ARCHIVED - Transcript - Winnipeg, Manitoba - 2002-02-04
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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Multiple broadcasting applications & BROADCASTING applications further to Public Notice 2001-79 "Call for applications for a broadcasting licence TO CARRY ON A RADIO PROGRAMMING UNDERTAKING TO SERVE WINNIPEG, MANITOBA".
MULTIPLES DEMANDES EN RADIODIFFUSION ET DEMANDES EN radiodiffusion suite à l'avis public CRTC 2001-79 "APPEL DE DEMANDES DE LICENCE DE RADIODIFFUSION VISANT L'EXPLOITATION D'UNE ENTREPRISE DE PROGRAMMATION DE RADIO POUR DESSERVIR WINNIPEG (MANITOBA)".
HELD AT: TENUE À:
Winnipeg Convention Centre Winnipeg Convention Centre
PanAm Room Salle PanAm
375 York Avenue 375, avenue York
Winnipeg, Manitoba Winnipeg (Manitoba)
4 February, 2002 le 4 février 2002
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
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Multiple broadcasting applications & BROADCASTING applications further to Public Notice 2001-79 "Call for applications for a broadcasting licence TO CARRY ON A RADIO PROGRAMMING UNDERTAKING TO SERVE WINNIPEG, MANITOBA".
MULTIPLES DEMANDES EN RADIODIFFUSION ET DEMANDES EN radiodiffusion suite à l'avis public CRTC 2001-79 "APPEL DE DEMANDES DE LICENCE DE RADIODIFFUSION VISANT L'EXPLOITATION D'UNE ENTREPRISE DE PROGRAMMATION DE RADIO POUR DESSERVIR WINNIPEG (MANITOBA)".
BEFORE / DEVANT:
Barbara Cram Regional Commissioner for Manitoba and Saskatchewan /
Conseillère régionale pour le Manitoba et le Saskatchewan
Ronald Williams Commissioner / Conseiller
Andrew Cardozo Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Joe Aguiar Hearing Manager / Gérant de
Gary Krushen Secretary / secrétaire
Peter McCallum Legal Counsel /
HELD AT: TENUE À:
Winnipeg Convention Centre Winnipeg Convention Centre
PanAm Room Salle PanAm
375 York Avenue 375, avenue York
Winnipeg, Manitoba Winnipeg (Manitoba)
4 February, 2002 le 4 février 2002
TABLE OF CONTENTS / TABLE DES MATIÈRES
APPLICATION BY / APPLICATION PAR
by Rogers Broadcasting Limited 35
par Rogers Broadcasting Limited
by Corus Radio Company / par Corus Radio Company 291
Winnipeg, Manitoba /
--- Upon commencing on Monday, February 4, 2002 at 0900 / L'audience débute le lundi 4 février 2002 à 0900
1 THE CHAIRPERSON: Good morning, ladies and gentlemen. Welcome to this hearing, during which we will review applications for new FM radio services and for a religious television service to serve the Winnipeg area.
2 My name is Barbara Cram. I am the Regional Commissioner for Manitoba and Saskatchewan. It is a pleasure to be here today. The Commission does not often have the pleasure of coming to Winnipeg to hold a hearing. However, you must know that our CRTC representatives working in our Winnipeg office make every effort to be available to you and to respond to your concerns. I know this because, as the Regional Commissioner, I work, not only at Regina, but also at the Winnipeg office as well.
3 With me on this panel are my colleagues and fellow commissioners: Ronald Williams, Regional Commissioner for Alberta and the Northwest Territories; and Commissioner Andrew Cardozo.
4 The CRTC team assisting us during this hearing consists of Joe Aguiar, Hearing Manager; Steve Parker; Suzanne Saso; Diane Maisonneuve; Judy Henry, who is in the examination room; Peter McCallum; Legal Counsel; and Gary Krushen, Director of the Winnipeg Regional Office and Hearing Secretary. If you have any questions about the hearing, please feel free to refer them to Mr. Krushen.
5 In order to evaluate the FM applications received, the Commission will examine a number of different factors such as the contribution the proposed service will make in achieving the objectives established in the Broadcasting Act, the competitive state of the market, the quality of the applications received and their implications with respect to the diversity of editorial voices and the possible impact of a new entrant or entrants into the market.
6 The Commission will also look at the proposed services' expected audience, an analysis of the markets involved, the potential advertising revenues, the evidence regarding the availability of financial resources and the means by which the applicant will promote the development of Canadian talent.
7 On July 11, 2001, the Commission issued a call for applications for a broadcasting service to carry on a radio programming undertaking to serve Winnipeg. In response to this call, the Commission received seven applications. This hearing will examine these seven proposals.
8 First, we will hear three competing applications for the use of the 99.1 MHz frequency.
9 Rogers Broadcasting proposes to convert its station CKY from the AM band to the FM band and to offer a Classic Hits service.
10 The second application we will hear is from Corus Radio. The station's musical format will be Oldies-Soft Adult Contemporary.
11 The third application was submitted by Global Communications. Global is not a stranger to Winnipeg or to the Canadian Broadcasting scene; however, this represents the company's first radio application in Canada. Global would offer a specialized Smooth Jazz service.
12 Next, we will hear representations and presentations from four applicants who wish to obtain FM radio licences for various frequencies.
13 We will start with N.I.B. 95.5 Cable FM. N.I.B. proposes to operate a radio station offering a Pop, Rock, Dance, Jazz and Blues music service. In a subsequent Notice of Public Hearing and at the applicant's request, the frequency has been changed from 106.3 to 107.9 MHz.
14 We will then hear from CKVN Radiolink System, who has applied for an FM radio licence on the 100.7 frequency. CKVN would offer a specialized Easy Listening music format radio station. For your information, the Commission has accepted additional letters of support for CKVN Radiolink to be added to their application.
15 Next, HIS Broadcasting will present its application to operate a specialized Christian music service on the 107.1 frequency.
16 Finally, we will hear the representations from Red River College Radio, who wish to obtain a licence for an instructional campus FM radio station. At the applicant's request, the frequency requested has been changed from 90.5 to 92.9 MHz, and the Public Notice has been amended accordingly.
17 This hearing will conclude with a presentation by Trinity Television. Trinity has applied for a licence for a new religious over-the-air television station in the Winnipeg market. Since mid-September of last year, the applicant has been operating a similar station in the Fraser Valley.
18 Trinity is well known in the field of religious programming. The proposed station would offer mainly Christian programming with 18 hours per week devoted to programs designed to achieve a balance in the expression of differing points of view in religion. Canadian programming would total at least 80 hours per week.
19 This hearing should last four days, beginning at 8:30 a.m. as of tomorrow and ending between 5:00 and 6:00 each day. Generally speaking, we will sit each morning until approximately 12:30 and recommence at approximately 2:00 p.m. and we will take one mid-morning and one mid-afternoon break. I will advise you of any changes in the schedule.
20 Generally, we expect to hear all of the radio applications on Monday and Tuesday. This is called Phase I. Then the parties will intervene against each other. Phase III is when the public provide their representations about the applications and this will take place on Wednesday morning. Then there will be the final arguments of the applicants. On Wednesday afternoon and Thursday we will hear Trinity's application, public interventions on this application and the final argument of Trinity.
21 When you are in the hearing room, we ask that you turn off your cellular phones and pagers because they may distract the participants and Commission members. We are counting on your cooperation in this matter for the length of the hearing.
22 Before we begin, I will ask the Hearing Secretary, Mr Krushen to explain the procedures we will be following. Mr. Krushen?
23 THE SECRETARY: Thank you Madam Chair. The radio applications being considered at this hearing will be heard in four phases.
24 Phase I is a presentation by the applicant to the Commission. Twenty minutes maximum is allowed for this presentation. Questions from the Commission will follow each applicant's presentation.
25 In Phase II, the applicants reappear in the same order as they presented their application to intervene against competing applicants. Ten minutes maximum is allocated for each intervention. Questions from the Commission may follow each intervention.
26 In Phase III, other appearing interveners make their presentations to the Commission. Ten minutes maximum is allowed for each of these presentations. Again, there may be questions from the Commission.
27 Phase IV provides an opportunity for each applicant to make comments or rebut the interventions that have been filed with respect to their application. Applicants appear in reverse order to which they did in Phase I. Again, ten minutes maximum are allowed and questions from the panel may follow.
28 Finally, the application by Trinity Television will be heard in three phases, with the second phase I've just described for competitive applications being eliminated.
29 For your general information, files associated with items at this hearing are available for viewing in the Assiniboine room, which is across the hall and to the right of the exit from this room.
30 Judy Henry from the CRTC's Winnipeg office will be staffing that room and she will be pleased to assist you, but please be aware that while an application is being heard the public files associated with it will be in this room and not available for viewing.
31 If you wish to have messages taken, we would be happy to post them outside the public examination room. The phone number of our public exam room is 984-0247. That number is also in the agenda.
32 There is a verbatim transcript of this hearing being taken by a court reporter who is located at the table just to my left. If you have any questions about how to obtain all or parts of this transcript, please approach the court reporter during the break for information.
33 When you are ready to present to the Commission, be sure to hit the button so that the light comes on on your microphone.
34 Now, with your leave Madam Chair, I will call the first applicant. First application is by Rogers Broadcasting Limited for a broadcasting licence to carry on English language FM radio programming undertaking at Winnipeg on the frequency 99.1 MHz with an effective radiated power of 100,000 watts. Please proceed when you are ready.
35 MR. MILES: Good morning, Madam Chair. Red light. Good morning, Madam Chair, members of the Commission. My pleasure to be here. I'm Gary Miles, Executive Vice-President, Radio Operations, Rogers Broadcasting. With me today, to my left, Sandra Stasiuk, Vice-President, Finance; and Sandy Sanderson, Executive Vice-President, National Programming Director. To my right, Ron Kizney, Vice-President and General Manager, CKY and CITI-FM; Steve Edwards, Vice-President, Corporate Engineering and Technology. At the next table, starting from my left, Ford Gardner, Program Director, CKY/CITI-FM; Rael Merson, President, Rogers Broadcasting; Alain Strati, Director, Regulatory Affairs; and George Buzunis, Chief Engineer, CKY/CITI-FM.
36 We are pleased to present our application to convert CKY from an AM radio station on AM frequency 580 KHz to an FM radio station, with a Rock format on FM frequency 99.1 MHz.
37 As the Commission knows, this is not an application for a new radio service. It is a conversion application. We believe that our application is consistent with the Commission's established policy on AM to FM conversions and would result in the best and most effective use of FM frequency 99.1 in this market.
38 FM frequency 99.1 will place the heritage radio service of CKY on an equal, competitive footing with other music formatted radio stations in Winnipeg. Local listeners will benefit from an increased choice and diversity of high-quality FM radio services. With the coverage offered by this frequency, CKY will continue to be available throughout Winnipeg and the surrounding area.
39 Since we are proposing to convert an existing AM radio station to an FM radio station, the approval of our application will have no material economic impact on other local radio stations. Our research shows there are a number of other FM channels available for use in Winnipeg. As such, the approval of our application would not prevent the Commission from licensing additional FM services in this market.
40 CKY is a heritage radio programming service that first went to air in 1923. Since then, CKY has played a leading role in the development of private radio in Winnipeg, offering local listeners high-quality surveillance and music programming. CKY's heritage and tradition has always been steeped in Rock Music. CKY has been recognized as a Top 40 rock and roll giant in the Canadian broadcasting system.
41 In the 1960s and '70s, CKY was on the forefront of the development of Canadian rock music in Western Canada. CKY helped to launch the Guess Who, Winnipeg's best known contribution to the rock scene. In fact, the Guess Who's first hit, "Shaking all Over," was recorded in the CKY production studio and first played on CKY radio.
42 Today, CKY continues to draw on its long established relationships with Western Canada rock musicians. Winnipeg's own Burton Cummings and Randy Bachman are not only fans of the station, but are often surprise guests.
43 The station has offered many programs that feature well known local artists, such as "KY 58 Clubhouse," hosted by the late Gary MacLean of MacLean and MacLean.
44 In 2000, CKY launched the Guess Who World Tour by kicking off the first show at a local club, offering Winnipeggers the opportunity to see the band for free. Last year the station hosted an event that raised $100,000 to support a trust fund for Gary MacLean's family after he was diagnosed with inoperable throat cancer.
45 Notwithstanding CKY's long history and deep connection with the local community, it faces significant challenges as an AM music station.
46 Winnipeg is like many other radio markets in Canada; music listeners now expect the higher technical quality of an FM signal. In addition, many listeners are simply not in the habit of tuning to the AM band for music.
47 CKY had pre-tax losses of almost $370,000 over the period 1995 to 2000. We project that, as an AM music station, CKY will continue to lose money on a cumulative basis over the next seven years. The financial challenges facing CKY will become even more severe if the Commission chooses to license additional FM radio services as part of this proceeding or some future proceeding.
48 Non-music formats are still viable on the AM band. But the key competitive non-music niches in the AM markets in Winnipeg are very ably occupied at the present time. The news/talk format offered by CJOB is the overall market leader and has been a great radio station. It commands an 18.5 share of the 12-plus listening. On its own, CJOB now accounts for 74 percent of all AM listening in Winnipeg. The other AM station in the market, CFST, recently replaced its music format with an all-sports format.
49 Ron Kizney.
50 MR. KIZNEY: This application is designed to respond to market trends in a way that will best serve local listeners and contribute to the achievement of the objectives of the Commission's commercial radio policy.
51 The conversion of CKY to an FM radio station with a Rock format will directly benefit local listeners. CKY-FM will add to the choice and diversity of Rock formats for all listeners on the FM band. Listeners will also benefit from the enhanced audio quality of an FM signal.
52 Conversion will allow us to address the financial challenges facing CKY. If this application is approved, we project that CKY will be able to attract the audiences and revenues necessary to support the continued provision of a high quality, music-formatted, local radio service.
53 In addition, the conversion of CKY to an FM station will allow us to increase our direct financial commitment to Canadian talent development.
54 As part of the CAB's initiative, the Canadian Talent Development Plan, CKY has already designated all of its $8,000 per year commitment to go directly to FACTOR. If this application is approved, CKY will increase its annual contribution to FACTOR by 50 percent. This represents a significant commitment over and above the accepted level of contribution by an FM station in a market the size of Winnipeg.
55 We will of course continue to rely on the advice and assistance of the Rogers Broadcasting Local Advisory Board in Winnipeg. The members of the Advisory Board include prominent local citizens with a clear commitment to the community.
56 Dorothy Dobbie is a successful local businessperson with over 20 years of experience in the field of printing and publishing. She is a former Member of Parliament, during which time she co-chaired the Joint Committee on the Renewal of Canada -- the Dobbie-Beaudoin Committee -- and served as Parliamentary Secretary to various Ministers. She has played leadership roles in many important business, community and charitable associations.
57 Bruce Jack is a partner in the Winnipeg office of Deloitte and Touche. He combines an active career in management consulting with an extensive commitment to the local community. Mr. Jack is currently Treasurer and board member of the Manitoba Children's Museum and has served as a member of the board of the Canadian Cancer Society, Junior Achievement of Manitoba and the Prairie Theatre Exchange.
58 Rita Barthwick is a well known local businessperson with an extensive record of achievement and service to the community. She has served as President of the Manitoba Chamber of Commerce, Chairperson of the Manitoba Canada Day committee, and as a member of the special advisory committees established by the Manitoba Minister of Education. She is currently director of ACTA Manitoba and serves on a number of boards and advisory councils, including the Canadian Standards Association Advisory Council and the Manitoba Historical Society. Steve.
59 MR. EDWARDS: Unlike the situation in many other larger markets in Canada, there is no shortage of available FM channels in Winnipeg. As you can see from the chart behind me, there are at least 11 FM channels that could be used to serve radio listeners in Winnipeg. There are five channels that could be used at high power and six channels that could be used at lower powers.
60 We are proposing that CKY-FM use Channel 256C -- 99.1 Mhz -- with an effective radiated power of 100 kW. That channel will best ensure that the CKY programming service continues to be available throughout Winnipeg and the surrounding areas.
61 In preparing our application, we were certainly cognizant of the potential loss of audience for CKY-AM. We propose to maximize the coverage of the new station by using the best available high power frequency and to construct a tall transmission tower.
62 The approval of our application would be consistent with the Commission's established policy on AM to FM conversions. Since there are a number of other FM channels available, our use of FM frequency 99.1 would not create technical barriers to the licensing of additional FM stations in Winnipeg.
63 The Commission has generally been prepared to approve conversion applications when there is more than one FM channel available in the market. Gary.
64 MR. MILES: Since we are proposing the conversion of an existing radio station, our application does not raise significant policy issues with respect to the competitive structure of the local radio market.
65 First, the conversion of CKY will not have a material economic impact on other local radio stations. As is set out in the financial projections filed with our application, CKY requires only a very modest increase in advertising revenues, well below the rate of market growth, to allow it to offer an attractive, economically viable FM radio service.
66 Second, as a conversion, this application will have no impact on the level of competition in this market. We currently own two radio stations and will continue to do so if this application is approved. As such, there will be no reduction in the level of competition.
67 Third, by placing CKY on an equal competitive footing with other music-formatted radio stations, this application will help to preserve and protect a long established and distinctive presence in the market.
68 Fourth, since there are a number of FM channels available, the approval of this application would not prevent the Commission from further increasing choice and diversity for local listeners by licensing additional FM services as part of this proceeding, or some future proceeding.
69 In conclusion, Madam Chair, members of the Commission, we believe that the approval of this application to convert CKY to an FM radio station would best serve local listeners. This application is consistent with the Commission's established policy on AM to FM conversions and would directly contribute to the achievement of the objectives of the commercial radio policy.
