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Providing Content in Canada's Official Languages
Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TELECOMMUNICATIONS COMMISSION
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT/SUJET:
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
HELD AT: TENUE À:
Membertou Trade and Membertou Trade and
Convention Centre Convention Centre
Maillard Street rue Maillard
Sydney, Nova Scotia Sydney (Nouvelle-Écosse)
April 16, 2007 le 16 avril 2007
Transcripts
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
Contents.
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Transcription
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Telecommunications Commission
Conseil de la radiodiffusion et des
télécommunications canadiennes
Transcript / Transcription
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Elizabeth Duncan Chairperson / Présidente
Andree Noel Commissioner / Conseiller
Ron Williams Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Donna Shewfelt Secretary / Secrétaire
Shari Fisher Legal Counsel /
Conseillère juridique
HELD AT: TENUE À:
Membertou Trade and Membertou Trade and
Convention Centre Convention Centre
Maillard Street rue Maillard
Sydney, Nova Scotia Sydney (Nouvelle-Écosse)
April 16, 2007 le 16 avril 2007
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PHASE I
PRESENTATION BY / PRÉSENTATION PAR:
Barry Maxwell Martin 6 / 26
Newcap Inc. 81 / 578
Andrew Newman 145 / 874
HFX Broadcasting Inc. 228 / 1519
PHASE II
(No interventions)
PHASE III
INTERVENTION BY / INTERVENTION PAR:
Frank Bruleigh 299 / 1967
Mayor John Morgan 304 / 1989
ABBACO Clothing 310 / 2025
Maritime Broadcasting Ltd. 315 / 2050
PHASE IV
REPLY BY / RÉPLIQUE PAR:
HFX Broadcasting Inc. 352 / 2301
Andrew Newman 360 / 2347
Newcap Inc. 365 / 2373
Barry Maxwell Martin 373 / 2409
Sydney, Nova Scotia
‑‑‑ Upon commencing on Monday, April 16, 2007
at 0930 / L'audience débute le lundi 16 avril
2007 à 0930
LISTNUM 1 \l 11 THE CHAIRPERSON: Good morning ladies and gentlemen, and welcome to this public hearing. My name is Elizabeth Duncan, and I'm the CRTC Regional Commissioner for the Atlantic. I will be presiding over the hearing. Joining me on a panel are my colleagues, Andre Noel, Regional Commissioner for Quebec, and Ronald Williams, Regional Commissioner for Alberta and the Northwest Territories.
LISTNUM 1 \l 12 The Commission team assisting us includes Hearing Manager, Lynn Cape, who is also Manager of Radio Applications and Policy, Sherry Fisher, Legal Counsel, Donna Shewfelt, Hearing Secretary and Manager of our Atlantic Regional Office.
LISTNUM 1 \l 13 Please speak with Mrs. Shewfelt if you have any questions with regard to hearing procedures.
LISTNUM 1 \l 14 The panel will begin by considering four proposals to operate an English language FM commercial radio station in the Sydney, Nova Scotia market. We will then examine two applications presented by Newcap to convert radio station CHVO Carbonear, Newfoundland from an AM to an FM, and to operate a new English‑language FM station in Kentville, Nova Scotia.
LISTNUM 1 \l 15 We will study the proposals in light of the cultural, economic and social objectives defined in the Broadcasting Act, and the regulations growing from it. The panel will base its decisions on several criteria, including the state of competition and the diversity of editorial voices in the market, as well as the quality of the applications. It will also look at the ability of the market to support new radio stations, the financial resources of each applicant, and proposed initiatives for Canadian Content Development.
LISTNUM 1 \l 16 With respect to the radio applications for Sydney, we will examine the proposals in the order of items one, two, four and five, presented in the Broadcasting Notice of Public Hearing, CRTC 2007‑2.
LISTNUM 1 \l 17 We will then review the application by Newcap to convert radio station CHVO Carbonear from the AM to the FM band. The proposed FM station would continue to offer CHVO's current country music format, and would operate on the 103.9 megahertz frequency. The applicant is seeking permission to simulcast the new station's programming on CHVO for a period of six months from the date it begins operation.
LISTNUM 1 \l 18 Finally, we will examine Newcap's application for a license to operate an English language FM commercial radio station in Kentville to serve the Annapolis Valley. The new station would operate on the frequency 89.3 megahertz. The applicant is proposing a classic hits music format.
LISTNUM 1 \l 19 With regards to the application by the Canadian Broadcasting Corporation, the consideration of the application presented by the Canadian Broadcasting Corporation, which is item three in the Notice of Public Hearing, has been moved to the non‑appearing phase of this public hearing.
LISTNUM 1 \l 110 I will now invite the hearing Secretary, Mrs. Shewfelt, to explain the procedures we will be following. Mrs. Shewfelt?
LISTNUM 1 \l 111 THE SECRETARY: Thank you, Madame Chair.
LISTNUM 1 \l 112 Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.
LISTNUM 1 \l 113 When you are in the hearing room, we would ask that you please turn off your cellphones, beepers, Blackberrys and other text messaging devices. They can be a distraction for participants and Commissioners, and they can interfere with the internal communication system used by our translators.
LISTNUM 1 \l 114 We would appreciate your co‑operation.
LISTNUM 1 \l 115 We expect the hearing to take approximately two days. Today we expect to finish around 6:00 or 6:30, and Tuesday we will begin at 9:00 a.m. and finish by early afternoon.
LISTNUM 1 \l 116 Today we will take an hour for lunch, and a break in the morning, and in the afternoon, and we will let you know of any schedule changes that may occur.
LISTNUM 1 \l 117 The Great Hall will serve as the examination room, where you can examine the public files of the applications being considered at this hearing. The telephone number of the examination room is 902‑562‑1389.
LISTNUM 1 \l 118 There is a verbatim transcript of this hearing being taken by the court reporter sitting across from me. If you have any questions on how to obtain all, or part of this transcript, please approach the court reporter during a break. Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of this hearing.
LISTNUM 1 \l 119 Simultaneous translation is available during the hearing. You may obtain a translation receiver through the technician at the back of the room. The English interpretation is on Channel 5, and the French is on Channel 6, and the floor channel is on Channel 4.
LISTNUM 1 \l 120 For the record, we wish to inform you that the applicants, Barry Maxwell Martin, on behalf of a corporation to be incorporated, and Halifax Broadcasting, a corporation, have filed additional information relating to their Canadian Content Development commitments on which they will be questioned at this Hearing, pursuant to the Commission's letter dated March 6, 2007. These documents can be viewed on their respective application files in the examination room.
LISTNUM 1 \l 121 We will now proceed with the presentations in the order of appearance set out in the agenda. Each party will be granted 20 minutes to make its presentation. Questions from the Commission will follow each presentation.
LISTNUM 1 \l 122 Phase I are the applicants' presentations.
LISTNUM 1 \l 123 And now, Madame Chairman, we will proceed with item one on the agenda, which is the application by Barry Maxwell Martin, on behalf of a corporation to be incorporated, for a license to operate an English language commercial FM radio programming undertaking in Sydney.
LISTNUM 1 \l 124 The new station would operate on frequency 103.5 megahertz, Channel 278B, with an effective radiated power of 26,500 watts, non‑directional antenna, antenna height of 169.6 meters.
LISTNUM 1 \l 125 Appearing for the applicant is Mr. Jay Bedford who will introduce his colleagues. You will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 126 MR. BEDFORD: Thank you very much.
LISTNUM 1 \l 127 First of all, welcome to Cape Breton Island. National Geographic Traveller magazine indicates that this is the number two travel destination in the world, and Conde Nast Travel magazine this is the most scenic island in the world. We're proud of your island. We're glad you're here. We hope that you come back during the summer season, when it's a little bit warmer, and you enjoy your, an opportunity to travel around the island.
LISTNUM 1 \l 128 And also welcome to the Membertou Trade and Convention Center. This facility has been opened for about three years now. It's an incredible facility, and of course, quite a compliment to the people of the Membertou community. As a matter of fact, I was very proud to be the MC of the very first function that was held in this facility.
LISTNUM 1 \l 129 Good morning, Madame Chair, Members of the Commission, Staff of the Commission, ladies and gentlemen. My name is Jay Bedford. I am one of three principals of the FM radio station proposed by the applicant, Barry Maxwell Martin, on behalf of a company to be incorporated.
LISTNUM 1 \l 130 I am pleased to have this opportunity to review with you the highlights of our application, but before I address our application, I'd like to take a moment to introduce the three principals involved in this application.
LISTNUM 1 \l 131 Barry Martin will serve as President, and will be in charge of all financial operations. He has a tremendous background in the financial community. He's a former bank manager, he's a certified internal auditor, and he is the President and Owner of the Meridian Hotel in Sydney, as well as other holdings.
LISTNUM 1 \l 132 Barry Martin is the gentleman seated to my immediate right, and to your left.
LISTNUM 1 \l 133 Alex Morrison is on my far left, your far right. Alex been, has been involved in the broadcast business for over 20 years. He worked at C99 FM here in Membertou, along with CHER radio in Sydney. He worked at CJCB, and CKPE in Sydney, and also worked at Y95 FM in Hamilton Ontario. He has probably MC'd more concerts on this island than just about anyone else. He is a very sports‑oriented individual. He was the voice of the Canadian Little League Championships, he's a baseball umpire, a hockey coach, and a referee.
LISTNUM 1 \l 134 My name is Jay Bedford. My background is extremely varied. I have spent a lot of time in the media ‑‑ over 35 years, 15 stations from Alberta to Newfoundland. I've been an assistant general manager, a program director. I've been on air, I've been involved in promotions, and also been sales manager of five radio stations. I also owned my own newspaper at one point in time, and I was the only Canadian writer that ever wrote freelance for Country Weekly, the number one selling country music magazine in the world. I've also been involved in business training and other things, as you can see on the screen and on the sheets of paper in front of you.
LISTNUM 1 \l 135 My remarks this morning will highlight the major strengths of our application.
LISTNUM 1 \l 136 The first is the overwhelming desire in this community for a locally‑owned station such as ours, as evidenced by the responses to our market survey, and by the letters of support, and affirmative interventions on behalf of our application.
LISTNUM 1 \l 137 The second is the financial responsibility of the station as confirmed by conservative financial projections for the first seven years of operation.
LISTNUM 1 \l 138 The third is our station's programming mix, with its focus on the special needs and interests of the local radio audience.
LISTNUM 1 \l 139 Let me begin by identifying the benefits of local ownership that our station will bring to this community.
LISTNUM 1 \l 140 Point number one: Like many of our prospective listeners, we have long been aware of the need for a fresh, independent local voice for our community.
LISTNUM 1 \l 141 Point two: Ours will be the only truly independent commercial station. The other applications are for stations that would be operated by non‑resident owners, and off‑island owners, or merely one of a group of stations.
LISTNUM 1 \l 142 We will provide the highest possible level of local news, weather and information about athletic, musical and other community events.
LISTNUM 1 \l 143 Because our station is locally owned, it would be an integral part of our community. We know the local listening audience. We live here. We know local musicians personally. We meet them, and talk with them regularly, and we actively support them. We know the local advertisers. We have worked with them for many years, and we are familiar with their special interests and preferences.
LISTNUM 1 \l 144 In addition, we, ourselves, are members of the local business community. We sit on local boards, we chair local functions, we host local concerts, and we coach local sports teams.
LISTNUM 1 \l 145 We are personally committed to our community because our friends and family live here, and because we know the significant economic and cultural impact that our station will have. For us, this radio station is about much more than just the bottom line.
LISTNUM 1 \l 146 Our application has overwhelming local support from local individuals, from businesses and not‑for‑profit organizations, as demonstrated by their letters of support in the original application, and the positive interventions that were filed over the last month and a half.
LISTNUM 1 \l 147 From the Municipal Council of the CBRM, the Cape Breton Regional Municipality, as demonstrated by their unanimous resolution of support, and the appearance of Mayor Morgan at these hearings.
LISTNUM 1 \l 148 The market survey submitted with our application reveals widespread and outspoken dissatisfaction with the perceived negative effects that consolidation has had on local radio ‑‑ the high repetition of music, the lack of local news and community information, especially in the evenings and on weekends, and the lack of live announcers, accessible staff and community engagement.
LISTNUM 1 \l 149 More than three‑quarters of the market survey respondents reported wanting a greater choice of local stations, and when asked about the importance of different aspects of their ideal radio station, 89 percent reported that community information was either important, or very important to them; 86 percent said local news; 84 percent said a locally‑owned station; 83 percent said having live announcers; and 79 percent said interviews with local guests.
LISTNUM 1 \l 150 Turning to the financial side of our application, our revenue and expense estimates are based upon our own experience. The soundness of these estimates have been confirmed with radio advertising reps in our community, and other similar communities. These projections are realistic.
LISTNUM 1 \l 151 One of us, the majority investor, Mr. Martin, is a certified internal auditor, a former bank manager, and a successful local businessman. Two of us have more than 50 years combined experience in a local commercial radio, involving station management, advertising, sales, programming and promotion.
LISTNUM 1 \l 152 We understand the other applicants are projecting substantially higher revenues than we have, however, for the first seven years of operation, we have chosen conservative estimates, number one, to be prudent, and number two, to avoid overstating the station's potential. But on the other hand, based upon our knowledge of advertising clients in this community, we anticipate but do not assume the station's revenues could be higher than the projections shown.
LISTNUM 1 \l 153 This slide shows our projections of PBIT, profit before interest and tax, as a percentage of total revenue. We expect our PBIT percentage to rise slightly, and then remain relatively constant at about 20 to 22 percent as we reinvest in our staff, add to our staff, and expand our service to the community.
LISTNUM 1 \l 154 Referring to net return on investment, we expect the net return on investment to increase steadily from 13 percent, in the first year of operation, to 36 percent in the seventh year.
LISTNUM 1 \l 155 Our station will not have an undue financial impact on the existing three commercial stations in the CBRM market. The retail stations to station ratio for the CBRM market is greater than for other Atlantic Canadian markets, except Halifax and St. John's, all of which have four or more stations. For example, the ratio for the CBRM market is substantially greater than the ratio for the Charlottetown market, which has four commercial radio stations.
LISTNUM 1 \l 156 With the addition of the station that we are proposing, the retail sales to station ratio for the CBRM market, and that's indicated by CBRM, plus one, will be comparable with the ratio in the Fredericton and Moncton markets, which has five and six commercial stations, respectively; somewhat greater than the ratio for the Saint John market, which is supporting five commercial stations; and still significantly greater than the ratio for the Charlottetown market, which, with its four commercial radio stations.
LISTNUM 1 \l 157 For seven years, the commercial radio market in the CBRM has been a monopoly. The introduction of competition will improve the quality of radio service to our community in both programming, and advertising rates for local businesses.
LISTNUM 1 \l 158 Our financial projections assume that our station would achieve a 20 percent share of the local radio advertising market. This slide shows that the CBRM market can easily support an additional commercial station.
LISTNUM 1 \l 159 The Financial Post's 2007 projection of retail sales growth in the CBRM market shows that the corresponding ratio of retail sales per station will grow about 4.7 percent over the next five years. This growth in the retail sales to station ratio for the CBRM is shown for three stations. That's the existing situation. CBRM, that's the blue curve. And for four stations, that's CBRM, plus one new station, that's the turquoise curve.
LISTNUM 1 \l 160 Even if the presently projected growth rate in the CBRM market were not to increase, the ratio in the Charlottetown market ‑‑ that's the red curve ‑‑ would take almost eight years to catch up to the ratio for four stations in the CBRM market, at the Charlottetown market's current projected growth rate.
LISTNUM 1 \l 161 But the growth rate of retail sales in the CBRM market is almost certain to increase. Major retailers such as Home Depot, Canadian Tire and WalMart have been demonstrating their confidence in the local economy with very large investments in new facility. Most building supply centers, supermarkets and automobile dealerships are investing in large, new facilities, and The Mayflower Mall, the largest shopping center on the island, will complete, this year, its largest expansion project since its original construction, in order to accommodate new national retailers like Home Sense, Winners, Future Shop, and Sport Check.
LISTNUM 1 \l 162 In addition, a new high‑tech sector is replacing the CBRM's old resource‑based industries. A $340,000,000 real estate development by German investors is already under construction near Louisbourg. The $400,000,000 Tar Ponds cleanup is scheduled to start this spring. Two studies are under way for massive development of the Port of Sydney, and XSTRATA is close to bringing the Donkin coal mine into production.
LISTNUM 1 \l 163 These large‑scale initiatives will have an immediate and direct positive impact on the CBRM economy, as well as a long‑term, indirect impact through the development of new infrastructure, and new economic activities.
LISTNUM 1 \l 164 In a competitive environment, the critical success factors for any station will be, one, understanding the local audience and the local advertising market, and two, the quality of local programming. We have listed below other factors that will ensure our stations financial success ‑‑ our advertising sales experience; advertising rates affordable to small, local business; station profits will remain in the community, and be reinvested in expanded services; and the principals' personal commitment, Barry, myself and Alex, to the station's success and the local community.
LISTNUM 1 \l 165 Our radio station will appeal to listeners who bring, who long for the traditional days of radio, with well‑known local announcers, community involvement interactivity and enthusiasm. Our station will feature live announcers for 113 hours of the 126 hour broadcast week. Our goal is to return radio to the days of involvement, enthusiasm and fun, and in return, to attract a loyal audience who will make our station a part of their daily life.
LISTNUM 1 \l 166 Our commitment to the people of the CBRM includes local news coverage, with a news hotline 24 hours a day, 24‑hour accessibility for all emergencies, daily contact with local police, fire and transportation departments, local weather and sports seven days a week, the promotion and coverage of community events, air time for volunteer organizations, including interviews, public service announcements, and informal announcer mentions as we often refer to as "jock talk". Though its ongoing promotion of local events, our station will be an essential part of the community fabric.
LISTNUM 1 \l 167 Our music will feature a mix of 80 percent classic rock, and 20 percent current and recent rock, providing familiar music to the older listeners, and a fresh and diverse collection of recent rock, mixed with emerging Canadian artists. The results of our market survey suggests that 39.7 percent of potential listeners would be likely, or very likely to listen to a new FM station broadcasting this music mix.
LISTNUM 1 \l 168 We were rather pleased to see that other survey results from other applicants indicate that 76.5 percent of the 18 to 24‑year olds in the CBRM market are likely, or very likely to listen to a station that plays classic rock, and 90.6 percent of the 18 to 24‑year olds are likely, or very likely to listen to current rock. Even though this is not our target audience, we feel rather excited that we will be able to attract a younger audience, as well.
LISTNUM 1 \l 169 The percentage of musical selections featuring emerging Canadian artists will be 11 percent. Every time we feature an emerging Canadian artist, we will billboard the selection with a promotional description of the artist and the song, including some biographical information, website location, and where the selection can be purchased, and/or downloaded.
LISTNUM 1 \l 170 We fully support FACTOR, and will allocate all of our financial contributions to FACTOR. We will consistently meet and/or exceed our Canadian content levels. We will promote local music events with announcer mentions, and interview features, and our no‑cost promotion will guarantee that Cape Breton artists will receive high‑profile advertising of any and all new recordings, regardless of their genre. Once again, that's a no‑cost promotion package.
LISTNUM 1 \l 171 Our station will broadcast more news, weather and sports than any of the other applicants. We will broadcast the highest amount of news of any of the applicants. We are the only applicant broadcasting regular news updates between 9:00 a.m. and 12:00 noon, and 1:00 and 4:00 in the afternoon. We are the only applicant broadcasting hourly news on Saturdays and Sundays, and on Sundays from 5:00 p.m. to 6:00 p.m., we will broadcast a news hour. It will feature a review of the week's top local news stories, along with good news stories from the business community, and interviews with local newsmakers.
LISTNUM 1 \l 172 In addition, we will be broadcasting over three and a half hours of community and local event information through interviews, announcer talk, and pre‑recorded public service announcements.
LISTNUM 1 \l 173 The crucial distinction between our application and other applications is that we actually do live in the CBRM, and we have the support of the community. We also have the financial means, the understanding of the local market, experience in the broadcast business, and personal engagement with our community, to ensure that our station thrives, and that it reflects the new spirit of optimism that is now emerging in the CBRM.
LISTNUM 1 \l 174 In conclusion, our station would be locally owned, locally managed, and locally programmed. We will take radio to the community, and bring the community back to radio.
LISTNUM 1 \l 175 Thank you very much. (Applause) Thank you.
LISTNUM 1 \l 176 THE CHAIRPERSON: Thank you, Mr. Bedford.
LISTNUM 1 \l 177 I'd like to begin first with some questions with respect to your programming.
LISTNUM 1 \l 178 MR. BEDFORD: Mmm hmm.
LISTNUM 1 \l 179 THE CHAIRPERSON: In your response February the 1st, you indicated that your station will broadcast 13 hours and two minutes of spoken‑word programming, and I'll just go through the breakdown that I have here.
LISTNUM 1 \l 180 The newscasts were going to be four hours and 50 minutes, a sports cast three hours and seven minutes, weather, two hours, community announcements, PSA's and current event promotion, two hours and five minutes, and the one‑hour programming, program on Sunday, which you just mentioned, for a total of 13 hours and two minutes.
LISTNUM 1 \l 181 And first of all, with respect to announcer talk, you indicate there will be an additional coverage of community events through jock mentions, in‑studio interviews, phone interviews, plus occasion remote coverage. How much time should be added to your spoken‑word commitment for this coverage, and for announcer talk, in general, if it hasn't been included in those totals?
LISTNUM 1 \l 182 MR. BEDFORD: If you would look at the slide that's on the screen in front of you, we have broken it down in a pie‑like format.
LISTNUM 1 \l 183 Public service announcements, either pre‑recorded, or read live, or featuring members of the community would account for 125 minutes.
LISTNUM 1 \l 184 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 185 MR. BEDFORD: Local event promotion would account for about 94 minutes, and that would be a combination of interviews, announcer talk, and so forth. The rest is on that chart, as well. Sports, 187 minutes, weather, 129.5 minutes, the 60‑minute news review program, and the news content, which is 290 minutes, and that's news conten‑, pure news content. That is not a newscast that includes news, weather and sports. That's the actual news content, itself.
LISTNUM 1 \l 186 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 187 MR. BEDFORD: We broke them down individually.
LISTNUM 1 \l 188 THE CHAIRPERSON: Okay, so that's slightly different than what we have, and that does take, then, into account the announcer talks?
LISTNUM 1 \l 189 MR. BEDFORD: Yes, it does.
LISTNUM 1 \l 190 THE CHAIRPERSON: Okay. Thank you very much. I just make a note here.
LISTNUM 1 \l 191 In regards to the healthy lifestyle segments, which you indicate will include messages and content from environmental groups, nutritionists, the anti‑smoking lobby, the Regional Health Authority, and non‑profit community groups, you indicate these segments will be aired throughout, through announcer input, and pre‑recorded announcements. What is the minimum amount of time per week allotted to your healthy lifestyle segments?
LISTNUM 1 \l 192 MR. BEDFORD: That would be included in our, those two segments that I referred to ‑‑ the 94 minutes, and the 125 minutes.
LISTNUM 1 \l 193 There is a fair amount of concern in this community over numerous health issues, so we decided we would include that in our news program, and also promote healthy lifestyle, healthy living, nutritional things. And as a result, we will encourage our radio announcers to do some research into that, so that we can include that in our, on our, in our on‑air patter, if I can use that expression.
LISTNUM 1 \l 194 THE CHAIRPERSON: What was it again? It would be included in the 94‑minute segment, and the ‑‑
LISTNUM 1 \l 195 MR. BEDFORD: That would be part of our community involvement commitment, yes.
LISTNUM 1 \l 196 THE CHAIRPERSON: Okay. I thought you mentioned ‑‑
LISTNUM 1 \l 197 MR. BEDFORD: It would, it ‑‑
LISTNUM 1 \l 198 THE CHAIRPERSON: ‑‑ two segments for ‑‑
LISTNUM 1 \l 199 MR. BEDFORD: ‑‑ would be part of the mix.
LISTNUM 1 \l 1100 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1101 MR. BEDFORD: That would be part of the PSA's, as well, obviously.
LISTNUM 1 \l 1102 THE CHAIRPERSON: Oh, okay. That was fine. Yes, thanks.
LISTNUM 1 \l 1103 MR. BEDFORD: I'm sorry.
LISTNUM 1 \l 1104 THE CHAIRPERSON: That's alright. That's alright. Thanks. So as far as the duration of each segment vary, I suppose, depending? Am I not ‑‑ you can't give me ‑‑
LISTNUM 1 \l 1105 MR. BEDFORD: It'll obviously vary in terms of the content.
LISTNUM 1 \l 1106 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 1107 MR. BEDFORD: Exactly.
LISTNUM 1 \l 1108 THE CHAIRPERSON: Alright. And when will they be presented? Daytime, evenings, weekends, week nights?
LISTNUM 1 \l 1109 MR. BEDFORD: We ‑‑ the ‑‑ since we are proposing to have live announcers on the air for 113 hours of the broadcast week, that will be included as part of their on‑air prep for each of those announced shifts, and then in addition to that, local organizations will be allowed to use the public service time to help promote healthy lifestyles, and healthy living.
LISTNUM 1 \l 1110 THE CHAIRPERSON: Okay. Is the public service time assigned specific slots, or again, that'd be more flexible?
LISTNUM 1 \l 1111 MR. BEDFORD: We're going to be more flexible with that, if it's allowed.
LISTNUM 1 \l 1112 THE CHAIRPERSON: Thank you. In regards to news, how much of the four hours and 50 minutes, or 290 minutes of newscasts ‑‑ make sure I have the same numbers now ‑‑ will provide ‑‑ I'm sorry ‑‑ will be devoted to local news stories?
LISTNUM 1 \l 1113 MR. BEDFORD: We will endeavour to provide as much local news as at all possible. Obviously a lot of that's based on exactly how busy the news day itself is. Our newscasts will be led with local news at all times, and our news staff will be ‑‑ we will obviously, in consultation with them, promote the fact that we want as much local news as at all possible.
LISTNUM 1 \l 1114 I ‑‑ with today's world, with the CNNs, and the News Worlds, and the ‑‑
LISTNUM 1 \l 1115 THE CHAIRPERSON: Yeah.
LISTNUM 1 \l 1116 MR. BEDFORD: The national and the international news has ‑‑ there's so many avenues available for the listener, and the viewer to get that kind of information, so we want to be as local as at all possible.
LISTNUM 1 \l 1117 THE CHAIRPERSON: So you wouldn't care to put even a minimum amount of time on it, because, again, you want to be flexible, or could you put a minimum?
LISTNUM 1 \l 1118 MR. MORRISON: What she's saying is what percentage of the 290 minutes would be, would ‑‑
LISTNUM 1 \l 1119 MR. BEDFORD: No.
LISTNUM 1 \l 1120 MR. MARTIN: No, you would ‑‑ it's ‑‑ it would all depend on, again, on the flow of the news. I mean, you can't judge by how much local news is going to be available. We can commit to two minutes, I would suppose.
LISTNUM 1 \l 1121 MR. BEDFORD: I think that ‑‑ yeah. Again, I've worked in newsrooms before, and I know what a news day is like, and I know there are days that you are bombarded with local stories.
LISTNUM 1 \l 1122 THE CHAIRPERSON: Yeah.
LISTNUM 1 \l 1123 MR. BEDFORD: There are days that there aren't that many stories. You're doing as much research as at all possible, you're trying to develop and cultivate as many stories as possible, you're possibly take, picking up an old story to find out if there's a new twist to it, and so forth, and you're calling out, making a lot of outgoing calls to base your story on to make sure the story is balanced and objective. I would say that if ‑‑ I would say that it ‑‑ out of every newscast, at least 50 percent of it's going to be local, if not more.
LISTNUM 1 \l 1124 THE CHAIRPERSON: Okay. Thank you very much.
LISTNUM 1 \l 1125 MR. BEDFORD: Is that the ‑‑
LISTNUM 1 \l 1126 THE CHAIRPERSON: That's fine.
LISTNUM 1 \l 1127 MR. BEDFORD: ‑‑ answer you were looking for?
LISTNUM 1 \l 1128 THE CHAIRPERSON: Yes, yeah, that's fine.
LISTNUM 1 \l 1129 In your supplementary brief, you indicate you will provide 24, a 24‑hour day news hotline, and 24‑hour accessibility for all Emergency Measure organizations, which I think you touch on here, too, today. In your brief, you refer to live announce shifts, 18 hours a day, Monday through Friday, 14 hours on Saturday, and a minimum of ten hours on Sunday. Will your news hotline be manned 24 hours a day?
LISTNUM 1 \l 1130 MR. BEDFORD: Yes, it will be. While there are live announcers in the building, and people in the newsroom, obviously those calls will be directed at that parti‑, at, to those phones. During the all‑night span of time, when we don't have ‑‑ or during the evenings on Sunday, when we don't necessarily have a live announcer on the air, those phone calls will be forwarded to The Meridian Hotel, and they will answered by a live voice, and information will be taken, and proper people will be contacted.
LISTNUM 1 \l 1131 THE CHAIRPERSON: And that would be the same with the Emergency Measures organizations?
LISTNUM 1 \l 1132 MR. BEDFORD: No. With the Emergency Measures, what we are proposing is we will have a series of cellphones, and each of our staff members will be allotted different weeks of the month, in which case that they will be on call 24 hours a day. It could be our news editor, it could be Alex Morrison, it could be myself, it could be Mr. Martin, but we will have a cellphone. All of the Emergency Measures organizations will have that phone number available to them at all times.
LISTNUM 1 \l 1133 THE CHAIRPERSON: Now if you wanted to input into your programming, when you got an emergency announcement, how would you do that? Remotely, or would somebody have to go into the station, or ‑‑
LISTNUM 1 \l 1134 MR. BEDFORD: We can use both methods. Primarily, with as much live content as we will have, it should not be a problem, however if something is required, we will be there as quickly as possible to make sure that it's, that it happens.
LISTNUM 1 \l 1135 THE CHAIRPERSON: Okay. So sometimes, of course, weather might prevent that, but you say you can do it remotely?
LISTNUM 1 \l 1136 MR. BEDFORD: Yes.
LISTNUM 1 \l 1137 THE CHAIRPERSON: Okay. With respect to live versus automated programming, in your response February 1st, you indicated a minimum of 123 of the 126 broadcast hours will originate from your local studios and/or local remote broadcast locations. The breakdown on page four of your response adds to a total of 113 hours, and I just turned to that myself.
LISTNUM 1 \l 1138 MR. BEDFORD: No, you're right.
LISTNUM 1 \l 1139 THE CHAIRPERSON: I just thought perhaps it was a typo.
LISTNUM 1 \l 1140 MR. BEDFORD: Yes, it was.
LISTNUM 1 \l 1141 THE CHAIRPERSON: Was it? Okay. Thanks.
LISTNUM 1 \l 1142 MR. BEDFORD: It was.
LISTNUM 1 \l 1143 THE CHAIRPERSON: Yeah. Okay. So that answers that. So the 113 is the correct number?
LISTNUM 1 \l 1144 MR. BEDFORD: Yes.
LISTNUM 1 \l 1145 THE CHAIRPERSON: Can you ‑‑ okay, so three hours will be reserved for the possible purchase ‑‑ no, I guess ‑‑
LISTNUM 1 \l 1146 MR. BEDFORD: The possible purchase and/or barter.
LISTNUM 1 \l 1147 THE CHAIRPERSON: How many hours is that?
LISTNUM 1 \l 1148 MR. BEDFORD: Three hours.
LISTNUM 1 \l 1149 THE CHAIRPERSON: Three hours. Okay.
LISTNUM 1 \l 1150 MR. BEDFORD: And we're not intending to do that, but we wanted to leave that option available to us, in case a nationally‑produced program becomes available that suits the sound of the station.
LISTNUM 1 \l 1151 THE CHAIRPERSON: Okay. And does that, is that type of programming fairly frequently come available, or ‑‑ it's possible.
LISTNUM 1 \l 1152 MR. BEDFORD: We've only reviewed one that we thought was even had the potential of ‑‑
LISTNUM 1 \l 1153 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1154 MR. BEDFORD: ‑‑ being included.
LISTNUM 1 \l 1155 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1156 MR. BEDFORD: We are going to ‑‑ you know, our intent to stay as local as much as possible. We just wanted to leave that window of opportunity in there.
LISTNUM 1 \l 1157 THE CHAIRPERSON: I appreciate that. Okay.
LISTNUM 1 \l 1158 MR. BEDFORD: We didn't want you to come back and say, "Where'd that come from?"
LISTNUM 1 \l 1159 THE CHAIRPERSON: Yeah, okay.
LISTNUM 1 \l 1160 MR. BEDFORD: Right?
LISTNUM 1 \l 1161 THE CHAIRPERSON: Yeah, alright. Thanks. Can you confirm the hours of the live programming will be as set out in your response April 4th, '06? It said Monday to Friday, 6:00 to midnight, Saturday, 7:00 to 9:00, Sundays, 8:00 to 5:00.
LISTNUM 1 \l 1162 MR. BEDFORD: That is correct.
LISTNUM 1 \l 1163 THE CHAIRPERSON: Okay. And in your April 6 response, you indicated 55 hours would be automated, and I'm just wondering what your intention is with respect to automation, and if there will always be somebody in the studio that's able to interject comments?
LISTNUM 1 \l 1164 MR. BEDFORD: The only part of our broadcast week that will be automated is the all‑night show.
LISTNUM 1 \l 1165 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 1166 MR. BEDFORD: Saturday evening, from 9:00 until midnight, as far as our current plans are concerned.
LISTNUM 1 \l 1167 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 1168 MR. BEDFORD: And Sunday, of course, from six in, from 5:00 in the afternoon, on, we will endeavour to put live people in there as soon as we can afford to do that.
LISTNUM 1 \l 1169 THE CHAIRPERSON: And so the automation, it's prepared in your studios through ‑‑
LISTNUM 1 \l 1170 MR. BEDFORD: It'll be prepared in our ‑‑
LISTNUM 1 \l 1171 THE CHAIRPERSON: ‑‑ and it's ‑‑
LISTNUM 1 \l 1172 MR. BEDFORD: ‑‑ studio ‑‑
LISTNUM 1 \l 1173 THE CHAIRPERSON: ‑‑ played at ‑‑
LISTNUM 1 \l 1174 MR. BEDFORD: Yeah.
LISTNUM 1 \l 1175 THE CHAIRPERSON: ‑‑ night, automatically. Okay.
LISTNUM 1 \l 1176 MR. BEDFORD: The news program, the two‑hour Atlantic Canadian music show, the two‑hour blues program will all be put into the system, and available for broadcast on Sunday night.
LISTNUM 1 \l 1177 THE CHAIRPERSON: Okay. So the voice tracking, then, what was that? I've just ‑‑
LISTNUM 1 \l 1178 MR. BEDFORD: There ‑‑ the only voice tracking that'll occur, in terms of regular music mix, will be the all‑night show, and pri‑, that's primarily just weather forecasts.
LISTNUM 1 \l 1179 THE CHAIRPERSON: So you're using voice tracking and automated synonymously?
LISTNUM 1 \l 1180 MR. BEDFORD: Oh, I'm sorry.
LISTNUM 1 \l 1181 THE CHAIRPERSON: Is that what you mean? I ‑‑
LISTNUM 1 \l 1182 MR. BEDFORD: Yes.
LISTNUM 1 \l 1183 THE CHAIRPERSON: ‑‑ just want to make sure I understand.
LISTNUM 1 \l 1184 MR. BEDFORD: Yes.
LISTNUM 1 \l 1185 THE CHAIRPERSON: Yes? That's correct? Okay.
‑‑‑ Pause
LISTNUM 1 \l 1186 THE CHAIRPERSON: Now we're going to deal with the CCD, so it's ‑‑
LISTNUM 1 \l 1187 UNIDENTIFIED: With what?
LISTNUM 1 \l 1188 THE CHAIRPERSON: It's a bit repetitive, but we ‑‑
LISTNUM 1 \l 1189 MR. BEDFORD: Canadian contact development.
LISTNUM 1 \l 1190 THE CHAIRPERSON: ‑‑ want to get it on the record, so in March 2007, the Commission sent you a letter. I'll let you get to your place, if you like.
-‑‑ Pause
LISTNUM 1 \l 1191 THE CHAIRPERSON: Okay. In March 2007, the Commission sent you a letter advising that it would want to review, at this public hearing, your proposed contributions to Canadian content development to ensure that these are in line with the new contribution regime outlined in the Commercial Radio Policy, 2006.
LISTNUM 1 \l 1192 We note that you have submitted a written reply to our letter, and that a copy of your reply is available on the public examination file for your application.
LISTNUM 1 \l 1193 For the purpose of the public record, I will take a few minutes, and go through the questions that we had sent you, and summarize your replies in order to ensure that we have a clear understanding of your CCD commitments.
LISTNUM 1 \l 1194 We had asked you to confirm your understanding that if licensed, your station will have to contribute a basic annual CCD contribution imposed by regulation, based on the station's total annual revenues, and the amounts set out in paragraph 116 of the new radio policy, Public Notice CRTC 2006, 158.
LISTNUM 1 \l 1195 You have stated, in your reply, that you would make basic annual CCD contributions in accordance with the radio regulations. According to my calculations, based on your financial projections, this would represent an annual CCD contribution of $500 in year one to three, years one to three, increasing to $1,000 in years four to seven. Is this correct?
LISTNUM 1 \l 1196 MR. BEDFORD: This is correct.
LISTNUM 1 \l 1197 THE CHAIRPERSON: We had asked you to confirm your understanding that no less than 60 percent of the station's basic annual CCD contribution must be allocated to either FACTOR or music action, and the remaining amount of any may be directed to any eligible CCD initiatives, at your discretion.
LISTNUM 1 \l 1198 I note you have indicated that the full amount of the basic annual CCD contribution will be allocated to FACTOR. Is this correct?
LISTNUM 1 \l 1199 MR. BEDFORD: This is also correct. Mr. Morrison has MC'd many ‑‑ well, probably more CCD release projects than just about anybody. I'm a former booking agent, and I'm a former manager of an aboriginal rock band. We have seen the value of the FACTOR organization, and as a result, we would like to see all of our contributions go to a FACTOR.
LISTNUM 1 \l 1200 THE CHAIRPERSON: Excellent.
LISTNUM 1 \l 1201 As set out in the new Commercial Radio Policy, the new annual basic CCD contribution will be imposed on all commercial radio licenses by regulation. The Commission will impose a transitionary condition of license reflecting the new basic annual CCD until such time as the regulations come into force. Once the regulation is in place, the COL would expire.
LISTNUM 1 \l 1202 You have indicated that you would adhere to such a condition of license. Is that correct?
LISTNUM 1 \l 1203 MR. BEDFORD: We confirm that. We'd be happy to.
LISTNUM 1 \l 1204 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1205 As was the case with the previous Canadian talent development policy, an applicant or licensee may choose to exceed the minimum annual basic CCD contribution. As part of the application now before us, you are proposing to contribute additional annual funding to CCD that would be over and above the basic required CCD.
LISTNUM 1 \l 1206 In your reply, you indicated that the over and above contributions would be $1,900 in years one to three, decreasing to $1,400 in years four to seven. Is this correct?
LISTNUM 1 \l 1207 MR. BEDFORD: That is correct.
LISTNUM 1 \l 1208 THE CHAIRPERSON: We had also asked that you confirm your understanding that under the new policy, not less than 20 percent of this annual over and above CCD contribution must be allocated to FACTOR, or a music action.
LISTNUM 1 \l 1209 In your reply, you confirmed your understanding that no less than 20 percent of the annual over and above CCD would have to be directed to FACTOR, however, you indicated that you wished to contribute 100 percent of the over and above amount to FACTOR. Is that correct?
LISTNUM 1 \l 1210 MR. BEDFORD: That is correct. I confirm that.
LISTNUM 1 \l 1211 THE CHAIRPERSON: Please confirm that you will adhere to the over and above CCD condi‑, contributions as a condition of license.
LISTNUM 1 \l 1212 MR. BEDFORD: We will adhere to that.
LISTNUM 1 \l 1213 THE CHAIRPERSON: In light of this, could you confirm you will not pursue your talent search contest, as a CCD initiative?
LISTNUM 1 \l 1214 MR. BEDFORD: We are going to ‑‑ no, we would continue to do that as a ‑‑ yeah ‑‑ as a local initiative, as something that the station wants to ‑‑
LISTNUM 1 \l 1215 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1216 MR. BEDFORD: ‑‑ pursue on its own.
LISTNUM 1 \l 1217 THE CHAIRPERSON: Alright. Thank you. Not as a CCD?
LISTNUM 1 \l 1218 MR. BEDFORD: No.
LISTNUM 1 \l 1219 THE CHAIRPERSON: Thank you. Now, with respect to emerging Canadian artists ‑
LISTNUM 1 \l 1220 MR. BEDFORD: Mmm hmm.
LISTNUM 1 \l 1221 THE CHAIRPERSON: ‑‑ I wanted to review your definition of emerging Canadian artists which you describe in your response February the 1st, '07 as:
"We consider a performer to be an emerging Canadian artist for the 12‑month period from the time they promote their first release to us directly, through a promotion firm and/or through an existing record company. We will consider new material from these artists based on appropriateness to our format [of classic rock and] of current rock and classic rock."
LISTNUM 1 \l 1222 With respect to your promotional material, would it have to include an audio sample, or would it consist of written material, only? The promotional material that comes in to you, would it have to include an audio sample, or would you ‑‑
LISTNUM 1 \l 1223 MR. BEDFORD: Would ‑‑
LISTNUM 1 \l 1224 THE CHAIRPERSON: ‑‑ accept it if it was just written material?
LISTNUM 1 \l 1225 MR. BEDFORD: We'll accept anything, but obviously we're looking for the audio sample.
LISTNUM 1 \l 1226 THE CHAIRPERSON: Okay. And would you consider airing a promotional CD or single that has not been released for purchase by the public?
LISTNUM 1 \l 1227 MR. BEDFORD: Alex?
LISTNUM 1 \l 1228 MR. MORRISON: We've talked about we wanted a full‑length CD, or EP.
LISTNUM 1 \l 1229 MR. BEDFORD: No, this is the actual airing of emerging Canadian artists.
LISTNUM 1 \l 1230 MR. MORRISON: No, we want that commercially published, only, or do you? I mean, it's totally ‑‑ it's your call.
LISTNUM 1 \l 1231 MR. BEDFORD: For artists that we are familiar with ‑‑ in other words, Cape Breton‑based artists, Atlantic Canadian artists ‑‑ if it was a well‑produced piece of music, and we considered it appropriate for our sound, and they fit within our definition of emerging Canadian artists, they would be, even though it was my, maybe not a commercially available piece of music at that point in time, we would play it.
LISTNUM 1 \l 1232 For other artists across the country who we would not be as familiar with, we would have to take that into consideration.
LISTNUM 1 \l 1233 THE CHAIRPERSON: Okay. Thank you.
LISTNUM 1 \l 1234 What type of system would you put in place to accurately cor‑, record and track the date of the, the promotional material is received in order to be able to apply the 12‑month period, including in your, concluded in your proposed definition?
LISTNUM 1 \l 1235 MR. BEDFORD: Well, obviously we would rely on a computer program, and we'd rely on a good manual system, as well.
LISTNUM 1 \l 1236 THE CHAIRPERSON: (Laughing) Okay.
LISTNUM 1 \l 1237 MR. BEDFORD: There's nothing wrong with a good file drawer.
LISTNUM 1 \l 1238 THE CHAIRPERSON: Okay, good. So you're planning to track it. Okay, thank you. That's good.
LISTNUM 1 \l 1239 MR. BEDFORD: There is controversy over the definition of emerging Canadian artists, anyway.
LISTNUM 1 \l 1240 THE CHAIRPERSON: Yes, no, and we're trying, we're still trying to develop it.
LISTNUM 1 \l 1241 MR. BEDFORD: And I know the CAB have theirs.
LISTNUM 1 \l 1242 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 1243 MR. BEDFORD: And we decided to tighten ours up a little bit, because we thought it was a little too wide spaced, a little too ‑‑
LISTNUM 1 \l 1244 THE CHAIRPERSON: It's an evolving ‑‑
LISTNUM 1 \l 1245 MR. BEDFORD: It is.
LISTNUM 1 \l 1246 THE CHAIRPERSON: ‑‑ definition, and ‑‑
LISTNUM 1 \l 1247 MR. BEDFORD: It's going to continue to evolve.
LISTNUM 1 \l 1248 THE CHAIRPERSON: Well, yes, and probably your comments'll influence the outcome, so that's fine. Thank you.
LISTNUM 1 \l 1249 You're proposing ‑‑ I'm going to talk about your music format, and as I understand it, you're proposing a rock music format, which will consist of 80 percent classic rock, 1963 to 1990, 20 percent new rock, 1991 to date, to current. How will your proposed rock format contribute to musical diversity in the market?
LISTNUM 1 \l 1250 MR. BEDFORD: The three existing stations in the market cover off three of the more acceptable formats in Canadian radio. One station's country, one station has a classic hit format. The third station is primarily current, with a, with some late '80s and '90s mixed in, as well.
LISTNUM 1 \l 1251 Those formats tend to be rather diverse, 'cause they're trying to reach people from eight to 80. I think with the addition of another station in the market, we can be a little bit more focused. I think that the ar‑, the people of this area have always loved cla‑, rock music. The older listeners certainly will identify with the classic rock. The younger listener will certainly identify with the more recent rock, as well as the current rock, and the emerging Canadian artists. And I think the mix of that familiar music, the music that they've heard in the past, plus some new material mixed in, will keep the station at, with a fresh sound, and I think that that combination will provide something that this area's not getting, at the moment. I think it will compliment what's already here.
LISTNUM 1 \l 1252 THE CHAIRPERSON: And how will your proposal, then, differ from the yet to be launched SHARE FM, which we understand is going to launch in May, and the classic rock mainstream rock station being proposed by Newcap?
LISTNUM 1 \l 1253 MR. BEDFORD: The distinct different between ours and Newcap is obviously the fact that we're going to play more recent rock, and current rock. The difference in terms of what we would be playing versus CHER‑AM, which is flipping to FM, with their classic hits format, there will be some overlap, but that overlap will be primarily in terms of artists, not in terms of the actual songs played.
LISTNUM 1 \l 1254 I anticipated that question, and I did write down a couple of, a couple of examples here. For example, when referring to classic rock, and when referring, for example, to Canadian artists like Trooper or April Wine, CHER would obviously be playing some of that material. So would we. We would go further into the, into their catalogue of music, and play those songs with a little more edge than the current stations are playing.
LISTNUM 1 \l 1255 THE CHAIRPERSON: So can you ‑‑ I'm curious, can you give me a percentage that your playlist might be duplicate, dupli‑, a duplicate of CHER's?
LISTNUM 1 \l 1256 MR. BEDFORD: In terms of CHER, and we did air check them recently, because they have changed their music mix dramatically over the past year, maybe in anticipation of these applications. We noticed a shift, and we did another survey of their music about a week and a half ago. We anticipate somewhere between 19 to 21 percent overlap in terms of artists, but not ‑‑
LISTNUM 1 \l 1257 THE CHAIRPERSON: Right.
LISTNUM 1 \l 1258 MR. BEDFORD: ‑‑ necessarily in terms of songs played.
LISTNUM 1 \l 1259 In regard to CKPE FM, the overlap that we see would probably be a little bit less than 19 percent, and it would also be primarily in terms of recent or current artists, where they might pick up on a rock song that ‑‑ by a current, that we would also play.
LISTNUM 1 \l 1260 THE CHAIRPERSON: And what about, then, Newcap's? What percentage overlap do you think you'd have with that application, with their playlist?
LISTNUM 1 \l 1261 MR. BEDFORD: Well, the fact that we're going to play 80 percent classic rock, and they're going to play 100 classic rock, if, the overlap would be a lot more apparent. I would think that having had the opportunity of listening to their stations in Halifax, their stations in Charlottetown, and in Fredericton, I believe ‑‑ one of the things that was indicated in our market survey, one of the things we already knew ‑‑ all that happened was the market survey confirmed it for us, is the local people are tired of the high repetition of music.
LISTNUM 1 \l 1262 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 1263 MR. BEDFORD: So we an‑, you know, we're proposing to launch a format with a minimum of 25‑‑ or 300‑thou‑, 3,000 songs, 2,500 to 3,000 songs, and continuously refresh that every three months. The people in the area want a variety of music. We're going to provide a variety of music. So, therefore, I think the overlap with the Newcap organization, which tends to play a little tighter playlist, we're not going to be a, have as tight a playlist as they will have.
LISTNUM 1 \l 1264 THE CHAIRPERSON: I don't know if you had a chance to look at their application. They ‑‑ I think as they refer to it as classic rock, mainstream rock.
LISTNUM 1 \l 1265 MR. BEDFORD: Mmm hmm.
LISTNUM 1 \l 1266 THE CHAIRPERSON: So does that still apply, then? Are you still considering that? You said yours would be 80 percent classic rock, and theirs was 100 percent classic, 100 percent.
LISTNUM 1 \l 1267 MR. BEDFORD: Mmm hmm.
LISTNUM 1 \l 1268 THE CHAIRPERSON: So would your answer change any, if I, if you take into consideration they've said they will have a classic rock, mainstream rock hybrid?
LISTNUM 1 \l 1269 MR. BEDFORD: That sounds a lot more like what we're proposing.
LISTNUM 1 \l 1270 THE CHAIRPERSON: Does it? Okay. Alright. And you did anticipate my next question, because I was wondering about the 2,500 songs in rotation, and ‑‑
LISTNUM 1 \l 1271 MR. BEDFORD: And may I reiterate, a minimum of ‑‑
LISTNUM 1 \l 1272 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 1273 MR. BEDFORD: ‑‑ 2,500.
LISTNUM 1 \l 1274 THE CHAIRPERSON: I wrote it down, minimum.
LISTNUM 1 \l 1275 MR. BEDFORD: Alright.
LISTNUM 1 \l 1276 THE CHAIRPERSON: (Laughing) I had minimum. I'm just wondering what would you say the rotation in the market is now?
LISTNUM 1 \l 1277 MR. BEDFORD: Rotation on current hits in this market right now is probably running around four hours, four and a half hours.
LISTNUM 1 \l 1278 THE CHAIRPERSON: Okay. So percentage? Can you give me a percentage? Like if you're going to have a 2,500 songs in rotation ‑‑
LISTNUM 1 \l 1279 MR. BEDFORD: We anticipate our, the rotation will be anywhere from four and a half to five and a half days.
LISTNUM 1 \l 1280 THE CHAIRPERSON: So if I'm listening to your radio station ‑‑
LISTNUM 1 \l 1281 MR. BEDFORD: The emerging Canadian artists ‑‑ oh, I'm sorry, I interrupted you. I ‑‑
LISTNUM 1 \l 1282 THE CHAIRPERSON: No, that's okay.
LISTNUM 1 \l 1283 MR. BEDFORD: I apologize.
LISTNUM 1 \l 1284 THE CHAIRPERSON: Go ahead. That's alright.
LISTNUM 1 \l 1285 MR. BEDFORD: The emerging Canadian artists would be on a higher rotation than that ‑‑
LISTNUM 1 \l 1286 THE CHAIRPERSON: Okay. If ‑‑
LISTNUM 1 \l 1287 MR. BEDFORD: ‑‑ obviously.
LISTNUM 1 \l 1288 THE CHAIRPERSON: ‑‑ I'm listening to your radio station, though, are you saying it would be four and a half days before I'd hear that same song again?
LISTNUM 1 \l 1289 MR. BEDFORD: Yes, it would, and it would be in a different time slot.
LISTNUM 1 \l 1290 THE CHAIRPERSON: This is a very new concept (laughs).
LISTNUM 1 \l 1291 MR. BEDFORD: We ‑‑ Mr. Morrison was the architect of the ‑‑
LISTNUM 1 \l 1292 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 1293 MR. BEDFORD: ‑‑ sound that the Membertou radio station had, when we went on air. It was a 50‑watt radio station. I worked with Alex at the station here in Membertou for about 16 months, and it was a very different concept. We had 8,500 songs in rotation, and ‑‑
LISTNUM 1 \l 1294 THE CHAIRPERSON: 8,500?
LISTNUM 1 \l 1295 MR. BEDFORD: There was 8,500 songs in the system at any one point in time. I'd say the rotation was probably in the range of 5,500 of the 8,500. It was interesting to note that we became the talk of the town over that 16‑month span of time, with a little 50‑watt radio station that only reached 55 percent of the market area.
LISTNUM 1 \l 1296 THE CHAIRPERSON: You know, it's interesting because it's sort of annoying to listen to the radio at the same time every day, and ‑‑
LISTNUM 1 \l 1297 MR. BEDFORD: The same song.
