ARCHIVED - Decision CRTC 2001-312

Decision CRTC 2001-312

Ottawa, 5 June 2001

FOCUS Entertainment Group Inc.
Vancouver, British Columbia
2000-1513-2

20 November 2000 Public Hearing
in Burnaby

New urban music FM station in Vancouver

The Commission, by majority vote, approves the application by FOCUS Entertainment Group Inc. (Focus) for a broadcasting licence for an English-language commercial FM radio programming undertaking at Vancouver. The new station will operate on the frequency 94.5 MHz and offer a format based on Urban music, similar to radio stations recently licensed in Calgary and Toronto. The licence will be subject to the terms and conditions described in the appendix to this decision as well as those in the licence to be issued. The Commission's overall approach to this and other competitive applications considered at the Burnaby hearing is discussed in this decision and in the accompanying Public Notice CRTC 2001-63 issued today.

The new station

1. 9;

The new station, to be known as "The Beat," will offer an Urban music format aimed at a wide spectrum of Vancouver residents ranging in age from 18 to 54. Its Urban format will be broadly based, including a range of music appropriate to the station's overall sound.

2. 9;

The station's music will be complemented by spoken word designed to give a voice and presence to Vancouver's diverse cultural communities. Some of the station's specific spoken word initiatives are discussed later in the decision.

Ownership

3. 9;

At the time the application was considered, there were three individual shareholders in Focus - Andrew Henni, John Rota and Tony Rota Jr. The applicant indicated that, once the station was licensed, the company's shareholders would be joined by Cowan Properties Ltd. (Cowan). Cowan will hold a 30% interest, while the three individuals will hold equal proportions of the remaining 70%. As stated in the appendix to this decision, a licence will be not issued unless Focus files, within 90 days of today's date, an executed shareholder's agreement for the Commission's approval.

Assessing the applications

4. 9;

The Commission assesses applications for new radio stations in light of the objectives set out in the Broadcasting Act, (the Act), the public interest and the various policies that it has established.

5. 9;

In recent decisions involving competing commercial radio applications, the Commission has noted that there are four main factors generally relevant to its evaluation of such applications. While their relative importance can vary according to the specific circumstances of the market, these factors are: the likely impact of a new entrant or entrants; the competitive state of a market; their implications with respect to the diversity of editorial voices in the market; and the quality of the applications.

Impact of a new entrant

6. 9;

The Commission generally seeks to assure itself that the competitive impact of a new entrant to a radio market will not impinge unduly on the ability of incumbent stations to meet their programming responsibilities under the Act. Otherwise, the Commission's predisposition lies clearly in favour of increased competition and diversity, and the improvements in the overall quality of available services that these promote.

7. 9;

The Vancouver radio market is performing well, with an overall profit before interest and taxes of 21.9% in 2000. Further projections related to future increases in advertising revenues indicated that the market could absorb an additional commercial station without undue impact on existing stations. The Commission is therefore convinced that the Vancouver radio market can support the station licensed in this decision.

Competitive state of the market

8. 9;

As with the first factor discussed above, the Commission is satisfied that its approval of this application has no negative implications with respect to the competitive state of the Vancouver radio market.

9. 9;

The competitive state of a market, as a factor in the Commission's consideration of applications proposing new commercial radio stations, is generally most relevant where the applicant is the licensee of an existing station in that market. In such cases, the Commission's concern is that its licensing actions not create an undue competitive imbalance in the market.

10. 9;

The Commission notes that Focus will be a new player both in the Vancouver market and in the Canadian radio industry. As such, it will serve to increase the level of competition in the market.

Diversity of editorial voices

11. 9;

The Commission notes that Focus, as a new player, will provide a new editorial voice in Vancouver.

Quality of the application

12. 9;

The Commission generally considers four main criteria when assessing the quality of a new radio application. These are: the applicant's local programming proposals and plans for providing reflection of the local community; its Canadian content commitments; the quality of its business plan (including the proposed format); and commitments in support of the development of Canadian talent.

13. 9;

The Commission is satisfied that Focus has presented a high-quality application in light of these criteria and that it has, overall, presented the best application for a new commercial station in Vancouver.

Reflection of the community

14. 9;

The Commission was particularly impressed by Focus' well-developed plan to showcase Vancouver's diversity within the context of a music station that would have wide appeal. In order to implement this plan, Focus will hire a community action director to reach out and embrace Vancouver's rapidly evolving multicultural reality and give it a face, a voice and an ongoing presence on mainstream radio.

15. 9;

Focus will also establish an extensive network of community correspondents who will report on the activities and concerns of different groups. Among the key communities that the licensee stated would be covered by correspondents are the Caribbean, Southeast Asian, Chinese, First Nations, Latin and student communities.