70 This proposed conversion:
71 (i) will increase choice and diversity for local listeners in the Winnipeg market;
72 (ii) is the best and most effective use of the FM frequency 99.1, since it will ensure the continued availability of the CKY heritage radio service throughout Winnipeg and the surrounding area;
73 (iii) will not create technical barriers to the licensing of additional FM radio stations, since there are a number of channels available in the Winnipeg market;
74 (iv) will have no material economic impact on the other local radio stations;
75 (v) will have no impact on the level of competition in the market; and
76 (vi) will result in increased support for Canadian talent development.
77 For all these reasons, we believe that the approval of our application to convert CKY to an FM radio station would be in the public interest. We look forward to questions that you may have for us. Thank you.
78 THE CHAIRPERSON: Thank you Mr. Miles, gentlemen, and Ms. Stasiuk. I will be starting with the questions.
79 I wanted to start with one question, which of course had not occurred to me before. The monies that you presently send to FACTOR and the ones that you are proposing to continue increasing, is that in any way designated to Winnipeg or Manitoba artists?
80 MR. MILES: We have asked FACTOR to designated it towards not necessarily one of the Winnipeg or Manitoba artists, and frankly, we had not thought of it in this particular case. We'd love to do it. We've done it in other applications. In one of our conversions in British Columbia, we dedicated it to B.C. musicians and things like that.
81 I think one of the things that FACTOR says is that they like to have a little wider catchment area, so it may well be for the Prairies. But yes, we'll ensure that that happens. We're big supporters of local talent here and we're quite proud of our involvement with the Guess Who, and we would do that, yes.
82 THE CHAIRPERSON: If I have it correct, CKY now has an Oldies format and you're asking that CKY, should you obtain this frequency, that CKY would be simulcast on the FM frequency for three months; is that correct?
83 MR. MILES: Yes.
84 THE CHAIRPERSON: Doesn't it normally happen the converse? That the new FM is actually simulcast on the AM?
85 MR. MILES: That's correct.
86 THE CHAIRPERSON: And you're asking for the opposite?
87 MR. MILES: We meant to say that we wanted to simulcast the FM on the AM frequency. So in other words, we would not be broadcasting Oldies on FM.
88 THE CHAIRPERSON: Oldies on FM. You know our rules now, Mr. Miles.
89 MR. MILES: Yes, I do know that.
90 THE CHAIRPERSON: So in fact, it's the new FM station that you would be simulcasting on the AM.
91 MR. MILES: And in fact, that's what we've done in all of our conversions.
92 THE CHAIRPERSON: And right now, you've got CITI at Classic Rock, if I've got it, and CKY, you've actually called it Rock in your presentation, I believe, but it's going to be Classic Hits; is that it?
93 MR. MILES: I think that there's two things to take into account on this one and it's a great question and I'm going to ask Sandy to sort of go a little forward on this with regards to the formats. As we're all aware, the formats are more and more difficult to sort of regulate because with more and more entries, you have to figure out where within the spectrum that it goes. CKY is a heritage Rock radio station, and in fact, the Oldies that we're currently playing on CKY were considered to be pretty evil songs back in those days. They were the rock and roll music of that particular time.
94 So the heritage of CKY Radio has been a Rock format, whether it's the Hits, Classic Hits format. There's a number of new formats of the rock genre that have been introduced; alternative would be one of them. There's a new format out in the States called Triple A. It's sort of '80s and '90s, all of the rock genre.
95 So what we've taken a look at more than anything else is to figure out where within the broader spectrum of Rock or A/C music, male or female music, that this station would fit, relying of course on our continued research into the marketplace and where the Commission ends up licensing other services. We do not want to duplicate radio services. We want to add to the diversity with the market services that are available, and sometimes that can't happen until all of the formats are shaken out and the rest of the licenses are granted.
96 But Sandy has some comments with regard to the male/female split within the marketplace.
97 MR. SANDERSON: Thank you Gary. The market ‑‑ at the moment, there are six FM stations, playing music in Winnipeg. Four of those are targeted primarily to women and just two are targeted primarily to men. We have a Top 40, an A/C, a Hot A/C and Country, which garner more females than males, and then a Classic Rock and an AOR playing rock. Two of the three applications before you are also for female-based formats.
98 Winnipeg is a rock town. I remember a gentleman who does research for us told me a few years ago that after doing a perceptual study, he'd never seen such a penchant for rock in any other market, certainly Canada, than Winnipeg. I think Ford Gardner just did some music research last week, I believe, and turned up a couple of interesting examples of that.
99 MR. GARDNER: The scores in Winnipeg related to rock compared to all the other cities that we did research in across Canada were, in fact, in some cases, double, double Ottawa for sure. It's a format in this town that scores far higher than any other market we've done the same research in.
100 MR. SANDERSON: So given that and the fact that there's an imbalance as far as male/female is concerned ‑‑ but overriding all of that is the heritage of CKY as a rock and roll station that started back when you were only allowed to see half of Elvis.
101 For those reasons, we feel our place is on the rock side as a new station.
102 THE CHAIRPERSON: I mean, I'm not Mr. Parker here; I know some music. If CITI is known as Classic Rock, what is the new CKY going to be? Your application called it Classic Hits. How do I distinguish between the two?
103 MR. SANDERSON: There is a distinction. It's not a huge distinction, but certainly with one owner having two stations in the same area, we would make sure that there was diversity. It makes no economic sense or reasons of diversity to have both stations going after the same audience.
104 Classic Rock is more of an album rock, non-hit type of music. It is songs that are several tracks deep on albums that everyone in the audience owns and became popular. Classic Hits is certified, "Billboard" kind of hits from the different eras, both of which are targeted toward men.
105 THE CHAIRPERSON: So then, the difference would then be that ‑‑ can I do it in terms of a percentage of hits from the '70s or '80s or '90s to distinguish between the two or just in the tone? It's more laid back, that CITI is more laid back or --
106 MR. SANDERSON: Madam Chair, it would be both, in both those ways. But certainly the exact allocation of '60s, '70s, '80s, '90s will have to be decided. I mean, the market is in flux and just by virtue of the fact that there's a hearing on, there are changes going on in the marketplace, when approvals are announced, there will be blocking programming going on. So the exact allocation of the eras will have to wait until we know what the market looks like.
107 THE CHAIRPERSON: All right. I'm kind of being found in a conundrum that sounds to me like you're going to go where there is a hole and you don't know where the hole is.
108 MR. SANDERSON: The hole could be changing right now. And if there are low approvals granted there will be several holes, and if several are granted there will be fewer holes.
109 THE CHAIRPERSON: But right now, you are thinking about Classic Hits from the '70s, '80s and '90s and that is male-oriented and more hit-related than CITI.
110 MR. SANDERSON: Yes.
111 THE CHAIRPERSON: It seems to me ‑‑ and here's where I want to talk diversity. It seems to me that what I'm seeing is that you're sort of splitting your own classic rock into hits and non-hits. Is this how I'm hearing it?
112 MR. SANDERSON: Well, what we want to do is to build on the heritage of CKY ‑‑ I mean, it's got so many years of heritage ‑‑ and celebrate that and put it in stereo. George will go crazy because it is in stereo now, but I mean on the FM band. So given that we feel it's important for a music station to be on the FM band not the AM band ‑‑ it's just the perceptions of the audience, it's the way it's going ‑‑ and given the fact that it's impossible to duplicate the format on FM, we'd like to try and draw those people who love CKY because it was a rock and roll giant, over to the FM band.
113 THE CHAIRPERSON: So what you're really trying to do is keep CKY the way it is, but because our regulations are different on the FM band, this is what you have to do?
114 MR. SANDERSON: Yes.
115 THE CHAIRPERSON: So again, I want to think about this issue of diversity because on the one hand, you say, Mr. Miles at page 9 in the penultimate paragraph of your presentation today, "This application will help to preserve and protect a long established and distinctive presence in the market." And then you, at page 10, talk about diversity. What will this add to the Winnipeg market?
116 MR. MILES: It will add two things. First of all, it will provide a service of a radio station that has a long heritage of providing a rock format, in which, the cume to the station has been declining over the last seven years. It's no different than any other AM-based radio station.
117 So all of a sudden this availability of a service to Winnipeg and its surrounding community continues to be less and less used by the public because they are not comfortable going to the AM band for music. So that's the first one.
118 The second one is that we want to build and continue to explore on the CKY heritage, which has always been a rock and roll radio station of some form or another, and as we sort of see our audience build and are able to do more research into it, we'll be able to more finely hone what particular brand of rock that is.
119 If we get down to it, there's either radio stations going towards a female listener or radio stations going towards a male listener. When we took a look at the marketplace, as Sandy has indicated, as well as the applications before, we saw that there was an overbalance of stations aimed at females ‑‑ and good for them, and that's the way it should be. So we want to continue to preserve where our expertise in this marketplace, not only on CITI but also on the whole heritage of CKY, of providing that service back into the mainstream listeners, and therefore establishing and making sure that CKY remains part of the radio spectrum in Winnipeg.
120 THE CHAIRPERSON: So then you say you won't have very much impact on other people, on other competitors in the market. Essentially though, would some of the impact come that you would be cannibalizing your own stations, cannibalizing CITI's listeners?
121 MR. MILES: I don't think there's any question about that. I think that as we continue to add more and more formats in the marketplace, that always is part of what happens. We've certainly done it within our own radio stations. Victoria would be a classic example of where we had an A/C radio station and we put on a Top 40 radio station and immediately took all the young end off our station.
122 But I think that's part of what happens, you know. We asked for multiple license ownership and we got it. Multiple license ownership, I think, has provided a great deal of diversity. And this is not an editorial comment, but we wouldn't have had Smooth Jazz formats, we wouldn't have had the ability to separate the kind of wider-based rock formats or female-based formats as we have now. And I think that's good because it's no longer just a matter of a certain demo; it is more a lifestyle of listening.
123 And that's really what we're talking about. We're talking about lifestyle of the heritage CKY AM radio listener and translating that into something that will appeal to them, in the Rock idiom on an FM band.
124 THE CHAIRPERSON: So on the one hand you say you'll have very little impact on existing competitors, and then on the other hand, Rogers, like anybody else, is here to make money and to be successful. The two don't necessarily fit in my mind. Clearly there will be some impact on other competitors in the, especially, if I can call it, male-based format competitors in the market. And Mr. Sanderson, who do you think that would be?
125 MR. SANDERSON: Well, it will have to be Corus. It will have to be the power station here, which is the other male station.
126 THE CHAIRPERSON: At the end of the day, should we license CKYN-FM, would CITI's format eventually change?
127 MR. MILES: It may; I don't know. Once again, we continue to do research into the marketplace and we continue to figure out what audience is not being served and stay true to the roots of the radio station.
128 THE CHAIRPERSON: Local programming. You've already said that you would accept a COL for the non-solicitation or acceptance of local advertising if you have less than one-third local programming. What are your plans for local programming?
129 MR. MILES: No, we will program this as a full-service radio station.
130 THE CHAIRPERSON: So what are your plans then for spoken word, local news, information?
131 MR. MILES: There'll be local news on the radio station. What we really talk about now though is more surveillance. So it is a blending really of what is important to that audience. In this particular case, male audiences may well be more interested in sporting news as compared with international news. So our surveillance material always represents that particular aspect. We provide more of a softer kind of news, if you would, on A/C radio stations; more of a sports kind of news on male-based stations; but still always, the news of the day, the current market conditions, traffic. Certainly weather in Winnipeg is always a big tune-in factor.
132 THE CHAIRPERSON: So can you tell me how much you anticipate when this programming will happen?
133 MR. MILES: We'll schedule it mostly throughout our drive period, so the morning drive and the afternoon drive, limited in the afternoon drive.
134 What we've found is that more and more people, of course, are finding other ways of getting their news ‑‑ as you and I used to recall, news on radio stations ‑‑ and so it's now more important to make sure that the topical talk patterns of the personalities reflect what the audience wants to expect in terms of surveillance, or as we would call it, news, weather, traffic, et cetera.
135 THE CHAIRPERSON: So Mr. Miles, how many minutes per hour, what hours?
136 MR. MILES: I would suggest that we would certainly have newscasts in the morning drive at six, seven, eight, nine, and certainly in the afternoon drive of four, five and six as we do with most of our other radio stations.
137 THE CHAIRPERSON: How many minutes?
138 MR. MILES: Duration? It would probably go anywhere from two to three minutes depending on what we put in the surveillance package.
139 THE CHAIRPERSON: If you were given approval, how long would it take you to implement this new station?
140 MR. MILES: I think I would ask, because I'm not allowed to answer technical questions, Steve Edwards and George Buzunis, and then I think it would be an appropriate time also for Steve, unless you have the question coming up, to explain sort of the frequency charts that we have.
141 THE CHAIRPERSON: Oh no, I have a question coming up.
142 MR. MILES: Okay, good. Terrific. Okay then, the conversion times, Steve?
143 MR. EDWARDS: It would take from six to twelve months after receipt of the licence depending on what time of year it was, but it wouldn't be out of the normal routine.
144 THE CHAIRPERSON: You don't need to add anything, Mr. Buzunis?
145 MR. MILES: Madam Chair, part of the reason for that rather longer period of time, of course, is because we are in the process of trying to construct a tall tower with common people, common ownership or some structure along that line. It's not our intention to be in the tower business, I assure you.
146 But because there is an opportunity here, and as you know, local communities are more and more concerned about towers and things like that, so if we can all get together and do that, and that provides for maximum use of this frequency for us.
147 THE CHAIRPERSON: I wanted to talk about one thing that -- normally I don't go heavily into numbers. In your approval scenario, in your projections ‑‑ I'm not sure if you have looked at it extensively ‑‑ there is a huge change in the PBIT in the second year that you're proposing, and I'm wondering if the amount you've stated for sales and promo in year two is, in fact, incorrect because there is a huge bump there. Maybe Mr. Strati, do you know?
148 MR. MILES: Sandra can certainly speak to that, but what we usually do is provide "boompf" in order to capture those listeners who have gone away from CKY and to launch the station and make sure that it has a presence in the marketplace. Sandra?
149 MS. STASIUK: Yes, we knew that that number had gone up and it was a significant change in year two due to the sales and marketing efforts that we anticipated.
150 THE CHAIRPERSON: So it is this "boompf" you were talking about, Mr. Miles?
151 MS. STASIUK: Yes.
152 THE CHAIRPERSON: Okay. You then talked, in your supplementary brief, about a time tested format, appeal to the CKY audience and potential to attract. This is this research that you've been talking about before, Mr. Gardner, about the rock format and its appeal. How often do you do these studies and how are they conducted?
153 MR. GARDNER: Annually, at the moment.
154 THE CHAIRPERSON: And what are they? Like a phone?
155 MR. GARDNER: It's an auditorium test of music and a focus group.
156 THE CHAIRPERSON: Okay, so you pick up ten people, kind of, once a year and sort of sit down with them and say, "What do you really like?" Is that it?
157 MR. GARDNER: No, I believe the number was 89.
158 THE CHAIRPERSON: In Winnipeg?
159 MR. GARDNER: Yes.
160 MR. MILES: In addition to that, Madam Chair, in our major markets, we go in and do an annual perceptual, which is respondents of about 850 to 1,000 and we've got past information from that from Winnipeg. And if we are allowed to proceed with this application to convert, we'll go back into that in this particular market to make sure that we find out as much as possible and tie it in with our other markets. So we have an extensive program in which we do market research into all of our major markets.
161 THE CHAIRPERSON: So every year then, what you call this "perceptual"?
162 MR. MILES: Yes, that's correct.
163 THE CHAIRPERSON: And is it a phone survey kind of thing?
164 MR. MILES: Yes. In fact, with ‑‑ Sandy, what's the PBM number into this marketplace? About ‑‑
165 MR. SANDERSON: Oh, the number of people?
166 MR. MILES: Yes.
167 MR. SANDERSON: Twelve hundred.
168 THE CHAIRPERSON: You talk about this being your hope of halting the declining share for CKY, and of course, your denial scenario shows revenue going down. But Winnipeg is sort of unique, isn't it? Or the Prairies are unique in terms of AM generally does better than anywhere else?
169 MR. MILES: Yes. I've got a smile on my face because it's not unique enough. I think the great news about operating AM radio stations on the Prairies, and we may get into this from a technical point of view, is that it's so difficult to actually duplicate the coverage with an FM signal. You can't build towers high enough and it doesn't go far enough.
170 Unfortunately, it hasn't stopped the decline and with a moment of sadness in my eyes, the demise of CKCK in Regina which, at one time, owned all of the Prairies, all of Saskatchewan, shared it with CFQC, I think the station was, in Saskatoon, and still, didn't stop that decline on that basis.
171 We've had some success, we believe, in keeping AM stations going. 680 News would be a great example of that, a station, by the way, that we changed to an all news format before it became unprofitable. We followed it up by News 1130, in Vancouver, and we haven't been as successful with News 1130 in Vancouver. Frankly, the market of 1.5 million is sort of on the cusp of what we would consider to be a good market for an all news radio program.
172 Having said that, we've also kept an AM service going in Kitchener with a news/information programming, similar to what CJOB has done here. I was in this market for 10 years, could never beat CJOB and it's a great radio station. You know, they have got a great niche and they do a great programming job on it.
173 In Calgary we kept our AM radio station. We converted it to Team 960, which is an all sports format. So where we can, we actually do believe in the AM product and we think there are great markets for it. But here, the two niches have been taken. A great radio station with a lot of heritage in CJOB and the CHUM station has already converted to that Team, all sports station. So as much as we would like to continue to do that, yes, it can.
