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:
Bellevue Ballroom Bellevue Ballroom
Holiday Inn Holiday Inn
1 Princess Street 1 Princess Street
Kingston, Ontario Kingston (Ontario)
May 10, 2000 le 10 mai 2000
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
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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
S. Langford Commissioner/Conseiller
J-M. Demers Commissioner/Conseiller
A. Noël Commissioner/Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
P. Cussons Hearing Manager and Secretary / Gérant de l'audience et Secrétaire
G. Batstone Legal Counsel /
L. Bennett Legal Counsel /
HELD AT: TENUE À:
Bellevue Ballroom Bellevue Ballroom
Holiday Inn Holiday Inn
1 Princess Street 1 Princess Street
Kingston, Ontario Kingston (Ontario)
May 10, 2000 le 10 mai 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
APPLICATION / DEMANDE
McCOLMAN MEDIA INC. 368
Questions by the Commission 386
Questions by Commission Counsel 434
CHUM LIMITED 439
Questions by the Commission 454
Questions by Commission Counsel 514
JOHN P. WRIGHT 528
Questions by the Commission 548
Questions by Commission Counsel 579
INTERVENTION / INTERVENTION
McCOLMAN MEDIA INC. 583
CHUM LIMITED 587
JOHN P. WRIGHT 596
INTERVENTION / INTERVENTION
CORUS RADIO COMPANY
Steve Rosenblum 599
Questions by the Commission 605
DOUG THORNE 617
MARK POTTER 624
DUNCAN SCOTT 632
DAVE CLARKE 639
GEORGETTE FRY 648
TABLE OF CONTENTS / TABLE DES MATIÈRES
KINGSTON SYMPHONY ASSOCIATION /
KINGSTON REGIONAL ARTS COUNCIL
James Coles 651
Jane Fitzgerald 654
John R. Armitage 661
WALTER F. HIGH 665
P. DAVID CARR-HARRIS 669
Kingston, Ontario / Kingston (Ontario)
--- Upon resuming on Wednesday, May 10, 2000
at 0830 / L'audience reprend le mercredi
10 mai 2000 à 0830
2074 THE CHAIRPERSON: Order, please.
2075 Good morning, ladies and gentlemen. Bonjour, mesdames et messieurs. Nous allons maintenant commencer le deuxième item à l'agenda qui sont les trois demandes de radio.
2076 So will now move to the second item on the agenda -- second, third and fourth, I guess -- which are the three competing radio stations.
2077 Mr. Secretary.
2078 MR. CUSSONS: Thank you, Madam Chairperson.
2079 Good morning, everyone. Bonjour, toutes le monde.
2080 I would just like to remind everyone again, especially people who perhaps were not with us yesterday, that the CRTC examination room is in the Sir John A. MacDonald Room on the first floor of the hotel.
2081 As Madam Chairperson just said, it is our intention to today to hear three competing FM applications for Kingston. There are four phases involved in the competitive process and it is our intention to complete all of those phases today.
2082 During Phase I, the applicants come forward one at a time and they make their presentation, including audio-visual and other materials, and for this they are allowed a maximum of 20 minutes. Questions by Members of the CRTC Panel normally follow and, if necessary, counsel.
2083 During Phase II, the applicants reappear in the same order to intervene to the competing applications. In this case, 10 minutes maximum are allowed.
2084 During Phase III, we invite other intervenors to come forward and present their comments. There is 10 minutes maximum allowed for those persons.
2085 Finally, in Phase IV we invite the competing applicants to return in reverse order to respond to all interventions.
2086 It is now my pleasure to introduce the first application by McColman Media Incorporated, on behalf of a company to be incorporated for a broadcasting licence to carry on an English-language FM radio programming undertaking at Kingston. The new station would operate on frequency 105.7 megahertz, Channel 289A, with an effective radiated power of 4,000 watts.
2087 The applicant proposes to operate a soft adult contemporary music format.
2088 The Commission notes that this application is technically mutually exclusive with other applications which are also scheduled at this hearing for the use of the 105.7 megahertz frequency.
2089 We have Mr. McColman and his colleagues.
2090 Good morning, sir.
2091 THE CHAIRPERSON: Before you proceed, may I remind people to please -- or ask people to turn off their cell phones. It is quite distressing for participants when phones ring at the crucial moment.
APPLICATION / DEMAND
2092 MR. McCOLMAN: Thank you, Mr. Secretary.
2093 Madam Chairperson and Members of the Commission, let me be the first of the radio applicants to welcome you to our beautiful limestone city, Kingston. My name is Garry McColman. I am President of McColman Media and we are pleased and excited to appear before you today to present our application for Easy 105.7 FM, a community-oriented radio station aimed at an older demographic.
2094 On my left is Mr. Mark McKercher, the Vice-President of the corporation to be incorporated if we are successful in obtaining our licence in this application.
2095 On my right is Mrs. Tracey Larlee, the Promotions and Community Relations Manager for McColman Media. Tracey will be the Promotions and Community Relations Manager for Easy 105.7 and has nine years of broadcast experience.
2096 Beside Mr. McKercher is Mr. Michael Koch, our legal counsel from Goodman Phillips & Vineberg.
2097 Behind me is Mr. Richard Sienko, the President of Target Broadcast Sales Inc., Canada's only independent national radio representative firm specializing in Independent radio broadcasters. Richard's experience was invaluable in reviewing our audience and sales projections in our application.
2098 Next to Richard is Mr. Gordon Elder of Elder Engineering, providing our technical expertise, and Ms Jackie St. Pierre of St. Pierre and Associates. Jackie has 19 years of radio management and on-air experience. She owns two local marketing firms. Jackie too has been invaluable in developing our application.
2099 Currently in Kingston our vast 40-plus radio audience is underserved. Our city does not have a community radio station that offers an adult contemporary format with community access, specialty programs and music and educated talk aimed at our vast 40-plus audience.
2100 We are before you today seeking your approval for a new local FM radio service to fill this gap in our community's radio choice. I say "our community" because I have lived in this community, Kingston, for over 21 years. My business partner, Mr. Mark McKercher, is a local business owner. He was born, raised and educated in Kingston at Queen's University and has resided in Kingston all his life. As a matter of fact, he is a third generation Kingstonian.
2101 Mark owns several successful local and regional businesses, including furniture stores, a full service travel agency and a restaurant. Mark supports our community by assisting local organizations and charities. He is a great mentor for local entrepreneurs.
2102 Importantly, Mark is also a major advertiser in the Kingston market. He buys more than $1 million dollars in advertising every year.
2103 MR. McKERCHER: Advertisers have had great difficulty reaching the older demographic in Kingston given the current mix of radio stations. I, for example, have moved radio dollars to other media to try to reach this audience. Many of the local stations are targeting the same audience, skewing younger and younger to fight for the 18-35 year olds.
2104 Kingston is a unique community. Statistics Canada tells us that 58 per cent of all Kingstonians have a post-secondary education. This is 10 per cent higher than the provincial average. We live in a predominately white-collar town with two universities, three colleges, four hospitals, two school boards and a large government sector of employees with Corrections Canada, OHIP and others, as well as an armed forces base. Finally, we have an aggressive high tech plan to continue to attract new businesses in the area of biotechnology and knowledge-based industries.
2105 With this very brief profile of Kingston, I'm sure you can quickly identify the need for a radio station targeting a mature, educated audience. As well, you can understand the challenge for an advertiser, a radio buyer, with limited commercial radio stations targeting the 40-plus audience.
2106 Let me tell you about our local radio landscape which has undergone significant change in the last few years. CHUM radio's CFLY-FM in August 1998 changed its format, skewing younger, to a hip adult contemporary format. It received newspaper coverage when it dropped its big band and jazz show, and again when it dropped its "Sunday Morning Café", a popular weekend show that was a combination of music and interviews.
2107 These changes in programming have left a large gap in the community, with organizations having an inadequate local radio source to broadcast interviews with campaign and event organizers. As a result, community organizations have turned to newspapers to enhance their advance promotion and publicity.
2108 A local country radio station introduced hot country in 1995 and also skewed younger. As an advertiser, I also must consider that in a predominantly white-collar town only a small proportion of my target audience is composed of country music fans.
2109 We have two AM radio stations as well. CKLC-AM, also owned by CHUM Limited, went through format changes in August 1998, moving a contemporary hit radio format to a lite rock radio station. CFFX, GTO 960, owned by Power Corporation, now Corus, is an oldies format. Both stations are music-intensive formats. Neither station provides community-oriented programs. Both stations under perform and have a very, very low audience share.
2110 These developments have left our 40-plus radio audience underserved, although Kingston has a lot to offer our adult community when one considers the factors I have referred to plus our tourism clusters and historical significance.
2111 During our presentation today we will focus on the need for an FM radio station targeted at this audience. We will also reflect on Kingston's vibrant economic prospects. We will review the impact of a new radio station in Kingston and its impact on other commercial stations. And, most importantly, we will introduce you to the programming highlights of Easy 105.7
2112 MR. McCOLMAN: Four years ago I began investigating the availability of an FM signal here in Kingston to fulfil my dream of operating a radio station here in Kingston, Canada.
2113 I clarify this because I have experience operating radio stations elsewhere, in Arizona and New Mexico, and I have not had the privilege of Canadian ownership under the Commission's governance. That is one of the main reasons why I'm here today. As the popular slogan is today: I am a Canadian.
2114 I have been born and bred to broadcast. Thirty-five years of my life dedicated to it. My experience includes consulting, radio management and sales for 20 years. I started my own business, McColman Media, that buys radio and television airtime. Through its expansion to the U.S. in the early '80s it grew to a multi-million dollar agency. In 1990 I divested and moved back to Kingston.
2115 I began performing an on-air daily shift daily for Power Broadcasting, Corus now. My radio audience grew and I grew the audience through my participation in the community, shaking hands with listeners and supporting local organizations, providing everything from emcee services to joining organizing committees, chairing a lot of those committees for local events.
2116 I currently sit on the Board of Directors in Kingston of the Salvation Army, where I chair; The Diabetes Association, and I am a Director with the Greater Kingston Chamber of Commerce. I was elected to municipal government for three years.
2117 When my on-air career in Kingston came to an end in August 1994 an opportunity presented itself to become a minority owner in a United States station that broadcasts in Kingston area. I have made WBDR a part of the Kingston community. We have supported our community by assisting local musical artists, by paying to produce their CDs and announcing their local performances on the air. The Greater Kingston Chamber of Commerce nominated us as "Entrepreneur of the Year".
2118 We voluntarily air 20 per cent Canadian content. Weekly we air a live Canadian dance program produced in Montreal and we are the only local radio station to air six hours of live-to-air programs from Kingston's night clubs weekly.
2119 Finally, we air 10 minutes of community public service announcements every day, supporting Kingston and its charities and have assisted in raising tens of thousands of dollars per year for local hospitals and children's organizations. This represents about $125,000 annually of airtime.
2120 In the past couple of years, as my research began with Industry Canada searching an opportunity to develop and create a Kingston station governed by the CRTC, I have become more familiar with the CRTC, its mandate and its role in Canadian radio.
2121 I started this application, leading the way for this hearing, because of my desire to stay in Kingston and fulfil my childhood dream of owning my own Canadian radio station, and also to continue to serve my community, a community-oriented station that targets an underserviced demographic.
2122 As mentioned by Mark, it was obvious to us that with the changes in the local radio environment left Kingston's 40-plus radio audience underserved by FM radio. As a member of the community I viewed this as a need, but as a radio person I viewed it as a tremendous opportunity.
2123 You might ask: Is there a large number of local listeners tuning to radio stations out of the market? And: Where are they tuning?
2124 MR. McKERCHER: Spring BBM 1999 shows that the older the demographic the greater the tuning to out-of-market stations or to CBC. Note that 61.2 per cent of the cume, or 42.2 per cent of the share, are going to other stations.
2125 In the case of the 45-plus demographic, 62.7 per cent of the cume and 47.2 per cent of the share tune to other stations.
2126 And, finally, in the case of the 50-plus demographic, 64 per cent of the cume and 48.8 per cent of the share tune to out-of-market stations. Clearly the older demographic has been forgotten by the existing operators.
2127 MR. McCOLMAN: The programming mix for Easy 105.7 will offer a diversity and services that are not duplicated in the market.
2128 MS LARLEE: Easy 105.7 will be an adult contemporary station. During the day time, Easy 105.7 FM will play a mix of familiar favourites from the past with soft music by the artists of today targeted at our 40-plus demographic. We will set up local audience clusters to assist in the programming of the station by providing input on the music mix.
2129 MR. McCOLMAN: But Easy 105.7 will not be a jukebox station. We will add diversity to the news voices in Kingston. We will be providing community-based programming and news with informative programs. We will provide more local news than any other station in the market. A comparison with news presently offered by local incumbents shows our over-achievement in this area. Easy 105.7 FM will provide news in a more in-depth, longer format with commentary daily.
2130 MS LARLEE: Newscasts will be scheduled hourly at 6:00, 7:00, 8:00 and 9:00 a.m., noon, 4:00 and 5:00 p.m. There will also be news breaks throughout the day. Each newscast will contain five minutes of news, plus sports and weather. News breaks will have three minutes of news plus weather. We will also add a business report at 1:00 p.m. and 6:00 p.m. as part of the news information packages.
2131 MR. McCOLMAN: Local news will lead all newscasts. We will also cover regional, national and global news. News packages will also include local and regional weather reports, when warranted, and local and national sports reports.
2132 Our newsroom will have two full-time news people and Kingston's only full-time radio sports reporter. The addition of the sports director will allow us to be Kingston's true source for sports. We plan to air minor hockey scores and high school and college scores. We will be accessible, and we will add to this service by displaying all scores on a web site we will implement.
2133 MS LARLEE: Commentary and special features will be added to the information packages. These will include:
2134 MR. McCOLMAN: "Kingston Today" is our special events calendar accessible on our web site;
2135 MS LARLEE: "Limestone Faces", highlighting Kingston's heroes and unsung celebrities package;
2136 MR. McCOLMAN: "In My Opinion" will be commentaries from our editorial board which will assist us in the direction of our educational talk, information-based, local programming and will be available for comment during daily commentaries discussing the hot topics of the day;
2137 MS LARLEE: "The Help Line", local specialists and professionals on the air answering questions submitted to the station via our web site or letters mailed to the station;
2138 MR. McCOLMAN: "Radio Risk Watch" will be 60 seconds of prevention with local specialists from police, fire departments; health tips from the local Health Unit;
2139 MS LARLEE: The "Kingston Arts Journal" will help us keep us in touch with our arts and cultural communities by presenting an in-depth look at upcoming events and activities, highlighting local authors and gallery exhibits;
2140 MR. McCOLMAN: "Second Opinion" will be aired daily. This will be the community's response to on-air commentaries run on our station. It is our way of making sure our radio airwaves are truly accessible.
2141 Easy 105.7 will also offer community access in the way of an open line show to be aired Monday to Friday from 11:00 a.m. to 12:00 noon and will lead into our noon hour report. The show could move to two hours per day as we find the right mix of talent and ratings.
2142 This will be the only open line radio show in our market. Easy 105.7 FM will ensure that all perspectives and viewpoints have the opportunity for expression on issues of importance through this live open forum each weekday.
2143 In addition to the open line show and community commentary mentioned, we want to provide block programming for members of community groups. It is our hope that we will have four specials per year.
2144 On Sunday mornings we will air a four-hour program called "The Sunday Café". This program will include a combination of music and information. The interviews contained in the show will be with local movers and fundraisers. It will be Kingston's only outlet for this type of on-air promotion on Kingston radio.
2145 We would add as a special feature a program highlighting our ethnic diversity by our local Folk Arts Council. This feature would talk about national holidays and their ethnic origins.
2146 Other specialty programs include: A Sunday night jazz show will air big band and jazz programming on Sundays from 6:00 to midnight. This show will highlight local musicians by including interviews and airing their musical material. For many, many years in this community this program was a big success on another station. In fact, we plan to live-to-air broadcasts with performances by local musicians once a month.
2147 On Saturday night we plan to air a nostalgia "Gold Show".
2148 As part of our Canadian talent initiative, we will be providing on-air broadcasts called live-to-air programs. We plan to offer one per month to be aired in its original format or edited for on-air use. Clips would be made available for several of our programs to assist in the cross-promotion of our programming.
2149 We will be the only station in the community recording local concerts and airing them on the radio station. This initiative will be supported by a comprehensive on-air promotional plan. This commitment will carry a value of about $100,000 per year.
2150 We can add to this our donation to FACTOR. We will donate $5,000 per year for the first three years and $6,000 per year thereafter. For our first licence term, seven years, our contribution to FACTOR would be $39,000, exceeding the CAB plan by $18,000.
2151 And, as mentioned in our application, we will produce a CD of local musicians.
2152 MR. McKERCHER: We not only think that diversity is good policy; we think it is good business. Our business plan is based on meeting a pent-up demand for a radio station that will attract listeners from an increasingly important and lucrative demographic.
2153 We have prepared a down to earth budget and set realistic goals. Our expenses are quite low, primarily because we propose a cost-effective transmitting system. The only compromise we are not willing make is in the quality of our service.
2154 We will be aggressive in our approach to finding new advertisers. We estimate that 85 per cent of our advertising dollars will come from new sources. Since our target audience is underserved, we will repatriate sales dollars from other media, mainly print. We will also repatriate audiences to a local station from stations outside our market.
2155 Accordingly, we will not have a significant impact on the revenues of operators already in the market.
2156 We return to the fact that Kingston's 40-plus market is underserved. Of our city's population, 45 per cent of our community is over 40 years of age, according to the Financial Post's Demographics 2000 estimates. There has been a significant growth in the senior market and, in fact, Kingston is known as the second largest retirement centre in Ontario.
2157 Today's seniors are buyers. They are active. They assist in driving the market and are spending money unlike seniors 20 years ago that did not plan for their retirement, cocooned and saved every dollar.
2158 MR. McCOLMAN: We live in this market. We have our pulse on what is happening seven days a week, 365 days a year. We know there is a market of both advertisers and listeners waiting to be served by Easy 105.7.
2159 We also believe there has never been a stronger time to invest in Kingston. In our reply to Corus' intervention we highlighted Kingston's economic climate, in particular the expansion of our retail sector.
2160 This boost in retail development will translate into new advertising dollars. We want to improve the radio diversity by providing a vehicle for advertisers to reach the 40-plus target audience on an FM radio station. We will reach advertisers whose radio budgets have migrated to other media. We will assist the market by growing the pie, as our share and tuning increase.
2161 We believe the market is under performing. The Radio Marketing Bureau tells us that radio should represent approximately 12 per cent of the overall market's advertising dollars. An educated guess is that local advertising is spending about $60 million a year. At 12 per cent this would translate to a radio market of roughly $7 million.
2162 However, local radio stations are generating approximately $5 to $5.5 million. This means that existing operators are under performing by $2 million. To grow this pie, we need to add diversification in format and diversification in target audience. We want to help grow the pie by adding to the market's available radio dollars.
2163 A new FM radio station wishing to attract an older demographic of 40-plus would not affect our current local radio stations by bleeding listeners from their audience pool and, therefor,e it should do little to affect their revenues.
2164 Madam Chairperson and Members of the Commission, we believe we have presented a strong case for support for Easy 105.7. Kingston deserves a radio station with diversity in programming, it deserves a station targeted at its vast 40-plus demographic with educated talk, specialty programs, expanded news and community access.
2165 As experienced, local business people we will provide good governance and adhere to the Commission's policies. We have outlined our contributions to FACTOR and other Canadian talent initiatives. We believe that approval of our application is in the public interest and meets the focus of the Commission's new commercial radio policy:
2166 - It is a quality application based on a market need with a sound business plan;
2167 - It adds to the diversity of news voices in the Kingston market;
2168 - It will have no significant impact on the incumbents.
2169 Accordingly, we respectfully ask for your support of this application and we welcome your questions.
2170 THE CHAIRPERSON: Thank you, Mr. McColman and your colleagues.
2171 Commissioner Wilson has questions for you.
2172 COMMISSIONER WILSON: Good morning, Mr. McColman. Thank you for being with us this morning, and welcome to you and the members of your team.
2173 I appreciate the detail that you provided us this morning with respect to your local program initiatives and we will take a look at some of those and some of the other programming issues a little later.
2174 I have questions for you in a number of areas, including clarification regarding your interest in "The Border" which you mentioned this morning and in your May 31st letter to the Commission; your choice of your programming format; questions regarding market impact; and your business plan; and some specific questions on your programming plans and Canadian Talent Development.
2175 We are here to try to make the record as full as possible. Part of that is going to involve me poking holes in your plan. I'm going to take you over some jumps and hopefully at the end of the day we will have enough information to help us evaluate your application.
2176 In your May 31st letter to the Commission and again this morning you talk about the minority interest that you have in WBDR. Just out of curiosity, what is the level of your interest in that station?
2177 MR. McCOLMAN: I own 11 per cent of WBDR.
2178 COMMISSIONER WILSON: Okay. How long as WBDR been on the air?
2179 MR. McCOLMAN: April of 1997.
2180 COMMISSIONER WILSON: April 1997, okay.
2181 In your application, when you filed the actual application form you originally listed two American citizens as officers or directors of your company and you did amend that --
2182 MR. McCOLMAN: Right.
2183 COMMISSIONER WILSON: -- pursuant to a deficiency question. But just, again out of curiosity, were either of these partners of yours in WBDR?
2184 MR. McCOLMAN: Yes.
2185 COMMISSIONER WILSON: Okay.
2186 Last night I was walking up Princess Street and I noticed a car with your station ID and frequency painted on it in bright green and yellow letters. It said "The Border" right across it. Was that car just visiting Kingston or would it be here all the time?
2187 MR. McCOLMAN: It's part of the community. It's here all the time. We have an office established here, a studio here and do business here. As I mentioned in my application, we are a part of the fabric of this community and have contributed, I would like to say, very much to it.
2188 COMMISSIONER WILSON: Okay.
2189 According to our market research, WBDR is the number one station in the Kingston market for adults 18 to 24. Is that --
2190 MR. McCOLMAN: Yes.
2191 COMMISSIONER WILSON: That's correct?
2192 MR. McCOLMAN: Yes, m'hm.
2193 COMMISSIONER WILSON: Clearly, based on what you have said in your comments and the statement you just made, you consider WBDR as a local market station, an incumbent station in the Kingston market?
2194 MR. McCOLMAN: Yes.
2195 COMMISSIONER WILSON: Okay.
2196 What U.S. communities does it serve?
2197 MR. McCOLMAN: WBDR is licensed to Cape Vincent, New York and it serves Watertown, Cape Vincent and surrounding areas.
2198 COMMISSIONER WILSON: How big are those communities in comparison to Kingston?
2199 MR. McCOLMAN: Watertown would be about 55,000, 45,000.
2200 COMMISSIONER WILSON: Cape Vincent is --
2201 MR. McCOLMAN: Twelve thousand.
2202 COMMISSIONER WILSON: Pretty small?
2203 MR. McCOLMAN: Cape Vincent is very small and more of a summer community.
2204 COMMISSIONER WILSON: So Kingston really is its major market?
2205 MR. McCOLMAN: Yes.
2206 COMMISSIONER WILSON: You are in the advertising business and you are also a minority shareholder in "The Border". Would you be in a position to know how much money in advertising revenues "The Border" draws out of the Kingston market?
2207 MR. McCOLMAN: This last year, approximately $400,000. It would be --
2208 COMMISSIONER WILSON: In local sales?
2209 MR. McCOLMAN: Yes, local sales.
2210 COMMISSIONER WILSON: That seems low, considering the market share.
2211 MR. McCOLMAN: Well, either then we have under achieved in sales or -- I would say that obviously we are new to the market and it is a slow growth pattern, but we are working at it and -- what can I say.
2212 COMMISSIONER WILSON: Okay. That's good.
2213 With respect to your choice of programming format, you are proposing a station that targets the 40-plus demographic.
2214 Again, you say in your letter of May 31st to the Commission that your research indicates that a majority of Kingston radio listeners in this demo listen to radio other than Kingston stations. I assume that you are referring to the BBM cumes and shares that you attached to the letter --
2215 MR. McCOLMAN: Yes.
2216 COMMISSIONER WILSON: -- and which you showed again this morning.
2217 I'm wondering if you went a little deeper into those numbers and looked at what proportion of the 61.2 per cent cume and the 42.4 per cent share is going to CBC?
2218 MR. McCOLMAN: We did refer to that in one of the letters.
2219 Mark, did you want to --
2220 COMMISSIONER WILSON: Because that would reduce those numbers quite significantly. If you take out the tuning to CBC --
2221 MR. McCOLMAN: Right.
2222 COMMISSIONER WILSON: -- those numbers would come down fairly significantly, would they not?
2223 MR. McCOLMAN: About 50 per cent of the tuning that was listed there was CBC.
2224 COMMISSIONER WILSON: The CBC.
2225 MR. McCOLMAN: I think there was another letter there on file that when we calculated our share we made reference to that.
2226 COMMISSIONER WILSON: I must have missed that.
2227 MR. McCOLMAN: Jackie, did you want to --
2228 MR. SIENKO: May I make a comment, Madam Chair?
2229 COMMISSIONER WILSON: Okay.
2230 MR. SIENKO: The CBC in 50-plus hours tuned represents a combined 37 per cent from the 50-plus, which is up from 19 per cent from adults 18-plus, and this is in the Fall BBM, the latest BBM available.
2231 COMMISSIONER WILSON: Okay. I will just get myself organized here again.
2232 I also have some BBM numbers -- we subscribe at the Commission to BBM -- and they show -- unless I'm not reading them correctly they show a number of things. They show that the distribution of total listening -- and I don't know how much material you actually got from BBM in support of your projections, but I just want to tell you what my numbers say.
2233 The distribution of total listening hours by age group, excluding CBC, shows that people from the 35 to 64 demos -- broken down into the 35 to 44, or whatever it is -- those who do listen to market stations listen to them a lot -- I'm sort of putting this in very simple terms -- and that people between 12 and 34 spend most of their time listening to out-of-market stations, 70-80 per cent of their tuning is to out-of-station markets, which includes "The Border". It also includes a CHUM station from Brockville and, I guess, some of those people are listening to CBC as well.
2234 I also have another chart that breaks down out-of-market tuning which shows that a fully 52 per cent of the total tuning in the market is to out-of-station markets and that by far the largest number of them are listening to "The Border", 16 per cent. A 16 per cent share is going to "The Border", and if you add that to the other U.S. stations that are spilling into this market, almost half of that 52 per cent is going to U.S. stations and the rest are tuning to Canadian stations, CBC Ottawa and Toronto at an 18 per cent share combined and "The River" at 5 per cent.
2235 What I'm getting to with this, if you just give me another minute, is something that I have been sort wrestling with as I have been reading through your application, which, as I said earlier, offers a really significant range of local programming initiatives which are very important to a community. But very often when we receive applications for new stations one of the strategies followed by applicants is to repatriate listeners and advertising revenue back into the local market.
2236 What we have here is quite an interesting situation, because an 18 per cent share is going to the CBC, which doesn't accept advertising; and a 16 per cent is going to "The Border", a U.S. station which does.
2237 I'm just wondering, Mr. McColman, if you could just give me your opinion on whether or not you think the Commission should be concerned about repatriating CBC listeners, that is our national public radio broadcaster, or should we be concerned about repatriating listeners and advertising dollars back into the Kingston market? Because that $400,000 a year that gets placed with "The Border", although you consider it a local station, that is going to a U.S. station. Not that I don't like the U.S., I visit there often, but I'm just curious about --
2238 Because clearly, you know, the target demographic that you have chosen won't compete with "The Border" because it skews to a different audience. So I am in a bit of a conundrum here trying to sort out how to approach this.
2239 MR. McCOLMAN: Well, let me -- I hope I can help you.
2240 COMMISSIONER WILSON: So do I.
2241 MR. McCOLMAN: First off, in discussing WBDR, the transmitter was there before I came along and I'm sure it will be there after I'm gone, which sits a mile within the American soil over there. So as I mentioned during our presentation, I am Canadian.
2242 I don't know what the best of the bad situation would be in light of the Commission or anyone on this side of the border, but we have a situation where we have a border radio station that is partially owned and operated on the Canadian side certainly by a Canadian who last year put $300,000-plus back into this community in wages, community contributions, to purchase of goods and services and rents and taxes, in every type of legal thing that an operating business could do, plus Garry McColman and his staff -- and please, if I have my one day in court I have to say "I", I guess, a little bit here.
2243 COMMISSIONER WILSON: That's okay.
2244 MR. McCOLMAN: We have invested not just money but, as my grandfather told me, "Garry, you can invest and throw money at anything you want to help an organization, but when you give your time you have given a part of your life." That is what we do.
2245 The reason that "The Border" is a success, WBDR, is not directly because of the music and because Garry McColman or anyone else was smart enough to know that there was a void in the market, it is a combination of things: It is the team that we put together, it is the involvement and acceptance by this Canadian city that we were not just a border station with a bunch of people running across here with a moneybag, throwing the money in and running back across the border. We have proven to the community in three years that we are here and that we are operating a business.
2246 To answer your question on this application, and I may as well come right out with it, when I said to you that I am here before you today because an opportunity presented itself for me to be an owner/operator of a Canadian radio station, I am a minority shareholder of that radio station and I will be a majority shareholder of this radio station. I will operate this radio station.
2247 If I can be so bold as to say that if I was successful at that radio station, and I am only taking off what you are telling me here, then I'm sure I can be successful at this radio station.
2248 Mark and I, we live in this community and how are we going to -- we don't want to repatriate directly from CBC but, Commissioner Wilson, you and the Commission for many months have been telling the CBC that they must become more regional. The headline of the National Post this morning says the CBC is going to, again, disenfranchise itself from the regions.
2249 We live here. We are answerable to the people here. I am on the Board of Directors of the Chamber of Commerce. Nine hundred and fifty businesses belong to that. If I were to get a licence and then turn my back on the community, I have to live here. I don't live in Toronto. I don't live in Ottawa. I live here.
2250 COMMISSIONER WILSON: Lucky you.
2251 MR. McCOLMAN: Yes, exactly. You can look over your shoulder and see why.
2252 But it is something that we have worked long and hard for and we are passionate about this because we know what radio used to be here and what radio can be. This application is not a jukebox with news headlines, it is the very fabric of our community. We know that because people listen to CBC here, and you know they won't stop listening to CBC.
2253 COMMISSIONER WILSON: No, hopefully not.
2254 MR. McCOLMAN: CBC is an excellent -- I have to admit driving home every night "As It Happens" has to be on my radio to get some solace for the day.
2255 But the fact of the matter is that knowing Kingston as we know it, Mark from his entrepreneur experience and myself from community giving and being on Council and talking with every part of this community, we know that there is an ambience here that is different than other communities. You can't compare us to Trois-Riviéres and Sherbrooke. We are not Trois-Riviéres and Sherbrooke. We are Kingston and we are a white-collar town and we have educated people here, a tremendous resource to draw from that will add talent to this radio station as well.
2256 You know, we will compete with CBC, there is no question, because I think we could be better than CBC. It's like what the real estate person says when buying and investing in real estate, it's location, location, location. Well, for us it's community, community, community, and that is why we are before you today.
2257 We have respect for the other broadcasters in the room today, much respect, but we also know what the local business climate is and what people are telling us what they want to hear on local radio.
2258 When there is a debate in this city, and there is one in every city every day, they fight it in the editorial pages of the newspaper. There is no community access in this city for the citizens to get on the radio and tell their elected officials or anyone else what they think.
2259 MR. SIENKO: Madam --
2260 MR. McCOLMAN: Dick, you had a comment?
2261 MR. SIENKO: Yes.
2262 Commissioner, in answer to your question or your comments regarding the age group and demographic listening, historically it seems that the younger demographic is music-driven listener, so therefore they -- and they also have a tendency to listen to their perception of a larger major market.
2263 If you go into the area around Toronto, people in the outside area will listen to Toronto stations for the younger demographic. As you look at your CBC tuning, Kingston is the highest CBC tuning of any of the major Ontario markets, if you look at Belleville, at Kingston -- I'm sorry, at Peterborough, London, Hamilton, et cetera, CBC tuning as a percentage in all demographics is less. Part of that reason is that there is a need for this local, local, local information. There is just -- it's there, it's available.
2264 You ask did this application go so that we would protect "The Border". The answer is no. You go where the need is. As you looked at the tuning, the 50-plus need was there. The highest tuning there is country. They have the long hours tuned.
2265 COMMISSIONER WILSON: Yes.
2266 MR. SIENKO: CBC has long hours tuned and through some mutual friends here in this market who have complained the fact that all they have is CBC and no other radio station. These are Torontonians who have also moved to this beautiful city.
2267 I trust that kind of clarifies some of your comments.
2268 COMMISSIONER WILSON: Thank you.
2269 Sometimes when you poke around you get lots of good information on the record.
2270 Okay, Mr. McColman, I am going to move now to the area of market impact.
2271 The public notice when we called for applications -- and Corus actually mentions this in their intervention -- talks about giving clear indication that there is a demand in a market; expected audience; an analysis of the markets involved; and potential advertising revenues, taking into account the results of any survey undertaking supporting the estimates.
2272 Now, you said in reply to Corus' intervention that the market studies filed by the existing operators are based on formulaic projections rather than on-the-ground research and after listening to you this morning I think I know what you mean.
2273 But I assume that because you have been connected with the broadcasting industry for quite a long time that you are familiar with the kinds of statistical models that are used throughout the radio industry to predict market behaviour.
2274 You are nodding.
2275 MR. McCOLMAN: Yes.
2276 COMMISSIONER WILSON: You are familiar with the kinds of studies that are typically filed with licence applications that look at the market and project audience share and estimate revenues and sometimes look at demand. You can approach it in different ways. There are different kinds of studies that you can do.
2277 MR. McCOLMAN: M'hm.
2278 COMMISSIONER WILSON: Okay. What is your opinion of the usefulness of these models? I mean, I take your point, you live here and you have lived here for a long time and I take your point that you know your community, but --
2279 MR. McCOLMAN: Well, that was a major decision, I suppose, that I had to wrestle with, because in making up the application and, I guess, presenting to you what we are classifying as a modest business plan, we also wanted to be modest in the cost for making the presentation.
