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ARCHIVED - Decision CRTC 2000-203

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Decision CRTC 2000-203
Ottawa, 16 June 2000
B. Denham Jolly, on behalf of a company to be incorporated
Toronto, Ontario – 199911615
31 January 2000 Public Hearing
Toronto
New urban music FM radio programming undertaking in Toronto

1.

The Commission approves the application by B. Denham Jolly, OBCI (Milestone Radio Inc., Milestone) for a broadcasting licence for an English-language FM radio programming undertaking at Toronto.

2.

Subject to the requirements of this decision, the Commission will issue a licence expiring 31 August 2006. This licence will be subject to the conditions specified in this decision and in the licence to be issued.
The new station

3.

The new station will offer an "Urban Music" musical format, targeted to an audience aged 25 to 44. Milestone stated that the format would be a "modern-day reflection of the rich musical traditions of Black musicians and Black-influenced music over at least the past century". The new station will add diversity to the musical genres available to Toronto audiences by exploring rhythm & blues (R&B), hip-hop and all the sub-groups of R&B, plus reggae and calypso, both of which are popular in the Toronto market but not currently heard to a great extent on any local or out-of-market commercial stations.

4.

The station will adjust its music programming to appeal to different audiences during different time periods. For example, evening hours will target a younger demographic with more hip-hop and more new R&B than will be heard during daytime.

5.

The licence will be subject to conditions related to levels of local programming, musical format, Canadian content, financial support for Canadian talent, and the use of hit material on the new station. These conditions are either set out below or in the licence to be issued. As noted in Public Notice CRTC 1999-137, standard conditions of licence are now set out only on the licence form.
Ownership

6.

Milestone Radio Inc., the company to be incorporated, will be controlled by Foundco Inc. (70.1%), which is controlled by five individuals, with Mr. B. Denham Jolly being the major shareholder. According to a voting trust agreement among the five shareholders, Mr. Jolly is also the voting trustee, with voting rights over all of their shares.

7.

Standard Radio Inc. (Standard) is a minority shareholder in Milestone (29.9%), and has the right to appoint one member to Milestone's board of directors. Standard owns and operates a number of radio stations in Quebec, Ontario, Alberta, Manitoba and British Columbia, and will provide a significant portion of capital funding for Milestone, in exchange for its voting interest.

8.

An intervention by CKMW Radio Limited, another applicant in this proceeding, raised a concern related to Standard's involvement in the Milestone application, concluding that a local management agreement (LMA) would effectively result from it.

9.

Milestone replied to the intervention by stating that its involvement with Standard through an LMA is not its intention, and that a sales agreement with Standard would be the extent of the integration.

10.

While the financial arrangements have the potential to provide Standard with a degree of influence over the operations of Milestone, the Commission is not convinced that this would lead to Standard being in a position to control the new station. While the licensee has indicated its intention to group sales with Standard, no other operational component will be grouped, and group sales alone does not indicate the existence of an LMA. The Commission further notes that no proposal regarding an LMA has been made in this case and that the Radio Regulations, 1986 have recently been amended to require that any radio licensee wishing to enter into an LMA obtain Commission approval prior to entering into such an arrangement.
Quality of the application

11.

Public Notice CRTC 2000-84 serves as a preamble to this and other decisions related to Toronto radio service published today. In that notice, the Commission sets out the general factors considered by it in making this decision.

12.

The Commission has taken into account that Milestone had no technical alternative to the use of the FM frequency applied for, the optimal means to serve its target audience in the format genre proposed. The Commission is satisfied that, apart from technical considerations, the primary one for approval is the quality of the individual application, in all the circumstances.

13.

The Commission is satisfied that Milestone has presented a high-quality application, taking into account the applicant's business plan and contributions to programming format diversity, as well as its plans for the reflection of the community and commitments for the development of Canadian talent.
Business plan and programming format

14.

The Milestone business plan is based on the use of an "Urban" musical format. The applicant presented a convincing argument to the effect that such a format will appeal to a significant population from all backgrounds, in addition to a core audience from the Black community. Milestone contended that no local radio service currently duplicates its proposal, noting at the hearing that one local station, CISS-FM plays some music similar to that contemplated by this application but that it plays exclusively hit material. Two other stations available in Toronto, CIDC-FM Orangeville and CING-FM Burlington, were considered by Milestone to be almost identical to CISS-FM.

15.

One foreign radio station, WBLK-FM Depew, New York, provides an "Urban" format similar to that planned by the applicant. That station attracts a 1% audience share in the Toronto market, and Milestone estimates that approximately $1.5 million in Toronto advertising revenue is annually lost to it. Milestone intends to repatriate a significant portion of tuning to WBLK-FM by offering more locally relevant spoken-word programming, local talent and a technically superior signal to that of WBLK-FM.

16.

The Commission considers Milestone to have a well-funded business plan predicated on repatriating audience from a foreign source, and with the potential to provide a format distinct from those currently available in Toronto.
Reflection of community

17.

At the hearing, Milestone noted that the proposed station would give the Black community "the capacity to celebrate itself in all its richness, all its dimensions: music, culture, drama, and entrepreneurship, and to be able to share that celebration, knowledge and information with the broader community."

18.

