of Loyalist College.

7437             Deborah Raynard majored in radio broadcasting at Canadore College, graduating in 1988.  Deborah has worked in markets across the country from Renfrew, Ontario, to St. John's, Newfoundland.  She has worked as a program director.  She has also hosted talk radio shows.

7438             I hope you will enjoy our presentation this afternoon.  We think that you will find it something of a mind‑expanding experience because today we are going to challenge some very long‑held beliefs.

7439             Principally, it is that private broadcasting's production, programming and air talent add very little, if any, to Canadian culture.

7440             I know you are probably thinking right now well, we don't say that and we don't think that.  But in reality, when you examine successive radio policies, they fail to recognize explicitly the Canadian broadcast talent.


7441             And that really is what our presentation is all about.

7442             To talk to that first, I would like to take a look at the currently held value equation of private radio, which is your first handout.

7443             You will see that quite simply today we view CanCon as basically being a transmitter plus Canadian music.  We feel that this equation pretty much looks at private radio as a commodity.

7444             We feel a more appropriate equation would be page 2 of your presentation, which truly shows the underlying creativity and richness that many talented people bring to the Canadian broadcasting system.

7445             In this case CanCon equals air talent plus production talent plus program directors, writers, promotion directors, newscasters and of course finally the music.

7446             I think I should have said page 3 there.

7447             THE CHAIRPERSON:  No.  It is still page 1.

7448             MR. BINGLEY:  Okay.  I think we had a printing disaster here.


7449             To further establish this value, I would like to turn this over first to Randy and then to Deb.

7450             MR. QUINN:  Thank you.

7451             Good afternoon, Commissioners.  I have been employed in the broadcasting industry for 30 years now.  I'm commonly what is known as a disc jockey.  Some people would think that I do little more than talk a little bit and play some music on the radio station, although my show is a little more complicated than that.

7452             To begin with, I prepare each program daily very carefully.  I do what is referred to as show preparation, where I search for interesting topical material.  Much of it is local.  If it is not local, I try to make it local by presenting it from our local listeners' perspective.

7453             This takes me an average of two hours per day to put together for each program.  My show includes commentary on a wide range of issues.  There is humour.  There is call‑ins from listeners, contests, interviews, traffic and weather.  There is news and a prerecorded editorial from our news director.

7454             And of course we play some music as well.


7455             It is what on television would be called a variety show.  It is the product of myself and a lot of other people who work hard behind the scenes.  In other words, it is the product of a group of highly talented Canadians.

7456             As far as the radio policy is concerned, none of us are recognized as providing any Canadian content, nor are we considered to be eligible Canadian talent for that matter.

7457             At the end of the day all we get credit for is playing Canadian music.

7458             Let's quickly take a look at the definitions of CanCon that flow from the radio policy.

7459             If you review the handout on page 2, you can see that for television all of the following qualify as Canadian content: news, comedy, commentary, editorials, interviews and discussions of current events, entertainment reports, and listener or viewer segments.

7460             None of these are considered as CanCon on radio.

7461             Those definitions are clearly inconsistent between the media.  They create some very odd distortions.


7462             For example, when I bring a Canadian musician in for an interview on my program, the interview itself is not counted as Canadian content.  Now the second he or she picks up the guitar and begins to play, that portion of the program becomes Canadian content.  When the guitar goes down, that is the end of the Canadian content.

7463             When comedian Ron James appears on television, it is 100 percent Canadian content.  But if Ron had his own show on private radio, well, none of his material would count as CanCon, nor would he be officially recognized as Canadian talent.

7464             It doesn't really make a lot of sense.  And how did we get to this point?

7465             I believe that we have inherited some concepts that go back generations, and this historical bias devalues the output of commercial radio stations.

7466             It was established by the Bureau of Broadcast Governors, the original broadcast regulator and an arm of the CBC.

7467             The conventional wisdom went something like this.  CBC's material was generally serious, talked to the big issues and therefore was important.  Private radio produced mainly entertainment based material and its spoken word content was considered to be unimportant.


7468             So today we have a definition of CanCon that is built upon a subjective value system that goes back generations.

7469             When Doug earlier described this as a mind‑expanding experience, he really meant to say that we hope that you will re‑examine this very dated paradigm.

7470             Now Deb Raynard will talk about the real value of private radio's non‑musical Canadian content.

7471             MS RAYNARD:  Thanks, Randy.

7472             What does private radio truly contribute to the develop of Canadian talent?

7473             I believe our radio station and hundreds of radio stations across this country support Canadian culture by playing Canadian music but by also supporting local and Canadian issues.

7474             Canadian content comes in many forms and has been counted so with television regulations for quite some time.


7475             Canadian radio now needs your help to stay alive and viable.  We can still stay true to our Canadian performers, our writers, musicians, producers, but I really believe that we can also welcome Canadian announcers, journalists, talk show hosts, producers, music directors, program directors, writers and the content they deliver into the category of Canadian content.

7476             Covering off issues that affect the average person in their own backyard is what small to medium‑sized radio stations in this country do best.

7477             Every radio station I've ever worked at ‑‑ and there's been a few ‑‑ we talk about the issues that affect the average Canadian on a day‑to‑day basis, often going right down to issues and events on a neighbourhood level.  This includes local happenings, local sports, charities, local politics.  We give access to the air waves through telephone phone calls and interviews.  A great radio station goes beyond reflecting the community, it becomes a community onto itself, a community of listeners.

7478             If you could go to your hand‑out, page 3, we'll take a look at the content of an average morning show.

7479             Now, this happens to be my morning show on COOL‑FM, but a typical hour we're looking at three hours (sic) of comedy, if it's a good day ‑‑ okay, it's a joke ‑‑ anyways...

‑‑‑ Laughter/Rire

7480             MS RAYNARD:  Four minutes of community events.


7481             THE CHAIRPERSON:  Comedy is tough.

7482             MS RAYNARD:  I know, it's a tough room.  Very, very, very tough room.  Four minutes of community events, and that will be your interviews, community calendar, so on, two minutes of contesting, four minutes of discussions, other topical issues, and finally 12 minutes ‑‑ again, that's a ballpark, it's an average, it differs from radio station to radio station ‑‑ but that's your news, weather sports and traffic.  That's a total of 24 minutes in a single hour.

7483             Over the course of a week that comes to over seven hours, and that's just for one radio station.

7484             And the next page shows the total creative output of over 500 private radio morning shows across the country.  When you do the math that comes to over 3,500 hours of original Canadian programming in just one week in just one day part.

7485             That's more than the total annual output of the entire Canadian television industry.

7486             I've done quite a bit of talking about music‑based stations, but what about news talk stations?  How does our current definition of Canadian content mesh with this format?  Not at all.


7487             When the first FM policy regarding CANCON was established in '72, the news talk format did not exist in Canada.  That means the original and successful ‑‑ successive policies, rather, do not even consider the CANCON contribution to this group of stations.  These stations do not play any music, much less Canadian music, and I'll leave it up to you to figure out the logic as to why a portion of their revenue should go towards industry funds supporting Canadian musicians.

7488             I believe we've shown a private radio and its overall content is a cultural industry in itself.  This afternoon you'll be hearing presentations from BCIT, an Aboriginal voices radio on that very topic.  We fully endorse their comments.

7489             Doug Bingley would now like to speak to that issue.

7490             MR. BINGLEY:  Thank you, Deb.

7491             Members of the Panel, over the years my stations have supported a number of Aboriginal projects.  In 1988 we promised the Commission that we would provide a one‑hour Aboriginal radio show, it's on the air today, it's called Spirit Winds and it's been on the air continuously for 18 years.


7492             Many years later we applied for a Toronto licence and I met with Gary Farmer and discussed the concept of providing funding for him to set up his first radio station.

7493             Now, we weren't awarded that licence, but that concept has since been picked up by a number of broadcasters and we feel it's a real benefit to these communities.

7494             When we were licensed for our second station in Barrie we promised to help set up a number of Aboriginal stations in our area.  We provided funding that has put four radio stations on the air and these are really a big deal in these communities.  They give ‑‑

7495             THE SECRETARY:  Mr. Bingley, I'm sorry, your time has expired.  If you could conclude, please.

7496             MR. BINGLEY:  Okay.  I'd just like to say that we do fully endorse both the Aboriginal voices radio and the BCIT proposals and I'd just like to close, if I may, with one observation.

7497             Every week on CBC Radio there's a great show hosted by Randy Bachman, it features classic rock and commentary and it's considered to be great Canadian content.


7498             Every day on radio station Q‑107 in Toronto, another musician, Kim Mitchell, hosts an afternoon show and none of his material is considered CANCON unless he happens to play one of his own records.

7499             And as soon as the record ends he's not considered Canadian talent any more, and I can't think of a more ironic example of what I think we need to recognize, broadcast talent is Canadian talent.

7500             Thank you.

7501             THE CHAIRPERSON:  Thank you, Mr. Bingley.

7502             If I look at page 2 of your hand‑out, CANCON definitions, and if we switched all of the radio nos to yeses as we do in television, is it your position then that you would accept a Canadian CANCON level of 60 per cent through the day and 50 per cent in prime time?

7503             MR. BINGLEY:  Well, in fact, that touches on ‑‑ are you talking about spoken word or are you talking about the output of the show?

7504             We consider that our programs are variety shows as Randy described and, in fact, we'd likely meet that level.


7505             If you put a stop watch to it and measured only spoken word, that would not be the case, but of course we don't do that with television, we don't take a Jay Leno show, for example, and take a stop watch to it to say how much qualifies as content.

7506             THE CHAIRPERSON:  So, I guess I am not sure what your point is.  Each medium, radio, television and within those categories, ethnic radio, specialty services, each has different Canadian content levels to try and maximize the featuring of Canadian artists, musicians, performers, writers, directors, consistent with what the medium and the situation that it operates in can bear, and if you look across, say, specialty services in television, you will find dozens of different CANCON levels, each adapted to the medium.

7507             So, I am not sure what your proposal is for radio.  The industry has been operating for over 30 years on the basis of musical selections and counting those for purposes of featuring Canadian artists and musicians.

7508             What is your overall proposal for Canadian content, other than trying to get the credit for your colleague here?


7509             MR. BINGLEY:  Actually that pretty much is the proposal.  We're not asking here for any new regulation, we're not suggesting that in any way, shape or form our suggestion takes away anything from the musical CANCON levels.

7510             We think though that at this time, this critical time when we're faced with other competing media, that it's very important that that definition be recognized.

7511             We don't see that there's a need to set a quota or a level, but we do feel that it's time ‑‑ we're hoping the Commission will start considering at this point, in any event, the spoken word content, the contribution ‑‑

7512             THE CHAIRPERSON:  But it ends up being about a level, because if you don't have a level that you have to meet then it doesn't ‑‑ why bother to even provide these definitions.  It is only so that you can decide whether or not they count.

7513             As you said, Jay Leno doesn't count in television to its Canadian content, however you measure it, it is with a view to achieving a certain level.

7514             So, do you have a proposal with regard to a new CANCON level for radio in which spoken word content would be considered?

7515             MR. BINGLEY:  I would say that the threshold would be predominantly Canadian content, and I know that's dancing around the Broadcasting Act.


7516             At this point I would reiterate, I think what we're after here is a recognition moving forward that this is something you may wish to in the future define levels.

7517             THE CHAIRPERSON:  Thank you.

7518             Commissioner Pennefather.

7519             COMMISSIONER PENNEFATHER:  Well, following up on that, that was what I wanted to talk to you about, but also just I think you answered the question, if there is one message I got from the written intervention beyond that in the Canadian talent development component, in the eligibility criteria you would want to assure that education, the AVR type of support, support to other funds which would enhance broadcast journalism courses and so on, that that bottom line is certainly one of the things you were concerned about.  Did I read that correctly?

7520             MR. BINGLEY:  Absolutely, Commissioner.  We think that flows again from this definition, and if you say that by definition the people involved in the field of broadcasting are providing Canadian programming, then it flows by definition of that, that these other groups, the educators and the Aboriginal broadcasters are valid recipients of CTD funding.


7521             COMMISSIONER PENNEFATHER:  Well, I think there is precedent for that and also the current eligibility criteria do include educational institutions, but I take your point and others are coming forward to say we should confirm that across the board on CTD, so from that point of view.

7522             I read also that you ‑‑ it appeared that you were looking for benefits that would allow for support for increasing staffing levels;  in other words, CTD would support your internal administration expenses.

7523             Do you really think that that would go across with your colleagues?

7524             MR. BINGLEY:  I think, Commissioner, when you're talking about ‑‑ I was specifically referring to transfers of ownership, and take the case of a news talk station.  Under the current system, if there's a transfer of ownership of a news talk station, the benefit flows to the music industry, and I'm not sure that really makes, in the real world, a lot of sense.


7525             So, I think again moving forward with all these other pressures we're going to be facing, there may be a time where funding for increased programming staff might be considered ‑‑ should be considered, I believe, a contribution to Canadian talent.

7526             Again, that all flows from that definition.

7527             COMMISSIONER PENNEFATHER:  Okay.  I think that's clear.  Thank you.

7528             THE CHAIRPERSON:  Thank you very much.

7529             Those are our questions.

7530             We will adjourn now and resume at 7:30.  Nous reprendrons à sept heures et demie.

7531             And, again, Madam Secretary, I guess it is the use of the 150 Promenade Portage.

7532             THE SECRETARY:  That's correct, Mr. Chairman.  So, if you are exiting the building, you have to go out the entrance on 150 Promenade Portage and also come back through that door, otherwise all the other doors are locked.

7533             Thank you. 

7534             MR. BINGLEY:  Thank you very much.

‑‑‑ Upon recessing at 1800 / Suspension à 1800

‑‑‑ Upon resuming at 1936 / Reprise à 1936

7535             THE CHAIRPERSON:  Order, please.  A l'ordre, s'il vous plaît.


7536             Madam la secrétaire.

7537             LA SECRÉTAIRE:  Merci, Monsieur le Présidant.

7538             I would now call the next participant, No. 38 in the order of appearance, the Canadian Association of Ethnic Radio Broadcasters.  Mr. Lenny Lombardi will be appearing for the participant.

