ARCHIVED -  Transcript - Hull, QC - 1999/12/08

HELD AT: TENUE À:

Conference Centre Centre de conférences

Outaouais Room Salle Outaouais

Hull, Quebec Hull (Québec)

December 8, 1999 Le 8 décembre 1999

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.

BEFORE / DEVANT:

A. Wylie Commissioner/Conseillère

D. McKendry Commissioner/Conseiller

A. Noël Commissioner/Conseillère

B. Cram Commissioner/Conseillère

J.-M. Demers Commissioner/Conseillère

ALSO PRESENT / AUSSI PRÉSENTS:

P. Cussons Hearing Manager /

Gérant de l'audience

B. Batstone Legal Counsel /

Conseiller juridique

D. Santerre Secretary / Secrétaire

HELD AT: TENUE À:

Conference Centre Centre de conférences

Outaouais Room Salle Outaouais

Hull, Quebec Hull (Québec)

December 8, 1999 Le 8 décembre 1999

PAGE

PRESENTATION BY

Sportscope Television Network Ltd. 688

Questions by the Commission 702

Questions by Commission Counsel 759

INTERVENTIONS

NetStar Communications Inc. 767

Questions by the Commission 777

Toronto Blue Jays Baseball Club 793

Questions by the Commission 797

Harrison, Young Pesonen and Newell Media Management 803

Questions by the Commission 809

CIAU University of Alberta 825

Questions by the Commission 834

Toronto Argonauts Football Club 845

Questions by the Commission 850

Reply on behalf of 853

Sportscope Television Network Ltd.

Questions by the Commission 858

Questions by Commission Counsel 860

PRESENTATION BY

Larche Communications (Barrie) Inc. 864

Questions by the Commission 883

Questions by Commission Counsel 912

PRESENTATION BY

Rock 95 Broadcasting (Barrie-Orillia) Ltd. 918

Questions by the Commission 937

Questions by Commission Counsel 982

PAGE

PRESENTATION BY

CHUM Limited 986

Questions by the Commission 1004

Intervention by

Larche Communications (Barrie) Inc. 1068

Intervention by

Rock 95 Broadcasting (Barrie-Orillia) Ltd. 1076

Questions by Commission Counsel 1082

Questions by the Commission 1083

Hull, Quebec / Hull (Québec)

--- Upon resuming on Wednesday, December 8, 1999

at 0834 / L'audience reprend le mercredi

8 décembre, à 0834

3635 THE CHAIRPERSON: Good morning.

3636 MS SANTERRE: Thank you, Madam Chair. This morning we will hear the application by Sportscope Television Network Limited, licensee of a national English language specialty programming undertaking devoted exclusively to sports programming with a particular focus on sports highlights, including video clips, scores and updates (Headline Sports), requesting Commission approval to amend two of its existing conditions of licence and to add a new one as described in the Notice of Public Hearing 1999-10.

3637 Mr. Levy.

3638 THE CHAIRPERSON: Good morning, Mr. Levy.

PRESENTATION / PRÉSENTATION

3639 MR. LEVY: Good morning, Madam Chairperson, Members of the Commission.

3640 Before beginning our presentation, let me introduce the members of our panel. My name is John Levy. I am the founder and controlling shareholder of Headline Sports.

3641 To my right is Michael MacMillan, Chairman and Chief Executive Officer of Alliance Atlantis Communications Inc. Alliance Atlantis is our partner in Headline Sports, with a 48 per cent interest in the company.

3642 To my left is Robert Malcolmson, Executive Vice President and General Counsel of Headline Sports. Next to Rob is Peter Grant, our legal counsel and a senior partner at McCarthy Tetrault.

3643 In the back row is Paul Williams, Executive Vice President, Headline Sports. Next to Paul is Gerry Tymon. Gerry is in charge of sales at Headline Sports and is the former President of NetStar Sales. Beside Gerry is Sarah Hughes, Vice President Finance, and next to Sarah is Anthony Ciccone, our Director of Programming.

3644 Headline Sports, Canada's sports news and highlight network is here today seeking amendments to our licence which, if approved, will accomplish three important objectives.

3645 First, Headline will dramatically improve the product which it delivers to its viewers. As you will hear and see today, the blending of limited live event coverage of our sports news and highlights will allow us to cover sports the Headline way -- unduplicated by any other network.

3646 Second, live event coverage will expose more Canadian sports fans to our network and allow them to sample our unique sports news and information product.

3647 Third, the integration of live events into our sports highlight format will assist in sustaining Headline's unique news and information niche over the long term.

3648 We would like to begin by showing a brief video that tells you the Headline Sports story.

--- Video presentation / Présentation vidéo

3649 As you have just seen, Headline Sports has come a long way from its initial operation as an alphanumeric source of sports information. As the concept grew into a national network, the one constant has been that we are first and foremost a sports news and information network with a strongly independent and entrepreneurial Canadian-based focus.

3650 Headline Sports has always been 100 per cent independently owned and controlled by Canadians. With the recent approval by the Commission of Alliance Atlantis' purchase of 48 per cent of Headline Sports, the company now has two strong shareholders with a common entrepreneurial spirit and a commitment to the growth and development of the network.

3651 I welcome Alliance Atlantis as a partner in the network and at this point I would ask Michael to say a few words.

3652 MR. MacMILLAN: Thank you, John.

3653 Members of the panel, at Alliance Atlantis we are naturally very excited about our future with Headline Sports. We are involved in a number of Canadian specialty services that share our vision of the broadcasting future in Canada. We want to be a part of networks that are committed to Canada and focus on building programming that is attractive to Canadians. We also look to invest in specialty networks that have a strong entrepreneurial drive behind them.

3654 That in a nutshell is exactly why we invested in Headline Sports. We believe that the network has carved out a unique and meaningful programming niche that adds further programming diversity to our Canadian Broadcasting System.

3655 The drive and clarity of vision that John has shown over the years has enabled this stand alone specialty network to emerge as a new player in an intensely competitive environment. We are committed to the goals that Headline Sports has set out in this application. We hope that the Commission will share and encourage our vision by approving the changes that we have proposed.

3656 MR. LEVY: Thank you, Michael.

3657 The driving force behind this application is to provide Canadian viewers with a more entertaining, more informative and different way to watch sports.

3658 This application is a product of the information age. We live in an age of real time news and information. Today's sports fans want all the news, highlights and scores as they happen. Our viewers are simply not content just to see the highlight or get the score, nor are they satisfied just to watch a traditional broadcast of a live event. Our viewers want more and we intend to deliver sports in a fashion never seen before.

3659 From the network that brought you the ticker that never goes away, now we will present the game in an equally innovative fashion. True to our original format, the game will never interrupt the score.

3660 Our goal is to deliver a unique product that appeals to an underserved segment of the Canadian sports audience -- young viewers.

3661 Today's young sports fans are sophisticated and have a thirst for in-depth data, news and sports information. They are a product of the information age and they are not content to spend three hours watching a traditional a live game broadcast. This is confirmed by Neilsen statistics that show viewers of live event broadcasts tend to skew much older. In our view, this is a function of the way the live events are presented by traditional networks.

3662 Our vision is to take a limited amount of live events and incorporate these games into the fabric of our news, highlight and information programming. On Headline Sports, a game won't be a continuous three hour full screen start to finish production dedicated strictly to the game. Instead, we intend to deliver both real time sports news and highlights while the game goes on.

3663 Well, how do we intend to do this?

3664 First, we will provide breaking news and scores on our ticker. The ticker will never leave the screen, emphasizing our commitment to our original core mandate.

3665 Second, we will break into the games every 15 minutes and provide viewers with simultaneous real time updates of all the news and highlights from the world of sport.

3666 Third, our on air news hosts will not only deliver sports news as it happens, they will also provide their commentary and insights on the game coverage as it unfolds. In the information age, today's sports fans want to hear more than just the play-by-play announcer. They want the underlying statistics, stories, news and information about the teams, players and coaches as the game goes on. Headline Sports will fill this void.

3667 Fourth, we will offer a seamless transition from the game to the news, stories and highlights that flow from it. Experience tells us that this will work. During last year's playoffs, we were the first to introduce live post-game coverage of press conferences. Viewer response was overwhelmingly positive.

3668 Approval of this application will also allow Headline Sports to address some of its shortcomings. Since our launch we have found that sports viewers are very discerning and that journalistic credibility is very important. To attract the serious sports fan over the long term, the network, must be perceived as an authority in the world of sport. It must have its place as a destination for sports. It is here that we are deficient.

3669 Without any live game coverage, Headline Sports is not considered as a true authority on the Canadian sports scene. Our profile is lower than any of the other networks because we don't cover live events. The limited live event coverage will bring instant credibility and authority. In so doing, we will increase the relevance of the network to our viewers. In a fragmented and competitive world of sports television, this is critically important.

3670 Approval of the application will also increase our exposure. As a stand alone network with no high profile destination programming, we are underexposed to Canadian sports viewers.

3671 Limited amounts of live event coverage will solve this problem. Live game coverage is destination programming at its best and it will allow us to attract a broader audience base, particularly viewers who are not sampling our product today. Live event coverage will serve as a platform to promote our new, highlight and information programming. More viewers will learn what we have to offer and programming will therefore be enhanced.

3672 We have always been committed to providing Canadians with in-depth and affordable sports news, information and highlight programming. We see this application as a necessary next step in maintaining that commitment.

3673 To give you a glimpse of how we will incorporate live event coverage into our core news and information format, let's roll the video.

---  Video presentation / Présentation vidéo

3674 MR. MALCOLMSON: Madam Chair, members of the Commission, as you have just seen, approval of this application will not result in a radical change in the essence of what you have licensed. We re not moving towards becoming a full-time, live-action licensee. We have developed a particular sports-related niche that our viewers truly value. We want to enhance that loyalty, build a truly Canadian brand identity and increase our audiences to more sustainable levels.

3675 Headline Sports will remain the network that you licensed in 1996 and we will continue to promote live-event programming on other networks.

3676 While our Headline format is unique it is also very labour intensive. Our programming schedule consists of constantly updated coverage of sports as it happens, 24 hours a day. Other sports networks run large blocks of live-event programming. Our model is quite different. We will deliver all the sports stories, scores and news during live game broadcasts. We will use our own personnel to provide uniquely Canadian insights into the world of sport.

3677 MR. LEVY: At Headline, we firmly believe that we already offer Canadian sports enthusiasts the best value for their money. At 10 cents on basic we are one of the best bargains available and we are not proposing to change that very low wholesale rate.

3678 However, in order to sustain our low cost news and information niche, some flexibility is required. As we have indicated, the need to become a longer-term destination for sports viewers. The Headline nature of our programming tends to draw viewers for relatively brief time segments. This in turn impacts our performance.

3679 First, Headline Sports currently ranks 23rd out of 25 English language Canadian specialty networks that are on air today in terms of total hours turned.

3680 Second, in terms of tuning, Headline Sports' share is 0.3 per cent of total tuning.

3681 And, third, Headline Sports also has the smallest average weekly reach of all English language specialty networks in Canada.

3682 To provide you with some comparisons, TSN ranks first in terms of share of total tuning and audience reach. This combined with the highest subscriber rate in Canadian television makes TSN the dominant incumbent. CTV Sportsnet, which launched months after Headline Sports, already ranks tenth in terms of total tuning and ninth in terms of reach. Moreover, it has the support and synergies associated with being part of Canada's largest private television network.

3683 The good news is that we have a recipe for success that will enable us to maintain the integrity of our core format and indeed strengthen our news and highlight product with limited amounts of live event coverage. We hope you will see fit to grant us the flexibility we need to become a longer-term contributor to the Canadian broadcasting system.

3684 Paul.

3685 MR. WILLIAMS: Thank you, John.

3686 Madam Chair, members of the Commission, we are extremely proud of what we have accomplished to date. We are committed to the Canadian broadcasting system and we are pleased to announce today three new amateur sports initiatives that will be implemented upon approval of the application.

3687 They are, number one, "World Class"; number two, "Love of the Sport"; number three, "This Week in the CIAU".

3688 Our first initiative, "World Class," will showcase Canada's premier female athletes and create homegrown role models for our female youth. "World Class" will be a monthly feature which will air 40 times per week.

3689 Our second commitment, "Love of the Sport," will be a weekly three minute feature on amateur athletes or community volunteers. This feature will be the product of a web based interactive nomination system through which our viewers will nominate candidates that best exemplify "Love of the Sport". "Love of the Sport" will air 50 times per week.

3690 The third initiative, "This Week in the CIAU" will be a 30-minute magazine show reviewing all sports activities in the CIAU; scores, standings, game highlights, statistics, male and female athlete of the week.

3691 All three are annual commitments throughout the balance of the licence term and represent a financial commitment by Headline Sports of $1.2 million.

3692 MR. LEVY: Granting the amendment to allow a modest amount of live sports action will complement a well-accepted service, without encroaching in any material manner on the licensees that are permitted to exhibit live action sports without restriction.

3693 Similarly, the flexibility to split our feed on a regional basis will facilitate rights acquisitions and provide more diverse programming. We understand that this condition is identical to the one already in place for TSN.

3694 We are also prepared to make a serious commitment to the exposure of live event Canadian programming in prime time. We have put forward a condition of licence that 50 per cent of all live-event programming in prime time will be Canadian. We would be pleased to discuss this commitment at any time during the hearing.

3695 Members of the panel, in closing we would ask you to affirm your support for the entrepreneurial spirit that has guided Headline Sports from the outset and the significant commitment to its future that has been made by its two shareholders by granting the application. We are committed, as evidence by the fact that in our 1996 application we projected cumulative losses over three years of $576,000. Actual cumulative losses for years one to three are anticipated to be approximately $10.3 million.

3696 Members of the Commission, approval of the application will benefit the Canadian broadcasting system in a number of ways:

3697 First, our viewers will have an opportunity to watch sports as it has never been seen before. This blending of sports news and highlights with live-event coverage is new and different and meets the needs of our modern, young viewers.

3698 Second, limited live-event coverage will enhance our core news, highlights and information programming, rendering our unique product more sustainable over the long term.

3699 Third, more viewers will come to know and use Headline's sports information -- live-event coverage will expose our network to more Canadians and allow them to sample our product.

3700 Four, self-imposed limits on hours of live event programming will ensure that we have no material adverse impact on other sports specialty licensees.

3701 And, fifth, the flexibility we have requested can be achieved without increasing our subscriber fees, thereby continuing to provide distributors a low cost sports alternative.

3702 We are ready to discuss this application with you in greater detail and look forward to receiving any questions that you may have.

3703 Thank you for your attention.

3704 THE CHAIRPERSON: Thank you, Mr. Levy, Mr. MacMillan and your colleagues.

3705 Commissioner McKendry, please.

3706 COMMISSIONER McKENDRY: Thank you, Madam Chair, and good morning.

3707 Let me begin by asking you a couple of questions that relate to your opening comments to us. I was taken by your comment, and I am quoting:

"Headline Sports will remain the network that you licensed in 1996 and we will continue to promote live-event programming on other networks."

3708 It seems to me, and I would like your comments on this, that in fact you won't remain the network that we licensed in 1996 because your existing licence has a condition of licence which prevents you from offering live sports events. I guess just to add to that point, on page 14 this morning you also said:

"We are also prepared to make a serious commitment to the exposure of live event Canadian programming in prime time."

3709 So how do you reconcile the fact that your existing licence doesn't allow you to do live programming and that you want to make a serious commitment now to it with the statement that you are going to remain the same network?

3710 MR. LEVY: Thank you, Commissioner.

3711 The inclusion in our existing format of limited live-event coverage is, in our belief, not a fundamental change to our existing programming format. It is our belief that we are not in any way departing from our unique niche, and we say that based upon a couple of specifics.

3712 Let me first point out to you that 85 per cent of our programming will remain exactly as it is today.

3713 In our application we have indicated that we will limit the live event coverage to a maximum of 15 per cent of our broadcast week.

3714 Secondly, and I think very important, is that we will be incorporating the live event into the programming format that we already have. Hopefully, the video demonstrated that to a certain degree, where our ticker never goes away; our real time live updates will continue to happen every 15 minutes; our on-air hosts will continue to break in with stories as they are happening.

3715 In effect, what we are doing is creating a seamless transition of sports news before the game, during the game, and after the game so there is a seamless transition.

3716 The reason that we are committed to staying within the format and within our niche is because we have tapped in to a very young, energetic, specific identifiable group of viewers. Sixty per cent of our viewers fall within the 18 to 34 age group. We skew younger than any other network.

3717 Traditional live sporting events -- just to quote a couple of statistics, because I think they are pertinent. And I was quite surprised when we came across these statistics.

3718 Of the entire viewership of Blue Jays baseball, for example, only 15 per cent of it falls within the 18 to 34 category.

3719 The one that surprised me more, because I have had personal experience with my kids playing hockey all these years and personally growing up with hockey, is that when they do statistics on the coverage in national hockey league, only 22 per cent of the viewers of hockey fall within this 18 to 34 category.

3720 That is the group that we are talking to. That is the niche that we are in. That is the group that we want to bring and incorporate some of the live event programming into that niche.

3721 To recap, while it is clear that we are here before the Commission for a change in licence, in amendment to our licence by a condition of licence, it is our contention that it is not a fundamental change, in summary for a couple of reasons.

3722 One, we are in a different genre. We are in our own genre.

3723 Two, we have a different audience than traditional sports broadcasts.

3724 Three, we are going to present the game differently.

3725 And four, as we will probably discuss later, we are in a different time, when it is very important for networks to be directly responsive to their viewers, to stay in tune with their viewers and to provide their viewers with the type of programming that will continue to excite them and will continue to have them view your network.

3726 COMMISSIONER McKENDRY: The 15 per cent of your schedule I think works out to 25 hours a week of live programming. Is that right?

3727 MR. LEVY: At the maximum, that is correct.

3728 COMMISSIONER McKENDRY: That would be in prime time. So, on average, assuming week nights, that would be five hours per evening. I think you have included part of the Saturday in your prime time definition.

3729 I guess what I am driving at here is that most people watch television during prime time, so that is what we have to focus on: that this will be 25 hours a week in prime time.

3730 I put to you that that is five hours in the evening.

3731 Do you have any comment on that?

3732 MR. LEVY: Yes. First of all, our ability to incorporate the live event coverages is determinative by two factors. The first is what is available out there.

3733 We have presented some evidence to the Commission that we have had discussions with some of our partners that are part of our network today. And we do understand that there is some product that we are going to be able to secure.

3734 The issue is, until we actually sit down and finalize negotiations, we are not certain as to what the blend and what the mix of this product is. Some of it will be professional, that is true. But as we have also shown, and as we have also presented, there is opportunity for us to present programming that does not currently show on other networks.

3735 That program tends to skew in prime time, for example, on the weekends. You mentioned Saturday. A lot of the CIAU that we are looking at incorporating, and other amateur sports, don't fall within the traditional prime time components.

3736 In addition to that, we are also looking at incorporating international sporting events which fall outside of traditional prime time programming hours.

3737 It is not our intention -- certainly not our intention on launch, because what we are anticipating and hoping, depending on what is available, is to launch with somewhere around 12 hours a week of live event programming again being incorporated into our product.

3738 Again, that is based upon what may or may not be available.

3739 COMMISSIONER McKENDRY: Do you want to add something?

3740 MR. MALCOLMSON: I would like to add a point in terms of the differences John has touched on.

3741 The other difference that we are quite proud of in terms of the live event coverage that we hope to be able to do is that in addition to incorporating it into the format as it exists and presenting it differently, we have made a serious commitment to the live event Canadian programming in prime time.

3742 We filed that as part of our reply; that 50 per cent of the live event hours we would do in the prime time hours would be devoted to live event Canadian programming.

3743 That is another difference. We think it is a significant difference and will assist in differentiating us from the other live event broadcasters.

3744 COMMISSIONER McKENDRY: One of the things I am trying to get are here -- if I listen to your comments this morning, what I take from them is that it is your view that this is not a significant change to your licence; this is a way to do what you do now better.

3745 When I take the 25 hours -- granted that you may start with 12, nevertheless your licence would allow you to do 25, if we approve this -- that works out to something like three to five hours an evening in prime time, which I would, on the face of it, say is a significant change to your licence.

3746 What I am asking you is: Why isn't that much live programming in prime time, when people watch television, a significant change to your licence?

3747 MR. MALCOLMSON: We certainly don't sit here before you today and deny that we are not seeking a change in our licence.

3748 The message we are trying to convey to you, which I think we conveyed in the presentation and in the video, is that the live events we hope to cover will be done in a different way, in a manner that is consistent with the mandate we currently have, in a manner that serves our target audience, which skews much younger than the other networks.

3749 I think we have talked about those points and I won't repeat them.

3750 The other thing is that the nature of the change we are seeking has to be considered in its overall context. We are not seeking to take a block of programming in prime time and present a traditional three-hour broadcast.

3751 As you saw, we are going to incorporate the game itself within the news and information format. I think that is a very important consideration.

3752 The other consideration that I think we need to talk about is that we live in an era of change. We live in an era of significant change. We are trying to stay with the growth curve and continue to serve our audience.

3753 The feedback we are getting from our viewers is that there is a gap in our format. You heard yesterday and the day before from the other panel that live professional sports events coverage and live coverage provides a source of credibility; is a must-have product and is something that fills in a schedule.

3754 We found that in our history there is a gap there. We are trying to fill that gap but in a way that is new, is different, and that doesn't encroach upon the territories of the other networks.

3755 I might just ask Peter to touch upon the pace of change issue which we think is quite relevant to the proposal we have in front of you.

3756 MR. GRANT: Commissioner, the point you asked, of course, focused primarily on the scheduling; that it would be focused in the evening hours.

3757 As I understand the intentions, there would in fact be a considerable amount of product shown on weekends. So it might be only three evenings a week in which you would see a live game. That might take up two or three hours on say three, four evenings a week at the most, and you would see then some weekend activity.

3758 Of course, being live, it has to be all configured around the actual scheduling timing of the events themselves. The amateur timing is different and the international timing is somewhat different than the conventional prime time schedule.

3759 On the issue that Rob mentioned, though, about the change, it goes to this question that this network is really evolving quite quickly to try and respond to what they see as a niche demand, and it is driven by the demographic they are in, which is a different demographic, a narrower demographic, a time sensitive and challenging demographic than many others. So they are responding to that.

3760 Normally, you might expect an application of this kind maybe to come forward at renewal and then do the adjustments. I see the industry moving far too quickly to sort of say, "Well, we only will countenance changes every seven years."

3761 The digital framework proceeding will be going on next year. We saw just yesterday and the day before a major change in the whole environment of sports rights and sports broadcasting that may or may not be approved in whatever form. All of those things are happening in mid term.

3762 In that context, it seems to me an application of this kind is quite appropriate to bring forward to the Commission so that the adjustment can be made right at the appropriate time so that this network has a chance to address the financial problems it is in, where its cost structure has been far higher than it anticipated, and do so in a time frame that can allow it to make these adjustments before the rest of the industry moves beyond it.

3763 COMMISSIONER McKENDRY: The amendments you have or the changes to your licence that you have in front of us raise another issue that I would like you to comment on, and I think you have to a certain degree in your oral comments.

3764 As you are aware, the Commission has a policy of licensing one service per genre, and we have a policy of not allowing competition within those genres. Now, in sports there is more than one sports specialty channel, but the policy is that they complement each other, those channels. Bringing live sports events to your service, on the face of it would appear to put you into direct competition with the other services, TSN, Sportsnet, that are also offering live sports events to viewers. Could you please respond to what I have just said?

3765 MR. MALCOLMSON: I will start, Commissioner McKendry, and others may jump in.

3766 Just first of all, factually, 85 per cent of our programming schedule remains unaltered if this application is approved, so I just think from the standpoint of context that is important.

3767 Secondly, our wholesale fee is 10 cents, which has an impact on the type of rights or the volume of major professional sports rights that one is able to go out into the marketplace and attempt to secure. I think there are differences in terms of quantum and there are differences in terms of the economics of our business.

3768 So those are some commercial realities.

3769 In terms of the genre policy that you refer to, we are certainly cognizant of it. As you said, it reads that you don't licence services that are directly competitive. We don't believe that approval of this application will put us into direct competition in a degree that would offend your policy.

3770 The other point is really I think at the core of the question, and that is: What is a genre? Our view is that a genre is really the complete package of product that you deliver to your viewer on a consistent basis. It is a function of your audience as well as the programming. The two are related.

3771 We think we have a unique genre. We think that this application will support that genre and serve the audience that is watching that particular genre.

3772 I guess the other point I would make is that no genre is airtight in and of itself. If you look at WTN, Life Network, Home and Garden Television, there is programming that migrates among those networks. Does that mean that HGTV is in WTN's genre when it is showing Martha Stewart? We don't think so.

3773 We think that you have to look at the complete package and make a judgment based on the overall package. We think the package we have presented to you keeps us in our genre and doesn't offend the policy.

3774 MR. LEVY: Perhaps I could just add one other specific point to what Rob has mentioned.

3775 The timing is definitely right for us now to start to incorporate some live event coverage. In addition to that, there is a very practical reason as to why it makes sense now. In addition to allowing us to hopefully financially correct ourselves over the next few years, by the end of the term of our licence, to put us back on a footing where we had hoped to be, quite frankly the third year, that is an obvious concern and hopefully live event programming will allow us to attract our viewers to stay longer, which is really our issue. They come to us, but we want to keep them there a little bit longer, and we want to attract some of the other 18 to 34 year olds. So in that regard, increased viewership translates to better numbers; it translates to our ability to hopefully secure additional revenues from advertisers.

3776 Another very practical reason why it is right now is that there is a whole bunch -- there is product that is available, but there are a lot of rights that are coming up in the next three years. If the Commission, for example, saw fit to grant this amendment at the end of our term as compared to now, you know, the horses might be already out of the barn, for example, CFL, NHL, Blue Jays come due in -- some of the rights relating to the Blue Jays come due in 2001 -- Raptors, Grizzlies, Commonwealth games, sharing on the Olympics, the next round of Olympics. There are all sorts of rights that will be coming due prior to 2002. As we have heard over the last few days, these rights tend to get picked up and sometimes these rights don't even make it to air.

3777 One thing I can assure the Commission is that if we are granted the application, you know, we are not going to become a warehousing company. We don't have shelves in our network, we have windows, and if we get the product I can assure you it is going on air. In fact, one thing I would hope is that, as a result of yesterday and hopefully our ability to have this limited inclusion of live event programming, maybe some of that warehoused inventory has a new window for exposure. We would be delighted.

3778 So I think that is significant in the context of why it is important for us now. I think the overall impression should be that, in our belief, it is not a substantial change. The timing is right for us, we are not infringing on the ability of other people to do what they are going to do. We will be in the marketplace for sure but, in terms of where we are versus where they are, I don't think there is any significant concern, and that is evidenced by the fact that nobody has intervened against us except some of the people that were here yesterday.

3779 COMMISSIONER McKENDRY: With respect to whether or not you will be competing with other services directly, you have made the point that 85 per cent of your schedule will be as it is now. But isn't it more appropriate to focus on what will happen to your schedule in prime time, because that is when people watch television?

3780 I remember in the TV policy hearing Mr. MacMillan telling us that you fish where the fish are. So while on the face of it there might be some comfort that only 85 per cent of your schedule will remain unchanged, isn't it the prime time period we have to focus on -- your schedule will change significantly in the prime time period when people watch TV?

3781 MR. LEVY: Well, I think, you know, you are right, but I think what we are trying to convey is that our network is a constant stream of information. That is the niche we created when you gave us the licence six years ago -- three years ago. We started six years ago Sportscope as the alphanumeric service. We have been streaming this information for a long time and we have just been getting better at it.

3782 I think, quite frankly, you are still thinking in the context -- and rightly so, because the only way you have ever seen a game is in a big three-hour block, you know, NHL on CBC, NHL on Global, NHL on -- I mean, you don't know which network you are watching because, except for the odd host that is different, it is the same presentation.

3783 We don't want to go there. We can't go there. The reason we can't go there is because that is not our viewership. Most of our viewership don't watch games that way. If we start doing it that way and just load up our prime time, then you are right, then we are looking like all the other -- the networks. We don't intend to do that.

3784 We intend to do it our way. I mean, there was some scepticism when we started as to, you know, "What is this sports, news and information? What are you going to do?" You know, "How are you going to create this niche? How are you going to find these people?" We did it. We have a young, energetic viewership and what we want to do is translate the way the game is traditionally shown into a format that they are going to find attractive.

3785 So I think for you to think about it in the context of just another three-hour block every night from 7:00 until 10:00, that is not what we are about.

3786 One other point that my colleague just pointed out to me was that we do something a little different than all the other networks, and we have always done that. You saw it on our video.

3787 We direct people to the other networks. Nobody does that. We tell people that while they are getting sports information from us, if they want to go see the game on CBC, or if they want to go see the game on CTV, or if they want to go just about anywhere but one network which we are not allowed to do it with -- we are a barker. It's our view that we are going to continue to be a barker and we will be a stronger barker.

3788 So even though we may have a game during prime time, the other networks are still going to have their games on in their fashion, and we are going to direct people to them. We are going to give them the scores, we are going to give them some highlights -- we expect that relationship will continued -- and we are going to tell them: Go over to Global, for whatever that event is. Go over to CTV. Go over to Sportsnet.

3789 If you want to see the whole game and it's on at the same time we are showing our game or other highlights, that is part of the information package that our young, interactive viewers who don't sit in front of --

3790 My kids don't watch television like I watch television. They are all over the place. They are watching television, they are on the phone, they are on that chat line. I mean, they are doing six things -- they are all multitasking and that is what our channel is. That is the natural reaction and reason why we skew so young.

3791 We don't want to go there. We are going to compete for some product, there is no question about that. But the question is: How do we translate that product to the end result.

3792 Believe me, we really love where we are. We love the niche. We love the people we are talking to. We want to stay right there. We don't want to transgress. We don't want to become like the other guy. That's our mantra: We are not the other guy. It's all over our office. So -- anyway.

3793 COMMISSIONER McKENDRY: But you do want people to stay longer at your -- I was going to say your site, but at your service?

3794 As I understand it --

3795 MR. LEVY: I like that. "At our site", I like that.

3796 COMMISSIONER McKENDRY: As I understand it, you want people to stay longer and that is one of the rationales underlying this is you need people to stay longer in order to attract more advertising revenue. People are coming now for a quick hit, leaving, and you would like them to stay longer. Is that right?

3797 MR. LEVY: Absolutely.

3798 I'm going to turn it over to Rob, he wants to make a comment, but longer to us doesn't mean three hours, you know. Longer to us means stay another five minutes a day. Longer to us means another five or ten minutes a day.

3799 I mean, people come in and out of our network. They are in catching highlights and then they are gone.

3800 So, you know, our version of "longer" isn't the traditional version of "longer". By having the game on people are going to come to us, they will watch part of the game, and then we are probably going to send them somewhere else because they are going to want to see something else, or they are going to pick up the phone or they are going to do whatever they are doing.

3801 So, hopefully, if we have the game on, in our fashion, they are going to come back to us, and they will come back to us and stay for another five minutes.

3802 We have information in the context of what that does to us. I mean, our viewers don't -- we don't need a lot to make a big difference in our context.

3803 Rob.

3804 MR. MALCOLMSON: Thanks, John.

3805 There are really two components to our audience objective here.

3806 The first is certainly we want to attract the type of numbers that a live game broadcast will attract but, as we have said, we are going to do it in a different way.

3807 But what is more important to us is increasing the audience to our schedule as either the live game broadcasts -- we really see the live game broadcast as an opportunity to bring people in to sample the rest of the product and to see what it is we are delivering in the marketplace today.

3808 So our objective is really to boost the audience that surrounds the live game as well. It's not to draw 500,000 viewers to the Grey Cup game, it is to draw a significant -- you know, a good component of viewership to the live event broadcast, but also to take that component and say: Here is who we are. Here is what we have. Here is what is within the rest of schedule. Increase that overall audience, increase the frequency of viewing to our news and information programming.

3809 That is one of the key components of what we are trying to do from a audience standpoint.

3810 COMMISSIONER McKENDRY: You mentioned that you would be starting off with about 12 hours of live programming. Can you tell us a bit about what we would see in those 12 hours if we approved the application?

3811 What specifically are you planning to start off with?

3812 MR. LEVY: Well, as I said before, it's difficult for me to have the schedule out in front of you because we can't finalize deals until we -- obviously until we can prove to the suppliers and to the other broadcasters, who hopefully we will be partnering with in buying product and presenting product or distributing their warehouse product.

3813 Clearly our 12 hours will be at least -- if it's in prime time, at least 50 per cent Canadian, because that's our commitment.

3814 We are anticipating that we are going to launch hopefully with some amateur at the same time, which seems to be very under-served. We are hoping to secure some professional rights as well.

3815 It is very difficult to nail down precisely what the product -- are we going to have hockey? Are we going to have baseball?

3816 We have had discussions with the leagues, with the teams. You have heard over the last few days there is product out there that is either, as I keep saying, in inventory or not being sold.

3817 You heard about the CFL the other day, for example. I know they have product that is in somebody else's inventory but that is available and dying for a place to get out. We would love to be able to secure those sort of arrangements.

3818 So we are going to have a mix. It's a blend of professional, amateur, and it is very difficult for us to be very specific as to what it is.

3819 Rob.

3820 MR. MALCOLMSON: If I can just add to that.

3821 In terms of -- I think you asked directly what product are you going to have on your screen.

3822 Firstly, we very much hope to be able to do something with the Canada West Conference of the CIAU which tell us that they have 450 regular season games available that aren't on television today. We think that is very compelling product for our young audience.

3823 In terms of the professional sports, you have heard, I think, or at least I heard in the last couple of days that -- I guess the example that struck me was the CTV Sportsnet example where they only wanted to buy 30 Toronto Blue Jays baseball games and the club wanted them to buy 40. Had we been there at that point in time, that is the type of buying we hope to do. We would try to secure those 10 games that others don't want.

3824 Similarly -- I think you heard Sam Pollock say this -- even a broadcaster picking up five games makes a difference to him in terms of his revenue.

3825 That type of what I would call mini-package is something that makes perfect sense given the number of hours that we would like to program and given the way we want to program things.

3826 So those are some examples of where we think we could have a role in the system that again doesn't sort of entrench on the traditional broadcaster's need for product.

3827 COMMISSIONER McKENDRY: I think earlier, you pointed out that one of the reasons you wanted to -- the import of this application now is there are rights coming up over the next couple of years that you would be interested in bidding on, and you cited the Raptors and baseball, and so on.

3828 I take it from that that you will be at the table to bid on major professional sporting events in competition with conventional broadcasters and other specialty services?

3829 MR. LEVY: I think the answer to that is: In the context of what we are doing, yes.

3830 You know, they are in one level and we are at another level, but clearly there is going to be common product out there that hopefully we will be able to bid upon and be successful upon.

3831 I think the key is, once we get it, when we are fortunate enough to secure it, what we do with it.

3832 Again I just want to repeat that there are two components to this plan that we are talking about: One is securing the product and one is displaying the product.

3833 Your specific question relates to: Are we going to secure it? And the answer is: Of course. I mean, if we want some professional games we have to jump into the market and bid and try to secure them.

3834 The next issue is: Once we get them what do we do with them? That is where we go into a whole discussion about how we are including it in the format and it won't look the same.

3835 MR. MALCOLMSON: I touched on this earlier and I just wanted to make sure that it was clear. Given the economics of our businesses as they stand today at 10 cent wholesale fee, I think it is pretty clear that we would be buying -- in the rights business we would probably be buying second or third. I think someone talked the roast and the rump.

3836 I think the reality is that we are out there buying smaller packages of rights, probably after the big guys have decided where and when they are going.

3837 So we will be in the market for professional rights. I think the manner in which we are in the market is going to be quite different.

3838 COMMISSIONER McKENDRY: In terms of the live programming that isn't Canadian, where will you source that programming? Will it be American? Will it be other countries?

3839 MR. LEVY: Our head of programming is a huge soccer fan and he has been pushing us over the last few years. He has this dream about somehow participating in our ability to get World Cup rights.

3840 Again, if you watch our network you will see that not only do we provide information on the traditional professional sports, but we have world soccer reports, we have world international reports.

3841 Our network is a 24-hour a day network. We serve a different audience. We would love to be able to pick up not only some American programming but international programming. That is very, very exciting to us.

3842 And there are other, perhaps partners out there, local stations and various markets, who pick up some of that programming and maybe they would be prepared to partner with us.

3843 So the answer is: We are not just picking up big professional American sports. There may be some components of that, but we are going to be looking at trying to expand the horizons of what is available and continue to be distinct.

3844 COMMISSIONER McKENDRY: Coming back to Canadian live programming, to what extent do you anticipate that regional programming will be an element of that?

3845 MR. LEVY: Well, we are very excited about that actually. The reason that we have a regional component as part of our application is really to facilitate our ability to buy some amateur sports.

3846 You know, you will hear, and you have heard hints of, a lot of college amateur sports in Canada that can't find a home on television, particularly some western CIAU programming. That programming may not be appropriate for all of Canada. Maybe Halifax doesn't care what happens between two universities out west, but they certainly care out west.

3847 So we felt that buy sort of carving out a very limited amount of local or regional -- regional programming similar to what TSN has, that would make sense for us because then we go into that marketplace and provide that programming.

3848 Again, the rest of the country would be seeing our usual streams, news, sports and information. What also would be interesting is we would be able to stream that regional programming into our broadcasts because, you know, we would be flipping back and forth from what is happening at some amateur sporting event out west and back to our network and our network back to them. So that's why it's there.

3849 COMMISSIONER McKENDRY: The proposal to amend the conditional licence to allow you to do live programming is coupled with two other proposed amendments. Are these a package of amendments that you want considered together? If, for the sake of discussion, we denied the ability to do live programming, are you still seeking the ability to reduce your overall Cancon commitment?

3850 MR. LEVY: No. It's a complete approach to the way we want to do things. It doesn't really make sense without the other.

3851 COMMISSIONER McKENDRY: Thank you. I want to discuss for a minute the financial situation that you have experienced and that you are facing. You obtained your licence in 1996 and the service started in 1997.

3852 Am I correct that the reason or the situation driving your application is the fact that from a financial point of view you are not anywhere near as successful as you hoped to be?

3853 MR. LEVY: That's not what is driving this application. What's driving this application is that it's right for us to enhance the programming at this point in time. The result of enhancing the programming will be that we will be able to correct the situation that we are in. That's not the situation we anticipated we would be in.

3854 The reason we are in that position is because the costs involved in providing information, sports information, on a continuing basis to these insatiable 18 to 34 year olds, and it's interesting because, you know, it skews younger than 18 to 34. We always talk 18 to 34 year olds because that's who you sell into. Who we are really talking to in addition to that are people who don't even show up on those meters. It's the 10 year olds, 11 year olds, 12 year olds. I mean they are all over this service.

3855 Unfortunately, they don't show up on that box and aren't the target of what's increased -- you know what viewership numbers and advertising dollars. The answer to your question, Commissioner, is that it's important for us to reverse the trend. There's no question about that. We want to turn this into a profitable -- we want to stem the losses. Let's put it that way.

3856 We are talking about, you know, anticipated losses of just over $500,000 and to date, or in the first three years of operation, we are in the whole by over $10 million. We are supporting that. We are not complaining about the fact we are supporting that. We love the niche we are in. We just think that it's important to reverse that trend before it becomes a serious problem.

3857 COMMISSIONER McKENDRY: Can you elaborate on what has created the situation that you are in? It's my impression that advertising revenues have been strong, in fact I think better than forecast if I recall correctly, but your expenses are much higher than forecast.

3858 What lead to that situation? What went wrong?

3859 MR. LEVY: Well, I think that you are right. Our advertising in the early years has exceeded what we originally anticipated. There's no question about that. I give that to hiring good people to go out and sell and we sold on the basis of a promise.

3860 When you are a new network in a marketplace such as ours, creating your own niche, you anticipate certain levels of viewership. You go to the market and you sell based on those levels. We were young, we were exciting, and we were an alternate that wasn't there before and we managed to secure those dollars.

3861 The problem happens when the viewership numbers don't support those numbers. Then what you are doing is making good. In terms of the advertising revenue, we did exceed it. We have trouble maintaining that unless the numbers increase. That's number one.

3862 From a financial standpoint, what did happen, it was a lot more expensive to continue to provide that level of programming for our customers. We didn't back down from it. We continued to expand. We introduced live hosts during the evening. We went out and got talent, as you saw. We keep rejigging our format within our niche to try and provide better programming. We take feeds. We have people all over the country.

3863 We didn't start with that. We didn't anticipate that we were going to have to do that, but we did and we are committed to that. That's why our costs were higher than anticipated and that's why we are in the position we are in.

3864 We think that with the inclusion of limited amount of live programming we are going to have the ability to boost the overall image of the network. We are going to be able to have people coming to us, not just during the games as Rob suggested, but all during the day.

3865 That marginal increase is going to give us a lift. It's going to be able to just reverse this trend of losses that we otherwise are going to sustain, at least until the end of the licence.

3866 COMMISSIONER McKENDRY: Just on the cost aspect of things, help me understand how the cost of acquiring live programming will as factored into your plans, I assume acquiring live programming and distributing live programming and providing it to viewers is an expensive undertaking.

3867 What gives you confidence that you will be able to overcome those costs with increased revenues? For example, I noticed between 1998 and 1999 your advertising fees, you know, increased substantially from $6.5 million to $8.4 million under the current situation. Are you anticipating another leap like that to compensate for the new costs? Just help me understand how the costs of acquiring live programming fit into the jigsaw puzzle of your financial situation.

3868 MR. LEVY: I think first of all you have got to understand it in the context of we are not filling our schedule in the context of what we were discussing before. We are not buying games. As Rob suggested, we are starting with 10 or 12 hours a week of live programming events incorporated into our format.

3869 We are talking, you know, about buying limited select packages of rights. To think of it in the context of the traditional networks and having to secure hundreds of games to fill not one, but maybe two networks, that's not where we're at. We need selective purchasing.

3870 The second is that we have been very ingenious and hopefully entrepreneurial and in tune with what the market is now doing in terms of how rights flow from the creators of the rights to the broadcasters. You know, you have heard over the last few days that there's people in the middle now who are part of the formula. There's media buyers. There's other existing non-broadcasting entities who are buying and packaging these rights and then bringing them forward.

3871 There's no doubt that we are going to be having to step up and pay fair market value for these things. Nobody is going to give us the games. We are going to have to pay for them. I think it's correct in assuming, which we are and we have had discussions with them and you will have certain people coming forward as part of this process, and you have already heard about how creative people can get when product "A" has a window on product "B"'s network. Sometimes you look at sharing advertising and sometimes you look at other promotions.

3872 Sometimes these things supplement the costs of the rights fees. That's how we are looking at doing it, in addition to which, I should add, there is, and again I keep coming back to it, there's product out there that's sitting on somebody's inventory that hasn't seen the light of day.

3873 As an opportunity, as a window to show that programming, there's incremental gains that can be made without many incremental costs as long as the production is handled and those costs are covered. I think you have to think about that available product which is also part of the mix.

3874 The other thing is a lot of our programming is going to be amateur and is going to be along the lines that we talked about before, which is CIAU. The rights fees to attract that sort of inventory is obviously not the same as the type of product that you are talking about.

3875 We looked at a complete blend, a complete mix. The one other factor is that, you know, we don't need a lot to make it work. That's how we can afford to do it on a dime.

3876 MR. MALCOLMSON: If I could just add to that. Rick Brace said something yesterday or the day before about a sort of different rights market emerging. I think he described it as today there's two rights currencies. One is the cash component which I think you are referring to, but the other which is becoming increasingly important is the level of exposure you as a broadcaster can offer the sport that's looking to get its product on television.

