ARCHIVED - Broadcasting Decision CRTC 2002-191

Broadcasting Decision CRTC 2002-191

Ottawa, 16 July 2002

Cogeco Radio-Télévision inc.
Québec, Quebec

3924301 Canada inc., doing business under the name and style of Communications Lévis 2001
Lévis, Quebec

Métromédia CMR Montréal inc.
Québec, Quebec

9098-7280 Québec inc.
Québec, Quebec

Applications 2001-1022-1, 2001-1024-7, 2001-1023-9, 2001-0282-2
Public Hearing at Québec, Quebec.
18 February 2002

New FM radio station in Québec

The Commission approves, by majority vote, the application by Cogeco Radio-Télévision inc. (Cogeco) for a licence to operate a French-language FM radio station in Québec. The competing applications filed by 3924301 Canada inc., doing business under the name and style of Communications Lévis 2001 (Communications Lévis), by Métromédia CMR Montréal inc. (Métromédia), and by 9098-7280 Québec inc., a wholly-owned subsidiary of Radio Nord Communications inc. (Radio Nord), are denied.

Introduction

1.

At the 18 February 2002 public hearing, the Commission considered four competing applications to carry on a new radio station to serve the Québec region. The applications were filed in response to Call for applications for a broadcasting licence to carry on a radio programming undertaking to serve Québec, Quebec, Public Notice CRTC 2001-78, 11 July 2001. Since all applicants proposed to use the frequency 91.9 MHz (channel 220B), the four applications were mutually exclusive on a technical basis. According to the allotment plan of the Department of Industry, 91.9 MHz is the only unused FM frequency available for Québec. Under the circumstances, the Commission could approve only one of the four applications.

2.

Another application filed by Genex Communications inc. (Genex) was competitive the four applications for the Québec market mentioned above. Genex proposed to amend the licence of CKNU-FM Donnacona to expand its contour to include Québec while continuing to operate on its current frequency of 100.9 MHz. Given the particular circumstances surrounding the Genex application, the Commission elected to deal with it in a separate decision. In Amendments of the licence for CKNU-FM, Broadcasting Decision CRTC 2002-190, 16 July 2002, the Commission has today denied the Genex application for the reasons set out in that decision.

3.

This decision provides an overview of the applications filed by the four applicants. It also outlines the principal criteria used to assess these applications and discusses the Cogeco application in greater detail, including the commitments made by the licensee of the new station and the commitments that it will be required to respect by condition of licence.

Overview of applications

Communications Lévis

4.

Communications Lévis proposed to operate a commercial FM radio station serving Lévis and the area to the south of Québec, including the regional county municipalities (RCMs) of Desjardins and Chûtes-de-la-Chaudière. The applicant proposed a musical format consisting essentially of current hits and oldies, which would appeal mainly to the 24-45 age group.

5.

The applicant proposed to broadcast 126 hours a week of local programming, including 32 hours of pre-recorded programming during the evening. It proposed to provide approximately 2 hours 50 minutes a week of local news and to cover events on the south shore on a priority basis, with events in Québec receiving second priority. The applicant committed to contribute $18,000 a year to the development of Canadian talent, including $11,000 to MusicAction.

Métromédia

6.

Métromédia proposed to operate a commercial FM radio station to serve the Québec region. The applicant proposed a pop rock musical format mainly targeting women in the 18-44 age group.

7.

The applicant proposed 87 hours a week of local programming, with the remainder of the programming originating from its station CKOI-FM Montréal. It proposed 2 hours 6 minutes a week of local news, and committed to contribute $108,000 a year to Canadian talent development, including $8,000 to MusicAction.

Radio Nord

8.

Radio Nord proposed to operate a commercial FM radio station to serve the Québec region. The applicant proposed a popular classical musical format mainly targeting the 25-54 age group.

9.

The applicant proposed 42 hours a week of local programming. It proposed 2 hours 26 minutes a week of local news, and committed to contribute $70,000 a year to Canadian talent development, including $20,000 to MusicAction.

Cogeco

10.

Cogeco proposed to operate a commercial FM radio station to serve the Québec region. The applicant proposed an adult contemporary musical format targeting the 25-54 age group, particularly women between the ages of 35 and 54.

11.

The applicant proposed 77.5 hours a week of local programming. It proposed 2 hours 30 minutes a week of local news, and committed to contribute $150,000 a year to Canadian talent development, including $50,000 to MusicAction and $50,000 to the Fonds RadioStar.

