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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES AVANT
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
VARIOUS BROADCAST APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
HELD AT: TENUE À:
Metropolitan Conference Centre de conférence
333 Fourth Avenue South West 333, Fourth Avenue Sud‑Ouest
Calgary, Alberta Calgary (Alberta)
February 27, 2006 Le 27 février 2006
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
VARIOUS BROADCAST APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Michel Arpin Chairperson / Président
Helen del Val Commissioner / Conseillère
Elizabeth Duncan Commissioner / Conseillère
Ronald Williams Commissioner / Conseillier
Stuart Langford Commissioner / Conseillier
ALSO PRESENT / AUSSI PRÉSENTS:
Chantal Boulet Secretary / Secrétaire
Leanne Bennett Legal Counsel /
Steve Parker Hearing Manager /
Gérant de l'audience
HELD AT: TENUE À:
Metropolitan Conference Centre de conférence
333 Fourth Avenue South West 333, Fourth Avenue Sud‑Ouest
Calgary, Alberta Calgary (Alberta)
February 27, 2006 Le 27 février 2006
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION BY:
Golden West Broadcasting Ltd. 1380 / 8727
Vista Radio Ltd. 1427 / 9028
Newcap Inc. 1498 / 9411
1182743 Alberta Ltd. 1544 / 9671
Touch Canada Broadcasting Inc. 1590 / 9899
INTERVENTION BY / INTERVENTION PAR:
Vista Radio Ltd. 1670 / 10566
Gelden West Broadcasting Ltd. 1678 / 10621
INTERVENTION BY / INTERVENTION PAR:
Jim Pattison Broadcast Group 1682 / 10649
REPLY BY / RÉPLIQUE PAR:
Touch Canada Broadcasting Inc. 1707 / 10807
1182743 Alberta Ltd. 1711 / 10836
Newcap Inc. 1718 / 10875
Vista Radio Ltd. 1729 / 10934
Golden West Broadcasting Ltd. 1732 / 10952
Calgary Alberta / Calgary (Alberta)
‑‑‑ Upon resuming on Monday, February 27, 2006
at 0900 / L'audience reprend le lundi
27 fevrier 2006 à 0900
SEQ 1_0 \* Arabic \r 87198719 THE CHAIRPERSON: Order, please.
SEQ 1_0 \* Arabic \n8720 Again, welcome to everybody here at this hearing for our review of the Lethbridge application.
SEQ 1_0 \* Arabic \n8721 I'm asking the secretary to introduce the item. Thank you.
SEQ 1_0 \* Arabic \n8722 THE SECRETARY: Thank you, Mr. Chairman.
SEQ 1_0 \* Arabic \n8723 Good morning, everyone.
SEQ 1_0 \* Arabic \n8724 We will now proceed with the competing radio applications for the Lethbridge market. We will be following the four‑phase process, therefore, we are now ready to start with item 14 on the agenda, which are applications by Golden West Broadcasting Limited to acquire the assets of the radio programming undertaking CJTS‑FM, an English‑language specialty FM radio station at Lethbridge, from Spirit Broadcasting Limited, and to amend the licence by changing the frequency from 97.1 MHz, channel 246LP, to 98.1 MHz, channel 252B, and to change the authorized contours by increasing the effective radiated power from 50 watts to 20,000 watts by increasing the antenna height and by relocating the transmitter, non‑directional antenna, antenna height 174.3 metres.
SEQ 1_0 \* Arabic \n8725 Appearing for the applicant is Mr. Elmer Hildebrand. Mr. Hildebrand will introduce his colleagues, and then have 20 minutes for his presentation.
SEQ 1_0 \* Arabic \n8726 Mr. Hildebrand.
PRESENTATION / PRÉSENTATION
SEQ 1_0 \* Arabic \n8727 MR. HILDEBRAND: Thank you.
SEQ 1_0 \* Arabic \n8728 Mr. Chairman, members of the Commission and Commission staff, my name is Elmer Hildebrand, president and CEO of Golden West Broadcasting.
SEQ 1_0 \* Arabic \n8729 With me is Lyndon Friesen, executive vice‑president of Golden West, and Terry Fleming, founder and owner of Spirit Broadcasting Ltd., operating CJTS‑FM in Lethbridge.
SEQ 1_0 \* Arabic \n8730 The application before you today is for Golden West to acquire assets of Spirit FM and to amend the licence so as to authorize an increase in the power of the existing radio stations to service the community more effectively.
SEQ 1_0 \* Arabic \n8731 Terry Fleming will now provide a brief update on the reasons for the sale transaction and Lyndon Friesen will briefly outline our plans.
SEQ 1_0 \* Arabic \n8732 MR. FLEMING: Thank you, Mr. Hildebrand.
SEQ 1_0 \* Arabic \n8733 I established Spirit FM just over five years ago, going into our sixth year now, in Lethbridge, with a unique gospel music format. And even though we are an LPF, a low‑power operation, it may not be perfect, but we have a very receptive audience, and growing all the time, in Lethbridge for this radio station.
SEQ 1_0 \* Arabic \n8734 Over the years, we have had various employees and volunteers help us with the radio station to keep it going; however, it has not been a financial success and has been a bit of a struggle that way. Although on the air for almost six years, it's been a very heavy struggle.
SEQ 1_0 \* Arabic \n8735 For health reasons, I have moved to the west coast, and that's where I am at the moment, although I travel back and forth quite frequently to oversee the radio station.
SEQ 1_0 \* Arabic \n8736 I found it very difficult to maintain staff from that place, even though I go back and forth quite a bit, and, therefore, for the financial and health reasons, I need to sell the radio station.
SEQ 1_0 \* Arabic \n8737 Now, we wanted very badly to have the radio station stay on the air providing the specialty music format to Lethbridge. My discussions with Mr. Hildebrand, of Golden West, dates back approximately 15 months and resulted in the transaction that is proposed before you today.
SEQ 1_0 \* Arabic \n8738 Golden West has committed to keeping the existing format, which made us very happy, and taking it to a new level, which gave me a lot of comfort and to conclude the arrangement of this sale.
SEQ 1_0 \* Arabic \n8739 MR. FRIESEN: We feel very confident that Golden West will be able to not only maintain, but improve, the existing specialty radio service to Lethbridge.
SEQ 1_0 \* Arabic \n8740 Two years ago, we purchased radio station CHVN‑FM in Winnipeg. This station has a format much like Spirit FM and we have been able to develop that station into a vibrant and viable radio station.
SEQ 1_0 \* Arabic \n8741 The experience we have had at CHVN will help us greatly in building a solid and professional operation in Lethbridge.
SEQ 1_0 \* Arabic \n8742 MR. HILDEBRAND: The second part of the application is to amend the licence by changing the frequency from 97.1 to 98.1 and to increase the effective radiated power to 20,000 watts. The amendment will enable us to provide a solid and consistent signal to Lethbridge and surrounding areas.
SEQ 1_0 \* Arabic \n8743 Our application will not basically alter the existing radio market in Lethbridge. The city is well‑served by four other private radio stations operated by Rogers and Pattison. In addition, there's a university radio station, and there's also two commercial television stations, plus a gospel television station, which is also selling sponsorships in the market.
SEQ 1_0 \* Arabic \n8744 We will, however, bring the Golden West community service radio tradition to the market and, as a result, the overall radio service to Lethbridge will be enhanced. We will obviously add to the news operation and the overall local service will, I think, be improved significantly.
SEQ 1_0 \* Arabic \n8745 We will work actively with gospel bands and music groups promoting their brand of music. We will be able to share the music with our existing gospel music station in Manitoba, so that will give us a larger library.
SEQ 1_0 \* Arabic \n8746 Our financial projections are modest and should have no negative impact on the existing broadcasters in Lethbridge.
SEQ 1_0 \* Arabic \n8747 Mr. Chairman, that concludes our remarks and we will be happy to answer any questions.
SEQ 1_0 \* Arabic \n8748 THE CHAIRMAN: Thank you very much, Mr. Hildebrand.
SEQ 1_0 \* Arabic \n8749 For those who weren't here last week, I'm hearing the headset to make sure that I really get everything that is said. It's not because I'm listening to the translation, it's only for enhance the quality of the sound.
SEQ 1_0 \* Arabic \n8750 My first questions will be for you, Mr. Fleming.
SEQ 1_0 \* Arabic \n8751 As you know, the Commission is always concerned when an acquisition is taking place during the first licence term. I heard you earlier saying that your personal health situation was an impairment at looking at the operation on a day‑to‑day basis, and that alone had a negative financial impact on the operation of the stations.
SEQ 1_0 \* Arabic \n8752 My first question is those are the accurate and factual reasons for which you have decided to sell the station?
SEQ 1_0 \* Arabic \n8753 MR. FLEMING: Yes, sir, it is.
SEQ 1_0 \* Arabic \n8754 THE CHAIRMAN: Okay. For the record, have you received other offers to purchase the station, other than the one you had received from Golden West?
SEQ 1_0 \* Arabic \n8755 MR. FLEMING: Yes, sir, I have received a few, but nothing in cement.
SEQ 1_0 \* Arabic \n8756 THE CHAIRMAN: Okay. Thank you.
SEQ 1_0 \* Arabic \n8757 Finally, if the Commission was to either deny the change of frequency or the increase of power, or even deny totally the Golden West application, you obviously understand that if the increase in power was not approved that Golden West will not do the acquisition, what will happen to the station if the Commission was to deny the Golden West application?
SEQ 1_0 \* Arabic \n8758 MR. FLEMING: Well, that's a question, sir, to be very up‑front and honest, I'm not prepared for, but I would imagine that we would have to continue on as best we could, under the circumstances. With the financial way it is and, of course, with the various radio stations and media and so on in the area, which eats up a pretty big chunk of the pie, I would have to cross that bridge when I came to it.
SEQ 1_0 \* Arabic \n8759 THE CHAIRMAN: Okay.
SEQ 1_0 \* Arabic \n8760 Now, I'm moving my questions to the principals of Golden West, and my first question has to do with ‑‑
SEQ 1_0 \* Arabic \n8761 THE CHAIRMAN: Mr. Hildebrand, do you have documented evidence supporting the rationale behind your decision to request technical amendments to change from a lower power service to a full‑power FM?
SEQ 1_0 \* Arabic \n8762 There have been some intervenors who have written saying that the signal of the station, the actual power, is sufficient to cover Lethbridge and the surrounding ‑‑ up to 15 kilometres around Lethbridge. So my question to you is: have you undertaken any study to determine that it was absolutely necessary to upgrade to full power?
SEQ 1_0 \* Arabic \n8763 MR. HILDEBRAND: Well, I think since low power doesn't provide for any protection from anywhere, it is not really a sound business practice to go into an arrangement where you don't have a protected frequency. The signal certainly is usable, but it's not consistent in the area. From our perspective, there were a number of frequencies that could be used, and we felt that at the modest power of 20,000 watts this would be the best way to serve the community.
SEQ 1_0 \* Arabic \n8764 THE CHAIRMAN: Obviously, you could have asked for, say, an increase from 50 to 250 watts, and then you will have moved from an unprotected frequency to a protected frequency, but keeping almost the same quality of signal and the same coverage area.
SEQ 1_0 \* Arabic \n8765 MR. HILDEBRAND: Surely we could have done that, but we felt, on a business basis, it made a little more sense to provide the service to the surrounding area as well.
SEQ 1_0 \* Arabic \n8766 One of the things that has been happening in this station is it is getting inquiries from people in the periphery to listen to the station because they like the format. From a Golden West perspective, it makes sense to have a little more solid signal than the 250 that might be possible.
SEQ 1_0 \* Arabic \n8767 THE CHAIRMAN: You have suggested that CJTS, in its existing form, is not viable as a business model. What evidence do you have to suggest that your commercial business plan is not achievable at a low power?
SEQ 1_0 \* Arabic \n8768 MR. HILDEBRAND: Well, I mean, I don't know that we really have that answer for you, Mr. Chairman, but I think as we go forward, from a Golden West perspective, we are inclined to operate with somewhat more power. At the end of the day, if the Commission would decide, in their wisdom, that it wasn't possible to do this, and that we should operate at a lower power, I'm sure we could accommodate that.
SEQ 1_0 \* Arabic \n8769 THE CHAIRMAN: Okay. You have indicated in your application, and I heard Mr. Friesen saying a few words about it, that you will employ similar strategies that you are currently using at CHVN‑FM in Winnipeg.
SEQ 1_0 \* Arabic \n8770 Could you elaborate on these business plan strategies? I'm not talking here the program aim, I'm only restricting myself to the business plan operation strategies, and their success, in the context of CHVN?
SEQ 1_0 \* Arabic \n8771 MR. HILDEBRAND: Well, again, CHVN's signal actually covers a large geographical area. We have found that the format has a receptive audience and we have been able to build the business significantly since we took over the radio station. Again, we have found that it isn't really interfering with any of the other radio stations in the market because of the specialty format, the niche audience that it has, yet, there is sufficient business interest in the audience that we have been able to increase the advertising revenue steadily. Our sense is that we will be able to do the same thing here.
SEQ 1_0 \* Arabic \n8772 One of the difficulties that the radio station has had up to now is, as Mr. Fleming indicated, he has been commuting back and forth between Lethbridge and the coast. It's hard to really maintain a stable management process in that environment, and so that to hire people and to get them to stay in the environment has been a challenge for him. As he also indicated, many of the employees at the radio station actually work on a voluntary basis.
SEQ 1_0 \* Arabic \n8773 Our plan is to set the station up on a pure business model, similar to what we have at CHVN in southern Manitoba. We are very confident that in that way we can not only provide a service to the community, but to make the radio station viable and to provide some long‑term career opportunities in the community of Lethbridge.
SEQ 1_0 \* Arabic \n8774 THE CHAIRMAN: Thank you.
SEQ 1_0 \* Arabic \n8775 You have indicated that year one projected revenues will be derived primarily from advertisers that currently advertise in CJTS.
SEQ 1_0 \* Arabic \n8776 What evidence do you have to support that assumption that the existing advertisers are willing to substantially increase their advertising budget to support their service? Because I know that you are viewing that the incumbent radio stations will not be affected by your increased power and that you will mainly develop either new business or increase budgets from those who are already advertising.
SEQ 1_0 \* Arabic \n8777 And a subquestion only, and maybe Mr. Fleming could answer to that more than you, is the current advertising on your stations the same ones that are on the other four FM stations in the market?
SEQ 1_0 \* Arabic \n8778 MR. FLEMING: I would say, sir, that there are some, yes, but there are certainly many advertisers that have a specific place that they want to advertise on this particular Christian format station that are very, very loyal and, as Mr. Hildebrand said, very few of them are going to be split.
SEQ 1_0 \* Arabic \n8779 We do have some split, naturally, that want to advertise on the secular radio station and CJTS, as well, so, yes, there are some ‑‑
SEQ 1_0 \* Arabic \n8780 THE CHAIRMAN: There are some.
SEQ 1_0 \* Arabic \n8781 MR. FLEMING: ‑‑ but many of them are not.
SEQ 1_0 \* Arabic \n8782 MR. HILDEBRAND: One of the things I might add here, Mr. Chairman, during my visits to the community, and talking to advertisers, one of the difficulties that the radio station has today is, because the sales account people turn over constantly, so there is a very short‑term lifespan, advertisers have told me that they don't really even get to know the person before they are gone and it's hard to develop a relationship going forward.
SEQ 1_0 \* Arabic \n8783 So our business model has always been that we put in place solid sales people, that are there for the long run and that develop relationships with advertisers and, as a result, we then turn that into a long‑term business relationship with clients. That's why we are very confident, when we look at the list of advertisers that the station's had over the past five years, that all we really need is to develop those on a consistent basis, and that would already meet our budgets.
SEQ 1_0 \* Arabic \n8784 The other thing I think it is important to realize that our budgets are modest. We are not looking to carve out a huge piece of the Lethbridge market. That's why, also, we are confident that we are not going to impact any of the other broadcasters in the market.
SEQ 1_0 \* Arabic \n8785 THE CHAIRMAN: Thank you.
SEQ 1_0 \* Arabic \n8786 We will now move to programming.
SEQ 1_0 \* Arabic \n8787 You have provided some information regarding the type of local and spoken‑word programming you will offer on CJTS. In part, you indicated that you will maintain CJTS's current commitments over the next full term of licence.
SEQ 1_0 \* Arabic \n8788 As part of the original licensing decision in 2000, CJTS committed to broadcast local and national news, weather, sports, community events, announcements, artists interviews and public interest stories.
SEQ 1_0 \* Arabic \n8789 Could you provide us with more information on the type of local reflections, spoke word you will offer on CJTS? In particular, I am interested in the type of local news programming you will carry and the amount of time per week you will devote to news and related surveillance.
SEQ 1_0 \* Arabic \n8790 MR. HILDEBRAND: Maybe I will ask Lyndon Friesen to, first of all, outline our whole news philosophy and process.
SEQ 1_0 \* Arabic \n8791 MR. FRIESEN: All of our radio stations in our entire business model, we tell our staff, and we sell it hard, and then we also stick with, that our relevance to any of these communities is only when we provide just a huge level of local news, local information, local sports. There's too many other options out there, we tell them, that they can listen to. So since that is our foundation, we build it from there.
SEQ 1_0 \* Arabic \n8792 So Lethbridge will be no different than that. We are going to provide a local news service that is very similar to other Golden West radio stations, that includes a local surveillance team that will actually be in the community gathering local interest information and stories and providing that for our listeners.
SEQ 1_0 \* Arabic \n8793 That, again, is our whole reason for existence, and we are only relevant if we can do that well.
SEQ 1_0 \* Arabic \n8794 THE CHAIRMAN: Generally speaking, how much time do you dedicate, say, to the local information?
SEQ 1_0 \* Arabic \n8795 MR. HILDEBRAND: We would be using local information almost exclusively, with a 60‑second national and international update on the top of the hour, at the newscast. But we would envision that we would have newscasts hourly between 6 and 10 a.m., between 12 and 2, again between 4 and 6, and then we would have newscasts on the half‑hour, as 7:30, 8:30 and 12:30, and 5:30. This would be predominantly Lethbridge and area news and information, sports and weather surveillance would obviously be going continuously.
SEQ 1_0 \* Arabic \n8796 THE CHAIRMAN: What is the duration of those newscasts?
SEQ 1_0 \* Arabic \n8797 MR. HILDEBRAND: The newscasts, on the hour, they would run between three and four minutes and on the half‑hour would be five minutes.
SEQ 1_0 \* Arabic \n8798 THE CHAIRMAN: Five‑minute newscasts.
SEQ 1_0 \* Arabic \n8799 What about the weekend?
SEQ 1_0 \* Arabic \n8800 MR. HILDEBRAND: We would have newscasts on the weekends, as well.
SEQ 1_0 \* Arabic \n8801 Our news operation goes 24/7, so that we would not go on automation for the weekend. We tend to think that the radio station should answer the phone on the weekend, as well as during the week.
SEQ 1_0 \* Arabic \n8802 THE CHAIRMAN: And outside the period that you gave me, 6 a.m. to 7 p.m., if there is a major event, obviously, there will be staff at the station?
SEQ 1_0 \* Arabic \n8803 MR. HILDEBRAND: Oh, yeah, we would still have updates in the evening, as well, but we wouldn't have the same complement of news people in the evening as we would during the day. Most of it would be happening in the day. We would still have news updates in the evening, as well, but probably not overnight.
SEQ 1_0 \* Arabic \n8804 THE CHAIRMAN: How many people are you planning to have in your news department?
SEQ 1_0 \* Arabic \n8805 MR. HILDEBRAND: We are planning to have three people in our news department.
SEQ 1_0 \* Arabic \n8806 THE CHAIRMAN: News department.
SEQ 1_0 \* Arabic \n8807 MR. HILDEBRAND: Right.
SEQ 1_0 \* Arabic \n8808 THE CHAIRMAN: That will include a director or ‑‑
SEQ 1_0 \* Arabic \n8809 MR. HILDEBRAND: Yes.
SEQ 1_0 \* Arabic \n8810 THE CHAIRMAN: But who also ‑‑
SEQ 1_0 \* Arabic \n8811 MR. HILDEBRAND: But he would also be on the ‑‑ or she would also be on the air.
SEQ 1_0 \* Arabic \n8812 THE CHAIRMAN: I see. Okay.
SEQ 1_0 \* Arabic \n8813 You have indicated that the local programming you will offer on CJTS will be similar to what is offered in Winnipeg.
SEQ 1_0 \* Arabic \n8814 Could you tell us a little more about the types of local reflection and spoken word that are currently offered on CHVN?
SEQ 1_0 \* Arabic \n8815 MR. HILDEBRAND: Well, in addition to the news and surveillance that I have already talked about, we also get heavily involved with musical groups that are appearing in the community, in the area, and so we would be not only highlighting their music, but we would be talking to the artists and get them involved with our audience.
SEQ 1_0 \* Arabic \n8816 We would be involved with pretty well everything that moves in Lethbridge. We would be providing news and information to all of the civil and public and university outlets, as well. So we would be involved, basically, with the entire community, which sort of is rolled up in our community service slogan, and so that we would make it a full‑service radio station.
SEQ 1_0 \* Arabic \n8817 THE CHAIRMAN: And you will be sharing programs with CHVN?
SEQ 1_0 \* Arabic \n8818 MR. HILDEBRAND: We wouldn't be sharing necessarily programming, but we would be sharing music. In CHVN, we have developed a number of musical talent nights, where we have anywhere from six to eight musical groups performing, and then the top group is awarded a prize of a CD that we helped them make. So we would certainly be using music from CHVN in Lethbridge, but we wouldn't be ‑‑ otherwise you are sharing information.
SEQ 1_0 \* Arabic \n8819 But the biggest piece that we can probably provide is the infrastructure that our company has in place, so that we have administrative and traffic and creative and all of those services available. And that would, again, enable us to provide service at a more professional level in Lethbridge than we would otherwise be able to do.
SEQ 1_0 \* Arabic \n8820 THE CHAIRMAN: In increasing to full power, obviously, currently the station is serving specifically Lethbridge, and it's core area, but in extending with full power, obviously, you will be covering some communities like Taber, Fort Macleod, Coaldale, Raymond.
SEQ 1_0 \* Arabic \n8821 MR. HILDEBRAND: Right.
SEQ 1_0 \* Arabic \n8822 THE CHAIRMAN: Have you any specific plan regarding servicing these communities?
SEQ 1_0 \* Arabic \n8823 MR. HILDEBRAND: Well, again, we would provide service there, as well. You would obviously be secondary to Lethbridge, because Lethbridge is the core that we are looking for, but the specialty part of our music would also appeal to some of those areas and is appealing now. The station is getting calls from Coaldale, for example, that the signal is spotty, they can hear it sometimes, not all the time.
SEQ 1_0 \* Arabic \n8824 If there are events taking place in those communities that are in line with our format, we would certainly be covering those, as well, and we would be happy to provide the same kind of overall service to the entire region that we are covering.
SEQ 1_0 \* Arabic \n8825 THE CHAIRMAN: Now, we will move towards religious programming, and, obviously, the notion of balanced programming that comes with it.
SEQ 1_0 \* Arabic \n8826 As you know, the Commission has set out a policy on religious programming and I need to get further information from you.
SEQ 1_0 \* Arabic \n8827 In your deficiency reply of October 28th, you have stated that you will not offer religious programming as defined in the religious broadcasting policy. In the same letter, you agreed to accept to operate under the standard condition of licence requiring the provisions of balance and ethics in religious programming.