The new station will reflect the community through the use of a significant amount of spoken word and open-line programming. Milestone stated that the spoken word content would be of particular interest to the Black community, but often with broad general appeal to the whole community as well. Open line programs will at times deal with topics of particular interest to the Black community, as well as address topics of general interest.

19.

The applicant specified that it would become a member of the Canadian Association of Broadcasters (CAB) and the Canadian Broadcast Standards Council (CBSC), and would abide by the Commission's 1998 policy on open-line programming. It also stated that it had developed guidelines that all staff involved in open-line programming will be required to follow. Milestone also stated that it would establish an Advisory Board. The board's role will be to provide advice and feedback on programming and policies, to provide a communications link between the station and the community, and to increase public awareness about the programming goals of the station.
Canadian talent development

20.

Milestone stated that its approach to Canadian talent development (CTD) was "to find the talent, produce the product and promote the product."

21.

At the hearing, the applicant confirmed that it would participate in the CTD plan created by the CAB, which prescribes a yearly contribution of $27,000 for stations in major markets such as Toronto. Adherence to that commitment shall be by condition of licence, as set out in the licence to be issued.

22.

In addition to this amount prescribed by the CAB plan, the Commission notes Milestone's commitment to contribute an additional $200 annually to that funding plan. It is therefore a condition of licence that, in addition to the $27,000 annual contribution to the CAB plan for funding of Canadian talent development, the licensee contribute not less than $200 annually to the CAB plan.

23.

Over and above contributions to the CAB plan, Milestone made a commitment to contribute $272,800 per year in direct funding for Canadian talent development. The applicant's plans for this expenditure include live broadcasts of jazz and other concerts, annual "Summer Rhythms & World Beat" concerts, annual "R&B/Gospel-Pop" concerts, as well as annual scholarships and grants. The plans also include a program to be called the Triple Urban-Mix Series. The Triple-Mix will involve a yearly talent search, broadcast of the finalists, carriage of information about the Triple-Mix on a permanent website, the production and broadcast of a compilation CD, and the production of three videos for the Triple-Mix winner. This expenditure will also include costs related to the development and maintenance of a permanent website, to be separate from the website of the new station.

24.

In addition to these initiatives, Milestone proposed to include in the annual $272,800 in direct costs, the salary for a co-ordinator position. The co-ordinator would implement all of the CTD initiatives noted above as well as develop and maintain the permanent website noted above. The Commission has approved salaries for such co-ordinators in the past as valid contributions to CTD, in cases where the salary forms a relatively small portion of the overall CTD commitment, and where the initiatives proposed would require significant time devoted to ongoing preparation or involvement by the co-ordinator in order to ensure that the initiatives are realized. The Commission is satisfied that, in this case, the duties of the co-ordinator would be significant and warrant the inclusion of the $48,500 yearly salary as part of the overall CTD budget.

25.

In addition to the annual contributions to the CAB funding plan noted above, it is a condition of licence that Milestone make annual minimum direct contributions as described above, of $272,800.

26.

The Commission reminds the licensee that all funds expended must meet the Commission's criteria for generally accepted, direct Canadian talent development, as set out in Public Notice CRTC 1990-111.
Other matters

27.

This authority will only be effective and the Commission will only issue the licence at such time as it receives documentation establishing that an eligible Canadian corporation has been incorporated in accordance with the application in all material respects and that this corporation may be issued a licence.

28.

In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled Implementation of an Employment Equity Policy, the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. In this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

29.

The Commission notes that, as discussed at the hearing, Milestone will devote $152,100 over seven years, for a training and apprenticeship program as part of its commitment to employment equity. At the hearing, the applicant specified that this would offer visible minority students an opportunity for hands-on experience in the broadcasting industry. The Commission notes that the applicant anticipates a training budget of $11,700 in the first year of operation, increasing in the second year to $23,400 annually for the balance of the licence term.
Technical matters

30.

The licence will only be issued and effective when the new station is ready to begin operation. When the licensee has completed construction and is prepared to commence operation, it must advise the Commission in writing. If the station is not constructed and ready to operate within 12 months of today’s date, extensions to this time frame may be granted provided that the licensee applies in writing to the Commission before the 12-month period or any extension of that period expires.

31.

As proposed, the new FM station will operate on the frequency 93.5 MHz, channel 228A, with an effective radiated power of 298 watts.

32.

The Department of Industry has advised the Commission that this application is conditionally technically acceptable. The Department will only issue a broadcasting certificate once it has determined that the proposed technical parameters will not create any unacceptable interference with aeronautical NAV/COM services.

33.

In accordance with section 22(1) of the Broadcasting Act, the Commission will only issue the licence and grant the authority to operate when it receives notification from the Department of Industry that its technical requirements have been met, and that a broadcasting certificate will be issued.
Interventions

34.

The Commission acknowledges and has considered all of the interventions submitted with respect to this application, including the four in opposition to it from competing applicants. It also notes the numerous expressions of support submitted, including thousands of letters and petition signatures.
Related CRTC documents
• Public Notice 1999-137 – New licence form for commercial radio stations
• Public Notice 1999-119 – Call for applications for a broadcasting licence to carry on a radio programming undertaking to serve Toronto, Ontario
• Public Notice 1990-111 – An FM policy for the nineties
• Public Notice 1998-85 – Order in Council P.C. 1998-800 concerning the reservation of radio frequencies in the Toronto Market.
Secretary General
This decision is to be appended to the licence.  It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca
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