ARCHIVED - Transcript
This page has been archived on the Web
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
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
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Various broadcasting applications /
Diverses demandes de radiodiffusion
HELD AT: TENUE À:
Quartz Ballroom Quartz Ballroom
Matrix Hotel Matrix Hôtel
10001-107th Street 10001-107th Street
Edmonton, Alberta Edmonton (Alberta)
May 28, 2008 Le 28 mai 2008
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Various broadcasting applications /
Diverses demandes de radiodiffusion
BEFORE / DEVANT:
Elizabeth Duncan Chairperson / Présidente
Rita Cugini Commissioner / Conseillère
Candice Molnar Commissioner / Conseillère
Peter Menzies Commissioner / Conseiller
Marc Patrone Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Cindy Ventura Secretary / Sécretaire
Lyne Cape Hearing Manager /
Gérante de l'audience
Regan Morris Legal Counsel
HELD AT: TENUE À:
Quartz Ballroom Quartz Ballroom
Matrix Hotel Matrix Hôtel
10001-107th Street 10001-107th Street
Edmonton, Alberta Edmonton (Alberta)
May 28, 2008 Le 28 mai 2008
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
Vista Radio Ltd. 231 / 1588
Clear Sky Radio Inc. 315 / 2075
Golden West Broadcasting Ltd. 403 / 2574
L.A. Radio Group Inc. 462 / 2964
L.A. Radio Group Inc. 540 / 3543
Edmonton, Alberta / Edmonton (Alberta)
‑‑‑ Upon resuming on Wednesday, May 28, 2008
at 0930 / L'audience reprend le mercredi
28 mai 2008 à 0930
1582 THE SECRETARY: Good morning and welcome. A few quick announcements.
1583 When you are in the hearing room we would ask that you please turn off your cell phones, beepers and blackberries as they are an unwelcome distraction and they cause interference on the internal communications systems used by our translators. We would appreciate your cooperation in regard throughout the hearing.
1584 For the record, the interveners Newcap Inc. and Dean Scott listed on the Agenda have informed the Commission that they will not be appearing in Phase III for the Red Deer market.
1585 Madam Chair, we will now proceed with Item 4, which is an application by Vista Radio Ltd. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer. The new station would operate on a frequency of 90.5 MHz, Channel 213C‑1, with an average effective radiated power of 13,500 watts, maximum effective radiated power of 20,000 watts, antenna height of 177 metres.
1586 Appearing for the applicant is Margot Micallef.
1587 Please introduce your colleagues and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1588 MS MICALLEF: Thank you.
1589 Madam Chair, Members of the Commission, CRTC staff, good morning. I would like to start, with your indulgence, with a bit of an introduction of our panel and get into a little bit more detail than we might otherwise, in light of the fact that we have some new members on the panel and that we are a relatively young company.
1590 Thank you.
1591 My name is Margot Micallef and I am the Chair and CEO of Vista Radio Ltd. and I am one of the founders of the company. By profession I was a lawyer in the area of communications law. In addition to private practice, I also worked as a Senior Vice‑President for a large telecommunications company and became a Queen's Counsel in 2002. I am also currently an Adjunct Professor in governance and ethics for the MBA program at the University of Alberta and was a co‑instructor of a seminar on communications law for the Faculty of Law at the University of British Columbia.
1592 I currently sit on the board of Canadian Women in Communications and on the board of the B.C. Association of Broadcasters.
1593 Immediately to my right is Mr. Paul Mann, who is our Executive Vice‑President of Vista Radio and also a founder. Paul's career started in Lethbridge 40 years ago at the age of 16 as the all‑night announcer on 1220 CJOC. Since then Paul has worked in numerous radio positions, including news, copyright sales, sales management, and before founding Vista Radio was the General Manager of Standard Radio.
1594 Paul was the host of an award‑winning and distinctly Canadian agricultural news syndication called "The Canadian Farmer" which aired on 40‑plus radio stations across Canada for over 12 years.
1595 During his career, Paul has won numerous community service and creative awards from the BCAB, the CAB and other organizations.
1596 To my left is Vice‑President of Programming for Vista Radio and also a founder, Mr. Jason Mann. Jason studied broadcasting at Lethbridge Community College. Jason has worked since then for a number of small and large market radio stations, including CKRD in Red Deer.
1597 Before founding Vista Radio, Jason was the Director of Programming for the Standard Radio B.C. Interior group of stations. Since joining Vista Radio initially as General Manager of CJSU in Duncan, Jason was the driving force behind a number of community initiatives which saw CJSU named as business of the year in less than eight months after it was acquired by Vista.
1598 To Jason's left is Joel Lamoureux. Joel is the Program Director of Vista Radio for the four‑station Coast Group on Vancouver Island. Joel started his career in radio in 1986, after obtaining his degree in broadcasting from Confederation College in Thunder Bay.
1599 Joel has worked in large and small markets for both large and small independent broadcasters. Before joining Vista in 2006, Joel served as the Music Director of Y105 in Ottawa where he mentored younger broadcasters seeking advancement in their careers.
1600 Joel was a three times nominee as broadcaster of the year for the Province of Manitoba and a CCMA music director nominee. He served as past President of the Powerview local Manitoba Métis Federation.
1601 In addition to serving as Program Director of Vista, Joel is a musician and, along with his wife Patty and his son Alex, he performs fiddle music in his well‑known family band.
1602 Behind Joel in our back row is John Yerxa, a former broadcaster who has been researching Canadian radio since the mid‑1980s. John's research has been presented in previous CRTC hearings by such companies as Corus, Newcap, Pattison and Standard, amongst others.
1603 To John's right and directly behind Jason is Mr. Glenn Hicks. Glenn is the Director of News and Information Services for Vista Radio. Glenn has been a broadcast journalist for over two decades. He started with the South African Broadcasting Corporation in Johannesburg. He was also the Associate Producer of a long running TV family entertainment show that became iconic with South African viewers.
1604 Glenn eventually moved to London, England, where he spent three years producing and presenting programming for the BBC World Service and domestic national satellite TV news.
1605 To Glenn's right is Mr. Bryan Edwards, Vice‑Chair of Vista Radio and a founder. Bryan has a 40‑year career in radio, television and cable in small and medium markets in British Columbia and Alberta. Throughout his career he has served the broadcast industry as a director and was chair of the Radio Marketing Bureau, the CAB and the BCAB.
1606 In 1992, Bryan Edwards was named B.C. broadcaster of the year.
1607 Finally, to Bryan's right, behind Paul, is Ingrid Vaughan, our Director of Human Resources and Diversity. Prior to joining Vista Radio, Ingrid was a consultant to small businesses in British Columbia in the area of marketing and communications and was a trainer in the area of human resources and business management. She is a published author in the area of personal communications styles, having published a book entitled "I'm a Circle ‑ You're a Square".
1608 I'm pleased to tell you that everyone on this panel today is a shareholder of Vista.
1609 Before we start our presentation, I also would like to put on the record that we have submitted to you, and it is in your package, two letters, one from FACTOR outlining that our commitment will be directed towards Alberta musicians and that 50 per cent of our commitment will be directed to emerging artists; and also a letter from AMIA outlining what their intended use is of our CCD commitment to their program.
1610 We are now ready to start our presentation.
1611 Madam Chair, Commissioners, it is our pleasure to be appearing before you with an application for a new FM station to serve Red Deer. In a number of decisions, the Commission has indicated the criteria it uses to evaluate applications for new FM services. In the case of Red Deer, we believe that some of these criteria are more pertinent than others.
1612 First of all, you look at the capacity of the market to absorb new radio services. The evidence submitted in our application and in each of the other applications attests to the strength of the Red Deer market.
1613 Neither of the incumbents has intervened on economic grounds. We conclude that economics is not an issue in this market.
1614 Second, you look at the impact of licensing on the diversity of voices in the market. In the case of Red Deer each applicant here is new to the market. Each would add to the diversity of voices in the market.
1615 Third, you examined the impact of licensing on the level of competition in the market. In each case the applicants before you bring a new competitor to the market.
1616 So what is left to distinguish the applicants in Red Deer?
1617 We believe it can be boiled down to two elements: Who has the best idea? Who has the track record to deliver on this idea?
1618 With respect, the answer is Vista. Here's why.
1619 MR. P. MANN: How many of us can remember how we felt at our high school prom? A bit nervous perhaps, worried about how we looked. Well, what about the emotion just before our first kiss: heart hammering and wondering if you or your date would get up the nerve. And how about the night you proposed: afraid she would say no and equally afraid she would say yes. Remember dancing for the first time as a newlywed: a little bit tipsy maybe but feeling the joy of everyone around you.
1620 Most of us can link those events to a song that was playing at that time. And even today when we hear those songs the memories take us back to those moments.
1621 That is the feeling that Classic Hits 90.5 will provide to Red Deer listeners.
1622 MR. J. MANN: Classic Hits 90.5's repertoire will focus on the 1970s and 1980s, with slightly greater emphasis on rock‑based hits, reintroducing many songs that are not being aired locally in any significant numbers. Classic Hits 90.5 will play a mixture that is approximately 35 per cent music from the 70s, 40 per cent music from the 80s, 10 per cent from the 90s and 15 per cent current music that is compatible with the Classic Hits sound.
1623 This current music mix includes emerging Canadian artists like Liam Titcomb, Rex Goudie, Brian Melo and Jeremy Fisher. We have provided a list of sample artists from each area in our supplementary brief.
1624 Classic Hits 90.5 will provide a diverse sound not currently available in Red Deer. There will be very little song duplication between Classic Hits 90.5 and the incumbents because while some of the artists played on our station might appear elsewhere, the tracks we play will not.
1625 MR. LAMOUREAUX: One of the challenges of a Classic Hits station is keeping the sound fresh and exciting. Vista has had success with this format and we have a number of ways to keep the sound appealing and relevant.
1626 We will have a large music library with few repeats. Much like a choreographer has dancers waiting in the wings to take centre stage or a hockey team that rotates its offensive lines, we will rotate music on and off our active playlist to ensure that we always have a fresh sweep of music on air.
1627 Our experience tells us that audiences want context and focus to the music they listen to. We accomplish this through our special music programs.
1628 Classic Hits 90.5 will provide regularly scheduled music programs, including an '80s show, a '70s show, a daily interactive noon hour program and other programs. We will also run special seasonal and weekend programs, for example, a One Hit Wonder weekend or a '70s weekend, the Top 500 of All Time and an All Number One Songs weekend.
1629 These special weekends provide excitement to our audience; a good example, our Canada Day celebration at our rock station in Prince George 94X. Last year we rebranded the station "The Beaver" for July 1 and played 100 per cent Canadian music. Reactions from our listeners varied, but everybody noticed.
1630 MR. HICKS: As vital and essential as getting the music right, our experience tells us that local relevant news and information are also strong audience drivers. At Vista, a central part of our operating philosophy is meeting our audience's needs for local connection. This is a particular strength of our company.
1631 The research told us that there was a great deal of dissatisfaction with the amount of local news and information in the market, especially among Classic Hits partisans. So we took this to heart and crafted a proposal that will address this need.
1632 We will spend $4.5 million on programming over the seven‑year term of the licence. That's more than any other applicant at this hearing. This will ensure comprehensive coverage of news and community events in Red Deer. 3.5 news people will provide five hours and 15 minutes of pure news each week, with the focus being on Red Deer. This translates into 92 newscasts each week.
1633 While pure news is the centrepiece of our service, it will be complimented by a wide range of other information. It goes without saying that Vista will provide a complete service of traffic and weather, with updates each and every hour. Community messages are also a central part of our service with regular billboards.
1634 MR. P. MANN: And we go beyond the usual when the community needs us. One icy stormy morning this past winter a much loved and respected Burns Lake, B.C. school teacher and foster mother, Brenda Levick was driving four youngsters to Prince George for medical appointments. Brenda and all four children were killed when her vehicle went out of control and hit a logging truck. Communities we serve, from Prince George to Burns Lake to Smithers were devastated. Brenda was highly respected by her peers in the Burns Lake school district not only for her work in the classroom, but also with aboriginal children throughout region.
1635 We felt that beyond the news coverage we could help the healing and provide the community with a way to honour Brenda's memory. We set up a bursary fund in Brenda Levick's name, with recommendations from her family and peers on how best to award the funds annually.
1636 We are pleased that recipients each year will be aboriginal children exhibiting good citizenship within the school and the community. An on air tribute to Brenda's life and good works helped to get the fund started.
1637 This is an example of Vista's leadership and investment in the communities it serves.
1638 MR. LAMOUREAUX: We will also run a regular schedule of information reports on features to reflect the interests and lifestyles of our audience. The Red Deer region is at the heart of Alberta's farm and ranch country and we intend to honour and reflect this population and their ongoing contribution.
1639 We will air a daily agribusiness feature. Vista has significant experience in providing services to the farmers. Our Executive Vice‑President, Paul Mann, wrote and hosted the Canadian farmer syndicated daily feature, running on up to 40 radio stations coast‑to‑coast from 1987 to 1995. The program was born in Alberta and produced from Alberta most of its 12‑plus years on the air.
1640 In addition to the Red Deer Rebels western hockey league team, Red Deer is home to a year‑round sports crazy population. There is a huge participation in minor hockey, city soccer, gymnastics, long‑distance running, high school basketball, volleyball and even a pond hockey league. And because of the long history of farming and ranching, rodeo is not only a sport but it is also a way of life and a weekend activity for thousands in the city and surrounding communities.
1641 And finally, the book ends for Red Deer sports fans are the Edmonton Eskimos and Oilers to the north and the Stampeders and Flames to the south.
1642 This is why we will be doing 62 sportscasts per week.
1643 The outdoor lifestyle is an important part of Red Deer and central Alberta life. In the winter snow sports are a key activity at Canyon ski and many other ski areas in the province; and in the summer central Alberta is lake country, with residents enjoying Sylvan, Pigeon and Gull Lakes.
1644 We will provide regular updates on conditions and events for our listeners.
1645 In all, Classic Hits 90.5 will provide almost 18 hours per week of relevant spoken word programming.
1646 MR. J. MANN: How did we decide to choose this format for this station?
1647 There were three factors. We gathered information from Banister Research to establish audience needs and interests, particularly for the music format. We then analyzed the information they provided in view of information from BBM. Finally, we considered this information in context with our own collective experience in the market and with the format, as well as our industry knowledge.
1648 When Vista approaches a new market, either through acquisition or a new licence application, we go in open‑minded with no preconception as to what the appropriate format would be.
1649 MR. YERXA: In early 2006 a survey of 400 adult radio listeners was first conducted for Vista in Red Deer. In this study, six mainstream formats were tested: Country, Soft Rock, Modern Rock, Classic Rock, Classic Hits and Top 40. All respondents were asked which music type they would listen to most often. They were then asked to rate how difficult it is to find a local FM radio station which plays each option.
1650 Once we compared each music type's popularity with its current availability, we saw two viable format opportunities: Classic Hits and Adult Contemporary.
1651 However, analysis of the impact on the other local stations led us to conclude that Classic Hits was the best new FM format option in Red Deer at that time.
1652 Then last fall, once the Commission issued its call for new Red Deer applications, we retested the Classic Hits and AC options among 400 local adult respondents and found that tremendous opportunity still existed for either format. Yet, once again, we saw that Classic Hits would have a smaller impact on the incumbents. Therefore, it remained the best format option.
1653 MR. J. MANN: There was one more issue to be checked before Vista made its decision. We noted that the Commission had licensed a new station to serve Lacombe in 2006 and that the decision indicated it would be Classic Hits. Yet we wondered why our second wave of research didn't show that the format was available, since the signal is easy to receive in Red Deer and the station makes its presence known through bus boards and other promotions.
1654 However, once we checked CJUV‑FM's website, known as Sunny 94, we found that it calls itself Central Alberta's Light Favourites. In addition, a number of station monitors over time made it clear that CJUV‑FM is not a Classic Hits station but is clearly a softer, Gold based AC. Our most recent monitor is included in your package.
1655 That is also why last fall's BBM survey showed that the least served group is men over 35, confirming that a rock‑based Classic Hits station is the best choice for Red Deer. We have provided the chart here for your reference.
1656 This year the Juno Awards were held in Calgary. If you watched, you saw a committed and dynamic Alberta music scene. Vista will reflect the same commitment to the Alberta music community through our support of emerging artists.
1657 The Commission has recognized that 35 per cent Canadian content is a challenge for a Classic Hits format. Part of our response to that challenge is to put a strong emphasis on new and emerging artists. We will ensure that one of every four Canadian songs we will play will come from new and emerging Canadian artists. This translates to 9 per cent of all music played on the station.
1658 This commitment leads the industry at three times the national average, and it is eight times the reported industry average for rock‑based formats.
1659 We will meet this commitment by working with emerging Canadian artists whose music is compatible with the format. We will also feature local and regional artists in our weekly program Songwriter's Cafe.
1660 Our commitment to these artists includes additional off‑air initiatives.
1661 In B.C. we write a monthly column in "B.C. Musician" magazine aimed at developing musicians. We would look for a similar partnership opportunity in Alberta.
1662 We decided to make a substantial investment in Alberta, with $777,000 over the term of the licence. The money will be split between two recognized third party music industry organizations, FACTOR and the Alberta Music Industry Association, AMIA.
1663 We strongly believe in FACTOR and we have asked them to direct our money to Alberta musicians. AMIA has a wide range of programs to support the province's music industry and our presence in Red Deer will allow them to expand their activities in this area of the province. Our contributions to each of these organizations are larger than any other applicant for a Red Deer licence.
1664 MS MICALLEF: So now you have heard a summary of our idea for a new station, Classic Hits 90.5, and here is why Vista will deliver on its promises.
1665 MR. P. MANN: We have the experience, commitment and financial resources to compete with two strong incumbents, the Pattison Group and Newcap. We successfully compete with Pattison, Rogers and Astral in many of the markets we serve.
1666 MR. J. MANN: How do we do it? By researching, investing the capital necessary to provide high quality sound and recruiting, training and keeping good people to deliver on our programming philosophy.
1667 MR. EDWARDS: Vista has achieved a significant amount of success by focusing on local service. In many of the stations we acquired local service had disappeared. Vista realizes that being open to the community is not only the right thing to do, but it is clearly the smart thing to do.
1668 At our recently launched Grande Prairie station we connected to the community in a way that it had not experienced before. Just as one example, we were approached by a young aboriginal student who wanted to do a weekly community affairs program aimed at high school students. He was turned down by the incumbent stations, in one case because the station didn't believe that a blind person could succeed on radio.
1669 We gave him that opportunity. His program has been well received by kids in the community and by the community as a whole.
1670 That's what industry and community leadership means to us at Vista.
1671 MS VAUGHAN: One of the biggest challenges in our industry is finding, hiring and keeping good people. At Vista we lead by example. We have been able to attract a strong and committed workforce by taking a proactive and innovative approach to our staffing needs.
1672 One example is developing talent from non‑traditional places.
1673 We recently launched an immigrant internship program that we call "Opening Vistas". Vista has collaborated with immigrant support groups such as Journalists in Exile, Journalists For Free Expression and Success to identify foreign trained broadcasters who have fled their countries of origin and who, despite their relevant professional experience, have been unable to find work in our industry in Canada.
1674 A brochure that describes the program is provided in your package, as well as an article from the Vancouver Sun about the program.
1675 Vista has also demonstrated its leadership in going beyond the traditional job‑related training by offering its employees training on how to understand each other's differences and work positively to improve communication with each other. This is an important success factor as we continue to build our diverse workforce.
1676 We also offer all employees an opportunity to become shareholders in the company. All of our senior and middle managers and one in four of our general employee population have become Vista shareholders, another key factor in attracting and retaining employees.
1677 MS MICALLEF: In conclusion, the Commission has set out its criteria for licensing new services. We believe that once past the economic criteria, you essentially are looking for the best new idea. In deciding on the best new idea we believe you should bear in mind the track record of the applicants to deliver on their promises.
1678 We submit that Vista's application best meets these two basic criteria because we undertook two rounds of research to determine the largest format opportunity in Red Deer and two formats emerged, Soft AC and Classic Hits. We retested following the launch of the new AC station in nearby Lacombe, confirming that Classic Hits was still the largest opportunity.
1679 Our research also indicated significant dissatisfaction with the amount of local news and information. We have answered that call with a proposal for well‑funded strong, local programming, the largest spending on programming over seven years of any of the applicants.
1680 We have committed a direct substantial cash contribution to two large proven third parties, FACTOR and AMIA, the largest contribution to these organizations of any of the applicants for Red Deer.
1681 We have promised a significant commitment to emerging artists.
1682 Vista has a track record of expanding service when it comes into a market, whether this is restoring local service to small markets in B.C. that we acquired or launching a new service in Grande Prairie against strong incumbents.
1683 In Red Deer we face two strong competitors, Pattison Broadcasting and Newcap. We have experience competing with the large consolidated broadcasters in various combinations in several markets and are successful.
1684 We are well funded, experienced and passionate about service and radio.
1685 We are a human resources success story. We place a strong emphasis on HR issues and diversity is a core value for us. You have heard from our Director of HR and Diversity Ingrid Vaughan, who has recently published a book entitled "I'm a Circle ‑‑ You're a Square" and trains our staff in the area of communications and sensitivity to diversity issues.
1686 In addition, we are most proud of our immigrant internship called "Opening Vistas" and our historical aboriginal recruitment practices that have allowed us to identify, recruit and train five aboriginal employees in on‑air positions.
1687 We are on record to our employees, the media, the industry and the Commission that we want to be a leader in our industry, a leader in service, in reflecting our communities and in supporting Canadian musicians.
1688 We believe that we have demonstrated our leadership and we would be proud to bring our brand of radio to Red Deer.
1689 Earlier in this presentation we talked about the connections that Classic Hits songs will make for our listeners. Madam Chair, Commissioners, this station is already in the air: we hope you will let us put it on the air.
1690 Thank you. We are happy to answer questions at this time.
1691 THE CHAIRPERSON: Thank you, Ms Micallef.
1692 Commissioner Patrone will be asking the questions initially.
COMMISSIONER PATRONE: Thank you, Madam Chair. Welcome all.
1693 Yes, I do remember my prom. I'm not sure I want to, but ‑‑
‑‑‑ Laughter / Rires
1694 COMMISSIONER PATRONE: You promised to have and keep a large library of music and offer few repeats. Can you give me some more specifics in terms of numbers of spins, that kind of thing?
1695 MS MICALLEF: Sure. I'm going to ask Jason and Joel to answer that question.
1697 MR. J. MANN: Absolutely. I guess there are many different ways you can approach it and look at it. Active titles in the library we would anticipate being in the neighbourhood of 1,200 active titles at any given time. That doesn't mean that there are only 1,200 songs, though, that would be suitable or available or make sense to play on the air, but with the nature of the gold based music format we find that the best approach or strategy is isolating a certain percentage, somewhere in the neighbourhood of 20 per cent of your active library in the gold portion of your library and setting aside different platoons; so resting 20 per cent, bringing in a new 20 per cent, resting another 20 per cent, bringing in a new 20 per cent, doing that three or four times a year.
1698 But at any given time active about 1,200.
1699 Because we have indicated that we play 15 per cent music from our current decade, most of which would be Canadian music, most of which would be relatively current and emerging music, we are going to have categories representing in the neighbourhood of 15 to 20 current artists, and those will spin roughly around three times a day.
1700 And the reason why you would want to do that is you would want to begin creating familiarity around those artists.
1701 So the highest rotation or spin per day would be three; on the low end would be, you know, once a week or once every 10 days, somewhere in that neighbourhood.
1702 COMMISSIONER PATRONE: Did you have more to add to that?
1703 MR. J. MANN: No.
1704 COMMISSIONER PATRONE: You spoke a little bit about the all Canadian weekend and you talked a little bit about the reaction. I think you described it as mixed.
1705 Can you talk about some of the reactions that you did get from listeners?
1706 MR. J. MANN: Sure. I don't have specific comments, but I think the comments ‑‑ any comment that was maybe on sort of the negative side wasn't necessarily about the music; it was just that we had changed the name of the station, and 94X in Prince George has established a very passionate following. It is a market leader in the BBMs, and so that kind of a change sent up a lot of signals in the P1 or core audience.
1707 That said, once people realized what we were doing, they thought it was fantastic, and so that's where I guess the celebration of Canadian music came in play.
1708 MS MICALLEF: It's sort of like the situation with Coca Cola when they changed coke and they ended up with new Coke and old Coke and the controversy that flowed from that actually turned out to be good for everyone.
1709 COMMISSIONER PATRONE: From what I remember from new coke, though, it wasn't very popular.
‑‑‑ Laughter / Rires
1710 COMMISSIONER PATRONE: I want to jump over to news very briefly.
1711 You spoke a little bit about the financial commitment to news and information, $4.5 million.
1712 What is the breakdown in the average newscast between local, regional, national and international news? Are you able to provide that for me, roughly? I'm not asking for the ‑‑
1713 MS MICALLEF: Sure. Just to clarify, the $4.5 million is not all to news; it is also partly to programming. So it is programming and news.
1714 COMMISSIONER PATRONE: Thank you.
1715 MS MICALLEF: Thank you. And I'm going to ask Glenn Hicks, our Director of News and Information, to speak on that.
1716 MR. HICKS: To answer your question, Commissioner Patrone, precisely, we have a minimum standard of 80 per cent local news in all our newscasts. A perfect way of you visualizing that ‑‑ and you are familiar with newscast running orders ‑‑ four out of every five stories in every single newscast that we broadcast live throughout the day would be local with local audio; the fifth story in five would be of a regional, provincial or national bias.
1717 Sometimes we would also have extra stories that would bounce on local angles from that.
1718 But 80 per cent minimum local content, allowing up to 20 per cent for the other news stories.
1719 COMMISSIONER PATRONE: How many reporters will you be able to put on the street?
1720 MR. HICKS: Well, we would have a news team of 3.5 and I will break that down for you.
1721 We would have a news director. In this sort of market typically a news director may anchor the morning news, but not necessarily. We would decide on the personnel we have. But a news director would certainly be in charge of the strategy and getting as much local content as possible, driving the news room and his or her team.
1722 The second reporter/news producer and third reporter/news producer, the second and third fulltime staff, would be out on the street, some hours in the office generating calls. All flexi hours, going out in the evenings. In fact, the news director ‑‑ my experience is that the news director also gets out at night, covers meetings, covers any community meetings that may be going on.
1723 COMMISSIONER PATRONE: So you will be able to have ‑‑ sorry. You will have a reporter late as well?
1724 MR. HICKS: Yes. Yes, we would have a reporter who would cover stuff at night. Now, I'm not saying that the reporter would necessarily be sitting in the newsroom through the evening, but they would go out and handle community events or news gather in the community by phone or directly with the community in the evening.
1725 And the .5, that half a person, would be a part‑timer, looking after the weekends predominantly.
1726 COMMISSIONER PATRONE: So stringers, volunteers, that kind of thing, will they be utilized at all?
1727 MR. HICKS: No. In this sort of market, from my experience running the news for all of our Vista stations, I'm very comfortable that 3.5 people deployed properly can carry and handle the local news‑gathering operation.
1728 COMMISSIONER PATRONE: Will the agribusiness segment be sponsored; and if so, what safeguards will exist as far as issues around editorial fairness and non‑bias?
