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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.
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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 29, 2008 Le 29 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 29, 2008 Le 29 mai 2008
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PHASE I (Cont'd)
PRESENTATION BY / PRÉSENTATION PAR:
Harvard Broadcasting Inc. 576 / 3776
Radio CJVR Ltd. 661 / 4363
Touch Canada Broadcasting Limited Partnership 737 / 4812
CHIP Media Inc. 793 / 5212
No interventions / Aucune intervention
INTERVENTION BY / INTERVENTION PAR:
The Alberta Music Education Foundation 880 / 5755
Soul Side In 885 / 5767
REPLY BY / RÉPLIQUE PAR:
Touch Canada Broadcasting Limited Partnership 900 / 5912
Radio CJVR Ltd. 902 / 5925
Harvard Broadcasting Inc. 915 / 6009
L.A. Radio Group Inc. 916 / 6020
Clear Sky Radio Inc. 918 / 6034
Vista Radio Ltd. 920 / 6047
Edmonton, Alberta / Edmonton (Alberta)
‑‑‑ Upon resuming on Thursday, May 29, 2008 at 0908 /
L'audience reprend le jeudi 29 mai 2008 à 0908
3763 THE CHAIRPERSON: Good morning. I am sorry for the delay.
3764 I have an announcement, so I will go ahead with that.
3765 This is in regard to the L.A. Radio Group and the Lacombe application yesterday afternoon. I had raised the question about the 3 millivolt and the 5 millivolt contour, and we did have it correctly described, as we discussed.
3766 However, we went back and looked at the initial application, and in that application the L.A. Radio Group said:
"Our immediate trading areas include, but are not limited to, Rimbey, Alix, Clive, Bentley, Mirror, Sylvan Lake and Blackfalds."
3767 We just wanted to clarify the record, so that people understood that those communities were included in their initial application.
3768 Thank you.
3769 Madam Secretary.
3770 THE SECRETARY: Thank you, Madam Chair.
3771 For the record, Golden West Broadcasting has filed today, in response to undertakings, revised spoken word commitments. These documents have been added to the public record, and copies are available in the Public Examination Room.
3772 We will now proceed with Item 9, which is an application by Harvard Broadcasting Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer.
3773 The new station would operate on a frequency of 100.7 MHz, Channel 264C1, with an average effective radiated power of 54,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 161.1 metres.
3774 Appearing for the Applicant is Bruce Cowie.
3775 Please introduce your colleagues. You will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
3776 MR. COWIE: Thank you. Good morning, Madam Chair and Members of the Commission. My name is Bruce Cowie, and I am the Vice‑President of Harvard Broadcasting.
3777 We are all very pleased to be here today to present our application for 100.7 The River, a new mainstream adult contemporary FM station targeting the 25 to 54 audience of Red Deer, Alberta.
3778 Before beginning our presentation I would like to introduce the members of our panel.
3779 Seated on my right is Michael Olstrom, Harvard Station Group Manager.
3780 Seated next to Michael is Karen Broderick, our National Sales Manager.
3781 On my left is Daryl Holien, Harvard's Director of FM Programming and Creative Services.
3782 As part of his current responsibilities, Daryl programs Harvard's mainstream adult radio station Lite 92 FM in Regina.
3783 In the back row, beginning on my far right, is Debra McLaughlin of Strategic Inc., the company that did comprehensive feasibility and consumer demand studies.
3784 Next to Debra is Rob Malcolmson, a partner in Goodmans, LLP, our legal counsel.
3785 Both Debra and Rob play key roles in the development and implementation of our Western Regional Growth Strategy.
3786 Next to Rob is Tina Svedahl, Vice‑President of Investments for Harvard Developments Inc., our parent company.
3787 Finally, on my left, in the back row, representing a modest change to our normal panel, is Rosanne Hill‑Blaisdell, a fourth generation member of the Hill family, and a Managing Director and Vice‑President with Harvard.
3788 Rosanne is here representing the Hill family in place of her father, Paul Hill, who was unable to be with us today.
3789 Rosanne will first speak to you about Harvard. Then, I will describe why we have chosen to apply for a new radio station in Red Deer, and how this new FM station fits our regional growth strategy.
3790 Tina will give an overview of the rapidly growing Red Deer market, and Karen will speak to advertiser demand for the format we propose.
3791 Debra will then address the consumer demand research and our choice of the mainstream AC format.
3792 Next, Daryl will tell you about the kind of programming we are proposing.
3793 Michael will describe The River's feature, news and information programming.
3794 Finally, I will present our locally focused CCD package.
3796 MS HILL‑BLAISDELL: Thanks, Bruce.
3797 Harvard Developments is a family‑owned diversified company that has been doing business in western Canada for 105 years. The success of the Hill companies has been built on two principles, caring and commitment, principles which guide not only our business operations, but our attitude and our social activities in the communities we serve.