LISTNUM 1 \l 1298 THE CHAIRPERSON: ‑‑ hear the same songs.
LISTNUM 1 \l 1299 MR. BEDFORD: You can ‑‑
LISTNUM 1 \l 1300 THE CHAIRPERSON: But ‑‑
LISTNUM 1 \l 1301 MR. BEDFORD: ‑‑ brush your teeth by it.
LISTNUM 1 \l 1302 THE CHAIRPERSON: Yes, correct.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1303 THE CHAIRPERSON: So when you say 2,500 songs in rotation, that means you have a library of 2,500 songs that you're currently playing, but further to that, you're saying that it wouldn't repeat for four and a half days?
LISTNUM 1 \l 1304 MR. BEDFORD: We are ‑‑ we have designed a program grid, and we will put eno‑, inject enough music into that system that the repeat on the classic rock, and the recent rock will be four and a half to five and a half days.
LISTNUM 1 \l 1305 THE CHAIRPERSON: And how do you ‑‑
LISTNUM 1 \l 1306 MR. BEDFORD: The current rock and the emerging artists will be a little faster rotation than that.
LISTNUM 1 \l 1307 THE CHAIRPERSON: Yeah, okay. Okay, so that probably takes into my ‑‑
LISTNUM 1 \l 1308 MR. BEDFORD: And that's of songs, not artists. The rotation of songs, not artists. Obviously you could hear a Rolling Stones' song today, and you could hear a Rolling Stones' song again tomorrow afternoon, but it would be two different songs.
LISTNUM 1 \l 1309 THE CHAIRPERSON: Oh, so ‑‑ yeah, no, I realized you meant that.
LISTNUM 1 \l 1310 MR. BEDFORD: Yeah.
LISTNUM 1 \l 1311 THE CHAIRPERSON: Yeah. So ‑‑ and that was going to take, answer my next question, because I know that if there's a song that's popular at the moment, you don't want to wait four and a half days to hear it again, so ‑‑
LISTNUM 1 \l 1312 MR. BEDFORD: Exactly.
LISTNUM 1 \l 1313 THE CHAIRPERSON: So that's the way you've got it? Okay.
LISTNUM 1 \l 1314 MR. BEDFORD: So the current, and the recurrent, the very recent rock would be on a higher rotation.
LISTNUM 1 \l 1315 THE CHAIRPERSON: Okay. That's great.
LISTNUM 1 \l 1316 With regards to the blues show ‑
LISTNUM 1 \l 1317 MR. BEDFORD: Yes?
LISTNUM 1 \l 1318 THE CHAIRPERSON: ‑‑ you're proposing a two‑hour weekly show, and just ‑‑ did I understand you say earlier that that's going to be in your pre‑recorded section?
LISTNUM 1 \l 1319 MR. BEDFORD: We hope to do it live.
LISTNUM 1 \l 1320 THE CHAIRPERSON: Yeah.
LISTNUM 1 \l 1321 MR. BEDFORD: But we want the option to be able to pre‑record it.
LISTNUM 1 \l 1322 THE CHAIRPERSON: Okay. And so I was wondering when that show will be presented. That was ‑‑
LISTNUM 1 \l 1323 MR. BEDFORD: 8:00 to ‑‑
LISTNUM 1 \l 1324 THE CHAIRPERSON: ‑‑ my first question.
LISTNUM 1 \l 1325 MR. BEDFORD: ‑‑ 10:00 on Sunday night.
LISTNUM 1 \l 1326 THE CHAIRPERSON: 8:00 to 10:00?
LISTNUM 1 \l 1327 MR. BEDFORD: 8:00 p.m. to 10:00 p.m. Sunday night, following the Atlantic Canadian show, which will be on from 6:00 to 8:00, following our news hour at 5:00. That's working backwards.
LISTNUM 1 \l 1328 THE CHAIRPERSON: Yeah, that's good. I think like that sometimes. Why do you feel this blues show will be of interest to the listeners of your proposed rock format?
LISTNUM 1 \l 1329 MR. BEDFORD: I think blues and rock are so closely aligned, so closely ‑‑ they fit so well together. There are no blues programs on current radio in this market. You know, I ‑‑ the CBC blues show is extremely well done, the one that comes in nationally, and I have listened to it many, many a time, and they have given exposure to people, for example, like Matt Minglewood.
LISTNUM 1 \l 1330 Matt Minglewood is ‑‑ we were there when we ‑‑ I was there when the ‑‑ I was the MC when the local musician's union gave him an award back in 1997, and he is commonly referred to as Cape Breton's Rock and Roll Road Warrior. But Matt also is a very wonderful blues singer, and as a matter of fact, he ‑‑ I can quote him from a, an article that was written two days ago in Toronto, Ontario, about the fact he's not getting the air play that he deserves, or that he thinks that he deserves, and then if you go through our application, you'll see there's one heck of a strong letter of support for our application, not only because of the blues show, but because his regular rock music will be part of our classic rock music segments.
LISTNUM 1 \l 1331 THE CHAIRPERSON: Because what rock music? Sorry.
LISTNUM 1 \l 1332 MR. BEDFORD: His older ‑‑
LISTNUM 1 \l 1333 THE CHAIRPERSON: His ‑‑
LISTNUM 1 \l 1334 MR. BEDFORD: ‑‑ hits from ‑‑
LISTNUM 1 \l 1335 THE CHAIRPERSON: Oh, yes, okay.
LISTNUM 1 \l 1336 MR. BEDFORD: ‑‑ the '70s and '80s ‑‑
LISTNUM 1 \l 1337 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 1338 MR. BEDFORD: ‑‑ will be part of our music mix, along with other Cape Breton artists, like Sam Moon, and Ian Acker, and The Field Battery, and ‑‑ these are artists that we have played in the past, and we want to play them again. They deserve the air play.
LISTNUM 1 \l 1339 Other examples would be the Glamour Puss Blues Band out of Moncton. They don't get any air play here. We will play them. I ‑‑ excuse me, I will correct myself. I know that Bill MacNeil's sitting in the audience. Coastal Radio, the community station, does play that, 'cause I have worked for them, and I know that for a fact.
LISTNUM 1 \l 1340 THE CHAIRPERSON: Can you confirm your un‑, that you understand that the minimum level of Canadian content for music selections from sub‑category 34, which is the jazz and blues category, was increased from ten to 20 percent in the 2006 Commercial Radio Policy?
LISTNUM 1 \l 1341 MR. BEDFORD: We have every intention to have a minimum of 35 percent CanCon in that two‑hour show.
LISTNUM 1 \l 1342 THE CHAIRPERSON: 35?
LISTNUM 1 \l 1343 MR. BEDFORD: 35 percent.
LISTNUM 1 \l 1344 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1345 MR. BEDFORD: A minimum of, yes.
LISTNUM 1 \l 1346 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1347 MR. BEDFORD: The same applies, obviously, our Atlantic Canadian show's going to be 100 percent Canadian content.
LISTNUM 1 \l 1348 THE CHAIRPERSON: Okay. So, so ‑‑
LISTNUM 1 \l 1349 MR. BEDFORD: My math has always been very good.
LISTNUM 1 \l 1350 THE CHAIRPERSON: It has? Oh, I see. Okay.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1351 THE CHAIRPERSON: So then I ‑‑ just for the record, you, can you confirm that you will adhere to this higher 20 percent level of Canadian content by condition of license until such time as the regulations are amended?
LISTNUM 1 \l 1352 MR. BEDFORD: Absolutely. No problem at all.
LISTNUM 1 \l 1353 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1354 I'm just turning to the economic section. You were projecting year one revenues of 470,000, increasing to 788,400 in year seven, and you have projected advertising revenues will go, grow by 20 percent in year two, 15 percent in year three, five percent in years four through seven.
LISTNUM 1 \l 1355 What sources of data did you use to assess the future growth potential of the Sydney, and to arrive at your revenue forecast for year one, and subsequent annual increases in your revenue?
LISTNUM 1 \l 1356 MR. BEDFORD: We came up with a thought process and/or a formula that would allow us to make a projection for year one that we thought was extremely conservative. Obviously, at the time that we did that, we had not seen any of the other applications.
LISTNUM 1 \l 1357 We were ‑‑ when we first approached Mr. Martin, Alex and I, we had already written a complete business plan. That business plan was presented to Barry. Barry is a numbers man. Barry is a former bank manager, he's an entrepreneur, he's a business person, he's a, an auditor. He took one look at the business plan, and he was extremely pleased with what he saw. He did not, for a moment, question our projections. He looked at us, and said, "You think the same way I do", and I said, "What do you mean by that, Barry?" He said, "You're very conservative in your approach". I said, "Yes.
LISTNUM 1 \l 1358 Obviously we hope to do more than that, and obviously the other three people that have applied for this, at this hearing, are projecting much higher revenues than we do. I hope that we can achieve higher revenues, but we have ba‑, built the radio station's financial projections on a decent cash flow, enough working capital in there, and a high enough revenue level to make sure that we can operate at a half million dollars a year.
LISTNUM 1 \l 1359 I was part of CHER back in 1979, when we were doing almost $800,000 a year, and that's ancient history, so we know the market can substantiate, can sustain our projections.
LISTNUM 1 \l 1360 THE CHAIRPERSON: Okay. I notice in your, some of your submissions that you estimated the ‑‑ you went, you go through your thinking on the formula, and estimate that the market is $3,000,000, and that your share will be at 20 percent I think is how you did it.
LISTNUM 1 \l 1361 MR. BEDFORD: Yes.
LISTNUM 1 \l 1362 THE CHAIRPERSON: So if ‑‑ and because you don't have access to the market numbers, can I assume if it was $10,000,000, you'd still think your share would be ‑‑ that's a figure out of the air, as you know.
LISTNUM 1 \l 1363 MR. BEDFORD: Oh, God ‑‑
LISTNUM 1 \l 1364 THE CHAIRPERSON: But ‑‑
LISTNUM 1 \l 1365 MR. BEDFORD: ‑‑ that'd be wonderful.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1366 THE CHAIRPERSON: But you'd still expect to get 20 percent ‑‑
LISTNUM 1 \l 1367 MR. BEDFORD: Yeah.
LISTNUM 1 \l 1368 THE CHAIRPERSON: ‑‑ of that?
LISTNUM 1 \l 1369 MR. BEDFORD: We know the radio revenue in this market's over 3,000,000. We just pegged it at that figure.
LISTNUM 1 \l 1370 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1371 MR. BEDFORD: And we know that we didn't have access to it, and we know that you do.
LISTNUM 1 \l 1372 THE CHAIRPERSON: Okay. The projected revenues from the four applicants, as you know, range from a low of 470 to a high of 915,000 in year one, to a low of 649,000 in year three, to a high in year three of 1,208,000. Over the seven‑year period, projected revenues from the other applicants are 38 to 91 percent higher than your projected revenues.
LISTNUM 1 \l 1373 You indicate in your supplementary brief, and again here today, that your estimates are conservative. How conservative do you feel your estimates are?
LISTNUM 1 \l 1374 MR. BEDFORD: Whoa (laughs).
LISTNUM 1 \l 1375 THE CHAIRPERSON: It's not a condition of license, so it's your best guess (laughs).
LISTNUM 1 \l 1376 MR. BEDFORD: I, I really ‑‑
LISTNUM 1 \l 1377 MR. MARTIN: Well, if we looked at it, we could always build in, you know, 25 percent. I, I think that 25 percent would be a safe percentage.
LISTNUM 1 \l 1378 MR. BEDFORD: I think in year one we're going to do at least 25 percent more than that.
LISTNUM 1 \l 1379 THE CHAIRPERSON: Okay. Okay. That's ‑‑
LISTNUM 1 \l 1380 MR. BEDFORD: And that's Mr. Martin speaking. I think we're going to do 50 percent, personally.
LISTNUM 1 \l 1381 THE CHAIRPERSON: So I should put down 25?
LISTNUM 1 \l 1382 MR. BEDFORD: Easy, big guy. Easy, big guy.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1383 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1384 MR. BEDFORD: I noticed in the paper this morning they used the term, "Local and national broadcasters will fight for a spot on the FM radio dial in Sydney at a CRTC hearing today". I rather like the idea I got Big Alex, and Big Barry with me.
LISTNUM 1 \l 1385 THE CHAIRPERSON: To look after you. (Laughing) Yeah.
LISTNUM 1 \l 1386 The ‑‑ I'm just wondering are ‑‑ I notice there's a considerable difference, as well, among the applicants with respect to capital expenditures.
LISTNUM 1 \l 1387 Are you confident your estimated capital expenditures are sufficient, or would you ‑‑ and would ‑‑ also, would you like to offer any additional comments with respect to your estimate of 220,000?
LISTNUM 1 \l 1388 MR. BEDFORD: We did a lot of research on that. We brought a consultant in, an engineering consultant in from Montreal, and an engineering consultant in from the Valley, who have worked on numerous radio applications.
LISTNUM 1 \l 1389 We told them that we wanted to make sure that our start‑up costs were reasonable. We wanted to make sure all along that the whole cost of our operation jived with the size of the community, and so forth. And as a result, we ‑‑ again, we have ‑‑ if ‑‑ we have chosen an extremely good transmitter. We have chosen an extremely good antenna system, because we know that's of prime importance. We've been a little bit more moderate in our choice of studio gear, and so forth, but we know that we can do it at that rate, know, and it's been confirmed by our engineers.
LISTNUM 1 \l 1390 The total investment that we're looking at, if you include our line of credit, and the hotel's leasehold improvements, borders on $400,000.
LISTNUM 1 \l 1391 THE CHAIRPERSON: So the hotel's contributing that, in effect, then?
LISTNUM 1 \l 1392 MR. BEDFORD: Oh, yeah. That's all leasehold improvements that the hotel's going to carry.
LISTNUM 1 \l 1393 THE CHAIRPERSON: I'm just wondering about the li‑, if you buy more moderately priced equipment, which is what I understood you to say, would you be looking at replacing that ‑‑ or maybe the nor‑, in the norm, you'd be replacing it anyway, after year three, or ‑‑
LISTNUM 1 \l 1394 MR. BEDFORD: One of the ‑‑ yeah, one of the ‑‑
LISTNUM 1 \l 1395 THE CHAIRPERSON: Have you given that any thought?
LISTNUM 1 \l 1396 MR. BEDFORD: One of the points that I made when I was speaking originally was the re‑investment in our staff, and the re‑investment in the station, and re‑investment in the community.
LISTNUM 1 \l 1397 One of the things that I rather enjoyed was the fact that, at one point in time, when you were erecting AM transmitter sites, it required a lot of land, expensive towers, and so on, and so forth. With FM, of course, we're able to collate, locate on the Global TV tower, and of course we have a letter of agreement with them. And that certainly keeps the costs down, and it certainly makes it a much more affordable venture.
LISTNUM 1 \l 1398 THE CHAIRPERSON: Yeah. So I didn't hear ‑‑ I know you're going to re‑invest, but did I hear you say re‑invest in capital expenditures, as well?
LISTNUM 1 \l 1399 MR. BEDFORD: With ‑‑ over time, yeah.
LISTNUM 1 \l 1400 THE CHAIRPERSON: As needed?
LISTNUM 1 \l 1401 MR. BEDFORD: As needed.
LISTNUM 1 \l 1402 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1403 MR. BEDFORD: I don't think that will apply to our antenna and transmitter combination ‑‑
LISTNUM 1 \l 1404 THE CHAIRPERSON: No.
LISTNUM 1 \l 1405 MR. BEDFORD: ‑‑ which is the most expensive purchase anyway.
LISTNUM 1 \l 1406 THE CHAIRPERSON: The 200 and ‑‑ okay. The 100, the 175,000 transmitting ‑‑
LISTNUM 1 \l 1407 MR. BEDFORD: That ‑‑
LISTNUM 1 \l 1408 THE CHAIRPERSON: ‑‑ is what you're referring to?
LISTNUM 1 \l 1409 MR. BEDFORD: That's ‑‑ yeah, exactly.
LISTNUM 1 \l 1410 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1411 MR. BEDFORD: We have the quotes ‑‑
LISTNUM 1 \l 1412 THE CHAIRPERSON: So that's ‑‑
LISTNUM 1 \l 1413 MR. BEDFORD: ‑‑ from those companies, and yes, they may have gone up five percent since those quotes ‑‑
LISTNUM 1 \l 1414 THE CHAIRPERSON: Yeah.
LISTNUM 1 \l 1415 MR. BEDFORD: ‑‑ were issued.
LISTNUM 1 \l 1416 THE CHAIRPERSON: But that's about a ten‑year life, then, is it, or ‑‑
LISTNUM 1 \l 1417 MR. BEDFORD: We want to amortize that over seven years, max.
LISTNUM 1 \l 1418 THE CHAIRPERSON: Seven? Okay. Now I ‑‑ in year one, you're forecasting a positive profit before interest and taxes beca‑, and if ‑‑ I'm wondering if the results aren't as forecasted, because it's probably optimistic. Oftentimes, in a new start‑up business, you're not going to see a profit in the first year, but at any rate, if it ‑‑ that's a general statement, so it doesn't necessarily mean it applies to radio, but if the results are not as forecasted, are you prepared to invest additional funds for as long as it takes for the station to turn a profit, and if necessary, to cover any unforeseen capital expenditures?
LISTNUM 1 \l 1419 MR. MARTIN: Yes. I'm a businessman, and if the station is hemorrhaging, then obviously, you know, I may not be prepared to put in the levels that it would take. If for some unforeseen reason it was a collapse, I will be monitoring the numbers extraordinarily close, but, yeah, I have sufficient resources at my disposal to allow the station any reasonable time, and reasonable losses until it achieves profitability.
LISTNUM 1 \l 1420 You know, in my experience, in most endeavours, you're lucky to see positive profitability after three to five years, and you know, I feel our numbers are so conservative going into this, that I believe we will achieve a small profit the first year. If not, I fully expect that it will be there in years two and three.
LISTNUM 1 \l 1421 THE CHAIRPERSON: Okay. Thank you.
LISTNUM 1 \l 1422 MR. BEDFORD: It was interesting. I asked the, one of the people at, in Gatineau. I said Mr. Martin's more than willing to bring a personal net worth statement with him for the confidential ‑
LISTNUM 1 \l 1423 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 1424 MR. BEDFORD: ‑‑ perusal of ‑‑
LISTNUM 1 \l 1425 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 1426 MR. BEDFORD: Of you three individuals, and I was told it was not necessary; that the financial analysis had already been completed.
LISTNUM 1 \l 1427 THE CHAIRPERSON: Yeah. My question isn't directed more to net worth, it's directed to willingness, but I got my answer. (Laughing) That's fine.
LISTNUM 1 \l 1428 MR. BEDFORD: Yeah, okay.
LISTNUM 1 \l 1429 THE CHAIRPERSON: Thank you. Yeah, thanks.
LISTNUM 1 \l 1430 I notice in your long‑range planning, you indicate you would consider applying for another license, if the local economy would support it, and that's sort of in the context of recognizing that that there's efficiencies in that. And I'm just wondering how many years out you think that might be.
LISTNUM 1 \l 1431 MR. BEDFORD: Well, this station, first of all, is a dream. That's a ‑‑
LISTNUM 1 \l 1432 THE CHAIRPERSON: Dreams do come true, so if it wa‑, ‑‑
LISTNUM 1 \l 1433 MR. BEDFORD: Dreams do come ‑‑
LISTNUM 1 \l 1434 THE CHAIRPERSON: If it came true ‑‑
LISTNUM 1 \l 1435 MR. BEDFORD: Dreams do come true.
LISTNUM 1 \l 1436 THE CHAIRPERSON: ‑‑ what would be your next dream, then?
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1437 MR. BEDFORD: And I ‑‑ the fact that we would even anticipate another station, yes. We wanted you to realize that we are, even though we keep talking about being conservative, we're also aggressive. I know that they're at odds with one another, those two terms, but we are conservative, but we're also aggressive, and if at any one point of time the market could sustain another station, we would certainly investigate, and maybe ‑‑
LISTNUM 1 \l 1438 THE CHAIRPERSON: So when ‑‑
LISTNUM 1 \l 1439 MR. BEDFORD: ‑‑ pursue that.
LISTNUM 1 \l 1440 THE CHAIRPERSON: When you made this statement, you didn't have a particular timeframe in mind. Just if the time was right?
LISTNUM 1 \l 1441 MR. MARTIN: I think within ten years.
LISTNUM 1 \l 1442 MR. BEDFORD: I would ‑‑ yeah, I was looking at seven years, and Barry says within ten years.
LISTNUM 1 \l 1443 MR. MARTIN: Seven to ten years.
LISTNUM 1 \l 1444 MR. BEDFORD: Seven to ten years.
LISTNUM 1 \l 1445 THE CHAIRPERSON: Okay. How many new entrants do you think the Sydney market could sustain, at this time?
LISTNUM 1 \l 1446 MR. BEDFORD: Based on the information that we've presented to you, based on our own research ‑‑ this is our consultant, Dr. Paul Patterson, who's sitting with us. I do apologize.
LISTNUM 1 \l 1447 THE CHAIRPERSON: Okay. Thank you.
LISTNUM 1 \l 1448 MR. BEDFORD: I should have introduced him at the beginning, and I didn't.
LISTNUM 1 \l 1449 Dr. Patterson is a very well‑respected local individual. He has three PhD's. He's written a book on the economic development of Cape Breton Island.
LISTNUM 1 \l 1450 MR. MARTIN: Answer the question.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1451 MR. BEDFORD: Yes, I got sidetracked there, because I did for‑, ‑‑
LISTNUM 1 \l 1452 THE CHAIRPERSON: I was thinking I was relieved you hadn't told me he had three HB, PhD's first, or I'd have been intimidated, so that's a good ‑‑ it came at the end.
LISTNUM 1 \l 1453 MR. BEDFORD: What was your question, again, please?
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1454 MR. BEDFORD: Oh, according to the material that we've presented, and also according to our own thought process, and the work that we've done with Dr. Patterson, we believe the market's large enough to sustain one and a half radio sta‑, one and a half more radio stations.
LISTNUM 1 \l 1455 THE CHAIRPERSON: So at this ‑‑ if we were to ‑‑ two and a half, then?
LISTNUM 1 \l 1456 MR. BEDFORD: One and a half more ‑‑
LISTNUM 1 \l 1457 THE CHAIRPERSON: Including your ‑‑
LISTNUM 1 \l 1458 MR. BEDFORD: ‑‑ new stations.
LISTNUM 1 \l 1459 THE CHAIRPERSON: ‑‑ your application?
LISTNUM 1 \l 1460 MR. BEDFORD: Yeah.
LISTNUM 1 \l 1461 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1462 MR. BEDFORD: We ‑‑ it's just borderline for two.
LISTNUM 1 \l 1463 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 1464 MR. BEDFORD: And there's certainly more than enough in terms of retail sales per station, and population per station to sustain one, and it's very close to two, so I'd like to use the expression one and a half.
LISTNUM 1 \l 1465 MR. MARTIN: Could be more.
LISTNUM 1 \l 1466 MR. BEDFORD: And based upon our positive approach towards the new investment coming into the market, like XSTRATA, the German $400, $400,000,000 development in Louisbourg, the Tar Ponds project, the retailers in the area expanding their properties, and building new facilities, if that all comes to be, obviously, it could sustain more than one station. It could be two, or even three. Especially seven to ten years from now, when we start our next one.
LISTNUM 1 \l 1467 UNIDENTIFIED: (Laughing) Your guys are getting carried away.
LISTNUM 1 \l 1468 THE CHAIRPERSON: Now just going back and looking at your slide 11, and you talk about the potential new developments, and I'm just sort of ‑‑ it's hard to put a timeframe. The Tar Ponds is actually going to start this spring? That's a definite, now, is it?
LISTNUM 1 \l 1469 MR. MARTIN: May, I believe.
LISTNUM 1 \l 1470 THE CHAIRPERSON: May?
LISTNUM 1 \l 1471 UNIDENTIFIED: May, yeah.
LISTNUM 1 \l 1472 THE CHAIRPERSON: Next month?
LISTNUM 1 \l 1473 MR. MARTIN: Yes.
LISTNUM 1 \l 1474 THE CHAIRPERSON: Oh, that's excellent then.
LISTNUM 1 \l 1475 And ‑‑ but some of these other things, like, how long before you'd see jobs from some of these other initiatives?
LISTNUM 1 \l 1476 MR. BEDFORD: Mr. Patter‑, ‑‑
LISTNUM 1 \l 1477 DR. PATTERSON: Yes, but let me look at the list so we can ‑‑
LISTNUM 1 \l 1478 THE CHAIRPERSON: Oh, sure, yeah. It's slide 11.
LISTNUM 1 \l 1479 DR. PATTERSON: Already because of the major retailers that are coming into town, there have been not only new jobs, but new ways of bringing jobs in. Many local people who have experience, say, in home building are being hired by Home Depot under special circumstances where they continue to do their work, but they work evenings, or something, so it, it's sort of a graduated thing.
LISTNUM 1 \l 1480 The Mayflower Mall, as we indicate, will be expanding ‑‑
LISTNUM 1 \l 1481 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 1482 DR. PATTERSON: ‑‑ and I understand from local economists that ‑‑ or people who know the local economy, including some of the retailers we've talked to, they expect retail sales to be increasing in their areas.
LISTNUM 1 \l 1483 The concern that some people have is whether it's going to be local businesses that expand, or whether these big boxes who come in and take their profits out.
LISTNUM 1 \l 1484 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 1485 DR. PATTERSON: And so there's an issue there about how much of the money is going to be staying the community for re‑investment, but if their intentions are realized, why, it will be staying in investment.
LISTNUM 1 \l 1486 The new high‑tech sector is a sort of a hidden but very important sector here, and two or three companies have really started to take off. The glass, Advance Glazings, Dynagen has become a world player when it comes to alternative energy sources. There are new companies with regard to wind energy. We have a small company that's just starting out who I, which has a revolutionary approach to plumbing your house. You order something, and it come‑, it gets sent in a box, and a plumber sticks it in, in two hours, and you're done. It's a very ‑‑
LISTNUM 1 \l 1487 THE CHAIRPERSON: Is the plumbing for your ‑‑
LISTNUM 1 \l 1488 DR. PATTERSON: ‑‑ modern ‑‑
LISTNUM 1 \l 1489 THE CHAIRPERSON: ‑‑ whole house? Is it for ‑‑
LISTNUM 1 \l 1490 DR. PATTERSON: Pardon me?
LISTNUM 1 \l 1491 THE CHAIRPERSON: For new construction?
LISTNUM 1 \l 1492 DR. PATTERSON: Your whole house ‑‑ heating, potable water, everything. Now you have these ‑‑ what do you call ‑‑ tube‑in‑tube is ‑‑ it's not the traditional copper piping, and it's not the traditional plastic piping, or steel piping. It's this new tube‑in‑tube which is used very widely in Europe. And so they, they've got a group of little, of young engineers and inventors who've come up with this beautiful panel that you put ‑‑ in fact, the funny part is people don't want to put it in the basement. They want to put it in the garage, so they can bring in their neighbours, and show it off, 'cause it, it's brass and chrome and dials. It looks like a Boeing 707. They're bec‑, they are about to take off.
LISTNUM 1 \l 1493 It's hard to know what the Tar Ponds spinoffs will be. Everybody's waiting breathlessly, and the Province and the Feds are basically keeping their cards close to their chest, but it's very clear that there are going to be major improvements in salaries, and people being hired there, and unemployment.
LISTNUM 1 \l 1494 This morning at noon, around noon time, they're going to announce the expansion of a call center right down in Sydney River. That's been growing, not as rapidly it was initially, but it's still growing.
LISTNUM 1 \l 1495 Finally, the biggy is XSTRATA. Although we've alluded to the closure of the coal mining industry in Cape Breton, there is a major mine which was prepared before that closure. It was called the Donkin Mine. And XSTRATA has been given permission by the Province to mine that, and there have been recent articles pointing out that they've opened it up, that they're getting close to installing the equipment necessary to start producing coal on a very big scale. I mean, they're ‑‑ we're talking about $100,000,000 or so investment right off the bat, and that should be a major source of new income, new jobs in the area.
LISTNUM 1 \l 1496 THE CHAIRPERSON: And so what would be the timing, would you expect, of something like that with ‑‑
LISTNUM 1 \l 1497 DR. PATTERSON: I'm only ‑‑ I mean, that's up to them. They're not going to ‑‑
LISTNUM 1 \l 1498 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 1499 DR. PATTERSON: ‑‑ release that, but the way the sort of momentum is gathering, I would say people are expecting to be hired within the next two years. They, they'd certainly be hiring people to do some of the pre‑, the electrical and the pre‑development work of the faces, and then, of course, they'll be hiring on a fu‑, several hundred people to do the full production.
LISTNUM 1 \l 1500 THE CHAIRPERSON: And is coal considered environmentally friendly? Is, is not ‑‑ is it going to be a environmental issue, or is it an, a ‑‑
LISTNUM 1 \l 1501 DR. PATTERSON: Oh, it, it's a ‑‑
LISTNUM 1 \l 1502 THE CHAIRPERSON: ‑‑ environmentally friendly.
LISTNUM 1 \l 1503 DR. PATTERSON: It's an environmental issue, but there's still an enormous demand for it around the world. Those are ‑‑ we haven't addressed those issues, but for example ‑‑
LISTNUM 1 \l 1504 THE CHAIRPERSON: It's sort of out of our purview here, but I was just interested in trying to co‑, understand what that ‑‑
LISTNUM 1 \l 1505 DR. PATTERSON: Until the closure of the coal and steel industries here, Sydney Harbour was one of the most highly, high‑traffic ports in the world, because we had so much coal going out, and so much ore coming in. The two studies that we've talked about going on, about the development of the port, or city, this is ‑‑ there's been a strategic plan in place since at least 1993, and right now it's gaining some interest by Federal Government, and the Provincial Government.
LISTNUM 1 \l 1506 That has another possibility for developing, and that would be all positive. There's no environmental concerns about that, because it would be basically imported. We wou‑, we hope to become ‑‑ this is the western abutment for a bridge to the rest of the world. Sydney has the shortest ‑‑ if you look on a globe, it has the shortest great circle routes from Sydney to Europe, Africa and South America. Surprisingly South America. So it's very, very positive, and the Chinese, I un‑, I've read, have insisted that Nova Scotia will be the place where they start bringing in their big super Panamax ships from, that come through the Gibraltar Straits. So Sydney is hoping to, and has for a long time, been working on developing both the old Sysco waterfront, where they have two massive ‑‑ I think 720 long, feet long wharves. They have the international pier which can, for, can take in and send out massive amounts of coal, or any other aggregate, and they're also talking about developing the western side, Westmount side of the harbour all the way out to Point Edward with investments by major companies in New Jersey ‑
LISTNUM 1 \l 1507 THE CHAIRPERSON: Okay. Thank you, Mis‑, ‑‑
LISTNUM 1 \l 1508 DR. PATTERSON: ‑‑ in container ports.
LISTNUM 1 \l 1509 THE CHAIRPERSON: Thank you, Dr. Patterson. That gives us a better understanding of the potential. Thank you.
LISTNUM 1 \l 1510 Just one last question that I have for you. What impact would the licensing of more than one new entrant today have on your business plans?
LISTNUM 1 \l 1511 MR. BEDFORD: The diversity of formats in the market is certainly going to play a big part in that. We think that we have picked a combination of ‑‑ our format mix is combined in such a way to have broad appeal, but still be very targeted towards that 25 to 55 age bracket that we're shooting for.
LISTNUM 1 \l 1512 I think with the addition of if there were two stations, it's just improved quality for the community, and with the improved quality, and with the fact that ‑‑ up until this point in time, there's been on FM station, one commercial ‑‑ excuse me ‑‑ FM radio station. If CBC gets their flip, if one of us get a license ‑‑ hopefully us ‑‑ if even a second station's licensed, all of a sudden the FM band is going to have such a high profile in this community that I do believe that, you know, it'll be a not only benefit to the community, but each of the radio stations, in turn, will enjoy that synergism that's caused by all of these stations being on the air, on the FM band at the same time.
LISTNUM 1 \l 1513 THE CHAIRPERSON: That's great. Thank you.
LISTNUM 1 \l 1514 MR. BEDFORD: And also, the advertising costs for the small advertiser, for the small business operator, there have be‑, there ‑‑ when we were in Membertou, we were selling radio ads for $8 a holler, and it'd be, you'd be amazed the number of small operators. It was the first time they ever had the opportunity of using radio, and they were extremely impressed with the results.
LISTNUM 1 \l 1515 So if you come on with a commercial radio station ‑‑ and yes, the rates are higher than that, obviously ‑‑ they're probably still going to be able to afford it, and the end result will be that they're going to be able to enjoy the immediacy, and the point of purchase type effects of radio advertising.
LISTNUM 1 \l 1516 THE CHAIRPERSON: Okay. Thank you very much. Commissioner Noel has a question ‑
LISTNUM 1 \l 1517 COMMISSIONER NOEL: Just the one ‑
LISTNUM 1 \l 1518 THE CHAIRPERSON: ‑‑ for you.
LISTNUM 1 \l 1519 COMMISSIONER NOEL: ‑‑ short question. If we decide, in our wisdom, to license two new applicants in the Sydney market, and if we decide that you are one of the lucky winners, which other applicant will be less damagable to your business plan?
LISTNUM 1 \l 1520 UNIDENTIFIED: (Inaudible).
LISTNUM 1 \l 1521 COMMISSIONER NOEL: Choose your partner, he says.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1522 MR. BEDFORD: Oh.
LISTNUM 1 \l 1523 MR. MARTIN: In what sense?
LISTNUM 1 \l 1524 MR. BEDFORD: Are you referring to market share, or do you mean like the economic impact upon us?
LISTNUM 1 \l 1525 COMMISSIONER NOEL: Well, I'm ‑‑ the audience.
LISTNUM 1 \l 1526 MR. BEDFORD: The audience is a listening audience ‑
LISTNUM 1 \l 1527 COMMISSIONER NOEL: Yeah.
LISTNUM 1 \l 1528 MR. BEDFORD: ‑‑ versus an advertising audience.
LISTNUM 1 \l 1529 COMMISSIONER NOEL: Listening audience. Who would be your worst adversary?
LISTNUM 1 \l 1530 MR. BEDFORD: The worst adversary?
LISTNUM 1 \l 1531 COMMISSIONER NOEL: Or who would be the ‑‑
LISTNUM 1 \l 1532 MR. BEDFORD: The one that would be ‑‑
LISTNUM 1 \l 1533 COMMISSIONER NOEL: ‑‑ less dangerous adversary?
LISTNUM 1 \l 1534 MR. BEDFORD: The less dangerous adversary?
LISTNUM 1 \l 1535 COMMISSIONER NOEL: Well, one ‑‑ you know, give me an answer. If ‑‑ I'm just asking you to ‑‑
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1536 COMMISSIONER NOEL: To get your feet wet here. Would it be Newcap? Would it be HFX? Would it be Newman?
LISTNUM 1 \l 1537 MR. BEDFORD: I could get, give answers to all three of those, but I think I'll zero in on one, in particular ‑‑ the Evanov application, which is very, very youth‑oriented. Demographically in this marketplace, there's not a lot of youth.
LISTNUM 1 \l 1538 A lot of it has moved away, especially the 20‑‑ to 30‑year olds. In addition to that, there have been surveys included in these four applications which prove that the younger people in this market happen to like rock, classic rock, as well as current rock, so as a result, I think that if we had that ‑‑ if we were one of the recipients of a license, we think that we would be able to attract not only our target audience, but also a younger audience, as well, because Cape Breton youth do like rock and classic rock music.
LISTNUM 1 \l 1539 So, therefore, the least damaging would probably be the Evanov one.
LISTNUM 1 \l 1540 The second least damaging would probably be the Andy Newman application, 'cause he's going adult contemporary, and probably the most damaging is the fact that we'd be head‑to‑head with Newcap on a classic rock and/or classic rock, plus mainstream, or classic rock, plus current rock type approach.
LISTNUM 1 \l 1541 COMMISSIONER NOEL: And do you think that the local aspect of your applications please in favour of the pertinence of your ‑‑ as opposed to Newcap's, which is based ‑‑
LISTNUM 1 \l 1542 MR. BEDFORD: A large corporation.
LISTNUM 1 \l 1543 COMMISSIONER NOEL: It's not already, is not already based in Cape Breton, or ‑‑
LISTNUM 1 \l 1544 MR. BEDFORD: Oh, no, they're a large corporation.
LISTNUM 1 \l 1545 COMMISSIONER NOEL: Nor Evanov who was in, on the west side of Toronto.
LISTNUM 1 \l 1546 MR. BEDFORD: Yeah. No, I mean, they're both ‑‑ all three applications are well done. All three applicants are good broadcasters, and they want to expand, and I can't blame them for that.
LISTNUM 1 \l 1547 We live in this market. We've been listening for years to, and years to what people really want in their radio. They would like to return to the days of radio with good local news coverage, and in addition to that, some enthusiasm, some energy, some fun, some good community involvement, and so on, and so forth, and that's what we want to deliver.
LISTNUM 1 \l 1548 COMMISSIONER NOEL: Thank you. I have no other questions.
LISTNUM 1 \l 1549 MR. BEDFORD: Thank you very much.
LISTNUM 1 \l 1550 THE CHAIRPERSON: You have any more?
LISTNUM 1 \l 1551 UNIDENTIFIED: No.
LISTNUM 1 \l 1552 THE CHAIRPERSON: No? Well, thank you, Mr. Bedford and Mr. Martin, Mr. Morrison and Dr. Patterson. We appreciated your comments. Thank you very much.
LISTNUM 1 \l 1553 MR. MARTIN: Thank you for the opportunity.
LISTNUM 1 \l 1554 MR. BEDFORD: Thank you very much for the opportunity.
LISTNUM 1 \l 1555 THE CHAIRPERSON: And we're going to ‑‑
LISTNUM 1 \l 1556 MS. FISHER: Sorry, Madame Chair, I have a question.
LISTNUM 1 \l 1557 THE CHAIRPERSON: Oh, certainly. Sorry.
LISTNUM 1 \l 1558 MS. FISHER: Sorry.
LISTNUM 1 \l 1559 THE CHAIRPERSON: Sorry.
LISTNUM 1 \l 1560 MS. FISHER: In reply to Madame Chair's question on the Canadian content level of your blues show, you have stated that you would adhere to the higher level of Canadian content of 20 percent which will be required by the regulations by condition of license, until such time as the regulations are amended.
LISTNUM 1 \l 1561 You have stated that, in fact, you plan to offer 35 percent Canadian content in this show. Please comment on whether you adhere to this 35 percent Canadian content in sub‑category 34 ‑‑ that's the jazz and blues ‑‑ as an exception to the minimum regulatory requirement by condition of license.
LISTNUM 1 \l 1562 MR. BEDFORD: We would willingly accept as condition of license a minimum of 35 percent in that category, and then during that blues show.
LISTNUM 1 \l 1563 MS. FISHER: Thank you. Thank you, Madame Chair.
LISTNUM 1 \l 1564 THE CHAIRPERSON: Thank you. Madame Secretary?
LISTNUM 1 \l 1565 THE SECRETARY: Yes. Thank you, Madame Chair. Perhaps this may be a time for our morning break.
LISTNUM 1 \l 1566 THE CHAIRPERSON: We'll adjourn, then, until 11:15. Is that ‑‑
LISTNUM 1 \l 1567 MS. FISHER: That's great.
LISTNUM 1 \l 1568 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1569 MR. BEDFORD: Thank you very, very much.
LISTNUM 1 \l 1570 MR. MARTIN: Thank you.
LISTNUM 1 \l 1571 MR. MORRISON: Thank you.
‑‑‑ Upon Recessing at 1052 / Suspension à 1052
‑‑‑ Upon Resuming at 1129 / Reprise à 1129
LISTNUM 1 \l 1572 THE CHAIRPERSON: Okay. Sorry for the delay. Madame Secretary?
LISTNUM 1 \l 1573 THE SECRETARY: Thank you, Madame Chair.
LISTNUM 1 \l 1574 We will now proceed with item two on the agenda which is the application by Newcap Inc. for a license to operate an English language FM commercial radio programming undertaking in Sydney.
LISTNUM 1 \l 1575 The new station would operate on frequency 101.9 megahertz, Channel 270C, with an average effective radiated power of 57,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 122.7 meters.
LISTNUM 1 \l 1576 Appearing for the applicant is Mr. Rob Steele who will introduce his colleagues.
LISTNUM 1 \l 1577 You will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 1578 MR. STEELE: Thank you.
LISTNUM 1 \l 1579 Good morning, Madame Chair, Members of the Commission, and Commission staff.
LISTNUM 1 \l 1580 I'm Rob Steele, President and the Chief Executive Officer of Newcap Radio, and before we begin our presentation, I'd like to introduce our team.
LISTNUM 1 \l 1581 Seated in the front row furthest to my left is Glenda Spenrath, Newcap's Director of Operations, and next to Glenda is Brad Muir, the Program Director and Operations Manager for our Fredericton FM rock station, CFRK FM, known as "Fred FM", which was launched in 2005. Beside Brad is Mark Maheu, Executive Vice‑President and Chief Strategist for Newcap, and seated next to me is Jennifer Evans, the General Manager of our Charlottetown stations, including our recently launched rock station, CKQK FM, known as "K‑Rock 1055".
LISTNUM 1 \l 1582 We're here today to present our application to provide a new radio‑listening choice to the Cape Breton Regional Municipality. It's a new choice in many ways.
LISTNUM 1 \l 1583 First, by bringing a missing radio‑listening option to the listeners of Cape Breton, and one that is available to most other communities of the size, the rock format.
LISTNUM 1 \l 1584 Secondly, by providing a new and distinct editorial voice to Sydney and area, one with the expertise to provide a credible choice to commercial radio that is clearly missing.
LISTNUM 1 \l 1585 And finally, by providing advertisers in the area with an alternative and an effective way to reach an audience not currently served by radio.
LISTNUM 1 \l 1586 The question that has been raised about this market is how much additional service can it sustain? The image that most Canadians have of Cape Breton is that it is economically challenged, despite its wonderful music, its culture, and its lifestyle. With the closing of mines and mills being the only news about the area that most outside Nova Scotia receive, no wonder there is a gross misunderstanding about this market.
LISTNUM 1 \l 1587 But in fact, while Cape Breton is not the economic hotspot that Alberta is, it has lots of economic activity, and it is rapidly re‑establishing its economy, and I'd like to ask Glenda Spenrath to start our presentation by outlining the strong economic case for a new station in this area.
LISTNUM 1 \l 1588 Glenda?
LISTNUM 1 \l 1589 MS. SPENRATH: Thank you, Rob. Thank you, Rob, and good morning, Madame Chair, and Members of the Commission.
LISTNUM 1 \l 1590 When we first considered applying for a new FM station here in Cape Breton, we knew that there was an appetite for additional radio choices here. With only three commercial radio stations to serve Sydney and area now known as the Cape Breton Regional Municipality, with a population of 103,000, the region is definitely under‑radioed.
LISTNUM 1 \l 1591 Cities of similar size have both more stations and more owners, giving both format and editorial diversity beyond what is available here.
LISTNUM 1 \l 1592 The market of Quinte in Ontario made up of Belleville, Trenton and the surrounding area, with a population of 100,000, has five commercial radio stations, with two different owners.
LISTNUM 1 \l 1593 Fredericton, with a population of 90,000, now has four radio stations. Before the launch of our classic rock station, Fred FM there, the radio market was also a closed shop, with one owner controlling three stations.
LISTNUM 1 \l 1594 Kamloops, B.C., a market of about 82,000, has five local radio stations, with two different ownership groups.
LISTNUM 1 \l 1595 The Cape Breton County Economic Development Authority put into place an economic development strategy in the mid‑1990s to transform the local economy from a resource‑based one to one sustained by services, health and financial, and both the Atlantic Canada Opportunities, and the Government of Nova Scotia have made diversification of the local economy a priority. The results have been encouraging.
LISTNUM 1 \l 1596 For example, the employment rate has increased substantially over the past ten years. The value of building permits in Cape Breton increased from 50.5 million in 2003 to $91.6 million in 2004, and again, to 98.2 million in 2005. Cape Breton Regional Municipality's totals incomes are projected to increase by 12 percent over the next five years.
LISTNUM 1 \l 1597 The Radio Bureau of Canada indicates that on average in Canada, the total advertising spin is three percent of retail sales, and that radio gets about 12 percent of this. Using this analysis, we believe that the projected retail sales for 2007 for the Regional Municipality of 1.14 billion should result in an advertising revenue pie of about 34,000,000, with radio getting about 4,000,000. And given that the Sydney area is the shopping center for the whole island, we believe that the potential is a bit higher than this.
LISTNUM 1 \l 1598 Now to tell you a bit about our research, and the format we propose, here is Brad Muir.
LISTNUM 1 \l 1599 MR. MUIR: Thanks, Glenda, and good morning.
LISTNUM 1 \l 1600 At Newcap, we operate successful rock radio stations in many cities around Atlantic Canada, and the Maritimes ‑‑ Charlottetown, Moncton, Fredericton and St. John's. Our involvement in the local music scene, and the East Coast Music Awards tell us there is a strong interest in rock throughout the region.
LISTNUM 1 \l 1601 Up to now, this interest in rock is not reflected in Sydney radio, with a country station, an AC, and a classic hit station.
LISTNUM 1 \l 1602 To test what kind of radio station we should propose, we asked Kroeger Media Research to examine the market for us. Kroeger conducted 250 detailed interviews with Sydney and area residents, testing what they listen to now, their satisfaction with their radio choices, their preferred music styles, their perception of the availability of music styles in Sydney radio, as well as a number of other questions about features on what they would like to hear on a new radio station.
LISTNUM 1 \l 1603 Kroeger tested six formats with the respondents to determine the degree of interest in the format, which he translated into "P1 listeners", and their perception as to whether the format was available, which he calls "P1 unfilled". What emerged was very interesting to us, and confirmed our perception of this market.
LISTNUM 1 \l 1604 Mainstream rock had a medium to high level of interest, but was considered to be almost not available in the market. Classic rock had a very high level of interest, and was perceived to be not available to any extent. Classic hits also had a fair amount of interest, and was not perceived as being available.
LISTNUM 1 \l 1605 Knowing that CHER‑AM was planning to go for a classic hits format, when converted to the FM band, Kroeger recommended that we provide a classic rock format, with a strong sampling of mainstream rock. He also suggested that the station provide a significant amount of local news, and local information.
LISTNUM 1 \l 1606 We took Kroeger's suggestions, and started to build our concept for a rock station based in Sydney, which we call Rock 1019. The format is one that we know very well, since this is the kind of format we offer in a number of markets across the region, and across the country, but just as Fred FM in Fredericton has its own flavour, and K‑Rock 1055 in Charlottetown has a very distinct approach, Rock 1019 will have a Cape Breton personality of its own; one distinct from the other stations in the market, and from other rock stations.
LISTNUM 1 \l 1607 The station will marry the greats of classic rock from the past 40 years from artists like The Rolling Stones, Neil Young, Sloan, Bruce Springsteen, and The Who, with compatible current mainstream rock artists like U‑2, Sam Roberts, Tom Petty, Nickelback, the Foo Fighters, and The Trews.
LISTNUM 1 \l 1608 And our own breaking artists will have a special place on our airwaves. At Q104 in Halifax, C103 in Moncton, and K‑Rock 1055 in Charlottetown, we have had amazing success with our Atlantic music shows ‑‑ "Route 104", "Action Atlantic" and "Sonic Source", respectively. Meanwhile, in St. John's, the long‑running "Home Brew" program has nurtured new careers and preserved the heritage of Newfoundland and Labrador music.
LISTNUM 1 \l 1609 The dedication that Atlantic Canadians have to home‑grown talent is evident in the popularity of these programs. It is also witnessed by the success of The East Coast Music Awards, of which Newcap is a major supporter and sponsor.
LISTNUM 1 \l 1610 There is a strong history of rock music in Atlantic Canada, from the 1970s blues rockers like Matt Minglewood, Sam Moon and Dutch Mason, to independent rockers like Sloan, through to today's stars, like Matt Mayes and El Torpedo. Dutch Mason's son, Garrett, and the Joel Plaskett Emergency, and there are many bands bubbling under, ready for that next step.
LISTNUM 1 \l 1611 For example, Cape Breton's Slow Coaster will be a future regular on Canadian rock radio, as will bands like Faded Blue, Air Traffic Control and the Contact from Nova Scotia, Age of Daze from New Brunswick, and Brothers in Stereo from Newfoundland.
LISTNUM 1 \l 1612 We intend to reflect the history, and present of Atlantic rock with "Rocking the Cape", a nightly feature that showcases what's going on in our region. While the emphasis will be on new and emerging Cape Breton artists, we won't forget the heritage artists from our area, as well as emerging rock artists from around Atlantic Canada. This will not be a re‑broadcast of other radio stations' programs, but it will benefit from our on‑the‑ground presence in all four provinces.
LISTNUM 1 \l 1613 Exposure of new artists in the major markets around the region will give their careers a real boost.
LISTNUM 1 \l 1614 At Newcap, we know it takes more than music to make a great radio station. As you may have heard us say at other hearings, we believe that in an environment with an expanding number of music options, whether it be satellite radio, cell downloads or iPods, radio's major advantage is to be live, and to be local, providing information that these other sources can't.
LISTNUM 1 \l 1615 Cape Breton deserves live, local Cape Breton newscasts, focusing on Cape Breton issues, and events, all day, every day. This is not available in this market, at present.
LISTNUM 1 \l 1616 The Kroeger research told us that there is a taste for a new source of news and information in the market. 80 percent of respondents said that they would listen to a radio station that provides more local news and information. We intend to be an additional editorial voice in the community, providing an alternative voice to the three MBS stations, and the CBC.
LISTNUM 1 \l 1617 Rock 1019 will bring a new journalistic voice to Sydney and Cape Breton. Three journalists will provide 79 newscasts per week, with major newscasts on the hour from 6:00 a.m. to 6:00 p.m. seven days a week, with shorter newscasts on the half hour in‑morning drive.
LISTNUM 1 \l 1618 We will also provide a complete service of weather, traffic and marine reports, community, emergency announcements and PSA's. This essential information will be provided in a timely fashion when it is needed, and updated frequently.
LISTNUM 1 \l 1619 Now one of the best times for rock radio is in the evening, so we've developed a new concept. It's called the late night breakfast show. This will bring a new and exciting kind of radio to Sydney listeners, whether they are shiftworkers with a schedule out of sync with the regular morning shows, rock fans that just don't want to watch T.V., or folks who are running errands, shopping or on the job in the evening. This program will provide news and information in a more informal, less structured format.
LISTNUM 1 \l 1620 We will have details on the Screaming Eagles junior hockey scores of that evening, and information about clubs and other entertainment venues around the region, and of course, all the breaking news, weather and other surveillance information.
LISTNUM 1 \l 1621 While Sydney may be the largest center in Cape Breton, there's lots of interest about what's going on around the island, and to tap into this interest, we intended to trek around Cape Breton on Friday afternoons with a show called "Hit the Road, Jack", which will originate from different towns and villages. While it will play lots of great rock, it will also invite local people in to talk about what's going on in their community.
LISTNUM 1 \l 1622 The show will give us a particular opportunity to reflect the different cultures around Cape Breton, whether the Acadians in Cheticamp, The First Nations community at Eskasoni, or the Gaelic speakers at The College of Cape Breton. In all, we will provide five hours and 45 minutes of newscasts each week, and a total of 12 hours of Spoken Word.
LISTNUM 1 \l 1623 And now to speak to you about the launch of Rock 1019, here's Jennifer Evans.
LISTNUM 1 \l 1624 MS. EVANS: Thank you, Brad, and good morning.
LISTNUM 1 \l 1625 At Newcap, we have had a lot of experience in the Maritimes at launching new rock stations into markets where we are the newcomers.
LISTNUM 1 \l 1626 When the Commission granted the conversation of CHTN in Charlottetown to the FM band, and a new licence for K‑Rock, the market was definitely dominated by MBS. They had their AM/FM combo, and an FM station coming in from Summerside. Similarly, in Fredericton, we launched Fred FM into a market with a three‑station grouping.
LISTNUM 1 \l 1627 In both cases, we were immediately successful. Fred FM debuted with a 17 share of tuning, and was number one in 12 plus tuning, and number on in its target demographic of man 18 to 49. In Charlottetown, K‑Rock 1055 debuted as the number one station in the market according to the BBM survey.