Interventions

Numerous interventions were filed with respect to the four competing applications, most supporting one of the proposals. The intervention by the Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ) indicated that it did not wish to endorse or oppose any of the applications; instead, it submitted comments on each one.

Commission's analysis and conclusions

The Commission has examined the four applications in terms of their furtherance of the cultural, economic and social objectives set out in the Broadcasting Act (the Act), given the expectations and particular requirements of the Québec market. It has also assessed them against the objectives set out in the Commercial Radio Policy 1998, Public Notice CRTC 1998-41, 30 April 1998 (the Commercial Radio Policy).

In past 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, including optimal utilization of the frequency applied for.

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 Québec market is a fairly dynamic market, in economic terms. The gross domestic product (GDP) of the market rose 3.6% in 2000, and growth is expected to be 3.7% in 2001. The average annual growth of the Québec market GDP over the last 5 years was 2.5%. Conference Board of Canada forecasts for the next five years indicate that the Québec market GDP will grow an average of 2.8% a year and retail sales will increase 3.6% a year.

The Commission also notes that the Québec radio market is more profitable than both the provincial and national averages. The margin of profit before interest and taxes (PBIT) for the radio industry in Québec was 19.92% in 2001 compared with 13.87% for all of Quebec and 16.13% for Canada as a whole. As a result, the Commission is satisfied that the Québec radio market can support the station to be licensed pursuant to this decision.

Competitive state of the market

The Québec market is currently served by 13 local radio stations, six of which are commercial stations. Cogeco already operates one of these commercial radio stations, CJMF-FM, as well as television station CFAP-TV, an affiliate of the TQS network.

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. The Commission's concern is not only that its licensing actions not create an undue competitive imbalance in the market but also, in such cases, that competition is promoted as much as is possible.

In assessing the competitive state of the Québec market, the Commission has considered, among other things, the eventual consequences of Transfer of Control of 3903206 Canada Inc., of Telemedia Radio Atlantic Inc. and of 50% of Radiomedia Inc. to Astral Radio Inc., Decision CRTC 2002-90, 19 April 2002 (Decision 2002-90). One effect of this decision would be to allow Astral Radio Inc. (Astral) to gain control of two commercial radio stations in Québec, CITF-FM and CHRC. Astral already holds the licence for CHIK-FM, another commercial radio station in Québec. As noted in Decision 2002-90, approval of the above transaction would give Astral a greater than 50% share of total revenues and total listenership in Québec.

Following its examination of the four competing applications, the Commission finds that, in the particular case of Québec and given consequences of Decision 2002-90, it is important to license a competitor with substantial resources who is already firmly established in the market in order to promote competition in the Québec market. The Commission is of the view that Cogeco is the competitor that best meets these criteria.

Diversity of editorial voices

Cogeco stated at the hearing that the new station would use the same newsroom as CJMF-FM and the same news director would serve both stations. It pointed out, however, that the stations would have totally separate journalistic staffs and that news would be treated differently by each station. Notwithstanding the fact that Cogeco is already active in the Québec market, the Commission considers that the new station will increase the diversity of voices present in the Québec region, although to a limited extent.

Quality of the application

The Commission considers that 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 optimal utilization of the proposed frequency); and its commitments in support of the development of Canadian talent.

The Commission considers that Cogeco has filed a high-quality application in terms of these criteria and that, on the whole, its application to carry on a new commercial radio station in Québec is the best proposal under the circumstances. The Commission therefore, by majority vote, approves the Cogeco application and denies the three competing applications. In the following sections, the proposals put forward by Cogeco are considered in the light of the four criteria mentioned earlier.

Reflection of the community

Cogeco stated that the new station's programming would have a character and tone that would be clearly local and would faithfully reflect the realities and concerns of the residents of Québec. Although the new stations would broadcast some network programming, local programming would account for about two-thirds of the broadcast week and all drive-time programming between 6 a.m. and 7 p.m. would be produced in Québec with program hosts from Québec. The focus on local matters would also be evident in weekend programming.

Cogeco committed to ensure that 70% of the new station's newscasts would be composed of local and regional news. It added that the station's local news would provide coverage of Québec, as well as the larger region including the areas of Charlevoix, Baie Saint-Paul and Portneuf. Cogeco also pointed out that it considered the Lévis area to be part of Québec market. Station staff would include the equivalent of 3.5 journalists.

