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Decision
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Ottawa, 12 February 1990
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Decision CRTC 90-91
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NewCap Broadcasting Limited
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Thunder Bay, Ontario - 882207400Stephen Spencer Bell, representing a company to be incorporatedThunder Bay, Ontario - 890722200
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At the 24 October 1989 Public Hearing in the National Capital Region, the Commission considered competing applications by NewCap Broadcasting Limited (NewCap) and Stephen Spencer Bell, representing a company to be incorporated (Thunder Country Radio) for a licence to operate an English-language FM radio broadcasting transmitting undertaking (Group III - country and country-oriented) at Thunder Bay, Ontario, operating on a frequency of 105.3 MHz with an effective radiated power of 100,000 watts. The competitive applications were submitted in response to a call issued by the Commission on 22 December 1988 (Public Notice CRTC 1988-208).
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The Thunder Bay area is currently served by five English-language radio undertakings. Specifically, NewCap provides AM radio service to the area via CJLB Thunder Bay; H.F. Dougall Company Limited operates joint stations CKPR and CJSD-FM and the Canadian Broadcasting Corporation provides its AM and FM network programming through wholly-owned stations CBQ and CBQ-FM. Based on the evidence presented by the applicants in their applications and at the hearing, the Commission is satisfied that a market exists for a country-oriented station serving the Thunder Bay area. Nonetheless, the Commission denies the NewCap and Thunder Country Radio applications for the reasons set out below.
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The NewCap Application
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NewCap, a wholly-owned subsidiary of Newfoundland Capital Corporation Limited, currently operates 7 AM and 2 FM stations in Nova Scotia and Newfoundland as well as CJLB. Through its wholly-owned subsidiaries, NewCap ultimately controls AM stations in both Prince Edward Island and Alberta and FM stations in Alberta and British Columbia.
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NewCap's proposal for a country music station is targeted at an adult audience (25 to 49 years of age) and, with respect to the development of Canadian musical talent, allocates $125,000 over a five-year period for various initiatives such as the "Canadian Country Talent Series" and "Top Card" projects. NewCap also committed to purchase an equipped mobile production unit at an estimated cost of $50,000.
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Notwithstanding the submission of a revised programming schedule, the applicant was unable to describe in detail the specific mosaic features it would broadcast on a weekly basis and the method by which the proposed weekly level of enrichment programming would be achieved.
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After careful consideration of the application as submitted and of the statements made at the hearing, the Commission is not convinced that the number of staff proposed by the applicant in the news and programming areas, particularly the number of full-time employees proposed, would be sufficient to ensure the consistent fulfillment of all of its commitments, most notably those relating to high quality foreground and mosaic programming.
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Furthermore, the Commission considers that the applicant's plans and initiatives with respect to its support and exposure of Canadian musical talent have not been sufficiently developed or clearly detailed.
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The Commission has also examined the financial information filed with the NewCap application. At the hearing, the Commission expressed concern that certain projections filed by the applicant were out of date and appeared to apply to a different operating scenario.
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Having assessed the application as filed and all the information available to it, including financial data submitted following the hearing, NewCap has failed to convince the Commission that it has provided the necessary programming and financial information to ensure the provision of a quality FM service to listeners in the area. Therefore, the Commission considers that an approval of the proposed FM station is not warranted and accordingly, has denied NewCap's application.
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The Commission acknowledges the interventions received in support of NewCap's application. Thunder Country Radio - The Stephen Spencer Bell Application
Thunder Country Radio proposes to carry on an independent FM commercial radio station to operate in the country and country-oriented musical format targeted to an adult demographic between 30 and 54 years of age. Mr. Bell currently controls (60%) North Superior Broadcasting Ltd., licensee of CFNO-FM Marathon and several rebroadcasters in Northern Ontario. The current application provides for an element of local representation.
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As part of its proposal, the applicant has included distinctive local features, such as reports on local sporting events, including play-by-play coverage of live events. With respect to Canadian talent development, Thunder Country Radio's initiatives include a regional musical talent search.
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The applicant committed to provide 9 hours 35 minutes of news programming each week. The Commission notes the applicant's statements made at the hearing which indicate that the news staff, composed of five full-time and two part-time employees, would also produce daily and weekend news magazines as well as several mosaic features.
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Thunder Country Radio also committed to provide 7 hours 41 minutes of enrichment and, in line with the local orientation of the station, to produce the majority of its proposed 13.2% foreground and 51.7% combined mosaic and foreground programming. Further, Thunder Country Radio has proposed a minimum of 43 play-by-play broadcasts of local sports events during the first year of operation. The Commission, however, is of the view, given the responsibilities of the staff members proposed for this FM operation, that Thunder Country Radio would have great difficulty in consistently fulfilling its programming commitments and that the applicant has underestimated the resources needed to undertake the proposed sports coverage.
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In considering Thunder Country Radio's projected revenues and expenses, the Commission expressed concern at the hearing that these projected figures are overly optimistic. In this respect, the applicant is projecting $769,000 total revenue in the first year and a cumulative five-year total revenue of over $5 million which is unusual for an independent station in a relatively small market. The Commission notes that these revenue figures are notably higher than those proposed by NewCap, a potential joint licensee, which would enjoy marketing and operating economies.
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The Commission considers that the projected expenses for the stand-alone station, operating a minimum of 18 hours each day of the week, have been understated in that they do not appear to reflect the higher start-up costs and the additional expenses of a stand-alone operation.
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The applicant explained at the hearing that the new undertaking would be adequately funded through the sale of shares, shareholder loans, a bank loan as well as a shareholder contingency fund. While the Commission notes the applicant's response to questions posed at the hearing with respect to the adequacy of funding, it has considered that the documentation with regard to a portion of the equity and shareholders' loan investment did not attest to the unequivocal availability of the funds required to establish and operate the proposed station.
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Based on all the information filed with the Commission with respect to the undertaking's proposed financing and supplementary financial resources, the Commission is not convinced that Thunder Country Radio has adequately documented its financing and that the financial projections included in the application are realistic for the market. In view of the financial and programming considerations discussed above, the Commission has denied the application.
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The Commission acknowledges the supporting interventions with respect to Thunder Country Radio's application.
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Fernand Bélisle
Secretary General
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