1729 MR. P. MANN: I think fair to say that just as sportscasts are sponsored, for example, in our Grande Prairie operation we have both an agribusiness feature as well as a resource industries feature that reflect the oil and gas industry in that region as well. Sponsorships are available and our editorial policy across the company stays intact, no different than it would in any newsroom.
1730 In fact, in the Grande Prairie market, one newsperson is responsible each week for generating the resource feature, another is responsible for the agribusiness feature, who has a farm directorship background in another market, and they treat it just like any other editorial policy in terms of story gathering.
1731 here is no crass commercial content I guess is sort of where you are going with that. It's true editorial content. It's not media release stuff.
1732 COMMISSIONER PATRONE: You spoke at length about your format and your selection of the Classic Hits format over others. You also talked a little bit about the Lacombe based station CJUV.
1733 Could you talk a little bit at length about how you are going to ensure as little overlap in terms of music as possible?
1734 MR. J. MANN: Well, first of all, we deeply believe that by providing diversity in music in the community, that is our greatest opportunity to carve out our own audience.
1735 So I guess, you know, as a matter of regular practice, what we do is we do monitor what the other radio stations are doing, and there is a balance between being reactionary, I suppose, if anybody were to make a change to their format, but as it stands right now the overlap is quite minimal actually. They have a pretty focused Soft AC sound.
1736 COMMISSIONER PATRONE: And in terms of your competition, or possible competition, right in Red Deer?
1737 MR. J. MANN: Yes.
1738 COMMISSIONER PATRONE: You don't anticipate much in the way of musical overlap as far as those stations?
1739 MR. J. MANN: I think that, you know, we do anticipate some musical overlap, but it comes to context, and so ‑‑ if you want, I could speak maybe specifically about Lacombe and what we sort of have determined, listening to the radio station and doing monitors.
1740 You know, in terms of Lacombe, 21 per cent of the music, in the last monitor anyways, was based in the '50s and '60s. So right there that is a full 20 per cent of non‑duplicated material.
1741 Four per cent was from 2000 on. So that is another 10 per cent that we are going to be doing that is from that decade. So that is now 30 per cent non‑duplicated just by nature of era.
1742 Then if you look at the music from the '70s, '80s and '90s, the percentage of the music that they would play that would be not duplicated is significant, leaving a pretty small piece of repertoire that we might have some shared audience in.
1743 Maybe to just give you some context around that even further, some of the artists that they would be playing that we wouldn't be playing would be The Supremes, The Bee Gees, Paul Anka, Captain and Tennille, Nat King Cole, Melissa Manchester, The Nylons, Aretha Franklin, Billy Ocean, Wilson Phillips, Amy Grant, Anne Murray and Celine Dion. So as you can tell, even if we are sharing some of the same music, when they go in to play something like that, the audience that we are trying to attract isn't going to want to listen to that.
1744 Further, I would say that in listening to Lacombe, they do an excellent job of serving Lacombe with information. You know, our focus is going to be primarily on Red Deer, so it goes beyond the music.
1745 Then as far as in market, maybe the one that you are referring to that you would be most curious about would be The Drive as it is a Classic Rock station. As you know, the Commission has licensed a number of Classic Rock and Classic Hit stations in the same market, and there are a number of Classic Rock and Classic Hits stations that have emerged in markets by existing companies and they exist and they work together.
1746 The Drive is a Classic Rock based station playing slightly more older rock than the other rock station in town, which is a very heavy rock station, but it too plays a heavier amount of modern music. Notice that there has been some migrating happening there, so it is maybe a little bit difficult to put the finger on it exactly, but we know this. We know that The Drive plays artists like Everlast, Offspring, Soundgarden, Seether, Six am, The Raconteurs, Matthew Good Band, Stone Temple Pilots, Against Me! and Smashing Pumpkins as examples of songs that we wouldn't play.
1747 And again, just as it was true for CJUV, the context of moving from those songs that we may share into those harder songs, if the listener and the audience that we are trying to attract isn't interested ‑‑ and they are not ‑‑ in hearing that edgier, harder music, you know, we are going to be the option for them, not that other station.
1748 I would suggest that some of the songs or the artists that we would play that The Drive wouldn't be playing, to further sort of show you how they would differ, would be Classic Hits 95 would play artists like Prince, Men at Work, Corey Hart, Gino Vannelli, Jeremy Fisher, Liam Titcomb, Brian Melo and Gavin DeGraw, which in any time that we have listened and monitored The Drive, they don't.
1749 They play pure rock. We generally, as a Classic Hits station, would play rock, a lighter rock, and a pop‑based rock blend.
1750 They are heavier; we would be lighter. Their music is more strident; ours less.
1751 I think that hopefully illustrates it for you.
1752 COMMISSIONER PATRONE: I want to speak a little bit about the CCD commitment.
1753 Vista is committing $770,000 total cash to support Canadian Content Development, direct contributions to FACTOR and the Alberta Recording Industry Association. This works out to $110,000 per year over seven years?
1754 MS MICALLEF: That's correct.
1755 COMMISSIONER PATRONE: Can you confirm that this amount is the over and above contribution and do you accept this as a condition of licence?
1756 MS MICALLEF: Yes, it is, and we do.
1757 COMMISSIONER PATRONE: Also another note of clarification, I know you spoke about it during your presentation. The Commission normally requires applicants to commit to 20 per cent of their total over and above CCD contributions to be directed to FACTOR or MUSICACTION.
1758 Are you proposing to direct 60 per cent of your over and above contribution toward FACTOR as a condition of licence?
1759 MS MICALLEF: Yes, we are.
1760 COMMISSIONER PATRONE: You are proposing 11 hours of spoken word content?
1761 MS MICALLEF: Yes.
1762 COMMISSIONER PATRONE: You have committed to five hours and 15 minutes to news?
1763 MS MICALLEF: Yes.
1764 COMMISSIONER PATRONE: What percentage of that will be ‑‑ actually, I think you answered that. I believe it was 80 per cent. Is that correct?
1765 MR. HICKS: That's right, yes.
1766 COMMISSIONER PATRONE: Why do you feel it is so important to designate so much time to news?
1767 MS MICALLEF: Actually, news is our passion. Not only do we feel it's a duty to ensure that we reflect the community through our news and through our spoken word and through our various programs, we actually feel that it is what drives audience to us and differentiates us from any of our competitors, especially in this particular demographic.
1768 I will also ask Glenn to add to that and you'll notice how passionate he is about news.
1769 MR. HICKS: Passionate but controlled. You know, as a news guy you want to be passionate, but when you're on the air anything but.
1770 No. You know, since Vista came on the scene I think it completely understood and acknowledged the sort of desperate state that perhaps some commercial radio stations had got themselves into, perhaps for financial reasons. News is an investment, but it is absolutely the cornerstone of every Vista station.
1771 Yes, the music is important, but news is monstrously powerful ‑‑ there's passion for you ‑‑ is very, very powerful in terms of engaging the community. The more local news you do, the more local news you get, the better you are with your community. The advertisers love it, the listeners relate to you.
1772 You know, an awful lot of the communities that we are in ‑‑ in fact Red Deer, for example. People come from all over the world to populate towns and cities across Canada and they have come with some knowledge of big‑city ideas, some knowledge of news that is relevant to them. Well, they move to a town, they want to hear about that town. They want to feel important. That town has an awful lot to reflect.
1773 While we would never ignore a national or an international story, 80 per cent as a minimum for local content we think is absolutely bang on. Many of our newscasts every day are 100 per cent local. We think that's right in the markets that we operate in.
1774 The community loves it. The communities feel proud that they have a radio station that actually talks about them and everything that they do.
1775 COMMISSIONER PATRONE: You spoke at length in your application about the economy in the area, and I believe you said it was not an issue as far as Red Deer is concerned. But as you are aware, I mean Alberta has gone through its boom and bust cycles.
1776 How well equipped is Vista in case economic and the situation around the economy should happen to deteriorate?
1777 MS MICALLEF: We are actually very well funded. We have quite a bit of liquidity available through our bank credit facilities. We have a very strong shareholder base. We are profitable in every one of our markets.
1778 Our projections for the Red Deer market actually took into account the possibility of two radio stations, so we are realistic in our expectations. We are realistic in our projections. We are very good operators and we are very comfortable that the Red Deer market could very well support an additional radio station.
1779 And if we were wrong on that and it needed more time for us to actually penetrate the market and become profitable, we are very confident that we have the ability to sustain any delay in profitability.
1780 COMMISSIONER PATRONE: You also spoke ‑‑ and I apologize for jumping around a little bit here. But in terms of music you are planning to repatriate some of the listeners who are now tuning into out of market stations.
1781 What percentage of those listeners do you anticipate Vista will be able to repatriate?
1782 MS MICALLEF: I'm going to ask John Yerxa to respond to that.
1783 MR. YERXA: According to the second wave of research that we conducted, approximately 44 per cent of a Classic Hits core audience would come from in market stations and the other 56 per cent would come from out of market stations.
1784 MR. J. MANN: I may have something to add to that.
1785 COMMISSIONER PATRONE: Go ahead.
1786 MR. J. MANN: What I would like to maybe just add to that ‑‑ and I don't have the specific number right now ‑‑ but if my memory serves me correctly, the latest BBM research indicated that Red Deer's 35‑plus audience had a pretty low amount of time tuned to local radio stations. It was somewhere in the neighbourhood of 65 or 68 per cent to local radio, whereas interestingly, and perhaps somewhat counterintuitive because of what we see across the rest of the nation, the younger audience actually had a higher percentage of tuning to local radio, the 12 to 34 demographic. That was somewhere in the neighbourhood of 83 per cent, I believe.
1787 COMMISSIONER PATRONE: A question around revenues.
1788 You expect to derive 30 per cent or $536,000 of your second year's revenues from incumbent stations?
1789 MR. P. MANN: That's correct. We have always taken a very pragmatic approach to what the true on the street impact is when we go into markets. I know presentation numbers vary dramatically, but the truth is there are always early adopters in those core businesses who are radio clients in any market, the low hanging fruit if you will, who always want to be on the radio. Therefore, there is going to be an automatic pick‑up. They want to be a part of it. They want to be a part of the hot new brand.
1790 We have certainly found that anywhere we have re‑branded and certainly most recently in Grande Prairie with the new station launched just a year ago. The early uptake to a great extent comes from the existing core radio users of the market.
1791 COMMISSIONER PATRONE: Are you able to specify and quantify which stations you expect those revenues to come from?
1792 MR. P. MANN: We think that obviously in terms of how you look at the share ‑‑ I mean, between the two incumbent companies we think it's going to work out fairly evenly in total dollars, but obviously the two brands, one on each company, that skews to the male side, The Drive, in the case of Pattison Z99, they would take more of that total share than the other formats would. But when you put the whole pie together, it is two stations per company and the dollars I think are going to be fairly even on a corporate basis.
1793 COMMISSIONER PATRONE: Just a few more questions left before I pass you on to my colleagues.
1794 Cruiser reports. Will the community cruiser be a green option hybrid vehicle ‑‑
‑‑‑ Laughter / Rires
1795 COMMISSIONER PATRONE: We have all seen these massive SUVs that are often employed by stations to spread the message, sort of drive‑by billboards really.
1796 So I pose that question to you.
1797 MR. P. MANN: I will start on that one.
1798 Sorry, we only laughed because it's actually something we have been discussing of late in several of our markets, particularly ones where climactically, on the coast and so on, these vehicles do function fairly well on an all‑year‑round basis. We just haven't figured out how we would get to the ski hill in it in some cases. But we are looking at it and we are serious about it.
1799 In fact, I might just take a moment on the green initiative to just point something out. It doesn't apply to the vehicles per se, but it does to overall conservation of our planet.
1800 Very recently we had the opportunity to move into a strategic partnership, an alliance if you will, with a resort in Nemo Bay on the Pacific mainland coast, and in conjunction with that the local First Nations people, as well in a partnership that's airing on every one of our Vista stations, not only in B.C. but Alberta and the Northwest Territories, simply urging our listeners in all of those markets to conserve energy, conserve our planet.
1801 So I don't know how many companies have, you know, company‑wide use of those kinds of programs, but to do it in partnership with a First Nations group I think might be a first, and it has been just an amazing thing.
1802 COMMISSIONER PATRONE: I appreciate the answer.
1803 I was asked not to ask that one, so I...
‑‑‑ Laughter / Rires
1804 COMMISSIONER PATRONE: The Rock Report. Will The Rock Report be locally produced in terms of it being a segment or will that be produced outside?
1805 MR. J. MANN: Locally produced and talking about general happenings about music that is on our playlist.
1806 COMMISSIONER PATRONE: Finally, your one in four songs from newer artist commitment, how will these artists be chosen?
1807 MR. J. MANN: Well, obviously we need to start with compatibility of format, with the format, and, you know, we are beginning to see ‑‑ this is, you know, obviously a challenging question to answer very specifically because there are no defined parameters around what is an emerging artist yet.
1808 Based on the CAB definition, based on the fact that BDS is providing now some emerging artist information ‑‑ it is not entirely conclusive, though, because it is a fairly short chart and I believe that a number of the artists on, say, the Hot AC or the AOR charts below the sort of Top 20 that BDS is providing are also emerging artists.
1809 So it is going to be obviously looking through those usual channels and doing what we do and reaching out to the music community very actively.
1810 Our programmers are passionate about music. They have roots in music in many cases, are musicians in many cases themselves, more than just Joel here, and we also have outreach programs and campaigns on the air and also in other media, with our example in British Columbia, B.C. Musicians magazine. So we are committed, passionate and we do a lot.
1811 MS MICALLEF: I might just add that in your package are two examples of two articles written, one by Jason and one by one of our other programmers for B.C. Musicians magazine. The focus of those articles is always to assist emerging artists.
1812 The last thing I would mention as well is that it is one of our stated objectives to promote emerging artists in Canadian music.
1813 COMMISSIONER PATRONE: Thank you all very much for your answers.
1814 Madam Chair...?
1815 THE CHAIRPERSON: Commissioner Cugini.
1816 COMMISSIONER CUGINI: Thank you and good morning. Just one question.
1817 This is a very popular format. This is a format that appeals to a broad age group. It might skew female, but it's pretty well split between male and female, if I have that correct, and yet your share projections are middle of the road in comparison to the other applicants.
1818 I guess my question is: How can we be assured that you haven't underestimated your share projections and therefore your impact on the market and your overall business plan therefore?
1819 MS MICALLEF: We have actually done quite a bit of research in this area and I'm going to ask John to respond to your question.
1820 MR. YERXA: Two factors: Number one, it reflected the favourite genre status that came through on the research. The second consideration that I know Paul took into account was the fact that it is very likely that the Commission could license two stations and that really should be reflected in the business plan.
1821 COMMISSIONER CUGINI: So you in your business plan have said ‑‑ when you put together your business plan, do you create two scenarios: what if we are the only ones licensed or what if the Commission licenses two?
1822 Based on Mr. Yerxa's answer, this is a sure projection based on the possibility that we might license two in Red Deer.
1823 MR. P. MANN: Correct and I think it's fair to say some number of applications back in time we in fact were building our business plans based on the assumption of one new re‑licence. The pattern of late in several recent decisions has been two.
1824 COMMISSIONER CUGINI: It's always dangerous to predict what we are going to do.
1825 MR. P. MANN: That's right.
‑‑‑ Laughter / Rires
1826 MR. P. MANN: So we began to revisit that.
1827 In this case there was really almost what I would call the half station rationale. In effect, in reality there is business being done by the Lacombe station out of Red Deer, albeit passively, but there is marketing of the entity in the marketplace in Red Deer. So we almost looked at that with a view that it's 4 and a half stations or 4 and a quarter, and what are the odds that it's really not going to be two, depending on how things work out.
1828 So we went a touch on the conservative side, as John stated, both on the share and treated that slice of the pie a little more conservatively on the revenue side as well.
1829 I can say to you I think that in Grande Prairie, where you did award two licences, yes, we are doing better than we imagined. But again, from a banker's philosophy, we try to go with what we believe we can achieve.
1830 COMMISSIONER CUGINI: And if we were to only license one, what would be the difference be in your share projections? And you would of course be the only ones that we would license.
‑‑‑ Laughter / Rires
1831 MR. P. MANN: John, do you want to answer the share question?
1832 MR. YERXA: Well that's a first question considering where this province has been. Although it has softened somewhat, I think we were looking at an inflation rate a year ago of about five to 6 per cent, but we are still just marginally above 3 per cent and, you know, if we end up with stagflation then we are in real trouble.
1833 I still think honestly that it's just more prudent to go forward, recognizing the impact of new technologies and so on. I really think that although the share percentage could jump somewhat, my advice to Vista would be to stick with the 12 per cent figure.
1834 COMMISSIONER CUGINI: Okay. Well, thank you very much.
1835 Those are my questions, Madam Chair.
1836 THE CHAIRPERSON: Commissioner Menzies...?
1837 COMMISSIONER MENZIES: I'm just curious on your 80 per cent for local news.
1838 Does that include the whole package, the news, weather, sports broadcast?
1839 MS MICALLEF: That's our pure news.
1840 COMMISSIONER MENZIES: That's just news?
1841 MS MICALLEF: Yes, it is.
1842 COMMISSIONER MENZIES: Okay. So sports, et cetera, is that in addition to that?
1843 MS MICALLEF: Yes, it is.
1844 COMMISSIONER MENZIES: And that 3.5 person newsroom, will they also cover your business and sports news or are they just news? Where would you get your sports, for instance, from?
1845 MS MICALLEF: The answer is yes.
1846 I will just ask Glenn if he has anything he would like to add to that.
1847 MR. HICKS: Yes. If I can break down a typical 3.5 news team, there would be preferred beats. So logically I would say one of the three reporter/producers, including the news director, would have a beet that may include the Chamber of Commerce. Somebody else may have a city beat. One of those three will most certainly have a sports bent.
1848 And to answer your earlier question, 80 per cent of the sports we deliver, 80 per cent of the sports news we put on the air is local audio sports news. It is not the NHL, the NBA. That again falls into that 20 per cent category.
1849 So I know where you are coming from in the pure new sense. There is kind of an argument that news is pure news, hard news, local. But given that our sports news in every single newscast is also 80 per cent on what the local coach is talking about, what the local team captain is talking about, previewing tonight's game or the weekend's game, 80 per cent of that is local as well.
1850 So from my perspective we have approaching five hours of local pure news.
1851 COMMISSIONER MENZIES: Okay. I'm just trying to get a handle on it. So one of your 3.5 would have a sports bent and they would be ‑‑ so in addition to their news assignments, they would also be covering the junior hockey team?
1852 MR. HICKS: Yes. So, for example, we would have to work out a flexi‑shift pattern, as we do with all our staff. But, for example, the third fulltime person would have a working day that might start at 1 o'clock in the afternoon.
1853 The first four or five hours of the day is on a beat news‑wise or in the newsroom preparing or getting the calls out and doing local stories. They then go off to the hockey game on the Tuesday night or the Thursday night, the junior hockey game, come back, put together a report, a voice report, some audio clips for the next morning's news, and by 10 or 11 o'clock at night that is the end of their eight‑hour shift.
1854 COMMISSIONER MENZIES: Okay. So you have to know the school board and you have to know calf roping?
‑‑‑ Laughter / Rires
1855 MR. HICKS: You know, there would be ‑‑ you know that in all the markets like this you could probably go to a structured board meeting every single night. You could do councils on a Monday or Tuesday, school boards, regional districts, hospital boards. You have to be selective. Sometimes you can't get to absolutely every single thing, you know. Every night you look at the agendas, you check. Are there things you could do telephonically?
1856 Sometimes I have people who, yes, go out in the evening. I send reporters in my ‑‑ in the Kootenays, I send reporters out to a council meeting, come back and immediately follow up by telephone a council meeting that's an hour and a half drive up the road. I can't send them to two because at the same time I have somebody doing a volunteer meeting on the West Kootenay Eco Society, for example, or a hospital board meeting.
1857 If you manage your team, you can get a lot done.
1858 COMMISSIONER MENZIES: Yes, I used to work for a guy like you.
‑‑‑ Laugher / Rires
1859 MR. HICKS: So I hear.
1860 COMMISSIONER MENZIES: What is it about your spoken word package, your news and sports package like that that makes you new, that makes you different, not just ‑‑ I quite often hear that this will be a new news voice, and I kind of wonder well, will it just be another news voice doing the same things that other people do?
1861 Why would I tune to your news and sports package instead of any of the other guys? I mean, I can listen to Calgary, Edmonton, everything in that market.
1862 MR. J. MANN: I might start anyways by just saying that if you are listening to Z99 as a listener per se, or maybe even listening to a station out of market because that's your only other option, this is going to be a new local news option because it's a new local music option. So people who might be tuning outside of the market now have a local news option that they might not have otherwise been able to palate.
1863 And the news covered on other stations may be somewhat different based on their demographic skew as well. Younger skewed radio stations probably aren't going to be covering some of the topics or issues that are relevant to the older 35‑54 demographic.
1864 From the programming chair, that's the way I look at it. I don't know if anybody has anything else to add to it.
1865 MS MICALLEF: The other thing I would like to add as well is our commitment to the quality of the newscasts and the fact that we don't just sit and receive the information; we actually go out and make stories.
1866 Also, our timeliness with the news is also significant.
1867 I'm going to ask Paul to tell you a story about a situation recently where we were the first to break a news story, and then Glenn also has something he would like to add.
1868 MR. P. MANN: I'm sure everybody has caught it on national television, or there was even The Post this morning. The biggest fire in the history of the city of Prince George occurred two nights ago. We lost a Canfor plant, about 350 jobs, and the wind drove that to other buildings, some of it as far as a mile away and the entire, as I said, city was on fire.
1869 You know, we have a competitor with radio and television in that market. There are newspapers in that market. I can tell you without hesitation our team broke that story. Our team was on that scene. We have an emergency preparedness program in every one of our stations that ensures first line of contact.
1870 Not only was our entire news team on the scene, but our programmers and air staff were there and worked through the night and into the next day non‑stop.
1871 So when Glenn speaks about our passion for news, it carries down to the very detailed level. I think in a market that size to break one of the bigger stories this week speaks for our teams.
1872 MR. HICKS: Commissioner Menzies, you will also know from your background that news organizations love breaking stories. I mean, heck, if you don't react to a breaking story, you're not worth your salt.
1873 But what is also important ‑‑ you asked the question: Well, what makes you different? That is I make it a point in every Vista news market to say to the people you cannot rely on the breaking stories and you cannot rely on stories to land in your lap. That's not how it works.
1874 In metropolitan news‑gathering centres that is going to happen all day long. You are going to get pedestrians being knocked over on the corner of First and Third, and if you want to report that all day long, well, tragic as it is, those are the things that you are surrounded by.
1875 In smaller markets where Vista specializes, that is not the news agenda. The news agenda is issue‑driven stuff. And if you are going to follow the issues, you have to have people out in the community all the time talking to volunteer groups, talking to city councillors, people on boards to find out the story behind the story. That is very much what makes us different.
1876 Yes, breaking news; yes, if there is a forest fire over the hill; yes, if there is a major highway smash; yes, if there is a killer on the loose. But that doesn't happen, tragically for newsrooms, often enough. In small newsrooms, we don't get the exciting juicy stuff day in, day out.
1877 Why people come to you in a small market in the news is because day in, day out four of those five local stories every newscast, with a new running order for the morning and a new running order for the afternoon. It's about the issues, it's about the issues that are affecting your listeners, what it means to them economically, socially, for their future, for their environment.
1878 That's exclusively what we train our news directors to do every day. That's why we are different.
1879 COMMISSIONER MENZIES: Okay. Ideas are hard in that sense.
1880 You mentioned in your presentation and it is in your application that your programming expenses are the highest of others, and I'm just trying to get a sense from you as to where you think that gives you an edge, because spending more money in and of itself isn't always seen as a good thing. I expect you go through that yourselves from time to time.
1881 So where specifically is that investment made? Is it in the recruitment of your people? Is it elsewhere? And where would that give you an edge?
1882 MS MICALLEF: First, it shows our commitment to the local community and to local programming and to new programming. We are not a company that spends money idly. We put our money to very good use.
1883 You may recall in previous applications we would have spoken about the first group of 19 stations that we acquired. All of them were underperforming, all of them were losing money. We had to spend money to turn them around to make them profitable, and we are happy to say that they are all profitable today.
1884 But just to illustrate the fact that we take our responsibility to the community seriously in the manner in which we spend the money. It is always put to good use.
1885 There are a number of different people who can comment on this because it really goes to the foundation of who we are and our commitment to local.
1886 I'm going to ask Jason to speak on it and Bryan as well.
1887 MR. J. MANN: Our philosophy is to first build the audience and to attract the audience and in order to do so you need to be competitive. And with additional station, possibly two, maybe two and a half into the marketplace, it is going to become a pretty competitive market.
1888 So we have anticipated being a leader.
1889 Music to an extent comes and goes, cycles. It is also to an extent a commodity. But what we can do and what we can control the most is the quality of what we do between the records and the service that we provide the community. And that does come with a cost.
1890 But we believe, and historically have proven, that with that investment you can turn it and monetize it.
1891 COMMISSIONER MENZIES: Just help me a little bit. Is it a human resources investment? Is it a marketing style investment?
1892 MR. J. MANN: Some of it is marketing, some of it is quality of people.
1893 COMMISSIONER MENZIES: All right. Thank you.
1894 I have no more questions.
1895 THE CHAIRPERSON: Commissioner Molnar, then.
1896 COMMISSIONER MOLNAR: Thank you.
1897 I would first like to just follow up on some questions that Commissioner Cugini was asking related to your financials.
1898 You mentioned, and I just want to confirm, that the financial projection that you have put forward, the business case you have put forward, is based on an assumption that there are two additional radio stations licensed for Red Deer.
1899 MR. P. MANN: That's correct. And in effect using the current Lacombe information best we can is almost as if it's four and a half stations currently.
1900 So I guess we are saying six and a half regardless of how that all plays out, yes.
1901 COMMISSIONER MOLNAR: Okay. You spoke about the extensive market research you did to identify the format of your music and, you know, to ensure you got it right here moving forward.
1902 Did you do similar research on the economics to understand ‑‑ how is it you came to feel some comfort that this market would be able to support two additional stations?
1903 What is the economic basis for that assumption?
1904 MR. P. MANN: In every one of our applications we take kind of, at minimum, two different approaches on the financial model: a bottom‑up approach and then a top‑down approach.
1905 Interestingly enough, over about eight of these now, we have always come in within about $100,000 of each other on the various approaches when we mix all the criteria together.
1906 So yes, we are pretty comfortable about it.
1907 We also talked to a number of business people in the community about the format specifically, about the dynamics of the market, and so forth. In fact, some of them have letters on our file, you know, supporting that direction.
1908 I think if we again look at similar scenarios, particularly in Alberta with our newest station in Grande Prairie over the past year, and we have a full fiscal year of history there now, and a fairly similar model of community, if you will, based on the ag and the resource industry dynamics, albeit a smaller market.
1909 You know, literally the number of radio operators in that market changed, doubled ‑‑ more than doubled in fact with the Christian station now on the air ‑‑ doubled and then some overnight. And as we have seen, the ability to absorb it has played out better than probably anyone would have imagined.
1910 So we have some fairly good on the ground history, as well as the specific research in this market.
1911 We sometimes will discount based on an anticipated audience share, by the way, in terms of revenue. This particular market, as you saw in the graphs, the end of the market that is being better served and better sold perhaps, leaves a fairly interesting hole for the 35 to 54 audience, and also for potential advertisers who want to target their business to that client base.