Although Cogeco did not propose to air open-line programs as such, it indicated that some network broadcasts with its station CFGL-FM Laval could, on an occasional basis, allow listeners in Québec to call in and voice their opinion. Cogeco stated that it is aware of the content of the Policy regarding open-line programming, Public Notice CRTC 1988-213, 23 December 1988, and made a commitment to follow the same rules for programs on its new station when listeners are on the air live.

Level of Canadian content

Cogeco indicated in its application that it would ensure that at least 45% of the popular music selections aired during the broadcast week are Canadian. This commitment exceeds the minimum level of 35% for popular music prescribed by the Radio Regulations, 1986 for commercial radio stations. It is a condition of licence that the new station broadcast on a weekly basis at least a 45% level of Canadian content for popular music selections (Category 2).

Business plan and programming format

The Cogeco business plan is based on the adult contemporary music format that it is successfully employed at station CFGL-FM Laval. Programming will be composed mainly of hits from the 1970s to the present. By its essentially music-driven content, the new station will set itself apart from Cogeco's other station in Québec, CJMF-FM, whose programming consists of 75% spoken word from 6 a.m. to 6 p.m. on weekdays.

Cogeco projects that it will start making a profit sooner and achieve a higher profit margin owing to the synergies realized by sharing the existing infrastructure of CJMF-FM. The new station will operate out of the same building as the existing radio station and will share such services as administration, technical services, promotion and the newsroom. Cogeco expects that this will generate synergies valued at over half a million dollars a year.

Cogeco proposed to operate the new station on the frequency 91.9 MHz, channel 220B, with an effective radiated power of 4,500 watts. The Commission finds that the technical parameters proposed by Cogeco represent optimal utilization of the last available FM frequency in Québec.

Development of Canadian talent

Cogeco intends to invest over one million dollars over seven years in direct contributions to Canadian talent development (CTD). It committed to take part in the CTD plan developed by the Canadian Association of Broadcasters (CAB). Further, Cogeco made a commitment to exceed the CTD expenditure level set out in CAB guidelines. It is a condition of licence that Cogeco honour its CTD commitments which are as follows:

§ to participate in the CAB's CTD plan and expend $50,000 a year, for a total of $350,000 over seven years, on this initiative. All monies intended for this initiative must be remitted to MusicAction.

§ To contribute $50,000 a year to Fonds RadioStar, for a total of $350,000 over seven years.

§ To contribute $45,000 a year, for a total of $315,000 over seven years, to the project La relève d'artistes en chanson, part of the Québec summer festival.

Cogeco also committed to expend $5,000 a year on grants to students from two radio educational institutions. It also committed to offer annual internships to students from the same two institutions to allow them to gain experience in radio in Québec.

With regard to the Québec summer festival project, Cogeco indicated at the public hearing that it had not yet finalized an agreement with festival officials. It committed to submit to the Commission an itemized statement of expenditures related to this project. The itemized statement of expenditures must be submitted to the Commission within 90 days of the date of this decision.

Cogeco further committed to re-allocate the $45,000 a year to an eligible initiative if an agreement cannot be finalized with officials of the Québec summer festival. If any expenditures associated with that project are considered ineligible as CTD direct expenditures, the licensee must re-allocate those monies to eligible initiatives.

Issuance of the licence

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

The Commission reminds the licensee that, pursuant to section 22(1) of the Act, the licence for this undertaking will only be issued when the Department notifies the Commission that its technical requirements have been met, and that a broadcasting certificate will be issued.

The undertaking must be operational at the earliest possible date and in any event no later than 24 months of the date of this decision, unless a request for an extension of time is approved by the Commission before 16July 2004. In order to ensure that such a request is processed in a timely manner, it should be submitted in writing at least 60 days before this date.

The licence will be subject to the conditions set out in this decision and as well as the conditions set out in New licence form for commercial radio stations, Public Notice CRTC 1999-137, 24 August 1999. The licence will expire on 31 August 2008.

Because this licensee is subject to the Employment Equity Act and files reports with Human Resources Development Canada, its employment equity practices are not examined by the Commission.

Conclusion

The Commission considers that the new station proposed by Cogeco will add greatly to the choice of local programming available to the population of the Québec region. It will also assist in meeting the expectations and needs of listeners, especially females, who will be the primary target audience. Given the significant proposed contributions for the support of Canadian artistic endeavours and for Canadian French-language artists and singers, the Commission is convinced that the new station will make an important contribution to the fulfilment of the Broadcasting Policy for Canada set out in the Act and to the objectives of the Commercial Radio Policy.

Secretary General