3798 As the Commission knows, Harvard is a regional broadcaster based in Saskatchewan. We have been in the broadcasting business since 1976, and we have been proud and honoured to serve the residents of each of the markets where we are licensed.
3799 We believe that independent broadcasters play a critical role in providing balance and reflecting regional differences, and that smaller and mid‑size owners, like ourselves, offer an important diversity of voices to the Canadian broadcasting system.
3801 MR. COWIE: Harvard has been seeking growth opportunities in western Canada for several years. Over the last two years the Commission has granted Harvard licences to operate in Calgary, Fort McMurray and Saskatoon, in addition to the three services we have successfully operated for many years in Regina.
3802 Red Deer represents another key step in our growth strategy. Together with our stations in Calgary and Fort McMurray, a new station in Red Deer will increase diversity of ownership and editorial perspective, and, at the same time, improve our ability to achieve some of the same efficiencies and economies of scale as our competitors.
3803 Harvard is a proven and trusted company, and we know that we can establish and run successful new FM stations quickly and effectively.
3804 We hope the Commission will consider our unique qualifications and experience, and recognize the role we can play in adding to the diversity of ownership and editorial voices.
3805 We ask you to allow us to extend our tradition of community service to Red Deer by approving this application.
3807 MS SVEDAHL: Thanks, Bruce.
3808 Red Deer is a prime candidate for a new radio station. The city is situated in the middle of the booming Calgary‑Edmonton economic corridor, and is experiencing rapid growth.
3809 Per capita household income is 23 percent above the national average, and retail sales per capita are almost three times the Canadian average.
3810 There is no business tax, and unemployment is low.
3811 And the strength of the Red Deer economy is projected to continue at this powerhouse pace.
3812 Despite this growth, the market remains underserved, with only four mainstream commercial stations, controlled by just two ownership groups.
3813 All of this suggests that there will be a significant additional demand for advertising inventory, which, in turn, will support a new station in Red Deer without unduly impacting the strong incumbent services.
3815 MS BRODERICK: Red Deer is growing at a rapid rate. Its population has increased by 22 percent since 2001. Over the last two years, it has enjoyed record sales of industrial and residential lands.
3816 Its economy is diverse, led by the booming oil and petrochemical industries, a growing manufacturing industry, strong retail and wholesale service sectors, agriculture, distribution, and tourism.
3817 Red Deer's central location means that it is the only market in the prairies with access to over two million people within a 160‑kilometre radius.
3818 Because of its ideal location, it is often called central Alberta's trading and distribution centre.
3819 Given the health of the local economy, its central location, and projections for further growth, we expect that advertising and retail spending will grow accordingly.
3820 Combined with the consumer demand identified in our research, we believe this means that more radio advertising dollars will be available to all stations in the market.
3822 MS McLAUGHLIN: Thanks, Karen.
3823 Our research discovered that there is a significant gap in the Red Deer radio market. Although mainstream adult contemporary is the most popular format in Canada, it is missing from the market. Almost 80 percent of the 25 to 54‑year‑old age group expressed some level of dissatisfaction with existing stations.
3824 While the highest level of interest in a mainstream AC station was found among those aged 35 to 44, it is significant that more than three‑quarters of the respondents to our survey said that they would listen to such a station. That is a very high level of consumer demand.
3825 In fact, our consumer research found that demand for this mainstream AC format was consistently high across all demos, indicating that this format presents the greatest opportunity to repatriate the largest group of disenfranchised listeners.
3826 Right now two commercial operators, Pattison and Newcap, account for almost two‑thirds of all hours tuned. Our research found that spill is a significant factor, with just over one‑third of all hours tuned to radio being attributed to out‑of‑market stations.
3827 Notably, some of that out‑of‑market tuning is to mainstream AC stations. As a result, a new station that meets consumer demand is likely to repatriate those listeners.
3829 MR. HOLIEN: Thanks, Debra.
3830 Our mainstream adult contemporary format will be distinctly different from what is available to listeners in Red Deer today. This is a format that combines several different genres of music, ranging from classic and modern rock to pop, dance, urban, and even some crossover country standards and folk.
3831 This is the most popular music format in Canada, yet it is missing from the Red Deer radio spectrum. In fact, over 75 percent of the songs on the AC chart are not heard on Red Deer radio.
3832 Newcap and Pattison currently offer four formats: one country, two rock, and a hot AC.
3833 If we look at these incumbent stations from a demographic‑served perspective and use BBM audience data for comparative purposes, it is clear that 100.7 The River will attract an older audience.