SEQ 1_0 \* Arabic \n8828 Brokered spoken‑word programming, such as Focus on the Family, Insights for Living, Adventures in Odyssey, Back to the Bible and Prophesy for Today are programming staples on a number of Golden West stations, such as CHRB, in High River. As well, programming information supplied on CHDM‑FM website shows that brokered programming, such as Focus on the Family, Insights for Living and Adventures in Odyssey are also here on the Winnipeg station.
SEQ 1_0 \* Arabic \n8829 Do you plan to offer these types of brokered spoken‑word programs on CJTS? Given the station's Christian music format, they will seem to be a natural fit.
SEQ 1_0 \* Arabic \n8830 MR. HILDEBRAND: Well, first of all, referring to CHVN, those programs that you refer to are not on between 6 a.m. and midnight. They are broadcast between midnight and 6 a.m. So, for the record, that's what we have been doing there.
SEQ 1_0 \* Arabic \n8831 The station was doing that when we purchased it, and so we have left those in place, but we have not been airing any, as you referred to it, brokered programming between 6 a.m. and midnight. The same plan would be in place for Lethbridge. We really are seeing this as a music‑based radio station and we wouldn't be looking to carry those programs during the day parts.
SEQ 1_0 \* Arabic \n8832 THE CHAIRMAN: I appreciate the fact that these programs are not carried during the defined broadcast day of the regulations, but the religious policy states that the notion of balanced programming applies on the 168 hours a week rather than the 126 hours a week. So even if they are carried outside the broadcast day, these programs are still under the purview of the religious programming policy and the balanced programming policy.
SEQ 1_0 \* Arabic \n8833 So my question to you is were you aware that they were covered by the existing policy?
SEQ 1_0 \* Arabic \n8834 MR. HILDEBRAND: Yes.
SEQ 1_0 \* Arabic \n8835 THE CHAIRMAN: You were.
SEQ 1_0 \* Arabic \n8836 Now, that it seems that you ‑‑ well, you surely have agreed to operate under the standard conditions regarding balance, so what are your plans regarding balanced programming, if you accept that these programs are to be considered as being religious programs and they are covered by the policy?
SEQ 1_0 \* Arabic \n8837 MR. HILDEBRAND: Well, if they are other programs that are interested in the midnight to 6 time block that would require further balance, we would be happy to consider that.
SEQ 1_0 \* Arabic \n8838 From my knowledge, there haven't been any inquiries for additional programs, so...
SEQ 1_0 \* Arabic \n8839 THE CHAIRMAN: But the policy also states that it's not only making available program time, that is it's not only waiting for somebody to knock at your door and say, "I want to have broadcast time", but also the policy strongly suggests that you selected the other, say, group to make use of your airways. Have you done that in Winnipeg?
SEQ 1_0 \* Arabic \n8840 MR. HILDEBRAND: Not really, no, but I guess we basically are reflecting the community, and our efforts are always to reflect the community that we serve. We think we have done that reasonably well.
SEQ 1_0 \* Arabic \n8841 THE CHAIRMAN: Now, how much of the spoken‑word programming that you will devote to balanced programming, in terms of ‑‑ I'm trying to figure out ‑‑ well, I know that the programs that you have ‑‑ are they daily programs, Focus on the Family, Insight for Living and ‑‑
SEQ 1_0 \* Arabic \n8842 MR. HILDEBRAND: They are Monday to Friday.
SEQ 1_0 \* Arabic \n8843 THE CHAIRMAN: They are Monday to Friday. They an hour each?
SEQ 1_0 \* Arabic \n8844 MR. HILDEBRAND: No, half‑hour.
SEQ 1_0 \* Arabic \n8845 THE CHAIRMAN: Half an hour.
SEQ 1_0 \* Arabic \n8846 MR. HILDEBRAND: The ones you refer to are half‑hour.
SEQ 1_0 \* Arabic \n8847 THE CHAIRMAN: So we are talking here five hours of programming that will fall into the religious programming category at this stage ‑‑
SEQ 1_0 \* Arabic \n8848 MR. HILDEBRAND: Right.
SEQ 1_0 \* Arabic \n8849 THE CHAIRMAN: ‑‑ now. Okay.
SEQ 1_0 \* Arabic \n8850 Could you comment on the possibility that the Commission impose your condition of licence requiring you to do a minimum amount of balanced programming?
SEQ 1_0 \* Arabic \n8851 MR. HILDEBRAND: Sure, it wouldn't be an issue.
SEQ 1_0 \* Arabic \n8852 THE CHAIRMAN: It won't be an issue.
SEQ 1_0 \* Arabic \n8853 Okay, thank you very much for this discussion. We will now talk about your CTD plans, and, as well, we will speak regarding tangible benefit in the same section.
SEQ 1_0 \* Arabic \n8854 The Commission needs your help to clarify the various components and replies you have provided regarding CTD and tangible benefits. Let me start first with the CTD.
SEQ 1_0 \* Arabic \n8855 In various replies you have mentioned that you are accepting all the conditions of licence currently imposed to Spirit Broadcasting. One of them, condition of licence no. 5, deals with an annual minimum contribution of $2,600 towards CTD.
SEQ 1_0 \* Arabic \n8856 According to our records, which, in a letter dated January 12th, you agreed there are still four $2,600 contributions that are due before the current licence expires in August 31, 2007. The two obviously are this year and next year and the previous years' contribution has been disallowed, as you know.
SEQ 1_0 \* Arabic \n8857 So the Commission is expecting that this $10,400 commitment be executed over the next 18 months. Do you agree with that statement?
SEQ 1_0 \* Arabic \n8858 MR. HILDEBRAND: Yes. I think in one of our letters, in discussions with Commission staff, I said whatever shortcoming there were in the current period, we would make up in ‑‑ if the application was approved, we would make that up in the current licence term.
SEQ 1_0 \* Arabic \n8859 THE CHAIRMAN: Fine.
SEQ 1_0 \* Arabic \n8860 In your application, you stated that were recommending $1,000 per year towards CTD. In a letter dated October 28, 2005, you mention that the funding was to go to the promotion and to the assistance of local music groups. In the same paragraph, you also mentioned that the $1,000 cash contribution was to go towards a scholarship at a local education institution.
SEQ 1_0 \* Arabic \n8861 For the record, are we talking here of two different $1,000 contribution or is it the same one?
SEQ 1_0 \* Arabic \n8862 MR. HILDEBRAND: No, it would be two different ones, and these would be minimums.
SEQ 1_0 \* Arabic \n8863 As we outlined in an earlier application, what we have been able to do with local musical groups, we have been able to sponsor concerts with them, and also then get CDs made and, in some cases, actually market it.
SEQ 1_0 \* Arabic \n8864 So these would be minimums for CTD. We would expect to do considerably more.
SEQ 1_0 \* Arabic \n8865 THE CHAIRMAN: Okay. Now, as you are aware, in order to be accepted, the CTD initiatives, they have to meet certain eligibility requirements. So what types of studies will the $1,000 scholarship funding support? You are saying that a bursary will be granted to a student in a local ‑‑
SEQ 1_0 \* Arabic \n8866 MR. HILDEBRAND: Well, it will be done through the school, obviously, and we will make sure that they are qualified under the CTD guidelines.
SEQ 1_0 \* Arabic \n8867 THE CHAIRMAN: Is there a journalism program at, say, the Lethbridge university?
SEQ 1_0 \* Arabic \n8868 MR. HILDEBRAND: Yes, there is, but we would tend to try to put the CTD contributions to music rather than journalism, but that would be an option. But we have done this in other markets, where we provided scholarships to musical groups at various high schools or colleges that we have been able to make sure that they qualify for third‑party regulations, and we would do the same thing here.
SEQ 1_0 \* Arabic \n8869 But I think want to emphasize that the numbers that we have in our application are minimums. We will, without a doubt, do significantly more.
SEQ 1_0 \* Arabic \n8870 THE CHAIRMAN: How will the successful recipient be chosen? He will be chosen by the school?
SEQ 1_0 \* Arabic \n8871 MR. HILDEBRAND: We have a process where we meet with them and the directors of the band or the musical groups, and we do that in consultation with them. In some communities there are also competitions, and there's a process that then works from there.
SEQ 1_0 \* Arabic \n8872 THE CHAIRMAN: Who will be responsible for administrating the fund?
SEQ 1_0 \* Arabic \n8873 MR. HILDEBRAND: That is something that falls into my purview, and that's part of ‑‑ most of my duties have been taken over by other people in our company, but I continue to look after CTD so that I can give ‑‑
SEQ 1_0 \* Arabic \n8874 THE CHAIRMAN: That one.
SEQ 1_0 \* Arabic \n8875 MR. HILDEBRAND: Yeah, so I give you assurance that we will do that. I need to have something to do, too.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n8876 THE CHAIRMAN: Regarding now the talent that you want to promote and assist, the music groups, how will they be selected?
SEQ 1_0 \* Arabic \n8877 MR. HILDEBRAND: Well, I mean, I think each market is a little different. I mean, I refer again to what we did at CHVN in Winnipeg. In the fall, we had a series of Saturday night concerts, with musical groups from across the area. Then, there was a competition and an run‑off, and then that culminated in a final concert, where we actually have an over‑sold crowd. It resulted in a winner, which then resulted in the production of a CD and a distribution of the CD.
SEQ 1_0 \* Arabic \n8878 So the whole process gets a lot of attraction and gets a lot of airplay on the radio station. And it really, really makes the musical groups very, very happy because in most cases these are musical groups that would not ever get any exposure on a major market broadcaster because they don't necessarily fit a format.
SEQ 1_0 \* Arabic \n8879 We are of the opinion that if they are local, then we can work them into our format in some way. We try to support them, and we found that is a very, very satisfying process.
SEQ 1_0 \* Arabic \n8880 THE CHAIRMAN: They will not necessarily be groups that are singing hymns or doing Christian music?
SEQ 1_0 \* Arabic \n8881 MR. HILDEBRAND: We wouldn't see them as hymns, no. They may still be in their mind gospel, but they wouldn't fall into the category of "Shall We Gather at the River".
SEQ 1_0 \* Arabic \n8882 THE CHAIRMAN: In the same October 28th, 2005 letter, in your paragraph 1 (c), you wrote that,
"We will adhere to the existing conditions of licence 1, 2, 3 and 5 for a new full licensed term." (As read)
SEQ 1_0 \* Arabic \n8883 Condition of licence no. 5 deals with an annual minimum contribution of $2,600 for CTD. So are we talking here about two times $1,000, plus one time $2,600?
SEQ 1_0 \* Arabic \n8884 MR. HILDEBRAND: Yes, we are.
SEQ 1_0 \* Arabic \n8885 THE CHAIRMAN: So it's a commitment for $4,600 ‑‑
SEQ 1_0 \* Arabic \n8886 MR. HILDEBRAND: Right.
SEQ 1_0 \* Arabic \n8887 THE CHAIRMAN: ‑‑ toward CTD that we are talking here.
SEQ 1_0 \* Arabic \n8888 What type of initiatives will Golden West undertake with the other $2,600?
SEQ 1_0 \* Arabic \n8889 MR. HILDEBRAND: Well, I think what we will do there is to do what we have done in southern Manitoba ‑‑ I keep referring to that ‑‑ where we will set more concerts into place that will develop more CDs. Our plan is always to give the artist more exposure.
SEQ 1_0 \* Arabic \n8890 The other thing that we will be doing is we will be carry a weekly half‑hour musical program that will be featuring musical groups and bands from southern Alberta, and, again, the best of those will be put into a production CD.
SEQ 1_0 \* Arabic \n8891 So there's more than ample opportunity to spend this money. What find in most areas, we actually end up spending more.
SEQ 1_0 \* Arabic \n8892 THE CHAIRMAN: I see.
SEQ 1_0 \* Arabic \n8893 Now, I will move towards tangible benefits.
SEQ 1_0 \* Arabic \n8894 In your June 20th, 2005 reply to deficiency, you stated that,
"If the Commission deems it appropriate to impose the 6 percent fee on this transaction, we will reluctantly agree."
SEQ 1_0 \* Arabic \n8895 My first question to you is: why will you reluctantly agree?
SEQ 1_0 \* Arabic \n8896 MR. HILDEBRAND: Well, I think, in my discussion with the Commission staff, the annual return filed by the licensee showed that this station had a modest profit, but that took into account that more than half of the employees were working as volunteers.
SEQ 1_0 \* Arabic \n8897 In our case, obviously, we would be paying everyone, we wouldn't be dealing with volunteers, and so my point was that, on a normal business basis, this station was really operating heavily in the red if those things would be paid for.
SEQ 1_0 \* Arabic \n8898 From that perspective, it was hard to come to the conclusion that the station was profitable. However, since this may be a grey area, I made the comment that if the Commission feels that ‑‑
SEQ 1_0 \* Arabic \n8899 THE CHAIRMAN: In its wisdom.
SEQ 1_0 \* Arabic \n8900 MR. HILDEBRAND: ‑‑ in its wisdom would feel that this is now deemed to be profitable, we would agree to that and pay the 6 percent.
SEQ 1_0 \* Arabic \n8901 THE CHAIRMAN: I noted in the annual return that, Mr. Fleming, you reported having five employees. Is that accurate?
SEQ 1_0 \* Arabic \n8902 MR. FLEMING: No, sir, it's not, no. We have two full‑time and three part‑time and about three volunteers.
SEQ 1_0 \* Arabic \n8903 THE CHAIRMAN: But, finally, you end up ‑‑ well, obviously, the part‑time, are they half‑time or ‑‑
SEQ 1_0 \* Arabic \n8904 MR. FLEMING: Very much so, yes.
SEQ 1_0 \* Arabic \n8905 THE CHAIRMAN: So we will say that you have three‑and‑a‑half full‑time employees, and other volunteers.
SEQ 1_0 \* Arabic \n8906 Mr. Hildebrand, how many employees are you contemplating for ‑‑
SEQ 1_0 \* Arabic \n8907 MR. HILDEBRAND: We would contemplate to have around 10 employees on a full‑time basis, plus the back‑up infrastructure from Golden West. These employees would basically be news people, on‑air people and sales people.
SEQ 1_0 \* Arabic \n8908 THE CHAIRMAN: I see. And the back office is provided out of ‑‑
SEQ 1_0 \* Arabic \n8909 MR. HILDEBRAND: Is provided out of Altona and Steinbach, in Manitoba, where all of the traffic, the creative and the production and the overall administration for all of our stations in the prairies, is handled out of there.
SEQ 1_0 \* Arabic \n8910 THE CHAIRMAN: Fine.
SEQ 1_0 \* Arabic \n8911 If the Commission was to determine that it's tangible benefits policy was to apply, what type of initiative other than ‑‑ obviously there are contributions that are deemed to go to FACTOR, and another one, too, Starmaker, but for the remaining part which type of activities will you contemplate?
SEQ 1_0 \* Arabic \n8912 MR. HILDEBRAND: We would contemplate, first of all, the FACTOR and Starmaker Fund and the money that we would send to FACTOR, we would try and earmark that they send it back to use in Alberta or Saskatchewan, or somewhere in the prairies, and not spend it in eastern Canada.
SEQ 1_0 \* Arabic \n8913 The third part, we would like use an organization called Avanti Records, who are in the process of ‑‑ they organize concerts, do CDs and produce records, and so they are in the genre that we work in. So that's an area that we would likely use the rest of the tangible benefits, if you so deemed it was necessary.
SEQ 1_0 \* Arabic \n8914 THE CHAIRMAN: My next question is purely on technical grounds.
SEQ 1_0 \* Arabic \n8915 Where is currently the transmitter located, on which tower? I notice that there are two towers?
SEQ 1_0 \* Arabic \n8916 MR. FLEMING: Sir, it's currently on top of the Lethbridge Centre, in the centre of Lethbridge, in the middle of town.
SEQ 1_0 \* Arabic \n8917 THE CHAIRMAN: In the middle of the town?
SEQ 1_0 \* Arabic \n8918 MR. FLEMING: Yes.
SEQ 1_0 \* Arabic \n8919 THE CHAIRMAN: I notice through the various documentation that I have, there are two existing transmitting sites, one operated by the CBC and the other one operated by CKUA. I deducted from reading your ‑‑ looking at the maps that were prepared by your engineer, Mr. Hildebrand, that you are going to be going to the CBC transmitting site.
SEQ 1_0 \* Arabic \n8920 MR. HILDEBRAND: That's our plan, yes.
SEQ 1_0 \* Arabic \n8921 THE CHAIRMAN: That's your plan.
SEQ 1_0 \* Arabic \n8922 I haven't seen in the application a letter of confirmation from the CBC agreeing to ‑‑
SEQ 1_0 \* Arabic \n8923 MR. HILDEBRAND: D.E.M. ALLEN have that document.
SEQ 1_0 \* Arabic \n8924 THE CHAIRMAN: D.E.M. ALLEN.
SEQ 1_0 \* Arabic \n8925 MR. HILDEBRAND: If it's not in your files, I will get it to you.
SEQ 1_0 \* Arabic \n8926 THE CHAIRMAN: Well, will you ask D.E.M. ALLEN to provide it for us?
SEQ 1_0 \* Arabic \n8927 MR. HILDEBRAND: Yes.
SEQ 1_0 \* Arabic \n8928 THE CHAIRMAN: Now, also, I notice, looking at the financials that you have allocated for capital expenditures, that you have allocated $50,000 for transmission. Then, when I'm looking at the others that are planning to go on the CBC tower, they have a much greater amount. I think it seems to be a much bigger proposition than what you are contemplating.
SEQ 1_0 \* Arabic \n8929 If it costs much more than what you think you have committed in your application, are you ready to make that investment?
SEQ 1_0 \* Arabic \n8930 MR. HILDEBRAND: Yes, we are.
SEQ 1_0 \* Arabic \n8931 THE CHAIRMAN: Because we are maybe talking here ten‑fold that money. I don't know.
SEQ 1_0 \* Arabic \n8932 MR. HILDEBRAND: No, it certainly wouldn't. We have been doing these kind of things in other towers, where we have been leasing space, and, yeah, we haven't had any difficulty with that. As a matter of fact, we have some CBC leases now, and we know what they are.
SEQ 1_0 \* Arabic \n8933 THE CHAIRMAN: Now, I move that one of the comments that was received from an intervenor, because I checked the file and I noticed that you didn't provide any comments or reply to Mr. Eric Cadman in intervention, but he strongly opposed the increase in power, suggesting that the Commission, in the past ‑‑ and he mentions particularly Medicine Hat, where the Commission has denied the power upgrade, and he's opposing your application on similar grounds, claiming that you are coming through the back door and using a financial negative situation only to get in the market.
SEQ 1_0 \* Arabic \n8934 Do you have comments on that?
SEQ 1_0 \* Arabic \n8935 MR. HILDEBRAND: Yeah, I don't ‑‑ I haven't received that letter from the gentleman you refer to, so I don't have a comment on that. But, again, we feel that we have a service that we are willing to provide, there is a service in the community of Lethbridge now that is in some peril, and we feel that the arrangement that we have proposed not only will ensure that service is maintained in the long run, but will also be enhanced.
SEQ 1_0 \* Arabic \n8936 THE CHAIRMAN: Well, we are slowly moving towards the end of your appearance.
SEQ 1_0 \* Arabic \n8937 If the Commission was to authorize your application, as well as another, which one will have the less negative impact on your business plan, and why?
SEQ 1_0 \* Arabic \n8938 MR. HILDEBRAND: That will be a very hard question to answer.
SEQ 1_0 \* Arabic \n8939 First of all, I mean the Commission will have to determine the merits of the other applicants. I think, as I indicated in my opening remarks, the City of Lethbridge, at 75,000, is already well‑served by a large number of broadcasters and the southern part of Alberta isn't growing in the same way that some of the other parts of Alberta are growing. So it would seem to me that the number of radio stations and televisions stations serving the market at this point may be adequate.
SEQ 1_0 \* Arabic \n8940 So that our point has been, when we filed the application, we were certainly not looking to open the market to a call, we were looking mainly to continue the service that was already being provided, and to do it in a somewhat better manner.
SEQ 1_0 \* Arabic \n8941 I don't think that we are in a good position to say here today which of the other applicants we would support, because, obviously, if we said this one's better than that one, then we would be providing support for them.
SEQ 1_0 \* Arabic \n8942 My hope would be that the Commission can deal with this particular application to leave the market as it is, and if the market grows in the future maybe more stations could be added at that time. But at this point, it seems to me that it might make sense to not over‑license the market.
SEQ 1_0 \* Arabic \n8943 THE CHAIRMAN: Thank you.
SEQ 1_0 \* Arabic \n8944 Mr. Langford wants to ask you questions.
SEQ 1_0 \* Arabic \n8945 MR. LANGFORD: Thank you.
SEQ 1_0 \* Arabic \n8946 Just a couple of questions on format. Has this station been a gospel station, as described today, for its whole time, its whole five years?
SEQ 1_0 \* Arabic \n8947 MR. FLEMING: Yes, sir, it has.
SEQ 1_0 \* Arabic \n8948 MR. LANGFORD: Do you have any idea what the listenership to this station is?
SEQ 1_0 \* Arabic \n8949 MR. FLEMING: Well, we are not subscribers to BBM, but we are subscribers to the University of Alberta, that's done three surveys for us. We think they are a very in‑depth survey, with usually five or six people on the survey doing it, the merits are just incredible and we believe in it, and we are told that we have a 15‑and‑a‑half percent share of the market.
SEQ 1_0 \* Arabic \n8950 MR. LANGFORD: Now, one of the other applicants did a study by Ipsos Reid on the listening patterns, because they are looking ‑‑ the applicant is Touch, and they are looking to compete with you in the market, and they found ‑‑ and I make no comment on how they did this. They polled 300 people by telephone ‑‑ and we have heard of Ipsos Reid, but I give no guarantees for their work, I'm simply quoting what I find here on page 6 of their study, which is on the public record ‑‑ and they found that 1 percent of listeners polled identified Spirit FM, CJTS 97.1, as their favourite station.
SEQ 1_0 \* Arabic \n8951 MR. HILDEBRAND: If I could comment on that, I think that though the station hasn't been a member of BBM, BBM has been serving the market over the years. From my position in the industry, I have been able to certainly see some of the numbers that BBM has had for the market, and they would be more in line with the Ipsos Reid figure than the University of Lethbridge figures that may have been used, so...
SEQ 1_0 \* Arabic \n8952 The station, obviously, it doesn't have a huge audience in the market, nor do I think that in our environment it would have a huge audience in the market. The format isn't designed to have a mass audience, and I don't think it ever will.
SEQ 1_0 \* Arabic \n8953 Again, if we keep going back to our station in southern Manitoba, which is similar, it may get into the 5 percent range, but it's not going to be a huge factor in the market. Nor will it likely be in Lethbridge.
SEQ 1_0 \* Arabic \n8954 MR. LANGFORD: So it brings me to the chair's final line of questioning with regard to competition. I'm not asking your to play favourites, but I am asking you to make a reasonable business decision for me.
SEQ 1_0 \* Arabic \n8955 What kind of an impact in this sort of market would The Touch FM application, which wants to play gospel music, have?
SEQ 1_0 \* Arabic \n8956 MR. HILDEBRAND: Well, by and large, we looked at their application and we see it almost duplicating what we do, and so we don't really see that it is necessary to license another station that's similar.
SEQ 1_0 \* Arabic \n8957 In our letter of intervention we did outline that ‑‑
SEQ 1_0 \* Arabic \n8958 MR. LANGFORD: M'hm.