174 Ford will tell you that our cume has gone down continually on the AM station and CKY, no different than we've experienced in Ottawa, that we've experienced in Calgary on CFFR. And the reasons we made some of those conversions in Winnipeg, or in Toronto and Vancouver, and the same reason we converted in Lethbridge ‑‑ we had a country music radio station on the AM band in Lethbridge. I mean, how good does that get? Except that there was another frequency, an FM frequency came on, and country music was put on against us and it just disappears. People want to listen to music on FM. I'd like to fight it, but I can't.
175 THE CHAIRPERSON: But relative to everywhere else, Winnipeg AMs did fairly good in the BBMs last fall?
176 MR. MILES: Last fall they did, yes. I'd like to take some credit on behalf of Ron Kizney and Ford Gardner for that. And I mean it very sincerely. The Guess Who relaunch; there was a world tour; it started off with a big rally here in Winnipeg and they went on to it. I think Country Music Week, the Guess Who is going to be honoured at that coming up in the next month. And so we capitalized on that here in Winnipeg on CKY. And we got a bit of a blip. But that's in share. The terms of it, the cume of this radio station has continually declined, declined, declined. And we don't see it going up. I'd like to say that my brilliant programmers could keep doing it but even they may not be able to.
177 THE CHAIRPERSON: So are you saying then that last fall's BBMs were a blip for CKY?
178 MR. MILES: I'd never tell my president that. I'd tell him it was great programming. But it certainly, when we take a look and compare it against -- and we run Oldies in other markets -- there was no blip in Calgary; there was no blip in Ottawa. And we run Oldies in those two radio stations and we have great programmers there. So yes, I would say it was the combination of the whole Guess Who format, the big emotional thing leading up with Gary MacLean's unfortunate demise, and then the rallying and things like that. You know, this was a Winnipeg event.
179 THE CHAIRPERSON: So as a result of that, of the share in the fall, you haven't changed your projections for CKY at all?
180 MR. MILES: No, I'm afraid not.
181 THE CHAIRPERSON: Since the filing of your application, there have been some world events, shall we say, that have changed the Conference Board projections for Winnipeg. What do you believe is the impact on the Winnipeg market of the changed projections of the Conference Board and, as they say, as a result of the tragic events of September 11th?
182 MR. MILES: Thank you for that. I have no degree in economics, but I do know one thing: that we foresaw the decline that started to happen all the way across Canada around about March or April, as did my other fellow broadcasters who operate in the same markets. We talk about this. So the events of 9/11 certainly delayed anything happening, but it was not the main factor in what was happening, which is that radio revenue has declined along with all other advertising revenue.
183 I operated two radio stations in Winnipeg as the manager for about ten years and here was the good news and the bad news about Winnipeg. The good news is that the markets usually grew about three percent. And that was the bad news. It never grew at seven and it didn't go down to about one or two.
184 In the last year, the TRAM report actually shows the radio revenues in Winnipeg going at about nine percent. But to be quite frank about it, the Winnipeg radio market has been under-evaluated for a long period of time. This is a tough, competitive radio market. You start thinking about nine radio stations in a market of about 500,000 people. I think Edmonton has about the same number with close to eight or nine hundred thousand, and I think there's one or two more with the new licences granted in Calgary, close to 900,000.
185 So this has always been a tough slug, which is why, in our conversion material, we purposely went underneath what the CRTC had established at a 4.4 long-term growth average in order to meet our projections.
186 So we're confident that, based on the material that we've give you, that we will be able to make this thing a successfully economic, viable radio station in light of the fact that I think the radio revenues are going to continue to decline, at least for the next six months, if, frankly, not for the next year.
187 THE CHAIRPERSON: So in terms of your plan and projections, has that changed, or were they sufficiently conservative to start off with that they haven't changed?
188 MR. MILES: They were sufficiently ambitious until I said I'd been in the Winnipeg market and I don't think we should be that ambitious because over the long haul, there is some problems in here with regards to getting the radio revenue up. I think that the operators we've got in the marketplace now are doing a good job of that. You know, we've got tough television competition. But that's fine, that's what it's all about is competition. And I think that over the long haul our projections will not change because we purposely went in lower than what the market rate has been for the last number of years.
189 THE CHAIRPERSON: So your plan hasn't changed. Your projections haven't changed.
190 MR. MILES: No. They were modest to begin with and they will continue to be modest.
191 THE CHAIRPERSON: And so now, and again, as a result of economic conditions, do you think the market would support your flip and another commercial station being added to the market?
192 MR. MILES: It's an interesting question. But to be quite frank about it, we never opposed any other additional radio stations. We're in this game to provide good radio service, to provide the best programming that we possibly can. What we want to do with our application is to balance out what we have with an AM radio station that's declining that belongs in this market and convert it to an FM radio station. So that's my primary game plan. We put our economic projections in underneath the marketplace growth. I don't know what the other applicants have suggested for their particular growth, but we're comfortable with our numbers.
193 THE CHAIRPERSON: So from, I guess I would call it a competitive point of view, it doesn't matter to you whether or not we license your flip and license another commercial station?
194 MR. MILES: No, it does not.
195 THE CHAIRPERSON: And would it impact on your business plan if we did that?
196 MR. MILES: It depends on what format that they went into. Again, if it was another male-based format that got licensed, it may and we would have to take another look at what we were planning to do. But we are accustomed to doing that. There's been a number of markets where new FM radio stations have been licensed recently -- Calgary, Ottawa, Vancouver -- and we're always making adjustments as, I suspect, the other broadcasters are.
197 THE CHAIRPERSON: So now we get into the technical aspect. You know, others are applying for the 99.1, and you said in your opening statement that yours is the best use of the frequency. From a technical perspective, why is yours the best use?
198 MR. MILES: Mr. Edwards.
199 MR. EDWARDS: The key reason is because we're proposing to use the most unencumbered, if you like, frequency at the highest height that is practical to do in the Winnipeg market.
200 THE CHAIRPERSON: And given the number of frequencies ‑‑ and I'm looking at your FM frequency availability list ‑‑ you have, I believe, Mr. Edwards, five that could all be high power, FM frequencies?
201 MR. EDWARDS: That's correct.
202 THE CHAIRPERSON: And when you talk high power, would they have the same coverage and the coverage you're proposing for CKYN-FM?
203 MR. EDWARDS: Very nearly. The differences ‑‑ there are more nuances than anything else. If I could describe it this way, the frequency that we applied for is the most obvious one in a sense because it has been allotted to the marketplace by Industry Canada for many years.
204 The others have more qualifiers than they do limitations. For example, channel 204, 88.7 Mhz, would have to be used at the CBC site because that's where they use television channel 6. That would be a nuisance for us. It would limit our ability to duplicate CKY because it's somebody else's tower. It wouldn't be where we'd be operating our other station. You know, we'd be limited to what kind of antenna we could put where. But that site is shared by Global and CBC, for example, so it may have great relevance to Global.
205 Another two channels are drop-ins into the marketplace and they have slightly different qualifiers. Channel 273 is third adjacent to CKMM, and traditionally that would have been difficult. But in fact, tomorrow, Industry Canada is chairing a government/industry meeting to study their proposals to change the rules to recognize the performance of current receivers which would treat third adjacent and fourth adjacent the same. So the limitation there is that those two licences would have to be located on the same tower. But again, it could be used at full power.
206 Oh sorry, and in that particular case, there is a slight directional requirement to the southwest to protect an American station.
207 The third channel, 284, is a similar situation except that it's third adjacent to CFQX, which is located some distance north of Winnipeg. It's licensed to serve Selkirk. And again, that would pose some difficulties for us because it would be in a different location and we couldn't achieve the same coverage that we could -- or at least the coverage in the same places that we could.
208 So we feel that the channel that we've applied for could come closest to duplicating the coverage of CKY, but it is a matter of degree. It's not that there's a dramatic difference between those channels and their usability.
209 THE CHAIRPERSON: And when I'm looking at that -- thank you Mr. Edwards -- when I'm looking at that, channel 210, that is the one that CBC has now?
210 MR. EDWARDS: No. I was trying to think of a way that I could highlight that one a little differently. CBC is not currently licensed to use that but it is their intention, I understand, have been told, to apply for that very soon and that's on their (inaudible -- off microphone) so to speak.
211 THE CHAIRPERSON: On their long range allocation?
212 MR. EDWARDS: Exactly. They anticipate applying for that very soon to be used from their site as well.
213 THE CHAIRPERSON: And at channel 204, Mr. Miles, you did say you're looking for a site to share with somebody, so CBC would be just as good a dancing partner as anybody else?
214 MR. EDWARDS: No, not at all. The limitation there is that the tower that we're looking to build with other broadcasters would be something over 800 feet tall, and we're in discussions right now with Master FM, which is a consortium owned by Rogers, CHUM, Standard, CBC and CHIN. They're interested in building that tower. With a new tower you could optimize the antennas for many of the current FM stations in the Winnipeg area. The CBC tower is well established, quite a long way out of town for good FM performance, and doesn't have anywhere near the flexibility for location of antennas that this site that we're talking about would. But it would work very well for broadcasters that might be already using that tower.
215 THE CHAIRPERSON: So would Rogers be willing to accept another frequency if authorized to flip?
216 MR. MILES: Yes.
217 THE CHAIRPERSON: And when I look at Mr. Edwards' list, are there any of the high power ones that you would not accept?
218 MR. EDWARDS: 204 would pose the greatest difficulty for us because it would provide the most limitations. Equally, 284 would be very difficult because, unless we could persuade the Commission and CFQX that they should move the tower close to Winnipeg, it wouldn't provide very good coverage of the Winnipeg market compared to the other two.
219 So if you were to say which of the alternative three would work, I would say 273 would come the closest.
220 THE CHAIRPERSON: And given the number ‑‑ and I take it that you therefore think that 99.1 is the best, at least in coverage for you, and clearly, Corus and Global would think pretty well the same ‑‑ why is it in the public interest to give that frequency to you?
221 MR. MILES: Again, it's a matter of coverage. We wanted to duplicate without extending, as we have done in similar instances where we're converting an AM radio station to an FM, and certainly one of the criteria we have always considered is to make sure the pattern tries to come as close as it can to the pattern of the AM radio station.
222 As we all know in the Prairies, that's almost impossible to do, but the figures that we're able to provide, I think that it shows somewhat of a ten percent decline in terms of the audience and it's the closest, again by maximizing the highest power.
223 THE CHAIRPERSON: I wanted to talk about that issue of same coverage because I take it that what you're really talking about is the, if I can call it, engineering coverage in terms of that's what you're really talking about, when they do the three and five kilometre contours.
224 But we all know that's not the reality. I was driving here to Winnipeg from Regina after September 11 and I could hear CKY a heck of a lot further than the coverage area of Winnipeg.
225 So we're really only talking theoretical, aren't we, when you talk about a low potential loss of customers?
226 MR. MILES: Well, theoretical only because we're able to measure the number of listeners against the number of listeners that are in there. Yes, absolutely the great thing about the Prairies is that some days you can pick up CKY outside of Regina. I used to remember as a broadcaster in Regina listening to CKY on the outskirts.
227 The other thing is that also there's coverage up into the northern part, into the resort areas and things like that. But I think the same could be said with that kind of -- I don't know whether you'd call it accidental coverage, because I don't mean it that way -- but there certainly is the ability to have those statements picked up remotely, far more than any FM radio station.
228 Again, having said that, what I do know is that there are more and more communities which are licensing radio stations on the FM band and providing local service to their community.
229 And at the end of the day, it is a local ‑‑ radio is local, local and local, and the majority of people live within the environs of Winnipeg in Manitoba. That's our core audience, that's the radio station we're licensed to serve, and it will be sad that we wouldn't be able to have that signal picked up as far as we would like it to go, but I can't build a tower that tall. Steve.
230 MR. EDWARDS: A few other comments. It gets very difficult -- you're quite right that ‑‑ in fact, one of my common complaints at many levels is that too many people, including the Commission at times, tend to look at contours as fences and you have coverage inside and there's no coverage outside. It's nothing more than a measure of a signal strength at a certain distance from the radio station.
231 But it's very difficult to compare AM and FM. It's really very much apples and oranges. I was just asking George what the nighttime coverage of CKY is like, and indeed, if you were to have driven in at night, you probably would have found not nearly as much difference between CKY and CITI, for example, as there is in the daytime.
232 CITI, or any other Winnipeg FM station, will also cover well outside of the contours that are shown on the maps. But the proof of the pudding in a sense is if you look where people are, there's roughly a ten percent difference in the daytime and it would be considerably less at night.
233 THE CHAIRPERSON: But, it's not fair to compare CITI to this, is it? Because CITI has double the normal --
234 MR. EDWARDS: It does and perhaps I shouldn't have even used that. I could show you some interesting maps that I have here. A lot of us who have grown up in the broadcast business tend to think of power in AM terms. The lower the frequency the greater the difference in power, the greater in difference the power has.
235 But you would be quite shocked, I'm sure, if you saw the difference between CITI's coverage at more than double the current limit, because of its grandfathered status, with the now traditional 100 kW stations. You don't get a lot of bang for your buck when you go to extremely high powers in FM the way you do in AM.
236 That's another reason why it wouldn't be fair to characterize these various alternatives as enormously different from one another. Even when they're slightly directional, it has very little impact on the actual coverage.
237 I could give you a little anecdote of an antenna that was replaced in North Bay recently due to a lightening strike. The effective radiated power was dropped from 100 kW to 15 kW on a temporary basis and nobody in the main coverage area even knew that anything had changed.
238 There are a lot of factors involved, but at the end of the day, in FM power isn't nearly as relevant as it is in AM. Height is much more important.
239 THE CHAIRPERSON: Thank you. That's all my questions. Commissioner Cardozo has a question or two.
240 COMMISSIONER CARDOZO: Just a couple of short questions. I wanted to understand a little further the issue of diversity in the market, the discussion that you had with Commissioner Cram in terms of the new format you're looking at.
241 As I understand it, the difference between Classic Rock and Classic Hits is something you understand quite well, and I can accept that there is some difference but it isn't monumental in terms of being a new format for the market maybe. But I look at some of the other current stations. CJKR has Mainstream Rock. CKMM has CHR Rhythm and CHIQ has adult CHR. And all these fit in in the Commission's category 2, subcategory 21, which is I think the language you understand but most other people ‑‑ most other Canadians don't and wouldn't care, but we have to sort of look at formats in these categories and subcategories.
242 We don't regulate mainstream formats, but what we're looking at in the context of a competitive hearing is perhaps two issues. One is diversity, but more importantly, how does your format fit into your business case? And as I see it, in terms of diversity, there's not a lot of diversity that you would be adding by moving from the CKY-AM that you have to the FM that you're applying for, but that there is a business case.
243 As Mr. Miles, you said, despite CKY's strengths, AM is dying as a music format and everyone needs to go to FM. And certainly, a Classic Hits format is a lucrative format, good for your business case. So beyond that, I don't see where your case is. What is in it -- and the real thing I'm asking is what's in it for the listeners of Winnipeg? What will they gain by this flip?
244 MR. MILES: Again, I'll ask Sandy to just sort of work through it. But I think what we have to take a look at is how many stations are serving the females in the marketplace and how many stations are serving males. Rock traditionally is a male-based format. And so therefore, it's ‑‑ taking a look to make sure that we weren't duplicating, I think it's up to the six versus two, Sandy?
245 MR. SANDERSON: This radio stuff, it always gets me. I think what Gary said, that male and female, there's a -- it's not anywhere near even at the moment. There's lots of room in the rock area, especially in Winnipeg.
246 CKY's audience is about 46 percent male, which is higher than the four female FMs and lower than the two rock stations. There are some ‑‑ hopefully some ‑‑ all the males and some of the females will come over to a station that is ‑‑ you know, we cannot put the station on FM. We can't serve all those listeners on FM. So we're going to try and do it, and because of the heritage of the station, we want to do it in the rock idiom, the rock general idiom.
247 CITI's format is Classic Rock that really rocks, is what we call it. It's harder, it's more male than what we're looking at for the new station, and it's album cuts. I guess ‑‑ these sound like big differences to me and not to real people. But all I can say is that we will separate. We will make sure they are separated. It doesn't make any sense from a business point of view to have two stations going after the same audience.
248 COMMISSIONER CARDOZO: I accept that you see the difference between the two stations, but I'm thinking that when you take into consideration the other three FMs in the market that I mentioned, won't you have sort of five doing fairly similar stuff?
249 MR. SANDERSON: Well, I think that the ‑‑ again, the male/female skew. CHUM's audience is 29 percent male. The Top 40 is 34 percent male. The soft A/C is 38 percent male. The country is 43 percent male but it's ‑‑ you know, that's almost in a place by itself. And I think this would rank up there in the 60 to 70 percent male orientation.
250 MR. MILES: Just to clarify what Sandy just said, is that the three stations that you discussed that weren't the rock-based stations have more predominantly female and so we would consider them to be a female-based format. Which, by the way, could change at any given time as we all know, and even as we're sitting here today, I'm sure that there are stations contemplating changes in their formats across the country as a result of new licences, and that's going to continue to happen.
251 COMMISSIONER CARDOZO: And it was your preference as opposed to just applying for a new FM, you wanted the flip of the AM to FM, meaning you don't see yourself continuing with CKY in any way?
252 MR. MILES: No, we applied for a conversion and that's what we wanted to do. We wanted to do it for a number of reasons and that is that that's part of what we're doing all across our division, which is to convert AM radio stations that we can't find a specialty niche format for and flip it over to FM.
253 Look it, if there was a great new AM format that came back in the next couple of years, I don't know, would we come back and ask for it? Maybe. But if the Commission licenses a number of radio stations for the Winnipeg market, this is going to continue to be not only a fairly competitive marketplace now but the competition will increase. So we sure better be sure of the format.
254 The problem is right now we don't have a format for CKY-AM on the oldies vein and I don't know when those regulations would change and that's not for the discussion here today.
