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Decision
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Ottawa, 25 April 1988
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Decision Introduction to Decisions CRTC 88-292 to 88-294
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Concerning Applications to Provide New Radio Services in the Toronto-Hamilton Area
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At a Public Hearing in Toronto on 1 February 1988, the Commission considered eight competing applications to provide new radio services in the Toronto-Hamilton area. Five of the applications were for broadcasting licences to operate new FM radio stations, one was for a licence to operate a new AM station, and two sought amendments to the licences of existing radio services in order to extend those services to the Toronto-Hamilton area.
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Consideration of these applications followed a call issued by the Commission in Public Notice CRTC 1987-91 dated 30 March 1987. In the call, the Commission noted that, in Decisions CRTC 86-232, 86-236 and 86-237, dated 20 March 1986, it had licensed three new FM radio stations in the Toronto area, and that two of the stations, which are commercial stations and therefore dependent solely on advertising support, were expected to be in a fragile financial situation until their operations are firmly established. The Commission also noted that, on 8 May 1986, it had licensed a new commercial FM radio station in the Hamilton area (Decision CRTC 86-434).
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Given the introduction into the Toronto-Hamilton area of these new FM services and the fact that a fundamental objective of the Commission's FM policy is to ensure that the FM radio services provided in a given market area are as varied and comprehensive as possible, the Commission announced in its call that it would expect applicants to demonstrate that the services they were proposing would add to the variety of the FM radio services in the Toronto-Hamilton area and would not pose a significant threat to the viability of the new FM stations in the area.
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In the call, the Commission also announced that, in considering applications from existing FM licensees, it would take into account how the application would improve or extend coverage, and the extent to which such improvement or expansion was required by the licensee from a technical or financial perspective.
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The Commission also asked each applicant to provide, among other things, a clear demonstration of financial viability consistent with the requirements indicated by the applicant's financial projections, including demonstrated availability of supplementary financing in the event that projected revenues are not realized.
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In his opening remarks at the 1 February hearing, the Chairman of the Commission stated that, because of the scarcity of frequencies in the Toronto-Hamilton area, the Commission's objective would be to maximize the benefits that the public would derive from any new station, and that, accordingly, its expectations for these applications would be greater than ever.
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The eight competing radio applications considered at the hearing are addressed in the decisions which follow. Decision CRTC 88-292 addresses four applications which were competing for use of the FM frequency 96.3 MHz. Decision CRTC 88-293 addresses two applications which were competing for use of the frequency 92.5 MHz. These two FM frequencies appear to be the last "high power" FM frequencies available for use in the Toronto-Hamilton area at this time.
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In Decision CRTC 88-294 the Commission addresses an application by Key Radio Limited for a new licence to carry on an FM broadcasting transmitting undertaking at Toronto upon surrender of its licence for CKEY, and an interdependent application by The CKO Radio Partnership for a new licence to carry on an AM broadcasting undertaking at Toronto upon surrender of its licence for CKO-FM-2. This transaction involved proposed changes in ownership of the two broadcasting undertakings. Both applicants proposed to establish their new stations by the acquisition of certain assets related to the operation of each other's existing Toronto station, excluding studios among other things.
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In Decision CRTC 86-232, the Commission noted that Toronto is the largest and, from a revenue standpoint, the strongest broadcast market for radio in Canada. In fact, Toronto radio stations in general enjoyed a profit margin in 1987 almost double the national average. The Annual Returns of Toronto licensees filed in confidence with the Commission indicate that total advertising revenues for commercial radio stations in Toronto for fiscal 1987 increased by 11% over 1986. Moreover, indications from some existing licensees who intervened at the 1 February hearing were that, in the first quarter of 1988, radio revenues in Toronto have continued to improve significantly over the same period in 1987.
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At present, overall economic conditions in Ontario are very favourable and the Metropolitan Toronto area, in particular, is experiencing significant economic growth. The Government of Ontario projects that this growth will continue, although to a lesser extent. Meanwhile, Statistics Canada reports that retail trade in Metropolitan Toronto grew 12.7% in 1987 over that of 1986.
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Based on the revenue trends for radio and the economic indicators noted above, the Commission is satisfied that the Toronto market can support the introduction of new radio services at this time, without creating undue harm for existing broadcasters.
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In Hamilton, on the other hand, the Annual Returns of area licensees filed in confidence with the Commission indicate that total radio revenues have remained stagnant since 1983, due to a decrease in national advertising since that time which has served to offset slight increases in local revenues. Based on these revenue trends and given that CKLH-FM, which began operation in 1986/87, has not yet added significantly to radio revenues generated in Hamilton, it is the Commission's opinion that the Hamilton market would not be able to support a new commercial radio station at this time.
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Fernand Bélisle
Secretary General
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