ARCHIVED -  Transcript - Vancouver, BC - 1999/05/04

TRANSCRIPT OF PROCEEDINGS

FOR THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

TRANSCRIPTION DES AUDIENCES DU

CONSEIL DE LA RADIODIFFUSION

ET DES TÉLÉCOMMUNICATIONS CANADIENNES

SUBJECT / SUJET:

PUBLIC HEARING/

AUDIENCE PUBLIQUE

HELD AT: TENUE À:

Empire Landmark Empire Landmark

Rooms 520/522 Salles 520/522

Vancouver, B.C. Vancouver (C.-B.)

Le 4 mai 1999 May 4, 1999

Volume 2

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès-verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

Canadian Radio-television and

Telecommunications Commission

Conseil de la radiodiffusion et des

télécommunications canadiennes

Transcript / Transcription

Public hearing / Audience publique

BEFORE / DEVANT:

Cindy Grauer Chairperson / Présidente

Andrée Wylie Commissioner / Conseillère

Vice-Chairperson,

Broadcasting / Vice-

présidente, radiodiffusion

Andrée Noël Commissioner / Conseillère

AUSSI PRÉSENTS / ALSO PRESENT:

Karen Moore Conseillers juridiques /

Jean-Pierre Blais Legal Counsel

Michael Burnside Hearing Manager /

Gérant de l'audience

Marguerite Vogel Hearing Secretary and

Director, Vancouver Office /

Secrétaire de l'audience

et Directrice, Bureau de

Vancouver

HELD AT: TENUE À:

Empire Landmark Empire Landmark

Rooms 520/522 Salles 520/522

Vancouver, B.C. Vancouver (C.-B.)

Le 4 mai 1999 May 4, 1999

Volume 2

TABLE OF CONTENTS / TABLE DES MATIÈRES

PAGE

Presentation by / Présentation par:

Open Learning Agency 308

O.K. Radio Group Ltd. 351

Rogers Broadcasting Limited 389

Seacoast Communications Group Incorporated 457

Intervention by / Intervention par:

Canadian Broadcasting Corporation 508

CKAY-AM 519

Simon Fraser Campus Radio Society 533

Reply by / Réplique par:

Seacoast Communications Group Incorporated 542

Rogers Broadcasting Limited 546

O.K. Radio Group Ltd. 546

Vancouver, B.C. / Vancouver, C.-B.

--- Upon resuming on Tuesday, May 4, 1999 at 0905/

L'audience reprend le mardi 4 mai 1999 à 0905

1580 THE CHAIRPERSON: Good morning, ladies and gentlemen, and welcome to this public hearing.

1581 My name is Cindy Grauer and I am the CRTC Commissioner for the British Columbia/Yukon Region. I will be presiding over this hearing on CKNO TV licence renewal and licence applications for FM radio stations in British Columbia.

1582 Allow me to introduce my colleagues on this panel. They are Andrée Wylie, Vice-Chair, Broadcasting and Commissioner Andrée Noël.

1583 The staff who will be assisting us during this hearing are Hearing Manager Michael Burnside; legal counsels, Karen Moore and Jean-Pierre Blais; and the Hearing Secretary, Marguerite Vogel, Director of our Vancouver office.

1584 Please do not hesitate to call on them if you have questions regarding matters of process.

1585 As you are aware, over the past few years, the Commission has been reviewing all its major broadcasting policies. The objectives of this review include ensuring access of Canadian viewers and listeners to the widest possible choice of quality radio and television programming while maintaining Canadian content in a predominant position.

1586 As part of this review, the Commission issued a new policy framework for commercial radio a year ago in April 1998 and it will release its new policy framework for television in the near future.

1587 Today, we will examine the application filed by the Open Learning Agency to renew the licence of its educational television station, CKNO TV.

1588 Afterwards, we will proceed to examine the eight applications for FM radio station licences submitted to the Commission to service the markets in Victoria, Kelowna, Duncan, and Surrey, in British Columbia. Some of these applications involve technical issues, others involve marketing issues, and some involve both.

1589 It should be noted that this is one of the first times the Commission is hearing radio licence applications since it issued its radio policy. Therefore, we would encourage the industry to give us some input as to how the CRTC should evaluate these types of applications, given that we have put in place a new, more flexible framework designed to enable the radio industry to become stronger financially, compete more effectively and meet the challenges of the 21st century.

1590 The Commission will hear the presentations of all interested parties and will take all views and comments presented into account before rendering its decision.

1591 Before we begin to hear the parties who will make presentations, I will ask the secretary, Marguerite Vogel, to go over some administrative and housekeeping matters regarding the conduct of this hearing.

1592 Madam Secretary.

1593 MS VOGEL: Thank you, Madam Chair.

1594 First, I will describe the procedure that will be followed for today's applications.

1595 Non-competitive applications are heard in three phases.

1596 Phase I is the presentation by the applicant to the Commission. Twenty minutes is allocated for this presentation. Questions from the Commission normally follow the applicant's presentation.

1597 Phase II is where appearing interveners, if any, make their presentations to the Commission. Ten minutes is allocated for each of these presentations. Again, there may be questions following.

1598 Phase III provides an opportunity for the applicant to make comments or to rebut the interventions that have been filed with respect to its application and 10 minutes is allocated for rebuttal. Again, questions may follow.

1599 Competitive applications, on the other hand, proceed in four phases.

1600 Phase I is the presentation by the applicant to the Commission and 20 minutes is allocated.

1601 In Phase II, the applicants reappear in the same order to intervene against other competing applicants. Ten minutes is allocated for each intervention.

1602 Phase III is where the appearing interveners make their presentations to the Commission and 10 minutes is allocated for each.

1603 In Phase IV, the applicants appear in reverse order to rebut or comment on interventions. Again, after any of these phases, there may be questions from the Commission.

1604 For your general information, the public files associated with the items at this hearing are available for viewing in room 526, which is just across the foyer from this room. CRTC staff in that room will be pleased to assist you, but please be aware that while an application is being heard, the public files associated with it will be in this room and not available for viewing.

1605 There is a verbatim transcript of this hearing being take by court reporters from StenoTran, who are allocated at the table to my left and behind. If you have any questions about how to obtain all or parts of this transcript, please approach Diane Olsen of StenoTran for information.

1606 Finally, if you want to have messages taken, we will be happy to post them outside of room 526. The phone number in the public examination room is 666-2334.

1607 If you have any further questions, please don't hesitate to contact any of us. We will be pleased to assist you whenever we can.

1608 Now, Madam Chairperson, with your leave, I will call today's first item.

1609 THE CHAIRPERSON: Thank you.

1610 MR. WEAFER: Good morning, Madam Chair. My name is Chris Weafer and I am serving as counsel for the Open Learning Agency on this application. I will just briefly introduce the panel.

1611 MS VOGEL: Excuse me, counsel, could I read the item in for the record before you proceed?

1612 MR. WEAFER: Oh, I'm sorry.

1613 MS VOGEL: I didn't even get to start my clock.

--- Laughter / Rires

1614 MR. WEAFER: I'm sorry, Madam Secretary.

0910

1615 MS VOGEL: Okay. Item number 2 on the agenda is an application by Open Learning Agency to renew the broadcasting licence of the television programming undertaking at Burnaby expiring on 31 August 1999.

1616 Please go ahead, counsel, whenever you are ready.

PRESENTATION / PRÉSENTATION

1617 MR. WEAFER: Thank you, Madam Secretary, and again, Madam Chair and members of the Commission, good morning and good morning to Commission staff.

1618 My name is Chris Weafer and I am appearing as counsel for the Open Learning Agency on this application for licence renewal.

1619 The panel that is before you front and centre is Joanne Ellis, who is Chair of the Board of the Open Learning Agency. To her immediate right is Dr. Jaap Tuinman, who is the President and Chief Executive Officer of the Open Learning Agency. To Joanne's left is Bohdan Zajcew, who is the General Manager of the Knowledge Network.

1620 To my far right is Glenna Stephens, who is a Project Officer with the Knowledge Network and to my immediate right is Wayne Robert, who is the Supervisor, Business Operations, for the Knowledge Network.

1621 Opening the text of our presentation will be Joanne and I will turn the microphone over to her.

1622 MS ELLIS: Madam Chair, members of the panel, thank you for this opportunity.

1623 While I am here in my capacity as the Chair of the Board of the Open Learning Agency, it is not the voice of the board that I wish to share with you today. Rather, it is the voice of a special group of viewers that often go unheard: rural Canadians.

1624 We are a fiercely independent group of people whose attachment to our land runs deep. In most other ways, we are not much different than our urban counterparts.

1625 Our communities have all the same problems: poverty, family violence, teen pregnancies, drug and alcohol addiction, and now, in B.C., rapidly rising unemployment rates that can be linked to our fishing and forest-based economies. We too need to move into the new millennium in an increasingly knowledge-based economy. Never has the need for public educational broadcasting and telecommunications been so important to us.

1626 Yesterday, I drove here from my home in Winlaw. Like all small communities throughout Canada, we rely on the power of broadcasting and telecommunications to bring us into the greater community of Canadians. In our mountainous country, broadcasting is difficult to achieve, and without the PEETS rebroadcast system which brings television to all small communities in the province, we would be isolated in thought as well as distance.

1627 I remember once when I was working in a small rural school, there was a technical problem with our local system. Every day as I arrived I was greeted by seven-year-old Matthew, hands on hips, pouts on lips, "Where is my Knowledge Network, Joanne? I miss my programs."

1628 The programs Matthew missed were "The Magic School Bus", "Kratts' Creatures" and "Wishbone", all educational, all entertaining and fun, and all non-violent. We cannot afford in this day and age to underestimate the importance of that non-violent choice for our young.

1629 In line with the Commission's vision of voices and choices for Canadians, the Knowledge Network is committed to building stronger and healthier communities by providing lifelong learning opportunities for all British Columbians.

1630 I would like to introduce Dr. Jaap Tuinman who will give you some idea of how we go about this important work.

1631 DR. TUINMAN: Thank you, Joanne.

1632 Mesdames, je suis reconnaissant aujourd'hui de cette occasion de nous parler de notre mandat envers nos partenaires et dépositaires et la façon dont notre programme s'aligne avec les buts et les objectifs de ceux du CRTC. Ces buts et objectifs sont reflétés dans la vision de la Commission, comme Joanne Ellis nous a parlé il y a quelques minutes.

1633 Let me share our own vision statement with you.

1634 The Open Learning Agency is an internationally recognized leader in the delivery of lifelong learning opportunities, the provision of access to learning, the development of prototypical instructional materials and the advanced use of technology in education and training. In this vision, the role of the Knowledge Network looms large.

1635 When I review the Broadcast Act against the goals we have for the Open Learning Agency, I find a clear, common purpose. Educational broadcasting does:

1636 We as educators take our responsibilities in this area very seriously. After all, education is the foundation of culture. To state the obvious, great literature is inaccessible to the illiterate -- and that's to state the very obvious.

1637 I am fairly certain that in your review of our application you saw reflected your own goals of a voice and a choice for British Columbians. We think we can accomplish this agenda in a way that no other educator or broadcaster does.

1638 We have had to make hard programming and budgetary decisions to maintain the balance between the requirements of our licence and our commitment to our educational mandate. Those decisions may well be influenced by the results of today's hearing. All we ask is that you remember the range commitments and the level of our accomplishments as you review our performance.

1639 The Knowledge Network has always provided access to educational materials for partner institutions as part of its mandate. We have, for instance, played 47 times the series "World at War" as required viewing for Simon Fraser University's third-year history course on World War II. It has made up to nearly 1,300 hours of our programming since 1984.

1640 It is not a Canadian program but it does provide a perspective on the history of our country that is, in the view of my colleagues at SFU, indispensable.

1641 In fact, we have broadcast many hours of programming for our educational partners throughout B.C., ensuring that the programs are accessible to their students as either required or as a curriculum enhancement, which is roughly the equivalent of the supplementary reading list found on any course syllabus in any university in North America, important stuff, in other words.

1642 Our programming, however, goes beyond the needs of our partner educational institutions. It crosses the boundary into community education, and that is a particularly important goal of the Open Learning Agency. Mrs. Ellis spoke eloquently to that point, however briefly.

1643 One of many examples of this type of community education programming was the series we produced called "Forests of Trees", "Forests of Images", "Forests of Words". In a landmark project, industry, union, aboriginal, educational and environmental leaders came together, on air, to watch and critique programs on forestry practices. High school and post-secondary educators adapted the series and the associated learning materials as a way to understand the impact of television on public opinion.

1644 It is difficult to attempt to fit these efforts into a framework that tries to differentiate and allocate activities as either formal or informal. We at the Open Learning Agency use the expression "Lifelong Learning" to describe this blending of the boundaries between formal and informal learning systems. If I had the time, I would love to tell you how creative we are on this agenda.

1645 In our licence, we committed to provide "a voice to Canada's Native peoples" and we have overachieved in that area. Over the past five years, First Nations members have been featured in many other programs on the Knowledge Network. They have appeared as panelists, as hosts and as interview subjects, often in programs not directly addressing "First Nations' Issues". As educators, we would be remiss if we did not integrate a First Nations perspective across the broadcast schedule within, but not limited to, our history, health, environment, regional and social issues programs.

1646 The real success story here is the type, the content and the quality of our programming. We are, for instance, able to take risks on projects like David Christenson's documentary on modern icon painters because we are not bound to find advertisers willing to be associated with the program.

1647 As he said in his intervention:

1648 Isn't that an artist speaking?

1649 We regularly broadcast programming directed at small target groups of learners because we understand that in order to provide diverse programming we need not always seek out a large audience but instead target the information to those to whom it will make the greatest difference.

1650 There are times, however, when we have to go for more massive appeal. We involve our viewers in the creation of choices for their programming through our Partners in Knowledge program. We have approximately 30,000 Partners in Knowledge, PIKs, for short, who donate an average of about $50 per year to go to their programming.

1651 On the Knowledge Network, they find television that is distinctly tailored to their tastes and culture. One example is a show called "Heartbeat". In the last three years, some 1,300 viewers have called our audience relations unit for more information on the program. Last fall, it drew 83,000 viewers. The profile of the viewers demonstrates that we are reaching an audience that is underserved, in that some 60 per cent were women and over 70 per cent were over the age of 55.

1652 All of this is very exciting but numbers, neither in the analysis of our schedule nor of our financial statements, tell the true story of what we are all here to accomplish. Simply counting viewers is not how the OLA nor the CRTC measure success.

1653 The Broadcast Act demands, as you well know, that we:

1654 Here is a line not authorized by our Communications Department. Perhaps we may not have done enough of it, but we sure have tried and we will keep trying.

1655 That is why we produced the only in-depth issue-debate programming examining matters of importance to British Columbians, Studio BC. John Thomson stated in his intervention letter:

1656 Nous voulons continuer nos efforts avec le soutien du CRTC. Nous avons essayé de tenir notre promesse, celle de garder notre mandat exécutif avant tout et de répondre aux défis financiers sans compromettre notre désir de diffuser une programmation canadienne aussi bien que régionale.

1657 Je peux vous dire qu'on a fait ceci non seulement parce que nous sommes des diffuseurs contrôlés mais aussi parce que nous sommes des éducateurs responsables.

1658 Now, I would like to turn your attention to the General Manager of the Knowledge Network, Bohdan Zajcew, who may, I suspect, well be the only non-staff person here who was involved in the original licence application in 1992.

1659 Je vous remercie.

1660 Over to you, Bohdan.

1661 MR. ZAJCEW: Before specifically addressing the particular concern of our appearance before the Commission, that being our underperformance in the area of Canadian content, I would like to emphasize some of the material ways in which the Knowledge Network has contributed to the objectives of the Canadian Broadcasting Act during the past licence term.

1662 We make these points recognizing that they do not solve our Canadian content shortfall but they indicate our material and unequivocal commitment to meeting the objectives of the CRTC.

1663 Dr. Tuinman has spoken of the goals for the Broadcast Act and their alignment with our goals as public educators. I would like to address our stewardship of both the intangible resources inherent in our broadcast licence as well as the material resources supplied by our partners and stakeholders.

1664 In 1992, our programming expenditure budget was $4.1 million and we anticipated a modest 2 per cent increase per year, as stated in our application. Of the total, we promised to allocate 49 per cent to the programming of Canadian programs.

1665 According to the terms outlined in our application, our total programming budget would have been $4.8 million and we would have had Canadian programming expenses last year of $2.4 million. Instead, last year, we spent $3.8 million on Canadian programming, 81 per cent of our programming budget of $4.7 million.

1666 As you can see, we managed to maintain our programming budget at almost the same value, even in the face of a decrease in base funding from $7.2 million to $5 million over the term of our licence. Of course, our decision to increase expenditures on Canadian programming still did not result in a 60/50 schedule. However, it certainly resulted in the creation of programming choices which would not have otherwise existed for British Columbians.

1667 Dr. Tuinman mentioned the "Heartbeat" series, which has had a great viewership on the Network. It is a British program. Over the history of the series, "Heartbeat" has raised over 1,000 Partner in Knowledge donations, totalling almost $80,000 for the Network.

1668 This money goes to provide funding for programming across our broadcast schedule, including the development through prelicences of independent programs like the "BC Times" series, six half-hour programs produced by a local producer. This series, a social history of B.C., crosses the boundaries of formal social studies to history "edutainment". This kind of partner-sponsored programming is not measured by the size of the audience or their donations but rather the impact it has on the lives of the viewers who do tune in.

1669 When we voluntarily accepted regulation in 1992, it was largely for the purpose of developing relationships with independent producers by offering access to a licensed broadcaster. Indeed, as committed, we continue to provide an average of $175,000 per year in prelicence fees and other commitments to the independent production community. These funds are provided toward production of at least 50 hours of new Canadian educational programs every year.

1670 As a licensed broadcaster, our involvement allows independent producers to access additional production funds. These producers then raise the remainder of their budgets based on the assured broadcast and, in some cases, the credibility afforded by our support. If we assume a conservative estimate of $150,000 for each of these hours, the Network's involvement is directly linked to over $7.5 million of activity in the Canadian independent production community yearly.

1671 The over 100 letters of intervention in support of our application state time and time again how important this activity has been for the independent film and video producers in Canada and especially in B.C. We actively support new ideas and first-time producers. We do not tie up their projects with exclusive licences, or even first windows, allowing them to have the flexibility to partner even with other broadcasters in our market.

1672 We take great pride in our contributions to the independent production community and we thank them for the support they have given us in this renewal application process. This level of assistance to independent producers would not have happened but for the fundamental misunderstanding that has informed our performance.

1673 Our understanding was that we would emphasize the creation of appropriate educational programming as a priority in fulfilling our educational mandate. We feel this was in alignment with the conditions outlined in our application and that we had the understanding of the Commission at that time. We have largely succeeded in this area. However, in doing so, we have failed to meet the Canadian content ratios demanded of us.

1674 Our original application approved by the Commission said:

1675 By this, we anticipated that if funding was reduced or if increased competition resulted in reduced availability of quality educational programming, we would be forced to rely more heavily on production.

1676 We also knew that the particular challenges associated with the production of educational programming, especially non-commercial educational programming, meant that our costs of production would be higher as we began to trigger and direct productions rather than passively await programming to come along which might suit our mandate.

1677 So, what has happened? How have these conditions under which we committed to meet the Canadian content levels fared in the last seven years? Well, our base funding is currently reduced to 69 per cent of our 1992 budget rather than the modest increase of 2 per cent per year we had predicted.

1678 Our competitive environment has swollen from one competitor to 15 -- 16 with the newly licensed national educational channel entering the market later this year -- and this so-called "edutainment" market has increased the price and decreased the availability of appropriate, quality Canadian product.

1679 The practical constraints associated with the production of educational programming have increased with our need to add value beyond the mere telecast of programs. This means that a portion of the expenses associated with the production of the program goes to adjunct materials such as study guides, interactive forums, multimedia accompaniments and pedagogical research.

1680 None of these extend the time the program is on the air but they do serve to extend the diversity of choices, and by extension, serve the mandates of the Open Learning Agency and the Broadcast Act.

1681 As a result, we had tough choices to make: Jeopardize our existence by abandoning our mandate and hence our principal source of funding or jeopardize our licence by delivering a schedule closer to 50/40 than to 60/50.

1682 The Knowledge Network model is distinct from other educational channels in the country. We provide access to the broadcast schedule without restriction for educational institutions, including the Open School TV program. Knowledge Network particularly focuses on the production of educational programming. Most production costs are not covered by base funding but rather through entrepreneurial activity or donations.

1683 All other educational broadcasters obtain higher levels per capita of provincial funding. They either have base funding for production activity or are acquisition only stations and have had greater success meeting the Canadian content objectives of the Commission, though not without some difficulties, as have been experienced in the past by both SCN and TVO.

1684 Knowledge Network may soon be the only television operation in Canada with a head office located in British Columbia. We see that as an important contribution to the regional objectives of the Broadcast Act.

1685 As part of our commitment in the next licence term, we are reassigning resources to address the remaining practical reporting issues through revision of our software and closer communication with the Commission staff. However, even given the difficulties outlined in our correspondence with the Commission, at no time were we told that we were not in compliance with the Regulations governing the reporting of our logs.

1686 The Commission also revised its software during the term of our licence and Knowledge Network was chosen as a beta tester for the Commission, devoting many hours to reviewing error reports and providing extensive feedback to Commission staff. We are grateful for the extensive assistance we have had in the past from the Commission's staff in attempting to resolve these practical reporting issues.

1687 We are also aware that the Commission is concerned with the current state of educational broadcasting in Canada and await the results of the current Television Policy Review. We are eager to work with the Commission and Commission staff to develop new models for supporting and analyzing this distinct activity.

1688 We are hopeful that we may be able to create a dialogue with the Commission to discover ways to satisfy the Commission's objectives while meeting our own as an educational broadcaster. Ultimately, we wish to set up a closer partnership with the Commission than we have had in the past.

1689 Nonetheless, it is clear that we have not delivered a schedule comprised of 60 per cent Canadian programming overall or 50 per cent in the evening broadcast period. We have been open and honest with the Commission in this regard.

1690 We have filed a letter with the Commission regarding our appearance here today. In it, we stated that we have realized our error and explained the mitigating factors, which we have reiterated here today, for the record. While previously we laboured under the misunderstanding that we were in alignment with the intent of the Broadcast Act and Regulations, the Commission's response has been emphatic in its correction of that notion.

1691 Clearly, the issue of delivering a 60/50 schedule is paramount. We accept this and therefore wish to state unequivocally that we will broadcast 50 per cent Canadian content in our evening broadcast schedule and provide 60 per cent Canadian programming overall for the proposed term of our renewed licence.

1692 We will do this recognizing that it will result in significant changes to the manner in which we program the Knowledge Network. Without a doubt, it will lessen the volume and quality of new programs we will support or produce.

1693 We will divert funding to simple acquisition of available Canadian programming. We will redirect administrative resources to work with the CRTC to develop new approaches to the monitoring and analysis of educational broadcasting activities.

1694 We wish to assure our other stakeholders that even in these new circumstances we will continue to deliver on our educational mandate. In short, we accept the challenge presented by the CRTC to continue to seek innovative means to fund, develop, create and broadcast quality educational programming that is meaningful to British Columbians.

1695 We would now be pleased to answer any questions the Commission may have.

1696 THE CHAIRPERSON: Thank you. I know I speak for my colleagues that we are very pleased to see that you have committed over the period of the next licence term to meet our expectations of 50 per cent in the evening and 60 per cent during the day.

1697 I know it has been a challenge over the past licence term and you have spoken briefly of how you managed to do that. I wonder if you could just elaborate a bit on how you are going to either change the programming or reach those targets.

1698 MR. ZAJCEW: I think, Madam Chair, that the approach to achieving compliance is a relatively straightforward one. There are a number of steps that we can take in this regard.

1699 In the first instance, as alluded to in our presentation here this morning, we intend, if so required, to move funding from production to the acquisition of Canadian programs. We know the difference between paying $2,000 an hour to acquire a program versus paying $2,000 a minute to produce a program. That will continue to leverage our availability on that count.

1700 We will increase the repeat factor of Canadian programs in our inventory. So as opposed to as we currently broadcast a program like "Studio BC" four times a week, we would be looking at increasing that substantially in order to move into compliance.

1701 We will continue to emphasize partnerships and sponsorships around Canadian acquisitions working with our colleagues in the educational broadcast community across the country to leverage better prices on Canadian programs as well as to seek out sponsorship and underwriting for more Canadian programs.

1702 It could very well mean eliminating certain types of programming in the short term, notably science and technology programming, from our broadcast schedule. In light of the competition that we alluded to in the marketplace that exists currently with other players, the prices for science and technology programming as a case in point have skyrocketed and it is exceptionally difficult to acquire quality Canadian programming within that genre of product. As a result, we may ourselves in a situation where we have to reconsider the inclusion of those kinds of programs in our schedule.

1703 In the final analysis, we would like to be able to engage in a dialogue with the Commission staff and to work with the Commission to ensure that our scheduling and continuity, as well as other practical measures, result in maximum Canadian content assessments in our broadcast schedule.

1704 We are aware that there are a variety of methodologies and approaches on this count to enhance the value of Canadian content and we would hope to be able to engage in a dialogue with the Commission staff to ensure that we are squeezing maximum Canadian content out of the schedule.

1705 THE CHAIRPERSON: Thank you. I know that one of the other issues that has been a challenge has been the whole matter of logging. What I am wondering is: Do you feel you can accurately measure your own performance with respect to logging, that you have a system in place, or is this something which is going to require more work?

1706 MR. ZAJCEW: I would prefer to defer the response to this question to my colleague, Mr. Robert, our Supervisor of Business Operations.

1707 Wayne.

1708 MR. ROBERT: Thank you.

1709 As the Commission staff, I'm sure, is well aware, it is a real challenge to keep all of the information moving around in regard to the changing broadcast environment. We have our own proprietary software that we have developed at the Open Learning Agency for educational broadcasting, which focuses really more on the programs rather than advertising, for instance, which most of the off-the-shelf kinds of broadcast information software do.

1710 So we are working to develop and adapt that to align with the processes that the Commission has. We have been talking back and forth, as you have seen from the correspondence, a great deal about this.

1711 We are also in the process of waiting in some ways for some changes that are forthcoming from the CRTC side of the equation in regard to error validation software and also in regard to getting a more clear idea of some of the effects. Some of our sign-ons are a little bit different than the CRTC is used to, I guess, or that other broadcasters do, and some of our programming decisions are also very different. So we are looking at ways of, in the future, hopefully, working out some of those differences and making sure that we are aligned with them.

1712 One of the other areas Chris was just pointing out to me is that we are looking at the whole question of the 150 per cent, both our use of that kind of programming and the availability of it for us. Currently in our schedule, we have only 26 programs out of our entire inventory of about 4,000 titles that are eligible for 150 per cent Canadian content. Some of those programs we don't even air in the required time frames where they get the 150 per cent. For instance, we air some children's programming in the evening where it is no longer eligible.

1713 What we are looking at though -- Chris is just pointing out to me -- are efforts to look at some of the other productions and some of the opportunities to work with the Commission to have 150 per cent assigned for some of our own productions more consistently and so in that application process, we are hoping to make some progress there as well.

1714 THE CHAIRPERSON: Thank you. I guess what I was really -- one of the issues I am struggling with is: How do you measure -- are you confident that you can measure your programming with respect to Canadian content? This has been, I know, a big challenge and I guess what we are looking for is some comfort that you put in place the mechanisms that will allow you to accurately measure your programming.

1715 MR. ROBERT: Okay. I am going to go out a little bit on a limb here and say that we are confident that we measure our programming. What we aren't confident is that when the Commission measures it, we come to the same agreement. I guess I don't know any more politic way of putting that. I think that is the real challenge.

