ARCHIVED -  Decision CRTC 87-189

Decision

Ottawa, 19 March 1987

Decision CRTC 87-189

Applications considered at the 24 November 1986 Public Hearing in Montreal concerning the granting or amending of licences for FM stations in Montreal and area

At a Public Hearing in Montreal on 24 November 1986, the Commission considered 16 applications that were competitive either with respect to their technical parameters or in terms of their target market in metropolitan Montreal. These included 9 applications for new commercial licences, 5 for community, institutional or educational stations and one for an FM station with a news format to replace CKO Pointe Claire, an existing AM station with this format. Nine of the applications were competing for the last available commercial frequency in Montreal, namely 95.1 Mhz (channel 236B). These applications were filed in response to a call made by the Commission on 2 January 1986 (Public Notice CRTC 1986-2).

The final competing application sought an increase in the power of an FM station in Hawkesbury, Ontario, the technical parameters of which were affected by one of the Montreal applications.

The call for applications was in response to the May 1984 notice in which the Commission announced that it was lifting the long-standing freeze on applications for licences to operate private FM stations in the Montreal area as well as in other Canadian markets. The freeze had been imposed by the Commission in April 1979 in order to permit the Canadian Broadcasting Corporation to develop long-term plans for the extension of its radio networks. A public hearing was held in April 1982 to study the impact of the CBC's plans on the use of available FM channels, particularly in regions such as Montreal where a shortage of such channels had been identified. The Commission announced its findings in February 1983 and, after further studies, lifted the FM freeze on 31 May 1984.

Since that time, the Commission has granted new FM licences in Toronto, Hamilton, Moncton and Vancouver among other locations. More recently, new FM licences have been granted in Quebec City, in the Saguenay/Lac Saint-Jean, the Lower St. Lawrence, the North Shore and the Beauce regions. Similar applications for the Ottawa/Hull region have also been heard recently.

The Criteria

As indicated in the January 1986 call for applications, the Commission assesses such applications in the light of certain criteria which, when taken together, are intended to assure the quality and diversity of the broadcasting services.

Among the significant elements that it has taken into consideration, the Commission has first of all evaluated the market's capacity to support new broadcasting services without threatening the existence of the services already offered in this market. It has also evaluated the viability of the various proposals submitted to it and has studied the programming proposals in relation to the general objectives set out in the FM radio policy, particularly the extent to which the new stations would add to the diversity and quality of radio services already available in the region.

In the case of a large urban centre such as Montreal, the Commission also attempts to establish a balance in terms of the services offered according to the linguistic and ethnic demographics of the communities to be served.

In its call for applications, the Commission also made the following statement:

It should be noted that in making this call, the Commission has not reached any conclusion with respect to the viability of such a service. Nor should it necessarily be construed that the Commission will, by virtue of having called for applications, authorize such a service at this time.

Consequently, and in consideration of the enormous range of broadcasting services available in Montreal, it was, therefore, incumbent on the applicants to demonstrate that their proposals would add important elements of diversity and that the market is sufficiently able to support a new station without having serious impact on the viability of existing licensees or unduly reducing their ability to carry out their programming responsibilities.

The Market

The Commission has carefully examined all aspects of the metropolitan Montreal market, in particular trends in demography and radio listening, as well as the economic growth potential of the market and its impact on the economic position of existing radio stations and on the availability of additional advertising revenue.

According to Statistics Canada's figures, in 1986 metropolitan Montreal had a population of approximately 2.9 million, making it the second largest urban centre in Canada. Over the past ten years, total population growth has been very slow. Although there was a decline in the English-speaking population between 1976 and 1981, this has been offset by increases in the French-language and immigrant populations. Statistics Canada anticipates minimal population growth between now and the year 2000.

The metropolitan Montreal area has a total of 23 radio stations, making it the best-served region in Canada in terms of the number of radio services. Radio listening in Montreal over the past few years has been characterized, as it is in most other Canadian markets, by a rapid increase in the number of listeners to FM stations at the expense of the AM stations. Montreal FM stations have experienced a 15% increase in listenership from 1980 to 1985, with an equivalent reduction in AM listening. In 1986, AM stations attracted a 43% share of the audience and FM stations 57%. However, if one considers general trends in radio listening, there has been a decrease of more than two million hours between 1980 and 1986 during which time the total population has increased slightly. Moreover, the respective share of listeners to FM and AM stations seems to have remained stable in recent years.