LISTNUM 1 \l 1628 In both cases, we have grown radio's share of advertising revenue by attracting new advertisers, and bringing back former radio users to our medium. Why the success? Well, clearly our research was accurate. There was a pent‑up demand for classic rock‑base music, and despite the dominance of the existing three‑station operations, the incumbents could not be all things to all people, and had focused on a limited number of broad formats. Men and women who like rock just felt they were settling for the radio stations they listened to, or were, in fact, ignoring radio altogether.
LISTNUM 1 \l 1629 We have to take some credit for launching exciting and fun radio stations attuned to the markets which we serve. They are unique and individual stations, customized to the needs of the market, and they have benefitted from Newcap's programming expertise. We have learned both from our successes, and from the setbacks we have had elsewhere, to make sure we do things right.
LISTNUM 1 \l 1630 In Charlottetown, we provide news on the hour, all day, all week, and a renewed focus on community service that our market was missing. One great example was just last week on Easter Sunday, when a spring blizzard hit Prince Edward Island, shutting down all Easter celebrations. We were the only ones live in studio to bring that information to listeners across P.E.I.
LISTNUM 1 \l 1631 And, finally, advertisers are pleased to have a new choice to place their commercials. We do not battle with the existing players by cutting price. In the long run, that would be bad for radio, and bad for us. We do provide value‑added advertising, targeting demographic groups that have not been reached efficiently in the past, and we price accordingly.
LISTNUM 1 \l 1632 We intend to bring this same approach to Sydney. Good research, good people, community involvement, pro‑active and targeting sales opportunities.
LISTNUM 1 \l 1633 And now to talk about Canadian Content Development is Mark Maheu.
LISTNUM 1 \l 1634 MR. MAHEU: Thanks, Jennifer.
LISTNUM 1 \l 1635 As we usually do, we have proposed a strong package of Canadian Content Development initiatives ‑‑ $406,000 over the first seven years of operations.
LISTNUM 1 \l 1636 Our approach is to fund national initiatives with over $80,000 going to FACTOR, and $70,000 to Canadian Music Week. But we have a local focus, as well. We will provide the Cape Breton‑Victoria Regional School Board with $210,000 to help budding musicians further their studies and their careers.
LISTNUM 1 \l 1637 We had originally proposed just under $45,000 in our application to Radio Starmaker fund, but after a discussion with Vice‑Chair Arpin at a recent hearing to discuss applications for Sudbury, we decided that we should probably revise our approach, and we've done so. We intend to divert this money to the Membertou First Nations Elementary School for the purchase of musical instruments, and for music lessons for promising young students.
LISTNUM 1 \l 1638 Madame Chair, Members of the Commission, we believe that we have an exciting proposition for the people of the Cape Breton Regional Municipality. For the first time in many years, they will have real diversity in music, in editorial voice, and in advertising options.
LISTNUM 1 \l 1639 With only three radio stations in this market, it is impossible to cover all the major programming groups without significant compromises. Clearly, the missing element is rock, rock music, and we propose to fill that void with a combination of the best classic rock, and today's rock successes. Our research is clear ‑‑ that this is, by far, the largest unserved programming niche in the market.
LISTNUM 1 \l 1640 We also propose to provide a complete radio service ‑‑ newscasts on the hour until 6:00 p.m. seven days a week, with a three‑person newsroom, and this will be supplemented by a more informal approach to news in the evenings on our late‑night breakfast program. A quality program service with $4.6 million in programming expenses over the first seven years. That's more than $2,000,000 higher than the next closest applicant.
LISTNUM 1 \l 1641 We will also reach out to the larger Cape Breton community with a travelling Friday afternoon show to bring attention to smaller communities, and create some buzz for Cape Breton music and events.
LISTNUM 1 \l 1642 And we will contribute significantly to the development of Canadian content, with $406,000 in spending over the first seven years of our license. That's over $100,000 more than the next closest applicant.
LISTNUM 1 \l 1643 Most importantly, perhaps, we bring the expertise and resources to effectively compete with a well‑established radio monopoly. We have launched new radio stations into single‑owner dominated markets before, most recently in Fredericton and Charlottetown, and have been successful in growing listening and radio's share of advertising.
LISTNUM 1 \l 1644 For these reasons, we ask you to grant us a license here in Sydney.
LISTNUM 1 \l 1645 We thank you, and we look forward to answering any questions you may have about our application.
LISTNUM 1 \l 1646 THE CHAIRPERSON: Thank you. Commissioner Williams will be doing the questioning.
LISTNUM 1 \l 1647 MR. MAHEU: Great.
LISTNUM 1 \l 1648 COMMISSIONER WILLIAMS: Good morning, Mr. Steele, and the panelists from Newcap.
LISTNUM 1 \l 1649 It's a pretty nice place here, Cape Breton. I haven't been out here forever, and I'm really impressed by how friendly and how pleasant this community is right from my taxi ride into town to the various people that helped me with my breakfast, and getting here, and it's a nice part of Canada.
LISTNUM 1 \l 1650 I'm going to begin my area in, my area of questioning in the programming section, and then, and work our way through.
LISTNUM 1 \l 1651 I guess I'd like to determine how much of your programming would be live, or if some will be automated, or voice‑tracked, and if some is automated and voice‑tracked, how much, and during what time of the day and week.
LISTNUM 1 \l 1652 MR. MAHEU: Commissioner Williams, one of the big key benefits we believe Newcap is bringing forward to the, our application for a new radio station here in Sydney is the fact that our proposal for a new radio station here would have the radio station be live and local on a 24/7, 365 basis. This is part of what Newcap has been doing in a number of markets across Canada.
LISTNUM 1 \l 1653 We mentioned earlier in our application about the other listening choices that many people who listen to radio have ‑‑ pre‑recorded music on iPods, MP3's, satellite radio, and so on.
LISTNUM 1 \l 1654 And corporately and collectively, we've taken a look at these trends, and we are in the radio business in a way big way in a lot of small and medium‑sized markets like Sydney, and we've determined through the research we've done, the anecdotal evidence we've seen, that one of the differentiating factors for us is the company has to be more than just music, and we feel that live and local service is a way that we can differentiate ourselves in many different communities, stand out from the pack, and really ingratiate ourselves with radio listeners.
LISTNUM 1 \l 1655 We're in a fight with a lot of other mediums that are unregulated, so we have to do what we can with our transmitters and the people power that we have in all of our local markets to build strong, sustainable franchises, and we've come to the conclusion that it will cost a little more money, and it's going to be more work, but our focus as a company, as it would be here in Sydney, on a local radio station basis, is to have somebody in this radio station 24/7, 365.
LISTNUM 1 \l 1656 It doesn't cost that much more to do it right, so what we're proposing for our radio station is that no voice tracking is going to be on the radio station. We're going to have live announcers on the radio station 24/7, 365, and we've budgeted for that.
LISTNUM 1 \l 1657 COMMISSIONER WILLIAMS: Thank you, Mr. Maheu.
LISTNUM 1 \l 1658 You've stated that you have five hours and 45 minutes of newscasts, however, there seems to be some additional news presented to seven to ten hours on your very, very late breakfast show.
LISTNUM 1 \l 1659 I guess I'd like to confirm the total hours of news over the broadcast week, and determine whether the 7:00 to 10:00 p.m. period is a Monday to Friday thing, or a seven day a week event, and perhaps give us some ideas on the other content of this very, very late breakfast show.
LISTNUM 1 \l 1660 MR. MAHEU: Sure. Just to clarify, so there's no misunderstanding, we've provided a quick reference sheet that breaks down the amount of news and Spoken Word.
LISTNUM 1 \l 1661 But to answer your question specifically, and then I'm going to ask Brad Muir to talk about the late night breakfast show to give you a sense of what that'll be about, but in terms of the news commitment that we're making, as a guaranteed minimum, we're looking at five hours and 45 minutes a week of what we would call traditional, regularly‑scheduled newscasts, the kind of newscasts that you would hear presented at the top of the hour, or in some cases, at the bottom of the hour. So five hours and 45 minutes a week. Some of the ‑‑
LISTNUM 1 \l 1662 COMMISSIONER WILLIAMS: Excuse me, excuse me, Mr. Maheu, for a sec. Would that five hours and 45 minutes be pure news, excluding say sports and other surveillance material?
LISTNUM 1 \l 1663 MR. MAHEU: The ‑‑ how we break it down, Commissioner Williams, is in our five‑minute newscasts Monday through Friday, of that five minutes, four minutes would be news, 30 seconds would be devoted to sports, and 30 seconds would be devoted to weather, but we count sports news and weather news as news, but to break it out more specifically, four minutes, 30 and 30, for a total of five minutes in those newscasts.
LISTNUM 1 \l 1664 And our focus here, as it is in all the other local markets that we operate in, is that we want to have a real focus on local news and information. So, you know, our preference and our goal is to always lead with local news, or localize the lead, if possible. So if there's something happening around the world, obviously if there are events happening in Afghanistan, or so on, they affect everybody, but we, what we would try to do, as we do in our other local markets, is try to find a perspective on that story of how it impacts people in the local marketplace. So our credo is kind of lead local, or localize the lead.
LISTNUM 1 \l 1665 Our late night breakfast show, we talk about it in terms of news. It's ‑‑ there's a lot of Spoken Word, a lot more than normal, and I'll let Brad elaborate a little bit. When we talk about news in that 7:00 'til 10:00 p.m. hour, it's more informal and less structured, and you won't hear it as a top hour newscast, per se. And I'll let Brad talk a little bit about the kinds of things you can expect to hear between 7:00 and 10:00 at night.
LISTNUM 1 \l 1666 MR. MUIR: Yeah, thanks, Mark.
LISTNUM 1 \l 1667 This late night breakfast show is a concept that we're really excited about, because in ‑‑ we've seen over the last number of years that, traditionally, the 6:00 to 10:00 a.m. morning time, so that gets all the entertainment, gets all the goodies, gets all the prizes, gets all the great guests. We're trying to reverse that trend, because we know that there's a lot of people who still listen to radio at night, and they deserve to be entertained, and to have all of the offerings that the regular, traditional morning shows offer, as well.
LISTNUM 1 \l 1668 So in that, you know, the music might be slightly different, because people listen to the radio differently in the morning than they do at night. They're a little more open to maybe rocking out a little more at night than they are at 6:10 with their coffee, and getting the kids ready for school. So the concept, musically, might be slightly different in the evening. Maybe a little harder, but the content and our attitude about involving the listeners, having fun, and getting out, seeing people, inviting people into the radio station, and taking the radio station out to people.
LISTNUM 1 \l 1669 So it's, it speaks more to the content, and the energy, and the vibe, and the things that we'll be talking about.
LISTNUM 1 \l 1670 MR. MAHEU: I think if I could just supplement what Brad said, as well, that in terms of, you know, Spoken Word in that evening show, I think we, we're going to spend a little more time talking about area bands, concerts, movies, movie reviews, DVD releases, and things like that. Entertainment news and such, that kind of falls into that Spoken Word/news category. It's definitely Spoken Word, but we don't consider it news like we would a top hour newscast, where we're reporting on current events, and things that are happening around the world.
LISTNUM 1 \l 1671 But there is, there's definitely much more Spoken Word being proposed by Newcap for this evening show than there would be on a normal rock radio station that tends to be, at that hour of the day, very music‑intensive, and more music, and less talk. But we think there's an opportunity there for us to be a little bit different, and build a brand by doing something a little bit different at night.
LISTNUM 1 \l 1672 COMMISSIONER WILLIAMS: Speaking of your news, and you've referred to equivalent news people, three full‑time equivalent news persons. Can ‑‑ what is ‑‑ what are the roles and responsibilities of each of these persons, and in light of the significant amount of news to be broadcast, would this news staff be sufficient to produce not only the local level that you speak of, but to ensure high quality newscasts?
LISTNUM 1 \l 1673 MR. MAHEU: Yeah, we're very confident that we can deliver high quality local news content, and meet or exceed the commitments that we've put forward with the three full‑time equivalent news people. Is, it's a practice that we employ in a number of radio stations.
LISTNUM 1 \l 1674 I'm going to ask Jennifer, in just a moment, to maybe give you a, kind of an equivalent example of what we've done with K‑Rock 1055 in Charlottetown ‑‑ a market of similar size, and how many news people we have, but our approach in Sydney, with the three full‑time equivalents, would likely be two full‑time, plus two part‑time news people.
LISTNUM 1 \l 1675 And each person is going to be multi‑tasking. Who's ever doing morning news will also, will likely be the news director of the radio station. The afternoon news person will supplement their on‑air news run with some reporting, and we'll employ part‑time reporters, and part‑time news people that work for us in the late afternoon, and on the weekends.
LISTNUM 1 \l 1676 So, you know, we do this in a number of locations. It works very well, and with technology the way it is today, we also have a big assist from technology where we can use the internet, we can use webcasting, we can use digital transmission to get phone interviews, or high quality audio interviews with other people, so we can do a lot of stuff from the radio station, and cover events without necessarily being there, at times. But there are going to be times at City Hall, or whatever, where we're going to need a reporter on site, and we'll do that.
LISTNUM 1 \l 1677 Jennifer, if you can maybe just very briefly give the Commissioners a sense of how we do it at K‑Rock?
LISTNUM 1 \l 1678 MS. EVANS: Sure. The operation, the way we work in Charlottetown, we actually have the largest private newsroom in the entire province. We have a five‑person newsroom, and how that breaks down, that's five full‑time employees dedicated to our newsroom. How that breaks down, of course, we have a morning show, a news host, we have an afternoon news host, and then we have a full‑time reporter and weekend news announcer.
LISTNUM 1 \l 1679 From time to time, we're also required to use part‑time employees to cover additional events. We'll be heading into ‑‑ all indicators are we're heading into a spring provincial election which is going to be a time that we will require additional part‑time reporters to help us for those very news‑intensive periods.
LISTNUM 1 \l 1680 The system works very well, and one thing that we have certainly received several compliments on in our new operation is our local news coverage, and people have really responded to the fact there is local news on your local radio station seven days a week, every single hour, on the hour.
LISTNUM 1 \l 1681 So it's been very well received in our market, and looking at the similarities between Charlottetown and Sydney, I can see that a full‑time news complement of three would work very well here, as well.
LISTNUM 1 \l 1682 COMMISSIONER WILLIAMS: Okay. Thank you for that.
LISTNUM 1 \l 1683 Can you talk a bit about your other Spoken Word elements ‑‑ traffic, sports, the community calendar, announcer talk, that sort of thing, and maybe kind of give me an idea of the total amount of spoken‑word programming to be offered during the broadcast week, and then perhaps you could finish up with some examples of the programming topics that might flow from your program entitled "Hit the Road, Jack", where you'll be broadcasting from various parts of the region.
LISTNUM 1 \l 1684 I'm particularly interested in that part, so if we can cover the first two areas, and then spend maybe a bit more time on the "Hit the Road, Jack" portion.
LISTNUM 1 \l 1685 MR. MAHEU: Sure, and I'll give you a sense of our total Spoken Word and news commitment, and then maybe I'll ask Brad to elaborate a little bit on some of our special programming features, like "Hit the Road, Jack" which we're quite excited about.
LISTNUM 1 \l 1686 When you add up our commitment to news, regularly‑scheduled newscasts, and then take into account the additional Spoken Word, or enriched Spoken Word that we're proposing on the radio station, it adds up to just over 12 hours a week. We're committing to 12 hours and ten minutes a week of Spoken Word, as defined by the broadcast week, of which, of that 12 hours and ten minutes, five hours and 45 minutes would be what we would call regularly scheduled traditional newscasts that take place at the top, or the bottom of the hour. The rest of it is supplementary enriched Spoken Word, announcer talk, surveillance information, et cetera.
LISTNUM 1 \l 1687 Some of that Spoken Word in the 12 hours and ten minutes will be taken up by things like the "Hit the Road, Jack" program, which is going to include music, but extended amounts of Spoken Word, and Brad, maybe you could elaborate a little bit on what we're trying to accomplish there, and what it might sound like on the radio.
LISTNUM 1 \l 1688 MR. MUIR: Sure. "Hit the Road, Jack", to really sum it up, it's about taking the radio station out to the people. For a long time, radio stations have been kind of hidden away in a closet, and nobody sees the people, nobody sees the radio station, and they don't get a chance to interact with people.
LISTNUM 1 \l 1689 So part of the goal is to get out there and to meet the community, find out really what is going on. So within "Hit the Road, Jack", the plan and our goal is to hit as many festivals as we possibly can, all the events, all the concerts. It might even be a kitchen party that we show up at. You're really just kind of not going to know week to week to week where we're going to show up, and that kind of brings a bit of excitement to people, as well.
LISTNUM 1 \l 1690 And the goal is to get the people on the radio with us, so that it's not necessarily just about us talking about what we think is important. We want to hear what they think is important, and that's how we're going to wrap that ‑‑ is to get out, and to meet the people, see the people, and bring them on the air with us.
LISTNUM 1 \l 1691 MR. MAHEU: And if I may, Commissioner Williams, our approach on this, especially in this area, there are so many smaller communities, and every one of these communities has some great stories to tell, and some real characters that are in these communities. And our goal with "Hit the Road, Jack" is to get out there, find these stories, and find these people, and get them on the radio, and have those stories be told.
LISTNUM 1 \l 1692 You know, we're confident, in terms of the format that we've selected, that rock is a format that this market will embrace rather quickly. There is a huge vacuum here for a rock station, so musically, that's not an issue. People will listen to our radio station because we're playing the kind of music that they want to hear.
LISTNUM 1 \l 1693 But if we want to keep the listening, and keep them engaged, and kind of keep re‑inventing what they're hearing on the radio every day, we think things like "Hit the Road, Jack" are going to be those extra elements that go above and beyond to kind of set us apart, and to help us make a name for ourself in a market where we're going to be the newcomers.
LISTNUM 1 \l 1694 So ‑‑ and inside of that, we think there's going to be some great Spoken Word, and a lot of fun on the radio that's going to be a little bit different.
LISTNUM 1 \l 1695 COMMISSIONER WILLIAMS: In your opening remarks, and in this section dealing with "Hit the Road, Jack", you said:
"This show will give us a particular opportunity to reflect the different cultures around Cape Breton, whether the Acadians in Cheticamp, First Nations, community Eskasoni, or the Gaelic speakers at the College of Cape Breton".
LISTNUM 1 \l 1696 Can you give me a sense of what a ‑‑ one of ‑‑ a program reflecting one of these three groups you'd be likely ‑‑ how ‑‑ what would your approach be?
LISTNUM 1 \l 1697 MR. MAHEU: Really what we're going to try to do is we're going to try to be as topical as we possibly can. In other words, we're going to try to schedule these out rather as far as in advance as we can, and get prepared for them appropriately.
LISTNUM 1 \l 1698 We're going to be looking for opportunities, say, in any one of those areas. If there is a festival, an anniversary celebration, something specifically interesting about the community that's happening that week, we would pick that community to be featured on "Hit the Road, Jack" on that Friday. We'd also be pre‑promoting it during the week, as well, so that community enjoys a little bit of the spotlight on the radio station leading up to the Friday.
LISTNUM 1 \l 1699 But we're going to be looking for opportunities to be there with something specific to bring to the listeners in Sydney, on Rock 1019. So in other words, if it's the 100th anniversary of a community, or they've just received an interesting award; if something innovative and unique is being developed in that community, or has happened; if one of them is a finalist in the Hockeyville Contest, or whatever it happens to be. If there's a reason for us to be there, that's why we want to be in there in a topical, meaningful way.
LISTNUM 1 \l 1700 And inside of the broadcast, if that's the premise for us being there, inside of that, with interviews with local people on the air as part of the program, we think this is where the unique stories about the community, the people who live there, the things that you didn't know about the community will start to come out on the radio. And I think there are a lot of communities with a great story to tell that are looking for an opportunity to get the word out about what they're famous for, and why people should come and do business with them, or visit there, or just drop in.
LISTNUM 1 \l 1701 So we think, in a way, we can perform a great community service for some of the small, smaller communities in the outlying area, as well, at the same time, creating great radio programming for people to listen to here in Sydney, and make a difference.
LISTNUM 1 \l 1702 COMMISSIONER WILLIAMS: Thank you, Mr. Maheu.
LISTNUM 1 \l 1703 I'm going now move into the area of questions relating to the Commission's new CCD contribution regime as outlined in the 2006 policy, and we're certainly encouraged that you took the initiative, based on Vice‑Chair Arpin's remarks to make some changes.
LISTNUM 1 \l 1704 Could you please confirm your understanding that if licensed, your station will have to contribute a basic annual CCD contribution imposed by regulation on the station's total annual revenues in an amount as set out in paragraph 116 of the new radio policy, Public Notice CRTC 2006‑158?
LISTNUM 1 \l 1705 Based on your financial projections, this would represent a basic annual contribution. Over seven years, this would represent total contributions of $8,490 under the basic annual CCD requirement.
LISTNUM 1 \l 1706 And could you please confirm your understanding that no less than 60 percent of the station's basic annual contribution must be allocated to either FACTOR, or music action, and the remaining amount, if any, may be directed to any eligible CCD initiatives, as per your direct discretion?
LISTNUM 1 \l 1707 MR. MAHEU: Yes, Commissioner Williams, we can confirm. We've read 2006‑158. We understand what it means. We have provided you with a quick chart here, so for the record, we are prepared to abide by 2006‑158 as it relates to the minimum amount of CCD that the station will be required to do.
LISTNUM 1 \l 1708 And then further confirm, on top of that, that what we're proposing in Sydney ‑‑ the $406,000 in supplementary CCD will be over and above what's required by 2006‑158.
LISTNUM 1 \l 1709 We also confirm, and understand that 60 percent of our minimum contribution required by 2006‑158 will be devoted to FACTOR, and we'd like to reserve the opportunity to look at what the options might be for the other 40 percent of that money, and either direct it to FACTOR, or some other deserving, qualifying endeavour under 2006‑158.
LISTNUM 1 \l 1710 COMMISSIONER WILLIAMS: Thank you, Mr. Maheu.
LISTNUM 1 \l 1711 As set out in the new Commercial Radio Policy, the new annual basic CCD contribution will be imposed all commercial radio licensees, per regulation. The Commission could impose a transitionary conditional license reflecting the new basic annual CCD, until such time as the regulation comes in force.
LISTNUM 1 \l 1712 Once the regulation is in place, the COL, of course, would expire. Do you have any comments regarding the Commission imposing such a described COL?
LISTNUM 1 \l 1713 MR. MAHEU: We would not have a ‑‑ we've made the commitment to do this, so we would not have a problem with a transitionary condition of license, or a condition of license requiring us to contribute the $406,000 over and above the basic amount required by 2006‑158. So it would not be a problem for us.
LISTNUM 1 \l 1714 COMMISSIONER WILLIAMS: As was the case with the previous Canadian talent development policy, an applicant or a licensee may choose to exceed the minimum annual basic CCD contribution.
LISTNUM 1 \l 1715 Under the old CTD policy, it was clear that your funding proposal exceeded the minimum planned requirements.
LISTNUM 1 \l 1716 As part of this application, you are proposing to contribute additional annual funding to CCD that would be over and above the basic required CCD contribution. Can you confirm for us the total annual amount of this over and above contribution to CCD?
LISTNUM 1 \l 1717 MR. MAHEU: The total over and above amount that we're committing to during the first seven years of operation totals $406,000, and we consider that to be over and above the basic CCD contribution that we'll be required to do as a condition of license. So the entire amount toward FACTOR, Canada Music Week, the School Board, Membertou School, will all be over and above during the first seven years, totalling $406,000.
LISTNUM 1 \l 1718 COMMISSIONER WILLIAMS: Could you also please confirm ‑‑ and I recognize you've given us documents ‑‑ can you please confirm your understanding that under the new policy, not less than 20 percent of this annual over and above CCD contribution must be allocated to fe‑, FACTOR, or music action?
LISTNUM 1 \l 1719 MR. MAHEU: Yes, we understand that, and we've decided, we've put forth that 20 percent of that $406,000 will be directed to FACTOR of the over and above money.
LISTNUM 1 \l 1720 COMMISSIONER WILLIAMS: Okay.
LISTNUM 1 \l 1721 THE CHAIRPERSON: Mr. Maheu, can I just ask a question on this point, before we move on?
LISTNUM 1 \l 1722 On the schedule included with your package this morning, it appears there might be a typo in year one. You're showing the CCD required in year one as 1,000. That actually should be $500. We were just wondering if you could re‑submit the schedule so it would be $500 required, and then the 60 percent, if you wouldn't mind?
LISTNUM 1 \l 1723 MR. MAHEU: Sure, no problem.
LISTNUM 1 \l 1724 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 1725 MR. MAHEU: We'll do that. Thank you.
LISTNUM 1 \l 1726 THE CHAIRPERSON: And I guess we'd need to have that by phase three, if that's not a problem?
LISTNUM 1 \l 1727 MR. MAHEU: No problem at all.
LISTNUM 1 \l 1728 THE CHAIRPERSON: Thank you. Thanks, Ron. Sorry.
LISTNUM 1 \l 1729 COMMISSIONER WILLIAMS: Thank you, Madame Chair.
LISTNUM 1 \l 1730 I guess we want to now explore the area on how your proposed classic rock, mainstream rock hybrid would, music format would contribute to musical diversity in the marketplace, and I guess in ‑‑ when you're preparing your response to this, maybe if you could consider, determine how the proposed format will differ from the yet to be launched CHER FM classic hits station, and the rock station being proposed by Barry Maxwell Martin.
LISTNUM 1 \l 1731 And spend a bit of time on the percentage of duplication of station playlists that would have with both CHER FM's and Barry Maxwell's proposed Sydney station.
LISTNUM 1 \l 1732 And just to make this a really long question, you can then wrap up with telling us why you, rather than the others, and maybe put forward your opinion as to, if we were to license more than one, who would be the least harmful to your application, and who would be the most harmful.
LISTNUM 1 \l 1733 So that's a pretty long question, but it's ‑‑ basically, we want to learn about your music format, and how it differs, and where it's the same, and ‑
LISTNUM 1 \l 1734 MR. MAHEU: Sure, Commissioner Williams.
LISTNUM 1 \l 1735 So if I understand what you're saying, you'd like to get a sense from us how Rock 101.9 will be different than the classic hits being proposed by the FM conversion on CHER, and the proposal we just heard from the Barry Maxwell Martin group, and our opinion on how many stations the market could potentially support, and the station mix or combination that potential works best or worst with our proposal?
LISTNUM 1 \l 1736 COMMISSIONER WILLIAMS: Right, and ‑
LISTNUM 1 \l 1737 MR. MAHEU: Okay.
LISTNUM 1 \l 1738 COMMISSIONER WILLIAMS: ‑‑ I know it was a long question, so ‑‑ and then a bit of a commentary on the, an estimate, say, on the percentage of duplication playlists.
LISTNUM 1 \l 1739 MR. MAHEU: Sure. Yeah. Fantastic.
LISTNUM 1 \l 1740 I'm going to give you a brief overview. I may ask Brad Muir to also help supplement and explain how we're different, but first of all, to give the Commission and everybody in attendance a very good sense of the kind of music that you're going to hear on the station that we're proposing.
LISTNUM 1 \l 1741 The previous applicant, I listened to their answer about how they perceived what our music was going to be like, and their perception of what we propose to do is not quite accurate, so I'm, I'd like us, if we could, to kind of set the record straight.
LISTNUM 1 \l 1742 Our research conducted in this marketplace was a very complete and comprehensive research study. We came back with the same answer that the previous applicant did, and that is that there is a huge hole and an opportunity here for a rock radio station. That is clear, in terms of the percentages.
LISTNUM 1 \l 1743 The recipe, so to speak, of what this rock station will sound like, and what it would be comprised of is different from what we're, they're proposing to what we're proposing. What we are proposing is really a hybrid maintstream rock station. 50 percent of the music that you would hear on Rock 101.9 would be what we would call traditional classic rock, some of the best rock from the last 35 or 40 years ‑‑ The Rolling Stones, Led Zepplin, The Who, and Springsteen, and April Wine, and people like that from the '70s, '80s and '90s. 50 percent of the music would be current and recurrent music, and we break it down this way ‑‑ 20 percent of the music on the radio station would be what we call current mainstream rock. These are new releases, songs that have been out for the past six months. They're new, they're current, and they're today. The next 30 percent of the music you would hear on the radio station would be what we call recurrent music, or young gold. This music is anywhere from six months to two years old, so they could be hits that have just fallen off the chart, so to speak. The rotation on these songs is slower, but in essence, the radio station is 50 percent current or recent, and 50 percent traditional classic rock.
LISTNUM 1 \l 1744 'Cause what we found in the research is that there was a strong call for classic rock in the market, and there was a real strong call for mainstream rock in the market, and we found that the best way to kind of, to serve this rock constituency, and not be too narrow, because there is no rock station in the market, is to do a li‑, a hybrid. It's very similar to what some stations in other bigger markets do. Standard with their bare format, is pretty much 50/50; half new rock, half classic rock, and we're doing that same type of approach in Charlottetown, where, on K‑Rock 1055, it's about half current and recent, and the other half is classic rock. So that is what the radio station will sound like.
LISTNUM 1 \l 1745 It will also give us an opportunity to play some of those emerging Canadian artists, and we've made a commitment to do that, and having a current component on the radio station.
LISTNUM 1 \l 1746 In terms of duplication, this is where it gets a little bit subjective, but I'll try to be as objective as possible here, to give you a sense.
LISTNUM 1 \l 1747 Let's first talk about the potential of duplication between Rock 1019 and a classic hits format. Classic hits is a format that really blends ‑‑ I should say this ‑‑ classic hits, as a format in general ‑‑ I can't speak to the specifics of what CHER is proposing, but classic hits is a format, tends to blend the very best of top‑40 popular music from the past 30 years, mostly from the '80s and '90s. A little bit from the '70s, but it tends to blend the best popular top‑40 songs with some of the popular rock songs from the past 30 years.
LISTNUM 1 \l 1748 And there are different flavours of classic hits, depending on the size of market, and where you are in the competitive environment, the recipe, how much gold, how much current, how much '70s, how much rock, or how much pop and top‑40 varies, depending on the market.
LISTNUM 1 \l 1749 So in this particular case, if the classic hits format follows the tried‑and‑true method of being largely popular top‑40, combined with some rock, the duplication between Rock 101 and that radio station would be somewhere probably in the area of 20 percent. There would be very little or no duplication on 50 percent of the music, the current and recurrent part of our format proposal, and there would be some duplication on the gold portion, and we're estimating that to be around 20 percent.
LISTNUM 1 \l 1750 Now in terms of the duplication for Rock 1019, as we propose it, with the previous applicant's proposal, I listened with interest that they talked about having a playlist that was somewhere in the neighbourhood of 3,500 songs, and that they would have very low turnover, and very low repeat factor. If that, in fact, is the case, then there is not going to be very much duplication between our proposal and theirs. There will be some, but it sounds to me like they're going to be playing a lot of songs that we aren't going to be playing.
LISTNUM 1 \l 1751 Our focus with rock, we do an awful lot of research in markets, when we put a radio station on the air, and we do extensive music testing in markets. And what we found is that by going into the markets, doing music research with potential listeners to the format, we have a very good sense of the kinds of songs, and specifically the songs that they want to hear most, and the songs they don't want to hear, because our experience and our research has shown us very clearly that giving them a great variety of songs they don't like is not perceived as being good variety. But do, people do want a variety of sounds, and options.
LISTNUM 1 \l 1752 So what we found is that, on most of our radio stations, that we can have a playlist on mainstream rock stations in the neighbourhood of 800 to 1,000 songs, and do very well, and the ratings that we have on these radio stations in these markets is normally very, very good, because we're giving people a steady diet of what they need, and what they want to hear from a radio station.
LISTNUM 1 \l 1753 So if the previous applicant is proposing potentially 3,500 songs, and we would be playing considerably fewer than that, I would say they're playing a lot of songs we won't be playing, so the duplication goes down. So I would anticipate that the duplication between that proposal and ours is probably in the neighbourhood of 25 to 30 percent, and that would be about where it stops.
LISTNUM 1 \l 1754 We're talking ‑‑ if ‑‑ to pick up the next part of your question, in terms of how many radio stations the Sydney marketplace could potentially support ‑‑ new services.
LISTNUM 1 \l 1755 We've looked at that very carefully. We based our business plan, the one we submitted with our application, on one radio station being licensed. As mentioned by the previous applicant, we do the same thing. We take a rel‑, what we believe is a relatively prudent and conservative approach based on our experience in markets of this size, and we have quite a bit of collective experience in markets of this size, and even smaller, in situations where we've received a license, or put a station on, and we, we've got a kind of a good database, and a good pool of experience to know how quickly ‑‑ yeah ‑‑ how you can ramp up revenues, and where listenership comes from, and where revenue comes from.
LISTNUM 1 \l 1756 So our business plan, although it was based on one, as we got into this, and discovered more about the market, we're really of the opinion that the market could support anywhere from one and a half to two, depending on what it was. We certainly think there's room for one, and potentially two radio stations in this market. The proposal from the previous applicant, in terms of total revenues, is rather low, and even that application, that revenue projection, combined with ours, would still leave, we believe, plenty of room for the incoming broadcaster to do quite well in this market.
LISTNUM 1 \l 1757 It was interesting to hear the economist on the panel of the previous group talking about the economic activity in the area. We share that. We believe that Cape Breton, and Sydney, in specific, their best days are still very much ahead of them. They're on the comeback. Things are getting better here. There's an optimism here that hasn't been around for quite awhile. Things are happening, and economic activity is picking up, and all of the data from FP markets or anecdotal conversations with business people tell us that things are getting better. And we believe that there's definitely room for one, and possibly two to be able to provide additional service to this market, and not have an undue impact on the incoming broadcaster, MBS.
LISTNUM 1 \l 1758 In terms of why our proposal? I think that was the final part of your question.
LISTNUM 1 \l 1759 COMMISSIONER WILLIAMS: Well, yours, and who would be least harmful and most harmful, if there were two licensed.
LISTNUM 1 \l 1760 MR. MAHEU: Yeah. I guess ‑‑ I don't want this to come off the wrong way, but we are of the opinion that if we were licensed in this marketplace, and the Commission saw fit to license another broadcaster, for a total of two new services, we could certainly live with, and work with any other applicant that you decided to license.
LISTNUM 1 \l 1761 Definitely the HFX and Newman applications are quite different that ours, and target different audiences, and have different business plans. It might, on the surface, seem kind of strange that we could live with another rock station, but the ‑‑ it's not very different here in terms of the competitive environment as it is in a couple of other markets that we're in.
LISTNUM 1 \l 1762 For instance, when we put a classic rock station in Fredericton a couple years ago, Fred FM, there was a mainstream rock station in the market owned by Estrow(Sp). And they did a really good job. There was just room for another radio station in the market. The research showed that even though there was a rock station in the market, there was still room for another one. It was a real rock and roll market, and we launched Fred FM into that market. There's two rock stations there, and they both do very well.
LISTNUM 1 \l 1763 Same thing in Charlottetown. We proposed a new mainstream rock station, we launched it. The market was so big on rock that MBS changed the format of their Summerside station from country, the week after we launched, to classic rock, so we went from having a market with no rock station to a market with two rock stations.
LISTNUM 1 \l 1764 And I think Sydney, if it was in the mind and the wisdom of the Commission to license two, could support two new services, even if they were both rock.
LISTNUM 1 \l 1765 Markets have a funny way of sorting themselves out, when new entrants come in, too, because for ‑‑ like the law of physics ‑‑ for every action there's an equal and opposite reaction, and when new stations come on the air, incumbent stations adjust to the market niches, and the needs and wants of listeners, as all good broadcasters do, and the market slowly changes and evolves.
LISTNUM 1 \l 1766 The same thing would happen here, I believe, we believe, with two rock stations being licensed. There's a large appetite for rock. The rock being proposed by Newcap and by Barry Maxwell Martin are substantively different. The Spoken Word and the approach on the radio stations are substantively different, and over time, each one would evolve and find their niche, and I think there's probably room for that.
LISTNUM 1 \l 1767 But to specifically answer your question, we wouldn't have a problem if you were to license two. If we were one of them, we could live with any other additional license that you licensed.
LISTNUM 1 \l 1768 COMMISSIONER WILLIAMS: Thank you, Mr. Maheu.
LISTNUM 1 \l 1769 Your application, and your supplementary brief, and your presentation in chief this morning, you've been very, very thorough and clear, so you've clarified many of the questions that I had, so I have one question remaining, though, and Newcap does not appear to have commissioned a third party economic assessment of the Sydney market, so I'm just looking back to your presentation this morning, and you quote the Cape Breton County Economic Development Authority, and we've heard earlier in this hearing of some of the other economic events of a positive nature that are starting to come down the road, or certainly on the horizon.
LISTNUM 1 \l 1770 Can you give us some idea of what other sources of data that you used to arrive that, at your economic conclusions, and given the economic outlook of the market, determine what assumptions Newcap made to arrive at the conclusion that only 30 percent of its projected revenues would be, would come from the incumbent radio services, while 70 percent would come from other sources?
LISTNUM 1 \l 1771 So how did you come to these conclusions? What type of research did you do? And I guess, give some substantiation to your conclusions.
LISTNUM 1 \l 1772 MR. STEELE: Sure. It's a, it's an excellent question, and a fair question.
LISTNUM 1 \l 1773 What we did in Sydney, and how we came to our economic conclusions about the marketplace was in a very similar vein to what we've done in other situations where we've surveyed, and taken a look at what we believe the opportunity is. We rely a lot on third‑party sources for information, like FP markets. We took a look at what ACOA is proposing for the area. We extensively looked at what the Chamber of Commerce had to say about the marketplace. We use the internet extensively. We have some other data from ‑‑ for the region, from TD and RBC on what their projections for this area are, and we kind of put that all together, and get a sense to ourselves of what the economic activity in the future might look like in the marketplace.
LISTNUM 1 \l 1774 To supplement that, we also had people from Newcap spend some time in the marketplace who are familiar with the Sydney market, have relationships with some business people here, and do a little bit of work on the ground in terms of talking to some business people about the economic environment, what they feel their, the future, immediate, and short‑term, and long‑term future is in Sydney, and we kind of put that altogether.
LISTNUM 1 \l 1775 We didn't commission a third‑party professional, economic study. We rarely do that, but in most cases, when we, when we've done our homework like we've done in Sydney, we're normally pretty accurate, and, in assessing what the potential for the marketplace is.
LISTNUM 1 \l 1776 It was encouraging to hear the previous applicant, the economist talking about some of the exciting things. The XTRATA news is rather big. That is, that's something that could have a profound impact on employment and prosperity in the area for a number of years to come, with the re‑introduction of coal mining for high‑efficiency clean coal power generation, which will be, you know, a lot of jobs and a lot of investment in the area.
LISTNUM 1 \l 1777 In terms of taking a look at what we believe the economy's going to do, and where we're, where our revenues will come from, we're proposing that 30 percent of the money that we're going to bill in the first year will come from the incoming broadcaster, and that's just ‑‑ no matter what you do, when you put a new radio service on, some of that money is going to come from the existing broadcaster.
LISTNUM 1 \l 1778 But we do believe that the other 70 percent ‑‑ and in our particular case, that's a little less than $700,000 in the first year ‑‑ is going to come from new advertisers to radio that are not on radio right now, and those who are currently spending, but can expand their budgets.
LISTNUM 1 \l 1779 And I'm going to ask Jennifer to talk, in just a moment, very briefly on a pretty good example of how that happens, but we know from other situations we've been in, as a company, that when we launch a new radio station in the market, an interesting thing happens. Total radio spending in almost every case goes up, because there are just more people on the street knocking on doors, having conversations with potential advertisers about the benefits of radio.
LISTNUM 1 \l 1780 And radio, as a medium, has a higher profile when new stations come on, so advertising spending always tend to go up beyond the level it would have gone up anyhow. So, in effect, it kind of grows the market by itself. So when we increase the market, by having more people talking about radio, and selling radio, it's not that far of stretch to think that we can take a pretty good share of some of that new money, 'cause we're going to be out there knocking on doors.
LISTNUM 1 \l 1781 There are also a number of advertisers that we believe, in this marketplace, will do business with us for the first time, and use radio, who are not using radio, because we have a format and a product on the air that fits their service, and it fits the target group of consumers that they're trying to reach. Jennifer's got a great example of that we just ran into Charlottetown, and in 45 seconds, if you could give them a sense, that'd be great.
LISTNUM 1 \l 1782 MS. EVANS: Sure. I guess one of the things that we're seeing in Charlottetown, with the launch with K‑Rock 1055 being a brand new music format to P.E.I., we're seeing ‑‑ three things happen. Advertisers have increased their budget to some extent, to include K‑Rock in their mix. We're seeing advertisers come back to radio, because finally there's a music format that will, in fact, reach their target audience, and the final item we're seeing is people coming to radio for the first time, because we have a format that was never available in P.E.I. before.
LISTNUM 1 \l 1783 A great example, and it's been very rewarding for our team, when a leading business person in P.E.I., that's huge in the hospitality industry, with over 12 different restaurants and bars, has never used radio to any extent before, because there wasn't a music format in P.E.I. to reach his demographic, and since K‑Rock has launched, we've really developed a partnership with this particular business. And since then, they've actually signed on for an annual contract with us. That is brand new revenue for radio in Prince Edward Island.
LISTNUM 1 \l 1784 And we're seeing that example, and there's many others that are coming. All of a sudden, these new businesses are coming, and wanting to be partners with us, because we have a product that just has not been available before, and certainly Sydney is going to be another great example of seeing new businesses come to use radio as their advertising medium.
LISTNUM 1 \l 1785 COMMISSIONER WILLIAMS: Well, thank you, Mr. Steele, Ms. Evans, Mr. Maheu, Mr. Muir, and Ms. Spenrath. That's ‑‑ I have a good, clear understanding of your application. I think ‑
LISTNUM 1 \l 1786 MR. STEELE: Thank you.
LISTNUM 1 \l 1787 COMMISSIONER WILLIAMS: ‑‑ those are all my questions, Madame Chair.
LISTNUM 1 \l 1788 COMMISSIONER NOEL: Maybe one little question for Monsieur Maheu, and I'm calling you "Maheu", because it's a French name from the Prescott Russell area.
LISTNUM 1 \l 1789 Would you say that it's like ‑‑ I'm going to make a little analogy with telephone, which I'm more familiar with, as you may or may not know, but in the good old days of the ROE, Return on Equity, we had black phones with dials, and then we changed, and we opened telephone inter‑competition, and we now have all sorts of things, so could you ‑‑ do you think it's a reasonable analogy if you have only one incumbent and one market, it will cater to a very definite part of the population? If you bring some newcomers, it will broaden the spectrum?
LISTNUM 1 \l 1790 MR. MAHEU: I would agree with that, Madame Noel. I think any time competition enters a business cycle, the consumer always benefits.
LISTNUM 1 \l 1791 There's inevitable disruption in the short term, whenever competition has been introduced into a closed environment, and that's one of the hiccups that businesses do have to deal with. We face it in our business. We're in situations where ‑‑ we're in markets where new competition's been introduced, and it's ‑‑
LISTNUM 1 \l 1792 COMMISSIONER NOEL: Saint John's.
LISTNUM 1 \l 1793 MR. MAHEU: Pardon me?
LISTNUM 1 \l 1794 COMMISSIONER NOEL: Saint John's.
LISTNUM 1 \l 1795 MR. MAHEU: Oui. And all of a sudden, you know, we have to react to that, and in the short term, it causes a hiccup.
LISTNUM 1 \l 1796 But what we found, and I think other broadcasters would say the same thing, that competition in any marketplace always serves the consumer best, as long as its reasonable competition. If you were to license ten new stations here, it would be very difficult for anybody to be successful, but reasonable competition ‑‑ consumers benefit by more choice. It makes the competitors also sharper, too, because there's a focus back on service, responsiveness.
LISTNUM 1 \l 1797 With the telephone companies, when you didn't have a choice of where you got a phone, or what colour of phone you could have, I think we all know that the level of service may have been here, but the introduction of new competition, new options for consumers has provided more choice, and made the companies providing those choices a lot more sensitive and responsive to consumers. And radio is a consumer product, like any other one, and the advertisers in this marketplace we believe deserve some more choice, and options. We believe that there's enough of an economy to support the incumbent, and new opportunities.
LISTNUM 1 \l 1798 So I would agree with you that more competition, although a little uncomfortable in the early going, in the long run, serves the constituency of consumers well.
LISTNUM 1 \l 1799 COMMISSIONER NOEL: And you're convinced that there's room for one, or more than one?
LISTNUM 1 \l 1800 MR. MAHEU: Definitely convinced there's room for one, and depending on who it was, potentially two.
LISTNUM 1 \l 1801 One of the reasons ‑‑ we are confident if it were two, if we were one of them ‑‑ is that we do have the experience, and we have the financial depth and wherewithal that if things do not go as, go well as quickly as we had thought, that we have the staying power to be able to stay with it. And one thing we have learned in our experience, and we work in a lot of small and medium sized markets like Sydney, is that in spite of our best intentions ‑‑ and we have examples in Fredericton and even in Charlottetown; they're going well ‑‑ but it always tends to cost a little more than we thought it was going to cost, and it always takes a little longer than we thought it would take. And ‑
LISTNUM 1 \l 1802 COMMISSIONER NOEL: It's like renovations.
LISTNUM 1 \l 1803 MR. MAHEU: (Laughing) Exactly.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1804 MR. MAHEU: So, you know, consistently, although we're conservative, it always takes a little longer than we think, and it always costs a little more, and things don't always go your way as quickly as you think they will.
LISTNUM 1 \l 1805 And so, you know, if we were licensed along with somebody else here, we certainly are confident in our ability to compete, achieve our goals, but we also have the depth of experience and the financial staying power that if it takes an extra year or two to accomplish our business plan, that we can do. And we've got the resources to be able to stay with it, because when we're here today ‑‑ this is on the record ‑‑ we're making commitments to the marketplace about what we're going to do ‑‑ the levels of service that we're going to provide.
LISTNUM 1 \l 1806 We're in business in a lot of places, and we intend on being in business for a long time, so we know we can't come, and say one thing, and then do another. If we say we're going to provide the news, we're going to have three news people, we're going to have live programming, we have to deliver, because we know somewhere down the line, if we don't, you're going to ask us about it.
LISTNUM 1 \l 1807 And so we've made that commitment, and we'll do what we have to do.
LISTNUM 1 \l 1808 COMMISSIONER NOEL: Comes renewal time, we're very bad.
LISTNUM 1 \l 1809 MR. MAHEU: That's correct. So the chickens come home to roost at some point, and ‑‑ but I ‑‑ one for sure, and if we were a second licensee in this market, we could certainly make it work with two.
LISTNUM 1 \l 1810 COMMISSIONER NOEL: Merci beaucoup, Monsieur Maheu.
LISTNUM 1 \l 1811 MR. MAHEU: Merci, Madame.
LISTNUM 1 \l 1812 THE CHAIRPERSON: I have one question for you.
LISTNUM 1 \l 1813 I would just like to understand I guess sort of the major items that make up your $1.1 million capital expenditure budget, and you know, the necessity for that, 'cause it ‑‑ there is, as I mentioned earlier, quite a discrepancy in the applications. Just some insight on that I'd appreciate.
LISTNUM 1 \l 1814 MR. STEELE: Glenda, I'm going to ask you to speak to that, when you can look it up there.
LISTNUM 1 \l 1815 There is, there's always going to be some discrepancies between licensees, based on tower locations, and so on. I think our capital ‑‑ find it here for you ‑‑
LISTNUM 1 \l 1816 THE CHAIRPERSON: 420 for the studio, 560 for transmitting, and a contingency for 120.
LISTNUM 1 \l 1817 MR. STEELE: That is pretty ‑‑
LISTNUM 1 \l 1818 THE CHAIRPERSON: That's what I have.
LISTNUM 1 \l 1819 MR. STEELE: It's pretty much in keeping with our previous experience of launching stations of this sort ‑‑ stand‑alones. We don't enjoy any economies of scale in this particular marketplace, so we aren't able to cut any corners, or save any money, because we don't have a sister station here, but our experience in putting out a radio station in Fredericton on the Astral Tower, what it cost us in terms of the transmitter, the studio equipment, what we're proposing in Sydney is very consistent with what it's cost us in real terms in Charlottetown, and in Fredericton.
LISTNUM 1 \l 1820 So we're comfortable with that amount being the right amount. Sometimes, in previous proposals, we may have been a little light in terms of what it was going to cost us, but this proposal is based on real‑world examples that are rather recent for us, so we have a really good sense that those numbers are pretty close.
LISTNUM 1 \l 1821 THE CHAIRPERSON: And you're going on some, on CBC's tower, I think ‑‑
LISTNUM 1 \l 1822 MR. STEELE: Yeah.
LISTNUM 1 \l 1823 THE CHAIRPERSON: ‑‑ it is? Okay. Thank you very much.
LISTNUM 1 \l 1824 That's the end of our questions, then. Oh, sorry ‑‑
LISTNUM 1 \l 1825 MS. FISHER: I have some questions, Madame Chair.
LISTNUM 1 \l 1826 THE CHAIRPERSON: I missed you the last ‑‑
LISTNUM 1 \l 1827 MS. FISHER: Sorry.
LISTNUM 1 \l 1828 THE CHAIRPERSON: Sorry. Yes, go ahead.
LISTNUM 1 \l 1829 MS. FISHER: I just have a couple of additional questions.
LISTNUM 1 \l 1830 First, I just wanted to clarify and confirm with respect to your news programming.
LISTNUM 1 \l 1831 Out of the total amount of news to present, to be presented, could you specify how much time would be devoted to local news stories, or news of local interest.
LISTNUM 1 \l 1832 MR. STEELE: Sure. In the five hours and 45 minutes a week of what we call traditional, or standard, regularly‑scheduled newscasts, our goal is to have 75 percent of that news content be local.
LISTNUM 1 \l 1833 MS. FISHER: Thank you.
LISTNUM 1 \l 1834 With respect to CCD, in response to Commissioner Williams, you confirmed that your total over and above the first seven years of operation would be 406,000. Can you confirm, for the record, that the annual over and above will be 58,000?
LISTNUM 1 \l 1835 MR. STEELE: Yes, we ‑‑ it'll be in equal increments over the seven ‑‑
LISTNUM 1 \l 1836 MS. FISHER: Okay.
LISTNUM 1 \l 1837 MR. STEELE: ‑‑ years.
LISTNUM 1 \l 1838 MS. FISHER: And you will adhere to this amount, including the 20 percent allocation to FACTOR as a condition of license?
LISTNUM 1 \l 1839 MR. STEELE: Yes, we will.
LISTNUM 1 \l 1840 MS. FISHER: Thank you.
LISTNUM 1 \l 1841 I also wanted to confirm that the allocation to Membertou School identified in your written submission this morning is replacing the contribution previously allocated to the Radio Starmaker Fund?
LISTNUM 1 \l 1842 MR. STEELE: Yes, it is.
LISTNUM 1 \l 1843 MS. FISHER: Thank you.
LISTNUM 1 \l 1844 And how would the monies be used? For example, would it be used for the purchase of musical instruments, or in a similar way as those identified for the other School Boards?
LISTNUM 1 \l 1845 MR. STEELE: Yes, it would, and we will have a letter to that effect that we're prepared to file with the Commission within a week.
LISTNUM 1 \l 1846 MS. FISHER: Okay. And who will be responsible for the allocation of funds? Will it be Newcap, or the schools?
LISTNUM 1 \l 1847 MR. STEELE: It'll be Newcap working with the schools, and we're going to develop a funding agreement with each so that they understand that, where the, how the money needs to be spent in order to qualify with the Commission's guidelines in 2006‑156, I believe.
LISTNUM 1 \l 1848 MS. FISHER: Excellent.
LISTNUM 1 \l 1849 MR. STEELE: And we're going to work with them on an annual basis, because we need to be able to report that in our annual return, so we'll take steps to work with them. We'll have a funding agreement that spells out what it can go for, and to make sure that it qualifies. And we'll ha‑, we'll meet with them on a regular basis to ensure that that's happening.
LISTNUM 1 \l 1850 MS. FISHER: Okay. And you'll be filing those agreements with the Commission ‑‑
LISTNUM 1 \l 1851 MR. STEELE: That's correct.
LISTNUM 1 \l 1852 MS. FISHER: ‑‑ so that we can have a look?
LISTNUM 1 \l 1853 MR. STEELE: Once they're done, yes.
LISTNUM 1 \l 1854 MS. FISHER: Excellent. Thank you. Those are my questions, Madame Chair.
LISTNUM 1 \l 1855 THE CHAIRPERSON: Thank you, Mr. Steele, Mr. Maheu, Ms. Evans, Mr. Muir, and Ms. Spenrath. Thank you very much.
LISTNUM 1 \l 1856 MR. STEELE: Thank you.
LISTNUM 1 \l 1857 THE CHAIRPERSON: Secretary? Further?