1716 We know how many hours of programming we broadcast. We know what its Canadian content status is. The differences that we have in our calculations with the Commission are relatively small but they are of significant impact when you are as close to the line as we have been. In the earlier years, certainly, we had much more vast differences.

1717 When we have been working with the Commission -- I have attached to your package some of the graphs that show the change in Canadian content figures over time. Again, what we have done is as we worked with the Commission, we found that through some of the changes and resubmission of our logs, we have had dramatic increases in the Canadian content that has been reported by the Commission back to us.

1718 So if you look at, for instance, a change in evening Canadian content figures over time, one of the graphs that is in your package -- I will give you a moment to just get hold of that one. What that graph is indicating is that, for instance, the 1997-1998 figures, when we originally heard back from the CRTC in October of 1998, they were somewhere between 40 and 45 per cent.

1719 When we resubmitted them in January of 1999, they moved to 50 per cent. Simply through our reorganization and dealing with the Commission on correcting -- in that particular case, the Commission actually getting involved in saying -- the Commission staff getting involved in saying, "Well, if we change the way that you have logged on these programs or change the nature of those programs, this will happen."

1720 The broadcast didn't change at all. So we are still struggling with this idea of how do we align our reporting? How do we align our error correction with that?

1721 Does that bring you any closer to the answer to your question? I guess you are asking: What are we going to do?

1722 THE CHAIRPERSON: I don't know. I know that this has been an ongoing issue, the issue of logging, separate and apart from the Canadian content and what I am looking for is: Are you confident that you are able now to put in place a method or a system of logging which is going to give us the information we need?

1723 MR. ROBERT: Certainly. As we have talked with the Commission, we haven't ever been outside of the Regulations regarding the reporting of our activities. In fact, the reports that we do produce are acceptable to the Commission. They contain errors which we then go back and forth and sort out.

1724 I am not saying that the analysis that we have is inaccurate and I don't think that the Commission staff -- I mean, obviously, at the end of the day have said, these are your figures to one-thousandth and so therefore, we must be satisfied with those. I think that we are going to be able to analyze those figures in such a way as we continue to dialogue with the Commission so that we will know better beforehand. But right now, we are not terribly surprised when we get the results.

1725 So I guess if you are saying: Will be able to align?

1726 THE CHAIRPERSON: Thank you.

1727 MR. ZAJCEW: Maybe I could just add one caveat to that. I think the point that Wayne is getting to is that we recognize that this is an incredibly complex issue and it is an iterative process, won through repetition, through dialogue with Commission staff, that we come closer to.

1728 I feel we are now closer than we ever have been before and I anticipate that in the term of our renewed licence, we will be in full alignment with the Commission's expectations in this regard.

1729 THE CHAIRPERSON: Thank you. One area I would like you to elaborate on is your scheduling plan is based on your four programming schemes. I take it from your presentation this morning and your commitments with respect to Canadian content that there may be some alteration in the programming stream scheduling in funding and I wonder if you could tell me if those four streams will remain as part of your new licence term and just elaborate a bit on how you...

1730 MR. ZAJCEW: Our anticipation is that the model that we have around our four streams of programming: community education, the self-directed learning, curriculum-driven and enhancement programming, and general education, our partner-sponsored programming will remain our operating model for the Knowledge Network broadcast schedule.

1731 Where we anticipate the primary change occurring within those strands is in our capacity to produce programs ourselves that fit into that particular area. I would think that the primary impact point would be in something like community education programming, which is about the social, political, cultural and economic histories, issues and concerns of British Columbians.

1732 Needless to say, we scour the market to acquire that kind of product from independent producers. Where it is not available, we have to produce it ourselves through programs like "Studio BC", through the kinds of rapping that we do around our children's programming in the morning schedule. But those kinds of elements stand at risk in this kind of a model, that we would do less of that in order to acquire more Canadian programming to meet the content requirements.

1733 THE CHAIRPERSON: Thank you. Your closed captioning: I know you have indicated that by year four of the new licence term your closed captioning will reach the 50 per cent mark and 95 per cent in year seven. I wonder if you could elaborate on that and how you plan to meet those goals.

1734 MR. ZAJCEW: When we originally applied for our licence in 1992, we came in in a scenario where less than 5 per cent of our programming overall was captioned at that point in time whereas we were not bound specifically to any percentage as a condition of licence within this term. We did indicate our desire to maximize the amount of closed captioning that existed in our broadcast schedule.

1735 To that end, we put policies in place around the inclusion of closed caption programming, where we were producing programming ourselves that we would be producing it with closed captioning. We made it a requirement of independent producers who were providing product for us that the programming that they provide to us be closed captioned because our view is that it adds value to the programming overall, not only for the hearing impaired which is an incredibly important constituency but also for very important pedagogical reasons. Closed captioning is an incredibly valuable tool for ESL instruction and as a result of that, recognizing that television is a medium used in this regard. It enhances our value by being able to offer closed captioning.

1736 As a result of policies that we have put in place there for around this, under the terms of our existing licence, we anticipate that really they will bear fruit truly in the term of the new licence and we anticipate building and enhancing more Canadian content as well as more closed captioning in our schedule as a result.

1737 THE CHAIRPERSON: Thank you.

1738 I don't think I have any more questions. Thank you.

1739 MR. ZAJCEW: Might I be allowed one last comment, Madam Chair?

1740 THE CHAIRPERSON: Certainly.

1741 MR. ZAJCEW: If I might. We indicated in our presentation that we would appreciate a dialogue with the Commission on our situation and to engage in a dialogue particularly around this very, very important issue of Canadian content in our programming.

1742 We have outlined for you today the steps that we would like to take in this regard and I would like to be so bold as perhaps to suggest a couple of ideas of how the Commission might be able to help us in this regard in order to ensure that the dialogue is a fruitful one.

1743 In the first instance, I would like to reiterate a point that my colleague, Mr. Robert, raised in his observations in that were the Commission to consider the according of 150 per cent Canadian content against curriculum programming, regional information programming, and documentary and children's programming when broadcast by an educational broadcaster, this would go a long, long way towards moving us into compliance.

1744 These two are under-represented Canadian programming categories. Drama forms a very small part of our broadcast schedule and steps in these under-represented categories would certainly enhance our position.

1745 The Commission could take steps to ease access to funding of regional information programming, as was outlined in the SCN submission to the Television Policy Review hearings back in September, "Voice in the Wilderness". These are regional information programs with limited secondary market potential. If there were access to public funds on this, this would help us out tremendously in this regard.

1746 The Commission could take steps to ease the cost of regulatory activities by working together with us to simplify and rationalize the reporting systems. We have a situation where, for example, as a non-commercial public broadcaster, when submitting a licence renewal form, we are required to fill out a form for commercial broadcasters where virtually 50 per cent of the form is not applicable to us.

1747 If we are indeed a valued contributor and part of the Canadian system, we would like to have that recognized and enhanced through these kinds of regulatory possibilities of working with the Commission to help us out in this regard.

1748 Similarly, the creation of policies which are relatively stable regarding regulatory requirements and the assignment of Canadian content to productions. We have, at the moment, a system which sometimes seems a little arbitrary in that regard and if we could come to a better understanding through working with the Commission staff in this regard, we would be better positioned to predict the impact of these kinds of programs in our broadcast schedule in order to maximize their value to us.

1749 In the final analysis, we spoke as well in terms of adding value to our broadcast schedule through the creation of supplementary reading lists, the creation of on-line presence, adding value to the programming which does not appear to extend the time of... broadcasters bring to the product through those kinds of projects.

1750 This too would go a long way towards providing that kind of meaningful dialogue with the Commission to ensure that we continue to meet the expectations of the Commission as well as the requirements of the Broadcast Act.

1751 THE CHAIRPERSON: Thank you. I believe Commissioner Wylie has a question.

1752 COMMISSIONER WYLIE: With regard to cooperation with the Commission, I can tell you that the number of letters that have been exchanged between you and the Commission, presumably to extend some help, is far thicker than the application you had to file for your renewal. So I don't know what you expect of the regulator. Most people want us to be a little more distant and let you do your own thing.

1753 So I'm not clear on hearing you this morning whether you are prepared to meet the 60/50, whether you are claiming that if you knew how to calculate it, you would meet it, or whether you want bonuses so that it is reduced effectively from 60/50. So I am not quite sure what you mean when you say you are committed to meeting 60/50 and how there seems to be such a great difficulty in calculating it so that it arrives at 60/50. You are aware that there are multiple licensees in Canada who do this calculation and, as the Open Learning Agency, it takes you a while to learn.

--- Laughter / Rires

1754 COMMISSIONER WYLIE: Have you considered trying to ask other broadcasters how they do it and perhaps meet a consultant or two and find out how it is done, because the Commission seems to have tried but you still seem to feel that it is so complex that perhaps you are meeting the commitment, it is just that it doesn't show it on graphs?

1755 So there is a number of questions here but is it your intention to meet the 60/50 as calculated by the industry in general and accepted by the Commission as meeting it?

1756 I realize that you are putting on the table this morning a possibility of reducing that effectively in terms of exhibition hours by bonuses. So that is something that perhaps the council will want to pursue. But if you put that aside, what are you saying, that perhaps you are meeting it but you haven't learned how to calculate it so that we decide that you have met it? It is not clear to me.

1757 MR. ZAJCEW: If I may, Madam Wylie, I believe that we have in fact been clear in our commitment. We have stated unequivocally that we will meet 60/50 according to the standards established by the Commission and accepted practice by the broadcasting community in the country.

1758 COMMISSIONER WYLIE: And report it in a manner that --

1759 MR. ZAJCEW: That's correct.

1760 COMMISSIONER WYLIE: -- you and the Commission are not at odds as to whether it has been met or not.

1761 MR. ZAJCEW: That is correct.

1762 COMMISSIONER WYLIE: Because it can't be that difficult if so many other people do it. I have particularly asked that correspondence between the Commission and you in the past be given to us. It is quite voluminous and seems to indicate as much help as possible from the regulator and surely as educators and people involved in pedagogy, you will learn to openly give us records that satisfy what your commitments are.

1763 MR. ZAJCEW: In fact, Madam Wylie, I believe that, to reiterate again, we have made the commitment and it is our intention to work with Commission staff in order to meet those obligations.

1764 COMMISSIONER WYLIE: Thank you.

1765 THE CHAIRPERSON: Thank you.

1766 Legal counsel.

1767 MS MOORE: Thank you, Madam Chair. First, I would just like to explore what extent you have explored the types of funding that might be available to you to increase the production of Canadian content.

1768 MR. ZAJCEW: As we indicated in our submission this morning, we had voluntarily submitted for licensing in 1992. At that time, primarily in order to be able to provide independent broadcasters with whom we work access to a licensed broadcaster in order to be able to give them the opportunity to leverage funding for their productions through things like the Canadian Television Production Fund, Telefilm, et cetera.

1769 So those are vehicles which are not open directly to a broadcaster such as Knowledge Network but rather to the independent producers with whom we partner, and by virtue of being a licensed broadcaster, we give them access to those kinds of funding opportunities. Those kinds of funds that are in place then we do access them.

1770 But by the same token, there are other funds of money which go towards the production of programming which are not accessible to us. Case in point, I am thinking of the Shaw Fund for Children's Programming which is by and large for programs which have been licensed by private broadcasters as opposed to a public broadcaster such as ourselves.

1771 So our belief is that we have pretty much primed and looked through all of the opportunities that are available to us in this regard, whether it be through work with our partners in knowledge programming, working through corporate underwriting and sponsorship. All of those avenues we have explored and continue to try to maximize the value from.

1772 MS MOORE: Thank you. Have you had any discussions with other educational broadcasters such as TVO and LTA with respect to Canadian content issues as well as logging issues?

1773 MR. ZAJCEW: We have certainly engaged in conversations with our colleagues in ATEC, the Association for Tele-Education in Canada, whose numbers include LTA as well as TV Ontario.

1774 On both of those subject matters, we have jointly explored buying programs in order to be able to leverage the cost of a national licence across a number of different regions and thereby reduce costs in that fashion. We have mounted several joint co-productions across the board with our partners in Saskatchewan as well as in Ontario.

1775 On the subject of logging issues, yes indeed, we have spoken with SCN and TV Ontario on both those counts.

1776 MS MOORE: Have those discussions with respect to logging been of assistance? Have you found differences between yourselves? Have they been of some assistance to you?

1777 MR. ZAJCEW: The discussions have been of tremendous assistance in that, as have the discussions with Commission staff on this count, in that they have served to identify some issues that we have jointly on this regard as well as highlighting some of the steps that can be taken to address those concerns.

1778 MS MOORE: If I might direct the following questions to your counsel, Mr. Weafer.

1779 First, I would just like to confirm that OLA does not own or operate any transmitters and that delivery of the programming is strictly via satellite to cable.

1780 MR. WEAFER: That's correct.

1781 MS MOORE: Accordingly, I would just note that as with other educational undertakings, like the Saskatchewan Communications Network Corporation, the Commission would renew OLA's licence as a non-commercial satellite to cable programming undertaking. Do you have any comment in that regard?

1782 MR. WEAFER: Not at this time, but we would like to review this matter. We raised it this morning and we will get back to you in correspondence within the next week. But it does seem appropriate.

1783 MS MOORE: Finally, would you agree that it would be appropriate to impose, as has been done for other educational programming undertakings, a condition of licence requiring adherence to the requirements of the Television Broadcasting Regulations? This would include, of course, the 50/60 requirement as a condition of licence.

1784 MR. WEAFER: I am not sure what that would add to it, being in the Regulations and if the Commission wished to impose that, it would be redundant and we intend -- but the client is certainly committed to meet what is set out in the Regulations for the licence term. So I don't see that being a problem.

1785 MS MOORE: Thank you.

1786 Those are my questions, Madam Chair.

1787 THE CHAIRPERSON: Thank you, counsel.

1788 Madam Secretary.

1789 MS VOGEL: Thank you, Madam Chair.

1790 We have had no intervenors but does anyone on the panel have any final comments?

1791 None? Then, you can stand down. Thank you.

1792 Madam Chair, our next item requires just a tiny bit of setup. So I am wondering if perhaps we could take a 5-minute break.

1793 THE CHAIRPERSON: Certainly.

--- Short recess at / Courte suspension à 1000

--- Upon resuming at / Reprise à 1010

1794 THE CHAIRPERSON: I believe we are ready to reconvene, Madam Secretary.

1013

1795 MS VOGEL: Thank you, Madam Chair.

1796 Item 3 on our agenda today is an application by O.K. Radio Group Ltd. for a broadcasting licence to carry on an English-language FM (radio) programming undertaking at Victoria, operating on the frequency 91.3 MHz (channel 217C) with an effective radiated power of 1,766 watts, upon surrender of the current licence issues to CKXM Victoria.

1797 The new FM would adopt CKXM's current country music service.

1798 The applicant is requesting permission to broadcast simultaneously on the AM and FM bands for a period of four months before surrendering the current licence issued to CKXM Victoria.

1799 Please go ahead whenever you are ready.

PRESENTATION / PRÉSENTATION

1800 MR. CHAREST: Madam Chair, members of the Commission, ladies and gentlemen, members of the Commission staff, and to my contemporaries and all the people representing the other Victoria applicants, I'm sure we are in for a nice time and afternoon, or morning, of great presentations.

1801 I am Roger Charest, President of O.K. Radio Group, and with me -- in front of me, the young man that started with me in broadcasting some 26 years ago with our first radio station. We were both members of the morning team at that time and we have been having fun ever since. He is the Vice-President and Chief Operating Officer of O.K. Radio Group.

1802 Stu Morton.

1803 MR. STUART MORTON: Good morning.

1804 MR. CHAREST: Next to Stu, when we did go on the air, Sarah was not born. She was born about four months after we launched our first station. So every time I look at Sarah I know how old we are. Sarah Morton is the Marketing and Promotions Manager. She just finished a degree in Women's Studies at UVic.

1805 Sarah Morton.

1806 MS SARAH MORTON: Good morning.

1807 MR. CHAREST: John Shields was also on the air that 26 years ago. He has been having a lot of fun since as well. He is our Senior Program Director in Victoria.

1808 John Shields.

1809 MR. SHIELDS: Good morning.

1810 MR. CHAREST: Dan McAllister came with us a little later. He is the General Manager in Victoria. He has been with us for some 20 years.

1811 Dan McAllister.

1812 MR. McALLISTER: Good morning.

1813 MR. CHAREST: Audrey Van Bruchem has been in broadcasting 20 years, although most recently with us. She is in the Accounting Department as the Accounting Supervisor.

1814 Audrey Van Bruchem.

1815 MS VAN BRUCHEM: Good morning.

1816 MR. CHAREST: And with me is Brian Blackburn, the Director of Sales and, more importantly, tired legs. He just finished the Vancouver Marathon on Sunday. Next year, I will be joining him.

1817 That is our panel.

1818 MR. BLACKBURN: Good morning.

1819 MR. CHAREST: We are appearing before you today to present our application to allow CKXM to serve Victoria will full stereo crystal clear sound. We will demonstrate that as an FM station CKXM can deliver a much better sound that will have tremendous benefits for Canadian recording artists. We will invest in Canadian talent development through the "Island Roots" program.

1820 The recording industry believes CKXM will make an important contribution to record sales by moving to FM.

1821 O.K. Radio Group is a western-owned and locally managed mid-sized company. We have a strong commitment to Victoria, with a local hands-on ownership and senior management presence. Stu Morton has spent the last 10 years as a Victoria resident, overseeing and actively involved in the day-to-day operation of the station. Starting this week, we are moving our offices and studios into a recently acquired 30,000 square foot building in Victoria.

1822 We are leaders in supporting Canadian music. John Shields was names "Major Market Music Director of the Year" by the Canadian Country Music Association. John has been also nominated "Country Music Person of the Year" by the B.C. Country Music Association.

1823 The industry knows we have made a worthwhile contribution to the Canadian country music industry as an AM station Victoria. We will do even more as an FM station.

1824 MS SARAH MORTON: CKXM's current 5 per cent share of the Victoria market consists almost exclusively of "hard core" country music fans. Many of these listeners have enthusiastically supported CKXM's application to move to FM. They tell us that they are being underserviced.

1825 Country music attracts listeners from all walks of life. They choose the music they listen to for the way it speaks to them and the way is relates to their daily lives. True music lovers recognize the quality of the FM stereo signal and do not want to go to AM for music.

1826 For country music lovers in Victoria, this means tuning into FM stations in Vancouver and Seattle and missing out on the benefits of local, community-oriented programming. They would prefer a local choice but would only make the move for a quality stereo signal. To experience significant growth, CKXM must be on the FM band.

1827 In almost all cases where there is an AM and FM country station in the same market, the FM outperforms the AM by a wide margin.

1828 One of today's most marketing savvy corporations, The GAP, knows the appeal of country. Their current television campaign includes an ad featuring Dwight Yoakam's rendition of a Queen song and a group of hip young line dancers. This "Khaki Country" ad breaks down many of the stereotypes around country music while remaining true to the genre. It is a fine line but it is what makes Shania Twain so successful and it is what makes country so appealing to so many North Americans.

1829 CKXM's move to the FM band will be a textbook lesson in marketing. The station will take on a fresh new character and will bring country music to an audience that is not being serviced locally. We have the programming and marketing expertise to make country successful on the West Coast, particularly if we have an FM licence.

1830 MR. SHIELDS: Country music has undergone an enormous change in its SONIC quality. It now uses the same production techniques that were formerly found in pop and rock music. AM radio no longer provides an adequate platform for this music.

1831 Canadian Country Superstar Shania Twain has moved the production envelope forward to a standard that is truly now considered to be a benchmark in country music today. She is part of a larger movement led by such performers as Garth Brooks, Alan Jackson, Patty Loveless, Faith Hill, Tim McGraw and Trisha Yearwood. These artists have truly brought country music into the mainstream.

1832 Recording artists are investing an incredible amount of energy, creativity, time and money to make their music sound fabulous. Canadian artists like Paul Brandt, Victoria's Sean Hogan, Lisa Brokop, Shirley Myers, Bruce Guthro, Prairie Oyster, and Shania Twain all deserve to have their music heard in the best possible way.

1833 We have asked our CKXM morning show host, Peter Schaad, to prepare an audio example of the difference between the way country music will sound on FM as compared to the present AM sound.

--- Audio clip / Clip audio

1834 MR. SHIELDS: Victoria's country music fans deserve and expect to hear their favourite music in full stereo sound. In this digital age, high-quality music choices are available at the push of a button and even the click of a mouse.

1835 A move to FM would bring about a powerful and exciting change to Victoria. A fresh new presence that you just heard in the music samples will endow CKXM with an entirely new character. The programming will have a bite that is simply not possible to attain on the AM band. We will be able to play the music the way it is supposed to be heard.

1836 Our plan is to continue to produce the various regular programs spotlighting new Canadian country performers. We will also continue our news commitment.

1837 On the FM band, we believe CKXM will be able to provide more live programming. This will allow greater access to our station by our listeners. For example, we will have more request programs, which we believe is a vital link with our listeners.

1838 We believe in Canadian music. We are proud to play Canadian music and in fact, the airplay of Canadian music is an integral component of our programming in every day part throughout our broadcast day. With our geographical location, we feel that playing Canadian gives our stations a point of differentiation from our American competitors.

1839 To further exemplify our support but more on a local level, CKXM proposes to provide a $25,000 per year commitment to artist development. This money would be used for a new program called "Island Roots" and it would be an island-wide talent initiative.

1840 Like The Q's Rocktoria, we will provide a professional studio experience, promotion, airplay, industry exposure, marketing, packaging, tour promotional support, and album distribution and sales. Combined with the commitment to extensive airplay and awareness, we know this program will become the country equivalent to The Q's highly regarded Rocktoria. It will be an effective local support project for the West Coast country music community.

1841 MR. STUART MORTON: We understand the importance of marketing as well as programming in the success of a radio station. After we signed on The Q in 1987, our marketing efforts virtually redefined radio in the Victoria market. Media and business people literally laughed at the idea that a ROCK station could be number one in a market like Victoria. We didn't believe our critics then any more than we believe those who don't think there is a terrific market for country music in Victoria today.

1842 In 1995, we took over 1200 CKXM as an oldies station. When we brought the station back on after a 45-day shutdown we had no audience. Today, CKXM has a central market audience of 31,000.

1843 Being on the FM band is important but it is only part of the equation. Great programming and high-powered marketing are the key elements in any radio success story. We also know that CKXM must be on the FM band to participate and benefit from the promotional and programming elements we can provide. The music listeners are on the FM band.

1844 We believe that new FM licences in the market will increase tuning to local stations. When The Q entered the market in 1987, that is exactly what happened. It happened again when CIOC re-launched in 1995.

1845 We believe CKXM will experience positive revenue growth with a move to the FM band. In the Victoria market, radio revenue growth has been substantial, with revenues of just over $12.1 million in the last fiscal year. This is an annual increase of over 15 per cent due in large part to the growth in tuning to local Victoria FM radio stations.

1846 We believe the public interest would be well-served should the Commission issue a favourable decision in this application.

1847 Consumers will get to hear the music they love in high-quality crystal clear FM stereo. The new sound for CKXM will create an excitingly fresh radio station in Victoria.

1848 O.K. Radio is a committed broadcaster that has delivered on its promises to the CRTC and to the communities we serve for over 26 years.

1849 CKXM will give new exposure to upcoming Canadian country artists plus an incredible Canadian Talent Development program that has already proven itself on Vancouver Island.

1850 CKXM is the only local country music voice in the densely populated Southern Vancouver Island area.

1851 We will repatriate listeners from U.S. stations just as we did with The Q in the early 1990's. The growth of in-market tuning benefits the radio industry in Victoria.

1852 On FM, CKXM will be a stronger radio station. It will be in a position to withstand competition from other new licences that might be granted in Victoria.

1853 This concludes our presentation. We are now prepared to answer any questions the Commission may have.

1854 THE CHAIRPERSON: Thank you. I will now turn to Commissioner Noël.

1855 COMMISSIONER NOËL: Good morning. I would like to know how you intend to spend the $25,000 budget that you have on Canadian Talent Development.

1856 MR. STUART MORTON: I will ask John Shields to answer that question.

1857 MR. SHIELDS: We would take $5,000 and we would prefer to use it and put it through to the British Columbia Country Music Association as part of our commitment, and the further $20,000, we would do to produce our own compilation CD. It would go towards the production, the studio rentals, the production of the CD, the marketing and the distribution.

1858 We would make sure that the CD was done well as our Rocktoria project -- we have lots of experience with that -- and we would make sure that the distribution is set up properly so it would go to all the major record companies and all the independent record companies. It would go to every country radio station across the country and we think they would provide a good starting point for a lot of the young, emerging country artists just on Vancouver Island.

1859 MR. STUART MORTON: I might add that these payments are all to third parties when he is talking about producers.

1860 COMMISSIONER NOËL: "Island Roots" is the $5,000 and the balance would be the production?

1861 MR. STUART MORTON: No, the $20,000 is for the "Island Roots" program; $5,000 would go to a third party.

1862 COMMISSIONER NOËL: Okay. In its 1998 Commercial Radio Policy, the Commission outlined that it would be prepared to issue licences depending on the individual merits of the applications, in particular, the benefits their approval will bring to communities concerned and the broadcasting system as a whole. Following this hearing, for market and other reasons, the Commission may not licence all the applicants.

1863 Recognizing the flexibility now offered commercial stations, for instance, the ability to shift music formats without prior Commission approval, and in the absence of specific programming conditions of licence, could you offer the panel today your thoughts on why we should award you a licence?

1864 MR. STUART MORTON: First of all, in terms of commitment to the format, we are certainly quite prepared to accept a condition of licence should the Commission so decide that would require us to continue to program in the country format for the entire first term of the licence.

1865 In terms of the other part of your question, I think that this application seeks to the diversity within the market. This is a market segment that is being underserved and certainly the service that we will provide will maintain as well as add to the diversity within the market.

1866 COMMISSIONER NOËL: At the time you filed your application, the Canadian level content for Category 2 music was 30 per cent and that is what is included in your submission. We modified that as of January 1999. The level was increased to a minimum weekly of 35 per cent.

1867 By way of clarification, could you confirm your adherence to the new regulatory level of 35 per cent for each broadcast week?

1868 MR. STUART MORTON: Yes. We filed an amendment raising it to 35 per cent and we confirm that we are committed to that.

1869 COMMISSIONER NOËL: So if I hear you well, the country music is not a viable format on the AM band at the present time?

1870 MR. STUART MORTON: We think all the indicators point to that all across Canada. Country music is doing exactly what happened to rock in the seventies. It is getting so busy in the production area that AM just doesn't properly reflect the quality of the production.

1871 COMMISSIONER NOËL: Assuming that all the applications that are before us this morning or today are approved, do you think that the market in Victoria can sustain five FM stations plus one AM station? There are currently five stations: three AM and two FM?

1872 MR. STUART MORTON: That's right. Yes, I do. I believe that all of these applications can be absorbed by the market. The market is fairly healthy. We have been somewhat insulated from some of the worst effects of the B.C. recession and the indicators are now that the B.C. economy is starting to -- some of the fundamentals are starting to improve. But yes, we believe the market can absorb this.

1873 COMMISSIONER NOËL: Okay. Now, the population growth of Victoria has been 7.13 per cent according to Statistics Canada from 1991 to 1997. Do you expect that the population growth rate will increase, decrease or remain constant in the near future?

1874 MR. STUART MORTON: I am going to ask Dan McAllister, who is a former President of the Chamber and has access to those kinds of statistics.

1875 MR. McALLISTER: I think, in the next five to ten years, we will see the population of Victoria grow to somewhere in the vicinity of 400,000 people.

1876 COMMISSIONER NOËL: From?

1877 MR. McALLISTER: I don't know what percentage that is over what it is now. It is about 326,000. It is fairly significant.

1878 COMMISSIONER NOËL: So you expect a bigger rate of increase in the province?

1879 MR. McALLISTER: Yes. The CRD does projections every year based on the last census. The last update was in 1996 and the 1998 numbers are projecting about 400,000 people in the CRD, which is our coverage area.