255 So that's the problem, we don't have a good format for long-term growth for our two licences, one of which currently is an AM and an FM in Winnipeg, and therefore we still wish to contain the two licenses in this market.
256 COMMISSIONER CARDOZO: Okay, thanks very much.
257 MR. MILES: Thank you, sir.
258 COMMISSIONER CARDOZO: Thank you Madam Chair.
259 THE CHAIRPERSON: Mr. McCallum?
260 LEGAL COUNSEL: Thank you, Madam Chair. Would you have -- that chart is ‑‑ you've described the chart and spoken to the chart. Would you have a copy of that chart that you could file for the record?
261 MR. EDWARDS: Would you like to have that one on the wall?
262 LEGAL COUNSEL: I'm thinking of a paper version of it. That's a little easier.
263 MR. MILES: That one doesn't fold very well, nor does it copy very well. But yes, we will supply that.
264 LEGAL COUNSEL: Thank you. Maybe when you come back in Phase II of this process you can provide it at that point in time?
265 MR. MILES: Sure.
266 LEGAL COUNSEL: Thank you. I'd like to take you, if you like, to one of the questions that Madam Chair asked you, but I'd just like to follow up a little bit on it, and it deals with the financial operations and in particular, the chart labelled page 5, where it says the first year of operation will be 2001 and then it has first year up to seventh year. Do you have that available?
267 And as you discussed with Madam Chair there was a negative PBIT, I think, for that particular year. But if you go to the line "Depreciation for year two" in that chart, the number that appears there is more than double the number that appears on the same line for each of the other years. Is that correct?
268 MS. STASIUK: I believe it is. We anticipated some capital additions in regards to the tower that we would build and I think there are a number of assets that make up that number.
269 LEGAL COUNSEL: So you'd be doing that in year two as opposed to year one? I just find it so odd that the number in year two would be so much greater than the numbers for all the other years, where the numbers for all the other years are level.
270 MS. STASIUK: I would have to go back and check the number at this time.
271 MR. MILES: And we will file that with you but it may well be what we consider to be year one and year two may be different in your mind versus our mind, but we'll file that with the Commission.
272 LEGAL COUNSEL: Okay. Again, if you can do that in Phase II, that would be good.
273 MR. MILES: Sure.
274 LEGAL COUNSEL: And can I just come back again to the sales and promotion line on that same chart. Again, the number for year two is so much greater than the numbers for the other years. You answered, I think, earlier that there would be a big bump in sales and promotion that year and I can understand that, but again, in looking at the depreciation line, you should look at that line as well and see if that line is correct?
275 MR. SANDERSON: No, that line is correct because that's the standard plan that we always do when we launch radio stations, whether they are new licences or conversions of AM to FM. Traditionally, sort of, we get the station on the air, make sure that everything is working well, that we've figured out the right mix for the clients that we're trying to serve and the radio listeners, and then launch a promotion.
276 LEGAL COUNSEL: Well, thank you. Finally, I think, in responding to one of Madam Chair's questions you said that you thought you would be taking audience from Corus, which I imagine is the CJKR-FM station, is the station from which you would estimate taking a market share; is that right?
277 MR. SANDERSON: That's correct, yes.
278 LEGAL COUNSEL: Do you have any estimate of how much percent of market share you might be taking from that station?
279 MR. SANDERSON: It's difficult to know until the dust settles, until we know exactly what the whole male side and how many stations there are dividing it up.
280 MR. MILES: I think what you find happens with more and more licences is that, at the end of the day, you don't take half an audience. Look it, they're great programmers over there and they're going to decide that we're going to get less than we want and we'd like more than they're going to give, but that isn't the way that it really works.
281 What happens is that you start to lose some fringe ends of a demo that's not completely served by your radio station and those numbers tend to be less and less than they used to be when there were just a rock format and another rock format came on, or if you had an AM country station and an FM country station came on.
282 So I think that, to Sandy's point, it's not as clearly defined any more.
283 LEGAL COUNSEL: Would you have any idea as to the dollars you might be taking?
284 MR. MILES: Dollars are a share of ‑‑ are a result of a share of audience and we continue to take a look at whether we can overachieve on that share, but it's going to end up with BBM numbers and share and the number of market dollars that we can either increase this market or not.
285 At the end of the day, I think that with more radio licences, there's always more people who come to the radio medium for advertising. We've got better trained salespeople out on the street. And sure, there is an immediate dip in all of the licences when a new station comes on. It doesn't really matter whether you're even in that format or competing against the format. There are only so many radio dollars. We license a new radio station, it doesn't mean there's going to be another $2 million come into radio immediately.
286 But we believe these days that the radio industry is now starting to turn out better and more professionally trained salespeople, we have more people on the street, that eventually we start to persuade people to come over to the radio medium. It's a great advertising medium. It's particularly great in periods of down times and reduced economy. It is a very effective radio thing.
287 So I think that, in the long run, what we have seen in all of the markets we're in, eventually the plimsoll line comes back up and everybody continues to go along according to the share of their audience.
288 LEGAL COUNSEL: Thank you Madam Chair.
289 THE CHAIRPERSON: Thank you, Gentlemen, Ms. Stasiuk. We will now take our morning break. We'll take twenty minutes and be back in twenty minutes.
--- Upon recessing at 1020/ Suspension à 1020
--- Upon resuming at 1040/ Reprise à 1040
290 THE SECRETARY: Thank you Madam Chair. The next application is by Corus Radio Company for a licence to operate an English language FM station at Winnipeg. The new station would operate on frequency 99.1 Mhz with an effective radiated power of 100,000 watts.
291 MR. BUCHKO: Good morning Madam Chair and Commissioners. My name is Garth Buchko and I am the General Manager of Corus' Winnipeg radio stations, CJOB and Power 97. Before we read our opening statement, I would like to take this opportunity to introduce our panel.
292 Seated in the front row, to my immediate left, is John Hayes, President of Corus Radio. To his left is Kathleen McNair, Vice-President, Regulatory Affairs, at Corus Entertainment. On my right is Sherrie Johnston, Operations Manager at CJOB and Power 97. In the back row, at the far left is Jennifer Holland, Manager of Financial reporting for Winnipeg Radio and at her right, is our research consultant, John Yerxa, President of John Yerxa Research.
293 In addition, I would like to introduce David McLeod, General Manager of Native Communications Inc., who is seated in the audience today.
294 We are pleased to be here today to present to the Commission our application for a truly distinct new FM station to serve Winnipeg.
295 MR. HAYES: A leading Canadian entertainment company, Corus operates 52 radio stations in a variety of formats from Quebec to British Columbia. Our stations have become renowned for the innovative mix of music and spoken word programming they bring to their respective communities.
296 Corus stations have undertaken extensive market research to ensure that our radio services are providing unique programming choices to local listeners. In fact, this research has resulted in Corus launching a number of new, diverse formats in communities across the country.
297 We contribute almost half a million dollars each year to Canadian talent development initiatives and millions more in benefit commitments. Furthermore, our stations have been credited with launching the careers of many prominent Canadian artists, including the Barenaked Ladies, Nickelback and Winnipeg's own, The Watchmen, to name a few.
298 Although Corus Entertainment is a relatively new company on the Canadian radio scene, its radio group is a compilation of radio stations from across Canada with long histories of community service and commitment to news and information programming. Indeed, one of the benefits to Corus of being a new entrant as a radio owner is its collective heritage, including the many accomplishments of Winnipeg's CJOB.
299 It is because of this acquired heritage and our respect for it that Corus has taken an active leadership in the Canadian radio industry. We were influential in the launch of digital radio in Canada and have an aggressive Internet strategy. We have joined forces with four leading U.S. radio broadcasters to create the Local Media Internet Venture, a project that will result in the creation of the first international network of local lifestyle web portals.
300 Radio's greatest inherent strength will always be its ability to respond instantly to the needs and interests of a local community. In fact, this application by Corus proposes a format that emphasizes news and information in the form of 25 percent spoken word programming. This way, the discussion of topics of interest in Winnipeg can be expanded to the FM dial. Our current radio stations, CJOB and CJKR-FM, are a fixture in the Winnipeg community and will continue to be in the future.
301 MR. BUCHKO: Corus has very strong ties to Western Canada and is committed to developing its presence in the West, especially in Winnipeg.
302 Should this application be approved, we will introduce a new and innovative format for Winnipeg listeners. This new station will complement our existing stations, which deliver a high level of local music and spoken word programming to our listeners and whose commitment to this community is unparalleled. Furthermore, our radio staff in Winnipeg will increase significantly.
303 Our Am station is recognized as a leader in Canadian broadcasting and is recognized as Winnipeg's new, information and sports leader. When breaking news hits Manitoba, its listeners rely on CJOB. IN 1997, as all Canadians watched as Manitoba was hit by the "Flood of the Century," during this disaster CJOB acted as a lifeline for Manitobans. CJOB staff was called upon to keep the people of Manitoba informed about the constantly changing levels of the Red River. With CJOB's very own transmitter submerged in water, we kept serving this great community from a back-up transmitter with an effective radiating power of only 500 watts. As a lifelong Winnipeg citizen, I can tell you, I have never been more proud of CJOB. In recognition of CJOB's efforts, it was awarded the CAB Gold Ribbon award for top news coverage, one of the industry's highest honours.
304 Just two weeks ago, we were notified that CJOB and CJOB's Charles Adler will be receiving the Patriot Award from the Royal Military Institute of Manitoba in recognition of our coverage of the 9/11 catastrophe. As far as we know, CJOB will be the only media outlet in Canada to be recognized in such a manner.
305 CJOB's commitment to both professional and amateur sports in Manitoba is unrivalled. Not only is CJOB the voice of the CFL's Winnipeg Blue Bombers, the AHL's Manitoba Moose and the Northern League's Winnipeg Goldeyes, its sponsorship dollars have assisted in bringing such world class events as the AT&T Canadian Senior Open Golf Championship, the World Junior Hockey Championships and numerous world curling championships to our region. We were also the exclusive radio voice of the Pan Am Games. In addition, amateur sports in Manitoba would likely not receive any coverage of their events and games without tremendous support they receive from CJOB.
306 We are also very involved in a number of charitable causes in the Winnipeg area. Over the last few years, the CJOB Radiothon has raised over $200,000 for the Winnipeg Children's Hospital Foundation. In addition we are the number one contributor to the Manitoba Special Olympics, donating more than $100,000 annually in cash and promotional value.
307 Power 97, Corus' FM station in Winnipeg, is a rock leader. It is the only mainstream rock station in the market that provides a unique and relevant programming choice to its core demographic, men 18 to 34 years of age. Like its AM sister station, it too has a long tradition of providing quality programming to its listeners as well as exceptional community service.
308 Through the presentation of a local summer concert last year, Power 97 was able to raise approximately $30,000 for children who have been orphaned by war in Third World countries. Power 97 also played an integral part in developing and presenting Winnipeg's Spiritfest, an outdoor concert series. Power 97 helped stage four different concerts, each benefiting a different charity, which were attended by hundreds of thousands of Manitobans.
309 Other charities Corus is affiliated with in Winnipeg area include the Winnipeg Harvest and the Christmas Cheer Board. The Winnipeg Children's Hospital Foundation, the Special Olympics, the Winnipeg Harvest and the Christmas Cheer Board have all filed interventions in support of this application. In fact, we can say, without a doubt, that our stations contribute more directly and indirectly to Winnipeg's non-profit groups than all the other radio stations in this market combined.
310 Clearly Corus has strong roots in Winnipeg, roots we are very proud of and looking to build on. In fact, this commitment to the local community will be the cornerstone of our new station.
311 MR. HAYES: Our proposed service will truly fill a void on the FM dial. No existing FM station in the Winnipeg market effectively provides either '50s, '60s and '70s hits blended with soft adult contemporary selections or extensive news and information programming.
312 Our new FM station will play a unique blend of soft adult contemporary selections. However, unlike a true soft A/C format, our station will also feature gold from the '60s and especially the '70s, music that many stations have walked away from.
313 For example, you might hear songs by older artists such as the Beatles, Simon and Garfunkel, Dan Hill, Gordon Lightfoot and Linda Ronstadt, mixed in with recent selections from Bruce Cockburn, Joni Mitchell, Bette Midler or Lionel Ritchie and other A/C artists with significant gold libraries.
314 In addition to the musical selections, the station will feature a high level of news and information programming throughout the day, including a number of new locally produced programs. For instance, on weekend morning the station will broadcast a locally hosted magazine style program consisting of news, information, music, interviews and lifestyle programming.
315 Corus' extensive experiences in programming news and information for CJOB and music across our many stations makes us ideally suited to operate this station. Not only will our new stations provide Winnipeggers with a unique programming choice, but it will provide an underserved audience with a service they truly want as well, as demonstrated by the research filed with our application.
316 MS. JOHNSTON: If licensed, our new FM station will not only increase the diversity of programming available on the FM dial, but it will also result in a number of exciting new initiatives that will benefit the residents of Winnipeg and the Canadian broadcast system.
317 Over the course of the first licence term, Corus will spend $3 million to support Canadian talent development and Aboriginal services in Manitoba, more than any other applicant has promised.
318 Of the $3 million in direct expenditure, the largest portion -- more than $1 million -- will be give to Native Communications Inc. NCI is a non-profit organization that provides Aboriginal language and cultural radio and television programming throughout Manitoba. Corus and NCI have worked together in the past on a number of occasions to offer Manitobans in remote communities, particularly Northern Manitoba, programming that otherwise would not be available. Over the last year, we permitted NCI to broadcast Winnipeg Blue Bombers games at no charge. NCI sold advertising during these games and was able to use the revenues generated to fund its operations.
319 As noted by NCI in its intervention filed in support of this application, this initiative is a seven-year solution that will not only help build an Aboriginal broadcast industry, it will change lives.
320 Corus has also committed significant resources to Canadian talent development. Corus will contribute $490,000 to the production of compilation CDs featuring emerging Canadian soft adult contemporary artists. The CDs will then be distributed to radio stations across the country for airplay.
321 In addition to the compilation CDs, Corus will also spend $840,000 on a live concert series featuring emerging and established Canadian adult contemporary acts.
322 The exposure these artists will receive through these two initiatives will have a tremendous impact on their careers, thus building on Corus' well known commitment of promoting and launching the careers of Canadian artists.
323 In addition to these initiatives, Corus has also committed more than $500,000 in support of the Winnipeg Symphony, the Manitoba Opera, Canadian Music Week and FACTOR.
324 MR. BUCHKO: The Winnipeg radio market is very competitive with more stations per capita than any other of the top 10 markets; however, it is also a market that is in a state of change.
325 A number of recent transactions have changed the face of the Winnipeg market. CHUM's acquisition of CFWM-FM from Standard gives CHUM two FM stations and one AM station in the Winnipeg market. Furthermore, Standard Radio's acquisition of Craig Broadcasting's two stations was recently approved, giving it two FM stations as well.
326 With the market's rate of growth and the efficiencies and synergies Standard and CHUM can realize, respectively, with their new stations, the market will only become more competitive. Consequently, in order to maintain competitive balance, Corus should be awarded this licence.
327 Corus' position in the Winnipeg market is heavily dependent on the continued success of CJOB. However, the long-term viability of AM radio is in question. We believe that approving this application will be crucial to ensuring that Corus remains competitive with other Winnipeg radio operators.
328 As noted in our application, we expect that our audience will be drawn effectively from CJOB listeners, as well as those who listen to other AM stations in the market. Moreover, we expect that we will repatriate listeners from out-of-market adult contemporary stations that can be heard in Winnipeg. As a result, our new FM station will have a limited impact on our competitors in Winnipeg, but we will ensure a competitive balance in the market.
329 In conclusion, we feel that our application meets the Commission's criteria relating to the issuance of new licences. It will introduce a new, diverse programming voice into the market. It will result in over $3 million in incremental CTD initiatives and support for Aboriginal programming in Manitoba. Furthermore, the approval of this application will help maintain competitive balance in the market without impacting the revenue of other stations.
330 CJOB and Power 97 have a long and proud history of contributing to the Winnipeg community. If licensed, our new station will build on that tradition.
331 For all these reasons we ask that the Commission approve our application. That concludes our opening remarks. We are pleased to answer any questions that you might have.
332 THE CHAIRPERSON: Thank you, Commissioner Cardozo?
333 COMMISSIONER CARDOZO: Thank you Madam Chair and good morning, Mr. Buchko and colleagues.
334 I have a series of questions and let me just tell you the topics that I'll be going through. We'll start with the NCI package; second, the other CTD benefits that you've suggested, or projects; and third, local reflection; fourth, economic and business issues; fifth, technical -- tell me if I'm talking too fast -- fifth, technical; and sixth, ownership.
335 That's just to give you a sense of how we'll be going, and some comments you may want to keep under certain sections but certainly make them whenever you feel you wish. Indeed, the questions are designed, as you know, to get some more information that we don't have on the file so that we have as full a file as possible so we can make a decision at the end of the day.
336 Let me start then with the NCI package. If you can give me a little more detail ‑‑ and indeed, I notice that NCI will be appearing during the intervention stage and we can certainly pursue some of that with them ‑‑ but I just wanted to get a better sense of what the package will be for. In the supplementary brief, it suggested that the money would be for operational and extension of the network. In the intervention from NCI there is also talk about a training program. Could you give us a breakdown of how that money will be used?
337 MR. BUCHKO: Mr. Commissioner, first of all, from the time we put the application in from further discussions with David McLeod and the NCI board, it was felt that the money would be better purely for operating from their standpoint. So in the end, we've said, we will give you $150,000 a year and you do with it as you please. For which, they've told us, they would like to develop, they would like to find Aboriginal talent, develop them and pay for all the costs of developing that talent. So in the end, we'll give them the money and, as long as they can use it for operating purposes, we really have no say how they are going to use it, as long as it does something to benefit the growth of the Aboriginal broadcasting in Manitoba.