1912 So in this case we actually, taking all other factors in Red Deer, took what came out as best we can get ‑‑ obviously, with no certainty of the absolute numbers, but as best we can get it ‑‑ what we said would come out about 1.4 million in the first year, and we actually premiumed that up by about 150,000 given that void in 35‑54, because it's typically a high demand advertiser category.
1913 MS MICALLEF: Let me also add a couple other things.
1914 First, we have amongst us in this group over 200 and something years of experience in this industry. We actually are as old as we look up there. And we budget for each one of our stations on a line by line basis. We have 23 stations currently and we spend a lot of time every year. In fact, we are running a five‑quarter budget.
1915 So what we do when we prepare our projections for these applications is not that dissimilar to what we do day in and day out in terms of all of the markets that we serve.
1916 We also look at economic information that is published by Financial Post and other economists about the area as well.
1917 COMMISSIONER MOLNAR: Okay. Thank you for that because my question wasn't ‑‑ I certainly wasn't questioning the financial forecast you put forward as much as I was wondering what information you had regarding the economic capacity of Red Deer to be able to hold or support two additional stations.
1918 MR. P. MANN: Perhaps just one additional comment, again not necessarily all that dissimilar from the Grande Prairie model where inventory is tight, for example, at many times of the week, many times of the year in the current incumbent operations in Red Deer, as our research would tell us at least.
1919 So we believe there is pretty significant room for new inventory uptake in the market as well, based again on some of the interview processes with some of the client base in the market.
1920 MS MICALLEF: Let me also refer you to our supplementary brief where we actually go into quite a bit of detail about the economic situation in Red Deer, and John Yerxa also through his research can add some assistance here.
1921 MR. YERXA: Well, the only thing that I would like to add is that certainly we looked at a lot of economic research and one of the most startling striking quotes that came out of it was from TD Economics. Don Drummond I believe, the Chief Economist, stated that Red Deer was at the centre, at that time last fall of, I think as he said, one of the hottest economic regions in the world.
1922 So while I considered there would be a slowdown, certainly given the recent history of the Commission it would seem likely that going in there one might anticipate there would be two licences granted.
1923 COMMISSIONER MOLNAR: Thank you.
1924 Another question I have relates to synergies.
1925 There are, you know, two well‑established, well‑financed, well‑run incumbents operating in that market and if you go in as a single station what sort of synergies are you potentially going to lose by being a single station within that market? Or conversely, perhaps you would like to tell me what synergies you have with some of your other operations that would help you be successful and run efficiently and effectively in that market.
1926 MS MICALLEF: I will just start here and then I will ask Bryan Edwards to also add some comments.
1927 First, in terms of synergies, the synergies that we share amongst our various radio stations would be the back office synergies, synergies with respect to traffic, with respect to some sales advice, HR, admin, you know, that sort of synergies. We don't share programming amongst our various stations at all.
1928 But there are benefits that we could pass on to our Red Deer station just by the strength of it being one of our group of stations.
1929 I will ask Bryan to chime in here.
1930 MR. EDWARDS: It's the story of my life. She answers the question and then asks me to repeat it.
‑‑‑ Laughter / Rires
1931 MR. EDWARDS: We really have a remarkable back office system. When Vista was created, there happened to be a brand new traffic system that hit the marketplace and we were the first in Canada to deploy it. It is an Internet based central server. So a lot of day‑to‑day activity that would normally happen in a marketplace is actually done remotely.
1932 Jason has a laptop with him today and if we wanted to, we could pull up any station in our chain and give you the last hour of sales that occurred. That's how user friendly it is.
1933 So that is an infrastructure that we have.
1934 We have the same kind of infrastructure on the financial side, almost a clone of the traffic system in the financial world. So that's a huge support system that we have which allows us whether we are the standalone or two in a market ‑‑ and I guess this is a roundabout way to answer the previous question.
1935 One of the reasons on a percentage basis our programming costs are higher is because that's where we spend our time and attention. In fact, sometimes it's easier to focus on one product stream when you are kicking it off because there are no other distractions. So when we launch Red Deer, this one station will be the only thing we care about in Red Deer.
1936 COMMISSIONER MOLNAR: Just to ensure I'm understanding, you mentioned you have 3.5 people for news. So there is no back office support for them?
1937 All of the news is created locally within the Red Deer market.
1938 MR. EDWARDS: Absolutely.
1939 COMMISSIONER MOLNAR: Okay, thank you.
1940 I have just two more questions.
1941 First off, I have a question related to your CCD.
1942 I noticed that you had proposed that the monies going to FACTOR would be directed to Alberta, and I had not seen that before. Is that something new?
1943 MS MICALLEF: It's actually not uncommon.
1944 COMMISSIONER MOLNAR: Oh, okay.
1945 MS MICALLEF: We do try to work with FACTOR in all of our markets. We are a very strong supporter of FACTOR. In fact, I believe in every one of our applications for new licences we had indicated that our CCD support would primarily go to FACTOR.
1946 It started out when we were a new company about three years ago. We had come up with a program that was very similar to FACTOR's but we were going to run it on a local basis, and FACTOR intervened and asked us if we would reconsider the creation of a new program which would have some duplicated services and therefore not be as efficient and instead direct our support to them.
1947 It was as part of that commitment to FACTOR that we were able to solicit their commitment back to supporting the stations in the various communities that we serve and the various markets that we serve.
1948 We have done this in every one of our applications.
1949 MR. P. MANN: And that is the updated letter that was announced and filed this morning, that we received from them.
1950 COMMISSIONER MOLNAR: Just a question. The Alberta Recording Industry Association where you would also direct some of your monies, is there any opportunity for artists to be going to both of these different funds?
1951 So would you have the same artist being funded through two different funds?
1952 MS MICALLEF: They actually do two different things, and Jason can provide some further assistance here.
1953 MR. J. MANN: AREA, which is now actually known now as AMIA, their focus is really on providing support and assistance and knowledge and training and information to artists who really haven't figured out how to make this crazy music business work yet. So they bring in high‑powered, high profile music leaders, producers, engineers, successful musicians and put on seminars and sessions and invite their membership to come and learn more about how to make a record and how to get it heard on the radio and that kind of stuff.
1954 So it is really early seed stage support that AMIA provides and not necessarily direct funding.
1955 In the instance of our contribution, they have indicated that they don't have enough funding to really do this type of work in the Red Deer area. They largely stay in the larger centres. This is something that they would like to achieve, is to be able to provide more localized support in some of these secondary markets, and Red Deer is a huge opportunity for them, they see.
1956 COMMISSIONER MOLNAR: Thank you. So this would be directed into the Red Deer market?
1957 MR. J. MANN: They have indicated that this is where they would like to create it. They don't have really any programs happening in the Red Deer market yet. We have talked about it and I have told them about the importance that we have placed on helping local musicians, and they agreed that in fact that would match with their mandate as well.
1958 COMMISSIONER MOLNAR: Thank you. Just one more question.
1959 I noticed in your application that the question on use of new distribution platforms was ‑‑ you indicated that you would not be looking at new distribution platforms.
1960 I wondered if you perhaps either had ‑‑ you know, is there any sense at all of using the Internet or other alternate distribution and new media to complement and promote your station? Where are you on that?
1961 MS MICALLEF: Actually, we said no to that question because we didn't have anything that we could put forward that was very specific, which is what the question was looking for.
1962 I can tell you, we have been a company now in existence for about three years. When we first started Vista radio the stations that we acquired were in bad need of repair. Technically often they were not functioning properly, they had lost touch with their communities, they were losing money. You know, there were a lot of problems.
1963 So the first thing we focused on for the first three years of operations really was turning these radio stations around and really building them up so that they could be strong competitors, strong contributors to the community.
1964 We are happy to say that we have doubled our revenues in the three years that we have operated these stations and they are all profitable stations.
1965 A year ago we turned our attention to new media, new media platforms, and we have created a task force to look at this and we actually are quite far along in that process.
1966 Jason is going to speak to that because this is something he has been working on very diligently.
1967 We also have some Internet‑based strategies already in place that support our various stations, and I will ask Glenn to speak specifically to what it is that we do.
1968 MR. J. MANN: I guess I was tagged as I have a bit of a background in the Internet and have been actively involved since about 1998 and have spent a lot of time on it, in fact.
1969 There are a number of things that we have been looking at. The Internet obviously, including streaming and podcasting and downloads, but also cell phone technology, WiMAX, texting and other mobile devices. So we have a pretty good understanding of what is happening.
1970 It is interesting, as we begin to fully understand what one new technology might be able to provide us as an opportunity and a new one emerges, so it is at a very interesting stage; a lot of evolution, a lot of change happening right now.
1971 So we have sort of been a little bit more reserved and not jumped right in.
1972 That said, we are moving forward specifically on a couple of initiatives.
1973 One is in the area of texting, mobile texting, and we see this as an add‑on feature that will benefit our advertisers. We are going to do some trialling and if we find it successful, we are going to apply it to station promotions as well.
1974 There are a couple of barriers in our way as far as engaging it right at this very moment, but we have a plan and we will be moving forward with it fairly quickly, I understand.
1975 With respect to the other one, that is of course the Internet. Our Internet strategy is articulated and we are moving forward with development right now. Really, at the heart or the core of our strategy, one of the first things that we recognize is we create a lot of local proprietary content and that is going to be our focus in what we do. We are going to leverage off of that.
1976 It will enable to us strengthen our existing relationships with our listeners through a new channel and build new relationships with new listeners and audience and viewers.
1977 It will also give an opportunity for more of a collaborative approach, I guess, or collaborative relationship with our audience. It won't be broadcasting; it will be two way, interactive, engaging, and not only engaging with us, but we will be able to connect our audience with each other as well through the platform.
1978 Of course, with respect to all of that and user generated content, we do anticipate moderating, moderating such user generated content. In the end, once we have all of this functioning and happening and the audience builds and the traffic flows, there will be a monetization opportunity for us as well that we believe.
1979 We have been working on the strategy officially for over a year now. We developed a task force internally, programmers, newspeople to talk about what we wanted to achieve as a company. We have held three strategic planning sessions. We have met with people not only inside our own company, but inside the industry, outside the industry as well, such as ISP providers, software designers, database technology companies, other broadcasters, both inside and outside of Canada, mad scientists, if you will, and other people who are on the fringe of technology.
1980 We know how we want to move forward and we are very close to launching our corporate strategy.
1981 MS MICALLEF: Glenn, can you speak to what we are currently doing on the Internet to support our stations?
1982 MR. HICKS: Sure. Because we generate so much unique locally‑based news and information that nobody else does in our market, isn't it nice to show it off. Wouldn't it be nice to get it out there to a bigger audience. So that is certainly the goal that Jason has spoken about.
1983 But at the moment we are already doing some perhaps elementary stuff. We put our headlines up on our website. Every week we podcast the entire news highlights of the week. We call it "The Week in Review", people who are out of market, people who are away from home, people who have family and friends in that area, they have moved on. Hey, what is happening back home? They can check that out. People who aren't necessarily tuning in to the radio at a specific time.
1984 We have a podcast at the end of every week called "The Week in Review"; all the highlights of local news, bang, in one shot every week. So there is a podcast there.
1985 We have jock profiles. We have a community calendar that we already put up on the web and that is refreshed every week, local community events that are going on, charitable causes, issues that are going on in the community more on the community level rather than news level. That is already up on our websites; and contests; and, of course, important surveillance information.
1986 In particular, for example, the last month is provincial emergency preparedness week, you know, forest fires, flooding, et cetera. Emergency and important preparation websites we would put up on the web so people can just get links to them. So that is what we are doing already.
1987 MS MICALLEF: I will just add that with respect to the Red Deer market, the demographic that that are catering to, the 35 to 54‑year‑old demographic, is most familiar or comfortable in respect of the new technologies with the Internet. So at the very least we would have the same sort of Internet strategy, maybe a more robust version of what we have in place right now to support our stations.
1988 We are anticipating that by the time that we would get licensed and launched that we would have our full‑blown Internet strategy which, as Jason describes, is a very robust, interactive strategy, in place and that we would launch that in Red Deer as well.
1989 COMMISSIONER MOLNAR: Okay, thank you. That was my last question with it, because I know it was a strategy under development yet to launch.
1990 So your plan ‑‑ I don't want to say an expectation ‑‑ is that you would launch an interactive web portal, if you will, an interactive strategy at the same time that you launched your stations.
1991 MS MICALLEF: Yes, we would. We are going to roll out our corporate Internet strategy in the next few months. It will be done on a test basis and we will roll it out to our various markets over the next 12 to 18 months. By the time we launch Red Deer, we would be ready to roll it out in Red Deer as well.
1992 COMMISSIONER MOLNAR: Okay. Thank you. Those are my questions.
1993 THE CHAIRPERSON: Thank you very much.
1994 I have a few questions, but that certainly just took care of one of them. That's very helpful.
1995 I wanted to just know, first of all, on the little diagram that you included with your presentation where the Lacombe station would fit.
1996 MR. J. MANN: We didn't specifically add it in the chart because it's a licence for Lacombe and not considered as ‑‑ oh, but you would like to still know where it would fit?
1997 THE CHAIRPERSON: Yes, just in terms of appeal to audiences.
1998 MR. J. MANN: It would be in the quadrant most closely related to where CKGY would be there. It is definitely female skewed and it would be older.
1999 THE CHAIRPERSON: Okay. Thank you, that helps.
2000 MR. J. MANN: Average year of music on the station on the last monitor was 1979.
2001 THE CHAIRPERSON: So when you say that, is there a percentage of music? What do you mean by that exactly?
2002 MR. J. MANN: When you sort of take the average of all the years from every song ‑‑
2003 THE CHAIRPERSON: Oh, that they are playing?
2004 MR. J. MANN: Yes.
2005 THE CHAIRPERSON: Okay. Thank you.
2006 Just housekeeping here.
2007 With respect to your CCD commitment, is that a typo in your paper? Is it $777,000 as you said and as is written in your paper here, or is it 770,000?
2008 MS MICALLEF: It is $110,000 times seven.
2009 THE CHAIRPERSON: $770,000, thank you. So we will just note that. That's all the housekeeping.
2010 I gather, first, that 60 per cent of your $770,000 is going to go to FACTOR.
2011 MS MICALLEF: Yes.
2012 THE CHAIRPERSON: That is your intention. And I notice they do have that usual sentence in their letter that if there are no qualifying Alberta artists, which is the best we have seen to date anyway.
2013 MS MICALLEF: Right.
2014 THE CHAIRPERSON: But do you have any way to influence that? Are you on committees that might assess the entries?
2015 MR. J. MANN: I think the best way we can influence it ‑‑ and I have been observing a fair amount of success ‑‑ and that is through educating and informing our audience that this funding is available. I have been quite amazed by the number of people who I have been in contact with at the musician base who just weren't aware of the funds or how to apply for the funds.
2016 So we are proactive. We believe that FACTOR can provide a very strong infrastructure and worthy service and, to some extent, really it's not about how they go about it; it's just that nobody knows about it or not enough people know about it.
2017 If you are a struggling emerging musician, it's kind of one of those things that you are not necessarily thinking about. So we are taking that as part of our responsibility to make sure that those funds ‑‑ that people in our listening area are aware of those funds and help them reach them.
2018 We have done that through on air messaging, just through casual conversation, when we speak with musicians when they come to the station looking for advice, and through outreach in appropriate magazines.
2019 THE CHAIRPERSON: That's very helpful.
2020 Yesterday Mr. Hildebrand made a comment that he was quite disappointed in the box of CDs that was recently sent around by FACTOR; that there was only one, I think, with an Alberta artist. But perhaps you have hit the nail on the head and that that is what is lacking.
2021 Thank you, that's helpful.
2022 How will you stay involved on an ongoing basis with the Alberta Music Industry Association to ensure the funds that you give to them are handled in accordance with the policy?
2023 MR. J. MANN: We would expect an annual reporting of the funds from them.
2024 THE CHAIRPERSON: So will you sort of contact them in advance to make sure before they give it out there doing it, reminding them of what the policy is? Is that the kind of involvement?
2025 MR. J. MANN: Well, we will have an ongoing and we do have an ongoing relationship with them. We have talked to them on several occasions. They understand what we want to achieve. We believe that our objectives are aligned and they have indicated that on an annual basis that they would be prepared to let us know how the money is being used.
2026 THE CHAIRPERSON: Thank you.
2027 MS MICALLEF: They have also, Madam Chair, indicated that they are looking for an opportunity to expand their service to the Red Deer market.
2028 THE CHAIRPERSON: It's not available to the whole of Alberta as it is?
2029 Maybe you can just describe to me what you mean by that, sir.
2030 MR. J. MANN: It is. Any musician could go to where they have the seminars and the sessions, but again ‑‑
2031 THE CHAIRPERSON: Oh, I see.
2032 MR. J. MANN: ‑‑ if it's in the middle of winter, the roads are bad, any kind of number of reasons why somebody might not be able to leave their hometown long enough, if they have day jobs, et cetera. So to be able to bring these seminars and sessions into secondary markets, they are going to reach way more people than they would be by being able to do it in, say, either just Calgary or Edmonton.
2033 THE CHAIRPERSON: Thank you.
2034 I just want to make sure I didn't miss anything here.
2035 I was just going to ask you, just following on your discussion with Commissioner Molnar, the programming of the music, will that all be done in Red Deer? It's not done as part of your back office.
2036 MR. J. MANN: Correct.
2037 THE CHAIRPERSON: And it's clear that you think the market can support two stations?
2038 Can I conclude that from your comments?
2039 MS MICALLEF: We do. The economic data with respect to Red Deer is still very strong, notwithstanding that there is, to a degree, a slowdown in the Alberta marketplace generally. We think it's a minor slowdown. We don't think it's going to be sustained.
2040 We are very bullish about the Red Deer market and would be very comfortable with having two new stations there.
2041 THE CHAIRPERSON: How many stations ‑‑ I think you said you have 26 or 23 now?
2042 MS MICALLEF: We have 23 now.
2043 THE CHAIRPERSON: And how many in Alberta at this time?
2044 MS MICALLEF: We have the Grande Prairie station in Alberta.
2045 THE CHAIRPERSON: just that, okay.
2046 I'm just wondering, if we were to license more than one, which of the applicants would you consider to be the most competitive with your proposed format and which the least?
2047 MS MICALLEF: We actually believe that we would be competitive with every applicant. We don't feel that we would have a disadvantage with any applicant that you licensed at all.
2048 So we would be quite comfortable competing with any one of the other applicants.
2049 THE CHAIRPERSON: Okay. That's great.
2050 So now this is your two minutes to sum up and tell us why it should be your group, Vista.
2051 MS MICALLEF: Thank you.
2052 We started out the presentation by saying that once all of the basic criteria are met, what is there left to distinguish the applicants?
2053 And we proposed to you that what was left was to ask who had the best idea and then to look at the track record of the applicant and say who was most likely to be able to fulfil those promises.
2054 It is our view that you will not see a better idea than the idea that Vista has put forward. You won't see a better idea that is more grounded in research than the idea that Vista has put forward. And we don't believe that you will see an idea that is more in tune with the audience and what the audience is looking for in Red Deer than the idea that Vista has put forward.
2055 We also believe that Vista is the best applicant to fulfil these promises. We have talked a bit today about the 19 stations that we first acquired about three years ago and the challenge that we had in each of those communities in not just turning the stations around to become profitable, which in itself of course was a large challenge, but more than anything to create the sorts of stations that we wanted to create.
2056 When Bryan, Paul, Jason and I founded Vista Radio four years ago, we did so on the basis that we wanted to make a difference in the communities that we served. With respect to the 19 stations that we acquired, a lot of them had lost touch with their communities. They were not making a commitment. They were not making difference in those markets.
2057 We turned everything around in those stations. We introduced better programming. We hired more people. We introduced training sessions for our staff. We moved studios into better locations and we rebuilt studios. We improved the technical sound of the stations.
2058 We in essence made a difference in the communities and became relevant to the communities that we served.
2059 We believe also that we are fulfilling our goal to be leaders in the industry as well. We have introduced a new immigrant internship program a few weeks ago at the BCAB. We invited our fellow broadcasters to join us in a similar program, either join us in furthering our program or we invited them to come up with similar programs of their own.
2060 We are happy to report that we were very well received in respect to this announcement and that many of our fellow broadcasters indicated that they would in fact either join us or start similar programs.
2061 So the two goals that we had when we first started this company, which was to make a difference in the communities that we served and to be leaders in the industry itself, we believe that we are well on our way in fulfilling those commitments.
2062 So we would then ask you to please allow us to make the commitment, to make a difference in the community of Red Deer and to bring our leadership to Red Deer.
2063 Thank you.
2064 THE CHAIRPERSON: Thank you.
2065 I didn't ask if counsel had any questions either. Sorry about that again.
2066 MS MICALLEF: Thank you.
2067 THE CHAIRPERSON: Anyway, it was a very helpful presentation.
2068 MS MICALLEF: Thank you.
2069 THE CHAIRPERSON: We are going to take a break now for 15 minutes and we will reconvene at 11:25.
2070 Thank you.
‑‑‑ Upon recessing at 1107 / Suspension à 1107
‑‑‑ Upon resuming at 1129 / Reprise à 1129
2071 THE SECRETARY: We will now reconvene.
2072 We will now proceed with Item 5, which is an application by Clear Sky Radio Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer. The new station would operate on a frequency of 90.5 MHz, Channel 213B, with an effective radiated power of 4700 watts, maximum effective radiated power of 9000 watts and an antenna height of 190.1 metres.
2073 Appearing for the applicant is Paul Larsen.
2074 Please introduce your colleagues and then you will have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
2075 MR. LARSEN: Thank you, Madam Secretary.
2076 Madam Chair, Commissioners and CRTC staff, good morning. My name is Paul Larsen and I am President of Clear Sky Radio. We are very excited to be before you as we continue to try to build Clear Sky Radio, this time with an application for a new FM radio station to serve Red Deer.
2077 I was asked to state on the record that we filed a letter this morning from FACTOR that confirms their acceptance of our CCD funding to FACTOR in earmarking the funds that we will be providing to Alberta artists. We filed that with the Hearing Secretary earlier this morning.
2078 Also, before we begin our presentation I would like to introduce you to our panel.
2079 To my right is Casey Wilson. Casey is the General Sales Manager of our Lethbridge, Alberta, radio station CJOC‑FM. Mr. Wilson joined us here ago when we launched CJOC. He joined us from Newcap Radio in Red Deer, where he was a Senior Account Manager. Casey has extensive management experience, including positions with Paramount Theatres and the Forzani Sports Group, as well as owning and operating his own restaurant business, all in Red Deer.
2080 If we are licensed to serve Red Deer, Casey's knowledge, both in radio and as a business person in Red Deer, will help us establish our radio station and business quickly and with precision.
2081 Next to Casey is Pat Siedlecki. Pat is our News Director in Lethbridge, as well as the play‑by‑play voice of the Lethbridge Hurricanes WHL franchise, which we are the official broadcaster of.
2082 Since last year's launch, Pat has established CJOC as the news leader in Lethbridge, overseeing a team of four dedicated news journalists who combine to write, produce and deliver over 100 newscasts on CJOC each and every week. By far, it is the most news coverage on radio in Lethbridge.
2083 Pat joined us last year when we launched CJOC after 10 years working in newsrooms on Vancouver Island.
2084 To my left is Lorene Halseth. Lorene is our Director of Administration for Clear Sky, responsible for our business functions, including accounting, traffic and human resources. Lorene also joined us last year when we launched our first station in Lethbridge and has been instrumental in helping us establish our business infrastructure at both CJOC and our second radio station, CJCY‑FM Medicine Hat, which we officially launched last week.
2085 Lorene has over 15 years' experience in radio administration, mostly with CKRY‑FM Calgary, where she started in accounting and eventually rose to become the Executive Assistant to the former owner and General Manager.
2086 Casey, Lorene and Pat are key members of the young and dynamic founding management team that we have assembled for Clear Sky Radio.
2087 Also joining us on our panel is Mr. Kerry Pelser. Kerry is the principal of D.E.M. Allen & Associates, the firm that conducted our technical brief. Kerry will be available to answer any questions specific to the frequency that we have chosen, should you have any.
2088 Finally, I believe the Commission is getting to know me, but as we have never presented to a number of you on this panel I would like to just quickly recap my history.
2089 I started in radio at age 16 as an all‑night announcer in Fort St. John, B.C., and over the past 22 years have progressively built my experience, moving from on‑air into programming and general management.
2090 In mid‑2005 I took the opportunity to attempt and achieve a career long goal of moving into ownership and formed Clear Sky Radio, responding to calls for applications in Calgary, Lethbridge, Fort McMurray and Medicine Hat.
2091 Clear Sky Radio is now an operating broadcasting company with two licences serving Lethbridge and Medicine Hat and we are ready to continue our growth in Alberta, which brings us to our Red Deer application.
2092 Today we will touch on one of the most unique and vibrant economies in all of Canada. We will tell you about the rapid population growth in Red Deer and how this dynamic city is underserved on radio. We will show how our full service Gold based Adult radio station will complement the Red Deer market and fill a service void with the 35‑plus audience, with a particular focus on those 45 and older.
2093 In terms of our company, Red Deer is the single‑most important market in our growth strategy. The map on the screen shows the geographic proximity to the two Alberta markets that we currently serve, offering tremendous opportunities for operational and programming synergies.
2094 Red Deer's population size, demographic make‑up and economic drivers are all quite similar to Lethbridge and Medicine Hat. Clear Sky is an Alberta‑based radio company with regional infrastructure, making us an ideal candidate to offer and operate a new FM radio licence, targeting Red Deer's mature 35 to 64‑year‑old adult audience given our presence and experience in similar Alberta markets. This triangle would represent an exceptionally strong regional broadcasting company.
2095 If licensed, our radio station will be known as 90.5 RED‑FM. Our target audience is adults 35 to 64, with a focus on those 45 and older, one of the fastest‑growing population segments in Red Deer.
2096 Musically our proposed format is Gold based Adult Contemporary. That means the biggest songs from the mid‑'60s through the mid‑'80s. It is a 20‑year span of music that our target audience grew up listening to, is very familiar with and very passionate about.
2097 In addition, approximately 20 per cent of the RED‑FM playlist will be music from the '90s and today. Featuring some new music in our programming mix will allow us the opportunity to play some emerging Canadian artists, even though our format is Gold based.
2098 Canadian music will be prominently featured in our programming, scheduled evenly throughout each hour.
2099 Further, we are committing that 5.25 per cent of our music will be emerging Canadian artists. That represents 15 per cent of our total Canadian content commitment. Because this music is not available on Red Deer airwaves today, we believe that we will attract many listeners not currently tuning in to local radio, those who are listening to satellite or cable music channels, out of market radio signals, Internet radio, personal CDs and MP3s, as those have been the only sources for this music format to date.
2100 We have seen this in real life with the two stations that we operate.
2101 In Medicine Hat, for example, we have come to find out that that market was the number two market in all of Canada for satellite radio subscriptions. Literally the day that we got our test signal on the air we began receiving phone calls from listeners thanking us for providing the music that they were looking for, combined with local information.
2102 It is a very simple formula for success.
2103 There is strong demand for RED‑FM. Our research shows that 84.3 per cent of those 35‑to‑64 year old adults in Red Deer would definitely or probably listen to our new station and, of those, 43.1 per cent said RED‑FM would become their favourite radio station.
