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Decision
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Ottawa, 27 June 1988
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Decision CRTC 88-432
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Trent Valley Broadcasting Inc.
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Campbellford, Ontario -873603500
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Following a Public Hearing in the National Capital Region on 12 April 1988, the Commission denies the application by Trent Valley Broadcasting Inc. (Trent Valley) for a licence to carry on an English-language FM radio broadcasting transmitting undertaking at Campbellford, operating on the frequency 98.7 MHz, with an effective radiated power of 50 watts.
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Mr. David Lockwood of Campbellford owns 63.8% of the issued common voting shares and has effective control of Trent Valley. Mr. Lockwood and the company's four other shareholders proposed to offer a community-oriented, independent, commercial FM service to Campbellford, operating in the Group IV format, featuring 40% pop and soft rock music, 40% country and country-oriented music, and 10% each of folk-oriented and jazz-oriented music.
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Although Campbellford is not served by any local radio station, this small town in south-central Ontario falls within the service contours of four AM and seven FM stations located in nearby Peterborough, Belleville and Trenton. These communities have populations of approximately 61,000, 36,000 and 15,300, respectively. By contrast, Campbellford has 3,500 residents, and the 3mV/m contour of the proposed low-power, unprotected station would have encompassed a potential audience of only 5,000 people.
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The applicant recognized that, as the licensee of a commercial FM station, it would have to compete against larger-market stations for both audience and revenue, and that it would be required to adhere to the same policies and regulations as its commercial competition. It was confident, however, that there is a need in the Campbellford area for local news and information, and that advertising revenues from local sources would be sufficient to support the proposed station.
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As stated in previous decisions, in assessing any application for a new broadcasting undertaking, the Commission must first be satisfied that the prospective licensee possesses a full and clear understanding of the market it proposes to serve and the needs of its residents. In cases such as the one before it, the Commission must also be convinced that the applicant has a thorough knowledge of the FM policy and a strong commitment to its objectives. Further, the Commission needs to be assured that the applicant has an adequate business plan, together with the financial resources necessary to maintain the proposed service and meet all of its commitments should revenues fall short of projections.
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In the present case, the Commission acknowledges the applicant's evident interest in establishing a community-oriented FM radio service at Campbellford. It also acknowledges the letters submitted by the Seymour Township council, by Councillor Charles Ibey of Campbellford, and by numerous area residents, all expressing support for this proposal. Nevertheless, based on the application and on responses to questions at the hearing, the Commission has determined that the application does not meet the objectives and minimum requirements of the FM policy. It has also determined that the financial viability and existence of a market for such an undertaking have not been adequately demonstrated.
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Of particular concern to the Commission is the applicant's apparent failure to perform any detailed market analysis or assessment of potential advertising revenues. Instead, the applicant appears to have prepared its projections largely on the basis of expressions of intended support for the proposal by local businesses and other potential advertisers, made during informal conversations with the applicant. As a result, the applicant may have seriously overestimated the market's revenue potential.
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In general, the amount of potential radio advertising within a given market is in proportion to the level of retail business activity in that market. On this basis, the estimated maximum annual radio revenue available in the Campbellford/Seymour market would be less than $50,000. According to Trent Valley, however, the support expressed by potential local advertisers would translate into first year revenues of $138,900. This is an amount that is also well in excess of the revenues earned by established stations operated by experienced broadcasters in other communities comparable to Campbellford. Moreover, the applicant projects a first-year pre-tax income of over $55,000. Such a performance appears to be extremely optimistic in an industry where new undertakings do not normally achieve profitability until well into their second or third year of operation.
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With respect to Trent Valley's programming proposals, the Commission considers that the applicant has not demonstrated a sufficient knowledge of the operational demands and responsibilities which the Commission's FM policy and regulations place on the licensee of a commercial FM station. In particular, the Commission is not satisfied that the applicant possesses an adequate understanding of the foreground and mosaic programming requirements, nor do the applicant's plans demonstrate a full appreciation of the human and financial resources necessary to produce the quantity or quality of programming promised in its application.
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Trent Valley's Promise of Performance includes a commitment to broadcast a total of 31 hours 36 minutes per week of spoken word programming. This level exceeds the production of many broadcast enterprises much larger than that proposed. Trent Valley sought to produce this level of spoken word programming and to carry out all other aspects of the station's operation, using the services of 3 1/3 full-time staff members (including two of the company's shareholders) and 3 2/3 casual or freelance employees. According to Trent Valley, the shareholders would be prepared to work long hours, and substantial amounts of programming would be produced with the assistance of volunteers from the local high school and from the community at large.
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In the Commission's view, such an approach would not be practical other than in the short term. Although broadcasters should continue to encourage greater public access to the airwaves, the extent to which the applicant proposes to rely on volunteer program staff would, in the Commission's view, be more realistic in the context of a non-profit, community radio operation (see Public Notice CRTC 1985-194 dated 26 August 1985). Even with this volunteer assistance, the proposed numbers of professional staff and other resources appear inadequate to sustain a sufficient calibre of programming to enable the applicant to meet its commitments on an ongoing basis and to compete successfully for audiences and revenues against other radio services available in the market.
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The Commission has taken note of the intervention submitted by the Canadian Association of Broadcasters expressing, among other things, concern about the applicant's ability to meet the objectives of the FM policy and regulations.
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Fernand Bélisle
Secretary General
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