338 COMMISSIONER CARDOZO: Okay, so what ‑‑ I guess it's Mr. McLeod's letter of intervention talks about five Aboriginal students will benefit from this fund a year and two would have jobs as well. Is that the kind of project you're looking at?
339 MR. BUCHKO: I'll ask Sherrie Johnston, who is the operations manager of CJOB and Power 97, who has been very involved in the Aboriginal development of broadcasting in Manitoba.
340 MS. JOHNSTON: Thank you. I'll just tell a little story that goes back several years. Several years ago, the management team of CJOB and Power 97 determined that the principle of employment equity is a good business practice. Indicators tell us that by the year 2013 the Aboriginal population in Winnipeg will be at least 100,000 people. That's a significant growth from what it is right now. And we believe that it's a good business practice, particularly on CJOB, that our workforce reflect the makeup of the community.
341 So at that time, we opened up our hiring process and proactively sought employee candidates from Aboriginal and visible minority groups, and unfortunately, we found that there's a very limited pool of talent available within those groups. So what this opportunity gives us, through our benefit package to support the Aboriginal community, to use NCI as a training ground and to develop these people, and then eventually we would hope to hire them at our stations and bring them into mainstream broadcasting.
342 So it represents a win-win for everybody. It's good for NCI; it's good for the Aboriginal community; and it's of course good for Corus because we'll be able to build a staff complement that reflects the community within which we live and do business. Thank you.
343 COMMISSIONER CARDOZO: So at this point your stations don't have any Aboriginal employees?
344 MS. JOHNSTON: Not at this time.
345 COMMISSIONER CARDOZO: Okay. Tell me more about what you've done in terms of your relationship with NCI. You talked about the Blue Bomber games simulcast or transmitted across the province.
346 MR. BUCHKO: Actually, our relationship probably dates back about two years when we started working together. I guess it's a relationship built originally out of need ‑‑ we needed to expand our broadcast coverage for the Winnipeg Blue Bombers ‑‑ but then it also became a good common relationship based on satisfying each other's needs.
347 I think the NCI provides a fabulous resource for the Northern community which otherwise wouldn't be there. When David McLeod and I first sat down and talked about Winnipeg Blue Bombers, he made it clear that they had no money to pay us for the service of being supplied 20 games. In the end, we give it to them for free. We deliver it to them for free and they send it out to all their stations throughout northern Manitoba and, in fact, Selkirk, Manitoba. They generate all the revenue and they keep all the revenue in return for that.
348 We also recently ‑‑ NCI has an annual talent search. They bring in acts from all over Manitoba, they build a CD, and they ran into some technical difficulties where they didn't have the technical ability to run a clear service through all their radio stations. There was a hum, there were some technical problems, of which I know nothing about, but there was a definite problem there. David called myself and we put our engineers together and we provided all the service, all the equipment and all the knowledge at no charge, just to help them out and make sure that their over the air broadcast was as technically sound as possible.
349 COMMISSIONER CARDOZO: With regards to the Blue Bomber games where you say they kept the revenues from those, what revenues would those have been? Were they doing separate advertising?
350 MR. BUCHKO: They would sell all the commercials available in the games. They would sell promotional sponsorships --
351 COMMISSIONER CARDOZO: So they were getting a feed just of the game from you and then they were putting in their own ads?
352 MR. BUCHKO: That's right. They would get a clean feed and they would replace our commercials with their commercials. And I think they generated somewhere between twenty-five and thirty thousand dollars in revenue, which is ‑‑ from their standpoint, that's fairly substantial, and great programming too.
353 Outside of Winnipeg, from our signal reach, especially since in the fall we have a limited pattern when our night pattern goes down, it gave all the people north of Selkirk, Manitoba, an opportunity to listen to Winnipeg Blue Bomber football.
354 COMMISSIONER CARDOZO: Okay, let me just take a moment to let you know that we certainly recognize what you're doing to assist Aboriginal broadcasting. As you've noted in your application, in our Calgary decision we did encourage commercial broadcasters to step up to the plate and assist Aboriginal broadcasting where possible. So we certainly note that and in terms of the proposal here, that's part of the mix that will be part of the decision. But I just want to take a second to note what you have done so far, and it's nice to see, too, that people do read our decisions.
355 Let me move to some of the other talent development issues. The live concerts. I just wanted to verify that the promotion aspects that you're talking about there, would those be third-party promotions? The reason I say this is because, as you may be aware, under the expenses that are allowed for direct and indirect talent development, promotion done by your own station would be considered an indirect benefit, whereas promotion done in third-party areas, whether newspapers or other radio stations or other media, would be a direct expenditure. So where you've talked about a certain amount of the money for the live concert series and the compilation CD, is the promotion or advertising aspect of a third party nature? Do you understand my question?
356 MR. BUCHKO: Absolutely, and Sherrie can walk us through that.
357 MS. JOHNSTON: Thanks, Garth. First of all, the complication CD, $70,000 per year. That's a home-grown CD project that will showcase emerging Manitoba A/C artists. We'll invite independent artists to submit their original songs for consideration, and then a panel that we'll put together of major record label reps, perhaps recording artists like Burton Cummings or Chantal Kreviazuk and of course, music and program directors from across the country, the people who decide what goes on the radio. Those are the types of people that we will have review all of the applicants. We'll select ten to put on the CD and then the CD will be promoted and distributed Canada-wide for airplay.
358 The expenditures are all direct. Promotion of the contest, we would do that pre and post and that would be advertising third party as well as promotion on our own stations, including other Corus stations across the country. That would be $50,000, and then $20,000 would be studio production of the artists, and then of course CD production and distribution.
359 COMMISSIONER CARDOZO: I just wanted to clarify that when you're doing the reporting to us at the end of the day, the promotion part where I think you put, for example, $20,000 under the compilation CD and an amount for the concert series, the promotion and advertising part would clearly be third party and anything you do in house would be considered an indirect benefit.
360 MS. McNAIR: That's correct. We would report the promotional dollars to third parties as a direct expenditure.
361 COMMISSIONER CARDOZO: And just one thing to go back to the NCI project, I'm sure they do appreciate that you're prepared to give them funds and they do with it what they feel, there would still be the reporting that it would meet some objectives of our talent development regulations.
362 MS. McNAIR: What we would propose is that we would in it, when we give them the funds is say that the funds would be used to support fulfilment of the objectives of the Canadian Broadcasting Act.
363 COMMISSIONER CARDOZO: On the concert series, would there be an admission fee? Are these sort of the concerts that you've talked about in your opening that Power 97 does? And I just wanted to understand if there was an admission fee, how that would fit into the mix of the money that you're putting in?
364 MS. JOHNSTON: The $120,000 per year for the live concert series, all of that money will go directly to the support and promotion of Canadian talent. So most of those funds, most of the $120,000, will go directly to the performers that we have in our concert series.
365 Other costs that we would incur, promotion of the event, technical hard costs, venue insurance. And to answer your question, would there be a fee to the concert? Probably, and I think that would be to help us offset some of these additional costs.
366 COMMISSIONER CARDOZO: These projects ‑‑ either the concerts or the compilation CDs -- would they be associated with any of the other similar projects that Corus does elsewhere in the country?
367 MS. JOHNSTON: I think that would be a goal. Our live concert series and the CD compilation are very Manitoba-focused projects, but it would be wonderful if we could take advantage of the Corus network, and perhaps ‑‑ if the CD compilation disc, if we had ten winners on it that we wanted to promote across the country, perhaps two or three of those could become part of the live concert series and then perhaps it gets even bigger and becomes a Canada-wide contest where Corus can showcase nationally winners.
368 COMMISSIONER CARDOZO: What is your experience with compilation CDs? It's something that we've been doing for a while and I just wanted to get your sense of are they really useful in terms of artists getting on the air? Or is it something that broadcasters do because they agreed to do it in order to get a licence and so you just slap ten songs together and put out a CD? Do you find that those songs actually get on air, and wouldn't get on air otherwise?
369 MS. JOHNSTON: I would say that the projects that we do, we're the best promoters of them because often it depends on what format the music is in. Because we've done a home-grown project way back when when we were CKIS, and yes, I think they're good for the artists. They are exciting. We usually take the contests and the shows out to local venues so there's good community support. And anything, even the production aspect, where we take the bands into a studio and cover the hard costs of the production and the CD, that's beneficial to them if they want to market internationally.
370 COMMISSIONER CARDOZO: Okay.
371 MR. BUCHKO: There's a local, local band in Winnipeg that came to us two years ago, which we never included in our Canadian talent development money. They're called Jet Set Satellite. They walked in with a CD they burned themselves and walked in and said, how do we go about getting this played? Where do we go? Our programming team sat down with them, introduced them to music people, introduced them, told them the ropes and where to go, we helped them produce the CD in good technical quality. And they've, quite honestly, become Power 97's house band when we have promotions, when we have events, when we do our major BBM promotions and we have 600 people there, they play for free for us because of the relationship we've built.
372 And Jet Set Satellite is probably two years away from making it big. Last summer they were on a major film soundtrack with a song. So they're just beginning it. And I think to answer your question, and Sherrie answered most of it, I think it's our obligation to find the Jet Set Satellites, the Watchmen, the Barenaked Ladies, and I know the Edge in Toronto broke Barenaked Ladies and gave them the opportunity.
373 Is it going to be all ten of our compilation acts? Probably not. But if there's one out of ten and if we don't do these types of initiatives and give bands opportunities, then they probably will remain in their garage playing the music that they're playing today.
374 COMMISSIONER CARDOZO: Your sense of it is that once you put out that CD that radio stations are playing those songs?
375 MR. BUCHKO: Radio stations -- the majority do. Like I said, there might be one or two acts, two songs on the compilation CD, but any ‑‑ even the Rolling Stones and Mick Jagger's new CD, there's really only one song that's being played on commercial radio so it -- I think that speaks to whether you're local Canadian or you're an international star. Canadian radio stations will play the best songs on that CD, and generally there's one or two. There should be one or two.
376 COMMISSIONER CARDOZO: And generally, who do you send these CDs to?
377 MR. BUCHKO: We haven't done one since our CKIS days, so I really can't speak from experience.
378 COMMISSIONER CARDOZO: Who would you plan to send this one to?
379 MR. BUCHKO: We would send them to all the soft A/C stations in Canada. We would obviously send them to all the Corus radio stations, 52 of it. CJOB plays a very limited amount of music but I can tell you that when there's a local entertainment act that comes into our station with a song, we definitely try to play it and highlight it.
380 So all the soft A/C stations in the country, all the oldies-based stations and all the Corus stations will definitely be asked and encouraged to play the CD compilation.
381 COMMISSIONER CARDOZO: Okay, and who will be responsible for these initiatives? Will that be you, Ms. Johnston? Who would be responsible for keeping track of the various initiatives and reporting?
382 MS. JOHNSTON: Yes, I would work with the program director of the new station to quarterback the project.
383 COMMISSIONER CARDOZO: Okay, thanks. Let me ask you some general questions on diversity with regards to these projects. Are we talking for the most part, with the concert and the compilation CDs, that you'd be focusing on Winnipeg and Manitoba artists and groups?
384 MR. BUCHKO: Yes, to be direct. There's a great abundance of talent in this city and province. My colleagues before us talked about what a great city this is for rock and what a great city this is for talent. There are so many people out there who are looking for an opportunity just to be noticed or get the funding to do what we're talking about. There is the Watchmen, which is another band Power 97 helped promote and helped launch, or another band that was touring the bars and no record company would give them the light of day. And once again, we did and they're now a cross-Canada, soon to become an international band.
385 There is plenty of talent in Winnipeg and Manitoba who should be recognized and we plan on helping the soft A/C side of the music because nobody is doing it right now in Winnipeg. Everybody is focusing on the rock bands and we'd be the only one who is focusing on the soft A/C side of the music.
386 COMMISSIONER CARDOZO: You see yourself promoting the diversity of talent, the cultural diversity, the Aboriginal reality of the talent that's out there?
387 MR. BUCHKO: Yes, we do. David and I have talked regularly about ‑‑ they have their talent search and there's obviously some real good talent that comes out of that. If there's a musical group, a talent, who fits our format, that wouldn't stand outside of our format -- if it was a country-western song, obviously we wouldn't play it, but working together as we have in the past couple years to strengthen, not only Winnipeg's soft A/C but the Aboriginal broadcasting of Aboriginal music would be a definite plus for us.
388 COMMISSIONER CARDOZO: Now, with the program, your initiative the Winnipeg cultural icons, with the Royal Winnipeg Ballet, the Winnipeg Symphony and the Manitoba Opera, have you got agreements with them in terms of how that money would be spent?
389 MR. BUCHKO: We've had discussions. Part of our Canadian talent development money right now goes to the Winnipeg Symphony. We've had discussions on how we can extend that money but there are no agreements, no formal agreements on how much money they would get. We would sit down with each individual group to see which are the best ways to utilize those funds.
390 COMMISSIONER CARDOZO: Okay. On local reflection, you plan to do a fair amount of information and lifestyle programming. Could you tell us a little more about that?
391 MR. BUCHKO: Quite honestly, I'm really excited about the opportunity to provide a type of information that CJOB provides on the FM dial, keeping in mind that this will be distinct, this will be completely separate from CJOB. But right now in Winnipeg, the average newscast on an FM station is about a minute and a half long. FM stations across Canada are looking for ways to get rid of news and information, not add to it.
392 Our FM station will be 25 percent spoken word. Without duplicating the services on CJOB, we will have our own news director, program director on our new FM station. We will have our own dedicated news team, and we'll be able to share some of the resources with CJOB when it comes to breaking news stories. If there's a fire downtown or if Jean Chrétien is coming to town and he's on with Charles Adler in the morning, we can use some of the bits from the interview with the CJOB personality.
393 But in the end, the news delivering services of our new FM station will be completely distinctive. Each area of the day will have its own news gathering person and that news person will be writing the news.
394 We will have a five-minute complete newscast at the top of the hour, every hour throughout the day from 6:00 a.m. to midnight. During the breakfast and drive time, we will have a two-minute update throughout the day, leaving out the 9:00 a.m. to 4:00 -- 3:00 p.m. We will have complete surveillances, weather four times an hour, traffic four times an hour and the breakfast and drive home show and weather throughout the day. We will update the weather on a continuous basis throughout the day on our new FM station.
395 Sports programming, sports news. CJOB is the sports leader in Winnipeg and we are the voice of all sport in Winnipeg, be it amateur or professional, and our FM station will have its own dedicated sports people but we will utilize the resources and the services and the contacts that CJOB has for interviews and for the extension on the FM dial.
396 And I can tell you right now as an FM listener, there are no services available in Winnipeg that will provide that kind of coverage on the FM dial.
397 COMMISSIONER CARDOZO: Is there a certain focus that would be different from CJOB in terms of the news and information staff? You said it's going to be different, but are you skewing to a different age group or educational level or ‑‑
398 MR. BUCHKO: Our target demographic is 35-64, which is where 58 percent of CJOB's audience lies. But our research shows that CJOB listeners do not want to listen to news, talk, information programming all the time. They're switching to CDs and they're trying to search for a music alternative on the FM dial that can still give them the information programming they want. So our FM station will still give them the music they want to hear, but will also give them the full information packaging that they have.
399 Psychographically, we will change the way we deliver news on the new FM station. It won't be the same, it won't be as in-depth. CJOB does as much as six-and-a-half to seven-minute packages top of the hour in breakfast and drive. We won't be as in-depth, but when it comes to business news and it comes to financial news and financial reporting, updates during the day, our new FM station will focus on more lifestyle issues too, besides doing the business updates and all those type of thing. We're talking just a different mindset of listener between AM and FM. We need to tailor the news to an FM listener.
400 COMMISSIONER CARDOZO: I wonder if Mr. Yerxa or anyone else can give me any more information. I'm still not clear as to how you've identified who those listeners would be who would not be listening to CJOB or some other station. How are they not being served now?
401 MR. YERXA: If you don't mind, I would like to generally start by talking about the market research because its results address the question of diversity by touching on one of the most serious issues, I believe, facing radio programmers, in particular A/C programmers across this country. And apart from news, which I'll address in a moment, one problem with market research over the past decade is that, by asking questions of soft A/C listeners in particular ‑‑ like is soft A/C too boring or is it ever too slow ‑‑ this process has, in effect, led many programmers to over-contemporise their formats and in many cases, become too up-tempo for many 35 to 64 listeners, especially those 45 plus years of age.
402 Consequently, over the past decade, we've seen this push to contemporise or brighten up soft A/C stations, and many A/C programmers, soft A/C, have simply assumed a more mainstream mantle. Of course, their efforts have generally succeeded because their previous mainstream competitors have also moved towards a hotter or more contemporary stance, many becoming adult CHR hybrids in the process, thereby opening the doors for these soft A/Cs to shift more mainstream.
403 But unfortunately, there now remains a whole batch of music that radio researchers and consultants have walked away from. You see, on the one hand, we no longer hear artists like Barbra Streisand, Simon and Garfunkel, Anne Murray, Air Supply, Dan Hill and so on, artists which comprise, for lack of a better word, I suppose, what I'll term square A/C right now. Likewise, there are acts like James Taylor, Paul McCartney, Carole King, Gordon Lightfoot, Linda Ronstadt, Little River Band, and numerous other '70s based artists, who for now I'll term soft rock, that A/C radio has also left behind.
404 While we acknowledge that most former soft A/Cs have now evolved into brighter contemporary sounding mainstream A/Cs, it is very important to recognize that at least two market segments, as I've just described them, now remain severely underserved. And sadly, most of those soft A/Cs that have contemporised now wouldn't even think of going back to the music that I've just identified because it's too old or too stale.