2104 MR. WILSON: Red Deer is currently served by four commercial radio stations owned by two major broadcast companies, Newcap and Pattison. Relative to other cities of similar size, Red Deer is underserved on the local radio dial.
2105 For example, Lethbridge, with a population of 15,000 fewer people than Red Deer, has five commercial stations, one more than Red Deer. And Medicine Hat, with a population of 25,000 fewer people than Red Deer, now has four commercial stations.
2106 Red Deer is ready for more radio.
2107 Virtually all economic data we studied indicates a very vibrant Red Deer economy with solid and sustainable growth going forward. Some of the key indicators that Red Deer can sustain new radio services include: incredibly strong retail sales, estimated to be 142 per cent above the national average by Financial Post markets; strong retail sales growth forecasts. Retail sales are forecast to increase 37 per cent between now and 2011.
2108 Employment, housing, transportation and steady population growth all point to the fact that the Red Deer economy has been growing rapidly, with no signs of slowing down.
2109 The correlation between retail sales and radio advertising sales is well documented and we believe that Red Deer's stronger than average retail sales, coupled with the fact they are forecast to continue growing significantly, indicate Red Deer can sustain new radio service at this time without impacting the service levels or business plans of the existing stations.
2110 TD Economics found Red Deer at the centre of one of the hottest economic regions in the world. The Red Deer region is strategically positioned midway between Alberta's two largest cities on the Highway 2 corridor, providing local companies with easy access to a massive trading area.
2111 The Calgary‑Red Deer‑Edmonton corridor is recognized around the world as a major economic force. The corridor produces a per capita GDP second only to Luxembourg.
2112 Our proposed radio station format is the right one for Red Deer. The demographics absolutely support this statement.
2113 According to the 2006 Federal Census, the city population grew an incredible 22.2 per cent between 2001 and 2006. The largest population increases have occurred within the 35‑to‑64 age groups and, more particularly, with the 45‑plus demographic.
2114 As you can see on the graph on the screen, they Red Deer population of adults aged 35 to 64 increased 23 per cent in the five years between 2001 and 2006, and those aged 45‑plus grew 35.8 per cent during the same period.
2115 The other significant population growth is at the other end of the demo, those aged 0 to 35 in particular, those aged 15 to 35. These stats clearly show two fast‑growing and underserved population segments and opportunities for new radio stations to serve Red Deer.
2116 According to the 2006 Federal Census, 37.9 per cent of City of Red Deer residents are between 35 and 64 years of age and they total over 30,000 people. This audience deserves a new radio station custom tailored for them.
2117 Local businesses that market to this impressive demographic deserve a targeted radio station to reach this audience. RED‑FM will be both.
2118 RED‑FM will open up new advertising opportunities for retailers and manufacturers who, until now, had limited radio choice on which to advertise their products and services to the mature adult population. This audience grew up listening to radio and radio is one of the most effective advertising mediums to reach these active, mature consumers, but only if there are new radio stations that appeal to them.
2119 RED‑FM will be that radio station in Red Deer.
2120 MR. SIEDLECKI: Clear Sky Radio and RED‑FM will bring a new independent news and information voice to Red Deer, increasing the editorial balance in the market. Our proposed station would be an important and substantial contributor to providing local news and information on the Red Deer airwaves.
2121 If licensed, RED‑FM will provide hourly locally produced newscasts between 6:00 a.m. and 6:00 p.m., Monday to Friday, and 8:00 a.m. to 4:00 p.m. on weekends. That is 98 newscasts weekly, totalling six hours and 21 minutes of new diverse news content each and every week on Red Deer's airwaves.
2122 We will accomplish this with three fulltime and one part‑time dedicated news staff. Our news focus will be on the City of Red Deer. 95.8 per cent of total respondents to our research said news and information specific to Red Deer is important and we will provide it for them.
2123 Other spoken word, including sports, weather, business news, oil and gas reports, arts and entertainment, will total another 4 hours and 14 minutes a week.
2124 Red Deer's adult audience enjoys an active lifestyle. Topics important to them include health and wellness, finance, travel, fine food and wine, and more. To satisfy the desire for lifestyle information, RED‑FM will air a weekly one‑hour program called "Red Deer This Week", featuring local experts discussing these topics and others.
2125 Our scheduled spoken word programming totals 12 hours and 56 minutes weekly, approximately 10 per cent of the broadcast week. Now this is a significant commitment to spoken word programming, but one we know we can deliver.
2126 We made similar commitments when we applied for stations in Lethbridge and Medicine Hat. We are now providing those commitments and even more in those two communities, with great response.
2127 One example is the recent Alberta provincial election. Our Lethbridge station CJOC was the only local electronic media outlet, radio or television, to provide live election coverage with three hours of wall to wall reporting and analysis. We will bring that same commitment to news and information programming to Red Deer if licensed.
2128 Red Deer would benefit from the synergies of strong, fully staffed newsrooms that we operate in Lethbridge and Medicine Hat. Using our server based newsroom software, all three newsrooms and news staff would be linked together, contributing to create important news and information programming that would benefit all three communities.
2129 We have delivered on our previous commitments and you have our promise that we will execute the spoken word commitments presented in this application if we are licensed in Red Deer.
2130 In this competitive media landscape, music alone will not ensure a successful or relevant radio station. Our spoken word and news content is what differentiates our radio stations from our competitors and ensures we will build a large and loyal audience that will come to rely on us as their source for immediate and timely local information.
2131 MR. LARSEN: Turning to Canadian Content Development, 80.1 per cent of respondents to our research said that exposure and promotion of local and Canadian artists is important. Even though we are proposing a Gold based format, we have committed that 15 per cent of our total Canadian content, or 5.25 per cent of our overall music mix, will be devoted to emerging Canadian talent.
2132 While it is much easier for current based radio formats to play a higher percentage of emerging artists by the very nature of playing new music, our audience did indicate their desire to see us support these emerging artists and we are pleased to make this commitment.
2133 Our direct Canadian Content Development contribution will be $140,250 over the initial licence term. 100 per cent of our direct CCD will stay in the Red Deer region. Our annual proposals include: post‑secondary music and journalism bursaries for Red Deer students; funding of the Red Deer Festival of Performing Arts; funding to FACTOR with our contributions earmarked to Alberta artists; and our original song competition which will be of direct benefit to local and regional independent Canadian artists.
2134 If licensed in Red Deer, we will be operating this competition in three Alberta markets, truly becoming a regional competition for local emerging artists.
2135 Our direct CCD commitments will be supported with significant on‑air promotion, website exposure and other marketing. We also propose to air a weekly one‑hour program focusing exclusively on independent Canadian music called "Maple Leaf Music". While we will be highly supportive of Canadian music throughout our programming, "Maple Leaf Music" gives us a platform to explore emerging and independent Canadian artists more thoroughly.
2136 MS HALSETH: On the community front 90.5 RED‑FM will be highly engaged, broadcasting live from many annual local festivals, including Westerner Days, Red Deer International Air Show, Winterfest, Heritage Day and many others.
2137 Red Deer is a culturally diverse city with a strong not for profit and social community. There are many individual organizations that promote and offer activities and services relating to multicultural interests, including the Cultural Development Association of Red Deer, the Community Information Referral Society, United Way of Central Alberta and the Red Deer Native Friendship Centre Society.
2138 We have already reached out to many of these organizations, ensuring our support through no charge public service announcements and interviews, if we are licensed. This will be invaluable in assisting them with fund raising and general awareness.
2139 Further, the on‑air exposure of these diverse groups and events will ensure that our programming is inclusive of Red Deer's entire population.
2140 If licensed, we will endeavour to create relationships with the area's First Nations, to ensure we are able to include their events and news within our programming. We are committed to reflecting diversity within our company, as well through employment, and provided information to this in our application.
2141 The administrative synergies that will be achieved if we are licensed are significant. A station in Red Deer will allow us to further diversify our depth and administration, allowing us to add another position to the department. As we add new people, we try to bring a new skillset into the company.
2142 Our stations are linked together with a virtual private network, enabling the entire department to work as a single unit even though the staff are physically located at different offices.
2143 The Red Deer station would also benefit from the administrative infrastructure we already have in place at our other stations. For example, traffic may be scheduled by a staff member in Lethbridge, while accounts payable are processed by our Medicine Hat admin staff.
2144 As we are working from a common server, I am able to oversee each area, even though my staff are not necessarily in the same office.
2145 Gaining another licence will allow us to enhance the opportunities for our current and future employees, enabling them to take on bigger responsibilities and new challenges without having to move to another company. It will allow them more choices in where they would like to be based.
2146 As we grow and get bigger, we are able to offer better benefits, such as a more comprehensive medical plan.
2147 As one example, we have an excellent health plan now that offers 80 per cent reimbursement. With more staff cost sharing the benefits, we will be able to increase coverage to 100 per cent and add new components without significantly increasing the premiums.
2148 Another benefit may include extending our vacation policy to include more flex time. With more staff, coverage of vacations and personal flex time becomes much easier.
2149 These are all small but important benefits of company growth that are often overlooked. Growth for our company means new opportunities for our current employees, and opportunity for new staff to join a dynamic and exciting young company that believes in empowering its people and allowing them to grow with us.
2150 MR. LARSEN: We have given this Red Deer application particular thought and extensive planning, with research confirming our instincts. We have built a solid business plan which is based solely on serving the City of Red Deer. We will bring a new format to Red Deer, one with virtually no overlap with the existing Red Deer stations and one that won't infringe on the incumbent station formats.
2151 RED‑FM will provide a fresh and focused choice for the fastest growing demographics in Red Deer. We will provide significant local news and other spoken word elements that are important to our target audience. Our station will bring a new independent news and information voice to the community and increase the diversity of spoken word voices in Red Deer.
2152 We will be highly active in the community. Community service is one of the core values of Clear Sky Radio and our radio stations. We have chosen a frequency that serves the city of Red Deer and our business plan well without impacting stations serving rural communities to the north and south of Red Deer.
2153 We are licensed in two southern Alberta markets and have strong regional infrastructure in place at our Lethbridge and Medicine Hat operations that would support and benefit a new radio station in Red Deer.
2154 Clear Sky Radio is an emerging radio company. Approval of this application will further strengthen a new regional western Canadian broadcaster and contribute to ownership diversity in Red Deer. We have the experience and the expertise to continue to grow our company. We have successfully launched two radio stations and, with that accomplished, we are now ready to take on our next station.
2155 Our only opportunity for growth is really through this application process. We are delivering exceptional local radio in two Alberta communities already and we are hopeful to do the same in Red Deer.
2156 We thank you very much for this opportunity to present our application for 90.5 RED‑FM, and we look forward to your questions.
2157 THE CHAIRPERSON: Thank you very much, Mr. Larsen.
2158 Commissioner Menzies will do the questioning initially.
COMMISSIONER MENZIES: Thank you.
2159 In terms of your news, you indicated that about 90 per cent of your news would be local and regional.
2160 Can you just clarify for me what you mean. How much of that would be what you would call strictly local? And then I will get you to describe what you see as regional.
2161 MR. LARSEN: Sure. Maybe I will ask Pat, our News Director, to address that question.
2162 MR. SIEDLECKI: Thanks, Paul.
2163 About 75 per cent truly local is what we foresee specific to the city of Red Deer; another 15 per cent from southern Alberta. We really see both of these categories as being local, so roughly 90 per cent.
2164 And the rest of that, of course, will be devised of provincial, national and international news.
2165 COMMISSIONER MENZIES: I think you answered it there, but your definition of region was southern Alberta, then, east, west, not just the Edmonton‑Calgary corridor?
2166 MR. LARSEN: Pat is used to reading our news in Lethbridge so he probably meant to say central Alberta.
2167 MR. SIEDLECKI: Yes.
2168 MR. LARSEN: We are trying to reflect the same commitment that we would do in Lethbridge. In Lethbridge our local news specific to the City of Lethbridge would be 75 per cent and then 15 per cent in southern Alberta, the communities surrounding Lethbridge.
2169 And Red Deer would be the same: 75 per cent specific to the City of Red Deer and 15 per cent specific to the region of central Alberta, so Sylvan Lake and up and down the corridor between Calgary and Edmonton.
2170 COMMISSIONER MENZIES: Okay, thank you.
2171 In your contributions in your application you indicated that 100 per cent of your basic would go to FACTOR and I just want to check.
2172 Do you want to capture that as a condition of licence or do you want to retain some flexibility, given that you are only required to give 60 per cent to FACTOR or MUSICACTION?
2173 MR. LARSEN: Because in our case, the basic based on our revenue projections is not a lot of money, we determined that 100 per cent would be adequate and we would accept that as a condition of licence for the basic.
2174 COMMISSIONER MENZIES: Thank you.
2175 Now, in your view, what do you have most in common with the Vista application, which appears quite similar?
2176 At the same time, what do you think most distinguishes you from them or them from you in terms of helping us figure out which of you is best suited for this market with this format?
2177 MR. LARSEN: Sure. I would say in terms of the most similarity between the two applications is the demographics that we are targeting. We are both going for the 35 and older end of the demographic pool. So that is the most obvious thing that we have in common with each other.
2178 They define their format as Classic Hits with a Rock lean; we define ours as a full‑service Gold based AC. So we would play probably a little softer music than what they are proposing to play as a Classic Hits station.
2179 We took that approach given in Red Deer that there is a Rock station in Z99 and a Classic Rock station in The Drive, and we felt that the Rock market specifically was quite well served, which is why we put the branding of ours as a Gold based Adult Contemporary.
2180 We would play ‑‑ and again it's hard to define because some people would say the Doobie Brothers are Pop music from the 70s, some say they are Rock music from the 70s. So it is difficult for us sometimes to put music labels.
2181 You know, we wouldn't play Led Zeppelin, but we would certainly play a Genesis or a Fleetwood Mac.
2182 So I think in terms of the differences between us and Vista would be truly more on the Gold based AC side.
2183 I would suspect that we will play an artist like Neil Diamond and they likely would not. We would play an artist like Seals & Crofts or The Carpenters and they likely would not.
2184 So I think we will be a little softer musically than what they are proposing.
2185 COMMISSIONER MENZIES: What would be the overall impression?
2186 You are both going after the same market in different ways, as you described. What would be the thing that would make you sound really unique and diverse and distinct, that would make you, in a very competitive market where there is all kinds of out of market tuning, one or more perhaps new competitors, what would make you stick out among the pack?
2187 That speaks to your business plan and your business viability. What would be the one or two or three things?
2188 MR. LARSEN: Unquestionably first and foremost it's our commitment to information programming. There is no question. We do more news in the two markets that we are in currently and we would do more news and information programming than is currently on the air in the Red Deer market.
2189 That aspect of programming ‑‑ as stations over the years have converted from AM to FM, we have seen news and information almost disappear from FM radio stations and it has only been in more recent times that companies have attempted to bring that programming back to radio.
2190 We have taken the approach ‑‑ I often say to our guys that we are doing old fashioned AM radio. It just happens to be on the FM band.
2191 And it really does make our station distinct and different.
2192 We are the only radio station in Lethbridge that has news every single hour at the top of the hour, from 6:00 in the morning until 6 o'clock at night, and it truly does differentiate us from the pack.
2193 We have fun with our imaging, the way that we market the station and image it. We think that RED will be a catchy brand in Red Deer, given that the Red Deer River is there. It can play off the city.
2194 I think the news and information programming to me is the one that just stands out clearly as what will differentiate us from the competitors, whether it's a new competitor or an existing competitor and a service level that ‑‑ the election coverage Pat mentioned in the speech is a perfect example.
2195 We live in a city of some 70,000 people in Lethbridge and we had a provincial election, Ralph Klein had stepped down. We have a new Premier. It is his first attempt to get officially elected by the populous. And in the city that size we have two television stations based in Lethbridge, Global Lethbridge and CTV has a Lethbridge office as well that this local programming.
2196 Neither of those television outlets, nor any of the other four commercial radio stations in the market, did any election and in fact Global didn't even run their 11 o'clock news that night. We did wall‑to‑wall election coverage from 8 o'clock when the polls closed until 11 o'clock at night with our team of four reporters that work for us, and we brought in two broadcast journalism students from the Lethbridge College journalism program.
2197 The next morning in the Letters to The Editor people had actually complimented us ‑‑ or it might have been the day after, I guess, because the newspaper deadline might have been too tight for it to get in. But there were comments in the newspaper thanking us for actually providing that news and information and election coverage and chastising, you know, not only the other radio stations but particularly that then didn't even get an 11 o'clock update on the local television station.
2198 So really we do put a lot of emphasis on news and information because it makes us different, and that is one of the advantages that we would have against the existing competitors or any new licensed stations.
2199 COMMISSIONER MENZIES: Thank you.
2200 I understand from the audience size perspective with the StatsCan demographics, the 35‑to‑64 year old thing ‑‑ although I think we all noticed that 35‑year‑olds are now described as older women ‑‑ it's a huge gap between a 35‑year old and a 64‑year old. I mean, there are very different things going on in their lives.
2201 So I need to understand more fully what your perfect listener looks like. Is it a he or a she? Is it 45, is it 37, is it 62?
2202 MR. LARSEN: We now have some sort of real world statistics because we are rated in BBM in Lethbridge. This music format is very similar to what we do in Lethbridge, so I kind of use that as a gauge of how we expect our audience share to develop in Red Deer.
2203 We are virtually a 50:50 split male to female. We do very well with the 45‑plus demographic.
2204 In our first book we were number two in BBM, adults 35‑to‑64, and in our second book, after being on the air less than a year, we are the number one station in Lethbridge for adults 35‑to‑64.
2205 We are finding the younger end of the demographics, say the 35‑year‑olds, just find this music fresh and refreshing and new, partly because they haven't heard it on the radio for a long time. These kids probably grew up listening to it; their parents were listening to this music. So they do have that connection with the older end of the demographic.
2206 The older end certainly are more loyal listeners. I would say that they are with our station all the time. The younger end comes and goes between the mainstream AC station, perhaps a Country station and the Rock station in our market.
2207 But we are finding the younger end, the 35‑to‑40 year olds, are really adopting to this music. We play a fair amount of music from the '80s, which I think helps solidify that. You know, 1986, '87, '88 is 20‑year old music now, and then we play from the '70s and the '60s.
2208 And it's hard to believe. I mean, I hire staff now that were born in the late '80s and it always flabbergasts me that, you know, these people are over the age of 20 years old.
2209 So the mix of music just seems to work with that 35‑to‑64 group.
2210 I would say our average listener is either a man or a woman in their early to mid‑40s, say between 43 and 46 years of age, but the loyalty of the 45 and older group, simply because we are the most Gold based sounding station on the radio dial, really has a passion for our radio station as well.
2211 So we are serving both ends of the spectrum very nicely.
2212 COMMISSIONER MENZIES: So your listener is just as likely to be a parent of young children as a grandparent?
2213 MR. LARSEN: It's funny, in Alberta we have 40‑year olds that listen to us that have children graduating from high school or perhaps even entering university that started their families young. We have audience that is in that same age group of 45‑year old, man or woman or family, that have young children at home. It is really diverse.
2214 We always say that when we are doing our programming, we imagine a family sitting at the breakfast table, husband and wife, a couple of kids, doesn't really matter what age group. That's who we are targeting. We want to speak to the adults that are sitting at the table, but we don't want to present anything that would be offensive to the family as a unit.
2215 So it's an interesting audience and it is a very dynamic audience. No two of the people are the same age or exactly the same.
2216 COMMISSIONER MENZIES: Is there any particular income bracket that this would be aimed at designed for advertisers? Is it a household income of $50,000 and above, $100,000 and above, or as much as you can possibly get?
2217 MR. LARSEN: I will let Casey add to my comments here in a moment.
2218 Again using the BBM data from Lethbridge, which is really the only statistical data that we have to reference, we do very well with the higher income earners. We do well with average income earners as well, but in Lethbridge I do believe we would be the highest rated stations with people in the $100,000‑plus income bracket and perhaps even with the $75,000‑$100,000 000 range.
2219 Casey might have more information off the top of his head.
2220 MR. WILSON: It is definitely targeted more to a mature, fluent disposable income audience. We have seen that in our BBM data, where the $100,000 plus is quite high in the family income.
2221 To answer your question, yes.
2222 COMMISSIONER MENZIES: Okay. Thanks.
2223 What sort of synergies do you expect with your Lethbridge and Medicine Hat operations?
2224 MR. LARSEN: In relation to Red Deer or between ‑‑
2225 COMMISSIONER MENZIES: In relation to Red Deer.
2226 MR. LARSEN: The synergies we see as really ‑‑ there is a lot of operational backend synergies which everybody talks about. Lorene spoke about it in the section of the speech about our administration.
2227 We have a virtual private network that links our two existing stations together ‑‑ we would bring Red Deer into that mix as well ‑‑ which allows us to have our staff spread at each location and have a healthy amount of staff at each location, but those administrative people may be working on tasks that are common to the entire company.
2228 So, for example, accounts receivable would be tied to Clear Sky as a whole, not a particular radio station.
2229 Somebody in Medicine Hat might be scheduling traffic for two stations or vice versa. It gives us great flexibility with vacation coverage, that type of thing.
2230 COMMISSIONER MENZIES: Does that explain your relatively low admin and general expenses as a percentage of revenue?
2231 MR. LARSEN: It allows us to spread those expenses.
2232 For example, we just launched Medicine Hat. We launched that station with fewer staff than we have in Lethbridge on the administration end because in Lethbridge we needed a Director of Admin with Lorene, who does all of our accounting and bookkeeping and company‑wide functions, and we needed a reception/traffic person. In Medicine Hat we only needed the reception/traffic position.
2233 So as we get more radio stations, certain budgetary departments do lessen because we can spread the cost between the multiple stations.
2234 The other synergies that I really do see are in the news and information side, and not that any of our radio stations would produce newscasts for each other, but it does offer us the opportunity, when there is a large news story in Lethbridge or Medicine Hat or Red Deer, for those reporters to interact with each other and provide the information back to the market if it's relevant.
2235 The biggest example I can think of off the top of my head is there is a trial coming up for a young person that he and his young girlfriend had murdered her family in Medicine Hat. It's a national story, it's a big story. His trial has been moved to Calgary. It is a news story that is of interest to the whole province.
2236 If we had a reporter from Lethbridge or Medicine Hat ‑‑ likely it would be a Medicine Hat reporter now ‑‑ that would go cover that story, they would share that with our existing stations.
2237 So that is another area of synergies that we definitely see.
2238 On the sales side, training. You know, as we get more stations we are able to bring in better training and guidance and, you know, we do work with a sales consultant, and again those costs get spread each time we have another station and hopefully strengthen the company as a whole over time.
2239 COMMISSIONER MENZIES: Okay.
2240 Now, your supplementary brief indicated, to me anyway ‑‑ this is my reading of it ‑‑ that you were only looking for markets within which your format worked.
2241 So my question in terms of that: If Telelink had come back and given you information that Gold based AC wasn't the best format, would you have developed a different format and still applied for Red Deer, or would you just have said that market is not for us and backed away?
2242 MR. LARSEN: As a fiscally responsible small company, we have taken the approach with our research to try and use our gut instinct to initially identify the market hole and then invest in research to go either prove us right or prove us wrong.
2243 In three cases so far it has proven us right so we haven't had to face that challenge.
2244 But to answer your question, if Telelink had come back and said 35‑to‑64 is full, there is no void there whatsoever, we absolutely would have come back and gone into the market with a format targeting a younger ‑‑ or perhaps at that point taken the more traditional route of trying to put a format finder in the market and determine what the holes were.
2245 Looking at BBM data as our first gauge, the 35‑to‑64 audience has tremendous out of market tuning and very low tuning of some 61 per cent, where the younger and up to the age of 35 had 82 per cent loyalty to the local station.
2246 So it was an immediate clear signal to us that the 35‑to‑64 was a definite hole. The research supported that.
2247 But we are not devoted specifically to always targeting the mature audience. It just happens to be what we have become good at and it just happens to be what we believe to be the biggest hole in this particular market.
2248 COMMISSIONER MENZIES: Just help me if that's slightly different. In your brief, I think I was quoting you, your plans were to be "the experts small/medium focused on the mature audience".
2249 MR. LARSEN: Right. So in looking at these opportunities so far, including Red Deer when I wrote this application, that was still the case and we do remain focused on that.
2250 But if there is an opportunity for us to branch out, we do have the expertise and programming knowledge in other areas.
2251 I guess all I'm trying to say is that while we are becoming the experts and we are focused on that business plan and it is working well for us at this point in time, as we continue to grow and those holes do get filled by either us or other broadcasters, we won't look exclusively at that demographic.
2252 COMMISSIONER MENZIES: Okay. That's what I'm trying to get a sense of, is your ability as a small obviously emerging company to grow more branches on your tree in that sense.
2253 MR. LARSEN: Right.
2254 COMMISSIONER MENZIES: Because on the one hand where you are at right now shows a very clear sense of focus; on the other hand, I suppose it could be critiqued as saying it's too narrow and doesn't have this flexibility.
2255 MR. LARSEN: Right.
2256 COMMISSIONER MENZIES: So I guess ‑‑ how to put the question?
2257 What happens if you get a licence for Red Deer and one of the incumbents or another licensee switches its format ‑‑
2258 MR. LARSEN: Right.
2259 COMMISSIONER MENZIES: ‑‑ to Gold based AC, says "Hey, this is great research, this is great stuff; 35‑to‑64 is where it's at. Boom, we are going there." They take all their incumbency and institutional strength.
2260 How do you respond?
2261 MR. LARSEN: And that could very well happen in this environment where format is not regulated. Somebody could very well fill that void in the meantime.
2262 Our staff, by and large, would probably be ecstatic because our staff are quite young and would probably be more excited about presenting a youth oriented format that Gold based.
2263 Myself, my experience prior to becoming an owner, was in programming and I spent many years in Country music as one format. I was the assistant program director of Power 107, the CHR station in Calgary, for a number of years. So I personally have depth and experience in youth‑based formats, and we certainly have a young and dynamic staff that would be eager to jump in and be all over pursuing that opportunity as well.
2264 COMMISSIONER MENZIES: Okay. Thank you.
2265 Now in your first year you have given 8.6 per cent as a share and it strikes me, or it could strike somebody, as being a fairly ambitious start, particularly as in the following years you are anticipating annual market share to grow about an average of 0.7 per cent.
2266 I mean, I understand these things are ballparkish, but it seems a pretty quick start out of the gate and I would like to know what it is that makes you so confident you can achieve that size of share that quickly and then hold it.
2267 MR. LARSEN: The 35‑to‑64 void in Red Deer and the minimal or lack of tuning to the existing stations by that demographic clearly shows that there is going to be an instant impact whoever fills that void in that market.
2268 In Lethbridge, we signed that station on July 1st, BBM started September 1st so we were only on the air for two months until the BBM period started. The results came out and we were immediately the second station with that demographic 35‑to‑64 and the number three station out of five, adults 12‑plus.
2269 We filled such a void there right out of the gate. We went right back into ratings in 2008 S1 survey and solidified that even further. We are still number one with adults 12‑plus, which makes sense. We have really solidified at number three, adults 25‑to‑54 and are now the number one station adults 35‑to‑64, all in less than a year.