1880 COMMISSIONER NOËL: M'hm. What about estimate of average rate, at which rate your advertising is expected to grow between 1999 and 2003?

1881 MR. STUART MORTON: Dan, do you want to take that?

1882 MR. McALLISTER: I'm sorry, could I hear that question again?

1883 COMMISSIONER NOËL: Yes. Do you have an estimate of the average rate at which the radio advertising revenues are expected to grow from 1999 to 2003?

1884 MR. McALLISTER: I will defer that back to our Vice-President of Sales, Brian.

1885 MR. BLACKBURN: Last year's revenues to the market were just over $12.1 million. Our projections are by year and within five years, revenues will grow to approximately $15 million.

1886 COMMISSIONER NOËL: That is a large increase because we have figures indicating a growth rate of about 1.3 per cent in the total Victoria market.

1887 MR. BLACKBURN: Last year's revenues over the previous year were 15 per cent. To date, the revenue --

1888 COMMISSIONER NOËL: Those are your figures?

1889 MR. BLACKBURN: No.

1890 COMMISSIONER NOËL: Or it's the total --

1891 MR. BLACKBURN: They are total market revenue figures. That was an increase over 15 per cent from the previous year. The revenue trends for this fiscal appear to be pacing last year and our estimation or at least our forecast with the potential that one or maybe two FM licences entering the market will increase tuning. As tuning increases into the market, therefore, revenue increases.

1892 COMMISSIONER NOËL: Increases -- okay.

1893 What if there was a sixth licensed radio station? What would be the impact in the Victoria market on the advertising revenues for your two stations?

1894 MR. BLACKBURN: Our share of market revenues now with the two stations is 39 per cent. However, we anticipate that there will be at least one new FM competitor in the market. Should one of those competitors have a format skewing to younger demo, it will impact our FM station in the younger demos, particularly 18-34.

1895 We see a decrease in our market revenues on the FM station. We project with an FM competitor coming into the market, our share of revenues would be approximately, combined, 30 to 32 per cent.

1896 COMMISSIONER NOËL: That is assuming you have two FM stations instead of an AM and an FM?

1897 MR. BLACKBURN: Right.

1898 COMMISSIONER NOËL: Could you provide an estimate of the percentage of the incremental advertising revenues that would be generated if your format is changed from an AM to an FM station?

1899 MR. BLACKBURN: Yes. I will just refer to my notes here, if I may.

--- Pause / Pause

1900 MR. BLACKBURN: Could I get you just to repeat that?

1901 COMMISSIONER NOËL: Yes. What is your estimate of your incremental revenues in percentage if we allow you to change your AM station to an FM station? What is the amount of additional revenue that you would get from just switching bands?

1902 MR. BLACKBURN: Okay. In the first year, we estimate revenue increases of $50,000; $50,000 in year one; an additional $80,000 in year two. I can give you percentages: approximately from 5 per cent to 9 per cent in year five.

1903 COMMISSIONER NOËL: Over what you are getting in revenues at the AM station now and year five?

1904 MR. BLACKBURN: Yes, that's right.

1905 COMMISSIONER NOËL: Recognizing the competitive nature of this Victoria FM application process and in the event that the Commission does decide to grant new Victoria FM licences to yourself and other applicants as part of this proceeding, could you outline for us the impact of such a scenario on your submitted business plan and particularly on projected revenues and audience shares?

1906 MR. STUART MORTON: Our business plan as submitted did take that into account. We assumed that at least one other licence was going to be granted. Brian, do you have some detail on that?

1907 MR. BLACKBURN: Yes, I do. Our share of audience in year one would be approximately 7.6 per cent. Our share of revenues on CKXM-FM in year one would be approximately 5.5 per cent to 6 per cent in year one. Our combination of CKXM-FM and The Q share of revenue would be 35 to 37 per cent in year one.

1908 MR. STUART MORTON: I think we should add that we believe that licensing additional stations is going to increase the revenue balloon, so to speak, so that these percentages are percentages of a larger revenue picture for the entire market.

1909 COMMISSIONER NOËL: Because local advertisers will go to your stations rather than to Vancouver or Seattle stations?

1910 MR. STUART MORTON: That's right. From a national perspective, Dan could certainly give you a little more detail because the national is a huge part of the revenue stream in this market.

1911 MR. McALLISTER: Those sales are based on share of market tuning and by going to FM and increasing the audience share in the market, the FM station would attract more national dollars. The market would attract more national dollars and the whole thing will grow in that form.

1912 I think our numbers are quite conservative based on some of the other markets that we have seen across Canada of comparable size, where the country FM, its share of FM tuning is quite high. If they are there with the other FMs when musical choices are being made, they are more likely to be chosen as a radio station to listen to if someone is dialling by.

1913 A lot of tuning is done by accident in a lot of markets in North America and if you are looking for music and you don't know what kind it is, you may not probably go to the AM band to look for country or any other music for that matter.

1914 COMMISSIONER NOËL: You demonstrated that earlier.

--- Laughter / Rires

1915 MR. McALLISTER: Thank you.

1916 COMMISSIONER NOËL: Quite eloquently.

1917 One of the -- if you applied for -- what is the number of that, ninety, ninety, ninety? -- I'm looking for the number of the station.

1918 MR. STUART MORTON: 91.3?

1919 COMMISSIONER NOËL: 91.3. If that frequency was not available because of some reasons, would you consider another FM frequency?

1920 MR. STUART MORTON: Well, our analysis -- our consultant's analysis is that there is a very low probability at this time that there is another useable frequency other than 91.3 in the market.

1921 COMMISSIONER NOËL: Okay. Could you elaborate -- I think one of the reasons people want to flip from the AM to the FM frequency is the night coverage. Is that part of your concerns?

1922 MR. STUART MORTON: No, nighttime coverage is not an issue, although certainly, FM gives you 24-hour interference-free coverage. Absolutely. But the nighttime -- we don't believe the nighttime coverage is an issue in this particular instance.

1923 COMMISSIONER NOËL: Okay.

1924 MR. SHIELDS: If I might just say through, from a programming perspective, we do get calls from listeners who can't listen to our radio station after 8:00 at night because of interference.

1925 COMMISSIONER NOËL: Because you have to lower your power?

1926 MR. SHIELDS: No, it is just the atmospheric interference.

1927 COMMISSIONER NOËL: Okay. I have no more questions. Cindy.

1928 THE CHAIRPERSON: Thank you, Commissioner Noël.

1929 I believe Commissioner Wylie has a question.

1930 COMMISSIONER WYLIE: You indicate that you don't have a problem with the approval of your application and approval of another application of the three that are before us, correct?

1931 MR. STUART MORTON: That's right.

1932 COMMISSIONER WYLIE: And you have given Commissioner Noël some numbers as to what the effect of that may be on your business plan?

1933 MR. STUART MORTON: Yes.

1934 COMMISSIONER WYLIE: What I'm not clear is whether you are speaking here -- well, let me backtrack. We have two applications on 107.3. One is an actual addition. It would be a sixth station in the market?

1935 MR. STUART MORTON: That's right.

1936 COMMISSIONER WYLIE: And one is what we refer to -- perhaps not in as dignified a manner as we could considering the difference -- as a flip from AM to FM, which would still remain then five stations in the market. When you gave those figures to Commissioner Noël, which of these two were you looking at?

1937 MR. STUART MORTON: We were talking about the addition of another station.

1938 COMMISSIONER WYLIE: A brand new station?

1939 MR. STUART MORTON: That's right, yes. When we did those projections, we weren't aware of the application by Rogers for --

1940 COMMISSIONER WYLIE: No, but you could have changed the numbers today?

1941 MR. STUART MORTON: No. Those are for the sixth.

1942 COMMISSIONER WYLIE: Would it be very different if instead of a sixth station the Commission were to approve one of the -- your flip and the other flip instead? Because the frequencies are different, there is no competition. Would your answer be different if the other approval were to the flip rather than to the sixth station?

1943 I am simply positing that that station, if it is a flip, is taking some money out of the market. Presumably, it will improve its situation with format, with sound and perhaps take more, but would it be equal to a sixth station?

1944 MR. STUART MORTON: It, you know, the existence of -- or a flip, as you call it, there may be some differences but I think that bringing another FM station into the market, first of all, the most positive element is that it increases local tuning in the market and therefore, there is an opportunity for the entire market revenue to grow. So I don't think that there is any really hugely significant differences between those two scenarios.

1945 COMMISSIONER WYLIE: When you talk as a broadcaster about this ballooning because of more tuning, is there any end to this? For example, if we were to find some way technically as we go through the day of licensing all the applications before us for Victoria, would your enthusiasm about more listening, brought on by more stations, be dampened?

1946 MR. STUART MORTON: Well, first of all, I believe that competition is good. I think that too little competition leads to poor product. On the other hand, certainly, in many American markets, we have seen situations where there was basically too much competition, where you had 50 stations, and 10 were making money and the others were all losing money. That seems like a rather poor use of valuable public frequencies. I think that certainly the levels we are talking about are healthy competition.

1947 COMMISSIONER WYLIE: Yes.

1948 MR. McALLISTER: If I could add, Madam Wylie, the increase in tuning in the Victoria market historically changed 12 years ago when we put The Q on the air and there was some 42 per cent out-of-market tuning. Today, there is 23 per cent and there are still 3 million hours that aren't being tuned by Victoria stations.

1949 COMMISSIONER WYLIE: Yes. My question was: Will it go to 46?

1950 MR. McALLISTER: We won't recapture everybody, but there is a --

1951 COMMISSIONER WYLIE: Do we eventually reach a saturation where we hear the arguments we heard yesterday about what is sustainable competition?

1952 Interestingly, that brings us to the Chair's comment in her opening remark that this is the first competitive hearing we have in English Canada -- we had one in Montreal -- since the new policy and the proposal to approve more consolidation in the industry -- not a proposal, a policy, but I suppose each hearing will hear proposals and decide how to apply it.

1953 So one of our questions, obviously, is: Is there a point where overlicensing is still a possible concern for broadcasters, given the new policy and the Commission's standing back from applying the radio market criteria as it used to? As broadcasters, do you feel comfortable with everybody who applies getting a licence?

1954 MR. STUART MORTON: M'hm. Yes, we do. I think the new policies, ownership policies are creating a situation where it is possible to have more licences and maintain a very healthy market.

1955 COMMISSIONER WYLIE: Now, you are speaking today for the Victoria market?

1956 MR. STUART MORTON: Yes.

1957 THE CHAIRPERSON: But my understanding is you have other radio stations as well, am I correct?

1958 MR. STUART MORTON: Yes, we do.

1959 COMMISSIONER WYLIE: Do you think that there are circumstances where your comments would be different?

1960 MR. CHAREST: Yes.

1961 COMMISSIONER WYLIE: About how generous you are about how many people can be licensed in the market?

1962 MR. CHAREST: Well, I don't think we are generous to that extent because I think Edmonton has been falling under that category where there were perhaps too many licences and it was difficult for some radio stations to etch out a proper scene where their employees could be paid well and they could all survive financially and make a profit.

1963 So when we look at other markets, certainly. If I were to be writing a plan for what will go on in the country, I would be cautious of some cities in Canada.

1964 COMMISSIONER WYLIE: Yes, and some of your comments may come back to haunt you if you are a broadcaster who has more than one market. I am not familiar sufficiently with -- as Commissioner Grauer would be -- with the situation but we are obviously going, over time, to develop some new ways of how we look at this and we are interested to hear broadcasters as to what the Commission should still look at and decide where consolidation can be allowed and where more licences can be granted, et cetera. We do have in our policies some objectives obviously but it is a new game and we are interested to hear what you have to say.

1965 So with regard to the Victoria market, you feel, if there were a way technically, all licences could be granted and you wouldn't have a financial or commercial problem?

1966 MR. STUART MORTON: No. We agree with that.

1967 COMMISSIONER WYLIE: But you also agree or seem to suggest that the Commission should not be completely hands-off about looking at what is sustainable when there are new entrants applying for licences?

1968 MR. STUART MORTON: Yes.

1969 COMMISSIONER WYLIE: This would be a general comment, not with regard to the Victoria market?

1970 MR. STUART MORTON: That's right.

1971 COMMISSIONER WYLIE: But just as a broadcaster because, as the Chair indicated, we are anxious to hear how this will develop because it is a new game. Thank you.

1972 Thank you, Madam Chair.

1973 THE CHAIRPERSON: Thank you, Commissioner Wylie.

1974 I have a couple of questions with respect to the Victoria market. This has, as I understand it, a high degree of out-of-market tuning compared to other markets in the country.

1975 One of the things I was curious about was, I think, the figures you just gave. CBC has been, until the fall, a Vancouver rebroad. So that would sort of look officially as an out-of-market station but it was probably included in your calculations as local tuning, is that correct?

1976 MR. STUART MORTON: Well, CBC was not included in the local market ratings reports when it was a Vancouver station. You had to get the unsuppressed reach to see what it was doing.

1977 THE CHAIRPERSON: Okay. So given this high figure of out-of-market tuning, you, I think, referred in your presentation to repatriating listeners as you did with The Q in the early 1990s. I wonder if you could elaborate on that a bit.

1978 MR. STUART MORTON: Dan, would you like to?

1979 MR. McALLISTER: As I indicated before, every time there has been an increase in in-market tuning, it has had something to do with: (a) The Q coming on the air; or (b) the re-launch of CKVA to CKXM as a country format and CFMS re-launching to CIOC, the Ocean, on the FM.

1980 It is interesting to note that those two stations were re-launched during a fall BBM book of 1995. While that was under way, CKXM was off the air for most of that sweep period. The out-of-market tuning actually went up 4 per cent. When we got back on the air in the spring of 1996, during that cycle, it went back down to 23 per cent.

1981 So we see the impact of the licences changing here every time something like that has happened and I think that when we get back to comparing it with other stations we see that the country FMs in markets all across Canada of comparable size, as well as in Calgary and Edmonton, the AM country in those markets doesn't share music listeners with FM. Those percentages are very low. When they are on the FM band, the percentages are very high because they are there where musical choices are being made and that is why we want to get CKXM up on the FM band.

1982 We entered the market with a 7.3 per cent back in 1987 on The Q and that was directly from out-of-market tuning. I think the out-of-market tuning went down by 6.8 per cent. The Q launched with 7.3. So there is a definite impact and the evidence is there, I think.

1983 THE CHAIRPERSON: So you have the evidence to show that when a new station -- an FM station has been added, you repatriate out-of-market tuning?

1984 MR. McALLISTER: Yes. Yes, the other stations weren't affect at all. We went from -- CFMS went from 12.9 to 11.3. That has not changed. When you go from -- on the re-launch -- from a 6 to a 12, that's change. That is what happened when they went from CFMS to the Ocean.

1985 THE CHAIRPERSON: Thank you. I know that Victoria is seen to have fewer licences per capita, if I can put it that way, than other markets of similar size and in particular, two FMs and three AMs. To what extent is this an anomaly and can you maybe give me some history, if you can, as to how this may have evolved?

1986 MR. STUART MORTON: Well, I think, going back to our experience with The Q, some of it is the stereotypes, the image that Victoria has. There was one FM station there for about 25 years. When we applied for The Q as a rock station, people -- as I said in my presentation -- literally thought we were crazy because Victoria just didn't seem to be that kind of a market. But the reality is that population demographics are much like any other market.

1987 I think also, of course, the answer is: There is so much coming into the market. There are 69 radio signals, according to BBM, that come into Victoria; 22 of those are on the AM band. The rest are all FMs. So you know, people have -- again, when we launched The Q, we spent a lot of time in Victoria. It was just amazing how many people were tuned to American FM stations.

1988 One of the audio dealers that became a good client of ours used to show us how people would buy these antenna amplifiers and instal them in their cars so they could pick up the American stations. So perhaps there hadn't been the impetus to develop new licences.

1989 THE CHAIRPERSON: What is the quality of the signal from those out-of-market stations in Victoria?

1990 MR. STUART MORTON: Well, it depends where you live. If you like in Oak Bay, the American signals come in pretty well. It is one of those things where you are driving along listening and suddenly it disappears and comes back a block later. When it is there, it's great and it is amazing what people will put up with if they like what they are hearing, I guess. But certainly, they are a factor.

1991 THE CHAIRPERSON: What I am really trying to do is get a sense of the whole issue of repatriating listeners. Obviously, sound quality must have something to do with it. The genre has something to do with it.

1992 MR. STUART MORTON: Absolutely.

1993 THE CHAIRPERSON: So I am just trying to get a sense of what the competition would be.

1994 MR. STUART MORTON: A more dependable signal. When The Q came on, that signal, you know, the big rock stations where CFOX, in Victoria, CFOX, and 99.9 in Seattle, people told us, you guys have such a great signal, my radio is locked on you. So that is a big factor. Local content, of course, is the other big factor.

1995 THE CHAIRPERSON: M'hm. I am sure you are aware, the Conference Board of Canada has very sort of grim projections for the Victoria market and very low growth rates in the local economy. I think what we are hearing is that your experience is somewhat contrary to that and I think there is some evidence that the radio advertising market grew fairly significantly last year and you are reasonably optimistic. I wonder if you could -- do you have any explanation for --

1996 MR. STUART MORTON: Well, I will make a couple of comments. Dan, I'm sure, will want to say something as well.

1997 We are somewhat insulated because it is a government community and the employment in government is very strong but there are some other factors. Dan, I know, has got some information there.

1998 MR. McALLISTER: I'm not sure exactly what year it is but it's not too far down in the early, how will we say, 2000s.

1999 THE CHAIRPERSON: The early part of the next century.

2000 MR. McALLISTER: That's it, where the birth rate and the death rate kind of are a saw-off and then we have in-migration as population estimate grows. Where does it happen here -- about 2003, that begins to swing. In about 2010, we are going to see in-migration and that will be the growth pattern.

2001 For instance, right now, the main demographic group in Victoria is the 25-54 year age group. That will move to 35-54 forever as long as we are all alive; 25-54 will be a strong number too but we won't see the young people staying. There will be out-migration, according to these forecasts, and it will age like the rest of the country. It is fairly close to the rest of the country -- is my understanding anyway.

2002 MR. STUART MORTON: Tourism is also a big factor in that.

2003 MR. McALLISTER: Well, tourism is our number one industry and some of the people come back to stay.

2004 MR. STUART MORTON: It has been strong. Business in the tourist industry has been very good, partly because of the Canadian dollar, I guess, but I think they had some records last year.

2005 MR. McALLISTER: This year was a record. It was a $2-billion year.

2006 MR. STUART MORTON: Yes.

2007 MR. McALLISTER: Ahead of schedule.

2008 THE CHAIRPERSON: You are experiencing a very buoyant radio advertising market, I take it, from the comments you are giving us here today?

2009 MR. STUART MORTON: Yes.

2010 THE CHAIRPERSON: Okay. Thank you very much.

2011 Counsel.

2012 MS MOORE: Thank you, Madam Chair. First, I just wanted to clarify: With respect to the issue of nighttime coverage, I wasn't sure whether ultimately you were saying that it is a concern that motivated you?

2013 MR. STUART MORTON: No, it is not a concern that motivated us. I think John's comments were just informal, empirical comments. But no, it is not one of the primary concerns.

2014 MS MOORE: Thank you. Earlier, you indicated that you would accept a condition of licence with respect to the program format. However, recognizing the flexibility that is now offered to commercial stations, for instance, the ability to shift formats without prior Commission approval, and in the absence of specific programming conditions of licence, could you offer us in further detail your thoughts on why you should be awarded a licence?

2015 MR. STUART MORTON: In terms of commitment?

2016 MS MOORE: Just in terms of -- I mean, you have had discussions earlier today with Commissioner Wylie and some of the other members with respect to what should the Commission be taking into account given the new Radio Policy and I would like to tie that specifically to your application in terms of some of the thoughts that you had offered earlier?

2017 MR. STUART MORTON: Well, I think that in one of the important factors -- as we mentioned, Victoria is kind of a linchpin of our operations. From our company's point of view, it is our largest market. We are in that middle ground.

2018 We are not a large corporation but we are not a local company either. I think that companies our size make a very significant contribution to the radio industry because of a looser corporate structure. We take more chances, we experiment a little bit more, and I think that our ability to grow and survive and develop in a market like Victoria will make a real contribution to the diversity that this industry needs in ownership as well as in programming formats.

2019 In addition to that, our ownership profile is also local, as Roger mentioned. I don't think he did mention that we have had a presence in Victoria since 1986 when we started applying for the licence. Roger spent three years there and then I moved out to Victoria to be involved with the station. So I believe that local ownership and our presence in that is important as well.

2020 MS MOORE: Thank you.

2021 Those are my questions, Madam Chair.

2022 THE CHAIRPERSON: Thank you, counsel.

2023 I think what we will do is take our morning break and reconvene at 11:15.

--- Short recess at / Courte pause à 1105

--- Upon resuming at / Reprise à 1125

2024 THE CHAIRPERSON: We will now reconvene.

2025 Madam Secretary.

1125

2026 MS VOGEL: Thank you, Madam Chair.

2027 Item 4 of our agenda is an application by Rogers Broadcasting Limited for a broadcasting licence to carry on an English-language FM (radio) programming undertaking at Victoria, operating on the frequency of 107.3 MHz (channel 297B) with an effective radiated power of 9,400 watts, upon surrender of the current licence issues to CJVI Victoria.

2028 The applicant proposes to provide a music format consisting of a blend of gold-based musical selections from a number of different musical genres.

2029 The applicant is requesting permission to broadcast simultaneously on the AM and FM bands for a period of three months before surrendering the current licence issues to CJVI Victoria.

2030 The Commission also notes that this application is technically mutually exclusive with the application filed by Seacoast Communications Group Incorporated which is also scheduled at this hearing for the use of the 107.3 MHz frequency.

2031 Could you go ahead when you are ready, please.

PRESENTATION / PRÉSENTATION

2032 MR. VINER: Thank you, Madam Secretary.

2033 I am Tony Viner, President of Rogers Broadcasting. With me today, on my immediate right, is Gary Miles, Executive Vice President, Radio Operations; to Gary's right, Sandra Stasiuk, Vice President, Finance, Radio Operations; to my immediate left, Kim Hesketh, Vice President and General Manager of CJVI-AM and CIOC-FM in Victoria; and next to Kim, Sandy Sanderson, Executive Vice President, Programming for Rogers Broadcasting Limited.

2034 We are pleased and excited to be before you today. Victoria is a challenging radio market in which almost half of all listening is to out-of-market radio stations. We see this hearing as an important opportunity for the Commission to significantly increase the choice and diversity of local radio services, and in so doing, to repatriate listeners and strengthen the local radio market.

2035 We are proud of the radio broadcasting heritage of our company and the reputation that we have established for innovation and for achieving success through investment in high-quality programming.

2036 In the 1960s, we launched one of Canada's first FM radio stations when very few people actually owned radios capable of receiving an FM signal. Today, that radio station, CHFI in Toronto, is one of Canada's most successful radio stations. Carrying on the tradition, in the 1990's, we undertook substantial investments to launch Canada's first all-news AM radio stations: 680 News in Toronto and CKWX News 1130 here in Vancouver.

2037 Over the years, Rogers Broadcasting has been a leader in supporting Canadian creative expression and Canadian talent development. We were one of the original founders of FACTOR in 1982 and since then have provided a total of $3.5 million to support its work.

2038 Rogers Broadcasting has long been committed to employment equity. We were one of the founding members of Canadian Women in Communications and were extremely pleased to be awarded the CWC Employer of the Year citation in 1998. Today, almost half of all senior management positions in Rogers Broadcasting are filled by women.

2039 Rogers Broadcasting currently owns and operates nine AM and ten FM radio stations in larger and smaller markets in British Columbia, Alberta, Manitoba and Ontario. We have been actively involved in the radio broadcasting industry in British Columbia and in Victoria for almost a decade, since we acquired the Selkirk radio stations.

2040 As my colleagues will now tell you, we believe that our proposal to convert CJVI-AM to an FM radio station with a unique and distinctive adult-oriented format will directly address the needs and interests of a significantly underserved segment of the local radio audience in Victoria and will make a substantial contribution to increased choice and diversity in the market.

2041 MR. MILES: Rogers Broadcasting operated CJVI-AM as a stand-alone radio station until 1995 when we acquired CFMS-FM which we subsequently re-launched as CIOC-FM -- the Ocean.

2042 As is our practice will all of our AM radio stations, we have undertaken substantial investments to improve the quality of the programming provided by CJVI-AM. In 1997, we converted the radio station from a music format to the significantly more expensive to operate news/talk format. After almost three years of ongoing investment in the programming provided by CJVI-AM, our operating losses now exceed $1.5 million.

2043 Victoria is a unique radio market. Local listeners have easy access to a wide range of attractive out-of-market FM radio signals from a number of larger Canadian and U.S. cities. This has undermined the effectiveness of the AM band in Victoria.

2044 In our view, the AM band in Victoria will now support only two formats, news/talk and country, with one station in each format. The news/talk format in Victoria is dominated by CFOX AM. The country format is securely occupied by CKXM-AM. There is no room for CJVI-AM in this mix.

2045 Our experience with CIOC-FM in Victoria has been instructive. We invested substantial resources to re-launch the station as the Ocean, with a new format specifically designed to appeal to those younger FM listeners who were seeking increased programming choice and diversity from out-of-market FM radio stations. The Ocean has now doubled its share of listeners, almost entirely at the expense of out-of-market FM radio stations. Tuning to out-of-market FM radio stations in Victoria fell from 57 per cent of all FM tuning in 1995 -- prior to the launch of the Ocean -- to 44 per cent in 1998.

2046 Charts I and II illustrate some recent trends in listening in the Victoria radio market. All information is from published BBM research.

2047 As you can see from Chart I, there has been a substantial increase in tuning by people under 45 in Victoria to the in-market radio stations. In-market tuning by members of this age group increased by six points over the period spring 1995 to the fall of 1998, that is, from 56 per cent up to 62 per cent. This is at least in part due to the re-launch of CIOC, the Ocean, that I just described.

2048 At the same time, as you can see from Chart II, tuning to in-market radio stations by listeners over the age of 45 has decreased. In-market tuning by members of this age group fell by five full points over the period, spring 1995 to fall 1998, that is, from 51 to 46. Clearly, the needs and interests of listeners over the age of 45 are not being addressed fully by local radio stations and these listeners are tuning to out-of-market stations for increased choice and diversity.

2049 As you can see from Chart III, listeners over the age of 45 in Victoria now devote more time to out-of-market radio stations than to local Victoria radio stations. Of the 3.2 million hours each week of tuning to radio by listeners 45+ in Victoria, 1.7 million hours or more than 50 per cent of these hours are lost to out-of-market radio stations in Vancouver, Seattle and Bellingham.

2050 In addition, over the next few years, demographic trends could result in further out-of-market tuning in Victoria. As you can see from Chart IV, based on information published by Stats Canada, the percentage of the population that is over 45 years old is projected to increase from 40 per cent in 1996 to 44 per cent by the year 2004. This means, at the same time, the percentage of the population that is under 45 will be expected to decrease from 60 in 1996 to 56 per cent in the year 2004.

2051 Our application to convert CJVI-AM to an FM radio station is specifically designed to respond to these underlying demographic and market trends.

2052 We are proposing to provide a mix of music, news and information programming that will be of particular interest to listeners in the 45+ age group. In so doing, our proposed new FM radio station will fill an important hole in the Victoria radio market. It will significantly increase choice and diversity to the local radio market and it will repatriate listeners from out-of-market radio stations with little or no impact on the audience or revenues of other local radio stations.

2053 MR. HESKETH: As Gary said, the 45+ age group is increasing at a rapid rate in Victoria. This trend is being fuelled not only by the natural aging of our established population but also by the popularity of our city as a retirement destination.