3834 Our median age will be 40, while, according to spring 2008 BBMs, CIZZ, CKGY and CHUB all have a median age of 35 or younger.
3835 The only station in the market with a median age that is even close to The River is CFDV, The Drive, a classic rock station, which has minimal overlap with our proposed mainstream AC format.
3836 The River will be distinct from what is on air in Red Deer today in three important ways: the range of music played, the eras covered, and the rotation of artists.
3837 By providing a broader range of artists, more titles, and less spins, 100.7 The River will offer a distinct new radio service that will hold some appeal for all demos, and therefore offer the greatest repatriation opportunity.
3838 Canadian mainstream AC artists like Sarah McLachlan, Bryan Adams, Kalan Porter, Michael Bublé, and Ron Sexsmith will be showcased throughout our regular playlist, and will receive meaningful airplay on the station as part of our commitment to 40 percent Canadian content.
3839 And 40 percent of our Canadian content will be dedicated to new and emerging artists. That is 16 percent of the new station's total schedule.
3841 MR. OLSTROM: We are also planning to do special feature programming initiatives that are designed to contribute directly to the exposure of Canadian artists.
3842 Each weekday, a Canadian mainstream AC artist will be profiled in a 60‑second feature called "Spotlight". This will be aired six times throughout the day.
3843 "Spotlight" will provide background information on an artist or group, allowing our listeners to get to know the artists, or by giving context to a song, or a performance. Each segment will immediately be followed by a song from that artist.
3844 Because of its placement within the regular rotation, we believe this is an ideal way to introduce new artists and releases. Therefore, at least three of these features per day will be dedicated to new and emerging artists.
3845 Our second special programming initiative will be a music magazine called "Made in Canada". It will air for two hours on Sunday afternoons, with a rebroadcast Wednesday evenings at 9 p.m.
3846 "Made in Canada" will focus on Canadian music ‑‑ who is making it, how they are doing it, what motivates the artists, and where the music is going.
3847 An examination of the latest trends, upcoming award shows like The Junos or the East Coast Music Awards, concert announcements and local performances are all subjects that the program will cover.
3848 Mainstream AC artists visiting or performing in Red Deer will be interviewed, and recording companies will be given the opportunity to showcase new talent.
3849 "Made in Canada" will be an important platform to introduce new and emerging artists to the Red Deer listeners.
3850 To give you an appreciation of what The River will bring to Red Deer, we would like to show you a brief video, produced by a new and emerging Canadian filmmaker, Josh Douglas.
‑‑‑ Video presentation / Présentation vidéo
3851 MR. OLSTROM: I would like to turn now to The River's information programming.
3852 Our research shows that local news is very important to our target audience. Eighty percent of news programming will therefore be devoted to local stories about Red Deer and its surrounding communities. We will offer 75 newscasts each week, along with sports reports. Our news, weather and sportscasts, together with our features, will total just under 8 hours of spoken word programming each week, and that is in addition to the almost 8.5 hours of announcer talk every week.
3853 Our plan is to be highly focused on community level news, from local politics and sports to community activities.
3854 Our Red Deer operation will employ three full‑time and one part‑time newsroom staff. Three reader/reporters will be responsible for news gathering in the field, as well as on‑air reporting, while the news director will assign stories, supervise the two reporters, and also engage in some news gathering and on‑air reporting.
3855 I should also note that, beyond the airwaves, we will make all of our programming available on streaming audio through our website. Our feature programming will be available in MP3 and broadcast wave format for downloading where the rights have been cleared.
3857 MR. COWIE: Finally, I am going to outline our plans for Canadian Content Development.
3858 Harvard's commitment of $1 million over seven years ranks at the top of the list among the applicants before you. This substantial funding commitment will go to three local initiatives: support for education, support for performance, and support for industry initiatives.
3859 Let me start with education.
3860 Harvard will donate $160,000 over seven years for scholarships to students studying music at Red Deer College, a comprehensive community college serving central Alberta and the prairies.
3861 Half of these scholarships will be earmarked for Aboriginal students.
3862 We also propose to contribute $135,000 to the Aboriginal Media Education Fund, which trains Aboriginal journalists and on‑air talent.
3863 Harvard will make a further commitment of $150,000 to create an opportunity for new and emerging artists at CentreFest, a three‑day festival held each summer in downtown Red Deer.
3864 CentreFest, the only festival of its kind in central Alberta, draws attendance from well beyond the city limits and presents both local and international performers.
3865 Through the funding that Harvard will provide, CentreFest will be able to realize its goal of adding music and new and emerging music artists to the lineup of entertainment.