SEQ 1_0 \* Arabic \n8959 MR. HILDEBRAND: ‑‑ it really looks like a duplication of what we are already doing and doesn't make a whole lot of sense.
SEQ 1_0 \* Arabic \n8960 MR. LANGFORD: Now, that leads me to my last question, and I'm really just trading on your experience here, if you don't mind.
SEQ 1_0 \* Arabic \n8961 When the Touch applicants came to us early last week, I believe it was on Tuesday, as one of the applicants for a Calgary station, they made quite a lot out of the notion that there are really two types of gospel music, one traditional or southern, if you want to call it that, and the other contemporary, and that the two don't mix, that they are oil and water. The two have separate audience, and some people like one and some people like the other.
SEQ 1_0 \* Arabic \n8962 Is your gospel either southern or contemporary or is it a mix?
SEQ 1_0 \* Arabic \n8963 MR. HILDEBRAND: No, I think it would be referred to as a mix.
SEQ 1_0 \* Arabic \n8964 I think there are many, many niches or many different kinds of gospel music, and whether there's a big enough audience for any particular niche by itself is probably doubtful. It is my contention that you need to have somewhat of a broad spectrum that you can appeal to.
SEQ 1_0 \* Arabic \n8965 MR. LANGFORD: M'hm.
SEQ 1_0 \* Arabic \n8966 MR. HILDEBRAND: I think there is the traditional gospel, that goes back many years, and then there is a new genre of gospel music that has some rock elements to it, some black, some soul, some high‑energy music with a lot of instrumentation behind it. So I think it's very hard to carve it out into a very, very narrow niche.
SEQ 1_0 \* Arabic \n8967 I mean, my sense is that it's not easy to make a living at this, and I think that if we didn't already have a radio station with a strong ‑‑ in place, we would be less enthused to do this. But we see that there is a market in many parts of the prairies, especially for the alternative sound that this provides.
SEQ 1_0 \* Arabic \n8968 I think this plays into the hands of what the Commission wants. The Commission wants more diversity. The genre that we are into here isn't going to appeal to most of the mainstream broadcasters, and certainly not the major market broadcasters.
SEQ 1_0 \* Arabic \n8969 So we look at this as carrying on sort of a niche format that we have been doing all our life, and we see that this makes some sense. We can trade on what we have learned in Manitoba, and so we see that the main reason why we are doing this.
SEQ 1_0 \* Arabic \n8970 Certainly, we see no reason why Touch Canada would be needed in the market, since we are already doing that.
SEQ 1_0 \* Arabic \n8971 MR. LANGFORD: Could I ask you one last question regarding Manitoba? I'm sorry to drag this on so long, but I do find this interesting in the context of so many applications nibbling around the same format.
SEQ 1_0 \* Arabic \n8972 If in Manitoba this Commission today could waive a magic wand and split your Manitoba service into two FM services, would there be enough of a market for you to format those services, one in contemporary gospel and the other in traditional or southern gospel?
SEQ 1_0 \* Arabic \n8973 MR. HILDEBRAND: I don't think so. Certainly, I'm convinced that a free‑standing operation would not be able to survive.
SEQ 1_0 \* Arabic \n8974 One of the reasons that we can obviously survive at a level that is lower than a free‑standing operation is we do have the infrastructure that provides administration, engineering, accounting and traffic and creative. All of that infrastructure is in place, so we don't need to hire as many people as a free‑standing operator does. Then, that obviously reduces our cost, and that's the only reason it works.
SEQ 1_0 \* Arabic \n8975 I don't think that if you split the thing in half in Manitoba and by your magic wand provided it to two separate operators ‑‑ they would both go broke.
SEQ 1_0 \* Arabic \n8976 MR. LANGFORD: You have been very, very helpful, and I'm grateful for that. Thank you very much.
SEQ 1_0 \* Arabic \n8977 Those are my questions, Mr. Chair.
SEQ 1_0 \* Arabic \n8978 THE CHAIRMAN: Commissioner del Val.
SEQ 1_0 \* Arabic \n8979 COMMISSIONER del VAL: Thank you, Mr. Hildebrand.
SEQ 1_0 \* Arabic \n8980 I have some questions regarding your intervention against Vista, so I don't know whether you are coming back in Phase 2. If you are not, may I ask them now?
SEQ 1_0 \* Arabic \n8981 MR. HILDEBRAND: I would propose to come back in Phase 2, once I had heard their whole application. I would prefer to maybe answer them at that time, rather than ‑‑
SEQ 1_0 \* Arabic \n8982 COMMISSIONER del VAL: Great.
SEQ 1_0 \* Arabic \n8983 MR. HILDEBRAND: ‑‑ try to presume in advance what they will be.
SEQ 1_0 \* Arabic \n8984 COMMISSIONER del VAL: Thank you.
SEQ 1_0 \* Arabic \n8985 So you will come back in Phase 2, then?
SEQ 1_0 \* Arabic \n8986 MR. HILDEBRAND: I will.
SEQ 1_0 \* Arabic \n8987 COMMISSIONER del VAL: Okay, thanks.
SEQ 1_0 \* Arabic \n8988 THE CHAIRMAN: Legal counsel.
SEQ 1_0 \* Arabic \n8989 MS BENNETT: Thank you.
SEQ 1_0 \* Arabic \n8990 I just have a couple of follow‑up questions.
SEQ 1_0 \* Arabic \n8991 The first one goes back to your discussion with Mr. Arpin about your commitment to cover the outstanding CTD commitment owed by CJTS.
SEQ 1_0 \* Arabic \n8992 Could you comment on the types of initiatives that Golden West would undertake with respect to that outstanding funding?
SEQ 1_0 \* Arabic \n8993 MR. HILDEBRAND: Well, I think we would probably do much of the same that Spirit has done to date, but some of the reasons why the situation is in arrears, I think, is because Spirit doesn't have probably the manpower to look after some of these.
SEQ 1_0 \* Arabic \n8994 They have actually done some of the initiatives, but haven't documented them properly to qualify. So the first thing we would do is document what is being done, and those items that really qualify we would do that.
SEQ 1_0 \* Arabic \n8995 To make up any differences, we would accelerate the other initiatives that I already talked about, instead of making one CD with one group, we would make another one for two groups, so that we could get this done fairly quickly.
SEQ 1_0 \* Arabic \n8996 Our plan would be to do this in the first year of our operation there, rather than wait till the end of the cycle.
SEQ 1_0 \* Arabic \n8997 MS BENNETT: Okay. Thank you.
SEQ 1_0 \* Arabic \n8998 My last two questions are just housekeeping.
SEQ 1_0 \* Arabic \n8999 You mentioned that you would file a letter from the CBC with respect to the use of the ‑‑
SEQ 1_0 \* Arabic \n9000 MR. HILDEBRAND: Yes.
SEQ 1_0 \* Arabic \n9001 MS BENNETT: Could you tell us when you would be able to file that letter?
SEQ 1_0 \* Arabic \n9002 MR. HILDEBRAND: Within the week.
SEQ 1_0 \* Arabic \n9003 MS BENNETT: Okay. And the last question.
SEQ 1_0 \* Arabic \n9004 You had a brief discussion with Mr. Arpin about the intervention, which I believe was from Mr. Cadman. If you were not served with that intervention and you would like an opportunity to comment, could you either let me know or another member of the Commission staff and we can set up a process to enable you to do that?
SEQ 1_0 \* Arabic \n9005 MR. HILDEBRAND: I would certainly like to see it.
SEQ 1_0 \* Arabic \n9006 MS BENNETT: Okay. We are going to check the public file to make sure that it's there, so maybe we can talk at the break.
SEQ 1_0 \* Arabic \n9007 MR. HILDEBRAND: Sure.
SEQ 1_0 \* Arabic \n9008 MS BENNETT: Okay. Thank you.
SEQ 1_0 \* Arabic \n9009 MR. HILDEBRAND: Thanks.
SEQ 1_0 \* Arabic \n9010 THE CHAIRMAN: Now, Mr. Hildebrand, it's the time for the wrap up. So in your own words, could you give us the reasons why the Commission should retain your application?
SEQ 1_0 \* Arabic \n9011 MR. HILDEBRAND: Thank you, Mr. Chair.
SEQ 1_0 \* Arabic \n9012 Well, I think the main reason is that we are a prairie‑based broadcaster that wants to provide somewhat of a different service than maybe is normally provided in the communities.
SEQ 1_0 \* Arabic \n9013 We have made our living providing local ‑‑ 100 percent local service, and that includes heavy concentration on news, heavy concentration of local involvement, a very, very direct and dedicated application of hiring people locally. We are very, very strong in our philosophy to hire people in the community that we serve, so that we are reluctant to parachute people in from another community because, generally, they don't know the community too well, they don't know even the pronunciation of the names, and all of that shows when they are on the air.
SEQ 1_0 \* Arabic \n9014 So we are 100 percent committed to broadcast on the prairies. We have covered Saskatchewan and Manitoba almost to the max and we have had so many invitations to provide that service to Alberta, as well. We feel that this is part of the process that we have undertaken some years ago and we see the Lethbridge market as a place where we can make a difference. We can provide service to the area that is already there, and I think we can provide a better service.
SEQ 1_0 \* Arabic \n9015 I know that with the addition of our news and information processes, the community will be dramatically better served. I think it's important to remember that we are doing this for the long run. We are career professional broadcasters and we are not looking to come in and flip things, we are here for the duration.
SEQ 1_0 \* Arabic \n9016 I think that Commission understand this. We are telling the Commission exactly what's on our mind. We feel that, given the applicants that are before you for Lethbridge, we are by far and away the most logical, the most credible, will provide the best service, provide the least disruption to the market and, at the end of the day, provide the community of Lethbridge with a service that they now have, only in a better manner.
SEQ 1_0 \* Arabic \n9017 So with that, Mr. Chairman, commissioner and staff, thank you for the opportunity.
SEQ 1_0 \* Arabic \n9018 THE CHAIRMAN: Thank you, Mr. Hildebrand, thank you, Mr. Fleming, thank you, Mr. Friesen.
SEQ 1_0 \* Arabic \n9019 The Commission will take a six‑, seven‑minute break. We will get back at 10:15 with the next item.
‑‑‑ Upon recessing at 1008 / Suspension à 1008
‑‑‑ Upon resuming at 1020 / Reprise à 1020
SEQ 1_0 \* Arabic \n9020 THE CHAIRMAN: Order, please.
SEQ 1_0 \* Arabic \n9021 I'm asking the secretary to introduce the next item.
SEQ 1_0 \* Arabic \n9022 THE SECRETARY: Thank you, Mr. Chairman.
SEQ 1_0 \* Arabic \n9023 We will now proceed to item 15 on the agenda, which is an application by Vista Radio Limited for a licence to operate an English‑language FM commercial radio programming undertaking in Lethbridge.
SEQ 1_0 \* Arabic \n9024 The new station would operate on frequency 94.1 MHz, channel 231C, with an average effective radiated power of 42,900 watts, maximum effective radiated power of 100,000 watts, antenna height of 132 metres.
SEQ 1_0 \* Arabic \n9025 Appearing for the applicant is Ms Margot Micallef, who will introduce her colleagues.
SEQ 1_0 \* Arabic \n9026 You will then have 20 minutes for your presentation.
SEQ 1_0 \* Arabic \n9027 Ms Micallef.
PRESENTATION / PRÉSENTATION
SEQ 1_0 \* Arabic \n9028 MS MICALLEF: Thank you.
SEQ 1_0 \* Arabic \n9029 Mr. Chairman, members of the Commission, CRTC staff, good morning.
SEQ 1_0 \* Arabic \n9030 My name is Margo Micallef and I am the chair and CEO of Vista Radio Limited, a wholly‑owned subsidiary of Vista Broadcast Group Limited.
SEQ 1_0 \* Arabic \n9031 Before we begin our presentation, I would first like to introduce our team.
SEQ 1_0 \* Arabic \n9032 Since this is Vista's first application before you, and our first time appearing as a group, I would like to provide some detailed information, perhaps a bit more than I might otherwise. Collectively, our group has a hundred years of broadcast experience.
SEQ 1_0 \* Arabic \n9033 Before joining Vista, I was a senior vice‑president of Shaw Communications Inc. Prior to that time I was a partner with a major law firm in Vancouver, British Columbia. I was specialized in broadcasting and communications and I was a constructor of a seminar in communications law for the Faculty of Law at the University of British Columbia. I was appointed to the Queens Council in 2002.
SEQ 1_0 \* Arabic \n9034 Immediately to my right is Bryan Edwards, president and chief operating officer of Vista Radio Limited. Mr. Edwards is the former president and chief operating officer of Okanagan Skeena Group Limited, where he oversaw the operations of 20 radio stations in small and mid‑markets in B.C.
SEQ 1_0 \* Arabic \n9035 Throughout his 30 years in the broadcast industry, Mr. Edwards has served the broadcast industry in a number of capacities. He was a director and the president of the B.C. Association of Broadcasters, a director of the Canadian Association of Broadcasters, chairman of the Radio Marketing Bureau, he sat as a member of the radio executive committee of the Bureau of Broadcast Measurement, and on the first Broadcast Standards Council.
SEQ 1_0 \* Arabic \n9036 Mr. Edwards was named B.C. Broadcaster of the Year, an honour bestowed on him by his peers in recognition of his significant contribution to the broadcast industry.
SEQ 1_0 \* Arabic \n9037 On my left is Mr. Paul Mann, executive vice‑president of Vista Radio. Paul's career started in Lethbridge 40 years ago, at the age of 16, as the all‑night announcer on 1220 CJOC. Since then, Paul has worked in numerous radio positions, including news, copyrighting, sales, sales management, and most recently as general manager and vice‑president of the Standard Radio B.C. Interior Operations, based in Kelowna.
SEQ 1_0 \* Arabic \n9038 Paul raised his family in Lethbridge while hosting the morning show on 1570 CKBA, in Taber. During this time he also took a leadership role in organizing a grassroots campaign to save a major economic driver in the community, the sugar beet industry. His effort attracted the support of the local MP, a senator, and 18,000 families in the form of a signed petition, and resulted in a 10‑year, three‑way agreement between the federal and provincial governments and the sugar beet industry.
SEQ 1_0 \* Arabic \n9039 Paul later went on to host an award‑winning and distinctly Canadian agricultural news syndication called "The Canadian Farmer", which aired on 60‑plus radio stations across Canada for over 15 years.
SEQ 1_0 \* Arabic \n9040 During his career, Paul has won numerous community service and creative awards from the CAB, the BCAB and other organizations.
SEQ 1_0 \* Arabic \n9041 To my right, but immediately behind Bryan, is John Yerxa, who has been researching Canadian radio since the mid‑1980s. Recently, John conducted extensive research which played a pivotal role in our rebranding of Sun FM, in Duncan, as well as Vista's new launch of the new Jet FM in Courtenay.
SEQ 1_0 \* Arabic \n9042 Prior to that time, during his association with Monarch Broadcasting, John was involved in the launch of Country 95 FM, in Lethbridge, as well as The Hawk, out of Taber.
SEQ 1_0 \* Arabic \n9043 To John's left, and in the middle of our back row, is Paul's son, the vice‑president of programming for Vista Radio, Mr. Jason Mann. Mr. Mann was born in Lethbridge and attended junior and senior high school and continued with post‑secondary broadcast training at Lethbridge Community College.
SEQ 1_0 \* Arabic \n9044 His career path included on‑air work at 1570 CKPA and 1090 CHEC, in Lethbridge. Jason then went on to stations in Red Deer, Calgary and Kelowna. While in Kelowna, he was appointed to director of programming for Telemedia Radio West, a position he held through his final years there with Standard Radio.
SEQ 1_0 \* Arabic \n9045 A highlight of Jason's career was during his final year in Kelowna, when he was responsible for leading the entire staff of the B.C. division of Standard Radio to the 2003 fire storm crisis. Under his leadership, the Kelowna stations earned one provincial and two national RTNDA awards, as well as one CAB award, for breaking news, and a BCAB award for community service for the yellow ribbon campaign which raised funds and awareness for those who lost so much during the fires.
SEQ 1_0 \* Arabic \n9046 Since joining Vista Radio, initially as general manager of Sun FM, in Duncan, British Columbia, Jason was the driving force behind a number of community initiatives which saw Sun FM named as business of the year less than eight months after Vista took it over.
SEQ 1_0 \* Arabic \n9047 Finally, to Jason's left, and directly behind Paul, is Mr. Glenn Hicks. Glenn is the news director of Vista's Kootenay operations. Glenn is here today because his input is integral to our whole philosophical approach to news.
SEQ 1_0 \* Arabic \n9048 Glenn has been a broadcast journalist for over two decades. He started with the South African Broadcasting Corporation in Johannesburg, and rose to become an anchor on national TV news and the host of a national drive‑time radio show.
SEQ 1_0 \* Arabic \n9049 Glenn eventually moved to London, England, where he spent three years producing and presenting programming for the BBC World Service and domestic national satellite TV news.
SEQ 1_0 \* Arabic \n9050 Throughout his broadcast career, he has been active in the nurturing and training of young broadcasters in radio and television. Now with his wife and daughter, Glenn lives in Nelson, British Columbia.
SEQ 1_0 \* Arabic \n9051 Members of the Commission, and staff, thank you for indulging us in this extended introduction. We very much wanted you to know the depth, background and experience that this team brings to Vista Radio and would bring to the Lethbridge market.
SEQ 1_0 \* Arabic \n9052 Mr. Chairman, and members of the Commission, we are now ready to begin our presentation.
SEQ 1_0 \* Arabic \n9053 Mr. Chairman, and members of the Commission, it is an honour to appear before you today with an application for a new FM station to serve Lethbridge, Alberta. The basis of our proposal is simple.
SEQ 1_0 \* Arabic \n9054 First, Lethbridge has a vibrant and growing economy.
SEQ 1_0 \* Arabic \n9055 Second, Vista will introduce a distinct format to Lethbridge, designed to react to the largest unserved segment of the adult radio listening population.
SEQ 1_0 \* Arabic \n9056 Third, by integrating a strong business plan, Vista will become an able radio competitor to the two well‑established commercial broadcasters already serving Lethbridge.
SEQ 1_0 \* Arabic \n9057 Fourth, we will bring a new editorial voice to south western Alberta.
SEQ 1_0 \* Arabic \n9058 Fifth, we will make a significant direct contribution to the development of Canadian talent.
SEQ 1_0 \* Arabic \n9059 And finally, by providing a new radio station reflective of the community and with a significant emphasis on local programming, our application will clearly meet your licensing criteria and benefit the Canadian broadcast system.
SEQ 1_0 \* Arabic \n9060 MR. EDWARDS: Vista Radio Limited currently consists of 19 licences, 16 of which are originating stations, all located in smaller British Columbia markets; however, Vista Radio's commitment is to be a strong western Canadian small and medium broadcaster, providing local content which is relevant and connected to the needs of our audiences.
SEQ 1_0 \* Arabic \n9061 Therefore, the addition of an FM station in Lethbridge will enable us to begin our expansion into Alberta, where most of our shareholders currently reside.
SEQ 1_0 \* Arabic \n9062 As a small‑market broadcaster, Vista has thus far made major commitments in all of the communities we are currently licensed to serve. We have local management in all of those stations and all of them make local decisions that are in the best interest of their respective markets.
SEQ 1_0 \* Arabic \n9063 Vista not only endeavours to employ people locally, but to ensure that all of our stations has sufficient on‑air and informational personnel to deliver a distinct musical sound, excellent local news and an absolute dedication to the cities and towns we operate in.
SEQ 1_0 \* Arabic \n9064 We view our Vista stations not only as the voice of their communities, but the building blocks of those same communities, and our mandate includes raising awareness of important local issues and supporting local initiatives, such as Vista's recent fund‑raising drive at the Cowichan Regional Hospital in Duncan, B.C.
SEQ 1_0 \* Arabic \n9065 Right now, we are also investing considerable resources in technology and new staff at all of our Vancouver Island operations in order to denetwork those stations and provide programming that is more in alignment with the principles of the company and the needs of the communities we serve.
SEQ 1_0 \* Arabic \n9066 Our mandate is simple. Vista strives to create local radio stations, staffed by local personnel, delivering local programming. Our company has a clear focus on improving the quality of local service to the small and medium markets where we operate.
SEQ 1_0 \* Arabic \n9067 MR. P. MANN: Lethbridge is a perfect fit for our company. Not only is it my home town, and Jason's home town, but as each of the commercial applicants for a new FM licence have already indicated to you in their supplementary briefs, Lethbridge is a thriving city in a province that is booming.
SEQ 1_0 \* Arabic \n9068 Indeed, early last January, January 6th, a news release issued by the City of Lethbridge announced that the dollar value of the building permits in 2005 was up a staggering 30 percent over 2004.
SEQ 1_0 \* Arabic \n9069 Our analysis of the correlation between retail sales and radio revenue further suggests that, as the economic hub of southwestern Alberta, the Lethbridge retail climate is exceptionally robust at over $1.4 billion in 2005.
SEQ 1_0 \* Arabic \n9070 Yet, the most recent mainstream commercial radio entrant licensed within the Lethbridge region was CKTA, Taber, back in 1974, and prior to that the last commercial entrant licensed to Lethbridge was CHEC radio, in 1970, 36 years ago.
SEQ 1_0 \* Arabic \n9071 According to Alberta Municipal Affairs, the Lethbridge population in 1970 was 39,552, but since then that figure has nearly doubled. Moreover, according to the just completed 2005 city census, Lethbridge's population has increased by over 6 percent in just the past three years and the trading area is now approximately 275,000 people.
SEQ 1_0 \* Arabic \n9072 We would therefore conclude that the Lethbridge radio market is now ready for another entrant.
SEQ 1_0 \* Arabic \n9073 MR. EDWARDS: If successful, Vista would operate a stand‑alone commercial FM station up against two large and well‑established radio groups, each operating an FM combo. Our competitor stations are as follows.
SEQ 1_0 \* Arabic \n9074 Pattison has Country 95, which targets a broad group of radio listeners who appreciate country music. It also operates B93, which, according to Rick Arnish, the president of Pattison Radio Group, is Hot AC.
SEQ 1_0 \* Arabic \n9075 For its part, Rogers operates Rock 106, which primarily focuses on more current rock music. Rogers also has The River, which is now classified both on the air and on its website as "Today's Hottest Music".
SEQ 1_0 \* Arabic \n9076 So, as you can see, three of the four commercial radio stations in Lethbridge are currently focused on more contemporary music and listeners at the younger end of the age spectrum.
SEQ 1_0 \* Arabic \n9077 So while launching a stand‑alone FM station against a Rogers and a Pattison combo may initially appear to put an applicant at a disadvantage, we are confident that Vista can operate successfully under these circumstances.
SEQ 1_0 \* Arabic \n9078 MR. P. MANN: To begin with, our proposal is for a classic hits FM specifically designed to appeal to adults between 35 and 54 years of age, many of who are now listening elsewhere to satisfy their hunger for the music they grew up with. The way we arrived at this choice was by commissioning Banister Research to find out what Lethbridge residents feel is missing from their radio menu.
SEQ 1_0 \* Arabic \n9079 MR. YERXA: Between July 25th and 28th of last year, Bannister Research conducted 40 telephone interviews with adult radio listeners in Lethbridge utilizing a questionnaire template which I designed and which has been used by numerous other broadcast companies, including Chorus, Pattison and Standard, to conduct format‑finder studies such as this one.