2280 I guess personally I felt, well, we are going to get an opportunity, obviously, to speak to you and you are going to be able to realize that we are here and we live here, and so I guess I didn't follow what we would call the normal course of action.
2281 I would have to say that in the letter I put a reference to the 55 businesses that I personally contacted and talked with. I have a list of those businesses and I have personal other -- the 950 businesses in the Chamber of Commerce. Being on the Board of Directors I deal with from Bombardier to the one person at home.
2282 I guess in the letter that I sent that information, I felt that when I didn't get an answer back saying "Well, we really need this type of a study over here", that would be a formula for you people to look at, a formula, then I felt, well, then obviously they have accepted the fact that I have talked to local businesses. It wasn't like that I didn't talk to anyone and just said, you know, "There is a need here."
2283 COMMISSIONER WILSON: That information certainly is valuable. It's great to have that on public records.
2284 MR. McCOLMAN: I guess what I'm saying is that we took the approach of it being a local application with the people who are on the ground here and who know what is happening and I hoped that when we came before you you would respect the fact that we really had done the research here on a -- I mean, I could have hired a company, some other place to stand in the mall I suppose or to do some phone --
2285 COMMISSIONER WILSON: I'm not sure it's quite that simple.
2286 MR. McCOLMAN: -- research, but -- maybe I'm making it too simple.
2287 COMMISSIONER WILSON: I'm quite certain that they don't do their work in the mall.
2288 MR. McCOLMAN: Right.
2289 COMMISSIONER WILSON: The point that I'm getting at is that one of the things the Commission has to look at is whether or not a market can sustain the introduction of another station.
2290 MR. McCOLMAN: Right.
2291 COMMISSIONER WILSON: That is certainly a consideration. The fact that we call for applications doesn't necessary mean we are going to grant one.
2292 MR. McCOLMAN: I understand that.
2293 COMMISSIONER WILSON: The models that are used and often filed as part of the applications predict market behaviour, you know, within a certain margin of error, and they allow an applicant to determine what a reasonable audience share might be and therefore what reasonable projected revenues might be, again within a certain margin of error, and then that kind of gives the Commission, along with the other kinds of information that you have filed, some assurance as to the potential impact a new station might have on the market.
2294 MR. McCOLMAN: Right. Well, we --
2295 COMMISSIONER WILSON: Do you think it is reasonable for the Commission to rely in part on studies of that kind?
2296 MR. McCOLMAN: I think that it is -- I think it's very --
2297 COMMISSIONER WILSON: Especially since we don't live here.
2298 MR. McCOLMAN: You're right.
2299 I think it is very reasonable to rely on that, and I think in the fact that two business people are before you, going to invest in the community the time and money that of course we will be investing is also an indication that we are extremely serious about being before you today.
2300 But on the impact, Madam Commissioner, we honestly feel, and we have made the statement here, that the market is under achieving in radio sales. You know, Kingston, in the 21 years that I have been here, has never been a boom or a bust community. It has had a wonderfully stable community -- economy for many, many years based on the fact of the private and public sector mix. I'm sure you will hear later today about things like Advantage Kingston.
2301 As far as the impact on the other radio stations, you know, our impact was -- we have about 15 per cent set that we would impact. But if you take our first year income of approximately $400,000 and you take it against the $5 million that is spent, we are talking about 1 per cent.
2302 COMMISSIONER WILSON: I want to go there actually.
2303 MR. McCOLMAN: Okay.
2304 COMMISSIONER WILSON: I want to talk to you about revenues and that actually provides me with just the perfect segue to go into that.
2305 Because in addition to helping us gauge whether a particular market can sustain an additional station, the other thing that those models typically do is help us assess how realistic your audience share and revenue projections are, and that goes directly to the impact on the existing operators.
2306 So in the absence of a market study, the kind of market study that might show those things, and in the absence of -- unless I missed something of financial assumptions, because when you filed your financial projections there were no assumptions attached to those, again unless I missed it -- I'm pretty sure I didn't because I went through the application. I think I went through every page.
2307 But I wonder if I could just ask you some questions about how you arrived at certain elements of your business plan.
2308 The first area that I want to look at is your audience share projections. You filed those in response to a deficiency question on the 21st of April.
2309 Have you looked at your projected share compared to the other two applicants who are applying?
2310 MR. McCOLMAN: Yes.
2311 COMMISSIONER WILSON: Okay. And your share -- first let me just ask you this: Is it based on -- the numbers that you filed on April 21st, are those numbers based on 12-plus or 40-plus?
2312 MR. McCOLMAN: Thirty-five-plus.
2313 COMMISSIONER WILSON: Thirty-five-plus, okay. Because it doesn't say that in the letter, so that was my first area of confusion.
2314 Because typically market share is 12-plus, so your audience share projections are much higher than --
2315 MR. McCOLMAN: Yes. The realistic figure on that would probably be in 11 or 12.
2316 COMMISSIONER WILSON: Eleven or 12.
2317 MR. McCOLMAN: Yes.
2318 COMMISSIONER WILSON: Which would bring you back into range.
2319 MR. McCOLMAN: Yes.
2320 COMMISSIONER WILSON: Okay. How did you arrive at your audience share? How did you come up with that, whether we are talking 35-plus or 12-plus? How did you determine that it would either be 22 -- let's talk about Year 1, that it would either be 22 per cent for 35-plus or 11 or 12 per cent for 12-plus?
2321 MR. McCOLMAN: On the 35-plus it was established on approximately 50 per cent, 40 to 50 per cent of the out of tuning --
2322 COMMISSIONER WILSON: Out-of-market tuning.
2323 MR. McCOLMAN: -- out-of-market tuning, BBM statistics.
2324 COMMISSIONER WILSON: Okay. So it came from the BBM numbers that you --
2325 MR. McCOLMAN: Yes.
2326 COMMISSIONER WILSON: Okay. Your answer to that question actually helps me -- actually I can probably delete some of these questions now that I know that it is 35-plus that you are basing it on, because if it were 12-plus that would have made you the number one station in the market in Year 1.
2327 MR. McCOLMAN: Which would have been very nice, but realistically, you know --
2328 COMMISSIONER WILSON: You seem like a very optimistic person, but that might be a little too optimistic for Year 1.
2329 MR. McCOLMAN: Unfortunately, the question to me also wasn't -- it didn't -- I know the broadcast standard and I guess I was over-thinking the situation on how it affected the target audience that we were applying for, and I apologize.
2330 COMMISSIONER WILSON: Okay. Because what I was going to ask you was what would happen to your business plan if you didn't achieve these audience shares. It would probably fall apart fairly rapidly, but if it's 35-plus, then --
2331 MR. McCOLMAN: Yes.
2332 COMMISSIONER WILSON: Okay.
2333 What per cent of your audience would come from existing stations?
2334 MR. McCOLMAN: The estimates that we have so far would be about 15 per cent of the audience.
2335 COMMISSIONER WILSON: Of the audience or the revenues?
2336 MR. McCOLMAN: Really of both, because I think one sort of duck-tails with the other in the fact that most of the Kingston stations at the moment -- I would say that a high end of the FM stations would be at 35 to 40, so we would overlap in that demo.
2337 COMMISSIONER WILSON: Okay. Let's look at your revenues now.
2338 I guess your revenues start to make a little bit more sense if your audience is 35-plus, because your audience share projections were very high and your revenue projections were pretty low, especially when compared to the other applicants.
2339 The other applicants, CHUM for example is estimating $1.16 million in the fifth year, and Mr. Wright is estimating $2 million and you are estimating $700,000 in total revenues. Actually, it still strikes me as low for an 11 per cent market share.
2340 So what is the relationship between your projected share and your projected revenues, because I need to understand why you think -- are you being extremely conservative or --
2341 MR. McCOLMAN: I have my blue shirt on today and I was just --
2342 Actually, we built the figures from the bottom up rather than from the top down. The type of format that we did propose we indicated the 15 per cent and you know how we basically figured that out.
2343 What we are doing is, we are projecting approximately -- and if we round it out to the highest -- $400,000 for the first year. Those projections are based on getting off the ground and heading on down the road I might add, but also knowing that the advertising market that we have here will be one that once we get going probably those projections will be conservative. But we wanted to not over estimate.
2344 I mean, some of the figures that I have seen here about the market itself I guess raise some questions and I'm sure that you will be raising some later, but the fact of the matter is that we believe that there is between $1 million and $1.5 million in revenue that the market is under achieving, and when we --
2345 COMMISSIONER WILSON: And yet after five years you think you are only going to get half of that?
2346 MR. McCOLMAN: Well, there is a great possibility that we will get more of that. I was the first one in with these projections and I hadn't seen any of the other projections and in the research that I had done on this I felt at the time that we would be quite around the $1 million mark and then if I was going to be a little more conservative than that then I should be a little under the $1 million mark by Year 7.
2347 But that was a year and four months ago and even being here and doing business for a longer period of time you really get the sense of how we are expanding and how we are growing. I think we know the advertising market and I think that in the first year after we get moving on down the road that probably I would guess that by Year 7 we would be in the $1 million range.
2348 MR. McKERCHER: I would like to comment on that.
2349 The projected revenue was based on Garry and my discussions from way back, and that was trying to estimate the revenues to offset the expenses, realizing that this was going to be a community radio station, what did we expect in revenues.
2350 My philosophy in business is always to be a very conservative prediction on revenues, the reason being is that a conservative prediction on revenues also allows you to have a real picture on how successful you could be if the predictions are conservative, and it also allows us to have a look at the expenses and say "What if we only achieve these revenues, are our expenses in line?", that we would be able to continue through and be able to get to the five-year period.
2351 Our goal is to be successful and these expenses we feel are very liberal and we feel that the revenues are very conservative to come with a very good business plan, in my mind, to be successful as a local community radio station.
2352 Thank you.
2353 COMMISSIONER WILSON: It's sort of like you guys are reading my minds because you keep giving me the openings into the next area of questioning, which is your expenses.
2354 Actually, let me just go back to your advertising sources. You said 15 per cent. You filed a letter -- before I go to expenses I just want to clarify this.
2355 In your April 21st letter, which was in response to some deficiency questions, you said that the proposed station would "garner advertising revenue from the following sources". You said "Local market radio stations, 15 per cent"; you said "increase in advertising budgets, 20 per cent; and other media, 20 per cent." That is 55 per cent.
2356 Where does the other 45 per cent come from?
2357 MR. McCOLMAN: I guess that was an error. I again apologize.
2358 The local market impact was the 15 per cent --
2359 COMMISSIONER WILSON: Yes.
2360 MR. McCOLMAN: -- and the increase in radio budgets and other media was 85 per cent.
2361 COMMISSIONER WILSON: Eighty-five per cent.
2362 MR. McCOLMAN: Yes.
2363 COMMISSIONER WILSON: Okay.
2364 So now on expenses. Half a second here. I'm buried in paper. Whoever said that this was going to be a paperless society was crazy. Computers just generate more paper.
--- Pause / Pause
2365 COMMISSIONER WILSON: Okay, Mr. McKercher, you said that your expenses were very liberal. Now, let me just ask you -- I was thinking while you were talking -- do you have any kind of technical infrastructure in place for "The Border" here in Kingston?
2366 MR. McCOLMAN: Yes, we have a full studio.
2367 COMMISSIONER WILSON: You have a full studio?
2368 MR. McCOLMAN: Yes, m'hm.
2369 COMMISSIONER WILSON: I have seen your agreement with Bell in terms of the tower, because that is the only technical expense that you are listing --
2370 MR. McCOLMAN: Yes.
2371 COMMISSIONER WILSON: -- as a technical expense.
2372 MR. McCOLMAN: And the equipment. Our new control room is all listed there as well.
2373 COMMISSIONER WILSON: As capital.
2374 MR. McCOLMAN: Yes.
2375 COMMISSIONER WILSON: Okay. Because --
2376 MR. McCOLMAN: Excuse me, Madam Commissioner, but the equipment at WBDR will not be --
2377 COMMISSIONER WILSON: Used.
2378 MR. McCOLMAN: It might not even be in the same building as this.
2379 COMMISSIONER WILSON: Oh, okay.
2380 If you look at, for example -- I'm just going to go through these -- programming expenses for example -- this is again at Year 5 -- $111,000 versus about $400,000 for CHUM and $600,000 for Mr. Wright. Why would yours be that low?
2381 The industry average for FMs is about 30 per cent of total revenues.
2382 MR. McCOLMAN: Could you clarify that again? I'm sorry, Commissioner.
2383 COMMISSIONER WILSON: Okay. Your programming expenses --
2384 MR. McCOLMAN: Yes.
2385 COMMISSIONER WILSON: -- in Year 5 --
2386 MR. McCOLMAN: M'hm.
2387 COMMISSIONER WILSON: -- are $111,000.
2388 MR. McCOLMAN: M'hm.
2389 COMMISSIONER WILSON: That includes Canadian Talent Development.
2390 MR. McCOLMAN: Yes, I understand.
2391 COMMISSIONER WILSON: Do you have your pro forma statement of revenue and expenses?
2392 MR. McCOLMAN: Yes, we have. We have estimated in there will be BBM fees and music rights, the satellite feed costs for whatever news service. There is -- what's the other fee here?
2393 Miscellaneous technical fee or in-field or in-studio.
2394 COMMISSIONER WILSON: I'm just trying to understand why your costs. Because actually if you go through the entire financial statement and you look at your expenses compared with the other applicants, they are significantly lower and I'm just wondering. You must be a really good budgeter.
2395 MR. McCOLMAN: Well, thank you.
2396 This is an innovative technology-at-work budget and with finding the exact location that would be perfect for the transmitter and getting an agreement with BCE as economical as we did, as you see in the BCE agreement, and then working down from there, really those are the real technical costs that we would have. I mean, it's --
2397 COMMISSIONER WILSON: Okay. What about the programming and admin -- actually, your administration costs are higher, quite a bit higher on a percentage basis than everybody else's, but the sales and promo figures are lower, the programming figures are lower than the other applicants.
2398 I'm just trying to get at how realistic the projections are, that's all.
2399 MR. McCOLMAN: Well, I know what the operation costs of a radio station are, I have been through it several times and I have given consulting work on this and, frankly, I think it's a very modest but it's a realistic budget. It is something that we -- it's nothing that I haven't done in the past.
2400 COMMISSIONER WILSON: Okay.
2401 MR. McCOLMAN: There may not be some big corporate bonuses in there, but certainly it is an on-the-ground budget that is going to fit the reality of the type of community radio station we are going to present.
2402 COMMISSIONER WILSON: Okay.
2403 MR. McCOLMAN: It may not be a Rolls Royce, but it certainly will be a sleek Chevrolet.
2404 MR. SIENKO: One other comment, Madam Commissioner, is these are entrepreneurs and it is surprising what we can do. That is why they are called entrepreneurs.
2405 COMMISSIONER WILSON: That's a very good point. I have been there. You can do a lot on a shoestring if you have to.
2406 I'm just going to take you through some questions with respect to your programming plans and then we are going to wrap this up.
2407 You indicated in your 31st of May letter that you intend to:
"... provide local access to seniors and on weekends will extend an invitation to members of Kingston's vibrant ethnic community to provide programs." (As read)
2408 Did you do any research to evaluate who or which groups would be interested in providing such programming and could you describe that programming?
2409 I'm not sure if you described in detail the kinds of programs that you would do for seniors, but maybe you can just refresh my memory on that.
2410 MR. McCOLMAN: Yes. The research was conducted -- we are members and we participate in the Folk Arts Council here, also the ethnic community a couple of times a year has a couple of weekends that they do here that I sit on committee's for. The largest community for example, the Portuguese community at Kingston, has had a very vibrant and popular cable television program here, but because of the narrowcast it has never had the radio station, with the exception of a 30-second commercial or promo or a clip on a newscast, to really expand what the community is doing, even in their own language.
2411 So this is the type of possibility that I presented to them and, of course, they are extremely excited about the opportunity that would be given to have a program such as Portuguese and next week it could be another language and it could switch amongst themselves, and I think I'm going to --
2412 COMMISSIONER WILSON: That will be regularly scheduled though?
2413 MR. McCOLMAN: Yes.
2414 COMMISSIONER WILSON: Every Sunday you would do that?
2415 MR. McCOLMAN: Yes.
2416 I will pass this over to Jackie St. Pierre who has also done a lot of research on our programming end of it, but as far as ourselves are concerned it is right from the associations themselves who would like to participate.
2418 MS ST. PIERRE: Thank you very much.
2419 Good morning.
2420 COMMISSIONER WILSON: Good morning.
2421 MS ST. PIERRE: I guess I could speak on first the ethnic portion that you spoke of.
2422 There would be four opportunities we would engage to try to encourage the community to come forward with four programs per year. It would be a very modest start. This is the block programming that we spoke of.
2423 COMMISSIONER WILSON: Yes.
2424 MS ST. PIERRE: The block programming could be anything from theatrical groups to seniors groups. We have a very -- we have called the Spirited Seniors Group as well that perform local plays, et cetera, and very, very local theatre groups as well that perform some wonderful material that were looking for opportunities to expand, perhaps moving to radio, story-telling, et cetera.
2425 COMMISSIONER WILSON: So you would start with four programs a year --
2426 MS ST. PIERRE: Per year.
2427 COMMISSIONER WILSON: -- and move to every Sunday?
2428 MS ST. PIERRE: No. No, excuse me. Let me just --
2429 Then the other portion of that is that during "The Café", which is on Sundays, would have an ethnic feature that could move from week to week. But the block programming, we would start out with only four times per year.
2430 Basically it needs to test itself. I'm not saying the actual time slot or the audience needs to test itself, but we need to test, you know, getting the right time element together, we need to make sure that the type of programming we have fits well with, you know, working with these groups, preparing for radio, not stage.
2431 COMMISSIONER WILSON: Yes, okay. That's helpful.
2432 Now, with respect to your newscasts, and you did expand on that in your comments this morning, you said -- somewhere in your application or deficiencies you said that your:
"... association with the Whig Standard will provide an additional forum for live interviews, daily commentary and debate on issues between newsmakers, reporters, community editorial boards and the listener." (As read)
2433 How would this work and would that -- would it just be part of your regular newscasts or would these be discrete programs that you would produce with the Kingston Whig Standard?
2434 MR. McCOLMAN: In the very beginning of the application I met with the Whig Standard publisher and editor and we came away from the meeting with an agreement that we would really like to have a discussion down the road about the availability of having one of their daily editorial writers to come on and even reflect on the editorial of the day. Because with the open line program it would feed something, obviously, into the --
2435 COMMISSIONER WILSON: Like a commentary.
2436 MR. McCOLMAN: Bring up issues, and so on and so forth, right.
2437 And the discussion -- and when we left the meeting of course, and I told him that we would be putting this in the application that we would be discussing this down the road so that there would be a blend of some form of commentary, but we would obviously have our own distinct news character. The more we put the application together the more we realized that in fact what we wanted to do was create our own identity.
2438 One of the other things that the local daily does, which is an excellent idea, is that they have a community editorial board made up of a couple of dozen area people from all walks of life. They write fascinating and wonderful columns about everything, every aspect, whether it is a national or international story, and bring it around to a local twist, local context, how it fits here in our community.
2439 I wish I had of brought the paper, but --
2440 COMMISSIONER WILSON: Do you want to know why I'm smiling?
2441 MR. McCOLMAN: Why?
2442 COMMISSIONER WILSON: Because my next question is about your editorial board.
2443 MR. McCOLMAN: Right.
2444 COMMISSIONER WILSON: You just said about the editorial board. Is it based on that model?
2445 MR. McCOLMAN: Yes, it is. It is based on that model.
2446 COMMISSIONER WILSON: Okay. So it's a community editorial board.
2447 MR. McCOLMAN: It is. And just like they do, which I think is a twofold for us, it's an invitation by promo to have people come in and meet in the radio station, apply to be on the board, and then to ask them to on a regular basis offer, write and come in and record, assisted by our technical people, to go on the air with -- and not say it has to be 30 seconds on the nose, whatever the amount of editorial time that they need. And it would be played on the radio station and then, of course, used in either the open line program or whatever for people to come to make comment on.
2448 COMMISSIONER WILSON: So it's not an editorial board whereby these people would be monitoring sort of the issue of balance in your news and public --
2449 MR. McCOLMAN: And the secondary --
2450 COMMISSIONER WILSON: Oh. Now you are duck-tailing into my --
2451 COMMISSIONER WILSON: Now I'm reading your mind.
2452 MR. McCOLMAN: Yes. What we are doing is -- and the second side of that would be that they would be a tremendous focus group for us and that they would be able to add programming ideas and give us constructive criticism, and so on and so forth.
2453 COMMISSIONER WILSON: You say that they would apply to be on your board?
2454 MR. McCOLMAN: Yes.
2455 COMMISSIONER WILSON: Who would decide? Who would pick them? You, or would it be --
2456 MR. McCOLMAN: No.
2457 COMMISSIONER WILSON: -- a panel of --
2458 MR. McCOLMAN: Yes. We would have a community panel that Ms St. Pierre, behind me, has been involved with for over 20 years in this community and has gladly volunteered to assist in that.
2459 COMMISSIONER WILSON: Okay. That's great.
2460 Now, you have also indicated that you intend to air Canadian jazz and big band music and that you want to help to further expose that genre of music and local artists through live broadcasts of their performances.
2461 Could you just describe that to me a little more?
2462 MR. McCOLMAN: Yes.
2463 COMMISSIONER WILSON: Will you record them in concert halls or clubs or --
2464 MR. McCOLMAN: Yes.
2465 Jackie, did you want to --
2466 COMMISSIONER WILSON: Is there a big live jazz and big band scene in Kingston?
2467 MS ST. PIERRE: I think very, very active jazz, big band group, and actually we have performances once per week still with local clubs. Now, they have a house band that often performs during those time and, of course, we would want to expand upon that so that we weren't sharing the same entertainment.
2468 I guess it is our hope that in doing these live performances -- we would like to do one live performance a month, but if the talent -- we could also use a CD and highlight performances from local CD as well by a local artist, musician.
2469 COMMISSIONER WILSON: Would it be strictly performance or would there be interviews and --
2470 MS ST. PIERRE: No, it will be interview content as well.
2471 COMMISSIONER WILSON: Okay.
2472 MS ST. PIERRE: But that would be done in the studio prior, and that's why I said that not everything would be live-to-air. There would actually be some editing so we could put in some of those pieces as well.
2473 COMMISSIONER WILSON: How much money are you putting towards that initiative?
2474 MS ST. PIERRE: It would cost $100,000 in a combination of hard costs and soft costs, meaning the cost of the actual production and the comprehensive on-air plan to promote those.
2475 COMMISSIONER WILSON: Is that part of your Canadian Talent Development initiative?
2476 MS ST. PIERRE: Yes, it is.
2477 COMMISSIONER WILSON: Okay. So that is part of the $147,000?
2478 MS ST. PIERRE: That is correct.
2479 COMMISSIONER WILSON: Okay, part of the $147,000 annual amount.
2480 MS ST. PIERRE: Yes. There would be $100,000 allocated for the live-air broadcasts; $39,000 to FACTOR; $8,000 for the production of a CD.
2481 COMMISSIONER WILSON: I'm sorry, $39,000 --
2482 MS ST. PIERRE: I'm sorry, yes. If we are doing it -- I'm sorry, they corrected me. We did do that wrong.
2483 A hundred thousand for the Canadian --
2484 COMMISSIONER WILSON: I was going to say, yes, a little windfall for FACTOR.
2485 MS ST. PIERRE: Yes. A hundred thousand per year to live-to-air broadcast, $8,000 per year the CD and then our first year would be $5,000 to FACTOR.
2486 COMMISSIONER WILSON: Your expenses just went up by $34,000.
2487 MR. McCOLMAN: So much for our modest budget.
2488 COMMISSIONER WILSON: Yes.
2489 Okay. Let me just see what else I want to know here.
2490 I'm sorry, the cost to produce the CD?
2491 MS ST. PIERRE: The expected costs with hard costs and promotional campaign would be $8,000 per year.
2492 COMMISSIONER WILSON: And that is included also in this $147,000?
2493 MS ST. PIERRE: Yes. I guess we should -- I have been corrected, meaning that I took the FACTOR of $7,000 -- $39,000. That should be $5,000 for the first year. So it would be $100,000 plus $8,000 for the CD and $5,000 for the first year of FACTOR. So that would be the correct --
2494 COMMISSIONER WILSON: Oh, $113,000 for the first year?
2495 MS ST. PIERRE: Year 1.
2496 COMMISSIONER WILSON: Okay.
2497 This CD that you are going to produce of a recording by local jazz artists, I think it starts in Year 2.
2498 MR. McCOLMAN: Yes.
2499 COMMISSIONER WILSON: Is that a firm commitment to produce that?
2500 MR. McCOLMAN: Yes, it is.
2501 COMMISSIONER WILSON: Okay.
2502 MR. McCOLMAN: I believe it is jazz and big band.
2503 COMMISSIONER WILSON: Jazz and big band, okay.
2504 And the FACTOR. Financial projections on page 10 of your application, you are allocating $5,000 in Years 1 to 3 and $6,000 in Years 4 and 5 for Canadian Talent Development. Is that all going to FACTOR?
2505 MR. McCOLMAN: Yes.
2506 COMMISSIONER WILSON: It is, okay.
2507 And your financial projections on Canadian Talent Development commitments are only for five years and typically we see a seven year plan. Are you making the commitment for seven years and would it be $6,000 in each of those last two years?
2508 MR. McCOLMAN: Yes, it would.
2509 COMMISSIONER WILSON: Okay.
2510 Final question, and it sort of stems from technical but I think it also gives you a chance to tell us why you think you are the best applicant if we should decide to licence someone.
2511 Your application is competitive and technically mutually exclusive with the other two applicants in this hearing and so usually at this point we seek your views in helping us decide why you would be the best use of this frequency, especially because it is the last available frequency in the market.
2512 So I would just like to give you an opportunity to say what, in your view, are the compelling reasons to grant you the requested frequency and in what ways does your proposal constitute the best use of the proposed frequency?
2513 MR. McCOLMAN: Well, we sit here before you this morning, Madam Commissioner, as two local community business people focusing on our community, concerned about our community, involved in our community, and one of the cornerstones of any community has always been the local radio station.
2514 Growing up, rushing home at noon, I couldn't get my soup and sandwich unless my mother had listened to CFRB and the 10 to noon news by Gordon Sinclair. If I was 30 seconds early, I had to wait 30 seconds until Mr. Sinclair signed off.
2515 It was the cornerstone of what built communities. It was the information piece that drove communities. It has always been -- and I'm proud to say as a broadcaster in radio, it has been the knitting that has held a lot of communities together in good times and in peril. We had some peril here during the ice storm and we found out how important community radio really was.
2516 During that time, really it also prompted me to realize that radio generally is becoming -- is turning away from the community. It is music-oriented, it's non-information, it's bits instead of information, and if you missed a bit today then the only alternative to that would be to go to print or some other forum, unless you are a news junkie on CNN or something.
2517 But even the success of a CNN has proven that information is popular. In Toronto radio and in Ottawa radio, how many talk stations are there now? They said AM radio was dead. AM radio isn't dead if it is programmed properly with information.
2518 But here in Kingston the Premier of the province came through this area a couple of weeks ago and had to go to Brockville and Belleville to get on the radio and communicate with the citizens of eastern Ontario, and yet the largest community in the middle had no other way of communication except bits on the newscasts.
2519 So what you see before you today is an applicant that targets the market that we believe is underserved. It's a modest proposal, there is no question about it, but we think that it is reasonable with revenue goals and revenue costs and we certainly think it is achievable.
2520 Our major community benefits that we hope to bring to Kingston and the area I think will tell the story in years to come that will make us proud of what we started here.
2521 And if granted the licence I will focus on this operation. This will be my focus. I will be the majority shareholder of this radio station and not WBDR and will bring to Kingston and to Canada something that I have been certainly dreaming about. This is better than making the NHL for a Canadian kid.
2522 COMMISSIONER WILSON: Don't go that far.
2523 MR. McCOLMAN: Maybe not as profitable in the first five years, as you see, but --
2524 COMMISSIONER WILSON: Better than the Leafs maybe.
2525 MR. McCOLMAN: But as a Kingstonian, as an involved person in the community, Mark McKercher and Garry McColman, I think we have served our dues here and we know what we are talking about and we would just ask you really to look favourably on this application.
2526 We thank you very much for coming here to Kingston to hear this. We appreciate that.
2527 COMMISSIONER WILSON: Thank you. Mr. McColman, Mr. McKercher.
2528 THE CHAIRPERSON: Thank you.
2530 MR. BATSTONE: Thank you, Commissioner Wylie.
2531 I would like to just explore the $100,000 you were talking about in terms of commitments and just in terms of talent development.
2532 Would this be a direct contribution to talent development, the $100,000, or are we talking studio upgrades, that kind of stuff? Just give me maybe a better sense of what the $100,000 would be.
2533 MS ST. PIERRE: The $100,000 was achieved by the cost of the on-air production and the promotional campaign to support the broadcasts.
2534 MR. BATSTONE: And these are the once monthly live-to-air --
2535 MS ST. PIERRE: That is correct.
2536 MR. BATSTONE: -- not necessarily live-to-air, but -- okay.
2537 I guess typically the Commission has considered promotion in that sense to be an indirect development, Canadian Talent Development, but indirect. Is that what you are saying here?
2538 Looking at the application I saw the direct Canadian Talent Development to be the contribution to FACTOR, obviously, the production of the CD. Is this an additional direct or would you characterize this as an indirect talent development commitment?
2539 MS ST. PIERRE: No, there are our direct hard costs. Is that what you're asking, are there hard costs in the $100,000?
2540 MR. BATSTONE: Well, "direct" refers to talent development or initiatives that go directly to supporting the artists themselves. I think that's a way to characterize it.
2541 Would you see this as doing that?
2542 MS ST. PIERRE: Oh, certainly. An on-air opportunity for a young artist or musician.
2543 MR. BATSTONE: Okay. I'm going to leave that for now.
2544 There has been some evidence on the record that the existing stations, in Kingston anyway, have not performed that well in the past few years. I'm wondering if you could just give us your views and the evidence that you would point to that suggests that the market can support another commercial station?
2545 MR. McCOLMAN: In 1998, if we take CFLY for example, they were successful -- they are successful in the fact that when they had programming that we are suggesting here that their share was much higher than what it is today. We have to assume that that relates to revenues.
2546 Of course, if you look back at the BBM ratings, you will see that in 1998 -- and I think I made mention of this in my letter -- that the share was approximately 24-26, off the top of my head, for CFLY at that time, and when they changed formats and went to a younger demo that that share has dropped into about 16 at the moment.
2547 So in our estimation that has a -- it has to have a direct relationship with what we are here before you with today, suggesting to you that the market is underserved and that rather than being a tremendous competitor to them they will find us as another radio source that will add to the overall radio advertising pie in this market.
2548 MR. BATSTONE: Okay. I would like to go back to the Canadian Talent Development.
2549 I don't know if you are familiar with Public Notice 1990-111. This was a PN where we set out in an appendix the type of commitments which we would generally consider to be direct and indirect commitments towards Canadian Talent Development.
2550 Maybe what I can do is just, if you are not familiar -- I don't know.
2551 Are you familiar with it, first off?
2552 MR. McCOLMAN: No, I'm not.
2553 MR. KOCH: Perhaps would it be helpful if we broke down the $100,000 into different elements?
2554 MR. BATSTONE: I think that would help. Sure.
2555 MR. KOCH: That would be my suggestion.
2556 MS ST. PIERRE: I do have that figure available.
2557 MR. KOCH: We can attempt that.
2558 MR. BATSTONE: Okay. Maybe what you could do is, you can come back at the reply stage and just perhaps give us an indication of where those fit into either as direct or indirect expenses, and also then whether you would be prepared to accept any that are direct expenses as a condition of licence, because that is the Commission's usual approach.
2559 MR. KOCH: Perhaps it would be helpful if we could have that discussion and we will come back with that in the reply phase, also with the breakdown.
2560 MR. BATSTONE: Okay. Thanks.
2561 That's everything I guess.
2562 THE CHAIRPERSON: Thank you very much, Mr. McColman and your colleagues. We will see you again.
2563 But for the moment we will take a 10-minute break. We will be back at 10:17.
--- Upon recessing at 1002 / Suspension à 1002
--- Upon resuming at 1020 / Reprise à 1020
2564 THE CHAIRPERSON: Order, please.
2565 For those who may not have been here at the beginning of the hearing yesterday, we will hear all intervenors and complete the hearing today, maybe tonight.
2566 Mr. Secretary, please.
2567 MR. CUSSONS: Thank you, Madam Chairperson.
2568 We will now hear an application by CHUM Limited for a broadcasting licence to carry on an English-language FM radio programming undertaking at Kingston. The new station would operate on frequency 105.7 megahertz, Channel 289B, with an effective radiated power of 26,600 watts.
2569 The applicant is proposing a soft adult contemporary music format.
2570 The Commission notes that this application is technically mutually exclusive with other applications which are also scheduled at this hearing for the use of the 105.7 megahertz frequency.
2571 I will invite Mr. Sherratt to introduce his colleagues.
2572 Mr. Sherratt.
APPLICATION / DEMANDE
2573 MR. SHERRATT: Thank you, Mr. Secretary.
2574 Madam Chair, Members of the Commission, for the record I am is Fred Sherratt, Executive Vice-President and Chief Operating Officer of CHUM Limited.
2575 Immediately in front of me is Jim Waters, President CHUM Group Radio who will quarterback our operation today.
2576 On Jim's right is Duff Roman, Vice-President Industry Affairs. On his left, Ross Davies, Vice-President Programming. Next to Ross, Jim Blundell, Regional Manager Eastern Ontario, CHUM Group Radio.
2577 On my right is Shelley Sheppard, CHUM Corporate Accounting.
2578 On my left, Hans Jansen, Partner, Bay Consulting Group. Next to Hans, Kerry French, Director of Research, CHUM Group Radio.
2579 Madam Chair and Members of the Commission, we find ourselves in a very unique position today. When the call came for applications for Kingston we commissioned an economic study to determine whether or not this community could economically support a third FM station. The results clearly demonstrated that any new station would cause difficulty, most particularly if it was a new player in the market focused on diluting existing services.