405 Of course, the point is that this format's broadness is what will now attract a demographic, combined with the incredible news commitment and information commitment that is being made, that is now severely underserved, not just here in Winnipeg, but in many markets across Canada.
406 Certainly there are those who would still perhaps question this approach in that they would think it is without precedent but I would respond that this concept actually has its roots in the old Transtar 41 format of the 1980s, which was developed by the research group out of Seattle and which helped to spawn the emergence of the soft A/C format in the first place.
407 It also served as the foundation for my approach when I first began to conduct research in the late '80s and early '90s for stations such as CHFI in Toronto, KISS-FM in Vancouver and so on --
408 COMMISSIONER CARDOZO: Can I just interrupt you for a second? I accept what you're saying in terms of the music overall, but I wanted to know more just about the information and news programming, what your sense is, where is the evidence or where do you see people looking for that and not being served currently elsewhere?
409 MR. YERXA: Within the research that we conducted, a majority of people indicated to us that they would like to hear a local FM station present news that is not presently available. And when we asked them if there was a station that could provide news and information apart from the CBC, whether it was available, again a majority indicated that it wasn't and that they would like to receive that on the FM dial.
410 We also asked how important it was that they be provided with news and information, and a significant percentage, 59 percent, said that it was very important.
411 COMMISSIONER CARDOZO: Okay, thanks. In terms of local reflection and local involvement, what is your basic approach, Mr. Buchko, to connecting your stations with the community?
412 MR. BUCHKO: The majority of the programming, 99.9 percent of the programming, will be done in Winnipeg from the new FM station. All the newscasts will be delivered locally, by local people, written locally. We propose in our plan to do a two-hour evening talk show from 9:00 p.m. to 11:00 p.m., which would be an FM, something new for FM in this city. It will be done locally by a local individual dealing with lifestyle issues that are important ‑‑ mainly targeted to females.
413 Saturday/Sunday morning will be a lifestyle program that will be four hours each morning. It will be lifestyle, news magazine, information program, tied in with music and all of our resources that we do on a regular basis anyways. You tie in the news programming, the lifestyle issues and all the interviews that we do during the day, our commitment of 25 percent spoken word is quite easy to attain.
414 COMMISSIONER CARDOZO: Is there room in your station for local groups, non-profit groups et cetera to have ‑‑ do they get covered regularly? Do they get their voice on the radio? Do people who are running campaigns, the Heart and Stroke Foundation or whatever, do they get access to your airwaves?
415 MR. BUCHKO: Absolutely. As I said in my opening statement, we dedicate more of our commercial time and more resources both financially and promotionally than anyone else in the city, be it any medium. The new FM station will be as committed to this community as CJOB and Power 97 is. It's just an extension. It will become really an extension. If we're doing a major fundraiser for the Children's Hospital Foundation, their annual appeal ‑‑ and we're doing it on two stations right now ‑‑ we would obviously add an third and create a PSA campaign, create interviews, and the new FM station would allow for more interviews and more coverage.
416 COMMISSIONER CARDOZO: Okay, thanks. If I could just move to the economic and business issues, and first ‑‑ this goes partially to what Mr. Yerxa was talking about in terms of the selection of format ‑‑ you're looking at an oldies, soft A/C format. Just tell me in a few words how that differs from say easy listening or smooth jazz?
417 MR. BUCHKO: I'll ask John Yerxa to answer that question for you.
418 MR. YERXA: Perhaps the best way to discuss how it differentiates from easy listening today is to begin by saying that easy listening as such, does not necessarily exist in most markets across this country. That is what we've been able to identify in most of our research. Unfortunately, many soft A/C stations have over-contemporised and have moved to a more up-tempo stance and as a result have alienated a large percentage of the 35-to-64, in particular 45‑to‑64 listeners out there.
419 To the extent that this station would be differentiated from what are now termed contemporary soft A/C or mainstream A/Cs, we would put much greater emphasis on a large percentage of music that we feel a lot of these stations have walked away from, from the '60s and '70s in particular, and we would focus primarily on those current artists who have a large amount of gold repertoire to call on.
420 COMMISSIONER CARDOZO: Okay, and how does it differ from the CHR rhythm?
421 MR. YERXA: I'm sorry?
422 COMMISSIONER CARDOZO: How does it differ from CHR Rhythm?
423 MR. YERXA: Right now, when you look at the CHR or hot A/C formats, a very large percentage of the music that appears on those charts is rock crossover material or R&B crossover material from the other formats. There is as a result a greater percentage of up-tempo music that is now appearing. There's also a significant percentage of country crossover material that's crossing over on to the mainstream A/C charts as well. But primarily it has to do with a question of tempo and it has to do with an opportunity to provide a block of music that is not currently being provided to these more mature listeners.
424 COMMISSIONER CARDOZO: If you were licensed, how long would it take to get the station going? For example, if we had a decision out in May, when would you be launching if you were licensed?
425 MR. BUCHKO: I would hope three months, but I would say six months would be a more feasible time period.
426 COMMISSIONER CARDOZO: And is there any time of year which is better to start operation? Is it he fall?
427 MR. BUCHKO: I would say the summer would be the best time, so you can be ready for the fall book. If you're not on during the fall BBM then you have to wait another six months before you get rated. And obviously it's a critical period if you have to wait six months before you can actually show how well your station is doing. If there's a lag effect, that will end up costing us some money in the end.
428 COMMISSIONER CARDOZO: Okay. Can I ask you about your financial projections? Under revenue, you've got a category called "Other." You've got local ads, national ads and other. What would the other be?
429 MR. BUCHKO: I know, but I'll ask Jennifer Holland, the financial person for Winnipeg, to answer.
430 MS. HOLLAND: In our other revenue projections we have things included there like remote production revenue, studio production time, promotional fees and Internet revenues.
431 COMMISSIONER CARDOZO: Other production time would be when you rent out your facilities to others?
432 MS. HOLLAND: Correct.
433 COMMISSIONER CARDOZO: How do you project your ad revenues over this period of time? I'm thinking about the projections for Corus overall. Based, I think, on figures put out by your company, there was an article in the Globe and Mail on Friday, which talked about the Corus overall ad revenues projected to go up by two to three percent, with local ads going up seven, national going down eight percent. What's your sense about the Winnipeg markets in that context?
434 MR. HAYES: Our sense about Winnipeg is that it's a very, very strong market. In fact, I want to say that this year the market has increased ‑‑ local market is up by twenty percent' is that right? -- in the first quarter. Retail continues to be very strong. It's clear that if there is a recession on, Winnipeg hasn't heard about it. People continue to buy large, durable items and make investments and seek to purchase other goods and services.
435 So we feel very good about Winnipeg. We think it's got a very strong local economy.
436 COMMISSIONER CARDOZO: Okay, because some of the projections we've been looking at are a bit different and, unfortunately, not as rosy. The Conference Board of Canada, for example, since last fall has revised its projections downward. Some have said in the past that this is one of the tightest radio markets. I think you and others today have talked about a very competitive market.
437 MR. HAYES: I would refer to what Gary Miles said this morning about Winnipeg and the fact that radio in general is becoming more and more accepted as an advertising medium by local retailers. In fact, we find -- this should be no great revelation, but we find that the better we train our sellers, the more effective we are at garnering revenue, and therefore the more effective radio advertising becomes. Because once an advertiser is exposed to radio and learns how terrific it really is and how it generates results, they come back again and again and again.
438 The other area that we seek to cultivate, if you will, is the newspaper area where there's an inordinate amount of advertising in markets like Winnipeg that rest with the newspaper and we think that radio has a good and compelling story to wrest some of that money away.
439 COMMISSIONER CARDOZO: Okay, there's quite an interesting stability in Winnipeg and that's a fairly diverse economy. Yet a certain amount of it, a good portion of it, is based on exports to the U.S. If you look at something like the current concern around MCI, Motor Coach Industries, if they were to leave town, that's 13,000 jobs that could go and then all the spin-offs that would be affected.
440 You're not concerned about that type of situation?
441 MR. HAYES: I should let Garth speak to that, but I think conjecture about a lot of what‑ifs, I don't know how to respond to that kind of conjecture.
442 MR. BUCHKO: I'm a born and raised Winnipegger. I've been selling and involved in management in Winnipeg for twenty years. In fact, if it wasn't for Gary Miles, I probably wouldn't be here today, so . . . And I worked with Gary back in those days when he was at CKRC when the market was challenging, and for many years Winnipeg revenue market didn't grow.
443 I think that was our own fault. I believe now, the last three years the Winnipeg revenue has grown. The last 52 weeks, Winnipeg revenue has grown by seven percent. Since September 1st when the so called recession hit and after 9/11, every other market dropped in revenue. Since September 1st, the Winnipeg market has grown altogether by 13 percent, which is significant.
444 I just think we're doing it better. Our salespeople, my salespeople are doing a better job the last couple, three years. They're better trained. And Gary Miles said the same thing. We're better equipped to grow the market. We've now got away from selling commercials and spots. We have now become salespeople who care about selling cars, computers and jeans.
445 That's why we're growing the revenue. And that's why the market growth is going to be substantial. I believe in our financial reporting we said in year two we'll grow by four percent, which is very reasonable. In years three to six, we've said ten percent and by year seven, 12 percent. That's a combination of ratings growth and market growth and by taking dollars from competitive mediums too.
446 COMMISSIONER CARDOZO: I'm assuming, Mr. Hayes, that the notion of what-ifs is something that one does take into consideration in economic projections and that you look at various scenarios on a sort of running basis as you're looking at how the economy of a country or city is doing.
447 MR. HAYES: Yes.
448 COMMISSIONER CARDOZO: Can I ask a couple of questions about share, the tuning share of the market. What are your projections for the first five years?
449 MR. BUCHKO: The tuning share will be between seven and ‑‑ about seven to eight share for the new FM station.
450 COMMISSIONER CARDOZO: And how much of this share would come from other stations, such as CJOB, CKY as well as Winker and Steinback?
451 MR. BUCHKO: Well, obviously our first, probably our biggest competitor will be our own station, the 35 to -- CJOB is comprised, 58 percent of its audience is 35 to 64. I believe we're better equipped to attack ourselves than somebody else because if somebody else attacked us in that way, with the same type of format, four or five years from now CJOB's financial credibility will be in question.
452 But the key with growing it is not only share, but the 35-to-64 year old demographic from a revenue point of view is truly underserved in the Winnipeg market. About 70 percent of all media buys done in Winnipeg is adults 25 to 54. When you look at CJOB's overall share of 18.5, it looks large. But when you break it down to 25-54 where all the money is being spent -- 70 percent of the money -- you take our cluster versus somebody else's cluster, we are in the middle of the pack or second in the pack for 25-54.
453 In the end, we will attack CJOB's audience but at least we'll share the audience. We will affect CKY-AM too. We will affect all audiences. But heard earlier, there's nobody that's really targeting 35-to-64 anymore, besides CJOB. We're the only ones who recognize that the population is growing older, that the money that they have to spend is significant, and every FM station in this city wants young 18-to-49 year olds, period. Even the new applications today will be all young targeted radio stations.
454 If I'm going to lose audience, and Corus is going to lose audience because somebody is attacking the upper end of our station, I want to attack myself.
455 COMMISSIONER CARDOZO: Okay. On the competitiveness issues, one of the points that you've made is that you need a new station to be competitive in the market and you talked about CHUM and Standard for example. I just want to point out a couple of other things and ask you how relevant it is. When you look at Corus overall ‑‑ which, according to our 2001 Broadcasting Policy Monitoring report, you're the number one operator in the country. You're an affiliate of Shaw Communications. Your combined tuning in the Winnipeg market is pretty strong ‑‑ are you guys crying wolf?
456 MR. HAYES: I don't think so as it relates to the dynamics of AM and FM listeners. I mean, clearly, AM is a declining medium. And clearly, it takes an awful lot of hard work and research and expense to provide the kind of programming that CJOB provides.
457 We know, for example, across Canada that the average profit margin per station is 20 percent. We know at our own news talk stations across Canada that the average profit margin is in the 10 to 15 percent range as of last year. These are statistics that worry us. Most stations have the same amount of inventory to sell. News talk may have a few more veils than a music-driven service, but in a marketplace that seeks to create a business out of selling ads, it's not only the amount of listeners you have but the amount of inventory you have available to sell.
458 In a market like Winnipeg, if we have two stations and competitors have three, for example, we are at an inventory disadvantage, and so the notion that we could provide strong, compelling programming that serves the market that really doesn't take listeners from another service but provides us with more inventory ourselves, to provide to our well trained sellers to sell, this strikes us as being a fairly compelling argument.
459 COMMISSIONER CARDOZO: Okay. In your application, in one of the supplementary briefs, you've given some pretty extensive detail about Corus as a company and the success in the area. There is a certain amount of restructuring taking place or has taken place in Corus. I take it Corus is keeping radio for the long term?
460 MR. HAYES: Yes. One of the things that we've done is that, as I noted in my opening remarks, Corus is really a compilation of a number of acquisitions that were made in the last two years and we've acquired stations that were owned and operated by some terrific operators around the company including the WIC stations which, CJKR and CJOB were a part of.
461 We have a very strong belief in radio as a local medium. We have a very strong belief that local cluster radio managers should be, not only required, but encouraged constantly to operate their stations in the public interest.
462 In fact, if there are five objectives that our company has on an on-going basis, community service is right at the top of the list, and community involvement and community knowledge.
463 That's why Garth is the local market expert and the person on our team who is driving this presentation today.
464 COMMISSIONER CARDOZO: What are the synergies that you anticipate between a new station and your existing stations?
465 MR. BUCHKO: I think the major, number one synergy would be the sharing of the news stories that most FM stations wouldn't get, and most radio stations wouldn't get. We are in constant contact with every hockey player, football player in the city on a daily basis. So those type of interviews.
466 We have reporters who cover the leg[islature], cover city hall, cover stories that, as an FM station, we wouldn't have two or three beat reporters. But when they have an exclusive interview with someone of notoriety, we're going to use that on our new FM station similar to what we do on Power 97 right now. We use the interviews and we use the clips in with the digital world of technology. It's easy to pull it down and use it.
467 But really, that's it. We're going to have our own separate programming department. We will have 11 people who are fully dedicated to programming news on our new FM station. CJOB has 23 people who are dedicated to gathering news and the programming of its news services. So together we will have a large news gathering operation between the two stations.
468 COMMISSIONER CARDOZO: That sort of raises the issue, the question in my mind about the matter of radio clusters that Mr. Hayes mentioned, and forgive me if you find my question to be aggressive. Really, what we're doing here is to try and tease out all the issues and to try and get you to put as much information on the record. I hope you don't feel I'm coming after you.
469 But assure me that this isn't that you are not more concerned about a radio cluster where you will have these shared services, and of course synergies are useful and good and make economic sense. Would the listener have to listen to all three stations in order to get that package? Are you not looking at this simply as three stations in which to get out a certain amount of music and news and share that kind of stuff? Differently, or the flip side of it, would it make any difference which of your three stations you're listening to in order to get the basic of what you're putting out there?
470 MR. HAYES: First of all, these would be ‑‑ the resulting cluster, if you will, would be three distinctive formats aimed at three distinctive audiences. There's a news talk audience that would be satisfied by CJOB, which is pretty much 100 percent speech programming. Then there's CJKR Power, which is oriented towards an 18-to-34 male audience. Then this station, which is oriented toward a 35-to-64 year old.
471 If we are to succeed as a business, we have to make sure that we reach and satisfy the interests of those distinctive audiences, and therefore, to think that we could just take elements from CJKR, for example, the male-oriented rock station, and plug it in on the soft A/C, the full service format, we would get no ratings traction. We would have no traction as a business. It would not serve our interests very well. And it would not serve our interests well because it wouldn't be serving the interests of the audience or the community.
472 As Garth pointed out in his opening remarks, this station, this new station would require us to make a substantial increase in the number of employees in our operations here in Winnipeg. And we're prepared to do that. This is clearly not the kind of format that's music intensive, that you can just plug in and hope that it works. This will require on-air talent and news people and reporters and such who are able to talk on the radio. And you have to be very skilled to do that, and you need back-up support.
473 This is an expensive proposition for us.
474 COMMISSIONER CARDOZO: And on the matter of increasing the number of employees, and looking back at the section you had in your application about Corus overall, there have been significant layoffs in recent months. How has that affected radio and is the increase of the new station a completely different issue?
475 MR HAYES: Yes, it is a completely different issue. Corus, like many other companies, has taken on a great amount of acquisitions following the change of rules as to ownership. In most cases, in most major markets throughout Canada, we have never focused on creating efficiencies or synergies within the clusters. We were just trying to assimilate the cultures and figure out how the business would work now that we've sort of integrated two AMs and two FMs or one AM from buyer A and an FM from buyer B and an AM/FM from seller C.
476 And we focused on that this last fall. I think it was well publicized and well characterized throughout the press as a layoff. But it was due. In order to operate the business in an efficient way, we found ourselves in many of the radio clusters -- Winnipeg was not one of them -- but in many of the radio clusters, we found ourselves simply with three people doing the same job.
477 MR. BUCHKO: Commissioner, just to further that point. I'd like to have it be noted that in Winnipeg when all the Corus restructuring took place, we had zero layoffs and we let zero people go.
478 COMMISSIONER CARDOZO: Can I ask you one more question about the Winnipeg market. Is it your sense that we could license more than one ‑‑ assuming we license, say, you ‑‑ could you operate with more than one other new FM licence in the market?
479 MR. HAYES: The Corus radio view is that more competition is better and that radio is such a powerful medium that it can best serve the marketplace when there are more voices.