LISTNUM 1 \l 1858 THE SECRETARY: I have nothing further, and perhaps this will be a time for ‑‑
LISTNUM 1 \l 1859 THE CHAIRPERSON: Oh, yes, she's going to ‑‑ go ahead.
LISTNUM 1 \l 1860 THE SECRETARY: ‑‑ our break.
LISTNUM 1 \l 1861 THE CHAIRPERSON: Yeah.
LISTNUM 1 \l 1862 THE SECRETARY: Our lunch break.
LISTNUM 1 \l 1863 THE CHAIRPERSON: And we'll be returning at ‑‑ is it 2:00? Do you have the schedule there?
LISTNUM 1 \l 1864 UNIDENTIFIED: 2:00.
LISTNUM 1 \l 1865 THE CHAIRPERSON: 2:00. Thank you very much.
‑‑‑ Upon Recessing at 1242 / Suspension à 1242
‑‑‑ Upon Resuming at 1402 / Reprise à 1402
LISTNUM 1 \l 1866 THE CHAIRPERSON: Good afternoon, ladies and gentlemen.
LISTNUM 1 \l 1867 I think we're going to first hear from the Secretary.
LISTNUM 1 \l 1868 THE SECRETARY: Thank you, Madame Chair.
LISTNUM 1 \l 1869 We will now proceed with item three on the agenda, which is the application by Andrew Newman, on behalf of a corporation to be incorporated, for a license to operate an English‑language FM commercial radio programming undertaking in Sydney.
LISTNUM 1 \l 1870 The new station would operate on frequency 93.1 megahertz, Channel 226B, with an effective radiated power of 50,000 watts, non‑directional antenna/antenna height of 85.6 meters.
LISTNUM 1 \l 1871 Madame Chair, I would like to note for the public record that MacEachern Broadcasting Limited is no longer part of this Andrew Newman application. The e‑mail from Mr. MacEachern has been placed on the public file. A letter confirming the availability of funds has also been placed on the public examination file of this application, both of which are available up in our public examination room.
LISTNUM 1 \l 1872 You will be applicant, or appearing for the applicant is Mr. Andrew Newman, who will introduce his colleagues, and then you'll have 20 minutes to make your presentation.
LISTNUM 1 \l 1873 THE CHAIRPERSON: Thank you.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 1874 MR. BELL: Slight correction. It's Andrew Bell, actually, just to ‑‑ introducing.
LISTNUM 1 \l 1875 Good afternoon, Chair Duncan, Commissioner Noel, Commissioner Williams and Members of the Commission.
LISTNUM 1 \l 1876 My name is Andrew Bell, and I'm the President of Coast Broadcasting. To my far right today is Gary Tredwell, our Program Director, and home‑grown local boy from the area ‑‑ grew up in the area ‑‑ and also Andy Newman who's our V‑P of Operations for Coast Broadcasting.
LISTNUM 1 \l 1877 Before we beginning today's presentation, we wish to acknowledge a change in our application. Our intention was to have a partnership with MacEachern Broadcasting of Port Hawkesbury, however, after initially informing us of his interest to be a part of this application, Mr. Bob MacEachern informed us on Friday past that he has decided that he no longer wishes to be involved.
LISTNUM 1 \l 1878 It remains our intention to form a Nova Scotia registered company, if granted a license through this process. The only change is the proposed company's ownership structure will now be 100 percent subsidiary to Coast Broadcasting Limited, an organization of which the CRTC is certainly aware.
LISTNUM 1 \l 1879 We feel the application is strong on its own merits, and we feel that the reason for choosing Sydney are just as important as they were under the proposed ownership structure.
LISTNUM 1 \l 1880 We apologize for the late notice, and thank the Commission's staff for the questions and advice, and would like to now like to proceed with our presentation.
LISTNUM 1 \l 1881 Our application is for a category 2 FM broadcasting license, with an adult contemporary format here in Sydney, or Cape Breton Regional Municipality, which we believe is the best format for the CBRM market, considering the aging population, and the current formats that exist, or will exist in the coming months. We believe that the current market is under‑served with regards to the number of radio stations present, and needs an additional license to provide an unbiased voice for editorial news and music content.
LISTNUM 1 \l 1882 Yes?
LISTNUM 1 \l 1883 COMMISSIONER NOEL: Could you just slow down, because the people in the back are ‑‑
LISTNUM 1 \l 1884 MR. BELL: Sure.
LISTNUM 1 \l 1885 COMMISSIONER NOEL: Okay?
LISTNUM 1 \l 1886 MR. BELL: Okay. So it's category 2 FM broadcasting license, serving CBRM, or Cape Breton Regional Municipality. It's an adult contemporary or classic hits format targeting adults 25‑54.
LISTNUM 1 \l 1887 We believe that the current market is under‑served with regards to the number of radio stations present, and needs an additional license to provide unbiased voice for editorial news and music content.
LISTNUM 1 \l 1888 Cape Breton and Sydney have long been regarded as a depressed economy, and one that was or is in decline. While although this may have been the case in the past, we believe the picture today is much different, as the economy has many projects on the horizon that will directly benefit the economy and provide growth in the Sydney marketplace. The question that needs to be asked is can Sydney support another operator?
LISTNUM 1 \l 1889 When one takes a look at the Stats Can information for census population by age and gender, quite evidently 25‑54 age demograph is the largest by a significant proportion. Male, female both together, obviously, of 45,000 people.
LISTNUM 1 \l 1890 Retail sales in the area continue to grow. 2006 projections through 2011 show an increase by 13 percent over the next five years. We all know that the largest spending demograph is 25‑54, when it comes to all advertisers that are out there, from furniture to cars to restaurants, and things along those lines. Retail sales in the area are going to rise to almost 1.5 billion by 2011. We believe that's a significant impa‑, number, and we believe that the market has the room for radios, two additional radio stations, potentially, to satisfy that 1.5 billion.
LISTNUM 1 \l 1891 The income in Cape Breton has grown, and is going to grow, projected by 22 percent over the next five years ‑‑ 2006, around 16,000 through to 2011 at over 20,000.
LISTNUM 1 \l 1892 And growth in the Sydney, as far as we concerned today, and going forward, is going to have a great impact on the economy, and a great reason and rationale for an additional radio station, hopefully, so let's have a look.
‑‑‑ Audio presentation
LISTNUM 1 \l 1893 MR. NEWMAN: Thanks to Grammy award winner, Gordie Sampson, for lending us his music, and certainly the culture of Cape Breton is well‑renowned across Canada, and across North America.
LISTNUM 1 \l 1894 Let's take a look at the Sydney radio market, as it stands today. The commercial formats currently in Sydney include CJCB, which is primarily a country AM station serving adults 45, plus. CKPE, as we confirmed by listening as late as yesterday and this morning, is primarily a Hot AC station targeting adults 12 to 34. CHER proposed a classic hits, classic rock format, and all indications are that they will soon be on the air with their FM, targeting primarily, by the sheer genre that they have proposed, males 18 to 49.
LISTNUM 1 \l 1895 The question is, for us, what was missing in the Sydney market for the people? We did extensive market research ‑‑ 420 18 to 54‑year olds polled back in August of 2006 ‑‑ the respondents represent the demographic makeup of the market. We didn't go to just one group. We wanted to get a good representation from a research of the demographic makeup of the market.
LISTNUM 1 \l 1896 Of the people we spoke to, 30.2 percent were heavy radio users ‑‑ four hours or more per week. 58.3 percent of the market research was conducted by females. That research is, of course, all on file with the Commission staff, and with the Commissioners for all of the details.
LISTNUM 1 \l 1897 72.6 percent of our respondents listened to CKPE, and I'll quantify that by saying they CUME'd CKPE, because these numbers that I'm going to give you do add up to more than 100. They said unaided, when asked, unaided, what stations they listened to. They gave us a list. But 72.6 percent did listen to CKPE, 29 listen on a regular basis to CHER, 26.7 percent listen to CJCB, 17.6 percent listen to the Canadian Broadcasting Corporation, and good news for the local community station, Membertou, 19.8 percent listen to that particular frequency. However, 86.2 percent of the respondents thought there should be more choice in the Sydney marketplace.
LISTNUM 1 \l 1898 We went a little deeper than that. We did some cluster analysis to determine the format gaps, if it were, and the true listener tastes. They're broken down by age, by genre, and again, that full analysis is on file with the Commission.
LISTNUM 1 \l 1899 We did want to look at persons aged 25‑54, because we do know that from a financial standpoint, they make the bulk of the buying decisions, and they are certainly the most sought‑after group. 45 percent of persons aged 25‑54 in the CBRM want recent adult pop ‑‑ Billy Joel, Sheryl Crow, Tina Turner, Sting, Bryan Adams. 57 percent are looking for more adult gold. Some people call this classic rock. We put this in genres, and called it adult gold ‑‑ Genesis, Styx, The Police, Rod Stewart, The Eagles, Rolling Stones, and Supertramp.
LISTNUM 1 \l 1900 Take a look at what's in the market right now to find out what's missing the Sydney market, and it is an adult FM station designed for the largest demographic in the region that is also under‑served, and has the most buying power and influence ‑‑ adults 25 to 54.
LISTNUM 1 \l 1901 We think that our proposed station on 93.1 FM will satisfy the audience demand in Sydney, and the CBRM.
LISTNUM 1 \l 1902 Here's some specifics on the plan. Our on‑air product will feature an emphasis on local issues, and community matters. One of the things that keeps coming back to us in this marketplace, from our research, is that this is a very tightly‑knit community; they're very interested in what's going in their backyards; and they'd like to be informed about that.
LISTNUM 1 \l 1903 We do have a plan to utilize live‑to‑air announcers during the key day parts, and on the weekends to provide current and relevant information to a demographic that certainly needs more information and wants more out of their listening choices than just listening to an iPod. We're proposing local news and sports, a distinct editorial voice, and when it comes down to specifics, we've outlined in our application four hours minimum of locally‑produced news on a weekly basis. Sydney and Cape Breton news ‑‑ that content, specifically, will exceed 90 percent of that four hours.
LISTNUM 1 \l 1904 We're proposing live coverage of community events, as the other applicants are. It's the smart thing to do. We intend to be entertaining and offer relevant topics for the key demographic ‑‑ adults 25 to 54.
LISTNUM 1 \l 1905 One of our key products that we've been working on in our other operation in St. John's is promotion of local talent on the air. It is one thing to say that you're playing local talent. It is another to step up, and give them the promotion that they deserve, giving them the opportunity to come on for interviews to promote the venues that they're going to be playing at, to let people know that they're working on a new project, and keep people interested in some of these artists that I guess the buzz word has become "emerging". (Clears throat) Excuse me.
LISTNUM 1 \l 1906 As in our other operation, we do fully intend to be active in the community through sponsorships. We're going to dedicate almost two hours per week for community matters, not in a block, but spread out through the broadcasting day, but the math does work out to be two hours a week for community matters, for community groups to have the opportunity to share their event information.
LISTNUM 1 \l 1907 And we're going to encourage our staff to become involved in their community. We want them to become part of the fabric that makes up the CBRM.
LISTNUM 1 \l 1908 And, of course, our commitment to our proposed CCD initiatives, and balanced levels of Canadian local artists throughout the day and the week. Again, it's very important for us to make sure that the local artists get equal amount air play throughout the week, rather than relegating them to a time of the day that they many not be reaching their potential audience.
LISTNUM 1 \l 1909 We are offering a performance area for live musicians to come in, and play live. It's one of the things that keeps coming back from our listeners at Coast in St. John's that they truly enjoy as listeners, and certainly the talent and the artists certainly appreciate the opportunity.
LISTNUM 1 \l 1910 Our adult contemporary classic hits format means a broader exposure to a wider variety of local artists. The adult contemporary genre, by its very nature, is very broad, and very dynamic, and it allows us a certain leeway to play a deeper variety of local talent than pure traditional artists, or pure rock artists, or pure hip‑hop artists.
LISTNUM 1 \l 1911 And we're offering internships for the next generation of broadcasters. Specifically in our application, we've outlined our community cruiser position. It gives a young broadcaster a chance to get their feet wet in a real‑world environment.
LISTNUM 1 \l 1912 And, of course, a reliable high‑quality transmission facility. We are going to be partnering with the CBC, if approved, to go onto their transmission site, and as we know, the CBC does a great job of keeping their broadcasting facilities, their facilities on the air, even in the middle of inclement weather, as we often get here in Cape Breton.
LISTNUM 1 \l 1913 How do we fund all of this? The business plan? The Sydney radio market has been primarily stagnant with one operator, one owner and three stations. We do believe, and our other, the other previous applicants have also acknowledged that a new FM license will bring new listeners, listeners back to commercial radio. It will likely bring with it new advertisers, and new revenues.
LISTNUM 1 \l 1914 We have put forth in our business plan conservative revenues with realistic increases, and they are based on historical and our own operations, liberal expenses based on similar sized operations. It's a real‑world business plan. And it has no appreciable impact on the existing operator's ability to discharge their programming requirements.
LISTNUM 1 \l 1915 We have heard various estimations of the value of the Sydney radio market. We've heard it as low as three. We have heard it as high as $5,000,000. We did inquire with the Commission's staff, at one point, to see if the information was available. Of course, under your regulations, it was not. We were forced to do some anecdotal information, but we do feel that if it's on the low side of the $4,000,000 mark, we can still meet our business objectives.
LISTNUM 1 \l 1916 We also feel that a new player will stimulate interest in radio, especially in those key buying and decisionmaking demographics.
LISTNUM 1 \l 1917 Our CCD, upon questioning and review, and of course the release of the proposed new, the new Radio Policy, we did review our initial Canadian Talent Development project or program, and we did refine it to reflect the wishes of the Commission under the new Radio Policy. Our Canadian Content Development has a total commitment of $680,682 in cash, and in‑kind donations.
LISTNUM 1 \l 1918 Specifically a commitment to play local stars in the same rotations as national artists, five spins per day for emerging artists, as defined in our CCD. Our actual cash donations represent a total of $69,162 over the course of our license term. Included in that is the Commission's wish to have money go to FACTOR ‑‑ $17,332.
LISTNUM 1 \l 1919 We'll offer daily broadcasts of the entertainment guides to promote all facets of the arts, be they music, be they literary, be they the performing arts, and of course our live space for the open‑air performances, the on‑air performances. We have not put a dollar value on that from a capital standpoint, or from a value standpoint. It is something that we are going to do, because it makes good programming sense.
LISTNUM 1 \l 1920 We also offer the condition of license to adhere to the proposed Radio regulations that were released back in 2006, and we appreciate you'll be asking about those in a few minutes.
LISTNUM 1 \l 1921 Our Canadian Content Development Program is reasonable and it's attainable for the Sydney market. It's a CCD that is for this marketplace and for this radio station.
LISTNUM 1 \l 1922 In summary, our 931 application is offering a distinct editorial voice. We are representing an organization that has a proven track record. We have had success with similar formats, and certainly financial success in another market, and we believe we can duplicate that in Sydney. We have a strong commitment that is reasonable to Canadian Content Development. And more importantly, we're going to deliver a product that is needed, and is wanted here in the Cape Breton Regional Municipality.
LISTNUM 1 \l 1923 CB3, CB931 is also something very important, but before I tell you about that, I'm going to allow Mr. Bell to clue things up.
LISTNUM 1 \l 1924 MR. BELL: In closing, we appreciate the fact that the CRTC has recognized the need to study the impact the larger media operations have on the industry, including the impact, the recent amalgamations, mergers, acquisitions having creating industry giants, and concern they present for the industry, and the smaller independent player to compete and provide unbiased broadcasting to a particular market.
LISTNUM 1 \l 1925 With this in mind, we believe that our application is the best option for an additional license in the Sydney market, and that granting a license to an existing smaller operation, such as ourselves, will no only allow the realization of economies that will ensure the ability to compete with the multi‑license player; it will also ensure provision of the best interest of the industry, the market, and the CRTC's long‑term goals.
LISTNUM 1 \l 1926 In December of 2002, we went in front of the Commission for a broadcasting license for the St. John's marketplace. As part of our application, we presented an opportunity for a new entrant to the media broadcasting that had the desire to grow, and add additional licenses. After successfully launching Coast 101.1 in St. John's February of 2004, we have attempted to fill this obligation with our application for a license in Charlottetown in 2005, however were unsuccessful.
LISTNUM 1 \l 1927 Today we stand in front of you once again, in an attempt to fulfil this obligation, and provide the industry with a proven, young up‑start organization that can only add, and the insurance of maintaining competitive environment in the radio industry in Canada.
LISTNUM 1 \l 1928 Andy?
LISTNUM 1 \l 1929 MR. NEWMAN: With our application here in Sydney, we would like to let you know that our philosophy, as we have proven in our previous application, and in our application in Charlottetown that was unsuccessful, that our philosophy still maintains that radio, in fact, can be local and it can be great.
LISTNUM 1 \l 1930 We thank the Commission for their time, and their understanding in our previously mentioned issue. Thank you.
LISTNUM 1 \l 1931 THE CHAIRPERSON: I'm asking Commissioner Noel to do the questioning.
LISTNUM 1 \l 1932 COMMISSIONER NOEL: Thank you, Madame Chair. Good afternoon, Mr. Bell and Mr. Newman.
LISTNUM 1 \l 1933 As the hearing Secretary mentioned earlier, we were informed by e‑mail Friday, by e‑mail sent by Mr. Robert MacEachern on Friday the 13th ‑‑ it must have been your lucky day, I guess ‑‑ that he was no longer a partner in this application, and I'm going to quote his e‑mail:
"Please note that MacEachern Broadcasting Limited is no longer part of this application process for April 16, 2007 in Sydney, Nova Scotia. Coast Broadcasting, Andy Newman, will be proceeding as scheduled".
LISTNUM 1 \l 1934 Could you tell us, given the fundamental change ‑‑ you know, you're starting from one part‑, from a partnership into now it's a Coast Broadcasting application, and that not posted in the, on the public record until this afternoon, actually ‑‑ could you tell us how this will affect your application?
LISTNUM 1 \l 1935 MR. BELL: As far as we're concerned, it will not affect our application at all. We were the principal that initiated this application. Mr. MacEachern approached us about being involved. He's since approached us about not being involved.
LISTNUM 1 \l 1936 I think what's important here is to understand is that nothing changes with regards to the CRTC, or the product that goes to where. That's what's the most important aspect of all of this is, which our application on all other fronts remains unchanged ‑‑ the product we're going to bring to air, the format, the investment, the financial backing. None of that's changed, and all of that remains exactly the same as it was, so I truly believe that beyond Mr. MacEachern, or the lack of Mr. MacEachern's involvement ‑‑
LISTNUM 1 \l 1937 COMMISSIONER NOEL: So, Mr. Bell, if I understand you well, instead of investing $50,000, you will be investing ‑‑ Coast Broadcasting ‑‑ well, it was supposed to be 50/50, and ‑‑
LISTNUM 1 \l 1938 MR. BELL: We were invest‑, ‑‑
LISTNUM 1 \l 1939 COMMISSIONER NOEL: And there was a loan of 500,000. I have confirmation that the loan is still available to Coast Broadcasting, but will you put the extra $50,000 of cash down that was mentioned in the application?
LISTNUM 1 \l 1940 MR. BELL: In actual fact, there was going to be no financial contribution from Mr. MacEachern. Mr. MacEachern's contribution would have been from a standpoint of his involvement, his expertise, as opposed to a financial. We were 100 percent of the financial backing of this initiative, and this application.
LISTNUM 1 \l 1941 COMMISSIONER NOEL: But you would have received 50 percent of the shares?
LISTNUM 1 \l 1942 MR. BELL: When we put this together, initially, that was ‑‑
LISTNUM 1 \l 1943 COMMISSIONER NOEL: That is actually what's on the re‑, on the ‑‑
LISTNUM 1 \l 1944 MR. BELL: Yeah.
LISTNUM 1 \l 1945 COMMISSIONER NOEL: On the public record.
LISTNUM 1 \l 1946 MR. BELL: Mmm hmm.
LISTNUM 1 \l 1947 COMMISSIONER BELL: So you will put up whatever ‑‑
LISTNUM 1 \l 1948 MR. BELL: Absolutely.
LISTNUM 1 \l 1949 COMMISSIONER NOEL: ‑‑ dollar amount which was valued at $100,000, if I can read correctly your application, and it was all coming from your pockets, but it wasn't evident from the record, I have to say.
LISTNUM 1 \l 1950 There's one point that bugs me there, and I'll tell you ‑‑ and you ma‑, you referred to it, as I said, it was, he was going to contribute in kind. As far as I remember, you're based in Newfoundland, right?
LISTNUM 1 \l 1951 MR. BELL: That's correct.
LISTNUM 1 \l 1952 COMMISSIONER NOEL: And he was based an hour away from Sydney?
LISTNUM 1 \l 1953 MR. BELL: That's correct.
LISTNUM 1 \l 1954 COMMISSIONER BELL: Was he supposed to ‑‑ I'm reading ‑‑ I will quote from your supplementary brief here, and you can comment on that:
"Robert (Bob) MacEachern, the principal and driving force of MacEachern Broadcasting, has fostered a philosophy of community radio and local content for his entire career. From all‑night announcer to owner, Bob is a small market independent with major market skills. His operation model is one to be admired and copied. Bob is a Cape Breton resident, and wears his culture with pride. His business contacts and community relationships are unrivaled. He has been awarded citizen of the year [blah, blah, blah] and mostly recently, super headed fundraising efforts for the new community center, a showpiece of the Strait area."
LISTNUM 1 \l 1955 How will you replace this gentleman who seemed to have such deep roots in the community, when you're based in Newfoundland? And having had the pleasure to fly to Newfoundland, and not being able to come back at the time that I was scheduled to come back, I'm just wondering how you will be able to achieve that presence in the market, if you're stuck in St. John's.
LISTNUM 1 \l 1956 MR. BELL: The concept of getting into St. John's and not getting out is actually an initiative started by our new Premier, and it's part of the immigration process, but we certainly understand the issue of transport.
LISTNUM 1 \l 1957 Mr. MacEachern's involvement ‑‑ "in kind" is a good word. In the banking industry, I believe they call it sweat equity. The involvement on a day‑to‑day basis, if you look at our, at the supplementary brief, yes, there was certainly a certain cache.
LISTNUM 1 \l 1958 COMMISSIONER NOEL: If I ‑‑ I didn't finish the quote.
LISTNUM 1 \l 1959 MR. BELL: Oh (laughs).
LISTNUM 1 \l 1960 COMMISSIONER NOEL: Now:
"Bob's ability to be in the Sydney marketplace on a frequent basis is demonstrated by the commuters who regularly travel [through] to and from Sydney, or to the Stora pulp mill in Port Hawkesbury, yet again, in the two markets are completely independent of wher‑, independent as Port Hawkesbury and Sydney".
LISTNUM 1 \l 1961 But that's ‑‑ what I want to understand is how you, will you replace that sweat equity, as you called it?
LISTNUM 1 \l 1962 MR. BELL: We'll hire a manager on the ground for the Sydney operation, and we will put someone in the place that ‑
LISTNUM 1 \l 1963 COMMISSIONER NOEL: And you will hire that experienced manager from where? You'll go and take somebody out of Maritime ‑‑
LISTNUM 1 \l 1964 MR. BELL: I believe Mr. Pace is in the audience, but ‑‑
LISTNUM 1 \l 1965 COMMISSIONER NOEL: ‑‑ Broadcasting.
LISTNUM 1 \l 1966 MR. BELL: ‑‑ I certainly wouldn't suggest that we'll take any of his people, but I think, you know, the ‑‑ he and I are probably coming to the same realization, at this point.
LISTNUM 1 \l 1967 Mr. Tredwell has ‑‑ Mr. Tredwell and I actually worked together for Mr. MacEachern back in the late '80s, and Mr. Tredwell's joined us in St. John's, and you know, being from Glace Bay, and understanding this market, and one of the things that we certainly appreciate and discover is that you truly need to have someone who understands the market to be on the ground.
LISTNUM 1 \l 1968 COMMISSIONER NOEL: Am I ‑‑
LISTNUM 1 \l 1969 MR. BELL: And I think we're going to ‑‑
LISTNUM 1 \l 1970 COMMISSIONER NOEL: Am I, am I ‑‑
LISTNUM 1 \l 1971 MR. BELL: ‑‑ lean on Mr. ‑‑
LISTNUM 1 \l 1972 COMMISSIONER NOEL: ‑‑ understanding that ‑
LISTNUM 1 \l 1973 MR. BELL: ‑‑ Tredwell's experience.
LISTNUM 1 \l 1974 COMMISSIONER NOEL: ‑‑ Mr. Tredwell here will be repatriated to Cape Breton.
LISTNUM 1 \l 1975 MR. BELL: I think that's going to be an option that he and his wife will have to discuss, yes.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 1976 COMMISSIONER NOEL: Okay.
LISTNUM 1 \l 1977 MR. BELL: But to answer your question, Madame Noel, the cache of that being ‑‑
LISTNUM 1 \l 1978 COMMISSIONER NOEL: You have to understand that I have to, I had to adjust to the new application ‑‑
LISTNUM 1 \l 1979 MR. BELL: Absolutely, and ‑‑
LISTNUM 1 \l 1980 COMMISSIONER NOEL: ‑‑ at very ‑
LISTNUM 1 \l 1981 MR. BELL: ‑‑ we also ‑‑
LISTNUM 1 \l 1982 COMMISSIONER NOEL: ‑‑ short notice.
LISTNUM 1 \l 1983 MR. BELL: We also appreciate that you didn't have the time that should normally have been afforded you, and it was unfortunate that the deal did not come together.
LISTNUM 1 \l 1984 The concern of not having an operator on the ground is something that we'll deal with on the operational side, and we'll replace Mr. MacEachern's three‑day‑a‑week sweat equity by a full‑time operations manager.
LISTNUM 1 \l 1985 COMMISSIONER NOEL: Welcome, Mr. Tredwell, to Cape Breton, and to Sydney.
LISTNUM 1 \l 1986 Just for the record, I would like to read the, a letter, confirmation that we just received at the end of the morning from Charles Bell, R. Bell Limited, which confirms that the financing of 500,000, up to $500,000 will be available to go to Coast Broadcasting, and that this is not in any way put in jeopardy by the fact that MacEachern Broadcasting has withdrawn from the application.
LISTNUM 1 \l 1987 And I understand, also, for the record, that the applicant is now Coast Broadcasting, period.
LISTNUM 1 \l 1988 MR. BELL: The actual application, Madame, was ‑‑
LISTNUM 1 \l 1989 COMMISSIONER NOEL: Was a company to be ‑‑
LISTNUM 1 \l 1990 MR. BELL: Was in my name on ‑‑
LISTNUM 1 \l 1991 COMMISSIONER NOEL: To be formed by the two ‑‑
LISTNUM 1 \l 1992 MR. BELL: On behalf of the company to be ‑‑
LISTNUM 1 \l 1993 COMMISSIONER NOEL: ‑‑ but now it ‑‑
LISTNUM 1 \l 1994 MR. BELL: ‑‑ incorporated.
LISTNUM 1 \l 1995 COMMISSIONER NOEL: ‑‑ will be directly owned by Coast Broadcasting, or will ‑‑
LISTNUM 1 \l 1996 MR. BELL: It will have to be a Nova Scotia subsidiary of Coast Broadcasting.
LISTNUM 1 \l 1997 COMMISSIONER NOEL: Okay, so you will have ‑‑
LISTNUM 1 \l 1998 MR. BELL: Yes, there will have to be ‑‑
LISTNUM 1 \l 1999 COMMISSIONER NOEL: ‑‑ a new ‑‑
LISTNUM 1 \l 11000 MR. BELL: ‑‑ another ‑‑
LISTNUM 1 \l 11001 COMMISSIONER NOEL: A new company to be created ‑‑
LISTNUM 1 \l 11002 MR. BELL: Yes.
LISTNUM 1 \l 11003 COMMISSIONER NOEL: ‑‑ which, of which the owner will be Coast Broadcasting ‑‑
LISTNUM 1 \l 11004 MR. BELL: Correct.
LISTNUM 1 \l 11005 COMMISSIONER NOEL: ‑‑ 100 percent. Thank you. Okay, now that we have sort of settled that part of the record, or that part that was not on the record, we will go the number, a number of other questions that we have. Clarifications for us to understand your application better.
LISTNUM 1 \l 11006 We will talk about programming. We will talk about Canadian Content Development, and if I do say CTD, I mean CCD, but you know, it's in my genes. We will ‑‑ I wanted to talk about the synergies with MacEachern, but we'll talk about the absence thereof, I guess. We'll talk format, and we'll talk about your definition of an emerging artist, and finally, we'll look into the basis on which you derived your economic conditions to support your business plan, okay?
LISTNUM 1 \l 11007 And we look, also, at the impact on Maritime Broadcras‑, Broadcasting of granting a new license in Sydney, and the number of acquisition, or the number of applications that should be granted in the Sydney market, because you base your assumptions, if I'm correct, on two new licenses.
LISTNUM 1 \l 11008 MR. BELL: Yes, we did.
LISTNUM 1 \l 11009 COMMISSIONER NOEL: Okay. But before that, I have a few little questions that are springing out of your presentation of this afternoon, and let me go back to where I put those little ‑‑ those here ‑‑ yes, you presented 19‑, or 2001 census figures at the very beginning of your presentation, Mr. Bell. Are you aware that the 2006 census figures are now available, and that they show, from what I have here, a 3.5 percent decline in the population of Sydney since 2001?
LISTNUM 1 \l 11010 MR. BELL: The information was taken from Stats Can, 'cause that's when it was taken off the website. I ‑‑ as per 2006 numbers ‑‑
LISTNUM 1 \l 11011 COMMISSIONER NOEL: Well, it's ‑‑ because on your document, it says "Cape Breton 2001".
LISTNUM 1 \l 11012 MR. NEWMAN: 2001.
LISTNUM 1 \l 11013 MR. BELL: Yeah.
LISTNUM 1 \l 11014 MR. NEWMAN: I'll speak to that.
LISTNUM 1 \l 11015 MR. BELL: I'm going to let Andy speak to that. I guess, from my standpoint, certainly am I ‑‑ the question is am I aware? I certainly am now. Andy, why don't you speak to ‑‑
LISTNUM 1 \l 11016 MR. NEWMAN: The fact that Cape Breton, the Cape Breton Regional Municipality, and actually they don't break out just the Sydney ‑‑
LISTNUM 1 \l 11017 COMMISSIONER NOEL: No, it said that ‑‑
LISTNUM 1 \l 11018 MR. NEWMAN: ‑‑ in Stats, in ‑‑
LISTNUM 1 \l 11019 COMMISSIONER NOEL: ‑‑ CBRM's ‑‑
LISTNUM 1 \l 11020 MR. NEWMAN: Yes.
LISTNUM 1 \l 11021 COMMISSIONER NOEL: ‑‑ Cape Breton Regional Municipality ‑‑
LISTNUM 1 \l 11022 MR. NEWMAN: The, the purp‑, ‑‑
LISTNUM 1 \l 11023 COMMISSIONER NOEL: ‑‑ and they forecast a ‑‑ they found that there was a 3.5 percent decline since the 2001 census, and that this tendency is supposed to continue through 2012.
LISTNUM 1 \l 11024 MR. NEWMAN: One of the intentions of that particular graph that we put up was to show the actual census ‑‑
LISTNUM 1 \l 11025 COMMISSIONER NOEL: Yes, yeah, I know what ‑‑
LISTNUM 1 \l 11026 MR. NEWMAN: ‑‑ population by ‑‑
LISTNUM 1 \l 11027 COMMISSIONER NOEL: What you meant, but ‑‑
LISTNUM 1 \l 11028 MR. NEWMAN: ‑‑ age and gender.
LISTNUM 1 \l 11029 COMMISSIONER NOEL: ‑‑ I was just wondering why you had the 2001 census figure, instead of the more recent 2006 figure.
LISTNUM 1 \l 11030 MR. NEWMAN: At the time of putting together the presentation, the 2006 weren't readily available.
LISTNUM 1 \l 11031 COMMISSIONER NOEL: Okay. Now next little thing.
LISTNUM 1 \l 11032 Well, we've discussed a little bit of that, but you mention on your on‑air product slides that you would put emphasis on local issues, and community matters. Was that prepared before your partner ‑‑
LISTNUM 1 \l 11033 MR. NEWMAN: The ‑‑
LISTNUM 1 \l 11034 COMMISSIONER NOEL: ‑‑ disappeared?
LISTNUM 1 \l 11035 MR. NEWMAN: The philosophy of this particular application is not unlike the philosophy that we currently operate in St. John's. It is a philosophy, and since you've mentioned his name, it is a philosophy that Mr. MacEachern shared with us.
LISTNUM 1 \l 11036 It is also a philosophy that we do operate by, currently, and proposed in the application, regardless of Mr. MacEachern's involvement. The ‑‑ as the previous applicants have also indicated, the importance of community involvement, especially in a market such as the Cape Breton Regional Municipality, it's such a tightly‑knit community that you have to pay attention to what the community wants.
LISTNUM 1 \l 11037 COMMISSIONER NOEL: And how ‑‑ I know this gentleman has already agreed to move back to Sydney, but how will you fill the void left by the departure of Mr. MacEachern, and for that particular ‑‑
LISTNUM 1 \l 11038 MR. NEWMAN: Mr. MacEachern's involvement in our operation was to be an operations manager, corporate philosophy, and conditions of license for this ‑‑
LISTNUM 1 \l 11039 COMMISSIONER NOEL: Yes, but he had the contacts.
LISTNUM 1 \l 11040 MR. NEWMAN: ‑‑ particular license.
LISTNUM 1 \l 11041 COMMISSIONER NOEL: That's what I mean.
LISTNUM 1 \l 11042 MR. NEWMAN: He had the contacts ‑‑
LISTNUM 1 \l 11043 COMMISSIONER NOEL: From what I have ‑‑
LISTNUM 1 \l 11044 MR. NEWMAN: ‑‑ in his ‑‑ yes.
LISTNUM 1 \l 11045 COMMISSIONER NOEL: From what I have read of what you wrote ‑‑
LISTNUM 1 \l 11046 MR. NEWMAN: Yes.
LISTNUM 1 \l 11047 COMMISSIONER NOEL: ‑‑ in your supplementary brief, he's the one who was rooted here.
LISTNUM 1 \l 11048 MR. NEWMAN: He was rooted in the Port Hawkesbury market, and did have contacts certainly in the Sydney and Cape Breton Regional Municipality marketplace. I think, taking a good look at the staff and hiring correctly, we'll certainly eliminate any of the shortfalls that Mr. MacEachern's loss to the application will bring.
LISTNUM 1 \l 11049 COMMISSIONER NOEL: Thank you, Mr. Newman.
LISTNUM 1 \l 11050 Now, just ‑‑ I was wondering here, on your business plan, you said you had conservative revenues, and liberal expenses. Have you thought other than of anything green?
LISTNUM 1 \l 11051 MR. NEWMAN: Pardon me?
LISTNUM 1 \l 11052 COMMISSIONER NOEL: Have you thought of anything green? Conservative revenues, liberal expenses.
LISTNUM 1 \l 11053 MR. NEWMAN: I think if you look at the bottom ‑‑
LISTNUM 1 \l 11054 COMMISSIONER NOEL: Something green.
LISTNUM 1 \l 11055 MR. NEWMAN: ‑‑ line, you'll see the green that we hope to achieve, yes.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11056 COMMISSIONER NOEL: I, I, I'm teas‑, I'm teasing you. Don't take that ‑‑
LISTNUM 1 \l 11057 MR. NEWMAN: And I did notice that you're using a ‑‑ someone this morning was using a green highlighter, so yes.
LISTNUM 1 \l 11058 COMMISSIONER NOEL: Oh, yeah, I'm not Irish. (Holding up highlighter) I'm going with pink. Okay. Let's go to programming, then.
LISTNUM 1 \l 11059 You see we're not yet a paperless industry yet. Not quite, although I can get a few things from my screen here.
LISTNUM 1 \l 11060 Your commitment to local programming. It's based on a week of 168 hours. How would you calculate the number of hours of local programming based on the normal broadcast week of 126 hours, but ‑‑ and those 126 hours, as you are, you know I'm sure, are calculated between 6:00 a.m. and midnight, including Saturdays, and starting on the Sunday.
LISTNUM 1 \l 11061 MR. NEWMAN: The percentages certainly will not change in, that we've outlined in our deficiency letter. We did take a look at the 24‑hour clock, and not the broadcast clock, which is how we arrived at the number. We certainly recognize the intent of when we would ‑‑
LISTNUM 1 \l 11062 COMMISSIONER NOEL: Yeah, we do the calculations on the ‑‑
LISTNUM 1 \l 11063 MR. NEWMAN: Yes.
LISTNUM 1 \l 11064 COMMISSIONER NOEL: ‑‑ 126‑hour week, so could you give us the figure based on the one ‑‑ you know, like it doesn't count if it's in the middle of the night. That's what I mean. So we, what we need to know is what, how many hours of local programming are going to be done during the broadcast week, which is the 126 hour between 6:00 a.m. and midnight, starting on the Sunday.
‑‑‑ Pause
LISTNUM 1 \l 11065 COMMISSIONER NOEL: Maybe you could ‑‑
LISTNUM 1 \l 11066 MR. NEWMAN: No, I'm just ‑‑
LISTNUM 1 \l 11067 COMMISSIONER NOEL: ‑‑ come back, come back in ‑
LISTNUM 1 \l 11068 MR. NEWMAN: Sure, no I'm just ‑
LISTNUM 1 \l 11069 COMMISSIONER NOEL: ‑‑ the Phase III, and give us the answer at ‑‑
LISTNUM 1 \l 11070 MR. NEWMAN: I, I'm getting you ‑‑
LISTNUM 1 \l 11071 COMMISSIONER NOEL: ‑‑ that stage.
LISTNUM 1 \l 11072 MR. NEWMAN: ‑‑ the actual number. I wanted to make sure that I didn't have a percentage there, and that we, in fact, had a number. We discussed that the number of hours of the Spoken Word, for example ‑‑
LISTNUM 1 \l 11073 COMMISSIONER NOEL: Well, we're talking ‑‑
LISTNUM 1 \l 11074 MR. NEWMAN: ‑‑ would be ‑‑
LISTNUM 1 \l 11075 COMMISSIONER NOEL: ‑‑ local programming.
LISTNUM 1 \l 11076 MR. NEWMAN: Right, which would be ‑‑
LISTNUM 1 \l 11077 COMMISSIONER NOEL: Which is not exactly Spoken Words. Do you want to come back in ‑‑
LISTNUM 1 \l 11078 MR. NEWMAN: Sure, that would be ‑‑
LISTNUM 1 \l 11079 COMMISSIONER NOEL: ‑‑ Phase III with the, with an answer to that?
LISTNUM 1 \l 11080 MR. NEWMAN: That would be fabulous. We'll get ‑‑
LISTNUM 1 \l 11081 MR. TREDWELL: It's there at the bottom of page seven.
LISTNUM 1 \l 11082 MR. NEWMAN: There, hang on. Gary tells me it's on the bottom of page seven, so there we are.
LISTNUM 1 \l 11083 MR. TREDWELL: That one?
LISTNUM 1 \l 11084 MR. NEWMAN: No.
LISTNUM 1 \l 11085 MR. TREDWELL: No? Okay.
LISTNUM 1 \l 11086 MR. NEWMAN: No. That's it. Math is one of Mr. Bell's strong points.
LISTNUM 1 \l 11087 COMMISSIONER NOEL: You'll have to take it, too, eh?
‑‑‑ Pause
LISTNUM 1 \l 11088 COMMISSIONER NOEL: Just make the calculations, and come back in Phrase III ‑‑
LISTNUM 1 \l 11089 MR. NEWMAN: Certainly.
LISTNUM 1 \l 11090 COMMISSIONER NOEL: ‑‑ please. Okay? And just a second, okay?
LISTNUM 1 \l 11091 Now could you my, tell us ‑‑ and maybe you'll have to answer us in Phase III, as well ‑‑ could you tell us how much of that local programming will be spoken words, and how much of that local programming will be music?
LISTNUM 1 \l 11092 MR. NEWMAN: The calculation that we're doing is just to take out the ‑‑ we had suggested we would like to reserve some time to purchase some syndicated programming from possibly ‑‑
LISTNUM 1 \l 11093 COMMISSIONER NOEL: So you're talk‑, ‑‑
LISTNUM 1 \l 11094 MR. NEWMAN: ‑‑ other areas of ‑
LISTNUM 1 \l 11095 COMMISSIONER NOEL: You're talking about the two to six hours that you mentioned in your supplementary ‑‑
LISTNUM 1 \l 11096 MR. NEWMAN: Yes.
LISTNUM 1 \l 11097 COMMISSIONER NOEL: ‑‑ brief? We'll be addressing that a little later on, okay, because I have ‑‑
LISTNUM 1 \l 11098 MR. NEWMAN: Yes.
LISTNUM 1 \l 11099 COMMISSIONER NOEL: ‑‑ a couple of questions on that.
LISTNUM 1 \l 11100 MR. NEWMAN: Sure.
LISTNUM 1 \l 11101 COMMISSIONER NOEL: Because of the reference you made to the actual show you mention as an example.
LISTNUM 1 \l 11102 MR. NEWMAN: Yes.
LISTNUM 1 \l 11103 COMMISSIONER NOEL: I will have some questions on that, so besides those six hours out of the 126 hours, am I correct to say that it's going to be all local ‑‑
LISTNUM 1 \l 11104 MR. NEWMAN: One ‑‑
LISTNUM 1 \l 11105 COMMISSIONER NOEL: ‑‑ programming?
LISTNUM 1 \l 11106 MR. NEWMAN: Yes.
LISTNUM 1 \l 11107 COMMISSIONER NOEL: Okay. So that leaves 120 hours of local programming out of 126. And how much of this is spoken words, and how much of this is music?
LISTNUM 1 \l 11108 MR. NEWMAN: 14 hours of spoken word.
LISTNUM 1 \l 11109 COMMISSIONER NOEL: Including news?
LISTNUM 1 \l 11110 MR. NEWMAN: That will include news, sports, surveillance. It does not include any of the commercial announcements.
LISTNUM 1 \l 11111 COMMISSIONER NOEL: So 14 out of a 120?
LISTNUM 1 \l 11112 MR. NEWMAN: Yes.
LISTNUM 1 \l 11113 COMMISSIONER NOEL: And the balance, that's 106 music, and six syndicated. Syndicated, non‑local. Am I correct?
LISTNUM 1 \l 11114 MR. NEWMAN: If you're referencing produced in Sydney, then the answer is yes.
LISTNUM 1 \l 11115 COMMISSIONER NOEL: That's what I call local, yes.
LISTNUM 1 \l 11116 MR. NEWMAN: Perfect.
LISTNUM 1 \l 11117 COMMISSIONER NOEL: Not produced in St. John's.
LISTNUM 1 \l 11118 MR. NEWMAN: No.
LISTNUM 1 \l 11119 COMMISSIONER NOEL: St. John. St. John's?
LISTNUM 1 \l 11120 MR. NEWMAN: St. John's.
LISTNUM 1 \l 11121 COMMISSIONER NOEL: I'm getting confused between St. John's and Saint John. Which is which?
LISTNUM 1 \l 11122 MR. NEWMAN: St. John's is S‑t‑. J‑o‑h‑n‑s, apostrophe "s".
LISTNUM 1 \l 11123 THE CHAIRPERSON: In Newfoundland, Newfoundland.
LISTNUM 1 \l 11124 MR. NEWMAN: In Newfoundland.
LISTNUM 1 \l 11125 COMMISSIONER NOEL: Newfoundland is St. John's ‑‑
LISTNUM 1 \l 11126 THE CHAIRPERSON: St. John's.
LISTNUM 1 \l 11127 MR. NEWMAN: Yes.
LISTNUM 1 \l 11128 COMMISSIONER NOEL: ‑‑ with a "sss" at the end? Okay. Okay. Forget, forgive me. You know, it's ‑‑ for me, the apostrophe "s" is sometimes confusing.
LISTNUM 1 \l 11129 How much of the four hours a week of news will be devoted to sports?
LISTNUM 1 \l 11130 MR. NEWMAN: The four hours of news is exclusive of sports.
LISTNUM 1 \l 11131 COMMISSIONER NOEL: Exclusive of sports?
LISTNUM 1 \l 11132 MR. NEWMAN: Yes.
LISTNUM 1 \l 11133 COMMISSIONER NOEL: So sports, news are not calculated. They would be added to the news ‑‑
LISTNUM 1 \l 11134 MR. NEWMAN: The new‑, the sports ‑‑
LISTNUM 1 \l 11135 COMMISSIONER NOEL: ‑‑ but part of the spoken words?
LISTNUM 1 \l 11136 MR. NEWMAN: The sports and the weather are not included in the four hours of news.
LISTNUM 1 \l 11137 COMMISSIONER NOEL: So it's four hours of pure news? No sports, no weather, no traffic?
LISTNUM 1 \l 11138 MR. NEWMAN: Correct.
LISTNUM 1 \l 11139 COMMISSIONER NOEL: Thank you.
LISTNUM 1 \l 11140 Now you've been talking about those students, and I've seen them popping again in your presentation of this afternoon ‑‑ internships ‑‑ I'm on on‑air product.
LISTNUM 1 \l 11141 MR. NEWMAN: Mmm hmm.
LISTNUM 1 \l 11142 COMMISSIONER NOEL: Internships for the next generation of broadcasters, community cruiser position. Could you tell me what this is, and what they will do?
LISTNUM 1 \l 11143 MR. NEWMAN: The community cruiser ‑‑
LISTNUM 1 \l 11144 COMMISSIONER NOEL: Or who this is, and what they will do?
LISTNUM 1 \l 11145 MR. NEWMAN: Not a particularly ground‑breaking position. It's a very common, very common for radio stations to hire students, preferably broadcasting students, to come, get some real‑world experience, actually be employed gainfully ‑‑ that's not a volunteer position. It's a position that's budgeted for. They would travel around to community events. They would be doing live reports. They would be representing the station.
LISTNUM 1 \l 11146 The concept is to go out into the community to bring the cultures of the particular communities back to the larger audience. They would journalistic in their nature, simply because they would have to go out and ask the questions to come back to report about the particular events.
LISTNUM 1 \l 11147 COMMISSIONER NOEL: Okay. You mentioned that preferably broadcasting students. Is there a broadcasting college in ‑‑
LISTNUM 1 \l 11148 MR. NEWMAN: There ‑‑
LISTNUM 1 \l 11149 COMMISSIONER NOEL: ‑‑ Cape Breton, or is there a communications school in Cape Breton?
LISTNUM 1 \l 11150 MR. NEWMAN: There had been for a short time, some time ago, back in the '80s, some type of broadcasting school that was attached to one of the high schools. There was a program being taught in the media, in a very general sense, but there is no university ‑‑
LISTNUM 1 \l 11151 COMMISSIONER NOEL: So basically ‑‑
LISTNUM 1 \l 11152 MR. NEWMAN: Cape Breton university.
LISTNUM 1 \l 11153 COMMISSIONER NOEL: ‑‑ we're talking summer students' job, and not permanent jobs here?
LISTNUM 1 \l 11154 MR. NEWMAN: It's very likely, as in the case of one of our producers in St. John's, that this position does lead to a permanent position as the company grows, and the requirement for ‑‑
LISTNUM 1 \l 11155 COMMISSIONER NOEL: Yes, but you mentioned broadcasting students, and since there's no broadcasting students here in Cape Breton, you ‑‑
LISTNUM 1 \l 11156 MR. NEWMAN: No, ideally, we would repatriate people from the Cape Breton region who have gone away to school, be that to Carlton, be that to ‑‑
LISTNUM 1 \l 11157 COMMISSIONER NOEL: That's what I mean. It will be ‑‑
LISTNUM 1 \l 11158 MR. NEWMAN: ‑‑ AMI.
LISTNUM 1 \l 11159 COMMISSIONER NOEL: ‑‑ a summer, it will be a summer job maybe leading to a permanent position, but it would not be students during the year that are also experiencing on the ground their ‑
LISTNUM 1 \l 11160 MR. NEWMAN: Some of the broadcasting ‑‑
LISTNUM 1 \l 11161 COMMISSIONER NOEL: Their journalistic skills?
LISTNUM 1 \l 11162 MR. NEWMAN: Some of the broadcasting schools do offer internships that are outside of the normal summer hours, but yes, it ‑‑
LISTNUM 1 \l 11163 COMMISSIONER NOEL: Co‑op programs, then?
LISTNUM 1 \l 11164 MR. NEWMAN: It would be ‑‑ that would be something that we would be availing from, whether that be AMI in Halifax, the College of the North Atlantic in Stephenville, which is just across the water, or some of the larger universities.
LISTNUM 1 \l 11165 COMMISSIONER NOEL: But mostly summer students?
LISTNUM 1 \l 11166 MR. NEWMAN: There's ‑‑ certainly the summer cruiser position is a summer position, yes.
LISTNUM 1 \l 11167 COMMISSIONER NOEL: Okay. Now what does that su‑, what is a summer cruiser? You mean he's cruising in a car around the island?
LISTNUM 1 \l 11168 MR. NEWMAN: Essentially, I guess the, he ‑‑
LISTNUM 1 \l 11169 COMMISSIONER NOEL: He's, he's becoming to ‑‑
LISTNUM 1 \l 11170 MR. NEWMAN: Yes.
LISTNUM 1 \l 11171 COMMISSIONER NOEL: To be the expert on the Cabot Trail?
LISTNUM 1 \l 11172 MR. NEWMAN: We'd certainly help you, yes. The summer cruiser position is ‑‑ yes, it's a, it's dedicated to travelling around the community to bring back the message from the community back to the masses. Yes.
LISTNUM 1 \l 11173 COMMISSIONER NOEL: Okay. Now what type of support would, will those students, or interns, as you call them, get from full‑time staff?
LISTNUM 1 \l 11174 MR. NEWMAN: Well, certainly just first and foremost, the experience of going out and meeting people, taking advantage, if they are expatriate Cape Bretoners, of coming back home and re‑establishing that if they're in the journalistic will certainly become invaluable. From a full‑time position, certainly the ‑‑
LISTNUM 1 \l 11175 COMMISSIONER NOEL: Mmm hmm.
LISTNUM 1 \l 11176 MR. NEWMAN: The staff members are encouraged to offer advice, offer direction. It would be the operation manager, and the program director's job to do air checks with them, to give them direction, to offer them suggestions of areas to travel.
LISTNUM 1 \l 11177 COMMISSIONER NOEL: Will there be supervision before they go on‑air?
LISTNUM 1 \l 11178 MR. NEWMAN: Absolutely, yes.
LISTNUM 1 \l 11179 COMMISSIONER NOEL: Okay. We'll tackle the CCD aspect, and as it's very technical, you'll have to bear with me. I'm going to ask you very technical questions. I think you've heard them before.
LISTNUM 1 \l 11180 In your 29 January 2007 response, you modified your original CCD funding proposal to reflect the Commission's new CCD contribution regime outlined in the Commission Radio Policy. Could you confirm your understanding that if licensed, your station will have to contribute a basic annual CCD contribution imposed by regulations based on the station's total annual revenues, and in the amounts as set out in paragraph 116 of the new Radio Policy; that is Public Notice CRTC 2006‑158?
LISTNUM 1 \l 11181 MR. NEWMAN: Yes, we ‑‑
LISTNUM 1 \l 11182 COMMISSIONER NOEL: And based on your financial projection, projections, this would represent a basic annual CCD contribution of $1,000 in years one through seven?
LISTNUM 1 \l 11183 MR. NEWMAN: Our planned third‑party donations are now $1,500 annually to FACTOR, as outlined in our deficiencies. We recognize that that is an overage, and we are certainly willing to commit to any of the conditions of license under the CCD proposal.
LISTNUM 1 \l 11184 COMMISSIONER NOEL: Could you confirm your understanding that no less of 60 percent of the station's basic annual CCD contribution must be allocated either to FACTOR, or music action, and the remaining amount, if any, may be directed to any eligible CCD initiatives at your discretion?
LISTNUM 1 \l 11185 MR. NEWMAN: Yes, we understand that, and are prepared to accept that.
LISTNUM 1 \l 11186 COMMISSIONER NOEL: Thank you.
LISTNUM 1 \l 11187 And as set out in the new Commercial Radio Policy, a new annual basic CCD contribution will be imposed on all commercial radio licensees by regulation. The Commission could impose a transitory condition of license, COL, reflecting the new basic annual CCD until such time as the regulations comes into force. Once the regulation is in place, the COL would expire.
LISTNUM 1 \l 11188 Do you have any comments regarding the Commission imposing such a COL?