2580 The Commission's policy on multiple ownership was developed to both provide economic strength for existing services and to encourage maximum diversity in the system by allowing stations within a group to diversify formats. Our approach to this process has been developed with your policy in mind.
2581 We believe the evidence clearly demonstrates there is not room for a new player, so if there is to be an increase in Canadian services in Kingston it must be done so as to achieve diversity without dilution under the umbrella of existing operators in order to avoid weakening the existing radio services which serve this community so well.
2582 My associates will review the economic evidence and outline our plan to develop program diversity in light of these facts. It is not that we are negative on Kingston. It is a great community and we have been a part of it for many years. However, we believe it is important to put the realities of the market in context.
2583 This is not a market that can clearly support a new station. However, we believe we can undertake an alternate service that will add to diversity, contribute to the Canadian system and not upset the market by utilizing the synergies inherent in your radio policy.
2584 MR. WATERS: I am not a stranger to Kingston. I have been involved in radio ownership here since 1976 when my sister Sherry, my brother Ron and I, purchased St. Lawrence Broadcasting, a company owned and operated by Terry French. At that time, St. Lawrence owned two stations in Kingston, CKLC and CKLC-FM. We later changed the FM call letters to CFLY.
2585 I lived in Kingston and managed the stations for three and-a-half years after the purchase. In 1979 I moved to Toronto and began working at CHUM. When I left John Wright became the General Manager of the Kingston stations.
2586 In November 1987 St. Lawrence Broadcasting purchased CFJR-AM in Brockville from John Radford. Included in the transaction was a licence for an FM station which was not yet on air. We launched Brockville's first and only FM station, CHXL, in July 1988. Today, CHXL-FM is called "The River".
2587 In November 1996 CHUM Limited purchased St. Lawrence Broadcasting from Sherry, Ron and myself.
2588 It is important to note that the call for applications to begin a new FM broadcasting service in Kingston was not initiated by either of the companies presently operating in the market, Corus or CHUM.
2589 In the last 12 months CHUM has applied for three new FM services in London, Barrie and Kingston. Bay Consulting Group conducted an economic study for us in each market. Clearly the only study which did not produce a positive case for the addition of new FM radio service was the one conducted in Kingston.
2590 When looking at the ability of a market to absorb a new entrant, the Commission has stated it considers, among other things, the impact on the market of a new entrant, the competitive state of the market, and has noted the relative profitability of the market in recent decisions.
2591 In order to clearly illustrate the profitability of the Kingston market, Corus and CHUM exchanged our actual revenue, expense and profit numbers for the past five years. The combined operating profit as a percentage of airtime sales of the four stations in 1994-1995 was 10.8 per cent. Four years later, in 1998-1999, it had fallen to a minus 3.6 per cent.
2592 We believe these actual profitability numbers and the results of our market study provide compelling evidence that Kingston does not have the economic base to justify the entry of a new stand-alone FM service.
2593 I would now like to ask Hans Jansen to comment on the results of our economic study. Following Hans, Jim Blundell will approach it from a "hands-on" local perspective.
2594 MR. JANSEN: The most recent information about the Kingston radio market shows that market size is even smaller than expected and that losses incurred by the existing radio industry are even greater.
2595 The average radio station in Kingston had airtime revenues of $1 million and operating expenses of $1.1 million in 1999. Operating losses for the average stations were $37,000, and that is before depreciation, interest expenses and other costs.
2596 Madam Chairperson and Commissioners, as you can see from the chart behind me, The radio industry's operating profit percentage as a percentage of airtime sales have been increasing in Canada but dropping Kingston. In 1995 the Canadian figure was 9.6 per cent and in Kingston it was 10.8 per cent. Five years later, in 1999, the national figure had risen to 19.0 per cent and the Kingston figure had fallen to minus 3.6 per cent.
2597 As you can see on the chart, the blue bars are the Canadian average and the red bars are the Kingston average.
2598 The population and retail sales base in Kingston are not growing materially. The most recent census shows that the population of the City of Kingston actually declined between the 1991 and the 1996 census counts.
2600 MR. BLUNDELL: As the figures we filed confirmed, this is not a profitable radio market. There are few years in which all four stations have returned a fair or even an acceptable return.
2601 There are at least four key reasons for this poor economic performance.
2602 Foremost is the difficult transition the local economy has experienced over the past five years as more than 5,000 government and government-related jobs have been eliminated. These jobs are not coming back. In addition, there have been significant cutbacks in a number of local industries.
2603 Secondly, there has been a transition in retail market share from radio's traditional core market of smaller, independent businesses to the "big box" store giants such as Wal-Mart and Home Depot. These large national businesses tend not to advertise on radio like the smaller local retailers do.
2604 Third, the past decade has seen growing competition from American broadcasters who set up their transmitters just across the border to enjoy the competitive advantages of the U.S. regulatory environment while poaching significant revenues from the Kingston market.
2605 Finally, the steady decline of local AM radio's reach and sales revenues has weakened local radio's overall power to serve the community and its businesses.
2606 While we have been able to use new technology to minimize the impact on our community, the reality is the market is not growing sufficiently to sustain a third operator without seriously impacting the existing stations.
2607 MR. WATERS: While this all sounds very negative, we believe the approach we have taken through this application will allow the entry of a new distinctive Canadian service through economies of scale and the adjustments we propose to our existing stations.
2608 The three-pronged programming strategy set out in our application will increase the diversity of radio programming available in Kingston with minimal effect on the existing Canadian stations in the market.
2609 I would now ask Ross Davies to talk more about our programming strategy.
2610 MR. DAVIES: Thanks, Jim.
2611 As part of its three-pronged strategy, CHUM proposes to create Light 105 FM for Kingston. Light 105 FM will feature soft contemporary music by artists such as Celine Dion, Elton John, Jann Arden, Phil Collins, Chicago, Chantal Kreviatiuk and Billy Joel. The station will appeal primarily to females between the ages of 35 and 54.
2612 Light 105 FM will be known as Kingston's "Soft Favorites" radio station.
2613 CKLC and CFLY-FM have had a long history of providing a strong news and community affairs voice in Kingston, and that will continue with our proposed new station. While we will enjoy the benefits of a combined news operation, Light 105 FM will be have a dedicated news supervisor ensuring that we provide news and information of particular relevance to our audience.
2614 Light 105 FM will schedule 69 newscasts each week. While local and regional news always comes first, Light 105 FM will also concentrate on news and issues of particular concern to its female audience. Personal health and lifestyle stories of concern to women will be evident in every newscast. Features on professional development and personal finance will be broadcast on a regular basis.
2615 Through the resources of the CHUM Radio Network, shows such as "The Touch of Health with Christine McFee", "From A Woman's Perspective" and "The Alternative Way" will be a part of the new service.
2616 Each day the "Light 105 FM Kingston Community Bulletin Board" will provide information about various events, activities and programs taking place in and around the Kingston area of direct relevance to our target audience.
2617 In addition, Light 105 will continue the extensive community support initiatives already in place at sister station CKLC, such as the annual "Kingston Toy Drive", the "Festival of Trees" and such on-air features as "The Educated Minute", which spotlights activity at the local school boards, and "Heart Spark", a daily feature produced in association with the Kingston Health Unit.
2618 As set out in our application, in concert with the introduction of Light 105 FM we will reposition the programming of CKLC-AM and more narrowly target the service of CFLY-FM.
2619 CKLC-AM now provides programming in the soft contemporary format. If we are successful in this application, Light 105 FM's programming will replicate CKLC-AM's current sound. It is well known in the broadcast industry that the soft adult contemporary format, with it's emphasis on superior sound and music programming, is much better suited to the technically superior FM band. CKLC has been operating in this format for two years with limited success. The format will be much more acceptable on FM.
2620 CKLC's proposed new programming format is designed to appeal to adults of 50-plus. This is generally referred to as "nostalgia" music or, in the broadcasting industry, as the "adult standards" format and features artists like Barbra Striesand, Nat King Cole, The Four Lads, Frank Sinatra, Moe Kaufmann and Anne Murray. This service is not now available in Kingston.
2621 At the same time, we would also adjust the musical direction of our existing FM station CFLY to help repatriate listeners from WBDR-FM located right across the river in New York State. This station is currently operating in a "CHR/HOT AC" format and. without the comparable regulatory conditions that apply to Canadian stations, has been very successful in taking both listeners and advertising dollars out of the Kingston market.
2622 Presently, CFLY-FM is a broad-based adult contemporary station appealing to adults 18 to 54. While the station is successful in its operation, the introduction of Light 105 FM will allow us to adjust CFLY-FM to fully serve its core target audience of adults 18 to 34 by operating as a "Hot Adult Contemporary" radio station. This change will allow the station to more fully serve the "key" 25 to 34 audience demographic currently being targeted by U.S.-based WBDR-FM.
2623 In summary, the programming adjustments we are proposing will provide:
2624 1) a new radio station, Light 105 FM, providing soft adult contemporary music on the FM band;
2625 2) a realigned CFLY-FM targeted as a true "Hot Adult Contemporary" radio station, more able to compete against the intrusion of WBDR-FM; and
2626 3) a new service for Kingston with CKLC-AM operating in a nostalgia format, a format not available in Kingston from any source.
2627 Duff Roman will now review our commitments to Canadian Talent Development.
2628 MR. ROMAN: Thank you, Ross.
2629 Kingston's new Light 105 FM will create the "Festival CD/Artist in Residence Program", an annual initiative on behalf of the station whereby each year a deserving local artist is selected to be showcased at a major Kingston music festival. This performer would, in effect, be given "star" treatment on Light 105, receiving extensive on-air support for all of his or her appearances during the festival and would be referred to as the "Light 105 Artist in Residence".
2630 In addition to this, the performer would receive air play of their material, along with an in-depth biographical feature on their musical background. The "Artist in Residence" performances will be recorded for the purposes of producing their own CDs which then would be distributed commercially.
2631 In support of this and other cultural activity in the region, Light 105 will spearhead a new "Kingston Community Culture Council" with the dedicated mission of helping local musical artists and cultural organizations that support them to achieve artistic and economic success.
2632 The "Kingston Community Culture Council" will be comprised of representatives of both the radio station and the local performing arts and music communities who will oversee and administer the mandate of the program. The council will focus on innovative fundraising events for arts and culture, initiatives such as "Business Skills Master Classes" for performers and their managers, and community-wide development projects such as the "Cultural Tourism Initiative" for Kingston that is being organized to promote the appearances of local and regional performers in this city.
2633 We see this council providing benefit in such areas as funding, professional development in business skills and promotion and marketing of musical talent supported by a comprehensive advertising and marketing campaign on Light 105 FM, CKLC and CFLY-FM. Each of these stations will make available to the Kingston Community Culture Council a total of 1,000 commercial announcements annually valued at $80,000 to be used specifically to promote fundraising events and projects in support of local arts and culture. These will be regular commercial schedules, not public service announcements.
2634 Light 105 FM will also contribute $3,000 annually to FACTOR as part of the Canadian Association of Broadcaster's formula for markets the size of Kingston.
2635 Over the seven year term of licence the combined total for all direct and indirect talent initiatives will be $668,500.
2636 Because Light 105 will adopt the Easy Contemporary sound currently on CKLC-AM, allowing that station to move to a full-blown nostalgia format, we will redirect our Canadian Talent Development commitments to more appropriate types of commitments appropriate to that genre of music. Similarly, adjustments will be made to the Canadian talent initiatives to CFLY-FM as it skews younger.
2637 We would be pleased to provide you with additional details.
2638 MR. WATERS: Madam Chair and Members of the Commission, it is difficult to summarize without sounding like I am contradicting myself, but this situation is unique.
2639 First and foremost, we believe that the results of our and other economic studies clearly show that Kingston is not ready for a new independent FM operator. The population and retail sales base are not growing rapidly enough. In fact, the population grew only 1 per cent between 1991 to 1999. Retail sales are basically flat over the past five years.
2640 The combined CHUM and Corus numbers show a disturbing decline in operating profit. In 1994-1995 the combined operating profit as a percentage of airtime revenues was 10.8 per cent, and in 1998-1999 it showed a loss of 3.6 per cent.
2641 While the evidence confirms there is not room for a new player in Kingston, we hope we have been able to demonstrate that an alternate Canadian voice can be added to the community if it is part of an existing operation.
2642 Our three-pronged programming approach does three important things:
2643 - It enhances the system by creating more diversity in the market;
2644 - It does the least damage to existing stations; and
2645 - It repatriates listening from the U.S. border stations.
2646 Madam Chair and Members of the Commission, that concludes our presentation. We will be pleased to answer any questions you may have.
2647 THE CHAIRPERSON: Thank you, Mr. Waters.
2648 Commissioner Langford, please.
2649 COMMISSIONER LANGFORD: Thank you very much.
2650 Thank you, gentlemen and lady, for your -- ladies. Oh, two, I'm sorry. I get caught behind this television here and I can't quite see all the time.
2651 Thank you for that presentation. It is very complete and very thorough.
2652 I do have a couple of questions just as I listened to you that came to mind. Some of them you actually pointed to yourself. Mr. Roman indicated that I probably would and now I do. I don't want to let him down.
2653 I'm trying to characterize your application because it is, in the words of Alice In Wonderland, "curiouser and curiouser". Listening to it I think it sort of seems to come down to: Don't do it; but if you must do it, do it to me. That's it, isn't it?
2654 MR. WATERS: They have said that to me a couple of times over the last few days.
2655 COMMISSIONER LANGFORD: It is hard to get a handle on that type of an approach because -- first of all, I congratulate you on your candidness, but you really don't want us to issue another licence here, do you?
2656 MR. WATERS: Well, I think that would probably be the first position, but I believe that if it were granted to us as the only existing broadcaster who has applied, I think there is a distinct advantage in that we would be providing more diversity to the market, a new service. So I think there are reasons on that side that a new licence would make sense.
2657 But I believe very strongly that it must be the existing broadcaster who gets the licence, because I think that we are the only ones who can make the case for it being economically viable by combining the new licence with our already existing AM and FM station that we are operating here presently.
2658 COMMISSIONER LANGFORD: It's just economies of scale, then. You have the second floor over in the Bank of Nova Scotia building there, you have two stations on the go and you can squeeze a third one into the broom closet or whatever. I haven't been up there so I don't know how much room you have, but you obviously have room for another microphone.
2659 MR. WATERS: I think the people that are in the station, Commissioner Langford, would say that it would have to fit into a broom closet. We don't have a lot of space, but we utilize it very well.
2660 COMMISSIONER LANGFORD: Yes. I walked around it this morning, I noticed somebody was putting a pup tent up on the roof. It gave me that impression.
2661 Well, it makes it a little difficult, because I think what I would like to do is to jump right to your format. It's a little bit like kind of being dragged to the altar here and I would like to know a little bit about whether you would need a third licence. I suppose that seems to me, just listening to you today, kind of a logical starting point.
2662 I should have marked these pages, but I think you said on pages 9 and 10 -- you discussed what you would do with this third licence. Again, I don't want to be derogatory here, but it really does seem like there is room in what you have now to do everything. If I get this right, you are going to kind of make one a little bit younger and make the AM a little bit older and then -- it's momma bear, poppa bear and baby bear here: This is what we have and then the new one in the middle will be just right.
2663 Is that the way it is?
2664 MR. WATERS: I don't quite see it that way.
2665 COMMISSIONER LANGFORD: Oh, good.
2666 MR. WATERS: The first thing that our proposed three-pronged programming approach does: One, most importantly, it creates diversity in the market, because we are putting a new signal into the market, a new format into the market, which would be the nostalgia format that would be on CKLC-AM.
2667 I think the other factor that is very important is the repatriation of the listening audience and of some advertising dollars back from the U.S. side which is going to WBDR, "The Border". We believe when we start repositioning our stations, CFLY-FM can better compete with "The Border" to repatriate those dollars and the audience.
2668 I think Ross has done an enormous amount of work on the programming and has been working with the people in Kingston for the past few years on the general programming nuances and habits in the market.
2669 I think, Ross, if you would like to --
2670 COMMISSIONER LANGFORD: Well, maybe if you don't mind, because you have had a go at it, maybe I can just try to sharpen this.
2671 It seems that you have an existing station, CFLY, which, according to what you said to us this morning and your earlier application documents, targets a young audience. Maybe not the youngest of the young, but it generally starts at 18 now and goes up to --
2672 MR. DAVIES: Fifty-four. It's broad.
2673 COMMISSIONER LANGFORD: Fifty-four. Now you are going to take out a section of that. You are going to take out the 34 to 50, move them to the new, because they are soft adult --
2674 MR. DAVIES: Right.
2675 COMMISSIONER LANGFORD: I love these terms.
2676 MR. DAVIES: Yes.
2677 COMMISSIONER LANGFORD: And then the geezers like me get to go to AM. That's where we go. The over 50 crowd go to AM, right?
2678 MR. DAVIES: I go there too.
2679 COMMISSIONER LANGFORD: Okay.
2680 Now, it's such fine division that it seems to me that you could do it all on the two you have now, albeit one is an AM and --
2681 MR. DAVIES: Right.
2682 COMMISSIONER LANGFORD: -- as you quite properly say, it doesn't lend itself to music.
2683 MR. DAVIES: Commissioner Langford, that really is the essence of it. The format is being done here on CKLC, but it is not typically ideally suited on the AM band.
2684 AM listening generally is older people and male-dominant. We put that format on the air there because it is not being done in the Kingston market and we felt that it needed to be a service to the Kingston community. But it is clearly not on the right band and so it would be much better suited to go on the FM frequency, and that is why we think it will be a better service to the community if we put it over there.
2685 In order to do so, it allows us then to take this broad skewing radio station in CFLY-FM and narrow it down a little bit more and to make a little bit of room for it because some of our CFLY-FM listeners would go to Light 105, we understand that but, more importantly, it allows us then to get at these people across the State line here, the border, and repatriate some of those listeners with a retargeted FLY-FM.
2686 COMMISSIONER LANGFORD: Let's look at that.
2687 You are going to take CFLY, you are going to hot it up and demographic down. You are going to make it younger and hotter and you are going to, hopefully -- the goal is to be successful in your right and then to repatriate some of what is coming across the St. Lawrence.
2688 Isn't there a possibility that the real damage you will be doing is to the signal you own coming up the river rather than the signal the Americans own that is coming across the river? Because isn't your station, which you nickname "The River", aimed at precisely this same young demographic?
2689 MR. DAVIES: No. The station that we are referring to in Brockville, "The River", is a youth-based format, but it is a rock-based male format. It is appealing to demographics that go, frankly, from about 18 all the way up to 45, because it plays classic rock and rock. But it is male-driven and it is less hit-oriented and less contemporary, if you understand what I'm saying.
2690 This station that we are talking about for CFLY-FM will be very pop and contemporary hit-oriented, playing hits as opposed to heavier-based rock music, which is what "The River" plays.
2691 So some of the audience demographics may be the same, but we are talking more of a female approach with FLY whereas "The River" is clearly a male-based radio station. So it won't impact on them.
2692 COMMISSIONER LANGFORD: Well, you are the experts, but are you now telling me -- and I want to get into this a little bit, mainly because it is such fine distinguishing that I would like to hear more of it.
2693 MR. DAVIES: Yes.
2694 COMMISSIONER LANGFORD: Are you now telling me that CFLY will also be female-oriented? I thought it was the new one, Light 105 --
2695 MR. DAVIES: Yes.
2696 COMMISSIONER LANGFORD: -- that would be female-oriented.
2697 MR. DAVIES: Yes. It will be female-dominant.
2698 COMMISSIONER LANGFORD: Dominant.
2699 MR. DAVIES: The format that we are talking about for CFLY in a hot AC typically skews to slightly more female than male. It would be probably in the neighbourhood of maybe 55/45 female to male.
2700 But the important part here, Commissioner Langford, is that there are male listeners who have a propensity for listening to a certain genre of music. For example, "The Border" has male tuning to it. That doesn't mean that -- the reason why they have that is they have a propensity for that type of music. Not all male people want to be rockers.
2701 "The River" is a station that plays rock music, also appeals to men, but a different type of genre, if you will, a different type of life group. So that is really the difference right there. So there are people who have a propensity for different styles of music.
2702 COMMISSIONER LANGFORD: When you talk about your new Light 105 appealing to women, is it that the music you play attracts women and therefore you add the other things, the women --
2703 MR. DAVIES: The news focus.
2704 COMMISSIONER LANGFORD: -- news focus, the women current affairs focus, the lifestyle focus, or is it that you are going to put all these pieces together and then, of course, women will follow?
2705 MR. DAVIES: Primarily it drives -- history shows, research shows that this format being in soft adult contemporary music does appeal primarily to women by and large and it is the music that first comes -- that drives them to that format. It only makes sense from a programming point of view to embellish that in spoken word content. So that is why it just makes sense to add on features like news features and health features that are relevant to the audience.
2706 COMMISSIONER LANGFORD: So it is the second way around, the music attracts the female audience and then you serve that audience --
2707 MR. DAVIES: That's correct.
2708 COMMISSIONER LANGFORD: -- with programming other than music that will appeal to them.
2709 MR. DAVIES: Yes.
2710 COMMISSIONER LANGFORD: To step to the first part of your paper today, the kind of dismal market conditions, when you fix on the new formula you would have for the two existing and the new Light 105, do you as well project those particular sounds, if I can call it that, those particular personalities, into the advertising market? In other words, the fact that you will have a station that appeals to women rather than a country sound, will that give you a different advertising projection -- advertising revenue, revenue projections?
2711 MR. WATERS: Let me, if I may, just try.
2712 If I give you the -- the way that we see it breaking out once we have -- if we are granted a licence and we move the stations around or position the stations differently, the way that we see the demographics breaking out, or at least the key demographics for the three stations, would be CFLY would be the hot AC, it would be 18 to 34 primary demo. Light 105 would be the soft AC, it would be 35 to 54. And then the nostalgia station on CKLC would be 50-plus.
2713 So I think what we are saying is that we have three stations positioned, I think quite well. It gives diversity to the market, it still gives a new service, but we are covering the advertising spectrum from 18 up to 64 -- I think that is as high as BBM goes -- but with the three different formats.
2714 So I think that we -- I'm not exactly sure that -- I don't think we could tell you that it is going to increase our advertising revenue dramatically, I don't think that is the right thing to say here, but I think that the key in all of it is repatriating some of the audience back from the U.S. and I think that is where the movement of CFLY focusing on the younger demographic can do that against "The Border" in the U.S.
2715 COMMISSIONER LANGFORD: We heard earlier this morning that that might be somewhere around $400,000. Is that a number -- do you have any kind of guesstimates on what is going south in the way of revenues?
2716 MR. BLUNDELL: Commissioner Langford, we heard $400,000 this morning, but we have heard from the Canadian principal in that station that their revenues were indeed as high as $900,000.
2717 COMMISSIONER LANGFORD: All from Kingston though?
2718 MR. BLUNDELL: We don't know that. He didn't describe that to us, but that's the information we have. So that $400,000 came as a bit of a shock this morning.
2719 COMMISSIONER LANGFORD: Shock on the low side?
2720 MR. BLUNDELL: Yes.
2721 COMMISSIONER LANGFORD: So you think there might be more money there to be repatriated?
2722 MR. BLUNDELL: We hope so.
2723 COMMISSIONER LANGFORD: And if you play your cards right, you will be repatriating it from the States rather than from Brockville.
2724 MR. BLUNDELL: That's right. The fact that we believe that that border station has taken the advertisers and the audience from a Canadian broadcaster in the first place, it would be nice to repatriate back to Canada.
2725 MR. WATERS: Commissioner Langford, I think it might be worth mentioning, because of your comment regarding Brockville, I think that it is important to note here -- and Jim certainly can support me on this if you like, Jim -- but we basically take about $150,000 of revenue from the Kingston market with our Brockville FM. About $80,000 of that is local retail dollars and about $70,000 is actual national money, usually brewery money because the stations that we have in Kingston, CKLC and CFLY presently, really don't provide the demographics that the brewery companies are looking for, but "The River" does. So we get some of that regional beer money on "The River".
2726 So I think it's important just to make the point that that is -- you asked this morning -- Commissioner Wilson was asking about how much money is going out of Kingston over to "The Border". Well I think it is important to put on the record that this is how much money is going out of Kingston to "The River", because it is obviously a factor. You mentioned it this morning, Commissioner Wilson, and you have mentioned it also, Commissioner Langford, so I think it is important to say that.
2727 MR. DAVIES: Commissioner Langford, at the risk of going back to a previous question which I might make even more confusing, the clarification of the formats here, we have a couple of charts that may help illustrate exactly the positioning of what we are talking about, what Jim was saying about the demographics for each radio station.
2728 As you will see behind me here, you will see --
2729 COMMISSIONER LANGFORD: Maybe you could turn that a little more so the other folks can see a bit of it too.
2730 MR. DAVIES: You will get the small copies.
2731 COMMISSIONER LANGFORD: We will get small copies so maybe you can turn that one and let the other folks have a look at it.
--- Pause / Pause
2732 COMMISSIONER LANGFORD: It's wonderful, isn't it?
2733 MR. DAVIES: I call it the balloon chart. It's not called "balloons" technically, but that is what I call it.
2734 COMMISSIONER LANGFORD: It looks like something you would see under a microscope, but I would hate to think of what it might be indicative of.
2735 MR. DAVIES: So in front of you and on these charts for the audience to see you will see the current landscaping here. We have this based on an access of age demographics and music intensity from soft to hard. You will see in the current where all the existing players -- and we have included the Brockville station in there and where they are all playing currently in the market.
2736 You will see, for example, where CKLC-AM is in the soft AC. It's that small light green strange shaped balloon. You will see where CFLY is. The large WBDR-FM balloon on the lower left. This is all based on the core audiences of these radio stations, their make-up based on BBM.
2737 If you look at the projected chart you will see that we have introduced Light 105 into the mix, and you will see it is basically occupied where CKLC-AM was, but it is occupying a larger balloon because it is going to be of a higher appeal being on the FM band. And we have moved CKLC way up to the top which signifies both an older audience and a softer approach in that format.
2738 Then, at the same time, you will see with CFLY-FM, it stays relatively the same but it moves a little bit down and it encroaches on WBDR-FM because with the realigned programming that is where we hope to repatriate these people. Their balloon -- if you compare the current to the projected, their balloon got smaller.
2739 That is the goal of the exercise here with our three-pronged programming strategy.
2740 I don't know if I have confused you even more, but I hope that that illustrates it a bit.
2741 COMMISSIONER LANGFORD: No, it's not confusing, it's quite clear. It is wishful thinking, but considered wishful thinking I suppose, or certainly wishful thinking based on some analysis and that is a good thing.
2742 Repatriation is a common theme in Canada with so much of the population strung along the border.
2743 MR. DAVIES: Yes.
2744 COMMISSIONER LANGFORD: But it is a very clear chart.
2745 MR. DAVIES: Good.
2746 COMMISSIONER LANGFORD: On format again, if you are going to reposition CKLC into the nostalgia or the sort geezer listening class, of which I am proud to be a member, why would you then put so much emphasis with the new signal, Light 105, on women? Because, I mean, obviously there are as many men, unless they are keeling over in Kingston of heart attacks at sort of 40, or something like that, but why would you put so much emphasis on women?
2747 MR. DAVIES: Commissioner Langford, it is a format that traditionally appeals more to women than men. It's not that it's so much -- it's not like it's 90 per cent women and 10 per men. As I say, it skews basically 60/40 female and it makes good broadcasting sense to appeal to those wishes and their likes of that audience who happen to like that particular kind of music.
2748 It won't skew into CKLC, it won't get up into -- some of the upper end of that audience may have some appeal in 50-plus, but again it is a different type of audience that will appeal to this kind of music and certainly not the adult standards or nostalgia or geezer format.
2749 COMMISSIONER LANGFORD: Okay.
2750 Why don't we switch, then, to looking briefly at news and information.
2751 We heard this morning, and you will have a chance to reply to that but I think it is worth mentioning that there are those who say there is a huge appetite for a lot more news, a lot more information, a lot more local voice input rather than music input. I notice that you are adding, according to this morning's presentation, quite a lot of information and quite a lot of female-focused information.
2752 What does it really come to though? Can you break it down into what kinds of things are we hearing? Are we going to hear news on the hour? Are we going to hear Dr. Laura on the half hour? How is this going to work?
2753 MR. DAVIES: I will give you a schedule here and then I can elaborate more specifically.
2754 When we talk about the newscasts, it will entail 69 newscasts over the course of the week and it will cover morning drive, middays and afternoons. It will start at 6:00 in the morning, 6:30, 7:00, 7:30, 8:00, 8:30, 9:00 a.m. At 12:00 noon --
2755 COMMISSIONER LANGFORD: How long would those be, each one of those?
2756 MR. DAVIES: There will be a combination of five-minute packages and three-minute packages, depending on the time of day. Obviously longer in drive times.
2757 And then it continues in the afternoon at 4:00, 5:00 and 6:00 p.m., and then Saturday and Sunday there is a morning and afternoon schedule as well.
2758 COMMISSIONER LANGFORD: And you are going to squeeze the news of the day as well as these programs focused at women --
2759 MR. DAVIES: Right.
2760 COMMISSIONER LANGFORD: -- into those small packages?
2761 MR. DAVIES: No. They won't necessarily be focused -- they won't be put into those packages.
2762 I think it is important to note that the news direction will always have news stories of interest to the female target audience. The features I was talking about, they will be in addition to and they will run at different times of the day at a locked-in feature.
2763 COMMISSIONER LANGFORD: What kind of lengths are we looking at for that sort of thing?
2764 MR. DAVIES: They are typically 90 seconds to two minutes to sometimes five minutes, depending on the nature of the particular show.
2765 COMMISSIONER LANGFORD: If I am in a position where I can listen to the radio all day or I can listen to the radio in the afternoon and I have particular interest in those things, will they be scheduled or are they just going to be --
2766 MR. DAVIES: Yes, they will be -- no, no. They will be locked in. In fact, they will be pre-promoted to say "Make sure you listen this afternoon at 4:00 for this particular feature."
2767 COMMISSIONER LANGFORD: Okay.
2768 Moving right along to -- I'm just following your format here, it's fine.
2769 Moving right along to your benefits package, part of it is extremely clear. Obviously $3,000 to FACTOR is $3,000 to FACTOR.
2770 But I want to talk a little bit about the indirect benefits package of the $80,000 per year, 1,000 commercial announcements.
2771 You say on page 12 of this morning's presentation:
"Each of these stations..."
2772 We are talking now about the three stations should you be licensed with what you call Light 105.
2773 You say on the top of page 12:
"Each of these stations will make available to the Kingston Community Culture Council a total of 1,000 commercial announcements..."
2774 Does that mean they will each do 1,000 or is it they will each do 333-and-a-third?
2775 MR. ROMAN: If I may, Mr. Langford, each station would do 1,000.
2776 COMMISSIONER LANGFORD: So 3,000.
2777 MR. ROMAN: Yes, per year.
2778 COMMISSIONER LANGFORD: Are you doing these sorts of things now with your two stations or is this a brand new initiative?
2779 MR. ROMAN: On this side we do -- we provide ads to an ad bank for Kingston initiatives, but this is a particularly targeted initiative and it essentially will direct itself toward the support of the Kingston Community Culture Council, which is really a fund raiser.
2780 What we are trying to do is to help the arts communities, the performing arts and musical communities, fund activities that flow directly back to their projects and initiatives.
2781 COMMISSIONER LANGFORD: Is this an existing body or is this a body you are going to set up?
2782 MR. ROMAN: No, this is not an existing body. It is brand new. We will be assembling the council, working with the leaders in those respective communities.
2783 COMMISSIONER LANGFORD: Can you give me an idea how that will work? How you will do it? What kind of people will be on it? How big will it be? What will it do? I mean, I don't need a four volume report, but if you could give some more idea of what this would be like.
2784 MR. ROMAN: Sure. The author of the initiative is Jim Blundell, so I think I will have Jim take this over.
2785 MR. BLUNDELL: Commissioner, I think that there are many things that we need and can be involved in. The Council should -- there are many groups in the Kingston area that need, not just support as far as on-air is concerned, but support as far as infrastructure is concerned. How can they raise monies? How can they raise funds for their organizations?
2786 There are a lot musicians, I think, that are very good musicians and very good at their craft, but perhaps we can do a little bit more than has been done in the past inasmuch as we can provide for them a way to train them to understand how business really works, how they can not just do their music well but how they can get it on the Internet, how they can market it, how they can take a business class so they can read a financial statement and understand what it means to be in business and to make that music business that they have grow.
2787 So we feel that while the CRTC and a lot of broadcasters have helped musicians over the last few years on the music side, that maybe we can go a little bit further and help them on the other side with infrastructure and business help.
2788 COMMISSIONER LANGFORD: What will one of these announcements -- give me an idea of what it will be like. How long or what sort of things are you going to say in them?
2789 MR. BLUNDELL: I don't see it so much as announcements, although certainly that would form part of it. But for instance a class where we can help musicians put on seminars for musicians to help them to market their product, to help them to take it to market; help them to read a financial statement and understand the business side of the music business.
2790 So it would be not just running announcements, but creating seminars and classes for them to attend. That would be one aspect.
2791 MR. ROMAN: Mr. Langford, if I could just help out on -- you asked specifically about what these commercials would say.
2792 I think that a defining element is, unlike public service announcements where the station essentially retains the control, usually chops down dramatically what the group or organization wants to say, we treat these performing arts and music organizations as clients. They, in a sense, tell us what they want to say, because we consider them more commercials than PSA.
2793 In other words, whether they are 30 seconds or 60 seconds, they will have an initiative. It might be a music festival or it might be a fundraiser or it might be an instrument lending program where they have to get the word out.
2794 I think one of the frustrations with public service and music organizations is they can't get the weight that a commercial schedule would deliver. They get the sort of conscience coverage that PSAs do. Whereas with this level, 1,000 per station per year, will allow them to reach their potential clients, contributor,s let's say, to a fundraising campaign or, as Jim Blundell is saying, getting the word out that there is a class, a development class with a seminar leader that will teach them about business skills, about how to be better music business professionals. They will get that message out, tailored the way a client would get the message out.
2795 We would help them with it. No cost for the creative. It could be produced as a recorded commercial or it could be a live spot read by the announcer, but that is the essential difference. They are treated like commercial clients who have the ultimate clout of getting that message across.
