ARCHIVED -  Decision CRTC 87-596

Decision

Ottawa, 6 August 1987

Decision CRTC 87-596

La Coopérative des Montagnes Ltée

Edmundston, Grand Falls and Kedgwick, New Brunswick - 870570900 - 870571700 - 870572500

At a Public Hearing in Bathurst, New Brunswick on 12 May 1987, the Commission considered applications submitted by La Coopérative des Montagnes Ltée (the Coopérative) to operate French-language community FM radio stations in the Group IV musical format in the communities of Edmundston, Grand Falls and Kedgwick. The proposal is for a regional concept designed to serve the francophone population of northwestern New Brunswick.

The proposed region is to be divided into three zones and will include among others the following communities: Edmundston, Saint-François-deMadawaska, Clair, Baker Brook, Saint-Hilaire, Verret, Saint-Jacques, Saint-Basile, Rivière-Verte and Sainte-Anne-de-Madawaska; Grand Falls, Saint-Léonard, Saint-André and Drummond; as well as Kedgwick and Saint-Quentin.

Northwestern New Brunswick contains one of the largest concentrations of Francophones outside the province of Quebec. According to the applicant, the population of the principal market of the proposed station in Edmundston is 44,477, of whom 96% are Francophones, while that of Grand Falls is 18,144 and 67% francophone, and Kedgwick and Saint-Quentin have a population of 8,568 which is 98% francophone.

A total of 17 radio stations can be received over-the-air in all or in parts of the region. Seven of these stations are Canadian while the remaining ten originate from the State of Maine in the United States. As stated in the applications, only two French-language radio stations provide a reliable signal to the entire area: CJEM Edmundston with its rebroadcaster CKMV in Grand Falls, and CBAF Moncton and its rebroadcasters.

Assessment of the Applications

As emphasized by the Commission in previous decisions, each application is evaluated according to several criteria which, when taken together, are intended to ensure the viability and quality of both the existing and proposed broadcasting services in the intended market. Among the necessary requirements that the Commission considers are the capacity of the market to absorb new radio stations without threatening the existence of the services already offered, the viability of the proposal as submitted, and an assessment of the programming plans in relation to the Commission's general objectives as set out in its radio and community radio policy documents. It also takes into account the extent to which the proposed services would add to the diversity offered and the quality of the radio services in a given market.

a) The market

Coopérative filed a market study conducted by the CEGIR firm to support its applications. This study examined the market potential for a local French-language FM radio station in the Edmundston/Grand Falls area. The demographic profile revealed by the study showed that between 1971 and 1981 there was a 4.5% increase in the total population of the counties of Madawaska and Victoria with a 5% increase in the number of residents whose mother tongue is French.

In support of its applications, the applicant also supplied the results of a 1985 Bureau of Broadcast Measurement (BBM) survey of Madawaska County (Edmundston) which indicated that the local station CJEM Edmundston and its rebroadcaster CKMV Grand Falls attracted a total of 78% of the listeners, with the rest tuning primarily to the American stations WDHP-FM and WSJR Madawaska, Maine. The French-language Canadian radio stations CION-FM Rivière-du-Loup, Quebec and CBAF-28-FM Edmundston (CBAF Moncton) attained only a minute fraction of the audience.

As for Victoria County (Grand Falls), the same BBM survey indicated that three American stations, WDHP-FM and WEGP Presqu'Ile and WFST Caribou, attained 47% of the audience, while of the French-language Canadian stations, CJEM Edmundston (and its Grand Falls rebroadcaster CKMV) and CBAF-28-FM Edmundston (CBAF Moncton) attained only 14% and 2% of the audience respectively.

With regard to current and potential advertising revenue in the Edmundston/Grand Falls region, the CEGIR study noted that there has been a marked increase in retail sales recently, and concluded that [TRANSLATION]:

Madawaska County seems to enjoy a very dynamic economic activity, its retail sales having increased substantially in the past five years ... From an economic viewpoint, it would appear that the region can accommodate a new local radio station without undue impact on existing services, since the market has not yet reached its full potential.

The CEGIR study reported that [TRANSLATION]: "the local advertising market could support ... increased activity in the order of $150,000 to $250,000".

At the hearing, the applicant confirmed that it anticipates achieving the following advertising revenues in the first year of operation: approximately $92,000 in Edmundston, $50,000 in Grand Falls and $25,000 in Kedgwick and Saint-Quentin.