7539             After you have introduced your colleagues you will have 10 minutes for your presentation.

7540             Thank you.

PRESENTATION / PRESÉNTATION

7541             MR. LOMBARDI:  Good evening, Mr. Chair, Mr. Vice‑Chair Broadcasting, Members of the Commission and Commission staff.  I would first like to thank you very much on behalf of my colleagues here for accommodating our travel plans and allowing us to appear before you at this time.

7542             Before starting our presentation in chief, I would like to introduce our panel to you.

7543             My name is Lenny Lombardi and I am President of CHIN Radio and TV International that operates CHIN‑AM and FM in Toronto and CJLL FM here in Ottawa.


7544             To my left is Marie Griffiths.  She is General Manager of CKDG‑FM in Montréal.

7545             To her left is Michael Caine who operates three stations, including the ethnic station CJMR‑AM in the GTA.

7546             To my right is Prabha Selvadurai, CEO of Canadian Multicultural Radio which operates CJSA‑FM in Toronto.

7547             Rounding out our panel is Frank Alvarez, President of Serve Radio International operating CIRV‑FM in Toronto.

7548             In addition to the radio operations, many of our members are also involved in TV production, specialty television services, community newspapers, and SCMO radio stations.

7549             Unable to be with us today but sending their support to our presentation are Andrew Mielewczyk of CFMB‑AM in Montréal; James Ho of CHMB‑AM in Vancouver, who was here for the greater part of today but unfortunately had to leave back for a flight to Vancouver; and Carmela Laurignano of CIAO Radio in the GTA, and unfortunately she can't be here for personal reasons.  Hopefully she will be able to attend tomorrow.


7550             In our presentation today we hope to provide you with a brief overview of the context in which we are operating, explain how it is changing, as well as elaborating on the issues concerning Canadian content, Canadian Talent Development and the transition to digital radio that affect ethnic radio stations.

7551             The make‑up of the Canadian population has greatly changed since the visionary first ethnic broadcasters in Canada, my father, Johnny Lombardi, Montréal's Casimir Stanikowski, John and Helen and Daperis of Montreal, Jan van Bruchem of Vancouver and the Caine family in Oakville, Mississauga first started offering third language programs.

7552             Today we have significant and growing populations from the Caribbean and from Central and Eastern Europe, Africa, Latin America, the Middle East, the Balkans, India and Pakistan, Sri Lanka, Hong Kong, Taiwan and Mainland China, as well as the Philippines.

7553             Currently in Toronto we have seven full‑time commercial and one full‑time community ethic station, as well as multiple SCMO services and out‑of‑market and border stations seeking audiences and revenues in this important radio market.


7554             Similar complexities and competition is happening in Vancouver, with five Canadian AM and FM licences, SCMO channels and stations on the U.S. border whose main focus in the B.C. Lower Mainland.  While Montréal does not have the same number of ethnic stations, there is still growing interest.

7555             All three of these markets are also served by ethnic over‑the‑air television services, the many specialty services that the CRTC has licensed ‑‑ all of which are allowed to seek out local revenues ‑‑ and a growing number of foreign specialty services.

7556             Marie.

7557             MS GRIFFITHS:  Thank you, Lenny.

7558             Bonsoir à tous.

7559             Our stations are very close to the communities we serve.  Direct contact through personal relationships, advisory boards and programming producers keep us in touch with the needs of our communities and the market for local ad sales.  It should be remembered that, in some ways, each of our stations is a number of stations, serving a number of linguistic groups and the various ages and sectors of these communities.


7560             This may partly explain our financial results.  Ethnic broadcasting has not achieved the same level of profitability as mainstream broadcasting.  The 2005 financial data that the Commission published in early May shows that the PBIT margin for all Canadian radio is 20.8 percent but for ethnic radio it is only 11.4 percent.

7561             Some of us are still in the start‑up phase so we are not even quite at that level yet.

7562             The good news is that the overall level is double what it was five years ago.  The bad news is that is still way too low.

7563             In the Notice of Public Hearing announcing this proceeding, the Commission noted the lower level of profitability for French language radio and questioned the reason for this.  We suggest that the Commission should also take note of the lower profit in our sector when introducing any new measures, as well as the specific features of ethnic radio.

7564             We face growth in competition which Lenny outlined and we also face real difficulty in convincing mainstream advertisers to take a chance on us in absence of BBM data and with the perception of advertisers that we are hard to buy.

7565             National revenues represent only 4.6 percent of all ethnic radio advertising revenues as opposed to 24.2 percent of all radio revenues.


7566             This may be beginning to change.  There is a new understanding that cultural diversity in the advertising market can be targeted and it can bring value to advertisers.

7567             What does this mean for ethnic radio?  Two things, we believe.

7568             First, to capitalize on this trend, ethnic radio needs to be thought of by advertisers as a part of mainstream broadcasting, not as an afterthought.  Ethnic radio serves culturally diverse audiences, but that is exactly why it is now mainstream in our largest cities.

7569             Ethnic radio needs to continue to meet the needs of our diverse third language audiences, and it also needs to be thought of by advertisers as popular radio serving the Canadian multicultural market.

7570             Second, as advertisers wake up to the power of cultural diversity, you can be sure that the largest broadcasting groups will also see the value now in multicultural and third language services to enhance their main operations.

7571             There is a risk that growth in advertising to culturally diverse markets, if it occurs, will not benefit established ethnic radio so much as it will be exploited by the larger conventional radio stations using the ancillary capacity of their digital radio stations.


7572             This could damage established multicultural and ethnic radio services that serve many different cultural communities at the same time.

7573             Prabha.

7574             MR. SELVADURAI:  Thank you.

7575             While we do not have comments on many of the issues that the Commission has raised, we did raise three concerns in particular.

7576             First of all, we don't believe that the Commission should apply any new rules developed in respect of the English and French language radio industry to the ethnic radio.  We operate in much different contexts with multiple audiences and different challenges.

7577             In particular, in the areas of Canadian Content and Talent Development, we don't believe that any of the proposals to increase the levels are appropriate for us.  As we pointed out in our brief, while there has been some increase in the number of performers in some groups, this is not true for all groups.  My own station serves some 22 groups with particular, but not exclusive, emphasis on South Asians.


7578             While it is true that there has been remarkable success and growth in Punjabi pop recordings, this is not true for my own community of Tamils from Sri Lanka or for the Somali and many other communities that we serve.

7579             In CMR's application for our station, we proposed to provide 10 percent Canadian content ‑‑ and we are able to do this.  But these levels are very different from one community to another.

7580             In addition, it should be remembered that the presence of artists and musicians does not necessarily translate into musical recordings of sufficient quality to air.

7581             In the area of Canadian Talent Development we are pleased that the Commission has recognized that we are different.  The industry agencies like FACTOR, Musicaction and the Radio Starmaker Fund are not oriented to third language recordings.  Any contributions we provide to these organizations are not likely to end up in recordings that meet the needs of audiences or of our musical communities.


7582             Most of us contribute to the CAEB Catalogue of Ethnic Music in addition to the many activities within the communities we serve.  Activities include the CHIN International Picnic, CMR's South Asian festival and concert, Mike FM's Starsearch, CHMB's Chinese New Year Festival and CIRV's annual Portuguese Summerfest, a three‑day event, as well as its Portuguese and Spanish Song Fests which produce a CD to promote the winners, as well as the annual Chinese Talent Contest.

7583             These activities provide exposure for our own artists and celebrate our cultures in a way that a cheque to FACTOR or to the Radio Starmaker Fund could never do.

7584             Frank.

7585             MR. ALVAREZ:  Thank you, Prabha.

7586             While we agree with much of CAB's brief, we do not agree that our CTC contributions, particularly those related to a transaction, should be split as CAB proposes.

7587             In fact, we do not think that they should be split in 2 percent to FACTOR, 3 percent to the Radio Starmaker Fund and 1 percent to eligible third party funds format currently used by the Commission.


7588             Rather, we believe that our contributions should continue to be directed to activities within the ethnic communities that we serve.  Many of us provide scholarships for ethnic youth in music or journalism.  We agree with those who suggest that contributions for scholarships for those pursuing courses in radio and television should also be included.

7589             On another matter, we like to underline the importance of distribution on the cable FM band to our members with AM stations.  Many of our listeners have become accustomed to receiving a better quality signal in this way.

7590             In some markets cable companies are now proposing to move the service to the digital box which will require our listeners to buy or rent an additional receiver to obtain the service they are used to receiving.

7591             Michael.

7592             MR. CAINE:  Thank you, Frank.

7593             Finally, we have serious concerns about the digital radio transition.  While we agree to some extent with the flexible approach suggested by CAB, we have two points here.


7594             First, with our lower rates of profit, spending hard earned dollars on a technology for digital radio that may or may not pan out for us is not a good idea.  We do believe that our audiences also should have access to high quality signals, but we do not wish to be forced into a path that may result in stranded investment.

7595             We are also concerned by the suggestion that broadcasters be permitted to do whatever they want with the additional channels that digital radio may provide to them.

7596             As Marie pointed out earlier, an obvious choice for many of these broadcasters would be to provide language ethnic services that could target the largest and most financially viable of these groups.

7597             I point out that all of us are required to meet your broad service requirements ‑‑ all of us ethnic broadcasters.  Therefore, we suggest that you use a policy similar to the SCMO approach, where those wishing to add ethnic radio to their digital offerings must apply where there is an over‑the‑air ethnic station already serving the market.

7598             The Commission should be prudent in approving any such applications recognizing that the technical quality, and therefore the potential impact, is significantly higher than for SCMO services.

7599             Mr. Chair, Members of the Commission, thank you for your attention and we would be pleased to answer any of your questions.

7600             THE CHAIRPERSON:  Thank you.


7601             Commissioner Pennefather.

7602             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

7603             Good evening.  Thank you for your presentation.

7604             Just a clarification.

7605             Mr. Alvarez referred to the CTD contributions.  Looking at paragraph 40 of your written submission, what you are referring to here is transfers of ownership of ethnic stations.  Correct?

7606             When you refer to "we do not think that they should be split 2 percent, 3 percent, 1 percent", you are referring to transfers of ownership of ethnic stations?

7607             MR. LOMBARDI:  Yes, that is correct.

7608             COMMISSIONER PENNEFATHER:  And you go on in your written submission to say:

"A significant amount of the money should remain in the communities while some of the benefit is directed to the ethnic radio catalogue."


7609             Can you give us a sense of the breakdown?  So we are saying 6 percent not split as 3, 2 and 1 here.  But do you have some sense of what you would think would be the breakdown for transfer of ownership tangible benefits?

7610             MR. LOMBARDI:  Madam Commissioner, we had not really thought about the actual breakdown.  I think the point we wanted to make is that in our business of ethnic broadcasting and the difficult task of developing talent within the ethnic communities, particularly the ones that we serve, we feel that FACTOR, Starmaker and these other traditional forms of Canadian talent organizations don't effectively target or assist ethnic artists.

7611             We would like to still remain to have that flexibility to direct the majority of those funds to organizations that we feel can do the best.

7612             COMMISSIONER PENNEFATHER:  Would that thesis apply as well to CTD commitments in the new licence and in the licence renewals circumstances?

7613             MR. LOMBARDI:  Certainly.

7614             COMMISSIONER PENNEFATHER:  That's clear.


7615             I can't help but ask you, though:  When you say that Musicaction, FACTOR, Radio Starmaker Fund and Fonds RadioStar are irrelevant to the ethnic music industry, aside from the point you are making about transfers of ownership of ethnic stations, do you think that they should be more relevant to ethnic musicians?

7616             MR. LOMBARDI:  If they were, we would support them.

7617             Certainly it not our desire ‑‑ and I'm speaking for the group, and they can jump in.

7618             But just to finish my point, I think we want to be active in the development of ethnic talent.  If those organizations could show some signs of ability to do that sort of thing, I think we would be comfortable in directing funds in that direction.

7619             MS GRIFFITHS:  Yes, it is interesting because it was my first year where I had to do my annual returns ‑‑ a tad late but there was a good reason.  I had to pay my $8,000, which was a condition of licence.  We sent $4,000 to FACTOR and $4,000 to Musicaction.

7620             This is the first time in all my years in ethnic broadcasting, and it was my way of making the first introduction to see would they be interested in embracing the thought at least so we could sit down with them and say:  Maybe you should be looking also at supporting ethnic artists.  There's enough of us around now.


7621             I mean, $8,000 won't take you too far but I know a few ethnic artists that could use it and do some good stuff that deserve it.

7622             There is a girl called Teri Vee(ph) in Montreal.  She's fabulous and she can't get anywhere.  She needs some help.

7623             I am supposed to meet the lady from Musicaction here at these hearings.  I have her name.

7624             Je ne me rappelle pas par coeur là, mais je l'ai noté.  En tout cas.

7625             When I spoke with them on the phone, that's the only contact I've ever had.

7626             My first question was:  Can an ethnic artist come to you?  Can they apply?  How can I use you?  Not abuse, use.

7627             And the girl said, "Look, I only do accounting."  It had to do with having received payment and that.  But she gave me the name of the lady to look for here.  And she said, "Please meet with her and I'm sure they'll answer all your questions."

7628             COMMISSIONER PENNEFATHER:  Thank you very much.

7629             THE CHAIRPERSON:  Madame Noël.

7630             CONSEILLÈRE NOËL : La question s'adresse à madame Griffiths parce que je pense qu'on parle uniquement des stations ethniques du Québec.


7631             Impératif français suggère dans son mémoire que les transitions dans les stations ethniques au Québec soient faites en français.  Qu'est‑ce que vous pensez de cette proposition?  Uniquement en français.

7632             Mme GRIFFITHS : Excusez, si vous pouvez m'expliquer exactement la transition.  Il faut que ça se fait en français?

7633             CONSEILLÈRE NOËL : Ça doit être les liens entre chacune des parties où vous parlez autre chose qu'une langue étrangère?