2796 COMMISSIONER LANGFORD: Is the value of these 3,000 commercial announcements $80,000, or is that the value of the announcements plus the sort of classes and other assistance that Mr. Blundell was talking about?
2797 MR. ROMAN: No, the airtime value is $25-and-change per spot, with 3,000 occasions per year, and that comes out to around $80,000.
2798 We have another initiative that delivers either cash -- costs us cash or contra for these particular business class lectures, these seminars, where we bring in the manager of the group, bring in the booking agent, bring in the groups themselves and just help them have some of the money they make on these one-nighters and on the revenues they derive from the music industry stick to their fingers.
2799 I could add, with my background as Director and Past-President of FACTOR, that the production funds that are flowing into the music industry to produce records now, I wouldn't say it's hard to spend, but there is a lot of it. There is some new money coming as well, as you probably know, with the significant benefits package.
2800 The emphasis we get from the music industry and from the music association leaders, some of whom will be speaking later today, is to help them in these areas, to help them with fundraising, to help them with business acumen. In other words, the marketing, the things that create the so-called mega superstars, or take the local home-grown start and take him or her up to the next level. We think that is where we can do some real good work here.
2801 FACTOR is getting a lot of money from a lot of radio stations. This is something unique.
2802 COMMISSIONER LANGFORD: Who will be on the Cultural Council? How will you form this council?
2803 MR. BLUNDELL: There are a number of organizations in town. Later on today one of the intervenors, Jim Coles, who is the President of the Symphony, those are the kinds of people that we would like to see on our council to help us to take this process forward.
2804 COMMISSIONER LANGFORD: I don't want to sound like I'm not enthusiastic about this, obviously anything that will help Canadian Talent Development is a good thing, as Martha Stewart would say, but I wonder about how that would be tied into the market conditions that you described at the very beginning. In other words, 3,000 spots, 30 seconds or 60 seconds, that is a lot of airtime. Even on three stations that is a lot of airtime.
2805 MR. ROMAN: I have heard it is three per day.
2806 I'm sorry. There we go. I haven't been in the business long, Mr. Langford, at figuring these controls out.
2807 That would be three per day over three stations over --
2808 COMMISSIONER LANGFORD: Nine per day over --
2809 MR. ROMAN: No, three per day per station, which is nine per day in total. That is heavy, but it is the kind of schedule that won't be irritating or overkill. Three per day is --
2810 COMMISSIONER LANGFORD: So even if the market hots up and you have advertisers beating on your door, you will commit to keeping three spots open on each --
2811 MR. ROMAN: Yes, sir.
2812 COMMISSIONER LANGFORD: -- on the new channel.
2813 MR. ROMAN: We can handle three per day.
2814 COMMISSIONER LANGFORD: Okay. Let's talk a little bit about the market generally, which I know is kind of going backwards from the way you have presented it, but now that we have your format plans and we have your kind of benefits package and your interest in this community.
2815 It isn't a rosy picture that you paint and one has to ask oneself: Is it just a fact of life? There are no villains here, Kingston is just not economically booming the way it should be? The women's prison just closed, some jobs will move. Or is it that the radio stations aren't doing that good a job? I mean, is it that you have missed the boat somewhere.
2816 The reason I ask this is -- I'm not looking for mea culpas or the hair shirt or anything, but you have shown us today with your beautiful colourful charts that under the pressure of another application you folks, with your experience, can sit down and reinvent yourselves. Perhaps you haven't been reinventing yourself. Perhaps you are not doing it right.
2817 Is that a possible explanation of why the market conditions for radio revenues are so bad?
2818 MR. WATERS: Commissioner Langford, first of all I would like to say that we, all of us, all of the 1,500 people that work at CHUM Limited think we are pretty good broadcasters and that we do do good work in the markets in which we operate.
2819 I think that what was interesting about -- what is interesting about Kingston is when the Commission issued its policy on multiple licence ownership a couple of years ago one of the things that was included in there was flipping stations from AM to FM which, of course, would be a consideration for us here.
2820 Because there are only two operators in the market, CHUM and at that time it was Power, their President, or Vice-President, Yvon Chouinard and I spoke about the possibilities that existed in this market. I know we both probably had the same person do the engineering study and there was only one frequency here. If there had been two I think we both would have agreed to apply at the same time and both apply to flip our AMs to FM so we both ended up with two FMs. But there was only one frequency.
2821 Mr. Chouinard and I actually talked about applying for the frequency together. That didn't quite work and then some other -- well, it was a consideration, but then other things started to happen in the market as far as they wanted to sell, they decided that they might try to sell their radio station, so the kind of idea of us working together, that kind of went by the boards.
2822 But I think that -- and I guess again, if we had decided to -- if we had initiated this, a flip for CKLC to FM, then I think we could have created a -- it would have been Corus or Power and us after the same frequency again.
2823 So I'm just not sure there was any advantage to that so I think we were both prepared to stay the way we were, each with two stations, and continue to operate that way. So that's the kind of the way that I see the market.
2824 But I think we have done a good job here, and I believe that Power has done the same. I think we have both operated well.
2825 I think what we can't forget here is in the last few years when things haven't gone that well is also when "The Border" hit the air, as Mr. McColman said this morning, in April of 1997, and revenues have suffered since that time.
2826 MR. DAVIES: And we also -- I mean, we are good broadcasters, we have been at it a long, long time, and we had some difficulty with the notion of turning back a licence. We did not want to turn back licence and take a service out of the market. I think that bothers us from a philosophical point of view and we didn't want to turn back a licence. If there is an opportunity to move one over to the FM band and still maintain and create a new service, that sounds pretty good to us.
2827 And let's not forget the fact that I have two people over from me, Mr. Digital Man, with the digital radio movement in Canada. We are hopeful that these AM frequencies are going to be alive and well in the not too distant future and I would hate to see that --
2828 MR. SHERRATT: I think that is one of the really key issues for us to address in radio in this country. If we go back to the beginnings of FM -- I am your senior so the geezer format, you and I will both --
2829 COMMISSIONER LANGFORD: I'm there. Yes, I'm there. I'll get my walker and we will go over.
2830 MR. SHERRATT: But AM was the dominant force. There were people handing back FM licences in the '50s. They had them and nobody listened to it. There weren't any receivers. But in Canada when the FM allocations took place we didn't do very well versus the United States. We just didn't have the per capita number of frequencies available in Canada that the Americans have.
2831 One of the big objectives of our company, and I think of other broadcasters, in preserving our AM stations -- because they are difficult to keep going and one of the things that affects revenues is keeping an AM station going, certainly affects profits is keeping the AM station going.
2832 But if we, through the policy that has been adapted by the government and you through this Commission's prodding to get the government to do it as a replacement technology, it means as digital rolls out -- and it is not going to happen overnight, it is going to take more time than Mr. Roman would like to see, but it's going to come -- we will get a better shake on frequencies in Canada and have more digital appearance and then everybody will be the same.
2833 Now, you earlier talked about: Well, can't you do these things with the two stations you have now?
2834 The big problem is, with AM you can't attract younger people to the AM band. They just don't listen to it, no matter what happens. So you keep skewing those older or you take them to information.
2835 I kind of do a little analogy that we go back and forth on the pendulum, but we got into specialty television very early in the piece. We started MuchMusic way back 15 years ago and we developed specialty television.
2836 Why? Well, a lot of it has to do with our radio background. Historically people watched television programs. There weren't great loyalties to the channel except for news once a day. On the other hand, they listened to radio stations. They tend to have their favourite station and if their favourite station isn't what they want it to be when they tune it in, they go away, because they expect to hear their radio station when they turn it on.
2837 So as we get more fragmentation, as we are seeing in television -- you know, I hate to say this but conventional television is becoming a little bit more like AM radio, our audiences are declining as we get more and more specialized services so people --
2838 COMMISSIONER LANGFORD: They are still applying for licences though.
2839 MR. SHERRATT: But not AM. I don't think you have had many applications.
2840 COMMISSIONER LANGFORD: I was thinking of conventional television.
2841 MR. SHERRATT: Oh, yes. Well, it depends on where you are. You know that old line, you are where you were when.
2842 But if you sort of apply it to that and come back to radio: What is the best thing to do in radio? If you can become more specialized in a field that has always been specialized, then you have a better opportunity of being successful and super serving the community that you are serving. Rather than having more American stations getting a bigger chunk of this pie or that pie, we think we can do it.
2843 If you look at our combined operating revenues and our profitability in the projections we have done, your first question to Jim this morning: Would you rather not have it?
2844 Probably you would say, well, you would rather not have it because we will make more money against the projections we filed with you if there is no new radio station here. If we have to program a third service -- or we are allowed to program a third service, our profitability will be reduced for a number of years. But for the long haul that is in the best interests of us, because we are long-term players, and it is in the best interests of the community.
2845 COMMISSIONER LANGFORD: Thank you for that.
2846 I must say that as I listened to Jim talk about his meetings with Mr. Chouinard, I remember those old sort of Edward G. Robinson movies where the boys are in the back room cutting up the cash from the territory, you know, and it must send the shivers down the would-be new players here because it really looks like it would be a tough, tough market to break into.
2847 I remember a time when CHUM and Citytv was a new player and full of new ideas that a lot of people poo-pooed and thought were pretty crazy, and they seemed to have worked out on all fronts for you folks.
2848 Now we have some new players here who really are, if their applications are not going to change in the next few minutes of what we heard this morning and what I assume we will hear a little later, they are new and they are different and they want to do something different. They see room here and they remind me a little bit of CHUM some years ago that saw room and saw opportunities where the established folks who had been cutting up the cash in their back rooms didn't see it, and I wonder --
2849 Which really does bring us to this market thing. I understand your point about synergies and economies of scale, it is pretty much Samuelson Economics 101 and probably is pretty accurate in a lot of ways, but is there room for this new local, really, truly local voice?
2850 MR. WATERS: Well, first of all, we are truly local. We have been here for a lot of years. Like we are not -- we are not new to the market. We have been here. I think we understand the market as well as anybody does and I think that purely the economics say to us that the only way that it works is for the existing broadcaster to get the new licence and our friends at Corus are not applying. They have withdrawn.
2851 COMMISSIONER LANGFORD: Your new friends, but your old friends.
2852 MR. WATERS: I think it's important to say -- I think no one understands what you are saying better than being the new applicant. I was myself here at one time.
2853 I have nothing but the greatest respect for John Wright. He and I worked together for nearly 20 years. Garry McColman I don't know as well, but I know he is well thought of in this community.
2854 I know what it's like to be a new player, I think CHUM has done it in many places. And it is nothing to do with John Wright or Garry McColman, we believe that the economics of the market say that -- or show us that the only viable solution is that the existing player gets the licence, or nobody gets the licence.
2855 COMMISSIONER LANGFORD: We had a gentleman talking to us the other day who described sort of local ownership this way: When it rains, the owner gets wet. When it rains in Kingston maybe the folks in Toronto don't get wet.
2856 I don't say that in a derogatory way, but do you have that kind of local management and representation here that can bring that same sensitivity that obviously someone who gets wet can bring to it?
2857 MR. WATERS: Yes. Do you mean do we have good local people here? Absolutely we do. Jim is just -- Jim has been the manager here for a little while. He is moving on to another property, but we have very good people here.
2858 Our new general manager is a gentleman who has been in Ottawa for several years, has business in Smiths Falls, in fact lives in Smiths Falls, and he is our new general manager in Kingston.
2859 So no, I think we have very good local people here who understand the situation.
2860 I hope I'm answering your question properly here.
2861 COMMISSIONER LANGFORD: Well, there is only one proper answer, it's the truth.
2862 MR. WATERS: Well, that's the truth.
2863 COMMISSIONER LANGFORD: The present guy is moving and the new guy is from Smiths Falls.
2864 MR. WATERS: Yes, that's the truth.
2865 COMMISSIONER LANGFORD: What about expanding your workforce --
2866 MR. SHERRATT: I don't want to leave that point, because --
2867 COMMISSIONER LANGFORD: I didn't think you would, but I was willing to let you.
2868 MR. SHERRATT: No. Radio is a very personal business. To be in the radio business you have to live it, eat it, sleep it, if you are going to be successful at it. If you are going to have a successful radio station in a community, whether it be Kingston or Peterborough or Timmins, the person who is in charge and the people who are there all have to do that and they have to be involved and an integral part of the community. It's the way the business works. You know, they go hand-in-hand.
2869 But we have often said, and you have heard the line before, that it's good business to do good and it's good to do business. I mean, you have to be a part of that because the radio station will not be -- if I could keep these two guys still I could see you.
2870 COMMISSIONER LANGFORD: There is some despair. There is some despair on the front benches, but we are going to throw them a couple of easy ones and cheer them up at the end.
--- Laughter / Rires
2871 MR. SHERRATT: But if you are truly going to become a part of the community, the person running it has to be a part of that community. I did it for years, Jimmy has done it, we have all done it. That's what it's all about and, you know, that is why it's such a great business to be in.
2872 COMMISSIONER LANGFORD: Jim didn't like my Smiths Falls line, but he is coming back. I can see the colour coming back to his face. It may be rage, but it may be something else.
--- Laughter / Rires
2873 COMMISSIONER LANGFORD: We will just talk very quickly about --
2874 MR. SHERRATT: If you lived in Smiths Falls, wouldn't you like moving to Kingston?
2875 COMMISSIONER LANGFORD: Oh, I have a cottage near Smiths Falls. I'm not touching that with a 10-foot pole.
2876 And it's Smiths Falls actually, isn't it. It's a funny -- with no apostrophe. It's a funny thing.
2877 I think this is my last question. I will obviously give you a chance to overcome the Smiths Falls line, Jim, and say something energetic at the end, but with regard to hiring people, I don't get a sense that you will be adding to your news force, your kind of local news force in this. I get a sense that it is tag-on again and that it is the synergies.
2878 And I understand the synergies, I'm not nay-saying the economies of scale argument at all, but don't you think there might be a possibility here to add a little extra on the local front?
2879 MR. DAVIES: He's asking permission.
2880 MR. WATERS: Go ahead, Jim.
2881 MR. BLUNDELL: Well, Commissioner Langford, we are proposing in our presentation that we would add two distinct news voices that would be designated to the new operation.
2882 COMMISSIONER LANGFORD: I'm sorry, I missed that. I apologize for that.
2883 So you are going to add two brand new person years to the building broom closet?
2884 MR. SHERRATT: No, no, no, that is to the news operation.
2885 COMMISSIONER LANGFORD: The news operation.
2886 MS SHEPPARD: We are also, if I might add, planning to add 13 new people to this operation in conjunction with our existing staff.
2887 COMMISSIONER LANGFORD: That is some broom closet.
2888 Those are my questions. You may have some final remarks you --
2889 THE CHAIRPERSON: I have a few questions first.
2890 COMMISSIONER LANGFORD: Okay. There will be more questions from --
2891 THE CHAIRPERSON: Are you --
2892 COMMISSIONER LANGFORD: I'm finished.
2893 Thank you very much.
2894 THE CHAIRPERSON: This question may be more commercial than regulatory and is slightly perverse, but would you consider -- by the way, all this movement reminds me of when I go to the movies. I always try to sit behind an old couple who look like they hate each other --
--- Laughter / Rires
2895 THE CHAIRPERSON: -- otherwise I miss part of the movie.
2896 COMMISSIONER LANGFORD: Find an old couple and one may follow the other.
2897 MR. WATERS: We weren't trying to cause a problem.
2898 THE CHAIRPERSON: You consider, of course, "The Border" to be in the market?
2899 MR. WATERS: Yes.
2900 THE CHAIRPERSON: So when you say no one else but somebody already in the market, or presumably associated with it, could make a go of this, if you can show synergies between "The Border" and Mr. McColman's application and therefore revenue expectations that are less than half of any other applicant and a persuasion to the Commission that they will be able to do a great local job, does that not fit -- in a perverse fashion, your comment that only you have said it in different ways: Only an independent station -- not ready for an independent station, only an existing broadcaster could make a go of it.
2901 Once you have answered this question, of course the second one is: If the other applicants -- if no one can show us that they will reduce the presence of "The Border" in Kingston, maybe we should take advantage.
2902 Do you follow me? If you consider "The Border" to be in the market and you can see ownership of synergies or whatever because they are very present in the market and they offer a strong Kingston service with revenue expectations that are lower because of this, doesn't that fit your requirement that only an existing station can do it without disturbing the whole commercial operations of the incumbents?
2903 There are regulatory concerns of course, but if no one can show us that they will repatriate "The Border" and remove it from an existing station, then presumably one could argue it is a regulatory wash.
2904 MR. WATERS: I think I stayed with you through that.
2905 I think for me it is pretty straightforward. With the new -- if we are awarded the new frequency, that will allow us to reformat our present FM station, which will -- which we believe will repatriate the listening audience from "The Border" back to Canada and then, therefore, repatriate the advertising dollars to follow.
2906 THE CHAIRPERSON: We agree. I did put that into my hypothesis, that of course from a regulatory perspective if you can remove "The Border", an American station, as a player of significance in the market.
2907 But suppose we are not convinced that what you put forward will do that, then it will be three stations. In that case, why not a new voice that will not disturb the market and will have diversity if they have a strong community presence? Instead of three CHUM, two Corus, we would have "The Border" and the McColman.
2908 You have to convince us that you will repatriate. It's not obvious with the format.
2909 Do you follow me? Of course, the Commission as a regulator wants to remove "The Border" as a strong player in the market and get a Canadian station to do that, but if not, then maybe it can be an asset in helping to put in a third voice in the market with a strong community presence and maybe lower revenues.
2910 I understand Mr. McColman's participation is low, but WBDR is there.
2911 Anyway, I just want you to comment further on that. I know you tell us that you will repatriate, but --
2912 MR. WATERS: We feel that is the most critical.
2913 THE CHAIRPERSON: -- it is three adult contemporary stations.
2914 MR. DAVIES: Madam Chair, if I may try to take a stab at that, we think it is -- clearly "The Border" are a significant reason why the economics of this market are as they are.
2915 You heard Mr. Blundell question the $400,000 revenue figure this morning. That was a surprise to us. We think it is much higher They are really having an effect on this market.
2916 We think it is critical that we take a run at these people and this allows us to do that. Yes, we are not talking about taking CFLY into a teen station at all, but what we are attempting to do here is to force them younger. If we take CFLY and adjust the programming as we have indicated, we will clearly be able to force them into some kind of movement. We are thinking that they would either have to go younger or get out of the format.
2917 We say that knowing that they have the advantage of an unregulated situation down there. But clearly we have to make that work, because the economics of this market right now are very, very difficult and so our strategy is based on repatriating listeners from "The Border". We have to go after these people.
2918 MR. SHERRATT: Madam Chair, I think if I could just have a go at it a little differently -- and I know exactly what you are saying as it relates to "The Border" and getting rid of it. It would be wonderful, but we have discovered we can't build an iron wall --
2919 THE CHAIRPERSON: Well, it's a long way from disappearing. A lot could be done between where they are and getting rid of it.
2920 MR. SHERRATT: Particularly when you can almost go like this and see their transmitter.
2921 It's a bit like the situation in Windsor-Detroit, but it's reversed because they are in the size of Windsor whereas Kingston would be the Detroit. That is the only difference but it's not as big.
2922 But from our experience in Windsor, and everybody else's experience in border markets, you cannot attack the low end of anybody who is playing CHR from a Canadian base. On given days you might be able to but on other days you can't, because in a non-regulated environment they play the tunes, as my son used to call them years ago, that the people want to hear all the time and they don't care whether they are Canadian or whether they are American.
2923 So you can only go after that part of the audience, the older part of that audience. That is the place to attack them and that is the place to try to repatriate audience.
2924 You will never get the low end back, as long as they want to stay there, and somehow make a living out of it. But if you can get their top end to a station that skews slightly older and then fits into the marketplace here, then you are indeed doing something against the station coming from out of the country that is not contributing to the system.
2925 Now, I heard what you said about, well, they have something going here. I'm not sure how they are going to program a station and do these wonderful things that you have alluded to for $78,000 a year, which is what I saw in their program expense for the first year. It would be quite a trick.
2926 But if you put that station in, as an example, it is right on top of our FM station right now. So that causes more fragmentation within the Canadian cluster of stations and we have a really finite market here. That is the position. This market is finite, it is not profitable, it hasn't grown.
2927 Are we better to have strong, Canadian services continuing to serve the community that they are licensed to serve and contributing to the Canadian system, or should we establish a station that has an alliance with an American station which already sells into Canada in concert with other American radio stations being marketed together, the American station and the Canadian station, that would further weaken this market.
2928 MR. BLUNDELL: Madam Chair, if I could just add to that, please.
2929 It would seem to me that if the McColman group with an existing FM station will be given another licence in another format in this market, it would be two FMs in this market. That indeed would create an imbalance, as far as I'm concerned, and an American imbalance and an unregulated environment for one of them for sure. But those two stations together could cause a very serious impact to the existing players here today because they have one that is unregulated and you add that to the Canadian side and it would cause havoc, I think.
2930 THE CHAIRPERSON: I thought I would, what is it, put the fox among the pigeons so that it will be late, we will be tired when we get to the intervention stage so it will be more lively now.
2931 I'm trying to understand the extent to which the profit has dropped dramatically between 1997-1998 and 1998-1999 while generally speaking the radio industry is not doing that badly, as you can see from the blue block.
2932 Of course, I don't have "The Border's" annual returns -- maybe they will give it to me now -- but I have yours -- and don't worry, I won't put the numbers on -- and when I look at it I'm trying to understand what happened here.
2933 When I look at CHUM's FM it's PBIT was up, its revenues were up and its expenses were down, but if I look at its AM it' PBIT is down quite dramatically and its revenues are down, but its expenses are up as much as its revenues are down almost.
2934 What is the explanation for that between the end of 1998 and end of 1999 numbers?
2935 MR. WATERS: There is a significant number in there for severances, Madam Chair.
2936 THE CHAIRPERSON: So that is an artificial or a one-time or whatever?
2937 MR. WATERS: Yes. That particular part of the expense, absolutely.
2938 THE CHAIRPERSON: Which considering -- am I right that in the red bar here there are four stations?
2939 MR. WATERS: Yes, that's correct.
2940 THE CHAIRPERSON: So any artificial increase in expenses makes a big difference, because it's --
2941 MR. WATERS: It would make a difference, but it's the cost of operating. I mean, we felt that we needed to make some adjustments at the station, so I think that has to be included. It is an expense. It's an operating expense.
2942 THE CHAIRPERSON: Yes. But when one is looking at trends --
2943 MR. WATERS: Right.
2944 THE CHAIRPERSON: -- I think it would be fair to say that a large change one year has to be taken into consideration when looking at how low the trend is.
2945 MR. WATERS: Yes. I don't think it -- that expense didn't move it from above the line to below the line on that particular graph.
2946 THE CHAIRPERSON: No, but it made the red bar lower.
2947 MR. JANSEN: Madam Chairperson, we have some additional information which may clarify to you the exact nature of the expenses, the total expenses for the four stations. I have 15 copies for you and the intervenors here if you would like to have a look.
2948 THE CHAIRPERSON: Why don't you explain the major component of it into the record.
2949 MR. JANSEN: Okay.
2950 Maybe I can ask Shelley to do that.
2951 But the total expenses for the four stations haven't increased all that dramatically from one year to the next.
2952 The total expenses in the industry were $4.1 million in 1998 and $4.27 million in 1999. So the information that we have here also deals with the issue of people sitting in the back room allocating the cash. It really shows there is no cash at all to allocate because the operating profits, even before interest payments and depreciation, are negative. They are minus $148,000.
2953 Shelley, maybe you could explain the issue around the one-time --
2954 THE CHAIRPERSON: My question was not all four, my question was to CHUM. Because if I look at the Power stations there isn't this dramatic difference in the expenses in the AM stations, as big a change. I was just curious to see what it was attributable to.
2955 Now, you are experienced broadcasters. Do you think that the fact that the Power stations were for sale had an effect on their performance in the last year?
2956 MR. WATERS: Absolutely not. I think Powers are and always have been excellent broadcasters and I don't think anything has suffered there. I don't think they would allow that to happen.
2957 THE CHAIRPERSON: But they were broadcasters completely leaving the industry. Do you think that Corus may increase the red bar maybe and bring it up above the line? You don't think there is absolutely any effect on a company that is leaving broadcasting and a company that is brand new?
2958 MR. WATERS: I don't think it is fair for me to comment on that, but I do know the people at Corus and --
2959 THE CHAIRPERSON: You don't have to tell me exactly what Corus and Power may have done, I'm just asking you as an experienced broadcaster whether your view is that it has no effect on performance while it is happening?
2960 MR. WATERS: I guess it might. You are talking about the transition from Power to Corus, that there is something they might have lost a little in there?
2961 THE CHAIRPERSON: We had this discussion, if you recall, in Vancouver, for example, with regard to WIC. I understand it was an extended period, but broadcasters don't -- you know, it's a particular situation.
2962 But I take your point that there is no -- in your view there is no reason why there should be a difference?
2963 MR. WATERS: Jim, if I might just say one thing, I think the most difficult thing in that transition period is for the staff because they are in the great unknown during that time. That is the most difficult thing. Whether that affects their performance or not, I don't know. I suppose it might. But I think it is very difficult for the people who are there waiting to find out when the shoe drops.
2964 THE CHAIRPERSON: That was an argument that was used by CHUM, if I recall, in Vancouver to say "Don't believe these incumbents who say there is no room in the market".
2965 So I'm not experienced like you, I am only believing you what you tell me in other circumstances.
2966 MR. WATERS: I wasn't in Vancouver.
2967 MR. BLUNDELL: Madam Chair, can I just speak to that for a moment?
2968 THE CHAIRPERSON: Of course.
2969 MR. BLUNDELL: It would seem to me that the graphs that we have in front of us, yes, there is a blip as a result of some one-time operating, but the graph shows that this is a depressed market. This is not a -- look at the graph that we provided for you. I mean, it is very obvious that this is not a buoyant radio market, hasn't been for some time. Whether it is a result of the changes in business, whether it is a result in a change in retail climate, whether it is indeed a change in "The Border" coming in and poaching from the Canadian broadcasters, it doesn't matter, it is there and it is a fact of life.
2970 Yes, there is a blip in that one area, but the trend is there. It is very obvious and I just wanted to point that out.
2971 THE CHAIRPERSON: Last question.
2972 Is it your view -- since I don't have their annual returns -- that WBDR has done better between 1997-1998 and 1998-1999?
2973 MR. BLUNDELL: The only thing I can tell you is that a discussion ensued between one of our senior people here in Kingston and the Canadian principal where they informed us that their revenues were just under $1 million. That is all the information I can give you. I have no paper, no document to support that.
2974 THE CHAIRPERSON: My reason for asking was whether these bars represent -- these bars represent the four stations, whether there was some dramatic happening in "The Border" that would have taken a lot of money, more money out of the market than usual. Because these bars, I guess, to read them as this is the life of the four stations, the red bars, so you have to look at that and say what has been --
2975 MR. BLUNDELL: And indeed, when you look at the years that it has gone down in the Kingston market, if you sort of tied that to the start of "The Border", I think you will see a correlation there.
2976 THE CHAIRPERSON: You mean "The Border" going on-air?
2977 MR. BLUNDELL: Yes.
2978 MR. SHERRATT: Madam Chair, we are almost getting ready to leave here on a negative note and we always hate to do that.
2979 THE CHAIRPERSON: No, there is counsel yet.
--- Laughter / Rires
2980 MR. SHERRATT: Well, then we will really get negative I guess.
2981 We had two approaches that we could have taken to this hearing, and Jim alluded to it at the beginning. We could have lined up at the end of the afternoon and said "Don't do anything, the sky is falling. Protect us. Save us from ourselves." Or we could do what we did and say "These are the real -- this is the reality. This is what Kingston is right now. It's a great community, it has great citizens, it is not dead and dying, it is not a ghost town, it just isn't having any growth."
2982 And the revenue base in Kingston for advertising isn't having any growth. It would seem that Hollinger have found that out, they have the paper for sale too.
2983 But we didn't do that. We didn't say "The sky is falling". We said "The sky is a little cloudy. It's cloudy, but the people who live here are vibrant, active, they are Canadians and they will make this community last and it will grow. It has been here a long time. There is a lot of history here."
2984 So we came to you and said "We are a part of this community, we understand the community, we want to add more diversity to the market. We will attack the cloudy sky, we will reduce our profits for a few years, but if you think there should be more diversity in Canadian radio voices here, we agree with that". It gives us an opportunity to more focus our radio stations in modern times, so we are here saying we are prepared to do that.
2985 THE CHAIRPERSON: Mr. Sherratt, I'm just saying what I said in Vancouver that made you radiant, which is: You can't take easily this bar against what is happening in radio in the country or what is happening in TV and project the future starting with blips. I thought you liked that argument so I thought I would use it again.
2986 COMMISSIONER LANGFORD: That was then, this is now.
2987 THE CHAIRPERSON: "The Border" goes on air, you will reduce your expenses dramatically in one area and there are only four stations. It has a big effect. Does that mean that unless we take your argument that only you should be given a licence, if anyone. because of the arguments you make, this will just continue and fall right off the page?
2988 MR. SHERRATT: No, we don't think we are going to go away and -- you know, we are going down the river in a hand basket.
2989 THE CHAIRPERSON: That's not what I'm talking about. I'm talking about using what has happened between these two years, some of it self-induced and some border-induced, and saying this is just going to continue going unless you do "X", which is a bit your argument, which is completely what the incumbents were saying in Vancouver.
2990 Since you were an applicant you were delighted when we were trying to point out "Well, are you sure you can project the future from the last two years." That's all.
2991 Anyway, I know now that intervention period will be much more lively.
2992 MR. SHERRATT: But I think the one point on that is that regardless of the blip in expenses, as you describe it, revenue still declined in the market in that period, in that two-year period. The revenue went down by nearly 6 per cent.
2993 THE CHAIRPERSON: But the bar would be different if you removed that, and also you took into consideration that "The Border" just came in. Maybe you haven't learned yet how to face it as well and that that $1 million that has gone out of the market -- that you think has gone out of the market, may increase -- it may not. You know, it's just a question of can one project from one year when unusual things have happened such as the intrusion of a new station.
2994 But anyway, I just wanted your comments.
2996 MR. BATSTONE: Thank you, Commissioner Wylie.
2997 I wanted to start with a question on growth in advertising revenues. Mr. Sherratt was just saying that he felt that the growth was likely to be flat.
2998 I believe in your application you had projected a growth rate of 4.5 per cent after 2000. Are you now suggesting that that wouldn't be the case and, if so, what effect would that have on the viability of the proposal?
2999 MS SHEPPARD: What we have forecasted in our three-station combo would be in Year 1 a growth in revenue of $600,000 and it would grow to $1 million in Year 7.
3000 Maybe what I can do is pass it over to Kerry and she can sort of elaborate to you as to where we think we are going to arrive at that revenue.
3001 MS FRENCH: Yes. I think in the younger end, with CFLY targeted to an 18 to 34 audience, that is our opportunity to repatriate dollars that are going across the river to "The Border". I think there is a lot of money there.
3002 I'm not sure that the figures that were quoted this morning included national advertising dollars and there certainly are monies going to "The Border" from national.
3003 The money that we are currently achieving on both CFLY and CKLC, some of that would be redirected to the new Light 105.
3004 The other area where we see a lot of potential growth is taking the CKLC format, moving CKLC to a nostalgia-based radio station. Having that targeted at 50-plus, 55-plus is a brand new service to the market. Our advertising sales people would be targeting an entirely new set of advertisers that we haven't had on the air before that would currently be advertising in newspaper or direct mail or not maybe advertising at all because they are not able to reach that target efficiently.
3005 So I think there are two growth areas where we could create new revenue. Also, the fact that our two FMs would be targeted very specifically would allow the advertisers that we currently have on the air to more hone in on their customer and we would help them grow their businesses and in turn grow their advertising budgets.
3006 MR. BATSTONE: Thank you very much.
3007 In your supplementary brief you stated that if the new licence were awarded to another applicant, and I will just quote:
"The decline in the operating profit of the combined operations of CKLC and CFLY would be severe enough to require a reduction in service offered by these two stations." (As read)
3008 I just wondered if you could specify what you meant by "reduction in service".
3009 MR. WATERS: I think what we meant there was simply that if the profitability of our operation is going down, then there are certain things that we may have to adjust such as the severances, if that is the case, or it may be a reduction in advertising expense or reduction in programming expense. It could be any number of things. But if your profitability is going down because there is another player licensed in the market, then you have to make adjustments. That is what we were really saying.
3010 MR. BATSTONE: I will turn now to Canadian Talent Development initiatives.
3011 I will point you to page 12 of the oral presentation you made earlier. On page 12 you say:
"Over the seven year term of licence the combined total for all direct and indirect talent initiatives will be $668,500."
3012 I wonder if you could provide me a breakdown, if you have one handy?
3013 MR. ROMAN: Sure.
3014 MR. BATSTONE: I have made one myself, but I would just like to check.
3015 MR. ROMAN: Great, Mr. Counsel.
3016 I will start, first of all, if you want to just use your pen here, on the direct side. You will remember that is the total of direct and indirect. So we will deal with the direct first.
3017 We have $5,000, the cost of recording the CD under the Festival CD and Artists in Residence Program. We have a $3,000 commitment to FACTOR on an annual basis. That would bring it up to $8,000.
3018 I will move over to the indirect side. This is on an annual basis, right?
3019 MR. BATSTONE: Yes.
3020 MR. ROMAN: Then we will do it times seven.
3021 MR. BATSTONE: Sure.
3022 MR. ROMAN: Okay, on the indirect side. On-air promotion for the Festival CD and Artists in Residence will be $2,500. Promotion for Festival CD and Artists in Residence using, among other things, the web site. Other marketing campaigns would be another $5,000. So then we have the annual level of indirect for that one initiative at $7,500.
3023 Over seven years the indirect, that initiative, is $52,500 and on the direct side, exclusive of FACTOR -- that $5,000 is simply $35,000.
3024 The second initiative is the Kingston Community Culture Council. We show the on-air initiative on the indirect side at $80,000, and that is a total of $560,000.
3025 So on the indirect side $52,000 and $56,000 would be $612,500, and on the direct side we have $35,000 and $21,000 would be -- let me get this right -- $46,000 -- I'm sorry, $56,000. Thank you, $56,000.