LISTNUM 1 \l 11189 MR. NEWMAN: The Commission's recommendations for this particular marketplace, and based on our financial projections, we have no issue with it being a transitional condition of license, no.
LISTNUM 1 \l 11190 COMMISSIONER NOEL: Thank you.
LISTNUM 1 \l 11191 And as you certainly recall from the past, under the previous Canadian Talent Development Policy, the CTD Policy, an applicant or licensee could choose to exceed the minimum annual basic CTD contribution.
LISTNUM 1 \l 11192 Under the old CTD Policy, it was clear that your funding proposal exceeded the minimum planned requirements.
LISTNUM 1 \l 11193 As part of this application, you are proposing to contribute additional annual funding to CCD that would be over and above the basic required CCD contribution.
LISTNUM 1 \l 11194 Can you confirm for us the total annual amount of this over and above CCD contribution? That is over and above the $1,000 that I mentioned ‑‑
LISTNUM 1 \l 11195 MR. NEWMAN: Yes.
LISTNUM 1 \l 11196 COMMISSIONER NOEL: ‑‑ earlier.
LISTNUM 1 \l 11197 MR. NEWMAN: Our planned third‑party donations which, if you take the $1,000 off, becomes an additional $500 to FACTOR per year.
LISTNUM 1 \l 11198 COMMISSIONER NOEL: 500 to FACTOR. Yeah?
LISTNUM 1 \l 11199 MR. NEWMAN: And $3,500 annually donated in the first two years to Music Nova Scotia, Music N.S. We would like the flexibility, after the second year, to determine if another local organization ‑‑ and I, when I mean local, I do, as you, the Sydney area ‑‑ be better suited possibly to promote local talent in the Sydney area. We did discover in previous applications that if we committed to donating to a particular organization, we were held to that for seven years, so we would like the Commissions flexibility to allow us to explore another local option after two years.
LISTNUM 1 \l 11200 COMMISSIONER NOEL: So if I understand well, your over and above contribution is $4,000 of which ‑‑
LISTNUM 1 \l 11201 MR. NEWMAN: Yes.
LISTNUM 1 \l 11202 COMMISSIONER NOEL: ‑‑ 500 which represents, if my calculations are correct, 20 percent ‑‑
LISTNUM 1 \l 11203 MR. NEWMAN: Yes.
LISTNUM 1 \l 11204 COMMISSIONER NOEL: ‑‑ is going to FACTOR, and the ‑‑
LISTNUM 1 \l 11205 MR. NEWMAN: Yes.
LISTNUM 1 \l 11206 COMMISSIONER NOEL: The remainder is going to Music Nova Scotia for the first two years, and then you want to have some flexibility as the operation starts to move ahead to ‑‑
LISTNUM 1 \l 11207 MR. NEWMAN: We want to keep the financial amount to be the same. We just would like the option to review ‑‑
LISTNUM 1 \l 11208 COMMISSIONER NOEL: To be able to give it ‑‑
LISTNUM 1 \l 11209 MR. NEWMAN: ‑‑ the beneficiary.
LISTNUM 1 \l 11210 COMMISSIONER NOEL: Give it to somebody else than Music Nova Scotia?
LISTNUM 1 \l 11211 MR. NEWMAN: Yes.
LISTNUM 1 \l 11212 COMMISSIONER NOEL: So if I go slowly with what ‑‑
LISTNUM 1 \l 11213 MR. NEWMAN: Thank you.
LISTNUM 1 \l 11214 COMMISSIONER NOEL: ‑‑ my fellows here wants to know, please confirm your understanding that under the new policy, no less than 20 percent of this annual over and above CCD contribution must be allocated to FACTOR, or music action.
LISTNUM 1 \l 11215 MR. NEWMAN: Correct.
LISTNUM 1 \l 11216 COMMISSIONER NOEL: With this in mind, what percentage of our annual ove‑, of your annual over and above CCD commitment do you wish to allocate to either FACTOR, or music action, and what dollar amount does this represent?
LISTNUM 1 \l 11217 I think we've got the answer. It's $500.
LISTNUM 1 \l 11218 MR. NEWMAN: 500.
LISTNUM 1 \l 11219 COMMISSIONER NOEL: ‑‑ and $3,500.
LISTNUM 1 \l 11220 MR. NEWMAN: Right.
LISTNUM 1 \l 11221 COMMISSIONER NOEL: Please identify the eligible CCD initiatives, and annual funding level for each that you would support with the remaining annual and over and above CCD contribution.
LISTNUM 1 \l 11222 This is the $3,500 to Music Nova Scotia.
LISTNUM 1 \l 11223 Please confirm that you will adhere to the over and above CCD contributions as conditions of license.
LISTNUM 1 \l 11224 MR. NEWMAN: Yes.
LISTNUM 1 \l 11225 COMMISSIONER NOEL: Thank you. So now I'm coming to ‑‑ I added a little more. I had prepared questions on synergies, and then I added "if any".
LISTNUM 1 \l 11226 Given the change in your plans, could you tell us ‑‑ Jesus, I can't read myself.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11227 COMMISSIONER NOEL: Sorry. Oh, it's "how". Gee, I must have been tired, when I wrote that one down.
LISTNUM 1 \l 11228 Tell us how you plan to operate the Sydney station without a local partner who knows the market.
LISTNUM 1 \l 11229 Well, I guess we answered that question already. We have this new resident of Sydney here that we'll put it down.
LISTNUM 1 \l 11230 MR. TREDWELL: Commissioner Noel, I have a beautiful three‑bedroom house in St. John's, so getting trapped there will not be a problem. Obviously you've got me moved here, which I'm okay with. My parents still live here, my brother still lives here. I come back here every year. My children love coming back. I miss the place. You can take the boy out of the bay, but you can't take the bay out of the boy, so I would love to come back to Cape Breton.
LISTNUM 1 \l 11231 I've wrote a list of dozens of things that happen here every year. I've been to the Marconi Interpretation Center. That's a big thing in Glace Bay. The Bell ‑‑
LISTNUM 1 \l 11232 COMMISSIONER NOEL: We haven't been able to go there, yet.
LISTNUM 1 \l 11233 MR. TREDWELL: Well, you should, and it's ‑‑ I believe it should be open. If not, we can jimmy the lock.
LISTNUM 1 \l 11234 The Bell Museum in Baddeck, the Savoy Theatre ‑‑ been there many times ‑‑ a lot of things happen here, like Action Week in Sydney. I've been to Rock on the Dock. I love going to the family's place in Mira, along the river.
LISTNUM 1 \l 11235 There are great things happening in the wintertime, too. I understand the Vince Ryan tournament is a scholarship‑driven event which now covers almost all of Cape Breton. If there's ice, and it's got a red line or a blue line, there's a ‑‑
LISTNUM 1 \l 11236 COMMISSIONER NOEL: Guess you're ready ‑‑
LISTNUM 1 \l 11237 MR. TREDWELL: ‑‑ game on it.
LISTNUM 1 \l 11238 COMMISSIONER NOEL: ‑‑ to move.
LISTNUM 1 \l 11239 MR. TREDWELL: Yeah. So many events happen here, I'm well aware of them, and I would love to come back. And I still have strong ties here. I only hope that I could be, I guess, as a good a man as my grandfather, who is a member of the Glace Bay Sports Hall of Fame, was a philanthropist, gave of his time, and especially of his money to support rugby, hockey, boxing, football for a brief time, I believe. That's all I can say is, you know, if we can strike a deal on my house in St. John's ‑‑
LISTNUM 1 \l 11240 COMMISSIONER NOEL: You'll take care of that.
LISTNUM 1 \l 11241 MR. TREDWELL: I'm sure somebody will buy it, but I would do my best to allay ‑‑
LISTNUM 1 \l 11242 COMMISSIONER NOEL: Yes.
LISTNUM 1 \l 11243 MR. TREDWELL: ‑‑ your fears of not having somebody from here, who understands here, on the ground.
LISTNUM 1 \l 11244 COMMISSIONER NOEL: Okay. On a more serious footing, let's say, do you anticipate any synergies with the Coast's, Coast Broadcasting's operations in St. John's, in terms of economies of scales, or do you have any thoughts on that? Human resources, whatever?
LISTNUM 1 \l 11245 MR. NEWMAN: There are certainly ‑
LISTNUM 1 \l 11246 COMMISSIONER NOEL: The floor's open.
LISTNUM 1 \l 11247 MR. NEWMAN: There's certainly front office, and of course, it gives us the opportunity ‑‑ if given the opportunity to be licensed in Sydney, it does give us a second operation. The synergies of having someone like myself who would be overseeing some of the group programming decisions, some of the administration duties from an HR standpoint are things that are certainly shareable.
LISTNUM 1 \l 11248 IT is certainly an item that, you know, in the days that we all started with 45's, and carts, and whatnot was a word for the big guys, but it's become part of the everyday. The transmission facilities, of course, we plan to utilize CBC, so they will be taking care of the maintenance of these types of things.
LISTNUM 1 \l 11249 I think there are some synergies from the back end. We don't see any synergies from a programming, or a news standpoint, certainly because of the geographic distance.
LISTNUM 1 \l 11250 COMMISSIONER NOEL: And the submarine cable's not yet there.
LISTNUM 1 \l 11251 MR. NEWMAN: Not yet, but if you've a 15 or some million, I think I know somebody who would like it.
LISTNUM 1 \l 11252 COMMISSIONER NOEL: Oh, my God. Formats.
‑‑‑ Pause
LISTNUM 1 \l 11253 COMMISSIONER NOEL: Formats. You're proposing an AC format, if I am correct.
LISTNUM 1 \l 11254 MR. NEWMAN: Yes.
LISTNUM 1 \l 11255 COMMISSIONER NOEL: Could you tell us why it is your view that this would add diversity to the Sydney market?
LISTNUM 1 \l 11256 MR. NEWMAN: With the knowledge, certainly, that Maritime Broadcasting had applied, and was subsequently granted the flip from AM to FM for CHER, and knowing that their intention, as they made public, was to go a classic format, and then looking at some of the other decisions that ‑‑ and types of programming that they've executed in some of their other markets ‑‑ also noting the fact that Newcap have a strong history and credibility in running a classic rock format, we knew that those two opportunities certainly didn't exist likely in the Sydney market, and we predicated our belief that the Sydney market was healthy enough to support two new entrants.
LISTNUM 1 \l 11257 So for us, the business decision to go to an adult contemporary format was driven by our market research, and by the fact that we know, from a retail standpoint, adults, 80 percent female, make the buying decisions from a retail standpoint, and while it may be argued that the females do not actually buy the product, it certainly can be argued that over 80 percent of the buying decisions are driven by females. 58.3 percent of the market researched is female, so it is a slightly more female marketplace, and we thought that the adult contemporary format ‑‑ given the music choices that came up in the cluster analysis that the marketing research has shown us, that the adult contemporary format was not only viable, but potentially profitable.
LISTNUM 1 \l 11258 COMMISSIONER NOEL: And how is it different from the CKPE FM format?
LISTNUM 1 \l 11259 MR. NEWMAN: The CKPE format, and, again, we had done some listening tests prior to our application, and then again most recently on the weekend, and they bore true ‑‑ CKPE is more of a hot AC station, given the formats to ‑‑
LISTNUM 1 \l 11260 COMMISSIONER NOEL: You'll have to help me here, because you know I'm more of the baroque type, and some of these distinctions just ‑‑ and in the French market, we don't have that many distinctions is ‑‑ so you ‑‑
LISTNUM 1 \l 11261 MR. NEWMAN: One of the things that we ‑‑
LISTNUM 1 \l 11262 COMMISSIONER NOEL: Help me here.
LISTNUM 1 \l 11263 MR. NEWMAN: One of the things that we did, when we did our marketing research, was recognizing the fact that we, as an industry, and then back there, too, we tend to talk in our own language, and we put our own terms on things, and they are just that. They're our own terms.
LISTNUM 1 \l 11264 There are days I don't understand some of our own terms, so in our cluster analysis, what we did was we asked about artist groupings. So we put artists together that are in like genres, and we spoke English to the people. And when I say "English", I mean layman English to the people that we inquired, and put that together, and then put our own names on it, based on the industry terminology.
LISTNUM 1 \l 11265 Hot AC is a more rhythmic version of adult contemporary. It has a little more of the current hip‑hop trends, and that's exactly what it is. The trend in ‑‑
LISTNUM 1 \l 11266 COMMISSIONER NOEL: Is there any ‑‑
LISTNUM 1 \l 11267 MR. NEWMAN: ‑‑ the new music style ‑‑
LISTNUM 1 \l 11268 COMMISSIONER NOEL: ‑‑ overlap between AC, Hot AC, classic hits, classic rock? Is there any overlap at all ‑‑
LISTNUM 1 \l 11269 MR. NEWMAN: I think the very nature, and we've actually did some percentages, and I'll open that up for you ‑‑ I believe we proposed, based on what we extrapolated to be CHER's format ‑‑ and again, an extrapolation, since it wasn't on the air yet ‑‑ we expected to be drawing about 15 to 20 percent of their library, and primarily those of the Canadian gold selections from the '70s. And from CKPE's category, anywhere from 15 to 20 percent of the Hot AC genre.
LISTNUM 1 \l 11270 What we've experienced in St. John's, for example, where we compete against Newcap's Hot AC hits, is that there is some overlap, but the percentage tends to be about 20 percent from an adult contemporary station, which tends to have a more, if you'll excuse the term, stagnant playlist. Songs go on the charts; they stay on the charts for awhile, because as adults, we tend to take longer to get used to the music, and we tend to like it for longer; the CHR‑, ‑‑
LISTNUM 1 \l 11271 COMMISSIONER NOEL: I'm still stuck on Vivaldi, you see, so ‑‑
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11272 COMMISSIONER NOEL: If we were to license two stations, yours and let's say HFX ‑‑
LISTNUM 1 \l 11273 MR. NEWMAN: Mmm hmm.
LISTNUM 1 \l 11274 COMMISSIONER NOEL: ‑‑ Broadcasting, how would your proposal, your proposed format be different compared to the format proposed by HFX Broadcasting?
LISTNUM 1 \l 11275 MR. NEWMAN: HFX is proposing more youth‑oriented format, and again, taking a look at their application ‑‑
LISTNUM 1 \l 11276 COMMISSIONER NOEL: So this end of the ‑‑ if you do the cross there on this side?
LISTNUM 1 \l 11277 MR. NEWMAN: Yes. Yes, I ‑‑
LISTNUM 1 \l 11278 COMMISSIONER NOEL: (Pointing to left side) Well, for you it would be ‑‑
LISTNUM 1 \l 11279 MR. NEWMAN: Yes.
LISTNUM 1 \l 11280 COMMISSIONER NOEL: ‑‑ this side.
LISTNUM 1 \l 11281 MR. NEWMAN: They are proposing a more youth‑oriented format. We certainly respect what they've done in some of their other markets. They seem to be on the forefront of some youth trends. It is a more fickle audience, certainly, than the adult audience. It wasn't an area that we have an expertise in, and we didn't, quite frankly, in our research see an opportunity to go for it.
LISTNUM 1 \l 11282 So we think that we would be vastly different. I would suggest 85 to 90 percent different from the HFX application.
LISTNUM 1 \l 11283 COMMISSIONER NOEL: So you would be on the ‑‑ if you take re‑, you know, the cross where the age and the hard music, soft music, older, younger, you would be on the ‑‑
LISTNUM 1 \l 11284 MR. NEWMAN: I wouldn't want to say ‑‑
LISTNUM 1 \l 11285 COMMISSIONER NOEL: ‑‑ older ‑‑
LISTNUM 1 \l 11286 MR. NEWMAN: ‑‑ older and slower, because that would suggest that we've all kind of crawled into ‑‑
LISTNUM 1 \l 11287 COMMISSIONER NOEL: I said older and younger, you know. One end of the cross is the old people, the right‑hand side. The left hand is the ‑‑
LISTNUM 1 \l 11288 MR. NEWMAN: We would be ‑‑
LISTNUM 1 \l 11289 COMMISSIONER NOEL: ‑‑ young people.
LISTNUM 1 \l 11290 MR. NEWMAN: We would be on the older side, certainly.
LISTNUM 1 \l 11291 COMMISSIONER NOEL: Okay. Now you mentioned in your application, or not in your application, but in answer to our deficiency letter, and your answer was given to us on ‑‑ let me just dig that ‑‑ your answer of 29 January 2007. You mentioned to us on page eight:
"We have explored several syndicated programs that may be (inaudible) for our audience, and the market. These are no longer than two hours in duration, and would be aired in off‑peak times. We envision no more than three of these to be used, and they are purchased from organizations such as Canada's Sun Source, and Nova Scotia's Blaine Morrison."
LISTNUM 1 \l 11292 Now, some of our people who are not stuck to baroque, have told me that this is jazz and blues, and ‑‑
LISTNUM 1 \l 11293 MR. NEWMAN: I ‑‑ yes.
LISTNUM 1 \l 11294 COMMISSIONER NOEL: ‑‑ jazz and blues, especially the Morrison thing ‑‑ jazz and blues is a category three music, special music, special interest music, and I think it was put forward to another applicant this morning. I can't recall which one, and maybe it's Newcap. Or, no, it's the first applicant. And there is, there was a change in the policy concerning ‑‑
LISTNUM 1 \l 11295 MR. NEWMAN: Mmm hmm.
LISTNUM 1 \l 11296 COMMISSIONER NOEL: ‑‑ the Canadian content of category 34 music. It has to go from ten percent, which was the case in the former Policy, to 20 percent in the new Policy, if you plan to offer jazz and blues, between two and six hours of jazz and blues per week.
LISTNUM 1 \l 11297 Do you plan ‑‑ will you abide by the new rules that it has to be a 20 percent Canadian content?
LISTNUM 1 \l 11298 MR. NEWMAN: Yes, absolutely. We're quite familiar with the Blaine Morrison program which is, yes, a blues program, which averages ‑‑ and we are currently running it in our operation in St. John's ‑‑
LISTNUM 1 \l 11299 COMMISSIONER NOEL: Would you accept a condition of ‑‑
LISTNUM 1 \l 11300 MR. NEWMAN: Yes.
LISTNUM 1 \l 11301 COMMISSIONER NOEL: ‑‑ license that 20 percent of any category 34 music be 20 percent until the regulations are amended?
LISTNUM 1 \l 11302 MR. NEWMAN: Absolutely, yes.
LISTNUM 1 \l 11303 COMMISSIONER NOEL: Or another transitory condition of ‑‑
LISTNUM 1 \l 11304 MR. NEWMAN: Sure.
LISTNUM 1 \l 11305 COMMISSIONER NOEL: ‑‑ license? Now can you tell us when, during the broadcast week, you plan to broadcast that kin‑, that show, or that kind of show, and why it fits with your proposed AC format?
LISTNUM 1 \l 11306 MR. NEWMAN: One of the things that we've discovered in markets that don't have multiple stations that we've been able to program, such as ‑‑ and I'll address the blues one, specifically, because it is one that has been a surprise to me, as a programmer ‑‑ that we've got an amazing response from not only the male audience, but the female audience, as well. And what we've able to do is repatriate iPod and satellite listeners back to commercial mainstream radio for at least a short time. They enjoy the music. They don't want a steady diet of it, but they do appreciate a couple of hours a week.
LISTNUM 1 \l 11307 In the case of the program that we're, you know, specifically targeting, and interested in, it has an Atlantic Canadian flavour to it. In most cases, these are artists that our audience, the audience in Sydney would have seen come through back in their personal haydays, either as musicians or as listeners ‑‑ back in the day when some of us went out, and socialized a little more than we currently do ‑‑ and they can, in the spirit of reminiscing, can put themselves back into that place, and I guess that's the psychology of why these shows are more successful.
LISTNUM 1 \l 11308 We have found currently that running them in the early evening, after the supper hour, when the house quiets down somewhat, but not so late that they have to stay up to listen to it ‑‑ if you can put it around 8:00 at night, then the adult audience will turn it on; they will enjoy it.
LISTNUM 1 \l 11309 And I would note that the CBC ‑‑
LISTNUM 1 \l 11310 COMMISSIONER NOEL: It's like drinking Chamomile.
LISTNUM 1 \l 11311 MR. NEWMAN: Quite possibly, yes.
LISTNUM 1 \l 11312 COMMISSIONER NOEL: It puts you to sleep.
LISTNUM 1 \l 11313 MR. NEWMAN: The CBC has just recently undergone a major programming change, and put on their own ‑‑
LISTNUM 1 \l 11314 COMMISSIONER NOEL: Radio, too, yes.
LISTNUM 1 \l 11315 MR. NEWMAN: ‑‑ jazz programming, yes.
LISTNUM 1 \l 11316 COMMISSIONER NOEL: Major.
LISTNUM 1 \l 11317 MR. NEWMAN: And they, they've seen the same things that we have seen in national research, and I'm sure the, you know, the Newcap organization has done exhaustive research across the country, and I'm sure they're seeing the same trends.
LISTNUM 1 \l 11318 COMMISSIONER NOEL: You know Montreal has a jazz station, only jazz station, jazz and blues.
LISTNUM 1 \l 11319 Emerging artists ‑‑ let's try to understand how you define emerging artists. You mentioned ‑‑ in your documentations, you're referring ‑‑ when you're talking about emerging artists, you're referring to Sydney artists that are unsigned, or do not have national distribution.
LISTNUM 1 \l 11320 Is that your definition of an emerging artist, or would it also encompass any Canadian artist that is unsigned, and doesn't have national distribution?
LISTNUM 1 \l 11321 MR. NEWMAN: What we found with the adult audience is a local artist they may not be familiar with, but will endeavour to search out and explore; the regional artists, the willingness of an adult to be exposed to brand new artists wanes with age, if you'll excuse the expression, but it's what we've seen in the research.
LISTNUM 1 \l 11322 And we think that local and regional artists are ones that we should focus on. They're the ones that we can generate the most positive result for. I think if it's a, an artist from the western regions of the country, or central Canada, that is making some headway in their own regions, then we could explore it as an emerging artist, but we would like to focus primarily the opportunity to promote our Cape Breton artists, and the regional Atlantic Canadian artists, because they're the ones that our audience will be most likely to respond to.
LISTNUM 1 \l 11323 COMMISSIONER NOEL: And would a non‑Sydney emerging artist manage his way to fit into your AC format, at some point in time?
LISTNUM 1 \l 11324 MR. NEWMAN: I think if they've had success in their own regions, and ‑‑
LISTNUM 1 \l 11325 COMMISSIONER NOEL: But then they wouldn't be so much emerging any more.
LISTNUM 1 \l 11326 MR. NEWMAN: There's been much discussion on the definition of an emerging artist, and quite frankly, I agree with you, but the, some of the definitions have been unsigned, not signed to a major market, so many years have passed, et cetera, et cetera.
LISTNUM 1 \l 11327 I think what we've seen with artists like Crush in Atlantic Canada, they had a following. They were an emerging artist, and they were given some airplay in central and western Canada, after they broke out of Atlantic Canada. However, by most people's definitions, they would still be considered a, an emerging artist because they haven't been signed to a major record deal.
LISTNUM 1 \l 11328 COMMISSIONER NOEL: Okay. Let's move to another topic ‑‑ your projections.
LISTNUM 1 \l 11329 In your projections of revenues, you've projected $828,000 in revenue in year one, of which $798,000, or 96 percent would come from local advertising.
LISTNUM 1 \l 11330 On what data do you rely to make these assumptions?
LISTNUM 1 \l 11331 MR. NEWMAN: As I said earlier, of course, the Sydney market was unavailable to, from an ownership standpoint because of the single owner. It didn't allow us access to the actual market data. We did, however, have the opportunity to peruse the Maritime Broadcasting conversation of CHER, so we did take some that data, and garner some market rates ‑‑ for example, historical sold‑out data that was gleaned from that application.
LISTNUM 1 \l 11332 And then we also took our own historicals from Coast Broadcasting, and some of the other known markets that we were familiar with. So we took some real world numbers, and put them together.
LISTNUM 1 \l 11333 The national number is a little less than the average, strictly because we'll be selling against the three stations that Maritime ‑‑
LISTNUM 1 \l 11334 COMMISSIONER NOEL: Yeah, because normally national is about what?
LISTNUM 1 \l 11335 MR. NEWMAN: About eight to ten percent.
LISTNUM 1 \l 11336 COMMISSIONER NOEL: Ten percent, hey?
LISTNUM 1 \l 11337 MR. NEWMAN: Yeah.
LISTNUM 1 \l 11338 COMMISSIONER NOEL: Okay. Now from year one to year seven, your revenue projection grows from 800, total revenue projection grows from 828,000 to a 1,010,000, roughly.
LISTNUM 1 \l 11339 MR. NEWMAN: Mmm hmm.
LISTNUM 1 \l 11340 COMMISSIONER NOEL: If you succeed in achieving your forecasted revenues, what would be the impact on Maritime Broadcasters?
LISTNUM 1 \l 11341 MR. NEWMAN: Well, I think we saw the example in the previous application of what happens. I think there is some initial instability. We certainly know that Newcap saw some initial instability in St. John's, when Coast was awarded their broadcasting license, but it would be fair to say that that market, for example, has balanced itself out. We've brought some new people to the table, and Newcap certainly are not any worse the wear. We've managed to generate some new money.
LISTNUM 1 \l 11342 The example that also Newcap ‑‑
LISTNUM 1 \l 11343 COMMISSIONER NOEL: Yes, they admitted to that this morning.
LISTNUM 1 \l 11344 MR. NEWMAN: Yes, and Newcap has also shown some great examples in the other markets, where they, too, have signed on similar circumstances, and there has been some initial instability. But given the size of the Maritime operation, not only in Sydney, but as a whole, we certainly feel that the impact of a new player, while it may have some instant impact on the gross sales, we don't expect it to impact on Maritime's ability to discharge its programming responsibilities, because certainly you have the actual numbers, access to the actual numbers, and I think they're in a fairly healthy position.
LISTNUM 1 \l 11345 COMMISSIONER NOEL: I will not say ‑‑
LISTNUM 1 \l 11346 MR. NEWMAN: No, and it's ‑‑
LISTNUM 1 \l 11347 COMMISSIONER NOEL: ‑‑ so (laughs) ‑‑
LISTNUM 1 \l 11348 MR. NEWMAN: Like, wasn't a question.
LISTNUM 1 \l 11349 COMMISSIONER NOEL: ‑‑ or otherwise.
LISTNUM 1 \l 11350 You mentioned in your application that your projections were based on two applicants being licensed in this market.
LISTNUM 1 \l 11351 How many new entrants do you think the Sydney market can sustain?
LISTNUM 1 \l 11352 MR. NEWMAN: Certainly no more than two.
LISTNUM 1 \l 11353 COMMISSIONER NOEL: No more than two?
LISTNUM 1 \l 11354 MR. NEWMAN: There is a feeling that one would be ideal, two is ‑‑ I think we all agree that our one would be ideal, but I think that there is a, there is an opportunity for a second license, yes.
LISTNUM 1 \l 11355 COMMISSIONER NOEL: And if the Commission, in its wisdom, would license you, who would you prefer as a co‑licensee in this market, or who would you hate to have at the same time you start your operations?
LISTNUM 1 \l 11356 MR. NEWMAN: I think we're all ladies and gentlemen. I don't think there's any hatred amongst ourselves. Some good, healthy ‑‑
LISTNUM 1 \l 11357 COMMISSIONER NOEL: No, no, no.
LISTNUM 1 \l 11358 MR. NEWMAN: ‑‑ competition, but yeah ‑‑
LISTNUM 1 \l 11359 COMMISSIONER NOEL: I didn't mean hate ‑‑
LISTNUM 1 \l 11360 MR. NEWMAN: ‑‑ I think ‑‑
LISTNUM 1 \l 11361 COMMISSIONER NOEL: ‑‑ hate the other people. I said hate to have as a ‑‑
LISTNUM 1 \l 11362 MR. NEWMAN: I think the ‑‑
LISTNUM 1 \l 11363 COMMISSIONER NOEL: ‑‑ co‑licensee.
LISTNUM 1 \l 11364 MR. NEWMAN: I think, as the previous applicant stated, that we have demonstrated our ability to work with our competitors, either they be direct or indirect, and we certainly have no issue with any of the other applicants.
LISTNUM 1 \l 11365 If there is a preference, I think given the state of the industry, the state of competitiveness, and I think the spirit of what the Chairman of the Commission has set out as a direction to explore for the fall, I think that we would have to favour the Maxwell application, strictly on its spirit.
LISTNUM 1 \l 11366 COMMISSIONER NOEL: Thank you. I have no more questions, Madame Chair.
LISTNUM 1 \l 11367 THE CHAIRPERSON: Commissioner Williams?
LISTNUM 1 \l 11368 COMMISSIONER WILLIAMS: Good afternoon.
LISTNUM 1 \l 11369 I just have a few questions regarding your revised ownership and financial arrangements that you outlined early in Commissioner Noel's questioning.
LISTNUM 1 \l 11370 I note that Mr. Newman and Mr. Bell would each own 50 percent of the proposed issued shares, effectively giving joint control. Is that correct?
LISTNUM 1 \l 11371 MR. NEWMAN: That is correct.
LISTNUM 1 \l 11372 COMMISSIONER WILLIAMS: Is there this ‑‑ and there's another Bell here ‑‑ Charles R. Bell Limited ‑‑ is there any relationship to you, Mr. Bell?
LISTNUM 1 \l 11373 MR. BELL: It is. I'm President of that company.
LISTNUM 1 \l 11374 COMMISSIONER WILLIAMS: You're President of that company?
LISTNUM 1 \l 11375 MR. BELL: Yeah.
LISTNUM 1 \l 11376 COMMISSIONER WILLIAMS: Have you ‑‑ I recognize you've probably had a lot to do over the weekend, but have you had an opportunity, Mr. Newman, to negotiate any form of shareholders' agreement, given these changes between Friday and now?
LISTNUM 1 \l 11377 MR. NEWMAN: As it pertains to Mr. Bell and I?
LISTNUM 1 \l 11378 COMMISSIONER WILLIAMS: As between, pertains between the two of you, and how the company would be governed.
LISTNUM 1 \l 11379 MR. NEWMAN: Currently, the arrangement with Coast Broadcasting Limited is set up as 50 percent ownership, and our ownership papers and our by‑laws are all filed with the Commission. We don't see any change in that. Mr. Bell and I will continue will own Coast Broadcasting Limited. Coast Broadcasting Limited will own 100 percent of the new Nova Scotia company to be incorporated.
LISTNUM 1 \l 11380 COMMISSIONER WILLIAMS: This loan from Charles R. Bell Limited to your company, does it take the form of an interest rate? Like, what is the interest rate? What is the term? What is the amortization? What are the details of this type of loan?
LISTNUM 1 \l 11381 MR. BELL: It clearly states in the letter that those terms and the agreement to work out, I have the ability to set those.
LISTNUM 1 \l 11382 I think what meets the Commission, in these circumstances, we're following directions of the Commission. The bank of, that we currently bank with is more than happy, based on our previous performance, to finance the new operation, the new license in Sydney, and ‑‑
LISTNUM 1 \l 11383 COMMISSIONER WILLIAMS: So the rates would be similar to bank rates, then?
LISTNUM 1 \l 11384 MR. BELL: Some banks would ‑‑ rates would certainly be at prime, prime plus a half, something in that vicinity, at good current rates.
LISTNUM 1 \l 11385 COMMISSIONER WILLIAMS: And there would be a similar rate from Charles R. Bell Limited?
LISTNUM 1 \l 11386 MR. BELL: Absolutely.
LISTNUM 1 \l 11387 COMMISSIONER WILLIAMS: And is there, has it been contemplated that perhaps the 500,000 could take the form an interest‑bearing preferred share. I guess I'm just trying to see if the ownership's going to change at all.
LISTNUM 1 \l 11388 MR. BELL: Not at all. The ownership will maintain the same structure that it has currently today.
LISTNUM 1 \l 11389 COMMISSIONER WILLIAMS: Okay. So it'd be a, almost a standard bank loan at almost bank rate?
LISTNUM 1 \l 11390 MR. BELL: It would be. Absolutely.
LISTNUM 1 \l 11391 COMMISSIONER WILLIAMS: Okay. That's all of my questions, Madame Chair. Thank you.
LISTNUM 1 \l 11392 THE CHAIRPERSON: Okay. I do have a few questions.
LISTNUM 1 \l 11393 I'll just follow along on the letter, then, from Charles R. Bell Limited, and I notice that it says that the company's prepared to loan the new entity up to $500,000. And I notice in your pro forma statements there that you've put the whole of the 500,000 in, so I'd like to ask you the same question I asked of the first group this morning. If the results aren't as anticipated, are you prepared to put in the money necessary to reach a successful conclusion with this license?
LISTNUM 1 \l 11394 MR. BELL: We are, and it needs reminding, too, that Coast Broadcasting is operating at a profit, and has the wherewithal, and the ability ‑‑
LISTNUM 1 \l 11395 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 11396 MR. BELL: ‑‑ to fund this, as well. That is the situation that stands, as we are today.
LISTNUM 1 \l 11397 THE CHAIRPERSON: I just wanted to clarify it.
LISTNUM 1 \l 11398 MR. BELL: Yeah.
LISTNUM 1 \l 11399 THE CHAIRPERSON: It's not about ability to; it's about willingness to
LISTNUM 1 \l 11400 MR. BELL: And the willingness on both sides is ‑‑
LISTNUM 1 \l 11401 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11402 MR. BELL: ‑‑ absolutely there.
LISTNUM 1 \l 11403 THE CHAIRPERSON: That's great, thanks.
LISTNUM 1 \l 11404 And with respect to your on‑air product, what I had gleaned from all of this information I have in front of me is that you were proposing an adult contemporary format, but on your slide today, you refer to it as adult contemporary/classic hits, and I just wanted to make sure that I have that right.
LISTNUM 1 \l 11405 MR. NEWMAN: The 15 to 20 percent that we discussed is possibly overlapping with CHER.
LISTNUM 1 \l 11406 THE CHAIRPERSON: Yes?
LISTNUM 1 \l 11407 MR. NEWMAN: CHER's definition is classic hits, so we felt it necessary to identify that, and discuss it when asked.
LISTNUM 1 \l 11408 THE CHAIRPERSON: And now Newcap's proposal is classic rock, mainstream rock, so there's a difference there, again?
LISTNUM 1 \l 11409 MR. NEWMAN: Yes. I thought Mr. Maheu did a great job of attempting to describe the variations of it, and it does change from market to market.
LISTNUM 1 \l 11410 THE CHAIRPERSON: But he, I think he indicated there'd be no overlap, or virtually none with
LISTNUM 1 \l 11411 MR. NEWMAN: Yes.
LISTNUM 1 \l 11412 THE CHAIRPERSON: ‑‑ with what you were proposing, and you agree with that, then?
LISTNUM 1 \l 11413 MR. NEWMAN: I do.
LISTNUM 1 \l 11414 THE CHAIRPERSON: Okay. Thank you.
LISTNUM 1 \l 11415 And with respect to your financial projections, and the earlier questions, and the fact that your projections are based on two entrants, I'm just curious to know what the impact would be if only one license was granted, and it was yours? Would your, would you see a 25 percent, 30 percent improvement? What? Or did you give that any thought?
LISTNUM 1 \l 11416 MR. NEWMAN: We didn't, frankly. I don't see it being overly dramatic. I think the second entrant certainly would require a better job from our sales people on the ground. I don't think it would be an appreciable impact. If I could, if I was pressed to put a number to it, possibly 15 perc‑, I'm just looking at the first year, and at $828,000, I, I don't think it would be much more than that.
LISTNUM 1 \l 11417 I think as a start‑up. to be taking a look at what we've done in St. John's, and what other start‑ups have done, that's a reasonable number to attain.
LISTNUM 1 \l 11418 THE CHAIRPERSON: So this was based on assuming there were two licensee, licenses ‑‑ 828, right? So what would you suppose the other license would be getting, then, in your assumptions. In terms of gross revenue, what would be they be taking
LISTNUM 1 \l 11419 MR. NEWMAN: I think they
LISTNUM 1 \l 11420 THE CHAIRPERSON: ‑‑ out of the market?
LISTNUM 1 \l 11421 MR. NEWMAN: ‑‑ should be similar.
LISTNUM 1 \l 11422 THE CHAIRPERSON: Do you? Okay. Alright.
LISTNUM 1 \l 11423 MR. NEWMAN: I don't think there's a large variation. There seemed to be large variation between the Maxwell application and ours, and ours being the other existing operators, but there wasn't a large variation between our numbers and Newcap's, for example.
LISTNUM 1 \l 11424 THE CHAIRPERSON: Mmm hmm. Although Newcap's were only predicated on one person, one party being licensed.
LISTNUM 1 \l 11425 MR. NEWMAN: True.
LISTNUM 1 \l 11426 THE CHAIRPERSON: That's sort of where I'm coming from here.
LISTNUM 1 \l 11427 MR. NEWMAN: Mmm hmm.
LISTNUM 1 \l 11428 THE CHAIRPERSON: With respect to your cash flow, and it was ‑‑ just let me find where that was submitted. It was included, I believe ‑‑ maybe not ‑‑ I was thinking it was with your original application, but it might have come later.
LISTNUM 1 \l 11429 But you show the 500,000 going in, but you don't show the 100,000 going in, and I just wanted to know if you wanted to comment on that. But it would probably help you, if I could refer to the page. If I ‑‑ it is actually with your original application. It was your Schedule 11.
LISTNUM 1 \l 11430 MR. NEWMAN: The list there was bank and other indebtedness beginning of the year, and when we did the numbers, because we were doing to be co‑owners, because Coast Broadcasting was going to be co‑owner, we didn't look at that being something that we were ‑‑ it was an investment, and we were prepared to lose.
LISTNUM 1 \l 11431 THE CHAIRPERSON: But your ‑‑ you do show $600,000 in capital expenditures, of which 50 was a contingency.
LISTNUM 1 \l 11432 MR. NEWMAN: Yes.
LISTNUM 1 \l 11433 THE CHAIRPERSON: So can I assume it was just an oversight, then?
LISTNUM 1 \l 11434 MR. NEWMAN: Yes.
LISTNUM 1 \l 11435 THE CHAIRPERSON: It was, eh?
LISTNUM 1 \l 11436 MR. NEWMAN: Yes.
LISTNUM 1 \l 11437 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11438 MR. NEWMAN: Yes.
LISTNUM 1 \l 11439 THE CHAIRPERSON: That happens.
LISTNUM 1 \l 11440 MR. NEWMAN: I don't believe the amounts will change dramatically, given the fairly conservative, the conservative increase from a sales standpoint. It's projected to be five percent per year over the seven‑year license term, which is similar to what the retail sales are expected to be over the
LISTNUM 1 \l 11441 THE CHAIRPERSON: The five percent is what, again? Sorry, Mister
LISTNUM 1 \l 11442 MR. NEWMAN: The
LISTNUM 1 \l 11443 THE CHAIRPERSON: ‑‑ Newman.
LISTNUM 1 \l 11444 MR. NEWMAN: The actual revenue number.
LISTNUM 1 \l 11445 MR. BELL: Yeah.
LISTNUM 1 \l 11446 THE CHAIRPERSON: What I'm wondering, then, is ‑‑ because this would look like you don't need the $100,000 equity injection.
LISTNUM 1 \l 11447 MR. NEWMAN: I think if we run into a situation where we need some more capital, it's ‑
LISTNUM 1 \l 11448 THE CHAIRPERSON: Then you'd use it?
LISTNUM 1 \l 11449 MR. NEWMAN: ‑‑ certainly there. Yeah.
LISTNUM 1 \l 11450 THE CHAIRPERSON: Okay. I think that con‑, oh, and ‑‑ okay, Mr. ‑‑ Commissioner Williams has another question for you.
LISTNUM 1 \l 11451 COMMISSIONER WILLIAMS: Sorry, to come back, I just have one small clarification.
LISTNUM 1 \l 11452 I just want to confirm that this proposed loan would not be in the form of a shareholder loan, or an interest‑bearing shareholder loan, but more along the lines of a standard loan. I think it's what you said, anyway ‑‑ in the same sort of nature that a bank would offer.
LISTNUM 1 \l 11453 MR. BELL: Yeah, it's arm's length. Absolutely, so it's not in the form of anything along those lines, no.
LISTNUM 1 \l 11454 COMMISSIONER WILLIAMS: Okay. So ownership will stay the same, eh?
LISTNUM 1 \l 11455 MR. BELL: Yeah, and ownership remains the same, stays the same.
LISTNUM 1 \l 11456 COMMISSIONER WILLIAMS: Okay. Thank you.
LISTNUM 1 \l 11457 MR. BELL: And I should say that the information here is predicated on our past experience with Coast, and what it requires for start‑up, so I think that there's some knowledge there that we can do, and that's where the numbers came from.
LISTNUM 1 \l 11458 THE CHAIRPERSON: I'd ‑‑ actually, and I do have one other question.
LISTNUM 1 \l 11459 The ‑‑ in your ‑‑ let me see now. In your comments, if I ‑‑ when you were doing your initial presentation, or in response to Commissioner Noel, you've said that you'd have to hire a manager to replace the contribution that you might have expected Mr. MacEachern to make, and I notice on Schedule 12 of your application, would that be replacing one of these positions, or in addition to it, so it might change your bottom line slightly?
LISTNUM 1 \l 11460 MR. NEWMAN: I think that I did see your question coming. The reality is, is that a, an operations manager is going to be required, given the new change of ownership, and Mr. MacEachern's sweat equity will not be there. That is going to be an additional cost, and it is going to directly impact the bottom line.
LISTNUM 1 \l 11461 THE CHAIRPERSON: So in our thinking, we could adjust for that. Do you want to volunteer a number, or will we just
LISTNUM 1 \l 11462 MR. NEWMAN: If I volunteer a number, it would be on the public record.
LISTNUM 1 \l 11463 THE CHAIRPERSON: So you
LISTNUM 1 \l 11464 MR. NEWMAN: But I ‑‑ if you would like to take an industry average, we'd certainly
LISTNUM 1 \l 11465 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11466 MR. NEWMAN: We'll be
LISTNUM 1 \l 11467 THE CHAIRPERSON: That's fine.
LISTNUM 1 \l 11468 MR. NEWMAN: ‑‑ working toward that.
LISTNUM 1 \l 11469 THE CHAIRPERSON: Okay. Thank you very much.
LISTNUM 1 \l 11470 So I think we'll take a break now.
LISTNUM 1 \l 11471 MS. FISHER: (Off microphone)
LISTNUM 1 \l 11472 THE CHAIRPERSON: Oh, excuse me. Again. Okay. Counsel has some questions for you.
LISTNUM 1 \l 11473 MS. FISHER: Sorry.
LISTNUM 1 \l 11474 THE CHAIRPERSON: Sorry. Sorry about that.
LISTNUM 1 \l 11475 MS. FISHER: I just want to go back to CCD for a question, for a couple of minutes.
LISTNUM 1 \l 11476 We want to just be very clear on what you are proposing. And without going into the breakdown of the initiatives, could you just confirm for us what your total over and above ‑‑ so the amount that's over and above the basic ‑‑ on an annual basis would be?
LISTNUM 1 \l 11477 MR. NEWMAN: There was an additional item on the CCD that Commissioner Noel, when she was questioning ‑‑ I think we might have gotten off track ‑‑ but there was an additional item there which was one percent of our profit would go directly to support the local initiatives, and 20 percent of that, as mandated by the Commission, would go to FACTOR.
LISTNUM 1 \l 11478 It's our belief that the stronger the station becomes, the more we'd be willing to give back, and given the trends for somewhat exaggerated CTD's or CCD's, we thought that we would like to go based on our profits. So we did put that in there, and I apologized to Commissioner Noel for possibly dragging her off track in her questioning.
LISTNUM 1 \l 11479 That one percent of profit equates to $832.40 based on our projections, that would flow to FACTOR. The remaining $3,329.60 over the seven‑year term, based on our projections, would go to local initiatives. So whatever the one percent of profit is based at, we would consider, as a condition of license, to put 20 percent to FACTOR.
LISTNUM 1 \l 11480 MS. FISHER: And then apart from that one percent, the set amounts that you're looking at giving to CCD, what would be the total annual amount of those?
LISTNUM 1 \l 11481 MR. NEWMAN: I'm just going to go back to the number. The set amount would be $4,000 annually, over and above.
LISTNUM 1 \l 11482 MS. FISHER: Okay. And then you are proposing, of that 4,000 annually, to allocate an additional $500 to FACTOR?
‑‑‑ Pause
LISTNUM 1 \l 11483 MR. NEWMAN: I think the planned third‑party donation features 1,500 to FACTOR as required by the Policy.
LISTNUM 1 \l 11484 MS. FISHER: Now is
LISTNUM 1 \l 11485 MR. NEWMAN: We thought the market required 1,500, and not 1,000.
LISTNUM 1 \l 11486 MS. FISHER: Is ‑‑ I'm sorry, just the 1,500 you're looking at is going to include both your basic contribution to FACTOR, and your over and above contribution to FACTOR?
LISTNUM 1 \l 11487 MR. NEWMAN: I have it broken out over the course of the ‑‑ just a moment. I'm going to have to grab here a piece of paper. I had it broken out over the course of the license, and not on an annual basis.
LISTNUM 1 \l 11488 MS. FISHER: Okay, 'cause we would like the amounts on an annual basis.
LISTNUM 1 \l 11489 MR. NEWMAN: On an annual basis.
LISTNUM 1 \l 11490 MS. FISHER: Would it be possible to provide us by ‑
LISTNUM 1 \l 11491 MR. NEWMAN: Absolutely.
LISTNUM 1 \l 11492 MS. FISHER: ‑‑ the beginning of, or by the beginning of Phase III
LISTNUM 1 \l 11493 MR. NEWMAN: Yes.
LISTNUM 1 \l 11494 MS. FISHER: ‑‑ just a break out, including the basic contribution on an annual basis, the basic contribution to FACTOR on an annual basis, your over and above proposal on an annual basis, and your over and above to FACTOR on an annual basis?
LISTNUM 1 \l 11495 MR. NEWMAN: Yes. We have all of the ‑‑ all of the information is here. It is just broken
LISTNUM 1 \l 11496 MS. FISHER: Okay.
LISTNUM 1 \l 11497 MR. NEWMAN: ‑‑ out on a total basis, rather than
LISTNUM 1 \l 11498 MS. FISHER: Okay.
LISTNUM 1 \l 11499 MR. NEWMAN: ‑‑ an annual basis, so we'll
LISTNUM 1 \l 11500 MS. FISHER: If you could just provide us a
LISTNUM 1 \l 11501 MR. NEWMAN: Absolutely.
LISTNUM 1 \l 11502 MS. FISHER: ‑‑ breakdown of everything annually, that would be fantastic.
LISTNUM 1 \l 11503 MR. NEWMAN: Certainly.
LISTNUM 1 \l 11504 MS. FISHER: Thank you.
LISTNUM 1 \l 11505 THE CHAIRPERSON: So thank you very much, Mr. Newman, Mr. Bell and Mr. ‑‑ get that name right ‑‑ being from Nova Scotia, you'd think I'd know that name ‑‑ Tredwell. Thank you very much.
LISTNUM 1 \l 11506 We'll take a break now for 15 minutes, so we'll reconvene about five to five.
LISTNUM 1 \l 11507 COMMISSIONER WILLIAMS: Four.
LISTNUM 1 \l 11508 COMMISSIONER NOEL: Five to four.
LISTNUM 1 \l 11509 THE CHAIRPERSON: Five to four. I'm rushing it. Five to four. (Laughing) Yeah. Thank you.
‑‑‑ Upon Recessing at 1537 / Suspension à 1537
‑‑‑ Upon Resuming at 1604 / Reprise à 1604
LISTNUM 1 \l 11510 THE CHAIRPERSON: Good afternoon, ladies and gentlemen.
LISTNUM 1 \l 11511 We're prepared to begin, and I'm going to be doing the questioning of the Evanov group, so if you would like to start.
LISTNUM 1 \l 11512 Sorry, Donna. I shou‑, I jumped ahead of you.
LISTNUM 1 \l 11513 THE SECRETARY: That's alright. Thank you, Madame Chair.
LISTNUM 1 \l 11514 We will now proceed with item four on the agenda, which is the application by Halifax, HFX Broadcasting Inc. for a license to operate in an English‑language FM commercial radio programming undertaking in Sydney.
LISTNUM 1 \l 11515 The new station would operate on frequency 100.9 megahertz, Channel 265(B) with an average effective radiated power of 10,500 watts, maximum effective radiated power of 23,400 watts, antenna height of 168 meters.
LISTNUM 1 \l 11516 Appearing for the applicant is Ms. Carmela Laurignano. Sorry.
LISTNUM 1 \l 11517 MS. LAURIGNANO: Laurignano.
LISTNUM 1 \l 11518 THE SECRETARY: Close. Who will introduce her colleagues, who will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
LISTNUM 1 \l 11519 MS. LAURIGNANO: Good afternoon, Madame Chair, Commissioners, Commission staff. My name is Carmela Laurignano, and that was very good, actually. I've been called worse.
LISTNUM 1 \l 11520 I am one of the owners of HFX Broadcasting Inc. I am pleased to be here today to present to you our proposal for a new FM to serve the markets of Sydney, and the Regional Municipality of Cape Breton.
LISTNUM 1 \l 11521 As you can see, I am part of a team, and I would like to begin by introducing the individuals responsible for assembling the application to you.
LISTNUM 1 \l 11522 Seated on my right is Paul Evanov. Paul is Vice‑President of HFX Broadcasting Inc., in charge of operations and programming. Paul oversaw the incredibly successful launch of our first Maritime station, Z1035 in Halifax, and is responsible for the youth programming for all Evanov stations.
LISTNUM 1 \l 11523 Seated to Paul's right to Dan Barton. Dan is a born and bred Maritimer with over 17 years of experience in programming to listeners in market across the Maritimes, including Sydney. Dan is currently the Program Director for Z1035 in Halifax, and as such, is the person directly responsible for catching the attention, and listening hours in Halifa‑, of Halifax youth.
LISTNUM 1 \l 11524 Next to Dan is Shane Wilson. Shane was born in Sydney, and brings forth formal training and years of experience to his role as a news director in Halifax. On a daily basis, Shane and his team take timely and sometimes complicated news stories, and make them both relevant and meaningful to a younger audience.
LISTNUM 1 \l 11525 On my left is Ky Joseph. Ky is my partner as an owner of HFX Broadcasting Inc., and she oversees all sales activities, and was in charge of assessing the advertising potential for this new service.
LISTNUM 1 \l 11526 In the back row, seated to your left, is Lorne Simon, a veteran broadcaster with years of experience in operations, as well as diversity programming through his employment with CHIN radio. Lorne is also a Cape, from Cape Breton, a former resident of Sydney, who began his broadcasting career in the market, and if HFX Broadcasting is granted the license, will return home to manage the new service.
LISTNUM 1 \l 11527 Next to Lorne is Debra McLaughlin of Strategic Inc. Debra prepared our consumer demand study and impact state assessments.
LISTNUM 1 \l 11528 Next to Debra is Stuart Robertson, our legal counsel of O'Donnell Robertson and Sanfilippo.
LISTNUM 1 \l 11529 I also bring your greetings from our President, Bill Evanov, who is attending to other company business today.
LISTNUM 1 \l 11530 When we first looked at this market, two things were obvious. The ownership of the three incumbent stations immediately suggested that with respect to diversity of voices, a new voice is needed. A single owner also suggested to us that the advertising market is suppressed as is often the case in situations where there is no real competition.
LISTNUM 1 \l 11531 So for us, the debate was not whether there should be a new station, but rather which demographic was least well‑served, and what format would best serve the market.
LISTNUM 1 \l 11532 When all investigations, both formal and informal, were complete, the answer was clear. Service is needed for the population under 35 years of age, and the format should be youth contemporary.
LISTNUM 1 \l 11533 Paul?
LISTNUM 1 \l 11534 MR. EVANOV: The question of "Why youth?" can be answered at two levels.
LISTNUM 1 \l 11535 First, on why it should be addressed at a broader system level, and secondly, why it is needed in Sydney. I'll begin with the system.
LISTNUM 1 \l 11536 As the records will show, we are not strangers to the hearing process, and in recent years, we have appeared before the Commission on several occasions, seeking to develop the most under‑served demographic in Canada ‑‑ youth. It is no secret why this lack of service at the lower end of the age range has developed.
LISTNUM 1 \l 11537 20 to 30 years ago, the bulk of radio was targeted to people under the age of 40. That is because the biggest of concentration of population were Baby Boomers, and they represented an enormous advertising market. As this population has aged, so too has radio. Following the biggest audience, radio stations have carved out formats that seek to serve sub‑sets of this group, whether it is a female or male audience, or a narrower group defined by music preference. What is consistent is that the target is generally not below the age of 30.
