ARCHIVED - Decision CRTC 2001-628

Decision CRTC 2001-628

Ottawa, 4 October 2001

Newcap Inc.
Ottawa, Ontario and Hull, Quebec
2001-0287-2

22 May 2001 Public Hearing
National Capital Region

New FM dance station for Ottawa/Hull

At a public hearing in the National Capital Region, the Commission considered eleven applications for FM stations to serve the Ottawa/Hull area. In this and other decisions published today, the Commission has approved a total of four applications for new FM stations: one English-language dance music station, one that will have an Aboriginal focus, a multicultural station, and an application for a French-language classical music service. The Commission's overall approach to the competitive applications for new radio stations to serve Ottawa/Hull is discussed in Public Notice CRTC 2001-105 issued today.

The Commission approves the application by Newcap Inc. (Newcap) for a broadcasting licence for an English-language FM radio programming undertaking at Ottawa/Hull. As proposed, the new FM station will operate on the frequency 89.9 MHz (channel 210C1) with an effective radiated power of 27,000 watts. The licence, when issued to Newcap, will be subject to the terms and conditions set out in the appendix to this decision, as well as those in the licence to be issued.

Newcap is the licensee of a number of radio stations serving communities in Newfoundland, Prince Edward Island, Nova Scotia, Ontario and Alberta. Newcap's parent company, Newfoundland Capital Corporation, which is controlled by Harry R. Steele, owns a number of weekly community newspapers in Newfoundland.

The new station

The new station, to be known as "The Planet", will offer a Dance music format aimed at an audience in the 18-44 age range, with a particularly strong interest from those aged 25-34. The applicant stated that the musical focus of the new station will be "very cutting edge, very new music", and described the Dance music to be played as "a diverse blend of European pop, urban, world beat rhythms and Latin music."

Also according to the applicant, the station's music will be accompanied by spoken word programming that will appeal to a diverse, multicultural, professional and educated audience that is very aware of and interested in the world around it.

Assessing the applications

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

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

Impact of a new entrant

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 existing 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.

The Ottawa/Hull radio market is performing well, with its stations having achieved higher than average profits before interest and taxes (PBIT) since 1998. In 2000, the average Ottawa/Hull PBIT was 20%. Projections are that future increases in advertising revenues should enable the market to absorb an additional English-language commercial station without undue impact on existing stations. The Commission is therefore convinced that the Ottawa/Hull market can support the new station licensed in this decision.

Competitive state of the market

The Commission is satisfied that its approval of Newcap's application has no negative implication with respect to the competitive state of the Ottawa/Hull English-language radio market.

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.

The Commission notes that since Newcap will be a new player in Ottawa/Hull, the establishment of its new station will serve to enhance the level of competition in the market.

Diversity of editorial voices

The Commission notes that Newcap, as a new entrant to the Ottawa/Hull market, will provide an additional editorial voice in the community.

Quality of the application

The Commission generally considers four main criteria when assessing the quality of an application for a new radio station. 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 its commitments in support of the development of Canadian talent.

The Commission is satisfied that the applicant has presented a high-quality application, as measured against these criteria, and that, overall, it has put forward the best application for a new, English-language commercial station in Ottawa/Hull.

Community reflection

The new station's spoken word programming will be entirely locally-originated, and will focus on the Ottawa/Hull community. According to the applicant, a minimum of 50% of all news stories presented on the new station will be devoted to local news.

As noted earlier, the applicant stated that the audience for the new station is expected to be ethnically and racially diverse and well educated, and Newcap plans to relate its news coverage "not only to Ottawa but also to listeners within individual communities by gender, race, ethnicity or sexual preference." At the hearing, the applicant explained that, in order to accomplish this, it intends to have reporters from different ethnic and racial minority communities, in order that relevant domestic and international news stories may be focused on and communicated more effectively to local communities.

Level of Canadian content

As part of its application, Newcap indicated that it will ensure that at least 40% of all popular music aired during the broadcast week and between 6:00 a.m. and 6:00 p.m. Monday to Friday is Canadian. This commitment exceeds the minimum of 35% of all popular music required of all commercial radio stations under the Radio Regulations, 1986. Newcap's commitment is set out as a condition of licence in the appendix to this decision.