3877 He talked about rightsholders looking at the number of promotions on a weekly basis, the amount of feature programming that the broadcaster can offer, the amount of shoulder programming, I think he called it, that the broadcaster can offer. We think we can provide very attractive feature programming promotional avails to a sports league that wants to target our audience. So we think we deliver, (a) a younger audience and, (b) with our format significant opportunities to meet the exposure requirements of the rightsholder.

3878 COMMISSIONER McKENDRY: Again, just to make sure that I understand, the outcome of this is that people will stay with you longer and you can charge more for advertising, that's the heart of it?

3879 MR. LEVY: That's our model.

3880 COMMISSIONER McKENDRY: Yesterday we had a discussion with Mr. Pollock about rights and that's when the 10 baseball games that you referred to came up. I recall him, and correct me if I am not recalling him correctly, that the rights for one game were in excess of $100,000. I don't recall the specific number, but I seem to recall $140,000 or something like that.

3881 If you bought those 10 games that would be a substantial increase in your program expenditures that you have experienced historically. Last year you spent $4 million on programming. If you bought those 10 games that would be bumping you up substantially in terms of a percentage of your historical programming expenses.

3882 Then, if you are going to bid on Raptors' games, as I take it, and other professional sports, including American sports, what do you forecast your programming expenses to grow to next year, assuming we approve your application?

3883 MR. LEVY: I will answer the specifics in terms of what the number is, but when you are in the rights' market, when you think, for example, of Raptors and the fees that are paid, there are deals currently out there where certain products, certain packages of products you don't pay rights fees for. You share inventories or you cover programming costs and you mentioned the Raptors, so there are specific opportunities in that regard.

3884 In our first year of operation our business plan basically shows a continuing -- basically, no impact, but with the addition of live games into our format and we are looking at an increment of around $3.5 million to $4 million in extra revenues and, incidentally, extra costs that will basically put us in a scenario where we have managed to incorporate into our format live games and not impact the bottom line.

3885 From that point forward we see it increasing marginally where our revenues are exceeding our costs and, therefore, pulling ourselves out of this losing equation that we have for the next couple of years.

3886 So, the terms of the magnitude we are talking about, in the first year, the first full year of introducing live-event coverage we are looking at increasing our revenues by approximately $3.5 million to $4 million.

3887 Again, I think that you have to understand it in the context of the mix of the programming we are talking about. It's not all going to be major professional sport.

3888 COMMISSIONER McKENDRY: Staying with the financial area, what will happen if we don't approve your application?

3889 MR. LEVY: Well, our projections show that we are going to continue to lose money for the balance of the term. It's going to become more and more difficult for us to continue to improve and strive to fill this insatiable appetite which is out there for our niche.

3890 It's going to put us in a position where we are going to have to think about continuing to expand the level of sports information, news and highlights and keep growing the way we are because at some point you will have to say that's not in the best interest of continuing to lose money like this.

3891 So I think from our context we will continue to work very hard to try and live within the format -- in the context of sports, news and information without any inclusion of a limited amount of live games. We will continue to try to be responsible, continue to try to grow, but our estimates show, based on our history, that we are not going to turn the corner until at least the end of our licence and thereafter we are not sure.

3892 COMMISSIONER McKENDRY: If we don't approve the application, I take it from what you have just said, it means it will take longer to turn the corner than if we do approve your application. You will turn the corner, if we don't approve your application, is that what you are telling us?

3893 MR. LEVY: Our business plan shows that we won't until the end, well, we have projected out to the end of our licence and past that for another year or two, and we don't see it turning unless we can dramatically increase the audience.

3894 COMMISSIONER McKENDRY: I wanted to ask you about the wholesale rate in that context. Would you consider raising your whole rate if we don't approve the application?

3895 MR. LEVY: We have prided ourselves, as you saw in the video, with being a low-cost alternative. The whole nature of this service was to be a low cost sports alternative, to provide distributors a way of supplementing and providing new sports information to its viewers.

3896 We have no intention of raising the rates over time. I can't tell you what the future holds in terms of if we are not granted this licence application, whether it means we will have to come back and think about that as a source and strap it on the backs of subscribers, like the other networks do. That wasn't our game plan.

3897 As some of the Commission may be aware, in my previous lives in the cable industry, it gets continuously harder to just keep pushing fees on the subscriber like that. So, we want it to be accessible. I don't know, Commissioner, if you remember, we sort of pictured ourselves as the scooter and that was sort of inexpensive and we were there for a dime and we want to maintain that.

3898 COMMISSIONER McKENDRY: If we do approve your application are you making a commitment that you won't raise your wholesale rate?

3899 MR. LEVY: Yes. I assume you are saying for the balance of the term. Is that what you are saying?

3900 COMMISSIONER McKENDRY: You tell me.

3901 MR. LEVY: Let's talk in the context of the balance of the term and then we will have this discussion again when we are here for renewal.

3902 COMMISSIONER McKENDRY: Just for a second, going back to the programming in relation to live events, once you put live events on what comes off?

3903 MR. LEVY: In our context, nothing. That's the beauty of our network.

3904 COMMISSIONER McKENDRY: And that's because the ticker is still running and because you are going to break into the programming with the split screen and so on?

3905 MR. LEVY: It's hard to visualize it and it's hard to present it in the context of a two-minute video. We tried and, hopefully, that's a bit of what we are looking at, but we are not dumping other product to put this product on. Our viewers are going to get the current information and more.

3906 COMMISSIONER McKENDRY: I just have a question now about the amendment you made where you said that 50 per cent of all the live programming in prime time will be Canadian. I want to ask you if in light of this commitment are you still seeking to reduce your evening Cancon requirement to 60 per cent and your overall requirement to 80 per cent?

3907 MR. LEVY: Yes.

3908 COMMISSIONER McKENDRY: Another question with respect to the live programming and the Canadian content commitment of 50 per cent. As I understand it, it's restricted to prime time. Have you given any consideration to extending it to live programming outside of prime time?

3909 MR. MALCOLMSON: I think, Commissioner McKendry, we did that a little bit by virtue of the definition that we put forward. In reply I think we expanded the definition of prime time, or at least tried to, to track when sports events happen.

3910 We defined it as, I believe, 6:00 p.m. Monday to Friday and noon to midnight on Saturday and Sunday. So I think it's a wider definition of prime time than one might normally think of when you think of prime time.

3911 COMMISSIONER McKENDRY: Given that you have proposed a limit on your live programming on a quarterly basis, 15 per cent of the quarterly program schedule, why are you proposing to measure the Canadian content of live programming on an annual basis?

3912 MR. MALCOLMSON: Our Cancon commitments have always been measured, since we were licensed, over the broadcast year. Originally, it was 100 per cent of the broadcast year, so we were seeking consistency.

3913 COMMISSIONER McKENDRY: Those are my questions for you. Thank you very much.

3914 THE CHAIRPERSON: Thank you, Commissioner McKendry.

3915 I have a couple of questions.

3916 We spoke about genre of programming, and obviously that is a very broad word. The Commission's intent is to try to see some diversity for subscribers.

3917 So if genre is not enough, whether it be sports or to ensure that diversity, it uses very specific conditions of licence to limit what one can do. It is usually based on what is before the Commission at the time of an application, whether it is "we won't do films" or, in this case, "we shall not broadcast any live sports event coverage".

3918 So I don't think you can underplay the fact that this is an amendment; it is a change. As Commissioner McKendry pointed out, it is even more so because it is in time prime. So the 15 per cent becomes a much higher percentage of those hours of prime time viewing.

3919 In light of that, as was pointed out, we look at the length of time you have had this licence. You speak of history and of a trend on the basis of which you make very pessimistic projections into the future.

3920 Do you think the amount of time you have been building an audience and trying to make a go of this amounts to creating a trend or a history sufficient to say "we know from this history and this trend that there is no other way but this to keep this viable and to do what we told the Commission we would do to add diversity and which the Commission accepted"?

3921 MR. LEVY: I think the short answer to that is yes. History shows us that where we are in our niche we have to continue to improve, we have to continue to be responsive. We don't want to lose what we have accomplished, which is to capture this young, new audience.

3922 We have to continue to improve our product. If we don't, we are in jeopardy perhaps of losing it.

3923 THE CHAIRPERSON: When we talk of a genre or different programming that would offer diversity to the subscriber, it is obvious that this is a different service offered to the subscriber.

3924 Do I understand from the change you are going to make that it won't be like what one would see on TSN because there will be break-ins, there will be a continuation of the news, a break-up of the screen other than advertising, and just a simple attracting the consumer who may want to use your service for the type of information that it provides immediately and watches long form sports programming or live programming events on another channel where that type of interruption is not present?

3925 I will ask Mr. MacMillan, who says you fish where the fish are: Are you not going to be neither fish nor fowl in perhaps trying to catch chickens with a fishing pole?

--- Laughter / Rires

3926 MR. LEVY: I am trying to think of an appropriate way to continue that metaphor, but I am unable to.

3927 I think the first thing with prime time in this regard is that Headline Sports can only use live events when they are live. I know that sounds like a silly tautology, but it is true. Under its current licence it could replay an event that had already happened, but we are looking at live events here.

3928 By and large, they happen on weekend days, through the day and in the evenings.

3929 I frankly think that the young audience has interest in watching a screen where more than one type of information is coming at them at the same time.

3930 The success of CP24 has a variety of different types of information, some of which overlap with other channels, like The Weather Channel, and so on. Young people today are increasingly doing that on their PCs. That is my response.

3931 Frankly, I think they will be quite interested in watching a multi-signal image.

3932 THE CHAIRPERSON: Have you tested that at all in focus groups, or some means of seeing whether you would lose most of your audience because those who like to watch live events, interrupted only by advertising if possible, are going to keep watching them where they are available and they won't tune into you at all because that is not what they are looking for; they are looking for immediate information?

3933 There must be some business, other than this, of making a go of this when one looks at the cost, as Commissioner McKendry pointed out, of buying interesting live sports that will be broken up, and the danger of losing an audience that you are just in the process of building for a different type of service. That is my question.

3934 And of course, as a regulator, then I ask: What is going to prevent you from saying well, people don't like this, so out with the screen and out with the information. We are going to play a total game only with advertising interruptions.

3935 There is nothing in your proposal that would prevent you from doing that.

3936 MR. LEVY: I am going to ask our soccer fanatic at the back to talk about the viewer feedback.

3937 THE CHAIRPERSON: I hope he is a regulatory expert too.

3938 MR. LEVY: I will kick it back up here.

3939 THE CHAIRPERSON: My question is: If you do find that being neither fish nor fowl doesn't quite work, what would prevent you then from moving away during those many hours from your core mandate, which is to not provide live sports at the moment, and provide live sports exactly the way the other channels provide it?

3940 The reason I am asking this question is because you have made a big point in your presentation today and in your answers that you are not moving away from your mandate that much because it won't look the same. It will have these interruptions.

3941 MR. LEVY: Okay. We will change direction here for a second since you --

3942 THE CHAIRPERSON: No "Mr. Soccer"...?

3943 MR. LEVY: "Mr. Soccer" is going to have to wait a minute because of the regulatory part.

3944 It is counterintuitive to what we are trying to do to duplicate what others are doing. If we were doing that, we would probably would not even be here today in the context of having a serious network.

3945 The only reason we have managed to create what we have is by getting in this particular zone. We have to guard that very cautiously, and we have to be very aggressive in trying to continue to promote it.

3946 Rob wants to make a comment on this.

3947 I think it would be naive to think that if we just started to look and feel and taste and smell like the other guys -- first of all, we would lose our fish. You are right. They would be gone.

3948 Second, it would be very difficult for a network such as ours to be able to try and attract the type of fish that are swimming in their tank.

3949 Let me turn over to Rob.

3950 THE CHAIRPERSON: Before you answer, Mr. Malcolmson, you did say -- someone did say -- that what we want to do is that we are trying to attract the audience available to a live game broadcast. Presumably, that is one type of audience, who is used to seeing a live game broadcast in a certain fashion.

3951 What makes you so sure that seeing it in that fashion is what that type of audience is looking for?

3952 MR. LEVY: Our predominant target is not the viewer that is watching the traditional game. Somewhere in our presentation you may have heard that there may be some spillover from that viewership in the context of people wanting to come to us to try our new format.

3953 What we want to do, what our intention is, is to present the game the way our viewers want to see it; get them to stay longer; get some of these other 18-to-34 year olds who are out in the marketplace, who are not watching the games now.

3954 Statistics show that the kids are not watching the games the same way they historically have, not the way I watched it.

3955 So what we are trying to do, first and foremost is integrate it into our plan to give our existing customers more to make them stay longer, number one; attract other 18 to 34 year olds, these other interactive young viewers, to get them to start to watch the game.

3956 In fact, Commissioner, it may work the other way. We may get these young guys and girls in watching and they might say, "Hey, you know what? This is good", and maybe they will flip over to the traditional way of watching games because now we have started to excite them. That is really our barker format to the ultimate, because now we are not just directing existing people over, we are helping the leagues to reconnect with the young audience.

3957 Every one of them will tell you, if they come up before you again, that the reason a lot of them are in trouble -- I know the reason the CFL is in big trouble is because they lost contact with my kids. You know, they ignored them. I couldn't drag my kids to those games. They lost a whole generation.

3958 I think they are realizing that those skewing above 34 years old or 49 years old and north of that, they are not going to be around forever, unfortunately. I say that hesitatingly because I'm starting to get into that age group but, you know, they are not going to be there forever. They better get in tune with the young people and they better excite them about their sport, otherwise, you know, they are going to have a lot of empty living rooms.

3959 Anyway, is there anything else you wanted to add to that, Rob?

3960 MR. MALCOLMSON: Just hopefully a practical answer to your regulatory question, which is what assurance do you have that we are going to be what we say we are going to be, which I think is a fair summary of your question.

3961 I think what you have is certainly the ability at licence renewal time, when we are back before you in 2003, to test on us on whether we have done what we have said we were going to do and perhaps, if you feel it is necessary, an expectation in your decision that we are going to present the games in the different fashion that we have tried to articulate today would give you some level of assurance that we are going to deliver what we say we are going to deliver.

3962 MR. MacMILLAN: May I just add one more thing? I was so busy trying to complete that metaphor that I forgot to really answer your question.

3963 THE CHAIRPERSON: You started it. Aren't you the one who said you will have to fish where the fish are, so you will have to make sure that you are not pitching something which is neither and losing both?

3964 I understand your point, that even ordinary sports games are broken up now and younger people are used to doing many things at the same time.

3965 MR. MacMILLAN: But the context, when I first started that metaphor, was one of expressing concern in that case that television drama might not be presented when most people actually find it convenient to watch TV. The reason that live sporting events happen in the evenings and on weekends is that is because it is when people find it convenient to attend those events. It's the easy time. It's not during working hours. That's why those events happen then.

3966 It seems to me that our proposal, in this sense, is a very good thing. It is making available those events when it is convenient. It is doing it in the Headline way, it is doing it in a different way, but that is actually delivering greater diversity, greater choice, especially considering that a lot of this programming is currently on the shelf, not in the window, as it were.

3967 So I think in fact we are fishing where the fish are, creating an opportunity to have these programs viewed at the convenient time. It makes more sense to do it this way, or to do it any way, in prime time, in the weekends, instead of at midnight or at 5:00 p.m. In fact, I think this does create a better, more useful service for our viewers.

3968 THE CHAIRPERSON: My last question. Although your proposal is for 25 hours, when that is raised the answer is often, "Oh, yes, but we are only going to do 10 to 12 at the beginning." Would the beginning be until 2003? Would that be acceptable?

3969 MR. MALCOLMSON: I just want to make sure I understand your question. Your question is --

3970 THE CHAIRPERSON: Your proposal is for 25 hours, and as Commissioner McKendry has discussed with you, because of the fact that it is concentrated in a particular time frame, it is a big change within that time frame, but at the beginning you will do 10 to 12 hours. That is supposed to give us some comfort. Would that be sufficient if the Commission weren't prepared to accept 25 hours?

3971 What is the beginning? You say "at the beginning", which would be, presumably, if we had a positive decision in 2000 or perhaps halfway through 2000, and then 2003 would be your renewal. Would that be a beginning, at 12 hours, so we can see how things are going in 2003, which is also a suggestion if we are concerned that we can review this at renewal?

3972 You don't have to answer. The application is for 25 hours, but incrementalism is always a bit of a problem.

3973 MR. LEVY: I think, Commissioner Wylie, the reason we went 15 per cent is to provide flexibility in the context of the type of product that is out there and when we are going to show it. We are estimating that we are going to watch, in 2001, the year ending 2001, which would be our -- hopefully, if we get a positive decision, that would be our end of the first year of operation. We can't integrate this thing all at once, nor do we want to integrate it all at once. We are talking about a ramp-up within the 15 per cent.

3974 So our object and the plan is to start with the 10, 12 hours a week and gradually and our business plan shows that depending on the availability of product, depending on our success, depending on our ability to sell, we are going to ramp to a maximum. Our plan shows that we get fairly close to the 15 per cent by the end of our term, which is August 2003. At that point, we will be back in front of the Commission and hopefully we will be saying, "We are very happy. It has worked. Let's renew and go forward." That is our plan.

3975 THE CHAIRPERSON: Commissioner Cram.

3976 COMMISSIONER CRAM: I'm sorry, I was caught up in fish and aquariums and chickens --

--- Laughter / Rires

3977 COMMISSIONER CRAM:  -- but I did want to hear from Mr. Soccer --

3978 MR. CICCONE: Finally. I thought you forgot about me.

3979 COMMISSIONER CRAM:  -- Mr. Ciccone as to the issue of the audience reaction and the concept of the acceptability to your demographic of the format and the live programming. I didn't hear that answer.

3980 MR. CICCONE: Just to give you a profile of who is watching Headline, basically, as John has mentioned, it is 18 to 34 predominantly and younger. These guys have a huge appetite for sports and they are used to doing many things at many times, multitasking, as John said.

3981 They sit at their computer, probably have their CD player playing a disc with their headsets on and watching television at the same time. We know this because on many occasions, via feedback segments on our channel, we ask the viewers about certain topics and about certain subjects and within minutes we are getting responses hitting our computer back. So it proves to us that they are watching television and sitting at their computers surfing the Web at the same time.

3982 On a daily basis we receive phone calls and e-mails at my office to suggest alternative programming ideas, new angles, what the appetite is, and we feel we have a good grasp on what the young viewer at home wants to see.

3983 Sorry, just to add to that, more soccer has been a predominant theme.

3984 COMMISSIONER CRAM: How about soccer from Regina?

3985 THE CHAIRPERSON: You won't have too many problems getting rights to those world games?

3986 MR. CICCONE: I'm sure I can persuade John.

3987 THE CHAIRPERSON: Oh, maybe you will have to persuade other people besides John.

3988 MR. CICCONE: You have to start somewhere.

--- Laughter / Rires

3989 THE CHAIRPERSON: Counsel.

3990 MR. BATSTONE: Thank you, Madam Chair.

3991 I wanted to start with a question about the regional programming. Just to clarify something, are we talking about separate feeds here?

3992 MR. LEVY: Yes. One separate feed.

3993 MR. BATSTONE: One separate feed. In one particular region?

3994 MR. LEVY: Correct.

3995 MR. BATSTONE: The west?

3996 MR. LEVY: No, not necessarily the west.

3997 MR. BATSTONE: Oh, okay.

3998 MR. LEVY: It will be wherever the region -- wherever the programming is coming from.

3999 MR. BATSTONE: I see. Okay.

4000 I would just like to ask a couple of questions about the amateur and under-represented sports coverage. You addressed this issue with Commissioner McKendry earlier.

4001 I would just like to first get your sense of whether you would be willing to accept a commitment towards amateur and under-represented sports -- I'm talking about a conditional licence here -- and, if you would, what level would be appropriate?

4002 MR. MALCOLMSON: Counsel, we are certainly excited about the opportunities for amateur sport, particularly the Canada West Conference at the CIAU. To accept a condition of licence, it would be difficult for us, just from the practical standpoint of rights acquisition. Until we are out in the marketplace with an ability to negotiate a rights deal, it is difficult to make a commitment by way of condition of licence.

4003 Perhaps if we are successful in having this application approved, the issue could be revisited at licence renewal time when we have been in the marketplace, we know what is out there and we know what we can do.

4004 MR. BATSTONE: My next question goes to the potential impact of the changes on local broadcasters. Just specifically, if you looked at what the potential impact might be. If you are offering me some programming in a particular area, is that likely to have an effect on the broadcasters?

4005 MR. MALCOLMSON: First I would note that no local broadcaster per se has intervened in opposition to this, nor has the CAB.

4006 The type of product that we are talking about, counsel, again, is product that isn't on television today. Our CIAU example is product that isn't being carried in a local market today, so that suggests to us that it is not going to have an impact.

4007 MR. BATSTONE: Similarly then, are you projecting that there would be much of an impact in terms of advertising revenue on other services? I'm thinking again of conventional services.

4008 MR. LEVY: With regard to the amateur sport? Is that what you are referring to?

4009 MR. BATSTONE: Not necessarily, just in terms of if we allow this additional programming?

4010 MR. MALCOLMSON: The answer with respect to conventional services is no. We think the order of magnitude of what we are doing will have minimal impact, if any.

4011 MR. BATSTONE: I only have a few more questions.

4012 Just in terms of you were discussing earlier with Commissioner McKendry the proposed conditional licence for Canadian content in prime time. He had asked you: Would you still need -- or would you still want to reduce the evening Cancon level to 60 per cent and the overall Cancon to 80 per cent with this additional commitment to 50 per cent Canadian content for live events.

4013 I would just like to explore with you why in fact that is the case. If 50 per cent of the stuff you are going to do -- or the live event anyways, in prime time, is going to be Canadian content, couldn't that reduction in the amount for the prime time period and the overall be less?

4014 MR. LEVY: I am just trying to understand. If you are specifically asking if we are committing to do 50 per cent of our prime time Canadian, which we are, are you suggesting that we don't need the requirement of 60 per cent in prime?

4015 MR. BATSTONE: That's what I'm wondering.

4016 MR. LEVY: Fewer conditions are better. I don't think we need that, unless I'm misunderstanding something.

4017 Rob.

4018 MR. MALCOLMSON: The condition of licence with respect to 50 per cent in prime time is in relation to live event programming, so that is based on an assumption that there will be live event programming within that block.

4019 That assumption will be, again, a function of the rights that are out there and what programming we are able to acquire. If we are not able to acquire live event Canadian programming and put it in our schedule, then the flexibility that we are looking for may in fact be required.

4020 MR. BATSTONE: I guess that's sort of where I'm going with this.

4021 If you weren't airing live event programming -- because if you are we would have the assurance that 50 per cent of it would be Canadian in prime time -- then there is that 40 per cent block and I would kind of like to explore what would be there.

4022 Would you be airing non-live, non-Canadian programming in prime time and do you need a full 40 per cent to do it?

4023 MR. LEVY: I think what we are looking at is some of the feature programming perhaps surrounding the live event which may necessitate that requirement as to why we need that other condition.

4024 MR. BATSTONE: Let me just clarify one thing then: Will there be non-live, non-Canadian programming? I guess given your nature of service right now, like I'm thinking this would be like a news magazine format or something from one of the U.S. broadcasters for instance. Is that something that would be there?

4025 MR. MALCOLMSON: That's a possibility.

4026 MR. BATSTONE: All right.

4027 Just in terms of the other question that Commissioner McKendry raised with respect to the different timeframes for measuring between the Canadian content on live and the overall commitment, one is on an annual basis, one is measured on a quarterly basis.

4028 What I'm wondering is what is the best way to measure it, I guess? Is there a need to have the averaging over the year as opposed to the averaging over the quarter?

4029 MR. LEVY: I think the short answer to that is, yes, it is important for us to have the ability to average over the course of the year, particularly in these three years as we are developing how we are incorporating this product, what product is available. You know, are we going to be able to incorporate some programming that may fill up larger blocks in terms of special olympics and that sort of programming.

4030 So as we build I think we need that flexibility.

4031 MR. BATSTONE: Are you suggesting, then, then -- I would like to explore all the possibilities here.

4032 Are you suggesting, then, that it would be appropriate that everything be measured on an annual basis?

4033 Similarly, the flip side of that is, would it unduly restrict you or would it cause problems if it was all measured on a quarterly basis?

4034 MR. MALCOLMSON: Our original Canadian content condition of 100 per cent, if I'm not mistaken, was measured on an annual basis. So the reduction in terms of 100 going to 80 that we have asked for we put forward as an annual basis.

4035 I believe, again, the prime time Canadian content condition again, for purposes of consistency of measurement, we put forward on an annual basis.

4036 MR. BATSTONE: But I guess the question -- now we are talking about quarterly in some cases to do with the -- I'm sorry.

4037 It's just the regional programming that is quarterly. Is that right?

4038 MR. LEVY: Correct.

4039 MR. BATSTONE: Yes. I was confused.

4040 Is there a particular reason, then, why that is quarterly as opposed to annual?

4041 MR. MALCOLMSON: The regional condition, counsel, was prepared to mirror the split feed condition that TSN has in decision -- I think it's 97-290. It is the exact wording, unless I have transcribed it wrong.

4042 MR. BATSTONE: Thank you.

4043 Those are all my questions.

4044 THE CHAIRPERSON: Thank you, Madam and gentlemen.

4045 MR. LEVY: Thank you.

4046 THE CHAIRPERSON: We will now take a 10-minute break and come back for a second phase with the intervenors.

4047 Thank you.

--- Upon recessing at 1021 / Suspension à 1021

 --- Upon resuming at 1038 / reprise à 1038

4048 THE CHAIRPERSON: Madam Secretary.

4049 MS SANTERRE: Thank you, Madam Chair.

4050 Before I announce the first intervenor, I just want to make a change to the order of appearance of the intervenors. CTV Inc. just advised us that they will be non-appearing today. Therefore, we have moved the Toronto Blue Jays Baseball Club with Mr. Pollock to be second on the agenda after NetStar.

4051 Now I would like to invite NetStar Communications Inc. to present their intervention.

4052 Monsieur.

INTERVENTION / INTERVENTION

4053 THE CHAIRPERSON: Welcome back.

4054 MR. CRAIG: Thank you. Madam Chairperson, Commissioners, ladies and gentlemen. My name is Gordon Craig and I am the Chairman and CEO of NetStar Communications. On my left is Jim Thompson, President of the NetStar Sports Group. On my right is Paul Brown, NetStar's Vice President of Business Affairs and beside Paul is Chris Johnston, our legal counsel and partner in the firm Johnston and Buchan.

4055 For the record, I would like to note that the comments and responses that we will make today solely express the views of NetStar.

4056 Madam Chair, our appearance today is an effort to balance the information before you and to offer you some facts. Put simply, the application by Sportscope is not an application for an amendment to its conditions of licence. It's an application to fundamentally alter the nature of Headline Sports service. It's an application for a new specialty programming network.

4057 The Commission's decision approving Headline Sports three years ago clearly outlined the nature of the new licence, and I quote:

"The licensee shall provide a national English-language specialty service that is dedicated solely to the broadcast of sports results and information --"

4058 And a further quote:

"The licensee shall not broadcast any live sports event coverage."

4059 No doubt it was a conscious and deliberate decision on the part of the Commission to include the word "solely" in the nature of the service to ensure for viewers a Canadian headline sports news service, a service which the applicant emphasized throughout the process would not broadcast any live events.

4060 It was to add diversity to the Canadian television lineup and to live within the Commission's policy framework of not licensing two services within a specific program genre that are directly competitive. In the applicant's own words:

"Sportscope Plus is not in the sports event coverage business and hence not directly competitive with the live sports event coverage offered by local, regional or national broadcasters."

4061 Sportscope also points out that this application is the next stage in the evolution of a service that began as a non-licensed alphanumeric offering, then applied for a licence to turn that service into a new Headline Sports service news channel and now is seeking its third incarnation into a prime time live sports event network with regional cut-in capabilities.

4062 MR. THOMPSON: Madam Chairperson, Commissioners and staff. Sportscope continuously echoes that it will remain a sports-oriented news network. It claims that event coverage will not affect the provision of up-to-date sports information that lies at the heart of their nature of service.

4063 In our respectful view, this is not at all possible under the proposed amendments. Scores and highlights are the very core of Headline Sports. During prime time and on the weekends, when peak sports viewing occurs, Headline Sports would become a live event sports specialty service under this proposal. That's a total departure from their current nature of service.

4064 The reality is that this is the very time when television news coverage of up to the minute sports scores and information is most valued by viewers. All major events are in progress at that time of the evening. That's the beauty of a headline sports service. It serves a real need for sports fans at critical viewing times. It adds diversity and complements existing live events sports programming on other networks.

4065 Were Headline Sports permitted to broadcast live events, there would, in fact, be no established sports wheel throughout this key prime time period for sports viewers.

4066 Let's look at the math for a minute. The proposal to broadcast live events 15 per cent of the time equates to 3.6 hours per day. That's an average of more than one event per day in prime time for a total of over 500 live events per year. It's hardly headline sports. It's TSN.

4067 Sportscope calls its proposals "relatively minor amendments to its condition of licence" including "a modest amount of live sports events coverage". Clearly, as you have heard, this is simply not the case.

4068 The applicant goes further to request a reduction in the service's Canadian content level to 60 per cent in prime time. This again is hardly a modest move from a 100 per cent Canadian headline service.

4069 All this in the first licence term. All this despite exceeding their performance and revenue projections. And all this without the benefit of the essential elements of any licence application like a business plan to demonstrate that the concept is viable and allow the Commission to properly evaluate the application; a program schedule to prove the feasibility of the proposal, and consumer research to support the proposal based on viewer interest.

4070 In particular, without consumer research, the Commission has no basis to evaluate subscriber and viewer reaction to a fundamental change in the program format and prime time schedule. The proposed program changes also contradict the consumer research provided in appendix 1 of the original application which at that time concluded:

"Sports enthusiasts are interested in having a dedicated source for sports information."

4071 What viewer demand is this application trying to address? We have already seen that it takes away the core headline sports service for viewers in prime time every day, a service that has had success with Canadian viewers.

4072 What does it add to programming diversity? Headline states that it:

"-- intends to compete vigorously with TSN and CTV Sportsnet for programming, audiences and advertising."

4073 In essence, it will be looking to move existing programming from other networks on to its service. That's not diversity. That's a new outlet, simply creating incremental revenue for professional sports properties that already have a home on Canadian television. This cannot be viewed as beneficial to the viewer or the Canadian broadcasting system.

4074 It should come as no surprise then that the positive support for this application comes solidly from professional sports organizations who have these very rights to sell. The result is more competition for professional sports rights rather than enhanced service for Canadian viewers.

4075 We think you have heard enough about this over the past few days. Let us say that keen competition already exists in many forms for these rights and will continue to exist without the Headline Sports proposal.

4076 While we understand that professional sports generally would support a potential competitor for their rights, we are at a loss as to what the specific intervening sports teams actually have to gain. The Blue Jays already have 162 games on Canadian television. The Argos have no games to sell and neither do the Maple Leafs.

4077 What is clear to us is the lack of commitment anywhere in this application to amateur sports or independent production. To that end, there is only one letter of stated support by amateur sport and none from Canadian independent producers.

4078 MR. CRAIG: Madam Chair, I would like to depart from the script that you were handed to get on the record some points in response to what we heard this morning.

4079 Number one, it was a very interesting new presentation that we observed on tape. However, I would like to suggest to you that no sports team or league would permit their product to be presented that way in terms of preserving the integrity of their sport. We urge the Commission to ask the sports intervenors who are following us if in fact they would permit their sport to be presented in such a fashion. Other broadcasters are prohibited by contract to in fact do such things.

4080 Commissioner McKendry got into the cost on those ten Blue Jays games. I would just like follow up a little bit on that. If they did pay $150,00 a game for rights and $50,000 a game for production, they were into a cost base of about $2 million. I would like to share with you that TSN is able to get less than $100,000 a game in advertising revenue on our network with a larger reach and a full game presentation.

4081 Even if they were somehow able to get $100,000 a game, those ten games would put them into the red by at least a million dollars, just for ten games.

4082 We commend them for their amateur sports initiatives, the world class program this week in the CIAU and the love of sport. However, they need no licence amendment to include those types of programming in their current schedule.

4083 It's interesting to know that every network that comes before you seeking a sports licence identifies all those CIAU games out there that aren't covered by television. I think if you go back in the record probably every one of us have done that. However, when you get the licence you find out that they are not very commercial, there isn't an audience that will sustain the cost of production and they seem to fall by the wayside.

4084 Mr. Levy also mentioned that he does have a business plan incorporating a ramp up in live sporting events, and we are wondering why that business plan wasn't filed with the Commission, so that we could all understand the economics of this new proposal.

4085 The research component, they haven't supplied any research, but they talk about the 18 to 34-year old demographic not being satisfied with traditional sports broadcasting and I think used as an example only 22 per cent of viewers from that demographic watch hockey.

4086 However, the population of Canada in the 18 to 34 age group is only about 24 per cent, so that seems to me to be fairly representative of the population. The 18 to 34-year olds have less tuning than other age groups, we know that, at 22 per cent of viewing. That's the same percentage Headline Sports says view hockey. However, Nielsen's "Hockey Night in Canada" numbers are about 26 per cent of their viewers come from the 18 to 34 viewing category.

4087 The conclusion in all of this is that there is no evidence that the 18 to 34-year old doesn't like traditional sports broadcasting. We urge the Applicant if they do have research or focus groups to please file it, but we are concerned that they have perhaps made a miscalculation on the format value again and could very well, as the Chair suggested, be back for another bailout if this particular format doesn't work as well.

4088 In conclusion then, this is a very big country with a small market, and the Commission in its wisdom has created an orderly Canadian sports broadcasting market which serves the Canadian viewer well. There is a national sports specialty service, a regional sports specialty service and a headline news sports specialty service.

4089 The combination of these three levels of service together allow the Canadian specialty broadcasters to compete effectively with all the sports programming that is available from Canadian conventional broadcasters, U.S. conventional broadcasters, U.S. cable networks and U.S. superstations.

4090 Approval of the Headlines Sports application as tabled would significantly dilute the strength and the contribution of all three networks going forward.

4091 Madam Chair, what is clear to us is that had Sportscope put forward this component of programming in its original application three years ago, the Commission would not have licensed it. Why then should the Commission be expected to deviate from its stated policies today.

4092 Thank you for the opportunity of expressing our views. I would be happy to answer any questions.

4093 THE CHAIRPERSON: Thank you, Mr. Craig.

4094 Mr. Craig, if there was not a contractual impediment to showing live events the way we saw them on the screen, let's put that aside, the contractual ability to do it because, presumably, contracts can be changed, do you see -- with your experience in sports do you agree with an older person's comment that this may be unattractive to the viewers, against the previous panel's comments that that's not the way young people watch sports?

4095 I am talking here not of the contractual impediment to do it, but the appeal of it because you do some split screening as well. What is your experience about what the viewer will actually find attractive of live sports?

4096 MR. CRAIG: Madam Chair, I hope it's not the demographic that I find myself in, but I do believe --

4097 THE CHAIRPERSON: As old as me is a big problem?

4098 MR. CRAIG: No, no. I was being very cautious not to refer to the Chair's demographic.

4099 But I personally believe that the presentation as demonstrated would not develop large audience followings. In my opinion it wouldn't attract large components of advertising dollars, but I think you will have an opportunity to ask one of the members of the advertising community whether or not that's true when he comes up as an intervenor.

4100 But it certainly would be a very small component of the audience that would find that attractive, but what would be missing, in my opinion in that, and what is there now with the carefully constructed orderly market, that a viewer in Canada can be watching a Blue Jays game on some other channel and if wants to get at any time of the evening the up-to-date scores and the highlights from other games, has an automatic switch to Headline Sports for a minute or 90 seconds and then back to the game and that's the element that is going to be missing.

4101 It was a very strategic component, I think, of the Commission's building of the Canadian specialty marketplace that put that component in place. What I see throughout prime time is that that component for the viewing public will be missing.

4102 THE CHAIRPERSON: Mr. Craig, if there were a way of insisting that this the way it would look -- in other words, they wouldn't depart from their mandate quite as much as they would if they showed live events the way you show them, if we could request that and insist that that's kept -- that that's the way it is done, would that remove your concern?

4103 MR. CRAIG: If there was a condition of licence that live sports didn't ever occupy maybe more than one-third of the screen, why not.

4104 THE CHAIRPERSON: And would it matter whether it would be script or actual voice? In other words --

4105 MR. CRAIG: For the other portions of the screen?

4106 THE CHAIRPERSON: A reporter with a microphone talking about something else. If it were just alphanumeric superimposed that would be enough to alleviate your concerns of having changed the format?

4107 MR. CRAIG: I think I would leave that production decision to them. I think what they would be concerned about is limiting the disruption for the viewers, whether they are seeking sports information or whether they are actually looking at the game.

4108 THE CHAIRPERSON: But your concern is that they not be TSN?

4109 MR. CRAIG: Absolutely.

4110 THE CHAIRPERSON: So I am asking you what is it that we could do to prevent them from being TSN and to make good their claim that they are not moving away that much from their format.

4111 MR. CRAIG: Well, they told us that they would be running the scores underneath on the banner throughout their entire presentation of the game. In fact, all sports networks do squeeze backs and do headline and score superimpositions at the bottom of the screen. Sportsnet does it, TSN does it, RDS does it. That's a normal technique to keep people watching your game and the presentation that's on your network.

4112 So that in itself isn't the uniqueness of what attracts the viewer to headline sports. It's the up-to-date highlights and comment that occurs inside that 15-minute wheel on an ongoing basis throughout prime time. That, I think, is what the missing element will be in the presentation.

4113 THE CHAIRPERSON: You have been involved with a sports channel for a long time. What is your view of the ability to sell time to advertisers on the basis of a demographic that is even -- even if you could show that you have it below 18? Well, I guess measurements are made from 12 on. Right?

4114 What is the ability to sell advertising in sports programming on the basis of a demographic below 18?

4115 MR. THOMPSON: Madam Chair, if I may answer that, all advertising is sold on the size of the audience.

4116 THE CHAIRPERSON: Not pitched to a particular --

4117 MR. THOMPSON: Well, we certainly focus to where we have a strong demographic. In our situation it would be men 18 to 49. However, there are other demographics, adults 25 to 54 is a very popular demographic for sport, as women viewers actually count for over 40 per cent of our viewing audiences.

4118 But regardless of that, we have to have large numbers and good, very solid demographic numbers in order to attract the advertisers and in order to give them the value that they believe they have acquired from us.

4119 THE CHAIRPERSON: Mr. Craig?

4120 MR. CRAIG: Madam Chair, I don't believe there is a market in sports broadcasting for below 12, or the 12-to-18 even. But again, that is another question perhaps that the intervenor coming behind us could respond to more categorical than I.

4121 The other thought that this format conjures up -- and I don't know where it is. I know that there are all kinds of difficulties at the moment with someone offering broadcast signals on the Internet.

4122 I do believe that on your own Web sites exactly what we saw presented this morning is what most broadcasters are going to be presenting on their Web sites, on the Internet, with the copyright intact for those young people who are into the computers and the Internet to watch and keep an eye on sports while at the same time they are doing other things. We don't need a channel to do that. That is where the Internet is going to take every one of us as broadcasters.

4123 THE CHAIRPERSON: Mr. Craig, in your presentation you skipped part of a page, the part about the CBC. Was that in the interest of having enough time?

4124 MR. CRAIG: Time.

4125 THE CHAIRPERSON: Not because you are abandoning that proposition.

4126 MR. CRAIG: No, not at all.

4127 THE CHAIRPERSON: In that case, would you expand on your question marks about their proposed program supply agreement with the CBC.

4128 MR. CRAIG: Madam Chair, we are curious about that proposed program supply agreement. In fact, the Canadian Broadcasting Corporation has conventional broadcast rights in most of the professional categories of NHL hockey, CFL football, Olympics, Blue Jays baseball, curling and auto racing. Those are the ones that we listed. But they have no ability to offer those programs or elements of those programs to a cable network.

4129 I guess our question mark was that that must mean that the CBC's proposed program supply with this organization, with the applicant, probably falls more in the category of amateur sport.

4130 We are still wondering, without a program schedule from the applicant, exactly what those components might be.

4131 I guess recognizing -- and this is not cast in a disparaging way, but Mr. Thompson and I both know anyway, from personal experience, that the CBC's cost of production is the highest in the industry. Hopefully in any supply agreement that the CBC might have with the applicant they would be at least recovering all of their costs and not subsidizing this applicant in the area of amateur sport.

4132 THE CHAIRPERSON: Can we take it from -- let me first say that some comments have been made in interventions and again this morning in the questioning about the fact that we don't really know, and the Sportscope panel didn't seem to be able to provide very much detail about what it is that they are going to show. And it is obviously based on acquiring rights, et cetera.

4133 Can we take it from the fact that NetStar has not only intervened in writing but stayed with us longer -- I know you like us -- that you are concerned, and in fact they will be able to achieve that to buy rights to interesting programming that will be competitive with what you show?

4134 MR. CRAIG: Madam Chair, the answer to that is yes.

4135 THE CHAIRPERSON: That you like us.

4136 MR. CRAIG: That we like you. And a yes to your question.

4137 We know there are some contracts -- and in fact, I would suggest the urgency of this application rather than going through the process of applying as a new specialty service that is open to the applicant at any point in time or waiting until licence renewal, which is when usually a modification of this magnitude might be considered in a licence, there are, as we speak, rights coming up in major league baseball that are under negotiation right now.

4138 We know that this applicant has some direct ties with major league baseball.

4139 It is very difficult not to suspect that this would be an area of interest for the applicant almost immediately.

4140 THE CHAIRPERSON: By the interest, you mean through the radio rights.

4141 MR. CRAIG: Yes, and past associations.

4142 THE CHAIRPERSON: I know that you have made it clear that you were appearing here just on behalf of NetStar. Nevertheless, NetStar was before us yesterday asking to change its ownership, which would have some result obviously.

4143 Would your answer to the ability to get rights be any different if that application were approved?

4144 MR. CRAIG: No, not at all.

4145 THE CHAIRPERSON: Then would you have the same view of this application if the other proposal were approved?

4146 MR. CRAIG: Madam Chair, the answer to that is yes, because I see a balanced and orderly broadcasting market being disrupted. I liken it to --

4147 THE CHAIRPERSON: That's what we heard yesterday.

4148 MR. CRAIG: I liken this applicant's request to expansion in the NHL. It seems like a good thing at the time, but the result is a diluted product across the board.

4149 I believe that that will happen if this applicant's request is supported by the Commission.

4150 THE CHAIRPERSON: Commissioner McKendry?

4151 COMMISSIONER McKENDRY: Just a quick question to help me understand the world of making money from acquiring sports rights.

4152 You mentioned that the Blue Jays game cost you, I think in total, $200,000: $150,000 for the rights and $50,000 to produce it.

4153 MR. CRAIG: Our rights -- because I think you heard yesterday from both the Blue Jays and major league baseball that we were able to negotiate a slight reduction in our per-game rights cost. It is over $100,000 but it is slightly less than $150.000.

4154 It is worth noting, as we go through that, that the clause that allowed us to do that was negotiated with major league baseball at a time when the Blue Jays and TSN had common ownership, and it was put into our contract with the Blue Jays, with Labatts' full knowledge, to in fact provide the broadcast side of the Labatts' arm with some latitude if product decreased in viewer appeal and market appeal.

4155 That happened and we exercised that clause, much to the Blue Jays' -- and at the time Mr. Beeston's -- chagrin.

4156 I believe the 40 games that Sportsnet purchased were in the neighbourhood of $130,000 to $150,000.

4157 COMMISSIONER McKENDRY: My question related to the fact that you went on to say, I think, that at most you collected $100,000 in revenues.

4158 MR. CRAIG: I believe this year it was $85,000 a game.

4159 COMMISSIONER McKENDRY: My question, just to understand how this world works, is: Why would you show baseball games?

4160 MR. CRAIG: Because we need that product in the summer, as we need NHL hockey in the winter, to gain carriage with our cable partners and DTH partners, to get on to the dial in an advantageous way, to attract viewers.

4161 That kind of product allows us to command the type of subscriber fee that we get from the cable industry, that allows us then to provide the mandated programming, the amateur sports programming that costs a lot to produce as well but doesn't attract the advertising dollar.

4162 The NHL and the Blue Jays are must-have product. And that is why, wearing another hat yesterday or the day before, Monday, my colleagues and I expressed to you that the teams offering regular season games in Canada, whether that is the Blue Jays or the Leafs or Canadians or Ottawa, have a ready-made buyer because we have to have that inventory in our schedule.

4163 Our bargaining power, in terms of the rights to those properties, is minimal.

4164 COMMISSIONER McKENDRY: Why wouldn't the same model, then, work for Sportscope?

4165 You have made a point that it would cost them more to acquire these rights than the revenues they could generate. The situation you are in, you said, as I understand your answer, "It is integral to our ability to offer an overall product that will drive our subscriber rates and allow us to fill our schedule" and so on. So why isn't that model applicable to Sportscope as well?

4166 MR. CRAIG: Principally, because that is the model that we applied for a licence to in fact deliver and a business proposition that we in fact applied for. That is not the business proposition that Headline Sports applied for and was granted a licence.

4167 COMMISSIONER McKENDRY: Thank you.

4168 THE CHAIRPERSON: Commissioner Cram.

4169 COMMISSIONER CRAM: Thank you.

4170 I'm really interested in this demographic, the 12-to-18-year old, the babies of babyboomers who I think are going to overwhelm us one of these days, and the concept that, if I understand correctly, a lot of American sitcoms are doing is sort of targeting them and essentially grooming them in terms of viewership because they believe that they have a lot of disposable income and will have more. It seems to me that that is sort of almost intrinsic in this business plan. Do you not believe that that concept has merit?

4171 MR. CRAIG: I think it is a risky business proposition with the high cost of sport. I can tell you -- at the risk of getting into WTN and prime discussions about carrying sports -- I can tell you --

4172 THE CHAIRPERSON: Absolutely no convent will have me. Don't worry.

--- Laughter / Rires

4173 MR. CRAIG: I can tell you of an actual example where YTV looked at carrying some Blue Jays games and putting some youngsters into the broadcast booth to talk to that demographic of viewer in their own language and abandoned it predominantly because of the cost and perhaps some research that they did to see whether it would float.

4174 I think the same thing has been done with MBA. Jim, is that right?

4175 MR. THOMPSON: Yes.

4176 MR. CRAIG: But it doesn't prove to be a viable business proposition.

4177 COMMISSIONER CRAM: I guess my question is, then, you are saying only with sports it is not a viable proposition?

4178 MR. CRAIG: I don't know about the sitcoms. I really can't speak to that, Commissioner.

4179 COMMISSIONER CRAM: Because, frankly, it would seem to me that what you are worried about is getting my nephew, who does multi-task -- and I wonder if he has an attention span of more than a nanosecond -- you are trying to get him to, in 10 years or 15 years, watch, for example, TSN. I don't know if you can tell now -- you would have to do a longitudinal study almost over 10, 15 years to find out if the investment paid off.

4180 MR. CRAIG: I can tell you, Commissioner Cram, that one of the ways that we are attempting to address that issue, and I believe other broadcasters are too, is through the Internet. We are using the Internet to retain viewers, to have viewers interface with our commentators throughout the program, ask questions, be answered questions, give them specific statistical information to different demographics and utilizing the Internet extensively to in fact: (a) attract that youngster, first of all, as a viewer, and then give him the interactivity that he is looking for with our programming and hopefully hook him on Blue Jays baseball, as a young adult, through his adult life.

4181 THE CHAIRPERSON: Thank you very much.

4182 MR. CRAIG: Thank you.

4183 THE CHAIRPERSON: Madam Secretary.

4184 MS SANTERRE: Thank you, Madam Chair.

4185 Now I would like to invite the Toronto Blue Jays Baseball Club with Mr. Pollock to present his intervention.

4186 THE CHAIRPERSON: Welcome back, Mr. Pollock.

4187 MS SANTERRE: Mr. Pollock, could you open the -- is the microphone open? Okay.

4188 MR. POLLOCK: I'm sorry.

INTERVENTION / INTERVENTION

4189 MR. POLLOCK: Madam Chair, Commissioners, thank you very much for this opportunity to intervene this morning.

4190 First of all, let me say that we support the application of Headline Sports. But before I get to that, I want to make sure that everybody understands that this doesn't conflict in any way with our submission yesterday that we strongly oppose the joining of Sportsnet and TSN and we certainly feel that they should remain separate and not create a monopoly.

4191 We view Headline Sports as a niche network and, as described by Mr. Levy, they are certainly well down the chart at this time in viewership, but they expect and I'm sure will grow that through time.

4192 I have heard a great deal of talk here about the Blue Jays and I certainly want to clear up a few points. I keep hearing about 10 Blue Jays games. I don't know where that is coming from or what the rationale for it is because we don't have 10 games to sell. We have sold all of our games this year.

4193 I think how this came in was that Sportsnet is covering the first elimination series to the National Hockey League, which conflicts with about two weeks in April and possibly three or four games. So I think when Mr. Levy was referring to teams -- his organization acquiring shelf inventory, he was talking about acquiring shelf inventory from broadcasters, not from us.

4194 Also, I was very interested in NetStar's comments about their existing contract. First of all, the contract -- and you can read it very clearly, it is in black and white -- had nothing to do with viewing audience, as to the reduction in the rights fees they paid. It had all to do with no competition. If there had have been competition, they couldn't have reduced the rights.

4195 They also, I think, to me, left the impression that Major League Baseball was the ones who negotiate contracts. Major League Baseball, the National Football League, the National Hockey League doesn't negotiate individual teams' rights. The teams do that. But all leagues have to approve all television contracts of their various members. So I wanted to make that point very, very clear.

4196 You might ask me where do I see Headline Sports acquiring any Blue Jays games? Certainly in the next two years the only possibility that I could see would be in the renegotiating of some party, some existing broadcaster, to that contract.

4197 Another situation that -- and this is like one game type of thing -- CBC, being a conventional broadcaster, has a force majeure contract. For example, if there was a coronation of the Queen or something or a death of the Queen, or something of that nature, they could opt out of a particular game. Now, obviously, if that game was like a July the 1st game or a prominent Saturday afternoon game or something, I'm sure that, being the good partners they have always been, they would come and talk to us and explore with us other opportunities. But, as I said, that is a remote -- that is, you know, a one-off situation.

4198 What can happen in 2002 and onward, of course I'm not able to predict. But I very, very much doubt that Headline Sports would be able to acquire any more than three or four games and then they would probably acquire them through -- from existing broadcasters who had those rights, and they would first have to negotiate with us to offload those games.

4199 Having said that, the strength I think of this application to a sports club is that one of the things that intrigues me the most is that when you are watching Headline Sports they always say: Tune in to CTV/Sportsnet or CBC and watch the game live. That is a big thing for us. They are promoting our game literally on another network. So if they were to have a live broadcast as part of that, whether it be amateur or some professional sport -- like, if it was CFL or a Raptors local game or something like that -- that would drive more viewers to watch our game, and, in any event, it would give us more publicity that we are playing and the Toronto Blue Jays' name keeps getting mentioned.

4200 I'm certainly not an expert in the demographic field and that, but I'm sure Headline Sports have done their homework carefully, and if, as they say, I have no reason to doubt it, that this skewed towards young fans, then that also benefits us greatly because children tend to get their parents to take them to games and of course that is a very, very interesting and important aspect for us.

4201 I guess it's the case, the more times your name is mentioned the better it helps you to sell your product.

4202 But we see them very much as a niche network, a very important network. We feel they should be given the opportunity to grow. If they can acquire some professional sport -- it will be difficult for them because, as I said, there is not much shelf inventory out there right now other than, I think, the CFL and probably Toronto Raptors home games, and I'm not even sure of that. But it will give them an opportunity to grow. They are not going to be able to get in there extensively, as they have outlined, it will have to grow in time and they will have to see what rights are available.

4203 I think that is the important thing, that rights are contracted usually for three or five year periods so it is going to take them time to find out what is out there for them, whether it be amateur or professional, and it is going to take them time to negotiate and acquire the various inventory that they need.

4204 I think that basically sets out our position, and I hope I have clarified some points that were previously mentioned that weren't on target and I would be very pleased to answer any questions.

4205 THE CHAIRPERSON: Thank you, Mr. Pollock.

4206 Commissioner Noël.

4207 COMMISSIONER NOËL: I think you have answered a couple of the questions I had before I even had time to put them to you.

4208 So you don't have any games to sell, or game rights to sell for the time being or not for the next future years?

4209 MR. POLLOCK: Not in the next two years.

4210 COMMISSIONER NOËL: Not in the next two years, okay.

4211 You and other rightsholders have stated that Headline Sports has a very innovative and unique and attractive approach.

4212 Could you comment on whether the live programming is necessary or essential to a successful headline highlights sports service?

4213 MR. POLLOCK: Well, you know, I am not a broadcaster, that is not my niche, but I think I have had a lot of experience, over 50 years in professional sport, and change has always taken place. You know, the old saying that kids go marching on is pretty true.

4214 I think that what they are proposing is something new. It's not totally and completely new, but it is something new. I think it is a good idea and I think it would appeal to young people.

4215 But, you know, as far as professional sports -- and I'm answering another question that may be asked -- seeing it on the screen there right now, yes, it looks good, but it would certainly take some negotiating, you know, and some further study just to see how it would impact professional sport.

4216 Like we see a different -- I see a different situation here. They have been very clear on what they have said. It's very limited. They are talking maybe five games, three games for example -- I will stay with Blue Jays baseball -- then they are going to acquire that from one of our existing partners.

4217 Well, the only way that one of our existing partners is going to want to do that is for some reason they have a stumbling block. That stumbling block, for example, could be -- in the present instance the only stumbling block is really Sportsnet because they have this two week window in April and if the other two networks, the CBC and NetStar, if they make a selection of games and leave these guys sitting with those two weeks, obviously they have a problem. Right now the only thing they can do is offload that onto their CTV network. That is maybe difficult.

4218 So I can't say what Sportsnet would do in that -- right now that's all they can do. They would have to come to us if they wanted to offload those games to Headline Sports.

4219 But basically what we have said, we would like to have all of our games on TV. We want full exposure. I think it's important to note here that we do have full exposure now for the first time. Previously, you know, TSN has made the statement: Well, they have to have baseball. Yes, they have to have baseball, but how many games? They restrict themselves to a certain number of games.

4220 When Sportsnet came along we were able to sell that other inventory in a large block, in a block of 40 games. Not three games, not eight games or 10 games but in a block of 40 games.

4221 So it is the exposure that we like and we don't think that at least some of our partners would want to have a black Blue Jays game because they are in a particular bind than have it shown. That is only my assumption. I can't speak for them.

4222 COMMISSIONER NOËL: You heard Mr. Craig mentioning that maybe the professional sports teams would not like the kind of format. You have seen some of the format that has been proposed on the video.

4223 Could you comment on that?

4224 MR. POLLOCK: Well, I mean, I have only seen it for the first time here and it is very generic, to say the least. I would want to see it further. I would want to see just how it would apply to our product.

4225 What they might do for us might be completely different than what they would do in an amateur situation. If we negotiate -- if one of our current partners, for example, came to us and had a particular reason that they needed to offload a game or two and we were to agree with that, we would certainly want to participate in exactly the format that would be shown. You know, it's possible they could deviate a little bit to meet our needs.

4226 So on basis, you know, the current -- it looks interesting but, as I said, when it happens it would be up to the negotiation.

4227 I don't like to deal too much in hypothetical possibilities at this point.

4228 COMMISSIONER NOËL: Thank you.

4229 Do you have any assurances that Headline Sports would eventually compete for coverage of your events? Did they give you such assurances past 2002 when you have some rights to sell?

4230 MR. POLLOCK: We have never talked to Headline Sports about them acquiring Blue Jays rights, as we haven't talked with anybody else, because, as I said, we have three excellent current partners and that just wouldn't be the right thing to do.

4231 We wouldn't enter into talks at this time with anybody else, including Headline Sports, about acquiring our games because, as I have said, we have sold those games right now and it is our hope that we are able to retain these three wonderful partners that we have.

4232 COMMISSIONER NOËL: You expect repeat business with them?

4233 MR. POLLOCK: We would love -- we want very much and I'm sure we will have it if there is no monopoly created.

4234 COMMISSIONER NOËL: Thank you very much, Mr. Pollock.

4235 MR. POLLOCK: Thank you.

4236 THE CHAIRPERSON: Thank you, Mr. Pollock.

4237 MR. POLLOCK: Thank you.

4238 THE CHAIRPERSON: I understand you are leaving us now.

4239 MR. POLLOCK: Yes. Not that I don't like your company at all. I enjoyed the hearings very much.

4240 Thank you very much.

4241 THE CHAIRPERSON: I'm sure we will need at least some illumination from the magi before we give any decisions on these applications, but we have enjoyed having you.

4242 MR. POLLOCK: Thank you.

4243 THE CHAIRPERSON: Thank you.

4244 Madam Secretary.

4245 MS SANTERRE: Thank you, Madam Chair.

4246 The next intervention will be by Harrison, Young Pesonen and Newell Media Management.

--- Pause / Pause

4247 THE CHAIRPERSON: Good morning, Mr. Newell.

INTERVENTION / INTERVENTION

4248 MR. NEWELL: Good morning. It is still morning.

4249 My name is Doug Newell and I am a Vice-President with Harrison, Young Pesonen and Newell.

4250 Our company is involved in the advertising business. We buy advertising of all sorts from television, radio, outdoor newspaper, magazines, the Internet. If can advertise it, we will buy it.

4251 As a result of our interest in these hearings -- I think this is the tenth time that I have appeared in front of the Commission -- our appearance here is -- we wrote in support of the application and we asked to appear in person.

4252 Our appearance here is in support of Headline Sports. It is not against anyone else. In fact, in the previous nine times that I have appeared before the Commission, I think every time we have been trying to do good as opposed to build -- to build as opposed to tear down something that already exists.

4253 In that regard I would like to make a comment about competition.

4254 I read with a great deal of concern about the Air Canada battle, takeover, merger, whatever it was that happened recently, and about the concerns that the union have expressed about destructive competition.

4255 In my viewpoint and to my experience and knowledge, I don't think competition is destructive. I believe in fact competition is what has resulted in our western economy being the leading in the world. It has done great things for Canada and for North America and for western culture. To have competition described as being destructive I think is wrong.

4256 I'm not opposed to growth or I'm not opposed to growth by merger. In fact, our company itself was acquired by another company, so it would be very hypocritical of me to stand here before you and say that this is a bad thing. I don't think it is, but I think a reaction or a concern about competition being destructive is totally off target.

4257 I do support competition. I think I have appeared here before many times saying I would like to have more stations.

4258 Lastly, I would also like to say that we support commercial broadcasting in Canada. I think the fact that we are different than Americans, that we have huge hours of tuning to American programming and foreign programming that it's important that the work that the Commission does to foster Canadian identity and Canadian culture and I support very much these hearings and the work that you do.

4259 Thank you.

4260 Now to my presentation.

4261 Conventional broadcasters have been reducing their coverage of Canadian sports. We did a study that started in 1995-1996 broadcast year. We did it in Toronto because it's very difficult the way that audiences are recorded in Canada to have homogeneous information across the country, so we restricted our study to the Toronto area only.

4262 We studied CBLT, CFTO and Global. We used the Nielsen 52 week measurement data. What we discovered was in the 1995-1996 broadcast year, there were 930 hours of live sports, Canadian sports, that were broadcast. By 1998-1999, those hours had been reduced to 721 hours.

4263 The point I'm making is that I think as a result of this there is certainly an opportunity to increase the amount of current sports, Canadian sports, that is being aired.

4264 Secondly, live sports, live Canadian sports as a program genre performs very well. The same technique that we used to find the number of hours we used to study the top ten Canadian live sports shows. On average in the Toronto area, they averaged a rating of 5.5 adults 18 to 49.

4265 If you study the top ten U.S. sports in that same geography and against that same target audience, the average rating was 4.3. Therefore, Canadian sports performed very well vis-à-vis the American sports counterpart.

4266 I think that's interesting because if you take a look at the drama genre or the comedy genre and compare Canadian comedy or Canadian drama with American comedy or American drama, you don't see the same situation at all. In fact, we did the top ten Canadian drama or comedy shows in the same period and it averaged a 2 adult 18 to 49 audience while the top ten Canadian drama or comedy shows averaged a 7.7.

4267 The conclusion that we are drawing is as a program genre, Canadian sports is very popular, much more popular than comedy or drama. Therefore, it is being underserved at the present time because conventional broadcasters have reduced their coverage on it.

4268 We think that this is an important piece of information for the Commission to consider. We think that approval of the applicant's request to change the licence will correct this situation. They have indicated that they will by promising at least 50 per cent Canadian coverage.

4269 The last point I think I would like to make is that if they do this, will this be a good thing for them? I believe the answer is yes because if they run live coverage instead of the 100 per cent headline news coverage that they are currently running, I believe that their audience will go up.

4270 We took a look at the top ten Canadian sports shows. They averaged a 5.5 rating against adults 18 to 49. Now, trying to isolate sports news out of a newscast is a difficult thing to do, but we took some news programs, some pre-show games, post-show games, press coverage, that kind of programming that was run during the year and the average of the top five shows, the top five not the top ten, was a 1.1 or about one fifth of the size of a live game coverage show, the point being that live games are going to increase the audience that Headline Sports will garner.

4271 As a result of increased audience I think, therefore, there will be higher advertising revenues that will be attracted to that station.

4272 Reduced competition in specialty will, I think, further erode the availability of live sports programming in the genre. While I am saying I'm not against what TSN and CTV and Sportsnet are trying to do, I am against anything that would reduce competition. I don't think that it's in the interests of Canadian broadcasters, the Canadian broadcast system or Canadian advertisers.

4273 Higher commercial audiences are good for the Canadian broadcasting system. Advertiser spending chases higher audiences. It always has, it always will. Higher commercial audiences mean higher advertising revenues and higher revenues means that Headline Sports will have more money to invest in Canadian programming, and that's not a bad thing.

4274 In summary, there is room for more live sports coverage, especially Canadian coverage. Live Canadian sports is more popular than comedy or drama or sports news and live sports will increase Headline Sports' audience and revenue. Therefore, we are asking you to approve the application.

4275 Thank you for your attention.

4276 THE CHAIRPERSON: Thank you, Mr. Newell.

4277 Commissioner Noël.

4278 COMMISSIONER NOËL: Mr. Newell, I have a couple of questions that maybe relate to what has been said earlier.

4279 You heard Mr. Pollock saying that his rights are sold until 2002. From what Mr. Thompson was saying, apparently the Toronto Argonauts and not the Astronauts as I was saying yesterday -- I'm a football fan, you see.

4280 The Argonauts or the Maple Leafs don't have any inventory to sell either or inventory of rights to sell. What do you think could be purchased in terms of live sports that would attract advertisers in the short term in view of the fact that all these rights are already committed for at least a two year window?

4281 MR. NEWELL: I am not familiar with the details that you have outlined. I'm assuming that what you have said and what I have heard being said is absolutely correct, so I will respond with that knowledge.

4282 COMMISSIONER NOËL: I take it from their presentation of this morning.

4283 MR. NEWELL: Yes. I will too. I don't have information to the contrary.

4284 The acquisition of rights, whether it be sports rights -- for broadcast rights -- whether they be sports rights or programming rights of other genres are generally done over a longer period than one year. I think this is a case that is being discussed currently.

4285 The rights that are in existence have a term to expire. I think Mr. Levy indicated that -- he said that he would be active in the renewal. I understand that Mr. Pollock said that he would like to renew his incumbencies. I think that's a standard programming process. The incumbents get first rights and competitors are allowed to bid for rights at the expiry.

4286 I don't think that that is an unusual situation. As to what they will do, it sounded to me like Mr. Levy and his group were saying that they would go slowly and acquire what they could acquire on a relatively short term basis so that they would be in a position to bid aggressively and competitively, which I think are good things, for properties that are going to get high audiences.

4287 Did I totally avoid your question?

4288 COMMISSIONER NOËL: Let's put it another way. What would be the attractiveness to advertisers of amateur sports rights?

4289 MR. NEWELL: If amateur sports produce large audiences, then it will be a good thing. If they produce small audiences, we will pay small money to do them.

4290 There are some circumstances where either because the produce is so much affiliated with the sport in particular, perhaps footgear or some of the implements that they might use in the sport themselves, in those circumstances there perhaps might be a must buy type of situation and, therefore, the amount of money that advertisers would be willing to pay would be premium, as opposed to the norm.

4291 But I would think that amateur sports is not well represented currently. I think, initially, the audiences would be rather small and I think the revenue, therefore, would be small also.

4292 COMMISSIONER NOËL: You mentioned that with more viewership there would be a possibility for Headline Sports to attract new advertising dollars to television, or --

4293 MR. NEWELL: I didn't mean to say that, I am sorry if I gave you that impression.

4294 I said that they would increase their advertising revenues.

4295 COMMISSIONER NOËL: Would it be new advertising dollars, or would it be taken out of other broadcast --

4296 MR. NEWELL: I understand your question.

4297 New advertising dollars are not generated, I don't believe, by new licences. I think new advertising dollars are generated by new products, new need, new consumers, and the advertising dollars will chase those media that deliver those customers.

4298 So, no, I do not believe that your licence decision will result in increased, substantially increased advertising dollars. I think the evidence that the Commission has in the past is that whenever you have given a licence there hasn't been that kind of upsurge, but certainly the decisions that you have made in the past 10 years with regard to specialty have changed the face of Canadian broadcasting and television in particular for the positive.

4299 COMMISSIONER NOËL: In your written intervention you mentioned that you had some concern over the proposed consolidation of TSN and Sportsnet. Could you emphasize on that?

4300 MR. NEWELL: Do you want my final answer?

4301 COMMISSIONER NOËL: Yes.

4302 MR. NEWELL: Do I have a lifeline?

4303 My concern is simply in the matter of reduced competition. It is not in any way reflecting on the application that they made or in any way reflecting on their ability to manage their businesses.

4304 I believe, as I said at the beginning of this presentation, in competition and I am against things that reduce competition and that was the substance of my comment.

4305 COMMISSIONER NOËL: Would you say that the approval of this application, the Headline Sports proposal would alleviate some of those concerns that you have?

4306 MR. NEWELL: Yes.

4307 COMMISSIONER NOËL: You have stated that you support Headline Sports' application because it will add to the competitive landscape and increase the amount of live sports events inventory available to advertisers. Can you comment more on the pros and cons of having multiple sports services and whatever it is, more attractive to advertisers when those services are competitive or complementary?

4308 MR. NEWELL: Well, I don't want to make a speech here, but for some reason or other in Canada we believe in the family compact, and that is if we can control things and reduce competition and keep it all amongst ourselves it will be good and the country will survive and flourish.

4309 I don't think that is what our history is all about at all. I think our history is about globalization. Certainly, we have a large country. We have a small population. We have unique problems in Canada. One of the ones we face right now is we need electronic measurement in all the markets across Canada and it's just not going to be affordable.

4310 So, there are proposals for monopolies and industry supported tripartite organizations and whatever and we do have special solutions and special needs in Canada.

4311 I am in favour of competition. I think it makes us all more creative. I think it provides things for the future of our country and to our population and the Canadian public that wouldn't be done under a controlled and uncompetitive environment.

4312 So, I support competition. I don't particularly like it, but I support it. I think it's good for us. I think it keeps us healthy and smart and producing the best that we have to offer in a world environment.

4313 COMMISSIONER NOËL: I will ask you to extrapolate a little bit. We have been talking about sports for most of the last few days. Would you say that your perspective applies only to sports or would it apply to all programming genres should we have competing programming genres in different types of specialty TV or conventional TV, more competing or more complementary?

4314 MR. NEWELL: I think we do have that already, Madam Commissioner. I mean, as a viewer I know that the specialty licences are up the dial to a large extent, in that the conventionals are down the dial to a large extent, but as a viewer my kids know where to find the WB on the cable channel. They know where to find the superchannel out of Atlanta. They know -- they find their way around. I don't think that they see a difference between the various windows of communication that are available to them.

4315 So, I think we already have competition in drama and in comedy and in the other programming genres that you regulate. I think it also applies to sports though as well.

4316 Certainly, you can get a lot of sports through pay per view and I think that's worrisome to me to a certain degree because it takes hours of tuning away that could be supported by advertising revenues which do provide jobs to people, helps sell products, put a lot of money in the Canadian economy and when hours of television are non-commercial that's not beneficial to our country or to the Canadian broadcast system.

4317 COMMISSIONER NOËL: Thank you.

4318 I have no more questions.

4319 THE CHAIRPERSON: Commissioner McKendry.

4320 COMMISSIONER McKENDRY: Did you have an opportunity to take a look at the video that was shown this morning?

4321 MR. NEWELL: Yes, I did.

4322 COMMISSIONER McKENDRY: From your perspective as an expert in advertising does that format appear to be an attractive format from the advertising perspective?

4323 MR. NEWELL: I'm in Mr. Pollock's demographic, not the Chair's demographic of course.

4324 Do I personally find it -- you didn't ask me that. You asked me professionally. Yes, I think it is. I think it's an inventive, creative way of presenting information.

4325 I don't like it personally, but it has its place. It is used not only in sports, but in financial reporting as well. CTV uses it, CNBC uses it, CNN uses it and, as Mr. Craig said, enlarging the screen and popping down the size of the screen are techniques or production values that are not new.

4326 When you put it all together from where I was sitting and watching the screen over here, it looked rather busy, but television, as you know, is not a family viewing situation any longer. It's a personal viewing situation. We tend to be quite close to the monitor when we are watching. So, I am assuming that it's going to be acceptable to -- as an advertiser I would assume that it's going to be acceptable to the audience.

4327 What I might say though and you haven't asked me and I will get my negotiating hat on here, is that it probably won't be as attractive financially to me because a big page might be worth more to a print advertiser than a small page, even though a page is a page. So, therefore, a busy screen may not be as attractive as an unbusy screen.

4328 TSN might be able to get a higher per unit rate than Headline Sports might be able to get per viewer because they've got a larger screen and Headline Sports has got a smaller screen. I am sure I will be negotiating with these people on those kinds of basis as in the future should you grant their application.

4329 COMMISSIONER McKENDRY: Would you have expected that this would be the kind of research that Sportscope would have undertaken in developing this format?

4330 MR. NEWELL: I am absolutely sure. I don't know why they haven't revealed it, but I am convinced that before they make these recommendations to you that they have done research that would make this viable, or that would prove that this is viable.

4331 I am sure this isn't Mr. Levy's grandmother research. There is just too much at stake for it not to be done.

4332 COMMISSIONER McKENDRY: We have a grandmother on the panel, so we need to be a little careful here.

4333 MR. NEWELL: Grandperson.

4334 COMMISSIONER McKENDRY: I wanted to ask you one question about competition because you have emphasized that's very important from your perspective. The Commission's current policy is not to allow competition within a genre, so even though there are three sports channels, Headline Sports, TSN, Sportsnet, they were licensed to complement each other, not compete with each other and that's the environment that exists today.

4335 If Sportscope's application was approved it would tend to, or some might argue that it would tend to erode that complementarity and allow more head-to-head competition, in the sense that they would be programming live sporting events in prime time against TSN or Sportsnet who are also programming live sports event in that period. Does that expand the audience, the total audience for sporting events, or does that contract the total audience for sporting events by breaking down those complementarity divisions we have put in place?

4336 MR. NEWELL: That's a very good question. My experience is that audiences have a given number of hours a week or a day -- a week is probably a better time frame to look over it. They have a given number of hours that they are prepared to spend doing something with media, whether it be newspapers, whether it be magazines, outdoor radio, whatever.

4337 What we have found is that -- and I think this does support what Headline Sports has been saying, is that younger audiences have been spending less time with mass media, with television and radio and spending more time with new media, and it is a problem for the mass media that they have to address. I think they are addressing it to a large extent.

4338 Specifically to your question, in the 25 hours or 22 hours, or depending upon the demographic that you are looking at, in the given the number of hours that the audience is prepared to spend with the medium, I think the number of hours that are spent with a program genre will depend upon the individual, the cyclographic attitudes of the individual and also the quality of the programming that is available.

4339 If everybody does a good job, I think sports audiences could increase. If the job is less attractive than competitive alternatives, then it could benefit drama or comedy.

4340 But right now I would bet on the sports thing going up, if they do a good job.

4341 COMMISSIONER McKENDRY: Thank you.

4342 MR. NEWELL: My pleasure.

4343 THE CHAIRPERSON: Commissioner Cram.

4344 COMMISSIONER CRAM: Thank you.

4345 Mr. Newell, I am not the grandmother, just for the record. However, I did want to talk about babies and babies of babyboomers, as you have heard me before.

4346 If I have it correct, you are using Nielsen data here. Does that track from 12 up?

4347 MR. NEWELL: The data is 2-plus.

4348 COMMISSIONER CRAM: You are talking about younger audiences and spending less time on the media.

4349 Do you think this kind of a format would attract a younger audience and would essentially, as I was talking about before, sort of groom them to stay with that service from here to eternity, for the quick hit?

4350 MR. NEWELL: I am going to answer the question, but I just want to tell a little story first, if I could.

4351 It is actually an interesting hearing. Mr. Pollock used to be my boss, very indirectly, way back when. Mr. Craig and I were owned by the same people at one point in time. This is quite an incestuous little gathering we have here.

4352 At any rate, at one point in time one of my clients was interested in advertising on Blue Jays baseball, but the demographic of Blue Jays baseball was quite old at the time. It was 25-plus as opposed to the younger 18-to-34.

4353 I know, but that is considered old. I am in no one's demographic myself.

4354 THE CHAIRPERSON: It's a good thing you are only an intervenor.

--- Laughter / Rires

4355 MR. NEWELL: At any rate, to finish the story off and not delay the hearing, the particular client wanted an 18-to-24, 12-to-34 type of audience demographic. And they said: Well, baseball isn't that. We need to get in some other kind of sport, because baseball will not attract that kind of audience.

4356 And then along came all the Fox games in the United States, and suddenly the way that CBS and NBC had broadcast those games in the United States changed dramatically and Fox brought a whole new presentation of baseball.

4357 Suddenly baseball became a hip advertising vehicle. That happened not immediately, but it happened in 18 months.

4358 I think the answer to your question is that it depends on the presentation. There are some sports where it is a difficult sell. If you are not involved in it and don't understand it, it is a difficult sell.

4359 But I think if it is done well and aimed at an audience -- most things are aimed at very broad audiences. But these people are niche players, as has been said 15 or 16 times so far this morning. They should know what you are doing.

4360 If you don't know what you are doing in a niche environment, you are not going to be around very long.

4361 COMMISSIONER CRAM: If I added to that the fact that they were going to broadcast university games, would that add to the attractiveness in terms of getting that demographic and holding them?

4362 MR. NEWELL: I understand your question. I have been amazed at why college sports have such a tremendous following in the United States and such a non-tremendous following in Canada. It can't be just explained by the difference in population, the ten times factor.

4363 I think that there probably are some national rivalries in Canada between college games that, if properly promoted, would gain audiences.

4364 There are some rivalries that would certainly be regional and that would not do that. And there are going to be some other events and types of sports, and things that are broadcast, that will have very niche audiences.

4365 In many ways that is what the specialty channels are all about. When TSN runs a Blue Jays baseball game, they do as well as a conventional broadcaster. When they run darts, they don't.

4366 COMMISSIONER CRAM: Thank you very much.

4367 MR. NEWELL: My pleasure.

4368 THE CHAIRPERSON: Thank you, Mr. Newell.

4369 MR. NEWELL: Thank you for having me.

4370 THE CHAIRPERSON: Madam Secretary.

4371 MS SANTERRE: Thank you, Madam Chair.

4372 The next intervention will be by CIAU University of Alberta.

4373 THE CHAIRPERSON: Good morning, Mr. Reade. Go ahead when you are ready.

INTERVENTION / INTERVENTION

4374 MR. READE: Madam Chairperson and Members of the Commission, thank you very much for giving me this opportunity.

4375 My name is Ian Reade. I am the Vice-President of Marketing for the CIAU, which is actually an elected position. I am also a past president of Canada West and have been working with Canada West for three years directly now on television broadcast deals with western Canadian universities.

4376 I am also the Athletic Director at the University of Alberta in Edmonton, which is Canada's best university sports program.

4377 You might as well get a plug in while you are here.

4378 I will say, first, that I am speaking in the best interests of the members of the CIAU, and I am not speaking on behalf of the CIAU as an elected member of the organization. I think it is important to understand that, because the CIAU is, in one way, a legal entity; and it is in another way an association -- or actually the "U" at the end it is for union. It is a union of very autonomous individual institutions in this country that all do business their own way and take pride in doing business in their own way.

4379 So I will come from that perspective. Having been involved with it for ten years, I do very much know how those members think and what their common goals and interests are.

4380 The CIAU is a Canadian -- and I want to stress Canadian -- organization, with Canadian athletes and Canadian products. It is really the only national coast to coast sports organization in this country, with universities all the way from Memorial in Newfoundland to Victoria in Victoria.

4381 It is very much a gender-equitable organization which we take great pride in. We have ten national championships for women and nine for men.

4382 It is a multi-sport league with 19 different championships. That league needs exposure very, very badly to assist in the justification of our existence on campus and in Canada.

4383 University sport in this country has changed dramatically, even in the last five years. And that is because university presidents are starting to understand the value of university sport as a vehicle to promote the Canadian universities on campus.

4384 It is changing dramatically, and I think a lot of the world is lagging behind that change.

4385 The major objective in the CIAU right now is to promote the CIAU as a brand. And to do that, we must be on television. We know that, and we are doing everything in our power to do that.

4386 The final thing I will say about the CIAU is that we probably -- and I am nearly sure of this -- contribute more to amateur sport in this country than any other organization in this country.

4387 For example, Basketball Canada has two fulltime coaches. The CIAU has 68 fulltime coaches, coaching amateur athletes, athletes that want to aspire to the national team or, in some very rare occasions, the NBA.

4388 I think that is very important, because it shows that the resources are there. If we have a common purpose and a common direction, we can do whatever we want.

4389 It is obvious that because we now are more concerned with the CIAU as a brand and our profile, that we will take steps in that direction.

4390 The reason I am here is because I am very, very happy with Headline Sports and the initiative they took this year to put the CIAU and the scores of all of our games on to Headline Sports. That is something that we have been trying for ten years to have happen, and it is something that has been sporadic until this year.

4391 It is something where we have had pretty good success in men's football. We could never get a women's soccer score on if we tried. We consider women's sport to be every bit as important as men's sport in the CIAU, and it has been very difficult for us to get the profile unless the media leads.

4392 Headline Sports is an important component of the media leading in this particular case.

4393 The other thing that it has done is every university in this country has a full-time sports information person. We have heard the words "sports information" at this table probably as many times as we have heard a few other things reiterated.

4394 Sports information has been a difficult sell on campuses because you have to spend $25,000 to $30,000 to have a person there moving scores and moving stories every day, all the time. When nobody at the other end picks those scores and stories up, it is not that easy to justify having that expenditure on campus.

4395 When Headline Sports took this initiative on and agreed to put video highlights of some of our games on, it helped to justify a lot of those expenditures and it has made a really practical difference. When I sit around the table and look across at my colleagues and say "We need to have a sports information person to report our scores because somebody actually wants to put them on", it is a whole different argument. It is a whole different argument.

4396 To my perspective, you know, it -- I don't know all about regulatory things and policies and history and all that kind of stuff, but it seems like a bit of a no-brainer that if you have more people that want to put your game on, the chances of getting your game on are better. We have, over the course of history, tried to even make contact with people at times to get particular games on.

4397 For example, I'm just going to give one example which is a self-serving example, and I won't apologize for it. At the University of Alberta we have a volleyball tournament which is the four best CIAU teams against the four top NCWA Men's Division 1 teams, Penn State, UCLA, USC, et cetera. We have beaten them every year, and people would think that the NCWA Division 1 couldn't -- we wouldn't even compete with them. Well, there is a couple of sports we can't compete with them in: men's football, men's basketball, maybe their women's basketball. Everything else we can compete with them. We can compete with them, but people don't believe that we can, and until people believe it we won't be able to do it.

4398 Our men's volleyball program last year had a person who went to the National Team, played in the World Cup, played in the Olympics -- this was the number three middle blocker in the world -- and was playing that same -- the next weekend came back and played in the CIAU national championships. People don't know that unless there are people like Headline Sports helping us to cover those events. It is very, very important to us.

4399 I will also say, in support of other people that are in this room associated with TSN, that TSN was the first broadcaster in to support the CIAU and was extremely important in the evolution and the history of the CIAU. But that doesn't mean we don't need another person. That doesn't mean we don't need somebody else at the table so that when we knock on the door or their phone line is busy there is not another phone that we can call.

4400 The CIAU Week in Review, which Headline Sports is proposing, would be an absolutely huge step for us, because the stories that I'm telling you here today, which I think are somewhat interesting, at least nobody has fallen asleep in the last five minutes, would be I think very interesting for the Canadian public and I think that young demographic is very interested in those studies.

4401 But, you know, unless the media is doing it, it is not cool. That is what I have to tell you. If the media ignores you, then the rest of the country ignores you, and the rest of the country ignores you because the media is ignoring, and they tell you that back and forth and back and forth, and you are in this media ping-pong game until you literally have a headache.

4402 So it is very important for us, a thing like a CIAU Week in Review. We have made a commitment -- if Headline Sports puts that on, we will help them to put it on. We are not going to sit there and say, "Well, that's great. Okay. Away you go. You guys do all the work and we will sit and be the beneficiaries." Those 48 sports information people out there will be the people that will help to put that on.

4403 So, you know, I do think it adds strength to the viewer's choice. I think it does add Canadian content, I mean, with apologies to the Raptors and all of their American players, and with apologies to the Blue Jays and all of their American players, it is a little bit difficult for a person who is in the CIAU with all Canadian players to figure out exactly how that is Canadian content, but I know I'm probably getting off of my mandate and onto my soapbox here, so I'm not going to do that, because I'm a very unopinionated person and I will not stoop so low as to criticize that.

4404 The other thing is, there were a lot of questions here about rights fees and, you know, it was me that had the little giggle in the back because the rights fees that we charge for regular season institutional games -- I don't mean the CIAU championships, which were a much different thing -- that the institutional rights fees that we charge are either zero or lower. In fact, we have been paying people, we have been paying people to put our games on television. Headline Sports could probably put a little line in their budget to say "Here is the money that the U of A will send me to put that game on television."

4405 So I want to say that there are hundreds of games out there. Many of them I wouldn't want to put on television if you gave me a camera because there is nobody in the stands, it's not that good. But there is lots of it that is very, very good.

4406 When UBC plays the University of Victoria in Victoria's gym, it is absolutely jam-packed, noisy, crazy and very high calibre basketball. If it was on television it would look good. Sometimes when, you know, we play the University of Lethbridge in women's basketball down in -- you wouldn't want to put that on television, but, you know, you can't paint the whole CIAU with that brush.

4407 I think that is really all I have to say. There is lots of content. There is lots of property available. We are willing to partner with Headline Sports in putting that property on television, and if they can't get Blue Jays games for a couple of years, baby, that's a window of opportunity for us. That's great news that Sam Pollock just gave me.

4408 So I will leave it at that. I just want to say that -- I don't want to be harsh in saying this, but a vote against this application is very much a vote against amateur sport. I don't want you to feel bad about that, if you have to go and vote against it later, but I want it to echo through the halls of the Commission at some point.

4409 Thank you.

4410 THE CHAIRPERSON: Thank you, Mr. Reade.

4411 Commissioner Cram.

4412 COMMISSIONER CRAM: Thank you, Mr. Reade.

4413 You said that TSN supported you initially. Has that support decreased or --

4414 MR. READE: I think it decreased somewhat, but maybe for a good reason. I mean, we are not -- we haven't been, over the course of the years, exactly the most professional partner to deal with. We haven't made all the good decisions and all the right decisions because we weren't necessarily -- didn't have the right people around the table all the time. But let me just say this.

4415 The facts are that one time TSN did broadcast a number of men's football league games that led up to the semi-finals that led up to the Vanier Cup. As a result of poor ratings, I guess, they now just do the semi-final games and the Vanier Cup. But the Vanier Cup's ratings this year were outstanding and, you know -- anyway, that is another story. It's not answering your question.

4416 Their support of us has been very, very good and very much appreciated. In fact, the CIAU would be in a lot of trouble if TSN didn't support us. As a result, I'm in a bit of an awkward position here because they don't support this and I do, and all that kind of stuff. But they have been very good. They have never put any pressure on me one way or the other. But they are a very, very important partner for us and do a very good job. But they don't do the whole job. We don't expect them to do the whole job.

4417 What Headline Sports is proposing is a niche that will do some of the job that will then promote the finals that are on TSN. I would think TSN would love this idea. In fact, I would bet 80 per cent of the people at TSN love this idea.

4418 But, what I would like to say is, if we put the regular season games on, the ones that look exciting, the ones that are good, when the CIAU championships are on TSN, the ratings are going to be way bigger. They are going to make more money. It is a no-brainer that you want to have your lead games to lead up to your play-offs to lead up to your championships. That's how you build it. It doesn't happen by just putting the final game of the season on and saying, "Okay, everybody, we have the championship on", and people go, "Oh, did you see that yesterday? That was good. I wish I would have seen it", and it's over. To me, this is very complementary and it's perfect.

4419 COMMISSIONER CRAM: So what is happening now on Headline Sports with the CIAU is scores, some video clips --

4420 MR. READE: Yes.

4421 COMMISSIONER CRAM:  -- and regularly. Is that the concept?

4422 MR. READE: Yes. It rolls, it's regular, it's up to date. If we did a better job of getting them video highlights, they would play them. We are still ramping up the whole area of video highlights, but I think in the next year to two we will be much better at that job and they will play those highlights for us. So that is another really big step in the direction we are trying to go, but they have been really regular in reporting scores, up-to-date scores, and rolling them on a regular basis.

4423 COMMISSIONER CRAM: So do I understand that habitually the sports information person collects this and then sends it on to Headline?

4424 MR. READE: Right.

4425 COMMISSIONER CRAM: With this week in the CIAU, which will be including scores, standings, game highlights, statistics, male and female athlete of the week, is it the sports information person who will be collecting that?

4426 MR. READ: Well, that's a little bit more complicated because that requires a lot more editorial work, it requires identifying the right stories. So, no, I don't think it will be the sports information people in the middle step. The first step would be the sports information people identifying the good stories. We will work with the local television outlets to make sure the stories are produced, and to some extent then try to help send those things on.

4427 But Headline Sports is going to be the editorial board and the producer and, you know, all of that, so they are obviously going to have a major role in quality and production and everything else. I don't think it is a feasible project with a country this size and the diversity of things that we do to expect them to do the whole thing. That is why I think it would be a great opportunity to work together.

4428 COMMISSIONER CRAM: With the live sports coverage that they are considering, are you anticipating that the coverage -- the other coverage, the up-to-date kind of news coverage will decrease or that it will remain the same?

4429 MR. READE: Oh, it will increase because people will be more interested in it and they will be demanding it. As far as I know media outlets, to a huge extent, do react to public demand.

4430 I think if our game is on live it is perfect to flip away from our game and go to rolling scores of other games in the CIAU and then back to our game. You know, even it happened to be, God forbid, a Blue Jays game or something, they could flip away and still go to our scores.

4431 So I think it would be -- I'm a bit of a sarcastic person so I will try to stay away from that, but it would still be a good thing for us

4432 I mean, any time you put the CIAU logo on a TV screen and broadcast it across this country it is a huge thing for us, because it hasn't been there.

4433 COMMISSIONER CRAM: Do you have any concerns, especially when they are saying 50 per cent Cancon, that there would be a fair bit of American programming or programming from elsewhere?

4434 MR. READE: Well, again, I can go back to my comment about Canadian content and I am really having a hard time figuring out how what we have on now is Canadian content.

4435 But given that we have said that the Blue Jays are in Toronto and therefore they are Canadian content --

4436 I'm always concerned about the Americanization of our Canadian children. I mean to me it is huge problem. I think we have created it ourselves. It's an opportunity for us to show real Canadians doing sport for the right reasons, and that is an opportunity that we shouldn't miss. We have to promote that opportunity in Canada. It's a wonderful opportunity.

4437 I mean, the Canadian content side to me is absolutely -- it's absolutely critical. But I am a very vociferous Canadian, so --

4438 Did I answer your question or did I just get off on another tangent?

4439 COMMISSIONER CRAM: That's all right.

4440 What do you anticipate in terms of the coverage that the CIAU games will get? Have you any idea of a quantum?

4441 MR. READE: I'm sure that we will be on every Saturday afternoon and every Friday night and every Sunday afternoon and most Wednesdays. I'm joking again.

4442 COMMISSIONER CRAM: What is the basis for this belief?

4443 MR. READE: Well, I don't know. Coffee.

--- Laughter / Rires

4444 MR. READE: No, actually I --

4445 THE CHAIRPERSON: Is it that good?

4446 MR. READE: Well, coffee, yes, with lots of sugar. No.

4447 Actually, I would be very, very happy if for, let's say, 12 weeks of the year we could get one game on a week. If we got the CIAU week in review and we got the rolling scores, I mean I could almost retire. I would have thought I died and went to heaven.

4448 COMMISSIONER CRAM: So do you have any basis to believe how much air time the CIAU will be getting if this amendment were granted?

4449 MR. READE: Based on previous experience I don't have any basis to believe it. But based on what I believe is the future of this channel and niche programming I absolutely believe that it will happen, it will be on, and we will not necessarily expect Headline Sports to take the initiative.

4450 You know, now with speed dials on phones and cell phones and everything else we can be in their face enough that we will remind them that they have made that promise.

4451 All I can say is that I believe that it is an important part of the niche and the rights fees are very good.

4452 COMMISSIONER CRAM: Thank you.

4453 THE CHAIRPERSON: Commissioner McKendry.

4454 COMMISSIONER McKENDRY: You said that in the CIAU women's sports are as important as men's sports. In terms of what would be carried forward to Headline Sports, would that balance between women's and men's sports be carried through to the screen, do you think?

4455 MR. READE: I believe there is more of an opportunity in women's sports than there is in men's. If you knew -- I don't expect you to -- I'm actually not being sarcastic this time.

4456 If you knew anything about the University in Alberta in Edmonton and the Pandas and the programs that we have you would know that we are a national power in virtually all of our women's programs.

4457 I am a firm believer, and have proven it through budgets and everything else at our institution, that women's sports is an unfulfilled niche and I think women's soccer World Cup proved that.

4458 Women's volleyball is very, very popular in a certain niche. Women's basketball I think lags behind women's volleyball but there is an opportunity there. I think women's soccer there is a huge opportunity there.

4459 Believe me, in the CIAU if you do not live gender equity you hear about it every single day.

4460 So we don't need Title 9 in Canada because 50 per cent of the people at our meetings are women and therefore they make sure they keep us honest.

4461 You know, I always say that -- in fact, they are always concerned about whether or not people will support women's sports, but most men are married to women and those women make decisions and in almost every -- in the demographics, 50 per cent of the fathers and mothers have girls for their children.

4462 You know, it flies in the face of reason that if given the opportunity people won't support women's sport. It flies in the face of any kind of reason.

4463 If you want to talk demographics, you know that is an unfulfilled niche. There is almost no women's sports in television in Canada at all. None, except I think WWF has introduced some women to their events.

--- Laughter / Rires

4464 MR. READE: But I don't watch it so I wouldn't be able to tell you, but I heard it.

4465 COMMISSIONER McKENDRY: You are assuming WWF is a sport.

4466 MR. READE: No, it's not, it's theatre actually. But I'm just using the definitions that we seem to be going by nowadays.

--- Laughter / Rires

4467 COMMISSIONER McKENDRY: I guess what I really want to get at here is: Are you confident and comfortable that Headline Sports will reflect the balance that exists within the CIAU in terms of what they actually put on the screen?

4468 MR. READE: They certainly have done that from day one. They put the scores on that we send them, they put the highlights on that we send them, they run the stories that we send them. I have no reason to believe, especially given that it is a niche network, that if there has ever been a niche opportunity this is it and I believe that once I am done nattering at them enough they will believe it too.

4469 COMMISSIONER McKENDRY: Thank you very much.

4470 MR. READE: You're welcome.

4471 THE CHAIRPERSON: It was interesting, though, that when you made a comparison between what would attract viewers and what would not, what would not, if I recall, was a women's basketball game in Lethbridge.

4472 MR. READE: Well, I'm sorry, but I have seen their team this year.

--- Laughter / Rires

4473 THE CHAIRPERSON: So I shouldn't --

4474 MR. READE: We are not live in Lethbridge I hope.

--- Laughter / Rires

4475 THE CHAIRPERSON: So I shouldn't rush to Alberta and start "The Flying Grandmothers"?

4476 MR. READE: I'm not going to get into anything about grandmothers around here at all. I can't be dragged.

--- Laughter / Rires

4477 THE CHAIRPERSON: Thank you, Mr. Reade.

4478 MR. READE: You're welcome.

4479 THE CHAIRPERSON: Madam Secretary.

4480 MS SANTERRE: Thank you, Madam Chairman.

4481 The next intervention will be by Toronto Argonauts Football Club with Mr. Nicholson.

4482 THE CHAIRPERSON: Good afternoon, Mr. Nicholson.

INTERVENTION / INTERVENTION

4483 MR. NICHOLSON: Good afternoon.

4484 Madam Chair and Members of the Commission, thank you for the time here today.

4485 I am Bob Nicholson, President of the Toronto Argonauts Football Club. I guess my comments today will reflect some of my other sporting experience as well, although I am here representing the Argonauts but have served for 17 years with the Toronto Blue Jays as well.

4486 We are here in support of the application by Sportscope Television Network.

4487 I would just like to say off the top that we are not a seller of sports rights. The current agreement in the CFL with TSN is that local teams have the rights to sell their own broadcasts. However, I am a member of the Board of Governors and certainly have my own personal opinions and vote as one member of eight teams in terms of our broadcast rights.

4488 We are very fortunate in having a very good relationship with TSN, who is the broadcaster for the CFL. They, however, have about 50 per cent of the inventory that is not broadcast and so I certainly -- in my own personal view we have opportunities within the CFL to have other broadcasts placed in other locations.

4489 I'm here supporting this application really for, I guess, four reasons. First of all really comes down to the good business partner that I have found Headline Sports to be and having worked with a number of their personnel, knowing Paul Williams for 17 years and working with him as a rightsholder for the Blue Jays on the radio; John Levy in the last couple of years as the major shareholder of the rightsholder of the Blue Jays, the radio rights.

4490 So I feel that in my relationship with them I have come to believe that Headline Sports has demonstrated a very good understanding of the marketplace and has done a great job in trying to promote sport, certainly within our community in Toronto.

4491 Despite the fact that Mr. Levy is a resident of Hamilton and not a big supporter of the Toronto Argonauts personally, needless to say, Headline Sports, despite not being a rightsholder, has worked with us with the football team and been very co-operative in trying to help promote us, covering some press conferences, showing some highlights of players, talking about some of the things around it, things not related to live broadcast but in terms of helping build support for the CFL in our city, which is a difficult CFL marketplace.

4492 They as well, I guess, have overall promoted CFL games, as evidenced, I guess, recently in terms of promoting the Grey Cup, leading up to it, and where possible have promoted the fact where viewers can turn to to see CFL broadcasts.

4493 Secondly, I have found them to be a very innovative and creative organization, not only through the acquisition of sports rights. In this case my dealings with them have been on the radio side where they worked with us in terms of dealing with a cash and inventory and a revenue-sharing arrangement. This is with respect to the Blue Jays radio rights.

4494 On the production side I have found their approach to be innovative. I guess they have showcased some things today, but certainly what they have done up to now with their updated ticker, the streaming of video highlights and news and information.

4495 I found it extremely important that they have taken time as part of some of their deals to include production about players and sort of their activities off the field to try to bring a personal face to the team, as well as promoting what the clubs are doing within their own communities. I think this all helps to help us build our marketplace in our various communities.

4496 I found it too wonderful, on a personal note, just to see them develop some hire and develop some young broadcast talent that we now see come to the screen.

4497 Thirdly, I guess the audience demographics, which has been touched on fairly significantly over the proceedings today, certainly we view the demographic in the 18 to 34 as an extremely important segment to help grow interest in sport and in particular in the CFL, in football, where we feel it's a very important demographic.

4498 I see this really as an opportunity not only to supplement and complement our traditional broadcasts with another form of broadcast that can specifically target that particular age group.

4499 Fourthly, and finally, I guess is the fact of the reference to competition. We have seen, as I think Mr. Newell referred to talking about the shift away from the over the air coverage of sports in the last couple of decades to a cable-based sort of delivery of sports broadcasts. If this, our application, would be approved, we would have three networks I guess that would be cable carrying live coverage which we believe in the ever expanding cable universe is extremely important for building the sports industry and maintaining, I believe, healthy competition.

4500 I guess when I say competition I say not only in terms of the marketplace for sports rights, which of course we have extreme interest in, but I believe as in sports itself when competition brings out the best in business as well.

4501 In summary, I am supporting this application really for the following reasons. I believe it's in the best interests of growing and developing sports in Canada. I believe it creates and maintains an important competition in the marketplace.

4502 I have come to know the people involved with Headline Sports and consider them to be reliable, innovative business partners. Finally, I believe with the consumer focus the bring, it's ultimately in the interest of the consumer, the viewing public.

4503 Thank you.

4504 THE CHAIRPERSON: Thank you.

4505 Commissioner Noël.

4506 COMMISSIONER NOËL: Mr. Nicholson, I'm not too familiar with football, as you may see. I tend to confuse Astronauts and Argonauts.

4507 MR. NICHOLSON: Astronauts and Argonauts.

4508 COMMISSIONER NOËL: I'm a grandmother too, you see.

4509 You have commented on Headline Sports' creative, innovative and unique approach and stated that live programming will supplement the format. I am not at the right line here. Yes, I am.

4510 Do you see the addition of some live programming as a necessary and essential part of success for headline and highlight service of sports?

4511 MR. NICHOLSON: I think I concur with the opinion that they have expressed in that it causes people to spend more time there and to learn more about not only the sport that we are trying to promote, but certainly other sports as well. It's certainly an added feature to bring people back to it.

4512 Given the target market that they are focusing on, clearly it's an audience that probably isn't as likely to stay there as long as they might on a broadcast that's being carried by TSN or CBC or one of the other networks.

4513 COMMISSIONER NOËL: You suggest in your intervention that approval of the Headline Sports' application should provide increased exposure for live coverage of sporting events from a Canadian perspective. Are you concerned that Headline Sports' proposals in combination may allow it to rebroadcast U.S. feeds?

4514 MR. NICHOLSON: I certainly have no idea what the balance would be. Obviously the guidelines of the Commission would dictate the level of broadcasts that they can have. Certainly I am looking at it from the point of view of some additional inventory in the Canadian Football League that could be available to be broadcast.

4515 COMMISSIONER NOËL: Has Headline Sports provided you any assurance that they would increase coverage of your events?

4516 MR. NICHOLSON: They are certainly going to be subject to the contractual arrangements that exist right now. The current television deal runs through the year 2002, so it would have to be them negotiating arrangements to access the inventory that's not currently being televised. It wouldn't be necessarily under the control of the league or certainly not under the control of the Toronto Argonauts.

4517 COMMISSIONER NOËL: You mentioned that there are some rights available in the CFL.

4518 MR. NICHOLSON: There's some inventory available. There are no rights now to broadcast, so that's strictly under the control of TSN who is the CFL's broadcaster.

4519 COMMISSIONER NOËL: I see. Okay.

4520 Thank you very much.

4521 THE CHAIRPERSON: Thank you for your participation.

4522 MR. NICHOLSON: Thank you very much.

4523 THE CHAIRPERSON: This completes, I believe, phase two of this application.

4524 Unless I hear groans of disapproval, my plan is to take a 15 minute break and then come back with the reply. Then we will have lunch and we will shift to the radio applications. This would allow those who are not involved in the rest of the hearing to leave us if they so choose.

4525 Alors nous prendrons une pause de 15 minutes.

--- Upon recessing at 1226 / Suspension à 1226

--- Upon resuming at 1255 / Reprise à 1255

4526 THE CHAIRPERSON: Welcome back to the third phase of this particular part of the hearing.

4527 Madam Secretary.

4528 MS SANTERRE: Thank you, Madam Chair.

4529 We will now hear the reply to the intervention by Sportscope Television Network Inc.

REPLY / RÉPLIQUE

4530 MR. LEVY: Thank you.

4531 Madam Chair, members of the panel, we believe the Canadian broadcasting system overwhelmingly supports this application. There is implicit support from the fact that not one Canadian off-air broadcaster, other than the CTV Network has intervened to oppose what we seek.

4532 Clearly, we do not present a threat to off-air operations. To quote Ms McQueen from Monday morning, others expressed no opinion, which suggests they think life will go on.

4533 CTV itself supports this application, provided that you grant its application. We dealt with that issue in our reply to the written interventions and will not repeat our response.

4534 You have heard from the intervenors. There is a demand for more sports programming. You have also heard that Headline Sports has been a committed partner in television and other radio collaborations.

4535 And, finally, you also heard that we are innovative in the way that we structure our rights deals. Our proposal will work at 10 cents.

4536 Clearly, the professional leagues and amateur groups believe that there is a void that we will be filling with our innovative approach to rights acquisitions and the manner in which we will deliver live sports packages to our viewers.

4537 We want to stress that our application, if granted, will make available to Canadians live sports events simply that they can't get now. Mr. Reade from the University of Alberta came from Edmonton all the way to tell you how frustrated he is with the lack of coverage of his events.

4538 Despite whatever else may have been said, the fact remains that not one University of Alberta or Canada West Conference regular season games are being televised, only the playoffs which are carried on TSN. We intend to correct that.

4539 Even though we cannot offer the playoffs, we will carry the regular season games. Frankly, and as you have heard, that will act as a barker channel or a scooter for TSN and its playoff games big time.

4540 We have consistently televised the highlights of CIAU games in the past and we will continue with that level of support in the future. But now we hope it's time to take the next step in putting tomorrow's Canadian professional athletes on TV.

4541 In our opening oral presentation we spoke of the need to have live sports events in our lineup in order to be considered an authority. Our proposal will allow us in fact to do that. We hope it will allow us to become one of the authorities on amateur sports in Canada as well.

4542 Mr. Reade has confirmed that the rights are available and he is most anxious to provide them to us.

4543 Our plan does make sense to the advertisers. These are the people that we are asking to pay for this additional enhancement to our programming, not our viewers.

4544 Mr. Newell has told you that there is room within the advertising market for this type of service and that his clients will support it. Our proposal will not only generate additional ad revenues within the actual live event itself but, more importantly, it will raise our viewer levels across the board. This will go a great distance to making us a more vibrant contributor to the Canadian broadcasting system in the long run.

4545 Really, the only opposition came from TSN. We understand that it may not relish the prospect of any other form of competition. Indeed, some intervenors expressed the view that the CTV/NetStar application will reduce the existing level of competition for live sports events programming.

4546 However, TSN has attempted to support this opposition by portraying the application as a radical departure from one licence per genre because we seek the opportunity to exhibit up to a maximum of 15 per cent live sporting events. TSN takes this position even though it also continues to maintain that it will not be able to acquire rights to display this type of programming.

4547 As to the change of format question, you have noticed broad support and agreement that our proposal is extremely innovative. Our service will continue to be distinct and we will continue to deliver on our original mandate and our original promise.

4548 We would also like to reply to the larger issue of access or the issue of access to programming and there is really probably five specific points that we would like to raise.

4549 First of all, it has been confirmed this morning that there is product being warehoused and that product is available to find a window should you grant the licence we are talking about.

4550 There is also a whole lot of product that is not yet warehoused and that's the more interesting product to us, and that product is looking for an opportunity for exposure into the Canadian market and is looking specifically to the age group that we represent. You have heard specific examples of that from the CIAU.

4551 There are three other sources of very specific programming that will be available that were touched on this morning that we would like to reiterate. We have filed with the Commission a letter from the CBC in which there is a commitment that we will partner together and be able to provide live professional sports on our network.

4552 Currently, next year, there is some foreign product available as well. There is a U.S. football package available that comes up next year. And in terms of baseball, even though you heard from one of our positive intervenors who came up and said that there was only a few games available in terms of the Blue Jays, there is in fact a full Major League Baseball package that is available in the upcoming year, which not only includes regular season games, it also includes playoffs and World Series.

4553 So there is product available to us. We have tried to build the flexibility to look at it on a gradual basis and we appreciate the opportunity of being here and we are here to answer any further questions that you may have. Thank you.

4554 THE CHAIRPERSON: Thank you, Mr. Levy.

4555 Commissioner McKendry.

4556 COMMISSIONER McKENDRY: When NetStar was advocating that we should deny your application they said that we should take into account that, according to NetStar, you haven't provided us with a program schedule, a business plan or consumer research. I am wondering if you have any reply to that argument put forward by NetStar?

4557 MR. MALCOLMSON: In terms of the program schedule, I will deal with that first. We think in effect we have put a plan in front of you that gives you a very good insight into the type of live event programming that we are planning to do.

4558 You have heard from Mr. Reade that that's the type of product he would like to get onto our screen and we'd like to put it there.

4559 You have seen our commitment to live event Canadian programming in prime time. We think that is strong evidence of our commitment to the type of programming that we will air in prime time.

4560 So we think that the program schedule issue is a little bit of a red herring, in the sense that we obviously can't tell you today with any certainty what particular rights we will be able to go out and acquire and that's a fact of life. So to the extent that that uncertainty exists, it exists.

4561 A business plan. We believe that we have a model that will work. We know that we filed our application, we went through the deficiency process and the application was deemed complete by the Commission.

4562 Research. We do research every day, as you heard from Mr. Ciccone. We believe that's the best research available. We talk to our viewers every day and we are quite confident that the type of product we are talking about in the configuration that you saw here is something that our viewers will really value and it's different. It's not encroaching on the traditional three-hour block of a live game.

4563 COMMISSIONER McKENDRY: Thank you.

4564 THE CHAIRPERSON: Counsel.

4565 MR. BATSTONE: I would like to take you back to the conditions of licence again. Do you have a copy in front of you?

4566 MR. MALCOLMSON: Just give me one second.

4567 MR. BATSTONE: Yes.

--- Pause / Pause

4568 MR. BATSTONE: I am going to go through them and make sure we are on the same page here. The overall commitment for live sports programming is 15 per cent on a quarterly programs basis, like on a quarterly basis. That's correct? Right?

4569 MR. MALCOLMSON: That's correct.

4570 MR. BATSTONE: And then, skipping down to 2(c), during prime time then there is the 50 per cent Cancon requirement and it is stated to be in any year. That's correct?

4571 MR. MALCOLMSON: You are talking about the live event prime time Cancon condition?

4572 MR. BATSTONE: That's right. Yes.

4573 MR. MALCOLMSON: It's expressed in a 12-month period, yes.

4574 MR. BATSTONE: I guess that's what I would like to reconcile. One, obviously, is quarterly and the other, the prime time one, is annual. I would like to -- I can understand why in respect of the overall Cancon requirements you stated in terms of the broadcast year because that's the way the existing condition is. For the new conditions there seems to be a bit of a discrepancy there and I wanted to explore that with you.

4575 MR. MALCOLMSON: Perhaps, and I am by far not a mathematician, perhaps you can explain what you see the discrepancy to be and we can talk about it.

4576 MR. BATSTONE: For instance, the 15 per cent live sports coverage overall, condition one, means that in each quarter you could do up to 15 per cent live sports programming. Okay?

4577 But then when you come to the prime time commitment, where it is 50 per cent live sports coverage shall be Canadian, that is over the entire year.

4578 What I am wondering is could you load up prime time live sports coverage in one particular portion of the year? For instance, could you satisfy that commitment by showing all CFL in the summer and nothing else, but then all NFL in the winter?

4579 That is what I am trying to get at: whether there is a particular reason for that, whether it is necessary; if it is necessary to make those consistent.

4580 MR. MALCOLMSON: It is certainly not our intention to. We had not thought of your example, quite frankly. That was not our intention.

4581 MR. BATSTONE: Would it be a problem if it was quarterly for the live sports programming in prime time?

4582 MR. LEVY: No.

4583 MR. BATSTONE: Those are all of my questions; thank you.

4584 THE CHAIRPERSON: Thank you very much, Mr. Levy, Mr. MacMillan, Mr. Malcolmson.

4585 MR. LEVY: Thank you very much.

4586 THE CHAIRPERSON: Have a Merry Christmas, and the same to the other sports people.

4587 As I said, we will need the Magi before we can decide on this, so don't expect anything before Christmas.

4588 Thank you very much.

4589 We will now break for lunch, come back at 2:30, and begin with the application for Barrie.

--- Recess at 1306 / Suspension à 1306

--- Upon resuming at 1433 / Reprise à 1433

4590 THE CHAIRPERSON: Good afternoon.

4591 Madam Secretary.

4592 MS SANTERRE: Thank you, Madam Chair.

4593 I will start by reviewing the procedure for the competing radio application that we have on the agenda.

4594 Phase I will be 20 minutes maximum for the presentation, including the audiovisual materials, and questions by the Members will follow.

4595 In Phase II the applicants will re-appear in the same order, but to intervene to competing applications. Ten minutes will be allowed.

4596 Phase III is appearing interventions from the public, with ten minutes maximum allowed for each intervenor.

4597 In Phase IV in reverse order, but using Phase I, applicants will re-appear at this time to comment on or rebut interventions filed to their application. Once again, ten minutes will be allowed.

4598 I will now introduce the first application.

4599 It is by Larche Communications (Barrie) Inc., for a broadcasting licence to carry on an English-language FM radio programming undertaking at Barrie. The new station would operate on frequency 97.7 MHz, with an effective radiated power of 10,560 watts.

4600 The applicant is proposing a classic rock music format.

4601 THE CHAIRPERSON: Welcome to our hearing and proceed, if you are ready.

PRESENTATION / PRÉSENTATION

4602 MR. LARCHE: Thank you very much, Madam Chair.

4603 I would like to, first of all, introduce our panel. Joining me, to my immediate left, is Mora Austin, who is the General Sales Manager for our Midland operation --

4604 MS SANTERRE: Mr. Larche, could we stop for a minute to change your microphone, because it is very annoying.

4605 MR. LARCHE: It is not me, though.

4606 MS SANTERRE: No.

--- Pause / Pause

4607 THE CHAIRPERSON: We will take a five-minute break to change it, just to make sure that we are not annoyed.

4608 MR. LARCHE: We appreciate that.

--- Recess at 1437 / Suspension à 1437

--- Upon resuming at 1439 / Reprise à 1439

4609 THE CHAIRPERSON: We will start again.

4610 MR. LARCHE: To my left is Mora Austin, who is our General Sales Manager in our Midland operation, CICZ-FM. Mora has been with the station for 12 years.

4611 Next to Mora is our company's Program Director, Derm Carnduff.

4612 Seated to Derm's left is our News Director, Rosalee Buonpensiero.

4613 Immediately behind me is our Technical Advisor, Gary Hooper, President of HP Services. Mr. Hooper was Vice-President of Engineering for Telemedia for 16 years before starting his own company.

4614 Next to Gary is Jeff Vidler, who is Vice-President of Media Research for the Angus-Reid Group.

4615 To Jeff's left is our Promotions and Marketing Director, Sean Ruscitti.

4616 Now I will start our presentation.

4617 Madam Chairperson and Commissioners, in your preambles to licensing decisions for Kelowna, London and Victoria you outlined the elements that you would consider in licensing new stations. I believe our application meets and exceeds these elements. Today we will review the five most compelling reasons this application should be approved as it relates to the criteria you have outlined.

4618 One, our business plan: We are the only applicant proposing a format that will truly increase diversity and respond to the market's wishes.

4619 Two, diversity in news and opinion: We are the only applicant that will provide a new and distinct news voice for Barrie, bringing a fresh approach to the community.

4620 Three, Canadian talent development: We propose unique and meaningful initiatives valued at over $460,000 over the licence term.

4621 Four, diversity of voices in the system: Approval of this application will promote competitive balance and ensure the survival of our small and young company.

4622 Five, market impact: Approval of our application will have the least negative impact on the other broadcasters in the region.

4623 We are proposing a classic rock format for Barrie. We chose classic rock for one simple reason: it is unquestionably what the market wants and will bring the most listeners back to Barrie radio.

4624 With further explanation, here is Mr. Jeff Vidler.

4625 MR. VIDLER: Thanks, Paul.

4626 Just over a year ago LCI commissioned us to look at some possible formats for a new FM station in Barrie. The objectives were to find which format would generate a sufficiently large audience to sustain high quality service and would best contribute to diversity in the market.

4627 A total of 300 18-54 year olds were surveyed by telephone in Barrie. Of the three formats tested, our findings showed that classic rock had the best potential to deliver high loyalty, a large weekly reach and would increase diversity in the market.

4628 We estimate that a classic rock format would achieve a 12 per cent share of hours tuned among 18-to-54 year olds, and a 15 per cent share among those aged 18 to 34.

4629 In terms of diversity, only 37 per cent of potential classic rock listeners said they were aware of a Barrie station that currently plays classic rock.

4630 Listeners attracted to a classic rock format were more likely than other 18-54 year olds to say that they were less than fully satisfied with the station they listen to most often, and to feel they can't find a Barrie station that suits their music tastes.

4631 Potential classic rock listeners were more likely than prospective listeners to other formats to say they would spend more time with radio if their format were licensed.

4632 A classic rock station can also be expected to repatriate listening.

4633 Among prospective listeners, only 38 per cent named a Barrie station as they one they tune most often, leaving roughly 6-in-10 spending most of their time listening to out-of-market signals. This, in turn, suggests that a classic rock station would have only a modest impact on local broadcasters.

4634 We also researched the effects of playing newer rock that fits in with the overall genre. The research confirmed that although classic rock should be the main focus of the proposed new station, newer rock could also play a key role in the station's music mix.

4635 To give you a better perspective of what the station will sound like, here is Derm Carnduff.

4636 MR. CARNDUFF: Thank you very much, Jeff.

4637 It is my privilege to introduce to you WILD 97.7, Barrie's classic rock.

4638 Wild 97.7 will be the most anticipated radio to ever hit Barrie. We will have the perfect balance of music, along with entertainment, news and information tailored specifically to the community.

4639 WILD 97.7 will first and foremost play the best classic rock with about 10 per cent from the 1960s, 30 per cent from the 1970s, and 25 per cent from the 1980s. We will also play newer rock that fits the genre, with about 15 per cent from the early 1990s and 20 per cent from the past 12 months.

4640 Core artists will include Canadian classic rock stars like Steppenwolf, the Guess Who, April Wine and Rush, as well as the Rolling Stones, Led Zeppelin, Supertramp and Def Leppard.

4641 Our research does show us that newer Canadian rock, such as Moist, Sloan, Our Lady Peace and Wide Mouth Mason will also fit in well.

4642 We do plan to showcase these new Canadian rock artists. We want to provide a more in-depth look at their CDs than is normally received on radio. For example, four times per day we will air a "New Artist Spotlight", featuring alternative tracks and interview clips.

4643 This illustration shows a sample hour of programming on WILD 97.7.

4644 To explain several key non-music portions of WILD 97.7's programming, here is Rosalee Buonpensiero.

4645 MS BUONPENSIERO: Thank you, Derm.

4646 Madam Chair and Commissioners, I am thrilled to have the honour to tell you about the news and information components of WILD 97.7.

4647 First of all, let me reiterate that our application is the only one in front of you today that will truly provide a new voice in Barrie. CHUM Limited owns Barrie's only television station, CKVR. The second applicant, Rock 95 Ltd., already owns and operates CFJB-FM in Barrie. It is also relevant to note that CFJB-FM derives its afternoon newscasts from the CKVR television newsroom.

4648 We should note that also CORUS, owners of CHAY-FM in Barrie, have applied to purchase CIQB-FM Barrie, leading to further concentration in news voices. CORUS's parent company, SHAW, also owns Barrie's only cable company, which derives its local news from the CHAY-FM newsroom.

4649 News and information will play a very important role in WILD 97.7's programming. The Angus Reid research clearly indicates that local news will be an important tool to repatriate out-of-market tuning.

4650 To accomplish this, we will build a newsroom in Barrie and hire two fulltime and two part-time news people. These four new people will broadcast news every half hour in the mornings and again during selected hours in the day.

4651 I want to make it clear that LCI will not change the structure or staff levels of its CICZ-FM Midland news facilities. Where it is practical, some news information will be shared between both stations creating greater efficiency in covering, for example, regional news.

4652 WILD 97.7 will devote much of its spoken work content reflecting the community. For example, we will air six community-focused features per day titled "Focus on Barrie". This feature will deal with everyday issues, such as family, health, relationships and investments, but from a local and regional perspective.

4653 WILD 97.7 will also develop a new Web site with an interactive community calendar, listing details of community activities and events. Community groups will be able to post information of their event at this heavily promoted site.

4654 WILD 97.7 will also install a voicemail system devoted to providing community information and activities. Anyone with a telephone will have instant access to local weather, road conditions, community events and much more. This system will also allow our newsroom to conduct polls and solicit comments on local issues.

4655 MR. LARCHE: Thank you, Rosalee.

4656 WILD 97.7 is totally committed to promoting and developing Canadian talent. Our application outlines several initiatives aimed at supporting Canadian talent, which we will review in a moment.

4657 This spreadsheet shows our initiatives and their respective costs -- the spreadsheet is attached at the back of your presentation, by the way -- totalling $463,500 over the licence term. We believe some of these costs do not qualify under the Commission's new definitions for CTD, and therefore we did not reflect such costs in our application.

4658 However, because the competing applicants placed a value on similar initiatives, we believed it was important that you compare apples to apples. In any event, we would accept the higher figure as a condition of licence.

4659 I will now turn the floor over to Sean Ruscitti to further explain our CTD initiatives.

4660 MR. RUSCITTI: Thank you, Paul.

4661 Madam Chair and Commissioners, we are looking forward to putting into place what we believe are some innovative and groundbreaking plans to promote and expose Canadian talent.

4662 With the approval of this application, WILD 97.7 will commission the construction of a state-of-the-art mobile recording studio at a cost of $75,000. The mobile studio will allow WILD 97.7 to broadcast and record a minimum of six live musical performances by new artists every year. The broadcast and studio will also be made available at least once per quarter to artists who have never been recorded professionally.

4663 Finally, the mobile studio will permit us to broadcast for extended periods of time at various events throughout Barrie -- such as Kempenfest on the shores of Kempenfelt Bay, and the Barrie Fall Fair, both of which attract over 100,000 people. Both of these groups have wholeheartedly supported our application in their positive letters of intervention.

4664 Other meaningful initiatives we are proposing include Rock-Fest. New artists and groups from throughout central Ontario will be invited to perform at an outdoor concert. Participants will receive a digital copy of their performance, which will be judged by industry professionals. The winner will receive an additional 20 hours of recording time with the mobile studio to produce a professional demo.

4665 WILD 97.7 will also commit to sending two local musicians to Canadian Music Week, held in Toronto every March. WILD 97.7 will also participate in the CAB's Music Marketing and Promotion Fund by committing $3,000 annually.

4666 Another exciting initiative we put forward is a Canadian talent development Web site, which will be promoted as a meeting place and industry resource for aspiring musicians and songwriters. The site will include information on securing available funds, listings of available venues to perform and more. Aspiring artists will be able to upload their demo work in MP3 format -- allowing music industry professionals and the general public an opportunity to hear new talent from the Barrie area.

4667 MR. LARCHE: Thank you, Sean.

4668 Madam Chair, another initiative we are proud to introduce will be the WILD 97.7 Aboriginal Broadcasting Apprenticeship Initiative.

4669 This program will be a very exciting and unique collaboration between the WILD 97.7 and the Beausoleil Band First Nation's low-powered station CHIM-FM, situated on Christian Island near Barrie. This station, operated by volunteers, is aimed at promoting the First Nations culture and events of interest in the aboriginal community.

4670 As part of this application, WILD 97.7 will create a position for summer employment for an aboriginal person pursuing a broadcast career. The apprentice will receive three months of work: 50 per cent devoted to working with WILD 97.7 in a broadcasting and promotions function -- and 50 per cent devoted to working at CHIM-FM.

4671 Additional benefits to this initiative will include airtime on WILD 97.7 available to CHIM-FM. WILD 97.7 will also make available the mobile studio at least twice per year to CHIM-FM.

4672 Madam Chair, I submit that the CTD initiatives we have proposed are progressive, unique and, more importantly, will truly assist aspiring Canadian talent in reaching their goals.

4673 LCI has operated CICZ-FM Midland for just over two years. Our plan was to turn the money-losing station into a respectable business, and I'm pleased to announce that at the end of our most recent fiscal year we turned a modest profit. This was accomplished by repatriating several Midland advertisers and selling our station using the greater Barrie Extended Market BBM cell, which includes Midland, Barrie and Orillia.

4674 The bad news is that our current stability may be fragile as the competitive balance of the marketplace changes. As previously mentioned, consolidation is already under way with CORUS. Furthermore, CKDX-FM Newmarket changed its format from dance to new country a few months ago. This station's signal is well received in the southern portion of our 3 millivolt contour and they are actively promoting the station in central Ontario. They have even hired a salesperson for the region and they currently broadcast live from Barrie once per week.

4675 But our worse-case scenario is the licensing of a new station by one of the competing applicants. If CHUM Ltd. is approved, they will have the added benefit of owning the only television station in the area. This advantage will allow them to cross-promote and cross-sell their media properties.

4676 The other applicant is Rock 95 Ltd., owner of CFJB-FM. Over the past ten years, this station has become both a financial and a ratings force. CFJB-FM has been the leader in the Barrie Extended Market BBM cell and the Midland central market cell, by nearly a two-to-one margin over the nearest competitor in the lucrative 18 to 54 age demographic. Giving this applicant another station would allow them to virtually dominate the 18 to 54 demographic. The Rock 95 Ltd. application projects a 9 per cent share of hours tuned in Barrie for their proposed new format. These graphs project this anticipated share to the Barrie Extended Market and Midland CA. When placed alongside the new CORUS combo, you can appreciate the competitive unbalance CICZ-FM will face.

4677 Madam Chair, the stability of two stations in central Ontario will place our company on a more equal footing within the marketplace. That is why we initiated this licence call. Technology will allow us to consolidate several functions between CICZ-FM and WILD 97.7, while continuing to serve two communities within one region. However, LCI will be in the unique position of being able to cross-promote local events and cultural activities between two neighbouring communities. We believe this is a unique benefit to the public that cannot be duplicated by current local broadcasters.

4678 We urge that you consider competitive balance as one of the several compelling reasons we are putting forth today.

4679 The Angus-Reid Research states that 38 per cent of WILD 97.7's tuning would come from existing Barrie broadcasters. This would translate into a modest 3.5 per cent decline in market share for CFJB-FM, a .7 per cent drop for CIQB-FM, and a .4 per cent drop for CHAY-FM. This graph illustrates the impact on each station using as a point of reference the most recent BBMs.

4680 Any short-term loss in hours tuned experienced by the Barrie stations will be readily replaced by new listeners as the population in Barrie continues to grow at an unprecedented rate. This next graph illustrates an overall increase in hours tuned for the current stations, based on population increase projections. It clearly demonstrates that the Barrie stations will continue to gain hours tuned, despite the entry of the WILD 97.7.

4681 We are convinced that the audience impact on existing stations will be minimal in the short term and inconsequential in the medium to longer term as the market continues to grow at an unprecedented rate.

4682 To review the financial impact on existing broadcasters, I wish to turn the microphone over to Mora Austin.

4683 MS AUSTIN: Thank you, Paul.

4684 First, I think it's important that we spend a few minutes discussing the unprecedented growth of the market. Barrie is Canada's fastest growing market, growing at 3.25 per cent annually. The population has increased by 65 per cent since 1988, and is expected to continue to grow at this rate for the foreseeable future. This population growth alone will support the addition of a new FM radio station.

4685 To consider the economic impact on existing stations, we projected advertising revenue growth using several key indicators, including population and retail sales growth. Our data was analyzed by noted researcher David Oakes, who said:

"I regard the possible radio advertising revenue impact (on current Barrie stations) as very small. The economic growth in the Barrie region will generate a large enough increase in radio revenue to more than compensate the existing stations for revenue possibilities lost because of the introduction."

4686 Based on the tangible market data and the analysis by Mr. Oakes, we submit that the Barrie market can readily sustain the entrance of WILD 97.7 without unduly affecting the current broadcaster's financial position.

4687 MR. LARCHE: Thank you, Mora.

4688 Madam Chairperson and Commissioners, I am extremely proud of the excellent job the young broadcasters in our company have accomplished in such a short period of time. CICZ-FM's ratings have increased from 20,000 to just under 100,000 listeners in just two years. Our revenues have tripled and we are now making money. We accomplished this by living our mission, which is: to provide entertaining, informative and compelling programming targeted to our listeners wants and needs; to meeting advertisers' needs by executing results-oriented marketing strategies; and, to fulfil the needs and interests, and reflect the circumstances and aspirations of the communities we serve.

4689 Examples of this include Derm and Sean raising money for the Salvation Army by broadcasting atop a 50-foot crane for 18 hours, or promoting Canadian talent by hosting our own StarQuest talent competition, which draws huge crowds to cheer on new local talent, or giving exposure to Canadian country talent by presenting artists such as Jamie Warren and Farmer's Daughter at Barrie Colts hockey games.

4690 That's why we were so honoured and delighted to be chosen as Radio Station of the Year by the Ontario Association of Broadcasters last March. Our StarQuest promotion was also chosen by the OAB for Best Canadian Talent Initiative in Ontario. In September, the Canadian Country Music Association chose Derm Carnduff as Music Director of the Year.

4691 Madam Chair and Commissioners, we definitely have what it takes to make WILD 97.7 a success. We are a small independent broadcast company committed for the long term. We want to grow and play an active role in the broadcast business as an alternative to the larger companies that seem to be getting larger by the week. At this year's CAB convention Madam Bertrand made it clear the Commission considers that smaller independent broadcasters have an important role to play in the future of Canadian broadcasting.

4692 I therefore submit to you that the five compelling reasons we have put forward today clearly fulfil the Broadcast Act and your criteria for licensing new stations:

4693 Approval of this application will fulfil the need of the market and increase diversity.

4694 Approval of this application will introduce a new voice in the City of Barrie, enriching the community's diversity and distinctiveness.

4695 Approval of this application will result in tangible and meaningful Canadian talent development initiatives, including the advancement of aboriginal peoples in the broadcast industry.

4696 Approval of this application will ensure the prosperity of a young broadcast company at a very fragile point in its evolution.

4697 And finally, approval of this application will have a minimum impact on existing broadcasters.

4698 Approval of this application is unquestionably in the public interest.

4699 Thank you.

4700 We would be more than happy to answer any questions.

4701 THE CHAIRPERSON: Thank you.

4702 Commissioner Demers.

4703 COMMISSIONER DEMERS: Bonjour, Mr. Larche.

4704 MR. LARCHE: Bonjour.

4705 COMMISSIONER DEMERS: I will ask a few questions, maybe starting with the oral presentations, especially at the end when you indicate that "this will fulfil a need of the market and an increase in diversity." Could you comment on that in light of the fact that your station in Midland is or is not heard in Barrie.

4706 MR. LARCHE: Yes. Our station is heard in Barrie, our Midland operation, which is a country format. We applied a couple of years ago to the CRTC to increase the power of our station to allow us to compete on an equal playing field with the other broadcasters in the area. However, our mandate is to service the Midland market and that is where we focus most of our news and marketing attention, and that is where most of our revenues come from is from the Midland market.

4707 We don't have a newsroom in Barrie; we don't have reporters in Barrie. We will, on occasion, cover Barrie news if it is relevant to the region, but we try to focus primarily on what is going on in our market.

4708 Rosalee, I don't know if you want to comment on that.

--- Off microphone / Sans microphone

4709 MR. LARCHE: Turn your mic on.

4710 MS BUONPENSIERO: You don't want to hear me, do you?

4711 We have a formula that works for Midland. It's 60 per cent Midland and Penetanguishene, which communities are very close together, almost as one. We focus 60 per cent of our news attention to Midland and Penetanguishene and the rest to the rest of the area. We cover what we like to call central Ontario, and we would like to use the same formula for Barrie: 60 per cent for Barrie and the rest would go towards the rest of the region.

4712 COMMISSIONER DEMERS: So you take the view that there would be no duplication in service?

4713 MR. LARCHE: Duplication in...?

4714 COMMISSIONER DEMERS: In service. In the news service or in other community services.

4715 MR. LARCHE: Our plan is to run two separate newsrooms. One would be based in Barrie, it would have its own news director. One would be based in Midland, as it is currently, with its own news director.

4716 But we do plan to consolidate a lot of the operation between Midland the proposed new station in Barrie.

4717 I would be the General Manager of both radio stations. We would have a combination sales force. We would combine some functions like creative writing and accounting and the trafficking of commercials.

4718 That is again why we initiated this call, because we will realize efficiencies that will allow us to get on a stronger financial footing.

4719 COMMISSIONER DEMERS: Thank you.

4720 Maybe turning to another point which was at the beginning of your presentation.

4721 You made a survey -- Angus-Reid did a survey for you and, of course, one of the options in the survey was classic rock. What were the other options or the description of the other types of services that people could answer?

4722 MR. LARCHE: I'm going to pass it over to Jeff Vidler in a second, but just before that, when we decided to apply for a new radio station the first research we looked at was BBN numbers in the Barrie market and we looked at what people were listening to in particular outside the market. We found that classic rock-type format stations were attracting the most listening out of town, or adult rock-type formats.

4723 We also took a look at the listening patterns of people under the age of 35 versus over the age of 35 and we found that people over the age of 35 were listening to out-of-market radio more than they were listening to local radio. So from that we had a hypotheses that the format that would attract the largest audience would be attractive to that age group.

4724 Jeff, do you want to take it from there?

4725 MR. VIDLER: Yes. Just to clarify maybe some of what Paul was saying, the fact that out-of-market tuning, both over the age of 35 and under the age of 35, was roughly the same -- in fact a little bit higher I believe over the age of 35, classic rock or adult rock formats seemed to be the largest single format category in terms of out-of-market tuning in the market -- it led Paul and ourselves to try to identify three different formats that might be the problem there.

4726 So we looked at three formats. One was classic rock, one was a softer classic hit-style format, and a third was what the industry calls a hot AC format, which is an up-tempo AC format. But the kind of -- each of these formats is the kind of format that appeals to listeners in around the age of 35 and, you know, consummate with the classic rock or adult rock tune that we saw coming from out-of-market.

4727 COMMISSIONER DEMERS: Thank you.

4728 Now if we get to the proposition you have here, classic rock.

4729 Would it have any duplication with, let's say, the Barrie station CFJB-FM.

4730 MR. LARCHE: Derm, do you want to talk?

4731 MR. CARNDUFF: Many of the artists that we will be playing and many of our core artists that we will be playing on our classic rock format are also played on CFJB in Barrie. However, CFJB covers, as far as the artists that they play, such a -- they cast such a wide net as far as artists that they play through different formats, a rock format and also a hot AC format, that what we are going to be able to do, though, is we are going to be playing and being able to play alternative cuts that are not by many of the same artists but songs in a library that will not be played on CFJB.

4732 COMMISSIONER DEMERS: Then do I conclude that there is no duplication?

4733 MR. CARNDUFF: I wouldn't be able to say that there will be absolutely no songs that we would play that CFJB doesn't currently play.

4734 MR. LARCHE: To answer your question, there would be some duplication but we believe that about 70 per cent of what we play would not be currently played on CFJB-FM.

4735 COMMISSIONER DEMERS: Thank you.

4736 MR. VIDLER: Again, perhaps looking at the research helps to put some clarification on this.

4737 Again going back to the three formats that we looked at in Barrie, the three hypotheses that we tested, classic rock, classic hits or hot AC format, after asking the market, the 18 to 54 year olds we surveyed, whether they would be interested in listening to these stations and how often they would listen to them, we then asked whether they felt for each of these formats there was currently a station in the market that was specialized in this kind of music. This was asked of those who would listen to each of the formats.

4738 The classic rock format, only 37 per cent could name any station as being one -- would name a station as being one that specialized in the format.

4739 The classic hits format, 52 per cent identified a station as playing -- specialized in that format now.

4740 The hot AC format, 55 per cent identified a station specializing in that now.

4741 So in terms of relative terms, classic rock seemed to add the most diversity to the market.

4742 COMMISSIONER DEMERS: So if I put the question differently: What would differentiate you from CFJB-FM?

4743 MR. LARCHE: I think probably the biggest thing would be that we would be a very focused radio station. We would be going for a classic rock sound. Classic rock obviously revolves around core artists from the 1970s and 1980s, but newer rock today that is coming out in particular from Canadian artists that really fit that genre.

4744 So to answer your question about what the difference would be, CFJB-FM has cast, again, a wide net and they play a lot of music by a lot of artists running from adult contemporary-type artists to classic rock artists.

4745 Our station would be focused. It would be a focused classic rock sounding radio station. We would, for all intents and purposes, be a niche format.

4746 COMMISSIONER DEMERS: This, in a sense, would answer the questions or what people in your survey said about the fact that they didn't find their sound in Barrie?

4747 MR. LARCHE: The reason we are proposing classic rock is because we did research and that is what it told us to do.

4748 Again, we are a small company, we only have one station, I would be foolish to go with anything else than what good research like Angus-Reid told us to do.

4749 That research clearly stated that the market did not perceive that there was a classic rock station available and that about 15 per cent of the Barrie audience 18 to 54 was listening to classic rock stations outside of the market. So the research went on to ask people if this format was provided to you, would you come back to Barrie radio, and they said they would.

4750 That is why Angus-Reid, in their projections of the make-up of the audience of our new radio station, showed that 60 per cent -- more than 60 per cent of our new audience would be people in Barrie who are not listening to Barrie radio, they are listening to Q.107 in Toronto.

4751 The remaining 40 per cent would come from Barrie radio stations and we outlined the impact that that would have on those radio stations.

4752 COMMISSIONER DEMERS: So in fact the Q.1 station is the one that you are aiming at, or the listeners you are aiming at?

4753 MR. LARCHE: There are three stations in particular that play a lot of classic rock, Q.107, which is -- I'm sorry, I know them by their -- I think it's CILQ, there is CKFM in Toronto as well, and there is Y95 out of Hamilton which is a classic rock station.

4754 These three stations are taking about a 16 per cent share of listenership in Barrie out of the market. We believe that we can bring back 12 per cent of that.

4755 Now, that 12 per cent would be made up of some of that out-of-market tuning, mostly from that, and some of it would come from the local radio stations.

4756 COMMISSIONER DEMERS: Okay. Thank you.

4757 If you have these listeners, could the new station sell that new in-market tuning to local advertisers?

4758 MR. LARCHE: Absolutely.

4759 Mora, do you want to comment at all on that?

4760 MS AUSTIN: I think that with there being a hole in the market for classic rock, I think we are able to give our advertisers a whole new customer base that they haven't perhaps been able to reach before. So I think that puts us in a unique position in sales to be able to do that.

4761 COMMISSIONER DEMERS: In your projections, if I remember correctly, that increase was in the same proportion as the type of listeners you would repatriate? The percentage of advertisers who would be advertising on your new station would comprise part of the budget that equals the repatriation of listeners?

4762 MS AUSTIN: Part of it, yes. Most of it would come just out of the growth of the market. The markets -- by the time we would actually get on the air the market would be growing by a million four for radio revenue. So most of that revenue would -- our revenue would come from the growth alone.

4763 COMMISSIONER DEMERS: That's where you mostly expect to get your revenues?

4764 MS AUSTIN: Yes.

4765 COMMISSIONER DEMERS: You projected at least -- well, I haven't been able to reconcile your oral presentation with this, but large projected at 29 per cent impact on CFJB-FM audience. Is that still your projection?

4766 MR. LARCHE: I think what we said is that our audience, if we captured a 12 share of listeners 18 to 54 in Barrie, 29 per cent of that 12 per cent would come from CFJB-FM. There would be a little bit more that would come from the other two radio stations, and 60 -- correct me if I'm wrong, Jeff, but I think approximately 60 per cent would come from people who are currently listening to radio outside the market.

4767 Does that answer your question?

4768 MR. VIDLER: They aren't the actual figures, Paul, because I have them at my fingertips, you don't.

4769 It's 29 per cent of the people who have identified said that a classic rock station would be the one they listen to most often. The station they currently listen to most often is CFJB.

4770 So it's not unreasonable to extend that to say that the station, of its audience 29 per cent of its core tuning will come from CFJB. A small proportion, roughly 6 per cent, would come from B101 and an even smaller proportion would come from CHEZ-FM.

4771 In total about roughly 38 per cent of those who identified they would make this classic rock station their favourite station are currently listening to Barrie stations and leaving roughly 6-in-10 who are currently tuning out-of-market.

4772 COMMISSIONER DEMERS: Synergies. You have made some remarks on that in your oral presentation.

4773 Could you elaborate on the synergies which would be available with the Midland station should this application be approved? Now, maybe elaborate more than you have done in your oral presentation.

4774 MR. LARCHE: Okay. Well, as I mentioned earlier, we wouldn't hire another general manager, I would be managing both radio stations. Our sales department would be a combo sales department so that the people who are currently selling for CICZ-FM would also be selling for the new radio station. We would add some sales people.

4775 A lot of the administrative functions of running a radio station would be centralized, for example accounting and the trafficking of commercials, and so on. Our creative writing would come out of one office as well, and some programming functions as well.

4776 We could have an announcer that is currently working for CICZ who may voice a commercial for the new radio station. There's definitely synergies there.

4777 For all intents and purposes, this would be very similar to basically owning two radio stations under one roof, the exception being that we would have two rents because we would have our studios and current operation and would remain in Midland with its distinct newsroom and one in Barrie. Rents are pretty cheap up there.

4778 COMMISSIONER DEMERS: You have some tuning, important tuning, significant tuning level in Barrie at the moment. How much of Midland's revenues are attributable to Barrie in percentage?

4779 MR. LARCHE: We currently have about an eight share of the Barrie audience and we have about a 15 share of the Midland audience. Are you asking what our current revenue breakdown is in terms of what we are taking out of Barrie?

4780 COMMISSIONER DEMERS: Right.

4781 MR. LARCHE: It's approximately 20 per cent of our overall revenue.

4782 Mora, you can give the overall breakdown.

4783 MS AUSTIN: Basically you are looking at about 60 per cent of our revenue comes from Midland, 20 per cent from Barrie and the other 20 per cent is made up of Orillia and some of the other surrounding areas in central Ontario.

4784 COMMISSIONER DEMERS: You have referred to the consolidation in the area. Do you have anything to add to that? What would the implications be for your competitive situation in Barrie?

4785 MR. LARCHE: Well, I think it's very relevant in our case. Again, as I mentioned in the oral presentation, I initiated this call. The reason I did it is because we have one radio station. We just got it on its feet.

4786 Frankly, you know, it scares me because I know that I am in the company of companies like Shaw, which is now CORUS, Telemedia within our marketplace. I anticipated that there would start to be some consolidation that would be going on that could make it difficult for us to continue to compete.

4787 We decided to be proactive. Barrie is the fastest growing market in Canada, so we put an application in for a radio station in that market because we found a hole there as well. We knew that we would realize some synergies between both operations.

4788 It's interesting that since we put our application in, consolidation is already starting to go on. Again, CORUS, which owns CHAY-FM in Barrie, has an application in to buy CIQB-FM which we refer to as B101. They also own the cable channel there, Shaw Cable. CHAY-FM supplies the news for the cable channel that Shaw owns. That is going on.

4789 Also in the market, the two other applicants that are proposing one as CHUM that owns the local television station, CKVR. Again, that scares us. Again, we just don't have the financial resources and the might to be able to fight those types of companies, especially if they decided to come after us on a format basis.

4790 COMMISSIONER DEMERS: Again in your presentation you spoke about the role of news and information, but if we come back to that, can you be more precise as to any percentage of news and information in relation to music? Have you something quite precise on that?

4791 MR. LARCHE: Yes, we do. Rosalee can talk to you about that.

4792 MS BUONPENSIERO: I'm sorry, are you asking how much news will be focused on Barrie or how many listeners will tune in because of local news?

4793 MR. LARCHE: How much news we are going to carry.

4794 COMMISSIONER DEMERS: Right, compared to music since you are music driven.

4795 MS BUONPENSIERO: We are music driven. Our rock music listeners technically aren't really interested in the world news, but they want to know what's going on in their own community as well as local weather, road conditions.

4796 With our two full time and two part time employees, it works out to about six hours of news per week, the typical morning drive with news, on the hour and half hour and again at noon and five and six as well as on the weekends, focusing of course on the community and making sure people can get around town and find out what's going on as well.

4797 MR. LARCHE: Just to add to that, the Angus Reid research told us that providing local Barrie news to classic rock listeners would assist us a lot in repatriating those out of market listeners. In other words, they felt that that would be very important to come back and listen in to Barrie radio.

4798 We believe that it's a competitive advantage for us to be very focused on Barrie news with this new radio station.

4799 COMMISSIONER DEMERS: Thank you. Now, as you indicated, there are competitive applications. Technically there's a possibility from the applications that we hear that two stations could be licensed in Barrie. Could the market support two new additional stations?

4800 MR. LARCHE: If we were one of them? When I looked at the Victoria decision, I knew this question might come up. If, for example, we were licensed and the Rock 95 application was licensed, or frankly the CHUM application, we would be fine with that.

4801 We believe that the market is growing and will continue to grow at such a rate that it will be able to absorb that type of impact. The only other radio player in the market would be CORUS. You know, they may not be too happy about that, but they would be in a better position to take that hit than an independent would, for example.

4802 The CRTC figures for Barrie show the market revenue in 1998 at $6.5 million. It shows that the market is growing at an average of 10.4 per cent. If we take a two year span, that's $1.4 million in new revenue that will be in that market between, let's say, 1998 and the year 2000 when a new station would probably go on the air.

4803 Our projection is about $725,000 in revenue for our first year. That means there's still an additional $750,000 in new revenue that the other stations will enjoy. If two stations were licensed, it would probably mean that the third party, which would be CORUS in this case, would probably not lose money, but they probably would have a flat year until the market continued to grow some more.

4804 COMMISSIONER DEMERS: Thank you. Turning back now to the Canadian talent development proposals. When you were reading your presentation, I hadn't been able to find the sheet. Now I have it.

4805 Could we go through it, let's say, from my perspective and see. So you have the CAB annual minimum of $3,000.

4806 MR. LARCHE: Correct.

4807 COMMISSIONER DEMERS: You have an annual concert of $1,000. I found in your application anyway a concert of $1,000. Is that --

4808 MR. LARCHE: We have outlined what we consider to be the direct cost in our definition of Canadian talent development as $1,000. In reality, it costs more money than that to put on that type of talent contest.

4809 We have firsthand experience with that because we currently do one for CICZ-FM called "Starquest". That is the promotion that won us the OAB award for Canadian talent development initiative of the year.

4810 COMMISSIONER DEMERS: Two local musicians would attend a music week at $1,000 for the two. On air promotion of local concert and artists program for $50,000. Do you agree with that?

4811 Let's go to it anyway. The aboriginal broadcasting apprenticeship initiative of $2,500 a year for seven years, $17,500. Now, you spoke about a mobile studio for $50,000.

4812 MR. KING: Capital cost of $75,000.

4813 COMMISSIONER DEMERS: $75,000. Okay. Could you rationalize that as being something that is spent directly for Canadian talent and that it is not self-serving for your enterprise?

4814 MR. LARCHE: Yes, I can.

4815 First of all, in our original application we did not put a dollar figure on it because we did not feel that it would count as direct CTD expenses as outlined in Notice 95-196. We are showing you a value now because, obviously, there is a value in putting this on and we want the Commission to understand that this studio is going to be a state-of-the-art recording studio. It will be in a mobile setup and we anticipate that about 70 per cent of its use will be geared towards the promotion and development of Canadian talent development.

4816 If you review our application you will see that we refer to it a lot as contest winners would receive recording time with it. They would be able to take demos from it, pressed CDs and so on and so forth. We also would make it available to the folks at CHIM-FM on Beausoleil Island.

4817 So most of the use that that studio would see would be for the promotion of Canadian talent development. Would we use it to also cover additional events? Absolutely.

4818 We mentioned that we would have it at events such as Kempenfest, which draws 200,000 people to Barrie. We would have it there for two or three days to broadcast from and we would also have it at other big events, such as the Barrie Fall Fair.

4819 COMMISSIONER DEMERS: My concern really is the difference between the figures we had in the application and the figures that we now have. I am wondering if I should go to each point, but I think it would be up to you to indicate where you feel that there is no doubt that these are direct -- these monies will go directly to talent and not the part of the undertaking you are putting into place.

4820 MR. LARCHE: Again, a lot of what this studio will do, we did not put it down as direct Canadian talent development expenditures. We are showing you that there is a cost in doing that which we have incorporated into our marketing, promotion and capital costs for the radio station, but when you have to record an act you have to hire technicians who will operate the facility and be able to mix it down properly.

4821 We are not ourselves in the recording business. We are not recording engineers. That goes across that we would have to go out and incur it, but the equipment that they would be using would be our equipment.

4822 COMMISSIONER DEMERS: I will leave it there. I thought I would have a big question at the end, but you touched it, the commercial radio policy. You have already very clearly indicated your approach to it and you referred to the Commission's decision in Kelowna, London and Victoria.

4823 I leave it open to you because I have no other questions, whether you would want to add anything to what you have already said in your introductory remarks.

4824 MR. LARCHE: I would like to touch on a few points with regard to the criteria that was set out in that decision. There are five or six points and I think that our application meets most of those points, more so than any of the other applicants you will hear today.

4825 First of all, our business plan, we are the ones who are offering a format that the market truly wants. Our research shows that, BBM research shows that and I believe that our competitor's research also shows that.

4826 The second point has to do with bringing a distinct voice to the market. We are the only applicant in front of you today that will bring truly a new and distinct news voice and opinion and presence to the marketplace.

4827 The third is with the issue of market balance. If we don't get this station and one of the other applicants do, it will be very difficult for us to compete and to survive in that central Ontario market.

4828 We showed you some graphs. They are attached to the presentation that we gave you today and they are within our original presentation that show that up against two or three combos it will be very difficult for us to survive. For example, in national sales right now all of the Barrie stations are represented by one national company and we are on our own. If another station is added to that, all these stations will be here and we will be down here.

4829 Again, we only have an eight share in Barrie. We are not a major player. We don't have the 15 and 20 shares that the Barrie stations have, but that's where the growth is going. It's not happening as much in Midland, which is where most of our money comes from.

4830 We think that another radio station coming into the market would also affect some of our Midland revenue. There is no doubt that it would have an impact because all of the stations in central Ontario sell on the Barrie extended market, BBM sell or try to sell on that sell which we showed you today, which includes Midland and Orillia and Barrie. So market balance we think we meet that criteria very well.

4831 Finally, just impact on the marketplace, if we receive this decision we think that that will have the least negative impact on the other players in the market versus the other way around. So those four in particular we feel we meet and exceed that criteria.

4832 COMMISSIONER DEMERS: Maybe a last, last question. Looking at these criteria is there one that you think supersedes them in your situation?

4833 MR. LARCHE: I think if I look at the criteria and I look at the Broadcasting Act I would think that two of them would. I think it's the business plan making sure that you are truly offering something that the community wants and will add diversity to the market and in our case bring back a lot of out-of-market listening.

4834 The second one would be to introduce a new news voice, a new opinion voice and a different perspective on what people in the Barrie market would get from news, especially in light of the fact that there are some large companies that are broadcasting out of Barrie.

4835 COMMISSIONER DEMERS: Thank you, Mr. Larche.

4836 Thank you, ladies and gentlemen.

4837 These are my questions, Madam Chair.

4838 THE CHAIRPERSON: Thank you.

4839 Commissioner Cram.

4840 COMMISSIONER CRAM: Thank you.

4841 Mr. Larche, I am not an engineer, and God forbid I would ever even think about it, but I look at where your antenna is going to be and it looks like it is going to be almost half way between Midland and Barrie.

4842 MR. LARCHE: The antenna would be where our current antenna is, which is just north of Barrie, between Barrie and Midland, if you want to call it that, roughly. That's the highest point in the land and we are on a tower there and what we are proposing is that we would replace the current antenna we have with a combined antenna which would allow us out of the same technical facility to put both signals out.

4843 Gary, I don't know if you have anything else to comment on here.

4844 MR. HOOPER: The location of the antenna, the CICZ antenna right now, is on a very high point of ground and Barrie's topography dictates that you have to have a high perspective in order to put a good signal into it. It is much better to be high than even to be close and low. So it geographically looks as though you are some distance from Barrie, but actually that's a very high point of ground and puts an adequate signal into Barrie.

4845 COMMISSIONER CRAM: And into Midland?

4846 MR. HOOPER: It would also reach Midland, yes.

4847 COMMISSIONER CRAM: So is part of your business plan then that you will be getting into Midland with a new voice also?

4848 MR. LARCHE: Again, we would be selling this radio station in what we call the Barrie extended market, but in our business plan we projected that about 70 per cent of our revenue would come from Barrie. The remainder would be from Midland, Orillia and we also think that we would have an opportunity to bring in some new advertising from possibly television and print because we would be repatriating a lot of out-of-town tuning, so radio listeners that currently nobody has been able to reach in the market.

4849 COMMISSIONER CRAM: I find your argument about being the voice in the market very interesting and repatriating market tuning because it appears from our numbers, and possibly yours, that you are the number one out-of-market tuned to person right now in the Barrie market. So how do you reconcile that, if you've got you say an eight share in the Barrie market and our numbers show that's about the highest out-of-market tuning, how do you reconcile that you would then be a new voice in that market?

4850 MR. LARCHE: What age demographic are you looking at because I know for a fact that Q107 in 18 to 54 has over a 10 share in Barrie. We know that CKFM has about a six share in Barrie.

4851 COMMISSIONER CRAM: If I am looking at them all, that's the numbers that we had, I believe, of spring 1999. All, the highest was you with a nine share and then CALQ with an eight share.

4852 MR. LARCHE: In what age demographic, does it say?

4853 COMMISSIONER CRAM: Total.

4854 MR. LARCHE: Total, 12 plus.

4855 COMMISSIONER CRAM: Yes.

4856 MR. LARCHE: That's right then, I am sure.

4857 COMMISSIONER CRAM: So are you a new voice then in Barrie?

4858 MR. LARCHE: Well, we believe we are because the Barrie radio stations have approximately 15 to 20 per cent of the tuning in those radio stations and our programming is not focused on Barrie.

4859 People listen to us in Barrie right now because we are the only country station available in central Ontario. Well, we were up until Newmarket switched formats. So, yes, people do listen to us in Barrie because we offer a format that they can't or couldn't get anywhere else. But they don't listen to us for news. They don't listen to us for information because we are not providing that level of service that they would require to listen to us for that.

4860 We don't offer enough Barrie news and information.

4861 COMMISSIONER CRAM: Then, on the other hand, on the competitive side, you appear to be using what I call the double market. The Greater Barrie Extended Market BBM cell and that's the one that you use when you say that CFJB-FM has a two to one margin over its nearest competitor. Am I hearing that -- is that the argument that you are presenting on the competitive equity side?

4862 MR. LARCHE: Yes, because that is the market that we are competing against them in, the Barrie extended market. When we are going out and selling to an advertiser in central Ontario, we are not showing them our Midland market audience. We are showing them the audience we have in central Ontario.

4863 When we are showing -- and I believe that CFJB does the same as well. They are showing their regional audience, because they have a very significant regional audience.

4864 That is why we use that.

4865 COMMISSIONER CRAM: Should we then be considering the population of that very extended market BBM sell for the purposes of assessing the demand for licensing in this set of applications, in this competitive set of applications?

4866 MR. LARCHE: Barrie is the most concentration of population in central Ontario. Outside of Barrie you have smaller communities such as Orillia, Midland, Penetanguishene, 14,000, 15,000, and then you have a lot of rural areas spread out.

4867 The area is what we call a macro community, in that a lot of people who live in Barrie may shop in Orillia on the weekend, or vice versa. People live in one town and they go to church in another town. There is not much space -- 30 to 40 kilometres -- between all these communities. So people move around.

4868 We did our research based on Barrie, not on the entire market. We knew that if whatever we proposed did not work in Barrie, it would not work in the region.

4869 COMMISSIONER CRAM: For the purposes of this set of applications, you think we should be considering the extended BBM area and population and its economic circumstances?

4870 MR. LARCHE: I can't speak for the other applicants. In our case, we projected that most of our revenue will come from Barrie, 70 per cent of it, and another 30 per cent will be made up of the rest of central Ontario.

4871 The signal we are proposing will allow us to cover that area to a certain extent. But we are primarily going to focus on Barrie.

4872 COMMISSIONER CRAM: Thank you.

4873 THE CHAIRPERSON: Thank you.

4874 Counsel?

4875 MR. BATSTONE: I have a couple of questions on the CTD initiatives, specifically the ones that you raise subsequently in your reply to interventions.

4876 On the question of the CTD director, you would allocate $11,000 a year for that position. Could you tell me what the duties and responsibilities of that person would be?

4877 MR. LARCHE: That figure is primarily -- we put that in there because another applicant put it in there. We honestly believe, and we say in our application that we don't believe a lot of these things truly are Canadian talent development.

4878 Your promotion director -- in our case Sean -- would be responsible as part of his job to carry on a lot of these functions.

4879 MR. RUSCITTI: I am getting a raise.

4880 MR. LARCHE: No, you're not.

4881 We felt that if another radio station could use $11,000, which is part of their promotion director's salary, as Canadian talent development, we would want to as well.

4882 MR. BATSTONE: This would not be creating a new position. It would simply be augmenting the duties of somebody who is --

4883 MR. LARCHE: Actually, we would be adding one person to our promotion department if we had a radio station. It would be a portion of that.

4884 MR. BATSTONE: But that person would have other duties at the station as well.

4885 MR. LARCHE: That's right. But they would make more than $11,000 a year.

4886 MR. BATSTONE: Just to be clear, then, the $11,000 is just an allocation of the salary that would be devoted to the CTD functions.

4887 MR. LARCHE: Correct.

4888 MR. BATSTONE: Turning, then, to the CTD Web site that you mentioned in your application, you have now assigned a dollar figure to it.

4889 Could you tell me a little bit about the content of that Web site. What exactly will be on there?

4890 MR. LARCHE: The Web site will be part of the overall radio station Web site. Radio and the Internet are truly amalgamating. We are very proud of what we have currently done with CICZ and the web. We have a very active Web site that gets a lot of traffic. We have people who respond to what the radio station is doing in terms of comments.

4891 They can join our Country Club, which is a thing we do there. We also allow them to purchase CDs and so on. So we are using it now as a new source of revenue.

4892 With this radio station, I really want to take it a step further. I budgeted $40,000 in our overall promotional cost to operate a Web site that would have a radio station component, where people could listen to us via the web and find out what the radio station is doing; a community component where people could not only find out what is going on in the community but could also upload information about their specific events.

4893 So the Salvation Army in Barrie could access this community event Web page. They themselves could type this in, which would go to this calendar which is very heavily promoted. Then the Canadian talent development portion of it, which we put $10,000 of this $40,000 towards, we think would be very unique. It would allow Barrie artists that fit the genre of music that we would be playing to profile themselves on this Web site; so some pictures, some bio material.

4894 Also, if they have done some demo material themselves, we would put it on our Web site in a compressed MP3 format, and that would allow the general public to hear how some of these bands are doing, even though they don't have a record contract.

4895 MR. BATSTONE: Would it be a case of the bands coming to you, asking to be profiled?

4896 MR. LARCHE: We would on the Web site have a form that if you want to be profiled, please send us your information. We would take a look at it, and if we feel they fit with what we are doing, then yes, we would profile them.

4897 All of the winners we would have -- we say we make the mobile studio available four times per year or six times per year. All of the recordings from that we would also put on that Web site to profile these artists.

4898 MR. BATSTONE: My last question, then, relates to the expense you had indicated for an audition party. Could you tell me a little bit about that.

4899 MR. LARCHE: We will host Rock-Fest, which is a talent contest. From that, we will have a first, second and third place winner that will receive some recording. Then what we will do is we will hold what we call an audition party, and we will bring record executives from Toronto, people within the industry, to this. It would just be a social event where these people would be allowed to meet these new artists, hear the material they are playing, and possibly a live performance.

4900 MR. BATSTONE: I think that is it. Thank you very much.

4901 THE CHAIRPERSON: Thank you very much -- unless you have something more to add.

4902 MR. LARCHE: We will be up again in a little while. So thank you very much.

4903 THE CHAIRPERSON: Thank you.

4904 We will take a ten-minute break while the panels change.

--- Upon recessing at 1547 / Suspension à 1547

--- Upon resuming at 1605 / Reprise à 1605

4905 THE CHAIRPERSON: Welcome back.

4906 Madam Secretary.

4907 MS SANTERRE: Thank you, Madam Chair.

4908 We will now hear the application by Rock 95 Broadcasting Ltd. for a broadcasting licence to carry on an English-language FM radio programming undertaking at Barrie. The new station would operate on frequency 107.5 MHz with an effective radiated power of 26,000 watts.

4909 The applicant is proposing a Top 40/Contemporary Hit music format.

4910 Mr. Bingley.

4911 THE CHAIRPERSON: If you will excuse me, Mr. Bingley. Before you start, I intended to tell you what our agenda was for today.

4912 We will hear the CHUM application before leaving as well as the Phase III, the intervention that -- Phase II, excuse me, that the competing applicants may want to make against each other, and we will start each other's application and we will start with the other intervenors tomorrow morning at 8:30.

4913 Thank you.

PRESENTATION / PRÉSENTATION

4914 MR. BINGLEY: Thank you, Madam Chair.

4915 Members of the Panel and Commission Staff, my name is Doug Bingley. I'm President and General Manager of Rock 95 Broadcasting. I would like to introduce some of the other members of our panel that are with me today.

4916 To my left is Sue Leighton. Sue is the Morning Show co-host of Rock 95. She is also the assistant program director of Rock 95. If we are successful in launching our new radio station, she will be the program director of Z107.5.

4917 To my left, at the other end of the table, is Linda MacGregor. Linda has been the host and producer of Spirit Winds. That is a show we have run on Rock 95 for the last eight years. It is a one-hour native program that -- the program has been running actually since we launched the radio station. Linda is a former judge for the Juno Award category Music of Aboriginal Canada. As well as producing the show for Rock 95, she is a community facilitator for the Union of Ontario Indians.

4918 Immediately behind me is David Oakes. David is the President of Oakes Research of Toronto. He conducted a format and advertisers survey for our proposed new operation.

4919 Beside David is Roy Hennessy. He is President of Hennessy & Bay Communications in Toronto. He runs Radio Works, one of their divisions, which is a radio specializing advertising agency; also a company called Ethnoworks, which is a multicultural advertising agency; and he is a past president of FACTOR and has been a program director at a number of stations across the country. Hennessy & Bay conducted our revenue forecast and economic impact study for us.

4920 Now, this afternoon, what I want to talk to you about is our new radio station Z107.5. I would like to demonstrate for you what this station would do for the people of Barrie. But I will also be taking a few minutes to tell you about our existing station, Rock 95, and how we conduct business there because I think it is very relevant. The best predicator of future action is what you have done in the past. I hope you will bear with me as we go through that part because it does relate directly to the proposed operation.

4921 To begin with, the new radio station, Z107.5, will provide a number of public benefits. First, it will give teens and young adults in Barrie their own local Top 40 radio station.

4922 Second, the station will play all new music, promoting Canadian talent. We will air Cancon levels higher than CRTC requirements and we will donate $1 million in direct and $600,000 in indirect benefits to Canadian talent, and we will help fund and develop five native community radio stations.

4923 Finally, we will be able to continue as Barrie's only locally-owned and operated station. This really is no small benefit. It will maintain diversity in the marketplace, and as an ownership group that actually lives and works in the community, we have been able to do some pretty amazing things.

4924 To begin with, I would like to give you a little bit about my background. It's a bit of a cliché but, like most people, I have wanted to work in this business since I was a kid. When I was 12 years old I can remember dragging some turntables and amplifiers down to our basement to set up my own little radio station. But, as my staff is quick to point out, unfortunately, I have a voice that is made for newspaper --

--- Laughter / Rires

4925 MR. BINGLEY:  -- so I was really unable to pursue an announcing career. I said to Sue earlier, "Please try to talk at least a little bit higher than I am here."

4926 But I did get into broadcasting at the age of 18 and I worked as a summer student for TV Ontario. I later joined them full time after I left university and I moved to CBC where I worked as a videotape editor working on shows such as the National and The Fifth Estate.

4927 In the mid-1970s, I was living in Barrie and that's when Q.107 launched in Toronto. At the same time in Barrie we got our own FM station. It was a soft AC called CHAY-FM and the younger people in the market, including myself at the time, were a little bit disappointed with that because Toronto got Pink Floyd and we got the Swingle Singers. So that's when I first got the idea for launching a rock-based station in the marketplace. That was 1977 and I was 23 years old.

4928 Almost 10 years later the Commission issued a call for applications for Barrie. I still saw the need for a rock-based station, so I attended a hearing to see what went on in this very room, as a matter of fact, reviewed a few applications, and wrote my own application, presented it and here we are today 11 years later. I have to tell you, it wasn't easy to launch a station from scratch. We were a small group of investors. To give you an idea, my wife and I had to put our house on the line in order to obtain bank financing.

4929 It was just very difficult. We were always undercapitalized it seemed. But we were right in our choice of format and the station did very well right out of the box. We billed over a million dollars in our first year in the marketplace.

4930 Then the recession hit and, like many other radio stations, it was pretty tough for four or five years. It wasn't unusual for me to do without a paycheque or for that mortgage to get a little bit bigger at the end of any given month. But we were successful. We have been able to build a very successful radio station and that is due to three major factors.

4931 The first is we have a commitment to major market programming quality. We have always had that commitment and we will carry that through to the new operation.

4932 Second, Rock 95 was launched as a rock-based radio station. We have remained true to our format and currently we program 50 per cent classic rock and 50 per cent new rock material.

4933 Third, we actively work in the community. Now, any broadcaster would tell you that it is essential to be a part of the community. To us it is more than just a cliché because we actually live and are very much involved in the community. So, for example, when the station supports the Barrie Central High School Band, my kids remember that band. So I want it to be successful.

4934 Similarly, when we support the Rotary Club of Barrie project, well, I'm a member of that club so I want it to work out as well.

4935 A good example of the type of project we have done, it is occurring right now, we have a toy drive. We have run this for 11 years. We raise over $50,000 in toys for needy children in the area. The last couple of years, we have worked in conjunction with CKVR Television to expand the base of that.

4936 Those are just numbers, but the fact is when you see someone come in with their small child and they are making a donation to that toy drive, it says a lot about the community and it really says a lot about the radio station. When you support the community in that way, the community always comes back and supports you.

4937 Now, just to shift gears for a couple of moments, what I would like to do is talk about the programming of the new station, and Sue Leighton, our Program Director, will address that.

4938 MS LEIGHTON: Thank you so very much, Doug.

4939 Madam Chairperson and Commissioners, I would like to begin by speaking briefly about how we chose our format.

4940 Before we could build a format, we had to answer one very important question: What group of people in Barrie are not being served by local radio? Now, to answer this, we first turned to BBM. As we can see by this BBM graph, the 12 to 24 age group in Barrie is largely underserved with over 65 per cent out-of-market tuning. In particular, teens have over 80 per cent out-of-market tuning.

4941 Now, having determined who is underserved, we then contracted Oakes Research to survey what format this demographic wants. The answer: CHR Top 40 radio. That is the format that we are proposing to you today.

4942 Top 40 radio embodies the very essence of radio, the spirit of radio, you may say. A generation grew up with Top 40 radio and it truly is the format that built radio to what it is today. But for various reasons, broadcasters have dropped the format and in doing so we risk losing the next generation of radio listeners.

4943 Top 40 can rejuvenate our industry. It brings new, young exciting announcers into the business, it gets people excited about Canadian music, it has the power to carry radio into the next millennium as a vibrant, relevant medium.

4944 Z107.5 is going to be exciting, up tempo and relevant to the younger members of the Barrie community. Our programming will be fast-paced, focused on the biggest hits of today, and include topics of interest to our target audience. Now, so far I have been talking about bringing back Top 40 radio.

4945 You see, I grew up in a small little town just north of Orillia and I missed out on Top 40 radio because it was never there in the first place. There wasn't a Top 40 station in our market and there still isn't one today. Because of this fact, Commissioners, I am extremely excited about the opportunity to program this station and bring this format to our market.

4946 Let's focus for a moment on how our format can benefit Canadian talent.

4947 As Doug mentioned to you earlier, the CHR format is the very best for promoting Canadian artists. That's because CHR is almost 100 per cent new music based. Most other formats are at least 50 per cent gold based.

4948 Frankly, this does very little to promote new Canadian talent.

4949 Our promise of performance includes 37 per cent Canadian content for all selections played, a content level higher than the CRTC regulation and the highest level of the three applicants appearing here today.

4950 I would also like to point out to you, Commissioners, that our Canadian content commitments are based on a 24-hour day.

4951 Further benefits include an indy's show for independent artists, daily features like the Canadian spotlight that highlight Canadian music, and live broadcasts of local bands.

4952 Now, let's discuss our $1.6 million in direct and indirect benefits for Canadian talent.

4953 Here is the reality for your average Canadian musician: They love to play music, they love to perform, but Canada is not a large market. There is not a lot of money in the business. There is enormous competition and often a musician has to play for next to nothing in seedy little bars just to get exposure or just to build up a following.

4954 If they are lucky they will get a contract with a big record company. The record company will lend them the money to cut an album, and then claw it back from the sales of their first album. In all likelihood they won't see a cent from that first release.

4955 For those lucky few who do make it to the top, the money isn't what the general public thinks. For the rest, it's a marginal living playing in the evening or maybe driving a cab or waiting on tables, always hustling to build their careers. It's a very tough business, Commissioners. It is a little familiar to me because it sounds a lot like radio.

4956 Our Canadian talent program recognizes all of these problems. Our main objective is to provide local support that augments all of the efforts these musicians put into their own careers.

4957 First, we will make donations to industry funds that are double the voluntary contribution levels of the CAB program.

4958 Next, we will fund an annual compilation on CD highlighting local bands. The CD will be distributed to radio stations and record companies all across the country. A key concern with local bands is that many venues no longer feature live music.

4959 To encourage more establishments to get onboard with live music, Z107.5 will air bi-monthly broadcasts from local clubs. We will pay musicians talent fees for taking part in these broadcasts and we will underwrite the cost of having a professional studio record, produce and mix down the show.

4960 We will develop an annual "Barrie in Sun" music festival, bringing live music to an outdoor venue and to clubs all across town. We want to make Barrie "music central".

4961 In today's world a band simply must have its own Web site to promote their music. We will build and maintain free Web sites for local talent

4962 Finally, Commissioners, we will hire a co-ordinator to make sure that these and our other CTD commitments are met.

4963 Our seven-year direct commitment to these initiatives totals $448,000. With the addition of indirect dollars, this total grows to $833,000.

4964 The new artist program encompasses only half of our Canadian talent initiatives. The other half is related to the development of native broadcasting.

4965 My friend Linda MacGregor will give you an overview of that program.

4966 MS MacGREGOR: Thank you, Sue.

4967 Madam Chair, Commissioners, I would like to speak to the public benefit of this application which commits five native-owned and operated radio stations on First Nations territory.

4968 Now, as a member of the native community I can say on good authority that the impact of this application is G,Nadjiwon. That means -- it's that feeling that you would have if you were to see the Rocky Mountains for the first time, how beautiful that is. That is how beautiful this application is to us and it would have a long-term -- immediate plus long-term positive impacts on our communities by all ages.

4969 Now, first I would like to focus on the most important benefit: How we are portrayed.

4970 Historically we have been challenged by a general mindset. This mindset was introduced to me as a child by television and it began like this:

"One little, two little, three little Indians...".

4971 Now, as innocent as that song may seem, I heard it differently as a child. Even as a child I felt minimized. It didn't feel right.

4972 Now, this song speaks to the reality of the world that I grew up in, and the world that we all grew up in, our perception of who we are as we look out and then those on the outside looking in for their perception of who we are as native people.

4973 I'm sure these early perceptions, these early introductions of who we are influenced everyone in this room about native people. We have all been impacted in some way. I was impacted about who I was as a native person through these early introductions.

4974 Now, the Canadian talent initiatives contained in this application will help to build a bridge between these two worlds, to turn around stereotypes, to turn around the misconceptions. The five proposed native radio stations will provide an incredibly effective forum for us to tell our own stories, to sing our songs, to hear about our heroes and to discuss our issues locally, regionally, nationally. Who better to speak to those issues than us, the native community?

4975 I want to say how important it is to me, to the native community, that this mainstream broadcaster, the Applicant, who has for over a decade helped us through his commitment to aboriginal broadcasting moved beyond "One little, two little, three little Indians" to developing community radio.

4976 Today he is prepared to extend that commitment even further. Here are the commitments from Z107.5:

4977 They will provide all the necessary equipment to set up and operate five native radio stations in the Barrie region. Here is a picture of a proposed studio. You can see that it is the state-of-the-art and includes this station automation package.

4978 Z107.5 will also provide maintenance for all five stations and, in addition, provide guaranteed funding for an incredible seven years. This would allow for permanent hiring of co-ordinators for each station to ensure that it stays on-air.

4979 They will set up a permanent training program, bringing students into the station on a regular basis and these students would produce a weekly one-hour show which would be broadcast on Z107.5. The direct and indirect benefits of this program come to over $800,000 -- just under $1 million.

4980 Now, if I may, I would like to review how a series of CRTC policies and the Broadcasting Act itself confirm why granting this licence is indeed in the public interest.

4981 Now, first, the importance of native radio. I couldn't put it better myself than the CRTC's Native Broadcasting Policy of 1990 when you had this to say about native broadcasting:

"These services have taken on a role akin to other publicly mandated services such as the CBC." (As read)

4982 So it seems we are in agreement: Native radio is a great thing.

4983 But there is one problem, up least up until today, and that is lack of funding.

4984 Here is what the Therrien report, also commissioned by the CRTC and written over 20 years ago, said about fair access.

"It is not enough to give access. Access alone is of little practical value without the assistance of trained staff, technicians and funds to produce programs." (As read)

4985 Over 10 years later in the Native Broadcasting Policy of 1990:

"In the Commission's view it is essential that aboriginal broadcasters receive sufficient funds to enable them to fulfil their responsibilities." (As read)

4986 And again it seems we are in agreement. Without money or training the right to apply for a broadcasting licence by us, the native community, will remain a nice theory. It is like having car keys and no car.

4987 Now, in addition, the Broadcasting Act implicitly recognizes this problem with this:

"Programming that reflects the aboriginal cultures of Canada should be provided within the Canadian broadcasting system as resources become available for the purpose." (As read)

4988 That is exactly what you have before you today at this time.

4989 This Applicant is placing before you, placing before the native community the resources to make possible five new aboriginal radio stations. We look forward to this incredible partnership.

4990 We also have a wealth of content. Z107.5 will assist with the development of aboriginal music, the preservation of the original languages spoken in Canada -- the original languages, encourage journalistic and artistic expression, as well as deliver a much needed first level of service in the native communities by the native communities.

4991 I think you would all agree that these are very compelling public benefits.

4992 Meegwetch.

4993 MR. BINGLEY: Thank you, Linda.

4994 Commissioners, we have a long term commitment to native radio. Since launching Rock 95, we have provided over $100,000 for that purpose.

4995 At this time there is one more element I would like to touch upon and that's economic impact within the market. Our proposal will have minimal impact on other stations. As a combo, the Shaw CORUS stations, B101 and CHAY, will see a profit of close to one and a half million dollars. They have all of the resources of Shaw behind them.

4996 With respect to large broadcasting, our top 40 format will not appeal to CICZ new country listeners and our advertisers will be those who seek a younger audience while their clients tend to skew older, so we will not be targeting their sales either.

4997 To ensure that we minimize any impact on CICZ, the large radio station, our application proposes a condition of licence to not sell in the Midland market.

4998 That's a brief overview of our application.

4999 I would like now to summarize our public benefits. First, we will provide a local station for the most underserved group in Barrie, teens and young adults.

5000 Second, our CHR format will provide a natural benefit for Canadian talent. This will be augmented by 37 per cent Cancon commitments and features that focus on Canadian talent.

5001 Third, we will provide over one million dollars in direct benefits and another $600,000 in indirect benefits to support Canadian talent. That's broken into two major initiatives, half to support Canadian musicians through a series of carefully planned effective initiatives and the second half will be the development of five native aboriginal community radio stations.

5002 The final benefit is ensuring continued diversity of ownership in the Barrie market with all of the benefits to our community that naturally follow.

5003 There's one final question that must be answered. Why are we applying for this licence in the first place? Eleven years ago I launched Rock 95 and the experience of building and launching a new radio station simply cannot be described. When you build a radio station from scratch and you see something that you have put a lot of effort into become so important to so many people, that really is the ultimate work experience.

5004 Although we have been successful in facing down three very large chains, our two major competitors, CHAY and B101, are about to merge together and, quite frankly, it's going to be extremely difficult to survive with them targeting us in concert.

5005 A second licence for Rock 95 will restore a level playing field yet maintain competition. It will allow us to compete and to continue as an independent.

5006 On a personal note, I got into radio because I love this business and I want to stay in this business. That's why I'm here today.

5007 That concludes our presentation. We would be pleased to answer your questions at this time.

5008 THE CHAIRPERSON: Thank you, Mr. Bingley.

5009 Commissioner Cram, please.

5010 COMMISSIONER CRAM: Thank you. I'm going to ask the same issue and not engineering questions about your antenna, but is your antenna on the same hill or the same geographic area?

5011 MR. BINGLEY: Yes. It's within a few kilometres.

5012 COMMISSIONER CRAM: So again you have access to Midland, your antenna, it broadcasts to Midland.

5013 MR. BINGLEY: Yes. The full coverage signal of all of these stations basically encompasses Barrie, Midland, Orillia and into the south part of Muskoka, including Bracebridge.

5014 COMMISSIONER CRAM: So then for the purposes of these competing applications, should we be considering sort of the demand of the market of the extended BBM area that we were talking about with LCI?

5015 MR. BINGLEY: Well, in terms of audience research, we included some research -- we included some respondents in Midland and in Collingwood. We thought that was important because naturally we are spilling into those markets.

5016 Moreover, most of those markets are out of the range of Toronto radio. The 500 microvolt contour of Toronto radio stations crosses almost right through Barrie. While you can receive some Toronto FM stations on car radios, in house and with small portable stereos you can't receive them.

5017 I think any new service that is provided in Barrie will provide a very valuable service in those outlying communities as well.

5018 COMMISSIONER CRAM: The first issue that I would like you to address, aside from the extended area, is our decisions in London, Kelowna and Victoria and the factors that we talked about that should be considered in competitive cases for radio.

5019 I'm wondering if you would like to have the opportunity to address those factors as they apply to you and what you think is the most important factor here in the Barrie or the extended Barrie market?

5020 MR. BINGLEY: Are you discussing the concept of economic impact or are you saying in the decision, the criteria for selecting an applicant?

5021 COMMISSIONER CRAM: Yes. If you can talk about each of the criteria as they refer to you. The first was the quality of the application and there was format in that. Then there were the competitive issues. If you would wish to discuss them as they apply to you.

5022 MR. BINGLEY: Yes, Commissioner. I think the first one you discussed, the concept of quality of application, you mentioned the concept of quality of the business plan. I think we have put before you a pretty thorough business plan. Certainly a lot of effort went into that. There was a lot of research and a lot of detail, as you may have noticed, that went into our application.

5023 You also mentioned quality in terms of a number of issues. One of the key ones was Canadian content. With respect to the other applicants here today, and are you asking me with reference to the other applicants?

5024 COMMISSIONER CRAM: You can be as self-serving as you wish.

5025 MR. BINGLEY: All right. Thank you very much.

5026 COMMISSIONER CRAM: Be careful though.

5027 MR. BINGLEY: All right.

5028 COMMISSIONER CRAM: If I find people that are exaggerating or contradicting --

5029 MR. BINGLEY: No, I won't wave the flag.

5030 COMMISSIONER CRAM: You tend to mention that to them.

5031 MR. BINGLEY: All right. Basically on our side of the ledger, we are proposing Canadian content levels that are 37 per cent. They are higher than CRTC minimums. That's a higher level in terms of measuring up public benefits compared to other applicants.

5032 We have a million dollars in direct Canadian talent initiatives. On their side of the ledger, CHUM has $600,00, Larche's file had approximately $35,000. I'm not quite sure where that sits. Maybe we will save that for the intervention phase.

5033 With regard to our Canadian talent initiatives, I believe we have the most carefully laid out and planned series of initiatives. We took a lot of time to examine what things would work together. Sue was talking about the problems that face Canadian musicians getting air play, being involved in local clubs, for example. That's where the music festivals come in.

5034 It's very important for Canadian bands today with the Internet to be able to have a presence on the net just as Canadian bands 20 years ago all of a sudden had to have a music video. Now they have to have a Web site.

5035 We are providing those and there's other examples in our application, but we have tried to present a well rounded series of initiatives.

5036 The other half of our initiatives have to do with native radio. This is something that I have very much been a proponent of for a number of years. When we first filed our application in 1986 for Rock 95, we had that. We have had a native show since that time. We have maintained that. As I say, there are a number of public benefits that kind of stack higher there.

5037 Another issue that you mentioned in your decision was impact in the marketplace. We have designed our station so that it will have minimal impact on other radio stations. It's true the market is growing and it's growing rapidly, but you can't say just in a blanket form oh, it won't have impact on anyone else because the market is growing.

5038 Certainly if I was to launch a country station, it would have a massive impact on Mr. Larche. An AC station, for example, would have much less impact because it's spread between a couple of other stations.

5039 Finally, I think it's very important and it really should be the starting point of all of this is what members of the Canadian public are being underserved. What's the public benefit of all of this?

5040 We have identified teens and young adults as needing this type of service. Certainly there's a lot of out of market tuning. All of these criteria I think are all public benefits and they all do match your standards.

5041 COMMISSIONER CRAM: And in terms of the Barrie market, what should be the most important criteria that we should be looking at out of those as listed in those three decisions?

5042 MR. BINGLEY: Well, I guess if you were to rank them, it would be a toss up. It is radio. The first thing you have to address is the market, what members of the Canadian public are going to be served. I think that's the first thing we have to address. Everything else sort of flows from that.

5043 We talk about diversity of voices and all of those things, but if you don't have a radio station there in the first place that suits your needs, all of those issues become a moot point.

5044 I think the second issue has to be Canadian talent development. This is something that the Commission has always placed a high value on. Canadian radio stations really do depend upon the music industry for support. That's our product, so I think it's appropriate that we support the industry. I think those are the two real key criteria there.

5045 The third is economic impact on other stations because it does no good, quite frankly, to launch a station if everyone gets into a difficulty. If you go down to the United States where they have had a pretty laissez-faire attitude to issuing licences, I like to say there's so many stations, so little choice. You can drive for 500 miles and not know what the weather is. It's like one massive good time oldie satellite station from New York state to the edge of Florida almost.

5046 I think that the industry loses if we over-licence in a market as well.

5047 COMMISSIONER CRAM: Why do you think in terms of your target, the 12 to 24, why do you think the present local stations aren't programming for this demographic, including yourself?

5048 MR. BINGLEY: Well, there's a couple of issues here. The first has to be and maybe I could address them on a case by case basis. You have to address the heritage of some of these stations.

5049 CIQB, B101 was originally CKBB. It was an AM station. It was the heritage station in the market launched in 1949. It has been an adult contemporary station for more than my life.

5050 CHAY-FM was launched as a soft AC. Personally, as I mentioned at the time, I thought there could have been a better format for the marketplace, but for better or worse, that's what they were launched as. There's certainly an economic reason for AC. It's the most popular market in terms of raising ad dollars in the country. I think there's some very good financial reasons for those broadcasters to stay there. It's also one of the most popular formats and the public is well served by that as well.

5051 In the case of Rock 95, we do have a significant component that is teen based. A problem we run across the last few years when we launched the station, it was pretty easy to say we were a rock station and that's going to be teenagers and it's going to be young adults,

5052 Something happened about five or six years ago and the teen market started to split. It went into a couple of directions. We started noticing that teens and younger people were starting to tune to more rhythmic based formats and more pop based formats.

5053 As a consequence, we can't follow that. We are either a rock station or we are not. We would have had to change our format and become a pop based station to follow that aspect of it.

5054 Really what you have, I guess to summarize it, you have two ACs that specialize in adults and you have a rock based station that's not as popular with teenagers as the pop and rhythmic based material.

5055 MR. HENNESSY: Doug, with regard to the advent of CHR radio, there are a number of issues. One of the key economic factors is that you go where -- the market tends to go where the revenue is. The vast majority of dollars spent on radio are in 25 to 54 demographic, so the teen -- even if you have a large share in the market, it tends to be diminished in value because there's less revenue driven to that market.

5056 That was one of the things that hindered the development of CHR. Another was regulatory and the fact that to do a true CHRN-FM was prohibitive. I think there was a desire for it in the marketplace and stations that were doing it on AM attempted to continue to do that, but the market had shifted from music to FM. That also had an impact in slowing down the evolution.

5057 I think if you see the impact across the country where this format has been introduced, one of the interesting things about this format that makes it more immediately viable is the rapid acceptance in the marketplace. The younger, the more active the listener, the easier it is to attract them to your station with the appeal of your format.

5058 An example of that would be the recent launch or re-launch of KISS-FM in Toronto. I don't know if the Commission is aware of a rating service called Mobil Track. In fact, it's an electronic measurement of radio tuning. It was developed by an American company but developed in Toronto as a test because Toronto is a very stable radio market.

5059 What they do is measure approximately 100,000 cars a day at about a dozen different locations around the city. They measure the RF frequency that is exuded by your radio as you drive by. So you can get a daily measurement 24 hours a day accurate tuning of every car. In home tuning according to U.S. research is very, very similar. It parallels each other.

5060 When KISS launched -- my agency uses this mobile track service because we are involved in buying ethnic advertising and the ethnic radio stations don't tend to subscribe to BBM ratings, so it is difficult to know who has what and so Mobile Track helps us with this.

5061 Anyway, we tracked the launch of KISS in Toronto and it was amazing. Compared to the launch of a country station, which can be quite rapid because it's a unique format, launched in adult contemporary format, it seems like it is going to take forever to get where you are going to go.

5062 But with CHR the word is out and you are there, and I think Toronto is the perfect example of that.

5063 COMMISSIONER CRAM: Just by you saying that, Mr. Hennessy, I have to ask the next question because it seems that when you look at things like this you talk not only about attractiveness, but to a certain demographic, but also the durability of that demographic, the fact that they will stay with you. Does this demographic stay or does it flit on fairly quickly?

5064 MR. HENNESSY: If you program the station well it will stay with you for a long time and grow with you and you will find this evidenced in the CHR stations. When they launch they tend to be very young, very core and --

5065 COMMISSIONER CRAM: And then they grow old, do they?

5066 MR. HENNESSY: Yes, don't we? Don't I? Sorry, Doug.

5067 MR. BINGLEY: Nice recovery, Roy.

5068 MR. HENNESSY: Was that a good one?

5069 The audience will immediately be the young, core top 40 listeners, and then as the word gets out and spreads to people who are less involved, less intense about their music, less intent about their pop stars, they become familiar with the station and they will try sampling.

5070 If the average person listens to three radio stations a week and you've got five buttons on your car radio, eventually, probably, your son or daughter will get that station onto that button and you will end up hearing it and you will become accustomed to it and you will see the audience grow. It tends to grow more with women than it does with men because they have more of an affinity to pop music, as opposed to music to weld by.

5071 So, it will grow and with the younger audience they are fickle, but they will stay with you if you truly serve that audience and that's what some of the initiatives that Sue is outlining will address, that you truly can measure that audience, monitor it, communicate with it and build your audience base from there.

5072 COMMISSIONER CRAM: Thank you.

5073 MR. HENNESSY: You are welcome.

5074 COMMISSIONER CRAM: What about duplication, Mr. Bingley, in terms of CFJB and your new proposed station?

5075 MR. BINGLEY: Well, there is a number of factors that differentiate the two. The first is a rock-based station in terms of musical style works vertically. You are talking format. You are talking rock from a number of different ages, so you are talking about 50 per cent classic rock or gold-based material and the balance being current and recurrent, or music less than a couple of years old.

5076 A contemporary hit station, if you will, programs horizontally. In other words, it plays new music and that is its defining factor is new based music. Typically, most of the music is under a couple of years old, so that is the key factor that differentiates it in terms of musical style.

5077 Now, with regard to programming elements -- Sue, do you want to cover that off?

5078 MS LEIGHTON: Thank you, Doug.

5079 One thing I wanted to add with the CHR format not only does it focus on new music, but it focuses on the biggest and the best songs, those songs that have clawed their way to the top of the charts and those songs that have proven themselves to what our younger audience wants, what our demographic wants.

5080 There may be some repetition on some songs. Obviously, if there is a huge rock song, Rock 95 will be playing it, but Z107.5 will also be playing it because that's what our listeners want.

5081 One of the main programming elements, one of the most important elements with Z107.5 is taking care of the needs of our listeners. Our listeners will let us know what they want to hear. These young people know what they want and they will tell us, whether it be through requests, opinion polls, our Internet web site and we will listen to what they want. That's the whole idea behind CHR.

5082 COMMISSIONER CRAM: So are you thinking, can you give us a number in duplication, five, ten, twenty, 500 per cent?

5083 MR. BINGLEY: If you don't mind, I think the key component is the rhythmic component. If you are taking a look at a CHR station, we would say probably 75 per cent of that music will be rhythmic or pop based.

5084 For example, you would be looking at an artist like Madonna or Celine Dion. If I was to put Madonna on Rock 95 I would have to have the phone system removed. It just is inconsistent with the rest of the music around it. So in that sense, let's say 75 per cent of the music would not be duplicated.

5085 The other way around, some of the current material on Rock 95 would be duplicated on the station and there is no doubt about that, but the key to finding factor in any given hour, of course, is the aging of the music as well. So, for example, while Rock 95 is maybe playing a Pink Floyd track, the CHR station might have a rock track by Pearl Jam that is common to the two stations, but the next track on the CHR station might be The Spice Girls, for example, and you certainly wouldn't hear that on Rock 95.

5086 COMMISSIONER CRAM: So you can't put a number them to the amount of duplication?

5087 MR. BINGLEY: It's going to vary from time to time, 20 to 25 per cent maximum.

5088 COMMISSIONER CRAM: All right.

5089 You said, and you did a lot of financial scenarios -- you said that a stand alone CHR had a limited chance of success. Did you mean by that that a stand alone had a limited chance of success, or a CHR format had a limited chance of success?

5090 MR. BINGLEY: Definitely a stand alone CHR. If you take a look at our revenue projections, it would be very difficult in the Barrie market, at least in our opinion, to run it as a stand alone, if you start to add in all of those general and admin expenses and technical expenses and so on. They can add quite a bit to that. There is a lot of savings in running two stations in combo and that's what we meant by that.

5091 COMMISSIONER CRAM: Sop it has to be both, stand alone and CHR. Is that the point?

5092 MR. BINGLEY: No, I'm sorry, it has to be a combo and CHR. I'm sorry, depending on the angle, yes.

5093 COMMISSIONER CRAM: You said in your presentation that a lot of the impact would come from CFJB in terms of audience share. Where else would the audience come from?

5094 MR. BINGLEY: A large proportion of the audience would come from out-of-market stations, in particular Hits 103.5, KISS-FM out of Toronto and that's where most of the material or the audience would be repatriated from.

5095 Roy, did you want to comment on that from your research?

5096 MR. HENNESSY: At this point in time when this analysis was done, but because it is CHR it does change rapidly, but when this was done the teens in Barrie -- Orangeville had a reach of 57.9 per cent of that market. So there is 57.9 per cent of the teens in Barrie are going out of market to a station that is also formatted more urban, more uptown, if you like, more Toronto because that's ultimately where they want to be, and still almost 60 per cent of the teens in Barrie are going there.

5097 Repatriation of that group would be rapid and I think you would see an immediate impact there.

5098 It also reflects young women in Barrie, that we have got a number there of a reach of 19.3 per cent who looking for the CHR format are going to the Orangeville station.

5099 COMMISSIONER CRAM: You do know that it is technically possible for us to licence two stations. In your belief could the market sustain it?

5100 MR. BINGLEY: I have some concern with that. The fact is two years ago there were three stations operating out of the Barrie market; Rock 95, B101 and CHAY.

5101 Two years ago Mr. Larche was granted the transmitter move and he has in terms of marketing become a de facto fourth radio station. This past summer the Commission licensed a Christian contemporary radio station and that won't take a lot of money out of the market, but it will take some money.

5102 If you were to issue another licence today, that is a fifth, and following that that is a sixth. So that's doubling the number of radio stations in the market in less than two years.

5103 I have some concern, as someone who has helped build this market, that it could become balkanized. It could become something like a Niagara Falls/St. Catharines where there is a lot of difficulty. While the revenue base is growing, if you introduce too many stations in the market you run the risk of introducing rate cutting and rate competition that can drive down the overall rate and stop and even reverse that growth and that's the concern I have.

5104 MR. HENNESSY: I also think it would be important that if there were two licences that it generate diversity and not duplication.

5105 COMMISSIONER CRAM: So you don't want two CHRs to be licensed at the same time. Is that --

5106 MR. HENNESSY: Or two classic rocks.

5107 COMMISSIONER CRAM: So if either Larche or CHUM were licensed and you were not what would be the impact on CFJB?

5108 MR. BINGLEY: We outlined that. We responded to an intervention that the Commission sent to us.

5109 We are projecting, for example, that our new CHI will pull about a quarter of a million dollars of revenue from Rock 95. It would pull even more, but we will have some synergies by combos selling the two stations. So it won't have that impact.

5110 If you launch a CHR in the market, it would take maybe a share point or two from Rock 95. So there is that potential for damage.

5111 The other thing you have to recognize is the combo situation of CHAY and B-101 and the ability of them to refocus their programming to more directly target us. That is something we are very concerned about.

5112 In the case of licensing a classic rock station, that station has a significant component of current rock, in my opinion -- and we will get into that in the intervention phase. It is pretty similar to our format. That would be devastating to us. Quite frankly, they are exactly the same client base. They are the same group of listeners.

5113 They are talking about removing 30 per cent of our audience right off the top, a 3 per cent market share. So that now knocks us down from no. 2 in the market to no. 4, behind CHAY and B-101.

5114 So we would lose, just there, probably a few hundred thousand dollars to CHAY and B-101, because we have suffered relative to them. And that is before the other stations started targeting our advertisers.

5115 So you could see within a two- or three-year period our revenues dropping by close to a million dollars. Certainly we would make up some of that, and it would not be as bad if we were a joint licensee. We would have the CHR. But it would be very difficult.

5116 I do believe the market would have some difficulty. It is growing, but it is still only just over 100,000 people.

5117 COMMISSIONER CRAM: In the same scenario, though, you would be able to survive.

5118 MR. BINGLEY: I hope so.

5119 COMMISSIONER CRAM: When you were talking about the consolidation in the market and the impact on your revenues, it wasn't necessarily the consolidation you were worried about, was it?

5120 Or was it the consolidation and then a sort of directed formatting at your present station?

5121 MR. BINGLEY: When you talk consolidation -- and let's just talk for a moment, if we may. There are no entries in the marketplace.

5122 There are two impacts. First, the combined sales force could go out and offer deals, packaged deals, for the two radio stations. That makes them more competitive compared to our station.

5123 Second, they would be able to adjust their programming, and I suspect they would adjust their programming. They have done it in the past, for example. There are a number of opportunities open to them.

5124 So right off the top you have the impact of the combo sales.

5125 The second thing is: What are they going to do with the programming?

5126 So it is both.

5127 COMMISSIONER CRAM: Can you quantify the financial impact of both of those individually?

5128 MR. BINGLEY: Bear with me for a moment.

5129 COMMISSIONER CRAM: Sure.

--- Pause / Pause

5130 MR. BINGLEY: We estimate -- and I am assuming that they would adjust their programming. I think that is the first assumption.

5131 We estimate that within two years CHAY and CIQB would draw approximately half a million dollars from our radio station.

5132 COMMISSIONER CRAM: Then when we were talking about your scenarios and your projections with the new station, I think you were saying your revenues were going to be -- did you say today a quarter of a million the first year?

5133 MR. BINGLEY: For the new station?

5134 COMMISSIONER CRAM: Yes.

5135 MR. BINGLEY: No. The impact of the station on Rock 95, we have assumed in all of our forecasts that it is -- we use the word "cannibalization". It has removed about a quarter of a million dollars from our existing station.

5136 COMMISSIONER CRAM: In terms of your projections for the new station, your most likely scenario shows your revenues, especially at the local sales, the lowest of all of the three of the applicants.

5137 Why do you project relatively such low revenues?

5138 MR. BINGLEY: Well, there are a couple of parts to that.

5139 First, I would like to address that to Mr. Hennessy, who came up with our base revenue projections.

5140 MR. HENNESSY: I think the optimum word here is conservatism. It is better to go in anticipating what might be at the end of the tunnel.

5141 Certainly the projections for the growth in the market -- and we are looking at projecting a share of 9.2 per cent of audience, and then if you depreciate that or weaken it because it is a CHR rating and give it a 60 per cent value, it would decrease the revenue that would be available to the station.

5142 The half million dollars allows for a start-up period. And I stated that it would be a quick acceleration in the market.

5143 There still is a period of time to convince the advertisers to wait for BBM ratings to show up to prove what you have done. You could do things to counter that.

5144 You can guarantee delivery; make sales in advance and if you don't deliver the audience, do make goods. You can do combo sales, a number of things. But there still is a reluctance and a drag period before the advertisers come on board.

5145 There are also a number of advertisers who have not used radio to reach teens for a period of time, and it is going to require re-education for them as well.

5146 So I think going in conservatively, $500,000 is the safe side.

5147 COMMISSIONER CRAM: The other part about your projections, Mr. Bingley, is that your expenses in programming are relatively the highest.

5148 Is this as a result of your emphasis on program, or what?

5149 MR. BINGLEY: I think actually the medium, Commissioner -- I believe CHUM's programming expenses are higher than ours. We are higher than Larche.

5150 We built them based upon what our actual expenses are in Rock 95, in our experience.

5151 We think, relative to the market -- we know we can achieve on that budget, and that is what we need to order to do the job.

5152 COMMISSIONER CRAM: The Cancon, 37 per cent, category 2: You say 24 hour a day, seven days a week.

5153 MR. BINGLEY: Yes, that is correct.

5154 COMMISSIONER CRAM: And you would commit to a COL to that effect?

5155 MR. BINGLEY: I'm sorry, COL...?

5156 COMMISSIONER CRAM: Condition of licence.

5157 MR. BINGLEY: Sorry. Yes, I would, most definitely.

5158 COMMISSIONER CRAM: A year ago I wouldn't have even know what that meant.

5159 You agree with that.

5160 MR. BINGLEY: Yes, I do.

5161 COMMISSIONER CRAM: Does that extra 2 per cent affect you financially? Is that an additional cost?

5162 MR. BINGLEY: No, it is not an additional cost.

5163 I would like to point out at the start that typically we run our radio station at 2 to 3 per cent over our POP to begin with. We always want to be in compliance and that's our way of doing it.

5164 So when we say 37 per cent, we are really pushing 39 to 40 per cent.

5165 We don't believe we are going to have a problem with that vis-à-vis the out-of-market stations that are 35, 36 per cent themselves.

5166 Sue, did you want to comment on that?

5167 MS LEIGHTON: Yes. One thing we want to pass along, Commissioners, is that our listeners favour the phrase "Canadian content". We really, truly stand behind this.

5168 It is no longer viewed as a negative by any means. Some of the best music in the world is coming out of Canada. What our musicians are producing is incredible.

5169 I think the thing to keep in mind with our application is that our listeners really want to hear a very wide variety of musical styles. Therefore, that gives us a much wider universe of Canadian content to draw from.

5170 For example, Rock 95 would be drawing new Canadian rock. With Z1075 we can draw from all styles.

5171 Like I said, on the rock station we can play the very latest song from eurhythmic pop or hip hop artist. We can also play the very latest from the Headstones, the Tragically Hip, Moist, and we don't see any difficulty in meeting our Canadian content requirements. There is plenty of material out there.

5172 MR. BINGLEY: I think another point is that our CHR station is going to be more in tune with our local audience in terms of their listening habits. And they are different from Toronto. The entire make-up of our community is different than Toronto.

5173 So while perhaps we lose a bit of flexibility vis-à-vis the Toronto stations because we have a higher Cancon commitment, we will be able to focus more closely on the musical styles that our listeners are after.

5174 COMMISSIONER CRAM: I must say, actually, I read that research of yours, Mr. Oakes, and I was very pleased to see that Canadian actually has a cache. I was very pleased to see that.

5175 Anyway, you are saying you are hiring a news director and then I heard LCI say, earlier today, that you have your afternoon news -- you get your afternoon news through CKVR TV.

5176 MR. BINGLEY: Yes. For the last two years we have picked up in the afternoon three newscasts that are provided through the CKVR newsroom. We didn't reduce our news staff when we did that. We didn't reduce our news commitment.

5177 We did it because, quite frankly, we thought it would make the product better. They have the largest newsroom in the marketplace and we are very happy with the content of that.

5178 I think the key factor, though, is that we are in control of what actually goes on the radio station. So we don't have to take their newscasts, but I believe it is a quality piece of programming that we are providing.

5179 COMMISSIONER CRAM: So what do you propose to do on 107? Have your own news?

5180 MR. BINGLEY: Yes. It definitely has a different news style than an album rock station would have.

5181 Sue, do you want to address that?

5182 MS LEIGHTON: Thank you, Doug.

5183 What we are proposing, Commissioners, we will be doing hourly newscasts, just over a minute and a half in length. We will be hiring a separate news director. We will be building a separate news staff, however, they will be located in the same newsroom. So Rock 95 will have their news staff, Z107.5 will have theirs but they will be housed in the same room.

5184 They will be sharing information. We will be using separate presenters writing up their own copy. Each news department will select their own line-up.

5185 Again, they will have their own news director. We truly believe -- it is a best-of-both-worlds situation. The information will be shared back and forth. It works towards affordability. But, obviously, news that is presented on Rock 95 and news that is presented on a CHR will have two completely different feels and tempos to it. I mean, when a big story comes in they can share it around and get it on the air very, very quickly.

5186 COMMISSIONER CRAM: So, then, do I understand you that -- you know, different news on the two, but on Rock 95 you are still going to retain the CHUM news in the afternoon?

5187 MR. BINGLEY: We will, yes. Yes, we will.

5188 COMMISSIONER CRAM: Okay.

5189 You were talking about features called I believe Barrie Links.

5190 MR. BINGLEY: Yes.

5191 COMMISSIONER CRAM: Would you be using those on both stations or just the 107?

5192 MR. BINGLEY: They would be on 107.

5193 COMMISSIONER CRAM: And you talked about sharing of staff. What staff would you be sharing? You have talked news sort of semi in terms of space.

5194 MR. BINGLEY: Yes. I think if you are talking -- are you talking news or programming in general?

5195 COMMISSIONER CRAM: Totality.

5196 MR. BINGLEY: Okay. First, let's start with the news, if we may.

5197 We will have separate news directors and separate news staff. The news directors really are -- I have always had a hands-off policy -- they are the ones who set the tone for the news programming on the radio station.

5198 In terms of on-air staffing, there won't be much overlap except on a couple of occasions, overnight periods, we will be doing some voice tracking between the two stations, the voice is shared between the two stations, and I believe we actually have two air shifts Monday and Tuesday evenings where an announcer from Rock 95 will work on Z107.5. That is because we are kind of half an announcer over at the present time. So that works out very efficiently.

5199 In other departments there is a great deal of duplication. Obviously, there is only one general manager. There is a lot of savings there, you save in reception, for example, you save in traffic, and Mr. Larche talked to those. There is a whole host of savings in the radio station.

5200 A savings in the technical department, for example, one of my partners is our station engineer and he will maintain both facilities.

5201 COMMISSIONER CRAM: I understand you have a contract for surveillance. Do you have a contract for traffic surveillance or something that --

5202 MR. BINGLEY: Yes, we do.

5203 COMMISSIONER CRAM: You would be using that on both stations. Is that --

5204 MR. BINGLEY: Yes, we will.

5205 COMMISSIONER CRAM: Would there be any difference in the content?

5206 MR. BINGLEY: Typically, that service has a couple of different announcers and we would work with them to ensure that the style is different.

5207 In terms of the content, it really wouldn't be different because the traffic on the 400 is the traffic on the 400.

5208 COMMISSIONER CRAM: I want to move to your CTD now.

5209 You talked about, on 107, having an aboriginal music program I believe Sundays at 10:00 with an intern and making it available to other stations. CFJB would also continue the Spirit Winds?

5210 MR. BINGLEY: Yes, we would.

5211 COMMISSIONER CRAM: Okay.

5212 And this is the original commitment you made in 1988?

5213 MR. BINGLEY: Yes.

5214 COMMISSIONER CRAM: If I understand the five reserves that you are going to be assisting, which reserves are they?

5215 MR. BINGLEY: Linda, do you want to address that?

5216 MS MacGREGOR: Yes, Commissioner. Those five reserves are Christian Island, also known as Beausoleil First Nation; Georgina Island; Parry Sound, also known as Wasuuksing; and Rama, also known as M'njikaning. Those would be the five First Nations.

5217 MR. BINGLEY: You left out one and that's Whata which is located near Bala, Ontario.

5218 MS MacGREGOR: Sorry. And Whata, which is -- interestingly enough, although four of those communities are Ojibwe, the fifth community is Mohawk, so even among the other four communities which are Ojibwe, there still is a variation within the linguistic flow of the language, so it does create uniqueness. We have a similar multiculture within our own culture. So there is still a great diversity.

5219 COMMISSIONER CRAM: That first one you were talking about, the Beausoleil, is that the one that you have been assisting in the past?

5220 MR. BINGLEY: Yes.

5221 COMMISSIONER CRAM: Is that the one that Mr. Larche was referring to in his --

5222 MR. BINGLEY: Yes, it was.

5223 COMMISSIONER CRAM: And you have given him, if I read it correctly, some used machinery or something.

5224 MR. BINGLEY: A combination of new and used. Some used cart machines, a new console, a low-power transmitter -- a very low-power transmitter -- as well as an antennae that was brand new, some new microphones and so on.

5225 COMMISSIONER CRAM: Here is your chance to explain to us why you believe that the Radio Initiative should be considered as a CTD benefit.

5226 MR. BINGLEY: Okay. Are you talking the -- okay.

5227 Linda, do you want to start with that?

5228 COMMISSIONER CRAM: I know you referred to it in here. I would like you to summarize it so we are obviously going to have to make a decision on whether it would be included and here is your chance.

5229 MR. BINGLEY: Yes. Okay. Fine.

5230 Linda.

5231 MS MacGREGOR: Now, when we speak to the aboriginal component of this application of course the question arises: Is this a Canadian talent initiative? I would have to say wholeheartedly, yes, it is for these reasons.

5232 The first, this application could donate money to FACTOR and earmark it for the production of native CDs. In that in itself there would be no question that it would be a Canadian talent initiative. But there is one problem with that and that is up until this point there really isn't an outlet for the CDs, so, again, it is similar to having the keys and no car.

5233 In addition to that, what compounds accessibility, what now is more viable for native musicians is about the five-year old new introduction by the Juno Awards of the category Music for Aboriginal Canada.

5234 Now, in programming Spirit Wind for the past eight years, the most significant change I have experienced is that with our initial beginning I only had music on cassette and until the introduction of that category I now have, at my resource in the Aboriginal Music Library, a vast selection of music by aboriginal artists on CD. With the introduction of that category it is much more viable.

5235 But without mainstream access, it still isn't exposure for these artists. You can literally win a Juno in Music for Aboriginal Canada but not be heard on mainstream radio.

5236 So the introduction of the five native radio stations provides this amazing forum an outlet for these artists.

5237 In addition, it has had a tremendous impact on the way I programmed "Spirit Wind".

5238 Initially it started out as a talk program. With the introduction of the category in the Juno Awards then came an incredible influx of music. Because the artists don't have mainstream exposure they are looking to the limited forums that there are through radio to be able to play their music.

5239 So now to be able to accommodate those artists, I have to -- because the show also is community-driven, the request comes from the artist to play our music and so now to be able to meet that artist's need, the Canadian aboriginal talent, I am almost in a position where I am predominantly music. So I am attempting to reach that market.

5240 We have artists who have been nominated and have won in the Toronto Blues Society category. So we have a wide variety of music.

5241 MR. BINGLEY: I think if I can add to that, what we are talking about is grants to native communications societies. We would equate that to grants to local arts groups. There is certainly an arms-length association.

5242 There is no doubt about it, as Linda so eloquently put, that they do support native musicians, they provide the outlet for air play, creating the demand -- never mind about the market-at-large, within aboriginal communities. It is difficult for aboriginal musicians to -- how do you break a record? Do you mail it to a Reserve 500 miles away? So that is an issue.

5243 The radio stations will focus on aboriginal languages, they will provide storytelling and a variety of artistic and journalistic expression on those radio stations.

5244 So while the outlet is different from what we would normally consider a Canadian talent initiative, if we were, for example, to give money to a local symphony orchestra, the outlet, the medium is the hall. In this case the outlet or the medium is the radio station.

5245 I guess to a certain extent that is coincidental, but that is why we feel it is a valuable Canadian talent initiative.

5246 Having said that, I would hope you would accept it as a CTD initiative because if you do I think other broadcasters will come forward. But if you do not support it as a CTD initiative, I don't think there is any doubt that it is a very valuable public benefit.

5247 MS MacGREGOR: If I may add one more point to that.

5248 Currently across Canada we have one mainstream aboriginal broadcaster, Carla Robinson. There is an aboriginal media college program delivered by First Nations Technical Institute at Tyendinaga and I have spoken to some of the employers of those graduates and they are not employed in their field of media relations. We have not been able to absorb the graduates.

5249 A number of them, if they are looking for employment, the catch-22 is experience. There are a lot of factors affecting that -- gaining that work experience.

5250 So once again, the First Nations aboriginal radio stations would provide that comfort level for them, also provide the very -- probably the most important aspect of this, even though the funding is incredible, is the training component. So that in addition to the college education in the media area, which is again geared to aboriginal reporting, that this also becomes a vehicle to provide that valuable experience for those people in that area, but also for community members who want to begin to look at this maybe for the first time as a means, a practical means of employment.

5251 I know myself and people like Carla Robinson are invited to First Nations for career days to speak to the students to say this is now a viable career for us and to bring the role models into the community so that we create that diversity.

5252 So that is a very critical point as far again as providing the development of Canadian talent to report on aboriginal issues.

5253 We say there are two stories, there is history, or "his story" and then there is "our story" and they are two very different stories. It's our story told by us compared to someone else's version, as best as they can deliver, about what they think happened. There have been many instances in our recent events, even within the last five years in Canada which spoke to those different news stories.

5254 Thank you.

5255 COMMISSIONER CRAM: Would you say it is sort of analogous to the London decision where CHUM/CTD was going to a college for training and for some capital expenditures. Would you say it would be sort of analogous to that?

5256 MR. BINGLEY: A large proportion of it would be, yes, because there is a high training component to it.

5257 COMMISSIONER CRAM: Yes. And then the capital is the machinery that you are donating.

5258 MR. BINGLEY: Yes, absolutely.

5259 COMMISSIONER CRAM: We then have to go to the issue of the CTD Director, the $11,000.

5260 You do understand that there are some concerns by the Commission as to why we would find that acceptable.

5261 Can you tell us the salary of $11,000, is that a full-time job, full-time salary?

5262 MR. BINGLEY: No. That is a part-time position.

5263 A few years ago we applied for a Kitchener licence and the Panel was very concerned. We had some pretty good Canadian talent initiatives that we were proposing and the issue was: How are you going to be sure that these things actually happen?

5264 In this case we are talking a wide range of initiatives to support Canadian musicians, we are talking working with five native radio stations, we are talking about co-ordinating training for the radio stations, so there is a lot of background work to that. For that reason we believe that this is an incremental expense.

5265 We are proposing $11,000 a year. We think it is a relatively modest amount relative to the work that will be provided. If anything, it's a low amount. We will probably be spending more money for that purpose.

5266 It is definitely an incremental position.

5267 COMMISSIONER CRAM: So this individual would be sort of co-ordinating the maintenance and everything else of the stations?

5268 MR. BINGLEY: Well, there are a number of aspects to it. You are talking about bringing interns into the radio station, setting up the training program.

5269 I have been involved in this. We have provided training, for mostly First Nation as well as Georgina Island. We also have a joint venture Russian station in St. Petersburg, Russia, and we have brought a number of Russian trainees to the radio station. That is a massive job: It is 9:00 in the morning, we are here. What do we do now?

5270 So that is not an insignificant job. It is quite important if you are going to have a successful outcome from that training.

5271 COMMISSIONER CRAM: Now, if -- I'm sorry.

5272 MS MacGREGOR: I'm sorry, Madam Chair -- pardon me, Commissioner.

5273 COMMISSIONER CRAM: Go ahead.

5274 MS MacGREGOR: If I may add to that, to compare where we are with radio, in First Nations we are probably in the same place where Canadian broadcasting was in the 1940s.

5275 Right now there are two radio stations which are attempting, on their own initiative, in addition with the kindness of Mr. Bingley to assist with the donation of equipment and training on a volunteer basis, is that right now we have a situation where you can turn on the community radio and it is at a very low, experimental stage, very low frequency, but even with that there isn't consistent programming. It's up, it's off. It's primarily on a volunteer basis.

5276 So for the first time this would have some funds towards -- even if it were a part-time position -- to be able to have some consistency with the program.

5277 In addition, the strength of this is that with the automation package that you saw on the screen earlier, what is different about what's at, for example, Christian Island right now and Georgina Island, is that is a manual operation. So someone has to physically be there for that program to be up and running.

5278 Now, the uniqueness of this automation package is that the music can be programmed in, interviews and any other programming can be programmed in and it can air 24 hours. Someone wouldn't have to physically be at that station to make it happen.

5279 So for us that is comparable to putting someone on the moon. Even though it is a relatively small amount of money it is still a giant step forward for us.

5280 In addition, once we -- which is usually our catch-22 in that there are other areas where we could apply for additional funds, and the terms for those additional funds is usually always to have a percentage of whatever we are applying for.

5281 This contribution in the form of a grant also provides for that base for funding to be able to access funds from other supporting programs.

5282 Thank you.

5283 COMMISSIONER CRAM: I wanted to talk about your Web site. I think I heard you saying that you would be building and maintaining this Web site.

5284 MR. BINGLEY: That's correct.

5285 COMMISSIONER CRAM: Your application referred to 5 per cent of it being in relation to the native stations.

5286 MR. BINGLEY: I'm not sure of the actual percentage. We will provide Web pages for the radio stations. There's a service called Real Audio. Ultimately we would like to get them on that Web page Real Audio so they could broadcast around the world.

5287 At the present time though, we are not quite sure how to get there from here because we are not sure of the coverage area of those stations. Typically how you get in on to the net is you have an off air receiver connected to a local server and then on to the net.

5288 We did not include that component in our application because in some cases, for example, in Whata that may physically be impossible, but that is a long term objective of that, yes.

5289 COMMISSIONER CRAM: And then you talked about 75 sites for bands. You would be developing them and maintaining them.

5290 MR. BINGLEY: Yes. We would work with the bands to develop them and maintain them. The maintenance, by the way, is a very important issue with any Web site.

5291 COMMISSIONER CRAM: Yes. When you say -- you are using the present tense, so are you doing that right now?

5292 MR. BINGLEY: No. When I'm saying the present tense, I'm saying even just developing our own Web site. For anyone to maintain that Web site is quite a challenge.

5293 COMMISSIONER CRAM: Okay. One last question. If you can look at page 17, schedule 5, or maybe you can tell us because you might know, Mr. Bingley. There's a table about indirect expenses and there's a reference to contra expense Internet. Any idea what that means?

5294 MR. BINGLEY: Yes. We have some --

5295 COMMISSIONER CRAM: I knew you would know.

5296 MR. BINGLEY: I'm so relieved. That's to cover the cost of the access line into the Internet service and Web hosting. We have worked with Internet service providers. We have worked out a plan so that we will be able to contra those facilities. That's why we show that as an indirect benefit.

5297 COMMISSIONER CRAM: Thank you very much.

5298 MR. BATSTONE: Just one very quick followup on the CTE director. You said it was part time, but is it one person working just on a part time basis or is it a part of a full time position?

5299 MR. BINGLEY: That would depend upon the resources that are available at the time. For example, I was talking to Linda the other day "You want to be Canadian talent director", but she has a full time job right now. So that very much will depend upon the resources. Probably it will start as a part time position. I could see that expanding and growing as time goes by.

5300 MR. BATSTONE: But I assume it would have to be somebody with some experience and sort of knowledge of the general area. I guess the question in my mind is it seems to me it would likely be somebody who has a job already doing something else.

5301 MR. BINGLEY: Well, what we are seeking and what we are thinking about, for example could be a broadcaster who is semi-retired. There are many examples of that type of individual.

5302 This ideally would be someone -- I guess the perfect match is someone who has worked in the industry for a number of years, has a passion for the industry and would be able to push forward that point of view and provide that level of training.

5303 MR. BATSTONE: Thank you.

5304 MS MacGREGOR: If I may add to that, currently there is a graduate from the media "mainstream program". She is from Christian Island. She hasn't been able to secure full time employment in her field. She is currently employed by the Barrie Native Friendship Centre just a kilometre down the road from the Rock 95 currently.

5305 Actually from time to time there are graduates of programs like that from our communities, aboriginal communities in the area who do call me and ask me if there is anything. Although they are doing something else, they always have their ear open as to "Are there any opportunities for me? This my love. I want to do this."

5306 Once this starts to become a reality, as the saying goes, build it and they will come, that will be the scenario in our communities. There are resources to draw on.

5307 Thank you.

5308 THE CHAIRPERSON: But it won't be an $11,000 raise for any of your current employees to do this on Saturday.

5309 MS LEIGHTON: No.

5310 THE CHAIRPERSON: Conversely, is there any chance that it will represent one part of the current salary they have and they will also perform this function?

5311 MR. BINGLEY: No, it does not because we are pretty well running full steam with what we have got in the programming department. As I mentioned, that was one position that was sort of a position and a half, but no, it doesn't represent that.

5312 THE CHAIRPERSON: So it will clearly be incremental.

5313 MR. BINGLEY: Yes, it definitely will.

5314 THE CHAIRPERSON: To the operational expenses that you have to operate the station were it not that you have the CTD commitment.

5315 MR. BINGLEY: Absolutely, and if you should request it or require it, we would be happy to provide proof of that after the station was on the air.

5316 MS MacGREGOR: And if I could speak to Mr. Bingley's integrity, when I looked at the application and it's --

5317 THE CHAIRPERSON: I wasn't questioning it.

5318 MS MacGREGOR: No. Actually I would like to speak to his integrity because when I look at this application, it's so unheard of for us to be partnered with mainstream society. There are more stories coming like this. It's really quite na inspiration for us in the native community.

5319 When I saw this I was so, I guess, impressed by it, I went to Mr. Bingley. I'm thinking also in terms of cost effectiveness, profit and loss. I offered to him that if he could save some funds by doubling up Z1075 native programming and deliver "Spirit Wind" with the same vehicle, I wouldn't have a problem with stepping aside for the sake of cost effectiveness and for what he is putting on the table for the betterment of the native community and all of us in our listening area.

5320 I didn't think I would be recounting this conversation, but he declined. He has said that the commitment that Rock 95 made through "Spirit Wind" and that I have had the privilege to work with for the eight years that he would have that remain as it is and Z1075 would function as a separate entity.

5321 Thank you.

5322 THE CHAIRPERSON: It was a very good question, Mr. Bingley, wasn't it?

5323 MR. BINGLEY: Thank you, Commissioner.

5324 THE CHAIRPERSON: Thank you very much.

5325 We will take a ten minute break and we will come back and hear the CHUM application.

--- Recess at 1730 / Suspension à 1730

--- Upon resuming at 1745 / Reprise à 1745

5326 THE CHAIRPERSON: Madam Secretary.

5327 MS SANTERRE: Thank you, Madam Chair.

5328 The next application is by CHUM Limited for a broadcasting licence to carry on an English-language FM radio programming undertaking at Barrie. The new station would operate on frequency 97.7 MHz with an effective radiated power of 9,960 watts.

5329 The applicant is proposing a Contemporary Hit Radio music format.

5330 THE CHAIRPERSON: Good afternoon. I am told this is still afternoon in Toronto.

PRESENTATION / PRÉSENTATION

5331 MR. SHERRATT: Most importantly, it's still afternoon we hope in Ottawa.

5332 Good afternoon, Madam Chair, members of the Commission.

5333 For the record, I am Fred Sherratt, Executive Vice-President and Chief Operating Officer of CHUM Limited. With me today in the front row are Jim Waters, President CHUM Group Radio; and on his right is Ross Davies, Vice-President Programming CHUM Group Radio. On Jim's left is Duff Roman, Vice-President Industry Affairs for Radio and CHUM Limited; and on Duff's left Shelley Sheppard, CHUM Limited Corporate Accounting. In this row with me on my extreme right is Kerry French, Director of Research CHUM Group Radio Sales. Beside Kerry is Hans Jansen, Partner, Bay Consulting Group. On my immediate left is Millet Salter, Bandshell By The Bay and on his left Doug Garraway, Vice-President and General Manager CKVR-TV Barrie.