3026 So the total comes to $668,500 for the seven year term of licence.
3027 MR. BATSTONE: Okay. One thing you didn't mention was the $1,000 associated with like business classes. Is that right?
3028 MR. ROMAN: No, I'm glad you spotted that because, as you know, in our submission we indicated it could be cash or in kind. So it wound up in limbo. If it's cash it is going to increase the direct commitments by $1,000. If it's in kind or contra it becomes indirect. So there is a variance of $7,000 on either side of the ledger. Okay?
3029 MR. BATSTONE: Okay. Thank you very much.
3030 MR. ROMAN: You're welcome.
3031 MR. BATSTONE: That's great.
3032 MR. ROMAN: There is a dimension to this that was in our application with regard to increasing the Canadian content levels -- I don't know if you were going there or not, counsel -- based on profitability.
3033 MR. BATSTONE: Yes, I was going to ask about that. If you would like to --
3034 MR. ROMAN: Great. Sure, I would like to address that if I could.
3035 Initially going in and developing the schedule of Canadian Talent Development initiatives ,we felt that probably the biggest benefit was investing in the viability of our three-service initiative to ensure diversity using the three distinct formats, expanding choice for Kingston. We think with our three-pronged description we did a good job of that. I think we made a strong case that the economics of the market for Kingston didn't permit a different approach than we have taken here at CHUM.
3036 Nevertheless, we promised to increase Canadian Talent Development commensurate with what we called sustained profitability. If you look at our financial spreads you will see that we estimate that by Year 3 we will reach positive PBIT.
3037 So what we are prepared to commit to right now is that if profitability sustained into Year 4, CHUM will define what the increased CTD would be.
3038 We would be prepared to double the contribution to FACTOR to $6,000 and increase our direct cash commitments to $25,000 a year. That would bring our annual CTD direct commitments to $31,000.
3039 That is how we saw the sustained profitability scenario playing out into a direct increase in CTD.
3040 MR. BATSTONE: Okay. Thank you very much for that.
3041 I have two more questions. One relates to the $1,000 per year that we were speaking about, the cash or in kind. I would just like to get a better sense if it is cash how it would be allocated, the types of things you would be doing with it.
3042 MR. ROMAN: Sure. I might ask Jim Blundell in a second, but as I understand it really that is the cost of, in a sense, the session leader probably, a business consultant coming in, one who specializes in music entertainment, business consulting, maybe even some business law, but generally speaking bringing someone in to deliver a course, a presentation, bringing in the stakeholders from the music industry and say "Great, you make great music, but ultimately in this business you have to learn how to keep the money, build a profitable business in the music business and be able to stay viable."
3043 So in some cases the individual might say "Look, I also need more clients. Instead of the $1,000 that I would normally charge, I would like an on-air schedule and maybe I can pull in more clients, other people in either the music business or some other part of the arts and entertainment business who would like my services."
3044 So that is how it turned up essentially on both sides of the ledger. Cash out-of-pocket, no problem, no on-air contra. If somebody says "I could do better letting other clients know about my services", we would make that option available to them.
3045 MR. BATSTONE: That's great. Thank you.
3046 Last question. Again on page 12 of the submission from earlier you had indicated that if the new stations were licensed and you reconfigured the way the stations are, you would redirect your Canadian Talent Development commitments to make them more appropriate to the genre of music, I take it for each station.
3047 I wonder if you -- especially what I would like to know is, I take it you have current commitments to the CAB plan on CKLC and CFLY?
3048 MR. ROMAN: Yes, 3,000 per station.
3049 MR. BATSTONE: Three thousand per station.
3050 MR. ROMAN: Yes.
3051 MR. BATSTONE: So we are not talking about affecting the amounts on any of the stations, are we?
3052 MR. ROMAN: No.
3053 MR. BATSTONE: Just the types of initiatives?
3054 MR. ROMAN: Yes. I think I will give you a flavour of some of the kinds of initiatives that the repositioned three stations would be able to provide, and these are really exciting in the sense that we have thought them through and essentially we could ramp them up to performing at their optimum level fairly quickly.
3055 With a younger skewed CFLY-FM we would undertake a series of free summer concerts, really looking at things like long weekends. We would support them with, again, very heavy campaigns of what we call one-liners and promotional announcements.
3056 And, remember this, we would be playing new artists. That is the one thing that CFLY-FM brings to this equation. As it skews down, not only are we freshening up the format and making it younger, but remember, as a Canadian regulated station we would be bringing in new Canadian artists to the mix more suitable to this younger format. So we think that is strong.
3057 We also, because of certainly my digital background and some of the areas that broadcasters are going with their web sites and things such as MP3, or whatever technology is both legal and passes scrutiny with the Copyright, but if the artist controls the material or the manager of the artists controls the material there is nothing wrong with the artist submitting MP3 files that we would place on our web site.
3058 In other words, we would use our CHUM web sites, not just in Kingston but all the other markets, to allow potential fans and listeners to download the music of new artists from Kingston using MP3 files.
3059 We have a terrific initiative that we would expand on and really take up to a much higher level, and that is we have started here with CFLY-FM an Instrument Lending Library conceived by the friends and family of Joe Chithalen, who is a well-known local musician who recently passed away, and we have started something called "The Joe Show". You might even hear about it later from our intervenors.
3060 We have been very successful in fundraising, but we would be able to reach a younger audience and another segment of the population that isn't reached by CFLY as it is currently.
3061 But, you know, as you can see, we have done some homework. If you want to hear more about our Kingston Jazz Society or on-air promotions for the CanAm Jazz Festival I could go on for a while. But we do have a schedule of initiatives that would reflect the new format positioning of the three stations.
3062 MR. BATSTONE: Those are all my questions.
3063 THE CHAIRPERSON: Commissioner Langford, can you wrap this up for us now?
3064 COMMISSIONER LANGFORD: Wrap it up?
3065 THE CHAIRPERSON: Because we interrupted your question earlier to give the opportunity to the applicant --
3066 COMMISSIONER LANGFORD: Oh, that's right. Yes.
3067 THE CHAIRPERSON: So we rely on you to do the "whereas".
3068 COMMISSIONER LANGFORD: We are going to do the "whereas".
3069 Whereas I was a little hard on the new man from Smiths Falls, and whereas you are an enthusiastic crowd of experienced broadcasters, whereas you are going to repatriate rock and roll from "The Border", do you have anything else you want to say before we take you out and execute you -- before we break for lunch?
3070 MR. WATERS: Commissioner Langford, I'm not sure that I could have said it much better than you have just said it, but I think it is worth repeating.
3071 I think it is very important to say again that we believe strongly that if there is a new license awarded it should be awarded to an incumbent broadcaster. We believe if that is the case that we would provide diversity to the market and we will not upset the balance in the market as it presently is.
3072 I think all of us want to thank you very much for listening to us this morning, for your insightful questions and your comments about Smiths Falls.
3073 Thank you.
3074 COMMISSIONER LANGFORD: Thank you.
3075 THE CHAIRPERSON: I noticed, Mr. Waters, you forgot to say to a Canadian incumbent broadcaster.
3076 MR. WATERS: You're right. You're right. You are absolutely right. Mr. Sherratt will let me have it for that.
3077 THE CHAIRPERSON: So maybe you weren't listening enough.
3078 COMMISSIONER LANGFORD: Get it on the record.
3079 MR. WATERS: Okay.
3080 THE CHAIRPERSON: Thank you. We will see you again.
3081 I was out of time apparently yesterday, but I'm doing okay now. It is 10 after 12:00, so we will come back at 1:15. Just an hour for lunch so that we can get the day done in due time.
--- Upon recessing at 1205 / Suspension à 1205
--- Upon resuming at 1310 / Reprise à 1310
3082 THE CHAIRPERSON: Order, please.
3083 Mr. Secretary, please.
3084 MR. CUSSONS: Thank you, Madam Chairperson.
3085 We will now hear an application by John P. Wright on behalf of a company to be incorporated for a broadcasting licence to carry on an English-language FM radio programming undertaking at Kingston.
3086 The new station would operate on frequency 105.7 megahertz, Channel 289B, with an effective radiated power of 24,000 watts.
3087 The applicant is proposing a rock format aimed at the 18 to 44 demographic group.
3088 The Commission notes that this application is technically mutually exclusive with other applications which are also scheduled at this hearing for the use of the 105.7 megahertz frequency.
3089 Mr. Wright.
APPLICATION / DEMANDE
3090 MR. WRIGHT: Oh, there we go. We have to remember to put the buttons on.
3091 Madam Chairperson and Commissioners, before I begin my presentation I would like to make an introduction of our panel members.
3092 Tony Viner, who is behind me on the left, is President of Rogers Media Inc.; Doug Kirk on my immediate left is President of Durham Radio and Managing Director of Telecommunications for Nesbitt Burns; Kim Wright, beside me, is a former owner for 15 years of Kingston publications and a Director of our company; Bryan Mercer, who is behind me on my right, is the Director of Marketing at Fort Henry in Kingston and he has been helping us as a private individual; Matt Woodward, behind me to the left, is a local musician; and Doug Raensbury is a local songwriter and a partner in a local recording studio.
3093 My name is John Wright and I will be the majority shareholder, President and local operator of ROCK 105 should the Commission grant us a licence.
3094 We will begin our presentation now.
3095 I'm sorry, Andrew. My apologies.
3096 MR. FORSYTH: That's all right.
3097 MR. WRIGHT: Andrew Forsyth, who is on my extreme right, is our Program Consultant.
3098 We will begin our presentation now and address the following key points.
3099 1. The underserved young adult and male 18 to 44 market segment;
3100 2. The economic viability of a new FM station in Kingston;
3101 3. Our format choice and programming;
3102 4. The impact on the other stations in the market;
3103 5. Our Canadian Talent Development initiatives.
3104 I have been involved in the radio business for over 35 years. I started with CKGM in Montreal and then joined CKLC and CFLY in Kingston in 1965, where I quickly became a small, very small, minority shareholder and a director of the company.
3105 I left CKLC and FLY-FM in 1994 and since then I have held a number of senior positions in the broadcasting industry.
3106 For the past 15 years my wife Kim and I have owned Kingston & The Islands Boatlines, which is a hospitality cruise business here in Kingston. It kind of operates right over there on the dock adjacent to the hotel.
3107 Today I am before you seeking a licence for a new FM undertaking to serve Kingston. This is a dream I have had for a very, very long time.
3108 Kingston is the largest city of the Thousand Islands with about 150,000 people. Historically Kingston's economy seldom had the highs and lows of other communities. The strong government base has stabilized the fluctuations in the private sector. But Kingston did experience a mild recession in the mid-1990s when the big government cutbacks took hold. However, now the tide has turned.
3109 For example, single family housing starts in Kingston in 1998 were the highest since 1990. For the first time in its history Kingston is now experiencing a Toronto phenomenon, some houses are actually selling for more than their listing prices.
3110 Recently Dupont announced a $51 million investment in Kingston. Ontario agreed to invest $21.4 million to establish a high performance computing virtual laboratory at Queens. Bell Canada announced 100 new jobs in Kingston. As well, Kingston Hotel occupancy rates increased by 11 per cent in 1998. That happened to be the second highest in Canada.
3111 Currently there are four local stations and two out-of-market stations competing for audience and revenue. The four local stations are all owned by large public broadcasting companies, FLY-FM and CKLC owned by CHUM, CFMK-FM and CFFX owned by Corus.
3112 These four stations account for less than half of all the listening in the Kingston by Kingston people. In the last decade, the two biggest developments in the Kingston radio market were not in Kingston. CHUM relocated the transmitter site for CHXL in Brockville and CHXL now has a competitive signal here in Kingston, giving CHUM three signals in Kingston.
3113 And the American station WBDR "The Border" went on the air in Cape Vincent, New York. This is a village of about 700 people and it is just 10 kilometres across Wolf Island from Kingston. With a top 40 format its sole purpose is to sell advertising in Kingston.
3114 Mr. McColman operates WBDR on the Canadian side. As we have heard, they have offices and studios in Kingston. They run a full operation here and they even sell remotes using Canadian announcers.
3115 WBDR and CHXL attract substantial tuning and revenues from the Kingston radio market and they are the biggest reason why more than half of all the hours tuned to radio by people in Kingston go to stations outside of Kingston.
3116 Our first chart shows the out-of-market tuning by three demo groups in Kingston. The first demo group is a 35-plus demo group. This is the group proposed by McColman and CHUM. Forty-eight per cent of the tuning by this group goes to out-of-market stations.
3117 The second column and the third column cover males 18 to 44 and young adults 18 to 24. This is the target group is the one for of our ROCK 105. Out-of-market tuning to these groups is considerably higher.
3118 In fact, the out-of-market tuning by males 18 to 44 is 32 per cent higher, and by young adults 18 to 24 it is 50 per cent higher than the 35-plus market segment.
3119 It just so happens, as we have also heard earlier, the American station, WBDR, has the highest share of all stations with this male 18 to 44 target group.
3120 This loss of tuning has created a huge audience gap in Kingston radio. Our plan is to build a successful new radio station in Kingston. We will close this gap and repatriate these listeners by offering increased choice and diversity of programming.
3121 Let's look at the programming formats and audience appeal of the four local stations on our Profile Chart. The chart shows the Kingston radio market in relationship to hours tuned in the Fall of 1999. The left/right axis plots the average age and the vertical line plots gender.
3122 CFLY's format is adult contemporary with a profile that indexes female and slightly over 35.
3123 CKLC's adult contemporary format indexes female as well, but just slightly older than FLY-FM.
3124 CFMK is country. It is older and gender neutral.
3125 And CFFX is an oldies station and its age demographic is also slightly older and it is gender neutral.
3126 All are positioned, as we can clearly see, in the right-hand quadrants of our radio Profile Chart.
3127 Now, let's add the profiles of Easy 105 proposed by McColman and Light 105.7 offered by CHUM. Both of these are in the top right-hand quadrant. The size of the circles represents the share of hours tuned. The four local stations are the actuals from the Fall BBM. Light 105 and Easy 105.7 are the shares anticipated by each applicant in their application.
3128 We commissioned Paragon Research to find a musical style or styles that weren't associated with one of the four local stations, and they did. The study showed three compatible rock formats that clearly weren't identified with any local station.
3129 Now, let's add ROCK 105, our proposed format to our chart. The research shows its position is in the bottom left quadrant.
3130 Our proposed ROCK format is very definitely designed to go where the local stations aren't. We will meet needs and address interests that are not being met by the existing local stations. We will repatriate tuning and reduce the listening gap by young adults and males 18 to 44.
3131 Andrew will speak to our format and the programming elements designed to bring back these hours.
3132 MR. FORSYTH: This application proposes a rock station that will address the needs of young adults and males 18 to 44. This means providing them with the music they know and like and relevant information presented in an entertaining and user-friendly package.
3133 The proposed station would common-thread music with the highest appeal to the target audience from the broad spectrum of rock. This would include music from classic rock artists like Led Zeppelin, Pink Floyd, Rush and the Rolling Stones, mainstream rock artists like Kingston's Tragically Hip, Aerosmith and AC/DC, as well as modern rock performers such as Pearl Jam, Moist and the Smashing Pumpkins.
3134 Our proposed new station will play selections like "Hard to Handle" by Black Crowes, "Closer to the Heart" by Rush, "Other Side" by Red Hot Chili Peppers and "You Oughta Know" by Alanis Morissette. A review of a recent playlist for CFLY-FM indicated they do not play any of these songs.
3135 Given the very different audience targeting of the existing Kingston stations and our proposed new station, there will be little duplication of music. The new station will add musical diversity to the market as Kingston's only rock station.
3136 The entire programming package will match the musical mandate, rock targeting young adults and men 18 to 44.
3137 News in the morning and afternoon drive periods will report on information and happenings of interest to a younger adult audience.
3138 It is a goal of the station to act as conduit for the expertise of its listeners. The station will encourage local experts from various fields to participate in the information programming, thereby contributing to the diversity and variety of news voices heard in the community. The station will also provide information on community sporting and recreational events.
3139 ROCK 105 will be music-intensive and community interactive. Access to the new station will be an important part of the programming, both on the air and on our web site. The station plans to air audience music requests as an ongoing basis and feature them on shows like "The Top 6 at 6" where the top requests compiled throughout the day will be aired.
3140 Listeners will request classic rock tracks on "The Electric Lunch".
3141 Our listeners will have an opportunity to comment and vote on new music through shows like the "7 o'clock News" and in our web site chat room called ROCKTALK. These shows will involve rock fans in the music and in the station.
3142 Our music and information programming is designed to super serve young adults and males 18 to 44. This will dramatically reduce the gap in tuning to local Kingston radio.
3144 MR. KIRK: Thanks, Andrew.
3145 As you know, I am an operator of a radio station in Ajax, Ontario. It operates in a similar type of market to Kingston and I know firsthand what repatriating audience and revenue is all about.
3146 The key question here -- given what you have heard earlier today, the key question is: Can Kingston support a new FM radio station?
3147 As we have seen, both Paragon and the BBM data show the largest underserved market segment in Kingston is young adults and males 18 to 44. Andrew has articulated how we will attract that market segment with our programming.
3148 The key question is: Will there be revenue available to support this proposed new station? Our answer is yes. We looked at three different methods of determining what radio revenue should be in this market -- not what it is, what it should be.
3149 We looked at John Wright's projections, obviously from his long experience in the market. He knows the market better than anyone here.
3150 We also looked at an HYPN study on Radio Revenue Per Adult that was filed with another applicant and we determined radio dollars per share point.
3151 The bottom line here is that all three methods produce the same results. Kingston, in 1998 has a radio revenue potential in excess of $6.8 million.
3152 But we also know, from what we heard this morning and based information filed in intervention by CHUM and Corus, that the four local stations are not generating this revenue. The gap between the four Kingston radio stations actual revenue and the market potential is $2.5 million.
3153 Why is there this hug revenue gap, you would say? Well, there is a large audience gap which we have described to you. The market is clearly underserved! Kingston has too few radio stations, not too many.
3154 With no rock station in Kingston, out-of-market stations like "The Border" -- the American station "The Border -- and CHUM's station, CHXL -- it's third station in this market -- have significant audience shares in Kingston and they take revenue out of the market. Obviously, from what we heard earlier this morning, over $1 million of revenue per year flowing out of this market.
3155 Our view, and our key point here, is if we repatriate the tuning and close the audience gap, and revenue will return to Kingston "The Border" and "The River". Also, radio will be more efficient in the market and revenue currently going to other media such as print, because of the inefficiency of the radio market, will return to Kingston radio.
3156 Just to note here, finally, the gap between the current estimated revenues of the four local stations and the revenue potential is more than double the first year projected revenues for ROCK 105. We will get the revenue from this gap.
3158 MR. WRIGHT: Thanks, Doug.
3159 The next question of course is: How will our rock station impact the existing Kingston stations?
3160 ROCK 105 will be Kingston's first rock station, but -- and this is very important -- it won't be the first station heard in Kingston to play rock music. CHUM's CHXL is a rock station and the American station WBDR plays a significant amount of rock. The impact of a rock station on the four local stations in Kingston in terms of both audience and revenue loss has already happened. So the effect of our proposed new radio station on the four existing stations will be minimal.
3161 We are projecting we will take just over 3 per cent of the hours tuned currently going to local stations. Our big impact will be on WBDR and CHXL, the out-of-market stations selling into Kingston. We plan to take 24 per cent of the hours tuned going to these out-of-market stations.
3162 Since our audience will not come from the existing four stations, it stands to reason that our revenue will not come from the four stations either.
3163 As outlined earlier, the gap between radio revenue potential and the estimated actual revenue for the four local stations is about $2.5 million. This gap is more than double our projected first year revenues, more than enough to allow us to operate without affecting the two existing operators, CHUM and Corus.
3164 Kim will speak to the reception she has received from the community.
3165 MS WRIGHT: We have talked with over 150 people regarding our proposed radio station. I personally have talked to more than 50 people, most of whom I have known professionally for over 20 years. I am happy to say that the positive response has been overwhelming and heartwarming.
3166 Support for our ROCK 105 comes from three diverse groups:
3167 Number one, people who love the format and would be loyal listeners. They are excited about a Kingston station playing the music they love.
3168 Number two, people running community organizations welcome a media outlet they can access. They look forward to the "above and beyond" support John and I offered when we both had media outlets in Kingston.
3169 Number three, local advertisers. In all cases they welcomed a visit from me and the chance to hear more about our proposed new station. They were not looking for more ways to spend their hard-earned money.
3170 These are car dealers, retailers and small business people who want to know "What's in this for me?" After hearing about ROCK 105 many of these business owners said they would spend more money on local radio to get the audience we would deliver. ROCK 105 is perfect for them.
3171 I spent a lot of time talking to Kingstonians. They like us and our proposed station. They know who we are and how successfully we have run our businesses in the past. Everyone says business is great right now, prices are up and people are spending. That's great news for the community, and it is good for us.
3172 MR. WRIGHT: Thanks, Kim.
3173 Our vision of ROCK 105 is of a station that is music-intensive and community-interactive. To accomplish this we will be hiring a Director of Marketing and Community Partnerships. This will be a senior position with our company. Our Canadian Talent Development initiatives will be the responsibility of this person.
3174 I have asked Bryan Mercer, who has been advising us, to speak to our program.
3176 MR. MERCER: Thanks, John.
3177 I have participated in a series of discussions with John and the local musicians about our commitments to Canadian Talent Development and this evolved into the Kingston Talent Development Plan. This plan will be the foundation for the entire ROCK 105 "Community Partnerships" program.
3178 Matt Woodward is a KTD Board member, local musician, music teacher and organizer of the annual "Live Music Lovers Weekend". This was the most successful local promotion of live music ever in Kingston.
3179 I would like Matt to comment on our plan.
3181 MR. WOODWARD: Thanks, Bryan.
3182 The live music scene in Kingston is something that many of us are very proud to be a part of. During the early '90s it was positively thriving, with exciting new groups such as The Tragically Hip, Moist, The Mahones, The Inbreds and Weeping Tile rising to national prominence, fuelled by a strong local fan base and nurturing local media support.
3183 The annual benefits that I organized during this period focused solely on local talent. The final event featured over 900 musicians in 10 venues.
3184 John and his staff worked selflessly to assist in promoting our events nationally, without once asking how big the station's logo would be in the program.
3185 Finding the talent for such an event was the easy part, because at that time one couldn't help but be aware of who was out there. Under John Wright's direction rock station CKLC-AM was the main reason for that awareness. He and his staff were constantly making things happen for the betterment of and to motivate local rock talent. On-air jocks were always donating time to local events, his staff were our friends and a nurturing, symbiotic environment existed.
3186 If you will forgive the cliché, "Sometimes you don't know what you've got until it's gone". Call it coincidence, but since John left town it has not been the same. There is no rock station. Our music scene is stagnant and it sorely needs a shot in the arm such as the Kingston Talent Development plan that we are proposing.
3187 Kingston Talent Development Board member Doug Raensbury, a friend of mind and one of Kingston's best singer/songwriters and a partner in a local recording studio, will talk about the plan.
3188 MR. RAENSBURY: Thanks, Matt.
3189 I believe that the last time there was heavy local radio support for local musicians John was at the helm. I benefited directly from that. The station played a couple of my songs regularly.
3190 The station also sponsored two compilation projects. One of them was live which was an incredibly ambitious undertaking. That kind of tangible support gave us credibility, recognition, royalties and assisted us in getting well-paid work. We had access to the airwaves and when John left this type of support waned.
3191 This is why I have agreed to be on the Kingston Talent Development Board to help co-organize the plan. We have looked at different elements and stages in the development of a successful band/performer and it broken down into three distinct stages:
3192 One, the development of younger talent.
3193 Two, the nurturing of better talent.
3194 Three, the recognition of the local stars.
3195 I am currently arranging for the recording of a local high school "Battle of the Bands" winner. The type of support that ROCK 105 is committed to would immensely enhance this whole process. Most importantly, I know from experience this is not just talk on John's part, because he has done it for us before.
3196 MR. MERCER: Thanks, Doug.
3197 ROCK 105's total commitment to the Kingston Talent Development Fund is $28,000 annually in direct costs and $40,000 annually in indirect costs.
3198 This is a plan we all feel very excited about and it covers all the elements we felt were necessary to be successful on a local level. It will combine cash, on-air promotion, live performances, on-air exposure, consulting and mentoring. It has the commitment of ROCK 105 and, most importantly, it has the commitment of local musicians who will serve on the Board of the Kingston Talent Development Plan.
3199 MR. WRIGHT: Thanks, Bryan, Matt, Doug.
3200 Chair, Members of the Commission, I would just like to summarize our presentation.
3201 Our proposed new FM radio station ROCK 105 will:
3202 Number one, increase the choice and diversity of high quality radio programming in Kingston by offering a broad-based rock format currently not available from other local stations, along with local news and information specific to the needs and interests of young adults and males 18 to 44.
3203 It will make a significant contribution to the Canadian broadcasting system as a whole by directing $200,000 over seven years to the development of Canadian talent, both through our Kingston Talent Development initiatives and through our contribution to FACTOR.
3204 It will strengthen the Kingston radio market by repatriating audiences and revenues from out-of-market radio stations.
3205 It will accomplish our audience and revenue projections without impacting existing local stations.
3206 And it will bring diversity of voices and ownership by the introduction of new, well-financed competitor into the Kingston radio market that will result in improved radio service for the people of Kingston.
3207 This will be the only major media outlet in Kingston with a local owner/operator.
3208 For all of these reasons I believe approval of this application would be in the public interest.
3209 Thank you very much and we stand ready to answer your questions.
3210 THE CHAIRPERSON: Thank you, Mr. Wright and your colleagues.
3211 Commissioner Demers, please.
3212 COMMISSIONER DEMERS: Good afternoon.
3213 I would like to start right in where you started, with the Kingston radio market. You found some money, more than others have found.
3214 Could we come back to the $2.5 million that is, in a way, in excess to what official figures would be. Could you elaborate really on that point? Come back to it. You have already said something.
3215 MR. WRIGHT: As we outlined in our presentation -- and I will ask Doug to comment on this in a few minutes.
3216 But as we outlined in our presentation, we used three different methods of determining the value of the potential of the market.
3217 As an example, in the share point calculation, currently 48 per cent of the tuning in Kingston goes to people in Kingston. The rest of it is out-of-market.
3218 So when we take the value of a share point, take 48 share points are listened to in Kingston and the market is about $4.2-$4.3 million, according to the CHUM/Corus intervention, it is about $93,000 or $94,000 per share point of tuning in the Kingston market.
3219 Now, if we also take accepted studies that have been done that say a market reaches its potential when 75 per cent of the hours tuned in that market are tuned locally, so there are 27 missing share points, 27 missing share points at $94,000 per share point comes to $2.5 million.
3220 I would ask Doug if he would have a further comment on that.
3221 MR. KIRK: I think clearly radio operates where it can derive audience. It is the audience that is valuable to the advertiser.
3222 I just want to comment a little more on two experiences I have had in the market.
3223 For example, about a little over five years ago we put an FM station on in Ajax, Ontario and the market was under performing. By creating a viable audience in Ajax, now the station is ranked in the top five in the east part of metropolitan Toronto. That station has almost tripled its revenue over that period.
3224 I think that is just a case in point similar to what we are proposing here, where if you generate the audience, serve that local market, it then becomes useful to local advertisers who want to reach that audience and it will stimulate radio revenue in this market.
3225 Clearly what you see in Kingston here is that the market has become less efficient. With only 48 per cent of tuning to the four local stations it is hard to reach some segments and revenue will disappear out of the radio business because other methods of reaching those target audiences are used. It is to the detriment of that.
3226 We also heard this morning that there is over $1 million of what we term "leakage" out of this market. Probably the right analogy for the weather today, but it leaks out of the market to "The Border" and to the Brockville station.
3227 So I think part of that gap is already Kingston dollars. There is $1 million of radio revenue in Kingston that is leaking out, but there is also an inefficiency and a stimulation argument that with a vibrant new audience in this market it can generate additional revenue.
3229 MR. WRIGHT: Thank you, Doug.
3230 COMMISSIONER DEMERS: What you describe as the "right" projection from John, is that exactly what it is or is there something else?
3231 MR. WRIGHT: I would like to think it's the right projection.
3232 As you have heard, I operated in this market for 29 years and I left Kingston -- my last full year in Kingston was 1993. If I can recall, back in 1993 the two stations I was responsible for in Kingston were doing around $2.7-$2.8 million, which would put -- you know, we were getting about half the audience so I would assume that we were getting around half the revenue. So that would put radio revenues in Kingston back then at about $5.5 million, somewhere in that neighbourhood in 1993.
3233 Then if we kind of project that through to the year 1998 we would come up with $6.8 million. I think it has been acknowledged in a couple of studies that the growth rate was about 5 per cent, so if we take 5 per cent on the $5.5 million it comes to $6.8 million. So that was the "right" projection.
3234 COMMISSIONER DEMERS: Thank you.
3235 And then maybe a substantive comment on the fact that you would be competing with four stations but owned by two owners. In face of your projections do you have specific comments on that?
3236 MR. WRIGHT: Yes. I think in Kingston I have more experience than anybody in the radio experience, so I have more experience than the current operators of CHUM have, I have more experience than the people at Corus.
3237 I operated the stations here for a long time, so I have no fears about -- if that was the question, I have no fears about competing with CHUM and Corus for audience and revenue in Kingston.
3238 COMMISSIONER DEMERS: As a stand-alone of course.
3239 MR. WRIGHT: As a stand-alone.
3240 COMMISSIONER DEMERS: On another point, the demand, you of course commented on that in your oral presentation, but your study by Paragon found that there is an 18 to 44 male rock audience in the Kingston market which is currently not being serviced by a local station. Could you briefly summarize how you arrive at this conclusion? You have already commented on this in your oral presentation, but would you have specific comments to make at this point?
3241 MR. WRIGHT: Yes. We commissioned -- and I will have Andrew Forsyth make his comments on this in a moment.
3242 We commissioned Paragon to do this study back in August of 1993, and specifically we wanted to uncover unserved markets. We wanted to make sure that there was enough of a market to serve in Kingston that would be economically viable. That is basically what the Paragon study showed. It showed this very large opening for a rock station serving the males 18 to 44.
3243 Andrew, you may want to fill in some more information.
3244 MR. FORSYTH: Paragon Research phoned 400 individuals in the Kingston area. The process of the research was done this way, and I hope this answers your question.
3245 They took music segments, samples of music from different music life groups, music styles such as country, mainstream soft, adult contemporary, alternative rock, hot AC, classic rack, album-oriented or mainstream rock, rhythmic CRH, which is rhythmic top 40, and pop top 40. With these samples of music they asked the person on the other end of the phone whether in fact they had a station association. Could they associate a Kingston radio station with any one of these clusters of music.
3246 When the research was done we found that the formats that came to the top of the list in the "Unknown", "Do not know", "We can't make an association", were alternative rock, classic rock and AOR, all of which, of course, are mutually compatible rock formats.
3247 So when we went through those again, alternative rock came in as the second highest format relative to "No known station in the market". Classic rock was the highest and AOR was third.
3248 So through all of those we were able to determine that those were the formats that were missing in the marketplace.
3249 COMMISSIONER DEMERS: Thank you.
3250 And if you compare those formats to what is actually being broadcast by the other stations, do you have more specific comments than you have when you take them station-by-station? You have made comments orally, but maybe you can be more refined on each of the FMs in the area.
3251 MR. FORSYTH: Certainly.
3252 If I take a look at the various music segments we went through -- and if you like I will go through all of them.
3253 We start with country music. Certainly country music was identified as being with CFMK, 45 per cent recognition for that format and that radio station. Only 24 per cent said they couldn't identify a format.
3254 We looked at mainstream soft AC, which is the softer side of adult contemporary. CFLY was recognized as the first radio station with association on that at 39 per cent, with only 21 per cent saying they could not associate a radio station with that format.
3255 Alternative rock had none showing at 26 per cent. So 26 per cent said they couldn't identify any radio station with this format.
3256 The American-Based "Border" came in second at 17 per cent. CFLY and "The River" in Brockville tied at 16 per cent for alternative-based music.
3257 Hot AC, "The Border" was recognized number one at 29 per cent; CFLY at 27 per cent and "Don't know" at 16 per cent. So we would look at that and say Hot AC is obviously a recognized fulfilled form in this marketplace. There is a good recognition for two stations.
3258 Classic rock, the "Do not know" was 35 per cent and "The River" in Brockville registered 21 per cent. So again, people in Kingston didn't recognize any radio station -- or at least 35 per cent did not recognize classic rock as being available in the marketplace.
3259 AOR, "None" as at 32 per cent, "The River" 24 per cent and "The Border" 13 per cent.
3260 Rhythmic CHR, "The Border" was recognized at 45 per cent and "None" at 36. And CHR Pop, again "The Border" at 32 per cent, CFLY at 27 per cent and "None" at 19.
3261 So when we look at the other formats, the other non-rock formats, if you look, you see that there is good station association. If you say "Country" people in Kingston go "Oh yes, there is a radio station playing that at CFMK". If we look at AC, if we look at rhythmic CHR, if we look at the top 40 end of things again, there is recognition being split between "The Border" and CFLY to a degree.
3262 COMMISSIONER DEMERS: Thank you.
3263 Now, we will come back to money and "The Border" station and CHXL.
3264 Did you give an amount of advertising that is currently taken out of the Kingston market by these stations, your figures on that?
3265 MR. WRIGHT: Yes. My figures would certainly be in excess of $1 million that is currently going out-of-market to those two stations.
3266 I think that there are so many different ways of looking at numbers, but I think over $1 million goes out.
3267 COMMISSIONER DEMERS: You don't differentiate between the two stations?
3268 MR. WRIGHT: I would believe "The Border" would do considerably more than "The River" because of its audience base being quite a bit larger.
3269 One of the problems that we do experience as well is the fact that "The Border", with such a large group of audience numbers, it tends to depress the rates in the market.
3270 A lot of Canadian advertisers that use "The Border" are aware that it is not a tax deductible item. So when they advertise on an American station they are not allowed to deduct it from their income statement, so these people tend to want rates that are quite a bit lower on "The Border" to compensate for the tax issue. So that tends to depress the rates on the other stations as well and it is another reason for the market situation in Kingston.