In 1985 gross revenues for all radio stations in Montreal were approximately $66 million. Although overall there was an average increase of 9.4% from 1980 to 1985, FM revenues increased by an average of 23.6%, whereas AM revenues rose by only 1.4%. If inflation is taken into account, this minimal growth in gross revenues for Montreal AM stations actually represents negative growth over this period. Generally, the development and financial performance of AM stations in the Montreal area have been significantly lower than those of AM stations elsewhere in Canada, while the FM stations have shown results comparable to those of other Canadian FM stations. It is not surprising, therefore, that most Montreal AM stations are experiencing financial difficulties at the present time.

The Commission further notes that both AM and FM stations in Montreal experienced significant decreases in their national advertising revenues between 1981 and 1985.

In light of this, it was crucial for the Commission that applicants, particularly those proposing to operate new commercial stations that could have an impact on the market, prove beyond a doubt that sufficient additional revenues exist in the market to ensure the viability of the new services as well as their ability to honour their commitments without threatening the survival of the existing radio services.

The projected revenues of the applicants who proposed to establish commercial FM stations varied from $151,000 to $1.6 million for the first year of operation, and from $340,000 to $2.7 million in the fifth year. In order to assess the availability of potential additional revenues, the Commission conducted an analysis of the studies submitted by the applicants and the interveners as well as the available statistics.

The Commission has carefully examined the projected revenues of each of the applicants and it considers that none has succeeded in demonstrating to the Commission's satisfaction that the Montreal radio advertising market offers sufficient short- and longterm elasticity above and beyond the normal growth in the revenue of existing radio stations which would permit the introduction of a new commercial radio station on the FM band in Montreal. At the same time, the Commission has not been convinced that a transfer of advertising revenue from other media to FM radio is either foreseeable or sufficient to compensate for the inelasticity of the existing Montreal radio advertising market.

Given all of the available information including the studies submitted by the applicants and the interveners, it is evident that there is virtually no possibility of there being sufficient advertising revenue to support a new commercial radio station in Montreal at the present time without significant impact on the existing stations. Thus, as a result, any new station authorized under the present circumstances would very likely derive most of its revenue at the expense of the existing stations.

In the absence of sufficient proof with regard to the availability of advertising revenue, the applicants for a new commercial station have been unable to demonstrate that the necessary conditions exist to ensure the viability of their proposals.

Diversity of programming services

The Montreal area enjoys an enormous range of programming services, of which the musical mixture is broad enough to satisfy listener tastes. As indicated earlier, there are 23 radio stations, including 17 commercial stations, 2 community stations and 4 CBC stations. In terms of language, there are 13 Frenchlanguage stations, 9 English-language and one ethnic station.

In the course of its deliberations, the Commission has also given special attention to the programming plans and commitments of each applicant in order to gauge how the quality and diversity of the programming available to Montreal listeners would be improved.

The Commission has evaluated the applicants' proposed program schedules with respect to what is currently offered by stations licensed to serve Montreal and it has concluded that the need for a new commercial radio station in Montreal has not been manifestly demonstrated. Some of the proposed music formats were for Group I or Group IV which are already available in the Montreal market. Moreover, other applications proposed a more specialized programming format based on category 6 music (Music - Traditional and Special Interest). The Commission notes in this regard that the CBC stations in Montreal, particularly its FM stations, broadcast more than 200 hours per week of category 6 music, primarily classical music but also jazz. Montreal's commercial FM stations broadcast nearly 30 hours per week of category 6 music, in particular jazz, classical music and opera.

With respect to the concept put forward by Publications Les Affaires Inc., which proposed to operate a Classical - Fine Arts FM station, with spoken word content oriented mainly towards finance and the economy, the Commission was concerned about the lack of precision in terms of the mixed music format proposed by the applicant, of which 40% was popular music. The Commission also notes that this applicant did not submit a detailed study in support of its argument that at least 72% of its advertising revenue would come from sources other than those from which competing stations derive their revenue. While taking into account the station's proposed orientation, the Commission was not sufficiently convinced that the applicant could, as it proposed, rely on a new advertising market and considered that it would be obliged to derive a sizeable portion of its revenue from the existing radio advertising market.

With respect to the two proposals for new ethnic FM stations, the Commission notes that Mr. George Argyris, representing a company to be incorporated, proposed primarily Greeklanguage programming, while Radio CJAO Inc.'s proposal was based mainly on Italian programming. The Commission considers that these services would not have added sufficiently to the diversity of radio services available in the market. It notes in this regard that 75% of the programming of the existing ethnic station CFMB is broadcast in the Greek and Italian languages, and that 25% of the programming of the community station CINQ-FM is also in these two languages. As well, a Greek radio service is available on cable.