According to its analysis of the information submitted, the Commission has concluded that these forecasts are realistic. Further, it considers that such an undertaking would repatriate francophone listeners who have been listening to English-language radio stations, particularly American ones.

The Commission notes, however, that the proposed community FM station in Edmundston would be a Type B station which, according to the Commission's policy on community radio, could only broadcast an average of 4 minutes of restricted advertising per hour per day, with a maximum of 6 minutes of advertising per hour. On the other hand, the stations in Grand Falls and Kedgwick would be Type A community stations, as there are no other radio stations in the same language serving this market, and could broadcast up to 250 minutes of advertising per day. Since, however, a number of programs would be broadcast simultaneously by the three stations, the Grand Falls and Kedgwick stations would be subject to the advertising restrictions pertaining to the Edmundston station.

b) Financing

The Coopérative indicated initially that the cost of establishing the three stations would be about $1,025,000, to be financed by a fundraising drive (25%) and by grants from the provincial and federal governments (which would account for 25% and 50% respectively). However, at the hearing it was established that the applicant had not been able to get confirmation that the provincial or federal grants would be awarded. In order to obtain the necessary start-up funds for the proposal, the Coopérative had asked the Caisse Populaire Notre-Dame des Sept-Douleurs Ltée at Edmundston (the Caisse Populaire) for a loan of $1,025,000 and had submitted to the Commission a letter implying that the Caisse Populaire was prepared to finance this loan.

However, when questioned at the hearing, Mr. Jacques G. Michaud, representing the Caisse Populaire, stated that its board of directors had not yet completed its assessment of the loan application because [TRANSLATION]: "we have not received all of the documentation for this proposal" and that the total amount of the loan would be divided between "several branches of the Caisse Populaire which are situated in the northwest of the province".

At the hearing and in order to resolve the deficiencies in its financing, the applicant explained that it could reduce its financial requirements because [TRANSLATION] "we believe that we can rely on other means, including community-initiated projects ... we could postpone building the recording studio until a second phase". The newsroom at Grand Falls has been delayed until the second phase of implementation and "we have deferred the introduction of technical training in the field and a mobile studio has been deferred ... we have also reduced the number of studio-transmission links". The applicant estimated that it could, in this way, reduce its funding requirements from $1 million to $718,295.

With regard to projected annual operating costs, the Coopérative explained that it hoped to obtain the necessary revenue from federal government grants (through Employment and Immigration Canada) and from advertising. It expressed the hope that its advertising revenue would constitute its major source of income by its fifth year of operation.

In this regard, the applicant stated at the hearing: [TRANSLATION]

We believe that we can diversify our sources of revenue by relying not only on advertising but also, at least initially, by looking to federal programs to help us get started. Later, we will augment these sources of revenue with money obtained from benefit events, by conducting fundraising campaigns and by using other means of community funding. Thus, we are convinced that there exist within the community sufficient resources to maintain our proposal.

The applicant added that 15 of the 17 municipalities designated in the proposal were supporting the project financially [TRANSLATION]: "in terms of both start-up costs and financial contributions toward operating expenses for the first five years". However, the Coopérative acknowledged that it had not received any funds or documentation to substantiate the federal government grants.

The Coopérative added that, to date, it had collected $20,000 in contributions as well as pledges totalling $80,000, although its objective was $250,000.

c) Programming Plans

Each station would broadcast a total of 122 hours per week: 64 hours would originate from the studios in Edmundston, 45 hours in Grand Falls and 25 hours in Kedgwick. Most of this programming would be broadcast simultaneously by all three stations, although each station would also broadcast separate programs at certain times.

The proposed Group IV music programming would be completely different from that of the local MOR station, CJEM Edmundston. The Coopérative planned to allocate an annual budget of $5,000 for Canadian talent to be used for the production of a weekly half-hour program and for the recording of performances at festivals within its service area.

The Commission notes that although the Coopérative proposed to broadcast 40% combined foreground/mosaic programming, it proposed only 14% foreground programming and 8.2% enrichment material. In addition, it only proposed 20.9% spoken word content at its Edmundston station, which is below the 35% objective established for Type B radio stations by the Commission in its "Review of Community Radio" (Public Notice CRTC 1985-194).

The Commission notes that 7 hours per week of commercial-free or sponsored air-time would be made available to community groups or individuals. The Coopérative planned to hire seven full-time employees for programming, including a program director and a news director, with the remainder of the positions being filled on a shared basis by announcers and reporters. These employees would be responsible for co-ordinating the daytime programming while that broadcast in the evenings and on the weekends would be produced by volunteers. In this regard, the Commission also notes that approximately 96% of the programs would be produced with the help of volunteers and that the applicant planned to establish a volunteer training program.

