ARCHIVED -  Decision CRTC 96-39

Decision

Ottawa, 31 January 1996

Decision CRTC 96-39

Christian Perron, on behalf of a company to be incorporated (Le Groupe Radio 1995)

Sept-Iles, Quebec - 950910000

 Application for a new FM radio programming undertaking - denied

Following a Public Hearing held in the National Capital Region beginning on 18 September 1995, the Commission denies the application by Christian Perron, on behalf of a company to be incorporated (Le Groupe Radio 1995), for a broadcasting licence to carry on a French-language FM radio programming undertaking at Sept-Iles on the frequency 94.1 Mhz, with an effective radiated power of 1,250 watts.

 In its application, the applicant proposed to broadcast 84 hours each week of locally produced programming and 42 hours each week of programming originating from CIEL-FM. The station was to be operated in a music format described by the applicant as "adult contemporary". According to the applicant, the new station was to offer programming distinct from that of the other two commercial radio stations serving the Sept-Iles/ Port-Cartier market, namely, CKCN Sept-Iles, owned by Radio Sept-Iles inc., and CIPC-FM Port-Cartier, owned by Radio Port-Cartier inc. The applicant stated that with its local and regional news coverage and its music format, it intended to recover a segment of Sept-Iles' population consisting of listeners between 35 and 60 years of age who have turned to Montreal FM stations delivered by cable over the past few years because their programming better meets their needs.

 In its Public Notice CRTC 1991-74 dated 23 July 1991 and entitled "Radio Market Policy", the Commission set out its procedures and criteria for processing of applications for new conventional, commercial AM and FM stations. The Commission also established, as a 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 Commission has assessed the impact of Le Groupe Radio 1995's proposal on the Sept-Iles/Port-Cartier market, paying specific attention to the financial situation of the existing local services and the capacity of the market to support a third conventional commercial radio station. In particular, the Commission has considered the effect of the new service on existing local services.

 In this regard, the Commission notes that Radio Port-Cartier inc. and Radio Sept-Iles inc. submitted interventions opposing this application. The interveners argued that the Sept-Iles/Port-Cartier advertising market is extremely weak and that the entry of a third commercial station would destabilize the market and jeopardize the survival of their undertakings. Radio Port-Cartier inc. added that the market's population has declined over the past 14 years, causing a fall in retail sales and a consequent decline in the market's financial capacity. In addition, Radio Port-Cartier inc. contended that, while the two interveners hold 90% of the available radio advertising base, their radio revenues have suffered an average decline of 6.6% each year since 1990.

 The Sept-Iles/Port Cartier market, which consists of the cities of Sept-Iles and Port-Cartier and some small communities in the surrounding area, has 53,575 inhabitants. The cities of Sept-Iles and Port-Cartier account for 60% of the market's population. In addition to stations CKCN and CIPC-FM, the market is served by Canadian Broadcasting Corporation station, CBSI-FM, broadcasting from Sept-Iles, and by five community stations serving other localities.

 Based on the financial data compiled by the Commission in its most recent radio market report and the data submitted by Radio Sept-Iles inc. and Radio Port-Cartier inc., the Commission finds that only one of these two stations was earning a profit before interest and tax at the end of 1994. The Commission further notes that the advertising revenues of each station have been declining and that they have suffered a drop of approximately 20% in their total revenues since 1989. In the Commission's view, the foregoing indicates the difficulties that the existing stations are having in fulfilling their responsibilities.

 At the hearing, the applicant argued that it intended to draw most, if not all, of its advertising revenues from media sources other than radio, and from business establishments that have never been tapped by the existing radio stations. In addition, the applicant maintained that it did not intend to solicit advertising in Port-Cartier. Even though the Commission considers that some sources of advertising revenues may still not have been tapped, it has calculated that this potential market would be considerably smaller than the applicant's projections. In view of the foregoing, the Commission considers that, to meet the budgets that the applicant has projected, it would ultimately have to derive at least half of its revenues from the market currently served by CKCN and CIPC-FM. The Commission is concerned that this could lead to the closing of CKCN or CIPC-FM, given these two stations' already precarious financial situation.

 The Commission also examined the applicant's arguments claiming that the existing services have a limited audience share because of the poor quality of their programming. The Commission considers that there is no evidence to conclude that the programming provided by the broadcasters of Sept-Iles and Port-Cartier is of poor quality. Instead, the Commission attributes the decline in listening time to the loss of popularity of AM stations which has been experienced everywhere in Canada, to the difficult economic conditions of the region which have reduced the financial resources of CKCN and CIPC-FM, and to technical changes affecting local and regional stations. The Commission further emphasizes that, in converting its station CIPC to the FM band two years ago, Radio Port-Cartier inc. was pursuing the same objective as the applicant, namely, repatriating the audiences and the revenues lost because of the popularity of outside FM stations.

 Based on all of the above, and having taken into consideration all the financial data at its disposal, the opposing interventions by Radio Sept-Iles inc. and Radio Port-Cartier inc. and the arguments submitted by the applicant in his application and at the public hearing, the Commission considers that approval of this application would seriously jeopardize the survival of the two existing stations in the Sept-Iles/Port-Cartier market and their ability to discharge their programming responsibilities. Accordingly, the Commission has denied this application.

 The Commission acknowledges the four interventions filed in support of this application.

 Allan J. Darling
 Secretary General