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Decision
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Ottawa, 28 July 1989
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Decision CRTC 89-525
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Telemedia Communications Ontario Inc.
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London, Ontario - 882763600 - 882356000
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Following a Public Hearing in Toronto on 13 March 1989, the Commission approves the 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.
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The Commission will issue an AM and a joint FM licence to Telemedia Ontario upon surrender of the current licences issued to LBL. The licences will expire 31 August 1993, and will be subject to the conditions specified in this decision and in the licences to be issued.
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Telemedia Ontario is the licensee of twelve radio stations in Ontario and holds a controlling interest in one other. It is also the licensee of four radio networks providing play-by-play sports coverage and other programming for broadcast by affiliates across Canada. The applicant is a subsidiary of Telemedia Communications Inc., whose radio holdings in Quebec and, through the applicant, in Ontario make it one of the two largest revenue earners among private radio broadcasters in Canada. Telemedia Ontario will purchase the assets of the two London stations for approximately $7.3 million. The purchaser cited its confidence in the London market, and in the role that CKSL and CIQM-FM will play in its overall Ontario operations, as reasons for its bid to acquire the two stations.
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CKSL was established by LBL in 1956, and CIQM-FM in 1986. On a consolidated basis the financial performance of the two stations has been weak, despite a generally buoyant and expanding local economy. LBL indicated that its decision to sell the stations was based on the desire of certain shareholders to liquidate their holdings for estate considerations, and on the conclusion reached by the company that Telemedia Ontario would be a "responsible, community-minded successor".
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Earlier applications for authority to transfer the assets of the two London stations to Telemedia Ontario were denied by the Commission in Decision CRTC 88-290 dated 21 April 1988 because the Commission did not consider the proposed benefits to be "significant and unequivocal" or that approval of the applications was in the public interest.
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As stated in that and in numerous other decisions, because the Commission does not solicit applications for authority to transfer ownership or effective control of broadcasting undertakings, the onus is on the purchaser to demonstrate to the Commission that the application as filed is the best possible under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature.
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One such concern is the question of concentration of ownership within the broadcasting system. However, as reiterated by the Commission on several previous occasions, concentration may be acceptable provided there continues to be a significant degree of diversity of ownership and of programming sources.
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Although Telemedia Ontario is a sizeable presence in the radio industry in Ontario, the current transaction will not bring about any reduction in the number of voices or in the diversity of services available to listeners in the London area. The issue of concentration is raised in the present context by the fact that the signal of CKSL London reaches into the Stratford market, which is served by one of Telemedia Ontario's existing stations, CJCS Stratford. At the hearing, Telemedia Ontario acknowledged that the CKSL signal was receivable in Stratford, but not with good quality. Further, noting that the London station does not solicit advertising in Stratford, it stated:
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As far as diversity of service [is concerned], these stations are night and day in what they sound like, what they do and why they exist. CJCS ... is a community service [that] goes inward towards Stratford... The format musically is adult contemporary; and from an audience point of view, they target 35 to 60. CKSL is a CHR [contemporary hit radio] station, looking for 18 to 34 demographic.
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The Commission has considered the applicant's statements on this issue and is convinced that approval of this transaction will not result in any significant duplication of ownership influence in the Stratford market, nor lead to a reduction in program diversity.
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At the hearing, the Commission discussed with the applicant the measures it will take to ensure continuity of service and a continuing London presence in the management and operation of the two stations. The Commission has taken note of Telemedia Ontario's statement that the existing local management of CKSL and CIQM-FM will be retained and that it has no plans to make any significant changes to the on-air sound of either station. CKSL will remain in its present contemporary hit radio format, and CIQM-FM will continue as a Group I FM station featuring predominantly softer pop and rock music targeted primarily to adults 24 to 54 years of age.
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As a further means of ensuring direct community input in the management of the London stations, the applicant will create a community advisory board which will be chaired by one of LBL's founding shareholders, Joseph Jeffrey, and will include representatives of the various arts, cultural and business associations and community groups active in the London area. The Commission expects Telemedia Ontario to ensure that the London character and orientation of CKSL and CIQM-FM is maintained.
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The Commission is fully satisfied that the benefits proposed as part of these applications are commensurate with the size and nature of the transaction, and that their approval is in the public interest.
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The applicant identified a number of non-quantifiable benefits, including the expertise that Telemedia Ontario will bring to the two stations in the area of sales, management and human resources, as well as certain administrative efficiencies that will help ease the stations' current financial difficulties. The applicant noted further that the transaction will create new opportunities for networking and program exchanges between stations, and that Telemedia Ontario's existing radio stations will gain access to CIQM-FM's state-of-the-art recording facilities. These will form the basis for the development of a proposed regional production centre in London.
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Telemedia Ontario also undertook to provide free on-air promotion for Canadian recordings. The Commission encourages the applicant to ensure that such promotional announcements are broadcast at times when they can be heard by the largest possible audiences.
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In addition to the non-quantifiable benefits described above, the applicant made firm and unequivocal commitments to fund various new projects and initiatives designed to benefit the London community, and the Canadian broadcasting system as a whole, through a minimum of $910,000 in direct expenditures over five years.
