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Decision
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Ottawa, 21 April 1988
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Decision CRTC 88-290
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Telemedia Communications Ontario Inc.
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London, Ontario - 873682900 - 873683700
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At a Public Hearing in Toronto on 1 February 1988, the Commission considered applications by Telemedia Communications Ontario Inc. (Telemedia Ontario) for authority to acquire the assets of CKSL and CIQM-FM London from London Broadcasters Limited (LBL) and for broadcasting licences to continue the operation of these undertakings upon surrender of the current licences issued to LBL, on the same terms and conditions as the current licences, except for proposed modifications to the existing Promises of Performance.
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Telemedia Ontario is currently the licensee of several radio stations in Ontario, including AM and FM undertakings in Sudbury, North Bay, Timmins and Sault Ste. Marie and AM stations in Toronto, Stratford, Orillia and Midland. It is a subsidiary of Telemedia Communications Inc. which is one of the two largest private radio licensees in Canada in terms of total broadcasting revenue.
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LBL for its part has been broadcasting to the London market via CKSL for over thirty years. Its FM station commenced operation in June of 1986. figures, CKSL and CIQM-FM ranked fourth and eighth, respectively, in the market.
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At the February hearing, LBL explained that the proposed sale had been precipitated by estate considerations.
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As stated in a number of decisions relating to applications for authority to transfer ownership of broadcasting undertakings, and because the Commission does not solicit applications for such transfers, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature.
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The first test any applicant must meet is that the proposed transfer of ownership yields significant and unequivocal benefits to the communities served by the broadcasting undertakings and to the Canadian broadcasting system as a whole, and that it is in the public interest.
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In particular, the Commission must be satisfied that the benefits, both those that can be quantified in monetary terms and others which may not easily be measurable in terms of their dollar value, are commensurate with the size of the transaction and that they take into account the responsibilities to be assumed, the characteristics and viability of the broadcasting undertakings in question, and the scale of the programming, management, financial and technical resources available to the purchaser.
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With respect to the non-quantifiable benefits related to its applications, Telemedia Ontario submitted that it could "offer the people of London our credibility, our resources, our expertise and our experience to maintain and strengthen what is already an excellent service" and proposed the creation of a local advisory board and the addition of a weekly one-hour Canadian content program to CKSL's schedule. It also proposed to make new London-produced programming available for syndication.
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Consistent with the regional concept it has proposed for other radio stations in similar-sized markets, the applicant outlined plans to develop London as the centre of a new regional grouping in southwestern Ontario. Underlining London's potential as a production centre and a newsgathering base for other stations in the area, Telemedia Ontario noted the career opportunities for LBL employees as well as the staff at its other radio stations in Ontario.
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In terms of benefits that can be quantified in monetary terms, Telemedia Ontario committed $15,000 per year or $75,000 over five years to set up a southwestern Ontario news bureau, including a bureau at Stratford, to provide news for all stations in the region. The applicant also allocated $150,000 over five years to pay a full-time producer responsible for Canadian content to develop foreground and mosaic programming for use by CIQM-FM and other FM stations licensed to Telemedia Ontario. In addition, it committed $27,000 in the first year to study the opinions and tastes of local audiences.
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With respect to Canadian talent development, the applicant proposed to increase LBL's annual contribution to FACTOR/CTL by $8,000, to add $1,000 to the cash award given to the winner of CIQM-FM's annual student playwright competition, to double the value of scholarships and bursaries for London musicians to $2,000 per year and to increase CKSL's yearly awards to two local colleges to $400 each. Telemedia Ontario planned to allocate an additional $2,000 per year to the recording activities of Fanshawe College's music industry arts program, increase the annual budget for Orchestra London recordings by $2,0 and award $1,000 each year on behalf of CIQM-FM to the best Canadian actor appearing at London's Grand Theatre.
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At the hearing, Telemedia Ontario further submitted that:
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... sometime over the term of licence ... there will be a requirement for a major upgrade of CKSL's transmitter site. Because of the preliminary nature of our studies and the future possibility of digital transmission, it is extremely difficult to make a precise dollar estimate but we are prepared to invest up to $1 million for such a project.
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Subsequent to the hearing, in response to the Commission's request, the applicant filed a detailed breakdown of the quantifiable benefits contained in the applications, as well as clarification of the annual operating expenses and staffing levels for both stations. Telemedia Ontario calculated the total value of the quantifiable benefits over a five-year licence term to be $1,616,000, including LBL's existing Canadian talent development commitments of $287,000.
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Commission takes into account only those benefits which would not be realized without the proposed transfer. Therefore, the amount of $287,000, which represents LBL's current Canadian talent commitments for both stations over five years and, as noted previously, includes budgetary allocations for FACTOR/CTL, an annual play-writing competition, bursaries for local musicians, recording activities and support of the local colleges, is not in the Commission's view a benefit resulting from this transaction.
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Similarly, the $1 million associated with the proposed upgrading of CKSL's transmitter site is not viewed as an unequivocal benefit of the transaction.
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When, at the hearing, the Commission drew Telemedia Ontario's attention to the fact that it had made no provision for the transmitter site in its capital cost projections, the applicant responded that "essentially we have done some preliminary studies which suggest that the array ... is going to need a dramatic upgrade". Beyond some background information furnished by LBL, the applicant did not provide precise details of the anticipated changes or a specific timetable for implementation. The Commission has not been persuaded that the purchaser had made a firm commitment to carry out this project over the next five years. Furthermore, in the Commission's view, maintenance and upgrading of the transmitter site could well be considered part of the normal responsibilities of any licensee, unless the existing licensee could not afford to do it or planned to delay such an improvement beyond what was proposed by the purchaser.
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The Commission has therefore concluded that the total value of the quantifiable benefits associated with these applications is $329,000 over the five-year term instead of the $1,616,000 claimed by the applicant. It notes in this regard that the $15,000 per year allocated by Telemedia Ontario for a news bureau at Stratford appears to be too modest a cost for such an initiative. The Commission is also concerned that the applicant is requesting changes to CIQM-FM's Promise of Performance only a short time after the FM station licensed to LBL commenced operation.
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Based on all the information presented and taking into account its general concerns with respect to transactions of this nature, the Commission is not satisfied that the benefits proposed are commensurate with the size and nature of the transaction and, therefore, considers that the applications do not represent the best possible proposal under the circumstances. The applicant has not demonstrated to the Commission's satisfaction that the proposed acquisitions would yield significant and unequivocal benefits to the communities served and to the Canadian broadcasting system as a whole or that approval of the applications is in the public interest. Accordingly, the applications are denied.
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The Commission acknowledges the several interventions in support of these applications. It has also noted the comments of CFPL Broadcasting Limited concerning the proposed amendments to CIQM-FM's Promise of Performance, the Canadian Independent Record Production Association's views on the applicant's Canadian content provisions and the intervention of Ms. Jan Wetstein.
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In a related decision issued today, the Commission has renewed CKSL's licence from 1 October 1988 to 31 August 1991 (Decision CRTC 88-291).
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Fernand Bélisle
Secretary General
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