7634             Mme GRIFFITHS : Sur place là, vous voulez dire?

7635             CONSEILLÈRE NOËL : Oui, à la station en ondes.

7636             Mme GRIFFITHS : Ah! en ondes.  Ah! bien, O.K.  Qu'on ne sert pas d'anglais du tout?

7637             CONSEILLÈRE NOËL : Oui.

7638             Mme GRIFFITHS : Bien, moi, je n'ai jamais divisé le Canada en anglais/français, vous voyez.  Pour moi, I go back and forth and it's so easy.  I think one of the beauties that identifies Montreal, c'est l'habileté de pouvoir le faire et le voir tout partout.  Pour moi, ça serait... on enlèverait une richesse.


7639             CONSEILLÈRE NOËL : Je vous remercie pour votre commentaire.

7640             Je n'ai pas d'autre question.

7641             THE CHAIRPERSON:  Thank you very much.  Those are our questions.

7642             MR. LOMBARDI:  Thank you.

7643             LE PRÉSIDENT : Madame la Secrétaire...

7644             COMMISSAIRE ARPIN : Pour madame Griffiths.  Musicaction a financé Lasa del Sala (phon.) pour son CD en espagnol.

7645             Mme GRIFFITHS : Merci, Monsieur le Vice‑Président.  Voilà!  Vous voyez, mes efforts d'ouvrir les portes vont être bien reçus.  Merci.

7646             THE SECRETARY:  Mr. Chairman, just for the record, I would like to indicate the participant list that has No. 33, the New Canada Institute, has advised us that they will not be appearing at the hearing.

7647             We will now proceed to the next participant, the British Columbia Institute of Technology on behalf of The Broadcast Educators Association of Canada and The Broadcast Educators Association of Canada, if they would come forward for their presentation.


‑‑‑ Pause

7648             THE SECRETARY:  Gentlemen, after your introduction, you will have ten minutes for your presentation.

7649             Thank you.

PRESENTATION / PRÉSENTATION

7650             MR. ALBRIGHT:  Good day, Mr. Chairman and Commissioners.  We are very glad to be here.

7651             First off, we have to apologize that we are missing a few members of our team as they had to take a return flight home.

7652             That would be Laura Davie from BCIT and Michele McManus from Confederation in Thunder Bay.

7653             I am Dave Albright, a faculty member of the Northern Alberta Institute of Technology in Edmonton, Alberta.  I also represent an organization called the Broadcast Educators Association of Canada.  Our organization represents provincially administered post secondary programs that train students for careers in radio, television, broadcast journalism, film, new media and animation.

7654             Brian Antonson, to my left, is the Associate Dean of the Media Communications Department at the British Columbia Institute of Technology in Vancouver.


7655             Also with us is Mr. John Hilton, who is currently adjunct professor at Osgoode Hall, former Chair of the Radio and Television Department at Ryerson University and John also provides legal counsel to the Broadcast Educators Association of Canada.

7656             My colleagues and I are very pleased to be here today to present a case for change in radio policy, something that we believe could be of tremendous value to both our training programs and to our industry.

7657             We represent almost two dozen training programs across Canada that provide broadcast and new media training to perhaps 4,000 students at any one time, approximately 2,000 of whom will graduate and move into employment with industries that we serve in in any given year.

7658             To begin, I would like to turn things over to BCIT's Mr. Brian Antonson to explain how we have come to be here.

7659             MR. ANTONSON:  Okay.  On your script it says Laura Davie, but I'm Brian.


7660             The worlds of broadcast and new media education face some daunting challenges these days and securing the ongoing funding to ensure our programs train on current technology and current equipment is a prime concern of ours.

7661             In the late 1990s Laura Davie and I identified what we believed would be opportunities for donations that could support capital projects in our facilities under the CRTC's tangible benefits policy.  These opportunities required some expansion or change in policy to be really effective.

7662             So in 1999 we made the first of a series of trips to meet with senior CRTC staff to discuss our concepts.  Everybody suggested that the appropriate time for presenting our case for change in policy would be at the next radio review, which was then some years away.

7663             Well, that time is now.

7664             In the meantime, we were encouraged to find a partner and bring our concepts forward on a test basis.  So our first partner was BCE.

7665             When BCE purchased CTV we made a presentation that caught their attention, resulting in a  donation of $1.5 million to BCIT.  That allowed us to create our BCE New Media Centre of Excellence which contains high tech new media and animation classrooms and computer labs.


7666             Today, this centre trains almost 200 fulltime students each year, along with another 1,000 part‑time students in every year.

7667             Our second partner was Global.  When they purchased BCTV in Vancouver, we presented them with what we thought was a compelling concept that resulted in their donation of $300,000, and that allowed us to create our Global Television News Centre of Excellence, containing a fully equipped television newsroom and production studio, and today that trains some 160 students every year.

7668             We have brought along a poster, which you see to your right.  Also, there is a copy of it at the back of your package, with the photo sheets involved there.

7669             These show you the extremely positive capital project results that came from those tangible benefits proposals being approved.

7670             Similar positive results have occurred sporadically across Canada.  In the BCE decision, the radio and television training programs at Ryerson University also received a $2.5 million allocation to establish the BCE Chair in Convergence, and a few years ago the broadcast program at Fanshaw College received $1.2 million to establish a leading edge music recording facility in the decision to grant CHUM a licence in London, I believe it was.


7671             But these benefits have touched only a very small number of the two dozen or so broadcast training programs in Canada, and the challenges remain and will continue to be huge in all programs right across the country.

7672             Provincially funded institutions face constant financial challenges and with the emerging necessary move to training in High Definition, the future prospects for our programs are truly daunting.

7673             But we hope that our suggested changes to radio policy might help us in addressing those challenges.

7674             Here is our case for change.

7675             We have two concepts which you will have reviewed as part of our submission.

7676             First, as I described, tangible benefits allocations have worked very well for us at BCIT and in some other programs across the country, but for the most part ‑‑ not all, but for the most part ‑‑ those have been approved under television policy and have affected only a small number of the existing programs in Canada.

7677             Radio policy currently allows tangible benefits at the times of transfer of ownership for only scholarships.


7678             We propose that the wording in the appropriate section be changed to read:

"Scholarships and capital grants to provincially‑administered post‑secondary educational institutions training in broadcasting or broadcast‑related fields also constitute tangible benefits."

7679             The important proposed change here is to allow capital grants to qualify, thus allowing stations to help create new facilities, introduce current technology and equipment to the schools that provide our industry's future employees.

7680             Second, the policy on Canadian Talent Development states that:

"Scholarships will qualify as Canadian talent development expenditures only when they support students engaged in music, journalism or other artist studies."

7681             It says:


"Grants to those organizations offering courses in broadcasting or devoted to the continuing education of radio staff will not qualify."

7682             We believe that we develop Canadian talent every day in all of our training programs right across Canada.  We train the people who will entertain and inform Canadians on radio and television for many years to come.  We train the people who will report Canadian news, who will play Canadian music, who will create Canadian music videos and commercial campaigns and drama and variety programming, and those who will use computer technology to produce stimulating animation and web images.

7683             And these images, of course, will be seen and used by Canadians every single day of their lives in the future.

7684             So we propose changes to that policy so that it reads:


"Scholarships will qualify as Canadian talent development expenditures only when they support students engaged in music, radio, television, broadcast journalism, print journalism, film, new media, animation, and other artistic studies.  Capital grants to provincially‑administered post‑secondary institutions offering training in broadcasting and related industries also will qualify."

7685             The immediate effect of these two changes being made will be that radio stations will now have the opportunity to at least consider allocating some of their commitments under those two policies to local or regional broadcast schools.

7686             A  number of our broadcast industry colleagues have asked over the years if they could provide this kind of support to us while at the same time meeting Commission expectations under these policies, and that is something that has encouraged us to move forward our concepts and proposals even more.

7687             Right now, the restrictions of these allocations to scholarships benefits people, but it benefits the very few and the very top students in our programs.


7688             By making these changes, the Commission and industry will see those benefits have the potential for extending to the entire student body in a program, and in some programs such as those at BCIT that I am most familiar with, that's hundreds of students.

7689             Certainly we expect stations will continue to provide support for our top students in the form of scholarships, but we also anticipate stations will embrace the concept of making commitments that benefit the many, not just the few.

7690             Our proposed changes, if accepted, will benefit our students, our donors who will employ them ultimately, our overall industry and then ultimately the listening and viewing audiences of Canada.

7691             Now over to Dave ‑‑ not Michele but Dave ‑‑ for some final words.

7692             MR. ALBRIGHT:  Or I can talk like this ‑‑ but I shall not.

7693             To sum up here, we really ask that the tangible benefits policy be expanded to include capital grants as well as scholarships as an acceptable allocation to the broadcast training programs.

7694             We ask that the Canadian Talent Development policy recognize that broadcast training programs do develop Canadian talent within their students.


7695             We ask that the Canadian Talent Development policy be expanded to include capital grants as well as scholarships as acceptable allocations to broadcast training programs.

7696             We believe our submission presents a compelling case for change in the radio policy.

7697             We believe the long‑term benefit to so many individual partners and to the industry as a whole speaks volumes towards a positive decision from the Commission.

7698             We thank the 30 intervenors who spoke up and supported our proposals, many from leading broadcast companies.  And we would also like to thank you for your time at this late hour today.

7699             We are pleased to respond to any questions you may have at this time.

7700             Thank you.

7701             THE CHAIRPERSON:  Thank you.

7702             Monsieur Arpin.

7703             COMMISSIONER ARPIN:  Thank you, Mr. Chair.


7704             I am looking at your brief and there is an appendix attached to it.  I note that the CJEP de Jonquière is part of the list.  I would suspect that it is not the whole CJEP but their arts and technical media sector that is part.

7705             I also note that you have Algonquin College, but they did split a year or two ago into a francophone unit, which is called Cité Collegial.

7706             Is Cité Collegial part of the BEAC?

7707             MR. ALBRIGHT:  Currently our membership fluctuates from year to year because it is a pay by membership opportunity.  We have them listed as Algonquin on our records.  But in our current year, which starts in September, they have not been listed as that.

7708             COMMISSIONER ARPIN:  As Cité Collegial.

7709             MR. ALBRIGHT:  Correct.

7710             COMMISSIONER ARPIN:  They even moved their campus towards Ottawa East, I will say, vis‑à‑vis Ottawa West where Algonquin College is.

7711             I am only asking the question because I know a number of Cité Collegial trainees are ending up in some of the Ottawa or the Gatineau region and the Montreal radio stations, which the ones that graduate from Jonquière are mostly or finally getting a job or they may go to Quebec City first before trying to relocate back to Montreal, as they all try to do.


7712             As you just said, since it is a paying membership, have you ever solicited Cité Collegial?

7713             It is rather new, that split within Algonquin College.  To my knowledge, it happened only a couple of years ago.

7714             MR. ALBRIGHT:  And to my knowledge, I have no real contact with that at this point right now.  But certainly we do not deny anybody access.

7715             COMMISSIONER ARPIN:  In reading your submission, and particularly page 3 where you define scholarship to "support students engaged in music" ‑‑ and obviously it is already in.

7716             But you had "radio, television and broadcast journalism".  I will stop here first.

7717             Is it because radio and television are generally taught to all of the students or do you have radio programs, television programs, print programs?

7718             MR. ALBRIGHT:  Colleges actually vary on how they deliver their content.  There is usually a component of radio‑television because there is a great synergy in those industries.


7719             To some extent journalism is a little heavier in some institutes or perhaps that becomes the lion's share of the instruction with mere reference to radio and television.

7720             Does that answer your question?

7721             MR. ANTONSON:  In a case such as ours in BCIT we have three programs, radio, television and broadcast journalism, which we then treat as news for radio and television.

7722             COMMISSIONER ARPIN:  You also added "print journalism, film, new media and animation and artistic studies".

7723             You added them for any given reason?

7724             MR. ALBRIGHT:  About three years ago the Broadcast Educators Association decided that we should expand our membership to include new media because there was so much synergy between the relevant technologies and we felt that ‑‑ and I think quite rightly so now, looking at where the industry is going ‑‑ that we bring them into the fold to allow them to be part of our organization as well.

7725             COMMISSIONER ARPIN:  But with regards to say print, film and animation and other artistic studies, why are you including them in your definition?

7726             MR. ANTONSON:  I can speak to that.


7727             Our world at BCIT, the world in British Columbia, is becoming very cross‑purposed.  We have people in our film program who are working in television production.  We have people in our new media program ‑‑ and Laura Davie, who had to leave, runs that area ‑‑ who are working in radio and television stations on web design and things like that.

7728             John pointed out to me that Ryerson's High Definition lab opened last week, another change that is happening in our industry.

7729             So we are embracing all these new technologies.

7730             New media and animation people are producing product that ends up on television. All those different things are happening.

7731             We have broadcast journalism grads who are working with web companies reporting news and posting it on the web, on their websites.

7732             So all of those things are converging rapidly.  Thus we think that they should all be included.

7733             MR. HYLTON:  Also, Mr. Arpin, the exchange between the schools at Ryerson, for example, the Journalism School and the School of Radio and Television Arts and the Film School, they actually move the students across for various courses.

7734             So there is a blending of those going on all the time.


7735             COMMISSIONER ARPIN:  And it is only at the end of their studies, I suspect, that they will start seeking a job, and they could have taken print journalism course and end up in a radio station.  And obviously they will say yes.

7736             MR. HYLTON:  Whatever the job is, sir.

7737             MR. ANTONSON:  And we have an interesting thing at BCIT where we have partnered with two local colleges, Quantlen College and Langara College, which have print journalism programs.  Their graduates, who have two years of training in print journalism, can come to us and receive a third year in broadcast.

7738             Conversely, our people with two years of broadcast journalism training can move to them and receive a third year in print journalism.  They are therefore much broader.  They can address any opportunities that come to them down the road.

7739             COMMISSIONER ARPIN:  At the end of the same page, you are concluding by saying:

"... we expect stations will continue to provide support for our top students in the form of scholarships ..."


7740             Are you also trying to convince the broadcasters to accommodate some training for students?  Or is it something that some of your members are trying to do so that the students have a chance to develop some skill in the working place?

7741             I would suspect it varies.

7742             MR. ANTONSON:  In our case ‑‑ and Dave can speak to his in Edmonton.

7743             But in our case, our students rotate through all the various different radio and television station operations in town as part of their second year training, and have for many, many years.