3866 Our investment will be directed specifically to support artists' fees.
3867 In addition, Harvard will provide funding to the Red Deer Symphony Orchestra, a musical institution that has been delighting audiences in this region for more than 20 years.
3868 Finally, Harvard will provide support to industry associations.
3869 Through its Calgary application, Harvard established the Music Industry Travel Assistance Program with AMIA, the Alberta Music Industry Association. This program, which provides funding for travel and tour support, has proved to be extremely popular and has been fully subscribed since its inception.
3870 To date, AMIA has funded 15 artists, for 15‑plus tours.
3871 We propose to enhance this program through $110,000 in additional funding.
3872 Harvard will also direct additional funds to FACTOR, over and above that required under the 2006 Commercial Radio Policy, with funds to be designated for Alberta artists where possible.
3873 In total, Harvard will contribute $147,000 over and above that which it is required to contribute.
3874 Madam Chair and Members of the Commission, in closing, I would like to summarize why we believe Harvard's proposal for a new mainstream adult contemporary radio station in Red Deer fulfils the Commission's licensing criteria.
3875 Harvard is a well‑established and well‑resourced company, with a solid business plan for this new service. Calgary, Fort McMurray, Edmonton and Red Deer form a critical economic corridor in Canada's fastest growing province.
3876 With three stations in Alberta, and hopefully a fourth in Edmonton, Harvard will begin to achieve the efficiencies and economies of scale that are currently available to our competitors.
3877 Madam Chair and Commissioners, critical mass in Alberta is absolutely essential to our Western Regional Growth Strategy.
3878 The River will supply a mainstream adult contemporary format that is missing in the market and that responds to the high demand on the part of the 25 to 54‑year‑old demographic.
3879 We will also give these underserved listeners the musical variety, local news and information they identified as being important to their selection of radio station.
3880 We have committed to 40 percent Canadian content throughout the broadcast day and week. Sixteen percent of our schedule will be devoted to new and emerging artists.
3881 We will promote the development of Canadian talent, both on‑air and off, through our feature programming and with a locally focused CCD package of $1 million.
3882 Granting our application will bring diversity of ownership, a new musical voice, and a fresh editorial perspective to a market that is currently served by just two owners.
3883 Finally, the Red Deer market is healthy, growing, and able to support a new radio station. Red Deer listeners are clearly dissatisfied with existing choices, as evidenced by the fact that one‑third of them are tuning to stations outside of the market.
3884 Given this significant level of out‑of‑market tuning, the booming retail sector, and the fact that our proposed format will be distinctive from all other radio alternatives in Red Deer, we believe that 100.7 The River will repatriate radio listeners and create more hours of tuning overall, with minimal impact on the existing services.
3885 Thank you very much for your attention, and we will be pleased to answer your questions.
3886 THE CHAIRPERSON: Thank you, Mr. Cowie and panel. I am going to start the questioning.
3887 First of all, with respect to spoken word ‑‑ and you touched on it in your opening remarks ‑‑
3888 I want to be absolutely clear that you are proposing 40 percent Canadian content in Category 2 music between 6 a.m. and 6 p.m., Monday to Friday, as well as over the broadcast week.
3889 MR. OLSTROM: That is correct.
3890 THE CHAIRPERSON: Is Harvard willing to accept a COL to that effect?
3891 MR. OLSTROM: Yes, we are.
3892 THE CHAIRPERSON: Thank you.
3893 You have proposed a mainstream adult contemporary music format, and you have described it here and in your brief. I am wondering if you have had a chance to look at the other applications, and I would first like to deal with the Clear Sky application.
3894 Clear Sky has proposed a gold‑based adult contemporary format, which they indicate would cover the biggest adult contemporary hits, spanning 40 years, from 1965 to date; and that their gold music selections would cover the sixties, seventies and eighties, with the seventies as the core decade; and that approximately one‑third of their musical selections would come from the nineties to date.
3895 Could you describe for us what the similarities and differences would be between your proposal and theirs?
3896 MR. OLSTROM: Madam Chair, thank you very much. I will start, and then I would like to turn it over to Daryl Holien, who will give you a breakdown of the differentiation in music between ourselves and Clear Sky, in particular.
3897 Our format, which is a mainstream adult contemporary format, is the most popular format in the country, and it spans a broader range in the demographic skew of 25‑54 adults, so we skew a little bit younger.
3898 The Clear Sky application, in addition to the Classic Hits application that is before you, skews older, primarily 35‑plus.
3899 I would like to turn to Daryl. Maybe Daryl could give you a breakdown of the actual musical component of the radio station and give you the differentiations.