2054 We believe that the new FM radio station that we are proposing will quickly distinguish itself in Victoria by providing a distinctive adult-oriented format that directly responds to the information and music needs and interests of members of the 45+ age group.

2055 Our target listeners are aging "baby boomers". They are politically aware and deeply interested in their local community. They expect to have access to a wide variety of local, regional and national news and information.

2056 Our proposed new FM radio station will directly respond to these expectations by providing more news and information programming than is the norm for a hit-based contemporary format radio station.

2057 As set out in the sample program schedule in Chart VI, our proposed new FM radio station will provide 30 minutes of information programming each hour, from 6:00 a.m. to 9:00 a.m. on weekday mornings, including news, weather, traffic and ferry information, sports, and business and entertainment features. A half-hour magazine program will be scheduled each day at noon, with major news packages at 5:00 p.m. and 6:00 p.m. each weekday.

2058 Newscasts will feature local personalities and news commentators and will provide detailed coverage of local, regional and national issues. Extensive business and sports reports will be provided along with detailed five-day weather forecasts from Environment Canada. Shorter news, weather and sports packages will be available throughout the day.

2059 Living in Victoria can present many challenges with respect to transportation to and from Vancouver Island. Ferry information is of particular interest to many Victoria residents. Our new FM radio station will meet this demand by including ferry updates in every hourly newscast along with local traffic conditions and road construction information.

2060 Our target listeners are accustomed to the quality of an FM radio signal. They are looking for the gold-based standards that our research indicates are not available on in-market FM stations in Victoria.

2061 Our proposed new FM station will respond directly to this demand by providing musical selections by such Canadian artists as Paul Anka, Anne Murray, Gordon Lightfoot and Rita MacNeil. Foreign artists will include Carole King, Neil Diamond, James Taylor, and Simon and Garfunkel. Selections by these musical artists were not available on any local FM radio station in Victoria last week.

2062 As you can see from the sample schedule, gold-based music will be featured in the mid-morning, afternoon and early evening periods. In the late evening on weeknights, the station will provide musical selections with a softer sound.

2063 Our target listeners are oriented towards the gold-based standards but they also have eclectic musical tastes, with a well-developed interest in a wide variety of musical genres from jazz to swing to light classical to gospel. Our proposed new FM radio station will respond to these interests as well.

2064 On Saturday, the late evening period will be devoted to jazz. We will play selections by such Canadian recording artists as Oscar Peterson, Moe Kaufman and Diana Krall, a Vancouver Island jazz artist and Grammy nominee. On Sunday mornings, we will feature gospel music, including selections by such Canadian artists as Canadian Gospel and Carolyn Arends. The late evening period on Sunday will be devoted to light classical.

2065 Our proposed new FM radio station will continue CJVI-AM's long-established tradition of active involvement in the local community. In cooperation with the Ocean, the station will seek out new opportunities to serve the local community, such as our highly successful annual "Coats for Kids" campaign.

2066 As we do in all the communities where Rogers Broadcasting has stations, our proposed FM station will also rely on the advice and assistance of the long-established Rogers Broadcasting Local Advisory Board. The members of this Board are prominent local citizens with a clear commitment to the local community. Current members of the Board are Lynda Farmer, the Past Chair of the United Way Campaign for Greater Victoria; Carole Didier, the Past President of the Victoria Chamber of Commerce; and Glenn Terrell, the CEO of the Victoria Chamber of Commerce.

2067 As part of this application, we have included substantial additional commitments to serve the local community and to contribute to the achievement of the policy objectives of the Broadcasting Act.

2068 If this application is approved, Rogers Broadcasting will contribute $500,000 over seven years to support the development of Canadian musical talent by the Victoria Symphony Orchestra.

2069 Each year, the Victoria Symphony Orchestra presents a free concert to thank the people of Victoria for their support. This concert, which is known as "Splash", is held in the Victoria Inner Harbour. The orchestra performs pieces from a wide variety of musical genres and new and emerging Canadian musical artists often are featured in the program.

2070 The funding we are proposing will be used to support the cost of "Splash" when new and emerging Canadian musical talent is featured or to support other initiatives by the Victoria Symphony Orchestra that directly contribute to the development of Canadian musical talent.

2071 MR. VINER: In addition, if this application is approved, we will provide a total of $1.5 million to FACTOR over seven years to support the important work of this organization in developing and promoting Canadian musical recordings by new Canadian musical talent.

2072 Rogers Broadcasting will request that FACTOR earmark $1 million specifically to support the recording of the works of Canadian musical artists suitable for play on Adult Contemporary radio stations. As the Commission is aware, there is a serious shortage of new Canadian music in this genre. This initiative is intended to help resolve this problem and will benefit all AC radio stations in Canada as well as Canadian creative musical talent.

2073 We will request that FACTOR earmark the remaining $500,000 to support the recording of the works of Canadian musical artists who are either currently based in or who began their musical careers in British Columbia. This proposal will support the continuing growth and development of Canadian musical artists from British Columbia and thereby help to ensure that Canadian musical artists from this province achieve greater prominence across the country.

2074 Rogers Broadcasting will further support the development of Canadian musical artists from British Columbia by ensuring that all FACTOR-supported recordings made by these artists as a result of this earmarked contribution are played on our proposed new FM radio station.

2075 The two proposals set out in our application represent a commitment by Rogers Broadcasting to contribute a total of $2 million over seven years and to undertake other promotional activities to support Canadian creative expression and the development of Canadian musical talent. These commitments are contingent only upon the approval of this application.

2076 Before we conclude our presentation, I would like to address one last issue.

2077 In our application, we proposed to use channel 297B. At the same time, we noted that our engineering studies had identified other channels that would be suitable for a new FM radio station to serve Victoria.

2078 We also indicated to the Commission that we did not believe that the approval of our application to convert CJVI-AM to an FM radio station would significantly change the competitive structure of the Victoria radio market. We are not proposing to add a new radio station to the market but rather would simply be moving an existing AM to the FM band.

2079 As such, it was and still is our view that there are no technical or economic reasons why the approval of our application would prevent the Commission from licensing an additional FM radio station as part of this proceeding if it were to determine that such a course of action were to be in the public interest.

2080 Moreover, while we have applied to use channel 297B, we would be prepared to use a different channel if the Commission were to determine that would be in the public interest. In that case, as it has in a number of past decisions, the Commission could approve our application conditional upon the location of a different frequency from the one that we have proposed and conditional upon written notification from Industry Canada that the necessary Broadcasting Certificates will be issued.

2081 Madame Chair, members of the Commission, in summary, we believe that the approval of this application to convert CJVI-AM to an FM radio station with a unique and distinctive adult-oriented format would be in the public interest for the following reasons:

2082 (1) It will increase the choice and diversity of high-quality radio programming on the FM band for a significantly underserved and rapidly growing segment of the Victoria radio audience.

2083 (2 ) It will allow the Commission to further increase choice and diversity in the Victoria radio market by licensing an additional new FM station as part of this proceeding.

2084 (3) It will repatriate audiences and revenues to the Victoria radio market.

2085 (4) It will have little or no negative economic impact on other radio stations in the market.

2086 (5) It will result in significant benefits totalling $2 million over seven years for the development of new and emerging Canadian musical talent.

2087 For all of these reasons, Rogers Broadcasting believes that this application is in the public interest and should be approved.

2088 We look forward to any questions that you may have for us.

2089 THE CHAIRPERSON: Thank you, Mr. Viner.

2090 I will now turn to Commissioner Wylie for questioning.

2091 COMMISSIONER WYLIE: Thank you, Madam Chair.

2092 Good morning, madam and gentlemen. You heard me this morning suggest or pick up on the Chair's comment that we encourage participants to give us some input as to how the CRTC should evaluate applications under the new policy.

2093 I would be, especially since this is the first time that we hear this type of competitive scenario under the new policy which has relaxed the ownership rules that existed before, since you are an experience broadcaster, before examining the details of your own application, I would like to explore with you what you believe are the criteria that should guide the Commission in attributing licences under its new policy while pursuing the objectives that it set out in that policy. So perhaps we can go into Radio 101 before we go into Radio 107.3.

--- Laughter / Rires

2094 COMMISSIONER WYLIE: I will refer, and it may stand you in good stead in some other markets, if it is not crucial for you in this market to go through this exercise.

2095 Should the Commission licence the applications -- if you go to the policy, the Commission stated in that policy at paragraph 6 that this policy was aimed at ensuring a strong, well-financed radio industry for the 21st century and that it would allow consolidation of ownership so that there would be new investment and more sustainable competition, despite the fact that it may look like there is a decrease in players.

2096 At paragraph 10, it announced that it would no longer apply the radio market policy when examining competing applications. In fact, you are aware that this market policy was intended to apply three criteria to see whether or not a market could sustain another station.

2097 The Commission, at paragraph 78 of the policy, said that it would no longer apply the radio market policy and it would be prepared to issue licences depending on the individual merits of the applications, in particular, the benefits that approval would bring to the community and the broadcasting system.

2098 At the same time, however, the Commission has two broad objectives and the policy, one, is to ensure that there is a diversity of news voices; the other, as I just read to you and it is in a number of paragraphs, that approval of the application would be beneficial to the community concerned and to the broadcasting system as a whole.

2099 So therefore, we have no radio market policy application per se in the manner that was applied before and two broad objectives, retain a diversity of news voices and ensure that there is merit to the application for the community concerned and for the broadcasting system as a whole.

2100 So if we go back to the market policy, should the Commission, in applying this policy, license all the applications before it that have merits in not diminishing unduly the number of news voices, perhaps adding to them and being beneficial to the community and to be the broadcasting system as a whole and do that without regard to the likely eventual viability of all the players and of the market to absorb the new player?

2101 So put simply, should the Commission license all applicants that meet these objectives without regard to the market in which they will be performing and say, well, the better stations will survive or should it still have some concern about the ability of the market to sustain new entry?

2102 And since this is Radio 101 rather than 107.3, I would like you to go beyond the Victoria market, which is a particular situation perhaps.

2103 MR. VINER: Commissioner Wylie, I will try to answer as best I can.

2104 First, I do believe that, as is the Commission's policy in most things, it does deal on a case-by-case basis and I think it will be difficult to find a policy that works everywhere and in every market in Canada. I think the practical reality of the availability of frequencies is something that of course the Commission is going to have to deal with.

2105 With respect --

2106 COMMISSIONER WYLIE: Since we can't control that --

2107 MR. VINER: Yes.

2108 COMMISSIONER WYLIE: Really, I didn't put it into the mix because there will be some situations where there is just no other frequency to be used. So I thought this would not be really an item that we would particularly be concerned about.

2109 MR. VINER: I believe that, with respect, when we, Rogers Broadcasting made their submission to the Commission at the hearing prior to or the result of which was the new Radio Policy, I think we did argue that the market criteria served a useful purpose in order to provide for controlled growth. That decision has now -- that Regulation or concern or criterion has now been put aside.

2110 I do think though that the Commission does have to take into consideration in some way the financial viability. I think what the Commission shouldn't be concerned about necessarily is that individual broadcasters sustain their existing levels of profitability or their existing revenues.

2111 But I do think that the Commission has to understand that there is a competitive balance in a market that has to be addressed. I do think the Commission should license the best idea and I think the Commission has to look at the contribution to the Canadian broadcasting system and to Canadian talent development in its deliberations.

2112 So I think that -- it was always my understanding that the Commission would no longer be bound by the market entry criteria but would take into consideration the effect of licensing on various markets. I think that when an applicant comes before you, you will get, in the normal course, interventions from existing broadcasters that will tell you what the impact of that licensing of that or those licensees, those new applicants will have on the market and I think that is going to have to play a role in your deliberation. I don't know if I have answered your question fully.

2113 COMMISSIONER WYLIE: What would be the result, in your case, of not giving this some consideration without applying the market criteria in a technical, mathematical or formulaic way as perhaps was done before? What do you see as the damage to the broadcasting system of licensing without regard to the ability of the market to sustain an additional station?

2114 MR. VINER: Well, I think -- personally, I believe that overlicensing might result, and if overlicensing results, I think that ultimately -- and our argument had always been that ultimately service to the local communities will be difficult to sustain.

2115 We talked without rehashing our submission but at the time that we made it, we tried to make the case with the Commission that -- and I think we did -- that there was too much dissolution and dilution of investment and of effort under the existing circumstance and that is why we made the argument for multiple licence ownership.

2116 My concern under a scenario where sort of everybody who was licensed in every case -- now, it may well be that in the case of Victoria which is a healthy and buoyant market, I would have a different response and that is why I said case-by-case. But I think that the potential is, without regard, that we may end up with a system that does not deliver the level of service.

2117 I know that the Commission is concerned about three issues. One is Canadian and one is diversity, but the third is high quality, and I think that my concern is that overlicensing might lead to lower quality.

2118 COMMISSIONER WYLIE: Could it not be that it would do the opposite, that it would lead those who are willing to, to rise to higher levels of performance, for example, to be a better presence in the community, perhaps offer more local programming, better diversity, actually be spurred to higher levels of performance so that they are the ones that remain on top? Could it not have the opposite effect?

2119 MR. VINER: Sure. I think that that is a possibility. But I think that we have seen that in a practical sense that does not always occur. What does occur is that stations who find themselves in economic hardship occasionally introduce programming that is inexpensive but not of high quality.

2120 COMMISSIONER WYLIE: But popular?

2121 MR. VINER: But popular. But popular. Sometimes from a foreign source.

2122 COMMISSIONER WYLIE: I can see where Canadian talent development and broader broadcasting system performance could decrease. I am not trying to rehash the policy, I am just trying to see how now we apply it in practice and willy-nilly we will be making decisions that will give the industry and us some sense of how we are doing it.

2123 One could argue that consolidation had the intent of giving a stronger financial capacity and not as much protection so that that financial capacity would allow broadcasters to compete -- would have the ability to compete and to perform better because they are pushed more and even perhaps offer more diversity and more local, to not be perhaps as lazy in making their money but more pressed.

2124 MR. VINER: I agree with all of that but I believe that the intent of the policy was that we would have fewer, stronger players, better able to compete as opposed to a proliferation of a number of players which if there were no criteria -- I am not a protectionist. I hate to be sort of put into that mode. I am just trying to explore with the Commission what I think the results might be.

2125 I think we have had plenty of examples of what can happen when radio stations are faced with economic hardship. Not all of those results have been good. I don't particularly want to be specific but I think that the Commission is aware of them.

2126 So on balance, I firmly support the multiple licence ownership policy. I do believe it will work in the way that it was set out to do, but I think that if the Commission were to choose a course of action -- and I know it's not being suggested -- of simply licensing sort of every available frequency without any regard for the financial viability and I think none of us are guaranteed to make money, and I don't think any of us can complain because somebody else is coming in and competing against us. But I think that the results may not be beneficial to the Canadian broadcasting system.

2127 COMMISSIONER WYLIE: So you would see it as a balance to be achieved in each situation and that the industry would have an onus to guide us as to what in that particular market will work to the benefit of the community and the broadcasting system and we would have to make a case-by-case decision in that?

2128 MR. VINER: I think it is difficult if you -- you could always reintroduce market entry criteria and I think the Commission has chosen not to do that. They have chosen competition over protection and I think that is to be applauded.

2129 We support that but I do think then, as always, a difficult job falls to the Commission to balance the competing interests, their competing interests and the interests of the public, the interests of the musical community in very many cases and the interests of the industry.

2130 So yes, I think you should take it into consideration. It will be one of those things on which you judge. I think the best idea still should win the day and I think that obviously, the contribution to Canadian talent development should be considered.

2131 COMMISSIONER WYLIE: Now, the best idea winning the day was in the past very much looked at against the background of the format suggested. As you know, the format has been deregulated and we often hear licensees who say, "Well, mine will be the most diverse addition. My proposal will be..." Then, if we raise the question, "But we don't regulate that. You can change it tomorrow", then there is, "Well, attach a condition of licence and make me stick with it."

2132 At paragraph 52 of that policy, the Commission clearly said it is not prepared to return to a regime where FM radio formats would be strictly defined and regulated.

2133 So having said that, would you read the need for diversity to be left to the market and for the broadcaster to decide how best to compete by changing from one format to the other, emphasizing more local, meeting the needs to stay competitive?

2134 MR. VINER: I believe that was the decision and conclusion of the Commission and one I share with them. I think that ultimately if for no other reason, I would like to think broadcasters act for a variety of altruistic reasons, but if they didn't, in their own financial self-interest, I think that the market will quickly sort out diversity. It just doesn't make sense to do otherwise.

2135 COMMISSIONER WYLIE: Now, I have read to you or referred to some paragraphs in the Commission's policy where it speaks of diversity and talks about diversity of news voice. One is paragraph 8, paragraph 32 and also paragraph 40 where diversity is combined with news voices.

2136 Do you understand this as meaning news in the classical sense: talk programming, opinion, and I think the Commission has in the past also looked at, are there newspapers in the market, et cetera? Do you see this as the Commission looking at the performance of the applicant and its plans with regard to that type of programming rather than format which was before based on a musical assessment?

2137 MR. VINER: My view of it is that the Commission's concern was editorial voices and it would take into consideration -- we had always hoped it would take into consideration all of the news voices available in the market from a wide variety of sources. That would include newspapers, magazines, television and specialty services, the Internet, and weeklies and dailies.

2138 So I think that the Commission should be concerned if there is a significant production in the number of news voices in the market as a result of an application or consolidation, but only in that context.

2139 COMMISSIONER WYLIE: So how do you see that? Do you see that as the applicants -- for example, in the Victoria market, when you look at it, under the news diversity criteria -- I will speak to your particular application later.

2140 In fact, when we have what we refer as flips or change of frequency band and in your case in particular, we go from a news/talk radio to a music one, should we be concerned that there will be a reduction in news voices if there is far less news and spoken word and information on the FM band? Is that a reduction in your view?

2141 MR. VINER: Well, in our view -- it's hard not to refer directly to our application.

2142 COMMISSIONER WYLIE: No, no, but you are here for your application. I am just badgering you before we look at your application.

--- Laughter / Rires

2143 MR. VINER: No, and I am delighted. It is not entirely unexpected, I may add.

2144 COMMISSIONER WYLIE: You may be a professor by the end of this session.

2145 MR. VINER: Yes, I may well be. In fact, I think -- correct me, Kim, but the amount of news, as we traditionally know news, on this application is not diminished.

2146 MR. HESKETH: Well, there are a couple of --

2147 COMMISSIONER WYLIE: We will go back to that -- when I look at your application, we will look at that.

2148 MR. VINER: Okay. But --

2149 COMMISSIONER WYLIE: But I just wanted to generally -- so how do we look at that? When we look at a flip, do we consider that that has nothing to do with not diminishing the news voices because there is no change in the market? So for example, in this situation, if we approve the two changes of band and did not give a new station, would we be equal with regard to diversity?

2150 MR. VINER: Yes, I think we would be.

2151 COMMISSIONER WYLIE: Yes, and of course, as you will have an opportunity to speak to it later, depending on what your plans are, it may be equal-equal rather than just a reduction?

2152 MR. VINER: Absolutely. Absolutely.

2153 COMMISSIONER WYLIE: Should the Commission give any consideration at all to the format proposed considering that it has clearly said it was not prepared to return to format regulation?

2154 MR. VINER: I don't know how the Commission can fail to at least take into consideration the idea proposed by broadcasters. I think when broadcasters come forward to the Commission, and I certainly believe it to be absolutely in this particular case. They have tried hard to come up with format alternatives that are diverse, that will be in their economic best interest to pursue.

2155 I think that stations generally don't change format on a regular basis unless they are forced to do so by economic circumstances; 680 News in Toronto is one and CKWX News here in Vancouver are two examples of stations that change format.

2156 So I think that yes, the Commission has to consider that if they licence an applicant with an idea for a format that makes sense to both the applicant and to the Commission, then they should take at face value that it is the intention of the applicant to maintain that format in the way in which they have proposed.

2157 I think that they have to look at the quality of the promise and the commitment and the applicant, but I think it is very difficult to ignore the proposal. If the proposal makes sense to you and makes sense to the applicant, chances are it will be a success. The only thing that will require change or modification is changing tastes or frankly, licensing television services or changes in tastes that none of us can foresee.

2158 COMMISSIONER WYLIE: Or possibly a competitive response?

2159 MR. VINER: Absolutely.

2160 COMMISSIONER WYLIE: I suppose, in part, we could measure, to the extent that it is a reflection of it, the understanding of the broadcaster of the market and his likely ability or her likely ability to succeed if the format proposed appears to be supported, et cetera. So it can be completely ignored even if we know that it can be changed as a competitive situation.

2161 MR. VINER: That would be my view and it has to be a sensible proposal. The Commission has heard a number of proposals and if someone comes forward with a proposal that might sort of on the face of it meet a number of the Commission objectives but not really be a practical plan, I think the Commission has to make that assessment, that that applicant might be more likely to change than not change. But on balance, I --

2162 COMMISSIONER WYLIE: You would agree with me that changes in format may be a competitive response?

2163 MR. VINER: Absolutely.

2164 COMMISSIONER WYLIE: In that sense, in French, it would keep people on their toes so that that's not bad for the system either if you want to rely on market forces more?

2165 MR. VINER: That's correct.

2166 COMMISSIONER WYLIE: Now, the other major objective besides the diversity of voices is to look at the merits of a proposal to the extent that it will benefit the community and the broadcasting system as a whole by furthering the objectives of the Act. What would you put under the first one, benefitting the community?

2167 MR. VINER: I think the provision --

2168 COMMISSIONER WYLIE: Just in generic terms.

2169 MR. VINER: Sure. Yes, absolutely. I think that the provision of service to a segment goes to diversity, but I think the provision of a service that does not already exist in the market, I think that the local involvement of the applicant is important. I think those are two considerations that --

2170 COMMISSIONER WYLIE: Under the benefits to the community and to the broadcasting system as a whole, what would you put under that rubric?

2171 MR. VINER: Obviously, I believe the exposure and development of Canadian talent is clearly something that the Commission is concerned with and has an obligation to be concerned with under the Broadcasting Act.

2172 Again, the Commission's assessment as to whether or not the proposed transaction, whether it be a new application or something under the multiple licence ownership, whether it results in strengthening the system in a reasonable and intelligent way.

2173 COMMISSIONER WYLIE: In a more broad fashion. For example, Canadian talent development has broader tentacles than involvement in the community.

2174 Is it your view that a change of frequency band or a flip is a new entrant?

2175 MR. VINER: It is interesting. It has never been seen as a new entrant. It wasn't previously seen as a new entrant under the old regime of market entry criteria. So no, I don't think it really is a new entrant, but nonetheless, it confers benefits on the individual or the company who is applying for the flip, for the change, the conversion. So it has to be viewed in that perspective as well.

2176 COMMISSIONER WYLIE: If it is important -- if it remains a concern to look at what the market can absorb, that would be looked at differently because that player is already taking some money out of the market?

2177 MR. VINER: Yes.

2178 COMMISSIONER WYLIE: So it is not as serious an addition in some ways as a new entrant?

2179 MR. VINER: I think it's -- that's correct and I think it is a case-by-case basis. I think that the proposed business plan and format and idea is something that the Commission has to take into consideration. So I do think that the Commission has to decide whether or not, as in the case of Victoria and many markets, whether or not the proposed change would attract new listening to the market.

2180 It has been our experience in several markets that it has attracted new listening and it has attracted advertising, and it has attracted advertisers to radio that never were previously there before. It really works that way. We know it here at the Ocean. Again, CKWX and 680 News are two examples of that where we attracted a number of advertisers who had never previously been in radio.

2181 So I think it's up to the applicants to make the case that a conversion can stimulate additional tuning and additional tuning to the local market.

2182 COMMISSIONER WYLIE: Well, we thank you for those comments. Now that we have done the lesson, we will go to the lab and see how we apply it to your application by looking at the details of your application.

2183 As the Chair mentioned earlier, the Commission is obviously interested in seeing how this develops because the industry too has to change course and emphasize different things. As I said, it is surprising to me that after wanting deregulation, the knee-jerk reaction to "But you can change your format" is "Well, no, no. Attach a condition of licence and stick me with my format."

--- Laughter / Rires

2184 COMMISSIONER WYLIE: So there is obviously a need to re-look at --

2185 MR. VINER: It wasn't ours, but --

2186 COMMISSIONER WYLIE: Pardon me?

2187 MR. VINER: It wasn't ours, but --

2188 COMMISSIONER WYLIE: No, no. But it's interesting to hear the more general comments.

2189 MR. VINER: Sure.

2190 COMMISSIONER WYLIE: Now, to go to your particular application, which is to change to a gold-based adult-oriented format on a different frequency band from your AM band talk radio station, in your supplementary brief, at page 9, you describe quite briefly that different musical genres will create a retrospective sound and clearly differentiate its format from the hit-based contemporary formats currently available in the market.

2191 You go on in the next paragraph to say that you will distinguish yourself by providing more news and more information programming than the hit-based contemporary FM stations.

2192 Now, with the musical programming, how differentiated will it be since your weekly hits is 49 per cent, which is what is used by hit stations as well? In the musical portion of your programming, how will you be different from hit-based stations?

2193 MR. VINER: Well, I will let Sandy or Kim provide specifics, but of course, in contemporary FM radio, Commission Wylie, it is 100 per cent hits. What we are proposing is that because we will have some gold and gold standards which do not qualify as hits, or do not qualify under the new hit to non-hit policy, that we will have fewer of those hits, but we will also play different music than is currently available or is even proposed by the other applicants.

2194 Perhaps, I could let --

2195 COMMISSIONER WYLIE: So 49 per cent to you is a low hit factor?

2196 MR. HESKETH: Yes.

2197 MR. SANDERSON: The type of music that we are planning for this station is music that appeals to an age group that is 45+ and it is a softer music. It is not golden oldies, if you will, but I will read out just a handful of artists. Paul Anka, Blue Rodeo, Gordon Lightfoot, Rita MacNeil, Joni Mitchell, Edward Bear, are some Canadian examples; Carole King, James Taylor, Carly Simon, Neil Diamond, America, Simon and Garfunkel, Cat Stevens, Dionne Warwick, the Captain and Tennille, Natalie Cole. I made this list up because not one of those artists was on the radio in Victoria last week.

2198 COMMISSIONER WYLIE: The fact that I recognize them all, I think, should speak for itself.

--- Laughter / Rires

2199 MR. VINER: They won't let me answer any music questions at all, Commissioner Wylie.

2200 COMMISSIONER WYLIE: Of course, you would only recognize Shania Twain and the really last --

2201 MR. VINER: There's --

2202 COMMISSIONER WYLIE: Being so much younger than I.

2203 MR. VINER: Not at all. In fact, there is a line from a Jethro Tull song about being too old to rock and roll and too young to die. It's a category in which I find myself firmly placed.

--- Laughter / Rires

2204 MR. VINER: But we are trying to appeal to the older end of the demographic which makes sense to us because it is an area that we understand. Adult contemporary music is an area in which our stations have done well. It is underserved in that most of the tuning -- a great deal of the tuning is out-of-market, 54 per cent, I think, and it is a fast-growing market site. So for all of those reasons, that's why we think it will be a successful format.

2205 COMMISSIONER WYLIE: On that same page of your supplementary brief, we will go back to this questions of news and information programming. You indicate that that is one way you will distinguish yourself, by providing more news and information programming.

2206 In discussing the general policy, we also reviewed the extent to which the Commission had emphasized the need to ensure that there is a diversity of news voices. Is this because you are moving band from a talk radio to a musical one but you have, you feel, the skills, expertise and so on that you will bring to this new station or is it a decision that that is how you will get more audience? Is it just a natural crossover or bringing your expertise on the AM band to your FM proposal?

