ARCHIVED -  Decision CRTC 90-440

Decision

Ottawa, 11 May 1990

Decision CRTC 90-440

D.J. Poechman, representing a company to be incorporated

Cambridge, Kitchener/Waterloo, Ontario - 894150200Andy McNabb, representing a company to be incorporatedKitchener, Ontario - 894176700

Richard Byrne, on behalf of a company to be incorporated
Kitchener/Waterloo, Ontario - 894175900

Twigg Communications Limited, representing a company to be incorporated
Waterloo, Ontario - 890242100

At a Public Hearing in London beginning on 20 February 1990, the Commission considered four competing applications for authority to establish a new English-language FM radio station to serve the Kitchener/Waterloo area. The applications were submitted in response to a call issued by the Commission in Public Notice CRTC l989-92 dated 31 July 1989. The Commission, for the reasons set out below, has determined that it is in the public interest to deny all four applications.

The application by D.J. Poechman, representing a company to be incorporated (Poechman), proposed an album-oriented, mainstream rock music station targeted primarily to listeners between the ages of 18 to 34 years. Poechman undertook to provide at least 25% of Canadian musical content drawn from category 5 and a minimum of 20% new untried music each week, as well as to broadcast native and student-produced programs. The applicant's plans with respect to the development of Canadian talent included annual direct expenditures totalling $43,000.

Andy McNabb, representing a company to be incorporated (McNabb), proposed an album-oriented format and a mix of mainstream and classic rock music, with a 30% level of Canadian category 5 musical selections. The station, targeted to the 18 to 34 age group, would also have a strong local news orientation and would support Canadian talent through a ten-point development plan involving a minimum annual expenditure of $25,000.

As part of his application, Richard Byrne, on behalf of a company to be incorporated, proposed "broad-based" album-oriented rock, featuring largely pop and rock music and a minimum of 20% Canadian musical content drawn from category 5. This applicant also proposed several specialty music shows and 18% foreground programming each week to serve its target audience of those between 18 and 40 years of age. With respect to Canadian talent development, the applicant allocated $57,500 annually in direct expenditures.

Twigg Communications Limited, representing a company to be incorporated (Twigg), proposed to promote the development of Canadian musical talent through its commitments to broadcast a minimum of 30% Canadian category 5 musical selections each week and to spend $108,000 in annual direct expenditures at the local level and another $225,000 at the corporate level. The applicant planned to provide its target audience of those listeners between 12 to 34 years of age with an album-oriented rock sound, including 20% foreground and 60% foreground and mosaic programming.

The Kitchener/Waterloo area is currently served by 3 AM commercial radio stations and 2 FM joint stations, namely CHYM Kitchener (Adult Contemporary) which enjoys the largest share of the Kitchener-area audience, CIAM Cambridge (Contemporary Hit Radio-CHR), CKKW Kitchener (CHR), CKGL-FM Kitchener (Group III-Country and Country-oriented) and CFCA-FM Kitchener (Group I-Easy Listening). The four applications at the London hearing proposed an FM radio service operating in the Group II (Pop and Rock Harder) musical format.

A significant feature of the Kitchener market, as reflected in broadcast measurement figures, is the large amount of tuning to out-of-market radio stations (approximately 55% in 1989). These stations, some of which offer harder rock music programming, originate mainly from Toronto, but include stations from surrounding communities such as Guelph, Hamilton and Brantford. The business plans of the four applicants were all predicated on the ability of their proposed programming services to repatriate out-of-town radio listeners. All four selected musical mixes which, they argued, would fill a niche for a local hard rock station and allow local advertisers to effectively reach the currently-underserved 18 to 34 male demographic.

In its call for applications, the Commission emphasized that it had not reached any conclusion with respect to the viability of the market for a new FM radio station in the Kitchener/Waterloo area, and that its call should not be construed as an indication of its intention to authorize such a service at this time. In the opening remarks at the Public Hearing, the panel chairperson stressed that all of the applicants "will be required to provide evidence which clearly demonstrates the demand and market for the proposed service and station".

In its assessment of these applications, the Commission also sought to be convinced that any new entrant would not only provide an attractive alternative to existing area stations in the market, but would be effective in repatriating listeners without unduly affecting the audience or revenue base of those local and area stations.

The Commission notes that, with several post-secondary educational institutions in the area, a large portion of the population in Waterloo County is composed of students, a group which typically spends a limited amount of time listening to radio and is limited in its appeal to advertisers. While no local Group II FM station currently serves this audience, CKKW (CHR), CIAM (CHR) and the University of Waterloo student radio station, CKMS-FM, do offer certain types of harder pop and rock music, although the latter, due to an effective radiated power of 50 watts, is only available to a portion of the audience in the area.

In this regard, the Commission notes the difficult financial positions of some of the radio stations in the area. The Commission's concern regarding the negative impact that the proposed station may have on existing stations in the market and on some smaller stations outside the immediate Kitchener area was also raised at the hearing by an intervenor. In this respect, CAP Communications Inc., licensee of CKKW, opposed all four competing applications on the grounds that a Group II format would duplicate some of CKKW's music programming and would cause undue financial harm, particularly at such an early stage in CKKW's existence as a CHR music station. The Commission notes that CKKW underwent a format change from Solid Gold to CHR in early 1989.

For their part, the applicants expressed confidence that their respective proposals, varied revenue sources, or the buoyancy of the market would help minimize the negative impact on existing stations. Nevertheless, they all acknowleged at the hearing that the local radio advertising sales market was limited and expected that at least a portion of their projected revenues would come at the expense of existing services.

Although the Commission has carefully examined all the evidence, including the financial and other information submitted, the applicants have failed to convince the Commission that the market would support the introduction of a new FM station at this time. Moreover, in the Commission's view, the current market potential is being effectively exploited by the existing stations. In reaching this determination, the Commission has also taken into account the condition of the local economy, the financial situations of the local stations and the fragmentation that currently exists in the market.

The Commission acknowledges the supporting interventions received from elected officials, municipal governments, educational institutions, local businesses, the artistic community, non-profit organizations and residents of the proposed areas. The Canadian Independent Record Production Association intervened with respect to each application expressing its views regarding Canadian music and programming requirements for FM stations.

The aforementioned denial leaves the frequencies 103.9 and 104.1 MHz (channels 281 and 280) available for use in the region. In this regard, three of the competing applications had proposed using channel 281, while the Poechman application for Cambridge was predicated upon the use of channel 280. Because of the potential for interference, however, only one station may operate on channel 281 or 280 in the same area concurrently.

In this respect, the Commission acknowledges the intervention received from Dufferin Communications Inc., licensee of CDIC-FM Orangeville, opposing, due to potential interference concerns, the use of the frequency proposed in the Poechman application and commenting on the McNabb technical proposal. For its part, Regional Broadcasting Inc., at the time an applicant to purchase CING-FM Burlington, expressed concern in its intervention that approval of Twigg's application might result in the technical impairment of the CING-FM signal. The Commission notes the applicants' replies to these interventions and considers that the technical information provided adequately addresses the intervenors' concerns.

A separate application by Telemedia Communications Inc. (Telemedia) (890723000), considered at the London Public Hearing, requests the use of channel 281 in its proposal to move its existing AM service in Stratford, CJSC, to the FM band. Telemedia intervened opposing the four applications on competing technical grounds. Telemedia's proposal for an FM station is denied in Decision CRTC 90-441 of today's date.

Rosemary Chisholm
Acting Secretary General