SEQ 1_0 \* Arabic \n9080 In the case of Lethbridge, once adult respondents were randomly selected, Bannister first studied their listening behaviour. It then probed listeners' interest in six mainstream yet very different music formats and asked whether they could identify an existing local FM station delivering each one.
SEQ 1_0 \* Arabic \n9081 The two most important calculations Bannister performed with their data were to identify the percentage of listeners that expressed significant interest in each format, as well as the percentage that could not associate a local FM radio station with each format.
SEQ 1_0 \* Arabic \n9082 By comparing these two results, one is able to identify the largest musical hole or opportunity in a market simply by examining the trade‑off between popularity and availability or, as I like to say, between more and less.
SEQ 1_0 \* Arabic \n9083 Obviously, the more popular a music type is within the overall population, the more economically viable that format will be; however, the more easily available a popular music type is perceived to be, the less opportunity it will have to grow as a distinct format without cannibalizing another player in the market. Therefore, suffice it to say that the more popular but less available a music type is, the greater opportunity there is for that format in any given market.
SEQ 1_0 \* Arabic \n9084 Using this approach, Bannister was easily able to determine that classic hits represents the best format opportunity in Lethbridge as it registered very high popularity, but was also perceived by all adult respondents to be the most difficult type of music to find on their local FM dial.
SEQ 1_0 \* Arabic \n9085 MR. P. MANN: So Vista was well‑advised by Bannister to go with classic hits, according to the research. It is a format whose audience is almost equally split between men and women, a format primarily targeted at those 35 to 54 years of age, a mainstream format that will have the least impact on any of the existing commercial stations.
SEQ 1_0 \* Arabic \n9086 It's also worth noting that the two stations most likely to share their core audience with a classic hit station are The River and Rock 106, at 20 percent and 15 percent, respectively. Both are operated by Rogers, yet, we would like to point out that Rogers Broadcasting has not intervened against our application.
SEQ 1_0 \* Arabic \n9087 We believe that's because Classic Hits 94.1 will only share between 11 percent and 20 percent of each existing commercial station's core audience, while gaining a significant percentage of its cume, 38 percent, from out‑of‑market radio stations. Therefore, Vista will be able to monetize the increased tuning or repatriation of listening to local commercial radio, thereby growing overall market revenue.
SEQ 1_0 \* Arabic \n9088 Our belief in this regard is significantly bolstered by the feedback we have gathered from numerous advertisers who say they would strongly support the launch of a new classic hits FM station, primarily serving the 35 to 54 demographic. This target audience is extremely valuable to the local advertising community and, therefore, we are confident that the revenue projections in our application are realistic.
SEQ 1_0 \* Arabic \n9089 MR. J. MANN: Vista's research mandate specifically outlined two objectives: number one, to locate a format that would be commercially viable in Lethbridge, as opposed to a niche format that would not; and, number two, to locate a format that, while popular, would have minimal impact on the four other commercial stations already in the market.
SEQ 1_0 \* Arabic \n9090 In classic hits, we have found a format that will primarily appeal to 35‑ to 54‑year‑old listeners by reintroducing many songs and artists which are not being currently aired locally in any significant numbers. Probably best known as one of the Jack, Joe or Bob stations in larger Canadian markets only, the difference between most of those stations and Classic Hits 94.1 is that, given the size of Lethbridge and the nature of the hole in the market, we will be slightly broader in our musical appeal by offering more seventies music and slightly more pop than rock music.
SEQ 1_0 \* Arabic \n9091 By carefully balancing gold artists like Joni Mitchell, Fleetwood Mac, Billy Joel, Valdy, Rod Stewart, Burton Cummings, America, Sherry Ulrich, the Doobie Brothers, Neil Young, the Eagles, Journey, Chilliwack, The Police, Doug and the Slugs, and the Cars, our classic hits format will be as comfortable for the average 40‑ and 50‑year‑old listener as a warn pair of jeans.
SEQ 1_0 \* Arabic \n9092 However, given our 35 percent Cancon commitment, we will not only revisit past Canadian acts, but we will also present newer Canadian artists who are compatible with the overall sound of the station, artists like Kathleen Edwards, Daniel Powter, Jeremy Fisher and Matthew Barber, along with Mister Completely, which, incidentally, is a Campbell River band that our stations on Vancouver Island were the first to play. And, of course Bedouin Soundclash.
SEQ 1_0 \* Arabic \n9093 Our view is that the insertion of more up‑to‑date Canadian acts will add a variety and freshness to our format without violating the overall premise of Classic Hits 94.1. After all, the key to this station is that it will be providing a much greater amount of 1970s and 1980s pop and rock music than the existing stations currently do, and in doing so it will be focused specifically on the 35‑to‑54 age demographic.
SEQ 1_0 \* Arabic \n9094 MR. HICKS: Classic Hits 94.1 will be much more than just a music station. Our research revealed that a high number of listeners are currently dissatisfied with the lack of news and information on Lethbridge radio stations and classic hits partisans exhibited the highest dissatisfaction on this issue when compared to partisans of all other music types. Moreover, they were also the most vocal in demanding increased news coverage. Therefore, our intention is to establish Classic Hits 94.1 as a significant new source for local and regional news coverage.
SEQ 1_0 \* Arabic \n9095 One of the biggest reasons why we at Vista feel that we are winning over local listeners is because of our attitude towards local information. For those few minutes each hour, for that breaking story, for that important local sports game, the news pertaining to your small town becomes the centre of the universe, and the listeners expect that. We try to deliver it with the same professionalism and dedication that you would expect from the CBC, the BBC or CNN. Why not?
SEQ 1_0 \* Arabic \n9096 But we are giving our listeners what the CBC and other large news organizations won't or simply cannot because the concerns of our smaller communities do not register on their dial; however, local news and information is always at the centre of our radar in the Vista Group.
SEQ 1_0 \* Arabic \n9097 Sure, we only use cell phones, mini‑disc recorders and portable mixing units, but that's all one needs if you blend it with a genuine compassion and understanding of what counts in your local community. Whether it's city council, the hospital board, the school board, the regional district, local elections, a dangerous intersection, a weather warning or those fire storms we recently encountered, we at Vista have an attitude towards writing, editing and delivering the news that makes our local listeners feel informed, engaged and proud that our various newsrooms goes to the trouble to hear from everyone and anyone who has a voice in their community.
SEQ 1_0 \* Arabic \n9098 In the case of Lethbridge, Vista will provide 92 regularly scheduled newscasts for in excess of six hours of news coverage per week. In addition to those 92 newscasts, we will broadcast 9‑and‑three‑quarter hours of structured spoken word per week, encompassing regular weather and road conditions, hourly community service announcements, entertainment and community events, as well as specialty information specifically designed for the region, such as agricultural reports, energy sector reports and a local business feature.
SEQ 1_0 \* Arabic \n9099 MR. P. MANN: Regarding our commitment to local information, I would like to point out that in just our first year on Vancouver Island, we have increased news staffing at our operations by 35 percent, resulting in a dramatic increase in the amount of local news coverage on‑air. Our policy is that each of our originating stations must have a strong editorial voice.
SEQ 1_0 \* Arabic \n9100 We view this local component of our programming as Vista's greatest opportunity to compete in an era of increase competitive technology, such as satellite radio and the Internet. In the case of Lethbridge, Vista's proposals will answer the call for a greater diversity of editorial voices, while our station addresses the local community's demand for more news and information.
SEQ 1_0 \* Arabic \n9101 MR. EDWARDS: Mr. Chairman and members of the Commission, let's turn our focus just for a moment to Canadian talent development.
SEQ 1_0 \* Arabic \n9102 As the Commission is aware, Vista is prepared to make a direct cash commitment of $50,000 per year, for a total of $350,000 over the full licence term, in support of Canadian talent development. We are very proud of this commitment and we look forward to discussing our overall approach to CTD with the Commission panel in the upcoming question and answer period.
SEQ 1_0 \* Arabic \n9103 MR. P. MANN: Of course, another way for Vista to nurture and develop Canadian talent is through the hiring of new broadcasters, who will come to Lethbridge to work at our station, buy homes, pay taxes, settle down, raise families and contribute to the future of southwestern Alberta.
SEQ 1_0 \* Arabic \n9104 Our new station will employ from its very first day of operation 16 new employees, including on‑air announcers, news, sports, creative writers, sales reps and promotion personnel. We are very committed to being a local radio station and Vista's operating philosophy of investing our money in small and medium markets across western Canada is one we will maintain now and in the future.
SEQ 1_0 \* Arabic \n9105 At the same time, please be aware that Vista is currently working hard to reflect the demographics of Canada in our workforce and our programming and, as such, we will insure that from the day Classic Hits 94.1 goes on air it will reflect the demographic make‑up of Lethbridge.
SEQ 1_0 \* Arabic \n9106 MS MICALLEF: Mr. Chairman, and members of the Commission, let's quickly review the merits of our application.
SEQ 1_0 \* Arabic \n9107 We have provided evidence underlining the strengths and dramatic growth of Lethbridge. We propose a music format that is commercially viable and which will add diversity to the market. Consequently, our business plan is well thought out, our revenues are achievable and our costs are reasonable.
SEQ 1_0 \* Arabic \n9108 We will bring a new editorial voice to Lethbridge with a commitment to news that is presently unmatched in the market. We will fully meet the Canadian content requirements and are prepared to allocate $50,000 per year, for a total of $350,000 over the licence term, to support Canadian talent development.
SEQ 1_0 \* Arabic \n9109 From day one, Vista will be committed to creating a workforce that reflects the cultural diversity of Lethbridge, and the province as a whole. Two of Vista's founders and key members of our executive team, Paul and Jason Mann, have their roots in Lethbridge. They, along with the rest of us, will personally insure that Vista's goal of being local, staying local and committing the financial resources to hire broadcasters who will live and work in Lethbridge is met.
SEQ 1_0 \* Arabic \n9110 This application will not only contribute significantly to the objectives of the Broadcasting Act, but it is truly a reflection of the commitment Vista Radio Limited is now bringing to all of its small‑market radio stations and the communities we are licensed to serve.
SEQ 1_0 \* Arabic \n9111 I wish to thank the Commission for this opportunity to explain our proposal to you and we would welcome your questions at this time.
SEQ 1_0 \* Arabic \n9112 THE CHAIRMAN: Thank you, Mrs. Micallef.
SEQ 1_0 \* Arabic \n9113 I'm asking Commissioner de Val.
SEQ 1_0 \* Arabic \n9114 COMMISSIONER del VAL: Thank you for your presentation.
SEQ 1_0 \* Arabic \n9115 You have anticipated a lot of the questions naturally, and it's particularly the question of why you chose the format you chose, and that's helpful. Thank you.
SEQ 1_0 \* Arabic \n9116 I do still have some more specific questions, and then it may end up being a bit redundant with what you have presented, so forgive me for that.
SEQ 1_0 \* Arabic \n9117 Based on your market research, what are the spoken‑word and information programming expectations of your target group, the 35‑ to 45‑year‑old?
SEQ 1_0 \* Arabic \n9118 MR. HICKS: Madam Commissioner, if I may answer that one, just in terms of the market research we conducted, it very much indicated that particular audience group in Lethbridge, 35 to 54, was the one that was earmarked for classic hits, that's the sort of music they would like, but in conjunction with that, complementary to that, is that is very much the age group that is demanding more news, better news. So there's a clear synergy there.
SEQ 1_0 \* Arabic \n9119 So in terms of honing in on that particular market, that's good for classic hits, it's good for news. That segment of the population stressed in our research that they are the most dissatisfied with the lack of quality news and information.
SEQ 1_0 \* Arabic \n9120 COMMISSIONER del VAL: Okay. And those needs are not being met by the existing stations that are serving Lethbridge?
SEQ 1_0 \* Arabic \n9121 MR. HICKS: Madam Commissioner, our research indicated that a large proportion, almost half, were currently dissatisfied with their lot in terms of what they are hearing on the local radio stations, yes, Ma'am.
SEQ 1_0 \* Arabic \n9122 COMMISSIONER del VAL: Okay. What specifically they are looking for is more news?
SEQ 1_0 \* Arabic \n9123 MR. HICKS: News and information, better handling of the spoken word.
SEQ 1_0 \* Arabic \n9124 You will appreciate, Madam Commissioner, and we see this in perhaps local radio across Canada, that older segment, that older listener, is quite rightly demanding a more mature, more professional handling of broadcast journalism.
SEQ 1_0 \* Arabic \n9125 Of course, while we get it from the respected news organizations like the CBC, we have an attitude at the Vista Group that says, "Well, why can't small market radio news be that way?", and that's why we specifically targeted that older audience in Lethbridge, who have told us by research, "Yeah, give us some of your good quality news, as well", and we can deliver on that.
SEQ 1_0 \* Arabic \n9126 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9127 According to your research ‑‑ and I'm looking at page 4 of your presentation ‑‑ there's stations that you have listed. According to your research, what is their age target group?
SEQ 1_0 \* Arabic \n9128 MR. HICKS: Ma'am, can I hand that one over to my colleague, John, here?
SEQ 1_0 \* Arabic \n9129 MR. YERXA: Commissioner del Val, are you looking for the audience overlap that this format would have? Are you looking at where the present partisanship of these stations is right now? What specifically are you asking for?
SEQ 1_0 \* Arabic \n9130 COMMISSIONER del VAL: Probably simpler than you thought. I have a notion in my mind that I just wanted to confirm.
SEQ 1_0 \* Arabic \n9131 All I need right now is, if I look at page 4 of your presentation, and at the top, you have, "Pattison has Country 95". According to your age group, what is their core demographic, and then, say, the same for B93, the same for Rock 106, and the same for The River, just those specifically, what age groups do those stations target?
SEQ 1_0 \* Arabic \n9132 MR. YERXA: All right.
SEQ 1_0 \* Arabic \n9133 MR. YERXA: According to our research, and I may have to dig out more information as we go along here because I have quite a thick binder, but in a nutshell all four of the existing commercial FM stations do skew towards ‑‑ or should I say at least three out of the four do skew significantly towards the younger end of the age spectrum, according to our research.
SEQ 1_0 \* Arabic \n9134 As far as the 35‑plus audience is concerned, as it stands right now in Lethbridge, one really has only a single choice when it comes to music, the more mature listener, and that is country. That is what our research identified, that apart from country, there is no classic hits station, with, I guess, the emphasis on the 18‑to‑34, 18‑to‑44 end of the age spectrum. That's where the hole exists.
SEQ 1_0 \* Arabic \n9135 I hope that answers your question a little bit.
SEQ 1_0 \* Arabic \n9136 COMMISSIONER del VAL: Okay. If you need more time to provide the numbers, or perhaps they could be in the research already and I just have missed those numbers, it's just that 35 would be young to me. So if you are saying "younger", are they skewed towards, say, 35 to 44, or are we actually talking 18 to 25?
SEQ 1_0 \* Arabic \n9137 So if you could provide that information, and just let us know how much time you need, to give the core audience, the targeted group of ‑‑ the respective target audience of each of the four stations you have mentioned, I would appreciate it.
SEQ 1_0 \* Arabic \n9138 COMMISSIONER del VAL: Is that doable?
SEQ 1_0 \* Arabic \n9139 MR. YERXA: Yes. I'm going to do that right now.
SEQ 1_0 \* Arabic \n9140 It's interesting, because I have never been asked, according to our research, what the rankings are and then breaking it out into the key demographic cells, although we certainly have that.
SEQ 1_0 \* Arabic \n9141 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9142 MR. YERXA: I do know what the overall rankings are and I do know that there is a concentration at the younger end of the age spectrum. What you want are specific percentages, if I'm not mistaken.
SEQ 1_0 \* Arabic \n9143 COMMISSIONER del VAL: No, I don't even need the ‑‑ I just need the age. What is the age core demographic for Country 95? Do they target 24 to 44? And say B93, do they target 18 to 25? That's all I need. I need the core audience targeted for each of those four stations, that's all I need.
SEQ 1_0 \* Arabic \n9144 MR. YERXA: I will do my best.
SEQ 1_0 \* Arabic \n9145 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9146 Now ‑‑ I will have more questions on this ‑‑ what about the Jim Pattison station that's classic hits, that is CJBZ, that is also a classic hits station and you wouldn't include that in your Lethbridge market?
SEQ 1_0 \* Arabic \n9147 MR. YERXA: Madam Commissioner, this really is the key point in this entire presentation ‑‑
SEQ 1_0 \* Arabic \n9148 COMMISSIONER del VAL: I know.
SEQ 1_0 \* Arabic \n9149 MR. YERXA: ‑‑ because there were a number of pieces of research that were conducted in the market. We conducted one, a competing applicant conducted another. In both pieces of research, we discovered that the largest format void in the market was for classic hits.
SEQ 1_0 \* Arabic \n9150 In our research, and in the competitor, I will mention the name, Kassof indicated that the largest, I think they term it, "format void", the methodology is very similar with classic hits.
SEQ 1_0 \* Arabic \n9151 Now, once Bannister had finished conducting this research for Vista, and I eventually inherited it, I was astounded to see this hole, having heard that supposedly one of the stations impacting the market was a classic hits station.
SEQ 1_0 \* Arabic \n9152 If you are going to conduct research and spend the money, then you had ‑‑ you are probably best advised to take those results seriously, otherwise why do research? My advice to Vista was to immediately go into the market and to monitor these stations and to do an extensive analysis to see if it backed up the research results, which it did.
SEQ 1_0 \* Arabic \n9153 The other applicant in this case, I understand now, reading through the materials and the supplementary, simply chose to move away from it simply because, if another station supposedly claimed to be doing that, then they felt that maybe that hole was filled.
SEQ 1_0 \* Arabic \n9154 I think they were, now in retrospect, under the misinterpretation that this station was moving into the format, where we have subsequently found they were moving away from that, if at all having served it in the first place. I believe, and I will turn it over to Mr. Jason Mann, if he wishes to comment, but I believe the most recent monitor of just two weeks ago ‑‑ this has been a series of monitors ‑‑ completely confirms this.
SEQ 1_0 \* Arabic \n9155 I shouldn't keep going because I'm the research consultant here, but I will turn it over to you and you can discuss the clarification from Pattison.
SEQ 1_0 \* Arabic \n9156 COMMISSIONER del VAL: Okay. But just so far on what you have said, so what you are telling me is that CJBZ ‑‑
SEQ 1_0 \* Arabic \n9157 MR. YERXA: B93.
SEQ 1_0 \* Arabic \n9158 COMMISSIONER del VAL: Yes ‑‑ is not a classic hits station?
SEQ 1_0 \* Arabic \n9159 MR. YERXA: No. In fact in the document that was passed onto to me in this whole process, I believe Mr. Rick Arnish, in his letter of intervention, even finally added some clarification, appropriate clarification of this, and said, "We are a Hot AC station".
SEQ 1_0 \* Arabic \n9160 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9161 Would you like to add anything, Mr. Mann?
SEQ 1_0 \* Arabic \n9162 COMMISSIONER del VAL: You don't have to.
SEQ 1_0 \* Arabic \n9163 MR. J. MANN: We did conduct a monitor, and if you wanted additional information on that specific demographic, breakdowns and decades of music that each station currently plays, we can provide that.
SEQ 1_0 \* Arabic \n9164 COMMISSIONER del VAL: What programming challenges do you anticipate that you will face in serving the spoken word, sort of the news and information programming, of your target audience in Lethbridge?
SEQ 1_0 \* Arabic \n9165 MR. HICKS: Madam Commissioner, I haven't identified specific challenges, I just know that certainly in a small ‑‑ from my experience already with the group, in a small market you really want to do the spoken word and news coverage justice, and perhaps the challenge will be how best to deploy and allocate a relatively modest newsroom.
SEQ 1_0 \* Arabic \n9166 I have experience in doing that and if you work on the shifts and you have the right enthusiasm amongst qualified broadcast journalists, then you can get there. But the challenges are covering everything. The challenges are making sure that the voices are all heard. The challenges are what happens on a Monday night, when you have Lethbridge city council and there happens to be perhaps a regional district side meeting and a school board deal going on. How do you get three people out there, whereas the perhaps the CBC they can get people out there, they have bigger teams.
SEQ 1_0 \* Arabic \n9167 So certainly the challenges would be deploying and using efficiently our broadcast journalists throughout the day, over the weekends, to make sure we don't miss important stories or important voices are not missed in Lethbridge.
SEQ 1_0 \* Arabic \n9168 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9169 Then, I'm jumping back again to my earlier question. I was trying to figure out why it is that you feel the spoken‑word expectations or needs are not currently being met by the incumbents. That's why I was asking about the age, because perhaps if I saw that they were in fact a lot younger, say 18 to 25 or whatever, which is unlikely, then, okay, maybe if their spoken word's targeted for a younger audience that could be one of the reasons.
SEQ 1_0 \* Arabic \n9170 But what are the other reasons? Are the existing stations not doing enough spoken work? They are doing a different type of spoken word? What does your research show that is lacking in the existing stations' spoken‑word programming?
SEQ 1_0 \* Arabic \n9171 MR. YERXA: Madam Commissioner, I will try and answer this as best I can.
SEQ 1_0 \* Arabic \n9172 First of all, within the research component that was conducted by Bannister Research, my understanding is that they did not deal in depth on specific issues and what do you want hear more of or less of, or so on.
SEQ 1_0 \* Arabic \n9173 But what they did derive from the research was that there certainly is ‑‑ the population, as we looked at the higher end of the population, they are ‑‑ especially dealing with the hole in the market, dealing with the classic hits partisans, primarily 35 to 54, that they expressed a greater dissatisfaction with news and information, and they also expressed a desire to hear more.
SEQ 1_0 \* Arabic \n9174 Now, I suppose ‑‑ and I have to be careful I don't move out of my realm here ‑‑ but I suppose one might want to look at the tonnage, if you will, at what is being offered in the market as far as newscasts and scheduling is concerned, as opposed to also what these people are currently receiving.
SEQ 1_0 \* Arabic \n9175 The fact is, if I have to go to a rock station to receive my information or if I have to go to a contemporary hit station, that may lend to my dissatisfaction, if you will. And to the extent that I may have to go out of market, to the extent that I may have to go to the CBC, which actually is not a bad option, but to that extent, where I have to go outside the market and listen to other stations to derive news and information programming, I suppose that is a factor which weighs on the collective psyche of that 35 to 54 target that we are looking at.
SEQ 1_0 \* Arabic \n9176 I hope that helps a little bit.
SEQ 1_0 \* Arabic \n9177 COMMISSIONER del VAL: Yes, thank you, it does.
SEQ 1_0 \* Arabic \n9178 Then, going back to your answer, Mr. Hicks, of the newsroom, I know that in your presentation I think you say that there will be 16 employees.
SEQ 1_0 \* Arabic \n9179 MR. P. MANN: A total of 16.
SEQ 1_0 \* Arabic \n9180 COMMISSIONER del VAL: A total of 16 for this particular station.
SEQ 1_0 \* Arabic \n9181 MR. P. MANN: Correct.
SEQ 1_0 \* Arabic \n9182 COMMISSIONER del VAL: So can you give me possibly a breakdown of what they do? In particular, say, what is the size of your newsroom staff and the types of resources that will be available to your news staff to ‑‑
SEQ 1_0 \* Arabic \n9183 MR. HICKS: Madam Commissioner, if I can just correct that ‑‑
SEQ 1_0 \* Arabic \n9184 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9185 MR. HICKS: ‑‑ I think in the presentation the 16 may very well have referred to our total newsroom complement across the Vista Group.