480 COMMISSIONER CARDOZO: There are seven applications. Are you saying wewe can license all seven and it would be okay?
481 MR. HAYES: Do you have the spectrum for that?
482 COMMISSIONER CARDOZO: Your application for 99.1 is competitive with the Global and Rogers applications. From a technical perspective, not looking at the format and all the other good stuff that you've talked about that you would do, from a technical perspective, why is yours best for that frequency and not the others? Just tell me about your part.
483 MR. BUCHKO: Well, we have no engineers up here so I'll keep it as simple as possible for even me to understand. Quite honestly, we haven't reviewed the other frequencies. We would be approachable, we would be in a position to take another frequency, as long as another frequency had similar power and gave us the same kind of strength and range.
484 But in the end, we only looked at the one dial position and frequency.
485 COMMISSIONER CARDOZO: Okay. I had a couple of other questions on that but you just told me your answers. You hadn't looked at the others.
486 Well, tell me overall then, looking at what you've suggested, I'm wondering if a great deal of your application comes down to a statement on page 8 of Schedule 20 where you say that the reason you want this frequency is "to ensure that our stations remain competitive. It is important that we be permitted to operate two FM stations as well."
487 I understand that from your perspective and the business case ‑‑ and we talked about that a few minutes and you gave me a clear answer on that. From the perspective of the consumer, of the listening public in Winnipeg, what's in it for them?
488 MR. BUCHKO: As John Yerxa pointed out earlier, there is a dire need for the 35-to-64, in fact the 45-plus audience, to find a music home on FM. Through our research I think we've clearly demonstrated that not only music is important, but a full service radio station with news, sports, traffic, weather, lifestyle programming and talk programming is important to that 35-plus, 45-plus audience.
489 From a market strength position, we are strong in Winnipeg. The share numbers don't deny it. When it comes to revenue strength, CJOB is the number two billing station in Winnipeg. The CHUM station is the number one billing station in Winnipeg. CHUM has another FM station from Standard coming in. They're going to improve it, I think. And Standard's acquisition of Craig stations -- they're going to improve those stations somewhat, some way. They're all, in the big picture, under-performing, I think, their new owners would suggest.
490 So it's our opinion that any good operator is going to look at changing those three FMs to attack who they might think might be the weakest or where the biggest hole is. I have a pretty good feeling that none of them will attack the 35-64 demo, the upper end, because everybody in Winnipeg seems to want the 18-to-49 year old. That's what they're slanted for. Everybody wants it. We've identified that there's an opportunity -- not only through research that there's a need, that there's a good financial opportunity there.
491 COMMISSIONER CARDOZO: I thank you for that because at the end of the day, we are looking at the economic issues that you've talked about but we also have to look at the public interest and the what's-in-it-for-the consumer part of it, so thanks for that.
492 Those are my questions. I appreciate your help. Thank you, Madam Chair.
493 THE CHAIRPERSON: Thank you Commissioner Cardozo, I have a few questions and I wanted to clarify a few things because I did read your application.
494 Looking at the benefits, I didn't see any reference to Winnipeg and Manitoba artists, and of course I was concerned about that. So is it fair to say that if we're talking in your CTD about funding an annual talent search, it's a talent search of Manitoba artists?
495 MS. JOHNSTON: Yes.
496 THE CHAIRPERSON: And you would agree to that being in your, if we licensed you?
497 MS JOHNSTON: Absolutely.
498 THE CHAIRPERSON: The same with the concerts. They would be in Winnipeg?
499 MS. JOHNSTON: Yes.
500 THE CHAIRPERSON: Of Manitoba artists?
501 MS. JOHNSTON: Yes.
502 THE CHAIRPERSON: Now, would they, the concerts, also be related to your genre? To the format?
503 MS. JOHNSTON: Yes.
504 THE CHAIRPERSON: The soft adult contemporary artists? Then, when I'm getting to the Canada Music Week, I take it that that has no connection with Manitoba or Winnipeg artists?
505 MS. McNAIR: No. But as you know, Canada Music Week, musicians from all over Canada go, but the cheque would be paid to Canada Music Week.
506 THE CHAIRPERSON: I also know that musicians from the Prairies are under-represented which is why I look for every opportunity to promote them and if I'm going to have a licence in Winnipeg, I'd like them to promote the under-represented people.
507 Same with FACTOR, are you going to be requesting that those monies would be dedicated to Manitoba or Winnipeg artists?
508 MS. McNAIR: Yes, we would encourage FACTOR to allocate those funds to Manitoba artists.
509 THE CHAIRPERSON: You've asked and they can confirm that it would be? You would do that?
510 MS. McNAIR: I know in the past we've asked FACTOR to do that. I don't know if they absolutely confirm.
511 THE CHAIRPERSON: They actually give a letter.
512 MS. McNAIR: Okay.
513 THE CHAIRPERSON: And is it your intention, Mr. Buchko to continue providing the Blue Bomber feed to NCI?
514 MR. BUCHKO: Absolutely, for as long as they want it.
515 THE CHAIRPERSON: At no cost?
516 MR. BUCHKO: At no cost. In fact, when the transmitter in Brandon is up and running this fall ‑‑ or this spring, I guess, let's hope by May or June ‑‑ the Brandon area, which has always been a hole for us in the Manitoba market, because there's no Brandon radio stations who carry Bomber coverage, we will have almost 100 percent penetration of the province with Blue Bomber football, and in fact, into Saskatchewan.
517 THE CHAIRPERSON: NCI, I think, will have 95 percent coverage, if I understand that correctly.
518 When we get into the ‑‑ back at the benefits, at another hearing where Commissioner Cardozo and I were, we were told that the complication CDs, while a wonderful thing, really don't help a young artist, that it's an issue of rotation. If you have a medium rotation or ‑‑ that is how the young artists actually get ahead in life. So that's why you got the questions from Commissioner Cardozo about the efficacy about a CD compilation.
519 What are your plans with the compilation, if you had the new station here and the other two, in terms of rotation?
520 MR. BUCHKO: Well, I guess if we decide that ten songs are the best that we have available, they should be airable. We're not going to put six that are and four that aren't. So on a local basis, they will receive significant airplay. I don't know if you're looking for a number or figure.
521 THE CHAIRPERSON: I'm looking for a type of rotation, yes.
522 MR. BUCHKO: Boy, I wish I had a programming guy up here --
523 THE CHAIRPERSON: Medium is about 14 a week.
524 MR. BUCHKO: I know I can't give you --
525 THE CHAIRPERSON: Maybe you could come back with that?
526 MR. BUCHKO: We will come back with a definite number before this proceeding is over. A And the other Corus stations and the other stations across the country who are soft A/C, we will do everything and we will produce the CD and distribute it.
527 THE CHAIRPERSON: I didn't understand what you were talking about, Mr. Buchko, the last 52 weeks, the market has gone up seven percent. Is that your knowledge of the advertising market, or what?
528 MR. BUCHKO: That's from the TRAM reports. The last 52 weeks, to the end of December, the market has gone up seven percent. From September 1st, it's gone up 13 percent this fiscal.
529 THE CHAIRPERSON: To the end of December?
530 MR. BUCHKO: Yes.
531 THE CHAIRPERSON: Okay. And having heard a lot of radio applications in the recent years, I was always told that my demographic, which is from 35 to 65 -- and certainly I'm in the younger part of it -- that we are not a good demographic because if we have money, we don't spend it and that le are primarily savers. Now, if you go for smooth jazz, you get the high-end people who have the Lexuses. But for the rest of us, we're not a good demographic and that's why you go for the kids who, if they have money, they'll spend it, and if they don't, they'll get it from their parents. What do you say, anybody on the panel, about that?
532 MR. HAYES: I also reside in your demographic, also at the younger end. I will tell you that having operated stations in the U.S. and owned radio stations in the U.S. and sold there in many major cities, for more years than I care to say, the demographic of 25-to-54 adults, has been applied by major ad agencies as the sweet spot, the target that they want to reach.
533 The younger end, because it's a time when younger consumers are forming brand loyalties and deciding on brands that they hope to stay with -- or that advertisers, marketers hope they'll stay with for the rest of their life.
534 The older demo is seen as a demo that's kind of made its brand loyalty decisions and has kind of decided what products and services it will rest with. There is a huge movement in the U.S., and I believe by extension in the international community, now that the demographics of North America in general are changing towards this older demo, suddenly the marketers themselves, in our age group, are saying, well, wait a minute, gee, you know, I'm 55 now and I still need to know about automotive or financial services or food products that are new and so on.
535 So I think that this will begin to change over time. However, in advertising, ever since I've been involved in this business, youth is king. The crazy thing about this is that it results in people in our demographic being underserved when it comes to content.
536 MR. BUCHKO: Madam Chair, I also, because CJOB is such a 35-to-64 demo, I've spent the last year and a half with our national rep company, Canadian Broadcast Sales, looking at ways to attack this demo and growing the demo, and there's so many books written on the growth and how the demo change is happening ‑‑ which is why I'm excited about this new FM station. The revenue growth that we're talking about is going to come from new areas because we're getting better at understanding the next demo.
537 There's so much business that's being spent in the newspaper that we're not getting because we didn't know enough about it. So I can tell you that from a national point of view, our national rep company is working on mutual fund companies, on the Cadillacs, the Mercedes of the world, who don't use radio. And we need to get better at that.
538 THE CHAIRPERSON: I wanted to talk about your point, Mr. Hayes, about the inventory disadvantage and yet, if we license you, don't we create another disadvantage? Predicated on the applications and some approvals, your concern is that you are headed up against somebody who has two FMs and one AM. And you want the ability to equalize the inventory of advertising; is that correct?
539 MR HAYES: Yes, that's part of it.
540 THE CHAIRPERSON: And yet, if we do that, because talk has more availabilities, don't we create yet another inequality?
541 MR. HAYES: Well, it all comes down to the demographic and the audience characteristics of a given station. CJOB has got a tremendous portion of its audience that's outside of that 25-to-54 demographic. CJKR has got a tremendous amount of its male demographics that are at the lower end.
542 We're seeking, I guess, some relief in inventory levels at the upper end of that 25-to-54 age group in a demographic that is currently under-served for programming and by extension, under-served in a music environment, by which advertisers can reach their audiences.
543 THE CHAIRPERSON: But if we use strictly your inventory advantage/disadvantage, you would again be advantaged if we gave you another FM, right?
544 MR. HAYES: Probably in terms of the gross amount of inventory that would be applicable, but it does come down to audience demographics.
545 A statistic from last fall, as related to me from CBS, was that, 80 percent of the national business in Canada on radio was placed against the adult 25-to-54 demographic.
546 What we're seeking to do here with this format is to create a new market here in Winnipeg for local audiences and by extension for local advertisers.
547 THE CHAIRPERSON: All this talk about differentiating yourself from CJOB in terms of news and coverage made me start to think about how you're going to be different from Power in terms of news and local coverage.
548 MR. BUCHKO: We'll be night and day different. The news readers on Power -- Power's a typical FM station. We do news in the morning, as little as possible, and then we get on to music. On the drive home we do news once, we have surveillances, traffic, on the street traffic, which is another advantage. Our new FM station will be -- there's no commercial stations in Winnipeg that has on the street traffic updates, and in Winnipeg on days like today, you need it. Our new FM station will have that. We share the resources with CJOB and Power. But there will be no duplication between Power and our new FM station.
549 THE CHAIRPERSON: And, Mr. Buchko, you did talk, when discussing this with Commissioner Cardozo, about 11 staff and then I don't know if it was you or Mr. Hayes who talked about our radio staff in Winnipeg will increase significantly. What does that mean?
550 MR. BUCHKO: Our plan is to have 11 staff who are in the news and programming side of the business. There will be dedicated news director, program director and on-air people. That's 11. Our plans are to have between 18 and 22 full-time staff who are working for the new station. So that will be support people, sales people, an operations person. So there will be 18 to 22 people that will be working for the new FM station.
551 THE CHAIRPERSON: So 18 to 22 incremental positions, at least 11 of which will be totally dedicated to the FM?
552 MR. BUCHKO: Yes.
553 THE CHAIRPERSON: How many does that add up to in terms of staff?
554 MR. BUCHKO: Currently right now at CJOB and Power 97, we have 65 full- and part-time people. About eight part-time, which is significantly more than any of the radio station's combinations in Winnipeg.
555 Just to clarify something, the 18 to 22 people will be solely dedicated to the new station. They won't be -- the extra people won't be --
556 THE CHAIRPERSON: Won't be sharing technical or --
557 MR. BUCHKO: No. We'll have our own traffic person, for example, and that person will be dedicated. We'll have to add some accounting support for the station. We'll have to add some creative people too. But when it comes to adding people, we hire effectively between 18 to 22 people.
558 THE CHAIRPERSON: Mr. Hayes, how many other markets does Corus have three stations, one being a talk station?
559 MR. HAYES: I'll have to add them up. We have talk stations in Vancouver. We have an all news station and a news talk station in Vancouver, and Edmonton. We have a news talk station in Calgary. We have a news talk station in Winnipeg, obviously. In Toronto, we have a news talk station. In London and Hamilton, we have a news talk station. In Montreal, we have all news in French and all news in English.
560 THE CHAIRPERSON: In Vancouver, you have the AM and the two FMs?
561 MR. HAYES: In Vancouver we have two AMs and two FMs.
562 THE CHAIRPERSON: In any of the other ones do you have one AM and two FMs?
563 MR. HAYES: Yes, in Calgary.
564 THE CHAIRPERSON: How many staff total do you have?
565 MR. HAYES: I can't tell you.
566 THE CHAIRPERSON: You can let us know?
567 MR. HAYES: Yes.
568 THE CHAIRPERSON: Any other one where there is two FMs and one AM?
569 MR. HAYES: That would be in Toronto, and I'll also have to get back to you to you on that. I think it's not inconsistent with the number here in Winnipeg although I need to get back to you. I think it may be higher.
570 THE CHAIRPERSON: Okay. On the issue of frequencies, I do think we need an answer to if any of the other frequencies would be acceptable, so you can come back to us in Phase II or III with that. Can I have somebody put the mike on and say yes?
571 MS. McNAIR: Yes.
572 MR. BUCHKO: I'm sorry, yes.
573 THE CHAIRPERSON: Very interesting talking about how lucrative some of us 35-plus people are and that we have no music home, but at the end of the day, if this doesn't work out, we can't stop you from changing your format anyway, can we?
574 MR. BUCHKO: No, you can't, but we've done all the research and there really isn't -- we're not interested in going after another 18-to-34 station. There's, it's duplicated. There is such heavy duplication in the lower end of the demo that really, the truly under-served segment of the population is 35‑64. Thirty-five to 54s will make a lot of money, we have to be better at selling the 55-to-64, but it's truly ‑‑ that's where there's an opportunity to grow the market and to provide a full service FM station, which, that's the hole, clearly.
575 THE CHAIRPERSON: Thank you. Mr. McCallum.
576 LEGAL COUNSEL: In coming back with your undertaking, if at all possible, could you respond in Phase II then when you come back. I think that would be normally Wednesday. So if at all possible.
577 MS. McNAIR: In Phase IV? We don't plan to appear in Phase --
578 LEGAL COUNSEL: Sorry, in Phase --
579 MS. McNAIR: -- in Phase II. In Phase IV, at the end on Wednesday?
580 LEGAL COUNSEL: It would even be better if you can, just in Phase II, just provide the answers at that time, if at all possible.
581 MS. McNAIR: Okay.
582 LEGAL COUNSEL: And, in looking at the frequencies, perhaps what you could do is, you could have a look at what Rogers filed earlier this morning because, if you look at the frequencies, all of them would have qualifiers. In responding on the frequencies, you said you would take another frequency if they were at a similar power or a similar strength, I think was what you said. But if you look at all the frequencies that are high power, according to what Rogers filed, all of them would have a qualifier at the high power.
583 At the low power, there's only one that does not have a qualifier, but even on that it's a low power as opposed to high power. So, perhaps in looking at the frequencies, you can look at what Rogers filed.
584 MS. McNAIR: We certainly will.
585 LEGAL COUNSEL: In speaking of spoken word programming you, I believe, said that 25 percent of the schedule could be spoken word; is that correct?
586 MS. McNAIR: Yes.
587 LEGAL COUNSEL: If the Commission decided that would be a condition of license, you would accept that?
588 MS. McNAIR: Yes.
589 LEGAL COUNSEL: In the market research that was done, I think by Mr. Yerxa, I think the market research asked people in the survey that were at least 35 years of age and below 64 years of age. Could you explain why the research was limited to that target age group?
590 MR. YERXA: Because in all of the research that we've conducted over the last -- we began to notice it in the last five to seven years, but in most of the research we've conducted across the country, that is where we have noticed the greatest degree of disenchantment amongst radio listeners and where we've been able to identify new holes and new opportunities.
591 LEGAL COUNSEL: I asked that in conjunction with one of the other applicants for the 99.1 frequency. They did research of 84 to 64, so they didn't limit the target to 35 to 64. So again, I'm still trying to understand why it was limited at the outset.
592 MR. YERXA: Once again, because our analysis would reveal that that is, generally speaking, the most underserved target. When you look at the BBM statistics for this market and you look at the formats that are presently being offered, all tend to skew younger than 40 years of age, whereas anything that is offered in excess of 40 years of age tends to be primarily provided on the AM dial.
593 LEGAL COUNSEL: Again, just one further on that, I note, for example, from the presentation this morning, you talked about Power. You said the core demographic for Power is men 18 to 34. And I just wondered, again, in respect of the research, you could have, for example, targeted women 18 to 34 with the new station if you'd wanted to, or you could have done your research based on that demographic, and again, you chose not to.
594 MR. HAYES: That's correct. Art and science kind of intersect in programming and when we surveyed the market place based on our experience, based on the research that's available to us through BBM, based on the research that's available to us through what CJKR has compiled in the past, we concluded that this end of the spectrum, demographic spectrum, was being over-served in Winnipeg, and made the decision.