In addition, the Commission notes Newcap's commitment that at least 50% of all Canadian content musical selections, or 20% of all musical selections broadcast, would be new music, released within the preceding 12 months.

Business plan and programming format

The Commission considers that the Dance music format proposed by the applicant is growing in popularity and reflective of the changing racial and ethnic composition of the region. The Commission is convinced this format will be attractive to listeners, will add to the diversity of programming available in the market, and is satisfied that the applicant has adequate financial resources to implement the new station.

Development of Canadian talent

As part of its application, Newcap made a commitment to participate in the Canadian talent development (CTD) funding plan created by the Canadian Association of Broadcasters (CAB), which prescribes a yearly contribution of $8,000 for stations in markets such as Ottawa. Adherence to that commitment shall be by condition of licence, as set out in the licence to be issued.

In addition to the amount prescribed by the CAB plan, the Commission notes Newcap's commitment to contribute a further $742,000 annually in direct contributions to CTD, amounting to a total of almost $5.2 million over the licence term. Of that amount, Newcap proposed to devote over $2.6 million to the development of the Aboriginal Voices Radio Network (AVRN), whose flagship Toronto FM radio station was approved in Decision CRTC 2000-204. Included in this development support for AVRN was a commitment to direct $588,000 over the licence term to AVRN for the establishment of a news bureau in Ottawa. If, for any reason, the news bureau was not implemented, Newcap stated that the amount for the news bureau would be redirected to FACTOR.

Consistent with its treatment in similar cases, the Commission has assessed the AVRN initiatives and has concluded that they do not directly develop Canadian talent, in that the funds will be dedicated to the support of a radio network. Nonetheless, this initiative would contribute to the fulfilment of paragraph 3(1)(o) of the Act, and as such the Commission considers that it is beneficial to the broadcasting system as a whole.

As part of the $5.2 million contribution to CTD over the licence term, Newcap proposed to devote at least $367,000 per year to FACTOR, to be used solely for the production or marketing of new dance music by Canadian artists and musicians from Ottawa. The various commitments are set out as conditions of licence in the appendix to this decision.

Newcap stated that, if Ottawa-based talent does not use all of the funds designated for this purpose in any given year, the unused funds will be rolled over into the next year's fund, to be used for the production or marketing of new dance music by Canadian artists and musicians, regardless of where in Canada they are based.

Interventions

A number of interventions in opposition to this application were submitted by various organizations in the francophone community in the Ottawa area. These interveners expressed concerns related to the impact that licensing this and other applications might have on the future development of French-language radio services to serve Ottawa-Hull. This matter is discussed in detail in Public Notice 2001-105, also published today.

An intervention was also submitted to this application by Global Television, expressing concern related to potential interference to its transmitter in Ottawa. In response, Newcap stated its belief that its proposal should not create any technical problems for the Global signal in Ottawa/Hull because it was engineered with a safety margin sufficient to protect the Global signal. Moreover, Industry Canada has found Newcap's technical proposal to be acceptable from its consideration of the spectrum assignment rules.

Christian Hit Radio Inc. (CHRI), also submitted an intervention in opposition, stating that it wished to submit an application for the use of the same frequency requested by Newcap. In response, Newcap noted that CHRI had had sufficient time to submit a competing application and failed to do so. The Commission concurs with this view.

Standard Radio (a competing applicant), submitted an intervention to the Newcap application, seeking clarification of statements related to employment equity contained in Newcap's written application. The Commission notes the applicant's response.

The Commission also acknowledges and has considered all other interventions submitted in support of this application.

Related CRTC documents

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 2001-628

Terms and conditions of licence pertaining to the licence to be issued to Newcap Inc. for a new FM station to serve Ottawa/Hull

Terms

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.

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.

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.

The licence, when issued, will expire 31 August 2008.

The Commission notes that Newcap Inc. is subject to the Employment Equity Act and therefore files reports concerning employment equity with Human Resources Development Canada.

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: