TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
BROADCASTING APPLICATIONS AND LICENCES/
DEMANDES ET LICENCES EN RADIODIFFUSION
HELD AT: TENUE À:
Triumph Howard Johnson Triumph Howard Johnson
MacDonald-Cartier Salle de bal
2737 Keele Street 2737, rue Keele
Toronto, Ontario Toronto (Ontario)
February 2, 2000 le 2 février 2000
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and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
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Toutefois, la publication susmentionnée est un compte rendu
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Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Public Hearing / Audience publique
Broadcasting Applications and Licences/
Demandes et licences en radiodiffusion
BEFORE / DEVANT:
A. Wylie Chairperson/Présidente
M. Wilson Commissioner/Conseillère
J. Pennefather Commissioner/Conseillère
A. Cardozo Commissioner/Conseiller
R. Williams Commissioner/Conseiller
C. Grauer Commissioner/Conseillère
A. Noël Commissioner/Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
P. Cussons Hearing Manager and Secretary / Gérant de l'audience et Secrétaire
D. Rhéaume Legal Counsel /
HELD AT: TENUE À:
Triumph Howard Johnson Triumph Howard Johnson
MacDonald-Cartier Salle de bal
2737 Keele Street 2737, rue Keele
Toronto, Ontario Toronto (Ontario)
February 2, 2000 le 2 février 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
1158556 Ontario Ltd. (Celestial Sound) 588
Questions by the Commission 600
Questions by Commission Counsel 625
Andy McNabb 633
Questions by the Commission 651
Questions by Commission Counsel 740
B. Denham Jolly 752
Questions by the Commission 771
Questions by Commission Counsel 819
Toronto, Ontario / Toronto (Ontario)
--- Upon resuming on Wednesday, February 2, 2000
at 0905 / L'audience reprend le mercredi
2 février 2000 à 0905
2608 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.
2609 Monsieur le Secrétaire.
2610 MR. RHÉAUME: Thank you, Madam Chairperson. Good morning, everybody.
2611 Our first application today is by 1158556 Ontario Limited, doing business under the name of Celestial Sound, to amend the broadcasting licence of the radio programming undertaking CHIM-FM Timmins, a Christian music service, the originating station, by adding a low power FM transmitter at Toronto, North York, operating on a frequency of 106.3 megahertz, channel 292LP, with an effective radiated power of 35 watts.
2612 The Applicant stated that the proposed transmitter will run the same programming at the same time as the main station in Timmins via long distance land lines and with the aid of a remotely accessed local computer located in North York.
2613 The applicant is also proposing to amend the following conditions of licence:
- to increase the maximum weekly level of hit material broadcast from 5 to 10 per cent;
- to increase from $1,200 to $2,000 its annual direct cost expenditures on Canadian talent development.
2614 The Applicant is proposing an additional condition of licence that would require an annual direct cost expenditure of $2,000 on Canadian talent development for each of CHIM-FM's repeaters.
2615 The Applicant is also proposing to delete the following condition of licence:
- the licensee shall not broadcast any commercial messages.
2616 The Commission notes that this application is technically mutually exclusive, with another application scheduled at this hearing for the use of the 106.3 megahertz frequency.
2617 I would now like to invite Mr. Roger de Brabant to come forward and his present his application.
2618 Mr. de Brabant.
2619 THE CHAIRPERSON: Good morning, Mr. de Brabant.
PRESENTATION / PRÉSENTATION
2620 MR. de BRABANT: Good morning.
2621 THE CHAIRPERSON: Make sure you active the microphone so that the recording can -- thank you.
2622 MR. de BRABANT: Good morning.
2623 THE CHAIRPERSON: Go ahead when you are ready.
2624 MR. de BRABANT: I just handed out -- everybody should have a copy of the highlights, just a very short presentation on some of what I consider the strengths of the application are.
2625 This new format will add true diversity to the Toronto airwaves, something that -- it's about the only format that Toronto presently does not have.
2626 That is point number one.
2627 This format promotes positive values, unlike the controversial formats of some stations. This music-only format promotes Christian contemporary music, promotes love, forgiveness, tolerance towards all peoples and, of course, with this all-music service we never address controversial issues or divisive topics. It's just to promote unity.
2628 It serves a huge niche market. According to Statistics Canada, 78 per cent of all Canadians consider themselves to be Christian in faith. So that is a pretty huge market that none of the traditional broadcasters are meeting up to this point.
2629 We have a very high commitment to our Canadian content level. For specialty stations normally the minimum requirement is 10 per cent. In the Timmins station we play 22 to 25 per cent and we have plans that would possibly raise that again in the future.
2630 With the enclosed Schedule 5, it demonstrates the high commitment to new Canadian talent initiatives and, of course, it far exceeds the minimum requirements of the plan. We want to give our new Canadian artists the maximum, not the minimum.
2631 This Christian contemporary format provides spiritual comfort and hope. I have enclosed, on the next three or four pages -- a copy for everybody -- a copy of the CRTC News Release, June 3, 1993 where the CRTC acknowledged that religious values play an important role in the lives of many Canadians and that religious broadcasting has the power to provide spiritual comfort, you know, people who are lonely, suicidal, the depressed and just the general public.
2632 This station, this repeater station in Toronto, as well with the other ones that we propose for all over Canada, will provide a high profile outlet for new Canadian artists and established Canadian artists who presently are not getting any air time from most of the traditional broadcasters.
2633 It will also provide a local voice for the Toronto Christian community. The public service announcements are not going to be just what is going on in Timmins, it would be -- whatever is run in Timmins would be in Toronto, North Bay and various places across the country, Vancouver, Montreal. So it will be like an east-west, north-south link. It will link -- it will give a better idea throughout the Christian community of what is going on in different parts of the country.
2634 This format is very widely received up to now due to the nature of it's noncontroversial, nondenominational and nonpolitical, music-only format.
2635 CHIM in Timmins is presently enjoying a listenership of about 19 per cent in the City of Timmins where there is presently six radio stations and many cable and satellite stations as well to choose from.
2636 Surveys have given us a weekly audience reach of approximately 29 per cent.
2637 The next point.
2638 CHIM is well-established as a leader in Canadian Christian broadcasting since December 1995 when we started our first audio test day. Since that time we have a library of about 4,500 Christian contemporary musical selections and in the last four years we have helped other Christian stations to get on the air, like in Sudbury, Thunder Bay, Winnipeg, Prince Rupert, B.C., Saint John, New Brunswick and Wetaskiwin, Alberta, which is in the application stage right now. It is expected to be, hopefully, on the air this summer and this fall.
2639 With the addition of the network repeater station in Toronto, this will greatly help to complete our national expansion plans, increase the coverage area.
2640 I also enclosed on the next page a list of other repeater station applications that are in progress. Some of these are before the Commission right now and others are in the research stage and we are just putting them together.
2641 One more point. Technical approval.
2642 Unlike some of other applicants for the use of frequency 106.3, ours is the only one that is not short-spaced to existing stations. Therefore, we are not expecting, you know, that there would be the creation of any interference zones because it is really going to be run as a low power station and meets all the minimum requirements, whereas if some proposals were to run it as an "A" or "A1" station, therefore they would be short spaced to several stations like in Guelph and St. Catharines.
2643 Of course, all CHIM repeater stations will have emergency backup power to ensure, you know, not interrupted service during hydro failures. That's what we have presently, right now.
2644 Then there is a list of the applications that are in progress from Halifax -- or from Newfoundland right to Vancouver, B.C.
2645 Of course, the next few pages I just highlighted a few things: The CRTC News Release, June 3, 1993.
2646 As it says:
"Our public consultation clearly showed that religious values play an important role in the lives of many Canadians...."
2647 There are a few other things I highlighted, the recognition of alternative values such as indicated.
"In developing its approach to religious broadcasting, the Commission sought to be responsive, not only to technological advances, but also the daily realities facing many Canadians in an increasingly complex society, particularly residents of communities where suicide, alcoholism and loneliness are widespread."
2648 That was back in 1993 of course.
"The Commission heard eloquent and convincing testimony that religious programming can provide a valuable service to those in such circumstances."
2649 Then I also include a list of the existing Toronto stations. Between AM and FM there is 30 local stations in the city. I marked off which ones were the ethnic stations. Very well represented.
2650 As you can see, all together there are -- if you count CHRY, the campus station also has ethnic programming. So there are seven stations out of a total of 30 in Toronto.
2651 That equals 23 per cent that have ethnic programming, so I'm sure everybody would -- or most people would agree that the need for the multicultural, the ethnic minority groups are very well served. They are doing a fine job with all their very diverse programming.
2652 So we are just asking that, you know, perhaps it's time that the CRTC licence a Christian contemporary music station that would serve the needs of the majority because, like I said, it's the only format that -- absolutely the only format that Toronto does not have on its airwaves right now.
2653 I enclosed a Schedule 5 copy to highlight our Canadian talent development initiatives.
2654 As we proposed earlier, we will be spending more than $2,000 a year per repeater station -- I'm sorry, in the areas of advertising to the general public for new gospel musicians to come forward.
2655 We have our talent search contest where they can send in their tapes.
2656 Then, point two, that is where we are going to advertise for them to send their demo tapes in and we will give the best entrants prime time on all stations that we have on our network at the time.
2657 The top three finishers will receive free studio time in a professional recording studio to produce their first CD.
2658 Just a few other points here.
2659 We are going to help them out by sending their tapes and CDs to other stations to help encourage them to get primary time in those markets as well. We are going to be announcing over-the-air all the locations across Canada that are selling their products. This way the artists will be able -- with increased sales they will make more money to put towards the production of their next CD. All the artists tapes and CDs will be made available for sale at CHIM, the broadcast centre in Timmins.
2660 Our present level of Canadian content is 22 per cent, as I mentioned before, which is more than double the minimum requirements for a specialty station, which is 10 per cent.
2661 So with the help of the CRTC in the form of more licences, we can truly make a difference in promoting our own gospel Canadian singers and composers because so many of them right now have to go to the U.S. There are even a couple of bands I know in the Toronto area that they reported they couldn't get any air time on traditional stations here whatsoever, or almost anywhere in Canada, and some of them have to go to the States. There is a station in Rochester, New York that are playing them but, you know, our own stations here won't give these artists any exposure whatsoever.
2662 On the bottom of the page I just put a short summary of the survey we took of 500 Toronto area Christians that were polled in a survey. Despite Toronto not having a Christian radio station we did find out that they are listening to the American Christian station WDCX from Buffalo, New York. Of course, they are not giving our Canadian artists any air time.
2663 With the 90 per cent who said they are listening to WDCX, a total of 95 per cent said they would rather listen to a Canadian Christian station based right here in Toronto.
2664 So, hopefully, with the Commission's approval and with God's help that is where we would come in to meet this huge need and recapture this listenership back from WDCX.
2665 Even though we had no negative interventions against our application, I have just enclosed a copy of a letter from CIRPA, the Canadian Independent Record Production Association, where they highlight -- they outline the criteria on how they figure the new stations in Toronto should be licensed, what their criteria should be.
2666 It was interesting, that's why I enclosed it, because the five points that they made here are things that we are doing already.
"1. That new and diverse formats that are currently not available in the market...."
2667 They figure they should "be licensed."
2668 Of course, what we are proposing is totally new and there is nothing like it in the Toronto area, or in the City of Toronto.
"2. That licences be granted to new independent-owned market entrants;
3. A higher level of Canadian content to a lower one;"
2669 That's what we believe in also. That's what we are striving for, to increase all the time.
"4. Canadian Talent Development promises have substantial higher dollar values;"
2670 Which we agree with and we are working on that too.
"5. Such CTD [Canadian Talent Development] funding should be targeted in as effective and cost efficient way as possible to best assist the development of Canadian artists and creators."
2671 So of the five points, our application meets five out of five, so we are in total agreement with CIRPA's list of recommendations, their criteria. So it's almost like even though it wasn't an intervention directed at us, but it could almost be taken like a positive intervention because we agree with them 100 per cent.
2672 These are the things we should do to help Canadian artists rather than always promoting -- like everybody is always promoting the American artists. In our own country we have to promote our own people as well. That should be our prime objective.
2673 That's about all I have in this presentation.
2674 THE CHAIRPERSON: Thank you, Mr. de Brabant.
2675 Commissioner Cardozo, please.
2676 COMMISSIONER CARDOZO: Thank you, Madam Chair.
2677 Thank you, Mr. de Brabant and welcome here.
2678 I will go through a number of questions with you so that we can try to get as much information on the record and understand more about your application so that we can make the best decision possible at the end of the day.
2679 What I will go through is a few areas on which I would like to get some more information. If there are other things I don't ask you about, feel free to add on those, but it also means that we probably have enough on those areas.
2680 So the seven areas that I will go through, and I will just let you know first off:
2681 First, an overview of your services that exist now and what the proposal is about vis-à-vis the transmitter to Toronto;
2682 Second, the commercial messages and its link to local programming;
2683 Third, the feed that you are proposing;
2684 Fourth, Canadian talent development;
2685 Fifth, some technical issues;
2686 Sixth, marketing; and
2687 Seventh, a general competitive question in terms of the best use of the frequencies that are available.
2688 Let me start, then, on just understanding your service as it currently exists now in Timmins.
2689 Could you tell us a bit about what the average listener -- what the listener hears from your station and what is it you do in the station?
2690 MR. de BRABANT: You want a definition of the average listener we have?
2691 COMMISSIONER CARDOZO: What does one hear from your radio station? Is it mostly music or music and spoken word?
2692 MR. de BRABANT: It's a 24-hour Christian contemporary music service. It's all music all the time. There is no preaching, there are no call-in shows, there are no controversial issues discussed, it's just the lyrics of today's Christian music to promote positive values.
2693 So we stay away from all controversial things because that just brings division. It doesn't do any good, it just upsets people.
2694 COMMISSIONER CARDOZO: Are you announcing the name of the station every so often? Do you have any news or is it strictly, strictly music?
2695 MR. de BRABANT: Strictly music.
2696 We have announcers, like public service announcements, community announcements. We have a lot of local stuff, weather updates and announcers announcing the songs and talking a little bit about the artists, especially the Canadian artists. We focus on that.
2697 COMMISSIONER CARDOZO: I understand that your services run -- I think the term was 100 per cent volunteers. So does that mean that the people who are making those announcements are volunteers as well, and how many hours a day are the volunteers -- or do you have tracks that you can run for several hours at a time without there being somebody in the studio?
2698 MR. de BRABANT: Everybody is an unpaid volunteer, including myself. I work full-time there.
2699 We are all computerized now so everything is stored in the computer. You don't have to have somebody there like 24 hours a day. We have people coming in from time to time in a week making announcements, PSAs, announcing another group of songs and then, you know, record five songs and the last five songs are back announced. So you don't have to have somebody there all the time.
2700 COMMISSIONER CARDOZO: Okay. So let's suppose you go in in the morning and you play some records, make some announcements, record all that, and then do you play that again for another, say three hours or something like that? I'm just trying to understand what the people in the studio do.
2701 Is there somebody there for 18 hours a day or are they there for certain hours and then you record and rerun the material a second time?
2702 MR. de BRABANT: Well, there is always a different schedule, but normally during the daytime -- there is always one or two people there in the daytime.
2703 The play list is like a few thousand songs long that is all stored in the computer, so shuffle the order of the songs and put the blocks of songs in different arrangements. So it's not very labour-intensive because, you know, when it goes through the list it will start playing again until we reshuffle things.
2704 COMMISSIONER CARDOZO: Okay. So you can just go in for a while and program it for a whole lot of hours going ahead. Is that how it would work?
2705 MR. de BRABANT: Yes.
2706 COMMISSIONER CARDOZO: You could go into the studio, program your music and your PSAs for the whole day, for example, and then it would just play that automatically?
2707 MR. de BRABANT: Yes. It could be done for the whole day or it could be done for several days in advance. There is always a different schedule. It depends on, you know, as volunteers are available.
2708 COMMISSIONER CARDOZO: This application that we are looking at today is for a transmitter in Toronto. We have four other applicants in-house from you for Red Deer, Iroquois Falls, Kirkland Lake and North Bay, and you have listed in your comments today a number of others that you are planning.
2709 So your plan is to eventually have a network across the country with a number of transmitters rebroadcasting what you are putting out from Timmins. Is that right?
2710 MR. de BRABANT: Yes, that's right. We plan to have between 50 and 70 stations from the east coast to the west coast and then the artists will finally have an outlet to get a high profile outlet for their music to become known far and wide throughout the country.
2711 COMMISSIONER CARDOZO: I suppose you would consider Toronto to be an essential part of this plan of yours, or an important --
2712 MR. de BRABANT: Yes. Of course Toronto would be a very key strategic area for this network. In almost every other Canadian centre there are frequencies available. Like I say, Toronto, Montreal and Vancouver it's really tight and, of course, these are the last frequencies available in Toronto so it would be in a strategic centre. It's the largest city in the country, so we figure this would be very critical for us to get this one.
2713 COMMISSIONER CARDOZO: Okay. Let me move to the issue of commercial messages and its relationship to local programming.
2714 As you are aware, we have a regulation that requires that if you are doing commercial messages in a particular market that you also be doing local programming.
2715 Can you hear me okay?
2716 MR. de BRABANT: Yes.
2717 COMMISSIONER CARDOZO: You can, okay. The acoustics in this room are a bit difficult so I will try to -- the thing is, I can hear myself really well so it's hard to tell whether you can. Usually it works the other way on microphones, you can't hear yourself.
2718 On the issue of commercial messages and local programming, as you are probably aware, if you are carrying commercial messages in a market you are also required to have 42 hours per week of local programming.
2719 Would you call what you are doing in Timmins local programming inasmuch as its programming that has essentially some spoken word that refers to the local community, whether it's news, sports, PSAs? Although PSAs are kind of messages, but I guess they are also a form of local programming?
2720 MR. de BRABANT: Yes. Yes, I would consider it definitely a local programming because everything -- all the PSAs, the community announcements, they are relevant right now to the Timmins area.
2721 As we expand we -- especially coming down here, if we get into Toronto and other larger markets, we would have to include news, weather and sports.
2722 COMMISSIONER CARDOZO: For your Toronto feed, then, you would have news, weather and sports?
2723 MR. de BRABANT: We would have that everywhere. When it's licensed we would have whatever is in Timmins rebroadcast everywhere. So we would have -- like whatever announcements are relevant to Toronto, they would be run in Timmins as well, and North Bay or wherever. They would be all over the country. So it would be one standard, like a news package.
2724 COMMISSIONER CARDOZO: Okay. So now, currently, you don't have news, weather and sports, which you don't have to because you are not carrying commercial messages, but if we change this -- if we remove this condition of licence and allow you to have commercials, then you would have news, weather and sports in Timmins?
2725 MR. de BRABANT: Everywhere. We would have it everywhere then.
2726 COMMISSIONER CARDOZO: News, weather and sports you would have in Toronto then, would that be news, weather and sports relevant to Toronto, or would that be the stuff out of Timmins being piped here?
2727 MR. de BRABANT: We would try to have a bit from every area that we are representing. Wherever we have a repeater station at that time we would have -- so it would be a local -- it would be local yet it would be broadcast throughout the whole system so everybody would have a better idea what's going on in other markets.
2728 COMMISSIONER CARDOZO: So there would be -- I'm just trying to think this through -- coming out of Timmins you would have, say, news, five or ten minutes of news and in that news you would have a few minutes of Timmins news and few minutes of Toronto news and people in both those markets would hear both the Timmins and the Toronto news?
2729 MR. de BRABANT: Exactly, that's what we do.
2730 COMMISSIONER CARDOZO: The commercials that you are planning, how would you describe those? Are those ads or are those sponsorships?
2731 MR. de BRABANT: Well, right now we have -- it's individual sponsorships. It's a non-commercial station at present, but we would -- but we have individual and corporate sponsorships. We just give on-air thank you credits thanking them for the support.
2732 But if we get the conditional licence change where we are allowed to sell advertising, well then of course we wouldn't have to rely on sponsorships any more, it would just be commercial -- some commercial time.
2733 We could do it either way. Either way it would work.
2734 COMMISSIONER CARDOZO: Okay. I'm just trying to think now, how the one-third or the 42 hours out of 126 per week would work in terms of local programming.
2735 If you were a Toronto station and you want to get ad revenue here in Toronto you would be required to carry -- a third of your programming could be local programming to Toronto. If you are going to run out of Timmins then you have a third that would have to be in Timmins.
2736 I don't mean to be facetious, but at some point you are going to run out of thirds and if you have -- if you are planning 10 or 15 stations, how would you do one-third local programming in each one of these stations when you are doing the same feed?
2737 MR. de BRABANT: Well, we are hoping that we can just, you know, run it as a network and have somebody in each market program, you know, doing the programming local, like on the computer. But, of course, that one-third would have to be separate for that market, like in Red Deer, Alberta or North Bay, or whatever. That one-third would have to be separate for that individual market and that way we would go across the whole country.
2738 COMMISSIONER CARDOZO: Let me just come back to your '90-95 licence, which is when you first got the licence. What you had said there was that you wouldn't need commercial messages. Essentially your income would come via an outdoor -- or funds raised through an outdoor electronic display sign located in downtown Timmins.
2739 How does that work? Is that still getting you the revenue that you need or have things changed?
2740 MR. de BRABANT: That worked fine, but that sign was sold a couple of years ago. We have just individual sponsorships, corporate sponsorships, and that is bringing in sufficient funds to run the station. If we get low we just, you know, approach more people to sponsor.
2741 Our operating costs are so low. It's about $800 a month right now to run 24 hours a day because it's all volunteer work.
2742 COMMISSIONER CARDOZO: So the electronic sign hasn't existed now for a couple of years and you are running essentially on individual and corporate sponsorships. Okay.
2743 You are looking at five to seven minutes per hour of commercial messages in Timmins. Do you have any sense whether that would affect the other stations in the -- whether that would have an affect on the other stations in the Timmins market?
2744 MR. de BRABANT: Their sales are doing very well. Two Télémedia stations a couple of years ago were selling $1.8 million a year in advertising, so with our market there it's like a niche market.
2745 We are targeting a different group than they are targeting presently, so I don't think it would have an adverse affect on them. They are still going to probably make their $1.8 million I'm sure there. They have a lot of listenership, a lot of support, so I don't think we would be any threat to them.
2746 COMMISSIONER CARDOZO: If we were to approve this application, would you be prepared to accept a condition of licence that would limit the commercial messages to something like sponsorship mentions or sponsorship acknowledgements as opposed to advertising in general?
2747 MR. de BRABANT: Like the way it is right now with sponsorships?
2748 COMMISSIONER CARDOZO: I'm sorry, let me repeat that.
2749 If we were to change this condition of licence, would you be prepared to limit your messages to sponsorship mentions or sponsorship acknowledgements which are different than advertising in general?
2750 MR. de BRABANT: Yes, okay. Well, if we have to, yes, we would accept that.
2751 COMMISSIONER CARDOZO: Let me ask you a little bit about the feed from Timmins to Toronto. I have an understanding a bit of the system that you plan to use and what I want is a sense of whether it would be a split or a single feed. As I understand it a single feed is where you transfer everything over lock, stock and barrel; a split feed is where you can mix and match, you can have some of the same material and some material relevant to each market.
2752 What kind of feed would you be sending from your computer in Timmins?
2753 MR. de BRABANT: Okay. What we propose to do, like we have a duplicate computer in Toronto, whichever location we are in, it would have the same programming as in Timmins, all the entire music library and the PSAs, the announcements that are not time sensitive, and then it can be remote dial-up on long distance telephone circuits or through the Internet and it can be programmed every morning, you know, if things have to be added or things that have to be taken off, you know, news, weather updates.
2754 So this way it would be a 24-hour dedicated link. You wouldn't need like a microwave feed or like a satellite downlink, you would just -- for those few minutes, 10 to 20 minutes a day, you would just dial up and program it that way. It would run by itself after that.
2755 COMMISSIONER CARDOZO: Okay. I'm not clear whether it would be the same feed for Timmins and Toronto or whether it would be separate feeds.
2756 MR. de BRABANT: Well, if we weren't allowed to sell advertising here, if it was just, say, corporate sponsorships and we didn't have to go with the one-third local programming, then whatever is in Timmins would come out all the other repeater stations exactly at the same time.
2757 COMMISSIONER CARDOZO: How would you get PSAs or news from Toronto? Would you be taking it off the wire service? Would you have somebody here sending it to you? Because you wouldn't have a studio in Toronto, right? You would be putting everything on from your studio in Timmins?
2758 MR. de BRABANT: We could have a small auxiliary studio here. We are going to have several representatives in the Toronto Christian community which would, you know, e-mail us or fax us and, you know, gather all the local information, local news and send it up to us and then we would produce it at the studio, insert in the computer and remote dial-up all the other repeater stations.
2759 COMMISSIONER CARDOZO: Okay. The messages, then, would be relevant to each market? You would have a single feed, right, so the same PSAs would go to all your markets at the same time.
2760 Okay. With regards to Canadian talent development, if I could just move to that, your current commitment is $1,200 for Canadian talent development. Can you confirm that that is something that is happening, that has been happening over the five years so far?
2761 MR. de BRABANT: Yes. That would have to be a minimum, but definitely that would be concerts and advertising for people who sent in their demo tapes and, you know, promotion of local gospel singers, whether they have concerts, whether it be in a church or an auditorium, promoting their events.
2762 So the $1,200 would be definitely a minimum. It would be a lot more than that.
2763 COMMISSIONER CARDOZO: So in the past it has been $1,200 or more than that per year. What you are proposing for this application is that you would increase that amount to $2,000. Is that $2,000 for Timmins and another $2,000 in Toronto?
2764 MR. de BRABANT: Yes, $2,000 for each market.
2765 COMMISSIONER CARDOZO: Okay. Is this increase from $1,200 to $2,000 related to the issue of commercial messages and is that quid pro quo for that in a sense?
2766 MR. de BRABANT: I'm sorry, could you rephrase the question?
2767 COMMISSIONER CARDOZO: You are upping the amount from $1,200 to $2,000. Is that related to the issue of allowing commercial messages?
2768 MR. de BRABANT: Well, we do it anyways. We would raise it anyways, whether it is a commercial station or whether it's on-air. Like the sponsorships, we would be willing to raise that anyways.
2769 COMMISSIONER CARDOZO: Let me just clarify while we are on that: This application has two or three different parts to it, one is for a transmitter to Toronto and the other is a change of condition of licence. Are these things all -- is this a package deal or would you be interested in -- at the end of the day could we do one and not the other? Is that of interest to you, or is it a package deal?
2770 MR. de BRABANT: However the Commission sees fit. We would go along and co-operate with what the Commission recommends.
2771 COMMISSIONER CARDOZO: The Canadian talent development project that you have, the gospel music talent search is a fairly ambitious project and you are confident that you can do this for the $2,000 that you are looking at or do you think it is going to take more than $2,000?
2772 MR. de BRABANT: Well, it could be -- well, with the advertising and with the production of their first CD, like their first single, yes, it could come out to $3,000, so it might even up that.
2773 COMMISSIONER CARDOZO: Is your gospel music talent search one that would run a separate one in each city that you have a transmitter? Is that the idea?
2774 MR. de BRABANT: There will be a standard message in all locations at the same time and they would -- it depends where they are, what part of the country. They would all mail it in to the main studio and we would group them together and take the best of the best and see who was going to come out on top.
2775 COMMISSIONER CARDOZO: I suppose I should focus more on the Toronto aspect because that is the application we are looking at here.
2776 So you would have the search for Timmins and Toronto and you would be prepared to spend up to $4,000 on it -- is that correct -- or over $4,000. A minimum of $4,000.
--- Pause / Pause
2777 COMMISSIONER CARDOZO: Let me ask you a few questions about the technical aspect of this application.
2778 You have applied for a low power FM station and, as I understand it, the transmitter will be at 401 and Don Valley Parkway, in that area?
2779 MR. de BRABANT: Yes.
2780 COMMISSIONER CARDOZO: That's quite a low power you are looking at and from looking at the map you have given us it wouldn't even come this far, as far as we are sitting here at Keele and 401.
2781 MR. de BRABANT: Our past experience has shown us that low power -- if the antenna is high enough even a few watts could go up to 25-30 miles. So it would cover most of the city.
2782 It might not be right in the downtown core, of course, for a low power station to penetrate all the highrise buildings, you know, car radios will get a bit -- you know, possibly get a bit noisy there, but it should cover most of the city quite well.
2783 COMMISSIONER CARDOZO: Okay. Are you aware that under Industry Canada Technical Regulations you would be responsible for resolving any problems that are caused by things such as interference with other frequencies?
2784 MR. de BRABANT: Yes.
2785 COMMISSIONER CARDOZO: Okay. Are you aware that low power FM transmitters are considered secondary undertakings and, as such, you are not entitled to protection by regular class FM stations such as Classes A1, AB, C1 and -- don't ask me what that means, but essentially they are FM stations of greater power than a low power. "C" being the highest, you would be, in a sense, at the bottom of this totem pole.
2786 MR. de BRABANT: Yes, I realize it would operate under an unprotected basis. Yes, we realize it would operate -- it would be an unprotected channel.
2787 I figure, well, it's a start. As we all know, there are not too many frequencies left.
2788 COMMISSIONER CARDOZO: I hate to go on but it gets worse than this.
2789 If there was interference caused to somebody else, to another FM frequency, you would be responsible for either resolving it or, in a worst-case scenario, you would have to close down your operation and seek another frequency. You are aware of that?
2790 MR. de BRABANT: Yes, I am aware of the regulations.
2791 COMMISSIONER CARDOZO: Have you looked at whether any other FM or AM frequencies are available?
2792 MR. de BRABANT: Have I searched for any other ones?
2793 COMMISSIONER CARDOZO: Yes.
2794 MR. de BRABANT: Over the past two or three years I have looked at several possibilities and there are a couple of applications I have worked on recently with short spacing, so this was the only one available aside from 93.5, so I figured this is the one I wanted to try for.
2795 COMMISSIONER CARDOZO: Let me ask you about the reliability of your service.
2796 You are in Timmins. They actually have bad weather here sometimes, in fact they called in the army last year when they had a snowfall, which people in Timmins might find quite amusing, but it was pretty serious in these parts apparently, and what if something happened to your transmitter in one of these storms? I'm not sure that the army would go fix your transmitter. You would have to do something about it. How do you propose to deal with the problem if there is a problem with the transmitter here? Is there someone who can tell you there is a problem?
2797 MR. de BRABANT: Yes. We have several people monitoring the signal here, as well as a couple of technical people who would be on call 24 hours a day. They would have a spare transmitter, spare equipment and they would be on call 24 hours so they would be expected to go in and resolve the problem right away. If it was a major problem that they needed help, then I would assist them as well.
2798 COMMISSIONER CARDOZO: These would be volunteers or would you be contracting a service to do this?
2799 MR. de BRABANT: Well, so far it would be volunteers, but if we have to pay somebody we would be prepared to do that as well.
2800 COMMISSIONER CARDOZO: Okay. Let me just go to marketing.
2801 You have a survey where 500 people in the Toronto area were interviewed about your proposal. Can you tell us a little more about the survey as to who did it and how respondents were chosen?
2802 MR. de BRABANT: There are a couple of people in churches who approached individuals one-to-one, like from different churches. They have people that they knew, people that they didn't know, just people at random, and asked them their views, like what they are listening to right now and if they would listen to a local Canadian, Toronto station. We got very positive feedback on that.
2803 COMMISSIONER CARDOZO: Did you have a formal questionnaire or a few questions that -- were people asked the same questions all the way through?
2804 MR. de BRABANT: Yes, they were asked the same questions. It was written down on the form and they were asked to respond.
2805 COMMISSIONER CARDOZO: Was it person-to-person or over the telephone? Personally or over the telephone?
2806 MR. de BRABANT: Most of it was one-on-one in person and there was some on the phone, telephone calls. Some even responded by fax.
2807 COMMISSIONER CARDOZO: You mentioned the volunteers at churches. Would it be people -- were these volunteers interviewing people at church or at church events, something of that nature?
2808 MR. de BRABANT: Yes. The volunteers were all from the churches, yes.
2809 COMMISSIONER CARDOZO: When they were picking people to be interviewed, were they picking at a church event or at a church service?
2810 MR. de BRABANT: Yes, it was at a service.
2811 COMMISSIONER CARDOZO: Your survey results indicate that 79 per cent of the respondents presently listen to WDCX in Buffalo. That sounds good on the face of it because you have a lot of those people who you could repatriate.
2812 But the other side of it is that the Toronto market essentially, the Buffalo religious station garners only 1 per cent of the share of the Toronto market so it is a fairly small number of people. You are looking at repatriating most of that listenership back to Toronto. Is that right?
2813 MR. de BRABANT: Yes, that's right. So far almost everything that I spoke to, that we interviewed, said they are listening to WCDX and they would prefer to have the local channel.
2814 COMMISSIONER CARDOZO: You have estimated that your share would be in the 8 to 12 per cent share, which is among the highest two or three in the Toronto market. How did you arrive at that figure?
2815 MR. de BRABANT: That is basically an industry standard for Christian contemporary music. It is anywhere from 10 per cent daily listenership up to 15 per cent. We know we have that in Timmins and other markets.
2816 Angus Reid took a survey about six years ago that stated at least 8 to 10 per cent of Canadians would listen to a Christian contemporary music service on a daily basis, so we know it is a pretty safe number to say between 10 and 15 per cent because there are a lot of non-Christians who are listening as well.
2817 COMMISSIONER CARDOZO: You are aware there is at least one other application before us in this hearing for a Christian station. Do you see them as a competitor or could both exist in the market at the same time?
2818 MR. de BRABANT: They are competing for 93.5. I believe the Toronto market is certainly more than large enough to have two stations coexist even with identical formats. I understand they are going to have a different type of programming.
2819 Even just recently the Commission licensed a second Christian commercial station in Winnipeg, which is about 700,000, so with Toronto being three or four times the size and just with the numbers here, Toronto could have least two or possibly even more of these stations.
2820 COMMISSIONER CARDOZO: That covers basically the questions that I want to ask.
2821 I have one more question which we have been asking most or all the applicants about whether they think -- or to give us their views on why they think their application is the best use of the frequency available and to sum up your application, but maybe I will just hold that for a couple of minutes and see if Madam Chair or legal counsel have any questions and then I will ask you to sum up in that context.
2822 THE CHAIRPERSON: Thank you.
2824 MR. RHÉAUME: Thank you, Madam Chairperson.
2825 Mr. de Brabant, I'm not really sure where to start. It appears that your plan is to have a number of retransmitters that would rebroadcast the signal from Timmins, and you also plan -- and that is the problem, you also plan, as I understand it, to have local inserts at these various transmitters, including our starting point here, Toronto. Is that correct?
2826 The problem we have is that the way this has been processed and filed by you originally is that it is an amendment to the Timmins licence in order to have a retransmitter in Toronto, which basically means that the only licensing vehicle available is for a full rebroadcaster in Toronto with no local inserts.
2827 If I understand your plan correctly, what you would require, likely, is to have a number of separate licences which would allow you local inserts.
2828 So right now as we speak what we can consider is, strictly speaking, a rebroadcaster only.
2829 Do you have any comments in that regard?
2830 MR. de BRABANT: Well, if that is what the Commission feels is best, a straight rebroadcaster, then of course we would be willing to go along with that too, if they figure it is going to be too complicated to have like the mini-news briefs in different locations to cover the whole country.
2831 But I understand what you are saying, as the number of repeater stations grow it would become increasingly more difficult to jam that all into a small package.
2832 MR. RHÉAUME: So looking forward, if we can, what I encourage you to explore, if you want to go ahead with your plan, is to have small local stations in various areas which would allow you local inserts. Okay.
2833 Now, the other thing is the one-third local programming policy.
2834 I don't see anywhere in your application and from your discussions with Commissioner Cardozo that you have any kind of resources available to you to do 42 hours of local programming. So what this means -- and maybe you comment on that as well -- is that you are basically asking the Commission to make an exception to its local programming policy in order to allow you access, in a limited fashion, to advertising -- limited advertising in Timmins.
2835 A policy is a pronouncement from the Commission that under certain circumstances this is what will be required. It is not law and the Commission can consider and entertain applications such as yours for exceptions.
2836 I think that is your only avenue at this time because, as I say, I don't see anywhere in your application sufficient resources to do any kind of local programming in Timmins. Would you care to comment on that?
2837 MR. de BRABANT: Okay. Well, if we went with the present format, just the sponsorships -- of course it's up to the Commission if they wanted to make an exemption that we have local advertising in different markets, you know, we would just leave that up to whichever you figure is best.
2838 Either way, if it's sponsorships, if we have to go with that then we would accept that.
2839 MR. RHÉAUME: Thank you.
2840 THE CHAIRPERSON: Thank you, counsel.
2841 Commissioner Cardozo.
2842 COMMISSIONER CARDOZO: Thank you, Madam Chair and counsel.
2843 I will just ask you, Mr. de Brabant, to sum up your application again and give us a view as to why you feel yours is the best application for the frequency.
2844 As you are aware, there are three other applications for this frequency who are Durham Radio, St. Sava's and Gary Farmer, the Aboriginal Voices Radio.
2845 So this is your chance to give us your last pitch in a few minutes.
2846 MR. de BRABANT: Okay. Well, we feel one of the biggest strengths of our application, of course, is it is very simple that all the format is available in Toronto. Like this is the only one, single format that is not present in the city and as the popularity of Christian contemporary music is growing across the country, since the June 3rd, '93 decision to legalize the Christian broadcasting, we figure this will bring true diversity.
2847 Our commitment to Canadian talent development of course is the other strong point.
2848 I believe the Toronto area is already well-served, more than well-served by the seven existing stations that have ethnic programming, so to -- they also include Aboriginal programming on some of these stations that I talked to.
2849 So I figure the radio audience, the general listenership in Toronto would be best served by having a new station, something that is not redundant, something that they don't have already over the AM and FM aerial frequency band.
2850 This is truly something diverse, something brand new and it is growing in popularity across the country. We most certainly would like to see it come in here and it would take away listeners who -- all the people are listening to WDCX in Buffalo, so it will give the new local Toronto gospel musicians, it would give them a very much needed outlet.
2851 So with the diversity and the Canadian talent development and the outlet for the new artists, I think this is truly something that that Toronto area needs.
2852 If the rest of Canada can have these stations, then I don't see why the people of Toronto can't as well. I think if Winnipeg, Thunder Bay, Sudbury, Timmins and Edmonton, Calgary and all over the country, if they can have it, I think the Christian community in Toronto, the largest centre, I think they most certainly deserve it as well. Like I say, it's a brand new format, something that they don't have.
2853 COMMISSIONER CARDOZO: Thank you very much, Mr. de Brabant. Thanks for your overview in answering all our questions today.
2854 Thank you, Madam Chair.
2855 THE CHAIRPERSON: Thank you, Mr. de Brabant.
2856 MR. de BRABANT: Thank you.
2857 THE CHAIRPERSON: Yes. Thank you.
2858 We will take a 10-minute break to allow for a change in applicant. So we will be back in 10 minutes.
--- Upon recessing at / Suspension à 1002
--- Upon resuming at / Reprise à 1035
2859 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.
2860 Oh, we don't have Mr. Secretary.
--- Pause / Pause
2861 THE CHAIRPERSON: Mr. McNabb.
2862 MR. McNABB: Thank you. We will be ready momentarily, Commissioner.
2863 The reason for the delay was that we found in the Agenda that they were two separate so we are just making sure our notes are correlated to give you a combined.
2864 What I understand, Peter, it is going to be a 30-minute presentation.
2865 THE CHAIRPERSON: We have no problem with you separating your FM and AM presentation in any manner you wish, it's just that we want to pursue our clarification and questioning together.
2866 You may do a separate presentation, of course, within the time frame allowed to everybody. You are welcome to do that.
2867 The questioning, however, because there are overlaps in certain areas, to have a record that is legally acceptable for both applications, it is our conclusion that the best way is to do the questioning together, but you may present them separately.
2868 Are you ready?
2869 MR. McNABB: In that case, I will be ready in five minutes. Is that okay?
2870 THE CHAIRPERSON: Yes.
2871 MR. McNABB: Thank you for your patience. We appreciate it.
--- Pause / Pause
2872 THE CHAIRPERSON: Mr. Secretary.
2873 MR. RHÉAUME: Thank you, Madam Chairperson.
2874 We will now hear actually two applications by Andy McNabb on behalf of a company to be incorporated.
2875 First of all for a broadcasting licence to carry on an English-language FM radio programming undertaking at Toronto.
2876 The new station would operate on frequency 93.5 megahertz, Channel 228B, with an effective radiated power of 1,430 watts.
2877 The Applicant is proposing a Christian music service, specialty format.
2878 The Commission notes that this application is technically mutually exclusive with other applications scheduled at this hearing for the use of the 93.5 megahertz frequency.
2879 Mr. McNabb is also applying for a broadcasting licence to carry on an English-language AM radio programming undertaking at Toronto. The new station would operate on frequency 740 kilohertz with a transmitter power of 50,000 watts.
2880 The applicant is proposing a Christian radio service offering mainly spoken word programming.
2881 The Commission notes that this application is technically mutually exclusive with other applications scheduled at this hearing for the use of the 740 kilohertz frequency.
2882 We have Mr. McNabb and his colleagues.
2883 Mr. McNabb.
2884 MR. McNABB: Commissioners and CRTC colleagues, thank you very much for your indulgence this morning and thank you for having us here today.
2885 It is an honour and a privilege to have the opportunity to have a crack at one, let alone two, broadcasting licences.
2886 My role with the proposed radio corporation is as owner and general manager. My profile is on Schedule 6, Appendix 1, pages 492 and 491 of the FM application and pages 485 and 484 of the AM application.
2887 I would like to introduce a number of people to you who bring an unparalleled level of expertise to Christian broadcasting. I'm going to introduce from left to right, my left, your right.
2888 On my left is Lucy Hallford, who will be the Chief Financial Officer of our new radio corporation. Lucy is the former Director of Finance for the Niagara Regional Police; the Director of Special Projects for Toronto hospitals; the Director of Finance for Mount Sinai; the Director of Finance for Cogen Corporation; the Manager of Financial Systems for Rogers Cablesystems; and the Internal Auditor for Xerox. Though Lucy has not worked within the realm of Christian broadcasting, she certainly has worked within the realm of telecommunications.
2889 To my right, and to be Operations Manager and Program Director at our new radio corporation, is Don Millar. Don is the former General Manager of CJOS Caronport, Saskatchewan. Don was responsible for the application and the complete start-up from soup to nuts for the first English-language Christian radio station in Canada to be licensed following the release of the '93 regulations that permitted Christian broadcasting.
2890 Before that Don was my neighbour over in Peterborough. He was former V-P Programming of Power Broadcasting CFMP 101.5.
2891 Peterborough has to be one of the most competitive markets per capita in this country. It then was a town of about 50,000, had four radio stations fighting for audience. With over 20 radio stations beaming in Don created, right from scratch, what was then the station soft rock format that earned a 22 per cent share of hours tuned. Again, that is in a four station market with over 20 Toronto signals beaming in, and that created CFMP to be one of the highest rated radio stations in Canada in terms of percentage of hours tuned. So that is no small accomplishment.
2892 So he brings a form of operations techniques as well as programming to us for Christian and secular broadcasting.
2893 Right behind me and to your right, Gordon Elder, Principal of Elder Engineering. Gordon will be prepared to answer any questions you have on the technical aspects of the FM 93.5 application.
2894 To Gordon's right and your left is Joe Davis, the Vice-President of Operations for Salem Communications Corporation, who is also General Manager of WMCA and WWDJ Radio New York. These are two Christian stations.
2895 Salem has financed us, with an option that they have not yet exercised for a minority partnership as per the CRTC regulations permitting foreign ownership.
2896 Salem is publicly traded on NASDAQ. The company now owns 59 radio stations, including 29 in the top 20 markets.
2897 Salem also owns Salem Radio Network which syndicates talk programming, news and music, to over 1,200 affiliated stations throughout the United States. This is all Christian broadcasting and it certainly brings a tremendous wealth of expertise that I have been able to draw on from Salem over the past five years that I have known Stu Epperson, who is the Chairman of Salem, and Ed Atsinger who is the President.
2898 Ed and Stu are currently in charge of the National Religious Broadcaster's Convention in Anaheim this week and so when you are hosting a party you better be there, so Joe has kindly consented to speak on behalf of Salem and is fully authorized to encumber Salem on my behalf. So we appreciate Joe coming here.
2899 Salem also owns Christian Contemporary Music magazine as well OnePlace.com. It's a technology developer, an operator of e-commerce sites for Christian business people around the globe. They are also the exclusive Christian media partner with Real Networks Incorporated by acquiring the exclusive rights to the entire "Spiritual" section of the new G-2 RealMedia player presets that you can get on the Internet.
2900 So now for the presentation.
2901 Four words really sum up -- I forgot one person, I apologize. That was my fault.
2902 THE CHAIRPERSON: I hope he's not in your room.
2903 MR. McNABB: Pardon me? No. No, no, no.
--- Laughter / Rires
2904 MR. McNABB: Who could forget David Oakes, especially when he has helped so many of the broadcasters in this room across this country, in the United States and around the world, achieve top ratings in their format category or in all formats in their city.
2905 David has had an uncanny ability, and I have had the pleasure of working with him over the past five years in different projects when we were able to create one of the top radio stations together with 24 per cent share of hours tuned, and that, in no small part, was due to David's expertise and research which gave us a template to build a format for that radio station.
2906 Now, you will notice there is an empty seat here. Some of you might know Gary Jessop from Blake, Cassels & Graydon. Gary right now is on a plane here and he will be happy to answer questions regarding any legal issues regarding Salem's ownership, any questions about effective control and who it rests with.
2907 So we would ask you to defer questions about Salem's participation and ownership until Gary arrives. As soon as you see that seat filled you will know it's Gary Jessop.
2908 So now for the general introduction.
2909 THE CHAIRPERSON: Mr. McNabb, so that you will be more comfortable, we will do the ownership questioning after lunch.
2910 MR. McNABB: Thank you so much.
2911 So I guess the time clock starts now.
2912 Four words really capsulize the heart behind what we are trying to do on FM and AM: Hoping, caring, sharing and praying. This is something totally new and different to the Toronto radio landscape because there is no full-time radio presence like this. There is no part-time radio presence that covers the whole of the Toronto CMA, and we are able to do that with this endeavour.
2913 The whole purpose is really radio that is going to bring hope to people's hearts, something that is going to touch their hearts in a way traditional radio just can't because they are not connecting on that level.
2914 The people who comprise the largest unserved cultural group in Toronto are classified by Statistics Canada as being up to 74 per cent of all people in the Toronto CMA. Those are people that define themselves as belonging to the Christian faith.
2915 It really creates a tremendous incremental use of the broadcast spectrum in either AM and FM.
2916 On the FM side in terms of breaking more new artists in a single format across eight genres of Christian music in Toronto.
2917 On the AM, oh, my goodness, Christians just don't live in Toronto. There isn't a higher concentration of Christians in the Toronto CMA, they are consistently strong all over, in the 60 and 70 percentages no matter what area of Ontario you go to.
2918 As a result, this really offers the best use of AM 740 spectrum as well, because, quite simply, there is a consistent representation of our target market that goes beyond the borders. It doesn't fall off like many other applicant's target markets might.
2919 We create -- not create, but we present a culture unlike any other that is going around today.
2920 I want to sort of preface the video for you. It runs six and-a-half minutes. We want to bring you to see the Toronto Christian market firsthand. Some broadcasters often joke about: Why are you using video to sell radio?
2921 We want to take you to the people of Toronto. We want you to see what they are doing, what they are thinking, what they are praying about and how much of a Christian music and preaching, teaching hotbed this town is. It will blow your mind when you see the numbers of people involved in some of the most significant Christian movements in North America and around the world right here at home.
2922 What we have here is a lot of fun. We have the groundwork for a new style of music for Toronto currently being raised up in 20,000 churches across Canada, 4,500 within 50 miles of us right here and 1,512, to be exact, right in the Toronto CMA. I mean, that is more than all the cultural halls, bars, taverns, dance clubs put together. So that is a real indicator of a cultural happening and a cultural presence.
2923 The word of God in music isn't just defined by the melody like any other format, it is most importantly defined by the message. It lifts up the name of Jesus Christ so that we can all have a heavenly hope, and it brings messages of hope and it brings messages of comfort that most music genres, most music titles can ever hope to deliver or match. This is really a hope that transcends skin colour, linguistic background, our ethnic heritage.
2924 It is all about uniting everybody in a common life-changing purpose. That is Christ's command that we love one another as he has been so good to love us.
2925 Christian music goes hand-in-hand with preaching and teaching. The listener loves both. This is why we are after both licences. We are not here to think: Oh well, if we go for two maybe we will get one and not the other. We want them both. The market has told us that they fervently desire both. There is a huge void and there is an emptiness in the Toronto radio spectrum and both applications can fill it today.
2926 So we want you to see what the City of Toronto wants, what the people of Toronto needs, words of exhortation, edification, of comfort, music of hope, words of encouragement.
2927 If you could roll the tape, please.
--- Video presentation / Présentation vidéo
2928 MR. McNABB: Forty-five hundred churches. That is a pervasive culture. It doesn't get much bigger than that. In fact, it doesn't get much bigger than that in Toronto and that is why we are really excited and why we really believe that something could happen here that will create a real precedent in Canada's biggest media market.
2929 Did you see the countenances on the men and women on this video who sang? Did you see the smile on their faces? That comes because they have a joy in their hearts, because they have a heavenly hope and that is manifest in their songs that they share with listeners, because Christ is real in their lives. It makes a difference. Not "it". "He" makes a difference. We can vouch for it.
2930 You know, their Christianity, our Christianity is our culture, and our culture is a very fulsome way of life.
2931 Culture can be defined as thinly as what sport we play. I'm a hockey player so I guess I'm part of the hockey culture every Monday morning, Wednesday morning and Friday night. I'm a skier, so I guess I'm part of the skiing culture too. But, you know, when you take a look at it, no matter what sport you are partaking in or what music you dance to, no matter how you define yourself, by age, whatever age group you are entering or just passing through, we can cut through the very thin veneer of demography and go right deep to the matters of the heart.
2932 Here it is: Where culture takes on it's truest, it's fullest, most comprehensive meaning in people's life when it becomes a way of life in its fullest.
2933 For people of faith, and the largest group of people of faith in Toronto who call themselves Christians, this is the largest cultural group in the city. This is a very comprehensive effect that affects the way we live our whole lives. It isn't just our recreational pursuits or what we want to do Friday and Saturday night that determines our attitude, but it sets our whole lives and our views, our responsibilities at home and at work and at play.
2934 It's interesting. Here is the message of the music touching people's hearts with a heavenly hope and it's kind of interesting. You know how Christian artists crossover to secular charts but it doesn't happen the other way around. Why? The Christian method brings something secular lyrics can't touch with a 10-foot pole.
2935 No wonder -- and this is why we are probably seeing all these Christian radio stations springing up in small communities, they are people who recognize this and, you know, God Bless people like Roger de Brabant and the folks from Thunder Bay and the folks from Sudbury and out west, you know, Sandu(ph) out in B.C. and everybody. They are recognizing it and moving toward it.
2936 Let's take a look at the criteria for awarding a station in terms of making a meaningful effort to achieving the mandate of the Broadcast Act.
2937 We talk about strengthening the cultural, political, social and economic fabric beyond that of any possible format opportunity.
2938 Well, Christian radio unto itself brings balance to Toronto, whether Christian music or Christian talk and teaching on the AM. We are bringing lyrics of love, we are bring talk of exhortation, edification and comfort instead of tearing people down, where an abundance of less than ethical principles abound in music today on radio and on the talk shows that we can tune into on different radio stations.
2939 That is why our potential listeners currently listen to Toronto radio seven hours less a week than the national average. Because why? Their needs haven't been met. They are under-tuning. There is a huge gap
2940 So knowing that culture is defined as a way of life, let's take a look at this culture that sees unparalleled levels of altruism and benevolence in feeding the hungry, clothing the needy, charitable giving and all manner of a desire to climb as those hierarchies needs, but this is out of a heartfelt desire simply to share the love of our Saviour who abides in our hearts and is made manifest in our eyes daily.
2941 Christian music carries this message without exception. Our talk programming doesn't tear people down, but it lifts them up with exhortation and edification.
2942 To get a handle what Christian talk would be like, remember this would be the first Christian talk station in Canada -- we are breaking new ground -- so what would it be like? Where is our standard of measurement?
2943 Take a look at Huntley Street. You see David and Norma and Reynold Maines(ph) there. You noticed how sweet they are. They are speaking about giving people a hope. People are sharing testimonies about what God has done in their lives. So that is the very same motivation we have.
2944 But we get to take it a few steps further because we are a local service. We can have programs talking about a Toronto perspective for Toronto people on issues of faith. No matter what the issue might be, we can bring a biblical perspective to it that has stood the test of time.
2945 Now, quite simply, Christian radio can do something that no other radio format can, and that is touch people's hearts. We go beyond the years right here.
2946 We know that radio strength is also the companion medium. When radio can get inside people's hearts we can begin to play a more relevant role in people's lives.
2947 What does that do? How does that affect the business proposition?
2948 This all sounds nice and sweet, but when you play a relevant role in people's lives you get their audience loyalty. If you have their audience loyalty you get the advertising loyalty. You get the advertising loyalty, you turn profitable, and profitable very quickly.
2949 In terms of strengthening the economic fabric of Canada, we have a $3 million miracle on FM alone, about $2.6 million on the AM side in terms of tithing.
2950 What is tithing? Well, that's where you give 10 per cent of gross. "Well, McNabb, how are we sure that you are actually going to give 10 per cent of your gross to registered Canadian charities?" Well, I guess look at our track record." We are tithing. We have been giving 10 per cent of our growth for years as Christians. Why? The Bible commands us to. It's not a holier than thou approach, but God says "Do it", we do it.
2951 We are happy to do it and it's fun because we see the hungry being fed and we see the needy being clothed and we see lives being touched, marital counselling, family counselling, bringing stronger family units.
2952 In terms of Canadian talent, we have talked about a $1 million miracle and a $600,000 solution. What is that?
2953 You will notice in our Canadian talent development in Schedule 4 of each of AM and FM that we say $439,000 in cold, hard cash to be invested in the development of Christian artists so that they can get studio time.
2954 We are also producing a compact disc called "Toronto Praise the Lord". We can offer you details if you have questions.
2955 But in addition to the $439,000 miracle -- or situation in a single-station scenario, we add to that something that we filed to the response of the CIRPA intervention in January where we managed to get an extra $175,000 in studio time for artists. Now, we could count that as direct or indirect and arguments could be made either way, but what we did, we simply created a contra situation for that. So $439,000 plus $175,000 becomes $600,000. Eight seventy-eight in the dual licence scenario plus $175,000 becomes $1 million.
2956 So we are going to be promoting Canadian talent heavily on the AM with updates on the Canadians thousands of times a year in each scenario.
2957 In terms of the business plan, we have -- it's kind of a neat situation. We have several different opportunities for revenue.
2958 Program revenue creates a real stable base. I mean, how many people have $374,000 -- I have the actual letters of commitment here that came in since we included them in the Johnny Lombardi response, intervention response.
2959 How many people can say "Hey, 10, 12, 14, 16 months out we already have 12, 13 14 per cent of our revenues already on the books? The average radio station already in existence today would consider themselves well off to have that. We don't even have the momentum of being established. This is how hungry people are.
2960 You know what? We didn't have to do a retail research study.
2961 Do you know why? Because program advertisers depend on the direct return on investment or they can't stay on the air. So if you get the programmers getting a direct return on investment, the advertisers are automatic.
2962 So this, combined with the empirical evidence presented by Neil Boron, 1.5 reasons in terms of dollars, cold, hard, fast dollars from Canadians going out of the country means Canadian advertisers are serious about wanting Christian radio. How much more serious will they be wanting to spent their money on Christian radio in Toronto with the Toronto perspective than with a radio station that doesn't offer any -- and that means any Toronto perspective at all.
2963 Key points to remember, in closing here: The Commission stated in the Broadcasting Policy for Religious Broadcasting in 1993 that it:
"...is thought to be responsive to the express desire of many that greater provision be made for the exposure of Canadian religious music and support for the Canadian religious music industry." (As read)
2964 You are doing that. You are licensing stations across Canada and we commend you for that.
2965 But you know what? There is an express desire of many right here in Toronto too and what fun we can have.
2966 There is tremendous experience in start-up. Don had to do with nickels what most radio operators do with dollars. In creating a competitive sound they had to compete with major market radio stations beaming into Caronport in Saskatchewan. Music with a message of hope. Christianity as a way of life. Christian music and Christian talk meeting the needs and transcending divisions of colour, ethnic background, ages as the largest cultural group in the city that has been standing unserved by Toronto radio since radio began.
2967 So we feel confident that this application does more to further the aims of the Broadcast Act. We are encouraged by the fact that the Commission has approved applications for Christian radio in other parts of the country. We ask for nothing less here in Toronto.
2968 Your questions are welcome.
2969 THE CHAIRPERSON: That ends your presentation?
2970 MR. McNABB: Yes.
2971 THE CHAIRPERSON: For all three -- or both applications, AM/FM?
2972 MR. McNABB: Correct.
2973 THE CHAIRPERSON: Commissioner Grauer, please.
2974 COMMISSIONER GRAUER: Thank you, Madam Chair.
2975 Thank you, Mr. McNabb. Welcome. Welcome to members of the panel.
2976 As Chair Wylie said, we will explore areas of ownership following lunch.
2977 This morning what I would like to do is talk a bit about the demand sources of revenue and audiences, local programming, balance and editorial control and Canadian talent development. So we will make our way through that.
2978 What I might do, and we might get back to it again later, but in your presentation you talked about the Buffalo advertisers, the Canadian advertisers that are going to Buffalo; you talk about $1.5 million in advertising, I think, that is going to Buffalo.
2979 Is that correct, $1.5 million?
2980 MR. McNABB: Correct. Canadian dollars.
2981 COMMISSIONER GRAUER: Canadian dollars.
2982 Then you have talked about your letters of commitment that you have secured.
2983 I guess what I'm interested in knowing is what kind -- who are these advertisers? What kind of revenue is it?
2984 I know that there has been talk, your financial statements I think have talked about half of your revenue coming from Ministries and programs and the other half is conventional advertising. I'm just wondering if we could kind of maybe go through piece-by-piece what is going to Buffalo, what you expect to repatriate, how and why you expect to repatriate it so I can get a better sense of that. If you could do that for me?
2985 MR. McNABB: Sure. Addressing the repatriation scenario, we have seen, regardless of format, where Canadians have sought to repatriate American audiences that where you provide a Canadian perspective for a format choice relative to that where there is significant American tuning, the Canadians win. They win not only with ratings but they win with revenues as well. Because again, when you provide a local perspective you draw people because it has become irrelevant.
2986 The Americans consistently fail to be relevant across the border. Why not? That isn't their fault, it's just their circumstances. They are right there in the United States of America, they have to, you know, serve their own friends and family right in their own neighbourhood. So there is only 24 hours a day.
2987 As a result, it creates a very significant opportunity for the Canadians to walk right in and offer that Canadian perspective. We have seen it with stations in Montreal, Vancouver, across the country.
2988 COMMISSIONER GRAUER: Maybe I didn't make myself very clear. I appreciate the issue of repatriation, what I'm trying to get a sense of is who -- what kind of revenue is it that is gone and how do you intend to bring it back?
2989 MR. McNABB: Sure. Let's take a look from the ground up in terms of program revenues.
2990 The FM has some program revenues of which we can fit pretty much all these $374,000 commitments in the spoken word programming that we have outlined.
2991 If you extrapolated this $374,000 in program commitments on the AM, that only comprises 12-13 per cent of our inventory. If you divide 12-13 per cent into $374,000, all of a sudden we seem to be projecting over $3 million -- that sounds absolutely astounding -- even though we stand by our more conservative projections of about $2.5 million on either radio station.
2992 Because program suppliers seek a direct and need a direct return on their dollar -- they need to or else they can't continue. It isn't like advertisers where they say "Gee, a couple of people said they heard on the radio, I guess it must be working." These people can only survive if contributions to the Ministry are sent by the listeners, either voluntarily or they ask within the ethical guidelines of the religious broadcasting policy. As a result, they look for that direct return on investment.
2993 So that automatically verifies when some of the largest broadcast Ministries say "Hey, we will be happy to come to the party. Hey, we're looking to add more stations in Toronto because one station is not enough." They like to be on as many as possible because each station's audience will sustain a program.
2994 COMMISSIONER GRAUER: Just so I'm clear, to make sure I understand that piece, you are speaking of program Ministries, you are speaking in terms of that revenue, that $374,000.
2995 Correct me if I'm wrong, I may well be confused here, but that is program Ministries committing to you they will take time and then they can generate the revenue from the audiences, direct revenue from the audiences. Is that correct?
2996 MR. McNABB: Absolutely correct.
2997 COMMISSIONER GRAUER: Is that the revenue that is now going to Buffalo?
2998 MR. McNABB: No, we are not even counting the advertising.
2999 COMMISSIONER GRAUER: Okay.
3000 MR. McNABB: That was advertising revenue.
3001 COMMISSIONER GRAUER: Okay, that's advertising revenue.
3002 MR. McNABB: That's icing on the cake -- well, more than icing on the cake.
3003 The programmers here are people who are on different broadcasting outlets, TV and radio, across Canada and some of them in the United States and, you know, when these people say "Yes, this is working" it automatically validates the advertiser's proposition, because they wouldn't come in if they knew -- if they didn't know how large the void is to carry out the mission that God has called them to in Toronto in terms of ministering spiritual comfort to the listener.
3004 So in terms of the advertisers, who are they?
3005 Typically a Christian radio advertiser is either an owner-managed business that is Christian-owned and operated or usually has a Christian who is very involved in the company and sees the opportunity to do business with an extremely loyal market.
3006 Because just -- share direct evidence, and Neil would corroborate this -- picture this: A Fort Erie WDCX listener -- Fort Erie being right across the ditch from Buffalo -- drove all the way around the Golden Horseshoe to the northeast corner of Toronto to Willowdale Dodge Chrysler to buy a car. Why? He said "Thank you for putting Christian radio on the air seven days a week, 24-hours a day. We can't get it anywhere else here in Ontario.
3007 As a result, that loyalty -- and that is not the exception, that is the rule. People really tend to support. Just like if you're in the Kinsmen Club you support your fellow Kinsmen, you know. Buy boy-oh-boy, the Christian radio listener makes an effort to go all out and let people know, because it is so distinct. Why? It is appealing to a greater level right here in the heart and, as a result, it automatically generates a greater level of loyalty and advertiser response.
3008 I'm sure Joe would validate that time and time and time and time again through the 59 stations of Salem.
3009 So we have taken a look at two revenue streams. But wait, there is more. There is what they call hourly sponsorships.
3010 Now, we could fill up our hours of spoken word content that we feel is appropriate on the FM so how can we generate more program Ministry on the FM when we have tons of Christian music running? Well, we can do hourly sponsorships, "This hour of music brought to you by".
3011 For example, World Vision is a huge advertiser on many of the Salem stations and World Vision is advertising here in Canada even on part-time Christian radio. Why? Because even part-time Christian radio covering off just half of this market has a valid audience unto its own.
3012 You can sell different Ministries sponsorships where we would say, "Tell you what, we will give you the hour `This hour is brought to you by' and you are going to have six minutes during that hour in maybe two minute breaks every 20 minutes to talk about the scope of the Ministry, what you're doing, you know, in terms of feeding the hungry, clothing the needy." Those are things that tend to get the greatest levels of response, where people see a perceived benefit to their community through their giving.
3013 So that is yet another source of revenue for the radio stations. For either radio station. We could even do that on the talk programs. I didn't even budget that on the AM. We budgeted it on the FM.
3014 We have even more sources of revenue in terms of doing concerts, selling the CD. There is a profit margin involved there. So with Christmas concerts and selling the CD that is, again, gravy on the potatoes.
3015 COMMISSIONER GRAUER: Thank you.
3016 You may want to refer this question to Mr. Oakes.
3017 What I will do is, I will address my questions to you and you can refer them to panel members as appropriate. How's that?
3018 This is with respect to the audience repatriation that you are projecting from Buffalo.
3019 I know on page 10 of your research, Mr. Oakes' research, you have indicated that 20 per cent of the audience will come from WDCX. The share of total hours from WDCX in the Toronto market is significantly less than 1 per cent, according to our figures. Mr. Oakes I think has estimated the number of Torontonians listening to be 80,000.
3020 So how many listeners do you expect to repatriate from Buffalo?
3021 MR. OAKES: Well, we expect to repatriate most of those listeners, the 80,000. The signal, the WDCX signal isn't complete in Toronto, it is limited. It is about their only major source of Christian programming and we will offer a lot of what they already offer.
3022 So we feel with the localization that it is almost going to be a one-to-one listener tuning out of WDCX to a Christian radio station in Toronto.
3023 COMMISSIONER GRAUER: So you expect to repatriate virtually all of those listeners?
3024 MR. OAKES: I think you might still get some cuming at WDCX, but I'm willing to bet they will spend a lot less time at WDCX.
3025 How much it's difficult to say. Probably people who have been listening to that station for quite a while, through many years, probably the west end of Toronto, they will still cume. Their hours tuned will drop dramatically.
3026 COMMISSIONER GRAUER: Thank you.
3027 I know you have also -- is the 2.4 audience estimates that you have projected in year one to each service or to both combined? It's in your Schedule 21.
3028 If it is reach service on a stand-alone basis what would your combined audience share be, given duplication in tuning?
3029 MR. McNABB: I will take this one, thank you.
3030 The 2.4 is for either station. Both stations generate almost equal level of hours tuning and cume.
3031 So what would you get in a combined situation? Well, you will notice from the research that two-thirds of each of the AM and FM audience say they would be willing to listen to the other as well, so how do you get the figure?
3032 So for the sake of round numbers -- and let's go low here, call each station's audience 240,000. What would be the unduplicated cume?
3033 Well, if two-thirds of each other's audience would tune the other, two-thirds of 240,000 is 160,000. So you are left, each station has 80,000 that is unduplicated. So 150,000 plus 80,000 equals 240,000, plus 80,000 equals 320,000 listeners.
3034 More stations -- more listeners for just one station alone centrally than some Toronto stations have full coverage. That shows a real huge void and I think that is accentuated by the fact that they are only listening two hours a day. They are hungry. WDCX isn't meeting all their needs.
3035 COMMISSIONER GRAUER: Thank you.
3036 I would like to talk now a bit about the ability of the market to support a station. I'm going to get back again to some advertising and revenue questions.
3037 You talk about unlike secular -- I think in your Schedule 18 you say:
"Unlike secular radio there is little stealing or churn of your revenue streams, as most secular stations seek to avoid religious revenue to maintain format consistency." (As read)
3038 I think you touched on that in your earlier presentation.
3039 You have also said:
"Much of our revenue is totally new to the Toronto market and comes in the form of national and local broadcast Ministry programs..." (As read)
3040 Which we have talked a little bit about:
"...plus local and regional Ministries and churches sponsoring locally produced programming." (As read)
3041 You have also projected profits in year one, I believe.
3042 MR. McNABB: Absolutely.
3043 COMMISSIONER GRAUER: Which is a very optimistic projection for your business.
3044 I'm curious to know: Where are your anticipated advertisers advertising now?
3045 MR. McNABB: WDCX. They are on WDCX to the tune of $1.5 million.
3046 But also let's consider the fact that WDCX essentially reaches right around the Golden Horseshoe and the west and north part of the -- not even the north part of the CMA. So it's essentially the Golden Horseshoe, west Toronto with a couple of pockets in eastern Toronto, but it doesn't reach -- central Toronto the signal is poor north of the 401.
3047 As a result, this tells us if there is $1.5 million just from the western half of Toronto, how much more willing advertisers are there in the central part of Toronto, the north part of the Toronto, the east part of Toronto, and beyond the Toronto CMA itself when you are giving a localized perspective that gains listener loyalty.
3048 So it really shows that $1.5 million is just a drop in the bucket of available Christian radio revenue.
3049 COMMISSIONER GRAUER: But what I'm really looking to try to understand better is where are these advertisers advertising now? I mean, presumably there is a pie of advertising dollars and they would be -- their business is advertising somewhere. So you presumably are going to attract those dollars from some existing medium.
3050 MR. McNABB: Apart from attracting advertisers from WDCX by default, because if they are customers they are going to be telling them "Well, guess what I'm listening to now". It's as simple as that. That is evidence, hard and fast evidence for the advertiser to say, "Well, guess where my advertising dollars are going to go now."
3051 The incremental dollars that we are going to get in advertising revenue are easily generated by a number of sources of growth in the market. We know that there is an -- forget the booming economy. Economies go up and down. We can't hang our hat on economic cycles. We want to hang our hat on hard, fast, proven empirical reality.
3052 Newspaper is ripe for the picking for radio. I know in Lindsay I had a lot of fun going into a small town and taking, in about three years, $.5 million away from the Lindsay Daily Post and Lindsay This Week. They are ripe for the picking.
3053 So when people see, the advertisers see that radio -- any given radio station, for the most part, commands the greatest share of yours and my time spent with any one member of the media. If you harness that and position that to the advertisers, they are saying, "Hey, if people are spending more time with you, that's where I want to be advertised." So we position that and radio can sell very successfully against newspaper, if you position it that way.
3054 So I speak from a proven track record in doing that. In a little town of 18,000, $.5 million. How much more so in a town of 4.6 million people? So, I mean, these are proven experiences.
3055 Salem will go into a situation. They don't have to do advertiser research. They just go in, they will open up stations, maybe one or two stations at a time -- and I'm going to call on Joe in a second just to share with you a really interesting experience -- they will go into a market like Atlanta, 17 -- Atlanta is significantly smaller than Toronto, it has 17 Christian radio signals.
3056 Do you know what Salem is doing? They are opening up two radio stations this spring, two of them at the same time. You know what? They are going to cashflow $.5 million in gross operating profit on each of the two radio stations when the lion's share of program revenues have already gone to these other 17 stations when you would think the lion's share of these loyal Christian advertising dollars have gone to these other 17 stations.
3057 We have multiple times the number of Christian advertisers and listeners available to us. Why? Because we are the only full-time game in town.
3058 Joe, maybe you can briefly just share the fact that you can go into a market and the dollars come and how you get those incremental dollars when they have seemingly all disappeared with other Christian broadcasters.
3059 MR. DAVIS: Well, Andy has done an extraordinary job of stating the case, but our experience has been that people of faith often advertise only by word-of-mouth. So when formatted radio becomes available to them in their niche format they discover that radio is the best word-of-mouth advertising they could possibly have.
3060 So I submit that not only do we attract a certain share of the existing pie, we expand the pie like no other medium. That has been our experience nearly everywhere we have gone.
3061 I can name mortgage lenders in New York City that had never advertised. It had only been word-of-mouth, a referral from lawyers or real estate agents. I can point to physicians and clinics and medical advertising that had been quite modest in nature that all of a sudden expanded when the Christian format became available.
3062 As Andy mentioned, we are going into Atlanta right now, which is a very saturated market, it is right in the heart of the Bible Belt and there are many Christian radio stations there. We have purchased two stations -- one was an in-format station, one was an out-of-format station -- and already we are generating more revenue then has ever been generated on these stations.
3063 There just seems to be an untapped reserve for people who do this and do it well. It is compelling for especially the direct response advertiser when you point to the fact that our program producers have to receive -- they look at us weekly and say "Is this station working? If I am paying $400 a half hour for a program, $2,000 a week -- $2,000-$2,500 a week, am I getting it back every week?" Most of them are. So advertisers find it very similarly effective.
3064 COMMISSIONER GRAUER: So if I understand you, you are saying -- or can I ask you: Is it your experience, then, that as a rule Christian radio develops new markets for advertising and does not in fact take -- erode the advertising markets of the existing secular radio stations in any given market?
3065 MR. DAVIS: Don't misunderstand me. The other radio stations are sometimes concerned about us because indeed we do take some of their advertisers, and we certainly take some from print, as Andy points out.
3066 But also, I would say 35 to 40 per cent of our advertising on most of our stations are people who have never advertised before, people who are just drawn ideologically to what we do and who have businesses and they are moving along.
3067 We have a client in Boston, if I may, a window replacement firm. They had one outlet. The man who owned it was a man of faith. He had a relative that worked for the radio station and he said "I will buy a few spots." He kept increasing. He has been with us now for nine years and he has 14 locations and his only method of advertising is Christian radio. It just seems to attract people that no other advertising attracts.
3068 COMMISSIONER GRAUER: Thank you,
3069 You mentioned a direct response programming. I want to get into some of the programming issues later, but maybe this is a good opportunity for you to explain how much of that is going to be on your station and how it works.
3070 MR. McNABB: Let's take a look at the AM first.
3071 In terms of direct response we are not talking about things that slice, dice and make julienne fries. We are talking about the --
3072 COMMISSIONER GRAUER: Could you slow down a little bit, please? You speak quickly, Mr. McNabb.
3073 MR. McNABB: Okay. In terms of direct response, we are not selling Cuisinarts and vegetable slicers and juicers. I was talking about the broadcast Ministries that need a direct response from the broadcast Ministry program listeners.
3074 So in terms of the AM, we have what we call here -- this is on page 600, by the way, of the AM application, which would be in Volume 3.
--- Pause / Pause
3075 MR. McNABB: You will see on the chart that we have non-local acquired churches and Ministries 54 hours a week, and yet we have 72 hours of locally produced spoken word and music programs.
3076 We are predominantly Canadian, we are predominantly local, because that is the way you win the game. But with 54 hours of non-local acquired churches and Ministries, when we are selling a half hour program for -- actually what we projected would only be around $400 per is now winding up at $500 per. These people are willing to pay it, and you can tell that by looking at those letters, the monies that they are committing, how often they are on. If they are once a week, et cetera, et cetera, for $26,000, they are paying $500.
3077 So the revenues we are getting per program are actually greater than we anticipated already. Already.
3078 So that is where we are getting our non-local acquired churches and Ministries program revenue.
3079 In terms of we have programs from local churches. You will notice the commitments from different churches in town. Even a church from St. Catharines is going to be sponsoring a program, Peter Karl Youngren, who is sponsoring our Power Hour program is paying to do that, which is a youth-oriented biblical issues program that invites people from all faiths to share their perspectives on the issues facing youth today.
3080 So that is what we are getting and where we are slotting all these program revenue opportunities on the AM.
--- Pause / Pause
3081 MR. McNABB: On the FM we have 18 hours of spoken word programming and they can be sponsored by a Ministry or they could actually be the direct Ministry programs themselves, whereas from the zero hour to the end of the program it's the Ministry speaking, but the majority of those hours out of the 18 hours are local programs that Ministries can sponsor.
3082 So you can really see how easy it is for us to slot in the local churches to either have a full program unto themselves or sponsor that hour of whatever theme of programming we are talking about.
3083 COMMISSIONER GRAUER: Thank you.
3084 If we can just get back. I know you don't expect that there will be any impact with regard to revenues on existing stations, do you include CJMR in that with respect to audiences and revenues or do you not expect that there will some?
3085 MR. McNABB: I wanted to be very sensitive to CJMR's situation. Despite the prevalence of what will be a very significant Christian audience on either one or both of these two radio stations I hope Michael Caine continued with it.
3086 You will notice in my filing -- and I never told Michael this because I didn't want to try to gain any brownie points with him -- but I unilaterally committed there to promote Christian programming on other radio stations.
3087 There is a little different mindset among Christians than secular stations who fight out for audience. The stronger we can make our Ministries who are on our station, on Michael's station, on WDCX, the greater the likelihood they are to increase our commitments on all of us.
3088 So by virtue of having the largest Canadian audience for a music station, by virtue of having the largest Canadian audience for a Christian talk and teaching station, we are in very strong position to bless others.
3089 In fact, a number of weeks ago I e-mailed Scott Jackson, who is one of your more recent Christian radio licensees up in Barrie -- who, by the way, I just want you to know, is doing extremely well. He has one the tightest, most professional sounding music radio stations, and he is doing it out of a small town like Barrie. Commendations to him. He has gone above the bar in his execution.
3090 But I e-mailed him a letter to say "Tell you what: As our Toronto listeners go north to cottage country on the weekends I am unilaterally, and I'm not asking for anything in return" -- and Scott will verify this. Give him a call -- "I will give you 10 promos a week for the first 52 weeks to say `Hey, if you are going up to cottage country up Highway 400 or 427, tune into our friends at Live 100.3 for great Christian music."
3091 Because the AM is a talk station covering half the free world, and the FM, of course, is a music station covering specifically Toronto but not getting up into Huronia. So, either way, we are in a position to complement and strengthen what Scott is doing.
3092 COMMISSIONER GRAUER: I appreciate sort of the goodwill and the spirit of community amongst the Christian broadcasters, but it seems to me you are ultimately in business, and you are in business to make money, so I just want to be clear -- and perhaps you could confirm to me -- that you don't expect this -- or do you expect this to have any impact either on CJMR or any other Toronto broadcaster with respect to revenues or audiences?
3093 MR. McNABB: That would be correct. Let me give you two cases in point.
3094 Let's take a look at Talk 640. Talk 640 from 10:00 p.m. to 11:00 p.m. has two of the biggest Christian broadcast program Ministries on the air back-to-back. It's their only Christian programming. They have 10:00 p.m. Monday to Friday, except for hockey games. That's Focus On The Family and Insight For Living.
3095 "Focus" and "Insight" spend more on Canadian radio stations, millions of dollars, primarily in smaller markets, thus sustaining the viability of many small market stations who, if they have a couple of hours of religious programming it might be their operating profit. But the situation there.
3096 You will notice in the filing that I made in January as my response to Johnny Lombardi's intervention which said "Ah, Christian radio. Niche audience. It's not serving the public interest." I thought "Oh yes, just watch this", and I showed him our levels of program commitment.
3097 In there "Focus" and "Insight" -- who are not into their budgeting signal scenarios yet for next year -- said "We are looking to add stations in Toronto."
3098 Now, it's interesting, Talk 640 is charging more for their nighttime than we are for our prime time. That is on a radio station whose audience isn't necessarily Christian.
3099 So, I mean, how much more viability does a Christian station have by putting Ministries like that on prime time programming than a station who doesn't have a predominance of Christian tuning, just by nature of format, charging significantly more than we do at their marginal time.
3100 So the Ministries themselves are saying "Hey, we will add stations. We will add stations." This is the situation.
3101 Because I know if anybody was in a position where they would have to drop Michael Caine, it would put me in a position of compromise and I didn't want to see that. So as a result I made very sure, "Are you guys going to stay where you are?"
3102 Because Michael has one, if not both of a couple of people that have committed to us now, because when we got into the sales cycle, after we had filed the application in September, we found that people said "Yes, we will do more stations in Toronto. We are not looking to switch here, we are looking to add. We want to strengthen our franchises, just like Tim Horton's: We want a doughnut shop on every corner."
3103 So this is the same thought of the broadcast program Ministries, which I think was recognized so very well in the broadcasting policy of '93 where you recognize the levels of demand for program time to be purchased by program Ministries in Canada and the States far outstrip the supply of time that broadcasters were willing make available.
3104 So this supply and demand equation gives us the real life empirical evidence that wipes out any hypothetical notions of prosperity.
3105 COMMISSIONER GRAUER: Maybe we could say "theoretically", to make sure I understand what you are saying.
3106 Theoretically, if a secular station -- I don't want to use an example of this particular program -- had the same kind of religious program you might be inclined to air and they are getting big audiences for it, subsequently big revenues for it, you are then putting that kind of programming on your station. Would you not draw audiences from -- is it not possible that you might draw audiences, and subsequently revenues, from that station and/or programming?
3107 MR. McNABB: Audiences, yes.
3108 Revenue. In terms of taking away revenues, no, because we have been very, very, very conscious about jeopardizing our religious revenues on other stations because we did not want to see our proposition compromised by doing so.
3109 MR. MILLAR: If I might just add to that.
3110 Usually these religious broadcasters, the producers of these programs recognize the desirability of preaching not necessarily just to the choir. They will preach to the choir under a Christian radio station because they can garner a great source of funds in order to keep the Ministry going and, as an outreach to those on secular radio stations, reach an audience totally unlike that which might be on a Christian radio station such as Talk 640.
3111 COMMISSIONER GRAUER: So you are saying the programming is sufficiently different that there is not going to be --
3112 MR. MILLAR: I believe so. In fact, these syndicators look at it as being complementary to each other and necessary in a market to reach everybody.
3113 COMMISSIONER GRAUER: Thank you.
3114 MR. McNABB: Excuse me, Commissioner. Joe Davis would like to offer some real-life evidence to that.
3115 So, Joe, if you could take over, please?
3116 MR. DAVIS: Well, I would just like to add briefly that over the years I have had the opportunity to review the Mission Statements of maybe hundreds of Ministries. Almost all of them have a dual purpose.
3117 One is to, obviously, attract converts, evangelize, the great commission kind of mentality, and that causes them to go to the secular arena, to the marketplace.
3118 But they also have a component that compels them to feed their faithful, to continue to disciple, to build up the convert, and that's where Christian radio comes in.
3119 So most of them are committed by their Mission Statements to doing both, and to have this option available to them I don't think would negate the other side of their Mission Statement or their ability to spend money to do it.
3120 COMMISSIONER GRAUER: Thank you.
3121 I wonder, you have included in your revenue projects both the AM and the FM and AM/FM combined contra revenue and expenses ranging from $400,000 to $534,000, and I wonder if you could just provide me some information on contra arrangements or what that --
3122 MR. McNABB: We have some very good news. It's not only good news for us, it's good news for you too. If I can just find the good news. We are photocopying the good news. Oh, it's in there. Thank you.
3123 We have, for example -- there is what, seven television stations in Toronto alone. We want to make a really big noise when we go on the air, because when people find out that there is such a refreshing listening opportunity they jump at it. Cases in point, here and here.
3124 We have 100 -- actually, just talking with two of the seven stations here, we are batting 1,000. We have $115,000 in commitments in television contra, one $65,000 of CTS, and God bless Brian Ellis at ONTV in Hamilton. We have a $50,000 contra commitment from him on ONTV.
3125 We haven't talked to the other five television stations yet, because when they say "You mean we can get a family-oriented audience that would really reflect the breadth of our television program?" "Yes." "Okay, we will do contra. Where do we sign." I mean, it was that easy.
3126 I didn't have to send letters of proposal. The deal was done in conversations over the phone and they faxed it through.
3127 I mean, they realized. Isn't that interesting that the secular media realizes the value of this audience? How much moreso to the advertisers and the listeners?
3128 COMMISSIONER GRAUER: That's good news. It's good news for you.
3129 You have a proposal for offering unsold inventory to the other market broadcasters and I wonder if you could elaborate for me a bit on that proposal?
3130 MR. McNABB: Could you just refer me to that page, please?
3131 COMMISSIONER GRAUER: Schedule 18 I think it is. What page is it?
3132 MR. McNABB: AM or FM?
--- Pause / Pause
3133 THE CHAIRPERSON: Was that not a commitment you made, Mr. McNabb? I recall reading that.
3134 MR. McNABB: I didn't catch the fullness of the question. That's why I just wanted to look at it in print.
3135 COMMISSIONER GRAUER: Rather than me go through this here, why don't we get back to it. Even I will have to find it here.
3136 THE CHAIRPERSON: Perhaps, Commissioner Grauer, you can restate the question so that we can get an answer.
3137 COMMISSIONER GRAUER: What it was was: You made a proposal and it was part of -- as I recall, and I can't find it -- of your rationale for why this would in fact not impact other broadcasters and you said that you would offer any unsold inventory to other broadcasters.
3138 Now, we can find it and I can get back to it later, but do you now recall that?
3139 MR. McNABB: Yes.
3140 COMMISSIONER GRAUER: Okay.
3141 MR. McNABB: Yes. That is where we have unilaterally made the offer without trying to seek reciprocity from Michael Caine or Scott Jackson, sort of these being the other broadcasters. Even on Talk 640 we have already told "Focus" and "Insight" agency in Canada, and I have told the principals of the Canadian offices of those Ministries that we will promote their program on other stations.
3142 So that's what I mean when we promote other broadcasters.
3143 So, for example, let's just take "Focus On The Family" and "Insight for Living". I believe Michael Caine has both of them. Talk 640 has both. We will say, for example, "If you are listening to `Focus On The Family'" -- either before or after the program say "Hey, if you want `Focus On The Family' at this time, go here; if you want it at that time, go there."
3144 Because these Ministries can gauge our effect on that, because they are going to see that there is a very definitive pattern they are getting that each station has. When all of a sudden there is a change, who is effecting the change? We are. So we get the credit for it. We get to take a credit for altruism.
3145 COMMISSIONER GRAUER: So you will undertake to promote the programming on the other stations. Is that what you are saying?
3146 MR. McNABB: Yes.
3147 COMMISSIONER GRAUER: Thank you.
3148 You have projected for your FM station $50,000 in SCMO revenue and I'm wondering if you could tell me who you -- what kind of programming you are looking to sell and who are your potential clients?
3149 MR. McNABB: The supply and demand equation for SCMO in Toronto is huge because you only have a couple of opportunities per station to make it happen, for FM stations. As a result, you have a surplus. You have dozens upon dozens of data carriers alone who use that subcarrier frequency to make it happen. So right now you have every subcarrier frequency on every FM station that is willing by their owners to be made available to other parties already committed to right now. The market is saturated. The demand is greater.
3150 So just out of data carriers alone you have a huge number of people looking for a more cost-effective situation.
3151 It's interesting. You will notice that we are proposing two for $50,000 in revenue. Do you know what the average per station is? The average per station for a subcarrier in this city for just one -- a subcarrier on one station, it's $50,000 per. So we said "Okay, let's take two and we will cut it half." Again, we have to be conservative.
3152 COMMISSIONER GRAUER: Do you have anybody in mind or are you --
3153 MR. McNABB: No. In terms of talking with broadcasters they said "Don't even bother going to these people right now. As soon as you have your licence you are going to be able to dictate to them how much you want to charge."
3154 COMMISSIONER GRAUER: Thank you.
3155 Now what I would like to do is to talk a little bit about the programming.
3156 I understand we have the AM and the FM so I guess we are going to need to go through this reasonably carefully.
3157 Perhaps if we could talk first about AM and what I would like to do is talk about -- you know, I know you have proposed over 70 hours of local programming and made a minimum commitment of 45.5 and stated that that will be adhered to rigidly.
3158 I guess what I would like to have is a better understanding of what that means and also what -- at the same time, how much non-local programming spoken word will you have? Where will it come from? What kind of programming will it be?
3159 I know we do have a number of different -- you know, we have the program Ministries and a number of different things. So perhaps you could take me through that. How much would be syndicated?
3160 MR. McNABB: I'm sorry, what was the last sentence?
3161 COMMISSIONER GRAUER: Syndicated. How much would be syndicated?
3162 MR. McNABB: The majority of our talk programming is locally produced as local. The majority of our produced talk programming is local and the majority of the Ministry programming is local.
3163 COMMISSIONER GRAUER: Maybe we could talk about hours. Could we do that?
3164 MR. McNABB: If you refer, Commissioner, to page 600 of Volume 3 on the AM --
3165 COMMISSIONER GRAUER: I may not have page 600 because I don't have all of your applications in their entirety -- which I gather was quite a stack -- with me, so perhaps if you could tell me where -- is it part of a schedule?
3166 MR. McNABB: We put together a chart in our November response to Gary McKimm's letter of October 27.
3167 COMMISSIONER GRAUER: Response to the deficiencies?
3168 MR. McNABB: Correct.
3169 THE CHAIRPERSON: Perhaps, Mr. McNabb, you should focus on the substance of the question, because pagination of what we have may not be identical. There is an exam room pagination, there is your pagination, there is pagination of the information we have. So if you focus on the information, then we will all be speaking about the same thing.
3170 MR. McNABB: Thank you.
3171 Our programming is over 60 per cent Canadian. In the clarifications of October 4, 1999 the 45 hours and 30 minutes of local programming per week as an absolute minimum is a commitment.
3172 We know the more local we are the more success we are going to have. We just thought, "Well, why be tied to certain parameters. Let's just have the flexibility to be programmers and be extremely responsive to whatever the listeners will want in eventuality."
3173 This isn't an opportunity to say "Oh, let's just put on syndicated programming in terms of something that doesn't provide the local perspective we want." We know we have to have local programming to win the day. We have to.
3174 And it has to be a majority or else we are not going to be able to sell as many advertisers. We will just be another WDCX, slap the programs on, call yourself a Christian broadcaster. No local perspective. So in order to win we have to be local.
3175 So the only reason we have said "Well, we will commit to this amount, but here is our whole line-up for this amount", is just so that we always have flexibility.
3176 COMMISSIONER GRAUER: Okay. Now, we are talking about AM, are we, here? Sixty per cent Canadian is what you said, which is of how many hours total?
3177 MR. McNABB: Sixty per cent of 126.
3178 COMMISSIONER GRAUER: I have these all somewhere.
3179 MR. McNABB: Seventy-five, seventy-six hours.
3180 COMMISSIONER GRAUER: But you are only going to -- I guess what I'm trying to understand here is: It's possible, then, that the balance, anything exceeding 45.5, while it will be Canadian, may not be local?
3181 MR. McNABB: No, we have to create local opportunities at every angle. We have to. It's just essential to our success because we have an American programmer across the border offering more of the same. It's the only way we can provide the Canadians a better listening opportunity.
3182 COMMISSIONER GRAUER: Okay, perhaps I could phrase this differently.
3183 Do you envision any Canadian programming which is not local?
3184 MR. McNABB: Yes.
3185 COMMISSIONER GRAUER: Okay. How much would that be and where might it come from and what might it be made up of?
3186 MR. McNABB: Pardon me. As our programming is predominant 60 per cent Canadian and the majority of that 60 per cent, we have anything outside of the local CMA is going to be a minority of our programming, not just our Canadian programming but of our programming overall.
3187 So again, we lead with Canadian, the majority is local and the minority is non-local Canadian.
3188 COMMISSIONER GRAUER: Okay.
3189 Maybe what we could do, then, is talk about I understand you want to be conservative and keep to the minimum. It is a station to serve a local market and so I must say it confused me that you wouldn't be wanting to commit to more local programming.
3190 However, having said that, what will be the nature of your non-Canadian programming and how much will be syndicated and where will it come from?
3191 MR. McNABB: Programs such as "Focus On The Family", "Insight For Living", programs that you will hear on different Canadian radio stations already, programs that because of their Ministries, their non-Canadian Ministries propensity to invest millions of dollars every year in the Canadian broadcast system, has proven itself so often to meet the needs of so many different listeners.
3192 So these are programs that already have a history in Canada, therefore if they are on in small town Saskatchewan how much more impact, how much more spiritual comfort and hope can they offer in the major market of 4.6 million like Toronto.
3193 We haven't spent much time at all, as you can see, focusing on the Americans. The Canadians themselves are so hungry, and the Canadians themselves are so huge.
3194 Just to illustrate the opportunities here in Canada, Pat Francis here, who built a church of 2,500 new members since 1993 and who is on our Board is on television stations and satellites around the globe, and this has only been running seven years. It takes millions of dollars to fund those commitments.
3195 Canadians are doing amazing things. Peter Youngren, who is CTS Sunday afternoons in Vision on Sundays as well, my Pastor out of St. Catharines -- our Pastor out of St. Catharines is on in 27 countries in Europe along. Canadians are doing things that the Canadian media hasn't picked up and recognized.
3196 Tremendously Canadians are spending more money abroad in Ministry programming than foreign programmers are spending here. Isn't that amazing?
3197 So it really shows you when we can provide Canadians with the opportunities that they haven't had before here at home, the money is already there.
3198 COMMISSIONER GRAUER: Thank you.
3199 I have one more question before we break for lunch. I have one more area of questioning, rather, and that is the area of balance in programming.
3200 I know there has been quite an exchange between the Commission and yourself on this matter and I believe you understand our policy, which is that:
"Those who broadcast religious programming have an obligation to offer differing views on matters of general public concern at the same time must expose the audience to different points of view on religion itself." (As read)
3201 I wonder if you could detail your plans in this regard and explain how your programs will reflect the different religious faiths and voices and provide that balance to your listeners?
3202 MR. McNABB: Before I hand things over to Don Millar to speak on that as Operations Manager, Program Director, I think a real telling case for the reality of the success of balanced programming on Christian radio is Neil Boron. American stations aren't tied to balance, but the fact is that they are smart enough to realize that balance builds audience.
3203 When Neil talked about the fact that consistently people of all different faiths would call in -- Canadians of all faiths would call in and there would be friendly, respectful dialogue. That made for good radio, because when you have a diversity of opinion it engages the listener more. The more you engage them the longer they listen. The longer they listen the more commercials they hear, the more advertisers they respond to, and so on.
3204 So from a pure economic model, it works. From a programming model, it increases your listener response rates as well.
3205 So we have a proven model that has had a direct Canadian case study by virtue of the multi-faith callers calling Stateside, and even paying to do so for the years and years that WDCX didn't even have an 800 call. People like balanced programming here in Toronto.
3206 I will let Don expound on that.
3207 MR. MILLAR: Yes, thank you.
3208 Commissioner Grauer, we are especially sensitive to this issue of balance because it has been a matter of misunderstanding over the years, especially regarding religious broadcasters who approached the Commission with an application and you asked them "Where is your balance?" and they say "We are going to have an open-line show" and that's pretty well it without any specific commitments as to what that open-line show shall be consisting of, the mechanisms to control that, as well as other faith groups.
3209 We understand balance to mean not just balance within the Christian community, but also integrating other phases within the municipality or the audience to which they serve.
3210 Specifically AM, we are committing to at least a minimum of 22 hours. That's 35 per cent of our spoken word to balanced programming manifested in Access 740 in the perspectives program.
3211 Regarding with FM, a minimum of 30 per cent or five hours will be devoted to balanced programming as well, utilizing Access 93.5. This is, as we say, a minimum commitment.
3212 We have other mechanisms, mechanisms we have undertaken to understand vis-à-vis the 1993 religious broadcast policy which referenced the 1988 broadcast policy as to mechanism to achieve balance. I think each one of those has been satisfied integrating the programming we have on AM 740 or 93.5, specifically the soap box mechanism which Access 740 or Access 93.5 achieves, searching out alternatives, perspectives program, providing a mechanism for complaints.
3213 Again, we will undertake to broadcast as frequently as can: If there is a difference of opinion, we want to hear that.
3214 I say that is a minimum because it is a minimum. We have letters of commitment from representatives from five major faith groups, one of whom Frank Dimant the Chair of Bnai Brith is eager to, if you will, get in on our programming as well.
3215 These will be facilitators not only a Compliance Committee to address the balance issue, but also will be conduits to documentaries, also will be sought after for opinions, viewpoints. They will be integrated within the body of our programming. We don't look at it as tokenism. We look at is as a necessary adjunct to a successful radio station into such a multicultural cosmopolitan area such as the greater Toronto area.
3216 Notice that in FM it's not an all-music FM application we are making. That might be the easy way out, but we are looking at 20 per cent of spoken word on the FM and again we are addressing the balance issue. It might have been nice to say that it's going to be all music, and we know that music does not inherently have to be balanced, but we recognize that spoken word is an important component of any radio station, whether it be AM or indeed FM.
3217 COMMISSIONER GRAUER: I appreciate your willingness to be responsive and it sounds to me that that is the way your specific programs are designed, which is to be responsive to communities.
3218 With respect to our policy on balance, what I would like to hear is how you might integrate right into your program schedule initiatives on your part to provide that kind of balance. In other words, if it is in these programs that you have talked to me about perhaps you could be quite specific in terms of how a program might work to ensure you have that kind of balance?
3219 MR. MILLAR: Yes. We have enunciated quite specifically in our program schedule, especially when it comes to Access 740, which will run from one o'clock until four o'clock in the afternoon in which other faiths will be sought to -- it's not just an open-line show. We will call out as well to make sure other faith groups are also represented regarding the issues of day. Because issues are universal. They are not specific to any of the Christian faiths.
3220 We might also say that one of those hours on Friday, integrated at one o'clock to two o'clock will be "Faith Forum", which will be specific to other faith matters.
3221 It won't be just -- when we say "faith" we don't mean just the Christian faith. That is how we will deal with three hours a day. That's 15 hours of solid commitment on AM 740 and five hours solid commitment on FM 93.5.
3222 That is in addition to "Perspectives". Again, "Perspectives", as we enunciate it, is different Toronto area faith and multicultural groups will be contacted to provide their viewpoints to help everybody understand each other. That runs two minutes a day, three times daily, seven days a week. That is our minimum commitment.
3223 As to "Israel Today", that is on top of all of this. That is on top of all the other specific -- now, each one who has signed these letters of commitment have an understanding. There is about a four point understanding, that is to be integrated within the programming as well as contribute to the programming, as well as being on part of the Compliance Committee. They have an understanding.
3224 It would be indeed cynical to invite these gentlemen and these ladies to represent their groups and we would proffer nothing save for a presentation to the CRTC. I think we have been specific.
3225 COMMISSIONER GRAUER: No, I understand that. What I'm just trying to make sure is that we really understand your proposal and what you are proposing to do to ensure that it does, you know, meet or is consistent with our policy.
3226 Do you envision, for instance, commissioning any programming and paying a producer that might present another view? I mean, is this envisaged as possibly part of your programming?
3227 MR. MILLAR: Indeed, as was enunciated in 1998 and again in 1993 as the mechanism to achieve balance is the production of a program. No costs would be borne by -- unless they indeed provided a complete program and we would run it unedited or untampered with, but failing their ability to produce it, we would produce it. We have the procedures, we have the facilities in place to produce it at our place. Again, it's up to them to basically facilitate us so we can produce what is good for them, not just for us.
3228 COMMISSIONER GRAUER: Thank you.
3229 MR. McNABB: If I may add, Commissioner, just to further add to that position, we took some very significant time in talking with the different faith groups other than those of Christian. The Buddhists, the Hindus, the Jews, the Moslems and Sikhs comprise 98.5 per cent of people of other faiths here in Toronto. StatsCan designation, hard and fast. We have them all and we are delivering to them all.
3230 We talked not with one representation, we went deep and we talked to people and said "What do you want? What do you want? What do you want?" It was like a focus group type of situation where -- and I took it upon myself to specifically do this because we know that there is a greater cultural sensitivity in this city.
3231 So we wanted to make sure if we were going to try something, attempt, let's deliver it and let's go above and beyond the call of duty and let's have some really good programming.
3232 Listen to the extent that these people are committing themselves and you can tell by virtue of this that we are the ones providing the production for them. They are providing their thoughts and speaking their hearts on their issues and perspectives of faith.
3233 Here is a letter from Chandra Khanan(ph). Now, these were filed, by the way, against Johnny Lombardi's response in January, because he said "Ah, it's not in the public interest." "Oh yes? Want to bet?" Talk about covering all faith groups.
3234 So what we have said -- Chandra here -- and this is echoed with Barbara Sedeki(ph) of the Muslim Association and, oh, my goodness, Suresh Bhalla with the Sikhs of Toronto, et cetera, et cetera, et cetera.
"I am willing to:
(a) appear as a guest on your programming on a regular based if called on by the radio station and/or appear as a guest in your documentaries, feature reports on our faith.
(b) participate by way of conference calls, average of 15 minutes once a week in topic discussions for different multi-faith open-line shows and documentary feature report ideas." (As read)
3235 We are not just saying, "Yes, yes, give us some programming." We are saying "Let's talk about it. Let's make some real kicking programming here that everybody is going to enjoy, people from your faith group and ours. It is going to be listenable stuff."
"(c) provide you with recommendations of other people in my faith group and abdicate to others to participate in the production of your multi-faith programming." (As read)
3236 We have a group. Let's make it bigger. More ideas, more input, what, better programming. Better programming, more listeners. More listeners, more advertisers. More advertisers, more money.
3237 MR. MILLAR: We have also drawn inspiration from the fact we have seen how, let's say CTS has integrated faith programs or balance programs in their day-to-day programming. Good programming is good programming and I think that sometimes there is a suspicion that if a Christian broadcaster comes forward and they are talking about other faith programming they are doing it because basically they have been mandated by policy.
3238 We feel that good programming is good programming and whether you are Christian or the other five faith groups, it's just good to watch, it's good to listen to and we ignore it at our peril.
3239 MR. McNABB: If I may add to that? Is that okay?
3240 COMMISSIONER GRAUER: Yes.
3241 MR. McNABB: Thank you.
3242 Looking to point (d) here:
"I am willing to become a member of your station Compliance Committee..." (As read)
3243 We didn't say editorial board. No, we said Compliance Committee. We want to comply with the heart behind all this, you see.
"...whereby we would meet monthly..." (As read)
3244 Monthly. Not every quarter, not half a year, but monthly:
"...and provide observations of your current and your proposed programming..." (As read)
3245 Both Christian and non-Christian:
"...and make recommendations to your Board of Directors to ensure that the stations offer opportunities for those views of different faiths to be expressed such that these programs meet CRTC Guidelines in terms of fairness and balance.
I understand that the Compliance Committee is to be comprised of three Christians and people of three other faiths as chosen by you." (As read)
3246 We have the four letters from the Hindus, the Sikhs, the Muslims and the Buddhists. Frank has given his verbal testimony of participation in all this. So we have five people willing to be on a three person committee. Supply exceeds demand. We are in very, very good shape to go above and beyond the call of duty in terms of balance.
3247 COMMISSIONER GRAUER: Thank you.
3248 I think, Madam Chair, if we could break now and we will do Canadian talent development and ownership after lunch.
3249 THE CHAIRPERSON: Thank you, Commissioner Grauer.
3250 I just have one question before we break for lunch.
3251 Mr. McNabb, do you see a difference between the achievement of balance by giving air time to various faith groups and even perhaps having multi-faith programs and the requirement, which is a requirement of every broadcaster to achieve balance in your programming, the programming that you generate?
3252 Do you see a difference between the achievement of balance by giving access to other faith groups because it is a religious station and the requirement of dealing with issues of public concern that may or may not be related to a difference in faith group but is simply an issue of public concern?
3253 MR. McNABB: Our responsibilities are opportunities in both, not only the specific multi-faith programming but the opportunities for balance within the context of our regular programming.
3254 For example, take a look at -- let's see here, "Prospectus", Access 740. Pardon me.
3255 Okay. Access 740. "Capital Connection", "Relationship Radio", "Women of the Word", "Men Of Integrity", "More Than Overcomers", the "Power Hour", "Reach Out" and "Heartbeat", these are all call-in programs where you can have people of different faiths calling in. Well, yes, we can have them, but what are you going to do to ensure that?
3256 Well, again, we are interested in expanding the pie. Frank Dimant, as you can see, is already committed to promoting our programming in his newspaper. The "Times of India" here in Toronto has already said "Hey, get in touch with us. I'm sorry, there are only 24 hours a day, we have a hearing coming up, but get in touch with us so that we would be willing to -- we would be willing to promote with you on this." That's awesome.
3257 MR. MILLAR: Madam Chair, we appreciate the question.
3258 It's not our intent, if you will, to take a chunk of our balanced alternative programming and put it over there. It's isolated from our day-to-day programming as indicated by the letters from these gentlemen as well as the other program. We plan on integrating it as a matter of policy and principle in our programming throughout the day.
3259 THE CHAIRPERSON: Thank you.
3260 We will now break until 2:00. We will resume at 2:00.
3261 Alors nous reviendrons à 2 heures.
--- Upon recessing at 1220 / Suspension à 1220
--- Upon resuming at 1405 / Reprise à 1405
3262 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.
3263 Welcome back, Mr. McNabb. We will follow through with the rest of our questioning.
3264 Commissioner Grauer, please.
3265 COMMISSIONER GRAUER: Thank you.
3266 What I would like to do is just go back briefly to the area of location programming just to make sure I understand.
3267 I wonder if you could tell me -- what I'm not clear on is how much of what you might call the mundane, day-to-day dailyness of weather, news, sports, the kind of local programming that is directly related to day-to-day life in the community, that kind of thing, that is produced by you not for resale, not for anything, that you will be programming?
3268 MR. MILLAR: I assume we are anticipating surveillance-type program, music, information, public service, time, temperature, weather, that type of programming, outside of the half hour programs or the programs we have talked about.
3269 We are assuming a drive-type show in the morning, probably from about 7:00 a.m. until 9:00 a.m. and again a drive in the afternoon could be 3:30 to 5:30 of a traditional-type, rolling-type surveillance program.
3270 COMMISSIONER GRAUER: Would you be doing news, weather, sports regularly throughout the day?
3271 MR. MILLAR: Yes, very much so. That is on -- we are talking AM, FM being a different matter.
3272 In fact, we have two newsmen that have been budgeted for in AM, so we would definitely be covering those issues around town on a full-time basis. Understanding too, because of the nature of programming, the newscasts would probably be about two minutes, two and-a-half minutes in order to accommodate some of the half hour programs, but we take very seriously the fact that we have to be germane to the audience, that means time, temperature, weather, public service and personality.
3273 COMMISSIONER GRAUER: What I don't have a really good sense of is what this station is going to sound like compared to what is there in terms of how much of your programming, aside from these indicators of weather, news, sports, is locally produced by your station, station-produced for the local audience and how much is going to be sold, how much you produce for -- how much is produced for your own market not to be -- you are not purchasing and you are not selling.
3274 MR. MILLAR: The locally produced spoken word and music programs, locally produced is 72 hours. These are not supplied programs, these are produced by us. Many of the programs will be call-in shows, "Men Of Integrity" -- and the list is already delineated, but "Relationship Radio", "Power Hour", "Heartbeat", those types of programs are all being done in-house, in most cases live.
3275 COMMISSIONER GRAUER: Specifically for local consumption, not to be sold to other markets or anything else?
3276 MR. MILLAR: No, just for us.
3277 COMMISSIONER GRAUER: All right. Thank you.
3278 MR. MILLAR: Thank you.
3279 COMMISSIONER GRAUER: If we could go to section 9(1), the new AM and FM combined, your proforma statement of revenues and expenses.
--- Pause / Pause
3280 COMMISSIONER GRAUER: Do you have that? You have it?
3281 If we look at your total of your seven year revenues projected, which national time sales are $9,269,584 -- the total at the far right. Those are national sales. Local is $26,539,000.
3282 Of those totals can you tell me how much is more traditional, conventional advertising revenues as would exist in mainstream stations and how much is sort of sold or brokered time?
3283 MR. McNABB: Sure. The AM first.
3284 COMMISSIONER GRAUER: Do you have the same chart as I do?
3285 MR. McNABB: Oh yes, we have the combined AM/FM proforma.
3286 COMMISSIONER GRAUER: Okay.
3287 MR. McNABB: So what we need to do, if I understand correctly, Commissioner, we break out national into a number of sub-components.
3288 Would you like us to offer you those components?
3289 COMMISSIONER GRAUER: Yes, although my primary interest is what is, you know, the conventional advertising as we understand it, traditional, and how much is brokered time or sold time.
3290 I know you have a number of different categories. If you could do it for me it would be much easier to just have it in two groups.
3291 MR. McNABB: If I understand correctly, you want to know the difference between time in which we are selling commercials and time in which we are selling programs?
3292 COMMISSIONER GRAUER: I would like to know the revenues, not the times. The dollar figures as opposed to the hours, correct.
3293 MR. McNABB: Yes, exactly.
3294 COMMISSIONER GRAUER: Yes.
3295 MR. McNABB: Yes.
3296 I don't know if Lucy breaks it out in a combined AM/FM the way the sheets go or if it was just added individually and put together for this sheet.
3297 COMMISSIONER GRAUER: If you have the information and we could do AM and then FM.
3298 MR. McNABB: Sure.
3299 COMMISSIONER GRAUER: I think we could do that, as long as we -- I don't want to get into too many categories. I am really interested in traditional sort of conventional sales as opposed to brokered.
3300 MR. McNABB: We have it.
3301 COMMISSIONER GRAUER: Great.
3302 MS HALLFORD: What we have for traditional agency commercials, direct commercials, those types of things, in year one it is $1 million combined. One million dollars.
3303 So in year one, out of $2.6 million combined -- I'm sorry, $3.6 --
3304 COMMISSIONER GRAUER: Of the total.
3305 MS HALLFORD: Of the total revenue of $4,193,000. Is that the number you have for revenue?
3306 COMMISSIONER GRAUER: Oh, yes.
3307 MS HALLFORD: We have combined agency commercial, direct commercial, that type of thing, as $1,030,000. So $1,030,000 out of $4,193,000 come from what we would call traditional advertising revenues.
--- Pause / Pause
3308 MS HALLFORD: That's correct.
3309 COMMISSIONER GRAUER: Thank you.
3310 So I am assuming that that sort of basic percentage would carry through the seven years?
3311 MS HALLFORD: Yes.
3312 COMMISSIONER GRAUER: The breakdown I would be.
3313 MS HALLFORD: Then also, the $1,100,000 represents local sponsorship where it is not direct -- it is not programs but it is sponsorship of, for example, an hour of music.
3314 COMMISSIONER GRAUER: Right. What I am trying to understand with respect to these revenues is how much is advertising sales, as we understand them, and how much is the other kind of revenue, whether it is sponsorship or brokered time or program Ministry time. I'm just --
3315 MR. McNABB: We will just read you the list on the individual breakout.
3316 For AM, national program revenue in year one --
3317 COMMISSIONER GRAUER: AM?
3318 MR. McNABB: National program revenue, year one, $1 million.
3319 COMMISSIONER GRAUER: What does "national program revenue mean"?
3320 MR. McNABB: The "Insights for Living", the World Impact Ministries.
3321 COMMISSIONER GRAUER: Okay.
3322 MR. McNABB: Yes, that is for AM.
3323 On AM continued, local program revenue is a total of $664,000, bringing our operating -- you know, commercial or program revenue to a total of $1.664 million.
3324 As you many have noted, when we combined our figures we decided "Let's pretend we don't sell one commercial on FM in a combined operation. We will just sell commercials on the AM." Again, just trying to be extremely conservative here.
3325 So the FM local program sponsorships would be a total of $1.1 million. This is what we call the sponsorship, an hour of our own local originated in-studio time.
3326 Then we get into some categories of revenue that we would sell as a combined effort: agency commercial, $50,000; direct commercials, owner managed businesses, car dealers, flower shops, primarily owned by --
3327 COMMISSIONER GRAUER: So those direct commercials would be in the form of a commercial that you would get from an agency, only it would be directly solicited by you.
3328 MR. McNABB: No. "I am Frank Jones of Frank Jones Menswear. Come on down."
3329 COMMISSIONER GRAUER: Pardon me?
3330 MR. McNABB: Those types of commercials, direct commercials. "Hi, I am Frank Jones of Frank Jones Menswear. Come on down. We have a sale on."
3331 COMMISSIONER GRAUER: And they are directly solicited by the station to the business owner.
3332 MR. McNABB: The sales people.
3333 COMMISSIONER GRAUER: And how much were they again?
3334 MR. McNABB: The direct commercials are $875,600; the Canadian Talent Development revenue, $54,000. And that comes from the sale of CDs and --
3335 COMMISSIONER GRAUER: I do have some questions on Canadian Talent Development later, so maybe we can get into that a bit.
3336 MR. McNABB: Sure. And our SCMO revenue, $50,000. That brings up what we would call a combined sales efforts of the third sub-total of $1,029,600.
3337 COMMISSIONER GRAUER: I see. What you have given me then is the breakdown of the commercial revenue; right?
3338 MR. McNABB: And then our contract revenue is $400,000.
3339 COMMISSIONER GRAUER: Right.
3340 MR. McNABB: So you will notice the total of all these figures would corroborate the total revenue in Year 1 of $4.936 million.
3341 COMMISSIONER GRAUER: Thank you. With respect to Canadian Talent Development, I have a couple of questions here. Just so I am clear -- and I think we talked a bit about it this morning -- the total combined, if you were to get the AM and the FM, of Canadian Talent Development, would be $878,000.
3342 MR. McNABB: Correct.
3343 COMMISSIONER GRAUER: So it is $436,668 each.
3344 MR. McNABB: Correct.
3345 COMMISSIONER GRAUER: You talk about an annual allocation of $54,000 of direct Canadian Talent Development to FACTOR in the Gospel Music Associations. With respect to that, how much would go to FACTOR? Could you provide some details on that $54,000?
3346 MR. McNABB: Yes. In the January response to Brian Chatar of CIRPA I detailed those expenditures, such that we take $20,000 off the top each year for the production of Toronto Praise the Lord, the CD compilation of Toronto and area Christian musical talent.
3347 Those costs include about 5 per cent a year, just like our Canadian Talent Development allocation increases: 5 per cent a year.
3348 We take the remainder and we divide by three --
3349 COMMISSIONER GRAUER: The remainder of?
3350 MR. McNABB: Yes. The remainder of $34,000 in the Year 1 scenario. One-third of that would go to FACTOR, because FACTOR has shown a track record in developing funding. Another third would go to the Canadian Gospel Music Association, which has shown a tremendous track record in endeavouring to do as many monthly events as they can and culminating in an annual award show that is broadcast on television beginning this year out of the CTS studio. Our funding there is to help them stage more monthly events so that they will be 12 months back to back.
3351 As a result, we will be able to take title sponsorship of that too.
3352 Third -- and not to be confused with CGMA -- we have the Gospel Music Association Canada. Where the CGMA is more of an event talent showcase each month, culminating in an annual award show, the Gospel Music Association Canada, which is a subsidiary or an affiliate of Gospel Music Association International in Nashville, has a more of an educational focus.
3353 They hold four quarterly learning events where they bring in the world's top record producers, song writers, performing artists, and conduct a university type of environment four times a year.
3354 I think the first one this year is going to be in April.
3355 COMMISSIONER GRAUER: So your contribution to FACTOR annually would be $12,000 from each, approximately, if it is a third of $30,000. Is that what we are talking about?
3356 MR. McNABB: Just shy, yes, of $12,000. And that is in a single station licence scenario, Year 1 only. And everything continues to grow 5 per cent.
3357 COMMISSIONER GRAUER: Thank you.
3358 We talked about the $54,000. Could you elaborate then on all of your Canadian Talent Development initiatives, direct and indirect. I think you said you would be happy to do that at the hearing, didn't you?
--- Pause / Pause
3359 MR. McNABB: Our Canadian Talent Development initiative will address a single station scenario and highlight what would happen in a dual licence scenario.
3360 We are proposing to devote in either case over 200 per cent of the required funds to eligible third parties over the seven years of our licence. For example, in Year 1 that is $54,000 instead of the required $27,000, and that amount increases 5 per cent a year.
3361 Over the course of the seven-year licence in a single station scenario that becomes, with 200 per cent commitment, a $439,000 cold hard cash contribution on each station, for a total of $878,000 in a dual licence scenario.
3362 As far as AM-740 is concerned, although primarily a Christian talk and teach station with some music programs, and allocating $439,000 in real cold hard cash to the development of Canadian Christian talent, we also have 2,184 specific weekly features -- that is 42 per week -- called The Canadians, where we interview, we play, and we promote Canadian artists, their songs, their engagements and the sale of their recordings in and around Toronto.
3363 In addition, we have allocated a minimum of 10,192 listings on 1,456 update features on AM-740. That is 28 updates per week. That promotes a minimum of seven Christian music performances or new Christian CD music releases per update.
3364 For FM 93.5 we have allocated a minimum -- and this is annually -- 26,208 listings on 6,552 updates. That is 126 updates -- that is one every hour -- with a minimum of four of these music events or notices per feature.
3365 Given the fact that there are at least 12 to 15 Saturday night concerts per week in Toronto alone, separate and apart from any other nights, you get an idea of how easy it is to fill updates with all the happenings in the Christian calendar.
3366 FM-93.5 also has 2,184 features of The Canadians. That is 42 per week.
3367 The interesting thing is that whether it be $439,000 per station or $878,000 combined, in either case it is an unprecedented amount being devoted to the development of Christian music talent in Canada. It is not being dumped into an existing music industry genre that has critical mass across Canada or lots of music television airplay. This is money being invested to develop the infrastructure and the critical mass for the radio format that offers the most viable, distinct and new and refreshing radio alternative in Toronto, as well as more markets than any other format across Canada. The Christian market can prove itself viable to markets small and large. Witness the number of low power FMs that are proliferating with Christian music.
3368 The point is that it is proven that more Christian licences have been awarded in markets small and large over the past five years than any other format category. That really gives us something to talk about on the air, because there is a lot of Canadian talent that can be raised up in those areas.
3369 To add to that, our video talked about The Million Dollar Miracle or The $600,000 Solution.
3370 The $600,000 Solution in either single station scenario is the $439,000 in cold hard cash, plus the $175,000 in studio time that we have already got a letter of commitment for from Canada Christian College's studio called the Upper Room here in Toronto. That was filed in the response to Brian Chater at CIRPA.
3371 That is where we get the $439,000 in The $600,000 Solution.
3372 In a combined dual licence scenario the $878,000 in cold hard cash, plus the $175,000, creates The Million Dollar Miracle.
3373 That being said, we have a monthly station name or names in a dual licence scenario. We have Station Presents or, in the dual licence, it is Station A and Station B Presents concerts. We have already got these planned monthly. Again, the more you do in the community, the more you get back. Sowing and reaping.
3374 These concerts, featuring Canadian talent, are having 150 commercials put behind them each month, creating an additional 1,800 full 30-second commercials per station in non-direct promotion. That is concert promotion alone. It is promotion for a big audience with a big demand, as well evidenced on the video.
3375 Take a look at the seven-point plan here to build this industry.
3376 We know that Toronto is a Christian music hotbed, representing 14.6, per Canada's population, 19 per cent of all Christian music sales in Canada. So it indexes a lot higher per sales than the population, and that is without Christian Music Radio. These people are hungry.
3377 It is the largest untapped talent pool in Canada. So we take a look at the fact that Christian talk and teaching listeners buy music; Christian music listeners buy music. So regardless of the station's format, we can promote new releases, focusing on Canadian selection due to the obvious relevance for our Canadian listeners.
3378 The whole idea here is that a talk and/or a music station in the strongest Christian music market in this country can serve as a feeder system to strengthen the whole industry in Canada: churches, artists, producers, and stations, because it gives them fresh content to put on the air.
3379 Worship is central to the Christian experience. The more we promote local Christian talent and use it as a platform to develop more Canadian talent and then share this talent with other churches and Canadian Christian radio stations, the more everyone benefits. The industry becomes stronger. Again more sowing, more reaping.
3380 What this does is allow artists to develop and that, in turn, enables more producers to focus and build on their craft. There are a lot of part-time producers out there. What this does -- because this money is funding the production of music for these artists; they become better known for producing more and greater levels of quality of Canadian Christian music.
3381 We have talked about the beneficiaries, FACTOR, CGMA, GMAC. Take a look at the seven-point plan.
3382 Bringing the best talent together in the Toronto Praise the Lord CD -- this is a 20-song compact disc featuring the best talent that 4,500 area churches in the Toronto area have to offer, produced by our station and styled to range from the genres of music that you saw played. It covers the whole gamut.
3383 That includes a contemporary adult selections to rhythm and blues to full scale gospel music, contemporary inspiration worship music, to the rock oriented Christian music to Christian country.
3384 What we are going to do is we are going to eliminate the bottleneck of distribution that has plagued so many artists of any different category of music in which they make their profession. CMC Distributions, which hold 70 per cent of the market share in Canada in terms of the sales of Christian music in stores, from Victoria to St. John's, has already guaranteed to distribute this CD to music stores, Christian and non-Christian, right across the Dominion.
3385 We are growing an industry here. We realize that some people are saying we are doing 35 per cent Cancom. Well, we are growing an industry. This is something new that is bringing diversity.
3386 We notice that the regulations say 10 per cent, but we know that with our initiative we can start off bang and program 15 per cent. Why is that -- 50 per cent more than required? Why are we doing that? To score Brownie points? No. It just makes sense.
3387 There are eight genres. We can cherry-pick right across the genres and as a result, airing 15 percent is a pretty easy thing to do. So it makes good strategic as opposed to political sense.
3388 Should we be granted a licence in either AM 740 or FM 93.5, or both, our daily feature of The Canadians we will be highlighting the best of the CD and the works of other Christian artists being raised up from our own initiatives. And although AM 740 is proposed primarily as an inspirational Christian talk and teaching station, we will be broadcasting locally produced music teachers and programs with tons of announcements, because promotion, not just air play, drives music sales too and grows an industry because it sends people out to the concerts. And the artists sell more CDs as a result.
3389 Should we be granted FM 93.5, our Christian music station will be able to put the best of Canadian Christian music into regular rotation, 24 hours a day. And our daily feature of The Canadians, as described before, will highlight the best in Canadian Christian music, the releases, the appearances, and so on.
3390 Our fourth point is to stimulate Canadian bookings of artists. Via on-air promotion and contact with other Christian radio licensees, we plan to stimulate multiple bookings in churches and concert venues, creating a tour situation, if you will, to say: Hey, we have so-and-so appearing in Toronto. Do you want them in your town? Why don't you promote them, pick up on what they are doing? They are already here in Ontario, an artist from B.C. Why don't you grab them while they are hot? Scott Jackson, what do you think? I will pass or I will take it. It's his choice.
3391 In that way Canadian Christian artists can put their God given talent to use in more venues, and they can make it more of a fulltime profession than a part-time passion.
3392 The fifth point is to give Canadians U.S.A. exposure on what is going on here. Well, simply put, we know the size of the American market to the south. We know that it is good when Canadians export. That brings more money back home.
3393 As the American market is about ten times the size of Canada, Christian American exposure will also strengthen our Canadians' careers and give them more economic strength to build their repertoire.
3394 Morningstar Radio, one of Salem's subsidiaries, is the world's largest broadcaster of Christian music. Morningstar has several formats. On just the adult contemporary format alone, they broadcast 12,000 hours a week on 115 affiliates, creating close to 12 million hours tuned to Morningstar's adult contemporary Christian programming each and every week: 12 million hours tuned. That is big stuff.
3395 What they have done -- Morningstar GM Michael Miller said: "I'll tell you what. You send me the best of what you have -- i.e., Toronto Praise the Lord. I am going to listen to the songs. What we will do is the songs that fit each of the formats -- and we can pretty well cover most of the genres with what Morningstar delivers -- we are going to play on American radio."
3396 So we are creating an export strategy, not just a domestic strategy here. We are trying to go again above and beyond the call of duty. What it does is create really an unprecedented gateway for Canadian Christian artists in the world's largest market and distribution system of the fastest growing style of music in both the U.S. and Canada.
3397 We come to the sixth point of the Canadian Talent Development Plan, where we look to stimulate more recording and more distribution for individual artists beyond the Toronto Praise the Lord CD. These combined initiatives that we have talked about are going to create several things. They are going to stimulate more performance due to more exposure.
3398 More exposure and increased economic benefits to these artists are going to necessitate them to return to the studio again and again, because they are saying: "I am on tour. I have to come up with fresh material." And because they return again and again and because we are undergirding them with The Million Dollar Miracle or The $600,000 Solution, this allows them to further and develop more Canadian Christian releases with more Canadian Christian artists than any other format might be able to do.
3399 So we take a look at the seventh point, and this comes back to our $439,000, 200 percent commitment with the free studio time, and the $600,000 solution, or the $878,000 dual licence commitment with the $175,000 in studio time, which we have already secured. Again, that is filed in the response to the CIRPA intervention.
3400 Creating The Million Dollar Miracle, it is very easy to expect that our moneys are going directly to, by virtue of FACTOR, CGMA, GMAC, to fund many parts of these initiatives as we are partnering with these recognized organizations, willing to capitalize on the one style of music with the greatest untapped potential of talent in 20,000 churches in Canada today.
3401 That is our Canadian Talent Development initiative.
3402 COMMISSIONER GRAUER: Thank you. I would like to digress for a minute.
3403 I don't know if you are familiar with our decision on London and Victoria when we outlined some of the criteria for awarding new FM licences. We said we were going to look at a number of criteria, of which Canadian Talent Development was an important aspect of any application.
3404 If I understand you correctly -- and please correct me, because this is the time to get the record straight -- you have committed $54,000 for direct Canadian Talent Development contributions, for which you show an offsetting revenue for that money in your financial statements.
3405 Then you have an additional sum of -- I am not quite sure how much. What is the value of the indirect, if we could call them that, the Canadian Talent Development expenditures which you have just outlined to me?
3406 MR. McNABB: I did not assign a dollar value to those. If you take the commercials that we talked about alone, in a single station scenario, $1,800, our average commercial rate is $50; $90,000 per station in indirect in terms of just concert commercials that we are sponsoring.
3407 COMMISSIONER GRAUER: I understand that. What I am saying is that when we look at all of the applicants, your Canadian Talent Development commitment is $54,000 and expenditures for which you have offsetting revenues is $54,000. So it is kind of a wash. Is that correct?
3408 MR. McNABB: Every opportunity a radio station has to expend dollars can be also an opportunity to create revenues. If there was no opportunity to generate one cent of Canadian Talent Development Revenue, we are still totally committed to $54,000 per year, increasing 5 per cent a year, on each radio station.
3409 COMMISSIONER GRAUER: Thank you.
3410 What I would like to do now is explore some of the ownership and financing areas.
3411 My first question for you is: It is not evident to me that you have any personal direct financial investment in this application. Do I understand that correctly?
3412 MR. McNABB: Correct.
3413 COMMISSIONER GRAUER: It is also not evident from the information filed with us that you have any other source of equity or debt financing other than Salem. Is that correct?
3414 MR. McNABB: Correct. Salem is our banker, and we wanted to take an approach whereby we would not be encumbered by a demand loan, but we could have tremendous financial resources. If we are focused on the business of programming and selling, we can do better rather than being distracted by restrictive covenants in a loan situation.
3415 We have created a situation whereby Salem is providing $1.35 million, U.S., which is also -- we didn't even talk about this, but just to let you know that we are covering ourselves here, and Gary Jessop was witness to the fact. Salem also is bound to adjust for the difference in the exchange rate. The Canadian dollar has been surging ahead. We talked about it, and Salem is committed to saying: Hey, whatever the exchange rate, we are going to commit that money.
3416 I know that Joe will validate that, because Joe participated in that discussion with Stu Epperson, Gary and me.
3417 In the dual licence scenario, they have also committed another $250,000. Again, all dollars here are U.S.
3418 COMMISSIONER GRAUER: In what scenario was that?
3419 MR. McNABB: In the dual licence scenario.
3420 In a single licence scenario, $1.35 million U.S., plus whatever difference to make up variances in the exchange rate; plus $250,000.
3421 I'm sorry, I have been reminded by our Chief Financial Officer that I stand corrected. It is $1.1 million, plus the $250,000; then adjusted.
3422 So our total amount from Salem is $1.3 million. Sorry about that.
3423 COMMISSIONER GRAUER: Maybe what you could do is take me through -- you have a first draw and a second draw. Maybe you could take me through how the financing works at the bank, the Bank of Salem.
3424 MR. JESSOP: The first draw, which has already been taken up, was meant to provide financial support for the licence process. The way it works for draw one and draw two -- and it is meant for start-up costs -- is that Salem will fund on the basis of the schedule and the agreement attached. The station has to pay it back within three years. It is interest only for the first 24 months and then interest and principal for the final 12 months.
3425 COMMISSIONER GRAUER: With respect to the agreement between yourself and Salem, could you explain to me how and when and the likelihood of a banking arrangement or you could trigger the option.
3426 How and when might that occur?
3427 MR. McNABB: I think that would occur very quickly because of the fact that Salem has seen in their own experiences the relatively quick success of Christian radio stations in either format to cash flow positively, right from the word go, because of the advance selling that we are doing.
3428 They would want to convert quickly, as soon as we approach our targets. This way it allows them to dip their toe in the water and fully commit once they see that the plan is actually happening. That way they can enjoy dividends.
3429 COMMISSIONER GRAUER: So you are looking to being a partner with Salem relatively quickly, relatively soon, should you get the licence.
3430 MR. McNABB: I would be honoured to. They bring an unparalleled depth of expertise in any one format than most Canadian broadcasters bring in, in aggregate, amongst all formats. That is an incredible depth and it is a great resource. I would like to be able to draw on that expertise.
3431 COMMISSIONER GRAUER: Could you then tell me -- I am sure that you have done a fair amount of thinking about, and perhaps talking in discussions, about board representation and matters like that. Perhaps you could elaborate a bit for me on those plans.
3432 MR. McNABB: Sure. Board representation; correct?
3433 Five directors shall be nominated to the Board of Directors. One non-Canadian is allowed. That one non-Canadian is Stu Epperson, Chairman of Salem Communications.
3434 The other directors on the board at Pat Francis, who founded one of the fastest growing churches in Canada and one of the largest broadcast ministries in this country, in terms of not only what they are doing here at home but what they are doing around the world. So she brings an unparalleled level of business and communications expertise, as well as ministry perspective.
3435 Then there is me.
3436 We also have Peter Youngren, who is the President of World Impact Ministries and my pastor from St. Catharines. To show you a bit about what Canadians are doing, not just at home but abroad, Peter ministers to more people in a single service in Eastern Europe and Asia as Billy Graham: 200,000, 250,000, 300,000 in one stadium at a time. He is a very astute businessman, and he has a heart for the gospel to minister to people and to provide spiritual comfort to them. And because he is a very good steward, he has been able to do this right around the world. So he brings an incredible level of ministry perspective and business perspective.
3437 We have one more left to nominate. I want to see who we might be able to find. This person will be a Canadian.
3438 We purposely did not rush just to fill it with friends who have good levels of expertise. We want people who have exemplary records as being the best in their respective field. I think that only makes the station stronger.
3439 COMMISSIONER GRAUER: Are these board members for your holding company or for the licensed company?
3440 MR. McNABB: One and the same.
3441 COMMISSIONER GRAUER: I wonder if you could submit the list to us of the board members you have so far -- not right this minute. You can have your water. The list of the directors that you have named.
3442 MR. McNABB: I will do that following the conclusion of these proceedings.
3443 COMMISSIONER GRAUER: Do you have a draft unanimous shareholder's agreement?
3444 MR. McNABB: Yes, we do. That was filed with the Commission.
3445 COMMISSIONER GRAUER: It was filed with us?
3446 MR. McNABB: In the October 4th --
3447 MR. JESSOP: No. Just to correct Mr. McNabb, there was no shareholder's agreement in place, and there are no plans for a shareholder's agreement.
3448 COMMISSIONER GRAUER: Okay. There are no plans for a shareholder's agreement.
3449 MR. JESSOP: No.
3450 COMMISSIONER GRAUER: Have you considered the issue of a right of veto; like not giving Salem a right of veto? Is that something that has been discussed between you?
3451 MR. McNABB: Yes, we have. When Ed Atsinger, President of Salem, and I first met five years ago I said: "Listen, I want to do in Canada what you guys have done in the States. But I want to do it with a Canadian approach. I want to do it with tremendous amounts of localized programming. But I want to run my own show. It is more fun that way."
3452 There were a couple of invitations to go work and I said: "No thanks. I want to stay here and I want to do it right here at home."
3453 So the issue of control was a pretty big one with me. I think when you are a type A personality, high D driver, you would rather be driving than be driven. So Salem was wonderful in accepting my desires to be able to put together my own team and run my own show up here.
3454 COMMISSIONER GRAUER: Are you then telling me that there is no -- would you accept, should we approve your applications, that there be no right of veto given to Salem?
3455 MR. McNABB: In a heartbeat.
3456 COMMISSIONER GRAUER: Thank you.
3457 Have you had any discussions with them if you were to decide to sell? Is there any kind of agreement? Are there any informal or formal agreements with Salem that we would not have?
3458 Have you had discussions with them if you chose to sell or if something aspired that such that it was necessary for you to sell? Are there any restrictions on who you might sell to?
3459 MR. McNABB: There are no restrictions whatsoever.
3460 By the way, Commissioner, I might add that I am not going to sell. We have seen the wonderful situation here in Toronto --
3461 COMMISSIONER GRAUER: I believe you would not sell, but sometimes life does not always go as we planned. That may be something you didn't plan to do.
3462 Why is the purchase price fixed at eight times EBITDA of the licence company? Does this reflect the ratio of the industry for a similar station?
3463 MR. McNABB: It is a reasonably fair estimate of value.
3464 COMMISSIONER GRAUER: Do you have any formal or informal programming arrangements with Salem or with respect to Salem's access to your programming schedule?
3465 MR. McNABB: They are welcome to sell different ministries. But they haven't; I have been out doing it.
3466 COMMISSIONER GRAUER: Pardon me?
3467 MR. McNABB: As you will notice, we have a sales agreement where they could sell only if I approve the sale of that program. The total veto rests with me. That is in the filing that we submitted in the November response to Gary McKimm's letter of October 27th.
3468 COMMISSIONER GRAUER: I understand that. I guess what I am asking is: Have you had informal discussions with them or any informal or formal arrangements with respect to purchasing programming from Salem?
3469 MR. McNABB: I do not plan to purchase any programming from Salem, the reason being that there are only 24 hours in a day and we have it planned out with the ministries that I can sell. Therefore, I don't have to pay anybody else commission. That saves some good money.
3470 I want to have the majority of our programming being Canadian and local; the majority of that local. So as a result, I have no room, nor desire, to buy any of Salem's programming, as good as it is. It has an American perspective. We are in Canada. It is as simple as that.
3471 COMMISSIONER GRAUER: When we spoke earlier about programming, if my memory serves me -- and it may not correctly -- you said your programming was going to be 60 per cent Canadian. Where would that other 40 percent come from?
3472 MR. McNABB: That 40 percent would come from ministries that you would find currently buying time on Canadian radio stations coast to coast: Insight for Living, the Focus on the Families, the Haven of Rest, and so on.
3473 COMMISSIONER GRAUER: So that would not be Salem programming?
3474 MR. McNABB: No, it would not. These are programs that are produced by individual ministries with individual causes.
3475 COMMISSIONER GRAUER: Thank you.
--- Pause / Pause
3476 MR. McNABB: Lucy Hallford suggests that I clarify the point that even though we have sales agreement with Salem, as filed in the November response to Gary McKimm's October 27th letter, I exercise total veto. So if they say "Hey, we've got XYZ Ministries on, I am saying hey, I have no room for it."
3477 That initiative is dead in the water, and our programming remains the same: predominantly Canadian, predominantly local.
3478 COMMISSIONER GRAUER: I am not sure I completely understood.
3479 MR. McNABB: We have a sales agreement with Salem. And if they have a program that I don't want or I don't have room for, I have the total veto.
3480 She thought it would be good to make it known that it is on paper, signed by both parties, that I hold the veto.
3481 COMMISSIONER GRAUER: Your agreement with Salem -- just so I am clear -- this is part of the August 12th agreement where there is the sales section. Is that it?
3482 Right of Salem to sell American programming --
3483 MR. McNABB: The formal sales agreement was filed in the November response to Gary McKimm's letter of October 27th. It was a one-pager.
3484 COMMISSIONER GRAUER: Thank you. Do you have any agreement with Salem with respect to programming fees?
3485 MR. McNABB: I'm sorry, to what programming?
3486 COMMISSIONER GRAUER: With respect to fees, programming fees to be paid.
3487 MR. McNABB: No, we don't pay them anything because we are not acquiring anything.
3488 COMMISSIONER GRAUER: I think that pretty much finishes my questions.
3489 I think counsel may have some questions, and then we will give you a final opportunity.
3491 MR. RHÉAUME: Thank you. I have just a few clarifications.
3492 On the same topic, is there any time reserved for programming of Salem?
3493 MR. McNABB: Not one minute. I personally hope to sell it all myself. That way I save on 15 percent commissions going south of the border.
3494 And I am very serious here. I am not trying to be cute. As you can see, with just a matter of hours of work, we have already generated $374,000 in hard fast commitments. I continue to be preselling in hopeful anticipation of a licence or licences in February, March, April, May, right through the decision.
3495 We plan to be ready at the moment the decision is handed out.
3496 MR. RHÉAUME: What proportion of your programming schedule for AM and then FM is sold programs?
3497 Start with 126 hours a week. How much of this is going to be sold?
3498 MR. McNABB: We can find a way to sell all 126 hours, whether it is "this hour of Access 740 is brought to you by Joe's Menswear", and Joe's Menswear sponsors the hour. We may have a florist in there; we may have a car dealer in there. But Joe is known as the "brought to you by guy".
3499 So we can literally find sponsorship of every hour, just like any radio station can find sponsorship of the Top Six at Six, the newscast, the weather forecast, the time and temperature.
3500 MR. RHÉAUME: Let me rephrase my question, Mr. McNabb.
3501 When I say sold times, the traditional expression is brokerage, where you find someone to buy a product; 15 minutes, a half hour, an hour for a given price. That could include actually some of the 72 hours that you refer to as local, and there is nothing wrong with that.
3502 We would like to get a true picture of what your service is going to sound like and what comes from you and from somebody else, and how much of that is sold at the time; not sponsorship.
3503 MR. McNABB: From the beginning of the program to the end of the program is fully -- its content is fully that of the ministry involved; correct?
3504 MR. RHÉAUME: You can try to qualify it as you see fit, but I think you understand my question. The question is: In what circumstances and to what extent do you get payment for the use of your airwaves?
3505 MR. McNABB: Okay. I will give it to you in several components here. Non-local, acquired church ministry program, 54 hours on AM 740.
3506 MR. RHÉAUME: Fifty-four hours a week on the AM?
3507 MR. McNABB: Correct.
3508 MR. RHÉAUME: And the remainder would be programs that are produced by yourselves and not sold. By not sold, I mean not purchased by third parties as a block, as a half-hour block, let's say.
3509 MR. McNABB: The non-brokered programming, in other words. We would add up the number of hours on page 601, which includes -- again, for non-brokered time there is 126 hours, and it is 6:00 a.m. to midnight.
3510 I just want to do a double count here.
3511 And 39 hours would be non-brokered program. Thirty-nine hours on AM would be non-brokered programs, and that includes 21 hours of Access 740, Live and Interactive, talk show, that and that one hour of Capital Connection; four hours of Relationship Radio; two hours of Women of the Word; two hours of Men of Integrity; two hours of More Than Overcomers; two hours of the Power Hour; one hour of Reach Out; and four hours for Heartbeat.
3512 Those are the in-studio programs that we do not broker out.
3513 Each of these 39 hours are all produced in our station. That is not even counting our 12 hours of music, which is all local.
3514 MR. RHÉAUME: Sorry, Mr. McNabb, that was the AM.
3515 MR. McNABB: Yes.
3516 MR. RHÉAUME: And the FM you have partly answered, I guess.
--- Pause / Pause
3517 MR. McNABB: I am just doing a double count. I want to give you the right figure the first time.
3518 THE CHAIRPERSON: Mr. McNabb, maybe I can give you a very pedestrian understanding of brokerage so that we can make sure we are speaking about the same thing.
3519 With variance, brokerage would mean that you sell a half hour of air time to Mr. or Mrs. X, and that person is responsible for programming in that half hour and for selling whatever air time they can to recoup their costs of production and of the air time. There are situations where possibly the radio station could be producing the program for the person who bought the half hour.
3520 Is that your understanding of brokerage from counsel?
3521 MR. McNABB: Yes. We have 93.5 non-brokered programming is 120 --
3522 THE CHAIRPERSON: It was the brokered, Mr. McNabb. It is easier. This way, this is confusing.
3523 Do you not know how many hours are non-brokered?
3524 MR. McNABB: Thirteen hours. I'm sorry, I was adding music and talk. I apologize. So 13 hours of brokered time.
3525 THE CHAIRPERSON: Thirteen.
3526 MR. McNABB: On FM.
3527 THE CHAIRPERSON: Everything else is going to be produced by the station, be it music, be it open line, be it a program.
3528 MR. McNABB: Absolutely correct.
3529 THE CHAIRPERSON: You acquire programming. Counsel can correct me, but that would not be brokered.
3530 MR. McNABB: No.
3531 THE CHAIRPERSON: You would pay for it. You would sell the ads in it.
3532 MR. RHÉAUME: No. We are not talking syndication here.
3533 My last question: Is it fair, Mr. McNabb, or unfair to characterize your Canadian Talent Initiative as being investments more than out of pocket contributions?
3534 In other words, if I read your projections correctly, you hope to recuperate your investments, and possibly even make a profit. Is that a fair assessment?
3535 MR. McNABB: Yes.
3536 MR. RHÉAUME: Thank you.
3537 MR. McNABB: I would like to add the proviso again that if we don't make a cent, that is okay with us. It has been initiated from our hearts as a pure expenditure to develop. If we get a return, great; but we are not choosing any or limiting any Canadian Talent Initiative regardless of how much or how little Canadian Talent Development revenue comes back in. It is just good business to capitalize on the opportunity in your community.
3538 MR. RHÉAUME: So hypothetically, if you produce a hit CD and you make a million dollars, all the better.
3539 MR. McNABB: I would agree.
3540 MR. RHÉAUME: I agree too. Thank you.
3541 Those are my questions, Madam Chairman.
3542 THE CHAIRPERSON: Thank you.
3543 Commissioner Grauer?
3544 COMMISSIONER GRAUER: I was just going to say, as we have with every applicant, that your application is competitive and technically mutually exclusive with seven other applications. We are seeking everybody's views to assist us in deciding which applicant has proposed the best use of both of these frequencies, which are highly coveted, very competitive.
3545 Perhaps you could take a few minutes, in closing, to answer any questions we might not have asked and to give us any more perhaps compelling reasons that you might have to grant you the frequency and tell us why your application is the best.
3546 MR. McNABB: You don't know how much I appreciate this opportunity.
3547 COMMISSIONER GRAUER: I think I do, actually.
--- Pause / Pause
3548 THE CHAIRPERSON: Mr. McNabb, don't tell me that you are not prepared for this. This is the eighth application we have heard with the same question.
3549 MR. McNABB: Let's deal with the AM first, and we will follow with the FM second.
3550 The AM programming is providing an unprecedented opportunity to bring a fresh perspective to Talk Radio in Toronto. It doesn't matter what radio station you listen to. There is a certain set of attitudes that are expressed. People want to have a hope. They want to have spiritual comfort, as the Commission has so duly noted time and again in its decisions and its religious broadcasting policy.
3551 People are hungry for the word of God when they call, when they pay to call all the way to Buffalo; 35,000 phone calls on Life Line that Neil took. The majority of them, two-thirds of them from Canada; the majority of them from right here in Toronto, let alone the golden horseshoe.
3552 That shows Canadians are willing to pay to get Christian radio, if you follow my drift. They paid for those phone calls. That has to be one of the most conclusive arguments for a format that nobody else could parallel. That is a heartfelt desire.
3553 When we look at the opportunity to minister to people who are hurting, to provide spiritual comfort in a spiritual perspective amongst the business of life, we are offering something that no Toronto broadcaster has ever offered since radio first began: programming of that sortation, edification, and comfort to sew into the lives and touch the hearts of people. We are not just hitting the ears, like every other radio station. We are going right to the hearts like never before.
3554 As a result, we see balance as being a critical aspect of that. Neil Boron shared the Canadian success story of balanced programming with The Canadians, of all faiths calling in engaging in lively, respectful and friendly dialogue where all perspectives were shared.
3555 So it has been proven without a doubt that Christian Talk Radio is not only wanted by Canadians, and not only wanted by Torontonians, it is needed by them. They are hungry for the word of God. They are hungry to fill a void in their hearts which only God can fill. That is the spiritual component of our lives. Only God can touch that side. That is why it is called spiritual.
3556 On the FM, no matter what age demographic, we are seeing a genre of music that can play the packed houses, whether it be the Skydome, Maple Leaf Gardens, the Air Canada Centre Concert Bowl. People are packing it. And how? It isn't Christian radio air play that is driving them in to fill up the Gardens or the ACC; it is word of mouth.
3557 And what is the word of mouth medium? Radio. What is going to accentuate and drive that home? Radio.
3558 If Timmins, God bless Roger de Brabant; if Sudbury, God bless them; if in Thunder Bay, awesome; if in Barrie; if two Christian music licences in Winnipeg back to back in six weeks -- and I commend you for a very wise decision -- how much more so the hottest Christian music market in this country.
3559 As a result, when it all comes down to it, we take a look at the cultural implications of this dual licence call with specific reference being made to fulfil these aspects of the Broadcast Act, we present for both AM and FM a culture that is more pervasive, that affects the way people live at work, at home and at play, in the most intimate aspect of their lives: in their own personal heartfelt faith in the existence of God and the saviour Jesus Christ.
3560 So with 20,000 churches in Canada, 4,500 within a 50-mile radius of Toronto, and 1,512 churches right here in the Toronto CMA, that is more than all the dance clubs, night clubs, cultural halls combined, and a very strong indicator of the most pervasive cultural presence in the city of Toronto that is waiting to be served on Talk Radio, with AM 740, and Music Radio, with FM 93.5.
3561 Thank you very much for this opportunity. We have been very honoured and excited to be here.
3562 THE CHAIRPERSON: Thank you, Mr. McNabb and your team.
3563 We will take a break for 15 minutes approximately. We will be back at 3:30 to hear the Jolly application.
3564 We will resume tomorrow morning with the Auguste application, if that is helpful to those who are wondering whether we may go beyond the Jolly application. We will not.
3565 We will be back in 15 minutes. Nous reprendrons dans 15 minutes.
--- Recess at 3:15 p.m. / Suspension à 1515
--- Upon resuming at 3:38 p.m. / Reprise à 1538
3566 THE CHAIRPERSON: Mr. Secretary.
3567 MR. CUSSONS: Thank you, Madam Chairperson.
3568 We will now hear an application by B. Denham Jolly on behalf of a company to be incorporated for a broadcasting licence to carry on an English-language FM radio programming undertaking at Toronto.
3569 The new station would operate on frequency 93.5 MHz (Channel 228A), with an effective radiated power of 298 watts.
3570 The applicant is proposing an "Urban" music format.
3571 The Commission notes that this application is technically mutually exclusive with other applications scheduled at this hearing for the use of the 93.5 MHz frequency.
3572 We have Mr. Jolly and his colleagues.
3573 Mr. Jolly...?
3574 THE CHAIRPERSON: Welcome, Mr. Jolly and your team.
PRESENTATION / PRÉSENTATION
3575 MR. JOLLY: Welcome, Commissioners. I know in a couple of cases it is welcome home and in one case it is welcome to your backyard.
3576 Good afternoon, Madam Chairperson and Members of the Commission.
3577 I am Denham Jolly, one of the five founding shareholders of Milestone Radio, and its President and Chief Executive Officer. Before we begin our presentation, I would like to introduce the Milestone team.
3578 To my left is Sylvia Searles, who will head Milestone Radio's Community Advisory Board. During her 16-year career with the City of Toronto and the Municipality of Toronto, Sylvia held a range of senior positions. These included assignments as Director, Human Resource Development & Employment Equity, and Manager of Corporate Training and Development. Among her many accomplishments, Sylvia has developed race relations training programs for Ontario's 116 police services.
3579 To Sylvia's left is Zanana Akande, a founding shareholder of Milestone, and a well-known educator and community leader. As part of her community activities, Zanana is the current president of Canadian Alliance of Black Educators and Board member of the Urban Alliance on Race Relations. In 1990, Ms Akande became the first Black woman in Cabinet in Ontario.
3580 On my immediate right is Tony Davy, another founding shareholder of Milestone, its Treasurer and a proposed director. Tony is currently in a senior Sales and Marketing position with Nortel Networks, overseeing major projects which include detailed economic and financial analyses. Tony played the lead role in developing Milestone's business plan.
3581 To Tony's right is Carl Redhead, another of Milestone's founding shareholders and a proposed director. Carl has more than 20 years of experience in the Toronto radio market, and is the former Vice-President of CHIN Radio in Toronto. Mr. Redhead was recognized for his professional accomplishments in the radio field with an African-Canadian Achievement Award for Media in 1998.
3582 Behind Carl is Robert Buchan, Milestone's regulatory counsel; and to his left is Kaan Yigit, President of Solutions Research Group, who conducted the market research upon which Milestone's business plan is based.
3583 To Kaan's left is Farley Flex, Music Director of Milestone Radio. Farley serves on the Board of VideoFACT, the Canadian talent development program funded by MuchMusic. He was also involved as a Board juror with FACTOR and a Board member of CIRPA. He has also been an active participant in the Toronto music industry for 12 years as a concert promoter and manager.
3584 Beside Farley is David Coriat, Executive Vice-President of Standard Radio, Inc. of Toronto, Milestone's minority shareholder.
3585 I would also like to acknowledge, seated in the front row of the audience, another of Milestone's founding shareholders, Mr. Reynold Austin, as well as Gary Slaight, President and CEO of Standard Radio, who is a proposed Director of Milestone.
3586 Also seated in the front row is Mr. Harvey Glatt, founder and former Chair of CHEZ Radio Inc. in Ottawa, one of our minority shareholders.
3587 Mr. Fil Fraser, President and CEO of Vision TV, who has agreed to be the independent fifth member of the Milestone board, cannot be here with us today.
3588 With those somewhat lengthy introductions completed, I will now begin the presentation of our application.
3589 Madam Chairperson, Milestone was founded in 1988 and it is with some considerable pride that I am able to note that Milestone's core team of founding shareholders has held together through this 12-year period. As witnessed by the interventions filed in this process, our loyal supporters in Toronto have helped us to maintain the vision of a voice for the Black community. We continue to refine and evolve our vision for Milestone Radio. This application reflects our collective learning and experience in this period.
3590 The Toronto marketplace has changed over the past decade. However, we are more convinced than ever that the strong demand fora Black-owned station with an identifiable Black sound and public persona has strengthened over the past decade, rather than abated.
3591 One established radio broadcasting company that recognized the validity of the Milestone concept was Standard Radio of Toronto. We are pleased that Standard is a participant as a minority shareholder in Milestone Radio Inc. Standard's financial involvement certainly strengthens Milestone's financial base.
3592 Standard's participation will also ensure that Milestone will have access to the extensive sales, marketing and research resources of one of Canada's foremost major market radio broadcasting companies. This is important because as a new stand-alone station, Milestone will face substantial competitive pressure from established broadcasters in the market, especially from those which operate multiple stations in Toronto.
3593 Before I turn to Carl, I would like to tell you how we will explain the Milestone vision. We will first review the overall Milestone concept, followed by spoken-word and music-programming plans and Canadian Talent Development initiatives. We will then turn to market demand, audience and our business plan. We will close by reviewing the benefits we will bring to the community and then a summary.
3595 MR. REDHEAD: Thank you.
3596 Commissioners, Milestone is proposing to establish a radio station with a diverse music format based on Rhythm and Blues music and related genres. Music, radio and retail industries usually call this sound the "Urban" format. This format is the modern-day reflection of the rich musical traditions of Black musicians and Black-influenced music over at least the past century.
3597 Let me briefly trace the history of today's Urban music. In the 1960s, the sound was defined by such artists as Chuck Berry, Little Richard and Sam Cooke. In the 1960s, the Motown sound ruled the airwaves, and so did artists such as James Brown, Aretha Franklin and Otis Redding. In the 1970s, it was Stevie Wonder, Marvin Gaye and Bob Marley. These artists define the heritage of today's Urban sound; today, young artists working in R&B, Hip Hop and other related genres are making their own unique musical contribution and extending the definition of a rich musical tradition.
3598 The Urban format has been developed most extensively in the United States, where at least one radio station in this format is now among the top five radio stations in virtually all major markets. This is because these stations appeal to significant population of people from all backgrounds, in addition to their core Black community audience.
3599 There is currently no station in the Toronto market operating in the Urban format -- in fact, no station in Canada, for that matter. Toronto radio listeners who are interested in Urban music have to tune into WBLK-FM from Buffalo. The alternatives to WBLK in Buffalo are limited. Contemporary Hit stations in the Toronto area such as KISS-FM operated by Rogers Broadcasting in fact play some Urban music. But the menu of Urban music they present is limited because they focus mostly on hits. They play Urban artists such as Lauryn Hill and TLC next to hits by established artists such as Shania Twain, Aerosmith or Backstreet Boys.
3600 Milestone is proposing to introduce a unique Canadian variation of the Urban format that takes into account the cultural characteristics of the potential audience and artists in Canada. In addition to Rhythm and Blues, it will include music in the Caribbean-based traditions. Our music mix will create more scope for Canadian creative artists and will clearly differentiate us from existing stations.
3601 I now ask Zanana Akande to take the microphone.
3602 MS AKANDE: Our spoken word programming will be another differentiating factor. We view the spoken word component of our programming as integral to the Milestone vision. To this end, you will note that we have provided a very specific and detailed description of our plans in our application.
3603 Milestone Radio will move the music beyond the spin. We will bring in artist to provide insights into their music. Talk programs will complement the music, providing listeners with information n the various musical genres. Milestone will be more than a jukebox; we will provide content in its cultural context. We will provide up-and-coming Canadian artists in unique and exciting ways. Milestone will be about access and representation, in words and music.
3604 Milestone will stimulate healthy dialogue among Toronto's diverse communities by providing interactive access programming, designed for and with the community. News and current affairs programming will cover local and international issues. Our spoken word programming will be thoughtful, balanced and educational.
3605 Among others, we have scheduled programs such as "Urban Forum", a talk show designed to provide members of the Black community with an opportunity to discuss issues and concerns that affect them. This program is also designed to provide a forum for inter-cultural dialogue.
3606 "Exposure" is a talk feature that provides an in-depth focus on issues and events of general interest to members of the Caribbean community in Toronto.
3607 "Winning Streak" is a magazine-style program that will focus on excellence in academics, in arts, in athletics, and community service and will address events and issues of concern to a young audience. All told, we have made specific commitments, and we will dedicate 15 hours during the week to a wide range of spoken-word programs.
3608 Farley will now provide more detail on our music programming and our plans in the area of Canadian Talent Development.
3610 MR. FLEX: Thank you.
3611 Milestone will provide one of the most diverse play lists on radio in a major market in Canada in terms of artists featured and distinct musical selections. We will play a substantial amount of music by emerging Urban artists not played elsewhere in Toronto.
3612 What is Milestone's music mix, you may ask? Morning and drive-time programming will feature new Rhythm and Blues music, consisting of Canadian and international selections. Music during these time periods will, of course, be complemented by news, sports and weather.
3613 Mid-morning and mid-afternoon periods will feature an eclectic mix of Soul, Rhythm and Blues, Reggae and World Rhythms. "Kaleidoscope", scheduled at noon each weekday, will offer listeners a mix of spoken word and music. In the evenings, the music mix will skew younger, more up tempo and will showcase the full range of Hip Hop and R&B. Specialty shows will feature music ranging from Motown and Soul to Calypso, Gospel and Jazz.
3614 In my role as an artist manager in the last 12 years, I had to face the challenge of breaking my artists into regular rotation on Toronto radio. Milestone will provide an important additional exposure opportunity for Canadian Urban artists. Fully 35 percent of the music will be Canadian during the broadcast day and in prime time. On average, Canadian Urban music artists will gain an additional 30 hours of prime time radio exposure per week in Canada's largest market. This will help create the next generation of Canadian success stories.
3615 Our music mandate links closely to our plans in terms of Canadian talent development. Milestone is making a commitment to Canadian Talent Development of $2.1 million over a seven-year period. The initiatives we are planning are geared exclusively toward Canadian Urban artists.
3616 In developing our Canadian Talent Development plans, we were guided by the CRTC's 1998 Radio Policy, which places emphasis on more direct encouragement of Canadian talent rather than indirect initiatives. Our proposals in this area relate directly to artist development. They include talent searches, grants for video and CD production, concerts, community grants and scholarships.
3617 The Urban music community in Toronto and beyond will see immediate, tangible benefits from our initiatives. Milestone will create a new platform for Urban music artists, so that emerging Canadian talent can build their careers without having to move to the United States or abroad.
3618 Commissioners, I hope you will have questions that will us to expand upon these initiatives and Milestone's plans in these areas.
3619 I would like to pass to Tony.
3620 MR. DAVY: Thank you, Farley.
3621 Commissioners, I would like to provide you with the highlights of our business plan and the market research upon which this plan was based.
3622 Research conducted for Milestones by the Solutions Research Group among a representative sample of Greater Toronto residents in 1999 demonstrates strong market demand for the Milestone station.
3623 First, Urban-related music genres are very popular with Toronto residents. Four of the top ten most popular music genres in Toronto are Urban-related.
3624 Second, the research found that there is a significant potential audience for the proposed Milestone station. The weekly audience reach for the station will be over 550,000 persons.
3625 Third, the research results show that Milestone radio will have a broad-based appeal across the market. The station will attract a substantial percentage of listeners from all major cultural groups: 57 percent of the potential listeners will be of European origin; 21 percent African-Canadian origin; and 16 percent will be of South and Southeast Asian origin.
3626 The finding that Milestone will have a significant audience beyond the scope of Toronto's vibrant Black community comes as no surprise to us. Canadians enjoy Black music. If we were to take a straw vote in this room, I am sure most of you have at least some Rhythm and Blues, Soul, Jazz, and Reggae CDs or the Motown sound in your collection. The popularity of yesterday and today's Black music artists transcends age, race or gender.
3627 Market research shows the wide appeal of the format. But there is also depth. The population of the Black community in the Toronto area is estimated at 350,000, the same size as Metropolitan Halifax, which supports seven commercial radio stations. The annual Caribana parade draws over one million people. Urban artists collectively sell an estimated 2.5 million CDs and cassettes in the Toronto area annually.
3628 Commissioners, based on market and advertiser research, Milestone is projecting that its new FM station will attract national and local advertising revenues totalling $3.9 million in Year 1, increasing to $7 million in Year 5. We anticipate moderate profitability over the final two years of the projection period.
3629 We believe that the Toronto market can easily accommodate a station such as Milestone. Total radio broadcasting revenues in Toronto have experienced strong growth over the past five years, increasing from $110 million in 1994 to about $150 million in 1998. The new Milestone radio station can easily be accommodated within the natural growth.
3630 Beyond natural market growth, we will draw advertising revenues from WBLK Buffalo and from some of the Toronto stations. In the case of WBLK, airtime sales research shows that this station currently attracts Canadian advertising revenues in the range of $1 million to $1.5 million annually. Many Toronto area advertisers, such as the promoters of special events, dance club operators, hotels, music stores and retailers, are regular advertisers on this station.
3631 I would now like to ask Sylvia to speak.
3632 MS SEARLES: Thank you, Tony.
3633 What will give Milestone its unique sound? The music mix, yes; the spoken word programming, absolutely; but equally important are the on-air personalities, announcers, news and sportscasters and producers -- the employees who will bring that rich, unique, distinctive sound to the airwaves.
3634 Milestone is committed to employing a diverse workforce reflective of the Toronto population. Our comprehensive employment equity program will ensure that members of the designated groups are present at all levels.
3635 Our recruitment and selection program will ensure that men and women of diverse backgrounds are involved in the development, production and delivery of the programming offered on the new station. Our orientation and training programs will ensure balanced portrayal of issues and communities.
3636 Commissioners, Milestone Radio is more than just a business proposition. The licensing of Milestone Radio will be one of the most significant developments in our community's history. For the first time, our community will have a strong voice on the airwaves. We will be able to communicate with each other, as well as with the larger community. And because Milestone will be unique -- Canada's first Black-owned and managed radio station -- it will be a distinctive forum for different viewpoints and open, honest dialogue among Toronto's diverse communities, something we desperately need as we move into this century where, in Toronto, racial minorities will be the majority.
3637 Just as women saw a void in media representation and knew that women were best suited to give voice to their hopes and aspirations, our community needs a similar voice.
3638 Milestone will be a powerful force for counteracting the negative image of our community, particularly our youth. How can we expect our youth to achieve their full potential when the mainstream media insists on portraying them as being involved in mostly antisocial behaviour?
3639 Milestone will provide balance -- including positive coverage of our youth and of our community.
3640 Commissioners, this application is more than just about providing Black music to Toronto. It is also about a community's pride of ownership. Licensing Milestone will give our community the capacity to celebrate itself in all its richness, all its dimensions: music, culture, drama, and entrepreneurship, and to be able to share that celebration, knowledge and information with the broader community. The licensing of Milestone is about validating the Black community as part of Canada's mainstream.
--- Applause / Applaudissements
3641 MS SEARLES: How can I be so sure that Milestone can deliver on these promises? The Milestone founders have stayed together for over ten years with the sole focus of making this dream a reality for our community. That presence, pride and commitment speaks volumes.
3642 The Milestone founders have also been very involved in and are part of the larger Canadian community, and they have already made significant contributions. They know our community's hopes, aspirations and concerns and therefore can respond to, not simply program for, our various communities.
3643 Over 7,000 Toronto area residents of all racial backgrounds took the time to write letters and sign petitions in support of Milestone. Hundreds called or volunteered at the office to demonstrate their confidence in Milestone's ability to deliver.
3644 I would like to close with the first sentence I wrote about Milestone's application, a sentence that I repeated at clubs, churches and schools: "A dream is about to come true and you can help make it happen."
3645 I say to you, Members of the Commission, a dream is about to come true; and with your approval, together we can make it happen.
3647 MR. JOLLY: Thank you for that impassioned speech, Sylvia.
--- Applause / Applaudissements
3648 MR. JOLLY: Madam Chair, Members of the Commission, I would like to close by summarizing the main points of our presentation and by answering the question: Why Milestone?
3649 First, I believe that Milestone Radio will make a significant contribution to the objectives set out in Section 3 of the Canadian Broadcasting Act. The approval of this application will significantly increase the reflection of cultural and racial diversity in programming and employment structure of Canadian broadcasting. It will also increase ownership diversity by providing new players with an important first opportunity to contribute their energy and financial resources to the development of a new Canadian radio programming service.
3650 Second, Milestone is making a significant, direct, no-strings-attached commitment to the development of Canadian Urban music talent by undertaking a major talent development initiative. We will spend $2.1 million over the seven-year term of the licence.
3651 Third, we prepared a high quality business plan, featuring a unique format and comprehensive analysis of consumer and advertising markets. We have the financial resources to make this station a reality and to meet all of our commitments in this competitive market.
3652 Fourth, our programming proposal goes beyond music, and we have made detailed commitments to spoken word. This will bring tangible benefits to the community. Our local programming will be relevant and inclusive and will add to the diversity of news voices in the marketplace.
3653 Finally, the Milestone proposal can be accommodated without disruption in the marketplace, given the favourable economic conditions in this radio market and the distinctiveness of our format.
3654 We have carefully reviewed your call for applications and prepared a response which comprehensively responds to all the Commission's requirements. I hope today we will be able to convince you to share the Milestone dream.
3655 We will now be happy to answer any questions you may have.
3656 Thank you.
--- Applause / Applaudissements
3657 THE CHAIRPERSON: Thank you, Mr. Jolly, and your team.
3658 On Monday morning, before we started, I made a very important technical announcement. I will now repeat it and add one. The technical announcement was that we expect people to turn off their cell phones while they are in the room. There are many of us now, and it is very distracting for the appearing panel when the phone rings.
3659 The second one is to restrain your human equipment and not applaud, despite your enthusiasm, until the end. That is distracting for both the appearing panel and for us.
3660 We thank you for co-operating on both counts.
3661 Commissioner Pennefather.
3662 COMMISSIONER PENNEFATHER: Good afternoon, Mr. Jolly, ladies and gentlemen.
3663 Thank you for being here.
3664 MR. JOLLY: Good afternoon, Commissioner.
3665 COMMISSIONER PENNEFATHER: As you yourself noted in your presentation this afternoon, this is a competitive environment. I believe you used the term "competitive pressure" in your opening remarks. Therefore, I do have some questions which I believe will help us better understand the details of your application.
3666 To give you a preview of what areas I would like to explore further with you, they would be programming, and more specifically the Canadian Talent Development initiative. The spoken word programming, two aspects: open line programming and the nature of some of the spoken word programs themselves.
3667 Secondly, in the employment equity area you have an apprenticeship program, and I would like to talk about that in more detail.
3668 The area of demand and market for this station, which you yourselves touched on this afternoon, is an important point. I would like some clarification on audience reach, revenues, and impact on other stations.
3669 Finally, as you know from attending these sessions, we will discuss with you your rationale for requesting this particular frequency and why you think your application is the one that should get this frequency. This, as you know, has been done with other applicants, which allows you as well a chance to wrap up your presentation.
3670 That is the agenda for discussion, and we will proceed.
3671 MR. JOLLY: Thank you.
3672 COMMISSIONER PENNEFATHER: I will address my questions to you, Mr. Jolly, but of course it is over to you to direct those questions -- although I do think Mr. Flex will be jumping in at some point. He made it clear he wanted some questions.
3673 In fact, I would like to start with Canadian Talent Development.
3674 In your supplementary brief to your application, and particularly in Schedule 5, you describe these initiatives. Let's start with one component, which is the CAB plan. I need a clarification here.
3675 You have agreed to participate in this plan, which for stations in the Toronto market means a contribution of $27,000 towards Canadian Talent Development.
3676 I note in your financial plan you have indicated an amount of $27,200 towards this item. Was this intentional to mark $27,200?
3677 MR. JOLLY: I will ask Carl Redhead to take that question.
3678 MR. REDHEAD: Yes. I guess that is a way of saying how much we endorse the CAB plan which the CRTC has endorsed and that we are willing to put even more money into it.
3679 COMMISSIONER PENNEFATHER: You would accept this amount as a condition of licence?
3680 MR. REDHEAD: Yes, we would.
3681 COMMISSIONER PENNEFATHER: Thank you.
3682 If we turn to the other initiatives which you have laid out, which I believe total an amount of $272,800 in the first year, there is an extensive list itemized in Schedule 5 and described there.
3683 I would like to ask you a question about certain of these projects in the Triple Mix series project, which accounts for $145,000, approximately, in year one. The pieces of this project that I would like to ask you about are the webcasts and the development of a permanent website.
--- Off microphone / Sans microphone
3684 COMMISSIONER PENNEFATHER: To give you a sense of where I am heading here, in Schedule 5 you mention that the advantage of using the Internet is that dissemination of new Canadian artists will have potential international attention. This website will also be used to expose other Canadian new music and performers from other initiatives in the project, such as summer rhythms and world beat concert.
3685 I want to know if this was a special site set up for this project or if what we are talking about here is the station's website. In other words, is it a totally different project with different programming or the same programming of the station?
3686 MR. REDHEAD: That's right, Commissioner Pennefather, it is a site that is totally dedicated to the Canadian talent initiative and everything that has to do with pushing the talent that is distinctively Canadian, especially what we develop.
3687 In fact, that website will have the URL of www.blackradio.com. The website which will cater to the general radio station's use, Milestone Radio, will be milestonradio.com.
3688 COMMISSIONER PENNEFATHER: What are the webcasts, though? There is a site and there is the webcast. One is $10,000 and one is $40,000. What are they?
3689 MR. REDHEAD: Webcast is a general term that was used there to mean anything that is carried on on the website. It will also include information and special detailed news and items of interest pertaining to the artist.
3690 COMMISSIONER PENNEFATHER: Which is the one that allows feedback from the audience in terms of the context? Is it the webcast or the special website? I believe that is why you were creating it.
3691 MR. REDHEAD: It depends on how the site itself is engineered. The site can handle different aspects of the whole project, so that aspect is one for the designer to put in place.
3692 COMMISSIONER PENNEFATHER: I am sure you understand one of the reasons I am asking this -- you raise it yourself in the presentation -- and that is the focus on direct contribution, direct to Canadian talent, as opposed to indirect. You are aware not only of the recent policy but also Policy 90-111.
3693 Technically speaking, the website and the webcast concept is not exactly described there. I am interested in you expanding on the nature of this project in the sense that you are presenting it as qualifying as direct contribution to Canadian Talent Development. Technically speaking, you may be asking us to make an exception, then, to the policy in terms of this being a direct contribution to Canadian talent.
3694 I was wondering if you could help us explore that.
3695 MR. REDHEAD: The reason we looked on it as direct is because that whole site, its upkeep, the fact that it has to be updated very regularly, will all be part and parcel of the duties of the Canadian Talent Co-ordinator.
3696 It is not something that the station itself will be handling.
3697 COMMISSIONER PENNEFATHER: I was coming to the co-ordinator.
3698 MR. REDHEAD: Okay.
3699 COMMISSIONER PENNEFATHER: Before we leave the website itself, which is noted as a contribution of $49,000, if it is not eligible as a direct contribution, would you still include that amount in your total package of talent development?
3700 MR. REDHEAD: Yes, we are committed to the full amount.
3701 COMMISSIONER PENNEFATHER: Again on the same theme of what is applicable as direct contribution, the co-ordinator is a staff position, as I understand it. The policy usually considers such staff positions as the normal cost of doing business.
3702 Why should the Commission make an exception in this case?
3703 MR. REDHEAD: May I correct you on one point. It is not a staff position. The co-ordinator will operate at arm's length from the station's staff. We have included in the application somewhere that the only person that the co-ordinator will report to is the General Manager.
3704 COMMISSIONER PENNEFATHER: Yes. It is on page 6 of Schedule 5. I wanted some clarification from you, because it was not totally clear that this staff person, as a fulltime staff member to Milestone, how that arm's length would work.
3705 You are describing here independent of the program staff but continually functioning on a fulltime basis. It is difficult for us to see that this kind of staff person, or this kind of activity, is directly related to the talent development.
3706 Could you clarify for me once again how this staff person, the co-ordinator, will in fact be separate from staff and directly related to talent development.
3707 MR. REDHEAD: The staff person -- the co-ordinator, I should say -- is tantamount to contracting out a job of work, a project. The whole Canadian Talent Development package can be looked upon as a separate project.
3708 This person -- him or her -- would have the total responsibility for executing that. In fact, much of the work that this person would have to do would not necessarily take place on the station premises.
3709 COMMISSIONER PENNEFATHER: Before we leave the subject, as a final technical question on that, the amount that you put aside for this co-ordinator, could it be redirected to a direct contribution if it was decided that it is not appropriate?
3710 MR. REDHEAD: Yes. We would, let's say, devise an additional project that would conform to your requirement.
3711 COMMISSIONER PENNEFATHER: My final question is really back to the basics in terms of including this type of activity. Again, I am exploring a little bit with you its contribution to Canadian talent development.
3712 How necessary is this webcasting to the concept of the triple mix or to your whole talent development?
3713 MR. REDHEAD: One of the approaches or the ways in which we intend to use the web would be to involve the audience in the process of selecting the finalists in terms of our search for talent, especially in the triple mix series.
3714 We thought that because this was new technology it will be a marvellous idea and concept to utilize it and bring it into a tangible way of use in terms of the Canadian talent development, and particularly so because the web affords an expansion of the audience so to speak.
3715 It crosses borders and boundaries. It has an international impact, not only from the point of view of crossing other countries but even crossing provinces. On our regular e-mail and web address right now, as a result of these hearings here, we have had many inquires from areas as far away as Winnipeg and Vancouver, showing interest in what is happening here in Toronto that is the focus of these hearings today.
3716 In that context, we thought we would incorporate it as a novel idea.
3717 COMMISSIONER PENNEFATHER: It sounds more like promotion to me, though, than actual performance.
3718 MR. REDHEAD: Well, the promotion is totally dedicated to the concept of the development of Canadian talent and exposing it.
3719 MR. JOLLY: Commissioner, the Canadian talent would also be promoted and not just locally, which I think is one of the things that Milestone is about.
3720 COMMISSIONER PENNEFATHER: Mr. Flex is showing signs of wanting to speak. I took him seriously when he said --
3721 MR. FLEX: I just wanted to add a small point Carl and Denham have just said. Currently on the Internet there are sites entitled hiphop.com. A lot of the independent artists who have been excluded from access to multinational deals and so forth use the Internet as a vehicle for promotion, and some artists who may be in this room today, Dan Yeo, for instance.
3722 I am always surfing the net to listen to new material and observe who is doing what. I recognize that several artists in Toronto are currently using the Internet as a vehicle for promotion, where they obviously don't have a radio station that close to home to utilize and certainly don't have access to major label type promotions. So the Internet becomes a serious vehicle.
3723 In closing, I would like to say that to encapsulate our approach to Canadian Talent Development, it is to find the talent, produce the product and promote the product. That is what completes the evolutionary process in terms of developing an infrastructure.
3724 THE CHAIRPERSON: Mr. Flex, if you move away from the mike, we won't have this boom. I have grown to be a real broadcast expert this week.
3725 COMMISSIONER PENNEFATHER: Come close to the mike, I am told. My voice doesn't travel very well. Between the two of us we will work it out somehow.
3726 I will come to one last question on the talent development. Overall, what we are looking for is direct contribution to artists and to make sure that that is the spirit; not only the spirit but the letter of where the projects are heading.
3727 There is another project on your list called Live Club Concerts. I see that there will be five broadcasts, $26,325 a year. Three will originate from clubs in this city. Where will the other two come from?
3728 MR. JOLLY: Could you repeat that?
3729 COMMISSIONER PENNEFATHER: In Schedule 5 and in other places you have Live Club Concerts as part of your list of talent development. Three of the five broadcasts will originate from clubs in the city. Where will the other two come from?
3730 MR. REDHEAD: That is a lovely question. The intention is that all would originate from the city.
3731 COMMISSIONER PENNEFATHER: You might want to check. It is a discrepancy in the description.
3732 I am going to move from music, but we will come back to it. I would like to go to the spoken word component of your application.
3733 First of all, a clarification. In Appendix H, which I reviewed in terms of looking at the spoken word component in detail, I discovered that you have a balance there of music to spoken word of approximately 71 per cent to 11.91 per cent. In your presentation this afternoon you say 15 hours, I believe.
3734 You talked about the spoken word. Could you expand a little more on what gives your spoken word component its uniqueness.
3735 MS AKANDE: Commissioner, this is a population that has been without a voice for quite some time on radio. When we talk about our spoken word, we are talking about two things basically. We are talking about content that is of interest to us, that is important to us as a community, and we are talking about form or register in which that content is presented.
3736 If I use the term register, let me say that if lawyers were talking to each other, there is a way of speaking to one another that the rest of us may not understand.
3737 CHUM has a sound, and our radio station of course would have a sound. That uniqueness is important because while I don't speak that register, I am drawn to it because I know that when I hear it I will most likely hear the music that I would be most interested in hearing, that Blacks would respond to, and many others within the population.
3738 I would hear opinions presented from a perspective that is unique, that is not generally on the air at this time.
3739 COMMISSIONER PENNEFATHER: Could you give a concrete example of that?
3740 MS AKANDE: For example, in terms of content, I may well be listening to a health broadcast about sickle-cell anaemia. And while that would be of particular interest to the Black community, it would also be of interest to others who work with children or adults within the community.
3741 It would certainly be of interest to school teachers, to social workers, to camp counsellors, to people who interact with them.
3742 So when I hear that -- and it would most likely be presented on a station like Milestone -- then of course I would be drawn to listen to it. And that would be part of the uniqueness.
3743 Women's issues -- something with which many of us are quite familiar -- would be presented from a different perspective. It might be the very first time that I would hear women's issues presented from my perspective.
3744 COMMISSIONER PENNEFATHER: Which of the programs "Urban Forum", "Exposure", "Kaleidoscope", "Calls and Shouts", would carry the kind of programming you are talking about? Or are you talking about a component of news and reports that spans this every day?
3745 MR. REDHEAD: I would be happy to take that.
3746 The nature of the discussion that Zanana Akande entered into with those specific examples would be very appropriate to the "Urban Forum", which is the main general open line program for all communities.
3747 I say all, because at some times or some weeks -- this is a weekly presentation -- there would be specific topics that would be of prime interest to the Black community per se. At those times the mainstream community will also be invited to interact, because they would have opinions, ideas and viewpoints to share.
3748 At other times there will be general topics of interest to everyone. So in that way the program also gives opportunity for intercultural exchange.
3749 COMMISSIONER PENNEFATHER: This leads me to obviously the question that has to do with the component of this that is open line and what internal guidelines and policies or other mechanisms you have in place with respect to open line programs.
3750 MR. REDHEAD: We are very sensitive to that. We are aware that in 1998 the CRTC put out a document about open line programming. One of the key bits of information I should advise you on, for instance, is that Milestone Radio will be a member of the CAB and also a member of the Canadian Broadcast Standards Council, the CBSC. Of course, that has a direct relevance to what we are talking about in terms of open line programming and the policing of that.
3751 In addition, we have a long list of guidelines that we would use as documents whereby the staff would be advised -- this is staff that would be involved in the production and broadcasting of open line programming. They have to be brought up to scratch on all the rules and regulations, the policies that we will put in place. There is a question of balance. There is a question of how to treat callers when they call in, that they should all not be insulted and be mannerly.
3752 We don't want to introduce this as extra material to the process. But if you wish to see this list, it is available.
3753 COMMISSIONER PENNEFATHER: Is this a different list from the guidelines that are in Exhibit H?
3754 MR. REDHEAD: Sorry...?
3755 COMMISSIONER PENNEFATHER: You have as Exhibit H a list of what is called Indicators.
3756 MR. REDHEAD: Yes, that's right.
3757 COMMISSIONER PENNEFATHER: Are the guidelines based on that?
3758 MR. REDHEAD: The guidelines -- no. These guidelines are quite separate. What you are referring to there are our own parameters for defining what to us will be a quality program, quote/unquote.
3759 COMMISSIONER PENNEFATHER: Yes. One of these I wanted a little explanation on.
3760 Just to be clear, the open line programming mechanisms and guidelines internally, you already have in place. You described to me the training that you will undertake to make sure that this is well understood?
3761 MR. REDHEAD: That is correct, by all the staff. It includes things like having a debriefing exercise after a program that has been very controversial, for instance, to determine whether we missed anything, what should we do to augment it; whether there is need for equal time, so to speak, on behalf of other groups; if there were other representations that we had not thought of ahead of time and how to compensate for it.
3762 I could also mention here, from a note passed by Mr. Jolly, that we will also be having an advisory board, to which Sylvia Searles can add some more details if you are interested.
3763 COMMISSIONER PENNEFATHER: I was going to ask in a moment to hear a little more about the advisory board. But before we get on to that, the concept that you have presented in the application, and again this afternoon, puts the emphasis in many instances on programming created by and for the community; in other words, more than open line, an interactive approach.
3764 I guess it is in that context that I am interested in your guidelines, not only in terms of policy but in terms of how you see yourselves presenting this approach. It is a challenging one. It is one that raises certain expectations, and yet you seem to be saying that this will be a balance between mainstream audience and Black communities.
3765 How do you see guiding yourselves through that? Is that what this guideline is going to do for you? Or is it much more strictly related to the Broadcasting Act and broadcasting policy?
3766 MR. REDHEAD: Well, it is a little of all of those issues. It would incorporate things like the broadcast codes, you know, the gender portrayal, children in advertising, and those issues. It is all-inclusive in terms of what policies exist from a CRTC and regulatory standpoint to standards of broadcasting, some of the regulations that talk about the human rights issues, that people are not to be abused on the basis of their race and gender, and what have you.
3767 It is all-inclusive where that is concerned.
3768 COMMISSIONER PENNEFATHER: In fact, Mr. Jolly, what will the role of the advisory committee be then?
3769 MR. JOLLY: Sylvia will be able to give you the entire function of that board, Commissioner.
3770 MS SEARLES: Thanks, Dan.
3771 There are basically three roles to the advisory committee. The first is to provide advice and feed back on programming and policy. Secondly, it is going to be an important communications link between the station and the community. And third, to promote Milestone's vision and also to increase public awareness about the programming goals and objectives.
3772 Those are the main objectives of the advisory board.
3773 COMMISSIONER PENNEFATHER: Thank you.
3774 I would like to come back to some of your comments in your presentation later, as well as that committee.
3775 My mother's ear tells me that there are younger people in the audience this afternoon, and this brings me to the youth orientation that you have mentioned in terms of programming. I noticed in listing the spoken word examples you did not include "What's Up", which I understand from your application is really oriented to youth because of the apprenticeship program.
3776 As well, "Winning Streak" also is designed for young people. Am I right? You can correct me if I am wrong on that.
3777 You have scheduled it on Saturday morning at 10:30. Can you tell me why?
3778 MR. REDHEAD: Number one, it is Saturday. Number two, it is a time when the youth would have time to listen to the radio and also participate by coming to the radio station to participate in the broadcast as needed.
3779 Principally, it is because it is a weekend and it provides accessibility for that core audience that we wish to reach.
3780 COMMISSIONER PENNEFATHER: Is the access you are talking about to produce shows or is it to listen?
3781 MR. REDHEAD: Listening as opposed to coming to the station. But listening in particular.
3782 It is early enough that if they have to leave home and go out and do the town, whatever, it will not impede them from doing that.
3783 COMMISSIONER PENNEFATHER: I know some teenagers who don't know the world until at least one on Saturdays. It was an interesting choice.
3784 I was really asking the question as a lead-in to this apprenticeship program which is referenced in "Winning Streak" and "What's Up". That is why I thought what you were aiming at there was the whole concept of involvement in program.
3785 As I understand it, the apprenticeship program is $105,300 over the five years, which includes on-air presentation. The first year is $11,700 and rising to $23,400 each year after that.
3786 It is currently presented as part of your employment equity program initiatives, and costs are counted under program expenses.
3787 This is on page 13 of the application, I believe.
3788 Would you accept a condition of licence with respect to this apprenticeship program?
3789 MR. REDHEAD: Yes, we would, Madam Commissioner.
3790 COMMISSIONER PENNEFATHER: It's timing.
3791 MR. REDHEAD: We have budgeted for it. We see it as an aid and value to students. In my experience in broadcasting, when Black graduates say from Ryerson or the broadcast colleges went to mainstream stations, they were told: "Why don't you go to CHIN?"
3792 So this is an opportunity for students of visible minority identity to get a heads-up so to speak, to use a modern term, into the industry and give them real hands on experience.
3793 COMMISSIONER PENNEFATHER: You have budgeted this over five years. Would you be willing to extend it if you have a seven-year licence and add the $23,400 times two?
3794 MR. REDHEAD: I have just looked to my financial advisor, and he nodded agreement.
3795 COMMISSIONER PENNEFATHER: I would like to move on now to an area that I must say I have a number of questions. I am concerned that I don't understand some of the conclusions you have drawn in the marketing and demand area.
3796 I think as you well understand, it is not that you have not described well the concept of the Urban format, but this is a competitive process and it is important that we understand why you think you can arrive at the result that you are proposing will occur with Milestone.
3797 This has to do obviously with audience share revenues, impact on other stations, and if you are going to get to where you say you will with this business plan and this proposal.
3798 I will take you through some of these points.
3799 Let's look at your expectations, and correct me if I am wrong. I am going through a number of the results that have come out of the various studies, and I want to know a little bit more about it.
3800 According to the SRG Study -- and I hope I got SRG correct -- you are looking at 23 percent of the 18-to-54 age group, and yet I think I saw somewhere that you are actually aiming for an older group than that, 25 to 35, with an average age of 33.
3801 Could you clarify for me what is the age bracket you are looking for and expect to reach with your audience.
3802 MR. JOLLY: I will pass that to Kaan Yigit to deal with that, Commissioner.
3803 MR. YIGIT: Good afternoon. Just to clarify that point, research was conducted in the 18-to-54 age group, specifically to understand where the appeal of the station would reside, meaning what part of that 18-to-54 audience would be most receptive to the Milestone concept.
3804 There is a table in the back of the research study that shows the age composition of the expected audience, and that suggests that close to 50 percent of the total audience would come from the 18-to-54 age group. The balance would come from 35-plus.
3805 The most receptive audience for the station at this point, according to this research, is 25-to-34, followed very closely by 18-to-24. But there will be appeal, as Zanana referred to it in the research, as a shoulder audience or a secondary audience, of 35-plus and also teens, although we did not measure them, because of the type of music that Milestone presents.
3806 COMMISSIONER PENNEFATHER: What do you mean by the most receptive, in your language? I am not clear.
3807 It is important when we come to looking at your expectations for share, for example, and for the particular kind of music and why you say there is no other such station available. Most receptive is 25 to 34?
3808 MR. YIGIT: Just to clarify the language, then. What I would need to say is that I use receptive as a proxy for reaching that demographic group. For example, our research shows that 30 percent of those in the 25-to-34 age group -- well, actually, 27 percent -- would listen to Milestone at least once a week.
3809 So in pure numbers, a greater proportion of that age group would be listeners than other age groups.
3810 The second most significant age group is 18-to-24. Within that group, roughly about 25 percent would be listeners.
3811 When I said receptive, I really meant propensity to listen.
3812 COMMISSIONER PENNEFATHER: That would skew your choice of programming of music, that 25-to-34 age group?
3813 MR. YIGIT: Correct.
3814 COMMISSIONER PENNEFATHER: If you were to say where you lean towards, it is that group as opposed to the 18-year-olds?
3815 MR. YIGIT: Of course, the appeal doesn't stop specifically at one singular age. But there are plenty of services available for the teen demographic 12-to-17 in the marketplace, and arguably 18-to-24 also.
3816 The way the music mix is designed is actually to take that 25-to-34 of the core audience and then be able to spill into younger demos or older demos, as the case may be.
3817 Does that help?
3818 COMMISSIONER PENNEFATHER: That is much clearer. The core, then, from which you can spread, up and down from there --
3819 MR. YIGIT: If I had to take one single narrow demographic break out of that whole population that would be most likely to listen to the station, it would be in the 25-to-34 age group.
3820 COMMISSIONER PENNEFATHER: And with that, you think in Year 1 you will have a 3.4 percent share. Why do you think that?
3821 Your competitors, KISS, for example, which I think you would agree with me is perhaps -- it is not the same but it has some of the same. I think it is one of the competitors you agree is there.
3822 It has an 8 percent share, and it is pretty close, the 25-to-44 age bracket, according to BBM.
3823 You are projecting a share of 3.4 percent. How realistic is that?
3824 MR. YIGIT: First of all, let me briefly describe to you how those projections were developed so that there is clarity. It is a four-step process that goes from the initial reach estimates -- I pointed out a little bit of those on Monday -- that goes into share projections and then takes market factors into account.
3825 The competitor you mentioned, KISS, has almost 900,000 listeners in the marketplace and generates about 8 share. We don't anticipate for a moment that this format would be at that 8 level, but based on the research and based on the projections or the model, it is quite likely that it will generate in its first year at least 3.5 percent.
3826 It would put the station somewhere in the range of youth oriented rock stations, like Q107 or Edge 102 in this market, which generate share points in that range with audiences of about half a million people. That is really comparable to I believe the Milestone numbers; not in terms of format -- I don't want to confuse that issue -- but simply in terms of what each generates in terms of share in the marketplace.
3827 So, if anything, I would say that the initial number is probably a conservative number.
3828 COMMISSIONER PENNEFATHER: Conservative?
3829 MR. YIGIT: Yes. Actually, in the business plan the share numbers go from the range of 3.4 to 4.7. And 4.7 is what we call at maturity, meaning once you execute the format properly and everything clicks. But until that happens, when you come into a marketplace like this, a competitive marketplace, there is going to be a ramp up period.
3830 COMMISSIONER PENNEFATHER: To get that share, I took it from your own report on page 27 -- and the reason I mentioned KISS is that you say the 25 percent of your audience will come from KISS and 13 percent from WBLK.
3831 I assume that you were after that audience from KISS. Yes, the others who are also 3.4 percent, but because of the content, because of the format -- you can tell I come from television and film. Because of the format, I mentioned KISS because you yourself raised KISS as a competitor and that you were after 25 percent of their audience. That is what you expect to go towards making up your share.
3832 MR. YIGIT: Let me clarify. There was no a priori decision as to who the station would compete with or where the audience would come from. The research was done precisely to determine exactly how this music mix and the format would do in the marketplace.
3833 I want to refer to this in terms of working through some very basic numbers to illustrate what is going on.
3834 KISS 92 in the fall of 1999, according to BBM numbers, has about 800,000 to 900,000 listeners; 25 percent of our base of 550,000 amounts to about 100,000 people.
3835 If all of that, if we make the aggressive assumption, comes from KISS, that still is an impact in the order of no more than 10 percent of their total base.
3836 BLK, on the other hand, has a little under 200,000 listeners in the marketplace. If 13 percent of Milestone's audience comes from that, that is actually half of BLK's audience right away.
3837 So even though in that chart it looks like you are getting more from KISS vis-à-vis BLK, that is simply a function of how popular those stations are in the marketplace. KISS is huge, and BLK is significant, with a couple of hundred thousand listeners; but when you work those numbers, as a proportion of their current listeners BLK gets hit halfway. I am not even bringing in to the equation the technical or the signal issues, but pure programming.
3838 And KISS, by definition -- and again I referred to large numbers on Monday. There is no way around putting this station in this market of any format without affecting somebody in some fashion.
3839 Finally, I just finished this study in a medium market in Canada not too long ago, and there the format was overlapping by 60 percent with our other format.
3840 So in the grand scheme of things, that is a reasonable number.
3841 COMMISSIONER PENNEFATHER: Just to add another piece to the puzzle, in terms of the tuning to out-of-market WBLK as 1 percent -- and it, as you yourself have said in the application and again today, is the competitor, as far as I understand your presentation, in terms of the Urban format per se. It gets 1 percent.
3842 What is going to make the difference for you to get to 3, climbing to 4.7 percent?
3843 MR. YIGIT: That is a good question, and it is one that we have been struggling with in any type of radio research we do in Toronto, Montreal and Vancouver for the past ten years.
3844 By way of background, if we had BBM representatives here today and asked them with respect to measurement of young skewing stations out of market in Toronto, they will concede to you that the diary method that is being used is not entirely efficient.
3845 In every tracking market study, credible ones that you look at in this country, in Vancouver, Toronto and Montreal, telephone based studies generate far higher share in reach numbers for stations such as BLK.
3846 The reason is that diary doesn't reach places where the telephone can in a survey research methodology sense. If you look at this piece of research and the research filed in 1996, the estimate audience for BLK is about 200,000. There is always a consistent under-representation in diary format for WBLK.
3847 Or in the case of Vancouver, it is CUBE, for example, that for years was under-measured.
3848 The point that I am trying to illustrate is -- and just to add: I am one of the two people involved with BBM advising them on how to measure the 18-to-34 age group, and more specifically the 18-to-24 age group. It is a known problem in the industry, because you get the diaries out to these kids and they don't return them. We don't know what they listen to, especially with that method.
3849 My defence of that point is simply that I understand when you look at the BBM -- well, one point if you bring all of that over just a little.
3850 But let's just say for the moment that that is absolutely accurate and that is the truth, that entire share point would be repatriated back into Toronto.
3851 COMMISSIONER PENNEFATHER: That is my next question. I came at it a little differently. You say the entire amount would be repatriated.
3852 Mr. Jolly, how are you going to do that? How are you going to repatriate this audience which you have said is the competition in the sense that, as I read it, and I understand it -- and correct me if I am wrong -- the WBLK format is the most similar to the format that you are proposing.
3853 Those who are looking for that format are listening to WBLK, and you are going to repatriate them all to Milestone. How is that going to be done?
3854 MR. JOLLY: There are a number of factors which would lend themselves to that. Number one, there no spoken word about Toronto; there is no local news about Toronto; there is no local talent from Toronto. Toronto advertisers do not get tax rebate on that program.
3855 Those are just some of the ways.
3856 COMMISSIONER PENNEFATHER: Is it the spoken word? Is it the local programming?
3857 MR. JOLLY: All of the above.
3858 COMMISSIONER PENNEFATHER: All of the above.
3859 MR. BUCHAN: Commissioner, you maybe can tell from the register of my voice that I am not an engineer; I am a lawyer. But there is also an engineering issue with regard to BLK if 93.5 is licensed to anyone. It is going to have an implication for WBLK's signal coming into Toronto.
3860 I think Mr. Redhead is probably the best person to address that.
3861 MR. REDHEAD: Yes, that is the common feeling; that because of the proximity of 93.5 and 93.7, which is the Buffalo frequency, the fact that the Buffalo frequency is already weak past Hamilton as it comes in here, it will have an effect on most radio sets to blanket it out.
3862 Part of the answer to your question is the fact that people have to strain their listening facility, depending on where they live in this city, to listen to an out-of-town station shows that they are only doing it because that facility gives them the music they want to hear. That is one of the rationales for Milestone coming into the Toronto market.
3863 COMMISSIONER PENNEFATHER: But why is Milestone choosing 93.5 which also has limitations? As I understand it, the contour that you are talking about as an A channel would only reach, with a good signal, to in and around here; and as we stretch out, it gets weaker and weaker.
3864 Again, we understand that it has some limitations, and your point is well taken. Why have you chosen that frequency?
3865 MR. REDHEAD: I can answer that.
3866 There are some applicants who are laying claim to that scenario that you have just described. The engineering study that we have done on 93.5 gives us the standard contour that takes in Oakville to the west; it slices through Brampton; it goes past Richmond Hill; and it slews over to Ajax. That is our marketing area, and we are quite satisfied with that scenario.
3867 When it comes to a weaker signal -- I have even read that in local papers -- it is not a fact, as far as Milestone's engineering is concerned.
3868 MR. JOLLY: I think, Commissioner, there has been some confusion with the old contours, but the CBC has done some work on it. And in layman's terms, it has gone from 100 watts to 486 watts. The power has increased almost five times. So that has now increased tremendously.
3870 You raise the point of the Buffalo frequency in terms of my question, which was repatriating the audience from the Buffalo station to Milestone and how that was going to be done. I was asking it in the sense of the content: the spoken word, the talent, and the music. We are back to the music.
3871 To be very clear, you say that other than Buffalo, there is no such Urban format available in Toronto.
3872 I believe that you described this format as Urban contemporary, Urban adult contemporary, Urban oldies. Of course, I do understand the concept of word -- and I think Mr. Redhead repeated it very well this morning -- describes what has been and will continue to be music designed by Black musicians.
3873 That being said, I want to go back again. I have taken you through what we are going to hear in terms of the spoken word. In terms of the music, could you go through with us again how you see this format. And I want to be very specific about it, because you were saying you will repatriate an audience from Buffalo. You will pull in, give or take a percentage or two, some of the listeners who re currently getting that kind of music -- albeit the hits -- from other stations here in Toronto.
3874 What will make them turn to you for this Urban format?
3875 MR. FLEX: I would like to answer that, if I may.
3876 The distinct difference between what Milestone is proposing and what now exists comes from a few different areas. Let me just encapsulate the most obvious ones.
3877 The one in-market station that does play some semblance of Urban music would be KISS. We have already identified that they play exclusively hit material. I would also like to identify that they saw no reason to intervene in this hearing.
3878 The other two stations just beyond the Greater Toronto Area would be CIDC and CING, from Burlington and Orangeville respectively.
3879 Those stations have formats that we can say are very close to being identical to what KISS offers.
3880 What we recognize in terms of the niche, not only from a Canadian talent standpoint but just from a programming standpoint, is that we are exploring the R&B, the hip hop and all the sub-groups of R&B as we identify them, as a volume of material that goes into the hundreds.
3881 I have with me an R&B -- what we call the bible: the St. James Brown version. In section A alone there are 500 R&B items. The vast majority of those would not be represented on the existing stations, excluding BLK of course.
3882 The other thing I would like to identify is the way we are programming the format, during drive time it would not be unusual on our station to hear Barry White in his fifties played alongside K-Ci and JoJo, who are in their early twenties.
3883 That is the derivation factor in terms of how the music has involved.
3884 Barry White himself has performed on the same songs with Chico DeBarge, who is like half his junior. This type of heritage and this type of development and identification that the music offers is a very smooth transition in terms of what our demographic is, but in terms of the music as we offer at different parts of the day.
3885 Specific to your question, when we talk of repatriating that audience, especially from WBLK, we are doing so with the additional factors of advertising, for instance.
3886 The predominant reason that WBLK -- I should say the secondary reason, beside the programming, that WBLK attracts so many Toronto listeners is something like club listings, for instance. The million dollars that Tony referred to comes from predominantly advertising about club issues, events, so on and so forth.
3887 I have spent in the last 12 years at least $200,000 on WBLK simply to reach my neighbours. So if that information is on a recognizable station, an acceptable station, it is not a far-fetched assumption that we will be able to repatriate people who are looking for information about their neighbourhood and having the same carrot that is going to attract them to get that information.
3888 I think that is very important to recognize from the repatriation standpoint.
3889 COMMISSIONER PENNEFATHER: Thank you.
3890 I was going to get to the matter of revenues, but I didn't want just to go by what is a genre which you say is not available at all and not give you a chance to be specific about what that means.
3891 This is a competitive situation, as you know, so I think it is important for us to not assume we know. We can hear some of those artists mentioned in other applications: we will carry this, we will carry that, we will carry this.
3892 I think it is important that you explain to us what we will actually hear on the air which differentiates you, which allows you to say, over and above the other items of your concept, that this is a unique Canadian station.
3893 On the revenues, on the business plan -- and again this discussion is based and skewed by the comments made on the Buffalo station. Your Schedule 9, your pro forma statement, shows total revenue of $3.9 million in Year 1.
3894 MR. JOLLY: Mr. Flex has something to add just before we move to that.
3895 MR. FLEX: Thank you.
3896 In addition to the common material that you might hear amongst the local stations, the out-of-market stations as well, the elements of reggae and calypso, for instance, which are certainly very prevalent in terms of popularity within the Toronto market, are not heard on any of the stations that we are referring to; whether it be hit format, or what have you.
3897 The amount we have identified in terms of diversity, being 60 percent roughly, includes gospel, for instance which, excluding BLK again, is not heard whatsoever in the Toronto market.
3898 As we know, that is a significant part of Urban culture.
3899 When we identify reggae, calypso, these are genres. Everybody has heard of Bob Marley, but you can't hear him on radio until recently when remixes are done and his career has actually been revived. We are talking about material from Bob Marley that the person who has that cultural connection with him, or is just familiar with him from an international standpoint, will be able to hear him in original form. That is very important.
3900 There are probably people wondering why is Lauryn Hill doing a song with Bob Marley, or why has that remake been done? I think what we are offering too that depth that Denham spoke of in the in-chief; that it is so important to recognize that the dimension of the artists that we are offering is not represented at all within the Toronto market.
3901 COMMISSIONER PENNEFATHER: Let me push this a little bit, then, on your schedule and where that music is going to turn up.
3902 Today you, I think in the presentation, also talked about putting a youth oriented program show in the evenings. Is this diversity going to happen throughout the day parts or are you going to find yourself drifting into more of the hit component in the evening -- even if it is with Black artists?
3903 MR. FLEX: The best example I could give you would be a station in Ottawa, for instance, called KOOL-FM. It is very popular and very successful in that market. What they have chosen to do, in terms of a hit format, is still identify the breadth, in terms of demographics, from the mother of a 16-year-old to that 16-year-old themselves.
3904 In the morning, for instance, you can hear Barry White with a younger more prominent artist as well. The same sort of model would be what we are proposing. You will be able to hear Lauryn Hill in the morning during drive time based on her popularity, et cetera, but you can also hear Aretha Franklin right alongside her.
3905 As I say, that is a very comfortable transition that you will hear on WBLK on all major U.S. urban stations in the major markets.
3906 So as we skew throughout the day, we will be able to implement the aspects of music that we are referring to, with the probable exception of gospel, which we would identify more so, obviously, on a Sunday and hope that we would draw that audience as well.
3907 Further to that, as we go into the evening and we skew younger, we skew in terms of genres as well towards more hip hop oriented tracks, more new R&B as it is identified within our proposal. Again, as we go through the depth and the variation within the sub-groups, we also have to add the Canadian component.
3908 We have Canadian talent that I can tell you first hand -- I have been on the board of VideoFACT for five years. We generally meet five times a year, and we generally get anywhere between 180 and 220 submissions per meeting for artists, independent artists who are not supported by multinationals or whose product is not owned by multinationals, who are seeking a video grant that should be to submit to air play to sell records.
3909 Because of the limited access to mainstream radio, they use these videos as a promotional tool to get a deal in the United States.
3910 Again, it is Canadian money, funded by MuchMusic through the VideoFACT board, giving it to local artists, who are then taking it to submit a demo package in L.A. These are things that we recognize and I specifically recognize in my experience.
3911 Of those 200 submissions, I don't have exact figures but I would say approximately anywhere between 25 and 35 percent would fall within the Urban genres that we are identifying.
3912 Again, we translate that 60-odd number times five, and we are talking of a significant number of artists.
3913 COMMISSIONER PENNEFATHER: Thank you. That is very helpful.
3914 I will turn, then, to revenues if I may and a few questions on the business plan.
3915 I am very much focused on page 12 of your November 5th letter in which you outline your revenue sources: 55 percent local media stations; 10 percent increase in advertising budgets; and 35 percent other media.
3916 I would like to discuss this other media and what that includes. What is the other media, and does it include WKLB?
3917 MR. DAVY: The other media would refer to out-of-market stations, including the U.S. stations, primarily WBLK, but also the out-of-market station 108, which is CING, and CIDC, and a number of others.
3918 COMMISSIONER PENNEFATHER: So the other media is your concept of repatriation of revenues from WBLK. Again it comes back to that. How much do you think will be involved in dollars of the $3.9 million of the sales?
3919 MR. DAVY: Of that $3.9 million, in Year 1 we assumed that $456,000 of that will come from WBLK.
3920 COMMISSIONER PENNEFATHER: And the balance in terms of other media?
3921 MR. DAVY: CING, for example, the 6 percent that we show translates, in terms of revenues, to $210,000. For CIDC, the 4 percent translates to $140,000.
3922 We can give you a list. The list is fairly comprehensive, but we do have them.
3923 COMMISSIONER PENNEFATHER: My question was to understand, as well, the viability of the repatriation concept; and secondly, where these other revenues were coming from.
3924 You used the air time study, I believe, to --
3925 MR. DAVY: That is correct, Commissioner. Basically, what we have done is from the potential draw from the various stations, we just translated that percentage back into revenue.
3926 COMMISSIONER PENNEFATHER: The CING study on page 17 says that none of the respondents to the study, in terms of potential revenue, were able to estimate the size of the African-Canadian community business market.
3927 I recognize they noted it would be difficult to do so. But do you have a sense of what that market is and can offer?
3928 MR. DAVY: The business market as it relates to advertising or --
3929 COMMISSIONER PENNEFATHER: I can get the reference. It is at the very end of the air time study, and it says that several of the participants were asked to estimate the size of the African-Canadian community business market in terms of a market source of revenue.
3930 MR. DAVY: Right.
3931 COMMISSIONER PENNEFATHER: It is difficult to put a value on it. They go on to say that this is not surprising.
3932 I was wondering if you had some idea of the support for your revenue that would come from the African-Canadian business community.
3933 MR. DAVY: I think a good proxy for that would be the one to $1.5 million in terms of what they have estimated for BLK. That does not get to things like the print. There are over half a dozen print, newspapers within the Black community, and those thrive very well.
3934 Again, I don't have a number for that.
3935 COMMISSIONER PENNEFATHER: Thank you.
3936 I just wanted a sense of some of the new advertising opportunities which the air time study mentions, in addition to repatriation of other media; and what your sense was of the potential for advertising from the Black community.
3937 MR. DAVY: There are a number of businesses within the Black community that today don't currently advertise on radio, who have told us that if there was such a station as Milestone they would be able to reach their target audience and, as such, would advertise, and who currently use different forms, newspapers. But again, they don't reach their target audience. So it is not that efficient.
3938 Today, for example, even BET advertises on WBLK. That is one of the primary sources to get to their audience.
3939 COMMISSIONER PENNEFATHER: Thank you.
3940 MR. JOLLY: I would like to add, Commissioner, that we have to recognize that this is an untapped market. It is not only Blacks that advertise to Blacks. There are other businesses that would love to get into that market. That is a very heavy source.
3941 COMMISSIONER PENNEFATHER: Yes, I appreciate that the study backs you on that point. It was just one piece of the study that was not entirely clear. But I was also concerned about the stake that you are placing on the repatriation of audiences and revenues from Buffalo, which is why we went into that to some extent.
3942 There is a final area of questioning which has to do with the use of the frequency, which, as you may know, we have asked all applicants.
3943 Prior to that, I would like to ask the Chair or counsel if they have any questions for you. Then I will come back. That last question offers you a chance to summarize why you think your application is the best.
3944 I will just ask Madam Chair and counsel if they have any questions.
3945 THE CHAIRPERSON: Counsel...?
3946 MR. RHÉAUME: Thank you, Madam Chair.
3947 Just a few clarifications at the corporate side.
3948 Mr. Jolly, is it fair to say that you would be voting all the shares in FoundCo in under a voting trust agreement?
3949 MR. JOLLY: That is correct, counsel.
3950 MR. RHÉAUME: There is also another voting trust agreement in Milestone -- and this one has me a little confused -- where it appears that you would be voting the special shares or you would be the voting trustee.
3951 The essential shares, as I understand it, from the voting trust agreement are non-voting. Could you help me out on this. What does that voting trust agreement mean?
3952 MR. JOLLY: There is a total of -- just one second.
3953 There are 9,180 voting shares, counsel, and there are 781 non-voting shares, for a total of 9,961 shares altogether.
3954 MR. RHÉAUME: My point, Mr. Jolly, is: What is the purpose of that voting trust agreement where you are described as the voting trustee for those special shares, the 811 shares that are non-voting?
3955 That is the part I don't really get.
3956 MR. JOLLY: The purpose of that is for control to reside with one person to deal with our partners.
3957 MR. RHÉAUME: So those 811 special shares might become voting at some point?
--- Off microphone / Sans microphone
3958 MR. JOLLY: There are no plans for that, counsel, at this point.
3959 MR. BUCHAN: Perhaps I could help out with this.
3960 The structure is set up so that the control will rest with FoundCo throughout, and the shareholdings in what will become the licensee company will be controlled up to and including and through the special resolution level at 66-2/3 percent by FoundCo. And the FoundCo shareholders, the five founding shareholders, have agreed to vote at shareholders meetings to act as a unified force because of the voting trust agreement. And Mr. Jolly will vote those shares.
3961 If there were an extreme situation where the non-voting shares acquired voting rights, the non-voting shares -- there is about 8 percent of total issues equity that are held by Mr. Glatt, Mr. Soloway, Mr. Detuba, Mr. Yigit -- I think it is 8 percent of those voting shares.
3962 If the non-voting shares acquired voting rights in an extreme situation -- and we are talking the special shares, the 811 shares -- they would vote with the FoundCo group, with the original group.
3963 The purpose of that very clearly is to ensure that even at a special resolution level with a meeting of shareholders, that standards would not have a blocking third. That is the way it is structured.
3964 MR. RHÉAUME: Thank you.
3965 There appears to be a value in Milestone Incorporated when the company is incorporated -- and correct me if I am wrong, Mr. Jolly -- of $10 million.
3966 MR. JOLLY: That is correct, counsel.
3967 MR. RHÉAUME: Which means that FoundCo actually would have a value, mathematically, of $7 million.
3968 Is there an agreement between the shareholders of FoundCo for the disposition of the shares in FoundCo at any point in time?
3969 MR. JOLLY: Yes, there is, counsel, and it is in our shareholder's agreement for FoundCo that is filed with the Commission.
3970 MR. RHÉAUME: I am just wondering if I missed something in your corporate documents.
3971 Is there any kind of right of first refusal on the part of anyone?
--- Off microphone / Sans microphone
3972 MR. RHÉAUME: In whose favour would that be, Mr. Jolly?
3973 MR. JOLLY: I am not quite clear what you mean by "in whose favour", counsel.
3974 MR. RHÉAUME: In FoundCo there is a shareholder's agreement with the right of first refusal of the shares --
3975 MR. JOLLY: It would be pro rata for the remaining shareholders.
3976 MR. BUCHAN: Maybe I could clarify because I reviewed these documents this morning.
3977 Within FoundCo there is a right of first refusal to the other founding members of FoundCo and/or to their estates. It is recognized that members of the immediate family of the FoundCo members could step into the other person's shoes.
3978 If one of the FoundCo members wished to sell his shares, they would have to make them available within FoundCo.
3979 MR. RHÉAUME: Thank you.
3980 Thank you, Madam Chair.
3981 THE CHAIRPERSON: Thank you.
3982 Commissioner Pennefather.
3983 COMMISSIONER PENNEFATHER: I am going to give you a chance to sum up but in this context: As you know, your application is competitive and technically mutually exclusive with seven other applications for the use of 93.5 frequency.
3984 Under this scenario, the Commission seeks the competitors' views to assist it in deciding which applicant has proposed the best use of the coveted frequency.
3985 What, in your view, are the compelling reasons to grant you the requested frequency? In what way does your proposal constitute the best use of the proposed frequency?
3986 And other than 93.5 requested, are you aware of any other FM frequency that could be used for establishing a proposed radio service? Have you looked at any other frequency options?
3987 MR. JOLLY: I will answer your last two questions first, Commissioner. The answer is no.
3988 The answer to your first question is I believe that Milestone has filed a very tight comprehensive accurate application; that we have established a sound business plan over five years, that has been well researched. The forecasts we feel are very conservative, ensuring a slight profit at the end of Year 3.
3989 We think that our application is well financed with additional sources from shareholders and especially FoundCo. We believe that our format is a proven format that has been well researched and that will bring us a reasonable share of the market.
3990 We believe that that format is evidenced by its presence in every major market in the United States -- and, of course, witness WBLK which commands a considerable share of the Toronto market.
3991 As Farley has expressed also, we know that there is a considerable absence of a large number of genres that we propose to play in the Toronto market. We believe that this will be unique. In fact, we will be playing 60 percent of unique music on our station.
3992 Our Canadian Talent Development and the genre that is proposed, I think will be very beneficial and speak to the needs of the artists in this community. Later on, at intervention time, you will have a chance to see and hear from some of those very people.
3993 Our spoken word and news programming will speak to the community's reflection, and it will address news voices and diversity in the community. The programs that have been addressed, such as "Winning Street" and "Urban Forum" will help to bring an inter-cultural understanding.
3994 In that point, Commissioner, I would like to make the point that we have, as a bedrock audience in Toronto, 350,000 Blacks within an area of 4.2 million people. It is not a healthy thing to have a city the size of Halifax inside of 4.5 million people with no voice. It just does not lend itself to the transition into the new millennium.
3995 We believe with our program there are a lot of social benefits: the prestige it will bring to the community; the reduction of alienation; the increase of self-esteem; better communication; better interaction with a larger community, as I just mentioned, with the 350,000 within 4.2 million.
3996 The commercial benefits have been alluded to earlier, where our merchants in our community, for example, get no rebate from the tax department when they spend their money on advertising. Sometimes it takes a considerable sum: for example, concert promoters, club promoters. It takes a considerable amount of promotion to put on an event.
3997 We believe, also, that there will be more diversity. It will bring more diversity to this community. There will be more opportunities for management, diversity in radio, programming; opportunities for radio and television graduates from places like Ryerson, who now have nowhere to go.
3998 They are today excluded, locked out, not just from radio but from television.
3999 There will be more diverse participation on the air, not only behind the scene as technicians, but as I mentioned before management and, more importantly, ownership.
4000 We feel that it is important to have many views and voices in the community. Just as the CBC insists on having its foreign correspondents in foreign lands to get a Canadian perspective on the news from those foreign places, we feel it is also important for the Black community to have a Black perspective on the news.
4001 We feel that the market impact will be negligible. We are talking about the Toronto market. Yes, it is competitive, but we have projected revenues of $3.9 million going to $7 million in the final year, which natural growth alone could take care of. In fact, the market grew from 1997 to 1998 by $17 million.
4002 Commissioner, we have read your Call for Applications carefully and brought forward a comprehensive response that we believe has met all the tests.
4003 I would like to close by telling you that my team's commitment to the Milestone vision is unequivocal. If you give us the chance, we are determined to make the station a success story as part of the Canadian broadcasting system.
4004 Merci, Commissioners; thank you very much.
--- Applause / Applaudissements
4005 THE CHAIRPERSON: Just as I was going to say thank you to the audience for being so co-operative.
4006 Thank you, Mr. Jolly and your team. It was a pleasure hearing you. We will see you, no doubt, later in the process.
4007 We will now adjourn until 9 o'clock tomorrow morning, at which time we will hear the Auguste application.
4008 I hope you all have a good evening.
--- Whereupon the hearing adjourned at 1730, to resume
on Thursday, February 3, 2000 at 0900 / L'audience
est ajournée à 1730, pour reprendre le jeudi
3 février 2000 à 0900