LISTNUM 1 \l 11538 This has left a clear and identifiable void in listening options for younger Canadians. Repeatedly, the justification is given that youths do not listen to radi‑, that youth does not listen to radio because it has the internet, MP3's, iPods, and it has more alternative listening sources than ever before. But let's really look at this argument.
LISTNUM 1 \l 11539 Like every generation before them, the youth of today have a very high interest in music. They are driven to it as a form of self‑expression, and as a means of entertainment. If the interest in music is unchanged, then how can the medium that provides it fall out of favour? Further, how can a portable medium with the advantage of local news and information be of no interest? The answer is simple. Radio no longer speaks to this demographic.
LISTNUM 1 \l 11540 The most common formats on air today have a high repetition of a few titles, and limited range of genres, and play it safe by slowly introducing new artists. Jock talk is directed towards an older demographic, and does not address information, or interest, or cover relevant topics for the majority of persons under the age of 25. And finally, stations have a heavy commercial load and commercial content that is not age‑appropriate.
LISTNUM 1 \l 11541 If this is what turns them away, doing the opposite will bring them back, and it is important to emphasize why a return to radio is important, not only because all Canadians should have representation in the radio spectrum, but because the very health of the radio market, in the long term, depends upon it.
LISTNUM 1 \l 11542 The reason radio is so healthy today, and has a strong listener base with persons over the age of 35 is because it spoke for and to them when they were younger. Critical media habits are developed in the teen years, and if we ignore this market now, we risk having a significantly reduced audience for radio in the future.
LISTNUM 1 \l 11543 Dan?
LISTNUM 1 \l 11544 MR. BARTON: What is true for the system is certainly true on a market level, and Sydney's no exception.
LISTNUM 1 \l 11545 The three local stations cover a range of formats and musical tastes, and provide service to that which is undeniably the bulk of the population ‑‑ over 35 years of age. You have country, classic hits, and adult CHR. However, what's missing is a service that offers programming to youth in the market.
LISTNUM 1 \l 11546 This is a significant consumer group with estimates of its size ranging from just one‑third to 40 percent of the population. There is no station that plays the range of music ‑‑ urban, rock, pop, dance, r&b ‑‑ that draws young listeners, and certainly there's no station that plays the amount of new music that's necessary to feed their need for discovering new aspects of the world.
LISTNUM 1 \l 11547 What we're proposing is to provide that service to this disenfranchised group, and it is disenfranchised. Unlike many markets where spill stations from other major centers can perhaps fill part of that need, Sydney's a fairly isolated radio market. The incumbent stations account for over 75 percent of all tuning, and a look at the unsuppressed BBM data shows a very low number of stations being received in the area.
LISTNUM 1 \l 11548 So if bringing youth back to radio is going to be accomplished, it will have to be through a local service.
LISTNUM 1 \l 11549 Our youth contemporary format is designed to do just that. We'll bring the new tracks, the new artists, and a truly wide blend of music to the market. We will not worry about charts, but rather play what's being downloaded onto MP3's and iPods, heard at the clubs, purchased at the stores, and found on‑line. In addition to this, we'll provide what no other music source can ‑‑ local relevant news and information.
LISTNUM 1 \l 11550 Focusing on a core demo of 12 to 24, our youth contemporary proposal will draw music from the urban, hip‑hop, r&b, dance, pop, modern rock, and alternative rock genres, featuring artists such as AKON, Fall Out Boy, Belly, Vibekingz ‑‑ (clears throat) excuse me ‑‑ and new and emerging artists like Classified, Spesh K, Live on Arrival, and Jamie Sparks. Youth contemporary is an intensely music‑based format, and even our spoken word will have this focus, concentrating on the artists and the tracks being played.
LISTNUM 1 \l 11551 Our consumer demand study demonstrated that one of the key areas of interest in programming was, in fact, local news and information. And we know from research we have reviewed from other markets, the biggest single complaint about alternative music sources is that by opting out of radio, listeners lose access to information relevant to their needs and location.
LISTNUM 1 \l 11552 Youth contemporary can provide this, and with the right blend of music, we believe we can bring them back. Does it work? Well, the numbers say yes. Since the launch of youth contemporary in Halifax last fall, hours of tuning among these typically declining demographics are growing again. Relative to fall 2005, tuning for 12 to 17 indexed at 135. Our spring box just released last week also showed growth, both in reach and in hours. Tuning in these demographics is up five person among teens, and four percent in 18 to 24.
LISTNUM 1 \l 11553 And this is not just a factor isolated to Halifax. In Calgary and Edmonton, hours of tuning among the younger demographics are up as a result of having access to a youth format, or formats.
LISTNUM 1 \l 11554 So radio is a medium that serve a younger demographic, and in our opinion, should. The system needs more youth contemporary‑styled services, and in particular, Sydney needs a service. Only five percent of the five to 17‑years old, and 12 percent of the 18 to 24‑year old demos said they were very satisfied with radio. This is a failing grade by any measure, and demonstrates that adult programming, however well done, simply does not work for younger audiences.
LISTNUM 1 \l 11555 Every 15 to 17‑year old, and 98 percent of the 18 to 24‑year old respondents stated they would definitely, or probably listen to this service, if it was licensed. There can be no more definitive indication of a gap in service than having every respondent state some degree of probability and listening.
LISTNUM 1 \l 11556 According to Pollara, these are some of the most remarkable scores they have ever seen in response to a format test, and they clearly indicate pent‑up demand.
LISTNUM 1 \l 11557 Shane?
LISTNUM 1 \l 11558 MR. WILSON: As Dan mentioned, news and information is a key element of our programming strategy ‑‑ in particular, the presentation of local news. We've assembled a comprehensive news package that will keep our listeners informed and engaged throughout the day. With a heavy rotation in the morning and afternoon, we'll be able to ensure that especially during peak listening periods, our listeners can stay with us to get both the music they love, and the information they need.
LISTNUM 1 \l 11559 We will have a team of on‑site reporters that will ensure our station is current on local issues, and matters of concern, and will be among the first on the scene. 100 percent of our news programming will be produced locally, and our first‑hand knowledge of the market will result in immediate access to community information. And our on‑site staff will mean that, most importantly, the community will feel they have access to us.
LISTNUM 1 \l 11560 We will also address the need to communicate with the community through an emergency response plan. Even at times, when we're using voice tracking, we will have management personnel on call to field inquiries, and handle any emergencies that arise. In addition, we will have someone on site at these times who can handle cut‑ins, and provide direction to both management and listeners.
LISTNUM 1 \l 11561 Lorne?
LISTNUM 1 \l 11562 MR. SIMON: Our commitment to Canadian artists manifests itself in two ways in our programming strategy.
LISTNUM 1 \l 11563 First, we will accept a condition of license that requires us to play 40 percent Canadian content throughout the regulated day.
LISTNUM 1 \l 11564 Secondly, we will commit to ensuring that just over one‑third of this category is in new and emerging artists. This translates into 14 percent of our overall schedule being dedicated to the most under‑represented group of artists in the system today.
LISTNUM 1 \l 11565 We believe this to be one of the highest commitments to artist development made to date, and we feel it is not only sustainable; it is necessary in a youth format.
LISTNUM 1 \l 11566 While not all formats, such as gold‑based formats, can handle this type of commitment, youth contemporary can, and in order to maintain it's freshness, must offer new and emerging artists as part of an integrated approach to programming.
LISTNUM 1 \l 11567 Dan?
LISTNUM 1 \l 11568 MR. BARTON: In addition to featuring Canadian new and emerging artists throughout our regular rotation, these performers will get focused exposure through programming features such as "Release of the Week", where we'll select a new CD, and showcase it.
LISTNUM 1 \l 11569 These might be established artists, or they could be a new and emerging Canadian performer.
LISTNUM 1 \l 11570 On Saturday afternoon, our "Canadian Waves" program will be strictly new Canadian talent, and new artists will be featured alongside such established acts, giving listeners a taste of simply what's new in Canadian music.
LISTNUM 1 \l 11571 Finally, "Mix it or Nix it" gives listeners direct input into the playlist through their votes to include or discard a song. This feature, besides engaging the audience, is an invaluable tool, giving the programming team an opportunity to test a range of new music, and decide how and when selections will be streamed into the regular rotation.
LISTNUM 1 \l 11572 All of these opportunities to expose new talent are above and beyond our stated intention to commit 14 percent of our regular play to new and emerging artists.
LISTNUM 1 \l 11573 Ky?
LISTNUM 1 \l 11574 MS. JOSEPH: Thank you, Dan.
LISTNUM 1 \l 11575 In addition to assessing the interest among consumers, we met with advertisers to discuss their interest and willingness to support a new service. Not surprisingly, with only one owner in town, interest in having some competition was significant. On both the national and local front, advertisers expressed a willingness to purchase a youth contemporary format, a sentiment expressed by new advertisers, and advertisers currently using other media.
LISTNUM 1 \l 11576 Interest in reaching youth has never been greater. Known as the four‑, six‑‑ or eight‑pocket generation, their spending as a per cent of their total income are second only to the 50‑plus demographic. They are big consumers of electronics, personal grooming products, entertainment and gaming, fast foods, fashion and, yes, even travel.
LISTNUM 1 \l 11577 Advertisers are concerned that there is no efficient way to reach this highly volatile but rich consumer group. Radio is perfect. It's portable, ideally positioned, given music is the core product, and can be efficiently purchased.
LISTNUM 1 \l 11578 Because there are more youth contemporary formats each year, it means that more and more advertisers can confidently plan a radio campaign will assurance that it can be effectively and efficiently deployed across the country. We are seeing both the number of advertisers planning youth campaigns, and the investment in these campaigns grow.
LISTNUM 1 \l 11579 Carmela?
LISTNUM 1 \l 11580 MS. LAURIGNANO: Our application also makes a considerable contribution by way of direct investment into talent development initiatives.
LISTNUM 1 \l 11581 In addition to making contributions to FACTOR, we will also recognize the Acadian influence, and commit to funding Musique Action. While we applaud these national initiatives, and recognize their invaluable contribution to Canadian Content Development, we wanted to ensure the local artists realize direct benefits from our proposed package.
LISTNUM 1 \l 11582 So we have also committed to support the Provincial Music Associations, MIANS, a not‑for‑profit run by and for local musicians. We are providing support the East Coast Music Association whose success is showcased through their awards program broadcast each year on the CBC.
LISTNUM 1 \l 11583 Local to Cape Breton, we will fund the Celtic Colours Festival, a unique Cape Breton event that brings a range of artists together, and provides exposure to large audiences that come from all over the country for this event of the year.
LISTNUM 1 \l 11584 Finally, we will support the training and education through a grant for scholarships to the Nova Scotia Community College. These national, regional and Cape Breton initiatives total an investment of $250,000 over the term of the license.
LISTNUM 1 \l 11585 In conclusion, our youth contemporary proposal represents not only an opportunity for this market, but also one for the system. Programming directed to the audiences of the future is necessary to the long‑term success of radio. If we do not create a relationship with a medium among the young today, how can we expect them to listen tomorrow? We have to, as an industry, seize this opportunity.
LISTNUM 1 \l 11586 An increase in the formats that can incorporate new and emerging artists is critical to the development of indigenous talent. Research presented at the Commercial Radio Policy hearings showed the limited exposure new artists receive with the average playlist. The burn on established artists and more gold formats will not remedy this imbalance.
LISTNUM 1 \l 11587 Our proposal addresses a consumer demand that has been demonstrated through our research, and confirmed by our experience in Halifax. Overwhelmingly, the youth of Sydney have said they want youth contemporary.
LISTNUM 1 \l 11588 We have proposed a reasonable business case that offers the greatest opportunity for developing advertiser revenues, and competes the least directly with incumbents in, of any applicant before you today.
LISTNUM 1 \l 11589 We have balanced support for national initiatives with truly local development through our plans for CCD investments. We have made a commitment to this province and Sydney by proposing a service that is fully staffed, and with programming commitments that are 100 percent locally produced.
LISTNUM 1 \l 11590 Over the years, our company has grown and expanded, however, despite an increase in stations and employees, we have never lost sight of what provided our initial success, and what continues to propel our achievements today, and that is local focus, local representation, and local commitments.
LISTNUM 1 \l 11591 We would like to provide this in Sydney. As we mentioned at the outset, for some of the people at this table, a new license means coming home. We would be delighted if the experience and resources of HFX Broadcasting Inc. could be used to help in the revitalization of this truly unique part of Canada, and to train a new generation of Cape Breton broadcasters.
LISTNUM 1 \l 11592 Thank you for your time and attention. We would be pleased to answer any questions you might have.
LISTNUM 1 \l 11593 THE CHAIRPERSON: Okay. Thank you very much.
LISTNUM 1 \l 11594 I'll probably have some questions on your introductory remarks, but I'll start with my planned questions.
LISTNUM 1 \l 11595 First of all, I was going to talk about, or ask you some questions about programming, and they ‑‑ my questions revolve around your response January 29th, so I may just turn to that myself. In that response, you indicated you will provide 13 hours and 51 minutes of spoken word programming for broadcast week, which, of which slightly more than eight hours will consist of live announcer talk and surveillance, and approximately four hours will be devoted to news.
LISTNUM 1 \l 11596 With respect to the approximately four hours of news, can you confirm these hours will be pure news, and will not contain any surveillance material?
LISTNUM 1 \l 11597 MS. LAURIGNANO: Yes, I will ask Paul Evanov to answer. I, I've lost a bit of my voice today. To their chagrin, it came back, so I'm going to try and save it.
LISTNUM 1 \l 11598 THE CHAIRPERSON: (Laughing) Okay.
LISTNUM 1 \l 11599 MR. EVANOV: In regards, our news commitment is over and above our jock talk, and announcer talk. Rolled in with the announcer talk is jock talk, which would have relevant news and information, but to give you an exact breakdown of our scheduled newscasts throughout the day and throughout the week, I'll ask Shane to break to down for you, specifically.
LISTNUM 1 \l 11600 MR. WILSON: Our breakdown for our news commitment is really in three separate areas. There's full newscasts, two minute ‑‑ a full newscast being a five‑minute newscast ‑‑ a two‑minute newscast package, and community calendar. We will produce 40 minutes of ‑‑ or, sorry, excuse me ‑‑ 45‑minute newscasts per week for 200 total minutes, 21 two‑minute newscasts or news updates for a total of 42, and our community calendar will be 14 two‑minute, roughly two‑minute packages that will change, depending on how many community events we have, for a total of 28 minutes.
LISTNUM 1 \l 11601 So we're looking at 270 total minutes of news.
LISTNUM 1 \l 11602 THE CHAIRPERSON: Can I just interrupt you there? In that letter, is that the same as reported in that letter, January 29th, or is, does that represent a change? Just to make sure I'm ‑‑ it's
LISTNUM 1 \l 11603 MR. WILSON: The calculations I've made represent our initial supplementary brief. There was ‑‑ and if I might pass that on to Paul
LISTNUM 1 \l 11604 THE CHAIRPERSON: In the January 29th letter, it shows 200 minutes of news Monday to Friday, with fi‑, in five‑minute slots, 20 minutes Monday to Friday in two‑minute slots, and 12 minutes on Saturday and Sunday, which is two minutes each.
LISTNUM 1 \l 11605 MR. EVANOV: I ‑‑ if I could just address what I think the error is, Madame Commissioner.
LISTNUM 1 \l 11606 There is an error in our deficiency response. One newscast was omitted Monday to Friday. It should include a 6:30, as well. The initial calculation in our supplementary brief was exactly as Shane had relayed, but the reason why it does not match, the ‑‑ if you'd take a look at Monday to Friday, on
LISTNUM 1 \l 11607 THE CHAIRPERSON: Yes?
LISTNUM 1 \l 11608 MR. EVANOV: ‑‑ page two, there is a 6:30 newscast which is missing there, which accounts for an additional ten minutes.
LISTNUM 1 \l 11609 THE CHAIRPERSON: And that's the five minutes?
LISTNUM 1 \l 11610 MR. EVANOV: Yeah.
LISTNUM 1 \l 11611 THE CHAIRPERSON: Five minutes each for that one?
LISTNUM 1 \l 11612 MR. EVANOV: Two minutes. Two minutes.
LISTNUM 1 \l 11613 THE CHAIRPERSON: Oh, two minutes?
LISTNUM 1 \l 11614 MR. EVANOV: Yes.
LISTNUM 1 \l 11615 And sorry, just to add on to your question, to be able to answer it specifically, is all the news will be local from the Sydney. Cape Breton area'll be done locally at a newsroom here, and Shane can kind of walk you through how the news is done, and how much local we have on there, and what it consists of.
LISTNUM 1 \l 11616 MR. WILSON: We will be modeling this newsroom on my newsroom in Halifax, so I ‑‑ and that's what I relate to. Obviously the stories will be different here.
LISTNUM 1 \l 11617 We had promised, and we promise for this license, 40 percent local content, which as well we did for our Halifax license. We're currently running 80 percent in Halifax, and consider that doable here, and doable, based on my monitoring of the current situation in Sydney, and the current media. And just from this morning, I was able to put together a newscast for our audience, which I'm just assuming is a similar taste to the Halifax audience, which was 100 percent local, and all good, solid news stories.
LISTNUM 1 \l 11618 THE CHAIRPERSON: And that, so that's pure news, then?
LISTNUM 1 \l 11619 MR. WILSON: That is correct.
LISTNUM 1 \l 11620 THE CHAIRPERSON: Okay. Great. Alright.
LISTNUM 1 \l 11621 MR. EVANOV: Sorry. Within that newscast would encompass sports and weather at the five‑minute top, at the five‑minute cast. We have, you know, about four minutes of actual news, which would be, as Shane said, at least 40 percent local, and then on top of that, you know, to give a ratio, it'd be say 30 seconds sports, 30 seconds weather, so the whole five minutes would encapsulate everything in the news that the youth need to hear in Sydney. And we feel there's, you know, more than enough news to
LISTNUM 1 \l 11622 THE CHAIRPERSON: Oh, sorry, Mr. Evanov, I just ‑‑ I don't think I've got it yet, then.
LISTNUM 1 \l 11623 So are you saying of the four hours, some of it would be other than pure news, up to four hours?
LISTNUM 1 \l 11624 MR. EVANOV: No, no, sorry.
LISTNUM 1 \l 11625 Sorry about that. I just was trying to break down the five‑minute newscast at the top hour ‑‑
LISTNUM 1 \l 11626 THE CHAIRPERSON: Oh, okay.
LISTNUM 1 \l 11627 MR: EVANOV: ‑‑ for you there, just to give you an idea of how the news would sound. It would be out of five minutes, four minutes of news, you know, and then 30 seconds of weather, 30 seconds of sports within that.
LISTNUM 1 \l 11628 THE CHAIRPERSON: 'Cause when I calculate that, I come to four hours news, in total, and using that five minutes, so then, so that would mean it would not be all pure news.
LISTNUM 1 \l 11629 MR. EVANOV: Sorry, within the five minute ‑‑ yes, that would all
LISTNUM 1 \l 11630 MR. WILSON: I believe your question is, it isn't played ‑‑ you're talking about weather as a surveillance element, correct?
LISTNUM 1 \l 11631 THE CHAIRPERSON: Yes, yeah.
LISTNUM 1 \l 11632 MR. WILSON: Okay. And I'm sorry. I might be able to clarify why there's a little confusion
LISTNUM 1 \l 11633 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11634 MR. WILSON: ‑‑ there. Here in the Maritimes, in particular, we tend to view weather as one of the most important parts of our news package, and when we say it's total news, we are including that weather forecast, as well.
LISTNUM 1 \l 11635 THE CHAIRPERSON: Oh, okay.
LISTNUM 1 \l 11636 MR. WILSON: I think the difference that you're making is that you're saying weather is a surveillance
LISTNUM 1 \l 11637 THE CHAIRPERSON: It
LISTNUM 1 \l 11638 MR. WILSON: ‑‑ as opposed to news.
LISTNUM 1 \l 11639 THE CHAIRPERSON: It is. So can you just tell me how much of a ‑‑ what percentage, then, we'd take out if we wanted to take out the weather?
LISTNUM 1 \l 11640 MR. WILSON: Oh, you're going to make me do math.
LISTNUM 1 \l 11641 MS. LAURIGNANO: We can work out the percentage and submit it, but basically, if you look at all the five‑minute, what we scheduled as five‑minute newscasts, you would deduct 30 seconds from each one of them, and that would give you four and a half.
LISTNUM 1 \l 11642 THE CHAIRPERSON: From each newscast?
LISTNUM 1 \l 11643 MS. LAURIGNANO: From each newscast that is scheduled five minutes.
LISTNUM 1 \l 11644 THE CHAIRPERSON: Okay, and what about the two minute ones?
LISTNUM 1 \l 11645 MS. LAURIGNANO: The two minutes is pure news. The weather and other surveillance is done through the talk in the other parts of the hour.
LISTNUM 1 \l 11646 THE CHAIRPERSON: Okay. So we deduct 30 seconds from the five minutes, and the others we wouldn't touch?
LISTNUM 1 \l 11647 MS. LAURIGNANO: Correct.
LISTNUM 1 \l 11648 THE CHAIRPERSON: Okay. Thank you. That's fine. I think we're okay with that.
LISTNUM 1 \l 11649 You indicate you'll be able to share news stores with your Halifax station, and other members of the Evanov group. In terms of hours and minutes, how much news will be produced by your Sydney station, and of that total time devoted to news, how much will be news of local interest?
LISTNUM 1 \l 11650 MS. LAURIGNANO: Yeah, I will address that.
LISTNUM 1 \l 11651 The newscasts will be 100 percent produced in Sydney for the Sydney station, as they are 100 produced for the Halifax station. There is no cost‑sharing between the two newsroom, or any newsroom of any of our operations, in fact.
LISTNUM 1 \l 11652 There might be some opportunities where either station could benefit from a resource that is available, and for example, if there is a news story that is happening in Halifax, it is the provincial capital, and there's an opportunity for this news department to request something from there, such as having a guest brought into the studio, and doing a telephone call. And to that extent, it would happen that way. There might be other opportunities where, for example, the community calendar events calendar, there might be a big show, or a concert happening in Halifax, we know that that's one of the major stops in eastern Canada, and maybe that particular artist whose relevant here cannot make an appearance here in that case, that we may be able to forward an interview from that station over here, but at that station, they would take that as raw material, and would package it in its own programming, and it would be locally produced.
LISTNUM 1 \l 11653 THE CHAIRPERSON: So ‑‑ okay, so they wouldn't be taking the exact clip?
LISTNUM 1 \l 11654 MS. LAURIGNANO: Yes.
LISTNUM 1 \l 11655 THE CHAIRPERSON: They'd be customizing it, if you like?
LISTNUM 1 \l 11656 MS. LAURIGNANO: Right.
LISTNUM 1 \l 11657 THE CHAIRPERSON: Personalizing it. Okay.
LISTNUM 1 \l 11658 Of the slightly more than eight hours of announcer talk and surveillance material, how much time in hours and minutes per week will be devoted to local programming, including local weather, local sports coverage, and the promotion of local events and activities? And if you could just break it down by category, 'cause that's how the new regulations are worded.
LISTNUM 1 \l 11659 MR. WILSON: I can address that.
LISTNUM 1 \l 11660 THE CHAIRPERSON: Sure.
LISTNUM 1 \l 11661 MR. WILSON: Just to break it down just by minutes, if that's acceptable?
LISTNUM 1 \l 11662 THE CHAIRPERSON: Sure.
LISTNUM 1 \l 11663 MR. WILSON: 200 minutes of news, of course, with the breakout of the four and a half that you had specified.
LISTNUM 1 \l 11664 THE CHAIRPERSON: This is talking just to ‑‑ this is referring to the eight hours of announcer talk?
LISTNUM 1 \l 11665 MR. WILSON: The eight hours of announcer talk?
LISTNUM 1 \l 11666 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 11667 MR. WILSON: Okay.
LISTNUM 1 \l 11668 THE CHAIRPERSON: Yeah.
LISTNUM 1 \l 11669 MR. BARTON: Madame Commissioner, our intention with the announcer talk is to completely reflect the 12 to 34 demographic, and specifically, in CBRM. So in terms of what's going to be local, it will be all of it.
LISTNUM 1 \l 11670 If we're bringing up something that's of national interest, it's because it's of interest to 12 to 34 in CBRM, so in terms of breaking it down of what's going to be local and what's not, it will all be produced locally.
LISTNUM 1 \l 11671 THE CHAIRPERSON: It'll all be local, and in terms of breaking it down between weather, local weather, local sports and local events and activities
LISTNUM 1 \l 11672 MR. BARTON: Well, one of the beautiful things about youth contemporary as a format is it's really based on their demand, so if we're getting a demand in CBRM that they want more sports with this particular format, we'll be able to increase the sports talk. If we find that there's something that's of particular weather importance that day, and that's what we're hearing back from 12 to 34, because we are an inactive format, that's what we'll provide.
LISTNUM 1 \l 11673 THE CHAIRPERSON: Okay. So you'll be responsive.
LISTNUM 1 \l 11674 MR. BARTON: Exactly.
LISTNUM 1 \l 11675 THE CHAIRPERSON: Okay. Now just if I can get you to look at that, again, at that January response. The calculation in response to question 4(a), and in your calculation of the 486 minutes of live announcer talk and surveillance, you deduct four and a half hours for feature programming, and I just couldn't follow where the four and a half came from. I just didn't know if I was misun‑, misinterpreting something. There's a little asterisk that refers to "feature programming above", but I couldn't get that to add to four and a half hours.
LISTNUM 1 \l 11676 MR. BARTON: The way we calculate our feature programming is there is music included in the feature programming, so what we did specifically is we calculated how much of each feature would be talk.
LISTNUM 1 \l 11677 So if you take a look at "Mix it or Nix it", for example, which is
LISTNUM 1 \l 11678 THE CHAIRPERSON: Yes?
LISTNUM 1 \l 11679 MR. BARTON: ‑‑ a half hour program
LISTNUM 1 \l 11680 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 11681 MR. BARTON: ‑‑ 10 minutes of that we calculate will be talk. We took that and multiplied it by five days, and came up with 50 minutes for the week.
LISTNUM 1 \l 11682 CD release of the week is a one‑hour program, and again, we calculate ‑‑ because we'll be talking about the artist that's featured, and the music that's featured, we calculated 25 percent of that hour be spoken word, or 15 minutes.
LISTNUM 1 \l 11683 "Canadian Waves", very similar, that it's a one‑hour program. We want to put a little more feature talk into that program, because of the fact that we're talking about new and emerging Canadian artists, so we feel it very important. So we've allocated a full third of that hour to spoken word which is, again, where we came up with the 20 minutes.
LISTNUM 1 \l 11684 THE CHAIRPERSON: But if I add those three, I don't come up to four and a half. See down below there where it's in the live announcer talk and surveillance, you take the 126 hours, less 4.5 hours, feature programming? I can't get the 4.5 hours is what I was trying to arrive at.
LISTNUM 1 \l 11685 MR. BARTON: Do you know where it is?
LISTNUM 1 \l 11686 MS. LAURIGNANO: Here, I'll explain it. He can't read my writing.
LISTNUM 1 \l 11687 The "Mix it or Nix it" is a half‑hour program that runs five days a week, so that's 2.5 hours. CD "Release of the Week" is one hour, so that becomes 3.5 hours. And "Canadian Waves" is the last hour program, and that becomes 4.5 hours of feature programming.
LISTNUM 1 \l 11688 THE CHAIRPERSON: Okay. Thanks.
LISTNUM 1 \l 11689 Now with regards to the total, 831 minutes, we're just wondering if the time show Cana‑, for "Canadian Waves" should be increased by 20 minutes to account for the second airing, which you mention in your supplementary brief at page 11.
LISTNUM 1 \l 11690 MR. EVANOV: Actually, that show is ‑‑ well, when it's repeated on Monday evenings, it's the same show that runs on Saturday, in case somebody was to miss it on the Saturday ‑‑ was in transit, or something ‑‑ so it's an actual ‑‑ it's the same show that would run on Saturdays
LISTNUM 1 \l 11691 MS. LAURIGNANO: That's right.
LISTNUM 1 \l 11692 MR. EVANOV: ‑‑ at 2:00 would run then, so that's why it's not allocated for more time, 'cause it's the same.
LISTNUM 1 \l 11693 MS. LAURIGNANO: But the answer to your answer is yes.
LISTNUM 1 \l 11694 THE CHAIRPERSON: Yes? Okay, 'cause I did ask
LISTNUM 1 \l 11695 MS. LAURIGNANO: Yes.
LISTNUM 1 \l 11696 THE CHAIRPERSON: That was my next question ‑‑ whether it was a repeat, so
LISTNUM 1 \l 11697 MS. LAURIGNANO: Yes.
LISTNUM 1 \l 11698 THE CHAIRPERSON: ‑‑ that's good. Okay. Thank you.
LISTNUM 1 \l 11699 MS. LAURIGNANO: Yeah.
LISTNUM 1 \l 11700 THE CHAIRPERSON: So we get the answers to the both. Okay.
LISTNUM 1 \l 11701 You mentioned in this letter, as well, 26 hours of programming per week would voice tracked. Wondering when those hours would be scheduled?
LISTNUM 1 \l 11702 MR. EVANOV: We've committed in our letter to a minimum of 100 hours will be live, and looking at probably anywhere up to 110, 115 hours live. All the programming will be local, even the voice tracking. If we're going to run a best of morning show from that week, from our, you know, Sydney radio station like a Saturday or Sunday morning between 6:00 and 9:00 a.m., we might run some best of morning show there for morn‑, our morning that week for people that might have missed some bits, or a voice track countdown done locally in Sydney from our station might be there, or between off‑peak hours 11:00 p.m. to midnight, but we plan on being live throughout, you know, basically the entire the day and weekend, the morning, mid‑day, drive and evening, but wanted that little flexibility over the term of the entire license to be able to, you know, do possible voice tracking at off‑peak times for, you know, such countdowns or best of shows.
LISTNUM 1 \l 11703 THE CHAIRPERSON: So off‑peak, it would not likely end up being in the daytime hours?
LISTNUM 1 \l 11704 MR. EVANOV: Definitely not.
LISTNUM 1 \l 11705 THE CHAIRPERSON: Okay. Thanks.
LISTNUM 1 \l 11706 MR. EVANOV: We'd want to be live, you know, as much as possible. Obviously, for this demographic, we need to be.
LISTNUM 1 \l 11707 THE CHAIRPERSON: In your answer to question five, you indicate you intend to broadcast a minimum of 100 hours per week of live programming, and in your answer to question 12(a), you commit to 110 hours of local programming.
LISTNUM 1 \l 11708 I'm just wondering what type of programming would make up the different of ten hours per week, and would it include programming of local interest perhaps produced by other members of Evanov group?
LISTNUM 1 \l 11709 MS. LAURIGNANO: (Coughs) Excuse me.
LISTNUM 1 \l 11710 THE CHAIRPERSON: It just seems to be the difference between live and local, and I was just wondering what made up the ten.
LISTNUM 1 \l 11711 MR. BARTON: Part of the reason for that difference is our voice tracking will still be local, so if we were to voice track additional hours, it's still local content, it's still produced here in CBRM, it still has local reflection. So that would be why there'd be a difference between the minimum 100 hours commitment, and the 110 hours that you see in response to question 12(a).
LISTNUM 1 \l 11712 THE CHAIRPERSON: So it's the voice tracking?
LISTNUM 1 \l 11713 MR. BARTON: Correct.
LISTNUM 1 \l 11714 THE CHAIRPERSON: Just think about that, now. So there's 126 hours in the broadcast week, so 100 hours would be live, 26 would be voice tracked?
LISTNUM 1 \l 11715 MS. LAURIGNANO: That's right. The ‑‑ there's opportunities, and again, keeping in mind that this is a minimum commitment, we don't anticipate that we'd be close to that, where we want to allow ourselves the flexibility of actually producing pre‑packaged programs that are still produced locally here, voice tracked.
LISTNUM 1 \l 11716 So it could be, for example, like a New Year's countdown, or it could be something ‑‑ the top ten of the month, or of the week, or it'd be something that the audience may wish as a desirable program that's just packaged, so it's voice tracked, but it's still local, and it's still produced exclusively for this station, and it would be actually very current. It may be voice tracked the day before, or a few hours before.
LISTNUM 1 \l 11717 THE CHAIRPERSON: And I suppose, again, it's possible it might take some information from somebody else in your group, but again, customize it, or personalize it.
LISTNUM 1 \l 11718 MS. LAURIGNANO: There's a very good possibility that we can share information and content on some levels.
LISTNUM 1 \l 11719 THE CHAIRPERSON: Okay. Now, we'll just turn to the Canadian content, and we have your response, so it's just a matter of confirming for the record.
LISTNUM 1 \l 11720 In March 2007, the Commission sent you a letter advising that it would want to review, at this public hearing, your proposed contributions to Canadian Content Development to ensure that these are in line with the new contribution regime outlined in its Commercial Radio Policy 2006.
LISTNUM 1 \l 11721 We note that you have submitted a written reply to your letter, and that a copy of your reply if available on the public examination file for your application.
LISTNUM 1 \l 11722 For the purpose of the public record, I would like to take a few minutes, and go through the questions that we had sent you, and summarize your replies in order to ensure that we have a clear understanding of your CCD commitments. We had asked you to confirm your understanding that if licensed, your station will have to contribute a basic annual CCD contribution imposed by regulation, based on the station's total annual revenues, and in the amounts as set out in paragraph 116 of the new Radio Policy, Public Notice CRTC 2006‑158.
LISTNUM 1 \l 11723 You have stated in your reply that based on your financial projections, this would represent an annual CCD contribution of $500 in year one, increasing to $1,000 in years two through seven. Is this correct?
LISTNUM 1 \l 11724 MS. LAURIGNANO: That is correct.
LISTNUM 1 \l 11725 THE CHAIRPERSON: We had asked you to confirm your understanding that no less than 60 percent of the station's basic annual CCD contribution must be allocated to either FACTOR or music action, and the remaining amount, if any, may be directed to any eligible CCD initiatives, at your discretion.
LISTNUM 1 \l 11726 You have confirmed that $300 in year one, and $600 in years two to seven representing no less than 60 percent of your basic annual CCD will be directed to FACTOR and/or music action. Is this correct?
LISTNUM 1 \l 11727 MS. LAURIGNANO: That is correct.
LISTNUM 1 \l 11728 THE CHAIRPERSON: As set out in the new Commercial Radio Policy, the new annual CCD contribution will be imposed on all commercial radio licenses by regulation. The Commission could impose a transitionary COL reflecting the new basic annual CCD until such time as regu‑, as the regulations come into force. Once the regulation is in place, the COL would expire.
LISTNUM 1 \l 11729 Do you have any comments regarding the Commission's imposing such a COL?
LISTNUM 1 \l 11730 MS. LAURIGNANO: No, we would be prepared to accept it, and it's within our business plan. That's fine.
LISTNUM 1 \l 11731 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11732 As was the case with the previous Canadian Talent Development policy, an applicant or licensee may choose to exceed the minimum annual basic CCD contribution. Under the old C‑, I'm sorry ‑‑ I'm ‑‑ under the old CC policy, it was clear that your funding proposal exceeded the minimum plan requirements.
LISTNUM 1 \l 11733 As part of this application, you are proposing to contribute annual funding to CCD that would be over and above the basic required CCD contribution. We had asked that you confirm the total annual amount of this over and above contribution.
LISTNUM 1 \l 11734 In your reply, you indicated that the over and above contributions would be $35,200 in year one, $34,700 in years two to six, and increasing to 34,800 in year seven. Is this correct?
LISTNUM 1 \l 11735 MS. LAURIGNANO: That is also correct.
LISTNUM 1 \l 11736 THE CHAIRPERSON: We had also asked that you confirm your understanding that under the new Policy, not less than 20 percent of this annual over and above CCD contribution must to allocated to FACTOR or music action.
LISTNUM 1 \l 11737 In your reply, you confirmed that no less than 20 percent of the annual over and above CCD would be directed to FACTOR and music action. In fact, you proposed higher annual minimum contributions to FACTOR, music action under the over and above requirement.
LISTNUM 1 \l 11738 According to my calculations, these would be of $7,700 in year one, obtained by subtracting the $300 to FACTOR under the basic from the total 8,000, $7,400 in years two to seven.
LISTNUM 1 \l 11739 Is this correct?
LISTNUM 1 \l 11740 MS. LAURIGNANO: That is correct.
LISTNUM 1 \l 11741 THE CHAIRPERSON: We note that the contributions will be divided evenly between FACTOR and music action.
LISTNUM 1 \l 11742 Is that correct?
LISTNUM 1 \l 11743 MS. LAURIGNANO: That is also correct.
LISTNUM 1 \l 11744 THE CHAIRPERSON: Thank you. We had asked that you identify the eligible CCD initiatives, and annual funding level for each initiative that you would support for the remaining annual over and above CCD contribution.
LISTNUM 1 \l 11745 Over ‑‑ in your reply, you stated that in light of your revised contributions to FACTOR, music action, you had adjusted your contributions to the following eligible initiatives ‑‑ $42,000 over seven years to the Music Industry Association of Nova Scotia, MIANS; $42,000 over seven years to the East Coast Music Association; $70,000 over seven years to the Celtic Colours International Festival; and $40,000 over seven years to the Nova Scotia Community College.
LISTNUM 1 \l 11746 Is this correct?
LISTNUM 1 \l 11747 MS. LAURIGNANO: That is correct, and these are also initiatives that we had proposed with our application, and pleased to say that we were able to retain them all with some adjustment, and believe that the integrity of each program was maintained, as well as we having met the new guidelines.
LISTNUM 1 \l 11748 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11749 Please confirm that you will adhere to the over and above CCD contributions as a condition of license.
LISTNUM 1 \l 11750 MS. LAURIGNANO: Confirm that we will.
LISTNUM 1 \l 11751 THE CHAIRPERSON: Thank you. Now I wanted to discuss your proposed music format and target.
LISTNUM 1 \l 11752 You mentioned that your Halifax station currently includes selections drawn from pop, urban, r&b, hip‑hop dance and modern rock genres. Your consumer demand survey portrayed your proposal form, your proposed format as urban, CHR, and dance.
LISTNUM 1 \l 11753 What music genres are you proposing to include in your format?
LISTNUM 1 \l 11754 MR. EVANOV: I'll ask Dan to fully explain the format which we're currently running in Halifax, which the Sydney model is made after, to walk you through it.
LISTNUM 1 \l 11755 MR. BARTON: And if I could say so, youth contemporary format is a format that we're very proud of. We, as a company, designed it. It was presented successfully to the CRTC in 2004 for Halifax. The Commission accepted it as a format in their decision, and described it adequately there, but we'll review it a little bit now.
LISTNUM 1 \l 11756 It does include a wide variety of genres. It includes urban, hip‑hop, r&b, dance, pop, modern rock. What we found in our research is that in order to attract, and to appeal to 12 to 34, and reflect their listening tastes, we couldn't pick just one genre. The tastes of 12 to 34 are far wider than that, I ‑‑ if I could even compare it to an adult contemporary.
LISTNUM 1 \l 11757 An adult contemporary format, as was stated by the previous presenters, is a format that plays music from different genres, blended with relevant spoken word and information. Well, where youth contemporary is comparable to that is that it does have a broad‑based sound, not focused on any one individual style, and has relevant spoken word and information that reflects the difference between the two.
LISTNUM 1 \l 11758 As well, adult contemporary is a 35‑plus format. Youth contemporary's specifically designed to reflect 12 to 34, and it strives to do that not just with the wide variety of musical genres, but by the fact that it doesn't adhere to a chart. It's an interactive format. It's really based on the demand of that demographic in any given market.
LISTNUM 1 \l 11759 I can give you Halifax as an example, that what we're doing right now, to make sure we're properly serving 12 to 34 is we're as interactive as possible in every way, shape and form, from our spoken word to our music. They're able to interact with us through the internet, through text message, through e‑mail, and tell us what music it is they want to hear, and we expose that in a lot of different ways, if I could just take you through it for a moment.
LISTNUM 1 \l 11760 We have a variety of countdowns on our radio station in Halifax, and the countdowns as designed as your top seven, your top six requests of the day, and that's updated daily. And, again, the way they let us know that is through text message, e‑mail and phone ‑‑ all the ways that 12 to 34's are used to communicating. And it's not properly reached out to, I don't think, often enough.
LISTNUM 1 \l 11761 But, again, because youth contemporary's designed to reflect them, that's how we do it. We also have ability on our website for you to just make general requests, even if it's not for the request show. We expose new music in a weeknight feature that we call "Head to Head" in Halifax, and a similar feature we have proposed for Sydney called "Mix it or Nix it" to brand tracks that you have a chance, during the course of that hour, to let us know, again, by the variety of different medium. You can use text message, e‑mail, cellphone, telephone. Let us know which song you think we should keep, and which one you're not so fond of.
LISTNUM 1 \l 11762 We're out in the community constantly. Again, in Halifax, four nights a week we're out in the local clubs with our DJ's, and we're getting a face‑to‑face reaction of what our audience thinks of this music, and we're able to take that and put it into our programming.
LISTNUM 1 \l 11763 So youth contemporary is not just a format that covers a wide variety of genres, but it's an incredibly interactive format that's in tune with 12 to 34, and reflects their taste.
LISTNUM 1 \l 11764 THE CHAIRPERSON: When you did your survey, you only asked, as I understand it, at any rate, about three genres. Don't you think that would have effected the outcome, or how was that handled?
LISTNUM 1 \l 11765 MR. EVANOV: We'll ask Debra to (inaudible) actually how the research was done.
LISTNUM 1 \l 11766 MS. McLAUGHLIN: We actually asked for a whole lot of genres, and classified them in different ways.
LISTNUM 1 \l 11767 When we specifically asked about the demand, I think the important part of that question is not urban, CHR or dance, but the list of artists that we have put on the record for them to consider. And if I just look down the list, there's all sort of cross‑over artists. Some might be considered urban, some might be considered hip‑hop. Those are definitions that are so blurred these days, it's not possible to provide that to a respondent, and be absolutely certain that they know who you're talking about.
LISTNUM 1 \l 11768 So that's why we expanded with a list of artists, and they cover a broader range than perhaps some people would define urban was covering.
LISTNUM 1 \l 11769 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11770 Would the genres be, or the different genres, I should say, be blended, or would they be day‑parted?
LISTNUM 1 \l 11771 MR. BARTON: They are, in fact, blended throughout the day.
LISTNUM 1 \l 11772 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11773 And the core audience you're proposed to serve then is 12 to 24, 12 to 34? That's the core?
LISTNUM 1 \l 11774 MR. BARTON: 12 to 34 would be the broad base for youth contemporary, and we'd
LISTNUM 1 \l 11775 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 11776 MR. BARTON: The refined demo would be 12 to 24.
LISTNUM 1 \l 11777 THE CHAIRPERSON: And skewed more to male or female?
LISTNUM 1 \l 11778 MR. BARTON: It's not actually skewed specifically male or female. It's just, again, based on the reaction that we get back from 12 to 34, and 12 to 24 within the market that we serve.
LISTNUM 1 \l 11779 THE CHAIRPERSON: And your ‑‑ how will your proposed format differ, for example, from CKPE's AC format, which we understand, based on the previous applicant, is actually HOT AC now?
LISTNUM 1 \l 11780 MR. BARTON: Yeah, I would agree with that description that it is a hot adult contemporary radio station. The biggest difference is in what the target audience is. Hot adult contemporary typically targets 25‑54, and skews even a little older. Their core would be 35 to 44. So in terms of target audience, they're not the same.
LISTNUM 1 \l 11781 In terms of music selection, we actually did a calculation prior to preparing this application, and we found titles duplicated were less than 15 percent.
LISTNUM 1 \l 11782 THE CHAIRPERSON: And what about, then, compared to ‑‑ I keep wanting to call it CHER, but I guess it CHER's FM classic hits. What's the
LISTNUM 1 \l 11783 MR. BARTON: In taking a look at CHER's format, as it is now, and what's proposed for the flip is a classic hits. The core of that is in the 1980s, which we don't really touch on, so the duplication there would be next to nil.
LISTNUM 1 \l 11784 THE CHAIRPERSON: And Andrew Newman's proposed AC classic hits format?
LISTNUM 1 \l 11785 MR. BARTON: Again, not having seen a complete playlist from Andrew, based on his definition, the duplication would have, again, be slim to nothing.
LISTNUM 1 \l 11786 THE CHAIRPERSON: Okay. And I didn't, I don't have here a question to ask you about the duplication with Newcap's, but it seems to me that I should, because they are proposing that hybrid. So do you have a, an idea what ‑‑ it seemed to me that would appeal to younger people, too.
LISTNUM 1 \l 11787 MR. BARTON: Yeah. In terms of the rock genre, I mean certainly, when we tested the different formats, we did find there was an appeal for rock. The key with youth contemporary is that it's not just a narrow‑focused rock, or it's not just a narrow‑focused urban. It is that blend.
LISTNUM 1 \l 11788 So in terms of what percentage, if you were to take the rock genre out of it, would be duplicated, it's difficult to calculate, simply because we don't determine what percentage of each of those genres is going to be part of our format, based on a magic formula. It's based on the demand of our audience. It's based on the demand of 12 to 34.
LISTNUM 1 \l 11789 MS. LAURIGNANO: And, in fact, we just add to that ‑‑ with the other applicants, the music format that they've proposed, we assume that seven years from now, that's what they're going to be playing, or five years, or ten years, because it is music‑driven, specifically either by genre or the type of format.
LISTNUM 1 \l 11790 The ‑‑ what defines and distinguishes youth contemporary is that it is the age demographic that determines what music is going to be played. So if you're serving that 12 to 24, and you were serving it a number of years ago, you wouldn't have had hip‑hop and urban on that station. If a wave of music comes along between now and then, that's going to be incorporated. So it morphs. The
LISTNUM 1 \l 11791 THE CHAIRPERSON: It's evolving?
LISTNUM 1 \l 11792 MS. LAURIGNANO: The music ‑‑ yes.
LISTNUM 1 \l 11793 THE CHAIRPERSON: Yes, it is.
LISTNUM 1 \l 11794 MS. LAURIGNANO: It evolves. The age is always there, and there's always a constant feed, because there's always 12‑year olds, you know, aging and feeding into it. So that is really the biggest difference.
LISTNUM 1 \l 11795 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11796 I'm going to move next into the economic and I have already here a number of questions on the economic, but I'm just, I just want to make sure that I understand. Obviously, you, you're convinced that because you're appealing to this age group, and you know, it's their parents that are doing the shopping for the most part ‑‑ or maybe I'm wrong on that; maybe they're spending their parents' money ‑‑ you have no concern that you're going to be able to get the advertising dollars?
LISTNUM 1 \l 11797 MS. LAURIGNANO: I think we'll ask Ky to answer that one.
LISTNUM 1 \l 11798 MS. JOSEPH: Thank you. I guess if I had ev‑, a penny for every adult who thought that, I would be a very rich woman.
LISTNUM 1 \l 11799 THE CHAIRPERSON: That explains why I'm not (laughs).
LISTNUM 1 \l 11800 MS. JOSEPH: (Laughing) Your kids might be, though.
LISTNUM 1 \l 11801 THE CHAIRPERSON: Yeah, that's right.
LISTNUM 1 \l 11802 MS. JOSEPH: No. Actually, we have a lot of experience, as you know, with this type of format, and the advertising ‑‑ we did an advertising demand, which was really part of how we came to our projections.
LISTNUM 1 \l 11803 You know, we conduct our street‑level advertising demand of those business categories we consider P1, which would be categories that target the 12 to 24, 12 to 34 demographic. We review national feasibility in a market. We have a discussion with a cross‑section of all the advertisers that we consider to be a P1 advertiser, and then we estimate calculations based on how clients would feel working with a new entrant into the marketplace, asking them what their budgets would be. Some are forthcoming; some are not so forthcoming. And then we're able to, once we establish our spot rate, and inventory sell‑out rate, we're able to establish what that revenue would be.
LISTNUM 1 \l 11804 What was really interesting in this market, and I've se‑, that I've seen more than any other market that we've applied for is that because there's such a pent‑up demand for the younger demographic, and because none of the current radio stations deliver that audience, the national advertisers have not brought their budgets forth in this market.
LISTNUM 1 \l 11805 You know, in fact, our research, in speaking with national buyers, clearly indicated that national buyers that would target the youth, in a lot of cases, they have two demographics. So there will be a primary demographic, for example of 25‑54, and there'll be a second demographic of 12 to 17, or 12 to 24. That secondary budget is not coming into this market.
LISTNUM 1 \l 11806 Further to that, we asked them if we could bring YCR into this market, would you be interested in advertising? And it was overwhelming what we heard from them. You know, I've got two dozen clients here that have confirmed that, yes, we would definitely buy this market, if you brought this format to the market. It's just cost‑efficient at this particular time.
LISTNUM 1 \l 11807 You know, as well, MBS having the monopoly on this market, they dictate the buying regulations for national buyers, and in fact, there's no cost‑per‑point that's used in this market in terms of dictating the rate. It's a gross rate. So what means is whether you're buying 25‑54 or 12‑17, the gross rate is the gross rate, and again, it just confirms that it just has not been cost effective.
LISTNUM 1 \l 11808 And then further to that, we've talked to advertisers who are currently using local TV. We've heard statements more than once ‑‑ actually, you know, a dozen times ‑‑ that they've said that TV is actually less expensive in this market than radio, in fact, to target their specific demographics. You know, I could list off a dozen clients that have told us that. Then you've got the local TV Guide cable network. Just in listening to it for 20 minutes, I felt that there was probably a 20‑minute loop with adverti‑, like a current rotation of advertisers. There were half a dozen advertisers that I would feel confident that would definitely jump onboard a youth contemporary radio station.
LISTNUM 1 \l 11809 In fact, there were two that actually advertise in Halifax on our station, and those are new advertisers to Halifax.
LISTNUM 1 \l 11810 And then just to go a little bit further, I guess we were fortunate, in this case, because we did launch Halifax six or seven months ago, and I reviewed the Halifax numbers, and out of 104 local clients, 38 had never before used radio. That's a representation of 38 new clients to radio. There were also 38 national clients that are on the station, from day one. Six of those are new, representing 20 percent new to radio.
LISTNUM 1 \l 11811 That ratio represents 24 percent of completely new advertisers to the Halifax radio station. We feel that that number will actually increase a little bit more, because when there's such a pent‑up demand from consumers, the consumer response is actually much quicker than the advertiser response.
LISTNUM 1 \l 11812 So to answer your question, yes, we definitely feel that there is viability for this radio station from a financial standpoint.
LISTNUM 1 \l 11813 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11814 I'll proceed with my questions, then, on the ‑‑ my economic questions.
LISTNUM 1 \l 11815 You're, you used a four percent growth rate for projecting radio revenues in the Sydney market, and we're curious to know what sources of data you used to support that growth rate.
LISTNUM 1 \l 11816 MS. JOSEPH: Well, essentially, we used two which were the rate of inflation at 1.9 percent, and then using the revenues that we've projected ‑‑ one entrant into the marketplace.
LISTNUM 1 \l 11817 THE CHAIRPERSON: Sorry, would you repeat that last part, again?
LISTNUM 1 \l 11818 MS. JOSEPH: We ‑‑ it was ‑‑ there were two calculations used. One was
LISTNUM 1 \l 11819 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 11820 MS. JOSEPH: ‑‑ the inflation, and the other was the revenues that a new entrant, a new radio station would bring into the marketplace.
LISTNUM 1 \l 11821 THE CHAIRPERSON: New advertising?
LISTNUM 1 \l 11822 MS. JOSEPH: That's correct.
LISTNUM 1 \l 11823 THE CHAIRPERSON: Okay. Thanks.
LISTNUM 1 \l 11824 Given the economic outlook for the Sydney market, what led you to conclude that only 25 percent of your projected revenues would be derived from the incumbent, and that 75 percent is readily available from other sources? Any maybe you've already explained, or you might want to add to that.
LISTNUM 1 \l 11825 MS. JOSEPH: I could just go on and on (laughs).
LISTNUM 1 \l 11826 THE CHAIRPERSON: Go ahead. Go ahead, it's helpful.
LISTNUM 1 \l 11827 MS. JOSEPH: Okay.
LISTNUM 1 \l 11828 THE CHAIRPERSON: It's good. Yeah.
LISTNUM 1 \l 11829 MS. JOSEPH: Well, first of all, I'll talk about the impact on the incumbents.
LISTNUM 1 \l 11830 We factored in 25 percent of our revenue, or $150,000, which really only represents three percent of the entire revenue we believe to come from the incumbents. When trying to determine impact in any market, the first thing you must look at is, okay, who are our listeners going to be, and who do they currently listen to?