7744             COMMISSIONER ARPIN:  I see.

7745             MR. ALBRIGHT:  And at our college, similar to a few others in our organization, part of their training program as the course proceeds is within a station itself, and we have found broadcast partners to be very willing to take them on and keep them in‑house.

7746             COMMISSIONER ARPIN:  For the record, I know that CJEP de Jonquière does that as well.  Their students go ‑‑ except at Ryerson there are no universities that are part of your association.

7747             MR. ALBRIGHT:  No.  That is correct.

7748             COMMISSIONER ARPIN:  That is correct.


7749             MR. HYLTON:  I'm not sure that there are any other universities that have an applied radio and television arts course, so perhaps that is why the one university is there.

7750             COMMISSIONER ARPIN:  You could always try to solicit l'université du Québec in Montreal.  They have a radio and a television program.

7751             MR. HYLTON:  I used the word "applied" because I think there is a little distinction there.  But I don't want to go out of my bounds.

7752             COMMISSIONER ARPIN:  Yes.  In journalism you have Laval University where Florian Sauvageau sits on top of it, and has been sitting there for many years.  I know it is a journalism program that he has been running.

7753             I am trying to lead you towards some solicitation.

7754             MR. ANTONSON:  We are always looking for members.

7755             COMMISSIONER ARPIN:  Do you have an idea how many college members have specific radio programs?

7756             MR. ALBRIGHT:  In our memberships?

7757             COMMISSIONER ARPIN:  Yes.


7758             MR. ALBRIGHT:  The exact number I don't have.  I would suspect primarily 90 percent of them do have a radio program within their combined college, except for some that you just brought up that are strictly print.

7759             COMMISSIONER ARPIN:  But they are not members of your association.

7760             MR. ALBRIGHT:  Not  yet.

7761             COMMISSIONER ARPIN:  Do you have an idea of the enrolment?  Are the students more interested in going into television than going into radio?

7762             MR. ALBRIGHT:  At the Northern Alberta Institute in Edmonton that number fluctuates.  Television for a while becomes the sexy industry.  This year around we are finding that radio has become a lot more active and we have a lot more students tending to enrol.

7763             Generally, we are a very over‑subscribed program with approximately a two or three‑to‑one.

7764             And I think Brian's numbers at BCIT are even higher than that.

7765             MR. ANTONSON:  Yes, four‑and‑a‑half to one application ratio.


7766             We have a third/a third/a third; a third radio, a third television and a third broadcast journalism.

7767             COMMISSIONER ARPIN:  Mr. Chairman, those are my questions.

7768             THE CHAIRPERSON:  Thank you.

7769             Commissioner Pennefather?

7770             COMMISSIONER PENNEFATHER:  Just a quick question.

7771             One of the key changes here is the addition of capital grants because the current descriptions of eligibility in the two policies cover some of the areas with some additions, as Vice‑Chair Arpin has pointed out.

7772             In your written submission you say, however, that your request, your proposal, is that it would only be the discretionary funds that would be directed to your proposal.

7773             Is that correct?

7774             MR. ANTONSON:  We are looking to open that opportunity, to have the discretionary funds.

7775             COMMISSIONER PENNEFATHER:  Yes.

7776             MR. ANTONSON:  In truth, anybody can give us any amount of money that they want.  But of course they would like to have credits with the Commission.


7777             COMMISSIONER PENNEFATHER:  No.  I understand that.

7778             MR. ANTONSON:  Yes.

7779             COMMISSIONER PENNEFATHER:  I am just asking if you could do a follow‑up for us since it is the discretionary fund, because you make the point you don't want to impact monies going to FACTOR.

7780             Could you give us some sense of what you expect the impact could be of your proposal on the discretionary funds going forward?

7781             MR. ANTONSON:  Sure.

7782             COMMISSIONER PENNEFATHER:  Looking at the annual reports of FACTOR and Starmaker Fund.

7783             That would be very helpful.

7784             MR. ANTONSON:  I would be happy to provide that.

7785             I would be willing to go after every single dollar I can get.

7786             COMMISSIONER PENNEFATHER:  Understood.

7787             MR. ANTONSON:  But I am sure that ‑‑

7788             COMMISSIONER PENNEFATHER:  It's more of an impact just in looking at it as a proposal.

7789             MR. ANTONSON:  Sure.

7790             COMMISSIONER PENNEFATHER:  Thank you.


7791             MR. ANTONSON:  You bet.

7792             COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

7793             THE CHAIRPERSON:  Thank you very much, gentlemen.

7794             Madam Secretary.

7795             THE SECRETARY:  Thank you, Mr. Chairman.

7796             The next participant will be CKUA Radio Network, Mr. Ken Regan, if you would come forward for your presentation.

‑‑‑ Pause

7797             THE SECRETARY:  Mr. Regan, when you are ready, you have ten minutes for your presentation.

PRESENTATION / PRÉSENTATION

7798             MR. REGAN:  Thank you, Mr. Chair and Commissioners.  It is nice to see you all again.

7799             I thank you on behalf of the thousands of supporters, voluntary donors and listeners of CKUA for the opportunity.

7800             As Canada's most successful listener supported community‑based broadcaster, I think we bring a unique perspective and hopefully a valuable one to the deliberations.


7801             I will keep my comments brief, as I have indicated here, and deal first, if I may, with the issue of Canadian content which has been raised here on a number of occasions.

7802             It is our belief at CKUA that the system developed and the Commission's historical requirements in support of music and Canadian artists, particularly Canadian content provisions, have worked very well.

7803             I think this Commission and your predecessors, along with the industry, have created an outstanding ‑‑ one of the world's most outstanding broadcast systems we believe, and I think the historic evolution of Canadian artists achieving international success is evidence of the success of that program.

7804             But I don't know that the issue is so much Canadian content levels as it is perhaps the critical issue being the need for more exposure of new talent, and we have heard that reference here this week as well.


7805             We believe, like our colleagues at campus station CJSW in Calgary and others, I think including the Canadian Association of Broadcasters, that the current Canadian content requirements are appropriate.  They have worked in the past, there is no reason that I can see that they wouldn't work well in the future ‑‑ equally well.

7806             If the issue is to provide better exposure for emerging artists, then we would support a minimum requirement for new and emerging Canadian artists within existing content requirements.  For example, if the content requirements are 35 percent, a minimum requirement, the 30 or 50 percent or whatever the percentage might be of that, be comprised of new or emerging Canadian talent, however that might be defined.

7807             AT CKUA we do not support a unilateral increase in Canadian content requirements for commercial radio, because we believe it would be inconsistent and patently unfair considering that competing broadcasters ‑‑ specifically the two satellite and radio providers Sirius and XM Radio ‑‑ are not required to maintain equivalent CanCon levels throughout their service.

7808             CKUA does not believe terrestrial commercial radio should bear even greater responsibility for increasing exposure of Canadian talent when their competitors are given that kind of special dispensation.


7809             With respect to the issue of retaining young audiences, which we at CKUA also believe is fundamental to all broadcasters, the simplistic answer is to say "Play young people's music and you will have young audiences."  There is truth to that and there are commercial radio broadcasters doing very well serving the youth market, but we also appreciate the demographic and financial implications that might make some commercial broadcasters reluctant to embrace that simple philosophy.

7810             If I might just make a side comment, I believe that commercial radio has diverted from its historical practice of tracking new generations and broadcasting to them.  If you go back to the swing jazz era ‑‑ not that I was around at that time, but my understanding of it is that that was the music that commercial radio picked up.  When swing jazz evolved into bobby‑soxers, that is the music that commercial radio picked up on.  When the bobby‑soxers turned into the rock 'n roll generation that is the music that commercial radio evolved or moved towards.

7811             And it wasn't until the baby‑boom generation came along and the demographic shift occurred in the late '60s that commercial radio began to track one generation throughout its lifetime, because of the overwhelming demographic and financial power that that generation held.


7812             I think it was maybe not a mistake on a financial basis, but I think that is where things changed and many commercial broadcasters, probably the majority, are still tracking my generation and I think at the expense of the new generation of kids that are coming up.

7813             If in fact commercial broadcasters are reluctant to embrace or play that kind of music, perhaps the earlier suggestion that I referred to about requiring a percentage of new or emerging artists would contribute to fulfilling some of the demand from young people, as well as perhaps helping commercial broadcasters develop the audiences that they are going to need at some point.

7814             With respect to the issue of digital transition, I agree, or CKUA agrees, with the written submission by CBC/Radio Canada that digital technology should be considered a complementary technology, not a replacement technology.

7815             Also, as a community broadcaster we agree with comments from some of our colleagues here that without a significant infusion of financial support, the campus and community broadcast sector will never be in a position to embrace or take advantage of the digital revolution.


7816             If I may, I would like to speak to the issue of community radio with respect to this in the context of these hearings, because I don't think it is possible to discuss one sector's issues, particularly the commercial radio sector, without considering the immediate or potential impact on other sectors.

7817             I think we have in Canada today a system in which the following is reality, if I may:  Commercial radio, the vanguard of Canadian radio broadcasting coming off a year of record profits, feels threatened by the real and potential impact of rapid technological change that is multiplying the competition exponentially and diverting traditional audiences away, and by what it considers a burdensome tax and royalty regime.

7818             On the other hand, campus and community broadcasters, in order to survive, want commercial radio to provide direct funding support to their sector, while at the same time relying to some significant degree on advertising revenues in direct competition with commercial radio companies from whom they seek support.


7819             And perhaps the ultimate irony, while commercial radio and community radio are each in their own way scrambling to develop and retain audiences with their own hard‑earned and often limited resources, the tax funded CBC, aside from launching services such as Galaxy and Radio 3 in direct competition with all broadcasters, uses its Canadian frequencies to promote Sirius satellite radio, which is also in direct competition with commercial and community radio, for audience.

7820             As we have stated previously to this Commission, community broadcasters in Canada face all the competitive and technological challenges as our colleagues in commercial radio, the CBC, and the other independent commercial broadcasters who have appeared before you this week.

7821             The difference is that, unlike the CBC, community broadcasters such as CKUA receive no direct government subsidy and, unlike commercial radio, we are not permitted to compete equally for advertising revenues.


7822             So community radio is trying to survive in this highly and increasingly competitive environment, trying to fulfil our obligations and commitments to the broadcasting system under the Broadcast Act, but we are forced to compete, figuratively speaking at least, with both hands tied behind our back.  We want to make contributions, we can make contributions, but we feel we are being inhibited.

7823             We have heard this week from colleagues within campus and community radio who suggest that commercial radio should, next to government ‑‑ and they will correct me if I have misinterpreted this ‑‑ suggesting that commercial be primary contributors I think to a community radio fund.

7824             As this Commission is well aware, CKUA has long been a strong promoter of the community radio fund concept and we agree with our colleagues from l'ARC du Canada that a community radio fund is essential if the campus and community broadcast sector is to succeed and survive in Canada.

7825             But CKUA does not agree that terrestrial commercial radio broadcasters alone should bear their primary funding responsibility among the industry participants.


7826             As we have stated in previous submissions to the Commission, we believe satellite radio providers should be the first contributors to such a fund using a formula based on a percentage of gross operating expenditure.  We say this because these services are, first are foremost, foreign services despite the limited Canadian channels they provide and, as foreign services licensed ‑‑ privileged to be licensed to operate in Canada in competition with community broadcasters and commercial radio ‑‑ CKUA believes they have an obligation, frankly, to make a direct contribution to the indigenous Canadian radio industry in return for the privilege.

7827             We also believe broadcast distribution undertakings in Canada could demonstrate a commitment to the communities from which they derive their profits by making contributions as well to a community radio fund.  We believe this to be particularly the case with respect to cable BDUs which already act as a collector for levies imposed on consumers to support such services as CBC Newsworld.

7828             Finally, CKUA believes commercial radio should make some contribution to support community broadcasting, not because we are nice guys and girls and because we do nice things for the community, but rather because the community broadcast sector, according to the Broadcast Act, is a fundamental component of the Canadian system.


7829             Moreover, CKUA believes that commercial radio contributions to a community radio fund would be an indirect support mechanism for Canadian Talent Development because it would support radio services that willingly play and promote the new and emerging and independent artists that commercial radio may be somewhat reluctant to engage in order to protect their commercial interests.

7830             However, in fairness, if commercial radio is to be required to provide direct support to the community radio sector through contributions to a community radio fund, CKUA at least believes the community radio sector should be willing to forego its right to sell advertising in direct competition with commercial radio.

7831             On a final note on this funding issue, CKUA is aware ‑‑ and I think the Commission as well, obviously ‑‑ of commercial radio's desire for elimination of the surplus portion of the Part 2 licensing fees now collected and placed in general revenues by our national government.

7832             While I appreciate that tax issues are not the purview of the Commission, I would like to get on the record at least that there is an opportunity with respect to a potential resolution to this issue of community radio funding that also offers a support mechanism.


7833             CKUA would support private broadcasters contention that the Part 2 licensing fee surplus should be returned to them.  However, CKUA believes that a portion of that surplus could and should be redirected to a community radio fund, with the remainder given back to the broadcasters.

7834             This would make the broadcasters happy, I think, because they would be recovering millions in unwarranted taxes, and what levies remain could be put toward establishment and maintenance of the community radio fund, which is ‑‑ and I have heard private broadcasters say they would feel better about paying those fees if those funds were in fact redirected to the industry.

7835             If such a formula were put in place, CKUA believes it would eliminate any other requirement for funding support from the private sector, providing the appropriate funds were made available and the appropriate distribution mechanisms put in place to manage access to the fund.

7836             Those are my comments and I appreciate your questions.

7837             THE CHAIRPERSON:  Thank you.

7838             Commissioner Pennefather...?

7839             COMMISSIONER PENNEFATHER:  Thank you.


7840             Good evening.  Your presentation tonight does clear up a couple of questions that I had.  Just to be sure I understand, I'm going to take this in through the angle of Canadian Talent Development.

7841             I see in your paragraph 25 tonight that you say that this would be "an indirect support mechanism".

7842             So backing up, the commercial radio contribution to the fund would not be through a Canadian Talent Development mechanism but rather through a levy or through other formula that you would propose?

7843             MR. REGAN:  Well, I know there has been some discussion in the past about using the Canadian talent or diverting some funds from Canadian Talent Development towards the community broadcast sector, but I'm not honestly quite clear on exactly what that means and I'm not sure that it has been clearly defined by either of the two sectors.