SEQ 1_0 \* Arabic \n9186 COMMISSIONER del VAL: Oh, okay, sorry, then.
SEQ 1_0 \* Arabic \n9187 MR. HICKS: But certainly this proposal, Ma'am, in terms of Lethbridge, would be a three‑person ‑‑
SEQ 1_0 \* Arabic \n9188 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9189 MR. HICKS: ‑‑ a full‑time news team ‑‑
SEQ 1_0 \* Arabic \n9190 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9191 MR. HICKS: ‑‑ typically working a 40‑hour week. In news there's no such thing as a 40‑hour week, but we try and get people get around that.
SEQ 1_0 \* Arabic \n9192 So, yes, I will give you an indication. Let me just give you a breakdown of exactly how those people would be deployed.
SEQ 1_0 \* Arabic \n9193 As we suggested, we have 92 newscasts per week, and that is completely doable with a complement of three full‑time broadcast journalists with Vista.
SEQ 1_0 \* Arabic \n9194 We are proposing three minutes of news every half hour, between 6 in the morning and 9 in the morning, and then hourly thereafter until 6 p.m. Monday to Friday. That will be for a total of 16 newscasts and 60 minutes of news coverage per day. Weekends, as well, newscasts on the hour between 7 and noon, totally 12 newscasts, or another hour of coverage. Our newscasts will be between four minutes and five‑and‑a‑half minutes, inclusive of sports, traffic and weather.
SEQ 1_0 \* Arabic \n9195 I would really like to emphasize, Ma'am, that we go crazy for local. I look after the Kootenay operation and when I arrived there there was a sad dependence on wires, on stories that really weren't hitting true to those communities there.
SEQ 1_0 \* Arabic \n9196 So I have implemented a proto, call it our news operation, there and I'm spreading it around the group, that we want to see 80 percent local content in all newscast, and I currently implement that as a minimum on a daily basis at our Kootenay operations.
SEQ 1_0 \* Arabic \n9197 You have got to get the team into that. You have to really help younger journalists, or journalists who may be not as experienced in the smaller markets, to look for lots of stories that are of genuine local interest. And we are achieving that, Ma'am, in one of our operations already.
SEQ 1_0 \* Arabic \n9198 COMMISSIONER del VAL: And you said 80, eight‑zero percent?
SEQ 1_0 \* Arabic \n9199 MR. HICKS: Eighty percent. In other words, if I can break it down in simple terms, if, for example, a typical morning show newscast would have five or six news stories, then I would expect five of them to be local, with local audio, and perhaps 20 percent of that newscast could hone in on an important provincial story or international story.
SEQ 1_0 \* Arabic \n9200 MR. P. MANN: Madam Commissioner, if it would be helpful, we do have a comprehensive by‑day, full‑week spoken‑word calendar or schedule, if you will, that we would be pleased to file if it would assist you.
SEQ 1_0 \* Arabic \n9201 COMMISSIONER del VAL: Yes, please. And that will be for this proposed station?
SEQ 1_0 \* Arabic \n9202 MR. P. MANN: Correct.
SEQ 1_0 \* Arabic \n9203 COMMISSIONER del VAL: Yes, please, if you could file. When do you think you could?
SEQ 1_0 \* Arabic \n9204 MR. P. MANN: We have it prepared, if you feel it's appropriate.
SEQ 1_0 \* Arabic \n9205 COMMISSIONER del VAL: Great.
SEQ 1_0 \* Arabic \n9206 So you have three as your newsroom staff. What other resources will be available to your news staff?
SEQ 1_0 \* Arabic \n9207 MR. HICKS: Well, there will be an ethic. One would be ignorant to assume that a small station can cover absolutely everything at all times, but what we are doing in the group, and similarly for Lethbridge, is to make sure the producers and presenters, and people who are in the building, have a sense of what to do, there's a protocol in place for news.
SEQ 1_0 \* Arabic \n9208 So I guess everybody in the station, to answer that question, everybody who works certainly at our stations in B.C., understands what a protocol should be, in terms of handling a news story, getting the chain of command, getting people out to the scene of somewhere. So we would call on the entire station, Madam Commissioner.
SEQ 1_0 \* Arabic \n9209 MR. J. MANN: Further to that, we do have a modest stringer and part‑time budget, as well, for evening meetings allocated.
SEQ 1_0 \* Arabic \n9210 COMMISSIONER del VAL: Thank you.
SEQ 1_0 \* Arabic \n9211 Will you be sharing any of your resources with your British Columbia stations?
SEQ 1_0 \* Arabic \n9212 MR. HICKS: I would imagine if there's a rationale, if there's a common link.
SEQ 1_0 \* Arabic \n9213 Again, I know that we hear often that certain broadcast groups say they are going to be able to link up with the rest of their national or provincial group, in terms of accessing those resources, and, of course, if there's an opportunity to use them, if there's an natural news link, but I want to really focus here, Madam Commissioner, that local is local.
SEQ 1_0 \* Arabic \n9214 If I'm going to bring the news to Lethbridge, as our news team will, and I'm giving you 80 percent of round‑the‑corner, round‑the‑block news, I really don't see how bringing in our other colleagues around B.C., for example, would do an awful lot on the day‑to‑day basis. But, of course, experience, advice, and possible story linkage, one has to be aware of that.
SEQ 1_0 \* Arabic \n9215 COMMISSIONER del VAL: Thank you.
SEQ 1_0 \* Arabic \n9216 Will the spoken‑word programming be 100 percent produced locally?
SEQ 1_0 \* Arabic \n9217 MR. HICKS: Yes, Ma'am.
SEQ 1_0 \* Arabic \n9218 COMMISSIONER del VAL: Okay. Thank you.
SEQ 1_0 \* Arabic \n9219 MR. HICKS: Of course, our spoken word is not only the newscasts, as you will see in our files there, that we have several other spoken word components ‑‑
SEQ 1_0 \* Arabic \n9220 COMMISSIONER del VAL: Yes.
SEQ 1_0 \* Arabic \n9221 MR. HICKS: ‑‑ over and above the newscast that really latch into local‑specific issues and information.
SEQ 1_0 \* Arabic \n9222 COMMISSIONER del VAL: Yes, and you have it in the program guide that you have provided. And in your supplementary brief, on pages 20 and 21, you have also mentioned your programs, "Agri Biz", "Energy Reports", "The Ag Market Reports". In your brief, you have also explained that you may be sharing some of the relevant stories between your proposed Lethbridge station and the Grande Prairie stations.
SEQ 1_0 \* Arabic \n9223 The programs that you have mentioned, the "Agri Biz", "Energy Report", "Ag Market Reports", are those being produced now?
SEQ 1_0 \* Arabic \n9224 MR. P. MANN: Perhaps I can answer that.
SEQ 1_0 \* Arabic \n9225 COMMISSIONER del VAL: Yes.
SEQ 1_0 \* Arabic \n9226 MR. P. MANN: No, they are not being produced now because we don't really have, obviously, an Alberta property at this time.
SEQ 1_0 \* Arabic \n9227 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9228 MR. P. MANN: However, I think our reference, really, in tying into Grande Prairie was on story content. So because there is a resource sector parallel, if you will, in the Peace country and in southwestern Alberta, as well as a significant comparable in the agra business area, there may be some appropriate story sharing that would contribute to the local feature in each case.
SEQ 1_0 \* Arabic \n9229 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9230 So those specific programs that I have mentioned, "The Agri Biz", "Energy Report" and "Ag Market Reports", will those be produced only if this particular Lethbridge station is licensed?
SEQ 1_0 \* Arabic \n9231 MR. P. MANN: We saw them as relevant to this particular area, as well as the Grande Prairie area, relevant to that application you referenced.
SEQ 1_0 \* Arabic \n9232 COMMISSIONER del VAL: Okay. Thank you.
SEQ 1_0 \* Arabic \n9233 Now, one of the statements you made in your supplementary brief, on page 27, and it was in section N, where you talked about alternative proposal, you said:
"In preparing this application, we have presented research which demonstrates that no station is presently perceived by adult radio listeners as offering a classic hits format in Lethbridge. This situation could change however before a new licence is granted. Should this occur, Vista Broadcast Group has identified an alternative format and we would propose to operate a new FM radio undertaking in Lethbridge utilizing this alternate format should the market conditions change."
SEQ 1_0 \* Arabic \n9234 Maybe two things. You said you have identified an alternative format, but it's not identified here. Maybe you can just explain that statement.
SEQ 1_0 \* Arabic \n9235 MR. YERXA: Madam Commissioner, yes, I spent a fair amount of time in southern Alberta going between markets, and Lethbridge is certainly one I have had a lot of experience in, and this research has touched on one or two possibilities that I had a feeling did exist in the market, not by any means as large at this point as classic hits. Suffice it to say, however, that if the stations move around and if somebody moves in to a new area, then another hole develops in another area.
SEQ 1_0 \* Arabic \n9236 I do have a couple of ideas. I just don't ‑‑ I don't know if I should divulge them publicly at this time. I should probably take direction from Vista at this stage, only because I think that giving this kind of information in a public forum may put a new entrant at a bit of a disadvantage.
SEQ 1_0 \* Arabic \n9237 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9238 MS MICALLEF: Madam Commissioner, we can file that on a confidential basis, if you would like us to.
SEQ 1_0 \* Arabic \n9239 COMMISSIONER del VAL: You see, my difficulty ‑‑ and I know that commercial FM stations can change their format, and I know that poses questions for a lot of people. However, I don't quite know what is the fairest way to interpret this message, when what we have in front of us is an application based on ‑‑ that's your foundation of this application is the classic hits. The financial are based on those, intervenors' comments are based on this. This is the foundation of the application.
SEQ 1_0 \* Arabic \n9240 Maybe you can help me. I don't know what is the fairest way to look at such a statement. If you file an alternate ‑‑ no, I don't think I would like you to file an alternate format in confidence, unless legal counsel advises me, because then what do I do with that information?
SEQ 1_0 \* Arabic \n9241 MR. YERXA: Well, Madam Commissioner, with all respect, I think the important thing at this juncture is that we honestly have identified a very good hole in the market. The danger, of course, in this whole public process ‑‑ and you have seen it before in other markets ‑‑ is everyone brings forth the best research and the best strategy and then, of course, the market kinds of welcomes them with open arms in different ways once they are fortunate enough to get the licence.
SEQ 1_0 \* Arabic \n9242 But, really, classic hits is the opportunity as it exists at this time.
SEQ 1_0 \* Arabic \n9243 MR. P. MANN: If I might, I suppose another alternative answer to your question might be that, in the event that someone usurped this format opportunity prior to us getting to air, if we were the successful applicant, another option, given the movement that can realistically take place, would be to do the research yet again before going to an alternate business plan.
SEQ 1_0 \* Arabic \n9244 MR. YERXA: I'm completely in favour of that.
SEQ 1_0 \* Arabic \n9245 MR. EDWARDS: If I may comment, I think there's an underlying question, and the question is: do we have a secret plan?
SEQ 1_0 \* Arabic \n9246 The answer is, no. We are applying for a classic hits format. I think our comment, we were anticipating what others may do in the market, and what we are saying to you, if they move, there are other opportunities. But our total business plan and our audience profile is based on classic hits.
SEQ 1_0 \* Arabic \n9247 COMMISSIONER del VAL: I'm not making any judgement on secret plans or whatever. I mean, in this market people move. But it's just that I didn't really ‑‑ I wasn't quite sure what you wanted me ‑‑ how you wanted me to interpret this message, particularly when your financials are based on this format.
SEQ 1_0 \* Arabic \n9248 Okay, then, I guess the question is, if you change your format, and your financials now are based on this format, how would the Commission be confident that you would continue to meet the commitments made based on this format?
SEQ 1_0 \* Arabic \n9249 MR. P. MANN: If I might, Madam Commissioner, we would just like to put forward, I think, that our intention is in good faith on this format and this research, and we trust everyone would play the game fairly, if it occurs.
SEQ 1_0 \* Arabic \n9250 MR. YERXA: I really hesitate to do this, but I really ‑‑ I know you want clarification on this and I will just say that one of the opportunities would also be in the 35‑plus realm, and I think, as far as the business plan and so on is concerned, there's going to be compatibility there.
SEQ 1_0 \* Arabic \n9251 So I hope that helps, but...
SEQ 1_0 \* Arabic \n9252 THE CHAIRMAN: If I was to ask you, will you maintain the same commitment regarding news, sports, weather, road conditions, agri‑business, energy, ski outdoors, than the one that you have made with regard to classic hits?
SEQ 1_0 \* Arabic \n9253 MR. P. MANN: Yes, Mr. Chairman, we would.
SEQ 1_0 \* Arabic \n9254 THE CHAIRMAN: So the commitments are the same, whatever the music format was to be, that's what you are saying?
SEQ 1_0 \* Arabic \n9255 MR. P. MANN: Yes, sir.
SEQ 1_0 \* Arabic \n9256 If I may, one more comment, Madam Commissioner, as well.
SEQ 1_0 \* Arabic \n9257 There are some alternative formats really alluded to as second and third choices, if you will, in the public research that's filed, as part of our Commission submission, that I suppose conclusions would be drawn from.
SEQ 1_0 \* Arabic \n9258 COMMISSIONER del VAL: Then I take it, just to follow up on Mr. Chairman's question, even if you had to change your format, which is the same rules as others, whatever condition of licence you have accepted, should you be licensed, they will stay the same and you will remain committed to those?
SEQ 1_0 \* Arabic \n9259 MR. P. MANN: Absolutely.
SEQ 1_0 \* Arabic \n9260 COMMISSIONER del VAL: Yes. The same with the CTD contributions?
SEQ 1_0 \* Arabic \n9261 MR. P. MANN: Yes.
SEQ 1_0 \* Arabic \n9262 COMMISSIONER del VAL: Okay, great.
SEQ 1_0 \* Arabic \n9263 Now, on your CTD contributions, CIRPA has filed an intervention, commenting against a number of applications, including yours. I think you have yet to respond to it, and against Vista specifically, CIRPA said this, regarding the CTD:
"CIRPA does not feel the proposed funds earmarked for the Native Women in the Arts Program will further advance the recording industry in Canada, and as such should not qualify for it's CTD spend. CIRPA Is also concerned that the station proposes to commit six times more funding to its own talent contest initiative than it will contribute to either FACTOR or the Radio Starmaker Fund." (As read)
SEQ 1_0 \* Arabic \n9264 So could you respond, firstly, to their comment about your Native Women in Arts Program and then, secondly, to their comment about not contributing more to FACTOR or Radio Starmaker Fund, please?
SEQ 1_0 \* Arabic \n9265 MR. P. MANN: Madam Commissioner, Mr. Edwards will respond to the greater question, I will answer the Native Women in the Arts question, if I may.
SEQ 1_0 \* Arabic \n9266 COMMISSIONER del VAL: Yes.
SEQ 1_0 \* Arabic \n9267 MR. P. MANN: The aboriginal population in south western Alberta is an important part of the social fabric. In fact, I grew up mere metres from the boundary of the Blood Indian Nation, attended school with them, did my first public music performance at age 10 on a stage on a Blood Nation recreation complex.
SEQ 1_0 \* Arabic \n9268 It's a mere $5,000 a year. They deserve the same chance. I think that's part of our commitment to this market.
SEQ 1_0 \* Arabic \n9269 MR. EDWARDS: I think you are going to find our response on the larger question quite interesting.
SEQ 1_0 \* Arabic \n9270 We were very moved by that letter and have reconsidered our position. In fact, we are a small organization, beginning to grow, and questioned whether in fact we could have as much impact on Canadian talent development with our own plan, as opposed to giving it to someone who has a charter. So we are prepared to take the additional $210,000 in our Front and Centre initiative and give it over to FACTOR.
SEQ 1_0 \* Arabic \n9271 COMMISSIONER del VAL: Sorry, your contribution to FACTOR as it currently stands is what?
SEQ 1_0 \* Arabic \n9272 MR. EDWARDS: Thirty‑five thousand.
SEQ 1_0 \* Arabic \n9273 COMMISSIONER del VAL: Thirty‑five thousand, and ‑‑
SEQ 1_0 \* Arabic \n9274 MR. EDWARDS: We are prepared to add the additional $210,000, for a total of $245,000.
SEQ 1_0 \* Arabic \n9275 COMMISSIONER del VAL: So you are proposing to increase your contribution to FACTOR ‑‑
SEQ 1_0 \* Arabic \n9276 MR. EDWARDS: In lieu?
SEQ 1_0 \* Arabic \n9277 COMMISSIONER del VAL: ‑‑ now?
SEQ 1_0 \* Arabic \n9278 MR. EDWARDS: Yes, in lieu of our own initiative.
SEQ 1_0 \* Arabic \n9279 THE CHAIRMAN: Sir, I understand that what you are saying, if the Commission was to disqualify all your other alternatives, you will give all the money to FACTOR? That's what I heard?
SEQ 1_0 \* Arabic \n9280 MR. EDWARDS: Now, what you heard was we have ‑‑ well, let's go back.
SEQ 1_0 \* Arabic \n9281 We believe the Native Women in the Arts, we have stated, should stay, and that's for $35,000. We have a cash contribution to the Alberta Recording Industry's Association of 35, we believe that should stand. We pledged $35,000 to Radio Starmaker, that should stand. We already pledged $35,000 to FACTOR.
SEQ 1_0 \* Arabic \n9282 What we then said was that we would run our own aggressive program for a total of $210,000. We have agreed with the CIRPA comments that perhaps they are in a better position to do it than we may. We are prepared to roll that $210,000 over to FACTOR.
SEQ 1_0 \* Arabic \n9283 COMMISSIONER del VAL: So what will your total CTD ‑‑
SEQ 1_0 \* Arabic \n9284 MR. EDWARDS: It will still remain at $350,000.
SEQ 1_0 \* Arabic \n9285 MS MICALLEF: Madam Commissioner, the difference is that our Front and Centre initiative paralleled the sort of program that FACTOR runs, and as they pointed out in their letter, why duplicate the effort? So we agree with them.
SEQ 1_0 \* Arabic \n9286 MR. J. MANN: I would like to add one point of clarification, as well, regarding the Native Women in the Arts.
SEQ 1_0 \* Arabic \n9287 The founder of that particular organization, Ms Sandra Lalonde, has agreed that those funds would be ear‑tagged for musical artists.
SEQ 1_0 \* Arabic \n9288 COMMISSIONER del VAL: Thank you.
SEQ 1_0 \* Arabic \n9289 Now, I have also noted that, aside from the commitment to the Native Women in the Arts organization, there aren't any specifics about any commitments towards the reflection and representation of cultural diversity in your programming or your corporation.
SEQ 1_0 \* Arabic \n9290 So have you identified at this point any other initiatives you are planning regarding the reflection and representation of cultural/ethnic/racial diversity in your employment practices, on‑air commitments, news, music or promotion of Canadian artists?
SEQ 1_0 \* Arabic \n9291 MS MICALLEF: We have a policy that our cultural diversity is aimed at showcasing the cultural mosaic of each of the communities. As well, that's reflected in our hiring practices.
SEQ 1_0 \* Arabic \n9292 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9293 Was your mike on, Ms. Micallef?
SEQ 1_0 \* Arabic \n9294 MS MICALLEF: It was. Did you not hear me properly?
SEQ 1_0 \* Arabic \n9295 COMMISSIONER del VAL: No, I could, but I can't see the light, sorry. Okay.
SEQ 1_0 \* Arabic \n9296 MS MICALLEF: My light's flash is showing here.
SEQ 1_0 \* Arabic \n9297 COMMISSIONER del VAL: Okay, great. Thank you.
SEQ 1_0 \* Arabic \n9298 MS MICALLEF: So what I would suggest is, if I can ask Jason Mann, who is our V‑P and director of programming, to talk about some of the sorts of programs that we have initiated in some of the other communities.
SEQ 1_0 \* Arabic \n9299 What we will do is, if licensed, we will work with the community to identify programs that would be appropriate for us to support. Lethbridge has a number of different festivals and different programs that do really build on the cultural diversity of the area. One of the programs they have is a Changing Faces Festival, which showcases the different cultural groups in the area. We have identified that it would make sense for us to work with that organization, because it does support the initiatives and the values that we also believe in.
SEQ 1_0 \* Arabic \n9300 We have not actually done anything with that organization yet, feeling it was premature to speak with them at this point, but we can speak to what we have done in other communities, where we have looked for these sorts of opportunities, and then Paul Mann can also speak to our employment equity policies and programs.
SEQ 1_0 \* Arabic \n9301 MR. J. MANN: Drawing on my experience in Duncan, which also has a fairly large representation of first nations people, we have a very strong relationship with the first nations of that area. We do give a considerable amount of access, and one would say that they are appreciative of that, I believe.
SEQ 1_0 \* Arabic \n9302 More specifically, an example, I guess, of something that we are doing, as far as working in hand with the community, in that particular segment of the community, is there's an individual who grew up in Smithers, showed some promise as a mathematician, which is well‑known that, for whatever reason, this segment of the population doesn't tend to perform well in the area of mathematics. So there was considerable interest taken in this particular person and their performance in that area.
SEQ 1_0 \* Arabic \n9303 Through the early ‑‑ well, through the high school years, the grades for this individual began to drop. It was later found that the reason was, after the ‑‑ after the school board did some investigation, they found that the reason why he wasn't doing homework ‑‑ sorry.
SEQ 1_0 \* Arabic \n9304 COMMISSIONER del VAL: Would you like me to come back to this question. I can go to other questions first.
SEQ 1_0 \* Arabic \n9305 MR. J. MANN: I can finish.
SEQ 1_0 \* Arabic \n9306 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9307 MR. J. MANN: ‑‑ was the reason that they were poverty‑stricken and they could not afford a table for him to do his homework on. Having been near there, I can relate ‑‑ sorry.
SEQ 1_0 \* Arabic \n9308 At any rate, this individual was given a grant to continue their education in a private school on Vancouver Island, Shawnigan Lake Private School. That funding has ceased, so we are taking up, with arms in the community, to help raise funds for this individual so that they could continue their education in that form and reach the excellence that they know that he can.
SEQ 1_0 \* Arabic \n9309 So in that way, we have become involved in the community. And, of course, when you become involved in the community at that level, you can't help but reflect it on the air.
SEQ 1_0 \* Arabic \n9310 Thank you.
SEQ 1_0 \* Arabic \n9311 COMMISSIONER del VAL: Thank you.
SEQ 1_0 \* Arabic \n9312 I will move on to the economic portion of my questions.
SEQ 1_0 \* Arabic \n9313 I note that your projected audience share, ranging from 14, in year one, up to 16.7 percent, in year seven. Now, can you please discuss how you use the results of your demand study to derive both your audience projections and your revenue projections?
SEQ 1_0 \* Arabic \n9314 MR. P. MANN: Madam Commissioner, perhaps we could break that into two parts.
SEQ 1_0 \* Arabic \n9315 MR. YERXA: I will deal with the audience.
SEQ 1_0 \* Arabic \n9316 MR. P. MANN: John will do the audience, yes.
SEQ 1_0 \* Arabic \n9317 MR. YERXA: When I received the results from Bannister, and they came to their various conclusions, one of the questions, of course, Vista posed was: what's a realistic market share? Knowing the dynamic of the Lethbridge market, I believe that the guaranteed cume came in at about 28 percent.