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The major initiative is the Canadian Investment in Quality Music (CIQM) Project. According to Telemedia Ontario, the project will have five primary objectives: to produce and record albums featuring Canadian symphony orchestras and artists; to produce Category 6 music programs for syndication to Canadian radio stations; to fund the arranging of contemporary Canadian music compositions for use by symphony orchestras in Canada and elsewhere; to subsidize Canadian artists and orchestras, thus allowing them to perform in smaller centres; and to provide bursaries and scholarships for young Canadian musicians, including composers and conductors. At the hearing, the applicant also indicated that there could be some direct involvement in the project by the Quebec radio stations owned by Telemedia Communications Inc.
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The project will be funded by a minimum annual contribution of $100,000 by Telemedia Ontario through the London FM station. This amount will be supplemented by all revenues earned through the rental of musical arrangements and the syndication and sale of programs and records produced under the project. In addition, Telemedia Ontario will furnish the project with services, staff and other support representing an estimated indirect expenditure of $25,000 per year. The project will be overseen by a seven-member board of trustees, four of whom will be independent of the applicant. The project's annual business plan and proposed activities will be administered by a Canadian Talent Co-ordinator. This is a new position to be created by the applicant and will represent a direct salary expense of $150,000 over five years. The person holding the position will also be active in co-ordinating local talent production, FM program exchanges and program syndication.
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Telemedia Ontario, in its application, expressed the view that the effectiveness of the CIQM Project would be enhanced if the Commission were to alter its definition of Subcategory 61 (classical) music by deleting the phrase that excludes from this subcategory any orchestrations, however classical in form, of the entertainment music of our time. Among other things, the applicant suggested that the increase in the range of Category 6 music that would result from such a change would, in turn, improve the marketability of the programming that will be produced for syndication under the project.
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The Commission has considered the applicant's views on this matter, but is not convinced that any such alteration to the current definition of Subcategory 61 music is warranted at this time. At the hearing, the applicant stated that, should the definition not be changed, it would nevertheless remain "absolutely and unequivocally committed" to the CIQM Project, at the same level of financial support proposed in the application. The Commission notes the applicant's assurance in this regard, and expects it to abide by its commitment. The Commission also expects Telemedia Ontario to adhere to the further commitment given at the hearing to file a yearly report describing the status of the project, and including details of all expenditures made during the previous year.
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In its submission, the applicant also indicated plans to establish an endowment fund, based on contributions from corporate donors and others. The interest from the fund would be used for such things as a major purchase of new equipment for an orchestra. The Commission encourages the applicant to pursue realization of this proposal and to keep the Commission informed of its progress in this regard. It notes, however, that the creation of such a fund is dependent upon receiving a favourable ruling from Revenue Canada regarding the tax deductibility of the donations.
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Among the other initiatives proposed as quantifiable benefits associated with the current transaction is the introduction of a new Southwestern Ontario news bureau in London, to be shared by the two stations and staffed by at least one additional news reporter/editor, representing a minimum direct expenditure of $150,000 over five years. Although the applicant has not proposed any increase in the overall amount of news programming broadcast by either London station, the Commission considers that this initiative should increase the quantity and quality of the regional news coverage on CKSL and CIQM-FM.
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As a second shared-cost initiative, the applicant proposed to establish a new summer student intern program whereby three broadcasting students will be employed at the radio stations for 17 weeks each summer. Telemedia Ontario emphasized that the students hired under this program would be in addition to the traditional levels of summer help employed by the London stations. The program represents a minimum direct expenditure of $50,000 over five years.
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CKSL will spend a minimum of $50,000 over five years to produce an annual "Rocks London" album, featuring local and regional musical talent, and will also institute a contribution of $2,000 to FACTOR for each of the next five years.
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At the hearing, the applicant confirmed that the new, quantifiable benefits noted above, representing $910,000 in direct expenditures, will be in addition to other direct expenditures Telemedia Ontario will make in fulfillment of various outstanding commitments made by the present licensee for the support and development of Canadian talent. The latter represent further annual expenditures of $67,000 and include such initiatives as the funding of a young playwrights competition, the production of free public concertsby CKSL, and FACTOR contributions, scholarships and record productions funded through CIQM-FM.
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Telemedia Ontario assured the Commission that, while some of the existing projects may be discontinued, all the funds committed to any project so cancelled would be redirected to other initiatives in support of Canadian talent. The Commission expects Telemedia Ontario to submit a yearly report summarizing the initiatives, including details of all direct expenditures, in support of Canadian talent carried out by or on behalf of CKSL and CIQM-FM. The Commission will follow with interest the success of such initiatives.
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In the case of each of CKSL and CIQM-FM, it is a condition of licence that the applicant adhere to the Canadian Association of Broadcasters' (CAB) self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.
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It is a condition of each licence that the applicant adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.
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The Commission acknowledges the 35 letters submitted by various interested groups and individuals in support of these applications. The Commission notes the further support expressed by the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) in its appearing intervention at the Toronto hearing.
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Fernand Bélisle
Secretary General
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