2270 I see the same pent‑up demand for an adult 35‑plus station in Red Deer and truly believe that you will see that sort of immediate impact, just like we did in Lethbridge, which took some of the competitors a little by surprise, but when you sit back and look at that service void that is there, it will be an immediate and a large impact right away.
2271 Medicine Hat is not rated, but the early reaction that we have had to that radio station has been exactly the same. It is: Thank you so much. Finally somebody is coming to play music for people over the age of 40, generally is what we are getting.
2272 This music, the '70s and '60s music, has been void on Canadian radio for a long time, partly because of regulation. As the '80s are now quite far behind us, we can add enough '80s music to meet the hit/non‑hit rule which is still in place. It has allowed development of this format to really come out in the last couple of years.
2273 And as the audience gets a little bit older, the '80s music becomes more palatable to that 35‑year‑old crowd, because we all grew up listening to it.
2274 I mean, I graduated high school in 1986 ‑‑ sorry, 1988 and that's the music I grew up listening to. I'm 38 years old now, so I'm just into the early part of the demographic that we are targeting.
2275 COMMISSIONER MENZIES: But what happens if it doesn't happen? What happens if the first number comes in and it's 4 per cent or 3 per cent?
2276 I guess what I'm asking here is: Do you have the human resource strength and the financial strength to adjust and adapt?
2277 MR. LARSEN: I think first off, to answer the question from a sales perspective ‑‑ and I will get Casey to help fill in a little more detail here ‑‑ the market share that we forecast or that comes out in BBM really only, by and large, impacts our national sales revenue and we specifically go very, very conservative on the national revenue.
2278 Approximately 10 per cent of our revenue forecast is national.
2279 Local retailers and local businesses, by and large, are buying on the passion of loving the radio station; it's their favourite station.
2280 We say in our station profile that we target the citizens that are business owners and moms and dads that live in the community, and by and large the business owners tend to be in the age bracket that we are targeting so they see it as a good fit locally.
2281 Regardless of where the BBM market share comes out in the first place, we think we will do very well and we would make our bread and butter on local revenue.
2282 If we ran into some challenges where we weren't hitting the revenue forecast that we put forward ‑‑ when I formed Clear Sky I ensured that I got a good investment partner to become my business partner in this company. I'm the operating partner and I'm a 50 per cent owner, but I do have a strong investment company behind me that absolutely guarantees that the funding will be there if we ever do fall short.
2283 With two radio stations now in Lethbridge and Medicine Hat, we also believe that our revenue generation and having been able to spread some costs over the two stations will allow us to get into a positive cash flow and be able to be self‑funded.
2284 We have line of credit with our bank that has extended us some credit facilities. So we are well‑funded and well prepared to see these stations through the start‑up.
2285 And believe me, the first few months require that extra ‑‑ we don't break even right away, that's for sure.
2286 COMMISSIONER MENZIES: No. That sort of segues a little bit into my next question.
2287 You have $1 million in revenue for year one for Red Deer in your plan. That's fully two‑thirds of what your year seven total. Again, it is sort of a quick start out of the gate so it would be helpful to have a fuller understanding of how you sell and how you anticipate picking up that large a percentage of what you see as your eventual market opportunity that quickly.
2288 MR. LARSEN: Sure. I come from the programming side and Casey's expertise ‑‑ he has sold in Red Deer for one of the existing radio companies, so he will have a lot better idea of how we are going to accomplish that goal and we've discussed it a lot.
2289 MR. WILSON: I guess to start off, from our experience in another market, in Lethbridge, with actually more radio stations, we have been able to come quite close to that number in Lethbridge already and we still have another quarter to go.
2290 From my personal experience of selling radio advertising in Red Deer and then moving to Lethbridge, it was a treat selling in Red Deer, the economy and the aggressiveness of businesses. People will come on board to new things just in a general sales atmosphere, I found with them.
2291 The national advertising was estimated quite low with this. I think there is a chance where that could even come in higher.
2292 But with the audience that we target, most national advertisers are focused on the 25‑to‑54, so it is really passionate of going after the business owners, the local people who tend to be, as Paul alluded earlier, our listeners as well in that business owner, affluent, disposable income.
2293 I would venture to say that most business owners, if they could have an eight share of a 35‑plus audience versus an eight share of a 15‑to‑35 audience, with the spending power of that 35‑plus audience, they would probably choose that.
2294 It makes sense that people have in our audience disposable income, so to target that as an advertiser, it fits.
2295 COMMISSIONER MENZIES: Okay.
2296 Now, just on news, a couple questions here.
2297 I'm trying to get a feeling to what extent you would be a new voice as opposed to another voice in terms of the market. You have a lot of newscasts planned, 96 I believe. What is innovative about your approach that is different from the status quo?
2298 MR. LARSEN: Sure. I will let Pat speak to this.
2299 COMMISSIONER MENZIES: Oh, and are you are going to cover rodeo?
2300 MR. LARSEN: Rodeo is big in central Alberta. Yes, we would definitely cover rodeo. In fact, we have the Medicine Hat Stampede coming up and we purchased a tarp for the chuck wagons there and in Lethbridge, which is quite funny because people associate rodeo reports and the rural lifestyle very much to Country music. By and large a lot of the farmers ‑‑ and my father‑in‑law is one of them ‑‑ grew up listening to Rock'n Roll music, and he gets on my case that we don't play enough Elvis Presley, but also wants to hear the farm reports and the ag reports and rodeo and that type of thing.
2301 So we do blend it in.
2302 I will let Pat speak to how we are going to be a new voice.
2303 From my perspective, we are a new voice in the sense that we are actually doing news on the radio.
2304 I know in Red Deer, I believe CKGY, the Country station, does do a very good job of local news and information. They have a very strong news director and an established newsroom. What we will find is we bring in a different format and by and large what we saw in Lethbridge, the only station that was doing any kind of a bit of news ‑‑ and it was in breakfast and at noon and in the afternoon ‑‑ was the Country music station.
2305 People were tuning to that station to get to the newscasts, not because they liked the music but because they could get local information, and then they would tune back to their favourite station.
2306 So when we came into Lethbridge ‑‑ and we expect the same to happen in Red Deer ‑‑ there will actually be a radio station that has news on the hour, just like in the old days of AM radio.
2307 I keep coming back to that. In Lethbridge in the year 2000, the last AM station switched from AM to FM. It went from a full‑service Country music AM station. CJOC‑AM was the call letters. It became Rock 106 and they have no news staff or newscasts whatsoever.
2308 So between the year 2000 and the year 2007 when we launched, that city had no local radio newscast whatsoever.
2309 QR77 out of Calgary had an 11 share audience in the city of Lethbridge because it was an AM news station that penetrated the market. Since we have come to town, that share has dropped in more than half and I truly believe we are quickly established as that large market share that you alluded to earlier because we are providing that local news.
2310 I will let Pat speak a little bit to the amount and the passion that we have for information.
2311 MR. SIEDLECKI: As Paul mentioned earlier about the fact of what we have done with the provincial election, with three hours of wall to wall coverage, with our reporters everywhere, with the capabilities of taking political scientists from the local college to comment at the top and bottom of each hour, numerous times throughout the course of the day if there is any breaking news, whether it be local, whether it be national or international ‑‑ because there are things that happen around the world that affect many, many people here ‑‑ we will break into local programming.
2312 One of the things we tag our newscasts, "The next news when it happens". And that's what we do.
2313 We are relevant, we are local, we are timely.
2314 You know, I think nowadays that is all important, not waiting; if something happens 10 minutes after your newscast at 2 o'clock, not waiting until 3 o'clock to have that information on. If there is something big that breaks, whether it be locally, nationally, internationally, provincially, we will cut into programming saying "This is what has just taken place. We will have more for you as we get more information".
2315 So that is one of the things that we really strive ourselves and work hard to produce.
2316 Our newscasts, you know, usually newscasts nowadays on FM stations are 90‑second updates or maybe 60‑second news headlines. On our major newscasts, 6:00, 7:00, 8:00 in the morning, noon, 4:00 and 5:00 in the afternoon, and the minors on the bottom hours ‑‑ the minor newscasts are three minutes of news. The top of the hours are five minutes of news. This is throughout the day, 6a to 6p. And we take a lot of pride in that.
2317 For instance, we have a very dedicated news staff in Lethbridge. We had three and a half to start. We have just added another part‑timer who actually has a lot of experience working with Global Lethbridge, who is a freelancer for us, because the demand is there and, you know, we are growing in that department.
2318 We all foresee this happening as well as we continue to grow in Medicine Hat, and of course if we are licensed in Red Deer as well.
2319 MR. LARSEN: I think when you ask about how we are going to be new and not just providing the same information as everybody else, by having ‑‑ probably not in Red Deer. We won't have the largest newsroom in the market. I think CKGY, because they do support news for a lot of their Alberta radio group stations in southern Alberta, do have quite a few news staff that are based in Red Deer. I'm not sure if they are working on Red Deer stories or not.
2320 But we will have a large enough staff to be out generating stories, covering meetings, and finding news stories.
2321 Pat can maybe talk about a couple of the big stories that we have broken in Lethbridge. We break some really big news stories in that market that again is new content that the other stations were not getting or perhaps were getting after a newspaper reporter broke the story.
2322 We will be a new news voice in that sense of going out and finding stories that just aren't being covered now.
2323 MR. SIEDLECKI: You know, we had an incident a few months back where there was a major house manufacturing company that was on the south end of Lethbridge. It was a very windy day and there was ‑‑
2324 COMMISSIONER MENZIES: No!
2325 MR. SIEDLECKI: Yes. Surprise, surprise.
2326 COMMISSIONER MENZIES: In Lethbridge?
‑‑‑ Laughter / Rires
2327 MR. SIEDLECKI: Surprise. I guess what happened was there was something happened within the plant sparking a major blaze and that spread quickly. Well, we had a reporter on the scene there within 15 minutes of that happening.
2328 That happened because a listener happened to be travelling in the area and saw what was going on and thought of us first to call because, you know, we ask them ‑‑ one of the questions I asked that listener myself was, "Why did you call us?" And they said, "Because you guys are the news leader in Lethbridge." And that is word for word.
2329 So that gives me the indication that people take a pride in what we do and that is what we want to bring to Red Deer as well, and I take a lot of pride in that myself.
2330 COMMISSIONER MENZIES: Okay. Thank you.
2331 In part of your business plan you described fully 45 per cent of your advertising coming from new radio advertisers. I understand that to be people who haven't advertised on radio before.
2332 In that, I am trying to get a sense of where they are advertising now and sort of whose lunch are you eating when that moves along.
2333 MR. LARSEN: Again I will let Casey expand on it.
2334 he one thing that jumps immediately to my mind was in Lethbridge I remember our very first client who was a significant client spending upwards of $35,000 to $40,000 with us, and I saw the traffic order come in and it was for a podiatrist or a company that specializes in podiatry.
2335 I phoned Casey and I said, "I have never heard a podiatrist on the radio before. Is this true they are going to spend that amount of money?" They are still one of our most substantial and large clients on the radio in Lethbridge.
2336 There are a lot of clients that haven't had a focused radio station to market on. They are using newspaper a lot, they are using magazines, and some of them, frankly, were just not advertising at all.
2337 They were going by word of mouth and Casey probably has some more examples.
2338 MR. WILSON: You hit on most of the points I was going to make, Paul.
2339 But newspapers is probably one of the biggest people that we are going to take from, if they are not advertising on radio already, just with the fact that is really who newspapers target, is the 35‑plus audience.
2340 We have seen some magazine spending as well come to us.
2341 We have also had some great success with higher ticket items that people really haven't traditionally had an avenue on radio with kind of the general focus in the 25‑year old range, you know, high‑end RVs, high‑end vehicles, be it Lexus or things like that.
2342 We have actually even had Calgary auto dealers that we have spoken with in regards to advertising their products in Lethbridge, just due to the fact that the Lethbridge market has never had an opportunity for them to go after.
2343 High‑end jewellery, things like that, where there just has never been a place for these people to advertise effectively on radio.
2344 COMMISSIONER MENZIES: Okay. Thanks.
2345 MR. LARSEN: When he talks about jewellery, we actually have a Rolex dealer in Lethbridge and they buy a full‑page back cover on a semi‑monthly city magazine that comes out. We certainly didn't take all of their budget from magazine, but they cut their magazine to a half page and put to rest on our radio station.
2346 I don't want to suggest either that we are taking all of the newspaper's advertising money but, you know, we try and encourage our clients to be multi‑faceted in their marketing. If they are going to add radio and they don't have money to increase their budget, we try and help find ways to reshape some of their other advertising. So they might take their half‑page newspaper and cut it to a quarter or they might take the colour out of the newspaper to a black‑and‑white to find money to spend on radio.
2347 And they are spending on radio for the very first time with our station in Lethbridge.
2348 COMMISSIONER MENZIES: Okay. Thank you.
2349 Just one quickly ‑‑ two more questions.
2350 The first one is you spoke about diversity in your presentation. Can you just briefly describe what you see as the cultural make‑up of Red Deer.
2351 MR. LARSEN: By and large ‑‑ I have the statistics in my package here and I forgot to mark the page, but we do know one of the largest visible minorities is Asian. There are significant First Nation populations.
2352 When I say "significant", it is probably 5 or 6 per cent of the population. In the small cities you don't see the same ethnic diversity that you see in the big cities. There is a diverse population there.
2353 Our commitment is really to not exclude anybody in our programming. For example, if a First Nations is having a pot luck supper or a fund raiser or a news story they want to get out, we will put that story on the radio, because we believe it is of interest to more than just that particular population. It is, in our estimation, a news event.
2354 We know there is a healthy population of diversity in Red Deer. It is by no means the majority, but enough that we want to reach out and make sure that we establish contact with the community associations that are in place in that city.
2355 COMMISSIONER MENZIES: Okay. How many licences would you recommend the Commission consider issuing from this hearing for Red Deer?
2356 MR. LARSEN: I mean, with all the economic analysis that we have done and looking at the two holes, we believe there is definitely room for two licences. There are two frequencies and we would be comfortable with two new licences.
2357 COMMISSIONER MENZIES: Thank you very much. That concludes my questions.
2358 THE CHAIRPERSON: Commissioner Patrone...?
2359 COMMISSIONER PATRONE: The new guy. Thanks, Madam Chair.
2360 Good afternoon.
2361 What, if any, differences do you see between the Red Deer market in comparison with Lethbridge and Medicine Hat?
2362 Are there unique aspects about the Red Deer market that Clear Sky feels it can capitalize on?
2363 MR. LARSEN: The most obvious one for me is there is an entrepreneurial spirit in Red Deer that doesn't seem to be as prominent in southern Alberta. In southern Alberta a lot of businesses have been generationally handed down, so we have car dealers that the grandfather started it, the father is retiring, it's going to the son now.
2364 In Red Deer ‑‑ and I think it is because of the proximity between the two major cities ‑‑ we have young people coming to start new car dealerships. So the entrepreneurial spirit and what Casey spoke to in terms of that willingness to just jump in and get it done and spend lots of money, it really is more prominent in Red Deer.
2365 Casey spent quite a few years in Red Deer, so he can probably add a little more to that as well.
2366 MR. WILSON: I think the key point is Red Deer is more aggressive. They are competing with Calgary, they are competing with Edmonton. You have two major markets. It is virtually impossible not to compete with those people as well.
2367 But it's just an aggressiveness. People in Red Deer, they love the city, it's growing, you know, it's ‑‑ booming is probably a better way to put it ‑‑ and they are taking part in that. It is not booming for no reason. People are aggressive. They are taking chances; they are coming on board.
2368 MR. LARSEN: I was going to say Casey grew up in Lethbridge, went off to Red Deer, moved back to Lethbridge. When we hired him coming from Red Deer radio and he told me the unit rates they are getting in Red Deer, I thought, "Great, we are going to be super wealthy in Lethbridge". And it is just not the same. Red Deer is a more established market in terms of that avenue as well.
2369 COMMISSIONER PATRONE: Is that why you see Red Deer as the most important link in the growth strategy for your company?
2370 MR. LARSEN: Well, I think for us it is the most important link in the sense that it is geographically close by.
2371 You know, we have applied for a lot of radio stations in the last few years. This is our sixth appearance for a radio application. This one strategically geographically makes so much sense in that we have a station in Lethbridge, one in Medicine Hat and one in Red Deer. So for our key staff to be able to get to each location ‑‑ myself included ‑‑ it's a major freeway that goes from Lethbridge up through Calgary to Red Deer, back down again to Calgary, over to Medicine Hat.
2372 That triangle represents for us really in any other market in this country, or certainly in Western Canada, the best opportunity for us to grow if we are fortunate enough to be licensed there.
2373 It is a key one for us. Not to say we won't continue existing as a company if we don't get it, but it is very important and strategically ‑‑ the fact that we are already operating in similar sized markets in the same province with economic drivers that are similar, it just makes so much sense for us to be pursuing this one.
2374 COMMISSIONER PATRONE: Has your economic research found that the labour force is, to a degree, fairly transitory and does that give you any source of concern considering that your targeted demographic consists of many that may very well decide to leave the area to go back to whatever area of the country they may have come from?
2375 MR. LARSEN: We did quite a bit of analysis and spent a fair amount of time in Red Deer and using Casey's experience from the market. The transient aspect of the workforce tends to be really a lot specific to the service industries that serve the oil and gas industry. So those people are coming in and out.
2376 Red Deer is one of the largest hubs for service industry for oil and gas. So those people, some live in Red Deer but work in Fort McMurray, so they might be considered transient even though they live there. But their spouse, their wife, their children actually reside in Red Deer. So perhaps that person's wife is working in local retail and she is not at risk of picking up and moving to Fort McMurray because they have chosen to reside in Red Deer.
2377 So with the businesses that we are targeting and the locally owned and operated businesses, we have found, like everywhere else, yes, there is a labour crunch and it's hard on everybody, but the transient nature of employees coming and going seems to be more specific to the oil and gas service industries which aren't traditionally advertisers that we would go after.
2378 COMMISSIONER PATRONE: I would like you to speak a little bit about your new music show "Maple Leaf Music" and how you intend to incorporate an hour of new music within the context of a largely Gold based radio format.
2379 MR. LARSEN: It is challenging in the aspect that our audience doesn't really demand a lot of new music. So we have to be pretty careful, as you have indicated, of how we mix this music into our programming.
2380 The show we run in Lethbridge runs on Sunday mornings and it runs between 8 and 9 o'clock. So it is an off prime show in the sense that it is not at 2:00 in the afternoon on a Friday. But we promote it throughout the week. We make sure people are aware of it. We have plans to put it up on our website.
2381 So people who are interested in finding that style of music and finding out about some new Canadian music definitely know where to find it, when to find it and how to get there.
2382 By putting it on on a weekend, you know, we are at no risk of it pushing our BBM numbers out of whack, for example, and putting our business plan, you know.
2383 And those artists do get airplay throughout the day as part of our commitment to play Canadian content, but it gives us an opportunity to sit down with an artist, interview them, put them on the radio, play two or three of their tracks and really talk a little bit more about their career, plug their website and let them feel engaged in the process.
2384 We found, by and large, the most interest from a listener standpoint happens to be when we put artists who are from that particular town or region. When we put a local artist who is from southern Alberta on that show, we know there is huge audience and we have done one or two live where we actually take phone calls and that type of thing as well.
2385 COMMISSIONER PATRONE: You spoke a little bit about your team coverage in the last provincial election. Do you have any audience listener numbers from that day?
2386 How would that, if you do in fact have those numbers, compare to the average listenership on, say, a day like that?
2387 MR. LARSEN: We don't have a specific numbers. I asked BBM if they would drill down and give me a one‑day report and they won't do that, unfortunately.
2388 The only indication we really got was the listener response after the fact.
2389 I suspect that by and large we had more listeners that night than we would traditionally have, though as the western hockey league broadcaster we have spoken word sports programming on almost every other night of the week for six months during that same period and our night time audience, we are, with all demographics I believe ‑‑ and I don't want to get in trouble with the BBM folks. But I believe we are number one with all but one demographic on nighttime radio, which I think has a lot to do with hockey and special programming like election coverage.
2390 COMMISSIONER PATRONE: Were you able to successfully monetize your election coverage with respect to selling ads and marketing and that sort of thing?
2391 MR. LARSEN: Well, our sales manager was all over me about trying to accomplish that. For the purpose of maintaining ‑‑ we really want to be careful about maintaining integrity during our news programming.
2392 I certainly resisted, you know, selling the election coverage to a sponsor, for example. We didn't do any of that type of thing.
2393 We ran our regular nighttime commercials, but I think we probably went 90 minutes or so before we actually stopped down and took a commercial break. Our nighttime load is not that heavy so we just had to catch up and play what was regularly scheduled.
2394 COMMISSIONER PATRONE: I'm just curious as to whether the economics of this might justify ongoing similar type of practices going forward.
2395 MR. LARSEN: In terms of...?
2396 COMMISSIONER PATRONE: Well, cost, relative to costs. I mean, you are bringing in extra reporters. Presumably you are hiring extra people for that night.
2397 MR. LARSEN: Right. Yes.
2398 COMMISSIONER PATRONE: You are spending more in order to bring that level of coverage to your listeners.
2399 How do you justify it economically I guess I'm asking you?
2400 MR. LARSEN: Things like election coverage and those special events happen fairly rarely so it is not really an ongoing additional cost. The extra staff that we brought in that night were first and second year journalism students from Lethbridge College. We are fortunate in Lethbridge that we have a broadcasting school and a college in our community that has a radio program, so we brought two young people in.
2401 We put them at the constituency offices that we thought were least likely to win. So they weren't key people on our programming, but were able to file reports and interview those candidates.
2402 We didn't pay them cash money. We bought them pizza and some beverages afterwards and really chalked it up to some excellent experience for them.
2403 The political scientist we had on the air, he is a Professor at Lethbridge College as well and we didn't offer ‑‑
2404 COMMISSIONER PATRONE: You gave him pizza as well.
2405 MR. LARSEN: We gave him pizza as well, yes. And he was quite happy for that.
2406 COMMISSIONER PATRONE: To what degree do you think you will be able to monetize a marketing demographic which at the top end I guess features people in their sixties and, as you are all well aware, advertisers traditionally view that particular demographic as kind of a non‑starter and compare that also with some of the lack of success that we have seen from some of the Oldies stations fairly recently.
2407 How are you going to monetize that group?
2408 MR. LARSEN: I think in terms of some of the lack of success with some of the Oldies stations that have been on the air partly has to do with the fact that by and large those stations have been on the AM band. We find the local retailer age is not a detriment per se.
2409 I remember going into ‑‑ our second big client was Eldorado RV and I went in to meet the owner of that dealership and I said, "Who do you want to target?" He goes, "Well, the people with the money are my age." He was 61 years old.
2410 So by and large those local advertisers don't look at the demographics as closely.
2411 We did not get really a ‑‑ maybe we got $5,000 in national revenue before we had a BBM. We do miss on some buys because we do skew 35 and older and a lot of the buys are based on 25‑to‑54. A lot of the buys are based on females 25‑to‑54, so unless you are very specific in that....
2412 That is why we have been careful to only allot 10 per cent in our first year for national advertising, and I think at the back end, at year seven, it might grow to 18 or 19 per cent, which is still 15 points less than a station that is traditionally targeting 25‑to‑54.
2413 COMMISSIONER PATRONE: Thank you very much.
2414 Those are my questions, Madam Chair.
2415 THE CHAIRPERSON: Commissioner Molnar...?
2416 COMMISSIONER MOLNAR: Thank you.
2417 I have been told that folks can't necessarily hear me in the back of the room so I'm going to try to speak a little louder this time.
2418 I just have a couple of questions.
2419 First of all, I just wanted to ask you a bit about your very aggressive expansion plans. I heard what you said about the benefits that come with growth, both for the employees you have and what you can deliver to your existing employee base, but obviously some of the additional synergies and cost efficiencies that come with growth.
2420 You appear to be on a very, very aggressive growth curve here. However, having started, I was just looking, Lethbridge started in July of 2007. So how many employees would you have there?
2421 MR. LARSEN: Lorene can correct me if I'm wrong.
2422 I think we have ‑‑ what are we, 16 fulltime ‑‑ 16 fulltime and three part‑time.
2423 Medicine Hat just launched with nine fulltime and we are adding a couple more positions there. Again, that station will have a slightly smaller staff then Lethbridge, because Lethbridge is our head office.
2424 So we are employing a substantial number of people.
2425 We have been able to attract some really great people who are excited about working for an independent company, one that gives them a lot of flexibility to be engaged in their job.
2426 In terms of aggressive growth, the CRTC calls for applications come and we don't control the timing, unfortunately, so sometimes the timing may seem aggressive because we are responding to calls for applications.
2427 I wouldn't think we are any more aggressive than any of the other applicants at this hearing, with the exception of a couple of the local guys that are here for their first time, in the sense that I have gotten to know a lot of these other companies and their people quite well because we all seem to appear at the same hearings over and over again.
2428 There have been a lot of calls for applications in the last two years.
2429 I think the fact that we won Lethbridge and got it on the air within a year of the decision, we won Medicine Hat and got it on the air within a year of the decision while we were building our first station at the same time, shows our ability not necessarily in a negative way to accomplish this growth.
2430 People are amazed at some of the staff that we have attracted to this company and it is because we are entrepreneurial, we are excited to give back to a career that we have all been in for years.
2431 Again, I can't reiterate enough the fact that I didn't just go out and start this company on my own. I'm not independently wealthy and millions of dollars in the bank to fund everything. I made sure that I was going to build a company that was well‑funded with partners that I have been associated with for over 20 years. They gave me my first job in radio in 1986. So we have a great working relationship.
2432 They are in it as an investment partner; I'm in it as the operating partner and the person who spent my whole career in this business.
2433 But from a funding perspective, we have no issues with the growth strategy and we have people who want to work for us and we are getting pretty full in the two stations that we already have.
2434 COMMISSIONER MOLNAR: Okay. Fair enough.
2435 I was thinking about this more from an operational perspective, because I know you did mention that financially you were capable of launching this and carrying it through. I was thinking more just the operational perspective, as you said.
2436 And congratulations for being able to launch within a year and do it a second time. I expect now Medicine Hat, being a new market, you need to put some particular attention to getting everything up and going there.
2437 MR. LARSEN: Sure.
2438 COMMISSIONER MOLNAR: You know, you are looking at getting into Red Deer with a 9 per cent audience share in your first year. As well, I would expect that would take particular attention.
2439 So I was just worrying more ‑‑ "worrying" ‑‑ I guess questioning the operational capacity to move this all so quickly.
2440 Perhaps two questions. First of all, would your expectation be to launch Red Deer within a year as well; and, if so, what is the capacity? Where does that capacity come to give the attention to this market?
2441 MR. LARSEN: I'm glad you expanded on the question because maybe I went off on a direction that you weren't really asking in the first place. So I'm pleased to expand on the direction that you wanted to take the conversation.
2442 In terms of the operational capacity, we are hiring outstanding people. I worked with Lorene in Calgary for five years at CKRY. Casey is born and raised in Lethbridge, grew up there, got experience in Red Deer, and I had a year, this past year, to work together with him to express my philosophies and how I would like our company to be built.
2443 Frankly, I have walked away from Lethbridge in large part over the last four or five months to focus on Medicine Hat and have spent most of my time and attention there and Lethbridge hasn't missed a beat.
2444 We are having months where we are beating our revenue forecast. We just achieved our annual budget with a quarter to go. The staff are very self‑sufficient and very dedicated and focused.