SEQ 1_0 \* Arabic \n9318 I suggested to them ‑‑ normally we take about anywhere between about a 50 percent to 70 percent cume core conversion, so I suggested, given the nature of the market, the competitiveness, they should probably cut that in half, go with 50 percent. That would put them at about a 14 share and they could build on that basis. That's how the market share was derived.
SEQ 1_0 \* Arabic \n9319 MR. P. MANN: Of course, we don't have PBIT information and revenue information on this particular market; however, with our experience and time spent in the market, our business community connections in the market, and our own due diligence, from several levels, we reasonably predict that it's conservatively at least a $6‑million market. So we built our model on that $60‑million current base.
SEQ 1_0 \* Arabic \n9320 We also looked at the fact that a share point at about 65 percent local tuning would suggest share points worth about $92,000. If we can affect approximately a 5 share point repatriation in the market to, say, 70, this would put the future share point about $96,400, suggesting that we would contribute about $750,000, first year of growth, to the market, the difference coming from direct impact on the incumbents, so in this approach, Madam Chairman, our 14 share, if you will, calculated to about $1,349,000, which we, frankly, felt was perhaps a big aggressive.
SEQ 1_0 \* Arabic \n9321 We took a second approach, as well, based on rate and inventory, if you will, using our experience in similar launches and relaunches of brands, and so forth. We set our inventory at 39,000 minutes a year, we based our first year at 50 percent sold, and created a rate assumption per minute of $58.
SEQ 1_0 \* Arabic \n9322 How did we arrive at $58, because we are quite aware, by the way, it's higher than our competing applicants. On the other hand, we are in a prime demographic, the most prime demographic for many advertisers.
SEQ 1_0 \* Arabic \n9323 We also believe that breaking that down to a $29 averaged 30‑second unit rate is not out of line in this market for a winning product, and we went with the alternative here, which created a million one‑thirty‑one, as the first year revenue assumption, and treated that, if you will, as our discount on what the first approach gave us.
SEQ 1_0 \* Arabic \n9324 COMMISSIONER del VAL: Okay. I also see that I think in your projections you are projecting about 33 percent will be ‑‑ the source of the income will be from incumbent stations, their existing advertiser budgets.
SEQ 1_0 \* Arabic \n9325 The 33 percent, can you identify any specific incumbents that will sort of take the ‑‑ how will they take the hits, like including, say, out‑of‑market tuning?
SEQ 1_0 \* Arabic \n9326 MR. P. MANN: We believe the Rogers products would take the largest hit, in part based on The River's format today, some from Rock 106. By and large, from the Pattison‑side, we think the bulk of the difference would come from the country brand.
SEQ 1_0 \* Arabic \n9327 COMMISSIONER del VAL: Okay.
SEQ 1_0 \* Arabic \n9328 On your programming expenses ‑‑ so your total expenses, programming expenses, is $2 million‑nine‑hundred‑plus, and that's for 9 hours and 45 minutes of scripted word per week. Then I compare it to, say, Newcap's, and their total programming expenses is just under $8 million, and yet what they are projecting in local word and spoken‑word proposal is 5 hours of scripted spoken word. So your programming expenses is about one‑third of Newcap's, but you are committing to almost double what they will provide.
SEQ 1_0 \* Arabic \n9329 Then, your sort of percentage of total revenue is ‑‑ about 20 percent of your total revenue is going to total programming expenses, say, while for Newcap they are about 30 percent, and for about half of the programming.
SEQ 1_0 \* Arabic \n9330 How would you like to comment on that? Is yours low? Is theirs too high? Is yours realistic?
SEQ 1_0 \* Arabic \n9331 MR. P. MANN: I certainly can't comment on theirs. I can tell you that our model is a model that's in use today in all of our operations relative to size and scale, and certainly is a model very similar to those that I have worked with in my past involvements with other sizeable companies in our industry. It's a budget percentage, departmental percentage structure, that works.
SEQ 1_0 \* Arabic \n9332 COMMISSIONER del VAL: So you are confident that your budget for programming expenses will be sufficient to cover your spoken‑word commitment, because that's expensive to produce?
SEQ 1_0 \* Arabic \n9333 MR. P. MANN: Yes, we are.
SEQ 1_0 \* Arabic \n9334 COMMISSIONER del VAL: Okay, and your total operating expense is about $28 million. In the first year, it's about $1.2 million total operating expenses, and you say that you are estimating about 16 employees.
SEQ 1_0 \* Arabic \n9335 What proportion of this total operating budget, what percentage, is for salaries and wages?
SEQ 1_0 \* Arabic \n9336 MR. P. MANN: We have 16 employees slated, and there is a budgetary break by position laid out in our backup information that we can provide you, if you wish, that identifies the anticipated start‑year salaries by position.
SEQ 1_0 \* Arabic \n9337 COMMISSIONER del VAL: Okay. Could you provide that, please?
SEQ 1_0 \* Arabic \n9338 MR. P. MANN: Certainly.
SEQ 1_0 \* Arabic \n9339 COMMISSIONER del VAL: How long do you think it will take?
SEQ 1_0 \* Arabic \n9340 MR. P. MANN: Before the reply portion, if that's appropriate.
SEQ 1_0 \* Arabic \n9341 COMMISSIONER del VAL: Thank you.
SEQ 1_0 \* Arabic \n9342 Have you done any studies or what evidence do you have to support the assumption that more than 50 percent of projected revenues will be derived from increased advertising budgets and new radio advertisers?
SEQ 1_0 \* Arabic \n9343 MR. P. MANN: Madam Commissioner, we did conduct an advertiser study in the marketplace, and I recognize we have not filed that research.
SEQ 1_0 \* Arabic \n9344 We chose not to do so for a couple of reasons. Obviously, number one, they identify specific significant advertisers by name and business in the marketplace and, as part of that respect, we also had additional concern about their privacy. But, yes, we did conduct specific sales research that led us to, in part, those conclusions, in addition to one‑on‑one dialogue with a number of businesses.
SEQ 1_0 \* Arabic \n9345 I can also speak to the fact that, as a philosophy, from a sales perspective with Vista, we very much believe in growing the value of radio as a medium.
SEQ 1_0 \* Arabic \n9346 It is fair to say in many of the markets we operate as ‑‑ we have taken them over, one of the first kinds of research we do is to determine what percent of the business licence numbers in the market we are actually doing business with and they have been anywhere from typically 5 to 8 or 9 per cent depending on the market and the previous ownership and so forth.
SEQ 1_0 \* Arabic \n9347 So I think it is fair to say that there is significant growth potential within the marketplace in a size of Lethbridge, not unlike many other places where the percent of businesses doing radio is still significantly small and that not unlike most places the significant percentage is in print and that there is a significant approach in our vision of sales to grow the business from other media as opposed to poaching on our radio competitors, if you will.
SEQ 1_0 \* Arabic \n9348 COMMISSIONER DEL VAL: Thank you. I appreciate the privacy concern. So provided that you, say, have consent from the advertisers you have spoken to or who have provided you their budgets or whatever to disclose to the Commission, would you be able to file the consent to disclosing with us on a confidential basis.
MR. P. MANN: On a confidential basis, Madam Commissioner, yes, we would and I believe we could do that before the end of the afternoon as well.
SEQ 1_0 \* Arabic \n9349 COMMISSIONER DEL VAL: Great, thank you.
SEQ 1_0 \* Arabic \n9350 Now, you are aware of the intervention that Golden West filed at intervention 256 and also the Jim Pattison Group filed at intervention 341, and they both commented that your revenue projections are overly aggressive. Can you respond to that please?
SEQ 1_0 \* Arabic \n9351 MR. P. MANN: We are comfortable with them and I guess if it gives us any comfort, in fact, the Newcap application first‑year revenue projections ‑‑ while it has not been dealt with here, we have certainly read the submission ‑‑ are fairly close to our own, although they are coming from a different format perspective.
SEQ 1_0 \* Arabic \n9352 I can certainly anecdotally comment to you that from past experience ‑‑ and Kelowna might be a very good one. I arrived in Kelowna in October 1995 as a sales manager for what was about to become the fifth station in the market, a country FM. We launched it as a country FM. It had an AM sister station that was full service, middle of the road music. It got reasonable takeoff and reasonable share but still didn't give us what we needed, we thought, to run our business.
SEQ 1_0 \* Arabic \n9353 So we did a re‑launch of the FM and I can tell you that in our experience it is all about getting the brand right, it is about how you approach the market, and I can say to you, because it was a publicly traded company at the time under Okanagan Skeena Group, that we were able to literally double the revenue of that combo in approximately 18 months. So it comes from your vision of business, I think, to a certain extent.
SEQ 1_0 \* Arabic \n9354 COMMISSIONER DEL VAL: Thank you. Those are my questions.
SEQ 1_0 \* Arabic \n9355 Thank you, Mr. Chairman. Those are my questions.
SEQ 1_0 \* Arabic \n9356 THE CHAIRPERSON: Thank you, Commissioner del Val.
SEQ 1_0 \* Arabic \n9357 I spent some time over the weekend perusing the Lethbridge and some of the localities' website. I spent some time trying to get a better feel for the market and found on the business development portion of the site a document that is called "Choose Lethbridge," which, to some extent, you referred in your introductory remarks when you said that the trading area is approximately 275,000 people. I know that it is mentioned in that section but that, I suspect, is what the document calls the southern Alberta communities.
SEQ 1_0 \* Arabic \n9358 When I am looking at your coverage map, you are surely not covering the total southern Alberta communities, you are only ‑‑ well, I will say a major portion of it and probably the one that is the most developed and inhabited. But there is another number that I find in that city that they call the Lethbridge region, and more than likely it will be the area where you will be deriving most of your activities. The study mentions that the population of 15+ in the Lethbridge region is close to 190,000, which is surely significant for your operation.
SEQ 1_0 \* Arabic \n9359 My question to you is in terms of coverage of your services, regarding particularly, say, news particularly, will you be covering Lethbridge or all these areas, including Taber, Vauxhall, Champion, Granham, Calston, Warner? What is your plan?
SEQ 1_0 \* Arabic \n9360 MR. P. MANN: It is definitely ‑‑ you have identified a number of the communities, certainly Taber, Coldale, Fort McLeod, Raymond, Clarisholm. I am picking the ones now, obviously ‑‑
SEQ 1_0 \* Arabic \n9361 THE CHAIRPERSON: Yes.
SEQ 1_0 \* Arabic \n9362 MR. P. MANN: ‑‑ of the larger populations where there is a fairly decent hub of business and other activity in communities of that size. There is no question that the service to the core communities, particularly within that 30 to 50 minutes or so of Lethbridge, would fall under our mandate. I think people look at themselves in the Lethbridge region very clearly within that circle.
SEQ 1_0 \* Arabic \n9363 THE CHAIRPERSON: That is what you will define being the Lethbridge region because, obviously, the document defines the southern Alberta communities which includes the Lethbridge region, obviously. So your plan is to have a broader view of all the ‑‑ what you say, within the 30‑45 minute drive from the core of Lethbridge will be the sector you will be servicing?
SEQ 1_0 \* Arabic \n9364 MR. P. MANN: Yes, and it is one of the reasons we identified some of the specific information features that we think are relevant to not just, obviously, the city ‑‑
SEQ 1_0 \* Arabic \n9365 THE CHAIRPERSON: Yes.
SEQ 1_0 \* Arabic \n9366 MR. P. MANN: ‑‑ but these rural and smaller agri‑business based communities within that hour's drive. They are all very much in tune with the agri‑business base and for some of them, particularly when you get into the Vauxhall, Hayes, Wolmand areas, places like that where the resource sector plays a greater role in what is coming out of the ground there as well.
SEQ 1_0 \* Arabic \n9367 THE CHAIRPERSON: Okay, thank you.
SEQ 1_0 \* Arabic \n9368 I have a question also that deals with your CTD and I only want to make sure because I heard Mr. Edwards saying that the front and centre initiative ‑‑ are you saying to us today that you are no more planning to do it, you agree with CIRPA and it is a plan that is totally removed if you are saying to us that if we think it doesn't meet the spirit of the CTD, you won't do it and then give the money to FACTOR?
SEQ 1_0 \* Arabic \n9369 MR. EDWARDS: I think what we are saying is we agree with the position taken in the intervention that it is probably a better use of our funds.
SEQ 1_0 \* Arabic \n9370 THE CHAIRPERSON: Obviously, cutting a cheque takes much less time than putting together the front and centre initiative.
SEQ 1_0 \* Arabic \n9371 MR. EDWARDS: Yes, it does, but we also had to weigh what was the best return on the investment and the name of the game here is to get some more Canadian content exposure and more airplay. So we are taking the position, being a small company, perhaps our impact would be greater to work with another organization.
SEQ 1_0 \* Arabic \n9372 THE CHAIRPERSON: Okay. If the Commission was to decide to grant two licences to Lethbridge, which one will have the lesser impact on your business plan?
SEQ 1_0 \* Arabic \n9373 MR. EDWARDS: The second FM that you give us.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n9374 MR. EDWARDS: I think that probably the application by Elmer would not give us any hesitation at all.
SEQ 1_0 \* Arabic \n9375 THE CHAIRPERSON: And if we were to grant, say, the Demers Company or Newcap ‑‑ say, if we were to grant also Newcap, you are going to be really competing for the same audience?
SEQ 1_0 \* Arabic \n9376 MR. EDWARDS: I think Newcap's application would be for a younger audience than yours.
SEQ 1_0 \* Arabic \n9377 THE CHAIRPERSON: Than yours. Okay, fine.
SEQ 1_0 \* Arabic \n9378 The legal counsel wants to ask you a further commitment.
SEQ 1_0 \* Arabic \n9379 MS BENNETT: No, just a clarification. With respect to the advertiser study that you discussed with Commissioner del Val that information is not something that would be treated as confidential under the Commission's Rules of Procedure. So I just wanted to ask if you could perhaps file an abridged version with no names that could be filed on the public record, and if you needed more time to do that, then, you know, if you needed until next week or something, that would be fine for filing.
SEQ 1_0 \* Arabic \n9380 MR. YERZA: That can be filed today. We will simply remove any reference to the people that were talked to, their phone numbers, the businesses, the cross‑section of advertisers.
SEQ 1_0 \* Arabic \n9381 MS BENNETT: All right, thank you very much.
SEQ 1_0 \* Arabic \n9382 THE CHAIRPERSON: Now, it is time for the wrap‑up of this appearance. So could you, in your own words, tell the Commission why we should retain your application over all the others that we are going to be hearing today?
SEQ 1_0 \* Arabic \n9383 MS MICALLEF: Thank you.
SEQ 1_0 \* Arabic \n9384 Firstly, we would like to start with why Lethbridge?
SEQ 1_0 \* Arabic \n9385 I think we have shown that the Lethbridge market is booming. The Mayor of Lethbridge himself just last month was quoted as saying that measuring the dollar value of building permits in the city was an indicator that Lethbridge was attracting its share of the economic boom experienced by the province as a whole. So Lethbridge, like the rest of Alberta, is doing very well. In fact, their retail market is $1.4 billion. They haven't had a licence in over 36 years.
SEQ 1_0 \* Arabic \n9386 So why Lethbridge? We think that we have shown that it makes a lot of sense right now for Lethbridge to have another radio station.
SEQ 1_0 \* Arabic \n9387 In terms of the age demographics that we have identified, 35‑54 represents the largest 20‑year age block in the community and it is largely unserved by the radio stations that are presently there.
SEQ 1_0 \* Arabic \n9388 If we were awarded a licence to provide a classic hits FM radio station in Lethbridge and in the area, we would provide diversity of programming; we would provide a diversity of voices; we would provide local presence, a strong local presence.
SEQ 1_0 \* Arabic \n9389 We would make a cash commitment of $245,000 to FACTOR, an additional $95,000 to additional Canadian talent development programs, including one that was focused on the Aboriginal community in the Lethbridge area. We would be able to achieve this through a business plan that was strong, that is reasonable, that is well financed and that is attainable. It is attainable because we have identified the right format, the right core group that is not being addressed and it is a group that is an important part of the advertising community and advertising decisions.
SEQ 1_0 \* Arabic \n9390 Two of our founders, Paul and Jason Mann, are from the area. They have ties to the area, they have worked in the area, they have worked in radio in the area and they understand the community. They are passionate about radio.
SEQ 1_0 \* Arabic \n9391 When Paul and Brian and Jason and I founded Vista Radio we did it with a vision that we wanted to make a difference in the small markets that we served. We believe that we are making that difference in British Columbia. We want to make that difference in Alberta.
SEQ 1_0 \* Arabic \n9392 We are asking you to help us make our vision a reality by giving us a licence in Lethbridge. Thank you.
SEQ 1_0 \* Arabic \n9393 THE CHAIRPERSON: Thank you very much.
SEQ 1_0 \* Arabic \n9394 Just before ‑‑ may I put the following question to you, Mrs. Micallef? You just mentioned that father and son Mann come from Lethbridge. If you were granted a licence, will any of the two return to live in Lethbridge?
SEQ 1_0 \* Arabic \n9395 MR. P. MANN: I have been the one designated to answer that question because my mom, who just turned 80, is saying, you have been on the road since you were 16, isn't it time to come home?
SEQ 1_0 \* Arabic \n9396 So while I am not prepared to commit full time, certainly, for the first year to 18 months of launching this product and working with the building of the product, the teams and the business community, absolutely, that will be a primary residence for me. Where we go from there depends on our business as a whole.
SEQ 1_0 \* Arabic \n9397 But as an initial commitment, absolutely, and I can say that on an interim basis because Jason is integral to building our product side wherever we go, we will have a significant joint presence in certainly the first 18 months.
SEQ 1_0 \* Arabic \n9398 THE CHAIRPERSON: Thank you very much.
SEQ 1_0 \* Arabic \n9399 We will break for the lunch period and we will ‑‑ oh, the secretary wants to add something.
SEQ 1_0 \* Arabic \n9400 THE SECRETARY: Thank you, Mr. Chairman.
SEQ 1_0 \* Arabic \n9401 I just want to say for the record that the spoken word programming matrix that was produced this morning by the Vista applicant will be available in the public examination room on this applicant's file. Thank you.
SEQ 1_0 \* Arabic \n9402 THE CHAIRPERSON: Thank you.
SEQ 1_0 \* Arabic \n9403 So we will break for lunch and we will get back at a quarter past one.
‑‑‑ Upon recessing at 1200 / Suspension à 1200
‑‑‑ Upon resuming at 1315 / Reprise à 1315
SEQ 1_0 \* Arabic \n9404 THE CHAIRPERSON: Order, please.
SEQ 1_0 \* Arabic \n9405 I will ask the secretary to introduce the next item.
SEQ 1_0 \* Arabic \n9406 THE SECRETARY: Thank you, Mr. Chairman.
SEQ 1_0 \* Arabic \n9407 Before we go on to the next item, I would just like to say for the record that the document called "Open Line Programming Policy" for the Jim Pattison Broadcast Group, which was item 6 on the agenda, this document has been filed with the panel and will be available in the public examination room for anybody to consult. Thank you.
SEQ 1_0 \* Arabic \n9408 Now, we are proceeding to item 16 on the agenda which is an application by Newcap Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Lethbridge.
SEQ 1_0 \* Arabic \n9409 The new station would operate on frequency 94.1 MHz (channel 231C1) with an effective radiated power of 100,000 watts (non‑directional antenna/antenna height of 174.3 metres).
SEQ 1_0 \* Arabic \n9410 Appearing for the applicant is Mr. Rob Steele who will introduce his colleagues and you will have 20 minutes for your presentation. Mr. Steele.
PRESENTATION / PRÉSENTATION
SEQ 1_0 \* Arabic \n9411 MR. STEELE: Good afternoon, Mr. Chair and Commissioners, members of the Commission and Commission staff.
SEQ 1_0 \* Arabic \n9412 I am Rob Steele, President and Chief Executive Officer of Newcap Radio and I would like to introduce the members of my team.
SEQ 1_0 \* Arabic \n9413 Seated in the front row to my far left is Josie Geuer, the Music Director of our Ottawa urban CHR station HOT 89.9. Next to Josie is Rob Mise, Group Program Director of Newcap.
SEQ 1_0 \* Arabic \n9414 Josie and Rob worked together in Ottawa until very recently and they led the team that made the launch of HOT 89.9 a huge success for us there in Ottawa.
SEQ 1_0 \* Arabic \n9415 Next to Rob is Mark Maheu, Executive Vice‑President and Chief Operating Officer for Newcap.
Seated beside me is Dave Murray, Vice‑President of Operations for Newcap Radio.
SEQ 1_0 \* Arabic \n9416 Mr. Chairman, we are very excited about the possibilities and opportunities in the Lethbridge market and we are surprised that more broadcasters did not answer your call for applications for a new radio station to serve Lethbridge because as you heard earlier today from other applicants, Lethbridge is an attractive and a dynamic market. Its residents deserve as much choice as Canadians in similar size markets.
SEQ 1_0 \* Arabic \n9417 Today, we will present to you the economic case for Lethbridge, our research into the programming needs of the market and our proposals to meet those needs.
SEQ 1_0 \* Arabic \n9418 I would like to ask Mark Maheu to present some context for the radio industry in the smaller markets of this province.
SEQ 1_0 \* Arabic \n9419 MR. MAHEU: Thank you, Rob, and good afternoon, Mr. Chair, members of the Commission, staff.
SEQ 1_0 \* Arabic \n9420 We are already well embarked on a new era for radio in this country. As the Commission noted in its Review of Radio Public Notice, we are seeing an increase in the competition for the ears and leisure time of the public. Two satellite radio companies are already launched, providing 100 channels or more in a variety of formats. It is likely that among the early adopters of this technology will be the residents of smaller and medium‑size markets throughout the country, those with relatively limited choice in local radio stations.
SEQ 1_0 \* Arabic \n9421 Music downloads to the computer, to the cell phone, iPods, MP3 players and other non‑conventional sources are flourishing. Youth tuning continues to decline. For example, the average hours tuned by teens declined in Canada from 11.3 hours per week to 8.5 hours a week between 1999 and 2004. Among men 18‑24 the decline was from 16.8 hours a week down to 15.5, and among women of the same age group, 17 hours a week down to 15.9.
SEQ 1_0 \* Arabic \n9422 We know that local radio can be successful against these emerging technologies even when they play music. The local touch is very important to listeners of all age groups whether for news, local events, weather or even the opportunity to call in for contests or influence the sound of the radio station.
SEQ 1_0 \* Arabic \n9423 Market surveys, listener callouts, emails, music tests, all help tailor the sound to local tastes. Compare this to paying a monthly fee for programming designed in Washington, D.C., New York or even Toronto. However, we must provide the music format that appeals to listeners and in many markets radio has failed young people, in particular, in its search for the Baby‑Boom generation.
SEQ 1_0 \* Arabic \n9424 So while in larger markets like Ottawa we can provide two youth‑oriented radio stations successfully with our CHR urban station and our modern rock station, younger audiences in other markets have a lot less choice. The good news is that when services are provided the audiences respond. The success of our CHR stations attest to this.
SEQ 1_0 \* Arabic \n9425 We believe that we will be successful in Lethbridge with a younger listener group because we approach it as we have in many other markets across Canada and here is how we go about doing this.
SEQ 1_0 \* Arabic \n9426 We pick markets with a capacity, we believe, will support new radio stations. In a second, Dave Murray is going to tell you a little bit more about the bright economic future for Lethbridge.
SEQ 1_0 \* Arabic \n9427 We then look for the biggest unserved group of listeners in the market, and Rob Mise will outline our research findings in Lethbridge.
