ARCHIVED -  Decision CRTC 96-736

Decision

Ottawa, 7 November 1996

Decision CRTC 96-736

Power Broadcasting Inc.

Rimouski, Quebec - 952704500

New FM radio programming undertaking in Rimouski - application denied

Following a Public Hearing in Québec beginning on 9 July 1996, the Commission denies the application by Power Broadcasting Inc. to carry on a French-language FM radio programming undertaking at Rimouski, operating on the frequency 102.9 MHz (channel 275B) with an effective radiated power of 33,600 watts. The licensee had indicated that if this application for a new FM station were approved, it would surrender the licence of its existing AM station, CFLP Rimouski.

At the hearing, Power Broadcasting Inc. stated that it filed this application to convert CFLP to FM in order to secure the survival of the station. The applicant submitted that the widespread erosion of AM listeners to the FM band in recent years has resulted in a substantial decline in CFLP's audience and advertising revenues.

The applicant also submitted at the hearing that the conversion of CFLP to FM would remove the technical constraints that prevent it from properly serving some communities in its service area. It explained that, because CFLP must aim its antennas eastward after sunset to avoid interfering with other stations' signals on the same frequency, its signal cannot be received after dark in the communities lying west of Rimouski, namely, Bic, Saint-Fabien, Saint-Simon and Saint-Eugène.

The Commission notes that Power Broadcasting Inc. operates another conventional commercial radio station, CIKI-FM Rimouski, in the same market as CFLP. The Commission, accordingly, examined the applicant's proposal taking into account the Commission's policy generally to prohibit two undertakings of the same type under common ownership in the same language to serve the same market. It also considered the applicant's arguments for an exemption from this policy.

The applicant has not convinced the Commission that CFLP's situation is as tenuous as it claims. First, the Commission notes that a large proportion of the revenues lost by CFLP migrated to CIKI-FM, and Power Broadcasting Inc. acknowledged this at the hearing. In addition, the combined average profit before interest and taxes (PBIT) of CFLP and CIKI-FM in 1995 was more than double the average PBIT of all AM and FM stations in the province of Quebec. Moreover, the combined financial situation of CFLP and CIKI-FM has improved since 1991.

The Rimouski market is also served by community station CKMN-FM, owned by La Radio communautaire du comté (La Radio du comté), and by two CBC stations, CKBR and CJBR-FM Rimouski.

La Radio du comté intervened in opposition to this application. At the hearing, the intervener stated: [TRANSLATION]

 Approval of this new FM service would strengthen the position of Power Broadcasting Inc. to the point where it would have a virtual monopoly of FM radio with regard to both content and advertising sales. Strengthening its position would result in a loss of advertising revenues at CKMN-FM and, eventually, force it to close.

In the opinion of the intervener, the loss of the community radio station would limit diversity of editorial content and information.

Coopérative d'édition Éditeq also intervened at the hearing to oppose the application. The intervener stated: [TRANSLATION]

 We feel that granting an FM broadcasting licence to a fourth station in a market as limited as the Rimouski area would jeopardize the very survival of the community station.

For its part, Power Broadcasting Inc. submitted that its proposal would divert no revenues from CKMN-FM; rather, its revenues would come from national advertisers, which are not accesssible by CKMN-FM, and from print advertisers.

The Commission considers that, if this application were approved, the conversion of CFLP to FM would give Power Broadcasting Inc. an overwhelming advantage in the solicitation of national and regional advertising. The Commission is concerned that advertising agencies would soon seek to benefit from the ability to purchase airtime on two FM stations under common ownership. Because the applicant would be able to offer advertisers the combination of CIKI-FM, having a music format specific to the Radiomutuel network and targeted at younger listeners, and CFLP-FM, with its music format specific to the Télémédia network and targeted at more mature listeners, advertisers could conduct their advertising campaigns through this licensee alone and still reach the two most important population segments in the market. In addition to inflicting undue harm on community station CKMN-FM, the Commission considers that this advantage could adversely affect the commercial stations operating in markets bordering the Rimouski market.

In its assessment of this proposal, the Commission has considered the demonstrated support for the application in the interventions received. The Commission recognizes that converting CFLP to FM would enable the station to solve its nighttime broadcasting problems. The Commission, however, is concerned that operating two FM stations under common ownership in this market would adversely impact the advertising revenues of CKMN-FM and the commercial stations serving adjacent markets, and hinder their ability to honour their programming obligations. In the Commission's view, because the present circumstances, as described by the licensee in its application, do not justify an exemption from the policy on common ownership, the Commission denies the application.

Allan J. Darling
Secretary General