LISTNUM 1 \l 11831 So based on our research consumer study, we realized that of the overwhelming response of a combination of 12‑‑ to 24‑year olds that said ‑‑ 99 percent of them said that they would definitely listen to our service ‑‑ they currently listen to a cross‑section of the three current radio stations. In fact, 28 percent currently listen to CKPE, 28 percent equally shared by CJCB, and then the other 16 percent coming from their third station.
LISTNUM 1 \l 11832 We also know that the youth in this market have turned to the internet, iPods, you know, those different types of places to get their music, so we will plan to repatriate those dollars. And, of course, based on all the other applicants before you today, we clearly have the least impact on the incumbents, due to the demographic that we intend to serve, and the advertisers who wish to target them.
LISTNUM 1 \l 11833 And, you know, then also, I mean ‑‑ again, I could go on and on, but I think I explained that, okay, the 25 coming from local advertisers, 15 percent increases in radio. You've heard before you today that it is interesting when a new radio station comes into any market, it just ‑‑ you know, there really is no equation, but the pie does grow. We see it in every market. You see it in every market.
LISTNUM 1 \l 11834 And it is safe to say, based on a lot of the research that we've done with direct advertisers, that yes, they would give us budget. A lot of them were not forthcoming in terms of we would cancel our budget on one station, and come with another, but certainly a lot of advertisers have two distinct demographics that they wish to target ‑‑ an older and a younger. So it's safe to say that that new revenue would come into the market.
LISTNUM 1 \l 11835 You know, 15 percent from national. Again, you know, I went through the national numbers with you. You know, clients such as Beech Nut Nutrition, National Ballet School of Canada, Pucker Up Lemonade; all of the movie companies, including Disney, Fox, Alliance, and Sony; Mattel, Hasbro, Kellogg's ‑‑ there are so many national clients that wish that they could buy a market like this, of, you know, of this size, and they just can't, so they don't, and they would.
LISTNUM 1 \l 11836 And then 35 percent of our revenue coming from other media. Again, we looked at TV, print, outdoor and grassroots.
LISTNUM 1 \l 11837 It was quite interesting to see that a lot of the advertisers in this market that are targeting the youth market are actually using, as I said, TV, including Seaside Communications, as an example. They're an inter‑ba‑, internet‑based company that do target the youth, and they felt that TV was less expensive than the current radio stations in the market.
LISTNUM 1 \l 11838 Print ‑‑ Ian's Menswear, CD's‑R‑Us, there are local restaurants, and furniture stores, and clothing. As a matter of fact, if I ‑‑ I took at look at the Cape Breton paper this weekend, and there were 20 clients that I would consider, that are, in fact, P1 categories to our radio station, and we feel, with our expertise, that once approached, once solicited that they would definitely be a candidate, and jump onboard with our new station.
LISTNUM 1 \l 11839 Then we looked at flyers. The Savoy Theatre, for example, in Glace Bay regularly uses flyers, and a street team to try and advertise to the young demographic, and in fact, I believe we filed our, a support letter from them stating most of the acts that they do bring into the hall are youth‑oriented acts, and it's a shame, in their words, that they can't target them using radio.
LISTNUM 1 \l 11840 And then, once again, in Halifax, we had reviewed, and we successfully achieved our projections in attracting advertisers to radio that do use other mediums. You know, nightclubs, for example ‑‑ none of them used radio in Halifax. Most of them do use radio right now. We're in the clubs four nights a week. We expect the same response here, based on the feedback that we've received from advertisers.
LISTNUM 1 \l 11841 THE CHAIRPERSON: So you're intending to be in the clubs here in Sydney, as well, then?
LISTNUM 1 \l 11842 MS. JOSEPH: Absolutely.
LISTNUM 1 \l 11843 THE CHAIRPERSON: Cert‑, I don't imagine there's as many as Halifax, but I don't really know that.
LISTNUM 1 \l 11844 MS. JOSEPH: There aren't.
LISTNUM 1 \l 11845 THE CHAIRPERSON: There're not?
LISTNUM 1 \l 11846 MS. JOSEPH: But nonetheless, there are quite a few. I mean, there are three large establishments, and then there are a plethora of pubs, and smaller‑type venues, so the number per capita I would imagine would be the exactly the same as Halifax.
LISTNUM 1 \l 11847 MS. LAURIGNANO: And there will be, by the time we get in, and get entrenched, because it tends to snowball. It creates an industry. You know, if young people can have an event that's organized for them, then, you know, they will attend, so it brings out promoters, it brings out the concert circuit. It ‑‑ you know, it often has the local artist who's getting recording contracts. It, it's, it just has a phenomenal effect in creating a whole bunch of spinoff in other industries, and other things.
LISTNUM 1 \l 11848 And just to add to Ky's thing about how does one, how does an advertiser reach this demographic right now? Well, it's really impossible for radio. Either they buy those few that are listening by default, and to reach them, they have to often buy the combo, which is you know, like all three, all three ‑‑
LISTNUM 1 \l 11849 THE CHAIRPERSON: Mmm hmm.
LISTNUM 1 \l 11850 MS. LAURIGNANO: ‑‑ and that's hardly cost effective, but you know, if you can just buy that, I mean, there's ‑‑ I used the example before ‑‑ if you're a car dealer, you know, or ‑‑ then, you know, are you interested in somebody who has a million listeners, or are you interested in someone who has 500 car buyers? In this case, we would be the one that could deliver those 500 car buyers at a fraction of the cost of what it would take to reach those other ones.
LISTNUM 1 \l 11851 So we know that there's a whole new stream of revenue that we can bring in, and really create a great other number of industries that will, in turn, generate and grow more business.
LISTNUM 1 \l 11852 THE CHAIRPERSON: I notice that when you're projec‑, you're not projecting a positive PBIT until year five, and I'm just wondering what impact ‑‑ if the growth rate is less than four percent, what impact that would have on the viability of your business plan.
LISTNUM 1 \l 11853 MS. LAURIGNANO: None whatsoever. We're on, we're in this, or it may take us a bit longer to get there, but we've never flipped a format. This is crusade with us. We're in it, and we know that we can make it. I mean, I ‑‑ you know, we, we've heard a lot of doom and gloom here, but we are very confident that the economic indicators are pointing in the right direction.
LISTNUM 1 \l 11854 We don't believe that Sydney's shutting down, quite frankly, you know, and that ‑‑ so maybe some people are leaving to, for economic reasons, to go get a job somewhere else, but there are a lot of people left behind, and there are a lot of people who are going to come back, and the majority of which are still here. So we are optimistic, which is why we're investing in the area. I mean, it is a significant investment, by the same way that the incumbent has invested, as well, for that matter.
LISTNUM 1 \l 11855 THE CHAIRPERSON: In your response January 29th, you indicate you intend to have a staff of 20 people, and you indicate that 12 of these staff members will be involved directly, or indirectly in programming capacities.
LISTNUM 1 \l 11856 I was just wondering ‑‑ I understand that five of them will be in the newsroom, so what would be the other seven programming positions?
LISTNUM 1 \l 11857 MR. EVANOV: For that, there will be a PD/MD, I think is one ‑‑
LISTNUM 1 \l 11858 THE CHAIRPERSON: You'll have to translate. Sorry.
LISTNUM 1 \l 11859 MR. EVANOV: Pardon me?
LISTNUM 1 \l 11860 THE CHAIRPERSON: (Laughing) Have to translate.
LISTNUM 1 \l 11861 MS. LAURIGNANO: Program director
LISTNUM 1 \l 11862 THE CHAIRPERSON: Sorry.
LISTNUM 1 \l 11863 MS. LAURIGNANO: ‑‑ and music director.
LISTNUM 1 \l 11864 MR. EVANOV: Program director and music director.
LISTNUM 1 \l 11865 THE CHAIRPERSON: Okay. Thanks.
LISTNUM 1 \l 11866 MR. EVANOV: Sorry.
LISTNUM 1 \l 11867 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 11868 MR. EVANOV: As one. A morning show of two people, a mid‑day host, a drive‑home host, an evening host. You mentioned the news ‑‑ two swing announcers to cover vacation, or also weekends, as well, and also a copy, a creative director/production director
LISTNUM 1 \l 11869 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11870 MR. EVANOV: ‑‑ which would give us 12 in the programming department there.
LISTNUM 1 \l 11871 THE CHAIRPERSON: So that accounts for the 12 programming. Oh, sorry.
LISTNUM 1 \l 11872 MR. EVANOV: Sorry. On the news, it's three actual, three paid, and then there'd be two interns on top of the three.
LISTNUM 1 \l 11873 THE CHAIRPERSON: Are they equivalent, are they two full‑time positions ‑‑ the interns? ‑‑ in the news?
LISTNUM 1 \l 11874 MS. LAURIGNANO: There are three.
LISTNUM 1 \l 11875 MR. EVANOV: This ‑‑ the interns?
LISTNUM 1 \l 11876 MS. LAURIGNANO: No.
LISTNUM 1 \l 11877 THE CHAIRPERSON: Yeah. Are they full‑time positions? There's five in total in the news department.
LISTNUM 1 \l 11878 MR. EVANOV: Yes, the ‑‑ oh, the thr‑, the interns would be based ‑‑ she didn't go into it ‑‑ the interns would be based on, depending on how long their internship to be, but when they're on, they'd be on full‑time for us, gathering news, collecting
LISTNUM 1 \l 11879 THE CHAIRPERSON: I see
LISTNUM 1 \l 11880 MR. EVANOV: ‑‑ news.
LISTNUM 1 \l 11881 THE CHAIRPERSON: ‑‑ what you're saying. Okay. So it's not five full‑time staff members, then, for news?
LISTNUM 1 \l 11882 MR. EVANOV: No, three full‑time, and then on top of the three full‑time, the two interns.
LISTNUM 1 \l 11883 THE CHAIRPERSON: Okay. So the difference, then, between the total staff of 20, and the 12 that are programming, what makes up the other eight positions there, then?
LISTNUM 1 \l 11884 MR. EVANOV: We have a ‑‑ in sales department, a sales manager, sales secretary/traffic co‑ordinator, sales reps, four sales reps, a promotion manager, engineer, and then general and admin.
LISTNUM 1 \l 11885 THE CHAIRPERSON: Okay. I apologize if I missed that in the writing. I didn't see it. I didn't see it in what I had, but at any rate, we have it on the record now.
LISTNUM 1 \l 11886 MR. EVANOV: Okay.
LISTNUM 1 \l 11887 MS. LAURIGNANO: Okay, thanks.
LISTNUM 1 \l 11888 THE CHAIRPERSON: Thanks. Yeah. And I gather, from your projections, that you expected to have your full complement of staff in place early on in the first year, 'cause I don't notice any big increases in
LISTNUM 1 \l 11889 MS. LAURIGNANO: Yes, from
LISTNUM 1 \l 11890 THE CHAIRPERSON: ‑‑ expenses.
LISTNUM 1 \l 11891 MS. LAURIGNANO: ‑‑ day one. In fact, we have budgeted for some pre‑operating expenses. We intend to get a general manager, and the key organizers in place first to recruit, as well.
LISTNUM 1 \l 11892 MR. EVANOV: And we learned from Halifax. We had a full staff going on in Halifax ahead of time, and had many people hired before the actual launch date, in order to have a successful launch, and we want to hit the ground running, and to do that, we need a full staff.
LISTNUM 1 \l 11893 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11894 You indicate that you will share human resources, accounting and traffic departments with your Halifax station, and I think you might have actually answered this a little earlier, just in a comment that you make, but I'm going to ask the question anyway.
LISTNUM 1 \l 11895 Have you included an allocation of these expenses in your projections, or is this just the incremental expenses that we're seeing in the Sydney projections?
LISTNUM 1 \l 11896 MS. LAURIGNANO: Those would just be incremental, and again, we will review the situation when it happens, and logistically, we'll see if that's feasible, or if we just locate totally here.
LISTNUM 1 \l 11897 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11898 MS. LAURIGNANO: Even for the incrementals.
LISTNUM 1 \l 11899 THE CHAIRPERSON: I guess as opposed to locating those departments here, you could just allocate the expenses, but
LISTNUM 1 \l 11900 MS. LAURIGNANO: Yes, true.
LISTNUM 1 \l 11901 THE CHAIRPERSON: That'd be something else.
LISTNUM 1 \l 11902 MS. LAURIGNANO: True.
LISTNUM 1 \l 11903 THE CHAIRPERSON: Yeah.
LISTNUM 1 \l 11904 In your January 29th response, you refer to the possibility of sharing certain elements of newscasts with other stations in your group, and again, maybe you've touched on that, but I'll ask again, just in case there's anything you want to add to it.
LISTNUM 1 \l 11905 I'm wondering if you've identified other potential synergies?
LISTNUM 1 \l 11906 MS. LAURIGNANO: The ‑‑ with regards to the news, it is in the context of what I said before ‑‑ that it could be clips, it could be a special request between stations, but again, it would always land, and the final destination would be at the local station, to produce packaged news at their discretion.
LISTNUM 1 \l 11907 THE CHAIRPERSON: And these have already been taken into consideration in your projections, so
LISTNUM 1 \l 11908 MS. LAURIGNANO: Yes, they have. The other, of course, is that we believe that there's a wealth of experience among our personnel that can be shared, and that's going to be done through regular meetings ‑‑ intercompany, interdepartment and interoffice. We do that on a regular basis, and we would include the Sydney operation as part of that, as well.
LISTNUM 1 \l 11909 THE CHAIRPERSON: So you do that now with your
LISTNUM 1 \l 11910 MS. LAURIGNANO: Yeah.
LISTNUM 1 \l 11911 THE CHAIRPERSON: ‑‑ Halifax
LISTNUM 1 \l 11912 MS. LAURIGNANO: Yes, we do.
LISTNUM 1 \l 11913 THE CHAIRPERSON: ‑‑ and your Ontario systems?
LISTNUM 1 \l 11914 MS. LAURIGNANO: Yes, we do, and it's ‑‑ we've got some results, because again, it's a sharing of ideas, and it just maximizes ‑‑ a lot of times a resource often ‑‑ again, somebody walks away with an idea, it solves problems, and it just ‑‑ and it also makes people feel like their part of something, because there is a commonality in the general philosophy of the station.
LISTNUM 1 \l 11915 THE CHAIRPERSON: Just as we've asked the other applicants, how many new entrants do you think the Sydney market could sustain?
LISTNUM 1 \l 11916 MS. LAURIGNANO: Well, we think that definitely we could come into the market, and have the least impact of all the applicants, because the incumbent has ‑‑ the majority of the audience listening to the existing stations are in the older demographic. We think the incumbent is a good broadcaster who's doing a very excellent job in those demographics in that field, but again, we could do very, very well, and be a compliment to that.
LISTNUM 1 \l 11917 Beyond that, you are privy to the financial situation at the other end of the spectrum, and I think you'd be the best judge of that.
LISTNUM 1 \l 11918 THE CHAIRPERSON: Okay. And if we did license more than one new entrant, would, what impact do you think that might have on your business plans?
LISTNUM 1 \l 11919 MS. LAURIGNANO: I think in the overall imp‑, the overall plan would be delivered. There would, it would be no ‑‑ we'd probably, to be realistic, would also suffer a little bit of adjustment, and we may be a little slower to getting where the objectives are, but I think that at the end of the seven‑year term, we would be where we want to be.
LISTNUM 1 \l 11920 THE CHAIRPERSON: Okay. Thank you. Now, if you'll just bear with me a second, I just want to go through your opening remarks, and just see if we've covered ‑‑ I did cover that.
LISTNUM 1 \l 11921 Oh, I was interested to know ‑‑ just see if it's ‑‑ I'm not quite sure who was mention‑, speaking to it, but it says in your remarks:
"Relative to fall 2005, tuning for 12 to 17 indexed at 135."
LISTNUM 1 \l 11922 And I just wonder if you could just explain to me what that means.
LISTNUM 1 \l 11923 MS. LAURIGNANO: I will ask Ms. McLaughlin, who's an expert in the field, as you know, to explain it.
LISTNUM 1 \l 11924 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 11925 MS. McLAUGHLIN: We simply took the hours of tuning and calculated on a per capita basis, because if you just take hours tuning, and compare, it doesn't take into account any growth for the population, or any changes in population. So we took the per capita tuning, and indexed it against fall 2005.
LISTNUM 1 \l 11926 THE CHAIRPERSON: And then what did you do with that? Sorry.
LISTNUM 1 \l 11927 MS. McLAUGHLIN: Well, an index is ‑‑ if we had ‑‑ and I don't have the raw numbers before me, but if we had ten hours in fall 2005, and we had 13.5, that would index at 135, 'cause it would be 13.5 divided by the ten, so
LISTNUM 1 \l 11928 MS. LAURIGNANO: Yeah, so in other words, that (inaudible)
LISTNUM 1 \l 11929 MS. McLAUGHLIN: What?
LISTNUM 1 \l 11930 MS. LAURIGNANO: If you were to (inaudible) right here to start (inaudible)
LISTNUM 1 \l 11931 MS. McLAUGHLIN: Oh, okay. What does an index mean in
LISTNUM 1 \l 11932 THE CHAIRPERSON: Well, no, I
LISTNUM 1 \l 11933 MS. McLAUGHLIN: In how we're doing it?
LISTNUM 1 \l 11934 THE CHAIRPERSON: Yeah, just in ‑‑ I dos‑, I don't
LISTNUM 1 \l 11935 MS. McLAUGHLIN: Okay.
LISTNUM 1 \l 11936 THE CHAIRPERSON: ‑‑ understand this section at all.
LISTNUM 1 \l 11937 MS. McLAUGHLIN: Okay.
LISTNUM 1 \l 11938 THE CHAIRPERSON: Sorry.
LISTNUM 1 \l 11939 MS. McLAUGHLIN: An index is an indication of performance relative to what happened, and if it's staying flat, the index equals 100. Anything over 100
LISTNUM 1 \l 11940 THE CHAIRPERSON: Oh.
LISTNUM 1 \l 11941 MS. McLAUGHLIN: ‑‑ indicates growth. Anything below indicates a loss.
LISTNUM 1 \l 11942 THE CHAIRPERSON: So if you were appealing to this audience, then it would have increased to 1.35 of
LISTNUM 1 \l 11943 MS. McLAUGHLIN: That's correct. That's
LISTNUM 1 \l 11944 THE CHAIRPERSON: Okay. Okay.
LISTNUM 1 \l 11945 MS. McLAUGHLIN: ‑‑ fairly large growth. Typically, when we look at changes in tuning by way of any demographic that has a new station, it's in the area of 105 to 110, but this speaks to a significant increase in the hours tuned, and it's ‑‑ because there's no other real changes in the market. If anything, when this new station came on, some of the playlist changed to abandon some of the younger music to shore up their older core demographics, so this tuning can be directly attributed to the introduction of youth format.
LISTNUM 1 \l 11946 THE CHAIRPERSON: Okay. Thank you. And I also ‑‑ a little but on, Ky, in your remarks, you mention:
"Known as the four, six or eight pocket generation".
LISTNUM 1 \l 11947 Sorry (laughs).
LISTNUM 1 \l 11948 MS. JOSEPH: Well, sad to say that these, the younger demographics, so kids that might be between the ages of 12 to 17, or 18 to 24 are products of divorce, so therefore they are not only picking the pockets of mom and dad, but they're picking the pockets of stepmom, stepdad, grandparents in a lot of cases.
LISTNUM 1 \l 11949 MS. JOSEPH: And actually it's a widely‑used term in advertising ‑‑ that they pick everybody pockets.
LISTNUM 1 \l 11950 THE CHAIRPERSON: Well, I'm glad I asked. I never, I've never heard that. Thank you. Yeah, okay. I think that's the end of my questions.
LISTNUM 1 \l 11951 Commissioner Williams? Commissioner Noel?
LISTNUM 1 \l 11952 COMMISSIONER NOEL: No.
LISTNUM 1 \l 11953 THE CHAIRPERSON: No? Okay. Counsel? (Laughing) Finally I got it right.
LISTNUM 1 \l 11954 MS. FISHER: Thank you, Madame Chair.
LISTNUM 1 \l 11955 Just one question. I know that Commissioner Duncan asked generally if you would adhere to the over and above CCD contributions as conditions of license, however, for clarity, I would like to ask specifically with respect to the contributions which you propose to allocate to FACTOR and Musique Action, for your comments on whether you will adhere to a condition of license requiring you to distribute these contributions evenly between FACTOR and Musique Action.
LISTNUM 1 \l 11956 MS. LAURIGNANO: Yes, we will. There is an eight ‑‑ there is 50,000, 56,000 in the over and above column there, and that would be distributed at 40,000 per year each, for a FACTOR and Musique Action.
LISTNUM 1 \l 11957 MS. FISHER: Excellent. Thank you.
LISTNUM 1 \l 11958 MS. LAURIGNANO: Thank you.
LISTNUM 1 \l 11959 THE CHAIRPERSON: Thank you. Thank you for coming. It was very helpful.
LISTNUM 1 \l 11960 THE SECRETARY: Thank you, Madame Chair. This completes Phase I of the consideration of items one to four on the agenda.
LISTNUM 1 \l 11961 I would like to take this opportunity to note that we will be completing today all four Phases associated with the applications for new FM stations to serve Sydney. Therefore, these proceedings may run a little later than the anticipating 6:30 p.m. conclusion time.
LISTNUM 1 \l 11962 We have now reached Phase II, in which applicants may appear to intervene on competing applications, if they wish.
LISTNUM 1 \l 11963 All of the applicants have indicated that they will not appear in Phase II. Therefore, Madame Chair, we will proceed to Phase III.
LISTNUM 1 \l 11964 Phase III are interventions, and we will now proceed in which other parties in the order set out in the agenda to present their intervention.
LISTNUM 1 \l 11965 I would now call Frank Bruleigh.
‑‑‑ Pause
LISTNUM 1 \l 11966 THE SECRETARY: Thank you. Please introduce yourself before your presentation. You have ten minutes for this presentation, and questions from the Commission may follow.
INTERVENTION
LISTNUM 1 \l 11967 MR. BRULEIGH: Thank you.
LISTNUM 1 \l 11968 My name is Frank Bruleigh, and I am the Recreation Manager for the Cape Breton Regional Municipality. I am also responsible for special events with the, with community groups here in the community.
LISTNUM 1 \l 11969 Just to give you a little bit of background here, Cape Breton Regional Municipality has a population of approximately 110,000 people, and our recreation department ‑‑ there are only people in our recreation department, in comparison to Halifax Regional Recreation Department has 125 people.
LISTNUM 1 \l 11970 We are basically responsible for setting up special events with community groups here in the community on a ‑‑ we have some national events, the Cape Breton International Drum Festival being one, which we are involved with; Celtic Colours, which I'm sure some of you have heard about. We are involved with sporting events. We've hosted the World Junior Hockey Championships here. We've hosted a number of Canadian Little Leagues Championships.
LISTNUM 1 \l 11971 Presently, starting the end of April to the end of October, we have approximately 60 different that we will be directly involved in.
LISTNUM 1 \l 11972 The reason that we have eight in our staff is that we are predominantly dependent upon volunteers in this community to help us stage these events. I guess the one key that I see in this community with regard to ‑‑ I guess one of the key components that makes this community strong is the volunteer commitment that we have within it. It's one of the few communities that I've seen where we've actually turned people away in a volunteer capacity, because we just ‑‑ we had so many people volunteering for events, that we had to turn people away.
LISTNUM 1 \l 11973 And I wanted to speak today, specifically, about the involvement of Jay Bedford and Alex Morrison, and their community involvement. I've known these gentlemen for the last 20 years.
LISTNUM 1 \l 11974 As well as being involved in specific sporting events, Jay has been involved as an MC with Cape Breton Regional Municipality events. He's been on the "Action Week" committee, which is a ten‑day festival here in the City of Sydney. He was on the original board of the South End Community Center which is a community center here, also in Sydney.
LISTNUM 1 \l 11975 He understands the needs of local musicians, and I realize that one of the areas that they're going to be looking at is the youth market. Cape Breton, I would say, is arguably one of the greatest spawning grounds for music of a national level. If we look at the Barra MacNeils, the Rankins, Gordie Sampson ‑‑ there's been a lot of great talent that has been produced here, and there is a lot of great young talent that has yet to be seen. In my understanding that's, that is one area that this radio station is looking at getting involved with is promotion of youth and culture in this community.
LISTNUM 1 \l 11976 Jay has also been a former booking agent, and a former band mem‑, band manager as well, and as I say, he's done a lot of volunteer work in this community.
LISTNUM 1 \l 11977 Alex, as well, has been involved ‑‑ '88 was the official voice of the Canadian Little League Championship in Glace Bay. '89, he was involved with the World Power‑Lifting Championships here in Sydney. Again, involved with the Canadian Little League Championships in 1998. As well, in 2001/2003, the Canadian Junior Little League Championships. He's been a host of "Action Week" celebrations here in the city, which is our summer festival, from 1998 to 2005. He's an MC at concerts at The Savoy Theatre, and Center 2000, and he's MC in numerous concerts for local organizations and schools.
LISTNUM 1 \l 11978 He's also been on the Board of Directors of the Canadian National Little League Championships, League President of the Devco's Old‑Timers' Hockey League, and also been a baseball umpire, a hockey referee, and a hockey coach.
LISTNUM 1 \l 11979 Other than that, I just wanted to say a point, again, that with a small, a very small staff here in Sydney, we are very dependent on people in this community. I guess one of the reasons ‑‑ I'm from this community ‑‑ one of the reasons I enjoy being in this community is the fact that you can always depend on our people to come out and volunteer for events, and I mean, that's what makes this community run, basically.
LISTNUM 1 \l 11980 Again, I'd just like to say that I think we have two good gentlemen here that obviously want to stay in Cape Breton. Cape Breton is their home, and I think that would be very positive to see some new radio here, as well.
LISTNUM 1 \l 11981 And I'll just conclude with those remarks. Thank you.
LISTNUM 1 \l 11982 THE CHAIRPERSON: Commissioner Williams?
LISTNUM 1 \l 11983 COMMISSIONER WILLIAMS: No, your intervention has been very clear. I have no questions. Thank you very much for appearing.
LISTNUM 1 \l 11984 MR. BRULEIGH: Thank you.
LISTNUM 1 \l 11985 THE CHAIRPERSON: Thank you, Mr. Bruleigh.
LISTNUM 1 \l 11986 THE SECRETARY: I would now call upon the Cape Breton Regional Municipality representative, please, to step forward.
LISTNUM 1 \l 11987 If you may introduce yourself, and you have ten minutes for this presentation, and questions from the Commission may follow.
LISTNUM 1 \l 11988 Thank you.
INTERVENTION
LISTNUM 1 \l 11989 MAYOR MORGAN: Thank you, Madame Chairperson, Members of the Commission.
LISTNUM 1 \l 11990 I am John Morgan, Mayor of the Cape Breton Regional Municipality. On behalf of the Municipal Council, first of all, I want to welcome you to Cape Breton to this convention center. It's a beautiful facility, and has become a visible reflection of the new sense of vitality and purpose in our community, so we're delighted that you're having your hearings here at Membertou.
LISTNUM 1 \l 11991 Three well‑known local citizens, Barry Martin, Jay Bedford, and Alex Morrison, have applied for a license to operate a new radio station in our community.
LISTNUM 1 \l 11992 I want to thank you for providing me with an opportunity to reiterate my support for their application.
LISTNUM 1 \l 11993 Last August, I presided over a meeting of the Municipal Council, at which our 16 Municipal Councillors representing different communities and rural areas, and with often differing perspectives, and priorities, unanimously adopted a resolution supporting their application.
LISTNUM 1 \l 11994 There are at least three reasons for our whole‑hearted support for their application. The first is an appreciation of what the three proponents of this new station mean to our community.
LISTNUM 1 \l 11995 Barry Martin is a local investor who has, among other business ventures, renovated what was once a maternity hospital, and developed it into a modern and successful hotel, providing comfortable accommodation for visitors to CBRM, and employment to local people.
LISTNUM 1 \l 11996 Jay Bedford is a respected local radio announcer and journalist, in demand as an instructor for journalism and entrepreneurship courses.
LISTNUM 1 \l 11997 Alex Morrison is another familiar and much admired radio announcer who's active in supporting many local musicians, and sports organizations.
LISTNUM 1 \l 11998 I'm personally familiar with both Jay and Alex, and their dedication to local musicians and their music. They have donated endless hours of their time helping non‑profit organizations, and sports organizations, and have hosted and MC'd literally hundreds of local events.
LISTNUM 1 \l 11999 Madame Chair, Board Members, the citizens of this region know these men. They respect them, they trust them, and they want their application to be approved.
LISTNUM 1 \l 12000 The second reason we support the application is our recognition of the need for a genuinely local voice which reflects this community, it's needs, interests and aspirations. The success of any radio station is dependent upon the quality of the interaction between the station, and the people it serves. Without active engagement both ways, no amount of technology or promotion can capture the hearts of the listeners, and a station which does not engage its listeners on what matters to them will not be embraced by the listeners.
LISTNUM 1 \l 12001 This is especially so for the citizens of CBRM. All three proponents of this application live in the Cape Breton Regional Municipality. They appreciate the talents of local people, and are intimately familiar with the local culture. Moreover, the resident of this community know them as individuals, and that is a firm base on which a station can build.
LISTNUM 1 \l 12002 The third is, the third reason we support this proposal is the importance of local ownership. Not long ago, this part of Cape Breton was known as the industrial heart of the Maritimes. We made steel and produced the coal that built and powered this nation's railroads, and helped to win two world wars. Our residents take tremendous pride in the fact that two fathers of modern telecommunications, Alexander Graham Bell, the inventor of the telephone, and Marconi, the inventor of radio, both lived and worked within a half hour of where now, of where we're now sitting.
LISTNUM 1 \l 12003 But our economy is changing. Our once dominant industries were owned and controlled by outsiders who had no ties to this community. Local people, their needs, their capabilities and their future did not weigh heavily in the setting of corporate priorities, and the making of executive decisions. We are living with the legacy of that neglect. A community needs more than just the salaries from employment. It needs the profits from these types of operations. It needs the information that local ownership supplies, the spinoff support services that local ownership supplies, the networks and mutually supportive business relationships, and the technical and business expertise to make effective plans and operational decisions in the future, all of which come from local ownership.
LISTNUM 1 \l 12004 New locally‑initiated economic activities are emerging in the CBRM owned and controlled by local people whose primary focus is on developing local capabilities, and bring wealth into our community; not on taking everything they can out of our community. It is important that any new radio station would provide local employment, but as a society, but as one of society's most important convening and information‑sharing agents, modern radio has a critical role to play, also, in reinforcing citizens' positive identification of their community in celebrating with them their collective successes, and in promoting their confidence in its future.
LISTNUM 1 \l 12005 To do that, a station must represent the spirit of the community it serves, and in our view, that requires that any new station be owned and operated and controlled by people who, themselves, live in our community, and want to see it prosper.
LISTNUM 1 \l 12006 Board Members, I thank you.
LISTNUM 1 \l 12007 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12008 COMMISSIONER WILLIAMS: Mr. Mayor, just one clarification.
LISTNUM 1 \l 12009 Did I hear you correctly when you said you ‑‑ this support that you've put forward for this group obtained the unanimous support of 16 Councillors from a variety of areas?
LISTNUM 1 \l 12010 MAYOR MORGAN: That is correct, yes.
LISTNUM 1 \l 12011 COMMISSIONER WILLIAMS: Is it very common that your group achieves unanimity?
LISTNUM 1 \l 12012 MAYOR MORGAN: I can't say it does on an, on controversial issues. In this circumstance, where there is a community that's very sensitive to having non‑local interest controlling critical industries, there's certainly a consensus of support on those types of issues, though.
LISTNUM 1 \l 12013 COMMISSIONER WILLIAMS: Did any of the other applicants seek the support of the Cape Breton Regional Municipality?
LISTNUM 1 \l 12014 MAYOR MORGAN: No, they did not.
LISTNUM 1 \l 12015 COMMISSIONER WILLIAMS: Yeah. Thank you, Mr. Mayor. That's my question, Madame Chair.
LISTNUM 1 \l 12016 THE CHAIRPERSON: Thank you very much for taking the time to appear, and we are enjoying the conference center. It's very nice.
LISTNUM 1 \l 12017 MAYOR MORGAN: Thank you very much.
LISTNUM 1 \l 12018 THE CHAIRPERSON: We'll enjoy it. Thank you.
LISTNUM 1 \l 12019 THE SECRETARY: Thank you, Madame Chair.
LISTNUM 1 \l 12020 I would now call ABBACO Clothing Company to come to the front. I hope I pronounced that correctly.
LISTNUM 1 \l 12021 MR. NATHANSON: Oh, that's okay.
LISTNUM 1 \l 12022 THE SECRETARY: You correct it. You can introduce yourself.
LISTNUM 1 \l 12023 MR. NATHANSON: Yeah.
LISTNUM 1 \l 12024 THE SECRETARY: And you'll have ten minutes for this presentation, and questions may follow from the Commission.
INTERVENTION
LISTNUM 1 \l 12025 MR. NATHANSON: I'd say welcome, but it's been done already.
LISTNUM 1 \l 12026 My name is Alan Nathanson. I'm a father of a 15‑year old who lives in Dartmouth, who I have to say is a avid listener of Halifax Broadcasting, CZ103. She used to listen to C100, but when they came on the air, that was it. She changed.
LISTNUM 1 \l 12027 I also am a local retailer. My family's been here for about 75 years, retailing. We enjoy it. We have a good time, and also I have the opportunity to saying to you that I was a talk‑show host for two and a half years on Maritime Broadcasting's talk‑back show, and Shaun Russell gave me that opportunity, and in life, you don't get many opportunities like this, and it was greatly appreciated. Unfortunately, my ‑‑ not career, but my time came to an abrupt end, but that's another story ‑‑ not to bore you folks with that.
LISTNUM 1 \l 12028 But I talked to a number of people, when I knew I was coming here. One was a social worker. I was trying to connect music and kids, because we all know that there's lots of radio stations out there. Nothing for kids. We know, in society, there's lots of things out there, but not a lot for kids, so I was trying to connect what kind of influence music can have on kids.
LISTNUM 1 \l 12029 Now, I have to tell you I'm not an expert in this. I just sought out some thought. I was told that music helps an individual form an identify, be part of a group. I know iPods are big. My daughter is beyond my comprehension of technology, but she listens to the radio station, and I say, "Your friends, who do they listen to? What stations in Halifax?", and there's lots of radio stations, and it was interesting. I found out that the kids that are playing guitars, playing drums, into the music like that, would listen to a classic rock station to hear the music. You listen to a youth station, and they don't get that, but almost all of Hannah's friends were listening to CZ103. Okay?
LISTNUM 1 \l 12030 Now, take it a bit further. We live in Cape Breton. Things aren't great in Cape Breton, but they aren't that bad. I will tell statistics that you saw before on the table, yeah, okay, but we have a huge underground economy, and I got to tell you there's lots of shopping goes on here, so I would take those statistics with a grain of salt. They look low to me, but that's, that being said.
LISTNUM 1 \l 12031 We have some problems in our community, okay? Very pronounced. When you don't have great economic growth, these things are more pronounced. Okay, drugs. The social worker tells me some stories about drugs. She started in as a social worker with Addiction Services four years ago. The average of a client was 15. Today it's 12. So I say can music help? And of course it can.
LISTNUM 1 \l 12032 Now, I consulted, you know, from St. Louis, a doctor, a PhD in Education, and I asked the same question. Is it possible that music can have an impact, a positive impact? Of course, the answer came back, "Yes". It's like you can sit in a Tim Horton's and seem to solve all the problems of the land, but the parliaments and the legislators can't do it. You hear this, it gets reinforced, but you can't ‑‑ it just doesn't happen for the kids.
LISTNUM 1 \l 12033 Again, being a father of a 15‑year old, I'm very concerned. It's not a great time to bring up kids anywheres. I love this four, six and eight pocket thing. I mean, my daughter obviously lives with her mother in Dartmouth, and she's perfected this picking of the pocket quite well, but you know, it comes back to she has an iPod, but she listens to the radio. She wakes up in the morning. That's it.
LISTNUM 1 \l 12034 And I think it's so important that the kids finally get something, right? Forget about ‑‑ I know in our, in our world is to make money. We live in a very moneyed situation ‑‑ our society, economy, everything is money, but why can't the kids get something, right?
LISTNUM 1 \l 12035 Further to that, further to the fact of having another station, or two stations here in Cape Breton, can they survive? Can they make money? I remember I had stores in Charlottetown, when there was a consolidation of the radio stations, and I remember meeting with my sales lady, and she was showing me the new sheets for rates. I said, "This is not right". Okay? You know, if you want to buy the station you're on, it's way up here now, but if you bought the combo, then they got you spending the money. Okay?
LISTNUM 1 \l 12036 I mean, you look at any industry, a monopoly is not good. Look at Bill Gates. That's not good. I mean, it's ridiculous. You look at other situations. If there's not competition, we lose, okay? The advertisers lose, the companies lose because they're not sharp any more, 'cause they, all they know is they open the lock every morning, and they can make their money.
LISTNUM 1 \l 12037 So I think it's important that we do have competition here. I do believe it's important that the kids get a radio station, and we ‑‑ then everyone will be happy. Every ‑‑ there's lots being, lots of money to be made here. Again, I go back to the underground economy. Look at the new retailers that are setting up here.
LISTNUM 1 \l 12038 So, in conclusion, please, I do support Halifax Broadcasting, and it'd be good for the kids. Thank you very much.
LISTNUM 1 \l 12039 THE CHAIRPERSON: Thank you, Mr. Natha‑,
LISTNUM 1 \l 12040 MR. NATHANSON: I'm sorry.
LISTNUM 1 \l 12041 THE CHAIRPERSON: No, that's fine. Thank you very much for your comments.
LISTNUM 1 \l 12042 Now, Madame Secretary, I think we're down to Maritime Broadcasting.
LISTNUM 1 \l 12043 THE SECRETARY: That's correct.
LISTNUM 1 \l 12044 THE CHAIRPERSON: So I think we'll take a 15‑minute break, and then start with their intervention.
LISTNUM 1 \l 12045 THE SECRETARY: That's fine. Thank you.
LISTNUM 1 \l 12046 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12047 THE SECRETARY: We will reconvene, then, in 15 minutes.
‑‑‑ Upon Recessing at 1742 / Suspension à 1742
‑‑‑ Upon Resuming at 1803 / Reprise à 1803
LISTNUM 1 \l 12048 THE CHAIRPERSON: Okay, Mr. Pace. Sorry for the delay. I think we can go ahead. Thank you. Okay?
LISTNUM 1 \l 12049 THE SECRETARY: Thank you, Madame Chair. We now call Maritime Broadcasting Limited, and please introduce yourselves, and you'll have ten minutes. Thank you.
INTERVENTION
LISTNUM 1 \l 12050 MR. PACE: I was going to say good day, but I think it's almost close to good evening.
LISTNUM 1 \l 12051 Madame Chair, Commissioners, Commission Staff, Ladies and Gentlemen. My name is Robert Pace, and I am the owner of Maritime Broadcasting Systems Limited. I am here with Owen Barnhill, who is our Chief Financial Officer.
LISTNUM 1 \l 12052 We filed a detailed written Intervention with the Commission, and we do not propose to review all of the economic data and forecasting we provided for Sydney, nor do we intend to review the detailed history of our Sydney radio stations.
LISTNUM 1 \l 12053 However, please allow me to highlight our key positions for you.
LISTNUM 1 \l 12054 MBS opposes the licensing of any new station at this time. Market conditions and population trends demonstrate that Sydney cannot currently support any additional licensing. Most critically, recent economic data demonstrates a weakening overall business environment in Sydney, stemming primarily from a significant population decline and deteriorating retail sales levels.
LISTNUM 1 \l 12055 As we explained more fully in our written intervention, our position is based on the very real threat that over‑licensing in Sydney will fragment the local radio audience, drive down advertising rates, and in turn undermine the provision of a critical local service.
LISTNUM 1 \l 12056 Further, introducing a new license would have a material negative impact on the new as‑yet‑unlaunched CHER FM, which deserves to be given a reasonable period of time in which to establish itself as a new station. It is our view that the Commission ought to show its support and encouragement for the investment risk which MBS has undertaken in Sydney, in order to provide a local service.
LISTNUM 1 \l 12057 We have provided you with a detailed history of CHER's tumultuous past, and I won't repeat all of the history here. CHER's story, however, provides the necessary context in order to appreciate the financial challenges in Sydney, and CHER's current position in the local radio market.
LISTNUM 1 \l 12058 MBS took over the day‑to‑day operation of CHER from the Receiver in 1997. As a testament to its commitment to broadcasting in Cape Breton, MBS purchased effective control of CHER AM in 2001.
LISTNUM 1 \l 12059 While MBS worked towards stabilizing CHER's AM performance, after a very rocky start and troublesome history, it was clear that conversation to the FM band was essential if the station were to remain viable.
LISTNUM 1 \l 12060 The Commission agreed, and granted our application to convert CHER to the FM band in fall 2006.
LISTNUM 1 \l 12061 Our decision to convert CHER to FM was not undertaken lightly. Although we were well aware of the financial challenges ahead of us, we felt that this conversion was essential to fulfill our mandate as a regional broadcaster, and ensuring the long‑term growth of the station.
LISTNUM 1 \l 12062 We have undertaken a significant investment in order to carry out the technical conversion. In addition to the 500,000 we invested in new technology for CHER, MBS has invested a further 500,000 into upgrading the broadcasting facilities for our other two stations, CJCB and CKPE.
LISTNUM 1 \l 12063 In our conversion application to CRTC, we projected that CHER FM would lose money for the first two years of its operation, until it becomes established as a new FM station and attracts a sufficient advertising base.
LISTNUM 1 \l 12064 MBS is of the view that CHER FM's path to profitability and indeed to sustainability will be jeopardized and delayed if another FM station is licensed. We project it won't be profitable for four to five years if another station enters the market.
LISTNUM 1 \l 12065 The replies to our interventions have focused unduly on the current pivot levels and used that to argue that the market can sustain new entrance. Halifax Broadcasting, for example, points out that CHER's pivots exceed the national average pivot for AM stations.
LISTNUM 1 \l 12066 What they fail to understand is that there is little comfort in that position. AM stations across the country are in a precarious position. The fact remains that despite MBS' best efforts, CHER's pivot percentages have been far below the average pivots for Canada, Atlantic Canada, and Nova Scotia, for the past five years.
LISTNUM 1 \l 12067 The analysis of whether market can support a license must not focus solely on pivot levels, particularly where the broader economic indicators in the market are in decline, and suggest that licensing new stations would be misguided.
LISTNUM 1 \l 12068 It has been the Commission's practice to examine a range of factors in addition to pivot, including employment levels, population trends, and especially retail sales growth, and we encourage the Commission to consider these factors in their deliberations.
LISTNUM 1 \l 12069 We are faced with the prospect of new competition in the Sydney market at a critical moment, as we are seeking to stabilize CHER's performance. In order to ensure CHER's successful future, MBS requires and deserves a legitimate opportunity to establish the new CHER FM in Sydney market and to recover its extensive investment.
LISTNUM 1 \l 12070 Owen?
LISTNUM 1 \l 12071 MR. BARNHILL: We provided the Commission with a series of statistics that illustrate the current state of the Cape Breton Regional Municipality's economy, an area in decline with no materials prospects of near term growth. Its economy lags far behind that of Canada, Nova Scotia, in a number of critical statistical areas; a reality that the applicants choose to ignore.
LISTNUM 1 \l 12072 I'd just like to highlight two of those statistics for you today.
LISTNUM 1 \l 12073 First, according to Stats Can, between July 1st, 2005, and June 30th, 2006, the Province of Nova Scotia experienced negative inter‑provincial migration of almost 4,000 persons, and this phenomenon is most acute in Sydney.
LISTNUM 1 \l 12074 Secondly, the Financial Post's Canadian Demographic 2007 Study noted that retail sales statistics for the Cape Breton census agglomeration is 12 percent below the national average in 2006.
LISTNUM 1 \l 12075 We cited 11 separate recent radio licensing decisions in our written intervention, all of which underscore retail sales growth as a key indicator of radio revenue and market. Where licenses were granted in those 11 markets, evidence of growth was apparent, and often above‑average retail sales were enjoyed.
LISTNUM 1 \l 12076 Sydney does not possess these same positive attributes.
LISTNUM 1 \l 12077 An additional critical element affecting the current state of CBRM is the exodus of people that it is experiencing, and particularly the exodus of youth from the Cape Breton Island. The population of Sydney has decreased over 25 percent in the past 30 years.
LISTNUM 1 \l 12078 In fact, although the Province of Nova Scotia experienced modest population growth in 2001 to 2006, the most recent Stats Can figures demonstrate that the population of CBRM actually dropped 3.5 percent during the same period.
LISTNUM 1 \l 12079 We are well aware of the far‑reaching implications of population decline and its effects on the local economy.
LISTNUM 1 \l 12080 The Commission should take note that Cape Breton University is an economic enabler for the Sydney community, but it's having a difficult time with respect to enrolment. In 2006, enrolment declined 8.9 percent ‑‑ three times the Provincial average ‑‑ and early indications are that most universities in Atlantic Canada will continue to decline with the effects of an aging population.
LISTNUM 1 \l 12081 Barry Martin's contention that a decrease in a younger age group will have no impact on retail sales is contrary to basic economic theory. The younger demographic is the lifeblood of any economy, and the decline in population, in particular in the youth age groups, will undoubtedly translate to a decline in retail sales.
LISTNUM 1 \l 12082 It is also noteworthy that once our application for conversion of CHER to FM was approved by the Commission this past fall, Atlantic Broadcasters Limited, based in Antigonish, withdrew its application for a new license in Sydney, in recognition of the fact that the Sydney radio market cannot support both a new CHER FM and another FM license.
LISTNUM 1 \l 12083 Clearly, we are not alone in this view.
LISTNUM 1 \l 12084 It is also worthy noting that Bob MacEachern, the owner of Port Hawkesbury radio station, withdrew his company's interest in partnership with Coast for a new radio license in Sydney.
LISTNUM 1 \l 12085 We find it of interest that two original applicants in closest geographic proximity to Sydney, Atlantic Broadcasting and MacEachern, and presumably with the greatest knowledge of the state of the Sydney economy, have withdrawn their applications for radio licenses.
LISTNUM 1 \l 12086 In its response to our intervention, application Barry Martin points to investment by major retailers as indicating there is confidence in the future of the regional economy. This development alone is insufficient to change one's understanding of the state of the economy; in particular, when consider economic indicators that bear more directly on the radio market.
LISTNUM 1 \l 12087 Experienced broadcasters know that the introduction of big box stores, such as WalMart or Home Depot, add no local advertising revenue, and serve to stifle local business.
LISTNUM 1 \l 12088 The fact remains that business are closing their door, as evidenced by the fact of the number of retail establishments for the Cape Breton census agglomeration, have decreased five percent from 2006 to 2007; a factor which is more directly relevant to the question of radio market's ability to absorb new entrants.
LISTNUM 1 \l 12089 During their oral presentation, applicant Barry Martin quoted retail sales growth for CBRM to be 4.7 percent over five years. For the record, comparable provincial and national statistics are 19.4 and 24.3, respectively; five or six times greater than CBRM.
LISTNUM 1 \l 12090 Newcap Broadcasting expressed the view that certain sectors of the local economy are in fact growing; namely, tourism, IT, and natural gas. Newcap forecasts that these sectors of the economy can be a catalyst for even greater prosperity in Sydney in the future.
LISTNUM 1 \l 12091 With respect to tourism, Newcap's position is simply unfounded. When looking at the statistics for Cape Breton, it became very clear that the tourism sector is anything but "fast growing".
LISTNUM 1 \l 12092 On the basis of virtually every measure used by the Provincial Government, the number of tourists have declined and are at least less encouraging than they were in 2000. For example, in regards to visitation by entry point, fixed occupancy rate, and visitors to the Provincial Visitor Information Centers.
LISTNUM 1 \l 12093 Most critically, tourism revenues have decreased, as have the figures for direct and indirect employment. HFX Broadcasting points out the fact of the Financial Post Canadian Demographic 2007 predicts that personal income for CBRM will increase 5.1 percent. While the statistic, in isolation, appears encouraging, in fact the corresponding figure for Nova Scotia is 8.3 and Canada 9.4. Again, Cape Breton significantly lags behind provincial and national benchmarks.
LISTNUM 1 \l 12094 HFX then quotes the same publication, saying retail sales will increase 21 million. 21 million represents a growth of 1.86 percent. Comparable statistics for Nova Scotia are 7.4 and Canada 9.4; four or fives times greater than CBRM's.
LISTNUM 1 \l 12095 All of the applicants have failed to provide concrete economic statistics that indicate CBRM is a sustainable economy. At best, the applicants provide anecdotal evidence or vague statistics without context.
LISTNUM 1 \l 12096 In fact, the fact is that the Sydney radio market is clearly not sufficiently strong to support the licensing of additional commercial radio operators at this time. To do so would undoubtedly impose financial hardship on the incumbent.
LISTNUM 1 \l 12097 It is abundantly clear that, given the state of the Sydney radio market, MBS will be unduly disadvantaged by the issuance of additional commercial radio licenses at this time.
LISTNUM 1 \l 12098 MR. PACE: MBS has demonstrated its unwavering commitment to the local community in its management, operation, and development of its three radio stations. The impact of CHER as an FM station in the Sydney radio market is unknown to MBS, to its potential competitors, and to the Commission.
LISTNUM 1 \l 12099 Until CHER FM is launched and has established its place in the market, I suggest it's difficult to make an informed decision regarding additional licenses.
LISTNUM 1 \l 12100 Let me be clear. Not one application has addressed two clear facts. One, a significant continued decline in population; and two, a drop in retail sales of 12 percent.
LISTNUM 1 \l 12101 On the basis of the current state of CHER, coupled with the condition of the Sydney radio market more broadly, MBS respectfully requests the Commission to deny the broadcasting applications for commercial radio stations before it today.
LISTNUM 1 \l 12102 To be clear, MBS is not suggesting that new commercial license should never be introduced to Sydney. Rather, we suggest that sufficient time must be provided for CHER to establish itself, and for the local economy to improve.
LISTNUM 1 \l 12103 Adopting a tempered approach to licensing will provide MBS with a fair and reasonable opportunity to recover its significant investments in the market, and to establish the new CHER FM in the Sydney radio market. Viability in Cape Breton is critical to MBS' ability to fulfil its role as a local and regional broadcaster.
LISTNUM 1 \l 12104 We thank you for giving us the opportunity to express our concerns. We'd be pleased to respond to any questions you have.
LISTNUM 1 \l 12105 THE CHAIRPERSON: Thank you, Mr. Pace.
LISTNUM 1 \l 12106 I'm asking Commissioner Noel to proceed.
LISTNUM 1 \l 12107 COMMISSIONER NOEL: Mr. Pace and Mr. ‑‑ sorry, I ‑‑ ?
LISTNUM 1 \l 12108 MR. BARNHILL: Barnhill.
LISTNUM 1 \l 12109 COMMISSIONER NOEL: Barnhill. I'm trying to reconcile the number of figures that are floating around, and of course your results in this market are confidential, so I will not cite figures. I will only refer to the ones that you made public yourself in your original interventions; i.e., percentages.
LISTNUM 1 \l 12110 And you are giving us percentages only for CHER, which is an AM station. Am I correct?
LISTNUM 1 \l 12111 MR. PACE: Correct.
LISTNUM 1 \l 12112 COMMISSIONER NOEL: And am I correct to understand that you are comparing the PBIT of CHER for the years 2001 to 2005, which is in AM stations, to the average PBIT of AM and FM stations combined?
LISTNUM 1 \l 12113 MR. PACE: No, but I'll ask Mr. Barnhill to ‑‑ he's better with numbers than I am.
LISTNUM 1 \l 12114 MR. BARNHILL: Thank you. Just allow me to look up the specific document we researched.
LISTNUM 1 \l 12115 COMMISSIONER NOEL: Well, I'm referring to page 4, paragraph 16, of your written interventions, where there's a diagram. Where you have 2005, some figure that is close to 18 percent PBIT for CHER, and I'm ‑‑
LISTNUM 1 \l 12116 MR. BARNHILL: I believe ‑‑
LISTNUM 1 \l 12117 COMMISSIONER NOEL: And I'm citing that number because you made it public yourself. Okay? Is that the ‑‑ is the comparison between AM stations, or is it between all stations?
LISTNUM 1 \l 12118 MR. BARNHILL: It is all stations in Atlantic, and all stations in Nova Scotia.
LISTNUM 1 \l 12119 COMMISSIONER NOEL: But it is only CHER which is an AM?