2207 MR. VINER: The answer is yes and yes.

2208 COMMISSIONER WYLIE: Good answers.

--- Laughter / Rires

2209 MR. VINER: We believe that the provision of high-quality news is important to the target group that we are looking towards. We don't think it is as important in the younger demographics but we do think it's important --

2210 COMMISSIONER WYLIE: We don't rock and roll at our age but we want to know who else is.

2211 MR. VINER: Absolutely. This is not because -- I don't want to appear disrespectful of the policy, but the reason why we would have made this proposal is a result that it is a good business practice for us in the target demographic that we provided.

2212 But I should let Kim who, you can tell from his voice, is a former news guy --

2213 COMMISSIONER WYLIE: Oh yes, since I interrupted him earlier.

2214 MR. HESKETH: That's fine. What we are proposing is a significant amount of news and information on this FM station because I think, as Tony said, we are doing this for business reasons and we feel that a format that targets a 45+ age group, which we know does spend quite a bit of time with other news/talk stations, not only in our market but out-of-market, that they have a need to be served when it comes to news and information. We recognize that.

2215 Our actual news and information content on the FM station is really a transference from the AM station with some modifications in that we will be doing larger news blocks at midday as an example and a weekend magazine show. What we are really doing is relying less of American syndicated programming but maintaining the local presence as far as news and editorial voices and commentary is concerned.

2216 COMMISSIONER WYLIE: Now, help me with this: In answer to a deficiency, question 3, you talk about major hourly news from 6:00 a.m. to 9:00 a.m., Monday to Friday, at noon, and again from 3:00 to 6:00, while news updates may be carried on the half-hour during the morning and afternoon drive period. Now, I wasn't fast enough to figure out whether you are more specific about "this may be carried on the half-hour" in your presentation.

2217 Could you clarify for me, in that drive time -- you have something on page 11 and 12 of your presentation today:

2218 Will there be news on the half hour?

2219 MR. HESKETH: There will be news on the half hour in the morning and afternoon drive periods, and as far as the rest of the day is concerned, since we filed the response to the deficiency, we in fact decided to increase our news content but do it in a block programming segment with a midday magazine program.

2220 COMMISSIONER WYLIE: So it is not only in Ottawa as a government town that the evening rush hour starts at 3:00?

--- Laughter / Rires

2221 MR. HESKETH: I think it starts a little earlier in Victoria.

2222 COMMISSIONER WYLIE: All the government towns are afflicted by this early --

2223 MR. HESKETH: That's right.

2224 COMMISSIONER WYLIE: I guess you consider that drive time, right, 3:00 to 6:00?

2225 MR. HESKETH: Because of the staggered work --

2226 COMMISSIONER WYLIE: Torontonians would be scandalized.

2227 MR. HESKETH: Well, that is their problem.

--- Laughter / Rires

2228 COMMISSIONER WYLIE: Let them suffer.

2229 MR. HESKETH: There are benefits to living in Victoria. But one of the things that does happen with a government town typically is that you do have some staggered work hours, both starting and ending times.

2230 COMMISSIONER WYLIE: Now, we discussed benefits to the community, I think, as opposed to benefits to the broadcasting system as a whole, then that was seen as involvement in the community, which is beneficial to the community and in most cases, we believe, brings back some financial rewards often to broadcasters by being closer to the community.

2231 What assurance would we have -- First, let me ask you: Do you think that as a talk/news station there is a greater ability or greater opportunity to be involved with the community than there is with a music format?

2232 MR. HESKETH: My experience would be no. I think you are involved in different ways. Our FM station is as involved as our AM station currently is in the Victoria market and there is a lot of cross-promotion that we do in creating synergies between the two stations.

2233 We mentioned our annual Coach for Kids campaign, which is a promotion and a community involvement of both radio stations. I think you can be as good as you want to be in terms of how you respond to your community based on what you want to do.

2234 CJVI has been in Victoria for 77 years. It is the oldest radio station in Victoria. It has a long heritage of service to the community and certainly we take that seriously, that we have to uphold that, whether we are on the AM band or the FM band.

2235 COMMISSIONER WYLIE: So at the moment, your achievements in that case and your advisory board is involved just as much with your talk station as your music station?

2236 MR. VINER: Absolutely.

2237 COMMISSIONER WYLIE: There is no more opportunity on a talk and information station to be involved with the community?

2238 MR. VINER: Well, I think there is the potential. I think it is hard to argue that there is not the potential, although you have to take into account your listeners' tastes.

2239 What we have discovered, Commissioner Wylie, in this particular market, is that that news/talk segment is well served. It is well served by Mel Cooper who you will hear from in a short time -- at CFOX. It is well served by CKNW. People are interested in what is going on in Vancouver, in talk shows that affect the province. It is well served by the CBC.

2240 I would just like to point out that given the current circumstances and that the CBC's entry as a local broadcaster may well have been sort of the straw that broke the camel's back, but I think it unlikely, that no matter what your decision that arises from today, that CJVI will be able to sustain the same level of talk programming -- news/talk programming that it does today. I think that is an economic reality.

2241 Gary mentioned that we lost sort of $1.5 million. We don't mind doing that if it is an investment and it is starting to pay dividends, but I think that you can expect some degree of modification.

2242 I would just like to make a couple of points with respect to the differences between the AM and the proposed FM.

2243 On the AM, we have currently news, entertainment and talk, and some of that talk is syndicated U.S. talk because it is inexpensive and popular. What we are proposing to do is to substitute music, 35 per cent of which will be Canadian, for that talk element, not all of which was local and in fact, to expand our news.

2244 COMMISSIONER WYLIE: Can we put that in the decision if we approve your application?

2245 MR. VINER: I always hesitate because now you are going to say that I am a protectionist again, but certainly, that is our proposal.

2246 COMMISSIONER WYLIE: No, no. I meant that you remove the cheap talk and replace it with expensive Canadian talk.

2247 MR. VINER: I didn't say expensive Canadian talk, but local news -- yes, you may -- local news and Canadian music is what I meant to say. If I didn't say it, I apologize.

2248 COMMISSIONER WYLIE: Oh, I may have made a mistake. I'm just trying.

--- Laughter / Rires

2249 MR. VINER: Commissioner Wylie, I just wanted to for a moment -- you have been teasing me a little bit about the broadcasters leaping to say, put it in the decision and make it a condition of licence. I think that the reason that broadcasters do that is really a testament to the sincerity that they bring to this application process. They are very sincere about it and they are sort of not worried. It goes to my earlier discussion that I think that they have tried and certainly, the applicants in this case have tried very hard to come up with proposals that make sense. So I don't think it is protectionism, I think it is a measure of their sincerity about their applications.

2250 COMMISSIONER WYLIE: Now, we have already agreed that the Commission should not in all cases and lightly disregard entirely on a case-by-case basis the market, or at least that is one way of looking at the application of the policy.

2251 In the Victoria case, in the deficiency response, question 5, when asked about market revenue growth, you estimate that the market will grow by 6 per cent in year two, 6.5 per cent in year three and four, and 7 per cent in year five. Can you explain to us how you arrived at this growth pattern which appears to be at odds with some of the calculations that have been made in other instances about the Victoria market?

2252 MR. MILES: Commissioner Wylie, thank you. There are probably three factors that contribute towards that.

2253 First of all, the radio revenue numbers for the Victoria market at $12.5 million are a result of the combined revenues from all of the radio stations currently in Victoria being submitted to an independent auditor. So we have tracking devices that say that this is what the market was and this is how it grew. In addition, those figures have been confirmed by Stats Canada, although they are somewhat behind the chorus. This TRAM report, as we call it, is available in most of the major markets across Canada.

2254 So the figures that the Victoria market grew in the last year was 15.some-odd per cent, but we currently are tracking the market growing at 7 per cent, and as I believe the O.K. Radio Group said, it looks like they are on track to continue to grow at that expansion. In addition to that, there is 44 per cent out-of-market tuning.

2255 So if we could go back to our experience when we converted the Ocean from CFMS to the Ocean, the market was indeed in the tank. It actually was decreasing, which had to do with the availability of diversity and choice on the FM band and in the total radio market. At the time that we acquired the assets of those two stations and sold the AM to the O.K. Radio Group who converted it to a country station.

2256 Between the two of us, the market grew from $9 million to $12.5 million over the course of three years. That is about a 35 per cent increase in the marketplace. This had to do -- because he put in a country station, we put in an AC station. Between the two of us, we repatriated this listing from out-of-market. The share at the CFMS when we took it over was about 7 per cent. It currently is 26. I would like to say it was the number one radio station in the market but it's not.

2257 The O.K. Radio Group station was the number one biller then and it is still the number one biller. So there's $3 million -- $3.-something million came into the market. So our assumption, based on that, is that we have taken the five years out to say that it is going to grow out about 6 per cent. I think that is a fairly logical explanation.

2258 I know that you had Canadian -- the economic development statistics in front of you and I subscribe to that too, except they change their economic outlook about every three months and I get a little confused about it because I am not very good with numbers. All I know is that if you put on formats, you increase the diversity and you have an opportunity to bring more people to buy radio.

2259 Mr. Viner mentioned the experience of 680 News and News 1130. We brought new people into radio to go onto an all news format and they have now expanded to be regular advertisers on all radio stations across Canada. So we projected the $12.5 million at 6 per cent, go forward to five years, it is about $4 million.

2260 It is not inconceivable to believe that we would repatriate in this scenario, where we talked about an additional FM radio station and a conversion, at least 4 share points from out-of-market and we think there is about 6 share points available for us. There's 12 available out of there. So 4 is an easy conversion to share point and I will file this in case we are getting a little lost with the numbers.

2261 But if share points were at $125,000, if you take that forward five years and add the increases, there is another $1 million. We are now at $5 million more into the Victoria radio market.

2262 We have said we need an incremental $1.7 million. That is the difference between CJVI as an AM to an FM. Mr. Cooper has indicated that he needs another 2-something. So we need about 3.5. That still leaves about 1.5 million available for growth of the other radio stations in the marketplace.

2263 So the difference here in this particular market has to do with the ability to repatriate that out-of-market tuning and that is where money comes in. Our experience with the Ocean clearly indicates that we are able to do this without upsetting the marketplace.

2264 COMMISSIONER WYLIE: While we are on the subject of revenue and audience share, there is a discrepancy in the numbers. You are projecting 9 per cent audience share while the revenue share is much higher. It is 13 per cent.

2265 MR. MILES: Sure, and that is quite true. If I could just refer back to our experience with the all news radio station, we have very low audience share and we have high revenue shares. The same thing here. There is approximately 12 per cent to music based out-of-market tuning available to this formatted radio station, this 45+ formatted radio station. We think that -- on stream, we currently have 2.5, something like that. We think we can get a 6; we will grow it to a 9.

2266 One of the other criteria that you use is that you are able to get more money for your share point depending on the kind of format that you have, depending on the advertiser you go after. We find that this particular format has about a 1.5 conversion rate. So for every share point you're worth, you can get about 1.5 worth of share point of increased revenue in the marketplace and hence, the reason why a 9 share actually generates more than a 9 share of the market would.

2267 COMMISSIONER WYLIE: You put a fair amount of emphasis on audience repatriation from out-of-market tuning and that was emphasized again this morning. In your supplementary brief at page 5, you give us a table there indicating the out-of-market tuning. Have you actually done any breakdown taking into consideration the format?

2268 MR. MILES: Yes, we have.

2269 COMMISSIONER WYLIE: That is out-of-market with regard to the one that you are proposing.

2270 MR. MILES: Thank you for that. Sandy, do you have the exact numbers? The overall is approximately 11 or 12 per cent, but Mr. Sanderson --

2271 COMMISSIONER WYLIE: That you could connect to the format?

2272 MR. MILES: Yes, and he will do that.

2273 MR. SANDERSON: Yes. I have the out-of-market tuning to some music formats, some of which are in Vancouver and some of which are in Seattle. The CKBD in Vancouver has a 3.4 share in Victoria and that is a nostalgia station. There is a jazz station in Seattle, KPLU, with a 2 share of Victoria audience. CISL, an oldies station in Vancouver, has 1.6. QM-FM, the CHUM soft AC station in Vancouver has a 1.2. A Seattle station, the classical station, 1 share. Another nostalgia station in Seattle has a 1 share and STAR-FM here has a 1 share. Those total 11.2.

2274 COMMISSIONER WYLIE: Would be music formats that you are targeting and therefore would strengthen the expectation or postulation that you would repatriate.

2275 MR. VINER: Yes, and we projected that --

2276 COMMISSIONER WYLIE: By going head on with those formats.

2277 MR. VINER: Yes. We projected we would take 6 of the 11.2. We wouldn't get it all immediately.

2278 COMMISSIONER WYLIE: Now, at page 12 of your supplementary brief, and again this morning, you emphasized that approval of your application should not prevent the Commission from licensing an additional new FM station. Now when I read that before you addressed the technical this morning, I though to myself, well, that has to be a flip because if you want approval on 107.3 the only really new applicant is on the same frequency. So it is technically exclusive or how one would say in English -- anyway, it is technically impossible to both be on the same frequency -- mutually exclusive, I got it.

2279 So I assume then you meant, I don't mind if you license another flip. But is it your proposal now that you have also said you are prepared to look at other technical alternatives that when you say you don't mind another approval that that could be the Seacoast application for an entirely new sixth station?

2280 MR. VINER: Yes.

2281 COMMISSIONER WYLIE: Now, would you see that as well as the possibility of a flip other than yours, in other words, all three applications being approved?

2282 MR. VINER: Yes.

2283 COMMISSIONER WYLIE: You think that the market could bear that? In part because you know you are going to have such a good proposal that you will stay on top.

2284 MR. VINER: Yes. Yes.

--- Laughter / Rires

2285 COMMISSIONER WYLIE: Considering -- it's getting late, eh?

2286 Considering that the average profitability in Victoria is quite low, you don't have a concern about the market if we were to license all three applicants so that you would have two flips and one new station?

2287 MR. VINER: No, I think we are contributing that low profitability on our AM station.

2288 COMMISSIONER WYLIE: Have you calculated the average without the -- if you took that out?

2289 MR. VINER: Commissioner Wylie, it goes back to what we think the effect on the market might be if these were licensed. In our case, it is not a theoretical exercise, it is from actual experience. When we re-launched CFMS as the Ocean, it stimulated -- and Stu Morton and Roger Charest talked about this, I think, eloquently. The market was stimulated.

2290 It was stimulated in a number of ways. One is repatriation, absolutely no question about it. The other though is that the radio market, through competition, becomes better because more advertisers are persuaded that they can advertise their services and products on appropriately formatted radio stations. So radio begins to work more effectively for them.

2291 So you have natural growth in the market that occurs because of the economic growth in the market and that just does occur naturally. Then, there is another growth factor that is a result of better radio, more choices. We have seen it time and time again, 680 News and the Ocean being two examples. Then, there is the third which we have all sort of beat the same drum, which is that there is so much out-of-market tuning here that we believe that that will create growth.

2292 So if it were technically possibly, I do believe that in this case the Commission could license all three applicants.

2293 COMMISSIONER WYLIE: Have you done any calculation as to what proportion of the revenues that would be additional with the flip would come from existing stations?

2294 MR. VINER: Yes, we have.

2295 MR. MILES: The least affected for terms of this conversion would be the FM radio station by the O.K. Radio Group. They have, I think it's only about a 3 share of 45+ tuning. There is approximately an 8 share coming from the Ocean. So we would be right up there with people who would be affected.

2296 In fact, we have indicated in one of the responses of deficiencies that we believe that the growth on the Ocean will not only not grow, it will actually go down in the initial period. But eventually as the market grows bigger, it will get back up into it.

2297 Then, most of the other is going to be from repatriation of the audience from outside as well as new sponsors, new clients into this kind of format in Victoria. Once again, I go back to our experience with the all news radio stations in which new clients came on as a result of format and spread out to the other people. So the radio industry was beneficiary of this kind of influx by new advertisers who get responsive results from new formats on radio.

2298 COMMISSIONER WYLIE: When you say you have indicated that, you mean those appendices that show financial operations with the status quo or a change, or depending on --

2299 MR. MILES: Which is the reason that Sandra is here, because I have lost in all of the responses we did. But they are there.

2300 COMMISSIONER WYLIE: Now, you have -- and this is my last question in case you are concerned about how long we will be here.

2301 You have indicated quite clearly this morning that not only were you theoretically saying that you didn't mind further licensing but that you are prepared to look at technical possibilities. Have you come to the conclusion that technically it would be possible to license all three?

2302 MR. VINER: It has been a source of some debate within our company. But we believe the answer is yes.

2303 COMMISSIONER WYLIE: Would it be a big concern to you if frequencies were granted to the other two applicants and you were left to find one for yourself?

2304 MR. VINER: Yes.

2305 COMMISSIONER WYLIE: So what would you propose that the Commission would do to put in practice what you say in theory, which is, let's approve them all. Leave somebody else to look for a frequency.

2306 MR. VINER: I think that the Commission might ask the successful applicants to try to come up with a plan.

2307 COMMISSIONER WYLIE: Sort it out.

2308 MR. VINER: Yes.

2309 COMMISSIONER WYLIE: Are you suggesting then that all three should be --

2310 MR. VINER: Yes.

2311 COMMISSIONER WYLIE: That neither should be assigned a frequency?

2312 MR. VINER: Yes.

2313 COMMISSIONER WYLIE: And let the applicant sort it out. How exactly would we do this?

2314 MR. VINER: We are not going to tell you.

--- Laughter / Rires

2315 MR. VINER: Commissioner Wylie, I'm sorry. I don't know, but I --

2316 COMMISSIONER WYLIE: No, I don't mean which frequency, I mean procedurally.

2317 MR. VINER: I don't know. I honestly don't know.

2318 COMMISSIONER WYLIE: But you are prepared to take your chances?

2319 MR. VINER: Yes.

2320 COMMISSIONER WYLIE: So there must be an answer somewhere.

2321 MR. VINER: I think that we could work it out.

2322 MR. MILES: Commissioner Wylie, there are some past experiences where this situation has occurred. I think one that comes to mind is in Calgary where there were two FM stations licensed and there needed to be frequencies --

2323 COMMISSIONER WYLIE: Oh, I know it has happened before, but I just want it on the record, just how generous you are so that we don't have problems. We want to know just what you mean by license everybody. So you would be prepared to have it done in that sense?

2324 MR. VINER: Yes.

2325 COMMISSIONER WYLIE: And have it sorted out after.

2326 Well, thank you very much for your patience and your cooperation. I think it has been a fruitful exercise, I hope.

2327 Thank you, Madam Chairman.

2328 THE CHAIRPERSON: Thank you, Commissioner Wylie.

2329 There is very little territory left uncovered. I just have one question and then what I think we will do is break for lunch and reconvene and this afternoon hear the balance of the Victoria applications.

2330 If you could just summarize for me -- it strikes me that there are a number of anomalies in the Victoria market. It appears there are five stations for a relatively large population, including two FMs and three AMs. There is a high degree of out-of-market tuning that you and all the applicants in fact believe can be repatriated.

2331 There has been a relatively low PBIT for those existing stations, which would appear to contradict a belief that there are opportunities in that market. In fact, I think you used the term that it is a buoyant market presently.

2332 The last thing I wonder if you could help me with is that I noticed that the breakdown between local and national advertising in Victoria, which I think is about a 50/50 split, if I am not mistaken -- correct me if I'm wrong -- also differs from a lot of other markets of this kind.

2333 I think that is a lot of questions and I don't want a detailed answer but if you could just give me a snapshot about why we should look at this market maybe a little differently than some of the evidence that I know was pretty extensively covered might indicate.

2334 MR. VINER: I will try to be brief. I think the answer to the question is that 60 per cent of the radio stations in this market are AM stations. I think that the answer is that people don't want to listen to AM and that they tune out-of-market FM especially in order to get the service that they want. It results in the fact that three of those AM stations are under financial pressure as a result because they aren't able to attract the tuning that they would if they were in the FM format.

2335 I should qualify that CFOX, I'm sure, does well as a news and information station in this market and there is usually is one news and information station that does well on the AM dial.

2336 So I think that much of the reason for the difference in the Victoria market is that the majority of the stations are on the AM band. That's why you have the out-of-market tuning and that's why you have the relatively poor performance of a couple of those stations. I called the market buoyant because a year-over-year increase of 15 per cent is buoyant; 7 per cent is buoyant. So that is the quick answer.

2337 With respect to the differential in national and local, I have no idea. Kim.

2338 MR. HESKETH: It has always been an anomaly in the Victoria market that the percent of national versus local has been skewed so much out of whack with what is considered to be the norm across the rest of the country. We think it has a lot to do with just -- well certainly in the past with the competition that was in the market at the time and particularly I make reference to CFMS and Capital Broadcasting, which artificially lowered the local rate. You have to compete and that is why we would sell local for less than we would national.

2339 National is a condition of your ratings and rating points and it just varies. I think that over the years it was about 50/50 at one point and I think we are starting it turn around, where the local rate is starting to improve and the differential is starting to widen.

2340 THE CHAIRPERSON: Thank you. That's all I have.

2341 Legal.

2342 MS MOORE: Thank you, Madam Chair.

2343 Earlier today, you noted that your engineering studies had identified other channels that would be suitable for a new FM radio station to serve Victoria. Are you in a position to name those channels today?

2344 MR. VINER: Yes, we are. Gary?

2345 MR. MILES: Thank you. This is lengthy so it may well be that we would submit it, but there are five identified channels. There is one commercial -- the last designated commercial frequency, 297. The other channels are 217, 209, 205 and 201; 297 is applied for by RBL CFOX, designated by the CBC for French Radio Two; 217 is applied for by Charest, designated by CBC for an unspecified purpose, probably Radio Three; 209 is applied for by Duncan and the CBC, French Radio One; 205, unwanted by everyone, perhaps it fell off the CBC's radar scope; and 201, which is a real, real bad channel. So there are four available.

2346 MR. VINER: We could also submit that list to you if you would like, counsel.

2347 MR. MILES: And we will.

2348 MS MOORE: Yes, if you could submit it for the public file today.

2349 MR. VINER: Yes.

2350 MR. MILES: We would be delighted.

2351 MS MOORE: Thank you.

2352 I would like to clear up a possible misconception by a statement that I believe you made earlier regarding hits. I believe that you indicated that contemporary formats can play up to 100 per cent hits. But I just wanted to clarify that of course under the new policy, with the new definition of hits, only music recorded prior to December 31st, 1980, qualifies as hits. So --

2353 MR. VINER: You are absolutely right, yes.

2354 MS MOORE: So wouldn't you agree that contemporary stations actually play a very low level of hits according to this revised definition?

2355 MR. VINER: According to the revised definition, absolutely.

2356 MS MOORE: Then just turning to the proposed format, I would just like to clarify a couple of issues.

2357 You have applied for the maximum weekly 49 per cent hits level, but my understanding is that the majority of gold-based music would come within the definition of hits. I am just wondering if you had any comments as to whether that 49 per cent would limit your ability to provide a consistent and appealing gold-based music format.

2358 MR. SANDERSON: Most of the music will be later than the cutoff date. It will be more contemporary.

2359 MS MOORE: In that case --

2360 MR. VINER: We should point out also -- excuse me -- there will also be jazz and classical and a number of selections that will not qualify as hits no matter the time of their recording.

2361 MS MOORE: So you are speaking to the elements that would be beyond the 49 per cent when you mention those, and in your view, that is in keeping with the gold-based contemporary format that you are proposing?

2362 MR. VINER: Yes.

2363 MS MOORE: Is that correct? Just finally, recognizing that many gold-based music stations have a reliance on a significant level of hits, I just want to understand, you have stated that your format will clearly differentiate it from hit-based contemporary formats that are currently available in the market. I was just wondering if you could speak to that a little further please.

2364 MR. VINER: Sure. We don't want to confuse that this is an oldies station as opposed to -- we didn't know how else to describe it as a gold-based standards station. So we are not an oldies station, I guess, is one possible answer.

2365 Sandy, did you want to add --

2366 MR. SANDERSON: Well, it could be described as a soft AC station as well. It is not 1962 --

2367 MR. VINER: I think it is important to note that what we are proposing is really a very different format than is currently available. It doesn't easily fall into any category. Many of our colleagues would think we are crazy to play this much news on an FM station -- to schedule this much news -- but it is our view that the target group that we are pursuing has eclectic tastes. That wasn't in my speech because I can't say "eclectic". So much of our non-hit material will be drawn from categories that aren't traditionally played on Canadian commercial private radio.

2368 MS MOORE: Thank you. Just finally, with respect to implementation, I was just wondering what your commitment would be in terms of having the undertaking on air. Would it be the standard within 12 months?

2369 MR. VINER: Oh, yes.

2370 MS MOORE: Thank you.

2371 Those are my questions, Madam Chair.

2372 THE CHAIRPERSON: Oh, oh -- Commissioner Wylie has one more question.

2373 COMMISSIONER WYLIE: It reminds me -- we didn't ask you about simulcasting. You propose three months. Is that a firm commitment?

2374 MR. VINER: We think three months is appropriate, Commissioner Wylie, in that it allows for an orderly transition. We would be happy to listen to the Commission's views on that.

2375 COMMISSIONER WYLIE: But would you be prepared to make a commitment to no more than three months?

2376 MR. VINER: Yes.

2377 COMMISSIONER WYLIE: Thanks.

2378 THE CHAIRPERSON: Before we break for lunch, I wonder if you have anything you would like to add to close with.

2379 MR. VINER: No, thank you, Madam Chair. I think this has been a full discussion. We think that what we are proposing, and I hope it isn't lost in the policy issues, but we do believe that we are proposing something that is unique, not only in the Victoria market but across Canada, and it is something that is a bit of a risk. But our company is known for taking risks.

2380 THE CHAIRPERSON: Thank you.

2381 We will now break for lunch and we will reconvene at 2:30.

--- Recess at / Suspension à 1300

--- Upon resuming at / Reprise à 1435

2382 THE CHAIRPERSON: Good afternoon, ladies and gentlemen. I believe we are now ready to reconvene.

2383 Madam Secretary.

1435

2384 MS VOGEL: Thank you, Madam Chairman.

2385 Item 5 on our agenda today is an application by Seacoast Communications Group Incorporated for a broadcasting licence to carry on an English-language FM (radio) programming undertaking at Victoria, operating on the frequency 107.3 MHz (channel 297B) with an effective radiated power of 20,000 watts.

2386 The applicant proposes to provide a modern rock and alternative music format.

2387 The Commission also notes that this application is technically mutually exclusive with the application filed by Rogers Broadcasting Limited -- item 11 in your agenda -- which is also scheduled at this hearing for the use of the 107.3 MHz frequency.

2388 Could you go ahead whenever you are ready?

PRESENTATION / PRÉSENTATION

2389 MR. COOPER: Thank you, Madam Chair and members of the Commission.

2390 We appear before you today excited and enthusiastic about a radio station concept that we believe will be an important addition to the radio dial in Victoria. I would like to introduce to you right now those who are with me today and their particular role in the application for a "new music station... for the new Victoria" -- for the new young Victoria, I might add.

2391 To my left is Terry Spence, one of British Columbia's most respected broadcasters both on and off the air. As Vice-President of Operations, he has guided and directed the development CFOX which today is one of Western Canada's most successful news, information and public affairs stations.

2392 To Terry's left, a four-time finalist and two-time winner as Music Director of the Year in the Canadian Music Association Awards, who will join our company if we are successful in this application, Jim Scanlon of Kelowna. Jim's "Indiegenius" modern rock CD productions have given new young British Columbia music writers, bands and performers invaluable exposure and assistance in their careers.

2393 Next is Sophie Lui, a fast-rising star of our Seacoast broadcast team, a journalist who will provide daily Victoria entertainment, music and club information relating to the interests of the youth and young adult audience of our community.

2394 Behind me is Greg Meiklejohn, an independent marketing and research specialist in Victoria who conducted several focus group discussions and other research for the proposed station.

2395 Next to him is a finalist in the 1999 Women of Distinction Awards for Outstanding Community Service, which by the way will be held next week in Victoria. Our congratulations to Kathy Baan who will be the leader of the new station's community activities and involvements.