3900 THE CHAIRPERSON: Thank you.
3901 MR. HOLIEN: If we look at the Clear Sky application, we would be playing approximately 20 percent current. Our new and emerging would be 16 percent, as opposed to Clear Sky's application, where their new and emerging is about 5 percent.
3902 If we look at the Clear Sky application, they would be playing songs from Neil Diamond, Barry Manilow, The Hollies, The Stampeders, King Harvest, The Guess Who. Those songs you certainly wouldn't hear on The River.
3903 If you look at our breakdown, we are 20 percent current. We are 10 percent from the seventies, 30 percent from the eighties, 25 percent from the nineties, and 12 percent recurrent.
3904 THE CHAIRPERSON: I just want to make sure that I have those percentages correct. Would you mind giving me those again?
3905 MR. HOLIEN: Sure. We are 20 percent current, 10 percent from the seventies, 30 percent from the eighties, 25 percent from the nineties, and 12 percent recurrent.
3906 THE CHAIRPERSON: That probably doesn't add to 100, but it's close.
3907 That doesn't add to 100, I don't think, does it?
3908 It's good enough.
3909 MR. HOLIEN: Maybe it's 28 percent, I'm sorry.
3910 It is 28 percent from the nineties.
3911 THE CHAIRPERSON: Okay. Good. That's fine, I just thought that maybe I had heard the number incorrectly.
3912 That's good. Thank you.
3913 I didn't mean to cut you off. That is how you would describe the ‑‑
3914 MR. HOLIEN: Yes. Described.
3915 THE CHAIRPERSON: Thank you.
3916 With respect to Golden West ‑‑ and you may have heard their presentation yesterday. They are also proposing an adult contemporary music format, which they describe as a lighter variety of music.
3917 I am just wondering, again, if you could sort of discuss the similarities and differences with your proposal.
3918 MR. OLSTROM: It is difficult for us to do a comparison, because we don't know ‑‑ a playlist was never submitted.
3919 So, for us to compare, it would be difficult.
3920 They did say that their target audience, or target demographic, was 25 to 50 years of age, with a focus on 35‑49 as the core.
3921 As I said, it is difficult, unless you take a look at the music, to do a comparative between ourselves.
3922 THE CHAIRPERSON: Okay. I appreciate that. Thank you.
3923 I just want to review ‑‑ I made a note when I looked at your brief. At paragraph 30 ‑‑
3924 Let me turn to it.
3925 At paragraph 30 you indicate 3 hours and 45 minutes of pure news.
3926 When I did that calculation, I didn't come up to that number, I came to 3 hours and 2.5 minutes.
3927 Would you mind ‑‑ you don't have to do it right now, unless you can point me to what my mistake is ‑‑
3928 MR. OLSTROM: The mistake was the fact that at noon, from Monday to Friday, there is a 10‑minute news package.
3929 THE CHAIRPERSON: Okay.
3930 MR. OLSTROM: There is a more comprehensive news package at noon.
3931 That should add up to the 3 hours and 45 minutes.
3932 THE CHAIRPERSON: It would actually be more than that, then, I think, wouldn't it?
3933 MR. OLSTROM: Pardon?
3934 THE CHAIRPERSON: I had 3 hours and 2.5 minutes. So you want me to add ‑‑
3935 MR. OLSTROM: The noon package is actually 10 minutes in length, Monday to Friday, so adding those up, according to my math ‑‑ which we hope is okay ‑‑ it should be 3 hours and 45 minutes.
3936 THE CHAIRPERSON: All right. We will go with that.
3937 MS McLAUGHLIN: If I could correct that, it is only adding 8 minutes for the five days, because there is a 2‑minute count at noon already.
3938 THE CHAIRPERSON: Okay. Thanks.
3939 MR. OLSTROM: I'm sorry.
3940 THE CHAIRPERSON: No, that's all right. That would make more sense to me.
3941 Thank you very much.
3942 In your presentation today, too, you mentioned that in the last two years ‑‑
3943 You have had a lot of expansion in the last two years ‑‑ Calgary, Fort McMurray and Saskatoon. Those would be large markets, especially Calgary and Saskatoon. Fort McMurray would be smaller than the other two, I think.
3944 What would the population be of Fort McMurray and Saskatoon?
3945 MR. COWIE: The order would be Calgary, Saskatoon, Fort McMurray ‑‑ diminishing numbers.
3946 THE CHAIRPERSON: I am wondering two things: when each of those systems would have launched ‑‑
3947 MR. OLSTROM: Pardon?
3948 THE CHAIRPERSON: When they would have launched. When you would have started operations.
3949 MR. OLSTROM: Saskatoon we just launched in the last couple of months.
3950 Fort McMurray was earlier this year.
3951 And Calgary launched on New Year's a year and a half ago.
3952 THE CHAIRPERSON: So now you are proposing to take on another licence, and, if you were approved, would you be looking a year or a year and a half out?