7844             If it means project funding through Canadian Talent Development initiatives it's not what is needed, frankly.

7845             What is needed in the community broadcast sector is core funding support.


7846             Project funding at the community broadcast sector level is money in and money out with administration in the middle and it's why at CKUA we have really foregone a lot of grant application opportunities because there is a tendency to fall into a trap of applying for grants just to get money in the door and then the money is spent on the project and on the administration of the project and at the end of the day you have no more money than you started with to deal with the core funding issues.

7847             So my feeling is, or my position is, that if commercial radio is going to provide funding to the community broadcast sector as part of a Canadian Talent Development initiative, it should be unfettered funding and core funding support.

7848             COMMISSIONER PENNEFATHER:  But it's not your principal thesis.  Your principal approach is through a different mechanism, a formula on revenues.

7849             MR. REGAN:  That's correct.

7850             COMMISSIONER PENNEFATHER:  Can you give us a sense of what the size of such a fund would be to be effective?

7851             MR. REGAN:  Well, I know some of my colleagues here this week referenced the possibility of a $5 million fund and I think that is not nearly enough.


7852             I believe that to have anything substantive in place you probably ‑‑ if I may, I'm not talking about enough funding to allow the community broadcast sector to survive at its current level.  I think what we are hoping to do here is provide the kind of funding that will allow the community broadcast sector to develop and improve its standards and its contribution to the community, and the reason it's not doing that today is because it doesn't have the money.  It doesn't have enough money.

7853             I would propose that something in the order of $20 to $25 million is what is truly needed to provide the kind of funding necessary to allow this sector to develop to its potential.  I know that sounds like a lot of money, but it's not when you consider the Part 2 licensing fee surplus annually runs somewhere I believe between $150 and $200 million a year.

7854             COMMISSIONER PENNEFATHER:  I think the proposal, at least from one or two submissions, was $18 million, of which 45 million would be the contribution of the private broadcaster.

7855             Your proposal is a matching‑grant basis, amounts equal to what the community broadcasters themselves earn specifically from fund‑raising.

7856             MR. REGAN:  Yes.


7857             COMMISSIONER PENNEFATHER:  Would that mean if that was $18.5 million from private that you would contribute $5 million from fund‑raising?

7858             Is that the way it would work?

7859             MR. REGAN:  That I would contribute?

7860             COMMISSIONER PENNEFATHER:  The community broadcasters themselves from fund‑raising would match private broadcaster contributions.

7861             MR. REGAN:  No.  If I may, my proposal for accessing the fund ‑‑ and this is where I differ from some of my colleagues at NCRA on this ‑‑ I believe that the funds should be accessed on a matching‑grant basis, whereby if I'm a station in Kamloops and I can raise $50,000 from my community, I should be able to draw down $50,000 from the fund.

7862             The reason I say that is because I believe it requires accountability, and I believe that even though we are the community broadcast sector and we are trying to do good work on behalf of the community, at some point if we are going to consider ourselves a legitimate part of the industry, we must be accountable.


7863             We must show our relevance for the privilege of owning the licence in that community.  I believe that one way that I know to show that relevance is to engender support from that community, and to the extent that the community is willing to support you I believe is an indication of your relevance.  And if you are able to raise ‑‑ if your relevance is $50,000 worth a year for a small community station in Kamloops, or if it's $1 million a year for a network that covers the province of Alberta, then I think you should be able to draw down an equivalent amount from the fund based on that so that you can re‑invest those funds into doing better work for your community.

7864             COMMISSIONER PENNEFATHER:  Thank you.

7865             Those are my questions, Mr. Chairman?

7866             THE CHAIRPERSON:  Thank you.

7867             Commissioner Cugini...?

7868             COMMISSIONER CUGINI:  Good evening.  Just one quick question.

7869             So it is your preference that we apply a quota for emerging artists as opposed to the bonus plan that was put forward by the CAB?

7870             MR. REGAN:  I'm not sure that I would say it's my preference.  I think it's another way of perhaps approaching the process.

7871             The bonus plan put forward by CAB, if I understand it correctly, I think could work.  I'm not sure that I would necessarily have a preference.


7872             However we achieve the objective, I think that's the most important thing.  If the bonus plan does the job, then great.

7873             But I just propose the quota requirement as an alternative option, and certainly from CKUA's perspective we would have certainly no objection to that kind of a quota.  I think we are probably exceeding that now.

7874             COMMISSIONER CUGINI:  But you would accept either/or?

7875             MR. REGAN:  Absolutely.

7876             COMMISSIONER CUGINI:  Thank you very much.

7877             MR. REGAN:  Thank you.

7878             THE CHAIRPERSON:  I think those are our questions, Mr. Regan.

7879             MR. REGAN:  Thank you.

7880             If I may ‑‑

7881             THE CHAIRPERSON:  Oh! I'm sorry, Mr. Arpin has a question.

7882             COMMISSIONER ARPIN:  Yes.  Mr. Regan, CKUA plays classical music?

7883             MR. REGAN:  Yes, sir.


7884             COMMISSIONER ARPIN:  And one of the questions that was part of the Public Notice was quota for category 3 type of radio station, I understand that you are committing the radio station and question was asked within the framework of the commercial radio.

7885             But what is your current level of Canadian content in your classical music section?

7886             MR. REGAN:  Gosh!  You know, I wouldn't want to venture a guess, but I do know that our programmer for classical music is a very knowledgeable young man on the Canadian music, aside of classical musical and I would guess that it's ‑‑ I wouldn't want to venture a guess, but I would ‑‑

7887             COMMISSIONER ARPIN:  Because the current regulation is ten per cent.

7888             MR. REGAN:  And I would say that we would exceed that.

7889             COMMISSIONER ARPIN:  You would exceed and there was suggestions made by various interveners at this hearing that it could go as high as 35 per cent, others were saying 20, but could you comment on that?

7890             MR. REGAN:  Well, I can say that we wouldn't object to that.  Now, we have a library, we are fortunate in having the kind of library that could also support that readily.


7891             I am not sure how many other stations might be in a position to say that, but it's nothing, I wouldn't object to it and frankly I would be reluctant to comment on behalf of other people in the industry, but from CKUA perspective, we would accept that.

7892             COMMISSIONER ARPIN:  I see.  There were suggestions made that the Commission considers quotas of Canadian composers.  One group was suggesting three percent and another group was suggesting five per cent of Canadian composers.  Obviously Canadian composers would be much more contemporary type of music than classical music.

7893             MR. REGAN:  Uh‑huh!

7894             COMMISSIONER ARPIN:  Are you playing any contemporary music like Murray Shaffer and the like?

7895             MR. REGAN:  We do.  Malcolm Forsythe, yes.  Yes, we do play that music.  I think, if I may, I think that the Commission wants to be careful about how many quotas are applied.  I think the more general approach if you wanted to say, well a certain level of Canadian content, but leave the discretion with it to the broadcaster within that, to determine how those quotas are arrived at I think would be a better process.

7896             That would be my personal opinion.


7897             COMMISSIONER ARPIN:  Thank you very much, Mr. Regan.

7898             MR. REGAN:  Thank you.  And if I may, Mr. Chairman.  You know that I'm a passionate man and passionate about this subject.  I think illustrative of that is the fact that as we speak, Edmonton is playing game six in their series against San Jose, so I'm here and I'm happy to be here.

7899             THE CHAIRPERSON:  You're lucky to have a team to route for.  Madam Secretary.

(laughter)

7900             THE SECRETARY:  Thank you, Mr. Chairman.

7901             I would now call on the next appearing participant at the National Campus and Community Radio Association.  L'association nationale des radios étudiantes et communautaires.

7902             THE CHAIRPERSON:  While they're setting up, we'll take a brief five minute break.

7903             Nous reprendrons dans cinq minutes.

‑‑‑ Recessed at 2043 / Suspension à 2043

‑‑‑ Resumed at 2052 / Reprise à 2052


7904             THE CHAIRPERSON:  It appears as though we'll complete the Wednesday line‑up tonight and in the spirit of optimism, we may actually, at the rate we're going, be able to complete the hearing by the end of the day tomorrow.

7905             To that end, the Secretary of the hearing will contact those parties who were supposed to be here on Friday, advising them to appear tomorrow afternoon towards the later part of the afternoon.

7906             Madam Secretary, call the next item, please.

7907             THE SECRETARY:  Thank you, Mr. Chairman.

7908             Ms Melissa Kaestner is appearing on behalf of the participant.  If you would please introduce your colleague and then  you will have ten minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

7909             Ms KAESTNER:  Thank you.

7910             Good evening members of the Commission.  My name is Melissa Kaestner and I'm the National Coordinator for the NCRA.  Here with me to present our submission is Chad Sanders NCRA Treasurer and CJAW Calgary Station Manager.  Ms Teresa Ward, NCRA Advisory Board Member and CHSR Fredericton Station Manager and John Harry Stevenson, NCRA Advisory Board Members and CHUO Ottawa Board of Directors.


7911             We are pleased to have this opportunity to address the Commission to outline our comments regarding the Commercial Radio Review Public Notice 2006‑1.

7912             The National Campus and Community Radio Association ‑ L'Association nationale des radios étudiantes et communautaires is a not for profit national association of organizations and individuals committed to volunteer based community oriented radio broadcasting.

7913             We are dedicated to advancing the rule and increasing the effectiveness of campus and community radio in Canada.  Our membership consists of 27 community based campus stations, seven community stations, one each of native internet and closed circuit stations, three stations in development and one association.

7914             Ranging from five to 18,200 watts, these stations are staffed by approximately 160 paid employees and more than 4,500 volunteers.  The total revenue of our member stations in 2005 was $4.1 million, individual station revenue ranges from $300.00 to $415,000.00 with average station revenue at approximately $110,000.00.


7915             MR. SANDERS:  The NCRA sees this Commercial Radio Review as an excellent opportunity for the Commission to examine the importance of community broadcasters and to ensure our participation in improving and enhancing Canadian radio in partnership with the commercial radio sector.

7916             Our proposals now will become an integral part of the strategic development of third sector radio.  We are contributing to this review because we believe decisions made here will impact our sector directly and profoundly.

7917             We believe that regulation and policy resulting from this review in such areas as emerging technologies, low power FM, Canadian content, support for emerging artists and Canadian talent development will impact our sector in the future.

7918             We support the notion that commercial radio should enhance the access that Canadians have to Canadian music and other programming affecting their communities and their country.  We believe all sectors of broadcasting should work together to explore and develop these opportunities.

7919             The long term viability and sustainability of the Canadian broadcast system depends on the interaction and cooperation of all sectors of radio, including a healthy community radio sector.


7920             Canadian radio is no longer a broadcasting system made up of discreet components.  It's an interconnected network of private and public broadcasters depending on each other to maintain the diversity that exists across this country.

7921             We also believe it is evolving into something more, perhaps an echo system that contains not just broadcasters, but the music and other media industries, an echo system that needs community and grassroots media as much as it does mainstream mass audience commercial media.

7922             Canada's community radio faces many more challenges that appears in the private and public sector.  As we attempt to participate in the various discussions of the radio broadcasting industry.  When given the opportunity to comment on the same issues, our commercial counterparts have, our sector has to do so with considerably fewer resources.

7923             Our active participation in such issues as expected scarcity and the delocalisation of radio in Canada could be supported by acknowledging that our sector requires far more resources that could be gathered by not for profit entities and, therefore, it needs the assistance of the commercial radio sector and the support of the CRTC.


7924             We are taken back by some of the questions that Artic Canada were asked yesterday because of their focus on commercial media metrics in the form of profits and advertising revenue as a measure of success.  These generally do not apply to community radio particularly in the English Canada.

7925             The social and cultural benefits of community radio are sometimes difficult to quantify in monetary or economic terms and comparison to commercial services is inappropriate.  We ask that the Commission refers to a recent study we have completed, a review of the available studies on the impact of community radio on its community.

7926             The partnership that community radio makes with our supporters are between independent groups and organizations that rely on our sector to get the word out.  Local musicians, theatre groups, festival and dance groups, charities and many other non profit organizations depend on our support, but instead of innovating and participating in these exciting community initiatives, limited resources are utilized simply to cover core operational costs.


7927             It is unfortunate that we can produce examples of stations that have closed their doors due to a lack of financing.  In recent years, three stations: CIMN in Charlottetown P.E.I., CCRS in Sudbury Ontario and CKIC in Wolfeville Nova Scotia have all closed because of the lack of financing.  CFPU in Ste Catharine's Ontario is forced to down size due to their under funding.  CKUT in Montreal Quebec faced the challenge to their funding this past spring and CKXU in Lethbridge Alberta continues to pay off large debts owed to their students union.

7928             Coast to coast too many communities struggle to find appropriate funding to start up a community radio station.  When even one community radio station becomes marginalized by financial crisis, the ripple is felt throughout the sector.  We are at risk of being reduced to a series of campus, radio clubs, and this is a direction we want to avoid.

7929             MS WARD:  We have the Broadcasting Act in mind in our proposal for a community radio levy.  In section 32, the Act states:

"The Canadian Broadcast system constitutes a single system and, as noted in Section 3(1)(d)(4), it expects that system to be adaptable to technological change.


Of the three sectors of the system mentioned in Section 3(1)(b), only the not for profit community sector has not been given the ability to do so.

Private radio is permitted to receive revenue through its use of public airwaves and funding for the public sector is provided to the CBC by taxpayers."

 

7930             And if I may, I would like to go off book for just a moment to point out that the Commission has made recent statements concerning community radio and I'm quoting now actually from our study of review of the available studies and the impact of community radio on its community, which is itself quoting the CRTC Broadcasting Policy Monitoring Report 2005:


"The Commission put forward specific measures and objectives in order to encourage broadcasting licensees to continue efforts to increase production and broadcast of regionally produced programs reflecting the realities of those communities and recognize the special role of community radio stations and further, the Commission identifies two clear objectives of the Canadian Broadcasting system with respect to diversity.  The broadcasting system should be a mirror in which all Canadians can see themselves.  And it should be one in which producers, writers, technicians and artists from different cultural and social perspectives have the opportunity to create a variety of programming and to develop their skills."