3271 So the key is to cut the audience down on "The Border", make it not a viable operation so that it is not as big effect and that will again drive rates up in the market.
3272 Excuse me, I get a little exuberant.
3273 COMMISSIONER DEMERS: Thank you.
3274 Have you given us your estimates of how many of your listeners would come from "The Border" and "The River" separately?
3275 MR. WRIGHT: Yes. I don't know if that chart was handed out, but we did do an estimate and, if you will notice, the top stations are the -- excuse me, I will wait until -- no, there is one more. It is at the very end of the presentation I believe.
3276 As we go down the list, you will see the local stations. The column to look at is the column that is number one, two, three, four, five, six -- seven columns along. It is on page 12 of the --
3277 COMMISSIONER DEMERS: I have it.
3278 MR. WRIGHT: Yes. There is a heading that says "ROCK 105" and that is the hours tuned that will go to ROCK 105 from the other stations. So the highlighted amount when we get down to "4 local" you will see that it's 3.4 per cent of the hours tuned from the local stations.
3279 Then we go down a little further and we cover "CHXL" and "The Border" and we call those "2 other". We just call them "Others".
3280 COMMISSIONER DEMERS: Okay.
3281 MR. WRIGHT: And 24 per cent is our projection of the hours tuned we will take from the "Others".
3282 COMMISSIONER DEMERS: Okay. They are aggregate.
3283 Okay. Source of advertising revenue.
3284 In your proposal there is -- and I think it resembles what you said earlier, that there would be no advertising coming from the local stations, that you would get -- steal if you wish -- but that there would be an increase in advertising of 56 per cent from out-of-market radio repatriation. So the majority of your revenue will come from an increase in advertising budgets.
3285 Do you conclude from that that it will match the format in the market at present? Do you feel that it is due to the fact that the format is not being met in the market at the moment?
3286 MR. WRIGHT: Yes. And I will have Doug make a comment on this in a moment, but as we have shown in our presentation, our station is going to be very different from the other local stations, but it will be a rock station and it will take the tuning back from "The River" and it will take the tuning back from "The Border".
3287 So because it is so different from the local stations, and because there are those out-of-town rock stations, the revenue that the local stations were going to lose has already been lost. So we are going to bring that money back.
3288 Now, I must say that we will have an affect on the local stations, but rather than having them decline further we will take away any anticipated growth for the first year. So they are not going to grow and that is the effect we will have on them.
3289 Normally when you sit down and do your budgeting year-to-year -- yikkers, there is the exuberance again -- you put the planned increase in for the coming year. Well, we are suggesting that there won't be a planned increase. So we won't diminish their revenue, but we won't allow them to increase because of our new entrance into the market.
3290 Doug, did you have a comment on the formats?
3291 MR. KIRK: Yes, I would. I would like to address that, John.
3292 Andrew is just taking a handout over that we prepared.
3293 Looking just on this whole question of formats, repatriation and speaking to the potential of the revenue repatriation, we looked at the various formats in Kingston and what they were generating in terms of audience and the impact of those stations in the market and in Watertown, New York. These are both off Fall 1999 BBMs and Fall 1999 Arbitron numbers.
3294 We compared the formats where they were common and where there are some missing pieces in this market. This little chart, if I can just walk through it with you --
3295 THE CHAIRPERSON: If I may interrupt, Mr. Kirk, do you have extra copies of what you are handing out to us to give to the Secretary so that at least the competing applicants have a chance to see them, if possible.
3296 I will give you three minutes, the other two applicants, if you want to pick up this information.
3297 I apologize, Commissioner Demers. I think it's easier for competitors to follow what you are talking about if they have the same material as we do.
3298 MR. KIRK: We can include it in the form of the main presentation.
3299 Thank you.
3300 THE CHAIRPERSON: I assume it hasn't been distributed?
3301 MR. KIRK: It has not, no.
3302 THE CHAIRPERSON: Okay.
3303 Is everybody satisfied?
3304 Go ahead now, and I do apologize to both of you.
3305 MR. KIRK: Thank you, Chairman Wylie.
3306 We just wanted to compare, because this whole argument turns on repatriation and where we can bring back audience to this market.
3307 If you look at these two, comparing the Fall 1999 BBM and Arbitron numbers in Kingston and Watertown, you can see the top format in both Kingston and Watertown is "country". The comparison columns show the Kingston station's impact in Watertown, which is negligible, less than 1 per cent, and the Watertown station's tuning in Kingston being approximately 3 per cent.
3308 In the oldies format, both markets have an oldies station, and again the U.S. station is quite highly rated and in Canada it is on Corus' AM station. The impact in Watertown is negligible. The Watertown station's impact in Kingston is negligible, about 1 per cent.
3309 When we get to classic hits, there is a station that services this market, "The River", CHXL Brockville, which does have a noticeable market share. There is a station in Watertown, New York which has a 15.5 share. It picks up a small share in the Kingston market and "The River" has a negligible share in the Watertown market.
3310 When we get down to the rock and pop areas -- and this is where "The Border" operates -- we can see in there without a comparable format in the Kingston market that the Watertown station, or the Cape Vincent station, has a very significant impact in this market.
3311 When we go down to AC, again very similar. Where there are in-market formats the out-of-market stations don't do well, and where there is a hole in the market there is room here for an out-of-market station.
3312 When you add the amount of tuning to "The Border", to WCIZ in the classic hits area and CHXL in Brockville, you are significantly over 20 per cent in that segment where there is a missing format in the Kingston market.
3313 This is key to our expectation putting on this new radio station, that is tuning that can be brought back home.
3314 John, I don't know if you want to amplify that any more.
3315 COMMISSIONER DEMERS: Thank you.
3316 On radio advertising again, if the revenue turned out to be substantially less than you expect, what impact would this have on the viability of your station?
3317 MR. WRIGHT: I guess it would increase our losses in the first couple of years.
3318 COMMISSIONER LANGFORD: Do you want to buy a boat --
--- Laughter / Rires
3319 COMMISSIONER LANGFORD: He can get you a great deal on a tour business.
3320 MR. WRIGHT: Yes, exactly.
3321 I think the point is, Commissioner Langford, do you want to buy a boat?
--- Laughter / Rires
3322 MR. KIRK: The revenue figures are something that I have great confidence in. I have walked up and down the streets of Kingston. I started here as a sales representative and I know most of the stores, I know most of the store owners. My wife, Kim, has been in the media business in Kingston for 18 years, she knows any of the ones that I might not.
3323 So the revenue figures we feel very, very confident about. I know the market and I know we can do it.
3324 COMMISSIONER DEMERS: Thank you.
3325 The growth of the market in Kingston, in your application you estimate that the growth will be at the rate of 7 per cent in the year that you propose to enter the market and then 3 per cent the following three years. Again, if the actual growth rate should turn out to be substantially less, again what is the impact on your figures or on your estimates on your station?
3326 MR. WRIGHT: I really believe that as an entrepreneur you look at the marketplace and take a look at that gap that we are staring at right over there of $2.5 million that Kingston is underachieving. It's not operating the way it should operate as a market. That is a large amount of money. So when we look at our first year projections, and our first year projections are considerably less than half of that amount, I just think that the number is a very achievable number.
3327 Again, my whole background is sales and marketing, my wife's background is sales and marketing and we know the market. So I am pretty confident we are going to hit the numbers. The market is under performing right now.
3328 MS WRIGHT: Can I just add that the publishing company I sold when we left Kingston has gone like this. It has had growth. So the economy is there.
3329 MR. WRIGHT: I might just add, too, that I had some conversations -- and we are talking about not only repatriating the dollars from out-of-market back into the market in radio, but we are talking about getting some money back into radio from other media.
3330 It just so happens that the publisher of the Whig Standard is a friend of mine and I think he takes great delight in telling me that 1996 was the biggest year that they had ever ha,d and they beat that in 1997, and they beat it in 1998, and they beat it in 1999. So the Whig Standard appears to be doing reasonably well and Kingston publications is increasing every year, but the radio market isn't. So we need to bring those dollars back into radio, and I think we can do that.
3331 COMMISSIONER DEMERS: Thank you.
3332 I hope he stays your friend after you have started to get money from him and -- his clients I should say.
3333 In local programming, again in your supplementary brief you state that the station:
"...would provide primarily local and regional Canadian news and information programming that is specifically designated to appeal to the needs and interests of younger adults and males 18 to 44." (As read)
3334 Could you provide greater details regarding your news coverage?
3335 MR. WRIGHT: Yes.
3336 I would ask Andrew to comment on that.
3337 MR. FORSYTH: We have developed a schedule for the station which would include 56 newscasts per week, six during the morning rush hour, one at noon and three in the afternoon on a Monday-to-Friday basis and then coverage again on Saturday and Sunday.
3338 The newscasts would be approximately five minute packages, here again depending on the time of day. We would alternate between five to three minutes in length.
3339 The content, as I said in the presentation, is very important relative to the fact that this is going to be a rock-based, music-intensive radio station and the audience is skewed male. Therefore the content of the news and all of the spoken word programming really has to lean to that particular target audience.
3340 So the coverage would be diverse, certainly compared to what we are already seeing in the market, just on the basis of -- I use this graph as an example again.
3341 If we look at all of the existing licensees who are female-oriented radio stations or at least gender neutral, so they skew tends to be middle-of-the-road, if you like, or female and the male side of news coverage perhaps doesn't get the coverage it should get.
3342 Male news coverage is simply a matter of looking at things from a male point of view. It might be talking about --
3343 COMMISSIONER WILSON: We might have different opinions about that.
3344 MR. FORSYTH: I was going to say, you know, if Doug Gilmore was still playing for the Maple Leafs -- and boy, he is probably glad he isn't -- there would probably be a story of that in the news as opposed to just a sports story. Those types of things, you know, would show up on a male station much more than they would necessarily on an adult contemporary station.
3345 COMMISSIONER DEMERS: Staff. How many reporters would you have?
3346 MR. WRIGHT: We will have two full-time newspeople and then some news stringers as well.
3347 COMMISSIONER DEMERS: So two full time in Kingston? They cover Kingston. Your stringers are for further up.
3348 With respect to spoken word you have given some indication. Can you give us some examples of some of the programs that would be specifically designated to appeal to your target audience?
3349 MR. WRIGHT: Andrew.
3350 MR. FORSYTH: Because the radio station is going to be music-intensive and the spoken word programming over and above the usual surveillance and information programming, if I look at that as one side, the other side is the music-based information.
3351 There will be information and spoken word on concert activities, club activities, what is going on in and around the Kingston area, here again targeted towards males 18 to 44.
3352 There will be music programs which will be request-driven where there will be some backgrounding on the artists and news on what is going on with various artists.
3353 As an example, upcoming, I guess it's next month, The Tragically Hip from Kingston will be releasing a new album. Certainly if the radio was on at that point in time it would not only be playing music from the album, but it would also be seeking interviews from the band and getting more background on the impact of that across the country.
3354 There are other new music programs that are lined up as well as a live concert series. So there will be a full gamut of music-oriented feature programming on the radio station.
3355 MR. WRIGHT: It is also a whole direction of ours that we use the terminology "music-intensive and community-interactive". It is very much the plan of the station to have interaction with our listeners throughout the day each and every day, so this will be another way of getting diverse opinions and voices on the air.
3356 COMMISSIONER DEMERS: Thank you.
3357 Canadian Talent Development. From my reading, over and above the CAB plan you are committed to an additional $180,000 over the seven years to support live performances in Kingston by Canadian artists.
3358 Could you confirm that you will ensure that the expenses relating to this initiative will all qualify as direct contribution to CTD as specified in our Public Notice?
3359 MR. WRIGHT: Yes, I can.
3360 COMMISSIONER DEMERS: Thank you.
3361 With respect to the initiatives you have specified that should the costs associated be less than the yearly allocated total, the difference would be added to the sum of money to be directed to FACTOR?
3362 MR. WRIGHT: Yes. We have a plan that Bryan and Doug and Matt spoke to earlier and it is a three-stage plan for development of local Kingston talent.
3363 As part of that plan we have -- as an example, in stage one of the plan we will promote and assist with live performances at local high schools, "Battle of Bands"-type performances; we will provide workshops educating students on "How to" through mentor programs; we will provide studio time and live performance exposure.
3364 In stage two we move on to the nurturing of better talent. So it is a staged development we are looking at here. In that area we will actually do live performances on the air. We will then do a CD compilation disk at the end of the year.
3365 Then in stage three we are going to actually playlist the songs of those developing stars on the station.
3366 I might ask Doug Raensbury in a moment to comment on the effect of that kind of program, but in each of those cases we have allocated a budget based on a certain number of events happening in a year.
3367 As an example, in our stage two costs we have a budget of $4,000 broken down by $400 for mixing and our equipment and our tape stock and our house sound production and when we add that up it comes to about $4,000 to each one of our live performances.
3368 Now, should something happen, as sometimes it does, you plan to do four of these in a year and for some reason you are prevented from doing that, I just want to make it very clear that the money will still be spent. If for some reason we are prevented from doing four of these live performances in a year, any of the money that is not spent that way will get spent on FACTOR, and we have asked FACTOR then to make sure it goes for rock artists. So the money will be spent one way or another.
3369 If you would, I would like Doug to comment on the impact that this on-air exposure -- because that is an important part when we get to the nurturing of the stars, when we get to the higher level, the playing of artists on the air becomes part of this whole plan.
3371 MR. RAENSBURY: Thank you, John.
3372 The impact this certainly had on me when John was at the helm and we had some of these and I got some airplay on the radio stations. As I mentioned before, your credibility, recognition and all that goes a way up. It is invaluable to have access to the airwaves.
3373 Now when I'm in the performing, but also in the recording process, we go through CDs with bands, and getting access to -- now they say "Now what do we do? How do we get some airplay? How do we" -- and it's hard to -- we need a local radio station that is going to take this band that you have developed, put it into airplay, and that can allow it to expand. Without that it is really difficult for them to move on.
3374 But even just one play and somebody hears it, you have more credibility because they say "Oh, I heard you on the radio. You must be good." It's like television can do that too. If you are seen on TV "Oh, well there, they must be good or otherwise it wouldn't be on the radio." And if it's not, then they say "Oh, well okay, it must be no good." It maybe shouldn't be that way, but that's how it is. It gives you this medium.
3375 Is that -- more, John?
3376 MR. WRIGHT: Thank you.
3377 COMMISSIONER DEMERS: Thank you.
3378 The last question, the answer is up to you, it concerns the fact that you are in competition for the frequency with others and the general question is: In what ways does your proposal constitute the best use of the proposed frequency? It's an open question.
3379 MR. WRIGHT: Yes. Well, I think it makes the best use of the frequency because it is -- our application is designed to reach the largest underserved market. Anything under that will be under-utilizing the frequency. We have looked at the research, we have looked at the BBM research, looked at Paragon research, and clearly the young adult male 18 to 44 segment is the largest underserved segment. So we certainly feel that that is the best use of the frequency.
3380 COMMISSIONER DEMERS: Thank you, Madam Chair.
3381 Thank you, sir. Did you want to add something?
3382 MR. WRIGHT: This is not the final wrap-up, is it?
3383 THE CHAIRPERSON: Well, Commissioner Langford has a question and so does counsel and you can wrap-up after.
3384 MR. WRIGHT: Okay.
3385 THE CHAIRPERSON: Thank you, Commissioner Demers.
3386 Commissioner Langford.
3387 COMMISSIONER LANGFORD: I wonder if you could put up the chart with the stickums, the quadrants. That's it.
3388 Where would you put "The Border" and "The River" in those quadrants?
3389 MR. FORSYTH: I will use these Post-its.
3390 COMMISSIONER LANGFORD: Absolutely, Post-its. Yellow Post-its on yellow, what could be nicer.
3391 MR. FORSYTH: Yellow on yellow. Is that clear.
3392 COMMISSIONER LANGFORD: Here, we have blue.
--- Laughter / Rires
3393 COMMISSIONER LANGFORD: Oh, I'm sorry.
3394 MR. FORSYTH: Did you note that I was hit?
3395 COMMISSIONER LANGFORD: Let the record show that I assaulted him with a Post-it pad.
3396 MR. FORSYTH: If I was going to place "The Border", that is where I would put "The Border".
3397 COMMISSIONER LANGFORD: Maybe you could just put them up and then come back to your microphone and say what they are --
3398 MR. FORSYTH: Sure.
3399 COMMISSIONER LANGFORD: -- because the transcriber is really going to have difficulty.
3400 MR. FORSYTH: Have a problem, okay.
--- Pause / Pause
3401 MR. FORSYTH: In essence, "The Border", the American top 40 rock-based station would be in the younger quadrant, younger female quadrant because it has a large component of pop and rhythm as well as a rock component as a top 40 radio station would.
3402 Also, "The River" would be very close to where ROCK 105 is in the male-oriented quadrant. As a rock-based radio station it would appeal to males probably in that range of 18 to 44.
3403 COMMISSIONER LANGFORD: Is there anything else we need up on your chart -- you don't have to put more stickums, but it's an interesting way to do it.
3404 Do we need the CBC up there in any way? I know they don't sell advertising but they do take listeners. Do we need the Queens University Campus Radio? Are any of those other voices in the community significant in those quadrants?
3405 MR. FORSYTH: They are certainly from a non-commercial viewpoint. We could put them up, but in terms of commercial radio -- and again, we are trying to repatriate tuning and repatriate dollars to the marketplace and growing radio usage in the marketplace. I don't know that --
3406 COMMISSIONER LANGFORD: Not relevant in that way, except for --
3407 MR. WRIGHT: Not relevant.
3408 MR. FORSYTH: If we were to put CBC on there it would be a fairly large circle. As we have heard earlier, CBC would be going up in that neighbourhood where CFMK, Easy and Light are located. It would be up in the right-hand side of the chart.
3409 COMMISSIONER LANGFORD: Just what I heard you say when you discussed this with my colleague, Commissioner Demers, is that you commissioned a Paragon study. I think I have written down what you said: We wanted to uncover unserved markets and we identified the males 18 to 34.
3410 I don't know whether I'm splitting hairs here, I'm not trying to in any way be difficult, I'm just looking for straight information, but it seems to me looking at that that the biggest unserved market in the terms of dollars you could repatriate is in fact the younger women, not younger men.
3411 So I just would ask you: Why would you go to the younger men against "The River", which is taking some money but not a lot, instead of going after the upper left-hand quadrant, the younger women on your chart, and "The Border"?
3412 MR. WRIGHT: Again, our mandate to Paragon was to uncover areas that the four local stations were not serving. The closest station to "The Border" is FLY-FM. If you were doing what "The Border" is doing you would be taking hours tuned away from FLY-FM which is another local station. So by going and doing the young adults and males 18 to 44, we don't go where any of the local stations are.
3413 It just so happens that our recent monitor that we did on "The Border" shows that -- Andrew, I think it is over 30 per cent or around that 30 per cent mark of all the music played on "The Border" is rock-style music.
3414 So the real goal here is, if FLY-FM can continue to put pressure on "The Border" on the female side and we can take tuning away from "The Border" on the male side, "The Border's" total audience will shrink to the point where they will be not a factor in the Kingston market.
3415 COMMISSIONER LANGFORD: Thank you very much.
3416 THE CHAIRPERSON: Counsel.
3417 MS BENNETT: Thank you.
3418 I just have a couple of clarification questions for your Canadian Talent Development contributions.
3419 If I can refer you to page 10 of your speaking notes, you indicate there that the total direct CTD commitment is $28,000 a year, which would represent $196,000 over seven years in addition to the $21,000 over seven years to the CAB plan. So the total would be $217,000 over seven years. In the speaking notes -- and this is on page 11, point 2, and in your application you refer to a total of $201,000 over seven years. Can you explain the $16,000 difference between those two numbers?
3420 MR. WRIGHT: Yes. The $28,000 commitment is our total commitment to Canadian Talent Development. That $28,000 includes the $25,000 spent on our Kingston Talent Development initiatives and the $3,000 going to FACTOR. So the two of them combined make the $28,000.
3421 Then, as we have said in our financials, when you take $28,000 a year and go over seven years, it is slightly less than the $201,000. So we indicated in the last two years of the seven year plan we would actually go to $30,000 in the last two years and then when you add it all up it comes to $201,000.
3422 MS BENNETT: So it is $201,000 plus the $21,000 CAB?
3423 MR. WRIGHT: No, it's $201,000 in total.
3424 MS BENNETT: The $25,000 plus the $3,000 --
3425 MR. WRIGHT: It's $180,000 plus -- yes.
3426 MS BENNETT: -- and then rounded up?
3427 MR. WRIGHT: Yes.
3428 MS BENNETT: Okay.
3429 Also, still on the Canadian Talent Development contribution, Commissioner Demers spoke to you about the difference that would be added in the sum to FACTOR if the cost of the initiative was less. Would you be prepared to accept that as a condition of licence?
3430 MR. WRIGHT: Yes, I would.
3431 MS BENNETT: Thank you.
3432 Thank you. No more questions.
3433 THE CHAIRPERSON: Now you have the microphone to wrap up, uninterrupted.
3434 MR. WRIGHT: Thank you very much.
3435 I was a little early with my comment before.
3436 I believe our application has best addressed the four key criteria set out by the Commission for licensing new broadcasting undertakings.
3437 Number one, our business plan addresses the largest unserved market segment of young adults and males 18 to 44.
3438 Number two, we are the only applicant that will bring diversity of news voices to Kingston.
3439 Number three, we have the most aggressive plan for Canadian Talent Development and promise the highest direct expenditures of over $200,000.
3440 Number four, we will bring diversity of ownership to Kingston.
3441 Most importantly for us, Kim and I will be new players to the broadcast ownership and will be the only local owner/operators. As was said this morning, when it rains in Kingston Kim and I will get wet.
3442 Thank you.
3443 THE CHAIRPERSON: Thank you, Mr. Wright, Ms Wright and your colleagues.
3444 Mr. Woodward, are you the one who said that to be good you have to be on radio or television?
3445 COMMISSIONER WILSON: No, that was Doug Raensbury.
3446 THE CHAIRPERSON: No? It was Mr. Raensbury.
3447 It is very nice for us to find out because we occasionally see ourselves on CPAC.
--- Laughter / Rires
3448 MR. RAENSBURY: You must be good.
3449 THE CHAIRPERSON: Thank you. We will see you again.
3450 We will allow about three or four minutes for a change and proceed with Phase II.
--- Upon recessing at 1428 / Suspension à 1428
--- Upon resuming at 1432 / Reprise à 1432
3451 THE CHAIRPERSON: Order, please.
3452 Mr. Secretary.
3453 MR. CUSSONS: Thank you, Madam Chairperson.
3454 We are now into Phase II of the process and I would like to invite McColman Media to present its intervention to the competing applications.
3455 Again, we are allowing a maximum of 10 minutes for this.
3456 Please proceed.
INTERVENTION / INTERVENTION
3457 MR. McCOLMAN: Thank you, Mr. Secretary, and we promise we will not use the 10 minutes.
3458 Actually, Madam Chair, we had no plan of any intervention whatsoever. From the questions that we have heard today and the good sense of the strengths and weaknesses of the three applicants that have appeared before you we certainly didn't feel as a team there was any value in belabouring some points.
3459 But I found out today, much to my delight, that I was a millionaire, and I wanted to certainly make the point that I told the Commission this morning a $400,000 figure and I have called the office and we have just filed with BBM a sworn affidavit and I'm hoping that before day's end that will be here and we will gladly give it to the Commission.
3460 However, at the conclusion of our appearance the Commission Counsel asked us to address at the earliest opportunity our split between the direct and indirect Canadian Talent initiatives that we have planned, so I have asked Jackie St. Pierre to address that.
3461 MS ST. PIERRE: Thank you very much and thank you for the opportunity to clarify this.
3462 I will start with our first year initiatives that we had given you a figure of $100,000. It is made up with live-to-air programming. The first year a hard cost of $19,000, soft costs of $81,000.
3463 The $19,000 I can clarify for you in hard costs of production costs, equipment, editing and some venue rentals that we included for test runs.
3464 The $81,000 was a campaign to reach potential musicians, promotional announcements, artists features.
3465 So I guess I'm saying "hard costs" and "soft costs", but I should be directing that to "direct" and "indirect" for your terms, and I apologize.
3466 The FACTOR the first year of $5,000.
3467 The CD. Depending on -- we have not said that we would be able to do it in the first year because thinking that the applications probably would not be out in -- you know, depending on when the applicant would be awarded a licence, but we would certainly hope that we would be able to make that part of the first year commitment.
3468 Then second year, the live-to-air production and editing costs drop to $8,000, promotional campaign at $40,000, FACTOR remaining the same, the CD costs remaining the same in direct and indirect costs.
3469 Year 3 remains the same as Year 2, and Years 4, 5, 6 and 7 see the increase of $1,000 to FACTOR each year, but otherwise the costs for the live-to-air programming and the CD costs remain the same.
3470 Thank you.
3471 MR. BATSTONE: I guess my only question in response to that would be with respect to the direct costs. Would you be prepared to accept the expenditure of those as a condition of licence?
3472 MR. McCOLMAN: Yes, we would, for the record, be willing to accept these as direct costs on a condition of licence.
3473 MR. BATSTONE: Just give us one second here.
--- Pause / Pause
3474 MR. BATSTONE: Okay, I'm sorry.
3475 Just to clarify, then, the live-to-air stuff, the $19,000 in the first year --
3476 MS ST. PIERRE: Yes.
3477 MR. BATSTONE: -- that is on top of the commitment to the CAB plan, the $5,000, right?
3478 MS ST. PIERRE: That's correct.
3479 MR. BATSTONE: Yes, okay.
3480 Thank you.
3481 MR. McCOLMAN: Thank you, Madam Chair. That's all we have.
3482 THE CHAIRPERSON: Thank you. We will see you again.
3483 Mr. Secretary, please.
3484 MR. CUSSONS: Thank you, Madam Chairperson.
3485 I will now invite CHUM Limited to come forward and present its intervention.
--- Pause / Pause
3486 THE CHAIRPERSON: Mr. Secretary.
3487 MR. CUSSONS: I will now invite CHUM Limited to present its intervention, please.
3488 I have just been given some materials from CHUM, but I understand that it is not necessary to distribute it at this stage. They just wanted us to have it for the record.
3489 THE CHAIRPERSON: Can we find out what it is?
3490 MR. CUSSONS: We will look at it as quickly as possible, Madam Chair.
3491 THE CHAIRPERSON: Perhaps Mr. Sherratt can tell me what it is he is leaving with us?
INTERVENTION / INTERVENTION
3492 MR. WATERS: Thank you, Mr. Secretary.
3493 Madam Chair, Members of the Commission, we will address the Wright/Rogers/Kirk application first, followed by the McColman/McKercher application.
3494 When looking at the ability of a market to absorb a new entrant the Commission has stated it considers, among other things, the impact on the market of a new entrant, the competitive state of the market and, in recent decisions, has noted the relative profitability of the market.
3495 But the primary assumption of the Wright application is repatriation of tuning. It identifies significant out-of-market tuning to WBDR-FM. WBDR ranks number one in share of tuning with teens and adults 18 to 34, with 65 per cent of its total hours tuned by women.
3496 Although audience repatriation is a laudable goal, two questions arise.
3497 One: Can the radio service proposed by Wright do the job? And:
3498 Two: Will the radio service offer significant programming diversity to Kingston residents?
3499 With respect to the first question, the applicant conducted radio format research which concluded that the optimum format was broad-based rock. However, that format traditionally does not perform well with female listeners, particularly those listeners who are tuning out-of-market to beat WBDR and other U.S. stations for hits.
3500 The music profile filed by Wright amply demonstrates that its proposed radio service is targeted to men. The proposed format and programming is in no way similar to the service offered by WBDR.
3501 We are filing, as part of this intervention, an analysis conducted in April 2000 of the music programming of WBDR. This documents that WBDR's music is dramatically different than the music profiled by Wright.
3502 The Monitor also demonstrates that WBDR:
3503 (a) plays virtually no Canadian music;
3504 (b) is based on a CHR contemporary hit radio format, not rock-based; and
3505 (c) is built on a high level of current hit music.
3506 In other words, as radio stations go, WBDR is about as different from the Wright application as one could imagine.
3507 Based upon CHUM's experience as a broadcaster in this market, we submit that Wright's proposed ratio station would not repatriate significant numbers of female listeners or advertising revenue from WBDR. In our view, the Wright application is based on the wrong format and targets the wrong station.
3508 Madam Chair, Members of the Commission, perhaps the most glaring shortcoming of the Wright/Rogers/Kirk application is the absence of any research as to the economic capacity of the market to support a viable stand-alone service.
3509 Based upon the evidence we have presented, we would suggest that Wright's revenue projections are unrealistic. Wright's revenue forecast for Year 5 is over $2 million. Considering the fact that the revenue for all of the Canadian stations in Kingston is approximately $4 million per year, capturing 50 per cent of the total market revenue is not only unrealistic but would severely reduce revenues of incumbent radio stations and severely affect their viability.
3510 MR. SHERRATT: Madam Chairman and Commissioners, in their presentation just a few moments ago Mr. Wright told you that there was $2.5 million leaking out of the market. He then told you 48 per cent of tuning was to local stations and that the norm should be 75 per cent. Then he said a share point is worth $93,000 today.
3511 Using his numbers, he is suggesting that he will do $2,046,000 in Year 5 on a 22 share. Even if we get to his 75 per cent tuning -- oh, before I say that, this equates to $93,000 a point, which would suggest there will be absolutely no growth in the market in that five years.
3512 Even if we get to his 75 per cent tuning in the market, this would mean that Corus and ourselves would get to 53 per cent. Using his $93,000 figure, it would give us $4.8 million between us, virtually what we are doing today, and that is five years from now.
3513 There has been absolutely no evidence filed by Mr. Wright. It is all anecdotal. There is absolutely no evidence available to suggest that an increase from four to five stations has ever increased tuning in a market by 48 per cent, particularly a station with CHR top 40 stations coming from 10 miles away across the United States border and the CBC getting better than a 20 share.
3514 Madam Chair, we know and respect Mr. Wright. He worked with us for many years. But this is clearly a case of exuberance to get a licence clouding reality, indeed the facts.
3515 Either Corus or ourselves will go down the tubes, or Mr. Wright will, or the CBC and the United States of America will disappear.
3516 MR. WATERS: In respect of the McColman application, here too is another anomaly.
3517 To be blunt, the McColman proposal does not target WBDR-FM "The Border". Why not? Probably because Mr. McColman is the Vice-President and Canadian Sales Manager for the U.S. station and he and members of his family earn their livelihood from the U.S. station. In fact, he owns over 11 per cent, which he said this morning.
3518 We are filing a background newspaper article which details the involvement of the McColman family at WBDR which they position as a Kingston station. We are also filing an advertisement which appeared in yesterday's Kingston Whig Standard on behalf of WBDR which features Mr. McColman and "Kingston's The Border 102.7 FM".
3519 In effect, McColman Media knows it would be difficult, if not futile, to compete against itself so they have chosen a soft rock format. Soft rock predominantly appeals to women, so there is some potential to repatriate women who tune out-of-market.
3520 In our view, softer rock is a wise format choice, it is akin to what we are proposing, but ours will be twinned with Canadian services to expand diversity in Canada.
3521 Mr. McColman failed to reveal this morning that "The Border" actually operates on two radio transmitters on two frequencies, WBDR on 102.7 and WWLF on 106.7. Both transmitters broadcast the same music, but WBDR 102.7, whose advertising is sold by McColman Media, broadcasts a separate cluster of commercials sold to Canadian advertisers and directed exclusively to the Kingston audience.
3522 Consider, then, the economies of awarding McColman another licence operating in conjunction with these two -- not one, but two -- U.S. radio stations.
3523 Granting McColman a licence would pose a real threat to Corus, CHUM and the Canadian broadcasting system, since WBDR could be sold in tandem with the new Canadian station making it a stronger and more formidable foreign competitor. In fact, WBDR is already sold in tandem with other U.S. stations which target Canadian audiences.
3524 Mr. McColman mentioned the contribution which "The Border" makes to the local Kingston economy in salaries and employment. For the record, the WBDR web site reveals that at least four members of his family are presently listed as "Border" staff.
3525 Mr. McColman also stated this morning that WBDR currently makes a contribution to the Canadian broadcasting system by playing 20 per cent Canadian music, voluntarily. The Monitor which we are submitting for an 18-hour broadcast day reveals levels of Canadian music at less than 2 per cent. That figure is commensurate from Monitors that we performed on other days.
3526 As was suggested during questioning this morning, McColman's financial projections are woefully inadequate.
3527 As was discussed during questioning, the McColman application showed a total programming budget of $76,500 in Year 1. That figure grows to $105,000 in Year 5. That amount was budgeted for all of their programming, including all the things they promised this morning, including production of a daily open-line talk show. The cost of producing an open-line show alone should exceed their total programming budget.
3528 We respectfully submit that in terms of benefits to the system, our proposal to move soft rock to FM, reformat CKLC-AM to an older skewing nostalgia format, and moving CFLY-FM younger, will result in an increase in diversity, an increase in service, with the least damage to existing operators.
3529 For all the reasons stated, we respectfully request you deny both Wright and McColman.
3530 THE CHAIRPERSON: Thank you, Mr. Sherratt and Mr. Waters.
3531 Mr. Sherratt, I expected excitement at the intervention stage, but not a big box of it.
3532 Can you make available to the competing applicants a copy, and we will also have a look at it before the reply to see whether it is acceptable.
3533 I assume from your comments that your justification for filing this is that it was raised in intervention by the applicant?
3534 MR. SHERRATT: Yes.
3535 THE CHAIRPERSON: It was raised by the applicant before the written intervention deadline as well, wasn't it? In other words, you could have deposited that at the written intervention deadline and given a bigger opportunity to the competing applicants to examine them.
3536 MR. SHERRATT: No. The Music Monitor we did is fairly recent.
3537 THE CHAIRPERSON: Wasn't ready.
3538 MR. SHERRATT: But the reason for filing it, the Canadian content was raised this morning.
3539 THE CHAIRPERSON: So I invite the applicants to have a look at the material and we will have a look at it as well and at the reply stage if anyone has a problem with it or we have we will let you know.