The Commission has also taken into consideration other weaknesses in the applications submitted by these two applicants, particularly with respect to the economic aspect which would likely have made the achievement of the projected revenues very uncertain, as well as the proposed underutilization of a Class B channel.

Following its analysis of the various demographic and economic factors to which it has made reference above, including the economic capacity of the market, the viability of the proposals, and the diversity of the proposed services, the Commission has decided to deny all nine (9) applications to operate commercial FM stations which are listed in Section A of the appendix to this decision.

Applications with limited impact on the market

A group of six (6) other applications on the agenda of the public hearing were not, by virtue of their characteristics, likely to significantly affect the market nor to have undue negative financial impact on existing radio stations. These applications included two for community radio stations, one for a new station and the other to increase the power of an existing station; an application to operate an educational radio station and two applications for institutional student radio stations, as well as an application to replace an existing AM news station with an FM station.

The Commission has considered these proposals according to the viability of the proposed services and the diversity which would result from their approval, while taking into account the limited number of frequencies still available, in particular those assigned for community, educational and institutional purposes, and the possibilities of future development.

In this context, the Commission has decided to approve the application submitted by Radio Communautaire de la Rive Sud Inc. to operate a new French-language FM community station in Longueuil and the application submitted by Martha-Marie Kleinhans, representing a company to be incorporated, to operate a new Englishlanguage special institutional FM station in Montreal. These two applications are dealt with in more detail below.

The four (4) other applications in this group, which are listed in Section B of the appendix to this decision, are denied. The Hawkesbury, Ontario application is the subject of Decision CRTC 87-190 of today's date. Another application on the agenda of the same hearing, presented by Les Edistions Le Canada Français Ltée for a licence to operate a new FM station at Saint-Jeansur-Richelieu is also the subject of a separate decision CRTC 87-191, published today.

With respect to the application by the Corporation pour l'avancement de nouvelles applications des langages Ltée (CANAL), the Commission notes that this proposal has been denied because it was technically mutually exclusive with the application by Martha-Marie Kleinhans as both proposed to make use of the same frequency. The Commission also notes that the technical parameters of the CANAL proposal would have resulted in a serious under-utilization of the maximum power permitted a Class B channel. The Commission wishes to acknowledge the originality of the organizational and programming concepts of this proposed educational FM radio service and that it is of the opinion that such an undertaking represents an excellent use of an educational channel. It therefore encourages the applicant to review its proposal in terms of the technical aspects, particularly the proposed channel and power.

With respect to the denial of the application by Western Caissons Limited to operate an English-language FM news station to replace its current AM news service, CKO Pointe-Claire, the Commission notes that this proposal was also predicated on the use of the 95.1 MHz frequency, which is the last commercial frequency available in Montreal. Considering the specialized nature of the proposed programming and the fact that other AM frequencies are available which could be used to solve the coverage problems affecting the current AM frequency, the Commission considers that approval of the application as submitted would not represent the optimum service possible for listeners in the Montreal area.

As a result of this decision, the last Montreal commercial frequency is still available for future use. The Commission wishes to point out that it would be prepared to consider innovative and viable radio proposals that would bring a true diversity to the market. However, it does not intend to consider other such applications in the near future, unless it can be clearly demonstrated that significant changes have occurred in the metropolitan Montreal market and that there exist untapped sources of revenue.

A total of 482 interventions were submitted in response to these applications. The Commission has considered each one and wishes to thank all of the interveners for their comments.

Radio Communautaire de la Rive Sud Inc.

Longueuil, Quebec - 853137800

The Commission approves the application for a broadcasting licence to operate a French-language community FM radio station in Longueuil, on the 103.1 MHz frequency (channel 276), with an effective radiated power of 50 watts.

The Commission will issue a licence expiring 31 August 1990, subject to the conditions stipulated in this decision and in the licence to be issued. This term will enable the Commission to consider the renewal of this licence at the same time as those of other radio stations in the region.

In accordance with the applicant's proposal and as set out in the Commission's policy statement on the Review of Community Radio (Public Notice CRTC 1985-194 dated 26 August 1985), the Commission will issue a special FM licence for community radio, Type B, to this station, which will be operated in the Group IV music format.

The Commission notes that this community station will be owned and controlled by a non-profit organization whose structure provides for membership, management, operation and programming primarily by members of the community.

