ARCHIVED -  Decision CRTC 96-313

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CRTC 96-313

Ottawa, 2 August 1996
Radio Nord inc.
Saint-Jérôme and Saint-Jovite, Quebec - 950164400 - 950165100
New FM radio programming undertakings at Saint-Jérôme and Saint-Jovite - denied
Following a Public Hearing held in the National Capital Region beginning on 15 April 1996, the Commission denies the applications submitted by Radio Nord inc. (Radio Nord) for broadcasting licences for French-language FM radio programming undertakings at Saint-Jérôme and Saint-Jovite. The applicant had requested to operate the proposed undertaking at Saint-Jérome on the frequency 103.9 MHz (channel 280A) with an effective radiated power of 767 watts and to operate the proposed undertaking at Saint-Jovite on the frequency 96.3 MHz (channel 242A) with an effective radiated power of 3,200 watts.
Radio Nord explained that its project basically sought to restore local radio service to these two communities following the closing of CJER Saint-Jérôme and its transmitter CKSJ Saint-Jovite in 1994. The applicant proposed to broadcast 42 hours a week of local programming at Saint-Jérôme and 15 hours at Saint-Jovite. The remainder of the programming would have come from CJLA-FM Lachute, Quebec, whose licensee is Radio Fusion inc. and whose owner is Radio Nord. These stations would have been operated as part of a network with CHPR-FM-1 Hawkesbury, Ontario, which is also owned by the applicant.
In Public Notice CRTC 1991-74 dated 23 July 1991 and entitled "Radio Market Policy", the Commission set out the procedures and criteria that it generally uses in the processing of applications for new conventional commercial AM and FM stations. Further, the Commission established as the basic criterion that the introduction of an additional commercial station must not unduly affect the ability of existing commercial stations to discharge their programming responsibilities.
The Saint-Jérôme market is currently served by a commercial radio station, namely, CIME-FM Sainte-Adèle. In this connection, the Commission notes that it received opposing interventions regarding Radio Nord's applications from Diffusion Laurentides, the licensee of CIME-FM, and from that station's employees. The interveners argued, in particular, that, as the Laurentian region is already heavily solicited by Montréal radio stations and by a dozen regional weekly newspapers, the establishment of new stations in the area might affect CIME-FM's very survival.
For its part, Radio Nord argued that its proposal would not affect CIME-FM. The applicant based its argument mainly on the contention that there is still considerable radio advertising potential available in the Saint-Jérôme market, and that the service it was proposing is different from that provided by CIME-FM. To estimate the radio advertising potential available, the applicant essentially used a method based on the size of retail sales, employing a yardstick, valid provincewide. In its initial application, Radio Nord had estimated the advertising potential of the Saint-Jérôme market at $1.5 million. At the public hearing, Radio Nord revised this figure to $2.8 million on the basis of the most recent data available to it. As for the proposed programming, Radio Nord stressed the local orientation that it would take compared with CIME-FM, which, according to the applicant, is more supraregional because of its broader coverage area.
Although it is generally acknowledged that retail sales have a significant impact on the advertising potential of a given market, the Commission points out that this factor is not always the only variable to be considered. This is all the truer in a market bordering a large urban area like Saint-Jérôme, where most Montréal radio stations can be received over-the-air. The operating conditions are, therefore, very different from those prevailing in more remote markets where local stations can more easily capture a predominant share of the audience and therefore of the available advertising base.
The Commission has been able to verify this phenomenon over the years in two markets neighbouring Montréal, namely, Saint-Jérôme to the north and Saint-Hyacinthe to the south of the metropolitan area. The competition waged in these two markets by Montréal radio stations, which have resources out of all proportion to those of small remote stations, meant that, even when two local stations were operated for a time in these two markets, the share of local listening time captured by the Montréal stations was in the neighbourhood of 80% or more.
The above phenomenon has major consequences for the viability of stations in bordering markets. Given the limited attraction of local stations, local advertisers, who often cannot afford to buy commercial air time on Montréal stations, tend to devote larger advertising budgets to local newspapers to reach a larger share of the population, at the expense of local radio.
The Commission recognizes that the addition of a new FM station in Saint-Jérôme might make it possible to recover a certain amount of local listening time that currently goes to Montréal stations and hence some of the revenues mainly enjoyed by other local media. However, given the pulling power of the Montréal stations in this market, the Commission considers these gains could not help but be limited, and, under these conditions, the share of listening time monopolized by the Montréal stations would probably continue to lie between about 75% and 80%.
In the circumstances, the Commission calculates that a realistic estimate of the advertising potential of the Saint-Jérôme market would be about $665,000, which is considerably lower than the $1.5 or $2.8 million calculated by Radio Nord. The Commission considers that a market with an advertising potential of this order cannot, on its own, ensure the financial viability of two local commercial stations, given the cost of operating a radio station.
In light of the foregoing, the Commission has concluded that Radio Nord's proposal, as filed, would necessarily have a negative impact on CIME-FM's financial position. Although CIME-FM's survival would not necessarily have been put in doubt by the applicant's project, the Commission considers CIME-FM's losses of advertising revenues would be sufficient to decrease significantly its ability to discharge its programming responsibilities.
Further, although Radio Nord's proposal would have increased the amount of local programming provided to the population of Saint-Jérôme and Saint-Jovite, the Commission notes that a large part of the programming would, nevertheless, have been of a regional nature, considering the amount of local programming proposed for these two communities. In the circumstances, the Commission has concluded that the advantages associated with approval of Radio Nord's application would not outweigh its possible negative impact on the local and regional radio service currently provided by CIME-FM.
As the applicant stated at the public hearing that its applications for Saint-Jérôme and Saint-Jovite were not severable, the Commission has denied both applications.
The Commission acknowledges the supporting intervention received with regard to the Saint-Jérôme application.
Allan J. Darling
Secretary General
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