3540 MR. SHERRATT: No problem.
3541 THE CHAIRPERSON: Thank you.
3542 Thank you. We will see you again.
3543 Mr. Secretary, please.
3544 MR. CUSSONS: Thank you, Madam Chairperson.
3545 I would now like to invite John P. Wright forward to intervene to the other applications.
3546 Mr. Wright, please.
3547 THE CHAIRPERSON: Mr. Wright, welcome back.
INTERVENTION / INTERVENTION
3548 MR. WRIGHT: Thank you.
3549 Chairperson, Commissioners, I think this is an intervention against the CHUM application.
3550 CHUM has stated -- I think I have this right -- there is no room for another radio station in Kingston unless it is their station.
3551 The biggest underserved market in Kingston is young adults and males 18 to 44, but CHUM has an out-of-market station, CHXL, that is stealing hours tuned and revenues from this segment. So they are not addressing Kingston's real need.
3552 CHUM now has three signals getting hours tuned and revenue from Kingston. CHUM's proposed format will add yet another station competing for the female target group, giving CHUM four signals getting hours tuned and revenue from Kingston.
3553 CHUM's proposal will do nothing to address the huge out-of-market tuning going to young adults and males 18 to 44.
3554 On the McColman application, Mr. McColman also has a vested interested in not addressing Kingston's most glaring underserved market segment. Mr. McColman, as we know, is the operator of WBDR "The Border" and a chief cause of the audience and revenue gap in Kingston radio.
3555 He is not addressing the needs of young adults and males 18 to 44 because in doing so he will take tuning and money away from WBDR and it will come back to Canada.
3556 Mr. McColman's program plans are suspect. He has grand plans for open-line shows, news and information for the 35-plus market segment, and yet has budgeted only $75,000 in Year 1 for programming. We don't understand how this can be done.
3557 The underserved market segment in Kingston is young adults and males 18 to 44. Neither CHUM nor McColman is willing to address this need in order to protect their out-of-market radio stations.
3558 We urge you to deny the applications by both CHUM and McColman.
3559 Thank you.
3560 THE CHAIRPERSON: Thank you, Mr. McColman -- Mr. Wright, I'm sorry.
--- Laughter / Rires
3561 THE CHAIRPERSON: Mr. Wright.
3562 MR. WRIGHT: Yes?
3563 THE CHAIRPERSON: Thank you.
3564 COMMISSIONER WILSON: She called you Mr. McColman by mistake.
3565 MR. WRIGHT: Oh, did you?
3566 Thank you.
3567 THE CHAIRPERSON: We will now proceed to Phase III.
3568 We will hear the Corus intervention, then we will take a break and then we will hear the supporting intervenors.
3569 Mr. Secretary, please.
3570 MR. CUSSONS: Thank you, Madam Chairperson.
3571 So I would like to invite the Corus Radio Company to come forward and present its intervention.
3572 Again, in this phase we are allowing intervenors 10 minutes maximum to present their interventions.
3573 Thank you.
--- Pause / Pause
3574 THE CHAIRPERSON: Proceed when you are ready.
INTERVENTION / INTERVENTION
3575 MR. BLACKADAR: Madam Chairperson, Members of the Commission, just for the record I am Hal Blackadar, Vice-President of Corus Radio Ontario.
3576 On my left is Trevelyn Gauthier, the Managing Director of Corus Radio Ontario and the person directly responsible for CFFX-AM and CFMK-AM here in Kingston. Trevelyn joined Corus from Power Broadcasting Ontario and has a history with these stations.
3577 To my right, Steve Rosenblum, the Account Director, Media and Research, for Harrison, Young, Pesonen & Newell, otherwise known as HYPN, the company that undertook the study of the Kingston market which was appended to our intervention.
3578 First of all, on behalf of Corus, welcome to Kingston and we thank you for granting us this opportunity to appear to express our views regarding the applications for an additional FM service in Kingston.
3579 As you know, Corus Entertainment was recently granted authority to acquire the radio and television assets of Power Broadcasting, including the two radio stations CFFX and CFMK licensed to serve the Kingston market. Corus Radio is pleased to participate in the Kingston radio market and is committed to bringing strong and dynamic programming to our audiences here in Kingston in the same manner that Power Broadcasting did during its stewardship.
3580 MS GAUTHIER: Our intervention today is about the opportunities and challenges that lie ahead for private radio here in Kingston. It is about the opportunity, on the one hand, of providing more local service through the introduction of a new FM service versus, on the other hand, the potential negative financial impact of granting such a licence on existing radio licensees.
3581 We believe that these two issues are also part of a third matter: Timing.
3582 In our view, a new radio service can and should be introduced into a market when the economic base shows sufficient upward momentum to support the service. Then clearly additional benefits accrue to the community through enhanced service as a result of greater investment in local programming, stronger support from local retailers, and enhance balance sheets for all licensees. However, when that economic growth is not there, the reverse happens.
3583 Having reviewed the data submitted by HYPN on behalf of Power Broadcasting, which we appended to our intervention, as well as the submission by Bay Consulting on behalf of CHUM Limited, we have concluded that the introduction of an additional local FM service in Kingston at this time is premature and will have negative financial implications for all radio licensees in Kingston.
3584 MR. BLACKADAR: It is for this reason that Corus withdrew the application previously filed by Power Broadcasting for an additional FM service after reviewing the accompanying data that forms part of the application before you today.
3585 Subsequent to the filing of our intervention, we agreed to provide to CHUM, for analysis purposes, the revenues, expenditures and operating incomes for our two stations here in Kingston. Likewise, their numbers were supplied to us and, as CHUM has demonstrated in their response to our intervention, the Kingston radio market is, to say the very least, fragile.
3586 Radio revenues for the past five years have stagnated. Operating costs for the corresponding period have risen roughly at the same rate of inflation. The net result, operating margins have declined from a modest 10.8 per cent in 1994-1995 to a negative PBIT of about 3.6 per cent this past fiscal year.
3587 An additional FM service, even if owned by an existing licensee, will only further exacerbate the losses on a per-station basis. This will have a negative impact on the level of investment that can be made in such important areas as local content, staffing and capital resources.
3588 Corus would like to have been before you today seeking approval for an additional local service. We are too well aware that when one asks if a new service would be beneficial there is bound to be a positive response. However, the two reports outlying the economics of the Kingston market submitted by Power Broadcasting and CHUM show a market that is lacklustre in its prospects for major economic growth in a city that in a number of areas has fallen below the average Ontario market.
3589 The HYPN study discloses an annual personal per capita income of $20.6 thousand, slightly below the Ontario average for like sized markets; and annual retail sales per capita of $9.1 thousand with a five year growth rate of 7.6 per cent, all of which are slightly below the Ontario average for similar markets. Certainly not a robust, healthy market.
3590 However, Commissioners, in favour of the new service the HYPN study points to the additional tuning and revenues a new FM service will bring to Kingston.
3591 The study outlines that Kingston suffers from a high degree of spill-in from radio stations outside Kingston, especially from the U.S. station known as "The Border". In fact, the HYPN study suggests that some 10 per cent of market tuning goes to this one particular station. Therefore, all three applicants before you today have stated that most of their audience will come from the repatriation of listeners to a local service.
3592 Repatriation is a very difficult task. CHUM's FM station in Kingston is currently operating in a similar format as "The Border", yet listeners continue to tune to this out-of-market station. While we wouldn't suggest that repatriation is an impossible task, we do believe that it is a long process whereas the financial impact that will be felt by current licensees if a new service is licensed will be immediate and quick.
3593 Both the HYPN and the Bay Consulting reports demonstrate that while the introduction of a new service may provide a lift to the Kingston market, it will not be sufficient to support a new radio service. The HYPN and Bay studies illustrate that radio revenues for a new service will come, in part, from current licensees.
3594 This is particularly troubling since we know how the Kingston radio market is currently generating average negative returns and the HYPN report discloses that current indicators show a slow down in measured Ontario radio markets.
3595 Without a growing and healthy market the introduction of a new service will actually result in the diminution of local content and programming. It will put significant pressure on day-to-day operations of existing licensees and affect each station's ability to invest in additional programming services, hire additional personnel and complete capital upgrades or investments in additional physical assets necessary to meet the needs of today's listeners.
3596 Therefore, in our view, the Commission should refrain from licensing a new radio station for Kingston at this time.
3597 Commissioners, we thank you for the opportunity to appear and address our concerns, and we would be pleased to answer any questions you have.
3598 THE CHAIRPERSON: Thank you, Mr. Blackadar.
3599 My questions will be in part to HYPN, but you are the intervenor so I will leave it to your judgment to jump in, participate, or respond.
3600 This study was initially prepared for another client by HYPN and then, obviously with your consent, endorsed or attached to another party's intervention who now is the replacement of your earlier client in the marketplace as a radio operator.
3601 When you prepare these documents, when HYPN prepares these documents and comes to the conclusion that repatriation is important -- will be an important factor, does it actually look into the formats of the client concerned and of the environment to arrive at the conclusions or numbers or does it just look at the share that the out-of-market stations have in the market you are analysing?
3602 Do you know what I mean? Do you actually look at -- did you look at Power's proposal and say "In light of this proposal I think repatriation will occur and it will be viable and if it had been another proposal" -- do you just look at the economics of it or do you look at the proposal?
3603 Do you understand what I mean?
3604 MR. ROSENBLUM: Yes, I do understand, Commissioner, and I am just looking through my binder to get to the right part.
3605 THE CHAIRPERSON: The answer need only be yes or no. It's a factual question. I'm not sure how you do it, whether the --
3606 MR. ROSENBLUM: All right.
3607 Power Broadcasting commissioned consumer research through Solutions Research Group. This research inquired as to the interest of the marketplace, specifically an 18 to 49 sample, into a specific format that Power had in mind. It was based on the consumer research that resulted that HYPN produced its report and implemented its share of market, share of tuning, share of revenue model that forms the basis for our report.
3608 So the consumer research was clearly format-oriented to determine the need.
3609 THE CHAIRPERSON: Conversely, the use of the HYPN study, in light of the fact that the applicants that are now before us don't include Power and have different formats, a different profile as radio programmers -- or new or may or may not want to repatriate. Does that affect your conclusions?
3610 MR. ROSENBLUM: No, it does not.
3611 THE CHAIRPERSON: Why not?
3612 MR. ROSENBLUM: We were commissioned by Power Broadcasting to determine what we believed the revenue implications were coming out of the consumer research that was produced. We also identified in our report where we thought those revenue elements were coming from.
3613 Being invited to take part today in the intervention by Corus, we are quite prepared to identify elements in the report that quite realistically pointed out that there are two sides of the coin.
3614 THE CHAIRPERSON: Yes. I'm not questioning the validity of your report, I'm just curious as to -- you have been here for a part of the --
3615 MR. ROSENBLUM: Our study is -- I'm sorry, are you asking if our study is or is not format-specific?
3616 THE CHAIRPERSON: Yes, that's right.
3617 MR. ROSENBLUM: Yes.
3618 THE CHAIRPERSON: Because presumably it is based on the ability to repatriate, I gather from reading the report and the intervention, is based in part -- the ability, rather, to introduce a new station in Kingston in a viable way is based in part on the ability of the new entrant to repatriate. Am I correct?
3619 MR. ROSENBLUM: Yes.
3620 THE CHAIRPERSON: And the ability to repatriate -- repatriate means stealing audience -- is based on the format you are going to have or your ability as a broadcaster to meet the competition by being agile, by reading the market, understanding. So when we hear applicants who say "we will repatriate", if their format appears to be completely different from whoever they are going to steal audience from, we are kind of wondering if that person understands that repatriation means stealing.
3621 Do you follow me?
3622 MR. ROSENBLUM: Yes.
3623 THE CHAIRPERSON: So I'm not questioning that it is now appended to someone else's participation, I'm just asking whether HYPN factors that into their conclusions.
3624 Does Mr. Blackadar understand what I'm speaking of?
3625 I am not questioning the validity of endorsing or accepting this report, I am just curious as to what are the ingredients that go into it other than the formula to come to conclusions.
3626 MR. ROSENBLUM: All right. I think I can help you.
3627 MR. BLACKADAR: Perhaps if I may, I can answer the research part of it as a graduate with the highest marks of Grade 7 in my high school, I did really well. That is about as far as the math is.
3628 I can tell you --
3629 THE CHAIRPERSON: Such an admission could get you into jail.
3630 MR. BLACKADAR: The issue with this radio market study -- and this is not the first one that I have been associated with with HYPN -- was basically in two parts.
3631 One was to look at the market to see how the market was performing. That had no bearing whatsoever on what the formats are in this particular case or what was being proposed by any of the applicants here.
3632 So there was a study of the Kingston market and that is outlined -- as Mr. Rosenblum has covered off here, and he can take you through this -- how the Kingston market itself performs.
3633 The second part of this was a study commissioned by Power which was really when they were looking at a format for the Kingston market what format would they do to best maximize the frequency which you heard the other applicants today refer to.
3634 If I could, I guess, summarize it by saying, I interpret your question to ask whether or not it matters what format is being proposed by any applicant, does that have an impact directly on how the study results. I believe the answer is no.
3635 But what this study does show is a relationship between out-of-market tuning that is going on, a market that is not performing, for whatever the reasons, to the level that other markets have been and are performing, and that is the decision I guess you have to make as to whether or not repatriation is going to be effectively able to be brought to the table here on the one side, and on the other side the impact if that does occur, what happens to those existing licensees in the Kingston market.
3636 THE CHAIRPERSON: Yes, exactly.
3637 Because I read -- well, I was second in Grade 8, so I did read and I believe I understand the economic part of it, but I am right in your conclusion that repatriation in this case will be crucial to not harming the incumbents while having a viable station. Right?
3638 MR. ROSENBLUM: That's correct.
3639 THE CHAIRPERSON: So the ability of anyone we may license to repatriate that, in your view, would also be of great importance?
3640 MR. ROSENBLUM: I understand better now what you were after. Yes.
3641 THE CHAIRPERSON: Yes. I was wondering if HYPN, as a company that produces these reports, factors that in, since this one seems to have been useable --
3642 MR. ROSENBLUM: If you are asking us whether we believe --
3643 THE CHAIRPERSON: -- in both circumstances.
3644 MR. ROSENBLUM: If you are asking us whether we believe that repatriation is a crucial element to the survival of a new station in this market, the answer is that it is absolutely is crucial.
3645 THE CHAIRPERSON: And it is up to us to judge the ability of the proposal put forward to repatriate or not?
3646 MR. ROSENBLUM: Correct. And even in the instance of our previous application, the report that we did, we signified that there would have to be a very, very significant level of repatriation to make the station viable. Even then, it could not survive with repatriation alone, that it will have to feed on the revenues of other stations in the market in order to survive. Even a station with a very high, high repatriation factor will have to feed off local stations as well to survive.
3647 THE CHAIRPERSON: One of the motives of my question -- and Mr. Blackadar may have a comment -- is, of course in this case one -- and in reply the applicants may want to address this -- but is the desire or commercial interest of the applicant to repatriate, especially if some of the out-of-town tuning comes from stations in which they have a whole or a part interest and their ability to somehow slide a format in the middle so that they are not harming either their station -- in the case of CHUM, Brockville -- or their stations in the market.
3648 You have to be clever to say "Well, here I am going to skew to the females age 18 to 21 and here I'm going to skew to the males 33 to 35, because I am an experienced broadcaster and I know exactly how to do that."
3649 MR. ROSENBLUM: Yes. If you are asking whether a station that is not targeting WBDR, what the implications would be, it would be a vastly higher impact on local station revenues.
3650 THE CHAIRPERSON: Yes. So it would be both one's belief -- I think I even heard one of the applicants say "Forget it, we just have to" -- almost said "Forget it, we have to live with it. When the Americans decide to skew to this audience we can't succeed."
3651 But anyway, so you have no problem with the suggestion that that has to be put into the mix over and above the economic formula of what the market can bear, the ability of the broadcaster to repatriate -- to skew --
3652 MR. ROSENBLUM: Yes. The repatriation of audiences and revenues, if that is what you are asking --
3653 THE CHAIRPERSON: Yes. Which means format.
3654 MR. ROSENBLUM: -- is crucial to the survival of a radio station, at least in accordance with our analysis and model.
3655 THE CHAIRPERSON: Then it is up to the applicants to convince us that they know how.
3656 MR. ROSENBLUM: The impact would be, of course, magnified by the fact that there is no revenue lift in this market. It seems, from what we have been able to observe, that the revenues today are exactly the same as they were five years ago and along with the profitability issues the impact would be devastating.
3657 THE CHAIRPERSON: Thank you. We thank you for your participation.
3658 MR. BLACKADAR: Thank you.
3659 THE CHAIRPERSON: It's nice, Mr. Rosenblum, that your work could be used twice. I tried to do that with one of my essays when I was in law school, but I got caught.
3660 We will now take a 10-minute break, no longer, and resume with the supporting applicants to conclude Phase III.
--- Upon recessing at 1515 / Suspension à 1515
--- Upon resuming at 1530 / Reprise à 1530
3661 THE CHAIRPERSON: Order, please.
3662 We will resume the hearing. We will hear the supporting intervenors on the various applications.
3663 The Commission, of course, always welcomes the participation of supporting intervenors and we try to hear as many as possible in the time available.
3664 Each intervenor's oral presentation is transcribed by the court reporter and added to the record and added to the written intervention that was filed by the intervenor. So if we have no questions for you or we don't engage in any exchange with you, it is not because we are not interested but rather because your support is clear and your intervention will be on the record.
3665 With regard to Phase IV, we are of the preliminary view, unless somebody persuades us otherwise, that the best way to proceed is to allow competing applicants copies of the material that was brought by one applicant and then, instead of having oral reply, to have written reply to be filed by Thursday, May 18th, not exceeding eight pages, which would be approximately the 10 minutes that you would be allowed here, and that would allow you to look at this material and reply to it as well.
3666 Of course, if applicants have a serious problem with my proposal we will hear from them. If not, then we would proceed with a written reply rather than an oral one, to be filed by May 18th and not to exceed eight pages, served on the competing applicants and put on the record for intervenors who may wish to read the reply.
3667 So unless we hear otherwise via the Secretary at some time, this is what will be Phase IV of the proceeding in this case.
3668 We will now proceed with the rest of Phase III which is to hear supporting intervenors.
3669 Again, we are interested in what you have to say to us, even if we don't engage in a long conversation with you.
3670 Mr. Secretary, please.
3671 MR. CUSSONS: Thank you, Madam Chairperson.
3672 I would like to invite Doug Thorne to come forward to present his intervention, please.
3673 THE CHAIRPERSON: Welcome. Proceed when you are ready.
INTERVENTION / INTERVENTION
3674 MR. THORNE: Thank you, Madam Chair and Members of the Commission.
3675 First, may I thank the Commission for allowing me the opportunity of addressing you today.
3676 The creation of a new radio station is really a historical event, especially when one considers some of the innovative broadcasting this country has offered in the past and that the new station will be part of the community mosaic for many, many years to come. As a broadcaster it is truly an honour to be part of this process.
3677 I have been a broadcaster for the past 29 years. My career started in Pembroke, Ontario, then took me to Toronto for 17 years and then on to Kingston. It was only in January of this year that I was forced to turn off my microphone.
3678 I currently make my living as a media consultant, but it is as a broadcaster and a Kingston resident that I address you today about the current condition of radio in this market and the drastic need for a new station to serve the 40-plus demographic.
3679 As stated in my letter of intervention, I have had the good fortune and talent to work at top-rated ratio stations.
3680 I have also had the misfortune of experiencing those same stations to become radio jukeboxes. These stations pride themselves in non-stop music sweeps. Now, how can you be proud of playing song after song after song, and how can anyone call themselves a programmer when all you offer is 40 to 50-minute music sweeps each and every hour?
3681 We used to do the same thing when I was a teenager in a restaurant in Cornwall with the jukebox. At that time it was called three plays for a quarter. As well, when I was a teenager radio was my best friend. It was there when I was lonely, it was there when I broke up with my girlfriend, it was there when I went out with a new girlfriend.
3682 We used to associate ourselves with the announcers. They were there. They were live. They were local.
3683 When I moved to Toronto I realized that my grandparents experienced the very same concept. They listened to CFRB. The radio would go on at 6:30 in the morning with Wally Crouter and would be turned off at 6:30 in the evening after Bill Deegan and Bob Hesketh.
3684 Radio was their best friend, and I never forgot the important role radio played in their lives. So, as a broadcaster in Kingston I tried to create that same atmosphere. I aimed to be my listener's best friend. I talked about Kingston, I talked about Kingstonians, and I touched their lives each and every day.
3685 The current situation in this market is completely different. Not only are we subjected to non-stop music sweeps, but it is difficult to find a live announcer after 9:00 in the morning. One AM station here has only one live announcer throughout the day. The other has two, but for limited periods of time.
3686 The FM stations are a little different because of their popularity, but not much.
3687 Remember when you used to be able to call into the studio of a radio station and get the announcer on the phone? Not in this market. They are too busy programming the next days' non-stop music sweeps.
3688 If a major disaster took place late in the day, not one of these so-called local stations could go live at an instant to give coverage.
3689 For an example, several weeks ago a serious accident occurred on Highway 15 when a truck slammed into a hydro transformer at 4:45 on a Friday afternoon. At one of the broadcast outlets the only person in the station at this time was the newscaster, and the first time the story went on the air was at 6:00 p.m. on the AM side, and not at all on the FM since there is no 6:00 p.m. newscast available there. No one was able to tell motorists to stay clear of the area because the highway was closed. No one was able to tell residents on their way home that the power would be off for quite some time.
3690 In my opinion, this group of radio stations failed their listeners by not having live announcers during a major drive period.
3691 It is my opinion as a broadcaster that our radio outlets in Kingston fail to provide proper coverage during the weekends as well. One AM station has been totally voice-tracked for several years and the other has recently added a live announcer for three hours each weekend morning, after months of voice-tracking.
3692 The FM stations have also voice-tracked the vast majority of the weekend hours.
3693 And news coverage, it is absent after 12:00 p.m. on both Saturdays and Sundays on all four outlets. A major disaster could occur at 2:00 p.m. on Saturday, but all would be well, according to our radio stations in Kingston, until Sunday morning.
3694 Now, you have heard references today to a program called "The Sunday Morning Café". It has been held up as an example of community at its best. Ladies and gentlemen of the Commission, I am the individual who created, developed, nurtured and groomed this unique community access program.
3695 I recognized that the Kingston public both needed and wanted a vehicle that showcased what this tremendous area has to offer. The "Café" was three hours of music and interviews. I had regular guests on the show, I had a lawyer, a doctor, the Executive Chef of this very hotel, and a lifestyle specialist.
3696 I also incorporated live interviews with elementary school students who reported on what was of importance to their schools and to their lives. This allowed me to share the magic of radio with these young minds and I was subsequently honoured with a National Bravo Award of Excellence in Educational Broadcasting. As well, this segment of my program was nominated for a Governor General's Award for Educational Broadcasting.
3697 I mention this to you because, in my estimation, this is the epitomy of what local community access radio can achieve.
3698 These regular guests were augmented by individuals and community groups who had a local story to share with my listening audience. I was the first Kingston broadcaster to air Georgette Fry's "The Exile" with Georgette performing live in my studio.
3699 Other local recording artists, including Hasket & The Cleavers, Pat Murray, Suzanne Grant as well as the Cantabile Youth Choir, were given a venue for their style links.
3700 Kingston Symphony Music Director, Glen Fast, frequently dropped into the "Café" to highlight his upcoming performances. Theatre groups made a point of taking advantage of this very same unique opportunity.
3701 The Heart & Stroke Foundation, the MS Society, Almost Home, The Lung Association, The Cancer Society and many other worthwhile organizations found that the "Café" was an important medium to get their messages of appeals and upcoming events to this Kingston community.
3702 Unfortunately, with the change in format at CFLY in August of 1998, these groups no longer have a voice in this area. For a year I was able to provide minimal support through CKLC to these organizations, but that was also deemed unnecessary when the focus there became music, music, music.
3703 I sincerely feel that an independent FM licence catering to a 40-plus market will make the present incumbents sharper and have them better serve their listeners, and hence their advertisers.
3704 As a broadcaster and a Kingston resident, I am proud to support the truly independent application of McColman Media and its directors Garry McColman and Mark McKercher. Their commitment to live, local radio, local talent, local organizations and local listeners will give Kingston what it has been long missing. Kingston will have its voice back. And through their endeavours and determination, Kingston and Kingstonians will once again have an opportunity to indulge in true, local, live radio and what it can offer, as it once was and should always be.
3705 Thank you.
3706 THE CHAIRPERSON: Thank you very much, Mr. Thorne, for your participation.
3707 MR. THORNE: Thank you.
3708 Mr. Secretary, please.
3709 MR. CUSSONS: Thank you, Madam Chairperson.
3710 Could Mark Potter please come forward and present his intervention?
3711 THE CHAIRPERSON: Welcome, Mr. Potter.
INTERVENTION / INTERVENTION
3712 MR. POTTER: Thank you.
3713 I appreciate the opportunity to speak here today.
3714 First of all, by way of introduction, I spent 13 years as a broadcaster in this community, mainly as Sports Director of Kingston's only commercial television. But, more importantly, I have been a lifelong resident of Kingston. I know the community and I have followed broadcasting in this market for more than 30 years.
3715 I left broadcasting eight years ago. I currently work in the financial industry with Merrill Lynch. I have no direct interest in this application, other than the fact that I am a listener and a lifelong Kingstonian who is concerned about broadcasting in this community.
3716 I believe there certainly is a forgotten demographic in this market. The proposal that I am supporting from McColman Media is aimed at a demographic that is not currently being properly served in this market. That is, of course, those listeners who are over the age of 40. Currently, the only station that really caters to this segment of the population is the CBC. The local stations that are now in this market cater to the 18 to 35-year-old demographic.
3717 It is my feeling that this proposed station is not going to take listeners away from the others, but instead offer an alternative to Kingstonians who are over the age of 40, and that certainly is a large demographic in this community. These people are looking for a radio station they can listen to.
3718 It is also my view that the stations that are currently serving this market have done very little to give the community a voice. They are using the same canned formats that you can hear up and down the dial in any market in any city right across Canada. When I listen to Kingston radio stations, I don't feel there is really too much "Kingston" about the programming on our stations.
3719 After reviewing the application for McColman Media, it is certainly very clear to me that they have presented a very clear commitment to the Kingston community. As you have heard previously, their commitment includes expanded news and sports coverage, as our last speaker touched on, something that has really almost been ignored in this community, certainly in recent years.
3720 People in Kingston are concerned about what is happening in their own community. When they turn to radio they want local news, they want to hear about local events, they want to hear about local people.
3721 Also, as well, they are proposing to hire a full-time sports director. As I mentioned, I spent almost 13 years working as a sports broadcaster in this community and I can certainly tell you that sports has largely been ignored by the current Kingston radio stations. There really is a very vibrant sports community here in Kingston that really has no voice in the community when it comes to radio and certainly a full-time sports director working in radio in this city would be a very welcome addition.
3722 But they certainly plan to go beyond expanding news and sports coverage. Part of their plan is to set up an open-line radio program that gives the community a voice on local issues. Outside of "Letters to the Editor" in the local newspapers, there really is no outlet for the citizens of this community to air their views on the hot local issues of the day.
3723 I grew up in an area in Kingston back in the 1960s and 1970s, and actually later worked with the host of a very popular radio talk show in this city, and it certainly was a time and an era when people had a chance to voice their opinions on really important local issues in their community. That has been gone now for more than 20 years and I think there really is a need for that type of programming here in the city.
3724 They are also proposing an editorial platform where well-informed Kingstonians will have a chance to air their views on the issues of the day by presenting on-air editorials.
3725 Another disturbing trend in broadcasting in recent years, especially in smaller markets, has been the loss of many respected, familiar broadcasting names. Certainly I know firsthand, I have had many friends in this city who work in broadcasting, many who no longer work in broadcasting because they have been squeezed by these local stations. They have been really squeezed on two fronts.
3726 First of all it is an economic front where they don't want to pay people who have been around and are established broadcasters in this community.
3727 And secondly, of course, it is the change in formats. Again, as our previous speaker has mentioned, the formats today are much tighter, they don't allow for personality and they are geared to a younger audience.
3728 I know certainly growing up in Kingston there were many well-known radio personalities in my day who certainly were very respected and very involved in their communities, and again that is an aspect that seems to be lacking in this era.
3729 Also, popular programs like "All That Jazz" and "Sunday Morning Café", which probably were the two most popular broadcasting programs in that market, are no longer on the air and that has definitely left a void in the community.
3730 This application plans to resurrect those programs and their hosts. That is not only going to satisfy local listeners who truly enjoyed those programs, but it is also again going to give the community a voice, a chance for local musicians and local charities to have a voice on the Kingston broadcasting scene.
3731 The new station is proposing a varied programming day that is going to appeal to a wide range of interests among its listeners.
3732 Perhaps the bigger question that you may be considering is: Does, in fact, Kingston need a fifth radio station when we already have four? That certainly is a very good question.
3733 After reviewing the application I certainly feel that they are proposing to offer listeners over the age of 40 something that is not currently available in this market. As I previously indicated, I don't believe this application is going to take listeners away from existing local stations.
3734 Another issue that has been brought up is the advertising dollar. Is there enough advertising dollars in this community to be spread across five different radio stations? As I mentioned, I work in the investment business, I work for a company, Merrill Lynch. Our target market is investors who are over the age of 50 who are the people who control the wealth in this country.
3735 Kingston, as you probably know, is one of the most popular retirement centres in Canada. Many local Kingston businesses cater to this demographic, but nobody in radio is doing it.
3736 I know at Merrill Lynch for the most part we don't spend our marketing dollars on radio because there really is not a station in this community that reaches out to our target market.
3737 I should also point out that today's retiree is much younger than in the past, they are more active and they spend more money. They are a very attractive demographic and they make up a very large part of this community, but they have been all but ignored by local broadcasters.
3738 Kingston at one time was known as a government town, but we do have a very vibrant, growing private sector in this city and the economy is certainly more diverse than it was just a few years ago.
3739 The advertising dollars are certainly there for businesses serving the lucrative 40-plus market, and when it comes to radio advertising they have simply been looking for a place where those dollars are going to be well spent.
3740 In summary, I believe this application by McColman media should be accepted by the CRTC. Kingston would certainly welcome a new radio station that is formatted for the 40-plus age group. Kingston would embrace a station that is a reflection of the community that truly gives the community a voice that is not there right now, a station where local news, local newsmakers and local events are important and they get the airtime they deserve, a station that offers a programming schedule that is diverse and reflects the many interests of its target audience.
3741 Again, that is why I have come forward today to support McColman Media and I think their proposal would be a welcome addition to Kingston broadcasting.
3742 I thank you for your time.
3743 THE CHAIRPERSON: Thank you very much, Mr. Potter, for your participation.
3744 MR. POTTER: Thank you.
3745 THE CHAIRPERSON: Mr. Secretary, please.
3746 MR. CUSSONS: Thank you, Madam Chairperson.
3747 I would now like to invite Duncan Scott to present his intervention.
3748 DR. SCOTT: Good afternoon.
3749 THE CHAIRPERSON: Good afternoon, Dr. Scott.
INTERVENTION / INTERVENTION
3750 DR. SCOTT: Madam Chairperson and Members of the Commission, my name is Duncan Scott and I am a physician who has practised medicine in Kingston since 1987. My family connections go back in this community for four generations.
3751 Kingston is a city that is rich in history, social diversity, is very vibrant and has a dynamic culture and arts community. It has affordable housing. The city itself is centrally located between the major cities along the shore of Lake Ontario.
3752 This city has enjoyed growth, especially among the aging baby-boomers who are selecting Kingston as their retirement choice. It is the number one centre of eastern Canada.
3753 This community sector requires products and services to cater to their special needs.
3754 Presently there is no local radio station serving this vital part of the community. Easy 105.7 will be a voice for them to share their concerns, talk about their fears and to salute their champions. It also will offer the arts community an arm to reach their core audience. The open-line show will assist them in keeping in touch with the community and, in turn, keeping the civic leaders in touch with them.
3755 The applicants, Mr. Mark McKercher and Mr. Garry McColman, are both well-respected Kingston businessmen who have been mentors in the business and broadcasting industry. They are individuals with strong family ties that are connected to our community.
3756 Garry McColman is a community leader and a local businessman. He has been a long-term supporter of local charities and special interest groups. I met Garry when he was serving our community as an elected Municipal Councillor. Garry has given his heart and soul to this community and can be seen on numerous local events in Kingston on a weekly basis, usually with his sleeves rolled up and a smile on his face.
3757 Mr. McKercher is a proven entrepreneur and the owner of three successful local businesses. I have watched him develop each of his ventures from the ground up, implementing his business plans, orchestrating his teams, while allowing employees to grow and to prosper. Mr. McKercher is continuously seeking new challenges and opportunities within the Kingston region. Mark has embraced the community by supporting local sports teams, charities and educational partners with donations of product, financial support and nurturing opportunities for students.
3758 Hence, I support the application and the team of McKercher and McColman to bring Kingston a strong business, an opportunity for Kingston's 40-plus demographic to enjoy a diverse radio programming format that is not presently offered, a voice for our local arts community to reach their desired audience, a community-minded business offering new opportunities for support for local organizations and charities.
3759 As employers they will offer exceptional opportunities as mentors for young broadcasters and entrepreneurs.
3760 I have been granted the opportunity to express the view of a well-known musician in Kingston, Mr. Rick Flanagan. He has been a local band leader for the last 12 years in Kingston and throughout that time his peers and he have been constantly frustrated by the local radio stations and their unwillingness to support local musical talent with regards to playing airtime.
3761 When a band releases a CD, airplay of the product is the greatest tool available to enhance their increased sales. Airplay can often make the difference between success and bankruptcy for our lesser-known artists.
3762 In the past decades, from the '50s to the '80s, most radio stations were willing to airplay local bands and help them along their career paths. This practice began to disappear in the '80s when highly formatted stations began to surface. These stations are usually owned by absentee landlords or larger corporations. More frequently than not, current programming of playlists is usually done out-of-house at the corporate headquarters. Local deejays and station managers are not permitted to simply insert any product that they deem worth airplay.
3763 On a regular basis, weekly or bi-weekly, local stations receive formatted programs of music with instructions as to when and how frequently to play each selection. This system, which is common throughout the industry, takes the decisions of music programming out of the hands of local stations and, hence, taking the community out of community radio.