7931             We have a proven track record in diversity.  Everyone at the table today understands the principal arguments regarding what constitutes diversity in programming and how forcing real diversity onto the private sector is impossible because it is not commercially viable.

7932             Pubic radio, the CBC, attempts it, but lacks of vital element in that the communities sector already has the invested participation of the listener as producer.

7933             As long as Canada is lacking an adequately supported community sector, we are limiting diversity and just as importantly, limiting our citizens' ability to exercise their right to make use of the airwaves themselves.


7934             In a prior appearance before the Commission we compared the public airwaves with the public highways.  If the government departments in charge of highways fail to allow for the public to drive upon them, if citizens were expected to raise their own money to build on ramps to access them, if people were expected to accept the limits of being able to purchase goods transported along them or ride the CBC bus, the need and solution would become as obvious as ours is today.

7935             The Broadcasting Act charges the CRTC with the management of the entire broadcast system.  You have been enabled to create a levy for the commercial sector to support the public's right to access and use the airwaves and a levy to support that system is legitimate and needed.

7936             Ms KAESTNER:  We want to speak briefly about funding levels.  The funding goals we have identified in our submission are the result of several months of research and several years of consultation and experience with our members.


7937             In our submission we outline the need to establish a community radio fund of Canada, the CRFC.  The goals of the CRFC will be to provide not for profit community radio with support for existing local programming and other core activities while supporting the development of the sector.

7938             Support from this fund will focus on areas that are both essential and often difficult to support from other sources.  We have listened to our 134 stations and the needs that they have identified to us outlining programs into four themes with clear objectives: sustainability and capacity building; local communities news; community music and expression and emerging distribution technologies.

7939             These four areas will focus on bringing the necessary skills and knowledge central to the ability of community radio stations to effectively serve their local communities throughout variety of initiatives.

7940             Initiatives can vary from the establishment of programs and support services to help the development of community radio in areas under served by existing media such as rural areas, two initiatives focusing on improving community access and outreach programming, including support for production of local news and community affairs programs and programming and projects that highlight and promote local music and musicians of all genres.


7941             The CRFC proposal will fill the programming gap between the commercial radio sector and the CBC and reincorporate the importance of the community radio sector.

7942             Canada is one of the few major industrialized nations without a funding program for community radio.  We have identified such programs in Australia, the United Kingdom, New Zealand, Ireland, the Netherlands, France, the United States and other countries.

7943             We found that funding is typically targeted and specific and our proposal has attempted to reflect best practices in other jurisdictions.  We would be happy to forward a summary of our research to the Commission by May 29th.

7944             We also looked to Canadian models such as the Canadian television fund and the policy frame work for community base media found in Broadcasting Public Notice CRTC 2002‑61, both of which mandate support for the Broadcasting system from broadcasters and distributors.


7945             MR. STEVENSEN:  To conclude, as the Commission might recall, we raised similar serious concerns about the future of community radio at the 2004 hearing on Subscription Radio.  We asked that support for our sector be made a condition of licence for the new services.

7946             Chairman Dalfen and Commissioner Langford asked the subscription radio applicants if they would support community radio if the CRTC did not make such support a condition of licence.  Satellite radio enthusiastically committed to doing so.

7947             We do not know now if satellite radio ever intended to follow through with the commitments they made at that hearing.  We do know, however, that numerous telephone calls, letters and e‑mails over several months were never returned.

7948             We approached the Chairman about the situation and you and the Commission staff were good enough to give them a nudge, which was very much appreciated.

7949             We subsequently received an indication that some sort of support might be coming from one of the services, but have still not heard from the other 18 months after the hearing and five months after the launch.

7950             The licences of the satellite radio services expire in 2011.  It will be many years before we will have a chance to call them to account.


7951             So, we are here today to tell the Commission that the continuing existence and vitality of community radio in Canada cannot depend on the charity of commercial broadcasters.

7952             We have been charged by the Commission, by you, to play an important and difficult public service role.  Our responsibility, we cannot continue without support from within the broadcast system.  Core funding for community radio should be a matter of regulation and made a condition of licence.

7953             Community radio is more than a collection of stations.  It is a model of communications based not on market share or profit, but on ideas and people and a passion for local community service.

7954             The proposal we and our partners have made during this hearing is not about what we have done, but about what our communities dream that we would do.  Our objectives are clear and we promise that with whatever support we receive we will work with the Commission to accomplish a great deal.

7955             We know that a Commission with vision will acknowledge and support the increasingly important role community media must play in a globalized society.

We believe the future of Canadian media depends on it.

7956             Thank you very much.  We welcome questions from the Commission.


7957             THE CHAIRPERSON:  Thank you.  Commissioner Noël.

7958             COMMISSIONER NOËL:  I have two areas of question.  One is the bonus.  You seem to adopt a bonus system for emerging artists.  Could you elaborate on that, please?

7959             MR. SANDERS:  We haven't actually set up a bonus system for emerging artists.  We have sort of said that there is a ‑‑ it's defined as under 12 months as a recognized artist and it's sort of an area that continues to need to be explored.

7960             COMMISSIONER NOËL:  You say at paragraph ‑‑ maybe I mistakenly took that for a bonus system, but at paragraph 20 of your written submission you say:

*We would like to see commercial broadcasters agree to a relevant incentive program.+

7961             What's an incentive program if it's not a bonus program?


7962             MR. SANDERS:  In the event of instituting an emerging artist program, there would have to be an incentive that they may in working with the Commission determine and define.  I guess our stands sort of an emerging artist isn't relevant to our sector because a majority of ours are emerging to become ‑‑

7963             COMMISSIONER NOËL:  I understand, but I was asking you because I read that and it looked like a bonus and I was wondering if you were ‑‑ I'm trying to find the proper English term, sorry it's a bit late tonight ‑‑ to lean towards the CAB's position of a bonus or premium or the music industry's quotas type approach?

7964             MR. SANDERS:  I think what we are trying to define is what we are trying to define is what is an emerging artist and it's more ‑‑ it shouldn't be a release more than 12 months old.  I think that was more of our sense.

7965             COMMISSIONER NOËL:  That's where you were aiming, but when I saw that incentive program, I was wondering what it meant.

7966             MR. SANDERS:  Okay.  Sorry.


7967             COMMISSIONER NOËL:  Okay.  The other question I have is concerning the establishment of a fund, the community radio fund and your proposal is to finance the broadcasters' part of it, roughly five million out of 18 through an increase in the transaction CTD from six to seven per cent where the one per cent additional would be transferred over to you?  Am I correct in my understanding?  Because you don't have ‑‑ none of the three groups have the same way of financing the five per cent or the five million.

7968             MR. STEVENSEN:  Well, I think that that's the result of identifying the need more so than knowing what the mechanism would be that would fill that need.  And we can certainly come up with a number or a set of numbers that represent what our members are telling us they need, but I think there is a general flexibility around what that mechanism would be.

7969             We would like to avoid being put in what we would consider to be a CTD box where we are restricted to doing projects that support emerging and local artists only.  That does not encompass the entire deal of what we need to do.

7970             COMMISSIONER NOËL:  Have you made calculations of the impact of that one percent increase, how much money that could, you know, using maybe the historic of transactions in the last five years, how money would have been produced to that one per cent? Have you made projections?


7971             MR. STEVENSEN:  Yes.  We have an it's not ‑‑ it's not enough to cover the amounts that we have been talking about and in the discussions we've had with the two ARCs, some sort of levy is a more appropriate mechanism.

7972             MS WARD:  If I may.  In our original submission we did talk about CTD funding and again, we do consider ourselves to be great Canadian talent developers and just by virtue of our existence, but we did identify it as one of two streams, one of two sources, so it wasn't that we wanted to totally rely on that need from the very first part of the submission.

7973             COMMISSIONER NOËL:  Now, you all have the same figure, it's five million that's coming from the commercial radio through some sort of CTD.

7974             What about the 13 other million that you need annually to finance your operations?

7975             MR. STEVENSEN:  The five million represents, I think, what was a starting point that the different associations could agree on and we also felt it was important that there be a diversity of funding sources for the fund, that that would make it a moral bust, a mechanism over time.

7976             And so, the terms of the other sources we would like to have a government component and approach provincial and federal governments and it's something that we are working toward now with the other associations.


7977             COMMISSIONER NOËL:  But have you had discussions at the provincial and federal levels that would lead you to believe that some money is available?

7978             MR. STEVENSEN:  The discussions haven't borne fruit yet.

7979             COMMISSIONER NOËL:  Have they started?

7980             MR. STEVENSEN:  They have started and I think the main problem and the main problem with the process that we've had is that the number of people that can meet and have contact with the different departments and potential founders has been limited.

7981             And a lot of this project is really about creating core capacity in the sector which doesn't exist and it's caused systemic under‑development for this part of the broadcasting system.

7982             COMMISSIONER NOËL:  You've heard Mr. Regan.  Do you think that if such a fund was created and funded, you would relinquish advertising revenues if you had the money in the fund and if it was properly funded?


7983             MR. SANDERS:  With due respect to Mr. Regan's proposal, the graph that we attached is Appendix A, will illustrate that although not significant numbers of advertising revenue exist for a lot of stations and it's still a very very important source of revenue right now.

7984             Not only is it valuable as money is valuable, but the outrage to our communities in illustrating that we have some sort of visibility and, unfortunately, sometimes due to the relevancy, why would we bother to advertise on community radio.  There is a relevancy factor that is illustrated when you do have advertisers on the air.

7985             And, of course, we are limited by most licences have four minutes per hour.  I think to reiterate like Ken said if a fund was able to replace and at the same time increase and improve, but today that fund doesn't exist, so I don't think I can speak for any of my colleagues in saying that we have waved our right to advertising at this time.  It's too dangerous.

7986             COMMISSIONER NOËL:  But in the hypothesis that the fund is created and is funded to the level of 18 millions a year?


7987             MR. SANDERS;  If it was up to 18 million a year and it replaced and made a substantial employment, I think advertising revenue would still be an important part for the reasons I have stated of being relevant to your community, the sponsorships that we do and the relationships that we have established with a number of non‑profits.

7988             I guess the definition of advertising would have to come up into speculation because if we sponsor a festival and advertise on our airwaves to go to a festival or a theatre group or participate in a fund raising activity for a charity is that deemed as advertising and I don't think any of our organizations would be willing to give that up.

7989             COMMISSIONER NOËL:  O.k.  Now, we have heard a lot, as I mentioned to my colleagues earlier, the buzz word in a few years back was vibrant and now the buzz word seems to be accountability.

7990             Should all organizations that are receiving contributions provide the Commission with reports annual or quarterly reports to allow the Commission to monitor and measure the effect of those contributions on the development of, for instance, in your case, the community stations?

7991             MR. SANDERS:  Yes.  We sort of have a long history of community accountability and transparency and annual reporting with full outside audited accounts, regular reporting of individual funding programs would obviously be in place for the Commission and all our partners on this project.


7992             The next review that we have with community radio coming up in the next year or two is an excellent opportunity to review as to the fund if it was implemented in the next few months.

7993             COMMISSIONER NOËL:  In your submission, your written submission, you mentioned that the low power FM station concept needs to be examined.  Could you elaborate on what you had in mind?

7994             MS WARD:  In our submission what we were trying to state to the Commission at that time, we understood that there is an issue among commercial broadcasters regarding low power FM, commercial broadcasters who are entering the market through the back door.

7995             COMMISSIONER NOËL:  Back door.

7996             MS WARD:  Our concerns are that any decisions that you make regarding this sector not have a detrimental impact on our sector because our sector does rely on low power FM just by the nature of being not to profit organization with very little funding.  We have often made the choice to go with 50 watts or lower in order to establish a radio in a community that simply couldn't have afforded to raise the money enough to hire an engineer.


7997             And there are a lot of radio stations right now who are relying on their low power FM status to continue their existence.

7998             Any policy that you develop that's going to cause our radio stations to have to face any amount of extra expense and it has occurred with licence renewals or actually an amendment for a power increase.  Radio stations have been requested to provide costly defences of a technological need to go up in power.  Even though I realize after the fact it was unintentional, it still costs $1,500.00 to produce and that's not very easy for a not for profit shoe string operation to be able to come up with.

7999             COMMISSIONER NOËL:  Now, for digital transmission you also need ‑‑ you also suggest that you need a funding mechanism to have money and capital equipment available to your individual stations.

8000             Does that funding ‑‑ would that funding come from the CTD or the ‑‑  not the CTD, but the community radio fund or would it be some additional funding?


8001             MR. STEVENSEN:  No.  The idea is the fund would be the main funding mechanism for the various initiatives and at this point, the majority of stations that are members in NCRA could not envision doing any kind of digital upgrade or begin broadcasting really in digital technology.  There isn't the capacity, the infrastructure to do that.

8002             So, that's one of the themes that we have identified in our four themes that was in the proposal.

8003             COMMISSIONER NOËL:  Thank you very much.  Those are my questions.

8004             THE CHAIRPERSON:  Just to pick up on what commissioner Noël said on the low power FM point.  Do you have any specific comments to offer now on which elements, if any, of the policy frame work of 2002 do you think needs to be examined?

8005             MS WARD:  At the risk of quoting the CAB too closely, I would be prepared to look at that document and get an answer to you by May 29th.

8006             THE CHAIRPERSON:  Thank you.  Those are our questions.  Madam Secretary.

8007             THE SECRETARY:  Thank you, Mr. Chairman.

8008             I would now ask for the next participant to come forward, the Centre for Research‑Action on Race Relations.

8009             If you would come forward to make your presentation.

‑‑‑ Pause


8010             THE SECRETARY:  I would then now call on the next appearing participant, the Aboriginal Voices Radio Inc., if you would come forward for your presentation?

‑‑‑ Pause

8011             THE SECRETARY:  Mr. Jamie Hill is appearing on behalf of the participant.  If you could introduce your colleagues and you will then have 10 minutes for your presentation.

PRESENTATION / PRÉSENTATION

8012             MR. HILL:  Thank you.

8013             Good afternoon, Mr. Chairman, Members of the Commission and Commission staff, ladies and gentlemen.  My name is Jamie Hill.  I am the President of AVR.