5334 We are here today seeking your approval for a new FM station to serve Canada's fastest growing city, Barrie, Ontario. This is not our first application for Barrie. We applied in the first wave of FM licensing in the mid-seventies. The successful applicant at that time was CHAY-FM, which was later sold to Shaw Communications.

5335 We believe that the reason we were unsuccessful at that time may well be the reason that we may be successful a quarter of a century later. CHUM is the licensee of CKVR-TV "The New VR", the local television station for Barrie, Simcoe County and the broad rural region of central Ontario.

5336 Back in 1975, no one had even thought of multiple licensing ownership, and, given the limited number of licences then granted, it was generally deemed that a new player would be the best way to ensure diversity in a given market. Thus, Barrie's first FM station was not a CHUM station.

5337 Today Barrie is served by three conventional commercial local FM stations and following regulatory process, two of those stations could well be owned by Shaw.

5338 CHUM's involvement in CKVR-TV goes back to 1965 and we have been an active, involved, corporate citizen of the community since that time. It is our belief that if this Commission elects to licence our application for a new FM service, both the station, and the community will benefit from the synergies that can be achieved through co-operation with CKVR. It will be a dynamic, involved, local, news, information and community radio station.

5339 CHUM has its roots in radio. Allan Waters bought a daytime only AM station in Toronto in 19564, 55 years ago. It became a full time, 24 hour a day station in 1957 and was relaunched as Canada's first Hit Parade radio station. That's what we called it in those days, not top 50 or top 40.

5340 In the intervening 42 years, CHUM has grown to include 27 radio stations, nine specialty services, six television stations in Ontario and ACCESS, the educational television service in Alberta. Three or four years ago we were considered a big player. Today we are medium-sized player.

5341 I believe the record shows that we have been responsible custodians of the public airwaves and have made strong contributions to, and become an integral part of, the communities we serve.

5342 One of our intervenors captured it very well and I quote:

"The personnel of The New VR have been generous, co-operative and enthusiastic when solicited, and their private, usually anonymous, contributions to the many activities within our society have enriched and strengthened its very fabric.

Through its resources, its creativity and its professional high standards, and through its dedication to positive ideals, The New VR has garnered a loyal audience and the sincere respect and admiration of the social, cultural, business and political leadership of our city."

5343 Should you approve this application, we look forward to adding to the CHUM tradition of strong community service in Barrie. Jim Waters, President CHUM Group Radio, will quarterback our presentation to you today. Jim.

5344 MR. WATERS: There have been several calls from the CRTC for new FM licences in different markets across Canada. CHUM has picked its spots to apply carefully. We have only applied in markets where starting a new FM radio service made sense for CHUM and at the same time would benefit the community.

5345 It has been 12 years since the licensing of the last new station in Barrie, and when the call came for a new FM service, we did not hesitate to file.

5346 CHUM is no stranger to Barrie. CKVR Television has been serving Barrie and the surrounding area for 44 years. We believe there are many ways in which we can develop synergies between The New VR and our proposed FM radio station to be known as 97.7 The Bay.

5347 We wanted the name of the station to mean something to the people in the Barrie community. Barrie is at the head of Lake Simcoe's Kempenfelt Bay, thus the name, "The Bay". People in Barrie relate to the bay and we are convinced they will relate to the station we propose.

5348 It is our intention to build on the excellent track record The New VR has in local news by having our radio news people work closely with our television newsroom to broadcast a more aggressive news schedule than you would normally do on a music intensive radio station.

5349 All of that said, we first had to do an extensive analysis of the economic circumstances of the Barrie market to show that it could support another FM radio service. Our analysis shows the population in the Barrie CMA grew 29 per cent between 1991 and 1999 -- faster than anywhere else in Canada.

5350 Another key factor is that radio revenues in Simcoe County, of which Barrie is the major market, grew 10.6 per cent in 1997 over 1996. these are key indicators that the market can support the entry of a new radio station. CHUM retained the Bay Consulting Group to do the market analysis. Hans Jansen will be presenting the highlights.

5351 Possibly the clearest indicator that the Barrie market can support a new radio station is found in the Spring 1999 BBM figures. All persons 12-plus tuning shows 59.4 per cent is to out of market stations. Further to that, out of market tuning by females 12 plus is 54.1 per cent and by females 12 to 34 is 60.7 per cent. these numbers clearly indicate that there is an opportunity repatriate these listeners to local Barrie radio.

5352 CHUM also did research to determine the programming needs of the community. It is very clear from the research that there is a programming void in the market for a female skewed youth oriented radio station. Ross Davies will provide details of the key findings from that study.

5353 Finally, 97.7 The Bay will team up with the City of Barrie and the Barrie Rotary Club for a very exciting local talent development initiative called "Bandshell By The Bay". Duff Roman will talk more about this later.

5354 Hans.

5355 MR. JANSEN: Madam Chair and Commissioners, Bay Consulting Group was asked to conduct an economic analysis of the Simcoe Country radio market and develop a professional opinion about realistically achievable sales targets for a new FM radio station for the 2001-2007 period.

5356 We found that the Barrie, Ontario radio market is sufficiently large to be able to justify another station.

5357 In 1997, the Barrie, Orillia, Midland and Collingwood stations combined achieved sales of $7.6 million, an increase of 10.6 per cent over the previous year. Local sales accounted for $6.3 million or 84.2 per cent of the total and national sales for $1 million or 12.9 per cent of revenue.

5358 Barrie has been growing much more rapidly than any of the 17 other major markets in Canada we compared it with. From 1991 to 1999, its population increased 29.2 per cent. That is much faster than the growth in cities we normally think of as being the rapidly-growing ones. Toronto and Calgary, for instance, grew a more modest 18 and 17 per cent during the same period. Vancouver, meanwhile, grew 20 per cent; and Edmonton, 6 per cent.

5359 The retail sector of the Barrie economy is benefiting from this population growth and from the resulting diversification in the rest of the economy. Retail sales in the Barrie CMA will be $1.28 billion in the year 2001 and $1.41 billion in 2004.

5360 In summary, the outlook for the FM sector's development in the Barrie market is excellent.

5361 Shelley.

5362 MS SHEPPARD: The introduction of a new radio station is expected to have several effects on the dynamics of the advertising industry in the Barrie radio market. Local radio spending in the area will be stimulated in response to:

5363 1) the ability of listeners to get another local signal;

5364 2) the addition of new radio advertisers who want to reach the core target group of the new station;

5365 3) the addition of new salespeople in Barrie and the Simcoe County market; and

5366 4) increased emphasis on market development activities by the salespeople of the existing FM stations.

5367 Additional advertising will be rerouted from print to broadcast because advertisers will now have a better opportunity to reach their targeted local customers and clients.

5368 Taking into account all of the results of the Bay Consulting Group study, we believe that a new local radio service can achieve a sales volume sufficient to ensure viability without unduly impacting the other existing stations.

5369 In other markets, CHUM Group Radio has found that when a new station is launched, a tremendous opportunity is created to not only attract new business categories and retailers to radio, but also to repatriate listeners back to the local market. The radio station also improves relationships in the community by providing better access to community groups for fundraising and building projects.

5370 In summary, our economic profile and inherent knowledge of the radio business indicates that the Barrie CMA has the fastest growing population base in Canada and that the Simcoe County market is sufficiently robust to allow the introduction of a new radio station.

5371 Ross.

5372 MR. DAVIES: The current radio landscape in Barrie offers listeners a choice of three popular music radio stations, plus a specialized commercial Christian station, all on the FM band.

5373 CHAY-FM plays soft adult contemporary music targeted to adults 35 to 64. CIQB-FM, or "B-101", plays mainstream adult contemporary music and targets adults 25 to 54; and CFJB-FM, or "Rock 95" plays a combination of current rock and classic rock, appealing predominantly to males 18 to 54.

5374 There is no station in Barrie that offers a musical format targeted primarily to the younger adult demographic between the ages of 15 to 35, directed towards women. 97.7 The Bay will fill that void.

5375 In the radio business this format is generally referred to as the "mainstream contemporary hit radio". The station will primarily focus on the hit music of today and the past few years by such Canadian artists as The Moffats, Debra Cox, (Barrie's own) VIP, and international performers like The Backstreet Boys, Brittney Spears, and Ricky Martin, and will not focus on older or classic gold songs. The station will not be confused with any existing station in Barrie.

5376 We identified this vacuum and initiated a detailed research study designed to examine the existing formats, confirm that an opportunity existed, and then explore various formats for their potential appeal in fulfilling that need. The project was conducted earlier this year, with a sample of over 400 people selected to reflect the Barrie market.

5377 The results of the study clearly confirmed that the "mainstream contemporary hit" format provided the largest opportunity in Barrie, with over 33 per cent of those interviewed saying this would be their favourite station -- a clear indicator that the market is without a station like "The Bay".

5378 "Music, News & Community" will define the true personality of our radio station.

5379 While 97.7 The Bay will be first and foremost a music intensive radio station, it must also be totally involved with the community. It is for this reason that the station will feature a significant presence of news and information throughout its weekly schedule.

5380 The Bay will broadcast 82 newscasts every week, in mornings, mid-days and afternoons, on a regular seven-day-a-week basis, including the CHUM National news at 12:00 noon each weekday.

5381 The Bay's close working relationship with our sister television station "The New VR", and its dedicated news staff of 28 people, will be of great assistance in making sure the radio station is keeping its audience fully informed on what matters most to them in the Barrie region.

5382 97.7 The Bay will also be responsive to the needs of the cultural and entertainment community in Barrie. Twice each day the station will air the "The Bay Events Calendar", where we publicize the various activities taking place, whether it is the local theatre company or the live club scene.

5383 We will also implement the "Barrie Lakefront Lifestyle Initiative" in conjunction with the Mayor's office of the city of Barrie to promote tourism and downtown revitalization. To facilitate this initiative, 97.7 The Bay has guaranteed the city of Barrie, at no cost, a weekly schedule of 28 thirty-second commercials which represents a value of over $280,000 over the seven-year term of the licence.

5384 "The Bay Watch Program" will be introduced to the community with a mandate to look after and respond to the "real life" issues of our young adult audience, combining interactive phone lines and web links to the city of Barrie's many community and social service programs. Everything from school and road closures, emergency weather updates, traffic accidents and news bulletins will be instantly available to the audience.

5385 To complement The Bay's on-air music programming, we will also take our music "to the streets", or in this case "to the bay". Each summer 97.7 The Bay will stage a free outdoor concert featuring 100 per cent Canadian talent, including local area performers originating from "The Bandshell By The Bay", CHUM's key Canadian talent initiative.

5386 Duff.

5387 MR. ROMAN: We have talked about the advantages of our presence in the Barrie community through CKVR-TV. Our Canadian Talent Development project grew out of discussions with Doug Garraway and his staff at The New VR. We wanted an initiative that would be meaningful to the citizens of Barrie, address a real need in the local music community, and provide tangible benefits on a realistic scale.

5388 Our CKVR people responded very swiftly from the perspective of long time local residents who are plugged into the needs and aspirations of their community. They made us aware that the citizens of Barrie had been seeking a way to build a bandshell somewhere adjacent to the city's waterfront.

5389 Doug introduced me to Millet Salter, a lifetime resident of Barrie -- and who is with us today. Doug has been spearheading the project on behalf of the Barrie Rotary Club.

5390 The Bandshell by The Bay initiative will involve a partnership of the Barrie Rotary Club, the city of Barrie and other community and business stakeholder groups who will provide ongoing, long lasting benefits to the city of Barrie.

5391 It will be an open-air performance centre at Memorial Square on the shores of Kempenfelt Bay. Here Canadian local and regional bands, orchestras, choirs, musicians and singers will provide cultural enrichment and animate the summer months. It will bring local residents and tourists to the lakeside and the adjacent downtown business core, and provide an arts celebration centre into the millennium.

5392 CHUM has a history of developing Canadian talent initiatives.

5393 In 1982, we spearheaded the founding of FACTOR, the Foundation to Assist Canadian Talent on Records. To date, our contribution to the foundation exceeds $2.5 million.

5394 We provided all the initial funding for MusicAction, which addresses the supply of Canadian Francophone musical recordings.

5395 We were the first to seriously address the production of Canadian music videos by establishing VideoFACT, which to date has provided over $15 million for the production of approximately 1,600 videos. We established Artsfact in British Columbia and, with the launch of Bravo!, established BravoFact.

5396 In this context, we believe "The Bandshell by The Bay" fulfils all of the Commission's criteria that distinguishes these outstanding Canadian Talent Development initiatives, providing a lasting home for the exposure and promotion of Canadian musical performing talent.

5397 CHUM Limited, with the launch of 97.7 The Bay, will undertaking the capital funding of $450,000 for "The Bandshell by The Bay".

5398 In addition, 97.7 The Bay will underwrite the costs of annual Canadian musical events to be presented at the Bandshell, featuring both local and regional and established Canadian musical performers, consistent with the space and environmental concerns.

5399 The total commitment for the concerts is a minimum of $210,000, or $30,000 a year over seven years.

5400 These commitments are in addition to our contribution to FACTOR under the Canadian Association of Broadcasters CTD guidelines totalling $21,000 over seven years.

5401 We can further quantify the indirect costs of the activities which will contribute to the success of these initiatives. 97.7 The Bay will undertake an on-air advertising campaign of no less than eight weeks duration comprised of 370 30-second occasions leading up to each event, an approximate value of $129,500 over seven years.

5402 Our sister station, The New VR, will also commit promotional activities in support of these concerts through on-location updates and concert coverage. The New VR will also provide on-air advertising campaigns of 20 spots a week over three weeks, valued at $140,000 over seven years.

5403 In summary, Madam Chair, CHUM will commit a total of $950,000 in direct and indirect Canadian talent development funding for the "The Bandshell by The Bay" initiative. We are further committing to provide year round on-air promotion of Canadian musical talent appearing at local Barrie venues through the twice daily "Bay Events Calendar", that Ross mentioned earlier, which represents an indirect value of $255,500 over seven years. The grand total of combined direct and quantified indirect initiatives represents a minimum value of $1,206,000 over the seven-year term of licence.

5404 Jim.

5405 MR. WATERS: Madam Chair and Members of the Commission, I would like to summarize thee benefits that approval of this application for a new FM broadcasting service in Barrie will bring to the community and to the system.

5406 First, it will fill a confirmed void in the market for a radio station designed to satisfy the needs of the large unserved audience of young adults between the ages of 15 to 35, targeted to women.

5407 Second, CHUM promises an aggressive local news presence with 82 newscasts per week with a consistent seven-day-a-week schedule.

5408 Third, the station will reflect the local community with the Bay Events Calendar which will publicize local cultural activities, and the Bay Watch Program which will respond to real life issue of our young adult audience through a combination of interactive phone lines and Web links to Barrie's community and social service programs.

5409 And, fourth, as part of its commitment to the development of Canadian music and the Barrie community, CHUM will support the City of Barrie and the Barrie Rotary Club to build the Bandshell By The Bay to provide a lasting home for the exposure and promotion of Canadian music.

5410 Madam Chair, Members of the Commission, we respectfully ask for your approval of this application and will be pleased to answer any questions you may have.

5411 THE CHAIRPERSON: Thank you, Mr. Sherratt, Mr. Waters, Mr. Roman.

5412 I don't have many questions, but they will be around your financial projections, your commitments for the community on the radio station and then your Canadian talent development.

5413 So, first, I would like to ask you, when you prepared those projections you looked at the format and how it would likely get an audience by filling a void, and you told us later on, in answer to a deficiency letter, that you counted on repatriating an audience from Toronto stations.

5414 Do you get any revenue from the CHUM stations that reach Barrie? Does it improve your revenue in Toronto sales because you have listenership in Barrie of your CHUM services?

5415 MR. WATERS: Oh, 1050 CHUM and CHUM-FM?

5416 THE CHAIRPERSON: Yes. One of them is oldies, I can see that, but the other one is adult contemporary.

5417 MR. WATERS: Yes.

5418 THE CHAIRPERSON: And it is heard in Barrie and it has a rating in Barrie. Correct?

5419 MR. WATERS: Yes.

5420 THE CHAIRPERSON: Does it have any impact on your Toronto station that is heard in Barrie, the AC one?

5421 MR. WATERS: Madam Chair, I would like to get Kerry French, if she would, to answer that question.

5422 Kerry.

5423 MS FRENCH: Madam Chair, I think there is an indirect effect. All of the radio stations that reach into the Barrie market out of Toronto, they account for about 60 per cent of the tuning. A lot of advertisers, more in years past than today, look at that and if they are buying a certain level of advertising across Canada, they may buy a little less in Barrie because they have the spill points out of Toronto.

5424 But all of the current Barrie licences have worked very hard, along with their national representative, to talk advertisers out of doing that because it is not in their best interests.

5425 So it is happening less and less as the years go by, but there is an indirect effect.

5426 THE CHAIRPERSON: Which of these stations? I suspect that you will tell me the oldies wouldn't have any impact, but the adult contemporary, with your proposed format of contemporary hits, would there be some possibility of repatriating this audience?

5427 I'm asking the question because I think in your consulting Bay research it says that there is a good opportunity for a new radio station in Barrie as long as it is a local signal. I get that from page 16 of The Bay Consulting Group.

5428 So, presumably, to the extent that there is an overlap between your AC station in Toronto, which reaches Barrie, and what you propose in Barrie, there is a possibility of some repatriation?

5429 MR. WATERS: Of our own listeners. At our own expense.

5430 THE CHAIRPERSON: Of your own listeners.

5431 But to the extent that it is a local station that is identifiable with the community.

5432 Those who listen possibly to your AC Toronto station would listen to your new station if it were very distinctively local is what your consultant says.

5433 MR. WATERS: Yes. We believe that. Yes.

5434 I think in any other experience that I have had I guess the best that I can speak to would be in Kingston. When we reprogrammed the station there some years ago, the problem was that the American stations in Watertown were taking audience and revenue out of Kingston. So we adjusted the format, repatriated those listeners back to the local station in Kingston.

5435 I think that the tendency is for the listener to stay with the local signal if it is what they want and it is what they feel is the best for the community, for them, I think. If they are not getting that service, which 60 per cent of the people in Barrie are saying they are not getting, they are tuning out of the market. They are going somewhere else to get it. So I think that they are crying out for a new local signal and I think that is what we are proposing here, Madam Chair.

5436 THE CHAIRPERSON: Which other radio station that reaches Barrie would be a source of repatriation for you? Of the stations that now are -- some 58 per cent -- you said 60 -- of the listening to Toronto stations, which other stations would you see --

5437 MR. WATERS: Madam Chair -- I'm sorry. I'm sorry to interrupt.

5438 THE CHAIRPERSON: Yes. Go ahead.

5439 MR. WATERS: Madam Chair, I think Kerry French has the numbers. But I think the ones that we would directly effect would be Rogers' station, CISS-FM; our own, CHUM-FM.

5440 Kerry, you probably have the numbers there and the list, but --

5441 MS FRENCH: Yes, Jim.

5442 I think that one of the stations that we would repatriate listening from the most would be the CIDC-FM out of Orangeville, which has a similar format to what we would propose.

5443 Another one would be CKFM out of Toronto. I think there would be a small impact on a lot of the Toronto signals that get into the market currently.

5444 THE CHAIRPERSON: And not particularly -- I think CILQ-FM was mentioned by the previous --

5445 MS FRENCH: Yes, CILQ, Q.107.

5446 I don't think we would repatriate a lot of that listening because that is a very definitive format, classic rock, which is --

5447 THE CHAIRPERSON: More like the former applicants.

5448 MS FRENCH: Yes.

5449 THE CHAIRPERSON: I see.

5450 Now, when you prepared your financial projections, you were looking at what amount of listening you could repatriate and also a loss to the local station in Barrie as well. I'm looking at your response to the deficiency letter at number 5. You have the largest -- well, local loss by radio stations, it ranges from 22 per cent in year one to 11 per cent in year seven in descending order that would be lost to the local stations because of your entry into the market. Correct?

5451 So you were looking there at one station?

5452 MR. WATERS: Yes, that's correct.

5453 THE CHAIRPERSON: Just you getting a licence?

5454 MR. WATERS: That's correct.

5455 THE CHAIRPERSON: Did you try to see what would happen if two stations were licensed and which one of the proposals before us?

5456 MR. WATERS: Well, certainly ours would be one.

5457 THE CHAIRPERSON: No. I mean yours, yes, of course, otherwise it wouldn't worry you, would it.

5458 MR. WATERS: I'm kind of answering the question the same as Mr. Larche did earlier.

5459 THE CHAIRPERSON: Because you would still be in Toronto.

5460 But if you are in Barrie, you were looking at yourself in Barrie and the three current stations paying a bit of a price for your arrival.

5461 We will discuss the other components of this, but that is how you prepared your financial projections?

5462 MR. WATERS: Yes, it is.

5463 THE CHAIRPERSON: But you know that there are two frequencies available.

5464 MR. WATERS: Yes.

5465 THE CHAIRPERSON: And possibly the Commission could give two licences.

5466 MR. WATERS: Yes.

5467 THE CHAIRPERSON: What effect would it have on your projections? Because presumably not only would you -- now you would be sharing the market with more takers.

5468 MR. WATERS: Yes. We have considered certainly that possibility. We have also run some numbers ourselves putting in two stations being licensed.

5469 But I actually think that the market can handle -- could handle two stations in the long run. I think it would just take a longer period of time for everyone to recover. I think that the economic growth that has been shown in the market and the activity in the market I think dictates that probably it could handle two more licences. I think it would take a little longer period for everyone to get back up to the revenue levels that they may be experiencing right now.

5470 But, Hans, I know you have the numbers there. If you could maybe share those with the Commission.

5471 MR. JANSEN: Madam Chair, it might be helpful to read the results of an analysis into the record which looks at the revenue available to the other stations, assuming two new stations are licensed.

5472 Under that scenario, in year one 7.99 million would be available to all stations. We estimate that 1.6 million of that total would be available to the two new stations, which is 20 per cent, and 6.39 million to the other stations.

5473 Now, the 6.39 million figure would increase to 7.41 million in the year 2004. This 7.41 million can be compared to a current volume available to the other stations of 7.3 million. In other words, it would take three years for the existing stations to be at a higher level of total revenue than they will realize in the current broadcast year.

5474 THE CHAIRPERSON: When you did this analysis, did you focus on one or the other of the two stations -- of the two applicants that are before us?

5475 MR. JANSEN: No. We looked at the total market and the potential dollars available from that total market to two new licensees, rather than one.

5476 THE CHAIRPERSON: But not the effect -- well, let me ask you: Would there be a larger effect on your ability to achieve your projections if one or the other of the two applicants before us, absent frequency problems?

5477 MR. WATERS: I think, Madam Chair, what we -- well, what we would hope for, I suppose, or the local community would be hoping for is diversity. So if it were us to be licensed as one, I suppose the application that at least competes with ours is Larche because he has applied for a totally different format than we have.

5478 So I'm not promoting anything here, I am just saying that if you are asking the question: Licensing two people who are applying for a very similar format I think would be not in the best interests of the people in Barrie.

5479 MR. JANSEN: Madam Chair, we have done a similar analysis for the scenario where you would license only new station. If that is helpful we can read those figures into the record as well.

5480 THE CHAIRPERSON: I imagine that we would get results similar to what you have in your application.

5481 MR. JANSEN: They are slightly better of course. The existing stations would recover more quickly.

5482 THE CHAIRPERSON: At No. 6, at paragraph 6 of the deficiency letter, am I correct in understanding that the manner in which your application is filed is we don't have to worry too much about what would happen to the existing stations because the growth in sales would increase to, I think it says 4.1 million, and it would make up for what they lose?

5483 MR. JANSEN: That's correct.

5484 MR. WATERS: Yes.

5485 MR. JANSEN: That's correct, Madam Chair.

5486 THE CHAIRPERSON: In doing your projections did you take into consideration the fact that one station -- two stations that are now owned by two owners may end up being owned by one owner, Shaw, and that possibly if we were to license Rock 95 there would be two -- there would be again two stations and you would be a sole licensee.

5487 Does that have an impact?

5488 MR. JANSEN: We had that information, Madam Chair, and we did take that into account, yes. This scenario takes into account the fact that maybe there --

5489 THE CHAIRPERSON: The scenario that is before us?

5490 MR. JANSEN: The scenario that I just read into the record --

5491 THE CHAIRPERSON: I see.

5492 MR. JANSEN:  -- does take a sale of one of the existing stations into account.

5493 THE CHAIRPERSON: And the fact that there may be two owners with two FM stations, if we were to license Rock 95 and if Shaw were to be approved for the transfer of --

5494 MR. WATERS: Yes.

5495 MR. JANSEN: That's correct.

5496 THE CHAIRPERSON: Now, you talk about synergies and the fact that CKVR is there and that there will be, from what I gather in your assumptions, a co-location, at least of the studios, with the TV stations.

5497 MR. WATERS: We are hoping that Doug Garraway can find space for us in the building that houses The New VR, although a lot of our capital expenses that we have outlined in the application actually allow for a new building.

5498 THE CHAIRPERSON: Oh, it does?

5499 MR. WATERS: Or a building to be built outside of, yes.

5500 THE CHAIRPERSON: It does. Because considering synergies and the possible co-location of the staff, which makes synergies easier, obviously --

5501 MR. WATERS: Yes.

5502 THE CHAIRPERSON:  -- from an administrative perspective, and so on, if you are in the same locale, presumably the antennas could be co-located too.

5503 MR. WATERS: Yes -- no. I'm sorry. The antennas can't be, no.

5504 THE CHAIRPERSON: No?

5505 MR. WATERS: No. It is going to be located on an antenna in Edgar, which is in the Township of Oro.

5506 THE CHAIRPERSON: This is so that you get a better coverage?

5507 MR. WATERS: Yes. It's a high point.

5508 The location is actually between the point where the Rock 95 site is and where the LCI site it. It's in between. That's the best way I can describe the geographical location.

5509 But we are all going for the high ground.

5510 THE CHAIRPERSON: But your capital expenditures, which are high, don't consider any of the synergies that you mentioned today?

5511 MR. WATERS: That's correct.

5512 THE CHAIRPERSON: So they may be lower actually. They are much higher than anyone else.

5513 MR. WATERS: I think what we have done is -- I think the capital as far as the transmitter is concerned would not change, but the building may very well change. Part of the capital as far as the building and the studios is concerned is bricks and mortar, so that would probably go down somewhat, yes, if we were able to locate in the building with The New VR.

5514 THE CHAIRPERSON: When we talk about synergies, I looked at the assumptions and at paragraph 16 of your assumptions you say that:

"There is 2% of total revenue charge included in administration as a chargeback because CHUM corporate is providing some administrative help." (As read)

5515 MR. WATERS: Yes.

5516 THE CHAIRPERSON: You list some of the support:

"... access to emergency engineering services, creative services, personnel and fringe benefits, insurance, research, et cetera, and access to all senior management at CHUM who are not separately charged to this licence application." (As read)

5517 Paragraph 17 says:

"There are no other intercompany or corporate charges."

5518 So presumably there is not. If you build the different buildings, and so on, you are not taking into consideration synergies to a great extent when we look at your financial projections.

5519 MR. SHERRATT: Jim, if I might, there are two factors here. One is that we want to be in proximity to CKVR because of this big news machine they have. They have 28 people working in the repertorial roles and getting it on the air. There are another 15 or 20 involved in news.

5520 There really are about 55 people who make the news programming at CKBR.

5521 You need to be in proximity to those people and they are outside of town. Conversely, CKBR would like a downtown location. The question is do we put half the radio station downtown and make that facility available to them because you really like to have a radio station downtown. That is a scenario that we looked at. Then the newspeople would work in tandem with them perhaps up on the Hill.

5522 I know when the numbers went into the application for the construction, we thought DR was full, but Doug has found a little bit of space up there because I think they see the advantage of those synergies as well.

5523 I think both scenarios are correct, but both are going to benefit. CKBR will benefit from that kind of a synergy just as The Bay will benefit from its association with CKBR.

5524 THE CHAIRPERSON: And despite those synergies, your administration and general expenses are way higher than the other two applicants. Do you have any comment? You have obviously looked at the other two applications.

5525 What I'm driving at is when I look at this, this is going to be a division of CHUM. Right? Assuming that your accountant has looked at that, I find it difficult to understand why this is a winning proposition when you look at the operating margins. Even by year five, it's still a deficit position. It's a deficit position before tax, after tax for the five years. Your revenues are much higher, but your expenses are way higher.

5526 I don't understand why these three applications with presumably similar hardware and needs, that yours would be so different and lead to such negative results for you. Why do you want to have a radio station in Barrie under these circumstances? What are you going to do with programming that requires so much more money?

5527 MR. WATERS: Well, first of all, I think it's important that we say again that we have been in Barrie for many, many years, 44 years, so it's a community that CHUM Limited is very familiar with.

5528 If I might just take a second to throw in a quick story, a quick anecdote about CHUM and Barrie. In 1972 I was working at CHUM. I was working in the music library. It was Christmas Eve. It was a Friday afternoon. I remember it extremely well.

5529 Someone came into the library and said "It's great. CHUM just got Commission approval to buy CFCF Television in Montreal and the Marconi radio stations", but the condition that the Commission put on that decision was that CHUM would have to sell the Marconi radio stations and also to sell CKVR Television which had a --

5530 THE CHAIRPERSON: Very difficult in those years.

5531 MR. WATERS: Which CHUM had actually taken ownership of about seven or eight years previously. I know Mr. Sherratt can fill in the holes here, but I know that he and my father had a discussion about that. The decision was a very simple one: We will not desert the people in Barrie who have worked for CHUM for seven or eight years and put long, hard hours in for us in favour of taking out a new licence in Montreal.

5532 I think that's the dedication that CHUM feels to Barrie, which is why we immediately responded when you made the call for a new FM service in Barrie.

5533 I think it's also worth pointing out that CHUM -- my cohort from the accounting department will remind me that CHUM usually overspends in programming. I think that it's an area that we pride ourselves on, on our track record in programming across the country. I'm not so sure that's because we spend a lot of money. I think we have some great people that work in programming across the group, but we do tend to spend maybe more than other operators would do.

5534 I think we are considered a pretty major player in the radio business. I think we are here for the long term in the radio business. We think that a new -- as I said in our presentation, I think this is a good opportunity for CHUM. We do have a great television station there. There are things that we can do together to benefit the community. If it costs us a little more, we are prepared to undertake that commitment.

5535 Shelley, you might want to comment on the way you try and hold Ross and I back on programming expenses across the company.

5536 MS SHEPPARD: Just to add to your comments. I put together the numbers that are before you today. CHUM does operate 26 radio stations, soon to be 27. We do have a very good expertise on what it costs to run a good quality radio station.

5537 In putting together our numbers, we have had a look at all of our other properties, similar stations in similar formats, the kind of money that we spend in promotion. These numbers are consistent with the kind of money we would put forward for those operations.

5538 THE CHAIRPERSON: I assume that you are making some margin on those other stations eventually.

5539 MR. WATERS: Yes.

5540 MS SHEPPARD: Yes, eventually. Obviously we are here for the long term and from an accounting viewpoint it does look dismal at the beginning, but we are in here for the long term and are very confident that we will do well in the Barrie market.

5541 THE CHAIRPERSON: Well, it doesn't look dismal at the revenue level because your projected revenues are very optimistic if I compare to the other two stations. It's your expenses that are even proportionately higher, therefore giving rise to operating margins that are dismal -- well, dismal initially or comparatively.

5542 Now, how realistic the other stations are, I gather some of them know Barrie too because one of them is operating in Barrie.

5543 MR. SHERRATT: Madam Chair, this is a unique experience I think in -- it seems like hundreds of years I have appeared before these tribunals -- that spending too much money has been considered a problem.

5544 THE CHAIRPERSON: Well, not really because it can give rise to questions about how realistic things are. This is why I'm asking.

5545 MR. SHERRATT: These numbers are based on our experience in various size markets across the country. We do try to operate all of our radio stations at the highest possible level in quality of service and it takes money.

5546 It takes money to have good people, to have good programming and to provide good service to the community. That we think is the number one thing required in the Broadcasting Act. The people that we are all here talking about are the public, the people that we are going to serve.

5547 If you just look at the columns, if you want to compare them, our programming costs alone are more than twice the one that's closest to us. That's based on experience and doing it right. We are here for the long haul. CHUM has been --

5548 THE CHAIRPERSON: You will have to help them project their revenues better too. You are going to tell me it's related to programming.

5549 MR. SHERRATT: Well, I looked at one category. Alone just in transmitter site rental and power, our costs under technical in those two categories are more than one of the other applicant's total costs for technical over a five year period. I don't know how they do it. They must have a ouija board much better than any I have ever discovered.

5550 THE CHAIRPERSON: I'm not here to tell you that you are spending too much money. I'm here to try to see of those three applications which one is realistic and which one is based on one's ability to withstand years of having negative operating margins and how realistic is that.

5551 It's simply to try to understand why there is such a difference in the three. Radio stations, of course, can spend or more or less, but they are radio stations in the end. I hear your explanations.

5552 Now, tell me another one. There's a very sexy word here that I have never seen. Your largest component or sources of your revenue at that same answer five to the deficiency is: "base dollars traceable by population growth". What is that? Is it more simple than it looks?

5553 MR. WATERS: I hope it is. They had to work me over on this one a little bit, Madam Chair, but --

5554 THE CHAIRPERSON: Ah, you too.

5555 MR. WATERS: Yes. Well, it's the 50 per cent represents the out of market tuning that we will repatriate back into the market. Have I got that correct?

5556 MS SHEPPARD: Yes.

5557 THE CHAIRPERSON: And it's obviously then related to the accuracy of your projections as to population growth?

5558 MR. WATERS: Yes.

5559 THE CHAIRPERSON: As is the $4.1 million --

5560 MR. WATERS: Yes.

5561 THE CHAIRPERSON:  -- that would replace what the local stations would have made possibly had you not come into the market, simply because of growth?

5562 MR. WATERS: Yes.

5563 THE CHAIRPERSON: Assuming that they could perform as well as they did before.

5564 In the service to the community area you tell us some of the things that you will be doing and some of them I would like to understand better. It is the same question to the other applicants. This is going to be a music driven station and pitched to a fairly young audience.

5565 So, would you expand a little more as to how you are going to make it a local station. I am looking mainly at your Schedule 16 and the proposals you have there to turn this station into a local station, which your consultant has told you is crucial to carving a place in the market, repatriating audience from the stations that are there and those that at the moment account for almost 60 per cent of listening.

5566 MR. WATERS: Madam Chair, Ross Davies is going to --

5567 THE CHAIRPERSON: You look delighted with this question.

5568 MR. DAVIES: No. I just want to get my turn.

5569 MR. WATERS: They have been studying hard. We have all been studying hard, but I think Ross is ready for this one. Ross.

5570 MR. DAVIES: I think one of the main means of repatriating tuning into a market is to talk about that market. When you have over 60 per cent tuning going elsewhere there is clearly an indication that there is something wrong there. So if we are going to repatriate those people there is a number of things that we can do. One of them is to provide a service or a format, if you will, in this case that is not being served right now, and in this particular market there is no contemporary radio hit format.

5571 By that alone we are going to attract people who are tuning elsewhere back into the community.

5572 I think another way of doing it is to make sure we service the needs of that audience and one of the main ways of doing that is provide news content for these people. We need to talk about Barrie, and so when we provide a music service it's one component, but we also have to back that up and reinforce that by providing a consistent, significant news schedule for them to know and learn about their community and we will be doing that.

5573 We have the great advantage, talk about synergies, of being associated with CKVR. They have 28 people and their award winning newsroom who have got cameras all over Barrie and Huronia, who have captured that market inherently and they know that market. We are lucky to be able to draw on that resource, to be able to provide targeted information in the news sense to our new audience. We are really excited about that.

5574 I think the other areas that we get in touch with them are in such areas as community service when we talk about things like our Bay Watch program where we are concerned about today's youth and all the challenges they have growing up. We all have kids and we can see what they are facing and we want to make sure that we can provide the people of Barrie, the young people of Barrie an opportunity to be in contact with the areas of concern to them.

5575 By doing a Bay Watch program where we can go out and connect with them and they can connect through us to the various social outreach programs in Barrie, we think that's an important vehicle to again keep people listening locally. We want to become their best friend and their ally. I think those are just some of the areas that we can help become a local service to the community.

5576 MR. WATERS: I think, Madam Chair, it is worth saying that CHUM -- it's in the CHUM culture to be intensely local wherever we operate, whether it be radio or whether it be television. I think that's a CHUM trait and it's something that we are quite proud of and something we have done in all of our operations.

5577 THE CHAIRPERSON: This Bay Watch program with interactive phone lines et cetera, will that be like an open line with the radio station or with an operator separate from on air? How will this work?

5578 MR. DAVIES: Madam Chair, we envision it as a number of different things. I think in this day of technology we have to be so savvy in that area, so it will be a combination of everything. It will have people in our building virtually throughout the day constantly updating and downloading information onto the phone lines and to the web sites.

5579 So it will be manned continually in that sense. As someone said earlier, anything having to do with web sites has to be updated continually, and that's in this particular case because of its context that's absolutely essential to that.

5580 So we will be having people on staff dedicated to that. Again, the resources of CKVR's newsroom will be a tremendous resource to that.

5581 The phone lines will be a combination of being able to dial in and get information instantly. If they don't happen to hear about a major snowstorm coming on the radio at that particular time because we may be playing a song -- well, they can dial up on the phone and get instant information that way. So that will be a recorded type of phone, but it will be a combination of all those things.

5582 THE CHAIRPERSON: And this will be advertised or made known to your listening public?

5583 MR. DAVIES: It will not work unless we do that. We have to commit to a regular schedule of daily announcements, seven days a week, 365 days of the year in order for this program to work. If they don't know about it it won't have any effect, so you are absolutely right about that.

5584 THE CHAIRPERSON: And you will have, I think either you said today or I read some 28 -- yes, some 28 newscasts a week?

5585 MR. DAVIES: No. Eight-two newscasts.

5586 THE CHAIRPERSON: Where do I get 28?

5587 MR. DAVIES: Twenty-eight news people in the CKVR newsroom.

5588 THE CHAIRPERSON: Yes. So that's how many a day, newscasts?

5589 MR. DAVIES: It will be -- oh, per day, hang on a second.

5590 MR. WATERS: Madam Chair, while Ross is looking that up there was another 28 that you heard. I think it's a schedule of 28 spots a week for the Barrie lifestyle initiative.

5591 THE CHAIRPERSON: Yes.

5592 MR. WATERS: That is the on-air schedule that we give to the City of Barrie, so they can promote.

5593 THE CHAIRPERSON: Yes.

5594 MR. WATERS: That's actually an initiative we have used in Windsor and in Kingston and in Brockville and it's a very successful one, so it's an initiative that we --

5595 THE CHAIRPERSON: Let's understand this one and then we will go back to the number of newscasts. How many news breaks and how long they will last.

5596 So, you call it today -- this is --

5597 MR. WATERS: The Barrie lifestyle --

5598 THE CHAIRPERSON: This is made available to the mayor's office. Right?

5599 MR. WATERS: Yes.

5600 THE CHAIRPERSON: And you call it today, I think, commercials and in Schedule 16 you called them announcements, 28 announcements a week over the term of a licence and you establish a price for that or the value of the benefit. So what will this be? Announcing -- why do you say commercials today? What will it be? Give me examples.

5601 MR. ROMAN: If I could, Jim.

5602 MR. WATERS: Sure.

5603 MR. ROMAN: I have had some experience with these initiatives in Windsor, in Kingston and other CHUM markets. I think essentially to set this up as distinct from public service announcements. They are public service, but here is the really significant difference.

5604 We turn over this schedule of 28 announcements, commercials, you can call them what you want, to the mayor's office. They are in essence a client. We do not dictate the content of those PSAs. It's not like a charity or a fundraising group coming and saying would you please give us some help with our charity. We have no control over the content. That's why they are more like commercials than PSAs.

5605 If the mayor's office says that it is a good idea to do an anti-drug campaign, he doesn't have to ask for the air time. He says, "Please devote my 28 announcements per week to the anti-drug campaign." If it is about road closures, "Please devote a portion of those announcements to road closures."

5606 This has changed the interaction, the dynamic between the mayor's office and any of the cities or locations I mentioned and the local radio station beyond belief. It has taken it out of the realm of us doing them a favour.

5607 Once the announcement schedule is in place, they are like a large client. They have the schedule and they take the content and this has worked tremendously because there is no down time or up time. It is not dependent on whether we are busy commercially or whether we have time for PSA announcements. It's locked into the schedule. These are guaranteed. If they choose to use them they have 28. If not, yes, they can revert back to us, but they tend to use them all up. They will find a way to use those 28 announcements.

5608 THE CHAIRPERSON: The script is provided.

5609 MR. ROMAN: We do all the production free of charge. If they want to give us supplied creative, fine; if they want to give us copy points and us create in fact quite highly produced spots, with sound effects or music, whatever, we will do that too on a donation basis.

5610 THE CHAIRPERSON: And it could be simply announcing an event as well.

5611 MR. ROMAN: Yes.

5612 THE CHAIRPERSON: Or an emergency or any number of things.

5613 With the newscasts, how long will they be and how many will there be?

5614 MR. DAVIES: Madam Chair, they will be --

5615 THE CHAIRPERSON: I didn't just divide by seven, because I don't think it works that way.

5616 MR. DAVIES: It almost does, and that is why I got caught. I had to go and check.

5617 Monday to Friday, there are 12 newscasts a day; and on Saturday and Sunday there are 11 newscasts per day. That makes up the 82 over the course of the week.

5618 THE CHAIRPERSON: How long is each?

5619 MR. DAVIES: There will be a combination of what we call in the industry major packages and shorter update packages.

5620 For example, in the morning drive period the packages will be five minutes in length, on the hour and half hour; and in the middle of the day they would be more like 97 seconds to go along with our frequency, more just kind of keeping people informed.

5621 That will go throughout the day.

5622 THE CHAIRPERSON: In the local service to the community, would it be fair to say that those are the three main efforts over and above -- we are not talking here about Canadian Talent Development. But it would be The Bay Watch program, these services, the newscasts.

5623 MR. WATERS: Yes. But I think there is something that we are forgetting here, and that is The Bandshell by the Bay initiative.

5624 THE CHAIRPERSON: Yes. Besides the Canadian Talent Development.

5625 MR. WATERS: Okay.

5626 THE CHAIRPERSON: I am talking here about -- we are told, and your consultant told you that your success eventually, after many years of not making any money, is dependent on localizing your station. And you know that it is important to the Commission also in its policy. That, I don't think has necessarily much to do with Bandshell on The Bay. It is how does this local station on the air serve the community. That is one aspect.

5627 They are not discrete. There is overlap.

5628 But over and above the music, what else does one get that makes the station local? Are those three initiatives --

5629 MR. DAVIES: In addition to those that we have mentioned, Madam Chair, I think it is important that we don't forget the relationship we have with CKVR.

5630 We have been in this community for over 40 years, as you heard Jim say. And CKVR, as Mr. Sherratt outlined when he quoted the intervenor, is an outstanding community provider in that area with CKVR.

5631 Going back to the synergy thing, there is an automatic connection where we will be aligned with Doug and his staff for such things as their annual Christmas program that they are doing that you heard referenced earlier today with one of the other applicants.

5632 It only makes sense for us to join forces with those people, to make it even better for kids at Christmas.

5633 Doug, you may want to elaborate more on this.

5634 The New Year's Eve program that they do, the first night for children every year where CKVR televises this event, it is a natural event for a station like The Bay to hook in to CKVR and provide all that much more exposure into the community.