The applicant stated at the hearing that its primary intention is to serve the population of the Champlain regional municipality, which comprises the towns of Longueuil, SaintHubert, Brossard, Saint-Lambert, Greenfield Park and Lemoyne, totalling nearly 350,000 residents on the South Shore. In addition to the main studio in Longueuil, the applicant proposes to establish satellite studios in Saint-Hubert and Brossard in order to provide improved local news coverage.

In authorizing this first community radio station on the South Shore, the Commission considers that it will fill a need at the local level in view of the closing of the studio of CHRS in Longueuil a year ago. The Commission has also taken into consideration the proposed station's strong community involvement, the support shown for the proposal as indicated in the interventions, as well as the financing structure which is already in place. The Commission notes in this regard that the applicant has submitted documentation attesting to the fact that the Quebec government, through the auspices of its Programme d'aide aux médias communautaires (PAMEC), is prepared to contribute to the financing of the infrastructure as well as the operating expenses of the proposed station.

With respect to programming, the Commission notes that the applicant proposes a level of 38.8% spoken word content, most of which is communityoriented; it also proposes 7 hours 55 minutes per week of news which will be predominantly local and regional in nature; 20% foreground format programming, as well as diversified music programming comprising all the subcategories of Music -General (category 5). The Commission has also noted the applicant's commitment to broadcast at least 70% French-language vocal music.

With respect to the promotion of Canadian talent, the licensee will devote 20 hours per week to vocal and instrumental music by Quebec artists in all music categories. It will allocate $6,000 a year to live broadcasts of shows from nightclubs, jazz clubs and coffee-houses and will broadcast a weekly program devoted to the cultures of various ethnic groups.

The Commission approves the proposal to broadcast an average of 4 minutes of advertising per hour per day, with a maximum of 6 minutes per hour, in accordance with the community radio policy for Type B stations.

At the hearing, the applicant stated that for two years it has been training its volunteer members who are interested in radio production and that they will be in a position to participate actively in all phases of program production. The Commission expects this community radio station to develop innovative and alternative forms of community-oriented programs. It also expects community radio to offer distinctive programming which examines issues of particular interest to the community, particularly each of the towns to be served, and special interest groups.

The Commission reminds the licensee that the channel approved by this decision is an unprotected channel. Accordingly, it would have to select another channel for the operation of the station, should optimum utilization of the broadcasting spectrum so require.

It is a condition of licence that construction of the station be completed and that it be in operation within twelve months of the date of this decision or such further period as the Commission may, upon receipt of a request for extension before the expiry of the said twelve months, deem appropriate under the circumstances.

Martha-Marie Kleinhans, representing a company to be incorporated

Montreal, Quebec - 860964600

The Commission approves the application for a broadcasting licence to operate an English-language institutional FM station in Montreal, on the 90.3 MHz frequency (channel 212), with an effective radiated power of 5,700 watts.

The Commission will issue a licence expiring 31 August 1990, subject to the conditions stipulated in this decision and in the licence to be issued. This term will enable the Commission to consider the renewal of this licence at the same time as those of other radio stations in the region.

In accordance with the applicant's proposal, the Commission will issue a special institutional FM licence to this station, which will be operated in the Group II music format.

This authority will only be effective at such time as the Commission receives documentation establishing that the company has been incorporated in accordance with the application.

The Commission notes that this new FM station will constitute an over-theair extension of the Radio McGill closed-circuit broadcasting service of Montreal's McGill University, which service has been in existence for nearly 25 years. The company to be incorporated will be a non-profit undertaking with no share capital and its board of directors will be composed of representatives of the university's management and staff, as well as students and off-campus members of the Montreal community. McGill University has guaranteed the financing of the infrastructure through a loan. The repayment of this loan and the station's operating expenses will for the most part be derived from a fee levied against each student enrolled at the university.

In approving this application, the Commission has taken into account the fact that in its application and at the hearing, the applicant demonstrated a profound understanding of the objectives of the FM radio policy. The Commission also notes that this student radio proposal conforms with the definition which was first formulated in Decision CRTC 75-247 dated 27 June 1975, the principal objectives of which were set out as follows:

... to communicate the concerns, interests and activities of the campus as well as of the academic environment to the public, and to offer to the general public innovative and alternative programming fare which makes use of the many resources available at the academic institution. Student radio may also provide basic training for students interested in broadcasting careers.

