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Decision
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Ottawa, 27 May 1988
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Decision CRTC 88-368
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CISN Radio Ltd.
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Edmonton, Alberta -873846000
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Following a Public Hearing in Victoria on 7 March 1988, the Commission approves the application for authority to transfer effective control of CISN Radio Ltd., the licensee of CISN-FM Edmonton, through the transfer of all the issued and outstanding shares of the company from the present shareholders to Shaw Cablesystems Ltd. (Shaw).
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CISN-FM was originally licensed in Decision CRTC 81-797 dated 29 October 1981. CISN Holdings Ltd., through its ownership of 84.2% of the voting shares, is the controlling shareholder of CISN Radio Ltd. and is controlled indirectly by Mr. Robert McCord of Edmonton. At the time of licensing, the country music format proposed by Mr. McCord and the station's independent status were considered as offering an important element of diversity and a valuable new dimension to the Edmonton market.
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Under Mr. McCord's direction, CISN-FM has established itself as a successful and financially viable independent FM station, providing a service enjoyed by a large and stable country music audience in the Edmonton area. Since commencing operation in June 1982, CISN-FM has generally operated in compliance with its Promise of Performance and has provided significant support for the development of Canadian talent, particularly through contributions to the Alberta Recording Indusry Association (ARIA).
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Mr. McCord, who will continue as President of CISN Radio Ltd., gave the following explanation for the proposed transfer of control of the licensee company to Shaw:
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In order for the station to reach even greater potential, major steps and expenditures are required. As an independent operator, my resources for continued growth and expansion are limited. Through the Shaw organization, CISN can reach that higher plateau in its service to the Edmonton community and to the Canadian broadcasting system.
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Shaw, the purchaser, is an Edmonton-based company with extensive cable television holdings in both eastern and western Canada, including a cable undertaking serving part of Edmonton.
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There is no clear cut control of this publicly-traded company. However, members of the Shaw family residing in Edmonton and Woodridge, Ontario own 59.5% of the issued and outstanding voting shares, and Mr. James Shaw of Edmonton is the company's President.
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For many years, Shaw's broadcasting activities focused exclusively on cable television. In August 1987, however, with CRTC approval, the company diversified its broadcasting interests through the acquisition of indirect ownership of radio stations CHEC Lethbridge, CKTA Taber, CKGY and CIZZ-FM (formerly CFCR-FM) Red Deer, Alberta (Decision CRTC 87-696). As noted by Shaw at the Victoria hearing, the addition of CISN-FM to the group of stations it owns represents an important expansion of its radio interests in the province.
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Shaw will purchase the outstanding shares of CISN Radio Ltd. from CISN Holdings Ltd. and two other shareholders for a total of approximately $7,330,000. Based on the evidence filed with the application, the Commission has no concerns with respect to the ability of Shaw to meet the financial obligations associated with this transaction.
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Because the Commission does not solicit applications for authority to transfer effective control of broadcasting undertakings, 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 Commission reaffirms that the first test any applicant must meet is that the proposed transfer of ownership or control 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 programming, management, financial and technical resources available to the purchaser.
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In Decision CRTC 87-334 dated 1 May 1987, the Commission denied an application by Moffat Communications Limited, the licensee of CHED Edmonton, to acquire the assets of CISN-FM. The Commission's conclusion was that the quantifiable and non-quantifiable benefits associated with that proposal were not sufficiently significant, taking into account in particular "the size and nature of the transaction ... and the potential loss of the independent status of a licensee in the Edmonton market." The Commission reminded CISN Radio Ltd. that, if it continued to view the sale of CISN-FM as being desirable, the Commission "would require any prospective purchaser to establish that its proposals would result in significant and unequivocal benefits, quantifiable and non-quantifiable, commensurate with the circumstances of the transaction."
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The Proposed Benefits
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At the Victoria hearing, the applicant submitted that approval of the proposed share transfer will yield a number of significant benefits, both quantifiable and non-quantifiable. With regard to non-quantifiable benefits, it noted that even though each of the stations in Shaw's radio division will continue to be operated as an autonomous unit, CISN-FM will add strength to the group and create increased potential for program exchanges and other co-operative ventures between the various stations:
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As the only major market station in the group, CISN will provide a valuable link to Alberta's capital city, and will add an important component to the newsgathering capabilities of the smaller market stations, with more direct access to the Alberta legislature and other Edmonton agencies.
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The applicant noted that CISN-FM, for its part, would gain from access to the news departments of the stations at Lethbridge and Red Deer.
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The applicant also described as a benefit the synergistic relationship between the various radio stations and cable television undertakings owned by Shaw. The applicant noted that past co-operation between CISN-FM and Shaw's Edmonton cable system has included participation by the radio station's staff in an annual Crime Stoppers Telethon, a Christmas simulcast, and a weekly program on the community channel entitled "Videophile". According to the applicant, co-operative efforts between radio and cable will expand in the future:
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Close co-operation between radio, with its own style of local involvement, and the community channel can lead to even further development of this important communications resource ... I can see a way of combining the efforts of CISN and Shaw Cable to introduce co-ordinated programming from the communities around Edmonton, many of which are served by Shaw Cable. CISN's community events co-ordinator will research the stories and activities to be broadcast by the CISN Caravan. A Shaw Cable mobile TV unit can travel with the Caravan to record selected events and stories for the community channel.