3764 If that isn't frustrating enough, Mr. Flanagan has encountered corporations which actually don't even have an in-house programmer at the corporate head office. Programming is contracted out to a third party company, sometimes in the U.S.A., which puts together weekly formats for numerous radio stations. These independent radio programming contractors are truly faceless to these local artists.
3765 Independent contractors and corporate programmers generally support musical talent presented to them by highly paid promoters who represent record companies. Local artists who have invested some $5,000 to $10,000 of their own money in their CDs don't stand a chance in competing with the larger corporations for airtime.
3766 Mr. Flanagan, a well-known musician, has had his own CD receive national airplay on the CBC and was unable to crack the local market. Most lesser known artists, including himself, have grown to depend on the CBC for airplay. It is truly ironic that the largest radio corporation in the country supports local artists, whereas the local stations refuse to take up the practice of helping their indigenous artists. This convoluted practice of programming may play favourably for large companie,s but is disastrous for the local artists.
3767 Indeed, it could be argued that generally radio stations no longer serve local communities, particularly those which simply tap into the satellite and feed news, weather and music.
3768 Mr. Flanagan goes on to support the proposal to create a station which will be centred around the local community, its events, people and its needs. He feels this will open the doors to local artists and help them promote their product and their careers. Indeed, he understands that one of the prime objectives of this application is to serve local musical performers and the audience who supports these performers.
3769 He feels this approach to community service is refreshing and worth serious deliberation. He is in full support of a media outlet which will be locally owned, locally staffed and locally accountable.
3770 You may have wondered, I brought up this certificate and this little trophy with a little horse. On the certificate it states:
"CKLC Sportsman of the Week, presented to Duncan Scott in recognition of your outstanding contribution to the world of sports in Kingston and Eastern Ontario." (As read)
3771 That was dated November 30, 1963 and it was signed by our local Kingstonian News/Sports Director, Bill Hamilton.
3772 That was 37 years ago -- 37 years ago.
3773 COMMISSIONER LANGFORD: But you were only three at the time.
3774 DR. SCOTT: That's right. Thank you very much.
3775 I wasn't born. It was a figment of my imagination.
3776 COMMISSIONER WILSON: I was only five.
3777 DR. SCOTT: And you were only five, yes, I know.
3778 We had a local radio station that was community-minded and I didn't have to listen to CBC on Thursday morning to find out what was going on in Kingston for my age group. It was a radio station that was so attuned to its listeners that it could make a mark upon a young equestrian's life, so much so that I still have these at home.
3779 I look to you, honoured Members of this Commission, to allow this group McColman Media, and its Directors Mr. Mark McKercher and Mr. Garry McColman, to have a local radio station so that again they may make an impact on others lives as it did mine.
3780 Thank you.
3781 THE CHAIRPERSON: Thank you, Dr. Scott.
3782 I'm an honest person and I will tell you in 1963 I was already married and fighting with my husband because he listened to and watched too much sports.
3783 COMMISSIONER WILSON: I really was five.
--- Laughter / Rires
3784 THE CHAIRPERSON: Thank you.
3785 DR. SCOTT: And it was 37 years ago.
3786 THE CHAIRPERSON: Thank you for your participation, Dr. Scott.
3787 Mr. Secretary.
3788 MR. CUSSONS: Thank you, Madam Chairperson.
3789 We will now hear the intervention by Dave Clarke.
3790 THE CHAIRPERSON: Welcome, Mr. Clarke.
INTERVENTION / INTERVENTION
3791 MR. CLARKE: Thank you, ladies and gentlemen.
3792 I know it has been a long day for you so I will try not to take too much of your time.
3793 I would like to preface my remarks by stating that while I am a Member of the Kingston City Council and a Member of the Board of Control here, I am not appearing in any official capacity on behalf of the city but rather as a private citizen and as a former broadcaster with over 20 years experience in the industry.
3794 THE CHAIRPERSON: I could tell by the voice. I always can tell.
3795 MR. CLARKE: As stated in the written submission I presented to the Commission, I would like to express support for the application by McColman Media and their Directors Mark McKercher and Garry McColman.
3796 I have reviewed the application for Easy 105.7. There are many components of this application which I find of great interest to both myself and the constituents I serve.
3797 As a Member of Kingston City Council I do recognize the need to reach my constituents. It is also important that our community has an opportunity to voice its concerns, to give its praises, to hear about projects proposed for our community and to suggest solutions to existing problems or current local dilemmas.
3798 For this reason I do lend my support to this application.
3799 The proposed radio station Easy 105.7 not only will provide our community with a blend of programming which is not already available in our community, as you have heard, but with a wide variety of foreground and community-oriented programming not present in many of the other applications.
3800 The McColman Media application includes a variety of public access, including an open-line radio show for our citizens to voice their concerns, their fears and even their ideas.
3801 As a former radio and television personality, as well as an open-line show host myself from time to time, I know the value that our community receives from this type of programming. As a politician I do recognize the importance of a two-way dialogue.
3802 Much has changed in the broadcast industry over the past 10 years and, unfortunately, not all of it for the best. Radio stations in particular, which used to be the focal point of our communities, have become much more impersonal. Many have lost contact with the communities which they serve, switching instead to satellite services as a cost-saving measure. We refer to them as being "on the bird".
3803 When accountants took over they began looking at the bottom line as opposed to the purpose. They lost touch with what radio really was. Radio is community. It can be interactive, it can be information, and it can be fun. That's why I got into the business, it was fun.
3804 I have watched firsthand as many stations that I worked for began turning to satellite services for their overnight programming as a way to save on personnel costs. Then the progression continued until the only live people in the building were the morning announcers.
3805 Outside of that four-hour period when a lone announcer fights to keep in touch and inform his community, outside of that period, there are no time checks, there is no temperature checks, there is not even a comment whether it is sunny, rainy, cloudy or there is snow on the ground, and you miss that when people are inside a building and turn on their radio to find out what is happening outside. Now they actually have to get up and walk outside the door.
3806 You know, even the news services are piped. We have broadcast news services serving our communities or they are simulcast as a cost-saving measure. I'm not saying it's bad. Many of them do a good job. But it's not local news. It's not local. It's not community.
3807 I used to be able to turn on the radio just about any time of day and turn the dial and know where I could find news. It was on the hour and over the noon hour. It was on the hour or on the quarter hour, depending on which station you were tuning in to. I knew I could get up-to-the-minute reports on the local happenings of the day, but today, with the exception of drive times, the only news I can find on the hour during the day is the CBC and, unfortunately, it may be good, but it's not local.
3808 Amongst the applications before you, the Easy 105.7 application shows the greatest attention to local news programming. Today too many radio stations are moving away from any form of locally generated programming. Many become jukebox or satellite stations which no longer lend themselves to the news, information and music required to serve the needs and interests of their communities and their citizens.
3809 Easy 105.7 will host a program on Sunday that will promote local events and fundraisers, highlight local authors, promote good health through interviews with local specialists and offer special interest groups an opportunity to be heard. I especially like the commitment to the return of the open-line show, which gives our citizens a voice.
3810 There will even be weekend jazz and big band programming which will include performances by our local musicians, and this type of support is what our community needs.
3811 We need a local station that will provide community access, give us the opportunity to show off our local talents and assist our local event planners, authors and leaders with a voice to talk about their projects and their special events.
3812 There are even plans for a live-to-air broadcast once a month. That is something we haven't seen in quite some time.
3813 This is all what community radio used to be and what it should be again.
3814 Now, I do know the people involved in this application and I know firsthand of their commitment to this community. There was a time when local radio stations and their personality were highly involved in our communities, not just as a way of raising ratings or boosting the sales of an advertiser, but really involved with the community.
3815 When the accountants, or bean counters, as I refer to them, took over the industry stations became more and more automated and things began to change. The bottom line became what was most important. Morale amongst employees sank. Spirit was lost.
3816 As currently is the case more often than not, radio station employees will only appear in public or participate in events if they are paid. Ladies and gentlemen, that is a sad state of affairs.
3817 What we need is a station with a greater pledge to community involvement and that is what I believe is part of the pledge by this application.
3818 As far as programming is concerned, it is obvious that this application is the only one of the three to offer a format not currently offered in the market.
3819 One application, as I understand it, seeks to not only mirror the programming of a border station with a current strong listenership in this community, it would also mirror the format of one of its own stations, "The River" out of Brockville which is marketed and actively beams into and is marketed and sold in this community. In fact, if you call two of the radio stations here, it is answered as "CKLC, FLY-FM" and "The River". So it will be going head-to-head or mirroring its own signal.
3820 Both of their applications target the younger audience which is already, I believe, overserved in this market. In fact, the Kingston area radio is predominately aimed at the 18 to 34 age demographic. What is not being served is the target audience of 40-plus, which is the intended demographic for this application.
3821 I believe the Kingston market does have room for another station, but only if it offers something that is not already being provided. Our more mature audiences need attention too, and I myself have reached that age.
3822 Regarding the economics of the market, I do not believe the economy can support another 18 to 34 age demographic station. I was a sales manager for three years for a radio station serving that demographic. I don't think there is a big enough piece of the pie. But there is for the 40-plus that is not currently being served.
3823 We don't need another jukebox or another automaton repeating the same format which is presently available in our market. What we need is real people who know this community, who live in our community, who are a part of our community and who will listen to that community, who will help to build our community spirit.
3824 We must return to the roots that made radio strong, to licence a radio station with a sense of community and provide for an interaction with that community. Easy 105.7's diverse format will be a great addition, in my mind, to the Kingston area.
3825 I thank you for the opportunity to support McColman Media and their directors and if you did have any questions I would be happy to answer them.
3826 Thank you.
3827 THE CHAIRPERSON: Thank you, Mr. Clarke for your participation.
3828 I only have one question: How does one get a voice like that?
3829 MR. CLARKE: Scotch and cigarettes.
--- Laughter / Rires
3830 THE CHAIRPERSON: I'm late in starting so I will have to have cigars.
3831 MR. CLARKE: There you go.
3832 THE CHAIRPERSON: Cigars and brandy.
3833 MR. CLARKE: Very fashionable.
3834 I have a copy of my comments I will leave with the Secretary, if that's all right.
3835 THE CHAIRPERSON: Thank you, Mr. Clarke.
3836 Mr. Secretary, please.
3837 MR. CUSSONS: Thank you, Madam Chairperson.
3838 THE CHAIRPERSON: You didn't leave your horse, did you?
3839 DR. SCOTT: No, I didn't leave my horse, but my papers. But of all the things that I have forgotten, I miss my mind the most.
3840 THE CHAIRPERSON: You're not a surgeon I hope.
--- Laughter / Rires
3841 MR. CUSSONS: I would now like to invite Georgette Fry to present her intervention, please.
3842 THE CHAIRPERSON: Good afternoon, Ms Fry.
INTERVENTION / INTERVENTION
3843 MS FRY: Good afternoon.
3844 Madam Chair, like everyone else I would like to thank the CRTC for this opportunity to come and speak before the Commission in support of the CHUM Group's application.
3845 I am a performer and songwriter and have been part of the Kingston community for 25 years now. I began my career in music here 24 years ago and it is a career that has been flourishing since the release of my debut CD in 1994.
3846 Whether we are aware of it or not, a lot of radio listening goes on between the hours of 8:00 a.m. and 6:00 p.m. A lot of that time we may not be consciously listening as we stand in line at the bank or sit in the waiting room at the dentist's office, but the music is on and in most cases the radio dial will be tuned to the local adult contemporary station.
3847 You would have to be in my shoes to know what a thrill it is to be in a public place and hear your song sandwiched between a couple of other more famous mainstream tunes, or to have people stop you on the street and tell you that they hear your song on the radio all the time, or have a clerk in a store tell you that when your song was on the radio the other day the woman at the cash promptly identified herself as your mother.
--- Laughter / Rires
3848 MS FRY: It is quite often the case that pop radio stations relegate their local artists to a segment of airtime outside of prime time. For whatever reasons this is done, it has the effect of ghettoizing local talent.
3849 This is not the case with our local station FLY-FM, who gave one of my songs regular daily rotation for more than three years and, as I understand it, there is a local band right now that is currently having three of the songs on their new CD in regular rotation.
3850 This kind of exposure helps artists like myself to step out of the club circuit and onto the concert stages, and you can't fill a theatre or an auditorium without it.
3851 This is when you become aware of the effect that airplay on mainstream radio has on your career. When you start to play that song that has been on the radio and the audience breaks into applause, you know that a significant number of those people are there because of that one song.
3852 These are the people who might not like going out to the clubs, but they will buy tickets to see me perform with my band at the Grand Theatre or with the Kingston Symphony at Fort Henry because they heard about the concert on the radio as they drove to or from work or as they waited in line somewhere.
3853 FLY-FM has made me a household name in this listening area. Adult contemporary radio brings people out to hear me and it sends them to the store to buy my CDs. For myself and other local artists it is a lifeline.
3854 Thank you.
3855 THE CHAIRPERSON: Thank you, Ms Fry, for your participation. We are delighted to see you.
3856 MS FRY: Thank you.
3857 THE CHAIRPERSON: Mr. Secretary, please.
3858 MR. CUSSONS: Thank you, Madam Chairperson.
3859 We will now hear from the Kingston Symphony Association, Mr. Coles.
3860 THE CHAIRPERSON: Welcome, Mr. Coles.
INTERVENTION / INTERVENTION
3861 MR. COLES: Thank you.
3862 Thank you very much, Madam Chair and the Members of the CRTC.
3863 Actually, you said Kingston Symphony Association. I am here wearing two hats. I am presently President of the Kingston Symphony Association, but I am also privileged presently to be President of the Kingston Regional Arts Council. So I am speaking in favour of CHUM's application to you wearing both of those hats.
3864 I am wearing both of those hats in terms of our appreciation of what the CHUM Group and the former proprietors of their stations have done for us in Kingston in terms of community service to the arts. That has been, for us, a considerable kind of contribution.
3865 It has been a contribution that is twofold in these respects: It has been a contribution in on-air time, telling the community about what we do in the arts here, what we do in the Regional Arts Council in terms of our support and advocacy of community arts.
3866 Specifically in terms of the Kingston Symphony in terms of the concerns and events that we present. That a very significant contribution on-air.
3867 But we are also very grateful to the CHUM Group for what they have done off-air for us in terms of contributing staff to events, whether that is an MC, as we have had at Fort Henry concerts.
3868 I honestly can't remember if it was a FLY-FM person, Doug Thorne who MC'd the concert that we did with Georgette Fry at the Fort --
3869 Was that Doug, Georgette? Is she gone?
3870 -- or not, but I know he has done that on a couple of occasions for us, a contribution of the CHUM Group.
3871 We are talking about our Beethoven run that the symphony does at Confederation Park along the street from here where we have had participation by CHUM people, whether we are talking about our "Music in Your Eyes" partnership with the Edward Day Gallery when it was still here on Ontario Street and a significant contribution by Jackie St. Pierre, among other people in the CHUM Group.
3872 Or, on the Regional Arts Council side, whether we are talking about out "Annual Affair With The Arts" or the beginnings of "First Night Celebrations".
3873 We are now going into our fourth year of "First Night Celebrations" in Kingston. Our first celebration was three years ago with the birth of the new City of Kingston, and the on-air and off-air co-operation that we got with CHUM Group was significant and most helpful to us in being able to do this.
3874 So I'm just happy to be able to say that in my experience and in terms of the groups that I work with, CHUM has never said no to community service and we are very grateful for this. This has meant a good deal not only to the Kingston arts community but also to the Kingston community as a whole economically, artistically and developmentally.
3875 Thank you.
3876 THE CHAIRPERSON: Thank you very much, Mr. Coles, for your participation. We are pleased that you made the effort to come and speak to us.
3877 MR. COLES: Thank you.
3878 THE CHAIRPERSON: Mr. Secretary, please.
3879 MR. CUSSONS: Thank you, Madam Chairperson.
3880 We will now hear from Hospice Kingston, Ms Jane Fitzgerald.
3881 COMMISSIONER LANGFORD: You can choose anyone you want. It's sort of an innocent red light district, you just choose any one you want.
--- Laughter / Rires
3882 THE CHAIRPERSON: Good afternoon, Ms Fitzgerald.
INTERVENTION / INTERVENTION
3883 MS FITZGERALD: Good afternoon.
3884 I have to say that unfortunately I don't have the voice, it seems, that my predecessors at this table have, but I will do my best.
3885 The only thing I would like to tell you about myself is that, unlike those individuals, I am not an old stone of Kingston, in fact I practically qualify -- barely qualify as a pebble here at this point.
3886 I have only been in the Kingston area for five years, but I think in that I do bring you a certain perspective. Certainly in the role that I have had as the Executive Director of Hospice Kingston, it very quickly introduced me to many facets of Kingston life here, including the media, and so I am here to support the application for the CHUM Group Radio.
3887 If you will allow me for a moment just to speak about what our organization does, because I think that it is very important for you to recognize the significance of the kind of organizations that are out there that are being supported by this group.
3888 Ours is an organization that began about 15 years ago. We are one of the first hospice organizations in the province. What we do is we provide compassionate and active care and support, through volunteers and nurses, to individuals who are living in the community who have been diagnosed with a life-threatening illness and through to bereavement if necessary. The units of support are the individual and the families.
3889 You should know that the work that we do is not just "good work", it is valuable and it is very significant to communities across this province. In fact, 10 years ago there were eight hospices, now there are 92 hospices across this province. So it indicates the kind of support and importance of this kind of service.
3890 Polls show that 85 per cent of Canadians today would like to spend their last days in the comfort of their own surroundings. And to let you know that in the last three years our organization in this community has experienced a 100 per cent increase in service delivery demands. If we were a business we would be singing, but where we have to get out there and generate our own revenues in order to provide these services, well, that is an ambitious challenge.
3891 We view people as a whole person, not just as a person with a physical illness. We look at a person who has emotions and spirituality and physical illness and psychological people as well.
3892 We value patient choices in the care that we provide. Since illness can be so invasive, the ability to make peace with dying and to make peace with living is the direct result of hospice and palliative care. We try to do more than just make a patient comfortable. We involve the patient, the family and other caregivers in the process that controls pain and treat symptoms, and the process that preserves normalcy and promotes laughter and enhances, enshrines and eternalizes love.
3893 It is a true value of hospice work. It is not work that everyone can do. It is valuable and in that value we need knowledgeable, very skilled and very compassionate people to get out and do that work in order for them to help us that are not experienced in this area to manage through this difficult time and to enrich the experience that individuals and family members and caregivers have.
3894 Back to the reality of the world. We know right now that cancer rates are increasing, unfortunately. We know that in hospital care that people are coming home to be looked after with much more complex medical challenging situations, and we know that we are an aging population.
3895 The bigger reality for us as an organization is that in order to meet our growing demand our organization right now must raise a half million a year just to make our ends meet. That is an ambitious challenge in a small community with many worthy and important causes and organizations.
3896 I have to tell you that I am absolutely amazed at the level of fundraising and community activity that goes on in this community. I would say that from now until about the end of October, even later perhaps, that practically every weekend you would find some sort of community event or fundraising activity going on -- at least one.
3897 I would also tell you to be assured that CFLY and CKLC would be names that would appear as sponsors and supporters of those events.
3898 Fundraising is important for two purposes, for both raising awareness as well as for generating revenues. When I consider the types of support that we have received from these radio stations, they not only assist us by promoting on-air our events, but they also help us in planning, in developing these events, and they are also there on-site. They are active participants and sometimes as rather friendly competitive teams. As someone mentioned earlier, they do bring a lot of fun to these events and are always a crowd pleaser.
3899 They are involved in the community of this life and I have truly marvelled at the degree of professionalism and enthusiasm that the staff of these groups bring to this community.
3900 Of course, when I talk about these events that occur weekend after weekend, the operative term there is "weekend". These events never occur, it seems, on Monday to Friday 9:00 to 5:00. So these are days when the rest of the world perhaps is seeking some R&R.
3901 I have had the pleasure of meeting many of the staff and their families. These are family events that we are talking about. I include my own young children in these events and I end up meeting many of the families of the staff of these radio stations who are supporting these events.
3902 CKLC and CFLY have contributed in a major way to the success of these events which have raised many, many thousands of dollars for us as an organization, and there is not a doubt in my mind that the events would not be as successful if we did not have the kind of level of support that they have provided for us.
3903 Aside from that, these events also serve to promote this community -- which I think happens to be one the best kept secrets in eastern Ontario. In fact, I travelled many years from Ottawa to Toronto and back and never knew what Kingston was or what it looked like. When I ventured here I certainly got a flavour and appreciated it and decided that I was going to find a way to come here and live. It's a terrific lifestyle, if anyone is interested.
3904 Public awareness has also been a long-standing goal of an organization like ours and, again, for many other community agencies who need that in order to not only make people aware of the services that are available to them, but also for those out there who are willing to support and contribute financially or other types of resources.
3905 We have received probably upwards of about $10,000 a year in in-kind support from CKLC and CFLY. We could never have afforded to put that in our budget as communications budgeting.
3906 I feel very strongly that these organizations have allowed us to get our message out and have also promoted Kingston and the life that it can provide to people here. It has brought many tourists to these events and it has enhanced the life that our community individuals have been able to enjoy.
3907 I feel that we are very fortunate to have this media group, CHUM Group Radio, involved with our organizations and with our city.
3908 And I would like to extend an invitation to any of you to join us on September 30th at Chilifest or on September 9th at the Dragonboat Festival to enjoy a part of Kingston's life. We know that these will be both supported by CHUM Group Radio.
3909 Thank you for your time today.
3910 THE CHAIRPERSON: Thank you, Ms Fitzgerald, for your participation.
3911 So some scotch and --
3912 COMMISSIONER WILSON: Scotch and cigarettes.
3913 THE CHAIRPERSON: -- and a few cigarettes before your next participation.
3914 MR. CUSSONS: Thank you, Madam Chairperson.
3915 We will now hear an intervention by John R. Armitage or Armitage Consulting.
3916 THE CHAIRPERSON: Welcome, Mr. Armitage.
INTERVENTION / INTERVENTION
3917 MR. ARMITAGE: Thank you, Madam Chair.
3918 I am here to support the application by the CHUM Group, but in no way should my comments be interpreted to diminish the applications by Mr. McColman or Mr. Wright, who are very fine individuals and fine citizens.
3919 I would like to talk to you about three things: About the economy of Kingston over the last five years; the attempt of citizens in this community to deal with the transition of the economy; and then the supportive role that the CHUM Group has played.
3920 In 1995 I had the pleasure of serving as the President of the Chamber of Commerce in Kingston, and in that year we became aware the CFB Kingston was the next base on the list of closures. We formed a citizens task force involving citizens from all walks of life, including organized labour, and were successful in convincing the federal government in early 1996 that it would cost more money to close Base Kingston and move the troops than it would to keep it open.
3921 As we were wrapping up that process, we became aware that public sector downsizing was going to severely impact Kingston in the last half of the '90s. A study which we carried out, and which has since proved correct, showed that in the period of '95 to the end of '99 Kingston would lose between 4,000 and 6,000 public service positions. That is out of a total workforce of some 40,000 people.
3922 The issue then was: How does one deal with the transition in an economy that is predominantly a public sector economy?
3923 The CFB Task Force evolved into an organization known as the Kingston Area Economic Renewal Project -- "Advantage Kingston" for short.
3924 This volunteer group of citizens dealt with the issue of: How do we deal with an economy that is flat, if not recessionary?
3925 In fact, through the period of '96 to '99 we lost about 1,000 jobs per year in the public sector, whereas the economy, by sheer momentum, creates about 700 jobs per year in Kingston. So we are coming off a flat period in Kingston.
3926 We employed the firm of Coopers & Lybrand in 1998 to look at four specific sectors to see if Kingston could develop a knowledge-based economy around telecommunications, health sciences, advanced materials and the environment.
3927 Coopers & Lybrand rated Kingston on its potential to develop clusters in these four areas on eight different scales, and we ranked poorly on two of the critical scales, one being access to venture capital, but the second one being, on a scale of 0 to 10, about a 1 in the community's awareness of the potential of knowledge-based industries to grow our economy.
3928 In 1997 Tony Orr, who has been the News Director of the CHUM Group for the last 23 years, became the volunteer Co-Chair of Advantage Kingston, an unpaid position. Tony has worked tirelessly in the last three years to help this community deal with its economic challenges. He has been recognized by a nomination as "Citizen of the Year". He has been a founder of the Software Factory, a new knowledge-based industry in Kingston.
3929 And, as a matter of fact, during the ice storm Tony was the lifeline for residents in this community. For a period of two days CKLC was the only station on the air and Tony has received many accolades for putting his family in a hotel and living in the radio station for the duration of the ice storm.
3930 The station came forward with an offer of airtime on its ad bank to help us deal with this public perception -- or lack of perception of the potential of a knowledge-based economy. In 1997, 1998 and 1999 the ad bank was used frequently by our group, Advantage Kingston, to help educate the citizens of Kingston of the potential of a knowledge-based economy.
3931 In actual fact, in 1999, 180 30-second commercials in all time slots were donated, with the airtime and production, having an imputed value of $16,562 as a donation to the community.
3932 The CHUM Group has been a critical component in raising the public awareness of the potential of knowledge-based enterprise. The next decade in Kingston I believe is going to be a very fruitful one and it is the people like Tony Orr and businesses like the CHUM Group that have made that a much easier transition for this community.
3933 Thank you.
3934 THE CHAIRPERSON: Thank you, Mr. Armitage, for your presentation. We appreciate your coming to participate.
3935 Mr. Secretary, please.
3936 MR. CUSSONS: Thank you, Madam Chairperson.
3937 Our next intervenor is Walter F. High.
INTERVENTION / INTERVENTION
3938 MR. HIGH: Hello and thank you for the invitation.
3939 I lie about my age so I can't tell you what format I listen to. I guess all of them.
3940 May 1st last year I lost a good friend through anaphylaxis shock. He died allergic to peanuts. In our sorrow, his family and a lot of other people, and many people in this room, wanted to do something for him and we didn't know quite what we could do for him. So we decided that we would start a musical lending library. That started because he was a musician. He had so many friends in this town that wanted to do something for him.
3941 Michelle Miatello and the CHUM Group came on board and it was like a little angel on our shoulder. You know, in all the adversity they helped us as much as they could. They gave us an incredible amount of spots on the radio.
3942 And if that wasn't enough, the City went on strike and so the Chithalen family, along with myself and some other people, were right out there pounding pegs in order to get the fence up and they were right there saying "What can we do? How can we help? We can let them know that the show is still going on." They were right on top of it, like all the time.
3943 It was just like in view of all the other things that we had to put together, you know, they did more than their part. I couldn't begin to thank them enough.
3944 We have raised $18,000 so far. And this is like a new organization, it's the Joe Chithalen Memorial Fund, and we have gotten guitars as far away as Los Angeles. Geoff Skunk Baxter sent up a guitar to lend to children here.
3945 I think probably -- and they offered to do this again this year coming up. That would be enough that we could start the library and bursaries for kids, you know, so that they can actually, you know, the people that can't afford it can go and learn the ins and outs of the trade.
3946 There isn't a lot of places for kids to go and learn about the songs that are put on the radio these days, and that's what we want to do. We want to give them that opportunity because, you know, it is one thing to learn the marching band sound in school and traditional stuff but, you know, that isn't what is going to make the money eventually. What is going to make the money is what is being heard on the radio and what they get paid for and how it gets sold.
3947 We are starting from the ground up and these people have been on board right from the ground up with us.
3948 The one thing I say about a group, like the CHUM Group, is -- they are in Montreal, they are in Toronto, they can bring things into our community. They can bring people into our community as part of this -- it's kind of like the extension, the Canada Space Arm, you know, it's like we are happy to have just that arm out there, you know. It's like "That's our arm."
3949 I'm hoping that they will be able to bring people into our community in terms of, you know, if there is a concert, if there is something that is going on.
3950 And most everybody was local that played, except for some people from Prairie Oyster and some people that had played in this town for a long time.
3951 I was pretty overwhelmed by it all. It was a good turnout. In view of the strike and everything else, we still raised a lot of money and I couldn't begin to thank these people enough.
3952 That's about everything I have to say. So if you have any questions, by all means I would be perfectly willing to answer them.
3953 THE CHAIRPERSON: Thank you, Mr. High, for your participation. Your support is clear and we thank you for coming.
3954 MR. HIGH: Thank you.
3955 THE CHAIRPERSON: Mr. Secretary, please.
3956 MR. CUSSONS: Thank you, Madam Chairperson.
3957 I believe we have one more supporting intervenor to call forward and that is P. David Carr-Harris.
3958 THE CHAIRPERSON: Welcome, Mr. Carr-Harris.
INTERVENTION / INTERVENTION
3959 MR. CARR-HARRIS: Thank you.
3960 Madam Chair, Members of the Panel, thank you for the opportunity to speak to you today in support of Mr. Wright's application.
3961 With your permission I would like to read the letter that I wrote. I don't pretend to know a lot about the industry, I am speaking to you from the perspective of a listener and a long-time one. I was born and raised in this city. My professional career is in Toronto with Coca-Cola, and for the last eight years I have been an instructor or teacher at a local community college.
3962 So with your permission:
"I have familiarized myself with the above noted application and I wish to support the proposal put forward by the applicants.
I believe that Kingston will benefit from the addition of a locally oriented station with a distinct music mix not broadcast elsewhere in the market. The Rock format proposed has been thoroughly researched and will serve the local target demographic well. Currently, there are no local rock stations. The U.S.A. radio station known as `The Border' (102.7 FM & 106.7 FM) and the Brockville radio station known as `The River' (103.7 FM) have a Classic Rock and TOP 40 format respectively. Both stations are responsible for taking significant amounts of advertising revenue out of the Kingston market. If this application is successful Rock 105.7 will offer an alternative advertising vehicle within The Greater Kingston Area. The advertising revenue drain previously experienced would be greatly reduced resulting in an increase locally, which would be better spent advertising local events, goods and services.
John and Kim Wright have been successful entrepreneurs in the Kingston area for over 25 years. They have won awards for their business acumen individually and as business partners. John has in excess of 30 years of radio experience, most of which is in the Kingston market. Kim also comes from a background in radio and was owner/publisher of a number of Kingston publications for 15 years. As business partners they own one of Kingston's largest tourism attractions as operators of Kingston Thousand Island Cruises.
John and Kim historically and currently are very active in the Kingston community. They have been recognized and honored as tireless volunteers and generous benefactors. With their extensive respective backgrounds in radio and their demonstrated enthusiastic community involvement, I can't think of any two people more qualified to own and operate a local radio station."
3963 Thank you for the opportunity to speak to this application.
3964 If you have any questions I would be happy to answer them.
3965 THE CHAIRPERSON: Thank you very much, Mr. Carr-Harris, for your presentation.
3966 COMMISSIONER LANGFORD: I have to put on the record a pre-bias here. Mr. Carr-Harris and I used to go bass fishing together in Buck Lake and I have to say that I have heard him tell a few fishing stories before, but I think everything we have heard here today sounds to be not in that category.
3967 It's nice to see you again, David.
3968 THE CHAIRPERSON: As long as you didn't bring Mr. Wright along.
3969 MR. CARR-HARRIS: Pardon me?
3970 THE CHAIRPERSON: I said as long as you didn't bring Mr. Wright along.
3971 MR. CARR-HARRIS: No.
3972 By the way, the adage is "bad scotch and too many cigarettes".
--- Laughter / Rires
3973 COMMISSIONER LANGFORD: He was always impressed by people with boats.
--- Laughter / Rires
3974 THE CHAIRPERSON: I believe this completes Phase III of the hearing, Mr. Secretary?
3975 MR. CUSSONS: Yes, it does, Madam Chairperson.
3976 THE CHAIRPERSON: Having heard nothing or anything to the contrary, I assume that we will receive the reply of the applicants by May 18th, including the reply, if so desired, on the material that has been deposited today.
3977 So the hearing is adjourned to the extent that the reply is still outstanding, but the oral part of it is over.
3978 I wish to thank all the participants, both applicants and intervenors, for their co-operation and participation.
3979 I also thank my colleagues, of course, and our staff for their support, and our thanks to the court reporter and to the technical staff as well.
3980 Mr. Waters looks agitated. Do you have a problem?
3981 MR. WATERS: I thought we were speaking, but that's fine. If we are not, that's fine.
3982 COMMISSIONER WILSON: Written reply.
3983 THE CHAIRPERSON: The written reply will be in lieu of oral reply, which will allow intervenors to also reply to the material which you filed, if they so wish.
3984 If you have a problem with that, you let us know.
3985 MR. WATERS: No problem whatsoever.
3986 THE CHAIRPERSON: Eight pages by May 18th. It will give you a longer period to reply.
3987 MR. WRIGHT: I'm sorry, Madam Chair, I misunderstood. I thought it was both.
3988 THE CHAIRPERSON: No, it was in lieu of reply, but if you want to speak to us you're welcome.
--- Laughter / Rires
3989 MR. WRIGHT: It was my understanding --
3990 THE CHAIRPERSON: Would you come to the microphone, please.
3991 MR. WRIGHT: I was just saying it was my understanding that if we felt we could get it finished before the room had to be occupied that we would try to complete it tonight, but perhaps I didn't express that properly.
3992 THE CHAIRPERSON: No, I believe that, unless you have a very serious problem, the same treatment for everyone would be wiser.
3993 MR. WRIGHT: I see. Okay.
3994 THE CHAIRPERSON: Therefore you will have an opportunity, as well as parties will have an opportunity, to deal with the CHUM documents, if they so wish.
3995 MR. WRIGHT: Okay. So they submitted these additional documents. I haven't seen those documents yet.
3996 THE CHAIRPERSON: They are available from the Secretary. That's what was in the box.
3997 MR. WRIGHT: I see.
3998 THE CHAIRPERSON: This way you will have an opportunity to look at it as well and file a reply in writing in lieu of orally. It should not prejudice anyone.
3999 MR. WRIGHT: Right. No, that's fine.
--- Pause / Pause
4000 THE CHAIRPERSON: So we thank you very much.
4001 This completes the oral part of the hearing and anyone interested should find a reply on the public record or from the three applicants, if they prefer. I'm sure that can arranged as well.
4002 Thank you again.
--- Whereupon the hearing concluded at 1643 /
L'audience se termine à 1643