2396 Next to Kathy is Walter Nicholson -- I should know his name. I have only known him for the last three years. Every week, we met on this matter. Walter Nicholson is a prominent young businessman who participated in our focus groups and helped us shape the interactive Internet concepts that our new station will pioneer, and by the way, someone who represents those 32,000 listeners who have to go offshore every week to Seattle and Vancouver radio stations to hear the modern rock and new music unavailable to them on the Victoria radio dial.

2397 Don Turri is Seacoast auditor and has worked with us on financial matters relating to the new station.

2398 Bud Goes is Seacoast Technical Director.

2399 And I am Mel Cooper, 48 years in British Columbia radio, the last 25 years as majority owner and still a hands-on Manager of our company's highly respected AM station, CFOX.

2400 This is my third appearance before the Commission to seek an FM licence to serve the capital city of British Columbia.

2401 In the early eighties, no applicant was granted a licence. In the late eighties, the Commission, in keeping with other CRTC decisions around the country in those days, granted an FM stand-alone licence to the O.K. Radio Group.

2402 Since this hearing deals with the only remaining FM dial position, at least commercial dial position, I guess it also means this is my last opportunity to apply for an FM station to serve Victoria.

2403 We appear before you as Victoria broadcasters who bring you some good news... and some bad news.

2404 The good news is that in a country of radio dominated by FM, we operate an AM radio station that continues to be an audience and community leader. It is not easy but we have proven that it can be done. Personally, I can pick up some 32 radio station signals loud and clear on my car radio as I drive around Victoria. It is formidable competition for the Victoria listener's ears.

2405 The good news is that we have done it.

2406 The bad news is that the odds are stacked against us. The community's other two AM-FM combinations have the ability to cost-share, to utilize synergies and to provide advantages to advertisers that are unavailable to us.

2407 Meanwhile, we battle on as a rare stand-alone AM providing the most expensive kind of radio to produce. CJVI in their application says our news/talk format dominates the AM band. Well, that doesn't come easy. In fact, it comes at a high price: at the expense of a reasonable bottom line.

2408 Our company is vulnerable and therefore Victoria's most active, involved and service-oriented community radio station is vulnerable. But we don't ask the Commission to grant us the licence just on an equal opportunity, level playing field basis.

2409 We ask the Commission to also use this opportunity to give Victoria what it deserves, a new vibrant station to serve an audience that wants its own local station. In the main, they are 15 to 29 years of age. They total some 65,000, nearly 25 per cent of the Greater Victoria population.

2410 The radio station that we have designed is not a cookie cutter format. It was planned by broadcasters who know Victoria intimately because we live there, we work there, we participate actively in community life. So it will be distinctly Victoria.

2411 To speak to some of the interesting ingredients of our proposed new station to serve the young Victoria, here is Terry Spence.

2412 MR. SPENCE: Our goal was to find an FM format to serve the most underserved segment of the community.

2413 BBM showed that 32,000 people under the age of 25 were tuning to rock stations outside our market and a study conducted for us by Meiklejohn Marketing proved that it was more than just casual tuning. Sixty-two per cent of the people under 30 had a Seattle or Vancouver station as their first choice and 80 per cent of them had a Seattle or Vancouver station as their second choice.

2414 But the good news was that 95 per cent of these young adults said they would come back if there were a new rock station in Victoria.

2415 To ensure that we fully understood the needs of the market, we hired one of North America's best radio market researchers: Marketing Research Partners Incorporated. They polled people between 18 and 54 to assess the potential of eight music formats for a new station, including formats like oldies, country, soft rock and adult contemporary.

2416 By far the two best formats for a new Victoria FM were alternative (or modern) rock and pop alternative. The research showed that a pop alternative station would cut deeply into CKKQ's audience but a modern rock station would have a minimal impact on existing Victoria stations. It would get most of its listeners from people now tuning to Seattle and Vancouver stations, mostly in the 18-34 age group, which none of the Victoria stations has as its primary target. Modern rock was the obvious choice.

2417 Marketing Research Partners frankly were amazed by the potential for this format in Victoria. They told us it was the biggest hole in a radio market that they had found anywhere in North America.

2418 We then put together a series of focus groups to fine-tune our research. Two groups of young men and women told us that a new Victoria FM station must cover the local entertainment scene, report on community events, play music by Canadian bands and, believe it or not, they even wanted local advertising. They said they are tired of hearing only Seattle ads and tired of just Seattle traffic reports, and Vancouver entertainment news, and so on.

2419 To make this truly a station for the 21st century, we organized a focus group of high-tech experts. We asked them to predict how the Internet would develop over the next several years and how we could utilize Internet technology to enhance our new FM station.

2420 They told us about exciting possibilities like helping Canadian musicians market their music worldwide on our Web site and distributing music by local bands on the Internet to other Canadian rock stations.

2421 They told us how to run chat rooms, with the station playing in the background, where young adults would meet electronically and talk about music, health, safety and other timely issues.

2422 They even told us how our listeners could arrange to be alerted via the Internet whenever we were about to play one of their favourite songs!

2423 This new station will be a positive influence on young adults. We will play their music, talk their language and deal with their social issues. We will also help them get a good education.

2424 We formed a partnership with the South Island Distance Education School which teaches thousands of students in distant and remote areas. Their highly skilled teachers will be in our Web site chat rooms during the evenings offering free help to students who are having difficulty with their homework.

2425 It is important to note here that while we have many plans to use the Internet, the radio station will be the centrepiece -- the new technology helps us expand the horizon.

2426 Our Canadian Talent Development plan is designed to solve real-life problems. We started with the premise that this new radio station will be a major catalyst to develop, promote, play and distribute modern rock music and to reward the people who create it.

2427 We put ourselves in the shoes of these young musicians, to understand the obstacles they face and then to find solutions.

2428 There is a cash grant to FACTOR to support their fine work, plus an annual Songwriters Seminar to teach these young musicians about legal and copyright issues, business practices and marketing techniques, and to give them professional critiques of their work.

2429 We will stage a huge "New Music Festival" once a year featuring the best of the new West Coast bands and we will produce a live concert CD from the Festival that we will distribute to rock stations throughout the country, promote and sell through our Web site and market through local retail stores. The musicians will be paid for performing and will share in the revenue from CD sales.

2430 We will play their music on the air, put the best of the new local rock bands on our Web site, sell their music on line and make the music available for free download by rock stations across the country to help local bands get airplay in new markets. This will put money in their pockets and give these young Canadians the financial means to continue to produce their music.

2431 We will work with students to develop their skills. Students from Gulf Islands Secondary School will learn recording and digital audio techniques in our studios at our expense. We have actually just tested this idea for the new station with several young men and women from the Gulf Islands. The students and their teachers rated it a huge success.

2432 We will support the school music program in Greater Victoria with an annual CD to showcase the best musicians in local schools and in another local high school we will help create an on site radio control room and recording studio where students from throughout our area will produce both recordings and live programs for broadcast on our new FM station.

2433 Madam Chairman, we have no objection if any or all of these promises are made conditions of licence. We will do everything we promise -- and then some.

2434 To research the advertiser appeal of a modern rock FM station, we commissioned Meiklejohn Marketing to hold hour-long, face-to-face interviews with more than 40 local business people, all of them in leadership positions in key business categories. Overwhelmingly, they told us they would support this new station.

2435 Finally, we brought together a cross-section of local business people in a focus group setting to discuss the viability of a new station aimed at the under-30 age group. They told us their attempts to reach that group have been ineffective and expensive. Some Victoria businesses have gone so far as to buy commercials on Seattle radio stations just to reach Victorians under the age of 30, a horrendously expensive process. "Yes", they told us, "give us a new modern rock FM station and we will support it."

2436 The music is the key to this new FM station. It is the main element that will bring tens of thousands of Victorians back to Victoria radio.

2437 Jim Scanlon, who did the music research for our application, is both an outstanding broadcaster and an expert on modern rock music.

2438 Jim.

2439 MR. SCANLON: Thank you, Terry, and good afternoon.

2440 By definition, modern rock is a contemporary format driven by music of the nineties. The relevant gold or older material also comes from this decade. The music is at times aggressive, passionate and thoughtful. It is a hybrid of styles that include electronica, hip-hop, hard rock, rock and sometimes pop.

2441 It is for those who have a passion for the new and the current and the unpredictable. To a modern rock listener it is the kind of music that matters. Successful modern rock stations appeal to the 18-34 demographic with the genders evenly split.

2442 Now, is there enough music out there to program a modern rocker and be successful? The answer is an overwhelming yes!

2443 Modern rock in technical terms is a non-hit format because of the newness of the music. But that is not to say some of those songs do not eventually become hits.

2444 This format has proven to be a successful launching pad for many of today's biggest and most successful acts. It has been counted on as an early supporter of those acts that are unproven elsewhere. Historically, this has resulted in a great relationship between radio and record companies.

2445 But it would only work if the product was good enough. And it has been and will continue to be. In fact, in an era where superstar acts are releasing mediocre product, modern rock survives and thrives on new sounds and fresh new faces.

2446 Another reason why modern rock was and still is a viable format is the proprietary nature of its programming. It develops and nurtures music it can call its own.

2447 Artists on modern rock stations sell an incredible amount of music. This more than any one thing is a testament to their popularity. Right now, in Canada, modern rock artists account for 30 per cent of the top 30 selling albums in the country.

2448 One need look no further than the popular EdgeFest tour as another example of the success of modern rock artists. This tour features on two stages some of the best Canadian performers. Originally started by a modern rock station, EdgeFest expects to gross $6.3 million on the sale of 210,000 tickets this year.

2449 Coincidentally, this week marks the beginning of another New MusicWest conference and festival. Artists and delegates from Canada will gather here in Vancouver to learn more about the industry. As a delegate for the past eight years, I guarantee that our new station will be an active supporter and promoter of this very worthwhile event.

2450 Now, the other exciting aspect about this format has been the expectation of working with many new and established Canadians bands. To be blunt, this is a no-brainer.

2451 Based on my 11 years' experience as a music director and 20 years in the business, I can assure you that there is no shortage of quality talent out there waiting to be heard on a station like this. Many in the record industry were emphatic in their support for a modern rock station because they recognize, like we do, that these artists deserve to be seen and heard. And it has been a proven fact that airplay does result in sales.

2452 It also helps propel those deserving acts to the next level: the international forum. Our innovative talent development plan, combined with our comprehensive webcasting means that the entire world could be listening to the best modern rock music that the West Coast of Canada has to offer.

2453 And now, to summarize, once again, here is Mel Cooper.

2454 MR. COOPER: Madam Chair and members of the Commission: Why grant a new licence to CFOX?

2455 Here, we believe, are the top ten reasons:

2456 (1) We have paid our dues: nearly 25 years of dedicated, exemplary leadership in Greater Victoria by the same owners.

2457 (2) We have earned our stripes: more awards for excellence and service than any other Western Canadian station, like the 1997 C.A.B. Community Service of the Year Award and a one-of-a-kind award which we proudly display in our studios; it's there for all to see. Forty-six different Victoria community and emergency organizations came together to present it to us two years ago for our above and beyond service.

2458 (3) We have done our homework. The research, focus groups, interviews and community meetings support the audience and the business case.

2459 (4) We have the community's backing and encouragement for a new modern rock station. Our application includes over 300 letters and other acknowledgments of support representing a virtual "who's who" of community and business life in Greater Victoria, including three municipal mayors.

2460 (5) We are a local radio company, an "independent" in a country of chain-owned radio stations. We believe there must be room in the Canadian radio system for locally owned, independent operators.

2461 (6) We will bring home tens and tens of thousands of youth and young adults who now have to go outside Victoria, into the United States, in fact, for their favourite music. We will get them in touch with their own city again.

2462 (7) We will increase diversity in the Victoria radio market with a fresh and innovative station, playing modern rock, supporting new and upcoming Vancouver Island bands in a variety of creative ways.

2463 (8) We will fill a need in the market with a minimal impact on the audience or revenues of the other stations. Finally, Victoria will have a station for the 25 per cent of the population that is 15-29 years of age.

2464 (9) We will be a positive force for youth and young adults in our community. We have already identified over 30 organizations who focus on support systems and provide opportunities for this segment of our community to learn, to grow and to prosper. We will work closely with them in the best tradition of our company.

2465 (10) Granting a licence to Seacoast helps protect CFOX, the community's important news, information and public service station which is now competitively disadvantaged.

2466 Madam Chair, Victoria's daily newspaper, the "Times Colonist", summed it up in an editorial in their April 19th edition which said in part:

2467 The editorial goes on to say:

2468 We hope the Commission agrees, Madam Chair, to grant CFOX the licence for a "new music station for the new young Victoria" -- a station for the 21st century.

2469 THE CHAIRPERSON: Thank you, Mr. Cooper.

2470 You have said here today and in your supplementary, page 20, that your new station is an alternative modern rock station offering the best combination of listener appeal and minimal impact to the two existing Victoria stations. While the main focus will be its music appeal, what are your plans in the area of spoken word material in addition to what you have outlined here today?

2471 MR. COOPER: The man who has put those plans together and knows them intimately is Terry Spence. So I would love to have him speak to it.

2472 MR. SPENCE: Madam Chair, in news, for example, we will have newscasts throughout the morning and afternoon drive periods, 2- to 4-minute newscasts on the hour and half-hour, morning and afternoon drive.

2473 Jim Scanlon has worked on a number of music specialty programs and we can talk about that in a moment.

2474 We also will have a community cruiser doing a minimum of 40 on-the-spot live reports per week, 2,000 of them a year, from community events, everything from rock concerts to the club scene, from runs, participatory sports events and all of that type of thing throughout the community. Now, we intend to be very active and live and local in the input that this radio station has in our community.

2475 Jim.

2476 MR. SCANLON: Well, in terms of spoken word content or however you would like to describe that, we have a number of ideas geared toward the modern rock listener and they involve a lot of backgrounding on artists and events related to those artists.

2477 In the original blueprint for a typical week here at the station, we included such features as download, which is, as the title would explain, taking the best of what the Internet has to offer. This is of course a 21st century Internet-oriented radio station.

2478 There is an excellent feature produced by a man whose acquaintance I made at 1998's Canadian Music Industry Week Awards, Allan Cross who works at The Edge 102 in Toronto. He has produced a syndicated series called "The Ongoing History of New Music", which would be a natural fit.

2479 There's other new music-related features as they relate to both international and Canadian acts. The tone and the texture from that point of view will complement the typical new structure of the radio station.

2480 THE CHAIRPERSON: Thank you. Clearly, the use of the Internet and the Web is integral to your proposed station in reaching a certain demographic. Is there anybody doing this now that you know of --

2481 MR. SPENCE: Madam Chair, not to this extent. We think we have a lot of ideas that have never been tried in a radio station, never been put on the air. You may notice in the supplementary -- we didn't mention in our presentation -- we even expect to use virtual dollars as prizing for on air contests.

2482 Every radio station does contests. Stations in this demographic do. But when you win a contest on our station, you may win $20 virtual that will go into your own password-protected account that you will then be able to use through the radio station Web site to buy tickets to local concerts and CDs produced by local bands, that type of thing.

2483 So we think there is a whole lot of new things that we can do to use the Internet to enhance the station. I know some figures that Jim looked at the other day were that in North America, 91 per cent of the core audience of modern rock stations -- 91 per cent of them -- are Internet-connected. So these people view the Internet almost as comfortably and as naturally as we view turning on a radio or television set.

2484 So we really feel that although the radio station is the core that the Internet connections will not only bring them back but keep them connected in all these different new ways that we are going to connect with.

2485 THE CHAIRPERSON: Thank you. As part of your Canadian talent development plan, you are proposing to allocate $14,000 of your overall $22,000 to the new Music Festival, with the cost related to the facility rental, payment for bands, digital recording, and the production and distribution of the new Music Festival CD. Will eligible Festival teleparticipants be drawn locally from Victoria or will the Festival be open to non-local talent? How do you envision that?

2486 MR. SPENCE: Our thought, Madam Chair, is that it would be primarily Victoria and Vancouver Island. There may be a possibility of having a Vancouver band or a hot new band from the Okanagan, but we see this very much as a local, with perhaps a bit of extension into the regional area. But it is definitely not the kind of event where you bring in the big American headliner or necessarily bands from across central or eastern Canada.

2487 THE CHAIRPERSON: So very much a local event?

2488 MR. SPENCE: Very much so, yes.

2489 MR. COOPER: Madam Chair, just to add to that, one of the things -- and I think we do ourselves a disservice because following the guidelines of the application form, we have put in the number of dollars that might be expended. But as they say in business, there is a thing called sweat equity. That is when you are actually putting yourself into it and you are putting your people into it. So we do -- there are a lot of soft costs.

2490 Yes, we do write a cheque to FACTOR. In our proposal, we will continue to that because we believe in what FACTOR does. But in the main what we do is interactive activities with Canadian talent. So our view is that we simply touch hard costs and fail really to tell you all the things that have to go into making these things work and be successful.

2491 THE CHAIRPERSON: Can you give me any estimate of what that might be in terms of cost?

2492 MR. SPENCE: It's a small example but this little thing we are doing with the Gulf Island Secondary School, here are a group of high school students who feel like they are -- they are in our broadcast areas, as you know, geographically but they are on this island and they feel that they are kind of isolated from the world. The first time I went over to meet with them and their teachers in their career development department, they had been visited the previous day by a professor from a university in Ontario who spent the first half-hour describing how difficult it had been to get there. So they were kind of feeling glum about that.

2493 So I said, "Well, you know, the great new thing about this world we are living in is that you can live on Salt Spring Island or Prince George or somewhere and be connected with the rest of the world and do great things and then come home and see the wonderful sunset over the hills."

2494 We have probably spent 200 or 300 hours with these young people so far just in getting ready in the one test. I don't know what my time is worth or what the other people who work with it or the studios they work in, or blocking off space in the radio station so they can be there. There is another group coming in in two weeks. We don't put a dollar value on that but it is quite extensive and it's great to see the looks on their faces when they sit down in front of the digital editing equipment and produce the sound track for the animation that they are creating at their school and they go back to their school and they are heroes, and a whole bunch more people want to sign up and be part of this because everyone is so excited about it. So it's a long answer to your question, I'm sorry.

2495 THE CHAIRPERSON: That is helpful. Thank you. I know we had some question about whether the Festival was a one-time annual event and it sounds like from your presentation this afternoon that that's what it would be as opposed to a series of concerts throughout the year.

2496 MR. SPENCE: Once a year a big event. We have a couple of venues in mind. We haven't signed contracts obviously with anyone yet. We see this as a large well-managed daytime outdoor day-long event on a Saturday or a Sunday and an outdoor venue away from houses and the people that might be disturbed by their loud sounds -- but an annual event. After a year or two, who knows, we might turn it into twice a year but we see this as a kind of a major annual thing.

2497 THE CHAIRPERSON: Thank you. By way of clarification, we have one question with respect to your application which contains a commitment to Category 3 music, Canadian content level of 35 per cent each broadcast week. Since very few stations offer levels beyond the regulatory minimum of 10 per cent, I just wanted to clarify your commitment in this regard.

2498 MR. SPENCE: Yes, 35 per cent is what we propose.

2499 THE CHAIRPERSON: Thirty-five per cent, Category 3, okay.

2500 Now, I have some questions, as I asked some of the others this morning, about the rate of growth of the Victoria market and the state of the economy there. As you may know -- I just want to read you an excerpt from a Conference Board 1998:

2501 Now, as you know, the PBIT for the Victoria stations has not been as high as the national average and I guess, on the other hand, we are hearing from all of the applicants really, it's a buoyant market, it's a growing radio advertising market. So I wonder if you could just comment on the seeming discrepancy for me.

2502 MR. COOPER: Well, the one thing we don't like to do publicly is to comment on the accuracy of the Conference Board of Canada, though over lunch, there were those who were talking about it earlier today and suggested that they don't count on the Conference Board of Canada's numbers for their business planning. I say that with respect to them but it would appear that they are surely and have been more negative about growth. For instance, if we had followed the Conference Board of Canada numbers going back a few years, we might have found that they were not really quite accurate in terms of our community.

2503 I would say that our capital region district, which is close to the scene and which follows all the population trends, has clearly indicated growth up to the level of $400,000 in just five or seven years -- maximum of five actually. The other thing is that the growth of the advertising market has been at a level that is more than the gross revenue that we indicate that we can do in our first year.

2504 Later, if you wish, we can comment on the source of funds which shows that this would enhance the money that will be coming to radio in the market because of the uniqueness of the format.

2505 So I would say that there may be those who might have political comments too about what has been happening to our economy in this province. We are looking for brighter days and I am sure they will come.

--- Laughter / Rires

2506 MR. COOPER: I will let the audience make its own conclusions there. But the fact is that yes, this is a very great province and Victoria is one of the great cities of the country. Its business as a tourist attraction drawing people into the community is one of a kind. We had a growth last year of over 15 per cent in that side of the industry.

2507 The Internet, the new technologies, we ignore them sometimes in our numbers because they are so new and fresh, but because of the ability of people to run businesses out of our city, with lifestyle being so important, it's not bad to live in Victoria and run your business. So I am really not gloomy at all about the growth of Victoria because it has so much to offer and because the record over the long haul has been that this is one of the great cities of the country, now the fourth largest community in Western Canada.

2508 THE CHAIRPERSON: Thank you. What I was really -- I appreciate that and it's more than what we see are seeming inconsistencies. I think what we have been hearing is evidence that in fact the radio advertising market is growing and is showing strong growth, and at the same time, that appears to be contradicted by a relatively low PBIT and in fact a sort of grim outlook by the Conference Board. So what I really want to do is just hear from you who are there operating that clearly you have a lot of confidence in the market.

2509 MR. COOPER: Yes, I think any of those kinds of views are more short term and we see quite -- for instance, if one was to isolate the last couple of months in terms of radio advertising in our community, there was a sudden stop. There was a decline but you have to look at it in the life of a station or of a community. As we look out and as the capital region district looks out, it points to a -- to use a phrase of one of our other applicants -- buoyant economy, buoyant growth.

2510 THE CHAIRPERSON: You have talked a bit about the repatriation of the out-of-market listeners. I guess this is another anomaly of this market, is the high degree of out-of-market tuning.

2511 You have directly connected your format to the out-of-market tuning, I gather. I wonder if you could just elaborate a little bit more on sort of specifically where that out-of-market tuning is with the proposed audience.

2512 MR. SPENCE: Primarily four radio stations in Vancouver and Seattle are the listeners that we are going to drive back to Victoria with this new station: The End in Seattle, 107.7; KUBE in Seattle, 93.3; Z95 here in the lower mainland; and to a lesser extent, CFOX here in the lower mainland. I have a 22-year-old University of Victoria student for a son and whenever his mother or I get in the car that he has been driving, it is always tuned to The End in Seattle and all his friends listen to it.

2513 All the people we had in our young people's focus groups listen to one or other of those four stations. I have even gone to speak to high schools, as we are sometimes asked to do, and when you start, you say, "Hold up your hands those of you that listen to this... this... this..." It's amazing. Virtually, the whole group of grade 11 or 12 students will be listeners to one of those four outside stations, two in Seattle and two in Vancouver.

2514 MR. COOPER: Maybe to be a bit more specific to your answer as well, Copeland Communications, which is the largest advertising company in Victoria, by far the largest, they have in Steven Hutchinson a Media Director who is very experienced in Canada. He provided a letter to the Commission about this format and in the letter, which was written on March the 30th, he said that:

2515 He goes on to say that:

2516 Then what he has done is he has broken up the stations that teens listen to off island and what adults listen to. It was really interesting because in total it is about a million hours of tuning a week. Obviously, Z95 has done a good job because of teens; 32 per cent of the Victoria teens who listen outside listen to that station. Just about touching 20 is KUBE of Seattle. In the adults 18-24, the Vancouver stations made up of Z95, the FOX, and CFMI have 20 per cent but Seattle stations have 26.

2517 So what we have here from his data which he has provided is pretty clear evidence that that is where they go and that, in fact, is where -- when we talk about repatriating Victoria listeners going elsewhere, this in fact is the bulk of Victoria listeners now who go elsewhere.

2518 THE CHAIRPERSON: Thank you. I assume that this is also the basis of -- I shouldn't say "assume". Would this also be -- the basis of the 70 per cent of new revenue that you expect to be generating from the market would be people who are currently not advertising because they can't reach that demographic?

2519 MR. COOPER: Yes, and that, Madam Chair, came as a result of Greg Meiklejohn's face-to-face interviews with Victoria business people. We outlined many of their comments in our application, as you may know, verbal bites from the focus groups that we had, that we have in our application. Some of them are extremely strong in their comments about what they would spend. They actually get down to specific numbers or they get down to where they will move from the newspaper.

2520 But the biggest message that they provide to us is this: that is that right now, and they say it pretty clearly, there is nowhere to go. If you want to talk to the young people of Victoria, if you want to talk to the young adults of Victoria and you want to talk to them about your entertainment that you are providing or if you want to discuss buying opportunities or whatever it is, business people know that they can't do it and they say, "There is no way to do it."

2521 Now, we will have a way to do it and I guess that that probably is one of the reasons why there is such an outpouring of support for our application which we had in the supplementary brief.

2522 THE CHAIRPERSON: Thank you. As you know, in the new radio policy, the Commission stated that it would be prepared to issue licences depending on the individual merits of the applications, in particular, the benefits their approval will bring to the communities concerned and the broadcasting system as a whole.

2523 Given that formats are no longer regulated and in the absence of specific programming conditions of licence, I know you have given us your 10 reasons why we might license your proposed station, but I wonder if you could give us any other thoughts on why you might be licensed?

2524 MR. COOPER: Well, it seems to me that we can't isolate a process that actually, at the time of a licence being granted, we can't ignore what the current situation is in the market. So while I appreciate the Commission's agreement to sort of allow the market to prevail, when it comes to new licences, I think it is important what need will be served, what hole will be filled, what will this do to enhance the diversity.

2525 I think those still become really important issues and I think they should always be part of the process because people don't win, listeners don't win, if in fact what we have is something that duplicates an existing service.

2526 So I think, to answer that finally, maybe succinctly, more succinctly than I have, I believe it should be still a part of the decision-making process when new licences are being granted, who provides the most services and the best services to fill community needs.

2527 THE CHAIRPERSON: Thank you. I wonder how that fits with -- well, I guess it's sort of -- one of the things that certainly I have been reviewing is I have been studying the various applications and the Victoria market is two FMs and three AMs in a market of over 300,000. Does that -- given the way the AM radio is evolving and the competition from other FMs from outside of the market, I just wonder if you could comment on the fact that with two FMs there available and a population of this size, would --

2528 MR. COOPER: Well, one of the things that I think people were amazed when they started to look at it, we have two FMs in the community, as you mentioned now, one for every 160,000 people in the community. Now, normal markets around the country will be an FM station for 40,000, for 50,000 or 60,000 people. That is about average. That is by the way, in terms of number of stations per population, AM or FM, is one per 64,000 in Victoria. You look at Kelowna, it is one for every 20,000 -- so the competition is much more intense -- Kamloops, Prince George.

2529 So Victoria listeners really have less choice in their own community, just on the basis of the fact there are only five licensed stations. Two FM commercial stations would be what you would expect from a community of 60,000 or 50,000 -- not 320,000.

2530 THE CHAIRPERSON: Do you know why -- can you shed any light on how this has evolved this way?

2531 MR. COOPER: Well, I am not an engineer, as my Technical Director knows. I do try to understand it. But yes, there was a moratorium for some time on licensing in Victoria. I think when they divvied up the allocation of FM channels many years ago and a sort of 10-year plan was established that we did not as a community get the number of dial positions that maybe a community of that size should have had.