16. 9;

In addition, the licensee plans to broadcast a weekly open-line program addressing issues of concern to the community, as well as a daily 20-minute calendar of events for the Urban community. Other programs with a significant spoken word component will also be offered.

Level of Canadian content

17. 9;

Focus will ensure that at least 35% of all popular (category 2) musical selections aired during each broadcast week are Canadian. This conforms to the requirements set out in the Radio Regulations, 1986. Although not as high as the level proposed by one of the other commercial applicants, the Commission considers that this commitment is acceptable in light of the format that has been proposed. It notes that the applicant's Urban format will be broadly based, including a mix of Modern Rhythm and Blues, Rap, Reggae, Soul and Funk, Bhangra, Techno, Hip-hop, Dance and Motown music.

Business plan and programming format

18. 9;

The Commission considers that the format proposed by the licensee will be attractive to listeners, and that adequate financing is available to implement the station and sustain it through the initial periods of operation.

19. 9;

The applicant's business plan is predicated on offering an Urban format. Although the applicant considered that the station's core musical styles have a strong appeal to those aged 18-34, it was also of the view that the station would attract a significant number of listeners up to 54 years of age. Focus considered that those tuning in for particular types of Urban music, such as Motown, would find the total variety of music played by the station to be engaging and would continue to listen. At the hearing, Cowan Properties Limited, the Vancouver company that will become the fourth shareholder in Focus, emphasized its commitment to the project and confirmed that it would provide additional resources if necessary.

Canadian talent development

20. 9;

Focus will spend a total of $2,849,704 on direct contributions to Canadian talent development (CTD) over seven years. CTD expenditures will total $350,000 in the first year and increase by 5% per annum up to and including Year 7. Conditions of licence regarding the specific amounts to be spent on CTD are set out in the appendix to this decision.

21. 9;

The total CTD expenditures proposed by Focus were the higher of the two applicants proposing an Urban format. Three of the ten applicants proposing commercial FM stations offered greater financial commitments to CTD. The Commission is, however, satisfied that the expenditures proposed by Focus are reasonable, particularly taking into account the fact that Focus is a new player in the broadcasting system and that it will operate a single station in the very competitive Vancouver market.

22. 9;

The licensee's CTD program includes a number of components. First, the licensee will participate in the CTD plan created by the Canadian Association of Broadcasters (CAB). The licensee, however, has made a commitment to exceed the spending levels required under the CAB's guidelines. Specifically, Focus will instead devote $30,000 to this initiative in Year 1, with 5% annual increases in each of the next six years for a total 7-year expenditure of $244,260. All money expended under this initiative will be paid to FACTOR with a request that the funds be directed to projects involving Urban artists in the Vancouver area.

23. 9;

In addition, Focus will establish an Annual Scholarship Program for students of broadcast journalism and of music. The licensee will spend $10,000 on this program in Year 1, and a total $81,420 over seven years.

24. 9;

Further, the licensee will implement The Beat Star Maker Program to develop, record, expose and promote budding Urban artists. Focus will spend $145,000 on this initiative in Year 1, and a total of $1,180,592 over seven years.

25. 9;

Each fall, the licensee will sponsor a skill development clinic for local Urban artists. The clinic, which will run every day for four weeks, will be called The Beat Boot Camp. Focus plans to rent a large venue, hire professional instructors, rent the necessary equipment, and advertise and promote the event. All local Urban talent will be invited to attend. The applicant will spend $15,000 on this initiative in the first year, and a total of $122,130 over seven years.

26. 9;

Focus will also showcase Urban music artists in an outdoor setting during an annual one-day festival to be known as Rhythmic Roots with BBQ. The licensee will pay talent fees to various performing artists from different cultural communities for performing at this event. $40,000 will be spent on this initiative in Year 1, and a total of $325,680 will be spent over seven years.

27. 9;

As well, the licensee will sponsor an annual event entitled the Urban Music Awards. This event will expose and promote Canadian music artists in a high profile manner. Award winners will be recognized at a gala event where they will receive an award statue. The applicant has budgeted $65,000 for this initiative Year 1, and a total of $529,231 over seven years.

28. 9;

Focus indicated that, as part of the Urban Music Awards initiative, it with hold a contest for the design of an award statue. The winning designer will receive $2,000. The licensee has also allocated a minimum of $8,000 per year for the production of statues to be presented at each year's award ceremony.