LISTNUM 1 \l 12120 MR. BARNHILL: Correct.
LISTNUM 1 \l 12121 COMMISSIONER NOEL: Thank you. So you're actually comparing two different types of things. If we were to compare CHER to the average AM results, PBIT, what would be the results? Will ‑‑ would it be lower or higher than ‑‑
LISTNUM 1 \l 12122 MR. BARNHILL: I believe HFX made the claim that it is higher than AM stations nationally.
LISTNUM 1 \l 12123 COMMISSIONER NOEL: I saw that in their written ‑‑ replique? What is a ‑‑ reply. Yes. I think the average, according to them, is 5.1 percent for Canada.
LISTNUM 1 \l 12124 Now, this is CHER. I have the advantage of having your combined operations in front of me, your combined operations for Sydney; that is, two AM, one FM station. And I see that for 2005 your PBIT margin was well above the Canadian average, the Nova Scotia average, the Atlantic Province average, and ‑‑ yeah. Canada, Atlantic, Nova Scotia. It was well ahead of that.
LISTNUM 1 \l 12125 And still, in 2006, and you experienced quite a drop in your PBIT between 2005 and 2006, I also have those figures. It is still above all those averages. That's the combined three stations, two AM, one FM.
LISTNUM 1 \l 12126 And I'm also looking at your administration and general expenses, and we're also talking on the ‑‑ so I would ‑‑ the drop between 2005 and 2006 in your PBIT is 23 percent. I'm not citing what it was in 2005 or 2006, but the drop is 23 percent.
LISTNUM 1 \l 12127 And I'm looking at your administration and general expenses for those two years and there is an increase between 2005 and 2006 of 23.9 percent. It's strange that your admin and general expenses are going up 23.9 percent, and at the same time your PBIT is going down 23 percent.
LISTNUM 1 \l 12128 So could you tell me what happened between those two years?
LISTNUM 1 \l 12129 MR. BARNHILL: I obviously don't have the detailed information in front of me, but I think there are a few things that went on. First of all, that CHER's application was one thing that consumed quite a bit of head office's time, so there is a slight allocation there. It does not make up the full 23 percent.
LISTNUM 1 \l 12130 But barring that, I would have to give you the detailed information on that. To go any further, I would be guessing.
LISTNUM 1 \l 12131 COMMISSIONER NOEL: Okay. Now, if I, if I quote from your written interventions, I'm going back to paragraph ‑‑ paragraph four. You say here:
"If an operator invests in a market that has limited potential and manages to derive a modest return on investment, the Commission should not use this as a basis to introduce more licenses."
LISTNUM 1 \l 12132 Now, you've agreed just previous to that that your PBIT is ahead of national ‑‑ even in 2006 when it declined by 23 percent. So can you tell me what a modest return means?
LISTNUM 1 \l 12133 MR. PACE: I'd love to. Okay. What ‑‑ ten years makes quite a difference here. All of these people that are here today, appearing before, you, there wasn't one of them around when CHER went bankrupt in 1997. And we stepped up to the plate as broadcasters, kept the service on air.
LISTNUM 1 \l 12134 Subsequent to that, we also bid on the two radio stations that we didn't own in this market, CKPE and CJCB. They were then owned by Fundy Cable. They had two other radio stations in Saint John which they also owned. And they put out a national package and sent it to 22 broadcasters, and guess what? We were the only bidder, at that time.
LISTNUM 1 \l 12135 So a lot has changed in ten years. What I'm saying here is that we were one of the few that stepped up to the plate when this was all in trouble, and we've built, through the good work of our employees that have stuck through with us, thick and thin, to improve the market here, and then we said, okay, we've got to do something with CHER. The AM stations in the country are in significant decline.
LISTNUM 1 \l 12136 So we step up to the plate, we make this investment so that we can monitor a new station here within the next 30 days, and then all of a sudden there's a call right over of the top of this, you know, before we even got on air.
LISTNUM 1 \l 12137 Do we run a good ship? Yes. We do. And we're quite proud of it. What I find disconcerting with respect to the CRTC, if you're a good operator, you're penalized with further competition. If you're a poor one, you're protected. I don't get that.
LISTNUM 1 \l 12138 I don't worry about competition. All I'm worried about here is the timing of the competition. I mean, we have not even got off from ground zero here with a new, brand new license.
LISTNUM 1 \l 12139 And here's what will happen. It's very predictable. The weak sister that we have right now is CHER. So you put more FM licenses in this market; guess what? The weak sister then, in those numbers that you're looking at that you have for CJCB, they go south. So then what I have is two FM's and a weak sister.
LISTNUM 1 \l 12140 So, I mean, that's what I'm trying to manage through, here. And at the same time, we inherited this old physical plant, like our CJCB transmitter is 62 years old, and we're replacing that as part of our total package here to improve our three radio stations. We're doing it all at the same time. We had to take down our existing tower and put a brand new tower up to accommodate the two FM's and the AM.
LISTNUM 1 \l 12141 So I'm not against the competition. I'm just against the timing. I think there's a precedent recently where the CRTC looked at, I think it was Pembrooke, and the same situation was ‑‑ and I think in the Commission's own words, we can pull it out here, the Commission notes that:
"English language FM radio station Pembrooke Broadcasting, August 2005, it approved an application by MBC for a license to operate a new radio station in Pembrooke. The station CIFY FM was launched in September. The Commission experienced..."
LISTNUM 1 \l 12142 This is the Commission saying this:
"... a new station takes at least two to three years to begin to reach its full potential."
LISTNUM 1 \l 12143 That's all I'm asking for.
LISTNUM 1 \l 12144 COMMISSIONER NOEL: But I have a question for you on that.
LISTNUM 1 \l 12145 MR. PACE: Sure.
LISTNUM 1 \l 12146 COMMISSIONER NOEL: I mean, C‑H‑E‑R‑, or CHER, or ‑‑
LISTNUM 1 \l 12147 MR. PACE: CHER.
LISTNUM 1 \l 12148 COMMISSIONER NOEL: CHER. CHER is not a new station. It is a flip, but it has an established base. It's not a new sta ‑‑ it's not like launching an entirely new station.
LISTNUM 1 \l 12149 MR. PACE: Well, the same costs are associated with it. When we do our launch for any FM, and I mean, other experienced broadcasters made the same comment today ‑‑
LISTNUM 1 \l 12150 COMMISSIONER NOEL: I mean, you already have offices, you already have staff. You are ‑‑ you're not starting from scratch here.
LISTNUM 1 \l 12151 MR. PACE: No, but under the rules of the CRTC, you know, a flip is a new license.
LISTNUM 1 \l 12152 MR. BARNHILL: There are some costs associated. I mean, there is the ‑‑
LISTNUM 1 \l 12153 COMMISSIONER NOEL: I agree that ‑‑
LISTNUM 1 \l 12154 MR. BARNHILL: ‑‑ entire promotion ‑‑
LISTNUM 1 \l 12155 COMMISSIONER NOEL: ‑‑ there could be some cross‑associated, but it's not an entirely new station. It's not like launching from scratch a new station where you have to find office space, rent office space, hire employees. You have the employees, you have the locations. Okay, you're building a new tower, but a tower is ‑‑ you could've rented space in the ‑‑ maybe you could've rented space in the CBC tower.
LISTNUM 1 \l 12156 MR. PACE: No. Couldn't.
LISTNUM 1 \l 12157 COMMISSIONER NOEL: You couldn't. For technical reasons?
LISTNUM 1 \l 12158 MR. PACE: Yes.
LISTNUM 1 \l 12159 COMMISSIONER NOEL: Maybe you will able to rent space in your tower to some ‑‑ Microcell or ‑‑ no, they're not in business anymore. Rogers, or the like. I mean, you know, it's ‑‑ a new tower is an expensive, an expensive piece of equipment. But it, you know, it ‑‑ you want to ride in the best car. Well, that's a cost of doing business too, eh?
LISTNUM 1 \l 12160 MR. PACE: Well, the difficulty that we had ‑‑
LISTNUM 1 \l 12161 COMMISSIONER NOEL: And, and it's ‑‑
LISTNUM 1 \l 12162 MR. PACE: ‑‑ that we had, this ‑‑
LISTNUM 1 \l 12163 COMMISSIONER NOEL: And it's being, it's being built for your three stations, not only for CHER.
LISTNUM 1 \l 12164 MR. PACE: But we had no choice, if we were going to keep our CJCB AM on that site, our CKPE antenna is also on that same tower. That's what they did. I inherited that problem.
LISTNUM 1 \l 12165 COMMISSIONER NOEL: You inherited it, but you bought it.
LISTNUM 1 \l 12166 MR. PACE: Yes.
LISTNUM 1 \l 12167 COMMISSIONER NOEL: You decided to buy it.
LISTNUM 1 \l 12168 MR. PACE: Correct.
LISTNUM 1 \l 12169 COMMISSIONER NOEL: Okay. I was listening to you talking about ten years ago, but if I look at the figures combined for five years ‑‑ I will not recite the figures, but I have to say that they're not bad. They're far from bad.
LISTNUM 1 \l 12170 MR. PACE: We're good operators.
LISTNUM 1 \l 12171 COMMISSIONER NOEL: So PB ‑‑ PBIT ‑‑
LISTNUM 1 \l 12172 MR. PACE: You know, we're proud of what we ‑‑
LISTNUM 1 \l 12173 COMMISSIONER NOEL: ‑‑ for the last five years, I don't have ‑‑ I, unfortunately, I didn't take the ten years backwards, but I have five years, and you're doing good, I have to say. Much better than Quebec stations, on average. Should I say?
LISTNUM 1 \l 12174 MR. PACE: I won't comment. Not going there.
LISTNUM 1 \l 12175 COMMISSIONER NOEL: Okay. I had another, another question concerning the flip. I understand that you operated it for the Receiver since 1997, and purchased it out of the Receiver in 2001. Why did you wait all those years to apply for the flip?
LISTNUM 1 \l 12176 MR. PACE: No, we bought it from the Receiver ‑‑
LISTNUM 1 \l 12177 COMMISSIONER NOEL: In 2001.
LISTNUM 1 \l 12178 MR. PACE: ‑‑ with a partner, with a partner, in 1997. We operated it ‑‑
LISTNUM 1 \l 12179 COMMISSIONER NOEL: Okay, and then you bought ‑‑
LISTNUM 1 \l 12180 MR. PACE: Then we bought it 100 percent in two thous ‑‑
LISTNUM 1 \l 12181 COMMISSIONER NOEL: You bought that all in ‑‑
LISTNUM 1 \l 12182 MR. PACE: Yes.
LISTNUM 1 \l 12183 COMMISSIONER NOEL: ‑‑ in 2001. So their share. Okay. And could you tell me why, if it was such a non‑profitable operation, you waited four years, five years, to apply for a flip?
LISTNUM 1 \l 12184 MR. PACE: That's real simple. We're a private company. We're based on private funds. And as you know, I've been at this now five years. Our growth opportunity, we came to the Commission five years ago and said, listen, as a regional broadcaster, if there's any interest in the country to support regional broadcasters, we have a difficult situation in the Maritimes where you have rural migration to urban centers.
LISTNUM 1 \l 12185 So we went to the Commission five years ago and tried to get a license in Halifax to establish a level playing field in Halifax ‑‑ that's where we have to survive. We didn't get it.
LISTNUM 1 \l 12186 We then took our AM and flipped it ‑‑
LISTNUM 1 \l 12187 COMMISSIONER NOEL: I wasn't on that panel.
LISTNUM 1 \l 12188 MR. PACE: I know. We then ‑‑ I'm just giving you the history so you appreciate the challenges that we're faced with, as regional broadcasters. We're not the big national 75‑station groups that are now around. We're in the middle, and I ‑‑ so I guess it's a philosophical thing, given the recent two deals. I mean, does the Commission ‑‑ just send us a signal. Does the Commission, you know, want four players in the country and that's it, or do they want four players in the country and individual station owners, and nothing in the middle.
LISTNUM 1 \l 12189 That's what we're talking about here, because that's the challenge that we're faced with. I mean, even in Halifax today we don't have a level playing field. We've got one operator that controls 65 percent of the market share.
LISTNUM 1 \l 12190 So why did we wait? Well, we just don't have unlimited funds to ‑‑
LISTNUM 1 \l 12191 COMMISSIONER NOEL: No, I just wanted to know.
LISTNUM 1 \l 12192 MR. PACE: Yeah. That's the background.
LISTNUM 1 \l 12193 COMMISSIONER NOEL: Okay.
LISTNUM 1 \l 12194 MR. PACE: I can get kind of passionate about it.
LISTNUM 1 \l 12195 COMMISSIONER NOEL: I have one final question, and it is concerning the retail sales. You seem to think that ‑‑ or you mentioned in your oral presentation this afternoon that experienced broadcasters ‑‑ and I'm at page 6:
"Experienced broadcasters know that the introduction of big box stores, such as WalMart or Home Depot, add no local advertising revenue and serve to stifle local businesses."
LISTNUM 1 \l 12196 But when you have large retailers like that, or what you call big box stores, don't they increase your national sales?
LISTNUM 1 \l 12197 MR. PACE: No.
LISTNUM 1 \l 12198 COMMISSIONER NOEL: They're not advertising at all on your stations?
LISTNUM 1 \l 12199 MR. PACE: It's minimal. And we ‑‑ that's why we gave you the figures today, to show what's happened in the last year.
LISTNUM 1 \l 12200 COMMISSIONER NOEL: How do they sell their ‑‑ how do they make their advertising? You know, I did rent a car from the airport, and I saw the Canadian Tire ‑‑ actually, it was there a couple of years ago when I did the Cabot Trail and I had a flat tire. And I had to run the rest of the Cabot Tire on four ‑‑ three Pirelli Tires and a Canadian one, Canadian Tire one. My car was sort of (makes noise). But at least I had a tire.
LISTNUM 1 \l 12201 But yeah, they have to advertise, those people. How do they ‑‑
LISTNUM 1 \l 12202 MR. PACE: They don't.
LISTNUM 1 \l 12203 COMMISSIONER NOEL: ‑‑ advertise?
LISTNUM 1 \l 12204 MR. PACE: Canadian Tire is the exception. They do. Home Depot does not. WalMart, as you know, it notorious for that. They come in, and what do they do? And it shows in the numbers. They're right there. It puts little retailers out of business. And that's what's happening, and we're facing that in the Maritimes.
LISTNUM 1 \l 12205 COMMISSIONER NOEL: But they have to advertise.
LISTNUM 1 \l 12206 MR. PACE: They don't.
LISTNUM 1 \l 12207 COMMISSIONER NOEL: They don't have a local television station here in Cape Breton, or do you?
LISTNUM 1 \l 12208 MR. PACE: No. It's an affiliate.
LISTNUM 1 \l 12209 COMMISSIONER NOEL: Hm?
LISTNUM 1 \l 12210 MR. PACE: It's an affiliate.
LISTNUM 1 \l 12211 COMMISSIONER NOEL: It's an affiliate. It's based out of...?
LISTNUM 1 \l 12212 MR. PACE: It's out of Halifax.
LISTNUM 1 \l 12213 COMMISSIONER NOEL: It's from Halifax.
LISTNUM 1 \l 12214 MR. PACE: Yeah.
LISTNUM 1 \l 12215 COMMISSIONER NOEL: So if they want to advertise their products here to the people of Cape Breton, how do they do that?
LISTNUM 1 \l 12216 MR. PACE: Well, like I said ‑‑
LISTNUM 1 \l 12217 COMMISSIONER NOEL: Local paper?
LISTNUM 1 \l 12218 MR. PACE: ‑‑ if you're a local person, the last thing that you want to see come in a market, both from radio's point of view and a local retail point of view, is a WalMart store. 'Cause they do not advertise on radio.
LISTNUM 1 \l 12219 COMMISSIONER NOEL: They only advertise on TV, that's what you mean?
LISTNUM 1 \l 12220 MR. PACE: That's right.
LISTNUM 1 \l 12221 COMMISSIONER NOEL: Okay.
LISTNUM 1 \l 12222 MR. PACE: So it doesn't add anything to the pie.
LISTNUM 1 \l 12223 COMMISSIONER NOEL: Okay. That's what I wanted to ‑‑ that's what I wanted to understand.
LISTNUM 1 \l 12224 MR. PACE: Right.
LISTNUM 1 \l 12225 COMMISSIONER NOEL: Because they have to advertise somehow. You know.
LISTNUM 1 \l 12226 MR. PACE: Yes. I agree. But ‑‑
LISTNUM 1 \l 12227 COMMISSIONER NOEL: But they don't use the local radio stations. They will only advertise from the Halifax TV stations?
LISTNUM 1 \l 12228 MR. PACE: If that.
LISTNUM 1 \l 12229 COMMISSIONER NOEL: Okay. Well, that's ‑‑ I would say that's about my questions. Thank you for letting us know what your concerns are.
LISTNUM 1 \l 12230 THE CHAIRPERSON: I do have a few questions.
LISTNUM 1 \l 12231 MR. PACE: Sure.
LISTNUM 1 \l 12232 THE CHAIRPERSON: I'm just wondering, of the million dollar investment that you're currently making in the market, how that breaks down?
LISTNUM 1 \l 12233 MR. PACE: I can get that, unless Owen has that right here.
LISTNUM 1 \l 12234 THE CHAIRPERSON: Just approximate is fine.
LISTNUM 1 \l 12235 MR. BARNHILL: As ‑‑ do you want it by stations, or specific pieces of equipment?
LISTNUM 1 \l 12236 THE CHAIRPERSON: No, I'm wondering, just generally, is it all because of your tower, or how much is it for the tower and how much is it for studio equipment?
LISTNUM 1 \l 12237 MR. BARNHILL: Okay. If you require that level of detail, we will get that to you.
LISTNUM 1 \l 12238 THE CHAIRPERSON: Okay. And so could you do it by the end of the day tomorr ‑‑ by the end of our session tomorrow?
LISTNUM 1 \l 12239 MR. BARNHILL: Certainly.
LISTNUM 1 \l 12240 MR. PACE: Yes, no problem.
LISTNUM 1 \l 12241 THE CHAIRPERSON: Thank you. Alright, thanks. And we were wondering, if we were to license someone, which one of the four applicants would have the greatest impact on you, and which one would have the least?
LISTNUM 1 \l 12242 MR. PACE: Well ‑‑
LISTNUM 1 \l 12243 THE CHAIRPERSON: An opinion.
LISTNUM 1 \l 12244 MR. PACE: Before you got down that road, I just want you to focus on tourism numbers, retail decline, sales numbers, population declines, Cape Breton University enrolment declines, small business closing. I guess Evanov's would probably have the least impact on us. We are not presently catering to that demographic, and the reason for that is that you just have to look at the census data. The decline in population is huge, and it's ‑‑
LISTNUM 1 \l 12245 This situation here is different than your recent hearings that you've had in the Maritimes with respect to Charlottetown and Fredericton and Halifax. There, you have enrolments in universities going up. There, you have retail sales trending up. All of those figures are going up.
LISTNUM 1 \l 12246 Here, they're all going down. So I ‑‑ you know, do we do well here 'cause we're good operators? Yes. I admit that readily. But, you know, should we be penalized for that? I guess that's a philosophical question.
LISTNUM 1 \l 12247 Over the next three or four years, I mean, it's not going to be easy here. That's just my own opinion but, you know, we've been in this market ten years. I think we know it.
LISTNUM 1 \l 12248 THE CHAIRPERSON: So you don't want to indicate which one you think would have the greatest impact? The other three would have equal impact, then?
LISTNUM 1 \l 12249 MR. PACE: Well, you know, let's not forget ‑‑ the biggest concern I have here is with CJCB, because we have ‑‑ you know, we've got to get our chair flipped, but then if all of a sudden we've got a new FM here for CBC, we've got possibly a community FM in one part of our market, and then, like, two licenses in this market will definitely be over‑licensed.
LISTNUM 1 \l 12250 And then ‑‑ 'cause we have the one AM that's left in the whole market.
LISTNUM 1 \l 12251 THE CHAIRPERSON: I guess the challenge in looking at the sta ‑‑ considering the stations individually ‑‑
LISTNUM 1 \l 12252 MR. PACE: Mm‑hm.
LISTNUM 1 \l 12253 THE CHAIRPERSON: ‑‑ this ‑‑ you know, accounting could have such a huge impact on how expenses are allocated and what the results are.
LISTNUM 1 \l 12254 MR. PACE: Yeah.
LISTNUM 1 \l 12255 THE CHAIRPERSON: So it's really difficult for us to have an objective view, looking at an individual station, when there's three in the market. We really would have to look, I think, at the total.
LISTNUM 1 \l 12256 MR. PACE: Yeah.
LISTNUM 1 \l 12257 THE CHAIRPERSON: And so that's part of the challenge. And of course the last station licensed in Sydney was 1965.
LISTNUM 1 \l 12258 MR. PACE: That was CHER.
LISTNUM 1 \l 12259 THE CHAIRPERSON: As I understand. Yeah.
LISTNUM 1 \l 12260 MR. PACE: Yeah. We know what happened to it.
LISTNUM 1 \l 12261 THE CHAIRPERSON: Yeah, but again, hard for us, sitting here today, to ‑‑ and we don't, I guess, don't need to go through all the history, but again, some of those factors could be influenced by the economy, but could equally be influenced by poor management. It's difficult for us to assess.
LISTNUM 1 \l 12262 MR. PACE: No, I understand that, but what's not difficult is to look at the actual economic numbers that we're faced with right now. I thought a lot of the applicants this afternoon, and they're all good people, had Sydney Crosby's skates on, 'cause they all skated around the question that you people all posed.
LISTNUM 1 \l 12263 You know, what are the effects of your application, based on the economic conditions, presently and going forward. I mean ‑‑
LISTNUM 1 \l 12264 THE CHAIRPERSON: What are the ‑‑
LISTNUM 1 \l 12265 MR. PACE: ‑‑ with retail sales going down, I think this would be one of the few markets I the country that you people have issued license for. And we cited 11 different applications where the numbers were all going the other way. So it'll be interesting.
LISTNUM 1 \l 12266 THE CHAIRPERSON: What ‑‑ how do you address the suggestion from I think probably all of the applicants that simply introducing a new station will increase the overall advertising revenue in the market?
LISTNUM 1 \l 12267 MR. PACE: I disagree with that. It's not going to happen in Charlottetown, and you people will have the numbers here shortly. That pie is not growing.
LISTNUM 1 \l 12268 THE CHAIRPERSON: The Char ‑‑ I thought we heard today that there was some new, new to the market advertisers?
LISTNUM 1 \l 12269 MR. PACE: Let's, let's look at the actual numbers when they come in. Could you see that in larger markets? I think I would buy into that argument. But my experience, the pie doesn't get smaller, it just comes out of somebody's hide.
LISTNUM 1 \l 12270 THE CHAIRPERSON: It doesn't get larger, you mean.
LISTNUM 1 \l 12271 MR. BARNHILL: And I think the other point is, that may be a statement in general. I mean, Newcap says that ‑‑ 40% increase in advertising revenue by virtue of a new FM. That ‑‑ this is a contracting economy. I think perhaps, other things being equal, and perhaps if you took a national average, that may be so.
LISTNUM 1 \l 12272 But I'm not sure that, given the economics in Sydney, you know, contracting economy, personal income growth being half the national average, retail sales going down, I'm not ‑‑ 40% is aggressive. You're going to grown the market 40%, it's a big piece of pie to grow.
LISTNUM 1 \l 12273 THE CHAIRPERSON: I think we did hear from the other applicants that ‑‑ and I think most of them were projecting anywhere from 75% non ‑‑ from sources other than MBS. And you don't agree with that?
LISTNUM 1 \l 12274 MR. PACE: What else would they say?
LISTNUM 1 \l 12275 THE CHAIRPERSON: Okay. What about ‑‑ I see ‑‑ I notice that ‑‑ a couple of things. Your format for CKPE, has it changed? I initially had AC, then I have AC/CHR, and then today I learned it's hot AC. Is that correct?
LISTNUM 1 \l 12276 MR. PACE: CHER is ‑‑
LISTNUM 1 \l 12277 THE CHAIRPERSON: No, CKPE, sorry.
LISTNUM 1 \l 12278 MR. PACE: Oh, CKPE.
LISTNUM 1 \l 12279 THE CHAIRPERSON: Mm‑hm, sorry.
LISTNUM 1 \l 12280 MR. PACE: I think it's necessarily broad. It's the only AC station, so I know it does, it is ‑‑ I guess if we had to put one label on it, it's probably nearer the hot AC. But again, when it's ‑‑ it does kind of cater to a larger demographic, so it is a bit ‑‑ a mix of everything.
LISTNUM 1 \l 12281 THE CHAIRPERSON: And do you agree with ‑‑ I think it might've been Mr. Newman that said, but did you agree that that hot AC would appeal to age 12 to 34?
LISTNUM 1 \l 12282 MR. PACE: His application?
LISTNUM 1 \l 12283 THE CHAIRPERSON: No, your ‑‑ the ‑‑ he ‑‑ I understood him to say he'd looked at your format recently, and that ‑‑
LISTNUM 1 \l 12284 MR. PACE: Mm‑hm.
LISTNUM 1 \l 12285 THE CHAIRPERSON: ‑‑ it was a hot AC, and that hot AC targetted age 12 to 34.
LISTNUM 1 \l 12286 MR. PACE: I'd say it's more 18 to 49.
LISTNUM 1 \l 12287 THE CHAIRPERSON: Thank you. And have you been in a situation before in other markets, I just don't know the answer to this, in a similar situation, where somebody was licensed, where you previously had been the only licensee? I'm ju ‑‑ I tell you where I'm going with my question. I'm just wondering, if somebody is licensed, how long it would be for you to recover.
LISTNUM 1 \l 12288 MR. PACE: I think outlined that with CHER in our document today. In our original flip application, we thought we would be profitable in the third year. If a new license was put in this market, I think you can push that out to, you know, the fifth year.
LISTNUM 1 \l 12289 THE CHAIRPERSON: But if we look at your group as a total, you'd still be above Canadian and provincial averages. Is that correct?
LISTNUM 1 \l 12290 MR. PACE: Yeah. But there'd be no doubt, or any doubt in your mind that if you look at those numbers and there's new FM's in the market, people won't listen to the AM signal. So you've got to factor that in. Because we've had that experience, and every ‑‑
LISTNUM 1 \l 12291 I'll give you the best example is in Saint John, New Brunswick. We have two FM's and an AM, and as soon as the AM was approved for the Irving operation over there, and as well as Rogers, our ‑‑ we had significant declines on our AM. We still have to operate it. So that, that's a problem. That's an issue. Unless the Commission is so inclined to allow three FM's in the market, but I don't think we're going there.
LISTNUM 1 \l 12292 THE CHAIRPERSON: Probably we won't be setting new policies here.
LISTNUM 1 \l 12293 MR. PACE: No.
LISTNUM 1 \l 12294 THE CHAIRPERSON: Counsel, do you have any questions? Thank you very much, Mr. Pace and Mr. Barnhill.
LISTNUM 1 \l 12295 MR. PACE: Great. Thanks very much.
LISTNUM 1 \l 12296 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12297 THE SECRETARY: Thank you, Madame Chair. This completes the list of appearing intervenors.
LISTNUM 1 \l 12298 We will now proceed to Phase IV, in which applicants can reply to all interventions submitted on their application.
LISTNUM 1 \l 12299 Applicants appear in reverse order. We would then ask Halifax ‑‑ or HFX Broadcasting Inc. to please step forward. You may have ten minutes for this purpose, and questions from the Commission may follow.
LISTNUM 1 \l 12300 I should also add, for the record, the applicant Newcap Inc., has submitted the revised cost breakdown with respect to their CCD commitments. That was requested by the panel this morning, or this afternoon. This document can be viewed on the application file in the examination room.
REPLY / RÉPLIQUE
LISTNUM 1 \l 12301 MS. LAURIGNANO: Thank you. Madame Chair, if I could just take one moment, I'd like to read into the record OUR pure news and nothing but news calculations. It breaks down under Monday through Friday, six a.m., seven a.m., eight a.m., nine a.m., ten a.m., noon, four p.m., and five p.m., five minutes each, 40 broadcasts.
LISTNUM 1 \l 12302 Again, and then with the discount at 4.5 minutes, it is 180 minutes. Monday through Friday, 6:30 a.m., 7:30 a.m., 8:30 a.m., 3 p.m., breaks down two minutes each for 40 minutes.
LISTNUM 1 \l 12303 Then Saturday and Sunday, we have 9 a.m., noon, 4 p.m., two minutes each, that's twelve minutes.
LISTNUM 1 \l 12304 We also have a Community Calendar feature, which is news, and that is 28 minutes. That runs Monday through Sunday, 11 a.m. and 6 p.m. So, for a total of 14.
LISTNUM 1 \l 12305 Therefore the total pure news without the Community Calendar is 3.52 hours ‑‑ sorry 3 minutes ‑‑ 3 hours and five ‑‑ 52 minutes. It's been a long day. 3 hours and 52 minutes per week, and the Community Calendar, as I said, works out to 28 minutes per week.
LISTNUM 1 \l 12306 If you include the 28, it is 4 hours and 28 minutes a week.
LISTNUM 1 \l 12307 THE CHAIRPERSON: Thank you. And it doesn't include weather or sports.
LISTNUM 1 \l 12308 MS. LAURIGNANO: Correct.
LISTNUM 1 \l 12309 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 12310 MS. LAURIGNANO: Yes. Just the news, ma'am.
LISTNUM 1 \l 12311 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 12312 MS. LAURIGNANO: So ‑‑ I think it's evening now, so good evening, everybody.
LISTNUM 1 \l 12313 THE CHAIRPERSON: Yes. Yeah.
LISTNUM 1 \l 12314 MS. LAURIGNANO: Madame Chair, Commissioners, and staff, again. My name is Carmella Laurignano. With me today is Dan Barton. We are here today to reply to an intervention by Maritime Broadcasting, and to summarize the issues associated with this process.
LISTNUM 1 \l 12315 I would like to start first by addressing what we feel is one of the key issues, and that is the economy. We feel that the matter is not as critical as some would have you believe.
LISTNUM 1 \l 12316 On page 6 of the Maritime Broadcasting System's intervention, Mr. Pace states:
"This is an area in decline..."
LISTNUM 1 \l 12317 And I quote:
"... with no material prospect for near term growth."
LISTNUM 1 \l 12318 We simply cannot understand the rationale behind this statement. We concede that Cape Breton has seen hard times, but that it is in recovery, has been recognized by all levels of Government, the applicants in this process, and, most importantly, by the many businesses that intervened, either in support of our application or others here today.
LISTNUM 1 \l 12319 There is quite a disconnect on how we all see the market and how MBS views it.
LISTNUM 1 \l 12320 We noted, when assembling this application, that there are a great deal of resources being put in place to spur the economic cycle of the area into an even more positive phase.
LISTNUM 1 \l 12321 As mentioned in our filed reply, the Cape Breton County Development Authority is actively engaged in developing infrastructure and marketing the area. Their midterm report, filed last November, with investments partners, including the Provincial and Federal Governments and private industry, summarizes what has been accomplished in the first six months of work.
LISTNUM 1 \l 12322 The list of projects completed are in the or in progress includes 14 infrastructure initiatives and 46 sector‑related undertakings. The marketing efforts directed towards attracting new businesses have also been paying off.
LISTNUM 1 \l 12323 The KPMG study, identifying the CBRM as one of the top‑ranking areas in North America to do business, has attracted attention. The most recent summary of activity from January of this year shows the relocation of one new IT business to the area, as well as inquiries from over 20 businesses interested in finding out about the infrastructure and incentive to relocate.
LISTNUM 1 \l 12324 Secondly, and particularly relevant to the format we are proposing, we note that Cape Breton University is actively engaged in attracting new students, with a very targetted plan addressing opportunities for foreign students. In recent years, the university system in Canada has not been effectively attracting or accommodating foreign students.
LISTNUM 1 \l 12325 Cape Breton University has identified this opportunity and expects to be attracting these and other students in the near future.
LISTNUM 1 \l 12326 Every time a new business or new project is announced, several of which were discussed this morning ‑‑ Tar Ponds, telemarketing, et cetera ‑‑ the spin‑off positive effect in the local economy exceeds the jobs created. It affects all suppliers of goods and services, whether that is housing, health, or retail sectors.
LISTNUM 1 \l 12327 Therefore, it is inconceivable to us that, given the commitment and well‑funded development efforts underwritten by all levels of Government and major national and regional private industry, that there is no anticipation of the short‑term benefits.
LISTNUM 1 \l 12328 No economist can accurately predict when the impact will be felt or how long it will take for an effort to take root. What an economist can do is take what they have before them and project them; that is, birth less death plus some movement. It does not have an eye into the future of how an initiative or several initiatives can steer the course of a region in a different direction, as for example happened in Fort McMurray.
LISTNUM 1 \l 12329 But we do know that, like the businesses who support more competition in the market, all of the partners in the development agree that the future is brighter now than it has been for years in Cape Breton, in the Cape Breton Regional Municipality.
LISTNUM 1 \l 12330 MR. BARTON: As mentioned earlier, I'm from the Maritimes, and my experience is directly relevant to these proceedings, as I was the operations manager for Maritime Broadcasting System stations in Sydney for five years. I can speak to both the potential and the optimism for this area.
LISTNUM 1 \l 12331 When I left this market, all three incumbent stations were profitable and thriving, just as they are now.
LISTNUM 1 \l 12332 All indications suggest this hasn't changed. Mr. Pace's own intervention points to an AM with a P‑bit that would be envied in many markets in Canada. If you spend any time listening to this market, you'll see the commercial load on the Cape, CJCB, and MAX 950, is quite heavy.
LISTNUM 1 \l 12333 I'd also like to add to this discussion the perspective I have of what's changed. I can see a real growth, most evident by new construction near Wentworth Park, the revitalization of Charlotte Street, more big box stores have arrived, and the planned expansion of the Mayflower Mall, all point to the improved opportunities for business.
LISTNUM 1 \l 12334 Even Mr. Pace sees the value of this investment, having committed to spending one million dollars to either upgrade or convert his facilities.
LISTNUM 1 \l 12335 My experience in Halifax shows that a new format that addresses an under‑served demographic can and does develop and audience and attract new advertisers. Our proposal for CBRM anticipates doing just that.
LISTNUM 1 \l 12336 HFX Broadcasting Inc. is a local company that is fully staffed in Halifax operations by people like myself, born and raised in the area and committed to remaining. The ties to resources in Toronto strengthen rather than detract from the contributions to the markets they serve, and I do not anticipate this changing with the CBRM license.
LISTNUM 1 \l 12337 MS. LAURIGNANO: Once we dismiss the economy as a principal concern, and once we agree that Cape Breton will continue to be here, and once we agree that 40 percent of its population is under 35 years of age, you are left with two questions: which demo, and which format.
LISTNUM 1 \l 12338 We have already detailed in our presentation that we view the choice to be as much about this market as a system, and nothing we have heard today has made us re‑think this position.
LISTNUM 1 \l 12339 Yes, there is a high demand for rock in all its various forms. In tests, classic hits always scores high. However, if you look at the primary demo for each of the other applicants, you will find that they overlap each other, and most importantly overlap with the demos already served by existing stations.
LISTNUM 1 \l 12340 It therefore makes sense to us, both from a business case scenario and as a matter of policy, to license a station that can provide a listening option to an under‑served demographic, develop new hours of tuning, and also bring new advertisers into the system.
LISTNUM 1 \l 12341 HFX Broadcasting Inc.'s experience in building new markets, and its access to resources, means it is ideally suited to launch and to succeed in the Cape Breton Regional Municipality.
LISTNUM 1 \l 12342 Thank you again for your time.
LISTNUM 1 \l 12343 THE CHAIRPERSON: Thank you both very much. I don't think we have any comments. No. Thank you.
LISTNUM 1 \l 12344 THE SECRETARY: We would now ask Andrew Newman, on behalf of a corporation to be incorporated, to respond to al the interventions that were filed to its application.
LISTNUM 1 \l 12345 You will have 10 minutes for this purpose, and questions from the Commission may follow.
LISTNUM 1 \l 12346 Commissioner Williams tells me, "Tell him to start".
REPLY / RÉPLIQUE
LISTNUM 1 \l 12347 MR. NEWMAN: Okay.
LISTNUM 1 \l 12348 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12349 MR. NEWMAN: We would like to thank the Commission for the opportunity to come back in Phase Three and to read into the Record the responses to two questions that were left remaining from Phase One.
LISTNUM 1 \l 12350 Our total local programming will be 120 out of the 126 in the broadcast week. Six hours per week will be reserved for potential syndicated programming, as discussed in Phase One.
LISTNUM 1 \l 12351 Local programming will also be featured during the midnight to six a.m. hours.
LISTNUM 1 \l 12352 On the issue of our annual breakdown of the CCD, I think everyone today is suffering from a lack of mathematical wizardry, but I understand it is a new initiative, and we certainly appreciate the Commission's willingness for all of us to play along nicely.
LISTNUM 1 \l 12353 Year one, our basic CCD will be $500, $4500 will be over and above, for a total of $5,000. $900 of that, as a condition of license, will go to Factor. In addition to the basic amount.
LISTNUM 1 \l 12354 Years two through seven, the basic amount is $1,000. Our total over and above is $10,000 for years two through seven; $1000 of that is basic.
LISTNUM 1 \l 12355 That leaves $9,000 over and above, based on the discussions and the math, that leaves $1800 over and above each year, in years two through seven, as a condition of license, going to Factor, with $600 as part of our mandated donations in years two through seven going to Factor. We accept that as a condition of license, in the interim and going forward.
LISTNUM 1 \l 12356 THE CHAIRPERSON: Okay. Thank you, Mr. Newman.
LISTNUM 1 \l 12357 MR. NEWMAN: Thank you. We would like to thank the Commission for the opportunity to reply to the interventions. There is a lot of doom and gloom. It's very easy to point out the negative.
LISTNUM 1 \l 12358 I live in St. John's, Newfoundland. I lived in Port Hawkesbury, Nova Scotia, right after the heavy water plant and the oil refineries pulled out. It's very easy to get caught up in the negativity that surrounds mega‑projects pulling out.
LISTNUM 1 \l 12359 I think what it is important to look at are the indicators of those ‑‑ the economic indicators that are designed for those who are staying in the market. We have not, in any way, questioned Mr. Pace's concerns that out‑migration exists.
LISTNUM 1 \l 12360 However, what we do see, judged by Statistics Canada's own numbers from 2001 and 2006, that the adult population in the Cape Breton Regional Municipality is not moving out at the rate of the other audiences. Adults 25 to 54 are staying here. We also appreciate HFX Broadcasting's contention that there is overlap in serving that format that happens in each and every city. It's about giving that audience, 25 to 54, a choice.
LISTNUM 1 \l 12361 Adults 25 to 54 overwhelmingly represent the largest group not affected by out‑migration. We do see that the total in out‑migration, the Cape Breton Regional Municipality, is impacting on the total audience 12 plus, but again, the adults in the market have chosen to stay.
LISTNUM 1 \l 12362 And the economic forecast for both the mega‑projects like the Tar Ponds, and those smaller private companies like our own that are going to bring ten, twelve, fifteen new jobs, are positive indicators in the Cape Breton Regional Municipality.
LISTNUM 1 \l 12363 It's not unreasonable to expect that when we deal with the largest demographic specifically skewed to females, which make 80 percent of the buying decisions, that new advertising dollars will be brought into the market by advertisers looking to reach this very sweet spot of the audience.
LISTNUM 1 \l 12364 Sydney deserves an intelligent music choice with programming that matches the audience. Again, female adults make up 80 percent of the buying decisions. Our research indicates that almost 60 percent of our audience will be female.
LISTNUM 1 \l 12365 The advertisers we've seen today in the other interventions have all talked about a choice for their advertising dollars, and we think that our 93.1 application will offer them that choice.
LISTNUM 1 \l 12366 We acknowledge today that some collateral issues surrounding our application were brought to the table today. We respectfully ask the Commission to weigh the application on its own merits, and ignore the demise of our proposed partnership with MacEachern Broadcasting.
LISTNUM 1 \l 12367 I will speak to Mr. Pace's observation that perhaps Mr. MacEachern pulled out for economic reasons. I've had a good conversation with Mr. MacEachern, it will remain private. I can tell you that that's not the case.
LISTNUM 1 \l 12368 Sydney, as I said, deserves an intelligent music choice with programming that matches the audiences. We do feel our community approach and our corporate philosophy that we've demonstrated has success is prime for this closely‑knit community. Our operation's financial projections, our CCD plans, are all realistic, and attainable.
LISTNUM 1 \l 12369 Again, we'd like to thank the Commission for their time and their consideration on this application.
LISTNUM 1 \l 12370 THE CHAIRPERSON: Thank you, Mr. Newman. Any other questions? Commissioner Williams? No? Thank you very much.
LISTNUM 1 \l 12371 THE SECRETARY: Thank you, Madame Chair. We would now ask Newcap Inc. to respond to all the interventions that were filed to ‑‑ in response to its application.
LISTNUM 1 \l 12372 You have ten minutes for this purpose and questions from the Commission may follow.
REPLY / RÉPLIQUE
LISTNUM 1 \l 12373 MR. MAHEU: Thank you, Madame Secretary. Madame Chair and Members of the Commission, Commission Staff, I certainly won't take up the ten‑minute allotment, but just if I may, for a couple of moments, basically give you a few thoughts on behalf of Newcap in reply to the intervention put forth by Maritime Broadcasting.
LISTNUM 1 \l 12374 At Newcap, we take a very different view of what's going on here in the Cape Breton Regional Municipality and in Sydney. We think very much that the glass is half full here. I think statistics can be interpreted and read a number of different ways, depending on your point of view, depending on your agenda and your position.
LISTNUM 1 \l 12375 We are of the opinion, based on all of the information that we've been able to look at for this marketplace, that this area's best days are still very much ahead of it. There's lots of good news and lots of positives happening in this community.
LISTNUM 1 \l 12376 I listened with interest to Mr. Barnhill and Mr. Pace talking about their particular situation with their investment in their three radio stations. I think we need to all remember that at this point in time MBS owns this market, in terms of commercial radio. They have no competition. And they've done so for a good amount of time.
LISTNUM 1 \l 12377 And I think Madame Noel's comments were well taken in terms of the questioning that there's been a significant amount of time where MBS has had the opportunity in a situation where they control the market to build good will, to build relationships with advertisers, to build deep roots with listeners.
LISTNUM 1 \l 12378 And although their conversion is coming at a, maybe a somewhat inopportune time, when other new licenses are being considered, they have had the benefit that other potential new licensees would not have, and that is longstanding relationships with advertisers and listeners.
LISTNUM 1 \l 12379 And regardless of what the Commission decides in terms of licensing in this market, whether it's none or one or two, the incumbent broadcaster is still going to be at a great advantage against any new licensee with their history in the market, their relationships with advertisers and listeners, and the infrastructure that's in place. It will be many years before any broadcaster could potentially catch up and make a significant impact.
LISTNUM 1 \l 12380 I would also like to, if I may, just very quickly, it may have been a, just some confusion. There was a reference made by Mr. Barnhill about Newcap saying that our format or our proposition would grow the market by 40 percent. That is not what we indicated this morning, and just for the record, we felt that, first of all, any new radio in the market, in our experience in markets of this size, has been very consistent that new radio entrants do grow the market substantially.
LISTNUM 1 \l 12381 But what we were proposing in this particular case is that we thought only 30 percent of our first year revenue would come from the incumbent broadcaster, MBS, and that 70 percent of our revenue would come from either new advertisers to radio or expanded budgets, because we would be bringing a new format opportunity in.
LISTNUM 1 \l 12382 Very briefly, if I may comment, as well, on the comments made by MBS in terms of more general views of the radio industry that, with consolidation, you know, we could end up with only four players in Canada, four big companies, and by implication I think Newcap was included in that.
LISTNUM 1 \l 12383 And all I wanted to say about that is, in terms of Newcap, we are very much ‑‑ yes, we have a lot of licenses, but they're markets of varying size, most of them are in small and medium‑sized markets. We're a pure‑play radio company.
LISTNUM 1 \l 12384 Mr. Steele owns the majority and controls the company. He's made a commitment to being a radio company. We've divested virtually everything else that NCC used to have. We believe in radio. We believe in markets like this one.
LISTNUM 1 \l 12385 And our employees, 68 percent of the people that work for Newcap own stock in our company. So although, yes, we are a public company, we're not private, we're a very tightly‑held publically traded company, with the Steele family and our employees owning a significant amount of stock. And there's a great deal of pride in our company, in what we do.
LISTNUM 1 \l 12386 So outside of that, there was reference made to Pembrooke in terms of licensing. I think the Commission is aware, but for the Record, you know, Pembrooke is a marketplace of less than 25,000 people. On a per capita basis, if you compared it to Sydney, this market would have nine radio stations. You know, Pembrooke has two radio stations for a market of 25,000 people, and there were, I think, very reasonable grounds on which the last license was turned down in that marketplace, and I don't think it relates to the particular situation facing us in Sydney.
LISTNUM 1 \l 12387 So to wrap up, we are very optimistic about the future in Sydney, and the Cape Breton Regional Municipality. We think that the glass is very much half full, that any licensing in this market would have a minimum impact on the incumbent because of their goodwill, their relationships, their infrastructure, and their dominance in the market, and whether you licensed one or two, it would be some time before it would have any material impact on MBS in this marketplace.
LISTNUM 1 \l 12388 And thank you very much for the opportunity to respond.
LISTNUM 1 \l 12389 THE CHAIRPERSON: Mr. Maheu, I think Commissioner Noel has a question for you.
LISTNUM 1 \l 12390 MR. MAHEU: Sure.
LISTNUM 1 \l 12391 COMMISSIONER NOEL: I have one question. I would like to have your views on the following. I'm reading from Mr. Pace, oral presentation of this afternoon, at page 6, where he says:
"Experienced broadcasters know that the introduction of big box stores, such as Wal‑Mart or Home Depot, add no local advertising revenue, and serve to stifle local businesses."
LISTNUM 1 \l 12392 And then I asked him about national advertising, and I think his answer was that they were all on TV and they're not in the radio.
LISTNUM 1 \l 12393 I would like to have your view on that.
LISTNUM 1 \l 12394 MR. MAHEU: There's some truth to that, but it's, again, I think you have to ‑‑ you get into it a little bit.
LISTNUM 1 \l 12395 I think the examples that were cited were Canadian Tire, Home Depot, WalMart, and things like that. There is a contention by some, and there's some anecdotal evidence to suggest, that large, big box retailers do have a long‑term detrimental effect on small retail operations.
LISTNUM 1 \l 12396 When you talk to the big box operators, or when they're faced with that question, they tend to respond that, well, many of those businesses were marginal businesses to begin with, and they were going to go out of business with any competition, and we happened to come along.
LISTNUM 1 \l 12397 In terms of how it affects local advertising, it varies from market to market. For instance, in some of our markets, WalMart does use radio. In some of our other markets, it does not. In some of our markets throughout Canada, Home Depot is a huge national advertiser with us. In some other markets, they're a smaller advertiser. In some of our markets, Canadian Tire uses a lot of radio. In other markets, they use a lot of flyers, very little radio.
LISTNUM 1 \l 12398 So I think regionally there are some differences, based on the marketing plan that each company has. As a rule, when you're listening to the statement that they don't add any local revenue, they tend to be national accounts so they are booked nationally, and there was some indication earlier, I believe, in ‑‑ I think it was the HFX application, about this market being kind of a tough market for national radio sales because it's not sold on a cost‑per‑point basis, and the formats are rather limited.
LISTNUM 1 \l 12399 The introduction of new services into the marketplace will likely cause the market to, number one, be rated by BBM on a regular basis, will bring in probably a separate national rep firm by whomever is licensed, so there's going to be competition there, and then you're going to see that, in turn, will encourage the national advertisers to now consider this market, because they'll be able to buy format‑specific solutions for their clients, and not have to buy three stations. It'll be on a cost‑per‑point basis, like it is in virtually every other market.
LISTNUM 1 \l 12400 So there's a bit of an up‑side there, too. Generally, though, big box retailers can take a toll on some smaller retail advertisers. The trade‑off is that more jobs are created. So there's ‑‑ for every action, there's an equal and opposite reaction. I think to characterize big box retailers as not spending money on radio is not accurate, because many of them do. Although they use television and newspaper more extensively, as well, but their budgets are larger.
LISTNUM 1 \l 12401 COMMISSIONER NOEL: Thank you.
LISTNUM 1 \l 12402 MR. MAHEU: Okay.
LISTNUM 1 \l 12403 COMMISSIONER NOEL: Et bon soir.
LISTNUM 1 \l 12404 MR. MAHEU: Merci beaucoup.
LISTNUM 1 \l 12405 THE CHAIRPERSON: Thank you, Mr. Maheu.
LISTNUM 1 \l 12406 MR. MAHEU: Thank you.
LISTNUM 1 \l 12407 THE SECRETARY: Thank you, Madame Chair. We would now ask Barry Maxwell Martin, on behalf of a corporation to be incorporated, to respond to all the interventions that were filed to its application.
LISTNUM 1 \l 12408 You will have ten minutes for this purpose, and questions from the Commission may follow.
REPLY / RÉPLIQUE
LISTNUM 1 \l 12409 MR. BEDFORD: Thank you very much. First time I've been at a proceeding like this. It was very educational, and I thoroughly enjoyed it, and I'm glad to have met some of the broadcasters that I've met over the phone or met through email or had the opportunity of listening to in the past.
LISTNUM 1 \l 12410 Regarding the MSB intervention, we stand by our written reply. It was very detailed. There's no sense in me reviewing that here and now. You already have a copy of it. We stand by that reply to the MBS intervention.
LISTNUM 1 \l 12411 Why our station should be approved? Our proposed programming format has been based on our personal experience, living and working on radio stations in this community.
LISTNUM 1 \l 12412 When we initially applied for a license for a new radio station in Sydney, we were acting on a clear need for a new radio voice in the community, as expressed by our friends, neighbours, relatives, the people that we communicate with day in and day out.
LISTNUM 1 \l 12413 As the Commission will have recognized, our original conclusions have been validated by our own market survey, as well as the research submitted by the other applicants. Local listeners want more variety.
LISTNUM 1 \l 12414 THE CHAIRPERSON: Excuse me, Mr. Bedford. This portion of the ‑‑ or this phase is intended just to rebut what's been said, and so I just want to caution you on that. It's not an opportunity again to sell your position.
LISTNUM 1 \l 12415 MR. BEDFORD: Alright, and if I'm hearing you properly, I should not be summarizing here? I should not be wrapping up?
LISTNUM 1 \l 12416 THE CHAIRPERSON: Unless counsel feels differently?
LISTNUM 1 \l 12417 COUNSEL: I think generally this phase is used for responses to interventions.
LISTNUM 1 \l 12418 MR. BEDFORD: Okay. Then I've actually already replied to that. We stand by our reply.
LISTNUM 1 \l 12419 THE CHAIRPERSON: You stand by your written ‑‑ okay. Thank you very much. Does anybody have any questions? Thank you very much.
LISTNUM 1 \l 12420 MR. BEDFORD: Thank you very, very much. I apologize.
LISTNUM 1 \l 12421 THE CHAIRPERSON: No, no problem. Thank you.
LISTNUM 1 \l 12422 MR. BEDFORD: And I must admit, in being prepared for this application, and the staff in Gatineau were exceptional. We ma ‑‑ we posed a lot of questions, and we were very, very impressed with the responses we got and how clearly they gave us the information that we were looking for.
LISTNUM 1 \l 12423 THE CHAIRPERSON: Thank you, Mr. Bedford. I'm sure they appreciate your applause. We found them very helpful, too.
LISTNUM 1 \l 12424 MR. BEDFORD: Alright. Thank you very much.
LISTNUM 1 \l 12425 THE CHAIRPERSON: Thanks.
LISTNUM 1 \l 12426 MR. BEDFORD: Hope you come back to Cape Breton during the summer.
LISTNUM 1 \l 12427 THE SECRETARY: Thank you, Madame Chair. This completes the consideration of items one to four on the agenda.
LISTNUM 1 \l 12428 THE CHAIRPERSON: We resume tomorrow at ‑‑ 9:00, did you say:
LISTNUM 1 \l 12429 THE SECRETARY: Yes, that's correct.
LISTNUM 1 \l 12430 THE CHAIRPERSON: Okay. Thank you very much, everybody.
‑‑‑ Whereupon the hearing adjourned at 1917, to
resume on Tuesday, April 17, 2007, at 0900 /
L'audience est ajournée à 1917, pour reprendre
le mardi 17 avril, 2007
REPORTERS
____________________ _____________________
Michelle Moody Lynda Johansson
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