2532 Now maybe they didn't think Victoria would ever grow to be eventually a community of 400,000 or more, which it will be, but I think it is also a reflection -- and my Technical Director is free to hit the button and speak if he wishes -- and that is that the number of signals in the northwest area of Seattle, Vancouver, Victoria, they didn't have a lot of frequencies, and to do it, there was a lot of juggling going on and Victoria ended up with a minimum number, really, only three viable commercial channels.

2533 That is why you see all the requests here today to move in on the -- if I may say that -- on those non-commercial channels that remain and, by the way, in very short supply themselves. So I think that is why we ended up in that basic position and, as you know, once the Commission turned down an application in the early eighties, then that gave us another long period of time before another hearing.

2534 So we have really not had the opportunity to get before you like this to talk about Victoria FM opportunities like other markets have.

2535 THE CHAIRPERSON: I just wondered if it had evolved differently than other markets.

2536 MR. COOPER: I think it really did.

2537 THE CHAIRPERSON: Because, as I say, I have been struck by a number of sort of anomalies.

2538 MR. COOPER: M'hm.

2539 THE CHAIRPERSON: The high out-of-market tuning, the low number of stations for the population, and...

2540 MR. COOPER: But things do change, as you know. I mean, who would have thought -- there are those who would think that Victoria, because of its preponderance of retired people, would not have this vibrant youth, these young people. It is, as record producers, as music managers that we quote in here say, you have to understand that Victoria is alive in the young side of the market. They don't roll up the carpets anymore at 6:00.

2541 THE CHAIRPERSON: If they ever did.

--- Laughter / Rires

2542 THE CHAIRPERSON: You say that you are at a competitive disadvantage having to compete as a stand-alone against two AM-FM combos. In the event that your application and one or more of the AM-FM flip applications to establish a new FM were approved, would you proceed with your plans to establish a new station?

2543 MR. COOPER: Yes.

2544 THE CHAIRPERSON: What impact would the approval of one or more of the AM-FM flip applications have upon the listening audiences and advertising revenues of your stand-alone AM?

2545 MR. COOPER: I actually believe that despite the fact -- and this gives me a very sort of lonely feeling because what is really being proposed is that everyone deserts the AM dial leaving it to us. So we are there on our own, sitting as the only local station on the AM dial. Now, that could have some impact on us, just that alone, because if people are used to going to AM for other services, you get a better chance of getting an audience. Now, more of them will be on the FM.

2546 So that is going to be a challenge for us. But we have had a series of challenges. Most broadcasters in this room could speak on for a long time about how difficult it would be to survive in an AM format on your own.

2547 So just to comment on that: Would it impact on us? To a degree, but our station is basically news information and talk and involvement, community involvement, and we think that that would not -- therefore, they would not take that much advertising away from us.

2548 THE CHAIRPERSON: So really then, your principal concern is that if there were no other local AMs existing in Victoria that it would drive people further away from the AM band?

2549 MR. COOPER: Right.

2550 THE CHAIRPERSON: And that is what would be the impact as opposed to any immediate impact on revenues --

2551 MR. COOPER: That's right. In fact, I think as -- I am an old AM broadcaster, I must admit, although I was involved in the CFMI application for Vancouver and did try before, as I say, to get an FM for Victoria. But I have a lot of faith still in AM. It needs a lot of work but there are formats that work on the AM dial.

2552 The day is coming when AM will be more sought after. Why is the industry chasing so hard on digital and so forth? We didn't have a belief that it -- one day when it can competitively -- or at least be competitive in the area of sound quality and stereo that the medium will have a much better opportunity.

2553 THE CHAIRPERSON: I wonder if you could elaborate on that a little bit with respect to the formats that can work on AM presently?

2554 MR. COOPER: Well for sure, news information talk. In markets like Toronto and others, the highest -- if I may use revenue numbers for a moment -- the highest revenue station in North America is a sports station, an all-sports. In other words, you have to appeal to special niches.

2555 Country does work. There is no doubt about the application for more new country that works on FM because of stereo, but there is a country sound that can really work on AM. I am surprised that everybody says that oldies needs -- they don't mention oldies as a viable format for AM. It is and that's proven in many parts of the country.

2556 I remember just a few years ago going to broadcast meetings when we had people with FM licences who were trying to hand them in. They said, "Would you take it off my hands?" They just didn't understand the potential of it.

2557 I hate to say it but I think right now a lot of broadcasters don't understand the potential still of AM. Having said that, it is an FM world out there but maybe the less we provide them with service, of course, there is going to be less listening to AM.

2558 THE CHAIRPERSON: Thank you. Is there a future for CFOX as a stand-alone AM in the Victoria market?

2559 MR. COOPER: I am not known to be a pessimist. Some of my best friends say, "Well, how do you continue to do this? Why don't you -- why are you operating such an expensive operation?" Maybe it's pride. Maybe it's just stubbornness. Maybe it's the fact that we really like what we do and also because we see an opportunity in our communities. It is a very news-oriented community because it is a capital city and we get to rub shoulders with political leaders every day.

2560 So as I think about it and look at it, I have seen, of course, a loss of revenue and, to a degree, audience. But we have held our head up pretty high through it all. But against two FM combinations, two FMs in one company, another two FMs, I think I would have to say reluctantly that we would have to. We would have no chance because our banker would probably tell us that we would have to cut back.

2561 We do fear that if we have to sit as an AM only, one of the few in any city of any size left in the country, our future could be kind of glum.

2562 THE CHAIRPERSON: Recognizing the competitive nature of this Victoria FM process, in the event the Commission does decide to grant new Victoria FM licences to both yourself and one or both of the other applicants, could you outline for us the impact of such a scenario on your business plan, particularly on projected revenues and audience?

2563 MR. COOPER: We actually believe that it would have -- I will come back and just qualify later, if I may, one point. We believe it won't have a big impact on our business plan and one of the reasons is that we are so distinctly different in terms of the audience we reach and where money isn't being spent now to reach them in Victoria, but our actual business plan will stand up because the new applicants or the new stations will not be talking to our audience and they won't be talking to our potential advertisers about the audience we provide that is quite unique to the radio dial. So I believe it will stand up.

2564 The only thing, I think, to qualify, and I guess I would put it this way, it is like bringing in three major supermarkets into a market all at the same time. The market has a difficult time absorbing them all at once. So to put three new FMs in right away might be -- you know, I have never seen that happen in the country. So I don't know what the result would be from looking back at experience.

2565 I think my gut feeling would be that to give three new licences at the same time could potentially create a problem for the new station that is starting from scratch, such as our own. Maybe they have to be phased in. I mean, that would be the more logical way if you could do it.

2566 THE CHAIRPERSON: Do you have any suggestions in that regard?

2567 MR. COOPER: That they be phased in?

2568 THE CHAIRPERSON: Yes, how would you phase them in? How would you manage that with respect to -- how would you --

2569 MR. COOPER: Through making -- well, you know, somebody said today that this was a Victoria love-in. Everybody was so nice to each other. Well, we work well together. We do but it is very competitive. Actually, to show you how competitive it is, the two current FMs -- the two current AMs and FMs, together, that's four, compete with advertising against us four-to-one. They have a package four-to-one. We have broad shoulders but that is the kind of competition. Now, that is business. I know that. I can't stop that. But there is that reality out there that that happens.

2570 So now, if you have more FMs coming in at the same time, you would have to say that is bound to have an impact. So I would suggest that one of the alternatives the Commission would have would be to look at granting a new licence because Victoria with six stations will not be overlicensed at all, and then to look at delaying while maybe also other things are considered, like: What do we do about the diminishing supply of non-commercial frequencies that everybody wants these days? How does that serve the communities in the long haul?

2571 I think SFU has already indicated they want to apply. Well, will they have a licence to apply for or at least a frequency? These are the kinds of maybe bigger issues, broader issues that the Commission has to look at.

2572 So if you did it, we will just do our best and we feel very comfortable with our format and with our target audience. So that is your decision but I guess my only fear would be not to throw too much at the market all at once.

2573 THE CHAIRPERSON: My other question in that regard is, and I wonder -- you have used the analogy of opening up three supermarkets. I mean some people have said you open up three restaurants in the same area and if it has been an underserved community, you know, it's -- is that possible in your view?

2574 MR. COOPER: There is no doubt in my mind that some of the growth we have seen in Victoria -- and the other applicants have said it -- is stimulated by new licences. There is no doubt in my mind about that, that you do get the whole spectrum, the whole radio medium benefits. So saying that, yes, there will be the ability of the market to respond to more service. So that would be a fact.

2575 THE CHAIRPERSON: You would not alter your business plan? Your business plan could stand on its own?

2576 MR. COOPER: Our business plan would stand, yes.

2577 THE CHAIRPERSON: My last question is: If for any reason the FM frequency you applied for were not available, would you be able, ready and willing to use another frequency for your proposed station?

2578 MR. COOPER: Well, just if I may -- as you know, when we applied, we were in fact the station that triggered the call. So we applied for what was available and the most logical, which is the commercial frequency that was available for the community. To come in as the first with an application for a non-commercial frequency might have mystified the Commission, "Why aren't you going for what has been set aside for you?" So that did trigger the other applications that came in after.

2579 It would be our first choice. We know it. We understand it. We are not so convinced that some of the others will work. But obviously, if it was the Commission's decision to give that 107.3 to another applicant, then we would have no choice but to look at the other alternatives.

2580 THE CHAIRPERSON: Thank you. Actually, I think that finishes my questions.

2581 Our legal counsel, I think, has a question.

2582 MS MOORE: Thank you, Madam Chair.

2583 I just want to clarify: With respect to the 35 per cent commitment for Category 3, I would just like to discuss that a little bit, especially in terms of how it might relate to your format.

2584 If I could just refresh all of our memories, and I note that in your application you stated that you were committing both 35 per cent for Category 2 and 35 per cent for Category 3; Category 2, in the vernacular, pop, rock and dance; Category 3, traditional and special interest, including things like concert music, folk, jazz and non-classic religious.

2585 I just note that the Commission has made statements, for example, in the Commercial Radio Policy that the threshold for Category 3 is at least 10 per cent because of the generally limited availability of Canadian recordings of this specialized type of music. So I just want to be clear that your intention is to commit to that much higher level of 35 per cent for Category 3.

2586 MR. SPENCE: That is only because we will have very little, if any, of that, but if we have any Category 3 music, it will be mixed in with the other music and we will have 35 per cent minimum Canadian content overall. We have no specific plans for Category 3 music.

2587 If it came that the Commission ruled that a particular cut were in that category, that would be fine and we would be at 35 per cent Canadian content in that category as well. But I mean, primarily, this is a Category 2 radio station.

2588 MS MOORE: Yes, I think that perhaps in the application where you indicated 35 per cent for Category 3 that that really isn't consistent with the format that you are proposing. So it would perhaps be more appropriate to have 35 per cent for Category 2 and not make a commitment above and beyond the minimum for Category 3.

2589 MR. SPENCE: Well, that would be fine. We are quite comfortable with that and if you would like to make that change, that would be quite appropriate.

2590 MS MOORE: Well, I am not suggesting it but I would think that with the format that you are proposing, in fact, 35 per cent for the Category 3 would kind of call into question the format that you are proposing?

2591 MR. SPENCE: Yes.

2592 MR. COOPER: We may have, in fact, led you astray in our -- maybe by going astray ourselves, and that is that it is a Category 2 station. If we played Category 3 music, it would be 35 per cent and I think that was the interpretation. So maybe it was the way we expressed it.

2593 MS MOORE: Thank you.

2594 Those are my questions, Madam Chair.

2595 THE CHAIRPERSON: Thank you, counsel.

2596 I believe Commissioner Wylie has a question.

2597 COMMISSIONER WYLIE: Well, it was just to clarify that what I hear you say is if we have a few Category 3 mixed in, we are not going to make a distinction as to how much Canadian content is in there.

2598 MR. COOPER: That's right.

2599 COMMISSIONER WYLIE: There may be some periods where you don't have any at all?

2600 MR. COOPER: Yes.

2601 MR. SPENCE: Absolutely.

2602 COMMISSIONER WYLIE: As long as we understand each other.

2603 MR. COOPER: Yes. Thank you.

2604 THE CHAIRPERSON: I think that finishes our questions. If you have anything to add, please feel free. Otherwise, I think we --

2605 MR. COOPER: No. Our thank you for the opportunity to appear before you. We look forward, with your support, when you make that final decision, to bringing Victoria a great radio station.

2606 THE CHAIRPERSON: Thank you.

2607 I think what we will do is take a 10-minute break now and return for Phase II.

--- Short recess at / Courte suspension à 1545

--- Upon resuming at / Reprise à 1555

2608 THE CHAIRPERSON: Madam Secretary, we are now ready to reconvene.

2609 MS VOGEL: Thank you, Madam Chair.

2610 We are now ready for Phase II of this process. As a reminder, Phase II is where the applicants reappear in the same order to intervene against other competing applicants. Ten minutes is allocated for each intervention. Questions might follow.

2611 With that in mind, I would like to recall O.K. Radio Group Limited please for their intervention.

2612 MR. STUART MORTON: Madam Chair, members of the Commission, I have no additional comments in intervention to any of the other applicants from Victoria.

2613 THE CHAIRPERSON: Thank you.

2614 MS VOGEL: I would like to invite Rogers Broadcasting Limited to come forward with their intervention, please.

2615 MR. VINER: Madam Chair, I would like my speech to be shorter than Mr. Morton's.

2616 THE CHAIRPERSON: I don't know if that is possible.

2617 MR. VINER: I don't think it is but I will only say we have no comment. We think that the Commission has heard some excellent applications and will have a difficult choice unless of course it chooses to grant all three.

2618 THE CHAIRPERSON: Thank you.

2619 COMMISSIONER WYLIE: I thought we were going to have Radio 102.

--- Laughter / Rires

2620 THE CHAIRPERSON: Are you sure?

2621 MR. VINER: No, ma'am.

2622 COMMISSIONER WYLIE: You didn't make the grade?

--- Laughter / Rires

2623 THE CHAIRPERSON: Thank you.

2624 MS VOGEL: Finally, would Seacoast Communications Group come forward for their intervention, please?

2625 MR. COOPER: Just to show that we do understand each other in Victoria, Seacoast has made its points and we don't wish to intervene.

2626 THE CHAIRPERSON: Thank you.

2627 MS VOGEL: Well then, we will embark on Phase III.

2628 THE CHAIRPERSON: Thank you, Madam Secretary.

1600

2629 MS VOGEL: Phase III is where the appearing interveners make their presentations to the Commission. Ten minutes is allocated for each presentation and there may be questions following the interventions.

2630 I would like to first invite Canadian Broadcasting Corporation to come forward for their intervention.

INTERVENTION

2631 MS ENGLEBERT: Madam Chair, ladies and gentlemen of the Commission.

2632 My name is Susan Englebert and I am the Regional Director of English Radio for British Columbia and Project Leader for the CBC's English Radio proposed new radio network, Radio Three.

2633 With me are Sam Nemes, Senior Manager, Transmission and Distribution, National Engineering, and Paul Monty, Senior Officer of the CBC's Regulatory Affairs.

2634 This is an intervention relative to O.K. Radio Group's application which proposes to broadcast on the frequency 91.3, on the agenda of this hearing. The CBC has also filed an application for 91.3 in Vancouver for Radio Three.

2635 The CBC's application, however, has not been included on the same hearing agenda. Yet, both applications are mutually exclusive: if this frequency is licensed for Victoria, it cannot be for Vancouver.

2636 We do not oppose the merits of O.K. Group's application. Rather, our intervention is aimed at the applicant's choice of frequencies and a concern that an existing commercial service would pre-empt a non-commercial applicant for the use of an educational, non-commercial frequency.

2637 We do not propose to discuss the specifics of Radio Three's proposal at this hearing but we feel we must submit the following facts which, in our minds, are evidence that it merits consideration at a public hearing:

2638 (1) Our Application was filed before, well before the deadline of November 26, in response to the call for applications for Victoria. We met the deadline.

2639 (2) We believe the Radio Three application is complete, by the depth and breadth of its programming proposals, its plan, its resources, its costs. It is by making the application public that others, be they the public, private broadcasters or editorial writers, may make a proper evaluation of it.

2640 (3) Radio Three has the endorsement of the CBC Board of Directors. The other endorsement required is that of the Commission. The comments of O.K. Radio in its reply to the CBC intervention would be more appropriate in a hearing on the merits of Radio Three's application.

2641 (4) We have been urged by the Commission to seek educational non-commercial frequencies, which leaves room at the upper FM band to private broadcasting. The very purpose of the educational, non-commercial portion of the band is to reserve sufficient space on the FM band to ensure programming diversity to FM radio, through public, educational, community, campus, and non-commercial broadcasting.

2642 This educational, non-commercial versus commercial distinction is not always possible. We know the CBC broadcasts on some commercial FM frequencies where educational frequencies are too few or too restricted or where they are not usable if they are not co-sited with a television station broadcasting on channel 6 and there are commercial stations broadcasting on educational, non-commercial FM frequencies because there are no commercial frequencies left.

2643 But here, it is possible. In fact, the CBC spent its own time, efforts and money to make that distinction possible, and with the assistance of Industry Canada and CHEK-TV which broadcasts on channel 6 on Saturna Island.

2644 We have found ways to free a number of educational, non-commercial frequencies and, by doing so, we have decongested the rest of the band. Furthermore, we refrained from applying for 107.3 in Victoria and have not intervened against those who applied for 107.3 even though it was a part of the CBC's Long-Range Radio Plan.

2645 After the CBC has made all attempts to avoid competing with private broadcasters for FM frequencies, today, it finds that it is private broadcasters that are competing with it rather than competing among themselves.

2646 Would it not have been more appropriate for O.K. Radio to compete with its private colleagues in Victoria for a commercial frequency?

2647 This not being the case, we submit that the Commission has on file two applications for the same educational non-commercial channel: one that is non-commercial, by a public broadcaster, for an entirely new service which responds to the objectives set out for it in the Broadcasting Act; and the other for an existing commercial service.

2648 In accordance with the principles of law and competence, we ask the Commission to consider our application for 91.3 before issuing a decision on the licensing of that frequency in a manner that would risk the deployment of a new national radio service for Canadians. The application of O.K. Radio may stand and simply be adjourned to this later hearing.

2649 Finally, we wish to ask the Commission to consider the CBC's application for Radio Three at its earliest convenience so that prospective applicants for new FMs responding to calls for applications and the CBC would know where they stand in case they compete for a number of FM frequencies.

2650 All of which we respectfully submit, Madam Chair, ladies and gentlemen of the Commission. We are now at your disposal.

2651 THE CHAIRPERSON: I believe Commissioner Wylie has a question.

2652 COMMISSIONER WYLIE: Good afternoon, Ms Englebert. In your view, which is more important procedurally when the Commission -- well first, let me ask you, is 91.3, in your view, a Victoria frequency or a Vancouver frequency?

2653 MS ENGLEBERT: I will ask Sam Nemes to answer that.

2654 MR. NEMES: 91.3 was assigned originally -- were allocated to Saturna Island. Before 1997, that frequency was the frequency allocated to Saturna. In Saturna, the frequency can be used both for Victoria or for Vancouver.

2655 COMMISSIONER WYLIE: So you don't accept that it is assigned to Victoria in particular?

2656 MR. NEMES: Well actually, following our test in 1997, Industry Canada decided, based on the test results, to allocate that frequency or to move that frequency from Saturna to Victoria.

2657 COMMISSIONER WYLIE: Yes, because procedurally, of course, you find yourself hard done by, but when there is a call for Victoria on a frequency assigned to Victoria, our view has been obviously that we hear Victoria applications and that yours was a Vancouver application. You obviously don't agree that this was a fair way to proceed but that is what we did, on the basis of the assignment.

2658 Were you here this morning when Mr. Viner, for example, from Rogers Broadcasting made his presentation and do you find any comfort in the discussion that there was about -- the room that there may be for accommodating various proposals without allocating the frequencies exactly as people have applied for them? Do you see any avenue there for the CBC in Vancouver? Is there another frequency in Vancouver?

2659 If the Commission has taken the position that the assignment was Victoria, not Vancouver, which is obviously what happened, you are concerned about the distinction between commercial and non-commercial use, or is there another frequency in Vancouver that could be used if that distinction was not focused on --

2660 MR. NEMES: If that distinction is not focused on, yes, there is another frequency, which is channel 233C, which is allocated to Vancouver.

2661 COMMISSIONER WYLIE: So you would agree with the applicants of this morning that there is some room as between Victoria and Vancouver for accommodation without postponing any part of this hearing?

2662 MR. NEMES: Well, does it mean that 233 is going to be assigned to the CBC?

2663 COMMISSIONER WYLIE: Well, I can't -- we are not hearing you today. All I am doing now is responding to your intervention, which is that the Commission should not make a decision or perhaps your position would be should not have even scheduled this hearing because you applied on 91.3 in Vancouver, right?

2664 So I am just trying to discuss with you whether not postponing decisions on any part of this hearing leaves the CBC completely without the possibility in Vancouver and I gather the answer is no?

2665 MR. NEMES: That's correct. There is channel 233 which is --

2666 COMMISSIONER WYLIE: But we certainly can't decide today without hearing your application how this would work. But I am just discussing here the fact that there are frequencies more than have been applied for.

2667 MR. NEMES: Yes. During this morning, we also heard -- the questions and the replies are always referred to three applicants for Victoria -- actually, you have four applicants: CBC French Radio --

2668 COMMISSIONER WYLIE: Because of the transmitter for the French radio, correct?

2669 MR. NEMES: Right. With regard to the number of frequencies in Victoria, also there are more than two FM frequencies in Victoria according to the Canadian FM broadcasting allotment plan. I think that the assigned frequencies in Victoria -- right now, there are seven and in addition to the education frequencies which are allocated today to Saturna.

2670 COMMISSIONER WYLIE: So there could be some other possibilities. I really have no other questions. I don't know if you have anything to add.

2671 MR. MONTY: There may be a consequence as well in wanting to institute a new service which will be up for future consideration.

2672 There's also meeting the Commission's expectation that we implement La Chaîne culturelle in every province in order to reach 50 per cent of the population. If we were to get the last frequency in Vancouver, that may not be -- there would be a choice to be made between either a new service or reaching that objective.

2673 As for the procedure, the fact that the application for 91.3 -- being at the hearing, what we are simply asking for is if you were to issue a decision -- if you were to consider a decision on this frequency to first hear our application before issuing that decision.

2674 COMMISSIONER WYLIE: Yes, but your request would be that no decision be made as a result of this hearing because of the problem you perceive or the procedural problem you perceive of the use of a Victoria frequency in Vancouver when we are hearing a Victoria -- you know, this is a Victoria hearing?

2675 MR. MONTY: Yes, but in light of the fact of that frequency having been assigned to Saturna rather than Victoria.

2676 COMMISSIONER WYLIE: Well, I thought your engineer said that in 1997 it was technically assigned to Victoria. Isn't that what I heard you say?

2677 MR. NEMES: Before 1997, it was part of the allotment in Saturna Island. Following our measurements, Industry Canada decided -- we tested actually channel 217 and channel 213; 213 we use for English radio. Following the measurements, Industry Canada decided to move that frequency to Victoria, yes.

2678 COMMISSIONER WYLIE: Thank you.

2679 MR. NEMES: However, we sent various letters to Industry Canada and the CRTC with regards to changes in the Long-Range Radio Plan, because we had in the Long-Range Radio Plan various channels assigned for French radio, both La Chaîne culturelle and Radio One in French, and by now not intervening against 297, we are losing that allocation for French stereo in Victoria.

2680 COMMISSIONER WYLIE: Thank you, Ms Englebert, Mr. Monty, Mr. Nemes.

2681 Thank you, Madam Chairman.

2682 THE CHAIRPERSON: Thank you, Commissioner Wylie.

2683 That's all. Thank you.

2684 MS VOGEL: Our next intervenor this afternoon is CKAY-AM.

1620

2685 THE CHAIRPERSON: Please go ahead whenever you are ready.

INTERVENTION

2686 MR. DREW: Madam Chairperson and members of the Commission. First of all, please forget my casual attire. I was under the impression that with us would not be occurring until tomorrow and my wife and I took a very leisurely drive over from the Island. We arrived here to find out that we would be on now.

2687 THE CHAIRPERSON: We think you look wonderful.

2688 MR. DREW: Pardon?

2689 THE CHAIRPERSON: I said we all think you look wonderful.

2690 MR. DREW: Oh, well, someone accused it of being a Duncan tuxedo.

--- Laughter / Rires

2691 THE CHAIRPERSON: Whatever.

2692 MR. DREW: Tracy Hamilton, our Sales Manager, was to join me and unfortunately, she was under the same impression and she has ringside seats to go see Rod Stewart tonight.

2693 THE CHAIRPERSON: Good for her!

2694 MR. DREW: Now, you know where she is.

2695 My name is Dick Drew.

2696 THE CHAIRPERSON: Is that Canadian content?

2697 MR. DREW: Pardon?

2698 THE CHAIRPERSON: Is that Canadian content?

2699 MR. DREW: My name is Dick Drew. My wife and I are the owners of radio station CKAY located in the Cowichan Valley and the Cowichan Valley or the CVRD is between Nanaimo and Victoria. CKAY is a locally owned and stand-alone single radio station independent, one of the last in the breed of the independent AM, as you heard Mel Cooper say earlier.

2700 I am at a disadvantage. Having arrived late, I did not hear the O.K. Radio Group presentation. So I can't comment on that with the other comments that were made.

2701 There are a number of very important reasons why CKAY is opposing the application by this Group for yet another FM frequency to serve our area.

2702 Make no mistake, their plan is to blanket our area with two FM signals from their outstanding transmitter site high atop the Malahat, located well within the Cowichan Valley Regional District, the CVRD. They plead poverty as the main reason for their need for two FM frequencies. I must ask the unpopular question: Are they really motivated by poverty or are they motivated by a desire for corporate growth?

2703 We respectfully request you deny this application and humbly suggest you reserve 91.3 for CBC Radio-Canada to retransmit CBUF-FM. The engineering brief prepared by the O.K. Group confirms that 91.3 works well from their site on the Malahat. This is the same site where CBC Radio One 90.5 transmits. It is also the same site from which the O.K. Group's phenomenally successful FM station CKKQ-FM transmits. And it is also the same site that CBC Radio-Canada plans to retransmit CBUF-FM from Vancouver.

2704 The O.K. Group's FM station CKKQ is phenomenally successful, both audience-wise and financially, largely in part to their incredibly strong signal from that site which looks down into and blankets the CVRD and Greater Victoria with an outstanding signal. CKXM-AM with their 50,000 watt regional clear channel signal is already difficult competition for CKAY.

2705 We compete for listeners and advertising dollars. Their ads in our local newspapers combined with their having a sales representative living in Duncan, a former sales rep from CKAY, already makes CKXM-AM a formidable competitor. Should they flip and become an FM station broadcasting from their site located within the CVRD, they would become crushing competition for CKAY.

2706 As stated in our intervention, should you approve their application, you would be licensing yet another FM station for them within the CVRD. They already own one FM signal. Is it need which brings them here today asking for yet another FM frequency? If you grant their request, it is certain to have a very damaging effect on CKAY.

2707 If it is the intention and the desire of the CRTC to encourage and support local radio committed to serving local communities, then the licensing of yet another chain-operated FM station, with a sister FM station already dominating the ratings, will be counter to those most admirable intentions. Another well-funded commercial FM station broadcasting from the Malahat located within the CVRD could well be the difference between CKAY continuing as an active involved force in the nine communities or becoming a carrier of music programming off a satellite from Toronto interrupted only for news, also off a satellite, and a few local commercials. I don't believe for a moment that you or the nine communities we serve wish that as a fate for CKAY.

2708 Now, I am supposed to introduce Tracy Hamilton, our General Sales Manager of CKAY to quote from some of the letters. So if you don't mind, I will try and sound like Tracy. I will read Tracy's part. Please bear with me.