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The applicant also outlined a five-year plan for the direct expenditure of $1,091,000, and a further sum of $237,000 in the form of indirect expenditures, on various measures and programs which it identified as being the quantifiable benefits flowing from approval of the proposed share transfer. According to the applicant, some of the money will be used to expand or improve upon projects already undertaken either by CISN-FM or by the other stations in Shaw's radio division, while other amounts will be allocated to new initiatives intended to improve the quality of service provided by CISN-FM to its listeners. The Commission notes that none of these benefits duplicate benefits associated with other transactions, or commitments or plans already made by the licensee or its shareholders. These quantifiable benefits are described below:
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a) Project Discovery
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Project Discovery, as a vehicle to support Canadian talent, was originally proposed by Shaw last year in the context of its applications to acquire control of the Lethbridge, Taber and Red Deer radio stations noted above. Shaw's commitment at that time was for the production of 300 musical videos by 60 different Alberta artists, over a five-year period, at a direct cost of $275,000. As part of the current application, Shaw made a commitment to provide further cash contributions to Project Discovery totalling $83,000 over five years. According to the applicant, this expanded commitment will enable Project Discovery to produce an additional 100 music videos by 20 different artists.
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Shaw indicated at the hearing that it is well on its way towards achieving its first-year target for Project Discovery, that being the production of 100 videos by 20 different Alberta-based artists. The applicant advised that 30 video recordings of performances by six different groups have been produced, and that the audio tracks "are already being played on the existing four Shaw radio stations". Shaw also confirmed plans to assemble the video recordings into a series of programs for distribution on its various cable television undertakings across Canada commencing in October 1988.
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b) Financial Support of ARIA
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CISN Radio Ltd. is the founder and principal source of funding for ARIA. The association consists of approximately 350 individuals involved in the music and entertainment industries in Alberta. According to the applicant, its purpose is to advance the aims of the Canadian music industry in general, and the Alberta music industry in particular, and to "act as a collective voice to government and potential corporate sponsors". During its six-year history, ARIA has sponsored a number of workshops and seminars designed to keep Alberta musicians, songwriters, studio technicians and others in touch with industry trends and developments. ARIA also funds an annual songwriting competition and an annual award program honouring deserving Alberta performers.
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CISN-FM's present commitment to ARIA consists of a minimum annual contribution of $25,000. In the current application, however, Shaw has committed to increase this minimum contribution by $35,000 per year, representing an increase of $175,000 in the funding provided by CISN-FM over a five-year period. The applicant indicated that the additional funding will be used to assist in the annual ARIA award show and the workshops and seminars, and will also be used to produce an annual album featuring Alberta talent.
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c) The "CISN Caravan" Project
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The applicant proposed to improve the quality of service to CISN-FM listeners residing in areas outside of Edmonton through the introduction of live broadcasts between the hours of 1:00 p.m. and 3:00 p.m. each Wednesday, Thursday and Friday, originating from "at least seven separate communities in the Edmonton area". The applicant noted that the communities of Morinville, Fort Saskatchewan, Sherwood Park, Spruce Grove, Stony Plain, Devon and Leduc will thus be provided with "their own broadcast voice on a regular basis".
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The applicant stated that it will hire a community co-ordinator, at a salary cost of $111,000 over five years, "who will be responsible for liaison with the individual communities [and] will assist the on-air host in program production as we present the suburban issues and lifestyles that appeal to our audience". A mobile studio (the CISN Caravan) will be equipped at a capital cost of $75,000 and will have additional operating costs estimated by the applicant to amount to $60,000 over a five-year period. The applicant will allocate a further $75,000 to establish an STL (studio-to-transmitter) system to relay programs from the mobile studio to the CISN-FM transmitter.
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According to the applicant's estimates, the total direct costs for this initiative will be $321,000 over the next five years, although it noted that these costs would be significantly higher were it not for the fact that the STL system will be able to utilize several microwave transmission towers owned by Shaw for use in connection with its Edmonton cable undertaking.
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d) Newsroom and Production Studio Upgrades; Improved Surveillance Programming
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The applicant presented plans to upgrade the CISN-FM newsroom through the purchase of a computerized news gathering system and a new work station at a cost of $55,000. Moreover, the station's production studio will be upgraded by the addition of digital audio facilities and a 16-track audio recording system at a projected cost of $25,000.
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In response to what the applicant described as a worsening problem with traffic congestion in Edmonton, it also proposed to allocate a total of $306,000 over the next five years for the rental of an aircraft, which will be used to provide listeners with reports on changing road and traffic conditions. A news reporter, whose responsibilities will include air traffic reports and other news duties, will be added to the station's staff at a salary of $126,000 over five years.