At the hearing the applicant emphasized its wish to offer different spoken word and music programming, providing listeners with a genuine alternative to other radio services currently available in Montreal. This is particularly obvious with respect to music which represents 55.4% of the programming, where the appliant has proposed to broadcast only 15% hits and a very high proportion (70%) of new and original material. It is also planning to broadcast more than 27 hours a week of Music - Traditional and Special Interest (category 6), consisting primarily of classical music and jazz. The Commission has also noted the applicant's commitment to broadcast 15% French-language vocal music and expects this minimum commitment to be honoured.

The applicant has proposed a spoken word content of 33.2% and that it will broadcast 9 hours 30 minutes per week of French-language programming. It is also proposing to broadcast 25% foreground format programming, of which 86% will be produced locally using resources available on or off the campus.

The applicant has also undertaken to showcase Canadian talent in various ways. It intends to emphasize less well known and unknown Canadian music and musicians, to broadcast live concerts from the McGill Faculty of Music and to promote little known Canadian literary works and authors. An annual budget of $1,000 will be earmarked for live broadcasts, while an additional sum of $1,500 will be allocated for the promotion of Canadian talent, beginning with the first year of operation.

Given that the new station is the first FM student station authorized for Montreal, and given the few remaining frequencies for this type of service and the large number of English- and French-language university and post-secondary institutions located in Montreal, at the hearing the Commission examined the question of access by other student groups and the eventual availability of other frequencies for the other postsecondary educational institutions particularly the French-language ones. The applicant stated that it already had an agreement which permits students at the Université de Montréal to broadcast a one-hour program each week on the new student station. This program will be in French and will deal with subjects of specific interest to the Université de Montréal while providing experience for those students interested in broadcasting.

The applicant also indicated that it would be prepared to increase this collaboration and to permit access to the station by other post-secondary institutions in Montreal: "Our policy is, as we have stated, that our doors are open and we would like to provide that program." Consequently, the Commission requires the licensee to submit a detailed plan for access by post-secondary institutions in Montreal, two months before the station commences operation. The Commission will also review this matter at the time of licence renewal.

Since this proposal for a new student station includes programs that provide access to off-campus groups as well as programming oriented to the community, the licensee is authorized to engage in a limited amount of "restricted" commercial activity. Consequently, the Commission authorizes the licensee, as a condition of licence, to broadcast up to 4 minutes per hour of restricted advertising, as defined in Public Notice CRTC 1983-43 dated 3 March 1983, entitled "Policy Statement on the Review of Radio", and subsequently amended in Public Notice CRTC 1985-194 dated 26 August 1985, entitled "Review of Community Radio".

In accordance with paragraph 22(1)(b) of the Broadcasting Act, the Commission will only issue the licence, and the authority granted herein may only be implemented, at such time as the Department of Communications (DOC) and Transport Canada have resolved the problems with respect to aircraft navigation that would result from the operation of the station in accordance with the proposed technical parameters and at such time as the DOC has confirmed that it will issue a Technical Construction and Operating Certificate.

It is a condition of licence that construction of the station be completed and that it be in operation within twelve months of the date of written notification from the Department of Communications that it will issue a Technical Construction and Operating Certificate or such further period as the Commision may, upon receipt of a request for extension before the expiry of the said twelve months, deem appropriate under the circumstances.

Fernand Bélisle
Secretary General

APPENDIX TO DECISION CRTC 87-189/ANNEXE A LA DÉCISION CRTC 87-189

A - Applications to operate commercial FM stations which have been denied/
Demandes d'exploitation de stations MF commerciales qui sont refusées

- 150628 Canada Inc. (860950500)
- Publications Les Affaires Inc. (860931500)
- 2327-3220 Québec Inc. (860946300)
- Roland Saucier and Michel Lafontaine (860969500)
- 146508 Canada Inc. (860939800)
- Joane Wilkie, representing a company to be incorporated/
représentant une compagnie devant être constituée (860958800)
- Hyman Glustein et Rae Aston, representing a company to
be incorporated/représentant une compagnie devant
être constituée (852885300)
- Georges Argyris, representing a company to be
incorporated/représentant une compagnie devant
être constituée (859169100)
- Radio CJAO-FM Inc. (860027200)

B - Applications to operate community, educational, institutional or news FM
stations which have been denied/Demandes d'exploitation de stations MF
communautaires, éducatives, institutionnelles ou d'actualités qui sont
refusées

- Western Caissons Limited (860959600)
- Radio communautaire de l'Est Inc. (853379600)
- Corporation pour l'avancement de nouvelles applications
des langages Ltée, (CANAL) (860896000)
- Paul Gott, representing a company to be incorporated/
représentant une compagnie devant être constituée (852947100)