29. 9;

The Commission accepts the $2,000 to be awarded to the winning designer as a direct contribution to CTD. However, given that the licensee confirmed at the hearing that this would be a one-time cost, the licensee must redirect this $2,000 to another eligible CTD initiative beginning in the second year. The Commission further considers that the licensee has not demonstrated that the $8,000 per year associated with the production of the award statues should qualify as a direct contribution to CTD. Focus must, therefore, redirect this annual expenditure of $8,000 to an eligible CTD initiative. The Commission requires the licensee to submit, within six months of the date of this decision, its plans for redirecting the $10,000 discussed in this paragraph to eligible CTD initiatives.

30. 9;

Finally, the licensee will hire a CTD coordinator to develop, coordinate and bring to fruition each of the elements in the station's CTD plan. The Commission has approved salaries for such coordinators 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 coordinator in order to ensure that the initiatives are realized. The Commission is satisfied that, in this case, the duties of the coordinator would be significant and warrant the inclusion of the proposed salary as part of the overall CTD budget.

31. 9;

The Commission reminds the licensee that in order to qualify as direct contributions to CTD, the fees associated with the marketing, advertising and promotion of Rhythmic Roots with BBQ, the Urban Music Awards and The Beat Star Maker Program must be paid to a third party. The Commission also notes that the licensee has allocated $1,000 for miscellaneous expenses related to the Rhythmic Roots with BBQ and Urban Music Awards initiatives. It reminds the licensee that it must ensure that all initiatives will in fact qualify as direct contributions to CTD as specified in Appendix 1 of Public Notice CRTC 1990-111, An FM Policy for the Nineties. Further, if in any given year no miscellaneous expenses have been incurred for these initiatives, the licensee must redirect these sums to eligible direct CTD initiatives. The Commission notes, in this regard, the licensee's statement at the hearing that, should any of its projects not qualify as direct contributions to CTD, it would still implement them in addition to redirecting the funds to eligible CTD initiatives.

Interventions

32. 9;

The Commission wishes to thank all those who participated in the public process leading to this decision, either through their written intervention or through their presentations at the public hearing.

Related CRTC documents

•  Public Notice 2001-63 - Introductory statement to Decisions CRTC 2001-312 to CRTC 2001-320: Radio applications considered at the 20 November 2000 public hearing in Burnaby, B.C.

•  Public Notice 1999-137 - New licence form for commercial radio stations

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 

Appendix to Decision CRTC 2001-312

Terms and conditions of licence pertaining to the licence to be issued to FOCUS Entertainment Group Inc. for a new FM station to serve Vancouver

The Commission will only issue the licence, and it will only be effective at such time as:

• the licensee confirms in writing that it is ready to begin operation. This must take place within 12 months of today's date. Any request for an extension to that deadline requires Commission approval and must be made in writing within that period.

• the licensee has submitted and the Commission has approved an executed Shareholder's Agreement. The licensee must submit this agreement within 90 days of the date of this decision.

The licence, when issued, will expire 31 August 2007.

The station will broadcast on the FM band, on the frequency 94.5 MHz, channel 233C, with an effective radiated power of 46,000 watts.

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 (Public Notice 1992-59).

Conditions of licence

The licence will be subject to the conditions specified in the licence to be issued, as also set out in Public Notice CRTC 1999-137. The licence will also be subject to the following conditions:

1. The licensee shall participate in the Canadian Association of Broadcaster's (CAB) program for Canadian talent development by making annual payments to third parties involved in Canadian Talent Development. However, rather than making payments at the minimum level for the Vancouver market set out in the CAB's Distribution Guidelines for Canadian Talent Development, the licensee shall make payments totalling $30,000 during the first year of the licence term. Such payments shall increase by 5% every year so that total payments of $244,260 are made over seven years. The entire amount required under this condition of licence must be paid to FACTOR. The licensee shall report these payments concurrently with its annual return.

2. In addition to its payments under the CAB program for Canadian talent development set out in condition of licence number 1, the licensee shall contribute a minimum $2,605,444 over seven years in direct funding to Canadian talent development as described in the application and in this decision. A minimum of $320,000 shall be contributed in the first year of operation, and this minimum amount shall increase by 5% per year up to and including the seventh year of operation.

Dissent by Commissioner Jean-Marc Demers

Commissioner Jean-Marc Demers dissents from this and from four other majority decisions on applications for new or amended radio licences heard at the 20 November 2000 public hearing in Burnaby. The Commissioner dissents, as well, from Public Notice CRTC 2001-63 Introductory statement to Decisions CRTC 2001-312 to 2001-320: Radio applications considered at the 20 November 2000 public hearing in Burnaby, B.C. The rationale underlying Commissioner Demer's dissent is presented at the conclusion of Public Notice 2001-63.