3953 Is that what you would be thinking?
3954 MR. OLSTROM: Within a year we anticipate that we would be able to launch.
3955 THE CHAIRPERSON: Do you anticipate ‑‑ I understand that you are a good‑sized company, but do you see any problem with absorbing four good‑sized systems at ‑‑
3956 MR. OLSTROM: Maybe I could have Bruce weigh in on that.
3957 MR. COWIE: No, this is part of a well‑planned approach to a western regional broadcasting presence, and we can manage this fine.
3958 THE CHAIRPERSON: Your three stations in Regina you must have owned for a long while, have you?
3959 MR. COWIE: We have owned the three stations in Regina since 1981.
3960 THE CHAIRPERSON: So this is quite a stepping out, as far as radio goes.
3961 MR. COWIE: It is, but "Modest Michael" will not have told you to this point that the alternative rock station in Calgary is doing extremely well.
3962 THE CHAIRPERSON: Oh, I am anxious to hear that.
3963 MR. COWIE: Its ratings are up there.
3964 To describe the e‑mail I got, it said: "Awesome. We rule."
3965 I think that might have been a touch of an overstatement but by and large this station is doing extremely well.
3966 Both Fort McMurray and Saskatoon had technical problems going in that had to be rectified before we could actually go on the air. Fort McMurray is the station of all three that has surprised us. It is doing very well. Now, there are extraordinary costs for operating in that market, as you can understand, but we clearly made the right decision to apply for and launch that radio station. It's being met with huge audience acceptance and the business book looks pretty good too.
3967 THE CHAIRPERSON: And the formats then of the Fort McMurray and Saskatoon, what formats are those stations?
3968 MR. OLSTROM: The format for Saskatoon is a youth contemporary format, and the format in Fort McMurray is an adult contemporary format with a skew to a younger audience in the evenings.
3969 THE CHAIRPERSON: Younger than you are proposing here?
3970 MR. OLSTROM: Oh, yes. No, this is a mainstream AC.
3971 THE CHAIRPERSON: So it would be different ‑‑
3972 MR. OLSTROM: In Fort McMurray we have skewed a little bit younger to cover a wider ‑‑ or breadth, I guess, of audience. With Fort ‑‑ or, sorry, with Red Deer, Red Deer is already being served at the younger end of the spectrum with a hot AC and a rock station. So the mainstream AC is going at the upper end of the 25‑54 demographic.
3973 MR. COWIE: Madam Chair, what might make our application look a little different than some others is that we believe we need to build the infrastructure of this western regional service in the new west, establish it, invest in the early years to make sure that they become relevant stations as quickly as possible and then fold the synergies in that we know are there as step two. That's not always the wisest way to do it but in our case until you know what the pieces are it's difficult not to do it that way.
3974 THE CHAIRPERSON: It actually segues well because I was interested in how your synergies were incorporated in your projections, and maybe we could just look at the projections at the same time then, because it does look like a different approach than some of the others.
3975 It's not apparent that there is a lot of synergies in there because you are forecasting large losses for the first ‑‑ large at least for the first two to three years. Some of the competing applications, as you know, even forecasted a profit in the first year.
3976 So perhaps you could maybe expand a bit on ‑‑
3977 MR. OLSTROM: There are synergies, but they tend to be in the backend.
3978 So I will turn to Tina in just a moment to speak a little bit further with respect to that, but we do believe in invested programming and that's where a lot of our expenses are.
3979 And Tina, if you could elaborate on that?
3980 MS SVEDAHL: Thanks, Michael.
3981 As Michael just said, our programming costs are on the higher end of $4.2 million but we are committed locally and we do spend the money upfront to get the stations underway.
3982 The synergies that we see are solely projected in our G and A costs. We expect there that ‑‑ I projected the G and A savings to be about 5 percent of the total revenue, or about 30 percent of G and A costs but we do focus on centralizing those reporting and accounting functions from a centralized perspective.
3983 THE CHAIRPERSON: Those would be from day one, centralized I expect, will they?
3984 MS SVEDAHL: Yes, yes.
3985 THE CHAIRPERSON: And so all of your programming, all your news, obviously ‑‑ you talked about your news staff. So everything, music programming, is all done ‑‑ will all be done in Red Deer?
3986 MR. OLSTROM: It's all local programming, yes.
3987 THE CHAIRPERSON: And your revenues ‑‑ I don't ‑‑ how do you go about calculating your forecast revenues? Maybe you could tell us that. It's a little bit different than the ‑‑
3988 MR. OLSTROM: Madam Chair, if I could turn to Karen Broderick to speak a little bit about that, about forecasting the revenues.