5635 MR. GARRAWAY: I might just elaborate on that, Madam Chair.

5636 We have had a history of community involvement as long as I have been there, which is since 1962. But we have also had a very good relationship with all of the other radio stations that are in our city as well, including Rock 95 and CHAY, and B-101 at different times and for different projects.

5637 It is a pretty exciting prospect to imagine being under the same roof with a radio station in our company and imagining the kinds of things we can do together for the community.

5638 THE CHAIRPERSON: So that's why you are making such an effort to find some space in that building.

5639 MR. GARRAWAY: I have found it.

5640 THE CHAIRPERSON: Save on capital costs.

5641 What about synergies because of the proximity of your Toronto stations and activities as well?

5642 MR. WATERS: No. We want to be local Barrie. So we would not be working with our stations in Toronto.

5643 THE CHAIRPERSON: Would you not use the possibility of joint promotion or even selling?

5644 MR. WATERS: I will say this -- and it is not quite fair to say no, we won't do that.

5645 CHUM and CHUM-FM just did a promotion with the new VR for the hospital in Newmarket, the York County Hospital, and it worked extremely well. They raised over $250,000 for the hospital.

5646 I suppose in a situation like that, where a group effort by a proposed new FM, the new VR, and maybe CHUM and CHUM-FM in Toronto could do it to help a hospital or some such good cause like that -- I suppose we could do that. I suppose it is not fair to blanket and say no, we would never do that.

5647 I guess there is the odd opportunity where that could be beneficial to everyone.

5648 THE CHAIRPERSON: In your presentation today you have talked about looking at new opportunities in radio and one very clear criterion you looked at, according to page 8, is whether the market is sufficiently robust to allow the introduction of a new radio station.

5649 Apart from that, what else do you look at since you say that you have only applied where starting a new FM radio made sense for CHUM considering your financial expectations -- if I look at your projections?

5650 MR. WATERS: I think -- I just want to make sure I have the question right.

5651 I think, first of all, when we do look at the opportunities that are available to all the broadcasters, including CHUM, across the country it made sense to us that Barrie was a community and a market in which CHUM had operated in. We were familiar with the market. We felt that putting a radio station with the new VR up there would be beneficial, not only to the community but it would make sense as being able to operate that way.

5652 I think it is something we certainly gave consideration to in London, which is the other place that we applied for the licence.

5653 It was terrific that we got it, but we also have a television station there. We have television in Ottawa. In fact, in Ottawa, for the first time radio is going to live with television in the same building, in the Byward Market.

5654 I don't know.

5655 Ross, help me.

5656 MR. DAVIES: Madam Chair, I think Jim gave a great example of the hospital in Newmarket. Sometimes big is good. I think when we combine the resources of CHUM, and in this case CHUM-FM in Toronto, and CKVR, and hopefully a new radio station, I think the big winner in that particular area is the hospital.

5657 That is an example of the big company helping out the little player.

5658 But we also should not forget that Barrie is going to be heard, as a result of CHUM's association, through things like the CHUM National news. We undertook the commitment years ago to broadcast a national news service every day on our radio stations from Halifax to Vancouver. It is important that each one of our radio stations supplies news content to that national newscast.

5659 And that will be the case here in Barrie if we are successful. Barrie News will make it on the CHUM National news.

5660 I think that is another example of it working kind of in reverse, and I don't think we should lose sight of that. I think that is a very good benefit for the community of Barrie.

5661 THE CHAIRPERSON: As you know, one of the areas that we look at as well, when we look at competing applications, is Canadian Talent Development.

5662 Mr. Salter, can I ask you what your profession in life is?

5663 MR. SALTER: Madam Chair, I am an architect and have been for almost 40 years.

5664 I might say, also, that I am obviously not a broadcaster, and I am obviously not a part of the targeted 97.7 By the Bay station. I think I have slipped over the edge of that demographic.

5665 THE CHAIRPERSON: And I suspect you are not a rising Canadian talent either -- a musical Canadian talent. Or maybe you are.

5666 MR. SALTER: I might say that, musically, all of the talent is with two of my four children and with my wife. I have the proverbial tin ear.

5667 THE CHAIRPERSON: Convince me, Mr. Waters, that it makes sense that we need an architect to talk to your Canadian Talent Development.

5668 MR. WATERS: Convince you that we need an architect?

5669 THE CHAIRPERSON: To speak to your Canadian Talent Development.

5670 Why is this an appropriate expenditure for the development of Canadian talent? I need to be convinced that it is not a little bizarre that we need an architect on the panel to talk to us about Canadian talent development.

5671 MR. WATERS: Madam Chair, I understand totally, but I would like Mr. Salter to answer, if he would.

5672 THE CHAIRPERSON: Well, no, I don't think Mr. Salter is a broadcaster. You are the broadcaster, you are before us, these are three competing applications. I want to understand how you fit this into the Canadian talent development better.

5673 We can speak after about the architectural details of your Canadian talent development.

5674 Do you know what I mean?

5675 MR. WATERS: I do know what you mean, but --

5676 THE CHAIRPERSON: Explain to me why this is -- convince me that this is a Canadian talent development commitment that we should take into consideration to its full value. I just need to be convinced, and I don't think an architect can do that. The broadcaster has to.

5677 MR. WATERS: Okay.

5678 I think it is important to note that Mr. Salter is an architect. The idea came to us through the Barrie Rotary Club, of which Mr. Salter is a member. That is the connection.

5679 He is not here as an architect. He is --

5680 THE CHAIRPERSON: I was being facetious. I want you to get --

5681 MR. WATERS: Okay. Oh, I'm not sure. I was --

5682 THE CHAIRPERSON: I want you to explain to me why, in our policy, we want broadcasters to show us how, over and above building a radio station that will serve the public, provide local community service and hopefully diversity, also have Canadian talent development, which I always understood as being musical talent development -- I'm not saying that I don't think this is appropriate. I want more explanation.

5683 I was being facetious that it is a bit of an indication that it is not quite obvious when we have an architect to explain why it is a CTD commitment.

5684 I like you, Mr. Salter, but --

--- Laughter / Rires

5685 MR. SALTER: But you hate architects.

--- Laughter / Rires

5686 THE CHAIRPERSON:  -- do you understand? No, but do you understand?

5687 What I would like you to do is --

5688 MR. WATERS: I think I do.

5689 THE CHAIRPERSON:  -- is justify this as something we should take fully into consideration within our policy in its complete value.

5690 MR. WATERS: Okay.

5691 I may ask for a little bit of help here, but, to begin with, I think when we go to a new market, such as Barrie, it is our usual practice to contact someone locally to talk about whether there is a specific need or something that we can do in the community that we could put together as our Canadian talent initiative.

5692 In this case, fortunately we have a local television station which CHUM owns. And Duff, who is usually our point person on developing our Canadian talent initiatives, called Doug Garraway and I think, Duff, from that point on, Doug talked about the bandshell and kind of pointed you towards Millet Salter. I think I'm correct to that point.

5693 MR. ROMAN: Up to that point. Yes, Jim.

5694 I guess I'm glad you asked this question. I hope, Madam Chair, I can be helpful to you.

5695 To pick up where Jim left the story, I did indeed contact Doug Garraway and indicated to Doug, who is also obviously a broadcaster on the television side, that our initiatives, when we go in to apply for a new licence, have to have meaning at the local level. We don't believe in simply shovelling in money in terms of certain funding initiatives. We do that anyway. That is a commitment we have made to organizations such as FACTOR.

5696 What we need are initiatives that work on a variety of levels. One, they have to be unique, they have to be realistic and they have to be ultimately effective. From the standpoint of where we went in our discussion with building an initiative, Doug said "A musical initiative?" I said, "Yes. It has to have a meaningful commitment that will enhance and develop and promote local Canadian talent."

5697 As far as I know, I wasn't in his office, but a light bulb went off over his head at that point and he said to me, "We have a project that has been in the works for 30 years in Barrie. For a variety of reasons, it has not advanced to the stage where this project can take form." He at that point said, "I'm going to put you next to a gentleman named Millet Salter who" --

5698 At this point, I didn't learn that Millet Salter, in fact, was an architect until many, many weeks after discussions with regard to the project. I was talking to him as a fellow who is part of a committee that has been trying to develop the funding for a bandshell which would feature concerts, choirs, musicians at the local level who are not yet recording artists, in many cases. These are the citizens of Barrie and in these ranks are the music and stars of tomorrow. These are the people that have to start somewhere.

5699 It is one thing to do CDs, it is one thing to apply to FACTOR for a grant, but it begins much earlier than that. It begins at the community, where someone who has an interest in music has to have a venue.

5700 At this point, and I really -- if you will permit me, I would like to get Millet in here somewhere, but I'm being told that a lot of these activities in downtown Barrie, when it is, oh, a festive occasion or Canada Day, take place on the back of a flatbed truck. That is the status of not having a venue in which to celebrate your local Canadian musical talent.

5701 So when I talked to Millet and he laid out what the considerations were, it seemed quite consistent with the approach we had taken in London and in other markets, that we had an initiative that the people of Barrie wanted, we had an initiative that would deal with something I think the Commission has been looking for, and that is: start earlier in the talent process.

5702 You have on-air commitments at 35 per cent, you have mature organizations such as FACTOR and Music Action funding and helping produce recordings. We are very much a part of the CARMA project, which is taking the significant benefits package and turning it into the marketing of Canadian music, but how do we start at the beginning of it all?

5703 So that is what made us excited, that we would have something that would have lasting value, that would be a gathering point, a focal point for citizens in Barrie. It would help in terms of bringing people to the lake shore and to help rejuvenate the downtown area, but, most importantly, it would be a showcase for local Barrie musical talent.

5704 Now, if you want me to explain again about the architect's --

5705 THE CHAIRPERSON: No. My question would not be of course at the costs of annual musical events, at the costs of hiring talent, the costs of producing and staging the concert. The associated promotion and publicity don't raise any questions. It is the large amount to the bandshell.

5706 I'm old enough to remember how Mr. Lombardi started his musical talent concerts. You know, it is not a new idea. I don't know where he staged them, but I can't remember him -- it is just that building a bandshell, whether that is -- it is very laudable of course and it is lovely, and I'm sure Mr. Salter will make sure it stands up well to the weather, et cetera. The question is more: Is that an appropriate amount? The amount of the capital necessary to build it, is it necessary for promoting local artists and concerts, et cetera?

5707 I understand that if it rains it will be better -- well, slightly better. So that was my question.

5708 MR. ROMAN: I understand. But I think in the context of coming in with a new FM radio service, essentially we were starting with a blank page, and what attracted us, in our discussions with Millet Salter and other activists in the Barrie community, was that they had an unfilled need for a musical venue. It wasn't a hockey rink and it wasn't a lacrosse field, it was a musical venue.

5709 So for us it all clicked into place and it just seemed an eminently useful way to contribute that amount of money, because it will have lasting benefits.

5710 THE CHAIRPERSON: I think it is a wonderful endeavour on the part of CHUM. I'm not questioning that any more than I'm questioning the beauty of the bandshell. I'm just asking you to justify or explain how that fits into our Canadian talent development which is supposed to -- for the development of talent.

5711 MR. DAVIES: Madam Chair, if I can confuse it maybe more or hopefully help it a little bit more. I think Millet can speak passionately about this when he talks about some of the issues you are actually referring to.

5712 I also serve on the Canadian Academy of Recording Arts and Science, CARAS, on the board of directors there, and I'm currently involved in the music education committee.

5713 As you may or may not know, CARAS have identified a huge problem with teaching young people to get music instruments and to get the instruments into the schools.

5714 I can't emphasize -- as you probably know, these programs are being cut out in schools across the country and we at CARAS are now putting money into the schools and actually buying musical instruments for these schools. We just did one recently up in Nunavik where Susan Iglucart(ph) went up there and presented the school that she went to with a whole bunch of musical instruments.

5715 It is really a problem for the music industry. And Duff is right, we need to get it at the grassroots level. We need to get young people playing and having instruments to have the opportunity to play.

5716 In addition to that, though -- and this is where CARMA comes in with the CAB initiative with this marketing fund money.

5717 In discussions with the music industry, they have identified that one of the key areas that they need to help our industry, their industry, is to get their bands playing. They need to get them out on the road.

5718 Duff, you know, they have identified tour support as a very, very important issue. We have to get our musicians to play. That is the only way they get better. They need to be put in front of people.

5719 That brings us back to Barrie and the "Bandshell by the Bay". We found out that there was a real need in Barrie to have the musicians play. They don't have that opportunity. This is what Millet brought to us, and there is the opportunity for them to perform.

5720 MR. SALTER: Madam Chair, I wonder if I could just beg your indulgence for a moment. We will put the architectural mantle aside.

5721 I am really here as a stand-in. Bob Hunter originated the concept of a bandshell venue in Barrie some 33 years ago. My first letter on file to Bob was February 4, 1967.

5722 Bob, I might add, was a retired broadcaster, the manager of radio station CKVB and a very dear friend who passed away suddenly on May 4th of this year. I'm sorry if I get a little emotional about this.

5723 One of the presenters in the previous submission coined the phrase "Build it and they will come". I would suggest to you in this instance, as Bob always said, "Build it because they are already here." That is exactly the situation.

5724 As an architect it is a source of pride and it is the proverbial loss leader. But I committed to Bob's wife and children the day after he passed away -- and I'm really sorry about this -- that somehow I would make this thing happen.

5725 Quite frankly, Rotary has committed $250,000, the project will cost about $550,000 in the inflationary environment in which we live. No CHUM support; no project.

5726 We were to acquire the other $250,000 from millennium grants and, quite frankly, we have not been successful.

5727 The committee -- and it's a small committee -- agree unanimously either CHUM wins and we win or CHUM loses and we lose.

5728 I am not here specifically to support CHUM's application for 97.7 on The Bay, but I am, quite frankly here for the good of the people of Barrie because I believe this thing would be a jewel and would help to revitalize a very tired downtown, compliments the lakefront, is, as Bob always said to me, and it was his idea as to the location, this is a natural amphitheatre. The sun east to west will be not in the performer's eyes, not in the audience's eyes. The prevailing winds are protected, the drop from Dunlop Street to the bandshell is a natural eight foot amphitheatre, buildings on each side flank and control the sound.

5729 It was a brilliant idea and, Madam Chair, I can say nothing more sincerely to you than I would dearly love to see this happen because I think it is one of the finest things, one of the best opportunities, small though it may be, that Barrie has had in many years.

5730 Thank you.

5731 MR. GARRAWAY: I wonder if I could just add to that, just very briefly. I'm not an architect, but I am kind of a musician and so I know the musical community in Barrie very, very well.

5732 There is something I think you should know about this and that is that the actual cost to create what is seen in that picture actually is more than $550,000, because there is grading, there is the closing of a road, there is the preparation of the site which apparently is going to cost in the area, I think, $300,000 to $350,000 which will be borne by the City of Barrie.

5733 I know the Mayor and the Mayor's office and the people who run the city recognize that this is something that the citizens of Barrie really could use.

5734 As a musician I have never had to play on the back of a flatbed trailer -- which is just as well, I guess, because they could have hauled me away -- but we had a visiting youth band from Europe this summer and the only place that they could play outside was in a little gazebo in a park on the waterfront.

5735 You know, that reminded me that this -- you know, in terms of the opportunity to display talent for it to be there for all the people all the time, that this is really an important development in the City of Barrie.

5736 Just to put it into context, we have all seen the graphs and charts about Barrie growing, it is the fastest growing city in Barrie. That's when you are talking about housing starts and so on.

5737 We are very lucky because not only has the City of Barrie recognized that and added the infrastructure necessary, but there are so many other initiatives that they are bringing the city of age. The city is coming of age.

5738 We have just opened a brand new grand library just adjacent to the downtown. The library vacated the old Carnegie library building which is now being redeveloped as the new MacLaren Arts Centre.

5739 We have just opened, about a year and-a-half ago I guess, a new rink in the Civic Square, an artificial ice rink that is available, unfortunately, in Barrie for quite a long time through the year.

5740 So these kinds of things are starting to go along with the increase in business, the increase in population.

5741 This could be just a wonderful component of that. It fits perfectly in an initiative the city has undertaken, and that is a 10-year, $20 million commitment to improve an already beautiful waterfront. Key to that development are linkages that will link the waterfront with various neighbourhoods and the downtown. This area here is the key linking area between downtown and the waterfront. So for a whole bunch of reasons it is a perfect fit and, of course, we hope it happens too.

5742 Back to the synergies, I can see all kinds of ways that VR can become really involved in this venue.

5743 THE CHAIRPERSON: Thank you, Mr. Garraway and Mr. Salter and Mr. Roman and Mr. Davies for more explanation on how you connect this.

5744 You may want to explain to Mr. Salter, I know you know what I'm driving at, if you are broadcasters is where does this stop.

5745 When we talk about competitive applications and putting forward a proposal to develop Canadian talent it is important that we are satisfied that it is linked to such development and if the -- to be considered a larger size commitment and whether or not we should only consider the actual money spent on the concerts and -- but you have provided some linkage, and even your architect has spoken almost like a broadcaster.

5746 Thank you very much.

5747 Yes, Commissioner Cram.

5748 COMMISSIONER CRAM: I am going to go on on the same topic because I have a very difficult time.

5749 What if a drama, if Shakespeare was in the bandshell, how does that promote Canadian talent development in music?

5750 MR. WATERS: I think it promotes -- in music.

5751 Well, maybe not if they are not singing it I suppose it doesn't --

5752 COMMISSIONER CRAM: So should we take some off the capital cost for that?

5753 MR. WATERS: No, I -- no. I think it still --

5754 COMMISSIONER CRAM: What if the Mayor were giving the July 1st speech there and there were firecrackers, but there was no music?

5755 MR. WATERS: Commissioner Cram, I think that we envision that the facility will be used for those reasons.

5756 I think that there certainly will be musical talent playing there frequently, but I think it would be unreasonable for us to think that they wouldn't be using it for other things. I hope that they do. It's in the middle of the city.

5757 As was explained by Millet and Doug that it's kind of a connector in the middle of the city and it's a place where we hope that a lot of activity takes place, whether it be music or not.

5758 COMMISSIONER CRAM: So if the Queen visited, or if it was an American band, how does that promote Canadian talent development? Where I'm coming from is we need money for Canadian talent development, but I think we have to have a causal link.

5759 When I hear this is to be a multipurpose building, it looks very nice for CHUM to do it for the city, but does it meet the Broadcasting Act and its requirements and what we're looking for? If you are saying it's a multipurpose bandshell, not solely for Canadian development, then I'm saying how much of the time do you believe that will be used for bands to play in?

5760 If it's 10 per cent, then maybe we should be talking about 10 per cent of the capital cost to be put into CTD. I mean in reality because we are talking about a scarcity of money for Canadian talent development. I understand your concerns and the concerns of the city, but our job is to worry about the broadcasting system and developing talent for that.

5761 MR. DAVIES: Commissioner Cram, if I can perhaps elaborate a bit. I don't think we can expect to fill the bandshell 365 days a year. I don't think Air Canada Centre in Toronto expects that or the Corel Centre here when they bring performing bands in.

5762 We are actually thrilled to be able to offer this bandshell for the other uses, some of which you have outlined. Clearly, we have got the one major concert that we want to put on every year, but that doesn't prohibit many other concert activities that may take place on the normal regular routine with a radio station throughout the year.

5763 I think you heard Doug Garraway, and perhaps Millet can answer you, there's a number of other musical activities taking place in the Barrie community. As you have heard them say, they don't have a venue. Now they will have a musical venue, but we can't expect to fill it 365 days a year. We would like to and maybe we can eventually, but we are happy to be able to offer it to other places.

5764 COMMISSIONER CRAM: So it will be as a public service, do I have it right, and hopefully it will be a venue for music, but also for other things.

5765 MR. SHERRATT: Commissioner Cram, it's a bit like the act. If you want to link it to the act, the act says it will be "predominantly".

5766 COMMISSIONER CRAM: I understand.

5767 MR. SHERRATT: It's our hope that this will be predominantly a music venue and predominantly a music venue for amateur local performing talent. That's the fundamental thrust of the process.

5768 A big American name established act isn't going to play the bandshell. They can't charge $75 a ticket there. They will do that out at Molson Park which is a commercial money driven venue. This is a venue to drive local involved talent.

5769 Yes, if the theatre can use it, that would be terrific if there isn't a concert going on there tonight. It would be wonderful if it was working every day that it wasn't below zero in Barrie. If it wasn't all music, I don't think that's going against the development of Canadian talent, but contributing beyond just musical talent.

5770 COMMISSIONER CRAM: Mr. Sherratt, I hear you. I understand the "predominantly". My point is I am talking directly. When we are talking about what I would see as a multipurpose building, I have a difficulty with that and particularly, as you know, it's going to be a multipurpose building. I understand your hopes that it will be used primarily for music.

5771 I have a difficult problem when we are talking about something that is really a matter for the community. I think it's a wonderful donation, but I have a problem with it being -- the total capital cost being attributed to CTD.

5772 You tell me how you think because that's -- you were going to say something, Mr. Roman?

5773 MR. ROMAN: Well, I was, Commissioner Cram. I was just going to say that what helps sort of keep our focus and our integrity with regard to this initiative is the genesis of the initiative.

5774 The genesis of the initiative is bandshell. Obviously if it's in a public green space, it is going to be multipurpose, but the person whose idea it was, was known, and is deceased now, as a musician. That is the genesis of the bandshell by the bay. It all flows from that.

5775 As Mr. Sherratt said, the predominant use I think really drives this, but we want a bandshell that's going to be used all the time and bring people together. We hope that the portion is predominant and significant in terms of musical talent, but it's first purpose -- I know Millet is going to help me with this one -- is as a musical venue. It is by definition a bandshell.

5776 MR. SHERRATT: I think you are under a pretty important discussion here, Commissioner Cram, because, you know, take a dollar in FACTOR and break it down. How much of it goes to music as such vis-à-vis what goes to recording studios, what goes to acetates, what goes to the whole process.

5777 There are a lot of things that make up music. Run through it.

5778 MR. ROMAN: Well, I could tell you this. Where an artist, however accomplished that artist is and whether or not that artist has a real opportunity of making money, but I can go very simply and tell you a royalty artist, in other words, an artist who has some hope of return if the record sells in fact usually doesn't get paid.

5779 Most of that money through FACTOR goes into the production of the recording. Yes, the studio musicians, the side musicians, they will be paid, but essentially if a four or five person band, group, is going to make a recording with commercial hopes, essentially they make a contribution to that recording and hope to take their end of it out of sales. The rest of it, as Fred Sherratt is saying, has to go to infrastructure. It has to go to a recording studio, it has to go to rehearsal space, it has to go to the rental equipment.

5780 It's the business of doing music. This may be the first time that we have really found a way of addressing the introductory phase of the development of musical artists.

5781 I know you are hearing about CD production and homegrowns and song contests and indeed contributions to FACTOR, but here's something that starts the process, that begins all the other good things that together with the music industry broadcasters have been able to build.

5782 You know, you just have to look at the Canadian star system to know that a lot of good things are working in conjunction with the Canadian on air commitments, the sound recording development program of Heritage Canada, FACTOR, Music Action.

5783 We are the envy of the world. We are next door to the most powerful nation in the world and we export this model. I hope you don't mind me going on a bit, Commissioner Cram.

5784 COMMISSIONER CRAM: No, no. I think you should.

5785 MR. ROMAN: Oh, okay.

5786 COMMISSIONER CRAM: I think you should try to make your best shot.

5787 MR. ROMAN: Okay. Well, I'm sure going to try. You know, I don't have to get into the fact that I have been in the music business as well and I know what a long shot it is with regard to where you go with the record.

5788 Sometimes you can produce a record in your garage or do it by yourself like the Barenaked Ladies, have no success with record companies, put it out there and people love it and buy it. Most of the time it's as our other competitive applicants have been saying, you don't see any money at all. The first CD or first recording that a group makes goes right back to the cost of all the things I have talked to you about. It's taken out of the hide of the artist.

5789 Where we are coming from is the very beginning of this process. It's part of the Canadian sort of public-private approach that we take to things. That's the model of export I was talking about.

5790 Australia is using the FACTOR model. EC countries have been in touch with FACTOR and with Music Action to say "How do you do this? How does it work?". The greatest export that the Americans have now is intellectual and entertainment products. I mean there are countries that have the barrier of a different language, but they can't escape this largest cultural monster that stalks the world.

5791 Getting an identity and a culture that can survive in that kind of environment has created an expertise for us Canadians. We have been building on it. This is a very important piece that has never been covered before, I think, as directly as we have. The beginning of it all.

5792 As someone once said, "How do I get to Carnegie Hall?" The response is "Practice". This is part of that first step. They have to have somewhere to show what their practice has done for them.

5793 COMMISSIONER CRAM: I'm just paraphrasing. Your argument is that the facilities, even though they be general purpose facilities, are the place to start for Canadian talent development. Is that your point, even though it's based on a hope, as Mr. Sherratt says, that it will be used primarily for music.

5794 MR. ROMAN: No, the initial purpose is primarily music. I think the bandshell defines it. Bandshell to me says a shell for a band.

5795 MR. SHERRATT: A general purpose facility is the Air Canada Centre and yet it is designed specifically for hockey and secondarily for basketball. That is a general purpose facility. The bandshell at the CNE doesn't have a lot of hockey games or basketball games and the bandshell by the bay won't have a lot of those either.

5796 It will be talent performing and by its very nature it is going to be principally musical and by its size and its location will be predominantly low.

5797 COMMISSIONER CRAM: So you start with a building, you don't start with people. Is that --

5798 MR. SHERRATT: Well, you --

5799 COMMISSIONER CRAM: No, because that was what Mr. Roman said. You start with infrastructure in terms of buildings as opposed to people.

5800 MR. SHERRATT: I thought Millett put it best when he said, "We have the people, we need the place for them to get into".

5801 COMMISSIONER CRAM: No, no. Talent development is what we are talking about.

5802 MR. SHERRATT: Oh, okay.

5803 COMMISSIONER CRAM: Yes.

5804 MR. ROMAN: Well, can I say, Commissioner Cram, that we have been at this talent development thing for a long time and it is time for other creative and imaginative initiatives to build the entire movement toward better and, we hope, prosperous Canadian talent.

5805 We contribute annually a quarter of a million dollars to FACTOR. We do it on behalf of our 26 radio stations. Similarly, we support Music Action. We are involved in what Ross talked about and that is the Marketing Fund that goes to the promotion and the marketing of music rather than the cost of production of records.

5806 So we can't leave this out, you know. There is something to be said for that expression, "Build it and they will come". Right now there isn't a bandshell green space facility predominantly devoted to presenting music in Barrie. It seemed to us like a great natural fit.

5807 COMMISSIONER CRAM: Thank you.

5808 THE CHAIRPERSON: Thank you very much, ladies and gentlemen.

5809 We will take a 10-minute break and I think since everybody has stated we will proceed with those interventions and start tomorrow morning with interventions other than the competing applicants.

5810 So I guess it is in reverse order. No, it is not, I am sorry. So you have to vacate, unfortunately.

5811 Thank you.

--- Upon recessing at 1928 / Suspension à 1928

--- Upon resuming at 1940 / Reprise à 1940

5812 THE CHAIRPERSON: Madam Secretary, please.

5813 MS SANTERRE: Thank you, Madam Chair. We will now hear the oral intervention by Larche Communications Inc.

INTERVENTION / INTERVENTION

5814 MR. LARCHE: Thank you very much.

5815 I guess I should say good evening again, Madam Chairperson and Commissioners. Thank you for this opportunity to discuss the applications by CHUM Limited, and Rock 95 Limited, owner of CFJB-FM.

5816 Both applicants today have applied for a CHR format to serve Barrie. Both claim the market hole is "underserved" youth. The reality is that this assertion does not hold up under analysis.

5817 First of all, to our knowledge, and we have just reviewed the application, CHUM did not file any audience research. Now, they did mention in their oral presentation, but we have not had an opportunity to see it. I have checked with the other applicant, he has not seen it, and we have just checked the public file and we did not see any in there.

5818 So I have to go under the assumption that there was no research done by CHUM because I didn't have an opportunity to see any audience research.

5819 So for this reason we can only rely upon our own research which was conducted by Angus-Reid and upon Rock 95 Ltd.'s research which was undertaken by David Oakes and Associates.

5820 The fact is this: Barrie wants a Classic Rock station -- plain and simple. Our research shows it, Rock 95 Limited shows it, and BBM figures show it.

5821 I would like Jeff Vidler from Angus-Reid to elaborate.

5822 MR. VIDLER: Thank you, Paul.

5823 Madam Chair, Commissioners. As pointed in the research findings included with LCI's application, Classic Rock with a new rock component will meet an underserved need in the Barrie marketplace. It will also generate a large audience, particularly among youth aged 18 to 34.

5824 Our research also indicated that the proposed Classic Rock format would repatriate a significant amount of out-of-market tuning. In fact, it suggest that roughly 60 pour cent of the station's hours tuned would come from out-of market stations.

5825 Corroborating research further indicates that a Classic Rock format would provide greater diversity and repatriate more out-of-market tuning than a Contemporary Hits or CHR format.

5826 This chart that you have in front of you now is from the Spring 1999 BBM and it compares Barrie tuning to out-of-market Rock stations and with tuning to out-of-market CHR stations and this is based on 12 to 49 year-olds. It shows that combined out-of-market tuning to Rock stations CILQ-FM and CKFM-FM in Toronto and CJXY in Hamilton is 50 per cent higher than it is to CHR stations, CIDC-FM Organgeville, CING-FM Burlington, and CISS-FM Toronto.

5827 The only other listener research submitted for this hearing also demonstrates an unmet need for Classic Rock. In the David Oakes Research, listener research study conducted for CFJB-FM, respondents were asked, on en open-ended basis, which type of music was not played often enough on radio. Among 15 to 44-year-olds, more mentioned Classic Rock than any other style. This was true even among those identified in the research as making up the potential "cume" audience for their proposed Contemporary Hits of CHR format.

5828 MR. LARCHE: Thank you, Jeff.

5829 Now, let's deal with the perception that Barrie youth are underserved. The research and facts not only don't support this argument, they refute it. This second chart that you are looking at is from the Spring BBM figures for out-of-town tuning, this time divided by age group.

5830 What we are seeing here is in-town tuning  -- and there is a typo on the paper you have in front of you -- by listeners under the age of 35, which is the bar on your left, and over the age of 35, which is the bar on the right. In reality, there is more local tuning in the younger demographic. These listeners are obviously getting more out of Barrie radio than the over-35 group. That is because the music that they want to her is currently being played by Barrie stations.

5831 CHUM's application listed as core artists Ricky Martin, Backstreet Boys, Will Smith, TLC, the Moffatts, Brittney Spears, Jennifer Lopez, N'Sync, Love Inc., Debra Cox, Cher, Savage Garden, 98 Degrees, Jewel, Lauryn Hill, Sky and Amanda Marshall. We submit that either CFJB-FM and/or CIQB-FM are currently airing all of these artists.

5832 Then why is Rock 95 Ltd. applying for a CHR format? The answer is simple: it is a tactical ploy to protect the market position of their existing station. CFJB-FM dominates the market with a format that runs from rock to Top 40. Applying for a CHR licence will allow them to solidify their younger audience. In their Schedule 16, the Rock 95 Ltd. application acknowledges that CFJB-FM does not currently serve the rock market well by indicating that one of the benefits of giving them a CHR station is that it will now allow them to better serve the rock audience on CFJB-FM.

5833 Rock 95 Ltd. made the decision to shift CFJB-FM away from serving the rock market towards a broader Classic Hits and Hot New Music format, leaving a big hole in the market. But at the same time, they think they deserve have it protected from a rock station.

5834 I would like to now turn our attention to the issue of Canadian Talent Development and the significant dollars proposed by both CHUM and Rock 95 Ltd. We believe that we have proposed an exciting package of initiatives that are locally focused and appropriate to the market. We recognize that the total dollar amount is lower than those of the competing applicants.

5835 Should the Commission base its decision in whole or in part on the size of the CTD proposals, the message will be clear: small independent broadcasters need not apply for competing FM applications.

5836 CHUM's application projects that the station will lose money for the six first years of the license term, accumulating over $4.8 million in pre-tax losses before turning a profit. How can an independent compete against that? CHUM can afford to look out 20 years before making the business viable, but we can't.

5837 Rock 95 Ltd. projects a marginal profit in Year 4 of their business plan. These figures do not take into account the cannibalization that their proposed new CHR will have on CFJB-FM. The Rock 95 Ltd. application states that CFJB-FM would be affected negatively somewhere between $250,000 and $500,000 per year. First of all, this is a clear indication of the duplication of formats between his existing and proposed stations.

5838 The overall impact of adding a new station will be close to a zero sum gain. The revenues from the new station will come largely from the existing station. But Rock 95 Ltd. will have ensured that no new competitor enters the market.

5839 The impact on the market: more duplication.

5840 Our point here is simple: If licences are issued on the overall financial CTD proposals, broadcasters with the financial resources will outbid the small independent broadcaster every time, even if the business models don't make any sense.

5841 We are extremely proud of the job that we have done to help promote Canadian talent without having to spend considerable dollars. Our StarQuest promotion was chosen as the OAB's Canadian Talent Development promotion of the year. We have given several aspiring Canadian country artists an opportunity to expose their music and talent to a captive audience at OHL hockey games.

5842 We regularly have local artists like Jason McCoy and Stephanie Beaumont participate in our morning shows. We also recently participated in the North of Toronto music convention in central Ontario as one of the presenting stations. We spearheaded a panel of local program directors that gave advice to aspiring artists.

5843 These types of initiatives don't cost much but they go a long way in promoting Canadian talent.

5844 The CTD initiatives we are proposing will have a real impact on the careers of local artists and on the system in general, and we can implement all of our proposals within the framework of a realistic business plan that investors would support.

5845 Thank you.

5846 THE CHAIRPERSON: Thank you, Mr. Larche.

5847 We have no questions. We will see you again tomorrow, of course.

5848 MR. LARCHE: Thank you.

5849 THE CHAIRPERSON: Madam Secretary.

5850 MS SANTERRE: Thank you, Madam Chair.

5851 The next intervention will be by Rock 95 Broadcasting (Barrie-Orillia) Ltd.

--- Pause / Pause

5852 THE CHAIRPERSON: Mr. Bingley, you look lonesome there.

5853 MR. BINGLEY: It was the only way I could be assured that my voice would be the lowest on the --

5854 THE CHAIRPERSON: You are like me. You are intimidated by all these broadcasters' voices; correct?

5855 MR. BINGLEY: There is some degree of intimidation.

5856 Actually, if I want to ruin my program director's day, I say I want to talk on the radio.

5857 THE CHAIRPERSON: Please go ahead.

5858 MR. BINGLEY: Thank you very much, Madam Chair.

INTERVENTION / INTERVENTION

5859 MR. BINGLEY: First, I would like to say that this intervention is against the applications presented here today, not the applicants. In the case of both CHUM Ltd. and Larche Communications, I think it is obvious that these are hard-working responsible broadcasters, but nevertheless there are some very important points that I think should be addressed.

5860 First, with regard to the CHUM application, the new FM policy allows multiple ownership in a market. The net effect of this has been that large broadcast chains have rapidly been growing by buying up small independent operators. But most of the benefits of the new policy flow naturally to these large chains. There is no benefit for small operators to consolidate.

5861 For example, in Barrie we certainly could not find $105 million so we could consolidate with B-101. And that is the number that the power station sold for.

5862 The Commission has always sought to maintain balance in the broadcasting system, and the only way to maintain any degree of balance, the only option that small operators have is building stations up from the ground up. That can only happen through the licensing process. That is the only way that we can enjoy the benefits of consolidation, if you will, multiple ownership in a market.

5863 That is our concern with the CHUM application.

5864 Turning to the Larche application, first with regard to public benefit, the target audience proposed by LCI has the least amount of out-of-market tuning of any age group.

5865 We included a graph with our presentation. It is in our application.

5866 If you talk about an underserved group of listeners, the Larche application has minimal benefit.

5867 Moreover, LCI states that they are filling a format hole. The hole does not exist. The format they tested in their questionnaire is not pure classic rock; indeed, today they have talked about current plus classic rock. This very much shadows our existing radio station.

5868 They have implied that Rock 95 is not a rock based radio station, yet we have approximately 50 per cent classic gold base and Larche Communications is proposing 15 per cent more gold. That is the only difference.

5869 As a frame of reference, LCI says that there is no classic rock in the market. They have a table that shows only 27 per cent of those interviewed identified Rock 95 as providing classic rock. But this number means nothing without a frame of reference.

5870 Of that group of people, how many identified some other station that is providing classic rock in or out of market? They only asked in market.

5871 In our survey, the survey filed with their application shows 42 per cent of those surveyed identified Rock 95 as playing classic rock, versus 13 per cent who identified Q.107. And that is the station that LCI mentioned they would find most of their tuning from.

5872 Moreover, we did music testing in March of 1998 and we engaged the Angus Reid Group to do a survey. The results of that survey are before you.

5873 The survey showed that of total respondents in the group -- and this is a group of people aged, I believe, 25 to 44 -- 40 per cent identified Rock 95 as classic rock versus 35 per cent other stations.

5874 Similarly, 42 per cent of Q.107 listeners thought that Rock 95 played classic rock, versus only 45 per cent for Q.107.

5875 I can't explain the discrepancy, but we think it is fairly clear that we do provide a significant classic rock component.

5876 The applicant further implies that Rock 95 is not a rock station, yet 29 per cent of their new tuning will come from Rock 95 versus only 23 per cent for Q.107, which they say is a rock station. Well, if we are not a rock station, why would the biggest source of their tuning come from Rock 95?

5877 We have also provided for you the latest chart from the record. This is the source that the Commission uses, of course, for identifying hits and so on. Rock 95 is currently playing 80 per cent of the music on that chart. We are clearly a rock radio station.

5878 We provided a CD-ROM that was filed with our application. You received a copy of that today. That is a web page on CD-ROM. It includes a scope taken off-air of the local stations, including Rock 95. And I will let you be the judge of that yourselves. I think it shows exactly what we are.

5879 Just in case there is still any doubt, here are some of the artists on our play list: Pink Floyd, Jimmy Hendrix, Kim Mitchell, Rush, Metallica, Pearl Jam, Moist, Tragically Hip and The Who.

5880 LCI claims most of their tuning will be repatriated from Toronto stations, yet Barrie is commuter central. We have been trying to repatriate that tuning for the last 11 years, and it is really difficult to repatriate tuning.

5881 If someone gets in their car, as 30 per cent of our workforce does, and commutes to Toronto, they commute out of range of your signal. So it is pretty difficult to repatriate that.

5882 Moreover, what gave Q.107 a real boost in our marketplace was when they started playing Howard Stern. Again, that is something that a local station can't -- and I certainly said would not -- do is run a Howard Stern to try to counter that.

5883 The final point is that it is difficult to compete with a Q.107 simply because of the loyalty of those people who are moving up to the marketplace.

5884 So we would contend that most of their tuning will come at the expense of Rock 95. Similarly, the economic impact, as I mentioned earlier, will fall squarely on our radio station. They are talking about us losing only 3 per cent of our market share, going from 13 per cent to 10 per cent.

5885 That, as I mentioned earlier, would knock us down relative to the CORUS stations. That would cost us a few hundred thousand dollars. The new radio station definitely would cost us a few hundred thousand dollars, and that's a downward spiral. That's just in Barrie.

5886 When you take a look at the surrounding areas, for some reason LCI says that they will have a 9 per cent market share in Barrie, but only 3 per cent in Midland. The fact is when you look at Midland and the region to the north, they don't have to compete with Q.107. So all their tuning will come from Rock 95. So, again, another couple of hundred thousand dollars would disappear as a consequence of that.

5887 Basically, what we are saying is, this is a station that targets us for listeners and it targets us for revenue, and I think it understates that fact.

5888 Finally, I would like to make a brief comment, which I'm sure at this time of the evening you would be happy for, with respect to the Canadian talent initiatives of LCI.

5889 It appears to us that they have changed their promise of performance or attempted to do this after filing. We have made written response to that in response to their intervention against our application and we will let that stand.

5890 That concludes our intervention.

5891 THE CHAIRPERSON: Counsel.

5892 MR. BATSTONE: Just to clarify on that last point, are you suggesting -- because I'm not sure it was entirely clear in the response that you made on the written record -- that the Commission shouldn't consider those initiatives?

5893 MR. BINGLEY: My belief is that the process of filing with gazetting is very analogous to a sealed bid for a government contract. Of course after you have seen the other guy's bid you can't go back and change that. So, no, we believe it constitutes a change in their POP and for that reason we don't necessarily feel that that is appropriate.

5894 MR. BATSTONE: I guess what I'm asking is: Are you asking the panel to rule that that information should not be accepted on the record?

5895 MR. BINGLEY: Yes, I am, sir.

5896 THE CHAIRPERSON: Are you making a distinction, Mr. Bingley, between the initiatives that were mentioned but that there was no dollar value attached to them and those that were not mentioned at all in the application or -- well, there was another category too. There could be some that, even if procedurally we were prepared to accept them, they may not be acceptable under the policy.

5897 Do you see the difference? One would be to say no from a procedural perspective, which is what you are saying, and the other would be simply because, even if they had been filed with the application, they are just not eligible for whatever reason.

5898 Do you see a distinction between those areas that were mentioned in the application but on which no numerical value was assessed because -- Mr. Larche's argument, I guess he can make it himself in reply -- he didn't realize that you could do it until he read your clever application.

5899 Do you see my point? Are you against the whole package --

5900 MR. BINGLEY: Yes, I do see. There is the two issues and I do see that.

5901 THE CHAIRPERSON:  -- or do you separate these issues?

5902 MR. BINGLEY: I guess there are two levels.

5903 The first level is that Mr. Larche is an experienced broadcaster. He submitted, for example, one initiative that was $1,000 for a band search that was not a CAB type of initiative, wasn't part of that CAB program. Yet, as justification for bringing in all these other things, he said, "Well, I didn't understand that you could accept things that weren't part of the CAB program."

5904 So, in procedural terms, yes, we are saying if he didn't assign a value to it certainly maybe he didn't understand this, but it certainly was not in that original application.

5905 And you have raised a valid second point. We did mention that in our written intervention that there are some of his initiatives that we felt, specifically the mobile vehicle, wouldn't qualify in any event.

5906 THE CHAIRPERSON: Any further comments to make on that at this stage?

5907 MR. BINGLEY: No, Commissioner. I would stand by what we have submitted in written format.

5908 THE CHAIRPERSON: Thank you.

5909 Thank you, Mr. Bingley.

5910 Madam Secretary.

5911 MS SANTERRE: The next intervention will be presented by CHUM Ltd./CHUM Ltée.

5912 THE CHAIRPERSON: We didn't scare your colleagues off, did we?

--- Off microphone / Sans microphone

--- Laughter / Rires

5913 MR. WATERS: They are all still here.

5914 THE CHAIRPERSON: Don't look so glum.

--- Laughter / Rires

5915 MR. WATERS: Madam Chair and Commissioners, thank you very much for your questions into the three applications, the three competing applications for Barrie today. Some were tougher than others, some questions were tougher than others, but that is the process and we are happy to be a part of it, and CHUM does not intend to intervene either of the other applications but we may have some thoughts in rebuttal.

5916 Thank you.

5917 THE CHAIRPERSON: Thank you very much.

5918 I hope everybody has a nice evening.

5919 We do apologize for being so late. We have a very heavy week, so we are trying to keep to our schedule, obviously at your expense in part. We apologize for that.

5920 Thank you very much and we will see you at 0830 tomorrow morning.

--- Whereupon the hearing adjourned at 2003,

to resume on Thursday, December 9, 1999

at 0830 / L'audience est ajournée à 2003,

pour reprendre le jeudi 9 décembre 1998

à 0830