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Decision
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Ottawa, 13 November 1990
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Decision CRTC 90-1102
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Trent Valley Broadcasting Inc.
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Campbellford, Ontario - 890315500
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Following a Public Hearing in the National Capital Region beginning on 11 June 1990, the Commission denies the application by Trent Valley Broadcasting Inc. (Trent Valley) for a licence to carry on an English-language FM broadcasting transmitting undertaking at Campbellford operating in a Group IV (Pop and Rock Softer and Country-oriented) musical format, on a frequency of 98.7 MHz with an effective radiated power of 1000 watts.
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Campbellford, a small community located northwest of Belleville with a substantial population of seniors and retired persons, is not served by any local radio station, but does receive both AM and FM radio service from stations in the nearby communities of Belleville, Trenton and Peterborough.
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Trent Valley proposed to provide Campbellford with a private, commercial, community-oriented FM station that would offer a service distinct from existing radio services available to listeners in the area, consisting of approximately 40 hours of locally-produced programming each week. The station would have broadcast a wide range of music.
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As stated in previous decisions dealing with such matters, 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 its objectives. Further, the Commission needs to be assured that the applicant has an adequate business plan and has at its disposal the financial resources necessary to meet its operational costs and programming commitments, even in the event of a shortfall in the station's projected revenues.
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A previous application by Trent Valley for a licence to operate a commercial FM station at Campbellford was denied by the Commission in Decision CRTC 88-432 dated 22 June 1988. In that Decision, the Commission determined "that the financial viability and existence of a market for such an undertaking have not been adequately demonstrated." Further, the Commission found that the degree to which the applicant proposed to rely on volunteer program staff suggested that the applicant's proposal would "be more realistic in the context of a non-profit, community radio operation".
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Other concerns with the previous application, as described in the Commission's 1988 decision, included the limited financial resources, the unusually low full-time staff levels that were proposed, and the applicant's apparent failure to perform any detailed market analysis or assessment of potential advertising revenues. The Commission also expressed doubts with respect to the applicant's "appreciation of the operational demands and responsibilities" placed on the licensee of a commercial FM operation, or a full understanding of the minimum programming requirements.
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The present application again proposes a commercial undertaking, although it would employ a higher power transmitter and encompass a wider service area than that submitted previously. Although the Commission notes that Trent Valley has demonstrated a greater understanding of Commission policy and regulation in the current application, it remains concerned with respect to the financial and human resources available to the applicant in its operation of a commercial undertaking.
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At the hearing, the Commission also expressed concern for the long-term viability of the undertaking and discussed with the applicant the financial aspects of the proposal. While some $39,000 in share capital is provided for in the application, this amount includes contributions for studio equipment, van and production facilities. Moreover, of this $39,000, the cash portion of the applicant's equity commitment would total only some $9,000. Despite the applicant's indication that further financing could be provided from the liquidation of a shareholder's property holdings, the Commission considers Trent Valley's overall financial commitment to be unusually low for the type of venture that was proposed. The Commission, in assessing the estimated establishment costs for the station, has considered the statement made at the hearing that the applicant is prepared to spend approximately $50,800 in this regard, including expenses of $18,770 relating to a transmitting plant. The Commission is of the view that the costs that would be required to establish adequate technical facilities for an operation of this type may have been underestimated.
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The Commission has also assessed the applicant's financial projections for the proposed station. The applicant predicated these projections on the assumption that it would capture and maintain an average of 20% of the Campbellford listening audience.
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The Commission notes, however, that the applicant did not perform a representative audience survey or provide evidence to substantiate the reasonableness of its assumption regarding the level of listener demand for the proposed station. Nor did the applicant demonstrate that it would be able to capture a 20% share in circumstances where it would only be operating for some 40 hours per week. Furthermore, were the actual audience size and, in turn, the advertising revenues to fall short of expectations, the Commission does not consider that the applicant has provided adequate evidence that its shareholders have at their disposal the liquid contingency funds that would be required to maintain the operation of the undertaking over the long term beyond the currently-documented financing.
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While the Commission considers that community concerns and interests may be expressed effectively through a local broadcasting service, the Commission is not convinced that this small commercial station, as proposed, would be able to attract the listenership necessary to support the undertaking over the long term.
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The Commission notes that the application, as filed, does not provide for any individuals devoted full-time to programming. In fact, the equivalent of only 2.5 permanent positions are proposed in all and these are to be filled be several part-time employees. The applicant proposed that most of the foreground programming to be broadcast by the station, including news programming, would be produced by station volunteers and students who would also have other operational duties associated with the station. The Commission, while encouraging public participation, is concerned that without a minimum number of full-time employees, there would be no station personnel accountable for the day-to-day operations of the proposed commercial venture. Moreover, in the Commission's view, it is unrealistic for a commercial station to rely over the long term on volunteer staff to ensure the consistent fulfilment of the station's commitments.
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It is also concerned about the proposed extensive use of privately-owned music collections for a long duration of time. Such reliance may result in difficulties in achieving and maintaining, for example, the applicant's commitment to a 30% weekly level of Canadian musical content.
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The Commission acknowledges the applicant's evident interest in providing local service to Campbellford, and the strong community support for the proposed station as reflected in the written and oral interventions submitted by elected officials, local business people and residents of the area. Based on all the foregoing, however, the Commission considers that the applicant has failed to demonstrate that this proposal to operate a commercial FM station at Campbellford would be viable. As stated in Decision CRTC 88-432, given the financial and human resources available to the applicant and the community support for the operation, the Commission continues to consider that the proposal would have been more realistic if it had been presented within the context of a non-profit community radio operation.
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The Commission notes that Trent Valley was one of seven applicants whose proposals were treated as competing applications at the 11 June hearing. Five of these others sought licences to provide new commercial stations at Belleville, while the seventh proposed to operate a student FM station at Belleville. It was established at the hearing that, while the Trent Valley and the student FM proposals were competing with the other applications in terms of service area, this competitive element does not exist with respect to programming or overall market orientation. Accordingly, these two applications were assessed on their own merits.
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In Decision CRTC 90-1101 of today's date, the Commission has approved an application by Twigg Communications Limited, on behalf of a company to be incorporated (Twigg), for a licence to carry on new commercial FM station at Belleville, and has denied the other four competing applications seeking licences to serve that community. In the Twigg decision the Commission has noted that applicant's plans to establish a network of stringers to provide coverage of news and events occuring in Campbellford and other smaller centres in the Belleville area. In Decision CRTC 90-1100, the Commission has approved an application by Bryan Olney, representing a corporation to be incorporated, for a licence to operate a student FM station at Belleville.
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Allan J. Darling
Secretary General
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