3989 MS BRODERICK: Actually, I think we will start with Tina first and then I can add to that if I need to.
3990 MS SVEDAHL: Thanks, Karen.
3991 From Harvard's perspective our budgeting process for Red Deer is no different than what we have presented to you in the past applications. We take the top‑down and the bottom‑up approach. In Red Deer the advertising sales are not public information so we had to take it one step further and look at the retail sales.
3992 The retail sales in Red Deer for 2009 are projected to be $2.6 billion and we extrapolated a share point value to be around $182,000 and we grew that further to account for our first year of operation. So our share point for year one, we are projecting to be about $185,000.
3993 And in our consumer demand study the share point is projected ‑‑ was demonstrated to be at maturity around 9.2. Given the broader demographic, as Michael has said, they are older and they take longer to adopt. Therefore, our first year share point is 5.5 to arrive at our million dollar projection.
3994 But I think it's important for Karen to speak specifically to the bottom‑up approach because we take that from in‑market studies.
3995 MS BRODERICK: Thanks, Tina. Yes, we do both approaches. We do the top‑down and the bottom‑up and that's just to substantiate what we determine the share point value as based on the research.
3996 So we take our individual day parts, their estimated sell outs and unit rates and then we multiply that by 52 weeks. So when we did this in this particular case the difference was actually less than $40,000. So we feel both top‑down/bottom‑up that the revenue projections are realistic for the Red Deer market.
3997 THE CHAIRPERSON: So you are comfortable with your revenue figures.
3998 Your sales, advertising and promotion, I wonder, that looks high. I don't know if you compared it to any other applicants or it's based on your experience to date in your other systems?
3999 MR. OLSTROM: As you know, in a start‑up situation it takes significant dollars to get a radio station off the ground and market it within the area.
4000 Tina, would you like to speak to that?
4001 MS SVEDAHL: Sure.
4002 Relatively speaking, it is high based on the numbers before you. If you look at the Alberta statistics, sales and advertising is around 25 percent. So we are definitely a little bit high but, as Michael said, a significant ‑‑ well, 25 percent of our costs in sales and advertising is in promo upfront.
4003 So again we are, you know, focusing on getting our radio station underfoot in the local market and spending that money in that area.
4004 THE CHAIRPERSON: And I see that you have got a steady increase in advertising dollars even out over the whole period ‑‑
4005 MS SVEDAHL: And it's a fragment of the way we budget because it's a percentage of our revenues so you do see growth in that area.
4006 THE CHAIRPERSON: And ‑‑
4007 MS SVEDAHL: And also in the sales commissions. I guess I have to comment on that too, sorry, because we have sales people on commission. Of course, their commissions are going to go up as our revenue gets higher, so we would expect that to occur.
4008 THE CHAIRPERSON: And obviously, I notice that the funding is all in‑house. So there is no interest showing here. So you don't ‑‑
4009 MS SVEDAHL: That's correct.
4010 THE CHAIRPERSON: ‑‑ record any interest in here?
4011 MS SVEDAHL: That's correct.
4012 THE CHAIRPERSON: And I understand from the application that carrying these losses is not an issue, financially?
4013 MS SVEDAHL: Not all, no.
4014 MR. COWIE: I just might add without going on too long about this, but the ‑‑ our vision of this infrastructure in the new west is that there is a growing connective between the Prairie provinces and, as a minimum, eastern British Columbia. If you draw lines north, south, east and west, agriculture flows right across through to southern Manitoba. In Alberta the economic corridor that will drive this country if not the North American continent over the next 30 or 40 years, starts in Medicine Hat, moves its way north through Calgary, Red Deer, Grande Prairie, Fort McMurray, and all of that provides the energy that will drive the economy over time.
4015 So if you look at that same kind of structure in Saskatchewan, Regina sits in the middle of the Prairie bread basket, so to speak. South of that are oilfields and a significant contributor to energy as long as we are using those kinds of fuels.
4016 And if we are not, north of Regina has the other answer, which is all kinds of field crops and so on, and off to Yorkton to the east of us which picks up the parkland and very expensive farmlands that are growing canola seeds and that sort of thing over there.
4017 But follow it straight north through Saskatoon, Saskatoon has become the industrial centre in Saskatchewan, and then north to the higher grade uranium deposits in the world.
4018 So there are two north‑south corridors. We are interested in both of those because these will be the growth areas in the west.
4019 And agriculture, you know, everybody sitting at this table has been waiting for Saskatchewan to be a strong, healthy economic province for a long time. If you read the Post the other day and read the story on Saskatchewan, the numbers are incredible. Farm income has never been at these levels in my lifetime that I can recall.