8014             We are very grateful for the opportunity to appear before you today in response to your invitation for comments regarding your review of the commercial radio policy.

8015             Before we begin, I would like to introduce members of our AVR team.


8016             They are Louis Cardinal, to my left, the Vice President of AVR.  Louis is an Aboriginal Relations Consultant to the City of Edmonton, also the founder and President of the newly formed Indigenous Media Institute and the founder and Co‑chair of the Global Indigenous Dialogue.  As well, Louis is a recent recipient of the Alberta Centennial Medal for his work in diversity, multiculturalism and human rights.

8017             Patrice Mousseau is the AVR Program Director and on‑air host.  Patrice serves on FACTOR selection committees as a member of Canadian Women in Communications and is a multiple award recipient for her work in radio.  Patrice is also very active in her community as Vice President of the board for the Native Women's Resource Centre in Toronto.  She is a member of the Métis and Ojibway Nations.

8018             Roy Hennessy is AVR's General Manager.  Mr. Hennessy has served as General Manager of Standard and Moffat stations in Toronto, Calgary, Edmonton and Vancouver.  He is a Past‑President of FACTOR, has served on many industry boards and was recognized for his contribution to the broadcasting industry as the recipient of the first annual President's Award by the Ontario Association of Broadcasters.


8019             J. Robert Wood is here with us today, an AVR Management Consultant.  Bob has spent over 30 years in radio, including 17 years with CHUM Limited as National Program Director and General Manager of CHUM and CHUM‑FM.

8020             Bob Templeton, also an AVR Management Advisor.  Bob is an early supporter of AVR, having agreed during his tenure as President of Newcap Broadcasting to support AVR in its question to establish a national aboriginal radio service.  Under Bob's guidance, Newcap enjoyed phenomenal growth and the highest profit margins among the major publicly traded broadcast companies.

8021             Also, information, if need be.

8022             As for myself, in addition to serving as President of AVR, I am the National Advertising Director of the Smithsonian's American Indian Magazine, and Editor‑in‑Chief and Publisher of Sage Magazine.  Previously I served as Communications and Information Systems Analyst for the Chief of Ontario, worked as a Director of Economic Development for the Ontario Federation of Indian Friendship Centres, and my education is economics.  At Harvard University I studied economics.

8023             We are now ready to commence our presentation.


8024             Mr. Chairman, Members of the Commission, ladies and gentlemen, we are here today because we feel we have a responsibility to bring an aboriginal perspective to your deliberations.

8025             In our presentation today we will provide a brief update on developments at AVR, propose regulatory measures that could help ensure that the Canadian broadcasting system reflects the special place of aboriginal people within Canadian society, and outline how the Commission can help AVR fulfil its community and nation‑building role.

8026             We are very proud of what we have accomplished since the new board was established 18 months ago.  We have established a strong new management team.  We have overhauled our governance practices with the help of McCarthy Tétrault, and strengthened AVR's financial management practices with the help of KPMG.

8027             In the past year, we have trimmed our overhead by more than half, cleaned up almost all of the liabilities on our balance sheet and developed a comprehensive business plan that is now being executed going forward.

8028             Our most important priority now is the launch of our stations in other markets.


8029             We are pleased to confirm today that thanks to your help AVR will commence broadcasting in Ottawa, Calgary and Vancouver by June 30, 2006.  We are very excited, indeed we are ecstatic to be able to share this news with you.  Furthermore, should some of our short‑term funding opportunities materialize, we will be able to launch in Edmonton, Kitchener and Montreal by September 1, 2006.

8030             Mr. Chairman, we will now provide a summary of the comments contained in our written submission filed two months ago with the Commission.  We will address each of the objectives identified by the Commission for this radio review process.

8031             MR. CARDINAL:  Objective A:  A strong, well‑financed commercial radio sector in both official languages capable of contributing to the fulfilment of the policy objective set out in the Act.

8032             Local sales agreements.  AVR has no comment to make with respect to local market agreements or local sales agreements as they apply to commercial broadcasters.


8033             However, we respectfully recommend that we be exempt from any restrictions on local sales agreements that might arise between AVR and commercial broadcasters.  This would enable us to access support from local commercial radio salespeople to boost advertising sales in various markets when and if our local programming levels reach the point where we qualify to sell locally.

8034             MR. HENNESSY:  Objective B deals with Canadian Talent Development.

8035             AVR respectively submits that direct or indirect Canadian Talent Development initiatives do not address the fundamental problem faced by aboriginal Canadian talent, and that is the near absence of airplay on most aboriginal and non‑aboriginal radio stations in Canada.  The Commission could help solve this problem by allowing and encouraging commercial broadcasters to support the full development of an aboriginal radio broadcasting infrastructure in Canada through their public benefits funding.

8036             AVR therefore proposes that the Commission modify its policy outline in Public Notice 1990‑111 to allow a generally accepted direct or indirect Canadian Talent Development commitments to include any commitments made by radio licensees to support the operation and expansion of AVR's national aboriginal radio service.


8037             Such a decision would allow AVR to apply the public benefits funding it receives from commercial broadcasters to establish radio service in urban centres where aboriginal Canadian artists will be able to receive the significant radio exposure required to foster their artistic development.

8038             CTD commitments made when applying for a new radio licence.  AVR strongly recommends that the 1 percent benefit be continued and that funds contributed to AVR qualify as an eligible CTD initiative.

8039             CTD commitments made in transfers for the control of ownership.  AVR strongly recommends that the 1 percent benefit be continued and that funds committed to AVR qualify as an eligible CTD initiative.

8040             AVR further recommends that such funds qualify as an eligible CTD initiative whether they are from radio or television licensees.

8041             CTD commitments made at the time of licence renewal.  AVR believes that the CAB plan is still an appropriate approach to CTD for radio broadcasters who are renewing their licences.  However, given that FACTOR/Musicaction receive substantial government funding, we believe a modified approach to CTD initiatives could help make financial contributions to CTD become more effective.

8042             AVR recommends, therefore, that a portion of the financial contributions at CTD at licence renewal be directed to AVR.


8043             MS MOUSSEAU:  Objective C:  A commercial radio sector that provides listeners with a greater diversity of musical genres and airplay for a greater variety of Canadian artists in both official languages.

8044             New music and emerging artists.  New aboriginal music and emerging Canadian artists face enormous barriers to airplay in Canada.  For example, CBC radio offers no aboriginal programs on its main network in the south.

8045             Commercial broadcasters provide virtually no aboriginal programming in their schedules.  Campus and community stations offer only a limited patchwork of programs, usually in non‑prime time.  Except for Winnipeg and Toronto there are no aboriginal stations in Canada's major urban centres, and the overwhelming majority of existing aboriginal stations devote most of their music programming to mainstream pop rock and country music.


8046             In its call for comments for this radio review, the Commission asked:  Are there models or approaches that could be adopted that would encourage the broadcast of new Canadian music and emerging Canadian artists.  The answer is an emphatic yes.  However, short of introducing a regulation that forces all broadcasters to meet a minimum quota of aboriginal Canadian music we believe the best approach would be to provide stable, long‑term funding to help facilitate the launch, operation and expansion of AVR to 15 major urban centres across Canada.

8047             AVR therefore recommends that the Commission introduce regulatory measures and incentives to provide AVR with stable, long‑term funding to ensure a place for new aboriginal music and emerging aboriginal Canadian artists in the Canadian broadcasting system.

8048             Diversity of musical formats.  AVR will feature an eclectic mix of Canadian and world aboriginal music from a broad range of genres.  AVR will thus contribute to programming diversity by virtue of its Canadian and world aboriginal worldbeat format and by the extensive catalogue of music it will feature in presenting this music to Canadians.

8049             We will restate the obvious:  Until an effective national aboriginal broadcasting network is in place featuring stations that provide distinctly aboriginal programming, there is very little likelihood that Canadian content regulations, CTD initiatives and other regulatory measures will do much to achieve access or diversity insofar as aboriginal Canadian music and talent are concerned.


8050             For this reason, we believe that long‑term stable funding for AVR is the best, fastest and most efficient way to achieve a significant and meaningful step towards this goal.

8051             In its call for comments, the Commission asked:  Are there ways in which the various funding agencies, FACTOR/Musicaction, Starmaker and Radiostar or other funding mechanisms could help facilitate music format diversity, AVR proposes that diversity could be enhanced simply by ensuring that the above mentioned funding agencies contribute some of the stable long‑term funding required to operate AVR.

8052             MR. CARDINAL:  Objective D:  A commercial radio sector that reflects the multicultural and multiracial nature of Canadian society and the special place of aboriginal people within society.


8053             Radio frequencies used for broadcasting are public properly.  Those who are granted the right to use scarce public frequencies have a duty and an obligation to contribute to the achievement of the objectives of the Act.  Commercial radio broadcasters thus have an obligation to ensure that the Canadian broadcasting system, through its programming and employment opportunities arising out of its operations, reflects the special place of aboriginal people within the Canadian society.

8054             Practically speaking however, we do not think that it is appropriate to expect commercial broadcasters to provide aboriginal music and spoken word programming as a part of their regular programming menu.

8055             As an alternative, AVR recommends that commercial broadcasters contribute funds to ensure that a strong, well‑financed national aboriginal radio service is in place to ensure that the Canadian broadcasting system reflects a special place of aboriginal people within Canadian society.

8056             AVR has pledged to make its programming available at no charge to existing aboriginal stations across Canada.  As a result, funding for AVR will benefit all aboriginal stations in Canada and thereby contribute to the development of infrastructure for an effective aboriginal broadcast system in Canada.

8057             MS MOUSSEAU:  Objective E:  A commercial radio sector that provides listeners with an appropriate amount of regularly scheduled, locally produced news and information.


8058             AVR has no proposal to make with respect to the amount of local news and information scheduled by the commercial radio sector.  We note, however, that stable long‑term funding for AVR will increase the diversity of news voices in major urban centres because of the presence of hourly news throughout the AVR programming schedule.

8059             MR. HENNESSY:  Objective F:  A commercial radio sector capable of making the transition to digital transmission and of exploiting new and emerging distribution platforms in a manner that furthers the objectives of the Act.

8060             The transition to digital transmission, regardless of the technology or the standard employed, AVR believes in the potential of digital broadcasting and the importance to the medium.  AVR would benefit from digital broadcasting, particularly in the markets where due to the scarcity of frequencies we will be forced to operate on frequencies that do not provide full market coverage, or be forced to forego some markets all together.

8061             In this event, we would hope that the digital broadcast regulations would enable AVR to utilize this technology to distribute its service.


8062             For new and emerging distribution platforms, AVR could, in the future, make its service available through XM or Sirius.  In light of this possibility, we hope that the regulatory structure would allow each, if not both, of these services to carry AVR.

8063             MR. HILL:  Mr. Chairman, Members of the Commission, section 310 of the Broadcasting Act states that:

"Programming that reflects the aboriginal cultures of Canada should be provided within the Canadian broadcasting system as resources become available for the purpose."  (As read)

8064             By implementing the regulatory measures outlined above, the Commission will be taking a giant step toward ensuring that the Canadian broadcasting system provides listeners with increased music and spoken word diversity, and guarantees airplay for aboriginal artists whose works are never heard on radio and that reflects the special place of aboriginal people within society.

8065             Mr. Chairman and Members of the Commission, we believe that the establishment of a strong and vibrant national aboriginal radio service should be a national cultural priority.


8066             Through the stable funding you can provide us, you can help to ensure that aboriginal people become full participating partners in the Canadian radio broadcasting system.

8067             On behalf of AVR and aboriginal people, I would like to thank you for your support I guess in us reaching this significant milestone of getting our stations on the air and we appreciate everything that you have done for us to help in making that happen.

8068             That concludes our presentation, Mr. Chairman, and we would be pleased to answer your questions.

8069             THE CHAIRPERSON:  Thank you, Mr. Hill.  Things seem to be picking up for you and we are delighted that you seem to be on the verge of launch.

8070             Do you have specific dates for Ottawa, Calgary and Vancouver?

8071             MR. HILL:  Well, we are going to try ‑‑ we know we will achieve the June 30th.  We are going to try to have one or two of them on air prior to that.  We don't have specific dates yet but we are ahead on one of them and are trying to get a little ahead on another one.  So we could go on the air a couple of weeks, a few weeks prior to that.


8072             But we are confident where we are at in the progress that's being made right now that we will achieve the deadline.  But if we can achieve June 21st for two of them, that would be ideal for us as well.

8073             THE CHAIRPERSON:  Where are you operating out of in Ottawa?

8074             MR. HILL:  As far as ‑‑

8075             THE CHAIRPERSON:  Studio and so on.

8076             MR. HILL:  Roy, do you want to comment on that?

8077             THE CHAIRPERSON:  It's just transmitting?  It's just rebroad so far?

8078             MR. HILL:  Oh, studio.  I'm sorry, Mr. Chairman.

8079             MR. HENNESSY:  At this point initially we will be simulcasting, rebroad and developing local facilities.


8080             We intend to have, as soon as we have the resources, to have the resources, to have a news bureau covering Parliament Hill.  We have had conversations and commitments from mainstream broadcasters to share or provide facilities for a stringer, a newsperson on Parliament Hill to add that perspective to our newscasts as we build out the network.

8081             But initially it will be a simulcast situation.

8082             THE CHAIRPERSON:  Certainly not a week passes when there isn't an item in this city dealing with central matters of interest to your listeners, I'm sure.

8083             You say on page 15 that you hope that the regulatory structure would allow each, if not both of XM or Sirius to carry AVR.  I'm wondering where you see an obstacle to that in the existing regulatory structure.

8084             MR. HILL:  Roy, maybe you can comment on that as well?

8085             MR. HENNESSY:  I don't think so much there's an obstruction to it, I think more that it's our willingness to go forward and with support and encouragement from the Commission that the satellite services would also be interested in carrying them.

8086             We have commitments of financial support coming from Sirius, starting in 2008 I believe it's in their commitment, and we have had discussions with both Sirius and XM.

8087             As a matter of fact, Patrice is in the process right now of producing a program ‑‑


8088             The special that you are developing with Susan Aglukark?

8089             MS MOUSSEAU:  Yes.  Susan Aglukark is putting out a new album, I am going to do a one‑hour special with her next week and we are going to make it available to all the digital broadcasters and whoever else wants to pick it up.  So we are going to go through her album and interview.