Interventions

The Commission received a number of interventions in support of the proposal from community organizations and from individuals. Among these, the Fédération des Francophones HorsQuébec Inc., the Fédération des jeunes Canadiens-français Inc., the Société nationale des acadiens, the Société des acadiens du NouveauBrunswick, the Société historique du Madawaska, the Association culturelle du Haut St-Jean, the Conseil du travail d'Edmundston, the Fédération des agriculteurs et agricultrices francophones du Nouveau-Brunswick and Activités-jeunesse (1980) Inc. appeared at the hearing to express their support for the project. These interveners considered that the stations [TRANSLATION]: "will fill an existing gap in the services available to the community", and halt the assimilation of young people and the Americanization of the airwaves. Most of these groups intended to participate in the operation of the stations by producing programs or by participating in raising funds towards the operating costs of the community stations.

The Syndicat des communications de la république de Madawaska, which represents the employees of CJEM Edmundston, and Radio Edmundston Ltée, licensee of CJEM, opposed the proposal because they considered that [TRANSLATION]: "the highly complex nature of the project and the financial burden it will impose on the region may not only doom it to failure, but could also result in decreased revenue for the existing broadcaster which would mean that it would have to either reduce its services or even consider closing down the undertaking".

In reply to the concerns of these two interveners, the Coopérative cited the findings of the CEGIR study and claimed that it was confident that [TRANSLATION]: "part of this market remains untapped".

Decision

The Commission is convinced that there is a need for a local Frenchlanguage FM radio service in northwestern New Brunswick, particularly in the areas of Grand Falls and Kedgwick and Saint-Quentin where no local service exists. Moreover, the importance of this type of service for francophone listeners in the area and their evident interest in such a service were clearly demonstrated at the hearing by the Coopérative and by the many interveners.

The Commission, nevertheless, considers that there remain serious doubts as to the realization of the proposal as filed particularly with respect to the weaknesses in terms of the financing. At the hearing, the applicant confirmed that even if the $1,025,000 initially required to establish the stations were to be reduced to $718,295, it would still have to take out a loan of about $600,000 to make up the difference.

The Commission wishes to reaffirm that, before scheduling any application for public hearing, it expects to receive written confirmation attesting to the availability of the necessary funds for the financing of the proposal. In this regard, the Commission discovered at the hearing that the present applications did not meet this requirement. Based on the statement of Mr. Michaud at the hearing, on behalf of the Caisse Populaire, it was revealed that contrary to what the documents previously submitted by the applicant indicated, the Coopérative had not obtained written confirmation that its loan would be approved by the Caisse Populaire.

With regard to the stations' annual operating costs, the Commission is of the view that even if the Coopérative could have obtained advertising revenue in its target market, it would have to obtain sizeable grants and public contributions to supplement the advertising revenue that the Coopérative would normally expect to derive from the market, failing which, given the magnitude of the project and the related expenses, it would have to compete more aggressively with existing broadcasters to obtain the necessary advertising revenue. Such a situation would not be consistent with the Commission's views as expressed in the "Review of Community Radio", in which it states that it considers it "essential that such licensees continue to seek funding for their operations from a diversity of sources, particularly from within the community ... and to lessen the effect of advertising on programming".

Further, the Commission considers that although the goals established by the applicant were consistent with the role and mandate of a community radio station, the applicant's proposal revealed that the type of infrastructure proposed more closely resembles that of a commercial station. The Commission has also noted that some of the applicant's programming proposals appear to be unrealistic, in particular the production of approximately 96% of the programming by volunteers, and the proposal to broadcast only 20.9% spoken word content.

Therefore, for all of the foregoing reasons, the Commission has decided to deny the applications submitted by the Coopérative des Montagnes Ltée for licences to operate community FM radio stations in Edmundston, Grand Falls and Kedgwick. Nevertheless, given the clearly expressed interest and demand for the proposal, the Commission would be prepared to consider any applications submitted with a view to serving this region which would take into account the concerns expressed in this decision. It therefore invites the applicant and all other interested parties to consult and to examine other means of rationalizing their approach to the provision of a French-language radio service adapted to the needs of the residents of northwestern New Brunswick and to the available resources. Such a service should also take into account the impact it could have on the radio services offered by existing licensees.

Fernand Bélisle
Secretary General