2709 She was going to quote from some of the many letters that we have received supporting CKAY.

2710 Mr. Lance Stewart, a restaurant owner and Executive Director of the Duncan Business Improvement Society... his two-page letter to you covered many aspects of CKAY's important role in the community, including:

2711 Mr. Norm Cauchie, President Elect, Vancouver Island Real Estate Board and Vice President, Kiwanis Club of Duncan. He says:

2712 Mr. Jack Abercrombie, a business person. He says:

2713 Denying their application achieves many goals.

2714 First, it makes 91.3 available to CBC Radio-Canada and satisfies their needs.

2715 Second, it frees 89.7 for CKAY and ensures CKAY's continued survival.

2716 The third and equally important reason is it will send an important message to large corporations with multi-licences in major markets -- and Victoria is a major market. You heard Mr. Cooper say it is the fourth largest market in Western Canada. The message will be to build their AM stations, support them financially with the enormous profits from their FM stations.

2717 Tell Mel Cooper of CFOX AM -- you heard him a short while ago -- that you can't operate and prosper with a quality AM station in a large major market. There are many other examples across Canada and the U.S. where caring professional broadcasters operate AM and FM combos successfully and very profitably. These committed professional broadcasters not only allocate operating costs between their stations, they also allocate profits.

2718 I do not have access to the financial statements of the O.K. Group's Victoria operations but I do have years of personal experience as General Manager of CHML and CKDS-FM, now known as Y95-FM, in Hamilton, Ontario, a market similar in size and competitive forces to Victoria. Victoria must compete for listeners against stations in Vancouver and Seattle. Hamilton competes for listeners against stations in Toronto and Buffalo, very similar markets.

2719 I know firsthand of the enormous profits an AM/FM combo, run properly, will generate. AM/FM combos benefit by shared expenses, reduced personnel, rent and buying power. The benefits become even more profitable if you are part of a larger group, which CKXM is.

2720 Finally, It is difficult to comprehend how CKXM-AM with 50,000 watts on a regional clear channel with outstanding coverage throughout southern B.C. can be suffering. Have they allowed CKXM to slide intentionally to provide ammunition for their request to flip to FM?

2721 In a large group such as theirs, it is not difficult, through creative accounting, to transfer revenues and expenses within the group and magically turn black into red. I am not saying they have. But I will say that it is a proven fact that in a major market, which Victoria is, AM with a sister FM is viable. It is not easy. Nothing worthwhile ever is. But I ask you: Where is it written that each and every major market broadcast licence, AM and FM, must generate enormous corporate profits?

2722 We respectfully request you deny their application. Thank you.

2723 THE CHAIRPERSON: Thank you, Mr. Drew.

2724 Commissioner Wylie has some questions.

2725 COMMISSIONER WYLIE: Good afternoon.

2726 MR. DREW: Good afternoon.

2727 COMMISSIONER WYLIE: Your concern is location on the Malahat, right -- on the Malahat site and because O.K. Radio has actually applied in particular to be located there?

2728 MR. DREW: No. I haven't applied to be there.

2729 COMMISSIONER WYLIE: No, no. I said because O.K. Radio has applied, that's why you are intervening against --

2730 MR. DREW: Yes.

2731 COMMISSIONER WYLIE: Yes, and my understanding is you have also filed two other interventions, which are non-appearing, against Seacoast and Rogers in case they also were to locate on the Malahat?

2732 MR. DREW: Yes.

2733 COMMISSIONER WYLIE: Otherwise, you don't have any objection.

2734 MR. DREW: No.

2735 COMMISSIONER WYLIE: We will also be hearing you later.

2736 MR. DREW: Yes.

2737 COMMISSIONER WYLIE: After you get rid of your tuxedo on your own application for a flip?

2738 MR. DREW: Yes.

2739 COMMISSIONER WYLIE: Would your concerns be minimized at all if that were a successful application and you would have a better chance to cover your market with your own radio station since these would be FM stations entering your market?

2740 MR. DREW: Well, we have right now -- 28 FM stations share -- a share of our market according to the BBM. Another one, and in fact, the largest FM station in the Cowichan Valley is CKKQ-FM, largely in part because of their signal which goes everywhere. Another signal up there -- another commercial signal up there with that kind of coverage would be very damaging to us. They have a very fine AM signal and what we are saying is, look, we are being eaten alive, I guess, with FM stations in our market, particularly since we have not been able to get one until, I hope, tomorrow.

2741 COMMISSIONER WYLIE: No, but that is why I am asking you: If you were on FM yourself, would your concern be alleviated about what you perceive as a possible invasion or a potential invasion of FM? When you are still on AM, it is obviously more of a concern.

2742 MR. DREW: Sure. If they were to make an application -- or if someone else were to -- not they. This is not attacking my colleagues at O.K. Radio. If another FM station were to apply in two or three years after we had started and we had had a chance to repatriate people back to our market, then I would look upon it differently, yes. But I believe we would have to have two or three years.

2743 COMMISSIONER WYLIE: So you find it difficult if it is concurrent? If we were to grant the O.K. Radio application to use the Malahat site or if either of the other two were to use the Malahat site, your point is it would be more difficult even if you were granted an FM frequency --

2744 MR. DREW: Yes.

2745 COMMISSIONER WYLIE: -- because it would be in the market concurrently?

2746 MR. DREW: Yes.

2747 COMMISSIONER WYLIE: Do you -- I am not as familiar with British Columbia as my colleague is but my understanding is Duncan is what, some 50 kilometres or something like that?

2748 MR. DREW: Duncan is -- I'm sorry. I still deal in miles. I haven't made the conversion.

2749 COMMISSIONER WYLIE: Oh, miles is fine for me.

2750 MR. DREW: Okay. Duncan is located exactly 35 miles from downtown Victoria and 35 miles from downtown Nanaimo.

2751 COMMISSIONER WYLIE: Yes.

2752 MR. DREW: It is right in the centre.

2753 COMMISSIONER WYLIE: So that is approximately, I guess?

2754 MR. DREW: Right, approximately. But the transmitter -- the O.K. transmitter is located on top of the Malahat, which is within the CVRD, the Cowichan Valley Regional District.

2755 COMMISSIONER WYLIE: Oh, I understand that. The point of my question was more: How different is the Duncan market from the Victoria market since you are very concerned about -- this would be still an out-of-town signal?

2756 MR. DREW: Yes.

2757 COMMISSIONER WYLIE: There is a difference between the two markets?

2758 MR. DREW: Yes.

2759 COMMISSIONER WYLIE: With an FM frequency especially, in Duncan, you would have at least an opportunity to be more of a local broadcaster?

2760 MR. DREW: Yes.

2761 COMMISSIONER WYLIE: It's not perfect, but if there were -- you would be the local broadcaster; they would be the out-of-market broadcaster because Victoria and Duncan are not one and the same?

2762 MR. DREW: No.

2763 COMMISSIONER WYLIE: It's not --

2764 MR. DREW: I wish I had their government offices and economy. No, that's right. That is a good point.

2765 COMMISSIONER WYLIE: I have no other questions and I look forward to seeing you again.

2766 MR. DREW: Thank you.

2767 THE CHAIRPERSON: Thank you. Just to clarify with respect to your answers to Commissioner Wylie's questions, to make sure I understand, I gather it is the CQ --

2768 MR. DREW: CKKQ?

2769 COMMISSIONER WYLIE: Yes. The CKKQ which is broadcasting from the Malahat site is the one FM station that now spills over into Duncan to the extent that it does. Is it because of that site? Is that it?

2770 MR. DREW: Well, that is a prime location for them.

2771 THE CHAIRPERSON: Right.

2772 MR. DREW: They have just as fine a signal in downtown Duncan as they have in downtown Victoria because they are at the top of the Malahat, which divides Duncan. I used to think it was the Wall of China but it isn't anymore. They have put a transmitter up there. But it is an ideal location. It is a beautiful location. That plus excellent programming.

2773 I won't say anything wrong about -- they are excellent programmers and a combination of that and the availability of listeners to be able to pick them up makes them a very dominant number one in the market. But they are fine programmers. I will take my hat off to them for that.

2774 THE CHAIRPERSON: I guess what I am trying to get at is that it is that particular transmitter site as opposed to some others which creates the problems for you in your market?

2775 MR. DREW: Yes, and I envision any other FM station up there having the same kind of signal.

2776 THE CHAIRPERSON: Thank you.

2777 MR. DREW: Thank you.

2778 MS VOGEL: Our next intervener this afternoon is Simon Fraser Campus Radio Society.

1635

2779 THE CHAIRPERSON: Please start whenever you are ready.

INTERVENTION

2780 MS FETTERLY: Good afternoon, Madam Chair and Commissioners. I would like to thank the CRTC for giving us this opportunity on such short notice.

2781 My name is Sherri Fetterly and with me is Renée Hildebrand. We are here from the Simon Fraser Campus Radio Society, which is located in Burnaby on the campus of Simon Fraser University.

2782 The Simon Fraser Campus Radio Society operates CJSF Radio, a campus/community radio station that has been in existence for over 30 years and broadcasting for more than 20. CJSF serves the communities of Burnaby, New Westminster, Port Moody, Port Coquitlam, Coquitlam, Surrey and Delta. Last year, the SFCRS submitted its application for the use of frequency 91.3, channel 217 in Vancouver and is awaiting a hearing date.

2783 We are here to represent the concerns of the SFCRS and to state our opposition to the O.K. Radio Group's application for channel 217 in Victoria.

2784 Our interest in intervening is:

2785 firstly, that we feel very strongly that the educational bandwidth should not be open to commercial broadcasters; and

2786 secondly, that we have equally strong concerns regarding the use of this frequency from Victoria potentially broadcasting into Vancouver, that due to the scarcity of educational frequencies every effort should be made to exploit those frequencies fully.

2787 Supporting the first point is the fact that channel 217 is in the educational bandwidth. This frequency is legally sanctioned by the Canadian Government through the Broadcasting Procedures and Rules which states in Section III that:

and that the CRTC determines whether an applicant qualifies under this designation.

2788 While it is understood that all frequencies are open to competition, it is also understood that competition is between qualified applicants of a given designation, meaning that competition should be limited to those who are legally qualified to use a given frequency.

2789 There are reasons why the educational bandwidth is in existence. This allocation is expressly intended to give access to non-commercial broadcasters.

2790 Access to the educational bandwidth has been essentially frozen for decades due to the existence of CHEK 6 television in Victoria. CHEK 6 began operating in 1956. This fact only impacts on educational broadcasters and has no bearing on commercial broadcasters' access to commercial allocations.

2791 We feel that it is an injustice to open up the frequencies available on the educational bandwidth and allow them to be capitalized upon by commercial broadcasters. There is already a playing field for commercial broadcasters.

2792 Further to our second point regarding the scarcity of educational bandwidth frequencies, we would like to add that for geographical reasons, channel 217 could present one of the better opportunities for co-channelling, that with any educational frequency, the viability of co-channelling should be examined.

2793 I would like to add that while the O.K. Radio Group emphasized to the CRTC that it is the only live 24-hour broadcaster in Victoria, we would like to point out that there is another station serving the community of Victoria 24 hours a day, live, and that is CFUV, a campus/community broadcaster that co-channels with CITR here in Vancouver.

2794 In conclusion, we ask that the Commission not grant a licence to the O.K. Radio Group. We do not simply propose a modification to the O.K. Radio Group's application in order to accommodate another broadcaster in the lower mainland. Rather, it would be consistent with the CRTC's mandate to seek and to expand diversity by preserving the educational bandwidth and to exploit any non-commercial frequencies to their fullest, allowing the greatest number of non-commercial broadcasters to utilize this bandwidth.

2795 Thank you. It has been a pleasure.

2796 THE CHAIRPERSON: Thank you. I believe Commissioner Wylie has a question.

2797 COMMISSIONER WYLIE: Good afternoon, Ms Hildebrand and Ms Fetterly.

2798 You were here when CBC appeared?

2799 MS FETTERLY: Yes.

2800 COMMISSIONER WYLIE: So my questions will be similar. Are your concerns -- your concerns appear to be more about the use of the non-commercial band for commercial purposes?

2801 MS FETTERLY: Correct.

2802 COMMISSIONER WYLIE: Or is it more a procedural problem that you have, that although your application for Vancouver was in, the Commission didn't ask you to appear at a hearing for Victoria? Which of the two?

2803 MS FETTERLY: Well then, there would be two.

2804 COMMISSIONER WYLIE: So you have two concerns.

2805 MS FETTERLY: There would be two concerns, yes.

2806 COMMISSIONER WYLIE: So both concerns. Do you have more to say about your procedural concern after my exchange with the CBC where we discussed the fact that the assignment is in Victoria? Now, we are talking about the procedural problem, not the use of the commercial band -- a non-commercial band for commercial purposes because I see two issues --

2807 MS FETTERLY: Yes.

2808 COMMISSIONER WYLIE: -- that you put forward. On the first issue, you heard their engineer acknowledge that it was a frequency assigned to Victoria. Do you agree with that or disagree?

2809 MS FETTERLY: That has become my understanding.

2810 COMMISSIONER WYLIE: You have nothing to --

2811 MS FETTERLY: I can't add to that.

2812 COMMISSIONER WYLIE: So in that case, you would understand our exchange that for the Commission, if there is a call for Victoria and the frequency is assigned to Victoria, you hear these people at a Victoria hearing.

2813 MS FETTERLY: I understand that.

2814 COMMISSIONER WYLIE: Okay. Now, on the second issue, is it your understanding that this distinction between commercial and non-commercial frequencies is a rigid requirement or do you know that there are a number of uses of non-commercial frequencies for commercial purposes?

2815 MS FETTERLY: I am not entirely positive I understand the question.

2816 COMMISSIONER WYLIE: Is it your understanding that there is a rigid distinction between frequencies on the non-commercial band and that Industry Canada doesn't allow their use for commercial purposes? Is that your understanding or do you know that there are such cases? It's not as distinct a --

2817 MS FETTERLY: It is not as distinct as it appears.

2818 COMMISSIONER WYLIE: No, or as you --

2819 MS FETTERLY: And I recognize where there has been scarcity in the educational bandwidth that educational broadcasters are in the commercial bandwidth. I don't know --

2820 COMMISSIONER WYLIE: Or non-use of the non-commercial band in some cases or where there is no indication that there are not enough frequencies, et cetera, because there are others as well?

2821 MS FETTERLY: Yes. Unfortunately, due to the extremely short notice for us to do this, I wasn't able to get that sort of information. It wasn't readily available to me at the time.

2822 COMMISSIONER WYLIE: I completely understand. You have an application sitting there on their frequency. There is a possibility that it may be assigned to someone else and I understand your frustration. I am just trying to explore with you --

2823 MS FETTERLY: Right.

2824 COMMISSIONER WYLIE: -- that there are -- I think natural justice was raised here as a problem and I am just trying to outline to you that it is not that clear-cut on both these issues: the first one, that the assignment is to Victoria; on the second one, that rigid distinction about the use of the two bands is not that clear.

2825 MS FETTERLY: Okay.

2826 MS HILDEBRAND: I think we understood when we started kind of putting together that this was a Victoria hearing. We accepted that. It was mainly the use of the educational bandwidth. I mean, we obviously have a very strong interest in preserving it, but for other potential broadcasters in the future, there is potential in Victoria of a non-commercial broadcaster wanting to use that signal and if it is granted to the O.K. Radio Group, that will no longer be in existence.

2827 COMMISSIONER WYLIE: Yes, and you know, of course, that the assignment of frequencies, we do play a role but it is also Industry Canada that manages the spectrum so that -- but I understand your concerns since you have an application.

2828 Madam Chair, these are my questions. I don't know if our counsel has anything to add but we certainly understand your frustration and than you for appearing.

2829 THE CHAIRPERSON: Thank you, Commissioner Wylie.

2830 I think that's all. Thank you.

2831 MS FETTERLY: Thank you.

2832 Madam Secretary.

2833 MS VOGEL: Our next intervener this afternoon is the Foundation to Assist Canadian Talent on Records, FACTOR. Do we have anyone from FACTOR in the room?

2834 Madam Chair, I understand that they are not going to appear this afternoon.

2835 THE CHAIRPERSON: Thank you, Madam Secretary.

2836 I wonder if we might take a 15-minute break now and reconvene at 5:00 for the final phase.

--- Short recess at / Courte suspension à 1645

--- Upon resuming at / Reprise à 1705

2837 THE CHAIRPERSON: Ladies and gentlemen, we will now reconvene for Phase IV, the fourth and final Phase, I might say.

2838 Madam Secretary.

2839 MS VOGEL: The fourth and final, yes. In Phase IV, again, the applicants appear in reverse order to rebut or comment on interventions and there is a 10-minute limit for these presentations.

2840 I would like to ask Seacoast Communications Group to come forward please.

REPLY / RÉPLIQUE

2841 MR. COOPER: I am pleased to say that we have no further points to make. I think they have been made today. Thank you very much.

2842 THE CHAIRPERSON: Thank you. I believe Commissioner Wylie has a question.

2843 COMMISSIONER WYLIE: We have questions. You have heard Mr. Viner talk about the technical issue and how it could be resolved. We would like your comments on the appropriateness of that proposal in general and more particularly as it relates to your application.

2844 MR. COOPER: Well, our Technical Director is Doug Allen of Winnipeg. He is extremely well-known in Canadian technical circles. He has advised us that there isn't an appropriate FM frequency other than those that have been applied for available. So we have gone with his advice. I think my only surprise is that I didn't see any information in the application. It says that there are other solutions, but there is no other solution given. I wish I had known that because I would have been on the phone to Doug Allen. So I wish I had more information.

2845 It seems to me that the broader issue too is the fact that the Commission is faced with having to sort out all the demands for non-commercial usage coming from all directions. So we don't know of a technical solution for some of these other dial positions as it would relate to us in Victoria. There may be one, but someone is already asking for that.

2846 COMMISSIONER WYLIE: So your view is that, not knowing of any particular solution, you are applying on 91.3 and that is your position?

2847 MR. COOPER: We are applying for 107.3.

2848 COMMISSIONER WYLIE: 107.3 and that remains your position?

2849 MR. COOPER: That is our position. The other --

2850 COMMISSIONER WYLIE: Even if it meant that the competing applicant -- that the chances of taking that position would mean that the other applicant may get 107.3?

2851 MR. COOPER: We are aware of that and we did say it is our first choice. We would have to, if we weren't granted 107.3, then of course --

2852 COMMISSIONER WYLIE: You would accept --

2853 MR. COOPER: We would accept the other, if there was one that worked, of course. Yes, we would.

2854 COMMISSIONER WYLIE: And in that circumstance, would you see -- which one would you find is fairer or more manageable, that if the Commission were to license two or three and you are mutually exclusive under 107.3, to not grant a frequency to anyone, just grant applications and let the broadcasters sort it out or actually, for example, grant 107.3 to someone else and let you sort it out?

2855 MR. COOPER: Well, I think to grant the licences and turn it over to those who receive them to sort out, I don't know how that can work in practicality -- how it works.

2856 COMMISSIONER WYLIE: It has been done.

2857 MR. COOPER: Has it? Well, I am not aware of that. It seems to me that it is something that I have not run into, so I don't know what the ground rules would be.

2858 COMMISSIONER WYLIE: But you want an FM radio station?

2859 MR. COOPER: Oh, absolutely.

2860 COMMISSIONER WYLIE: And if necessary, you will lean how to do this?

--- Laughter / Rires

2861 MR. COOPER: Well, surely without the logical, we think, alternative or at least opportunity for us.

2862 COMMISSIONER WYLIE: Well presumably, the Commission would be reluctant to grant an application to someone who has no frequency. So presumably, if we were to pursue that, we would have to ourselves agree with Mr. Viner that there are solutions?

2863 MR. COOPER: M'hm. Yes.

2864 COMMISSIONER WYLIE: Your wife will be surprised when she comes back from Buffalo that you have learned something new.

2865 MR. COOPER: I have learned a lot from Tony over the years.

2866 COMMISSIONER WYLIE: Thank you.

2867 Those are my questions, Madam Chair.

2868 THE CHAIRPERSON: Thank you, Mr. Cooper.

2869 Madam Secretary.

2870 MS VOGEL: Would Rogers Broadcasting come forward now, please?

REPLY / RÉPLIQUE

2871 MR. VINER: Madam Chair, we would just like to thank FACTOR for their intervention. Unfortunately, a personal situation arose and Heather Ostertag could not be here, but I think her intervention is on the record.

2872 I have nothing more to add. It has been a long day and a fulsome discussion, I think.

2873 COMMISSIONER WYLIE: We will send you your grade eventually.

--- Laughter / Rires

2874 MR. VINER: My grade or my degree?

2875 COMMISSIONER WYLIE: Don't be too ambitious.

--- Laughter / Rires

2876 MR. VINER: I will take that under advisement.

2877 THE CHAIRPERSON: We don't have any questions. Thank you, Mr. Viner.

2878 MS VOGEL: Would O.K. Radio Group come forward, please?

REPLY / RÉPLIQUE

2879 MR. McALLISTER: Madam Chair, Commissioners, at this time, we would like to acknowledge and thank our many interveners who intervened positively on our behalf. We would like to thank the Canadian Country Music Association, the B.C. Country Music Association, the many artists, the record companies and our many clients who support us. Their support is on the record and we would like to, on the record, thank them.

2880 Mr. Morton will address the other interventions.

2881 MR. STUART MORTON: I would like to address the Simon Fraser intervention, if I could, to begin with. We might have a solution to offer in respect of their concerns.

2882 As you know, we are applying on 91.3. The second adjacent channel to 91.3 would normally only -- this is the advice I have from our technical people -- could only be used with a 100-kilometre separation. Now, the Simon Fraser Campus and the Malahat Ridge transmitter site are separated by 88 kilometres.

2883 So if we were to authorize Simon Fraser to use the second adjacent channel and the frequency on the other side, the user on the other side did the same thing, then it would be possible for them conceivably to have a low-power transmitter serving the campus. There would need to be some testing to ensure that there wasn't any undue area of interference, but our consultants believe that there wouldn't be.

2884 So that may, in fact, offer some kind of a solution to the dilemma that Simon Fraser potentially finds itself in.

2885 Can I do these in any order? I will address the -- just briefly touch on the CBC. I think we have submitted a written reply to their intervention and just note once again that there is a shortage of frequencies in Victoria, that some of the commercial frequencies are being used for educational or non-commercial purposes.

2886 The University of Victoria has an A channel which was a commercial assignment and the CBC Radio Two has a C channel commercial assignment. That was because these educational channels weren't available until we established that Malahat Ridge transmitter site.

2887 I'm only a little disappointed that in giving credit to all the people that helped the CBC do their testing, channel 6 television, they forgot to mention us, because it was only by virtue of the fact that they were on our site, with our assistance, that they were able to do this testing.

2888 The CKAY intervention, I understand exactly what Dick is saying. I have operated stations in markets under similar conditions. We owned a station in Westlock just outside of Edmonton for many years, about eight years. I personally operated that radio station. Signals from Edmonton poured into the market and it is indeed difficult.

2889 I believe, however, that we are not the enemy in this situation. J.R. Country, for instance, has higher tuning in the Cowichan Valley than CKXM and a move to the FM band would, I think, take audience from J.R. before it would take any audience from CKAY.

2890 In addition to that, the selling that Dick mentions, I think a move to the FM band would inevitably, as our central market audience grows, would do the same thing to our rates. Rates would go up. It is only because the audience to CKXM is small enough that the rates are affordable for Cowichan Valley advertisers and quite frankly, we are not interested in taking revenue from the Cowichan Valley. It amounts to less than $10,000 a year and it is not our plan to take revenue from the Cowichan Valley.

2891 Our application is to serve Victoria, to provide service to an underserved group of listeners to country music and that is our primary intention. That is our focus and our intention is to focus on serving the central Victoria market.

2892 MR. McALLISTER: In closing, we would like to leave a few thoughts with you.

2893 We believe there is a demand for the country format in Victoria. Research by Seacoast has validated that fact today. Artists who don't understand this process that we are in today still want their music on FM.

2894 The Canadian music artists who work hard at their craft deserve and will benefit from us converting to FM. We have always overachieved our Canadian content commitment; 35 per cent will be a minimum, in our terms.

2895 The Victoria market is buoyant and can certainly support the minimal impact that our conversion would have. We are a dynamic, medium-sized company which delivers on its promises. Thank you.

2896 THE CHAIRPERSON: Thank you, gentlemen.

2897 I believe Commissioner Wylie has a question.

2898 COMMISSIONER WYLIE: You won't be surprised about what my question is. You have also heard Mr. Viner's position and the response of Seacoast. We would like also your comments about the frequency matter and whether you feel that it would be appropriate for the Commission to leave it to the broadcasters to try including the comments that have -- interventions that have been made, et cetera, to accommodate as many people as possible.

2899 If the Commission were to license all three of the applicants for Victoria and took into consideration other surrounding frequency problems, would you find it acceptable if the licensing was done in that fashion, both as a general proposition and as it affects you, or is your application for 91.3?

2900 MR. STUART MORTON: Well, I too will be able to report to my wife that I have learned something today because I understand that it has been done before. I don't know the circumstances of that.

2901 COMMISSIONER WYLIE: Well, they're obviously not going to be on all four but it has been done.

2902 MR. STUART MORTON: Certainly, we desire an FM licence. The only qualification to that is that our best advice is that 91.3 works from our site and that 107.3 does not because it is so close to the navigation Transport Canada band and our site is right over top of the airport. That is why we didn't apply for 107.3.

2903 COMMISSIONER WYLIE: You would want us, I gather, to put into the mix when making our determination the fact that the Malahat site is yours?

2904 MR. STUART MORTON: Yes.

2905 COMMISSIONER WYLIE: How many other -- I should know, but I don't. How many other -- who else is broadcasting from there are the moment?

2906 MR. STUART MORTON: The CBC broadcasts Radio One from Malahat.

2907 COMMISSIONER WYLIE: That is the AM. On the AM band -- oh no, it would be the FM band?

2908 MR. STUART MORTON: It's just FM, yes.

2909 COMMISSIONER WYLIE: Because it is from Malahat, right?

2910 MR. STUART MORTON: That's right, yes.

2911 COMMISSIONER WYLIE: So they are broadcasting Radio One on the FM band?

2912 MR. STUART MORTON: That's right.

2913 COMMISSIONER WYLIE: So they are co-sited.

2914 MR. STUART MORTON: And they have applied for the CBC French service to be on that site as well.

2915 COMMISSIONER WYLIE: To be on the same site?

2916 MR. STUART MORTON: Yes.

2917 COMMISSIONER WYLIE: So that your generosity would be dampened by the fact that you own the Malahat site?

--- Laughter / Rires

2918 MR. STUART MORTON: Perhaps.

2919 COMMISSIONER WYLIE: I guess your position is obvious.

2920 That's it, Madam Chairman. Thank you.

2921 THE CHAIRPERSON: Thank you, Commissioner Wylie.

2922 Thank you, gentlemen.

2923 MS MOORE: Madam Chair, if I might.

2924 THE CHAIRPERSON: Oh, I'm sorry. Legal counsel has a question.

2925 MS MOORE: Thank you. I am just wondering if you are prepared at this time to offer an undertaking to enter into discussions with SFU regarding the possible alternative that you have identified with respect to the second adjacent channel.

2926 MR. STUART MORTON: Certainly, we could make our technical staff available to them and, in fact, even make our consultant available for some discussions with them.

2927 MS MOORE: Thank you.

2928 THE CHAIRPERSON: Thank you, gentlemen.

2929 Well, this concludes the hearing with respect to the Victoria applications. I would like to thank everybody. It has been a long day and we will reconvene tomorrow morning with Kelowna, I believe.

2930 Thank you very much.

--- Whereupon the hearing adjourned at 1720, to resume

on Wednesday, May 5, 1999 at 0900 / L'audience est

ajournée à 1720, pour reprendre le mercredi 5 mai

1999 à 0900