8090             MR. HENNESSY:  In conversations we have had with Sirius in particular regarding not this show but this type of programming, they have expressed an interest in wanting to pick them up.

8091             So I don't think there is going to be an obstacle, it's just one of those overall initiatives we would like to see move forward.

8092             One of our philosophies we are working on is to take advantage of every avenue of technology we can to ensure that ‑‑ we are never going to have huge staffs in multiple locations given the resources and the funding and that that we have, but to be able to create quality programming that we can use technology to disseminate to the 1.5 million aboriginals in Canada.


8093             One other point, too.  We see our service as being an aboriginal radio service, but we are not a service intended uniquely to serve the aboriginal community.  Our philosophy is to be inclusive when possible.  There are a couple of examples of that that we can get to perhaps during our discussion.

8094             But to be able to create that type of programming in a central area and then use technology, whichever platforms are decided, whatever, to distribute it, if they are low power FMs on small Reserves in Northern Canada and we get to them by internet, by satellite, however it gets there, the important thing is that these community stations that now perhaps have two or three hours of programming a day, we can fill in the other 21 and we can create that two‑way link, that is the vision that we are working on.

8095             THE CHAIRPERSON:  All right.  Thank you.

8096             Commissioner Pennefather...?

8097             COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.  You did steal my opening line, though.

8098             THE CHAIRPERSON:  I'm sorry.  Chairman's prerogative.

‑‑‑ Laughter / Rires


8099             COMMISSIONER PENNEFATHER:  I was going to say, is it 6:00 a.m. on June 30th?

8100             It is good to hear, good to read.  It brought back memories of Mr. Farmer and everyone sitting in front of us in Toronto back in the day, and in Moncton, right, gentlemen.

8101             I did have just a couple of questions.  The first is on the Canadian Talent Development proposal.

8102             You have gone and clarified one point for me by articulating your position on new licences, transfers and renewals, but if we look at your proposal for changing the policy 1990‑111, there is a change ‑‑ correct me if I'm wrong ‑‑ from what was submitted previously.

8103             Is that not the case?

8104             Do you have your written submission with you?

8105             MR. HILL:  No.  I don't have it in front of me, no.

8106             Do you know what the change is?

8107             COMMISSIONER PENNEFATHER:  I have it in front of me.  It is:


"... to allow generally accepted direct CTD commitments to include any commitments made by radio licensees to AVR or any native broadcaster that features music and spoken word programming that is predominantly and distinctively aboriginal."  (As read)

8108             MR. HILL:  Yes.  Commissioner, we actually thought that we were going to run out of time so we went through an editing process and we wrestled with this for a long time.  But we thought that because ‑‑ I guess we were hoping the Commission would pick up because we want to provide all of our services free‑of‑charge to all aboriginal radio stations.

8109             We support that.  We do support it going to aboriginal broadcasting.  I thought that we had had it in there in one spot, that it was still in there so that would be clear.

8110             But the submission that we gave to you, we still support and believe in what we submitted previously to this, it's just that we had tried ‑‑

8111             COMMISSIONER PENNEFATHER:  All right.

8112             MR. HILL:  I think we went over 10 minutes.

‑‑‑ Laughter / Rires


8113             COMMISSIONER PENNEFATHER:  No, that's all right.

8114             MR. HILL:  So we were trying to figure out how to get all this in there.

8115             COMMISSIONER PENNEFATHER:  I think it's just from our point of view your point is very well taken in terms of the funding and the pieces of the puzzle you are putting together for AVR.

8116             The point I'm making is that in your written submission you are also making the point about a policy change in 1990‑111 to allow radio licensees to contribute money through CTD to AVR, and in this case other native broadcasters.

8117             So we want to see whether it is specific to AVR or generally to AVR and other projects by native broadcasters.

8118             MR. HENNESSY:  We have had this discussion over the last couple of days.  One of the points that we were going back and forth with and one of the reasons to not include it in this conversation initially was the qualification of how do we qualify, how do we specify which AVR or which aboriginal station would quality or not.

8119             That's not for us to call, but we believe we do.


8120             COMMISSIONER PENNEFATHER:  That I understand.

8121             MR. HENNESSY:  Good.

8122             COMMISSIONER PENNEFATHER:  And that was the nature of the point.  But since I saw a difference in the writing of the two proposals I thought we had better put it on the record why you had a different articulation of that.

8123             MR. HILL:  Commissioner, if I could?

8124             COMMISSIONER PENNEFATHER:  Go ahead, Mr. Hill.

8125             MR. HILL:  We do want to make clear that we are here hopefully to support all aboriginal broadcasting and we see that as the role of AVR for the future.

8126             MR. HENNESSY:  One other thing, this idea of what qualifies and what doesn't, as Patrice pointed out in her comments, most of the existing aboriginal stations are really mainstream radio.  They have aboriginal owners, aboriginal management, but in fact they are playing Garth Brooks.  We are not.


8127             MR. CARDINAL:  May I add to that as well by saying that a lot of the radio stations, particularly in our region, aboriginal radio stations, while they are aboriginal they are also serving one particular group in some instances, a couple of particular indigenous groups.  And it is important for us as AVR to recognize that we need to be able to create and support a structure, a system that allows all these other voices to find their way into these other communities.

8128             That is really important for us in AVR to develop that and recognize that there are some disconnects within our community and AVR will be there to provide those connections.

8129             COMMISSIONER PENNEFATHER:  One of the points we have been discussing obviously through the week in Canadian Talent Development is the CAB proposal to put all contributions within the Starmaker Fund after which it is distributed to either eligible benefits or to FACTOR/Musicaction.

8130             You note on page 11 tonight:

"AVR proposes that diversity could be enhanced simply by ensuring that the above mentioned funding agencies FACTOR/Musicaction, Starmaker Fund and Fond Radiostar, contribute some of the stable long‑term funding required to operate AVR."  (As read)


8131             So again, could you just expand on how you see that happening under the CAB proposal?

8132             MR. HILL:  Perhaps I would like Bob Templeton to comment on that.

8133             If I could start with Bob?

8134             MR. TEMPLETON:  (Off microphone).

8135             MR. HILL:  I was going to go over to Bob Wood first.  Why don't we start with Bob Wood, if we could, to comment on that.

8136             MR. CARDINAL:  All right.

8137             All of our artists are emerging artists that we promote and we play on our radio station.  A number of our ‑‑ well, all of our artists are trying to get heard and we are providing that format for them where they can bring their music forward.  The diversity of our artists is considerable, from traditional contemporary music to hip‑hop.  So we have a very broad range of artists and a diversification of artists, culturally and also within the music genres as well.


8138             MR. WOOD:  I think it's just important to note ‑‑ and Roy was commenting on this earlier today ‑‑ they have 7,500 aboriginal selections in the music library at AVR.  If you were to listen to any number of aboriginal stations across Canada, almost all of that music goes unheard.  They don't play it.  The conventional system doesn't play it and aboriginal stations don't play it.  So the way to achieve true diversity is to support AVR.

8139             MR. HENNESSY:  I mentioned earlier about engaging the technologies to achieve our vision, the vision that Jamie and the board and Patrice and the other staff members are building.

8140             The current library, we envisage this becoming a national archive of aboriginal music, not necessarily just Canadian but fundamentally that is where we will start from.  So we have 7,500 tracks at this point in time.

8141             There are 658 distinct aboriginal artists in that library at this point in time, catalogued, cross‑referenced, they are there.  Our goal, as I said, is to build this larger archive or library, to become a resource, perhaps worldwide, global.  With the internet and various ways to access, download, taking advantage of that in a way that will help support not just the development of the artist but also the development of AVR is a logical step forward.

8142             Using things like pandora.com, where you enter a few of the selections, the type of genre of music that you life.


8143             We are exploring these various groups to see which ones would be most beneficial to us, but if it was pandora, for example, and you happened to like country music and you picked out a few artists, pandora will identify what you like and start throwing samples at you.  If some of those samples just happen to be aboriginal artists from our national library who don't have a record label, who don't have record managers, who aren't available at HMV, that you would have to desperately track down to try and buy, but it pops up, you sample a bit of it, think you like it, go there, listen to it, download it, and we share in $0.99 or whatever it ends up being.  Multiply that by thousands of music fans around the world, that is the advantage of technology for an organization like ourselves that is trying to go beyond the restrictions of the mainstream.

8144             Because we are not seeking market share ‑‑ we are not a commercial enterprise, we are cultural ‑‑ and that is a major difference.

8145             So going beyond that, we are not going to be in BBM, we are not going to be a threat to the broadcasters, but we still have to find ways to achieve our goals and also generate the revenues to build our company, build our organization.


8146             COMMISSIONER PENNEFATHER:  As you build consciousness and awareness of aboriginal music, yes through AVR, but as it grows, and certainly using the technologies and the cultural drive that you just described, do you think going forward the Commission should be satisfied with your statement that it is not appropriate to expect commercial broadcasters to provide aboriginal music?

8147             Is part of the goal here not also to bring that awareness to mainstream broadcasting?

8148             MR. HENNESSY:  I would like the commercial broadcasters to add the aboriginal artists based on the success of those artists, by the quality of their product and the ability to grow their recognition and popularity through the exposure that we provide to them.

8149             I don't believe ‑‑ I'm not a big fan in over‑regulation and I think that might be crossing that line.  That's a personal philosophy.  I'm not ‑‑

8150             COMMISSIONER PENNEFATHER:  I don't think I was referring to regulation so much as awareness, that the ‑‑

8151             MR. HENNESSY:  Ah.

8152             COMMISSIONER PENNEFATHER:  I'm quoting you here:


"We do think it is appropriate to expect commercial broadcasters to provide aboriginal music and spoken word."  (As read)

8153             But focusing on the music, to your point of building a library, building awareness, and looking at it from the Commission's side and from the Broadcasting Act side ‑‑

8154             MR. HENNESSY:  Yes.  Yes.

8155             COMMISSIONER PENNEFATHER:  We totally agree with the AVR focus and approach, but at some point in time the full system should also be accessible to artists and to audiences for aboriginal ‑‑

8156             MR. HENNESSY:  But would that not be a natural evolution as well with the growth of the artist.

8157             COMMISSIONER PENNEFATHER:  One would hope so.

8158             MR. HENNESSY:  We would hope so.  I mean, certainly we don't want to develop a star system within the aboriginal community and have it ignored by the rest of the country or the world.


8159             MR. WOOD:  Commissioner, if I could just add one comment to your point, the problem for aboriginal artists, they have tons of radio stations they can cross over to, but they have no stations they can cross over from.  That is where AVR comes in.

8160             So it's like the conventional system, a record will start in smaller markets and move its way up and finally graduate into the major markets.  Aboriginal artists don't have that opportunity, but if they have a network like ours to cross over from and they start to generate the exposure that they need, the conventional commercial broadcasters will pick up on that music.

8161             They will hear which songs are in higher rotation and after a while those songs will start to infiltrate the charts.  As they do, they will flourish in the conventional system.

8162             COMMISSIONER PENNEFATHER:  Good.  Thank you.

8163             MR. HENNESSY:  We had a discussion amongst ourselves in what you were looking for during this review.  One of the topics obviously was going to be new and emerging and the definitions of those terms, in particular emerging came up in our conversation earlier today.

8164             Before you can emerge you have to be heard.  That's where we are at.


8165             COMMISSIONER PENNEFATHER:  Thank you.

8166             Those are my questions, Mr. Chairman.

8167             THE CHAIRPERSON:  Thank you.

8168             Mr. Arpin...?

8169             COMMISSIONER ARPIN:  Thank you, Mr. Chair.

8170             You are going to be implementing your station in Montréal at some point in time.  Are you following what is going on on the French scene?

8171             We just spoke about aboriginal music which is totally unknown by the commercial broadcasters and I have in mind two names Kashtin and Florent Vollant who has been played and over played in the French market.  They have really made a high commercial success.

8172             I know that Florent Vollant is French.  Are there similar aboriginal artists in English Canada that have reached a commercial status or the success to the extent that they ‑‑ in their own language, not in English but in Cree or whatever language they speak that have attained a certain level of notoriety to the extent that the commercial broadcasters have played them?  Not necessarily are playing them today, but have played them over the last decade or so.


8173             MS MOUSSEAU:  Immediately when you mentioned Kashtin and Florent Vollant group by the name of Taima and they are French.

8174             COMMISSIONER ARPIN:  Yes.

8175             MS MOUSSEAU:  Incredible.  They were up for Juno.  Do they get any commercial radio play?  Absolutely not.

8176             COMMISSIONER ARPIN:  They are getting some.

8177             MS MOUSSEAU:  Not here unfortunately.  Probably in Quebec because they are from Québec, northern Québec.

8178             There is a tremendous amount of talent that is from northern Québec and in the French‑speaking communities and in the east that just AVR provides a vehicle for to have that infrastructure that maybe other commercial radio stations can start picking up on them and saying, "Oh, well we are being played on this one particular station and perhaps you are going to want to listen to our CD or our demo once, maybe twice."

8179             COMMISSIONER ARPIN:  As an aside, is AVR playing them?

8180             MS MOUSSEAU:  Absolutely.

8181             COMMISSIONER ARPIN:  They are.


8182             Thank you.

8183             THE CHAIRPERSON:  Thank you very much.  Those are our questions.

8184             I think we are caught up.

‑‑‑ Laughter / Rires

‑‑‑ Off record discussion / Discussion officieuse

8185             THE CHAIRPERSON:  We will resume tomorrow morning at 9:00 a.m.  Nous reprendrons le matin à 9 h 00.

‑‑‑ Whereupon the hearing adjourned at 2200,

    to resume on Thursday, May 18, 2006

    at 0900 / L'audience est ajournée à 2200,

    pour reprendre le jeudi 17 mai 2006

    à 0900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                      REPORTERS

 

 

                         

 

_____________________     _____________________

Lynda Johansson           Fiona Potvin

 

 

 

 

_____________________     _____________________

Jean Desaulniers          Madeleine Matte

 

 

 

 

_____________________    

Monique Mahoney          

 

 

  

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