ARCHIVED - Broadcasting Decision CRTC 2013-431

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Route reference: 2013-111

Ottawa, 23 August 2013

Rawlco Radio Ltd.
Calgary, Alberta

Application 2012-1503-8, received 29 November 2012

CHUP-FM Calgary – Licence renewal and amendment

The Commission renews the broadcasting licence for the English-language commercial radio station CHUP-FM Calgary from 1 September 2013 to 31 August 2020.

The Commission approves the applicant’s request that CHUP-FM no longer operate within the specialty format.  

The application

1. Rawlco Radio Ltd. (Rawlco) filed an application to renew the broadcasting licence for the English-language commercial radio station CHUP-FM Calgary, which expires 31 August 2013.

2. Rawlco also requested that CHUP-FM no longer operate within the specialty format. Accordingly, it proposed to delete conditions of licence 2 and 3, set out in its licensing decision^[1] as follows:

2. The station shall be operated within the Specialty format as defined in A Review of Certain Matters Concerning Radio, Public Notice CRTC 1995-60, 21 April 1995, and Revised Content Categories and Subcategories for Radio, Public Notice CRTC 2000-14, 28 January 2000, as amended from time to time.

3. The licensee shall, in any broadcast week, devote a minimum of 30% of all musical selections broadcast to musical selections drawn from subcategory 32 (Folk and folk-oriented).

3. In support of its application, Rawlco submitted that the proposed licence amendment is necessary for the viability of CHUP-FM, which has suffered significant financial losses since it launched in 2008. While Rawlco does not believe that CHUP-FM can be viable so long as it operates within the specialty format, it indicated that it would continue to do so and absorb future losses if the Commission were to deny its request. The Commission did not receive any interventions regarding this application.

Commission’s analysis and decision

4. After examining the application in light of applicable regulations and policies, the Commission considers that the issues to be addressed are the following:

• Has the applicant demonstrated an economic need to justify the proposed amendment?
• Would approval of the proposed amendment have an undue negative impact on stations in the Calgary radio market?

Economic need

5. The Commission notes that despite efforts to improve its financial situation, CHUP-FM has not shown any signs of improvement in its financial performance since its launch. Notably, the station has incurred over $11 million in financial losses to date. Rawlco indicated that it expects this number to reach $12.5 million by the end of the station’s licence term in 2013. Rawlco projected that the financial performance of the station would improve should it be relieved of the conditions of licence applicable to its specialty format as it would allow CHUP-FM to broaden its appeal.

6. The Commission also notes that CHUP-FM operates as a standalone music station within a competitive market, which likely exacerbates the challenges faced by the station since it is unable to draw on synergies available to multi-station groups.

7. Given the above, the Commission agrees with Rawlco that the long-term viability of the station is likely hindered by its specialty format and that approval of the requested amendment would allow its station to compete more evenly with existing stations in the market and improve its financial performance and viability. As such, the Commission is of the view that CHUP-FM has demonstrated an economic need for its proposed amendment.

Undue negative impact on stations in the Calgary radio market

8. In regards to the potential impact of the proposed amendments, the Commission notes that while total radio revenues in the Calgary radio market declined from $102.2 million to $95.8 million between 2008 and 2012 (representing a compound annual growth rate of -1.6%), the market’s profitability nonetheless remained strong with annual profit before interest and taxes margins ranging from 20% to 26%.

9. Further, the Commission notes that the additional advertising revenue projected by CHUP-FM, should its proposed amendment be approved, would represent a relatively small share of the total advertising revenues generated in the Calgary radio market. The Commission also notes that the potential impact of this amendment would likely be spread out among a number of stations and that CHUP-FM would likely compete with the mainstream stations in Calgary, most of which are operated by profitable multi-station groups.

10. The Commission also notes that it recently approved an application by the Jim Pattison Broadcast Group Limited Partnership^[2] to operate an English-language commercial FM radio station in Calgary. This standalone station has not yet launched. It would operate in a very competitive market and would not benefit from the synergies associated with operating multiple stations in the same market. As such, approval of Rawlco’s request could exacerbate the challenges that this new station would face as it attempts to establish itself in the Calgary radio market. However, the Commission notes that it did not receive any interventions in opposition to the application.

11. Given the relatively limited incremental revenue projected, the fact that the impact would be spread across a number of stations, the strong financial performance of the existing stations and that no opposing interventions were received, the Commission is of the view that approval of CHUP-FM’s proposed amendment would not have an undue negative impact on stations operating in the Calgary radio market.

Conclusion

12. In light of all of the above, the Commission approves Rawlco Radio Ltd.’s request to amend the conditions of licence for the English-language commercial radio programming undertaking CHUP-FM Calgary so that it no longer be required to operate within the specialty format.

13. In addition, the Commission renews the broadcasting licence for CHUP-FM from 1 September 2013 to 31 August 2020. The terms and conditions of licence are set out in the appendix to this decision.

Other matters

14. The Commission notes that Rawlco will continue to make its yearly contributions to Canadian talent development (CTD), as set out in Broadcasting Decisions 2006-322 and 2009-54, until they have been fulfilled. Conditions of licence to this effect are set out in the appendix to this decision. As of 1 September 2015, these CTD contributions will be replaced by the Canadian content development requirements set out in section 15 of the Radio Regulations, 1986.

Secretary General

Related documents

• Licensing of new radio stations to serve Calgary, Alberta, Broadcasting Decision CRTC 2012-308, 24 May 2012
• CIGY-FM Calgary – Licence amendment, Broadcasting Decision CRTC 2009-54, 6 February 2009
• Folk/Acoustic Specialty FM radio station in Calgary, Broadcasting Decision CRTC 2006-322, 2 August 2006

*This decision is to be appended to the licence.

Footnotes