595 LEGAL COUNSEL: You had concluded that, sorry, before you -- in giving instructions to Mr. Yerxa concluded that before you even gave him instructions; is that right?
596 MR. HAYES: That's my understanding. Is that right, Gary?
597 MR. BUCHKO: Yes, it was, but all we did was say survey the 35-to-64 year olds and ask them what they would like. We didn't guide them. We didn't ask them if they wanted new soft A/C and news service and that type of thing. Based on the dollars that are being spent in the marketplace against a younger demo, we just knew that by going into a station that is going to go after younger demographics, it wouldn't be viable. So we asked the question, based on the hole in the marketplace, of the demographic hole, 35-to-64, what format would they like. What are they missing out and what type of services are they missing out on the FM dial, and clearly they told us an oldies, soft A/C with a large talk component to it.
598 LEGAL COUNSEL: Thank you. Turning for a second to the lifestyle magazine program, I take it that would be on from 9:00 to 11:00 p.m.?
599 MR. BUCHKO: During the week, Monday through Friday we will run a two-hour -- it will be a talk program that's hosted -- I haven't decided yet, male or female -- but it will be hosted locally and it will be targeted to women. Our research for CJOB over the last many, many years -- and I think we're pretty good at doing talk programming in Winnipeg -- has told us that there's a large opportunity for a host of doing an evening talk show. So that will be Monday through Friday from 9:00 to 11:00 p.m.
600 LEGAL COUNSEL: And there would be audience participation in that?
601 MR. BUCHKO: Absolutely. It will be open line. It will be similar yet different. On CJOB we tried to create a ‑‑ we have a parent talk show. We have issues that are important to families. And the FM station will only allow us to expand that to five days a week on lifestyle issues and parenting issues and issues that are important to a 38-year-old mother.
602 LEGAL COUNSEL: So do you have your own guidelines on open-line programming, for example?
603 MR. BUCHKO: Yes, we do.
604 LEGAL COUNSEL: And those are developed for other stations?
605 MR. BUCHKO: We have guidelines that we have internally and we have Corus guidelines for open-line programming. But we are stringent in sticking with our guidelines in Winnipeg. And the weekend, that's when we'll have the lifestyle magazine programming from 6:00 till 10:00 a.m.
606 LEGAL COUNSEL: Sorry, did you say you already had guidelines in place right now?
607 MR. BUCHKO: Yes, we do.
608 LEGAL COUNSEL: For CJOB?
609 MR. BUCHKO: Yes, we do.
610 LEGAL COUNSEL: And they would be the same guidelines for this?
611 MR. BUCHKO: Absolutely.
612 LEGAL COUNSEL: Thank you. Again, if this station were licensed, what would you estimate would be the impact on CFWM-FM and CHIQ-FM?
613 MR. BUCHKO: I'll let John Yerxa talk about the research and how it will affect them.
614 MR. YERXA: An oldies-based, soft A/C radio station would only have a marginal impact on the other A/C players in the market. This is primarily because of the two stations that might fall under the A/C umbrella.
615 Q-94 would have to be classified as hot A/C, if not adult CHR, as well over half of its core listeners select CHR or rock as their favourite type of music.
616 And Magic 99 would have to be classified as mainstream A/C, considering that its play list encompasses a large number of cross-over selections from CHR, rock and country, while approximately one-quarter of its core listeners actually selects some version of CHR or rock as their favourite type of music. And yet, only 27 percent of Magic's core choose either soft A/C or one of the two Gold life groups as a favourite.
617 Consequently, the impact on these two stations would be somewhat limited as this new station's A/C repertoire would primarily encompass those artists who possess significant Gold libraries and Gold repertoire would feature artists that A/C radio has largely walked away from.
618 LEGAL COUNSEL: Are you able to quantify your answer in terms of possible market share or dollars?
619 MR. YERXA: Not at this point, knowing that we don't know how the other stations would react upon sign-on.
620 LEGAL COUNSEL: Thank you. Thank you, Madam Chair.
621 THE CHAIRPERSON: Thank you Mr. Hayes, Mr. Buchko and the rest of you. Thank you very much.
622 We will now take a break until two o'clock.
--- Upon recessing at 1230/ Suspension à 1230
--- Upon resuming at 1400/ Reprise à 1400
623 THE CHAIRPERSON: Mr. Secretary.
624 THE SECRETARY: Thank you, Madam Chair. The next application is by Global Communications Limited for a licence to operate an English language specialty FM radio station in Winnipeg. The new station would operate on frequency 99.1 MHz with an effective radiated power of 100,000 watts. Please begin when you're ready.
625 MR. NOBLE: Thank you, Mr. Secretary. Good afternoon, Madam Chair, Commissioners and Commission staff. My name is Gerry Noble and I am the President and Chief Executive Officer of Global Television Network.
626 In a moment, I'll ask Charlotte Bell to introduce our panel. But first, I'd like to take a little time to tell you how our entry into radio in Canada and our proposal for a Smooth Jazz radio station in Winnipeg fits within our overall corporate strategy.
627 As you know, it was in Winnipeg, through the start-up of CKND-TV, that CanWest Global laid down the first building block for what has become a successful national television network for Canadians. Approval of this application represents for CanWest an opportunity to begin a new chapter, our entry into radio in Canada. We already operate a number of successful radio stations in one of the world's most competitive radio markets, New Zealand. The licensing of Smooth FM would allow us to expand our operations into radio in Canada, and most importantly, into the city we call home, Winnipeg.
628 Our entry into radio is integral to our development strategy, which recognizes the importance of expanding our media offerings in order to compete in an increasingly fragmented media environment.
629 As one of Canada's leading diversified media companies, our strategy is focused on the development, promotion and exhibition of content across a variety of platforms. With your approval of this application, this will now include radio.
630 Throughout Canada we are deeply rooted in the communities we serve. In Winnipeg, where our corporate office is based, CanWest has helped fund a number of cultural institutions, including the CanWest Global Performing Arts Centre, which houses the Manitoba Theatre for Young People. CanWest already has strong ties to the local jazz scene in Winnipeg as a significant supporter of the Jazz Winnipeg Festival through a variety of initiatives each year.
631 Beyond meeting our corporate objectives, this application is also reflective of our Chairman, I.H. Asper's personal commitment to Winnipeg's local jazz community and his ongoing dedication to increase the exposure of local jazz artists.
632 For the past several years, the CanWest Global Foundation has helped sponsor numerous jazz concerts and events, providing a stage for local and other Canadian artists to play alongside some of the world's best jazz performers.
633 This past summer, at the Jazz Winnipeg Festival, CanWest sponsored the "Legends of the Bandstand" featuring Hank Jones, Louis Hayes, Curtis Fuller and others. At previous festivals, CanWest has sponsored performances by Dave Brubeck and Pat Metheny and Canadian jazz stars, the Holly Cole Trio, Diana Krall and Marc Jordan, to name just a few.
634 The CanWest Global Foundation is also the presenter of "An Evening of Manitoba Jazz" at the Hotel Fort Garry where the CanWest Global Jazz Achievement Award is given each year and a number of local jazz artists perform.
635 Approval of this application will allow us to further support existing Canadian and Winnipeg jazz artists, as well as help develop new emerging talent. This is why we have committed a substantial amount of money to Canadian talent development, which we will discuss later in our presentation.
636 Smooth FM will also benefit from cross-promotional opportunities with CKND as well as our digital jazz specialty service, Cool TV, which we hope to have launched some time this year.
637 Commissioners, our Executive Chairman, Mr. Asper, has often stated his goal of creating new Canadian jazz stars. This application is an important first step in meeting this goal. It will provide a new window for Canadian jazz talent on air and a substantial investment in developing and promoting jazz talent, both here and across the country and of course it will provide an exciting new listening choice to Winnipeg radio listeners.
638 I would now like to ask Charlotte to introduce our panel and field your questions.
639 MS. BELL: Thank you, Gerry. Commissioners, we are pleased to appear before you to present our application for a smooth jazz radio station to serve Winnipeg.
640 With us today, to my left, is Del Sexsmith. A Winnipeg resident his entire life, Del has a long history of community involvement in this city and has extensive background in the radio industry with more than 23 years of experience. Among other things, Del has worked as program director for CJOB and operations manager for both CJOB and CKIS-FM in Winnipeg. His knowledge also extends to music. He is actively involved in the local music scene and is also a jazz fan.
641 In the row behind to my far left is our senior financial analyst, Katherine Browne, who has appeared before the Commission many times before. Next to Katherine is Monte Graham, general manager of CKND‑TV, and next to him is Lisa Best, CKND's entertainment on-air personality who will also provide local cultural and entertainment reports for Smooth FM if we are successful with this application.
642 At the side table to my far right is David Oakes, president of Oakes Research, who conducted our format and demand survey. Sitting next to David is Ken Goldstein, a well known broadcast economist and CanWest's chief strategy officer. Finally, next to Ken is Jim Moltner, of Imagineering, our technical engineer.
643 In the audience, we also have with us today, representing the Asper family, Gail Asper, a director on the board of CanWest Global Communications Corp., our parent company. Gail is also very active in the Winnipeg cultural community.
644 This application fully responds to the Commission's selection criteria for licensing new radio stations. Smooth FM will be a quality service providing a high level of diversity to the marketplace. Smooth FM will provide significant exposure for Canadian jazz artists. Smooth FM will provide a new reflection of the local cultural scene. Smooth FM will also make a significant contribution to Canadian talent development, and it will do all this while having a minimal impact on incumbents.
645 We began this exercise by asking Oakes Research to survey Winnipeg residents in order to assess their musical interests and tastes. The research clearly told us that there was demand for a smooth jazz radio station in this market. The presence of a vibrant jazz community will ensure that we reach our reasonable market share projection of 5 percent for year one.
646 We've proposed the highest program spending of any applicant before you. We've proposed a specialty music format that will devote 70 percent of its entire schedule to a mix of traditional and smooth jazz. With the exception of a few hours per week being devoted to jazz on existing stations, this format is not represented in this market.
647 Our Canadian content levels surpass Commission regulatory requirements. Smooth FM will devote 35 percent of its music to Canadian content even though regulations require a 10 percent level for Category 3.
648 Finally, our comprehensive Canadian talent development proposal will direct $2.5 million over the period of the licence to local and national jazz artists. Del.
649 MR. SEXSMITH: Thank you. Commissioners, smooth jazz is one of the fastest growing radio formats in North America. Since its inception in Los Angeles in the mid-'80s, it has gained momentum to the point that it is recognized as a distinct format on radio industry charts such as R&R and Billboard.
650 As you will hear from the testimonials on our video, there is a vibrant jazz community waiting to break out in both Winnipeg and across Canada, including traditional and more contemporary jazz artists emerging in every part of the country. Jazz has gained momentum in the past few years with record sales and concert attendance increasing every year. Now, 17 Canadian cities hold jazz festivals attracting almost four million people each year.
651 Our proposal is tailor-made to meet the tastes of Winnipeg jazz lovers with its blend of smooth jazz and other jazz styles. This hybrid approach will satisfy the interest of existing jazz lovers while introducing others to this music form.
652 To help our audience understand and appreciate the music, we will schedule special features throughout the day and block programs through the schedule providing our audiences with the great sounds of jazz as well as background information about the music and artists they hear.
653 Research shows that our target demographic tends to appreciate news, information on business and cultural events. We will provide comprehensive news packages each day in addition to regular business news and local cultural and entertainment features. Lisa.
654 MS. BEST: Thank you. Winnipeg prides itself in being a jewel in the belly button of Canada. Smooth FM will add another facet to this gem on the prairies. As a reporter working the entertainment scene on a daily basis in Winnipeg, the most obvious difference between radio and television is about 60 pounds of gear. Radio is a more accessible medium, not only for listeners but for those reporting it as well.
655 The opportunity and ability to cover events greatly increases with radio. With a focus on local entertainment, specifically the jazz and smooth jazz scene, Smooth FM's daily entertainment coverage of events would include a list of jazz events and upcoming events in the province and Winnipeg under the banner of "Jazz du Jour." In keeping with CanWest Global's commitment to nurture local jazz artists, whether established or not, Smooth FM will present special features like "Smooth Operators." The focus will be on newcomers local and national, with a special emphasis on local jazz prodigies.
656 Smooth FM will offer us the opportunity to cover live jazz events at a variety of Winnipeg venues, including the Sheraton Downtown, the Mardi Gras Jazz Café and the West End Cultural Centre.
657 Smooth FM's commitment to the genre of music currently not given enough exposure in Winnipeg will also provide a boost to the local concert scene and live music venues.
658 Kevin Donnelly, the former VP of House of Blues Concerts in Vancouver, who is now with Winnipeg Enterprises, told me he believes the pre-promotion of jazz and smooth jazz musicians and their music on Smooth FM will entice more well known artists to bring their concerts to our city.
659 MS. BELL: We'd now like to show you a short video presentation to give you an idea of what the service might sound like.
660 (VIDEO PRESENTATION)
661 MS. BELL: We're ready to answer your questions.
662 THE CHAIRPERSON: Thank you. Commissioner Williams.
663 COMMISSIONER WILLIAMS: When I got off the plane last night someone said, "Welcome to Winterpeg," but I'm intrigued to learn that it is now known as the jewel in the belly button of Canada.
664 I'm going to cover the same general area of questioning that the other Commissioners have done earlier today and I'm going to begin in the area of contribution to talent development.
665 As part of the annual contest for new jazz talent called Project Smooth, you specified as direct expense an amount of $8,000 for promotion of the contest consisting of artwork, newspaper advertisements and fliers. In Public Notice 1990-11, the Commission indicated that it considers the expenses related to the promotion of a contest as indirect. Your annual budget could therefore be decreased by this amount of $8,000 if the Commission were to decide that these expenses should be considered as indirect.
666 How would this amount be redirected to acceptable CTD initiatives?
667 MS. BELL: It would be redirected either in adding another CD or additional funds in creating the two CDs. We've, as you know, given $10,000 to each of the artists. As you know, you can create a CD for $3,000 or $30,000, so I think that that's where we would reallocate those funds.
668 COMMISSIONER WILLIAMS: Okay. Thank you. For the first five years of the licence term, $200,000 will be directed to FACTOR. Half of this amount, $100,000, will be devoted to Winnipeg and other Manitoba artists and the remaining will be available to Canadian artists elsewhere in the country. At least half of the $200,000 will go to support smooth jazz artists. Do you have an agreement with FACTOR to that effect?
669 MS. BELL: Yes, we've had discussions with FACTOR and I'd just like to make one clarification. I had a long discussion with Heather Ostertag, who runs FACTOR, and discussed with her our plan. She was thrilled and agreed immediately that yes, in fact, half of those funds would be dedicated to Manitoba and Winnipeg jazz. And then when I mentioned a further split of 50 percent, she said, "You know, you'd be micro-managing these funds." She said the money will be spent as you ask, there will be money spent on smooth jazz and more mainstream types of jazz. But she recommended that we not further split how the money would be allocated.
670 COMMISSIONER WILLIAMS: How do you plan on distributing the amount of $67,000 and $73,000 the sixth and seventh year of the licence term?
671 MS. BELL: You're referring to the amounts, the 10 percent of -- I'm sorry, those amounts are the amounts that would be going to FACTOR in the last two years?
672 COMMISSIONER WILLIAMS: Yes, in years six and seven.
673 MS. BELL: The same thing basically, 50 percent would be going to Winnipeg or Manitoba jazz and the other 50 percent across Canada.
674 COMMISSIONER WILLIAMS: Now, you are further proposing to spend $80,000 annually for two distinct initiatives, the Jazz Winnipeg Festival and the Asper Foundation Jazz Performance Series. Is the Asper Foundation Jazz Performance Series to take place during the Jazz Winnipeg Festival in June and could you tell us a bit maybe about both of the events?
675 MS. BELL: The Asper jazz series does not take place during the festival. I think those concerts take place elsewhere during the year in the wintertime. I believe there is one coming up very close to now actually.
676 COMMISSIONER WILLIAMS: And can you tell us a bit about each of the events?
677 MS. BELL: Are you referring to just an explanation of --
678 COMMISSIONER WILLIAMS: Just a quick overview of the jazz festival and then how the Asper Foundation Jazz Performance Series is different from it.
679 MS. BELL: I'll just have Gerry to --
680 MR. NOBLE: Being a Winnipeg resident for some years, I've experienced both of those. And the Winnipeg Jazz Festival -- the Jazz Winnipeg Festival is an event that occurs over the period of the summer which is when all the jazz performers come to town and perform at various locations, and CanWest Global sponsors that and this project will also sponsor that. It's a fairly intense festival.
681 The Asper Jazz Series is a series of concerts throughout the year that the Asper family sponsors. They bring in a special performer and book a hall, so it's not specifically associated with the festival itself. It's separate. It's something the Aspers do to help Canadian jazz artists and help bring world renowned jazz to Winnipeg.
682 So they're separate and distinct. Both of those will be supported by our Smooth FM application.
683 COMMISSIONER WILLIAMS: Thank you. You provided a breakdown of the proposed direct expenses: $8,000 would be allocated to musicians fees for the Asper series, $24,000 would pay the physical cost to stage for six concerts and $48,000 would be dedicated to musicians' fees for four performances, smooth and other jazz. Could you tell us a bit about and elaborate on the proposed budget for each of the two projects?
684 MS. BELL: In terms of the Asper series, that allocation of $8,000 is just for those concerts. In terms of the remainder, which is $72,000, that would be allocated through the Jazz Festival.
685 COMMISSIONER WILLIAMS: Okay. Regarding the University of Manitoba Jazz Camp, can you please explain the criteria that will be used to select the recipients of the $10,000 bursaries, the four of them and I guess possibly -- and how the station will ensure that this selection is made accordingly?