2445 We're putting that same infrastructure into our second station. So in Medicine Had we have hired a local retail sales manager who is on the ground and hopefully over this next year will be a person again that I can mentor, and that individual can take over that radio station as the leader.
2446 The same thing for me. If we get Red Deer, my time and attention will shift from Medicine Hat to Red Deer at the appropriate time and create that infrastructure and self‑sustainment at that station as well.
2447 You know, it hasn't been officially announced to all of our staff yet, but Casey is about to be promoted to the General Manager of our Lethbridge operation.
2448 I'm sure they are all listening on line now and having a heart attack.
‑‑‑ Laughter / Rires
2449 COMMISSIONER MOLNAR: It has now been announced.
2450 MR. LARSEN: It has now been announced, I guess.
2451 MR. WILSON: So it's on the record.
2452 MR. LARSEN: You know, in Medicine Hat my hope and goal is that the Sales Manager we have hired there will evolve into that same position within the first year.
2453 I didn't create Clear Sky Radio to move to a market and become the on‑site General Manager for the rest of my life. I mean, I had a great job as a General Manager with a great broadcasting company, and I created Clear Sky to build a small regional company and empower some young people.
2454 I have been very fortunate in my career to have opportunities when I was young and people that took a chance and that's what I'm trying to give back and create these radio stations that are by and large self‑sufficient with local management, but tied together with a common corporate philosophy or a company‑wide philosophy that ties everything together.
2455 We are putting great people in place and I have no concerns whatsoever.
2456 We launched Medicine Hat on Friday. I was there Sunday night until 2:00 in the morning, back at 5:00 a.m. for the first morning show, drove up here for the hearing, and I have no hesitation in taking a three‑week vacation at the end of this hearing and leaving the radio stations in good hands.
2457 So I think operationally we are fine.
2458 If we get the Red Deer licence, we are committed to getting that station on the air within the first year, partly because we go to these communities and we see a lot of people and we promise that we are going to ‑‑ if we are fortunate enough to be licensed by the government, we are going bring this new, exciting radio station to town and we get people all keyed up and geared up for it. And if it takes us two years to launch (a) we lose that momentum and (b), as I think Commissioner Menzies pointed out, somebody else is probably going to fill the void on us.
2459 If you license two, depending if it is a youth and an old one, it's not so bad. If you license two going after the same demographic, there is a bit of a rush to be first on.
2460 In Medicine Hat Rogers launched their new Rock station approximately two and a half months before us, so we are the second new station coming in after they have been on the ground for three or four months.
2461 It hasn't hurt us because they are a Rock station going after 18‑to‑34 and we are a Gold based station going after 35‑to‑64, so we have been able to coexist.
2462 But we do want to get the Red Deer station up definitely within one year, if we are fortunate enough to be licensed. And I think we have the people to do it. In fact, I know we have the people to do it.
2463 COMMISSIONER MOLNAR: Thank you.
2464 I wanted to just ask one question about the second station, assuming we were to launch two stations.
2465 You know, you mentioned that you felt that your distinctive ‑‑ what sets you apart is your news and information. That's what differentiates you. And yet when we look at the applications in front of us, we have many who would propose that that spoken word and local, you know, their local presence, their local news is what is going to set them apart.
2466 Would you see room within the market for two with an aggressive local presence?
2467 MR. LARSEN: Absolutely. I think local news, local information, being aggressively local is good for the market, regardless of everything else that goes around it, the music and everything else.
2468 Radio used to be about serving the community. I spent 10 or 11 years in a small company called Nornet that was little AM radio stations in places like Athabasca and Westlock and Drumheller, Alberta, communities of 4,000 or 5,000 people. We provided local news and information and engaged in the communities, and we have seen a move away from local information on radio, primarily with AM to FM conversions and the traditional big market thinking being that on music you have to play FM and news is out of place and who would do sports programming on FM.
2469 So I think two new licences providing a healthy dose of local information on the radio would be great for the city of Red Deer and the people that live there and would have no hesitation competing.
2470 In fact, the news department would be excited.
2471 COMMISSIONER MOLNAR: With any of the licensees?
2472 MR. LARSEN: You know, I guess logically when I look at the two very distinct opportunities for radio stations in this market by population growth and where the holes may be, the natural fit seems to be a licence targeting young and a licence targeting old. You have two new players that complement the whole spectrum of the City of Red Deer.
2473 We would compete with anybody that is licensed alongside us, absolutely. I think the city would be better served if both ends of the demographic pool got new radio stations, but we would happily compete with anybody else who is licensed, for sure.
2474 COMMISSIONER MOLNAR: Thank you. I have just one more question, and it is related to new distribution platforms.
2475 I see in your application that you stated that you plan to stream, potentially providing subchannels on the Internet for Canadian content, and so on.
2476 I wondered if you could just perhaps elaborate on that, tell me where within your company that skills and talents come and what is your plan for moving on to the new media platforms.
2477 MR. LARSEN: Absolutely. I mean on the baseline both of our radio stations stream audio. The FM signal is streamed on the Internet on both stations. It has been from day one on both stations.
2478 I personally believe that our success in the ratings is partly attributed to that. We have people call us every day that work in offices in Lethbridge that no longer have radios at their desks, but they have a computer and they have streaming audio.
2479 When we launched Medicine Hat the streaming company got things a little messed up and our Lethbridge stream was down for a day on Monday, and it was Memorial Day in the States where the stream originates, and we got flooded with complaints and they were all local complaints from people in Lethbridge that listen to our station every day on the Internet.
2480 So the Internet platform is hugely important to us and we are committed to pursuing it.
2481 Steaming is relatively easy because we can plug in our existing programming and the computer churns away in the back and connects with a server farm somewhere else.
2482 The subchannels is an idea that we had in the sense that we could create, yes, a 100 per cent Canadian subchannel that people who choose to seek that out and find it can listen to it. We could create a subchannel that is very nostalgia‑based, that plays a lot of music from the '50s and '60s that would really super serve the really top end of the demographics that we are pursuing.
2483 You know, traditionally people have thought that the older demographics are not on the Internet and they are not listening to streaming, and more and more I have to tell you that when you buy a new computer is so easy to stream now because it is all right there. You click the button; you don't have to install anything.
2484 We are finding even at the top end of the demographics, people are finding the Internet.
2485 The one question that we are still trying to wrangle with and see how it all shakes out is how much royalties are going to be charged on exclusive subchannel content that is not related to our over the air stream.
2486 We saw in the United States, for example, retroactive fees going back several years that almost bankrupted a lot of people. So we are cautious only in the sense that I believe some of the copyright stuff is going to be coming out in very short order and then we will have a very good idea of what our costs are. Then we have to determine how we are going to monetize the offset the costs.
2487 We really have some exciting plans for the Internet that once our radio company is up and running, we can turn our attention to. Sooner rather than later we will probably hire a young manager to take on the Internet specifically. At 38 years old it is well beyond me. Casey is in his late ‑‑
2488 COMMISSIONER MOLNAR: You need to be careful what you are saying right now.
2489 MR. LARSEN: Sorry. Sorry.
‑‑‑ Laughter / Rires
2490 MR. LARSEN: But the Internet, and in particular the really emerging technologies are very much a young person's experience.
2491 I have a young nephew who is just going into kindergarten and they have laptops in this kindergarten school in Calgary. I mean this kid could play video games on the computer at two years old. He had an Apple Mac and he could get on the Internet, find the site.
2492 This new generation is growing up with the Internet, and we will hire people that understand where the Internet has been and where it is going to take that direction for us.
2493 COMMISSIONER MOLNAR: So would it be fair to say at this point your plan is simply to stream your website and longer term you are looking at a more interactive, more fulsome web strategy?
2494 MR. LARSEN: I would say musically the streaming is already happening, so we are up and running with that. In the mid‑term I would say we will start turning some attention to the web.
2495 But our primary focus as a broadcasting company is doing great radio first and then exploring some of the technologies.
2496 The other thing is, in small markets where we operate some of the technologies, there is not enough mass population that it is really going to be huge right out of the gate, where, you know, if we were launching a station in Calgary and you have a million‑plus people to draw from, streaming our station over Internet cell phones might be something we would be really excited to do right away because of that large population base.
2497 But I don't know if we are that close to the farmer combining in his field listening to our station over his cell phone just yet.
2498 But we are excited about where the platforms are going. I think another applicant said earlier that it changes almost daily. So we want to do the basics now. Streaming audio is well established.
2499 If some of this new stuff comes, if there is something exciting that looks like it is going to stick for the long‑term ‑‑ you know, when we built Lethbridge and Medicine Hat, we are the only station in both markets that is ready to go with IBOC digital radio should Industry Canada license that spectrum to be used in Canada.
2500 I'm not sure if that technology is going anywhere or if it is already dead in the States. We will watch that, but that is another emerging technology that is not on the Internet that may be another opportunity for us.
2501 Our platforms are brand new. There is not one piece of analog wiring in our radio stations. It is all over computers, it is all digital. So there is another opportunity that if IBOC is allowed to happen in Canada, we can do virtually right away.
2502 Now, nobody is going to have a radio in Lethbridge to listen to it, so we probably won't do that. But we will see how it goes.
2503 There is some exciting stuff down the pike that we are excited to look at as we look toward the future of our company.
2504 COMMISSIONER MOLNAR: Thank you. Those are my questions.
2505 THE CHAIRPERSON: Thank you, Mr. Larsen. It has been very detailed. I just have a couple of questions.
2506 Just following along on Commissioner Molnar's question there, when I hear you talking about these subchannels, is the focus when you talk about that, is it your radio station and promoting your radio station and listeners to your radio station or is your notion more an entirely ‑‑ maybe not entirely, but a more independent entrepreneurial opportunity?
2507 MR. LARSEN: I think probably the latter. We have a lot of listeners that ask us why we don't play a certain style of music on the radio. Partly it is because we can't build a big enough audience, partly it is being competitive in the market.
2508 So when we look at subchannels, I was fortunate when I left Corus Radio, Newcap was coming to Calgary with a licence that they had bought which was a specialty Smooth Jazz station. We debuted in Calgary was a great market share and a really cool station that played instrumental music. Over time that market share eroded to the point that it was no longer a good business plan as a commercial FM radio station for Newcap.
2509 The music was great, the passion was great, you know, and had we created perhaps an Internet Smooth Jazz radio station that that small audience could go find on their own, we could have made a business model out of that.
2510 I think a lot of us are a little cautious mostly on the royalties side, because if royalties are charged we are absolutely prepared to pay for them, but we have to figure out a way to generate revenue then to offset that cost.
2511 That is really what is holding most of us up, I think.
2512 THE CHAIRPERSON: I want to clarify a point on your presentation today with respect to spoken word programming.
2513 The pages aren't numbered, but at any rate, you conclude spoken word programming totals 12 hours and 56 minutes. But in your brief at page 28 your total is 13 hours and 41 minutes. So it's a difference of about 45 minutes.
2514 I just want to make sure of the right number.
2515 MR. LARSEN: If it's appropriate, if I could have the opportunity to go back and calculate the right number.
2516 One of the two is right, I'm not sure.
2517 THE CHAIRPERSON: Yes.
2518 MR. LARSEN: But if I could do that and file it for you, one of those two numbers is absolutely correct.
2519 THE CHAIRPERSON: That's perfectly fine. Will you do that by Friday then?
2520 MR. LARSEN: Absolutely, yes.
2521 THE CHAIRPERSON: So whatever the difference is, it will be clear to us. You will set it all out.
2522 MR. LARSEN: Sure, I will do that.
2523 THE CHAIRPERSON: One other question I had.
2524 I see here on some information I have that you have 89 hours of live to air planned, but in another spot I see 126.
2525 I just want to know what is the right number live to air.
2526 MR. LARSEN: It would be 89, because we do run voice tracking in the evening hours and a bit on the weekends.
2527 THE CHAIRPERSON: Is your voice tracking locally produced, though?
2528 MR. LARSEN: By and large our voice tracking is locally produced. We do run a syndicated show called "The John Tesh Radio Show". Those voice tracks are provided by a U.S. company; John Tesh voices them.
2529 We have scheduled our own music and our own programming and our own local updates within that, but the voice tracks are not produced by us for that show.
2530 THE CHAIRPERSON: So the third party voice tracked, how many hours would that represent?
2531 MR. LARSEN: If we run ‑‑ and we are not sure that we will run that.
2532 THE CHAIRPERSON: Oh, you're not sure, okay.
2533 MR. LARSEN: I was referring, sorry, to Lethbridge.
2534 It would depend if that show was available or not. It would be 7:00 to midnight five nights a week, so that would be five hours times five, 25 hours.
2535 THE CHAIRPERSON: All right.
2536 MR. LARSEN: If we chose to run the show.
2537 THE CHAIRPERSON: All right. Thank you very much.
2538 So it is clear that you expect that there might be two licensed and that you are willing to compete. I understand that your advice is one appealing to the lower age demographic and one at the higher.
2539 That's what I hear you saying?
2540 MR. LARSEN: That would be what we would certainly be most comfortable with.
2541 THE CHAIRPERSON: Okay. This is then your two minutes to tell us ‑‑ sorry. Legal.
2542 Gosh, I will get it down right. I've got two weeks to do it.
‑‑‑ Laughter / Rires
2543 THE CHAIRPERSON: Legal, please. Thanks.
2544 MR. MORRIS: Just a quick question.
2545 We noticed that your spoken word programming commitments didn't include any time for announcer talk.
2546 MR. LARSEN: We have found historically the announcer talk is impossible to quantify. So in our previous applications and this one we have quantified the news and information and any scheduled spoken word.
2547 Any quantification for general announcer talk would be a best case, best guess on our part. Sometimes we get announcers ‑‑ we have a new morning guy in Medicine Hat that likes to talk a lot and we have other people that don't like to talk so much. So it is very difficult to quantify a specific number on that.
2548 MR. MORRIS: So you couldn't provide even just an estimate?
2549 MR. LARSEN: I could provide a guess based on ‑‑ we set out music clocks and we set out what we would like our announcers to talk about. So based on the format we have created, I could provide that information which is what we are striving for and I guarantee we are over delivering on it. But I could give you that number.
2550 MR. MORRIS: That would be great.
2551 MR. LARSEN: Okay.
2552 MR. MORRIS: Thanks.
2553 THE CHAIRPERSON: Mr. Larsen, then, now is your two minutes to tell us why.
2554 MR. LARSEN: Well, thank you, Madam Chair, Commissioners and CRTC staff.
2555 It has been great to appear before some new Commissioners and be engaged with some new and interesting questions.
2556 We are excited to continue down our path of strategically growing Clear Sky Radio in Alberta. We have established two very dynamic and community‑involved radio stations in this province and we would love the opportunity to bring our commitment to full service radio to Red Deer.
2557 We are very proud that we have delivered on what we said we would deliver on our other two applications, and you have my word that if we are licensed in Red Deer this very significant amount of spoken word commitment in particular will be carried out by our company.
2558 We have an exceptional team of young broadcasters who are anxious to continue furthering their skillsets and growing their careers and they would like to do it with our company.
2559 In Red Deer we have identified a robust and growing city that is underserved on the radio dial. We have become skilled at programming to and serving the mature adult audience, as well as the business community that markets to those consumers. We are targeting the fastest growing demographic in the City of Red Deer, one that already comprises nearly 40 per cent of the population of that city.
2560 We are proposing a distinct format that is not currently available in Red Deer, ensuring minimal impact on the incumbent broadcasters. We bring a significant commitment to spoken word and news programming, truly enhancing the diversity of voices in the Red Deer market.
2561 Red Deer is in close proximity to our existing stations in Lethbridge and Medicine Hat, offering administrative and some other synergies that are unique to our company that will be of benefit to a new Red Deer station, while further strengthening Clear Sky Radio as a whole.
2562 Our story and our goal has been consistent from our very first application and hearing appearance in Calgary back in February of 2005, I believe. To build a focused and independent Western Canadian broadcasting company is what we set out to do and we continue on that goal.
2563 To do that, though, we must grow at this important stage of our development and the application process for us is really the only way to do it. With the trading multiples of existing stations, we just don't have the financial power to buy stations, nor are there any for sale for that matter.
2564 We are young and we are experienced and we will be here for years to come, contributing compelling and innovative radio in the markets that we serve. We hope to have that opportunity to do so in Red Deer.
2565 It has been a great pleasure to appear before you today. Thanks for your attention and we will be anxiously awaiting your decisions.
2566 THE CHAIRPERSON: Thank you, Mr. Larsen and your team.
2567 We are now going to take a one‑hour lunch break. So we will be back about 2:05.
2568 Thank you.
‑‑‑ Upon recessing at 1302 / Suspension à 1302
‑‑‑ Upon resuming at 1409 / Reprise à 1409
2569 THE SECRETARY: Good afternoon.
2570 We will now proceed with Item 6, which is an application by Golden West Broadcasting Ltd. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer. The new station would operate on a frequency of 100.7 MHz, Channel 264C‑1 with an effective radiated power of 100,000 watts, non‑directional antenna height of 196.4 metres.
2571 Appearing for the applicant is Lyndon Friesen.
2572 Please introduce your colleagues and you will then have 20 minutes to make your presentation.
2573 Thank you.
PRESENTATION / PRÉSENTATION
2574 MR. FRIESEN: Thank you.
2575 Members of the Commission, Commission staff, fellow applicants, we are pleased to be here again today. We may be the only applicant to appear two days in a row, so we are hoping that you hear some similar themes.
2576 My name is Lyndon Friesen, President of Golden West Broadcasting and with me today are Elmer Hildebrand, CEO of Golden West, and Robin Hildebrand, our Director of Human Resources.
2577 We are here today to make a commitment to the people of Red Deer, a commitment to invest in the local community and to provide an unprecedented level of local service.
2578 Red Deer is experiencing explosive growth and we plan to bring Red Deer a new station with an unrelenting local focus.
2579 Strategically located in the middle of the Calgary‑Edmonton corridor, the population of the city is growing at an astonishing pace, currently at around 85,000 with close to 225,000 people in the general trading area. This population growth is linked to the exploding economic activity in the region and the retail sector is experiencing tremendous growth.
2580 The city continues to see very high levels of private sector investment, with new business starts driving a profitable economy.
2581 The leaders of Red Deer have given us every indication that the city will continue on its current course of growth and prosperity. Recently, Mayor Morris Flewelling described the need for our kind of local service, and this is illustrated in his letter accompanying our application in which he states:
"Golden West has a remarkable long‑standing reputation and strong commitment to community service radio, quality programming, local news and local information."
2582 He also clearly indicates in his letter of support for Golden West that Red Deer is more than capable of sustaining another FM radio station.
2583 The City of Red Deer is currently served by one local television station and four local commercial stations. These existing broadcasters are committed to serving specific groups of listeners, but the population in the area has doubled since the last licence was issued.
2584 This population growth has resulted in significant changes to the demographic landscape and both listeners and retailers are telling us that they find it challenging to get on air to reach the people they need to. We will provide a much‑needed additional opportunity for these people to connect with local businesses and community groups.
2585 We are committed to bringing a fresh new alternative to the existing successful radio stations, giving the people of Red Deer more choice and diversity, enhancing the overall radio service available in the region.
2586 Red Deer deserves a station that is committed to local service 100 per cent.
2587 The local people we talked to indicated a clear need for coverage of general community events and happenings, reporting not only on what happens with City Council, the Chamber and other business and civic organizations, but also reporting on the wide range of activities that often operate under the radar, cultural events, school plays and sporting events, the local oil and gas sector activity and the every day business in the retail community.
2588 Red Deer, like all markets, has access to any music they want from the Internet, satellite radio, and in this case out of market radio stations from the surrounding communities, Calgary and Edmonton. It's all there.
2589 We will provide a unique, dedicated FM radio station with a format that appeals to the whole family and never turns anyone away. This is a fabulous opportunity to provide the people of Red Deer with a radio station they can listen to anywhere, at work, at home, in the car and at play.
2590 And not only do they get great music, they get an exclusively local approach to gathering and delivering fresh local content to Red Deer.
2591 MS HILDEBRAND: Golden West Radio is committed to developing a strong local staff deeply committed to their community. To achieve this, we have a distinct and significant policy to hire local people to work at the radio station. These are people who have an inherent knowledge of the community and the region. They are part of the fabric of Red Deer. They are up to speed on current issues, activities and events. They are the community.
2592 MR. FRIESEN: If it matters to the people of Red Deer, it matters to us. Local news is the key component of local content. The cornerstone of our local content will be the most comprehensive fully staffed team of interactive reporters in the region. Our experience in other communities tells us this station will need at least five people to gather content for Red Deer. These reporters will fully cover ongoing news stories and community events, while also giving in‑depth coverage to an active sports community, a large and diverse arts community, agriculture and ranching and, of course, the booming oil and gas sectors.
2593 Red Deer's rapid growth is due in part to a diverse industry base, including thriving agriculture, ranching and the natural resource sectors. When events in these areas affect Red Deer, we will provide every detail of the local impact.
2594 But here is an example of a news story to show you what we mean.
‑‑‑ Audio clip / Clip audio
2595 MR. FRIESEN: The pulse of Red Deer is its people. Our staff will provide those people with what is important to them now, wherever they are, at home, in the car, at work and at play. We will bring them conversations with the Mayor, the retailers, the Chamber, the coaches and the artists, giving each one a local voice in the community.
2596 Comprehensive local news is so vital that we do not plan to subscribe to any national news services. It is not necessary to scour the daily newspapers of the major urban centres just down the highway; instead, our time is invested locally. International or national stories that affect the community will be delivered in a local context.
2597 MS HILDEBRAND: To support this fully staffed news room we will hire a full contingent of local on air staff, all with their own deep personal ties and interests in the local community. These people will also gather content in their day to day interactions in Red Deer. Fully equipped with microphones and cameras, the result will be fresh, relevant content that keeps pace with what is going on in Red Deer.
2598 MR. FRIESEN: With years of commitment and experience in promoting and supporting local sports, Red Deer will benefit from full coverage and interactive promotion of local sporting events at every level.
2599 In our discussions, we found the community wants more than just top tier national and international scores and results; they want the activities of all the local amateur teams, whether it is the kids on the baseball tournament or adults curling bonspiel.
2600 MS HILDEBRAND: As we explored Red Deer, we discovered an incredibly diverse and vibrant arts community. The Red Deer College is a major force in the arts and music community and has created a wide range of programs committed to local arts and music. Even with that, the local music scene still struggles for local recognition and community encouragement.
2601 In his attached letter of support, Dean Scott, a local Red Deer musician, says:
"There is in fact an extensive arts and music scene in Red Deer. This community exists in an almost underground capacity at times as the result of a lack of community awareness."
2602 We can change that by giving this group a local voice. Red Deer's population is young and productive. Music and arts groups are a huge attraction for both young families and young people. An FM radio station with our kind of local community focus and bright music choice can bring these groups together.
2603 MR. FRIESEN: We discovered a huge opportunity in Red Deer, an entire demographic looking for a radio station to deliver their type of music. The existing radio stations are playing Country, Classic Rock or Hot Adult Contemporary, formats that are aimed at very specific target groups. We will provide a bright Adult Contemporary radio station that will appeal primarily to adult women and to their families.
2604 It is a Pop Gold based FM radio station with a softer blend of music that will deliver more time spent listening than almost any other format, because it is a mix of the best adult hits of today, combined with timeless classics, familiar music they will listen to all day at home, at work and in the car. It is a music alternative that is mature and family friendly. It is music with feeling and emotion, songs that strike a chord with these listeners.
2605 Playing up to 14 songs an hour from a library of over a thousand records, this music intensive format will be built on artists that have huge appeal, especially to women: Céline Dion, Billy Joel, Chantal Kreviazuk, Elton John, Jann Arden, John Mayer, Michael Buble, Sarah McLachlan and Bon Jovi, just to name a few.
2606 It is a radio station this demographic loves and is searching for on the dial and one they will never have to turn off.
2607 Here is a sample of the music we will offer to Red Deer.
‑‑‑ Audio clip / Clip audio
2608 MR. FRIESEN: Again, that sample of well‑known performers and incredibly popular songs was 55 per cent Canadian artists, which tells you again that our commitment to a minimum of 40 per cent Canadian content will energize the music available locally in Red Deer.
2609 Local musical talent is everywhere. Golden West continually recruits and supports local talent, providing local exposure and promotion to a host of emerging artists and local musicians. We will produce and air a weekly half‑hour program featuring made in Red Deer music, a weekly showcase for emerging artists.
2610 It is all about giving exposure to local groups and musicians showcasing their talent and their local brand of music. There is an amazing source of local artists, singers, songwriters and musicians from the region. There is more than adequate material readily available. The sheer number of local musicians in the region is incredible.
2611 As well, we will create a new and separate music category specifically for emerging local artists scheduled a minimum of three times a day, seven days a week, all in prime time, 6:00 a.m. to 6:00 p.m.
2612 Over the years we have partnered with thousands of local artists with similar initiatives in the Prairies. They tell us they find this type of promotion and airplay to be extremely helpful in jump‑starting their careers because it is local radio that brings their music to the communities. It is music local audiences can get excited about.
2613 That is what we will do on the radio and those benefits will be multiplied by bringing Red Deer their own new media platform. It is an interactive Web 2.0 format that is a source of online content with an exclusively local focus, updated several times each day seven days a week, focused exclusively on local information.
2614 We know firsthand how rapidly this becomes an integral part of the community, delivering a continuous flow of reliable information, a platform that generates astounding interaction among the people and the community it serves. We brought these sites to other communities and traffic and volume statistics are absolutely amazing.
2615 As key sources of information that people trust, the sites become important on a daily, even hourly, basis. This is another example of our commitment to local information and serving the community.
2616 We anticipate the same reaction in Red Deer.
2617 Again, this is not a radio station site, although we will have one. It is all the content, information, surveillance, resources and entertainment Red Deer will get from the radio station delivered on demand in the new media format Red Deer wants and needs.
2618 The community is looking for and ready for reddeernow.com.
2619 On site weather equipment will display real, current and local conditions, whether it is school or daycare closures, traffic snarls, extreme weather conditions or any event that will have an effect on the day. When news goes on the air it is immediately available online, refreshed regularly all day.
2620 Interactive community based reporters will frequently relay local information to new media users about relevant issues in their community with video, discussion boards, feedback and a wide range of user generated content. Red Deer will have access to classified ads, job listings, community entertainment and more 24 hours a day, seven days a week.
2621 As you can see, by approving our application the City of Red Deer will enjoy an exciting new local musical choice. They will get a crystal clear FM radio station and a new media partner in reddeernow.com. This is what community service is all about.
2622 As a family operated radio company, we have never wavered from our commitment to the communities we serve, and this new FM station for Red Deer will continue that tradition.
2623 MR. HILDEBRAND: Women, all locally hired and trained, currently represent 40 per cent of our management team and an incredible 72 per cent of our sales force. This past February, as we told you yesterday, we were recognized by the Canadian Women in Communications with the Employer of the Year Award for being leaders in hiring and advancing local women into positions of leadership.
2624 This year, for the third year in a row, Golden West was named one of Canada's 50 best managed companies.
2625 Both of these awards are a testament to our long‑standing commitment to local community service.
2626 When it comes to Canadian Content Development, we note that some of the applicants have offered to provide much more direct in Canadian content funds than we have. So if it's an auction, then we won't win. We feel it much more important, however, and that it has as much impact or more is to provide in‑depth community service that serves local and emerging artists.