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The Commission's Decision
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The Commission has examined the benefits associated with this transaction, both quantifiable and non-quantifiable, and is convinced that they are significant, unequivocal, and commensurate with the size and nature of the transaction.
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Particularly significant, in the Commission's view, is the tangible and effective support which the licensee and Shaw will extend to Canadian talent through their expanded contributions to Project Discovery and ARIA. The Commission also believes that the applicant's proposal for the introduction of programs originating live from various communities in the vicinity of Edmonton, constitutes an important benefit for these communities. Similar views regarding this project were also expressed in interventions submitted by municipal officials representing several of the cities and towns concerned.
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In addition, the Commission is of the opinion that there will be clear benefits to listeners of Shaw's radio stations in the communities of Lethbridge, Taber and Red Deer as a result of their access, via CISN-FM, to greater coverage of events and activities in Edmonton.
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The applicant confirmed at the hearing that all of its commitments are firm, and that it will proceed with each of the projects and initiatives described earlier in this decision, regardless of the station's financial performance:
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For instance, to take the studio to transmitter links, if for some reason technically we were not able to do that, we would have to substitute with land lines and the cost would be higher, in fact, in there. We are committed to doing those community broadcasts. So it will either cost what we have here or more.
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According to the applicant, the only aspect of any of its specific proposals that may be beyond its control is "the technology with respect to doing air traffic reports". The applicant indicated that, should it be obliged to alter or abandon this project for technical or other reasons, the unused budget allocation would likely be redirected to other projects of benefit to the Edmonton community:
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Certainly over the next three or four or five years we would identify other things that are going to be done in the radio station that are beneficial that we haven't even thought of ... at this point.
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The Commission notes the licensee's statement, and expects that if for any reason some or all of the funds earmarked for this project are not spent, they will be allocated to other identifiable programming initiatives. Moreover, and as in other similar cases involving transfers of control, the Commission intends to examine whether adherence to this or any of the licensee's other commitments should be made conditions of licence at the time it considers the renewal of CISN-FM's licence, which expires 30 September 1990.
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The Commission has considered the fact that approval of the transaction will result in the ownership by Shaw of both a radio station and a cable television undertaking in Edmonton, as well as of radio stations in Red Deer (approximately 80 km. south of Edmonton). The Commission is satisfied, however, that any concerns arising from such cross-ownership and concentration are outweighed by the quantifiable and non-quantifiable benefits that will flow from such approval to Edmonton and surrounding communities.
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In reaching its decision, the Commission has placed particular importance on the fact that CISN-FM will continue to be operated as an independent FM station, thus ensuring that the level of diversity among the broadcast voices available in the Edmonton area is not diminished. As well, the Commission has taken note of the financial resources available to Shaw to maintain and improve the high quality of service provided by CISN-FM, the fact that the purchaser's headquarters are based in Edmonton, and the measures Shaw has taken to provide for continuity of station management and direction following the transaction.
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Based on the evidence before it, and for the reasons noted above, the Commission is satisfied that approval of the transfer of control of CISN Radio Ltd. to Shaw is in the public interest. The Commission encourages the applicant to pursue vigorously its initiatives in support of Canadian talent as well as its various plans to enhance the quality of the CISN-FM service. It will follow with interest the applicant's efforts to increase the exchange of information and programming among the five radio stations owned by Shaw and to expand the range of co-operation between CISN-FM and Shaw's Edmonton cable system.
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The Commission acknowledges and thanks all of the interveners, representing 25 individuals, community groups, municipalities and other interested parties, who wrote to express their support for the application.
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At the Victoria hearing, the Commission also discussed briefly with the licensee the matter of logger tapes. Subsections 8(5) and 8(6) of the Radio Regulations, 1986 (the regulations) require each licensee to retain and furnish to the Commission upon request "a clear and intelligible tape recording or other exact copy of all matter broadcast" for a period of at least four weeks from the date of broadcast.
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Upon receipt of the application for the transfer of control in the fall of 1987, the Commission requested the licensee to submit its logger tapes for the week commencing 22 November 1987. In a letter submitted with the tapes the licensee acknowledged that its logger machine "was down for routine maintenance" during a 20-minute period at noon on 24 November. Due to deteriorating sound quality of the tape of the programming broadcast on Wednesday 25 November, the Commission had difficulty analyzing the content.
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The Commission notes that no sound quality problems were discovered on the logger tapes of the other days of the week in question. The Commission also notes the licensee's assurance that, in future, it will record all broadcast matter on cassette tape during periods when its main logger machine is undergoing maintenance. The Commission reiterates the importance of ensuring that appropriate measures are taken to make certain that the regulations are adhered to at all times and will monitor the licensee's performance in this regard during the remainder of its licence term.
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Fernand Bélisle
Secretary General
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