SEQ 1_0 \* Arabic \n9428 Then we go to work. We have a great team in place at Newcap and when we launch a new radio station we are able to attract the best and brightest people to bring their passion for radio and to join us.
SEQ 1_0 \* Arabic \n9429 The end result of all these efforts will be a radio station playing the hit music and providing the services Lethbridge needs and wants.
SEQ 1_0 \* Arabic \n9430 MR. MURRAY: Thank you, Mark. Good afternoon, Commissioners.
SEQ 1_0 \* Arabic \n9431 Like all of Alberta, the Lethbridge area continues to benefit from an economic growth. The Lethbridge census area, which is largely made up of Lethbridge and its surrounding trading area, continues to show growth in all key economic indicators. Here are a few.
SEQ 1_0 \* Arabic \n9432 From 1996 to 2001, the population grew by 10 per cent according to Stats Can, and from 2001 to 2004, it grew a further 4 per cent according to Alberta Municipal Affairs. Between 1996 and 2001, the number of people employed in the area grew by 10 per cent. In the same period, median family income grew by 13 per cent from $14,000 to $53,000.
SEQ 1_0 \* Arabic \n9433 These facts lead us to conclude that there are more people in Lethbridge with more jobs and more money to spend on homes, vehicles, appliances as well as restaurants and other services.
SEQ 1_0 \* Arabic \n9434 It is no surprise that Financial Post Markets confirms this optimism. It projects that the retail sales of $1.9 billion in 2006 are projected to grow by $100 million per year for every year until 2011 to a total of $2.4 billion. That is a growth rate of 26 per cent.
SEQ 1_0 \* Arabic \n9435 The Lethbridge economy is a diversified one. With 33 per cent of Alberta's farmgate receipts, the dairy and cattle businesses, grains and other cash crops help drive the economy. As a result, food processing is a major industry.
SEQ 1_0 \* Arabic \n9436 Lethbridge is southern Alberta's shopping hub with several shopping centres and a downtown serving a retail trading area of about 275,000 people which extends into the United States and British Columbia.
SEQ 1_0 \* Arabic \n9437 The city is also the service and convention centre for southern Alberta, with multiple tourist attractions.
SEQ 1_0 \* Arabic \n9438 The University of Alberta attracts students from all over Alberta, Canada and the world. These young people are prime prospects for our proposed format.
SEQ 1_0 \* Arabic \n9439 The Alberta radio industry is among the most successful in the country with an average annual growth rate in the years from 2001 to 2004‑05 of 10 per cent in revenue and 9 per cent in profit before interest and taxes. The profit margins are among Canada's highest with a profit before interest and taxes margin of 30 per cent.
SEQ 1_0 \* Arabic \n9440 The two existing licensees, Rogers and Pattison, each with two stations, are well positioned both financially and competitively to continue to be successful with the addition of a new competitor.
SEQ 1_0 \* Arabic \n9441 Newcap is confident that this market can easily sustain our proposed station, particularly since it will provide a service aiming at a previously underserved demographic group.
SEQ 1_0 \* Arabic \n9442 Now, to talk about how we choose our format, I would like to introduce Rob Mise.
SEQ 1_0 \* Arabic \n9443 MR. MISE: Thank you, David.
SEQ 1_0 \* Arabic \n9444 Our approach to finding the right format for Lethbridge is the same as what Mark Kassof presented to you in our Calgary application. We did not go in to test a format we had already selected or limit ourselves to an age group that we had decided in advance is underserved. Rather, we tested a wide range of age groups within a variety of formats, the most popular ones from our experience.
SEQ 1_0 \* Arabic \n9445 In the case of Lethbridge, we surveyed 18‑64 year olds to check their interest in eight different formats. But we are not only interested in the most popular format, we also look to find one that is not already served in the marketplace. So in addition to our questions on current listening habits and music preferences, we also asked if there is a station playing the various kinds of music in the market.
SEQ 1_0 \* Arabic \n9446 We then calculated what we call the percent of format void for the market and for various demographic groups. We checked into this against recent market developments and other factors such as satisfaction with radio by the various demographic groups.
SEQ 1_0 \* Arabic \n9447 The percent of format void is highest for classic hits followed by contemporary hit radio or CHR. But we had to temper this with the relatively recent change of a Pattison station to classic hits.
SEQ 1_0 \* Arabic \n9448 A check against some other questions reinforces the choice of CHR. The format has the highest percent of format void among 18‑34 year olds, both men and women. Those who are the most interested in CHR have the lowest rate of satisfaction with Lethbridge radio of any of the formats tested at 2.7 on a scale of 1‑5.
SEQ 1_0 \* Arabic \n9449 Now to tell you more about the sound of the station we are going to be talking about is Josie Geuer.
SEQ 1_0 \* Arabic \n9450 MS GEUER: At Newcap, we have a lot of experience in the successful launch of stations oriented to young adults. In Ottawa, our station HOT 89.9 has been a critical success and I am proud of what our team has done there in a few short years. We will bring the same diligence and energy to HOT 94.1.
SEQ 1_0 \* Arabic \n9451 Newcap runs CHR stations in several markets and we have learned a few lessons about this on the way. We do not cookie‑cutter these stations. To be successful they have to have their own personality and reflect the nature of the market.
SEQ 1_0 \* Arabic \n9452 So HOT 94.1 will be a broader CHR format than our Ottawa station where there are other stations serving youth and young adults. With a target demographic that certainly includes teens but also 18‑34 year olds we will include a lot more pop music in the mix along with the best of today's modern rock, hip‑hop and other hits.
SEQ 1_0 \* Arabic \n9453 If we were on air today you would be hearing great Canadian artists like Keisha Chante, Mesari, Nickelback, Carl Henry, A Simple Plan and Melissa O'Neill, and international artists like Kelly Clarkson, Pussycat Dolls and Fallout Boy.
SEQ 1_0 \* Arabic \n9454 Along with our energized music mix including lots of talk about the world of music and pop culture, we will have a number of special interest music programs that will be as interactive as possible, giving our audience the chance to reach us through instant messaging, email or their cell phones.
SEQ 1_0 \* Arabic \n9455 Local shows like the HOT's "Seven at Seven," "Battle of the Beats," and "Instant Request" will all showcase the new "HOT and Happening" while asking our listeners to get involved in choosing and commenting on their favourite picks, and Lethbridge will have both its own "Top 30 Countdown" and Newcap's "National Canadian Hit 30," featuring the top hit music for the week across Canada along with the best Canadian hits of the week.
SEQ 1_0 \* Arabic \n9456 Our approach will be fun and upbeat. We will showcase our audience's favourite music but speak to them about what is going on in their world.
SEQ 1_0 \* Arabic \n9457 Our newsroom with the equivalent of four full‑time people will produce 53 weekly news packages, 35 community event updates, 35 public affairs features and a weekly hour public affairs program. The emphasis will be largely on the local news of Lethbridge and area accounting for about 75 per cent of the stories.
SEQ 1_0 \* Arabic \n9458 At Newcap we are strong believers in investing in Canadian music at all levels to help build a pipeline of appealing Canadian music that our audiences are eager to listen to. We propose to spend $700,000 over the course of the licence to support Canadian music. Our initiatives in Lethbridge are aimed at three levels.
SEQ 1_0 \* Arabic \n9459 Basic music education. We propose to devote $15,000 each year for a total of $105,000 over the term of licence to initiatives with the Lethbridge Board of Education, with $5,000 annually for the purchase of instruments for students who can't afford them, $5,000 for music scholarships and $5,000 to support the annual music festival.
SEQ 1_0 \* Arabic \n9460 Educating developing musicians. We will spend $385,000 on the creation of the Southern Alberta Music Conference, a regional equivalent of Canadian Music Week, providing musicians with the opportunity to meet and work with labels, producers, managers and top‑flight musicians to learn more about developing their musical skills and careers. The conference will include a contest whose winner will get both cash and airplay from Newcap.
SEQ 1_0 \* Arabic \n9461 Helping emerging acts to the next stage. We propose to provide $210,000 to the Radio Starmaker Fund to support promotional and market opportunities for new and emerging acts.
SEQ 1_0 \* Arabic \n9462 Rob Steele will now sum up our presentation.
SEQ 1_0 \* Arabic \n9463 MR. STEELE: Thank you, Josie.
SEQ 1_0 \* Arabic \n9464 We believe that our application is in the public interest and deserves your consideration for the following reasons.
SEQ 1_0 \* Arabic \n9465 Number one: Lethbridge is a growing and dynamic market that deserves a great new radio station, particularly one that targets a group that is currently greatly underserved.
SEQ 1_0 \* Arabic \n9466 Two: Newcap will bring a new listening choice to the market with the financial resources, great people and new ideas to make a great new station come to life.
SEQ 1_0 \* Arabic \n9467 Three: HOT 94.1 will bring a new editorial voice to the market with the resources necessary to provide a credible voice to a younger demographic.
SEQ 1_0 \* Arabic \n9468 Four: We propose to invest $700,000 in Canadian talent development.
SEQ 1_0 \* Arabic \n9469 Five: We will be playing new Canadian music supporting a new generation of artists.
SEQ 1_0 \* Arabic \n9470 Six: We will invest $4.1 million for program expenses to provide the highest quality local service we can.
SEQ 1_0 \* Arabic \n9471 And finally, we have chosen the most underserved group in the market, identified through extensive research looking at market preferences for a wide range of formats.
SEQ 1_0 \* Arabic \n9472 Thank you for your attention. Mark Maheu and our team will be pleased to answer any questions you may have.
SEQ 1_0 \* Arabic \n9473 THE CHAIRPERSON: Thank you, Mr. Steele.
SEQ 1_0 \* Arabic \n9474 Commissioner Duncan.
SEQ 1_0 \* Arabic \n9475 COMMISSIONER DUNCAN: Good afternoon. We note in part of your five‑hour spoken word commitment that you did not include DJ banter and we were just wondering if you could give us an estimate of how much in addition that would add to the five‑hour weekly commitment.
SEQ 1_0 \* Arabic \n9476 MR. MAHEU: Commissioner Duncan, I am assuming you mean the general ‑‑
SEQ 1_0 \* Arabic \n9477 COMMISSIONER DUNCAN: Chatter.
SEQ 1_0 \* Arabic \n9478 MR. MAHEU: ‑‑ talk on the air and so on?
SEQ 1_0 \* Arabic \n9479 COMMISSIONER DUNCAN: Yes.
SEQ 1_0 \* Arabic \n9480 MR. MAHEU: It is likely the equivalent of that or a bit more. I would say 5 to 7 hours a week over the course of a seven‑day week.
SEQ 1_0 \* Arabic \n9481 COMMISSIONER DUNCAN: So double the amount?
SEQ 1_0 \* Arabic \n9482 MR. MAHEU: Yes. And that would be just general ‑‑
SEQ 1_0 \* Arabic \n9483 COMMISSIONER DUNCAN: Talk?
SEQ 1_0 \* Arabic \n9484 MR. MAHEU: ‑‑ talk back and forth and information and morning shows, things like that.
SEQ 1_0 \* Arabic \n9485 COMMISSIONER DUNCAN: In your October 28th deficiency response you indicated you will be live to air 6:00 a.m. to midnight daily and voice‑tracked overnight. You also indicate in that response that the "Canadian Hit 30" program originating from your Ottawa radio station will represent one hour per week of non‑local programming.
SEQ 1_0 \* Arabic \n9486 Will there be any other non‑locally produced programming aired during the broadcast week, and if so, how much?
SEQ 1_0 \* Arabic \n9487 MR. MAHEU: Likely there is going to be at least one syndicated countdown program that would be non‑locally produced. That would probably run three hours a week and likely, like we do in other places, we would air it twice. So there's six hours a week of non‑originating programming.
SEQ 1_0 \* Arabic \n9488 COMMISSIONER DUNCAN: That is like a weekday evening?
SEQ 1_0 \* Arabic \n9489 MR. MAHEU: It would likely be on the weekends.
SEQ 1_0 \* Arabic \n9490 COMMISSIONER DUNCAN: Thank you.
SEQ 1_0 \* Arabic \n9491 I am turning now to the CTD and specifically to the Alberta Musicians' Convention, Southeastern Alberta Musicians' Convention. We are wondering who would be invited to attend the convention and if the invitation will be strictly limited to musicians from the southeastern part of Alberta.
SEQ 1_0 \* Arabic \n9492 MR. MAHEU: I am going to ask Rob Mise in just a moment to expand a little bit on that but I should give you some of the details on that.
SEQ 1_0 \* Arabic \n9493 I should preface it with the idea behind this annual music conference would be to make it as inclusive as possible. Predominantly, we were kind of counting on the fact that people within the province of Alberta generally would be the first ones to kind of gravitate towards it but we hope to see this kind of grow and mushroom much like the Canadian Music Week Conference started.
SEQ 1_0 \* Arabic \n9494 I know personally, I was at the very first one when it was called the Record Conference back in the early 80s and you could have counted the people in the room on five different hands. It wasn't a very big crowd and then it has grown into what we see today as being the premier music event.
SEQ 1_0 \* Arabic \n9495 So we see it as being open to everybody but we think in the early years it will be predominantly people from Alberta.
SEQ 1_0 \* Arabic \n9496 I will let Rob expand on that a little bit.
SEQ 1_0 \* Arabic \n9497 MR. MISE: When we were putting together the application for today, we asked, what can we do for musicians and for artists to provide support for the Alberta music industry, and we are very excited about this. We have kind of dubbed the whole program "The Future is Now."
SEQ 1_0 \* Arabic \n9498 Mark mentioned Music Week in Toronto which starts this week and Newcap is a corporate sponsor. The east coast has the ECMAs and, of course, Vancouver has New Music West. Then we talk about the Prairies with great outstanding talent like Jann Arden and Ian Tyson, Nickelback, Paul Brandt.
SEQ 1_0 \* Arabic \n9499 This is a convention for musicians, songwriters, also for artists, labels, independents, students, teachers. This is going to be an all‑inclusive two‑day event for them regardless of their job experience or their job title. It is very grassroots. It is for emerging singers and songwriters and it will be directed by the stakeholders who are the artists and musicians.
SEQ 1_0 \* Arabic \n9500 It will be slow to start. We are going to roll it out as the years go on but we see the artists and musicians really being in charge of this program and we see many of them who will be attending for the very first time. As opposed to hopping on a plane to go into Toronto or Vancouver, this could be a half‑day drive into Lethbridge for this conference.
SEQ 1_0 \* Arabic \n9501 COMMISSIONER DUNCAN: Now, Mr. Mise, a further question on that. Then how would you go about soliciting or inviting people to come?
SEQ 1_0 \* Arabic \n9502 MR. MISE: We will be advertising on all of our Alberta radio stations inviting the public, plus we will be using extensive database material too for that.
SEQ 1_0 \* Arabic \n9503 COMMISSIONER DUNCAN: Thank you. Just continuing on then with the budget, we noted that you had allowed in the budget $5,800 for high school scholarships. So first of all, we wanted to clarify if these were in addition to the $5,000 allowed for in the Lethbridge School Board music program.
SEQ 1_0 \* Arabic \n9504 MR. MURRAY: Yes, they are in addition to that.
SEQ 1_0 \* Arabic \n9505 COMMISSIONER DUNCAN: In addition. Thank you. And how would those then ‑‑ could you give us some detail on how they would be administered?
SEQ 1_0 \* Arabic \n9506 MR. MAHEU: Do you want to answer that one?
SEQ 1_0 \* Arabic \n9507 MR. MISE: Sure, please. The $5,000, for example, is for the purchase of students' ‑‑ for the instruments and we are certainly aware that there is no shortage of need here.
SEQ 1_0 \* Arabic \n9508 COMMISSIONER DUNCAN: Well, this is on the $5,800 now for the musicians' convention. That is the one I was wondering about the details on. There is $5,800 in the budget. It is called High School Scholarships.
SEQ 1_0 \* Arabic \n9509 MR. MISE: Yes.
SEQ 1_0 \* Arabic \n9510 COMMISSIONER DUNCAN: Go ahead. I am sorry, I didn't mean to interrupt you.
SEQ 1_0 \* Arabic \n9511 MR. MISE: No, that is okay.
SEQ 1_0 \* Arabic \n9512 MR. MAHEU: I think ‑‑ if I can just borrow this page.
SEQ 1_0 \* Arabic \n9513 MR. MISE: Sure.
SEQ 1_0 \* Arabic \n9514 MR. MAHEU: You are talking about the budget we have laid out for the Southern Alberta Music Conference?
SEQ 1_0 \* Arabic \n9515 COMMISSIONER DUNCAN: Exactly.
SEQ 1_0 \* Arabic \n9516 MR. MAHEU: Yes. We budgeted $5,800 for high school sponsorships, and as Dave mentioned, that is in addition to what we budgeted in the schools. This is still very much in the formulaic stages of what we want to do with the conference and what it will become but what we kind of had in mind is that in conjunction with the conference annually that we would make $5,800 available in scholarships and we haven't determined how many or what the amounts would be, probably in the area of $800 to $1,200 so we could do a number of them by region and those would be awarded annually as part of our Southern Alberta Music Conference. These would be for deserving students mostly at the high school level to continue their music education.
SEQ 1_0 \* Arabic \n9517 COMMISSIONER DUNCAN: I noticed one other point you mentioned is that they wouldn't be for tuition but these are more like prizes, are they?
SEQ 1_0 \* Arabic \n9518 MR. MAHEU: Exactly, they are almost like bursaries or honorariums that would be awarded.
SEQ 1_0 \* Arabic \n9519 COMMISSIONER DUNCAN: Thank you.
SEQ 1_0 \* Arabic \n9520 With regards to that budget and the personnel, you indicate a convention manager, an IT supervisor and a technical director. Are these people in addition to Newcap's salary budget or are they employees of Newcap?
SEQ 1_0 \* Arabic \n9521 MR. MURRAY: No, these are individuals that would be hired to operate the convention on a full‑time basis during its tenure, like not full‑time all year‑round, I mean, but while the convention is being organized and at the convention itself.
SEQ 1_0 \* Arabic \n9522 COMMISSIONER DUNCAN: Okay. You indicate also in that budget that $12,900 would go for the talent contest winner and you indicate for producer, studio time, cash prize, radio play. Does this amount represent out‑of‑pocket expenses to be paid to outside parties or are they in‑kind contributions?
SEQ 1_0 \* Arabic \n9523 MR. MURRAY: No, they would be outside third‑party contributions.
SEQ 1_0 \* Arabic \n9524 COMMISSIONER DUNCAN: So the radio play then, when you include radio play in that, there is no dollar amount attributed to ‑‑
SEQ 1_0 \* Arabic \n9525 MR. MAHEU: There is no cash value associated with that, no.
SEQ 1_0 \* Arabic \n9526 COMMISSIONER DUNCAN: Okay, thank you.
SEQ 1_0 \* Arabic \n9527 Just on the merchandise souvenir table, a $4,400 component to the program, we were just curious if you could give us some idea about what you see happening there. I assume it is going to generate revenues. What will happen with the monies generated?
SEQ 1_0 \* Arabic \n9528 MR. MISE: We don't really expect it to make any money at all. This is more just souvenirs of the event.
SEQ 1_0 \* Arabic \n9529 COMMISSIONER DUNCAN: So people will buy them it will just cover the cost?
SEQ 1_0 \* Arabic \n9530 MR. MISE: That is correct.
SEQ 1_0 \* Arabic \n9531 COMMISSIONER DUNCAN: Thank you.
SEQ 1_0 \* Arabic \n9532 MR. MAHEU: Madam Commissioner, if I may too, just on that point because it is an important point.
SEQ 1_0 \* Arabic \n9533 The money that we are budgeting each year for the Southern Alberta Music Conference, that is for the course of the seven years of the licence but we also know that once something like this starts, just because at the end of a seven‑year licence period ‑‑ we are not anticipating stopping it.
SEQ 1_0 \* Arabic \n9534 So the idea in our minds is to start small, we put some seed money towards this, enough that we figure we can get it going over the course of the seven years but if it grows like we think it is going to grow, it is going to cost much more than the $55,000 a year that we have budgeted.
SEQ 1_0 \* Arabic \n9535 Our approach to this is going to be that this is a not‑for‑profit operation. So in other words, if there are any profits made from this, whether it is through souvenirs or at some point we are doing showcase shows where you have to buy a ticket to get in or something like that, above and beyond the free stuff that is available, if there is any revenue generated from this, it is going to go into adding on to next year's.
SEQ 1_0 \* Arabic \n9536 It is not going to be a self‑liquidating thing by any respect because we think this is going to cost probably a little more than we budget because these things tend to always cost more than we think they are going to cost. We are committed to doing it but we are also trying to see well into the future that this is going to continue after the first seven‑year licence period is done and we can't just say then, well, we have done our bit for king and country and you are on your own.
SEQ 1_0 \* Arabic \n9537 We see ourselves as being a partner and a founding partner in this and it is going to be our responsibility to continue to see it funded as time goes on. We hope that after the course of the seven years is done it can fund itself, and starting things like this in the early going may help us get there.
SEQ 1_0 \* Arabic \n9538 COMMISSIONER DUNCAN: All right, I appreciate that.
SEQ 1_0 \* Arabic \n9539 MR. MAHEU: Okay.
SEQ 1_0 \* Arabic \n9540 COMMISSIONER DUNCAN: That is very enlightening. I think that is helpful. Probably it might make some of my questions sound petty but I am just kind of curious to get sort of a better understanding of what some of the projects are but I am glad you made those comments.
SEQ 1_0 \* Arabic \n9541 The technical sessions then, for example, that you would offer, are they an in‑kind donation or are those third‑party contributions or payments to third parties as well?
SEQ 1_0 \* Arabic \n9542 MR. MISE: Also third‑party payment, correct.
SEQ 1_0 \* Arabic \n9543 COMMISSIONER DUNCAN: So these would be musicians who need ‑‑ what would they be getting for that?
SEQ 1_0 \* Arabic \n9544 MR. MAHEU: I think what we are referring to there is there is going to be some cost for the technical setup to do some of these workshops and so on and some of that is budgeted. I think when you get into who is going to be doing the actual work conducting these, we are going to rely on a number of things.
SEQ 1_0 \* Arabic \n9545 We have a number of radio stations across the country, some of them in fairly significant markets. Those are very important markets to labels. They lean on us an awful lot to play their music and to help them do what they need to do, as they do with every radio station, but I think this is a way that we can lean back a little bit and say, listen, you have got some great emerging artists or you have got a couple of songwriters that are making a lot of great hit music right now in your stable, in your roster, and can you get them out to the Southern Alberta Music Conference.
SEQ 1_0 \* Arabic \n9546 I think we are going to try to use relationships we have built. We have a very good relationship and I think most of the people that are going to participate as speakers, as teachers or as facilitators for certain seminars are going to come on a no‑charge basis and we have enough time each year to kind of start lining that up.
SEQ 1_0 \* Arabic \n9547 For instance, most of the speakers, if not all of them, at CMW are not compensated for their appearance and we are going to approach the Southern Alberta Music Conference the same way.
SEQ 1_0 \* Arabic \n9548 COMMISSIONER DUNCAN: You raise an interesting point or you make me think of an interesting point. You have not allowed for a CTD coordinator. So who would be responsible for ‑‑ because this obviously is going to take quite a bit of organization.
SEQ 1_0 \* Arabic \n9549 MR. MAHEU: It is and it is going to be basically a stationwide effort. It is going to be headed up by the general manager, the program director, the promotion director, the music director. We envision the whole staff taking this on as a project. It is part of our commitment to making ourselves part of the Lethbridge community. So it is going to be a full‑out station effort. We do not and have not budgeted anybody as a coordinator.
