ARCHIVED -  Decision CRTC 96-761

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CRTC 96-761

Ottawa, 18 November 1996
Radio CKYK FM inc.
Alma, Quebec - 199602131
Licence amendments - Denied
Following a Public Hearing held in Québec beginning on 9 July 1996, the Commission denies the application to amend the broadcasting licence of radio programming undertaking CKYK-FM Alma by relocating the antenna from its present site near Chambord to a site east of Larouche; by changing the frequency from 95.5 MHz (channel 238B) to 95.7 MHz (channel 239C1); and by increasing the effective radiated power from 50,000 watts to 100,000 watts.
The Commission authorized the operation of CKYK-FM on 6 January 1993 (Decision CRTC 93-6) and issued a broadcasting licence expiring on 31 August 1997. This authorization was granted in the context of a broader plan to consolidate radio in the Lac Saint-Jean area resulting in the corporate restructuring of the new station in Alma and the radio stations in Roberval, Dolbeau and Chibougamau-Chapais under a holding company which became "Groupe Radio Antenne 6 inc." (Decisions CRTC 93-7, 93-8 and 93-9).
Shortly after CKYK-FM went on the air in the fall of 1993, the Commission received an application to amend the station's licence by adding transmitters at Alma and east of Jonquière to improve the poor quality of CKYK-FM's signal in those areas. In Decision CRTC 94-657 dated 18 August 1994, the Commission authorized the operation of a new transmitter at Alma, but denied the proposal for the Jonquière area. The Commission decided to deny this proposal because adding a transmitter in the Jonquière area would effectively extend CKYK-FM's market beyond the area authorized in Decision CRTC 93-6. The Commission was also concerned that introducing another FM signal into the neighbouring market of Saguenay would unduly affect the existing local stations.
The technical modifications proposed in this application would have extended CKYK-FM's coverage area eastward. The result of this would be that, instead of serving essentially the Lac Saint-Jean area, as proposed in the initial application, the station also would have covered a portion of the Saguenay, notably its principal urban centre Chicoutimi-Jonquière. The Iicensee acknowledged at the hearing that this represented a major modification compared with its initial proposal.
In defending this application, the Iicensee explained that it was pursuing a two-fold objective. First, it wanted to rectify CKYK-FM's signal reception problems in the core of its central market area, namely certain sections of Alma. Discussing this issue at the public hearing, the licensee indicated that installing the additional transmitter authorized in 1994 had not corrected these problems, and that it intended to discontinue using this transmitter once this application was approved. The Iicensee said its main objective was to ensure that CKYK-FM would not merely survive, but would grow over the medium and long term by developing into a station that would be truly regional in scope and would serve both the Lac Saint-Jean and Saguenay areas.
In support of its position, the Iicensee submitted that, by serving the Saguenay area, it would restore a healthy balance in the radio industry in Saguenay-Lac Saint-Jean, because the commercial radio stations in the Saguenay already cover Lac Saint-Jean. The licensee stated that, although the consolidation of its operations and the arrival of CKYK-FM yielded higher advertising revenues for the local radio industry, the situation is still fragile because audience shares have not changed, with Saguenay stations still holding almost 60% of the Lac Saint-Jean audience. The Iicensee added that the recent turmoil in the media industry following the establishment of the Radiomédia network in Quebec and the growing trend in the region toward big-box stores have also contributed to the fragility of the situation.
The Commission received seven interventions in relation to this application, all of which were in opposition. Most interventions were filed by Saguenay broadcasters and their employee unions. Radiomutuel inc. (Radiomutuel), licensee of CKRS and CJAB-FM Chicoutimi, appeared at the hearing to present its arguments, which were essentially the same as those of the other interveners. Radiomutuel pointed to the fragility of the Saguenay radio market and the danger of destabilizing it by introducing the signal of another radio station. Radiomutuel argued that the 1994 closure of CJMT Chicoutimi demonstrated that the market could not support another station. The intervener also submitted that the various editions of the radio market report for Chicoutimi-Jonquière also show that the market does not meet the criteria contained in the Commission's radio market policy regarding profitability of existing stations.
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.
As the Iicensee's proposal is clearly intended to gain access to the Saguenay market, the Commission examined the application in the light of the radio market policy mentioned above. The Commission also noted the licensee's statements at the public hearing that the 1995 radio market report does not reflect the current situation in the Chicoutimi-Jonquière market because it takes into account the financial results of station CJMT, which ran a deficit in its final years of operation and has been closed since 1994. The licensee also argued that the benefits flowing from creation of the Radiomédia network should also be taken into consideration.
In order to determine whether a market can support an additional radio station, the Commission generally considers the financial results of the last five years. Consequently, the Saguenay market does not meet the criteria for collective profitability because the overall profit margin of all radio stations in the market has been negative for the last five years. Using the radio market criteria as the primary indicator, the Commission has more closely examined the impact of the closure of CJMT and of the creation of the Radiomédia network. Even though CJMT's closure enabled stations CKRS, CJAB-FM and CFIX-FM Chicoutimi to generate revenue growth in 1995, the Commission considers that these improvements are too recent to conclude that the market has recovered in the period since these events. Given these circumstances, the Commission is of the view that current conditions in this market do not support a conclusion that access to the Saguenay market by CKYK-FM, at this time, would not unduly affect the ability of existing stations to discharge their programming responsibilities.
Nor does the Commission see the survival of CKYK-FM as dependent on its gaining access now to the Chicoutimi-Jonquière market. The Commission arrived at this conclusion after examining the current state of radio in Lac Saint-Jean and CKYK-FM's situation in particular. The Commission finds that, since CKYK-FM first went on the air, advertising revenues reported by Lac Saint-Jean stations have grown by almost $1 million or 95%. Moreover, in 1995, the average profit before interest and tax of the stations in Groupe Radio Antenne 6 inc., and that of CKYK-FM in particular, substantially exceeded the average profit margin of all radio stations in the province.
The Commission is of the further view that, if the Iicensee finds a satisfactory solution to CKYK-FM's technical problems affecting coverage in its central market area in Alma, it will be in a position to expand its audience share and improve its competitive position in its own market.
Allan J. Darling
Secretary General
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