2627 Our weekly half‑hour program featuring local artists will have a value of more than $200,000 alone in real exposure over the first licence term.
2628 We have also committed to $4,000 annually for seven years to the Red Deer College Music Department, another $4,000 annually for seven years to the Red Deer Symphony, $2,000 annually for seven years to Red Deer High School music scholarship, $10,000 annually for seven years toward the production of CDs for local artists, and $15,000 annually for years six and seven for artists that have not yet emerged.
2629 The total commitment is $200,000 over the seven‑year term.
2630 We are aware of the fact that other applicants are projecting much higher revenues than we have stated in our application. Again, as the Commission knows, we tend to be conservative in our estimates and promises. We then go above and beyond in developing our audience and our business. As a rule, we tend to deliver more than promised in our original application.
2631 This will be no different in Red Deer. We will have little impact on existing broadcasters since it is our goal to develop new local business and recruit and train new local staff.
2632 Our unique brand of radio appeals greatly to communities in Western Canada and we are certain the same will be true of Red Deer. This is a huge opportunity to bring diversity to Red Deer, to bring new local service and a terrific new music format.
2633 As stated on many occasions, we are comfortable operating in the shadows of large urban centres as we do in many other communities where we work. It is our desire to serve the City of Red Deer and we know we can provide the kind of radio station that Red Deer wants.
2634 As Mayor Flewelling said in his letter of support, our application would:
"... serve only to enhance the overall service of the well‑established radio stations already in place and thriving in our community."
2635 Local community service radio is essential for growing Alberta communities and we are ready and willing to provide it.
2636 That, ladies and gentlemen, concludes our presentation. We are now ready to answer your questions.
2637 THE CHAIRPERSON: Thank you for your presentation.
2638 Commissioner Molnar will commence the questioning.
COMMISSIONER MOLNAR: Thank you.
2639 Good afternoon.
2640 As you know, we did this yesterday and some of these questions are going to be very similar. I do want to not presuppose any answers. It's a new application and a new licence opportunity. So while it may seem like I'm repeating the questions of yesterday, I think it's fair that you get the opportunity to answer for this licence application as well.
2641 I'm going to begin with just a couple questions on the format.
2642 You have said ‑‑ and I apologize, I'm going quickly through the information you provided here today.
2643 But I believe you said ‑‑ sorry, I'm just going to find it here ‑‑ that you have found a demonstrated need for the format. I'm just trying to find your words in here.
2644 You said in music on page 8:
"We discovered a huge opportunity in Red Deer, an entire demographic looking for a radio station to deliver their type of music."
2645 I wonder if you could tell me what work you did to discover this gap or this target, this niche, if you will, that required filling.
2646 MR. FRIESEN: Sure. What I won't be able to tell you is the kind of research we did scientifically through any kind of research, but I will tell you that what we did do is we spent a lot of time in the community talking to people. Just one drive into the town and you could clearly identify the biggest opportunity, certainly from our perspective.
2647 We did use economic research. We used things like the TD Economic Reports and other research. We did our research.
2648 But when we pulled into town and talked to people, we found that by talking to people ‑‑ and we talked to everybody from community leaders and we were very surprised that nobody else had talked to them, and certainly we were starting at the higher level and then going down.
2649 They were surprised as well that our approach to trying to understand their community and the kind of service that they wanted, our brand was just embraced by them, and you saw it in the letter from the Mayor.
2650 So we talked to everybody, from people at the rink, to organizations, to the music people, to the community leaders and that, I guess together with our 50 years of broadcast experience and of community involvement, spoke loud and clear.
2651 There is an opportunity here that is not being provided, and that is how we came to that determination.
2652 COMMISSIONER MOLNAR: Okay. Thank you.
2653 So the demographic, just so I understand, is 25‑to‑50 year olds and targeted toward adult women?
2654 MR. FRIESEN: Yes.
2655 COMMISSIONER MOLNAR: That's what you are looking for?
2656 MR. FRIESEN: That would be our goal.
2657 COMMISSIONER MOLNAR: Okay. Would you be able to tell me, having looked at ‑‑ I assume that you have looked at the applications that are here before us for the Red Deer market.
2658 Would you be able to tell us how your format would compare, for example, to those that would be proposed by, for example, Clear Sky or Harvard?
2659 MR. FRIESEN: I think it would be nearer to a Harvard application. I think theirs was a mainstream AC. This would have a similar approach.
2660 Again, it is a Gold based Soft AC station is what we are proposing. It is a variety station. It has lots of emotion.
2661 The other thing that we wanted to make sure was that it is the kind of music and the kind of station that attracts people ‑‑ the kind of people attracted to this station are mature and they are with money. So this is a very sales friendly kind of radio station and it will have huge adult appeal is how we plan to do it.
2662 COMMISSIONER MOLNAR: Would you suggest that it would provide a greater amount of programming diversity than, for example, the Harvard station ‑‑
2663 MR. FRIESEN: I haven't heard their ‑‑
2664 COMMISSIONER MOLNAR: ‑‑ or that it would fill a niche in any way specific?
2665 MR. FRIESEN: We haven't heard all of them yet, but I think the diversity comes in the brand and the style of local approach that we take.
2666 We will absolutely commit to more resources and gathering local information and providing a news and information service to the community unlike any that we have heard so far. Certainly that approach will be very unique and blended together with this music.
2667 When we do this, this is aimed right at families, as they are going to work, as they are preparing, as they are at play. This information matters to young families and that is why this approach, we think, will make a lot of sense and be unique.
2668 COMMISSIONER MOLNAR: Okay, thanks.
2669 I'm going to come back to the whole issue of spoken word, and I understand that is a big part of what you define to be your differentiator.
2670 I would like to speak for a little bit about your revenue projections.
2671 Mr. Hildebrand, you noted in your opening remarks that you recognize that your revenue projections are conservative. I think if you looked at the applications that were in front of us for this, very conservative, in fact the most conservative of anybody who has filed here today.
2672 I would like to understand that, because I think it is fair to say conservative and it might be another thing to say it is understated, if you will.
2673 So I'm just going to reference some information, and I'm not sure if you have done this work or not. But based on some of the other applications that came forward, for example if we look at Vista, they would have projected for each 1 per cent audience share to generate about $131,000 per share point; Harvard, $192,000; CJVR, $181,000; so very significant revenues in comparison to what yours would show, which is $61,000 per tuning point.
2674 MR. HILDEBRAND: Yes.
2675 COMMISSIONER MOLNAR: Is there anything you could provide to us as rationale for those estimates or reasons behind that?
2676 MR. HILDEBRAND: Well, I guess it's similar to what we said yesterday in that when we go into a market we like to be, you know, conservative and if we have a business plan that works at that level then we know that we can grow the business going forward.
2677 In a market like this it may well be possible to do more business, but I think it is also fair to say that our projections would have the least impact on the incumbent broadcasters in the city, so that it would be probably the easiest one to approve from that standpoint.
2678 COMMISSIONER MOLNAR: Fair. Let me just follow up on that.
2679 I believe you projected a 5 per cent impact on incumbents?
2680 MR. HILDEBRAND: Yes.
2681 COMMISSIONER MOLNAR: Whereas others are projecting in the range of approximately 25 to 30 per cent impact.
2682 Is this a projection or is this an approach to the market that would suggest somehow you would have a lesser impact on the incumbents?
2683 MR. HILDEBRAND: Well again, I think the way we generate our business probably leads us to feel that we would have a smaller impact since we will likely be looking to generate much of our business outside of the current big radio advertisers in the city, because we have found in most communities there are a lot of potential advertisers that are never seen by radio stations.
2684 That is why we feel that we would take relatively little from the incumbents, but more so develop business that is now either going to flyers or other forms of advertising, newspapers, as we heard this morning.
2685 That is basically our philosophy.
2686 COMMISSIONER MOLNAR: Okay. So it is an approach to the market ‑‑
2687 MR. HILDEBRAND: Right.
2688 COMMISSIONER MOLNAR: ‑‑ where in fact you will have a lesser impact on an incumbent.
2689 MR. HILDEBRAND: We feel that way, yes.
2690 COMMISSIONER MOLNAR: Okay. Is there any experience you could provide us where you may have entered another market and that was the outcome?
2691 MR. HILDEBRAND: Well, certainly we have launched many radio stations in the last number of years, and by and large that is the process that has worked for us and we feel that could work here as well.
2692 We find, as we have said earlier at hearings, that we have a certain template that we have developed that works in all communities and if we stay true to that, then the economic model actually works.
2693 We noticed that some of the applicants are also projecting a fairly high revenue going into the market, but then they are also projecting big losses for the first year or two, you know some as high as $700,000 of losses on a revenue of $1 million.
2694 That is an economic model that doesn't make a lot of sense to me. We like to generally generate as much revenue as we need to pay our bills, and so we are projecting only very modest losses initially, and then grow the business from there.
2695 COMMISSIONER MOLNAR: Fair. I apologize for having to continue this.
2696 MR. HILDEBRAND: No, no.
2697 COMMISSIONER MOLNAR: I'm just trying to understand this.
2698 Because your market share, your audience share estimates are ‑‑ you know, they are in line, and if I look in year one you would project a 12 per cent audience share by year one.
2699 MR. HILDEBRAND: Roughly, yes.
2700 COMMISSIONER MOLNAR: So a 12 per cent audience share but only $60,000 per share point versus $180,000 per share point, with relatively little impact on the incumbents. You know, there is nothing there with the price of the advertising or anything. It's just ‑‑
2701 MR. HILDEBRAND: You know, again, certainly the market share for us is always an estimate because nobody knows, and historically speaking it is borne out later on when the station goes on the air. I mean, you don't know exactly where your market share will be. You were hoping that it would be that high, but we don't know that because we can't determine that the same way as we can determine our revenue.
2702 If we go out with a sales team, we know that this kind of revenue can be generated. So we just feel comfortable with presenting it that way.
2703 COMMISSIONER MOLNAR: Would you say you are more comfortable with your revenue projection than your audience share projection?
2704 MR. HILDEBRAND: Certainly we are, yes.
2705 COMMISSIONER MOLNAR: Yes? Okay.
2706 MR. HILDEBRAND: In our case we can more easily define that than we can project an audience share, because audience share also takes into account what will happen with the other stations in the market.
2707 We are assuming, as others are, that you might license two stations, so that will have some impact on the existing radio stations. And existing radio stations may likely crank up their activities to try and hold the audience they have.
2708 So I think the audience share is always much more of a guess than, from our perspective, the revenue that we know we can generate if we follow time‑tested procedures that we have in place.
2709 COMMISSIONER MOLNAR: Thank you.
2710 And just following up, it was something I wanted to follow up on, and that was the expectations or your projections as it regarded the number of stations, number of new entrants into the market.
2711 So this is assuming more than one potentially entering?
2712 MR. HILDEBRAND: Yes. We would assume that the Commission would license two stations in Red Deer. When we look at markets like Brandon, which are half the size of Red Deer that already have four stations, then Red Deer could easily, I think, absorb two.
2713 Red Deer, as we have said, has basically doubled in size since the last licence was issued. And Red Deer, as everyone says and that is confirmed by a variety of reports, is a very hot market as opposed to Brandon, which isn't.
2714 So when we looked at this we felt certain that the Commission would provide at least two new licences for the city.
2715 COMMISSIONER MOLNAR: Okay. So that's your estimate.
2716 MR. HILDEBRAND: Right.
2717 COMMISSIONER MOLNAR: And that is your estimate regardless of who might be the second station in.
2718 MR. HILDEBRAND: I think it wouldn't make a lot of difference who else would be licensed.
2719 Again, we would go about our business carving out our audience with our community service formula that we know works. So we would set about our task of generating that audience and generating the revenue.
2720 COMMISSIONER MOLNAR: Okay. Thanks.
2721 I'm going to move on to questions about the news and spoken word, which I'm sure you are anxious to speak of.
2722 I see here today that you provided us with a revised Chart 1, so you have incorporated Sundays. So that changes the total spoken word in a week to seven hours and 35 minutes.
2723 MR. FRIESEN: Correct.
2724 COMMISSIONER MOLNAR: Okay. And that again is local news and sports, and it is not containing announcer talk?
2725 MR. FRIESEN: It does not include announcer talk or weather.
2726 COMMISSIONER MOLNAR: Or weather, okay.
2727 I believe, if I'm remembering correctly, yesterday you were asked as an undertaking to provide an estimate that would incorporate all of it.
2728 MR. FRIESEN: We will provide that. We will undertake to provide that, yes.
2729 COMMISSIONER MOLNAR: Okay.
2730 MR. FRIESEN: And we will do that here as well.
2731 COMMISSIONER MOLNAR: Okay. Very good. Thank you.
2732 MR. FRIESEN: Before the week is out we will have it.
2733 COMMISSIONER MOLNAR: Yes. By Friday I think was the date; thank you.
2734 Yesterday we got into a bit of a discussion as it relates to local news and truly understanding the commitment to the news and, you know, what is 100 per cent local and what is local versus regional versus national.
2735 I will just let you know right now we are going to have that same conversation.
2736 MR. FRIESEN: Good. Terrific.
2737 COMMISSIONER MOLNAR: Okay. I am trying to understand, to get a true understanding of what the people in Red Deer would have access to through your station, through the news that you are providing.
2738 Clearly you are providing a significant amount of news. It's focused locally. But could you tell me again ‑‑ for example, we heard this morning from Vista, they said roughly, you know, four in five of their news stories are going to be local, but there is also ‑‑ and some days it is all local if that's where the news is, but if there is a significant regional event or national event, that comes on.
2739 So for them, they were saying it is roughly four out of five.
2740 Would you have something like that, some kind of estimate you could provide us so we can better understand how regional and national issues are being ‑‑ how your audience would be informed of the regional and national issues?
2741 MR. FRIESEN: I think the local stories are easy to understand and likely easy to articulate. The other ones ‑‑ you know, I think where we might be getting a little hung up is on how we describe, how we cover the more regional and international stories.
2742 I guess yesterday's issue with one of the Ministers in Ottawa, how we would have handled that story, because it does have national ‑‑ it's a national story. It deals with a Quebec Minister, so it has nothing to do with High River, Alberta or Okotoks or Red Deer. But our approach to that would be to contact our local MP and get his take on how that is going to impact the community and the country.
2743 So we do cover those stories. We don't avoid them. What we try to say and what we then do is before we really get to the story we want to get a local angle on it so that how does it impact the local people and what are the reactions locally.
2744 So it is not that we don't talk about national and regional issues. It is how we talk about those, and that is how do they affect this community. So if it is something that is a provincial matter that is going to affect the city, we want to get city leaders and city people involved in that discussion to talk to us about that.
2745 We won't just take a rip and read story from a national service provider and provide that kind of ‑‑ that kind of news is available everywhere. We don't have to spend any time more ‑‑ everybody when they get up in the morning has changed their pattern. We don't just listen to the radio any more. I think we check the Internet, we check some e‑mail, and by the time we are down the path anywhere there is a hundred places to get that kind of information.
2746 Our unique brand will then just take and make it local. So it gives a compelling reason for audiences locally to come to our station and see how it impacts them. That is our approach to it. I'm not sure if that provides enough clarity, but certainly that is our approach.
2747 That national example would be likely the best way to describe it.
2748 COMMISSIONER MOLNAR: Fair enough.
2749 You know, I was thinking about this last night, thinking about a farmer on the field who is very linked in to the radio so they would want to know that there was an earthquake in China.
2750 MR. FRIESEN: Of course.
2751 COMMISSIONER MOLNAR: And fair enough, there is Internet and there is a lot of different media, but when you are driving the truck or you are driving ‑‑
2752 MR. FRIESEN: And on those big ones, we won't miss it.
2753 COMMISSIONER MOLNAR: Yes.
2754 MR. FRIESEN: We do deal with those issues and then very quickly get to a local angle.
2755 On our Internet sites you wouldn't see that story because there are a hundred Internet sites that have those stories.
2756 COMMISSIONER MOLNAR: Right.
2757 MR. FRIESEN: What you would see is the local take on it. So we may not be first to market with that story, but we will provide a local angle.
2758 COMMISSIONER MOLNAR: Okay. Thank you.
2759 My colleagues may have more questions, I'm not sure, on that aspect.
2760 MR. FRIESEN: Sure.
2761 COMMISSIONER MOLNAR: But I'm going to continue on, thank you.
2762 Again, just to clean up a couple of things with the application: live to air programming. You did not specify in your application the number of hours a week that you would be live to air.
2763 Do you have that information when you will be live to air or are you always live to air?
2764 MR. FRIESEN: We won't be live to air during the night. Again, I didn't have that piece in there.
2765 But we will start at 5:30 or 6:00. For the record, I would say 6:00 and we will have staffing in the building until at least 9 o'clock at night.
2766 COMMISSIONER MOLNAR: Okay, thanks.
2767 Another question that may be a bit familiar and that is related to synergies.
2768 We talked about that yesterday but I would like to just talk about it again today to ensure we understand as you enter Red Deer in the financial forecast you put forward, which recognizing it is potentially conservative on the revenue side, but nonetheless it is PBIT positive.
2769 You have incorporated some synergies, some cost efficiencies in there when creating that forecast, I assume, and you move forward with synergies in your business?
2770 MR. FRIESEN: Our entire network is designed with all of the synergies built into it from a back room perspective. We don't try to get synergy in the newsroom. We don't try to get much synergy, other than in some specialized production on the on‑air side. Specialized production means jingles and those kinds of things.
2771 The synergies come from engineering, traffic, creative, accounting, and those back office functions that, you know, if you were a stand‑alone station you would have to have people in all those areas. In those areas we have a central office that is really technically connected to all the stations.
2772 Those functions happen centrally so these new stations really don't require any of those people or any of those costs.
2773 COMMISSIONER MOLNAR: So you have no synergies in the programming end?
2774 MR. FRIESEN: Other than expertise.
2775 Maybe, Elmer, you want to go further on that.
2776 MR. HILDEBRAND: Go ahead.
2777 MR. FRIESEN: The synergies that we get are again like other operators. We do have access ‑‑ the big story in High River, Alberta, and Okotoks over the last few days has been that of course they have flash flooding in the communities and they had to do an evacuation in the middle of the night. Those are the kind of stories that we then can share if they affect the other pieces of the province.
2778 So there are some synergies there.
2779 But from a programming perspective, you know, other than to supply and provide expertise in production, in the music selection, those kind of synergies come from leadership, not from day to day.
2781 MR. HILDEBRAND: I think other than those that have been already mentioned, the synergy would be maybe from the overall experience that the company has gained over the years on how to do relatively good community service radio.
2782 We have a corporate philosophy that has taken us down this path and so we have a lot of experience with that. That's a synergy that is hard to quantify, but that is always there as a sort of an overarching tent over all of our stations.
2783 So that is certainly an important piece of the synergy, but it is very hard to sort of quantify.
2784 COMMISSIONER MOLNAR: I just want to back up one more time to these financials because, as I said, your financials are positive from year one on, with a relatively low ‑‑ well, a very low revenue estimate relative to what others would estimate or project for this market.
2785 So I expect you did in fact on your operating costs take into consideration what it would cost you to do this, given your supporting network and so on.
2786 So, to me, what sort of falls out a little bit is if your revenue potential was double what you have projected, how would that change what you would deliver back as it relates perhaps to programming or perhaps to Canadian content development or what?
2787 MR. HILDEBRAND: Well, certainly if that was the case, then we would obviously deliver more right across the board. As we grow, we will deliver more.
2788 But we know that with the process that we have set up, we can deliver a good product, a product that will be unique and different for Red Deer and we are comfortable with that going forward.
2789 COMMISSIONER MOLNAR: Okay. I want to just make sure I'm understanding when you say what you are delivering.
2790 You are proposing to deliver $200,000 over seven years in CCD, and you have defined ‑‑
2791 MR. HILDEBRAND: That is over and above the basic.
2792 COMMISSIONER MOLNAR: Over and above the basic, right.
2793 MR. HILDEBRAND: Right.
2794 COMMISSIONER MOLNAR: And you have defined this and this all meets CCD commercial ‑‑
2795 MR. HILDEBRAND: Right. And we would like to ‑‑ we will provide as much money to FACTOR as the Commission requires us to forward to FACTOR. But as we said yesterday, we would like to have that number as low as possible, simply because in our experience none of the FACTOR money that we have sent to them over the past many years has ever come back to any of our areas.
2796 So we think this is a project that works well in major markets, Vancouver, Toronto, Montreal, Calgary and Edmonton, who get most of the benefits of FACTOR resources. So we would like to provide the money that goes to that corner of our business to emerging artists in the Prairies.
2797 That is similar to a story that we have said many times before the Commission, so for the record we would just like to say that once more.
2798 COMMISSIONER MOLNAR: I don't question at all how you chose to potentially spend your CCD, or allocate your CCD, but I was interested earlier today to hear that you could provide monies to FACTOR and have them targeted to a local area.
2799 Is that anything you have considered?
2800 MR. HILDEBRAND: Well, we have had correspondence and communication with FACTOR ever since we started sending them money to have it, you know, come back to the Prairies. So we have always heard, "Oh, we will do that. We will do that." But it has never happened.
2801 So our experience certainly hasn't been positive in that area. That is why we keep bringing this up to the Commission.
2802 COMMISSIONER MOLNAR: Just on the CCD, you also note about your weekly half‑hour program that would have a value of more than $200,000 in exposure. That is over and about CCD.
2803 MR. HILDEBRAND: Right.
2804 COMMISSIONER MOLNAR: That value, is that just monetized?
2805 MR. HILDEBRAND: Well, I mean if somebody was buying the time, that would be in excess of that. So when we provide this weekly time period to musicians, in addition to the time block that they get there is also ongoing promotion of who is appearing that week. So some of the material that is generally used during day parts, so it is sort of integrated into the whole broadcast day then.
2806 COMMISSIONER MOLNAR: So what for that would you define to be a local artist?
2807 MR. HILDEBRAND: Well, somebody that was in the region. Basically, we would look for somebody in Red Deer or surrounding area. We would find that there were more artists there than we could handle.
2808 In many smaller communities in the Prairies we have waiting lists of organizations and groups that want to be on the program, and so there is far more talent in these communities than we realize and most of it never gets exposed.
2809 To quote I think Mr. Scott who sent a letter to the Commission, there is a lot of people in the community that have talent but aren't recognized, or nobody knows that because nobody is embracing them, nobody is promoting them. So they are there and they are doing their thing.
2810 That is what we do. We showcase them and it is amazing the kind of reaction or response that flows from that.
2811 We found that is one of the most interesting things that we have been able to develop over the years.
2812 MR. FRIESEN: But one of the hardest things to start. Our PD's will say there is not enough music, there is nobody here. Until you do a few programs and then there is a line‑up. All of our people come back to us ‑‑ you know, I was listening to an anniversary program of that just recently on our Portage station, and the two announcers who were doing it were just marvelling; like we can't believe ‑‑ and they told this story, that when we started we were sceptics, but before a few months were up we couldn't believe the line‑up of people.
2813 And it's quality music, airable music, just by interviewing people and getting them on the radio. The support that comes back from the community when you do that is incredible.
2814 So that's the story that repeats itself all the time.
2815 When we talk to the locals like Dean Scott, he told us that same story. So they are delighted when we say that's what we do, because if they can get a chance to get exposed, they think that is a great opportunity.
2816 COMMISSIONER MOLNAR: Thank you.
2817 I did wonder how you find a half an hour every week, but fair enough, you spoke about that.
2818 MR. FRIESEN: Yes.
2819 COMMISSIONER MOLNAR: There is lots of talent. That's great to hear.
2820 MR. HILDEBRAND: I think I should add at this point that your predecessor Barb Cram was a great proponent of this particular piece and would often urge other broadcasters to do the same kind of thing, and we were interested to know that some of the applicants this morning were talking about something similar.
2821 So an idea has come about that is I think very positive for the Prairies.
2822 COMMISSIONER MOLNAR: Yes. I have one final question and that is related to cultural diversity.
2823 Can you tell me the make‑up of the Red Deer market, the cultural make‑up, and how you actually intend to reflect that on air.
2824 I'm just going to add a little bit that, you know, I have heard you in the past say "we hire locally and they reflect their community". But in some ways, you know, what would you have, maybe 10 people at this station, 15 people at this station. So how would you actually reflect the full make‑up of the Red Deer culture, you know, cultural diversity, through your programming and on your station?
2825 MR. HILDEBRAND: Well, broadly speaking, we would obviously reflect that in our local news, in our promotion of events in the community, like in addition to any people that we would hire. We would use that right across the board.
2826 We think that we can easily reflect a community by reporting on events that take place on a daily basis, on a weekly basis. We will be participating in events that take place and so that way we can reflect the cultural aspects of the communities quite well.
2827 COMMISSIONER MOLNAR: Do you have any particular in the markets that you serve today, any particular initiatives or processes in place to ensure that it's inclusive; that you have outreach to all the different areas and populations, demographics within a marketplace?
2828 MR. HILDEBRAND: Well, basically because we get totally involved with the community, this is all part of what we do on a daily basis. So we would reflect the community of Red Deer as it exists.
2829 So from that standpoint we think that this is just part of our job. I mean, this is part of being a community service radio station, to reflect all of those cultural diversities that exist.
2830 COMMISSIONER MOLNAR: Okay. Well, thank you. And those are my questions.
2831 THE CHAIRPERSON: Thank you.
2832 Commissioner Menzies...?
2833 COMMISSIONER MENZIES: Thank you.
2834 Can you help me understand why you don't do any data‑based research when you go into the markets? It's not that you aren't skilled operators with a good reputation and that sort of thing, but I'm just curious to know why not.
2835 MR. HILDEBRAND: Basically because we would be spending a lot of money that we feel can be put to better use. Many broadcasters that appear in front of you do extensive research in a variety of ways, and we have chosen to rely on our experience and our involvement with the communities that we feel gets us the same thing.
2836 It's not that we have never done any research. Many years ago I actually undertook to do a research project which then told me what I already knew, and so it didn't make a lot of sense to spend a lot of money confirming what we already had in place.
2837 That has basically been our history and our process and we found that it works.
2838 COMMISSIONER MENZIES: I'm sure it does.
2839 MR. HILDEBRAND: There may be some researchers in the room who would like us to hire their services ‑‑
2840 COMMISSIONER MENZIES: Well, maybe you could contract out to them.
2841 MR. HILDEBRAND: ‑‑ but like we have just felt that it was part of the piece that was not really required to provide the service to the community.
2842 COMMISSIONER. MENZIES: Okay. Help me understand the difference between what you discovered and what others discovered. I'm trying to figure out which market there is.
2843 MR. HILDEBRAND: Well, I think many of the applicants that you will hear will be ‑‑ the researchers will be confirming many of the things that we already know.
2844 If the Commission gets a thick package of research, I think it confirms again what has been said. But in our particular case we have just felt that that wasn't something that we wanted to spend a lot of money on.
2845 COMMISSIONER MENZIES: okay. I don't want to set you up to do a critique that you don't want to, but I'm just struck.
2846 You believe it takes five people, five news reporters or reporters of some variety, to cover the area. I have heard others that it's 3.5. It is only 1.5, but on a percentage basis when you go from ‑‑ if you only have three people and you add one, that makes a big difference to your day.
2847 Help me understand the discrepancy without ‑‑ I don't want to set you up to be just doing a critique of the others, but tell me what the difference is.