SEQ 1_0 \* Arabic \n9550 If we find this thing is bigger than we thought it was going to be and it needs some full‑time management, then we will hire full‑time management and that management of the conference will be funded outside of our commitment to the Canadian Talent Development. So it would be on our nickel on the expense line.
SEQ 1_0 \* Arabic \n9551 COMMISSIONER DUNCAN: Thank you.
SEQ 1_0 \* Arabic \n9552 The Special Women in Broadcast session, I was curious to know what you envision there.
SEQ 1_0 \* Arabic \n9553 MR. MISE: That is actually a typo. It should say: "Special Women in Music" session as opposed to broadcast.
SEQ 1_0 \* Arabic \n9554 COMMISSIONER DUNCAN: Okay.
SEQ 1_0 \* Arabic \n9555 MR. MISE: I am sorry about that.
SEQ 1_0 \* Arabic \n9556 COMMISSIONER DUNCAN: Okay. Then I probably don't have to ask the question.
SEQ 1_0 \* Arabic \n9557 Now turning to the Lethbridge School Music Board program, you indicate that the scholarships are not designed to offer tuition costs ‑‑ this is in your brief, I believe ‑‑ but to help raise awareness and to promote music program excellence. I am wondering if they would be more accurately described then as prizes than scholarships. Are they actually going to be scholarships, as required?
SEQ 1_0 \* Arabic \n9558 MR. MAHEU: If that is what it takes to make it work, that is our intent.
SEQ 1_0 \* Arabic \n9559 COMMISSIONER DUNCAN: This is my advice to you.
SEQ 1_0 \* Arabic \n9560 MR. MAHEU: Yes. We would do it in such a way that it does qualify but the important part is that the money gets to the people where it can do the most good.
SEQ 1_0 \* Arabic \n9561 COMMMISSIONER LANGFORD: I think you have got him going, Elizabeth. Just keep tightening the screw.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n9562 MR. MAHEU: The key here is to get the money to the people where it can do the most good and there are some very young deserving students, I think, throughout the school system that could use a little help getting their music career to the next level, and as always, we would work with the appropriate authorities within the school to identify those folks and create a system whereby it could be awarded properly and used for the right reasons. It is for them to continue their musical education.
SEQ 1_0 \* Arabic \n9563 COMMISSIONER DUNCAN: Thank you.
SEQ 1_0 \* Arabic \n9564 I am turning to the market study and ‑‑ I am just referencing your market study and you expressed interest in the CHR format. We wondered if you were confident ‑‑ obviously you are but I will ask anyway ‑‑ that the surveyed 23 per cent of positive interest and 9 per cent of strong positive interest constitutes a potential audience sufficient to make your business plan viable.
SEQ 1_0 \* Arabic \n9565 MR. MAHEU: There is no question about that. In our research study ‑‑ it was interesting listening this morning to the Vista presentation because they did research on the Lethbridge market and there are some differences in opinion on where the opportunities are. We are very confident in the market's ability, based on our research, to support a contemporary hit radio station.
SEQ 1_0 \* Arabic \n9566 One of the things we should note, in this particular study, we only surveyed 18‑64 year olds; so teens do not make up part of this research study. But we know from our practical experience in our own markets where we have top 40 radio stations and when you look at the ratings of markets across the country, any top 40 radio station has a significant share of teens. So we kind of know right away that we are going to have teen tuning and a pretty significant share of it.
SEQ 1_0 \* Arabic \n9567 So when you add that tuning, which is not included in the research tuning that we are projecting, we are very, very confident that there is more than enough share here to have a significant presence in the marketplace and be able to fulfill our business plan.
SEQ 1_0 \* Arabic \n9568 COMMISSIONER DUNCAN: Just following along with some of what we heard this morning, you had ‑‑ I read in your brief ‑‑ considered the classic hits and decided against that, that this was the better route for you. I am just wondering if there was anything that you heard this morning, particularly with respect to the Pattison Group's Tabor station, if you were aware that they had changed their format, as I understood this morning.
SEQ 1_0 \* Arabic \n9569 MR. MAHEU: Yes, and some of those things had an impact, had a definite impact on our decision to go with a contemporary hit radio station. If I could take maybe 90 seconds or so to kind of go through that for you.
SEQ 1_0 \* Arabic \n9570 The Pattison station in Tabor is positioning itself as 80s, 90s and now. Now, we operate a number of classic hits radio stations in different markets across Canada. So we have some really good practical experience with classic hits and what makes that work and we know that about 90 per cent of the classic hits format is 80s, 90s and today. Eighties, 90s and now could be another word for classic hits or another acronym for it because that is exactly the essence of what classic hits is. A little bit of 70s in classic hits but only about 10 per cent. Ninety per cent of it is 80s, 90s and today.
SEQ 1_0 \* Arabic \n9571 So when we look at and when you listen to the Pattison radio station ‑‑ and it has gone through a number of changes over the years in terms of what its programming is ‑‑ it is very much what you would hear on any classic hits radio station across Canada right now, very, very close. So we perceive that one to be a classic hits radio station that is already on in the market. It is not as highly rated as some of the other radio stations in the city but when we did our research we saw that there could be a hole for classic hits and we have to ask ourselves, okay, why would there be a hole for classic hits if there is a station that is classic hits or pretty much classic hits already?
SEQ 1_0 \* Arabic \n9572 And this is not meant with any disrespect whatsoever to the Pattison Group because they are excellent broadcasters and do a great job but normally when you see an opportunity like that the research is telling you that if there is a station in that format right now, it is not doing a very good job or it is not doing as good a job as it could maybe do to maximize the potential of the format.
SEQ 1_0 \* Arabic \n9573 There may be a whole bunch of reasons that we are not aware of for that to be happening but the fact of the matter is if you take a look at the type of music a classic hit station plays, that music is being played predominantly on one radio station in the marketplace and it is the Pattison station.
SEQ 1_0 \* Arabic \n9574 So when we looked at the research, we thought, well, there is a call for applications, where is the opportunity in the market? And we are also aware of all the different criteria that the Commission looks at when licensing a new applicant. One of the criteria is what impact is it going to have on the incumbent broadcasters in the market.
SEQ 1_0 \* Arabic \n9575 When we looked at all of that and boiled it all down, and there was a pretty significant opportunity for contemporary hit radio which does not exist in the market at all, it became a much easier decision for us to make and then we did the business plan around that. So that is why we think top 40 or contemporary hit radio is the opportunity because that format does not exist in any shape or form right now.
SEQ 1_0 \* Arabic \n9576 One more thing, if I may, to sum up on your question. From what we heard this morning, the characterization by the Vista Group that three of the four broadcasters in the market are targeting a younger audience, we don't believe that that is accurate.
SEQ 1_0 \* Arabic \n9577 If you look at the BBM results and you take a look at the radio stations and how they are doing in certain demographic groups and the formats that they are in, it is an easy case to make.
SEQ 1_0 \* Arabic \n9578 When you take a look at the Rogers, HOT AC radio station is the number one radio station 35‑54 by a country mile and it does a great job in an older demo. Country is predominantly normally in most markets an older demo as well, and the rock station is filling a fairly wide hole as an active rock station and it does well young and it does well 35‑54, especially with men.
SEQ 1_0 \* Arabic \n9579 So we don't believe the assertation that there is a lot of choice there for younger listeners and we think that a top 40 station could move in there and fill a nice gap that is available.
SEQ 1_0 \* Arabic \n9580 COMMISSIONER DUNCAN: So your target audience, again, is ‑‑
SEQ 1_0 \* Arabic \n9581 MR. MAHEU: Eighteen to 34.
SEQ 1_0 \* Arabic \n9582 COMMISSIONER DUNCAN: Eighteen to 34. And the rock station would not be ‑‑ Rogers rock station would target what ‑‑ what age group would they target?
SEQ 1_0 \* Arabic \n9583 MR. MAHEU: Right now, that rock station is likely targeting an 18‑44 demographic and the ratings it has 18‑34 are quite high but part of that is by virtue of the fact that there is no top 40 alternative right now in the marketplace. When you take a look at top 40 music right now, it is pretty much made up 50 per cent pop and dance music and 50 per cent pop alternative, and the Rogers station is certainly playing some of that pop alternative music.
SEQ 1_0 \* Arabic \n9584 There is no CHR station in the city playing it. So they are going to generate maybe a large audience than they might if there was competition. So there is certainly a little bit of audience that is at risk there but it would be at risk no matter who came in. Anybody serving a younger audience is going to take a little bit of that away when that is not your primary focus.
SEQ 1_0 \* Arabic \n9585 COMMISSIONER DUNCAN: That is very helpful, especially in light of the comments we had this morning. So you are obviously convinced you have made the right decision?
SEQ 1_0 \* Arabic \n9586 MR. MAHEU: Absolutely! Even more so now.
SEQ 1_0 \* Arabic \n9587 COMMISSIONER DUNCAN: Thank you.
SEQ 1_0 \* Arabic \n9588 The Commission notes the market study that you provided to determine the proposed format and the financial assumptions behind the revenue projections for your proposed service but we are just wondering if you could link the two for us, if you could explain how you use the results from the demand study to get to your projected revenue.
SEQ 1_0 \* Arabic \n9589 MR. MURRAY: Thank you. The audience share that we feel we will achieve, as we indicated in deficiency, is 13 or 14 per cent. And basically sort of going through our experience in many size markets that we are in like Fredericton, which is around the same population and Red Deer, et cetera, we came up with our revenue in that way or we came up with our revenue, as you indicated in Appendix 4.4, by looking at the number of minutes and the rate per minute that we felt was reasonable in these size markets, and then we looked at that amount and compared them to what we were getting in Fredericton, Red Deer, et cetera, for a station, also taking into consideration that it would take some time to build that revenue up after you have launched. We felt that starting at $1.2 and growing to almost $2 million in seven years was reasonable.
SEQ 1_0 \* Arabic \n9590 COMMISSIONER DUNCAN: It was amazing to me how close your projections were with Vista's as if somebody was looking over somebody's shoulder.
SEQ 1_0 \* Arabic \n9591 MR. MURRAY: Right.
SEQ 1_0 \* Arabic \n9592 COMMISSIONER DUNCAN: The projections ‑‑ it was quite interesting that they were that close.
SEQ 1_0 \* Arabic \n9593 MR. MURRAY: Quite coincidental.
SEQ 1_0 \* Arabic \n9594 COMMISSIONER DUNCAN: With respect to the market impact, you project that 35 per cent will come from the incumbent station and I am just wondering, most of that ‑‑ did I read that you expect it would come from the Rogers station?
SEQ 1_0 \* Arabic \n9595 MR. MAHEU: Thirty‑five per cent would likely come from incumbent stations and it ‑‑ although we don't have the revenue figures that other markets ‑‑ we don't know what Rogers is billing and we don't know what Pattison is billing. We know by looking at the ratings and our general overall knowledge of both of those companies in the business, we have a sense of how well each one is doing.
SEQ 1_0 \* Arabic \n9596 The more you have, the more you have to lose, I guess. So we are suggesting that Rogers is probably billing a little more money in that market. So some of it would come from them. Certainly, if they have a rock station, which they do, and some of their audience is in our target demo, there is a direct correlation there as well.
SEQ 1_0 \* Arabic \n9597 COMMISSIONER DUNCAN: So in concluding that 65 per cent will either come from expanded budgets or new radio advertisers, do you have a scientific approach to coming up with that number?
SEQ 1_0 \* Arabic \n9598 MR. MAHEU: It is something we look at in every market where we have a radio station or we have a new radio station going on. It is a relatively unscientific approach. It is based on a lot of experience, what has happened in the past.
SEQ 1_0 \* Arabic \n9599 Our experience is when new radio stations sign on in the market, whatever growth rate was existing in that market and would have happened anyways is somewhat accelerated and the more radio stations you add, the bigger the degree of acceleration for a period of time, and it normally lasts anywhere between 12 and 18 months.
SEQ 1_0 \* Arabic \n9600 So if you have a market that is ticking along at 5 per cent annual increases every year and just seems to be going up with the economy, if you were to license a new radio station or two, all of a sudden that market might grow 8, 9, 10 per cent the first year and it might even grow 8 or 9 per cent the second year and then kind of come back to the normal levels of growth.
SEQ 1_0 \* Arabic \n9601 The reason for that, we found, is that when you add more people in a market, especially a smaller market, where more people are out there selling radio, talking up radio a little more, and when new competition comes in, existing incumbent broadcasters, they tend to step up their game a little bit too and they are back to selling radio again, maybe not just themselves but how they are different from everybody else. It is good for the business and business tends to be a little better over time.
SEQ 1_0 \* Arabic \n9602 So we feel by adding another radio station to the market, the market will actually expand a little more than it would have without a new radio station. So that will help fund some of it.
SEQ 1_0 \* Arabic \n9603 The other thing that we are counting on is the fact that we are proposing to bring a new format to Lethbridge, a format that targets a younger adult audience, and right now it is a little difficult to reach that younger adult audience on any of the existing radio stations.
SEQ 1_0 \* Arabic \n9604 We believe that there are a number of business categories in this market, the same kind of business categories we find in other markets we are doing business in, that would like to reach a younger demographic but they have to buy an older‑targeted radio station or pay for a lot of reach they really don't need and they are not using as much radio, if any at all. So we think that offering a product that is going to reach a targeted group of people is going to bring some of those advertisers to the table where they might not be there now.
SEQ 1_0 \* Arabic \n9605 COMMISSIONER DUNCAN: What about the age demographic then of this market? How is the age demographic?
SEQ 1_0 \* Arabic \n9606 MR. MAHEU: As compared to the national average?
SEQ 1_0 \* Arabic \n9607 COMMISSIONER DUNCAN: Well, I am just wondering, on the total population, is it young, old, in Lethbridge?
SEQ 1_0 \* Arabic \n9608 MR. MAHEU: I know that Alberta is slightly younger than the national average and I think that has a lot to do with a lot of younger people moving to the province from other provinces to go to work because the economy is so strong here. Our understanding of Lethbridge is it is just about the national average in terms of average age. So there isn't a disproportionately large or small number of people in any demographic group.
SEQ 1_0 \* Arabic \n9609 COMMISSIONER DUNCAN: So how many licences do you think, Mr. Maheu, that the market could sustain?
SEQ 1_0 \* Arabic \n9610 MR. MAHEU: Hum ‑‑ no. Mr. Murray said five and I don't think that is correct.
SEQ 1_0 \* Arabic \n9611 COMMISSIONER DUNCAN: It will make our decision easier.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n9612 MR. MAHEU: That is a different place.
SEQ 1_0 \* Arabic \n9613 Are you considering the Spirit FM power upgrade to full station status as a new licence?
SEQ 1_0 \* Arabic \n9614 COMMISSIONER DUNCAN: You can ignore that for that question.
SEQ 1_0 \* Arabic \n9615 MR. MAHEU: Okay. Setting that one aside, there is certainly room for one. I guess it would depend on what the format was going to be for the second one.
SEQ 1_0 \* Arabic \n9616 You have consolidated competition in the marketplace with Rogers and Pattison each owning two, and I am going to give you kind of a ‑‑ I am not trying to avoid the question but I am going to give you an answer just for context.
SEQ 1_0 \* Arabic \n9617 If you were to have one owner get two licences, it could probably support two. And the reason I am saying that is because the owner would enjoy some economies of scale in the operation. So in terms of your ability to generate revenue and to be profitable in a reasonable amount of time, it could probably support two.
SEQ 1_0 \* Arabic \n9618 It would be a little more difficult to support two independent operators with standalone FMs because they each have their own start‑up costs, they each have their own overhead and there are no economies of scale there.
SEQ 1_0 \* Arabic \n9619 So one for sure. Two would be ‑‑ it would be tough. It is not impossible but it would be certainly tougher. Our business plan was based on one radio station, one commercial mainstream radio station being licensed in the market.
SEQ 1_0 \* Arabic \n9620 COMMISSIONER DUNCAN: Thank you very much.
SEQ 1_0 \* Arabic \n9621 That concludes my questions, Mr. Chairman.
SEQ 1_0 \* Arabic \n9622 THE CHAIRPERSON: If I was to ask the same question but this time agreeing with the increase in power to Spirit, will your answer be the same?
SEQ 1_0 \* Arabic \n9623 MR. MAHEU: Yes, Mr. Chair, it would be the same. We don't see the Spirit format or the radio station in its present form being a real big competitor for ad dollars compared to, say, the Rogers and the Pattison operations.
SEQ 1_0 \* Arabic \n9624 THE CHAIRPERSON: For sure, but they are, nevertheless, aiming at getting half a million dollars of local retail revenues.
SEQ 1_0 \* Arabic \n9625 MR. MAHEU: Our experience with those types of radio stations with specialty licences and the religious gospel or Christian music formats tends to be they find ad revenue or non‑traditional revenues for radio that normal broadcasters would never have access to. There are some business owners and people in the community that will spend money on that radio station because of their beliefs and they want to support that radio station, and in other cases they wouldn't be interested in radio advertising or couldn't afford regular radio advertising.
SEQ 1_0 \* Arabic \n9626 So the money ‑‑ it is not insignificant once you are proposing to build but we believe it comes from places that most mainstream stations would not get a lot of money from.
SEQ 1_0 \* Arabic \n9627 THE CHAIRPERSON: Commissioner Langford.
SEQ 1_0 \* Arabic \n9628 COMMMISSIONER LANGFORD: I think we are all singing the same tune as we get near the end but maybe that is not abnormal. I would just like to build again on Commissioner Duncan's and Chair Arpin's probing here, just take it to another level.
SEQ 1_0 \* Arabic \n9629 Is it irrelevant to you regarding religious programming which one it is, Touch or Golden West expanded?
SEQ 1_0 \* Arabic \n9630 MR. MAHEU: It is not relevant in terms of our business plan, no.
SEQ 1_0 \* Arabic \n9631 COMMMISSIONER LANGFORD: And is it relevant ‑‑ I just want to cover all the earmarks. If we left Spirit at low power and said to Mr. Hildebrand, you can own it if you want but it is staying that way, and brought in Touch ‑‑
SEQ 1_0 \* Arabic \n9632 MR. MAHEU: No problem at all.
SEQ 1_0 \* Arabic \n9633 COMMMISSIONER LANGFORD: So no relevance. Okay, so now we are down to three people.
SEQ 1_0 \* Arabic \n9634 So let us assume, just because I am mean‑spirited I have decided to license two and you are second, and I am going to give it to one of the other guys, they are my first choice. Who would you prefer me to choose ‑‑ not personalities here, they are all good people and all that, but I am talking format, business, impact, that sort of thing ‑‑ of the other two?
SEQ 1_0 \* Arabic \n9635 MR. MAHEU: Well, it is kind of like you are giving me the great opportunity to be a radio King Solomon here and it is very difficult to ‑‑
SEQ 1_0 \* Arabic \n9636 COMMMISSIONER LANGFORD: No, you can't have half of each.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n9637 COMMMISSIONER LANGFORD: You have to have one or the other.
SEQ 1_0 \* Arabic \n9638 MR. MAHEU: Yes.
SEQ 1_0 \* Arabic \n9639 COMMMISSIONER LANGFORD: It seems obvious to me but I just would like to know what ‑‑
SEQ 1_0 \* Arabic \n9640 MR. MAHEU: Sure. Obviously ‑‑
SEQ 1_0 \* Arabic \n9641 COMMMISSIONER LANGFORD: So just a review ‑‑ I am sorry. Here is your market. You are going to have something in religion, probably just one to make it easier, you are going to have yourself ‑‑
SEQ 1_0 \* Arabic \n9642 MR. MAHEU: And one other.
SEQ 1_0 \* Arabic \n9643 COMMMISSIONER LANGFORD: ‑‑ but you are conditional upon one other.
SEQ 1_0 \* Arabic \n9644 MR. MAHEU: Then the one other, I would have to say, is the 45+ application from the Larsen Group, only because it would stay out of our way demographically and there would be very little overlap between those two radio stations, and our experience and my personal experience with radio stations targeted 45+, they tend not to be a big player for revenue. So that would leave more room for us. Just speaking corporately and somewhat selfishly if there had to be two.
SEQ 1_0 \* Arabic \n9645 That is not to say that Vista Group doesn't have some merits in their application but if you are asking me to decide, that would be what I would suggest.
SEQ 1_0 \* Arabic \n9646 COMMMISSIONER LANGFORD: So you have answered my question in an interesting way here because if I decide you are not getting anything, the other two fit together not too badly either too.
SEQ 1_0 \* Arabic \n9647 MR. MAHEU: There is a lot more overlap ‑‑
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n9648 COMMMISSIONER LANGFORD: But let us not leave it on a negative note.
SEQ 1_0 \* Arabic \n9649 MR. MAHEU: There is a lot more overlap between a 35‑54 and a 45+ but I take your point.
SEQ 1_0 \* Arabic \n9650 COMMMISSIONER LANGFORD: I just couldn't help having a little fun. That is great, thanks very much for that. It really helps to hear it from the people who are running these things, who are programming them. We have to remain slightly academic here and you guys are on the ground. So I am very grateful for that. Thank you very much.
SEQ 1_0 \* Arabic \n9651 Thank you, Mr. Chair.
SEQ 1_0 \* Arabic \n9652 THE CHAIRPERSON: Thank you, Commissioner Langford.
SEQ 1_0 \* Arabic \n9653 If I was to give you five minutes to wrap up, Mr. Maheu, what will you tell us?
SEQ 1_0 \* Arabic \n9654 MR. MAHEU: It probably wouldn't take five minutes but if I could have 60 to 90 seconds, I think we could sum it up pretty quickly.
SEQ 1_0 \* Arabic \n9655 Thank you again for the opportunity to present our idea for a radio station in Lethbridge. We have great experience with this format. It is obvious through what we have talked about today that there is a strong need and a want with 18‑34s in the marketplace for a radio station that plays the music that they want to hear.
SEQ 1_0 \* Arabic \n9656 This group is less satisfied with radio in Lethbridge, according to our research, than any other group that we surveyed. The people in the 18‑34 year old age group that like top 40 music do not have anywhere that they can listen.
SEQ 1_0 \* Arabic \n9657 When you look at the BBM numbers, most of that listening, 70 per cent, for instance, on teens, which we didn't survey, but if you look at teens and BBM, a 30 per cent share going to the HOT AC radio station, a 40 share of teens going to the rock station, which is highly unusual. You won't see that in virtually any other market in the country.
SEQ 1_0 \* Arabic \n9658 So there is obviously with teens and 18‑34 year olds a need for a radio station.
SEQ 1_0 \* Arabic \n9659 We would very much like to be that radio station. We were the only applicant coming forward with an idea for a younger format. We believe we can deliver on our promises. We have devoted $4.1 million over the first term of our licence into programming which includes significant news and which we believe will benefit the community significantly.
SEQ 1_0 \* Arabic \n9660 We have also earmarked $700,000 for Canadian talent development and I won't go into all of that again. Suffice it to say we believe we have come up with a great new idea with the Southern Alberta Music Conference that could really start something from the grassroots up for the Lethbridge area and for all of Alberta and could benefit a lot of aspiring singers, songwriters and musicians.
SEQ 1_0 \* Arabic \n9661 And as I always mention because I am very proud of it, Newcap is now 750+ people strong. We believe we have some of the best and brightest minds working for us. We understand this format very well and we as a company would be very excited at the prospect of puttin