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Decision
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Ottawa, 13 March 1990
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Decision CRTC 90-229
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Douglas S.K. Setterington, on behalf of a company to be incorporated
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St. Catharines, Ontario - 893193300
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Following a Public Hearing in the National Capital Region commencing 21 November 1989, the Commission approves the application by Douglas S.K. Setterington, on behalf of a company to be incorporated, for authority to acquire the assets of AM radio station CHSC St. Catharines from Redmond Communications Limited (Redmond), and for a broadcasting licence to continue the operation of this undertaking under the same terms and conditions as the current licence.
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The Commission will issue a licence to the applicant upon surrender of the current licence. The new licence will expire 31 August 1994. This authority will only be effective and the licence will only be issued at such time as the Commission receives documentation establishing that the company has been incorporated in accordance with the application in all material respects.
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Because the Commission does not solicit applications for authority to transfer ownership or effective control of broadcasting undertakings, and because there is thus only one proposal presented to the Commission, the onus is on the applicant in such cases 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 notes in this regard that the applicant company will be controlled by Mr. Setterington through his ownership of 53% of the total voting shares. Mr. Setterington has a background in radio production and broadcast sales, having once worked at CHSC and at a number of other stations in small and medium-sized Ontario markets. While his occupation in recent years has been as principal shareholder and manager of a successful St. Catharines-based advertising/graphic design agency, Mr. Setterington indicated that his goal has long been to re-involve himself in broadcasting as the owner of a radio station.
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When asked for his views on the apparent national trend whereby audiences for FM stations have been expanding at the expense of AM listenership, Mr. Setterington offered the following observations:
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The station (CHSC) is sound and has essentially what I think it should have... The exercise that I am faced with is an exercise that I have been faced with for 20 years. I have a product here... and I believe I can promote it to a point where it will become even more successful ... I believe that ... a niche in small-to-medium markets can be found for AM radio that can make them even more successful than they already are.
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Based on the evidence before it, the Commission has no concerns with respect to the availability and the adequacy of the financing required to complete this transaction. Moreover, the Commission is satisfied that Mr. Setterington has a firm understanding of the challenges inherent in radio AM ownership, a good business plan, a vision of what he wishes to accomplish with the station and a willingness to devote the energy and time required to achieve these goals.
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As for the vendor, Redmond will remain present in this market as licensee of CHRE-FM St. Catharines. The company is controlled by Mr. Robert E. Redmond, who also owns radio stations in Toronto and Simcoe, Ontario as well as in Calgary, Alberta. In explaining his decision to sell CHSC, Mr. Redmond stated that advertisers have tended to perceive CHRE-FM as being an "appendage" of CHSC, with the result that neither station has been able to maximize its sales potential. According to Mr. Redmond, with the sale of CHSC to the applicant, both stations will be able to establish clear identities and reach their full economic potential in the St. Catharines market.
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At the hearing, Mr. Redmond assured the Commission that the divestiture of CHSC did not signify any dilution of his commitment to the community of St. Catharines, or any lessening of his continuing responsibilities to that community as the owner of CHRE-FM. The Commission places considerable importance on these assurances by Mr. Redmond, and expects Mr. Redmond to fulfill all of his obligations to St. Catharines. In this context, the Commission also notes Mr. Redmond's statement at the hearing that the foreground commitment set out in the CHRE-FM Promise of Performance will be maintained throughout the remainder of the FM station's current term of licence.
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In the application, Mr. Setterington submitted that a number of important intangible benefits will flow from this transaction, including the fact that it will contribute to diversity by establishing a new and independent broadcast voice in the St. Catharines area. Emphasis was also placed on the fact that the station will be locally owned and operated by one already familiar with the station, and who possesses the financial resources, marketing and sales experience "... to maintain the pre-eminent position of the station within the community."
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The applicant also made commitments with respect to a number of financial expenditures it will make, which represent the tangible benefits flowing from the transaction. Included among these are first year expenditures of $188,800 which will be principally for conversion of the CHSC signal to AM stereo capability. As other tangible benefits, the applicant proposed annual expenditures in the form of contributions to certain music and arts funds, scholarships and bursaries, as well as various other initiatives in support of Canadian talent. These contributions will increase by 5% each year, and will represent further financial expenditures of $149,192 over five years. Together with the costs of the AM stereo conversion, they comprise a total proposed tangible benefits package valued at $337,992.
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The Commission has assessed the various projects and initiatives proposed by the applicant, and notes that it has claimed as benefits certain annual expenditures for cultural expression and station-produced live productions. Although the proposed expenditures are greater than the commitments of the present licensee in these areas, it is only the excess amounts that qualify as being truly incremental benefits associated with this transaction. Nevertheless, the Commission notes the applicant's willingness to assume responsibility for the present licensee's commitments in respect of cultural expression and station-produced live productions. It is also generally satisfied that the remaining incremental benefits proposed are significient and unequivocal, and commensurate with the size and nature of the transaction. Moreover, the Commission is satisfied that approval of this application is in the public interest.
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The Commission expects the applicant to ensure that all of the proposed expenditures of $337,992 over five years, including the existing expenditures in respect of cultural expression and station-produced live production to which the current licensee is committed, as well as the proposed 5% annual increase in the contributions to these and the various other initiatives in support of Canadian talent, are made in accordance with the schedule outlined in the application and discussed at the hearing. Further, the Commission expects the applicant to submit annual reports on the status of each of the proposed initiatives in support of Canadian talent development.
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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 also a condition of 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 27 interventions received in support of this application.
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Fernand Bélisle
Secretary General
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