2848 MR. FRIESEN: Yes. We hope, as you do, that these numbers are conservative so we can add even more people to it.
2849 I live in a community of 10,000 people. We live next to the city of Winnipeg. There are six people in our newsroom fulltime gathering news every day and on weekends, not just day‑time, not just weekdays.
2850 The biggest hurdle we are discussing these days is that they need to add more people to the newsroom because of the kind of service that we ask them to provide to the community. So, you know, five was the number that we thought had to be the minimum in order to cover the day parts so we can get out of the radio station, into the community, reflect back to the community our commitment.
2851 So five may not be enough, but certainly it is enough to start and to provide that service if we can grow. That piece is so important that we are going to continue to invest on that road even in smaller communities.
2852 This one, I don't think five will be enough for the long haul.
2853 MR. HILDEBRAND: Maybe to add to that, as we indicated yesterday, we have put pretty much all of our eggs in the local news basket. So we determined some years ago that for us to have any relative value in a community, local news was where we needed to be.
2854 So we have invested more money in local news on a proportionate basis than probably most broadcasters, but we feel that is, again, one of the backbones of our service and we are not prepared to shave off on that.
2855 I don't think we can ever do too much local news because there is always more than we can cover. That's a very important piece of our equation.
2856 COMMISSIONER MENZIES: Okay. Thank you.
2857 THE CHAIRPERSON: Commissioner Patrone...?
2858 COMMISSIONER PATRONE: Thank you, Madam Chair.
2859 Good afternoon, all.
2860 Further on the local news beat, how many people did you speak with about the need for more local news and information programming and coverage, and what did you find out about specifically what they were looking for with regards to that?
2861 MR. FRIESEN: Well, you know, the specific number I would have to go back to my log and count.
2862 COMMISSIONER PATRONE: Roughly.
2863 MR. FRIESEN: But I would think maybe half a dozen to a dozen directly, and then in some environments there were more people. So I don't know exactly how many.
2864 They were leaders in the community; they came from different aspects. You know, the hockey team told us that they were getting great service, but they said here are some areas where you could help us.
2865 Those were the kind of things that we did.
2866 In the civic leadership there were more people, but our focus was on the Mayor. We wanted to get his take on what he thought he felt from the community.
2867 COMMISSIONER PATRONE: And what did they say was currently lacking in that regard, the people you spoke with?
2868 MR. FRIESEN: Generally there was not great dissatisfaction. What they spoke about was the big opportunity. I mean, that's the talk. Certainly if you land in Red Deer it just feels like dynamic, explosive. Those are some of the words we used.
2869 When you talk to the Mayor, the first thing they want to tell you is the kind of success stories that happen in their community. They are sometimes retail stories. They told us of the Wal‑Mart that just ‑‑ I think it's one of the only 24‑hour Wal‑Marts, but they had to do this to serve all the ‑‑ and then they told us about the 10,000 Village opening where the head office would phone and say we can't believe that these are the numbers you are actually...
2870 They just talked about the vibrant community and that there was so much more opportunity.
2871 There wasn't a lot of criticism, other than what they wanted to do was get more diversity. They want more to serve their city and that's what we heard back.
2872 COMMISSIONER PATRONE: That spot that you played for us, was that a news story in your way of looking at it?
2873 MR. FRIESEN: You know, I think if you spent time looking at that, it covered every angle. The one we chose was maybe a more ‑‑ a less important story, but it is the kind that you actually have to go and get. They don't come to you.
2874 The flood comes to us; the fires, they come to us and they come to everybody.
2875 I think what we are talking about here is a more in‑depth coverage that actually impacts the families and the people that we know we are going to reach.
2876 COMMISSIONER PATRONE: Yes.
2877 MR. HILDEBRAND: I think to add to that story, that wouldn't be a hard news story, but still when they are getting ready it is news for a local community.
2878 So our view is that whenever 20 or more people get together for something, there is a news story there. I think the current broadcaster is doing an admirable job, but in a city this size they can't ‑‑ there is more news than they can possibly cover. So we would take the smaller "news stories" that would be news in our environment.
2879 COMMISSIONER PATRONE: I asked because it sounded like either a promotion or even a paid spot, and when you talk about doing a whole lot of local news, I'm wondering where you draw the line between hard news and the type of spot we saw.
2880 MR. FRIESEN: That was not hard news. We recognize that. I think what we wanted to show was that that is the piece ‑‑ and again I'm going to repeat myself.
2881 But the hard news comes to us and those are the easy ones to cover. I think we have to reach ‑‑ yes, that may have been more announcer talk kind of stuff and so if I was running the station, I would agree that that doesn't really belong in a newscast. It belongs on the radio.
2882 I think that is what we are trying to portray, is that the easy stuff is being covered. It is when you get out on the street and talk to people, that is where the real stories of the people and the interesting stuff comes about and the stuff that impacts their lives. That is what we are trying to ‑‑
2883 COMMISSIONER PATRONE: Okay.
2884 MR. HILDEBRAND: That illustration would probably be something that we could say the first story would be news, after that it is advertising. But when you are starting it up, at that point it is a news item.
2885 COMMISSIONER PATRONE: What time will "Made in Red Deer" air? Day? When does that show up? When are you planning to air that show?
2886 MR. HILDEBRAND: It would likely air on a Saturday afternoon with a repeat Sunday night, that kind of environment.
2887 What we generally do, we have the show on a Saturday afternoon and then repeat it another time on the weekend.
2888 COMMISSIONER PATRONE: How do local artists qualify to have their material aired on that show? Would they send a CD to you? Do they meet with you? How does that work?
2889 MR. HILDEBRAND: All of the above. I mean, our people are out in the community constantly. They are hearing artists perform at different places, talk to them and you have a CD or you want to be on the air? We do want to be on the air.
2890 They come to us because we are so involved with the communities that it just sort of appears. So we don't have to go chasing it. Once the program is on the air, you then have more people contacting you to try to be on the show than you can handle.
2891 So that's why, as Lyndon says, you have waiting lists.
2892 COMMISSIONER PATRONE: Those are my questions. Thank you.
2893 Madam Chair...?
2894 THE CHAIRPERSON: I just have a few questions.
2895 I just wanted to ‑‑ and you are probably ready to pull your hair out with all the questions on these financial projections ‑‑
2896 MR. FRIESEN: No.
2897 THE CHAIRPERSON: ‑‑ but just bear with me if you would.
2898 The number of staff that I understood you to say to start would be five news people.
2899 MR. FRIESEN: In the newsroom.
2900 THE CHAIRPERSON: So what will your other staffing be?
2901 MR. FRIESEN: Well, we will need at least another three or four for the on‑air cycle, so it could get to about a dozen, maybe not quite.
2902 THE CHAIRPERSON: So in your forecast then obviously you have allowed salaries for 12 people?
2903 MR. FRIESEN: Up to, yes.
2904 THE CHAIRPERSON: I'm thinking that probably with the growing market here and all we hear about difficulty in finding qualified people in Alberta to work, I'm just wondering, you probably have inflated salaries. So is that also reflected in your forecast would you say?
2905 MR. FRIESEN: You know, I think it is. We operate right next to Calgary, which of all the places I think may pose some difficulties because you get people in the door ‑‑ I mean, there is a lot of competition for good people.
2906 No, we are going through an experience here that if anybody can project it, it will be a pretty good day for them. It is difficult to project, but we think that this makes sense.
2907 MR. HILDEBRAND: Yes, I think the other thing that we have found in communities much smaller than Red Deer that there are people who want to be in media. So to find people locally to work in our environment has generally not been difficult.
2908 THE CHAIRPERSON: Do you hire for the most part fulltime people or would they be ‑‑
2909 MR. HILDEBRAND: Yes, mostly fulltime.
2910 THE CHAIRPERSON: Mostly full‑time, okay. I will stop asking about that.
2911 I didn't get a clear, I didn't think, understanding of your answer to the question live to air. So I just wonder if you could calculate the hours.
2912 And if you don't have it right there if you could just include it with that other information because it is something that we think it is important to understand.
2913 MR. FRIESEN: We will do that.
2914 THE CHAIRPERSON: The other question is ‑‑ and I probably don't need to ask this because you have given us your little sheet, but I just want to correct ‑‑ if correct is the right word.
2915 On your presentation on page 14 when you are talking about the CD, it reads $15,000 annually for years six and seven, but I think you would agree with me it should be $30,000.
2916 I just wanted to correct it for the record.
2917 MR. HILDEBRAND: Yes, it is $30,000.
2918 THE CHAIRPERSON: Okay. So it's just different in the preparation.
2919 MR. HILDEBRAND: Yes.
2920 THE CHAIRPERSON: Okay. Thank you.
2921 I think that's ‑‑ oh, wait a second, those are not all the questions I had.
2922 I wanted to understand better what your core demographic is. We understand that you are targeting adults 25‑to‑50, that it is going to be more appeal to women, but we want to just know what would be a narrower target.
2923 MR. FRIESEN: We intentionally left it in that area so that once we get closer to it, we can further define it.
2924 Our goal would be to have probably a 35 ‑‑ the narrow skew would be 35‑to‑49, you know, if we could target it that closely.
2925 Again, I don't know how you would ‑‑ it is only when the outcome is printed that you know exactly how you have done. The same music and the same approach in different markets produces a different exact core, but that is a generality.
2926 THE CHAIRPERSON: So 35‑to‑49 you are suggesting?
2927 MR. FRIESEN: To 49.
2928 THE CHAIRPERSON: Just tell me, it's interesting that you think it is going to appeal to women and their families. Children don't always enjoy what their parents ‑‑ or most often don't, I think, enjoy with their parents listen to.
2929 Is that sort of meant to be as specific and precise as it sounds? You just don't mean ‑‑
2930 MR. FRIESEN: By families, I mean ‑‑ I'm just going to tell you how it is in my house and who controls the dial, depending how old the kids are.
2931 I don't know how well you can define that, other than our approach is that we want to reach ‑‑ we want to be family‑friendly. By that I mean we want to be the kind of radio station that they can turn on in the home and not have the offensive and be pretty general, but stick around because of the kind of information that impacts their life.
2932 If there is a soccer game tonight or a hockey practice, those are the kinds of things that families want to hear about. And if we are good enough to chase them ‑‑ either say it on the radio or chase them to a website where that stuff is, that will attract families and people we think of all ages.
2933 MR. HILDEBRAND: I just want to add to that.
2934 I think it is very important to understand that music is only going to be part of our daily cake, because it is the information that will have as much or more appeal to the audience as the music itself. So the music is as much there not to chase anybody away, but it's part of the fabric but not the whole fabric.
2935 THE CHAIRPERSON: Okay, thank you.
2936 So obviously from your comments, then, you don't have a problem if more than two ‑‑ if two were licensed. That wouldn't cause you ‑‑
2937 MR. HILDEBRAND: No, I don't think we would have any comment.
2938 As a matter of fact, we would like to maybe compliment both the applicants that were up here this morning. They are talking local news and local information much more than we have ever heard at previous hearings.
2939 So what we have found is that many broadcasters are starting to do now what we have been doing for a long time and we want to compliment them for their vision.
2940 THE CHAIRPERSON: I'm sure they appreciate your help.
‑‑‑ Laughter / Rires
2941 THE CHAIRPERSON: So would you care to comment on which of the applicants, competing applicants, would be the most compatible or least compatible or does it matter? It doesn't matter to you?
2942 MR. HILDEBRAND: I don't think it matters, no.
2943 THE CHAIRPERSON: okay. So this ‑‑ oh, legal. Thank you.
‑‑‑ Laughter / Rires
2944 MR. MORRIS: Just a quick question.
2945 I just wanted to confirm that all of the initiatives that you have listed for your over and above CCD contribution will be eligible initiatives.
2946 MR. HILDEBRAND: Yes.
2947 MR. MORRIS: Thanks.
2948 THE CHAIRPERSON: So it is your two minutes now to tell us why we should pick Golden West.
2949 MR. FRIESEN: Well, we won't take the full two minutes, but we will want to say thank you for the opportunity to appear for two days in a row and hear, we think, a compelling story for two communities ‑‑ today we are talking about Red Deer.
2950 The kind of service that we want to provide to Red Deer we think the town and the city will embrace.
2951 As I mentioned earlier, just driving into town it is easy to identify and feel the vibrant opportunity in this city and especially meeting with the community leaders. The immediate support we got because we talked to people, which they told us ‑‑ and again, this was just recently. I mean, the stories we heard from them, they appreciated the fact that we would actually come and spend some time to try to understand what it was that made their city tick, and they were delighted and more than happy to support the kind of initiative that we talk about and with the history that we have had.
2952 So we just want to say thanks.
2953 Our brand will be unique. We are going to go local. More importantly they will get two new media opportunities. Our new media plan isn't just about what we plan to do; it's something we do. We have proven this. The acceptance is incredible. They belong together. New media and radio happen to belong together.
2954 We will hire local people with inherent knowledge of the community, with involvement in the community. So Red Deer will get more about Red Deer than they have ever had before.
2955 That is our commitment to Red Deer. That is our commitment today and we thank you so much for the opportunity.
2956 THE CHAIRPERSON: Thank you very much.
2957 We are going to take a 15‑minute break. That should put us back about 3:40.
2958 Thank you.
‑‑‑ Upon recessing at 1525 / Suspension à 1525
‑‑‑ Upon resuming at 1545 / Reprise à 1545
2959 THE SECRETARY: We will now begin.
2960 We will now proceed with Item 7, which an application by L.A. Radio Group Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer. The new station would operate on frequency 100.7 MHz, Channel 264C‑1, with an average effective radiated power of 27,000 watts, maximum effective radiated power of 53,000 watts, antenna height of 161 metres.
2961 Appearing for the applicant is Troy Schaab.
2962 Please introduce your colleagues and you will have 20 minutes to make your presentation.
2963 Thank you.
PRESENTATION / PRÉSENTATION
2964 MR. SCHAAB: Thank you.
2965 Good afternoon, Madam Chair, Members of the Commission and Commission staff.
2966 My name is Troy Schaab and I'm President and Program Manager for L.A. Radio Group and have been the morning announcer for our station Sunny 94 in Lacombe.
2967 First of all, I would like to introduce the L.A. Radio Group team.
2968 To my left, my wife and business partner Sonia Sawyer. Sonia is the Chief Financial Officer of L.A. Radio Group and Operations Manager of Sunny 94.
2969 Sonia grew up in Red Deer and is the past Executive Director of the Red Deer Downtown Business Association and brings with her a real wealth of knowledge of the Red Deer business community.
2970 On my right is Karen McDonnell, who assists in our marketing and business development. Karen is also principal of Toro Marketing. Toro is a B.C. based company. However, Karen was born and raised in Lacombe and lived and worked in Red Deer for a number of years. That was a big bonus for us. She has an in‑depth understanding of the central Alberta market.
2971 Beside Karen, at my far right, is Dennis Allen. Dennis is the Director of Music Operations. Dennis has been a part of the central Alberta music scene for six years as a past Music Director at two Red Deer stations and is highly respected within the music industry. We are very fortunate to have Denny a part of L.A. Radio Group.
2972 Beside Sonia, on my far left, is Mr. Neil Evans. Neil is L.A. Radio Group's technical consultant. Neil is a central Albertan with over 40 years' experience in the broadcast engineering sector, antenna systems design and an extensive list of experience far too lengthy to mention here today.
2973 We are thrilled to be here today to present our plans for CITY‑FM to serve Red Deer and our central Alberta. We have been waiting for this day a very long time. Not only are we happy to be here, central Alberta is eager to have us here presenting our plans for our community's new FM radio station 100.7 CITY‑FM.
2974 You are going to hear us speak about our home in central Alberta a lot over the next hour and we are excited and passionate, too, to show you what our community is all about. What we bring to the table is we work here; we spend our money here; we raise our children in central Alberta; all of our investors live here; and all the money we earn is invested back into central Alberta.
2975 We are a hard‑working, respected, locally owned entrepreneurial business looking to grow.
2976 Central Alberta has been home to our family for the past 12 years, and in that time we have seen huge growth in the population and new businesses in central Alberta. In fact, when Sonia was Executive Director for the Red Deer Downtown Business Association, she helped deliver on the city's economic development strategies and has a real knowledge of the business community.
2977 Stats Canada reports that Red Deer is one of the fastest growing markets in Canada. The BMO calls it a hot bed for small businesses. We have lived through this growth firsthand and know the market is ready and the time could not be better for a new radio station for central Alberta.
2978 We have received incredible support from the central Alberta community for CITY‑FM's new music station. We have received support and interest from hundreds of community members, from the Red Deer Chamber of Commerce to local businesses to potential listeners. The community said loud and clear they want us and our proposed new music station for Red Deer.
2979 We didn't respond to an open call for a new radio station for Red Deer. We do not have a corporate mandate to respond to all open calls in Western Canada. We triggered the call with our September 2007 application.
2980 Starting a new station in Red Deer is a logical extension to grow from our Lacombe station Sunny 94. We are all well aware that other Red Deer applicants here this week have interests elsewhere. This is our only application. You didn't see me in Kelowna last October; you aren't going to see me next week in Edmonton at the hearings or in Saskatchewan next year.
2981 Central Alberta is my home. I belong here and the community wants us here. Simply put, I am a local entrepreneur who wants to grow my business.
2982 I would like to start by talking about the market.
2983 The applicants here today will talk to you about the Red Deer market. However, based on our knowledge of this area, we know that a Red Deer market does not exist; it's a central Alberta market.
2984 The existing stations know this. Every current station broadcasting from Red Deer brands themselves as a central Alberta radio station. Pattison's BIG 105 markets themselves as central Alberta's best music, and their sister station 106.7 The Drive is branded as central Alberta's best rock. Newcap's stations CKGY and Z99 both brand themselves as central Alberta's most listened to radio stations.
2985 For the other applicants to narrow the market solely to Red Deer is based on a lack of understanding of this marketplace.
2986 The Red Deer city market is based on a population of over 80,000 people. The central Alberta market is a market of over 200,000 people that make up the trading area in central Alberta. And every applicant contour map fully covers central Alberta, making them a central Alberta radio station.
2987 CITY‑FM's revenue projections are based on a .5 mV contour map for the central Albertan market of 176,000 population. 35 per cent of our CITY‑FM year two local revenue projections, or $462,000, are from new radio advertisers. We have become small‑business specialists.
2988 L.A. Radio Group has proven success in growing new radio advertisers as 80 per cent of our Sunny 94 advertisers are new radio advertisers, and we will use this skill and experience to attract new local radio advertisers to the Red Deer market.
2989 The growing number of small businesses in Red Deer equates to a growing potential market for new radio advertisers. This is a market we feel is currently underserved in the current Red Deer radio advertising marketplace, as I know there are numerous businesses that have never been approached to advertise on radio.
2990 L.A. Radio Group needs this licence to grow our company and leverage our resources in the marketplace.
2991 Synergies and efficiencies with Sunny 94, here is how we will grow. We will gain efficiencies in six key areas: senior management, technical, creative writing, production, news and administration. These efficiencies will dramatically improve our operation.
2992 As mentioned in the 2004 decision by the CRTC when 106.7 The Drive was licensed:
"The Commission considers that the public interest is best served at this time by strengthening Pattison's position in the market and achieving a competitive balance, rather than introducing a new licensee from a larger broadcast group."
2993 The same argument holds true today with granting a licence to central Alberta's locally owned and independent L.A. Radio Group.
2994 We are most excited about the music format we have developed. As an established radio team in central Alberta, we are actively involved in the community and talk to a lot of people on a daily basis, not just during an application process. We have come to know what the market demands for music. We also know that what the market wants in music doesn't fit into one category.
2995 Therefore, we have created a new category customized to the central Alberta market, a new music station. We are targeting a demo of adults 18‑to‑44 years, with a core demo of 18‑to‑24.
2996 We will deliver 65 per cent Modern Rock and 35 per cent mainstream Top 40, ensuring a minimum 40 per cent Canadian content.
2997 How did we test this market? Well, we contracted Toro Marketing to conduct a market survey. Toro talked to 382 Red Deer residents in a telephone survey at this time last year as to their listing preferences.
2998 Our proposed new hit music format was the clear winner with 68 per cent of those surveyed stating they would listen to CITY‑FM's new music format.
2999 This is a great mix to add to central Alberta. Not only would CITY‑FM add diversity in music, we would add diversity in ownership. Currently in Red Deer two companies own four corporate stations; two owned by Pattison Broadcasting and two owned by Newcap. The Pattison stations broadcast Classic Rock and Hot AC and the Newcap stations deliver broad‑based Rock and Country.
3000 CITY‑FM would be Red Deer's only locally owned, independent radio station and we are so proud of that.
3001 CITY‑FM will be dedicated to supporting emerging artists, with a strong focus on Canadian talent. Within CITY‑FM's minimum 40 per cent Canadian content, we will ensure emerging artists have substantial airplay by dedicating at least 20 per cent to emerging artists.
3002 CITY‑FM will be a springboard for emerging artists to launch their careers. We will play new artists such as Red Deer's own Absolute. Now, here is a young band with a very promising future and without a doubt will have airtime and promotion on CITY‑FM. I love their CD.
3003 There is so much undiscovered talent in central Alberta and Canada and no other format, other than a new music station, can offer these airplay and promotion opportunities to new emerging artists.
3004 Also, our partnership with Red Deer College and the music program, who we already have a strong relationship with, will provide us with ample talent to showcase in our Live at City Cafe program.
3005 What is Live at City Cafe? We are so jacked about this feature.
3006 Live at City Cafe will be an interactive 30‑to‑60 minute live program giving Canadian artists a chance to showcase their music at CITY‑FM. Live at City Cafe will be hosted in both the City Cafe studio, as well as locations throughout central Alberta, to provide emerging Canadian artists with on‑air exposure.
3007 We have just lined up an ideal ground‑floor location in Red Deer in a high traffic area for CITY‑FM. This location gives CITY‑FM an interactive studio with the capacity to host an audience in studio and outside, as we also have a retractable door that we can open to extend the studio into the street and give the public an interactive experience of Live at City Cafe.
3008 Live at City Cafe will also travel outside of the studio. We have plans to broadcast Live at City Cafe at different venues across central Alberta, including the Far Side Lounge at Red Deer College, The Vat, the Centrium, or wherever the Canadian artists are performing in central Alberta.
3009 This is only one of the avenues for CITY‑FM to promote new music and emerging Canadian artists.
3010 Canada's New Music Countdown will be a locally produced weekly one‑hour summary of the top songs by artists across our nation. This will be an interactive countdown, highlighting new music and giving listeners a chance to vote for their favourite song.
3011 Each week a Canadian indie artist will be highlighted on the countdown. CITY‑FM's interactive website will be another tool to further promote emerging Canadian artists.
3012 CITY‑FM will be central Alberta's undisputed choice for new music and will provide independent artists with mass exposure through airplay, advertising and promotion.
3013 CITY‑FM will further promote Canadian artists through our CCD contributions in the way of cash contributions, specialty programming and promotions. CITY‑FM will contribute over half a million dollars in CCD over seven years to grow and support Canadian artists. This half million is over and above the minimum CCD contributions.
3014 We are local, and our programming is local. 90 per cent of CITY‑FM's programming will be produced in‑house.
3015 In addition to our focus on new music, CITY‑FM will provide a total of 5.2 hours of spoken word per broadcast week. Our spoken word content will be a significant component to our programming and tailored specifically to meet the needs of our demographic.
3016 Included in our spoken word are news, local weather, local traffic reports and what is going on in the community. CITY‑FM's spoken word will be relevant and of interest to our target demo and include concert info, festivals and lifestyle.
3017 CITY‑FM will be extremely focused in bringing central Alberta a radio station with a true local flavour. According to our market research, CITY‑FM's innovative new music format will fill a void in the current music formats offered in the central Alberta market and repatriate younger listeners from alternate music sources back to radio.
3018 Our market research showed that 20 per cent of those surveyed that currently do not listen to the radio would tune into CITY‑FM's new music format. When we equate this to our trading area, this gives us a potential of over 5,000 brand new radio listeners who don't tune into radio and currently listen to iPods. This is simply a win‑win for the radio broadcasting industry.
3019 CITY‑FM's format will truly fill the void in the market and have minimal negative impact on the existing stations.
3020 Here is a sample of CITY‑FM's new music and what the community has to say about their locally owned L.A. Radio Group.
‑‑‑ Audio clip / Clip audio
3021 MR. SCHAAB: We fulfil all of the CRTC's criteria for a new licence. We have a quality application. Our business plan is sound and based on our knowledge and experience in the market that we know intimately.
3022 CITY‑FM will add diversity as Red Deer's only independent station. We will offer diversity of ownership and deliver 90 per cent local programming.
3023 CITY‑FM will target underserved listeners. We conducted a comprehensive market analysis, and responses for our format were 68 per cent in favour for our new music format. We are not adding another adult station but a station focused on the younger listening audience that will repatriate young listeners back to radio.
3024 A competitive station for the market. The market can sustain another radio station and CITY‑FM will have the least economic impact on the incumbent stations, including our own Sunny 94.
3025 L.A. Radio Group is a young, dynamic company that is looking to grow and expand to be a continued player in the radio broadcasting industry. Our business plan is sound, our investors are ready, the community wants us, and we are prepared to launch CITY‑FM as soon as possible upon receiving a licence.
3026 The licensing of CITY‑FM is in the public's interest and therefore this application should be approved.
3027 Thank you. We look forward to answering any questions that you may have.
3028 THE CHAIRPERSON: Thank you very much.
3029 Commissioner Cugini will lead the questions.
COMMISSIONER CUGINI: Thank you, Madam Chair.
3030 Mr. Schaab and to your team, I just hope that I can match your level of enthusiasm in my questioning.
3031 MR. SCHAAB: Okay.
3032 COMMISSIONER CUGINI: Note to staff, I think we should always schedule you at the end of the day because you certainly raise the energy level.
‑‑‑ Laughter / Rires
3033 MR. SCHAAB: Thank you.
3034 COMMISSIONER CUGINI: I do want to ask you firstly questions that have been raised by your oral presentation and then we will move on to more formal questions.
3035 MR. SCHAAB: Sure.
3036 COMMISSIONER CUGINI: On page 3 you went to great length in specifying that it is not a Red Deer market; it is a central Alberta market. I want you to elaborate for us why that is important to you to make that distinction that it is a central Alberta market and not just a Red Deer market.
3037 MR. SCHAAB: That's a very good question. Thank you.
3038 I am going to pass it over to our marketing expert, Karen McDonnell.
3039 COMMISSIONER CUGINI: Sure.
3040 MS McDONNELL: Thanks, Troy.
3041 I think the biggest question when we first started this and we read the other applicants after the call was issued was why would they come in, you know, so many of them, with a format similar to what Sunny is offering and not consider any economic impact on our Sunny 94 station. So then we started to ‑‑
3042 COMMISSIONER CUGINI: Because you are not licensed to serve Red Deer.
3043 MS McDONNELL: Exactly. That's why.
3044 But then, on the other hand, if we are looking at the best public interest, and Red Deer already offers a Country station, a Rock station, a Classic Rock station and a Hot AC, as well as our signal is broadcast into the Red Deer market, so listeners have that choice; they have that alternative.
3045 So when we look at the best public interest for the central Alberta trading area, which I think almost every applicant did base their revenue projections, that is how we had to look at how do we define the market in general.