4020 We always had an axiom in Saskatchewan that said that when wheat was worth $12.00 the bins were empty; when the bins were full wheat was worth $3.00. That isn't happening anymore. I mean the land prices in Saskatchewan are sky high, and so on and so on.
4021 So we think we need to occupy the east‑west corridors that provide food. The east‑west corridors also provide water that supplies all of the basics to get the economy going and also feed stocks into the United States.
4022 So the new west is real and we think that we need to be there, participants in that, supporting smaller markets who have to find their way into this new regionalized kind of thinking. We are not proposing that but that's in fact what is going to happen.
4023 Red Deer is going to be a different place. Red Deer is a key element in the north‑south corridor in this province. And the Red Deer region because of its distribution abilities and so on is going to be a very important cog in Alberta over time.
4024 So we see kind of a bigger picture and it's not going to be for the timid to go and fill in all those spots, but the rewards we know are there, and that we can be of a service to western Canada and the country by being relevant radio stations in those corridors in the markets that are there.
4025 THE CHAIRPERSON: What type of ‑‑ or what period of time are you looking at, are you talking about here as far as growing out your radio station in parallel with the way you see the economy going?
4026 MR. COWIE: Well, I would like to hear Mr. Menzies on that point at some point but the ‑‑
4027 THE CHAIRPERSON: You probably will.
‑‑‑ Laughter / Rires
4028 MR. COWIE: Because he knows.
4029 But it is happening much faster than even we thought it would. Nobody could have predicted what is going on in Saskatchewan a year ago. Well, maybe a year ago, but two years ago couldn't have.
4030 And the ideas, you know, about economic union across the west which makes so much sense are beginning to percolate. There have been reports.
4031 In fact, the first one that was done by the Conference Board of Canada, Paul Hill, our owner, was one of the authors of that. It got lost in some political milieu somewhere but the economic idea made all kinds of sense.
4032 Those arguments are going to be brought forward and so on. Our job as we said to you before, as we are doing in Fort McMurray, was to have people who come, work and live there, understand what they are a part of, what they are contributing to and what good they can do not only Alberta, Saskatchewan, Manitoba; North America, for the world.
4033 This is an exciting place to be and, you know, as Jessica Simpson says, I don't really understand any of this but I want it.
‑‑‑ Laughter / Rires
4034 THE CHAIRPERSON: Well, maybe you will send a little back out to the far east for the rest of us.
4035 But I actually was trying to focus in as well, just following on in parallel with your comment about the growth in the economy here, your longer term future plans then for your radio operations as a whole. I mean we are here today talking about Red Deer.
4036 MR. COWIE: Right.
4037 THE CHAIRPERSON: But you have a longer term strategy that you see planned out five, ten years?
4038 MR. COWIE: Yes.
4039 THE CHAIRPERSON: Or how far ahead have you gone?
4040 MR. COWIE: Well, I guess it's about how long I last. I don't know.
4041 Really, the main ‑‑
4042 THE CHAIRPERSON: You want to be sure to enjoy the fruits of all your labours, so hang around for a long time.
4043 MR. COWIE: The main pieces of this strategic plan we will have before the Commission within a three‑year period. Three to five years is when most of this change in the west is going to take place and some of the markets might surprise you.
4044 But our focus currently is on ‑‑ where we think the main driver will be is the north‑south corridor in Alberta. That will be the economic driver of this country for a whole bunch of reasons. I mean, there is everything there.
4045 Now, currently it's based on mostly fuels. The truth be told, I think the tarsands probably has a larger deposit in Saskatchewan than it does in Alberta; hasn't been touched yet.
4046 And so the migration will move with ‑‑ I think there will be a highly skilled workforce, productive workforce that will move freely throughout this western region and it will be a powerhouse, you know, for our federal place in the world.
4047 THE CHAIRPERSON: It's interesting too ‑‑ and I can see my colleagues and I can see Peter is moving up in his chair. They are going to have questions for you ‑‑ it's interesting too because when we are looking at what information staff has given to us on the prospects for this market, you know, you have to ‑‑ you tend to be a little conservative. Is it going to continue on ad infinitum?
4048 And it does seem, at least from your remarks that it's going to continue on for some long time. So that's encouraging.
4049 MR. COWIE: And it's going to have to take on a leadership role.
4050 THE CHAIRPERSON: Just to lead into another aspect more specific to Red Deer then, how many say systems or licensees do you think that the market could sustain at this point in time?
4051 MR. COWIE: Every city in this country would like to have the growth possibilities of Red Deer. We think you could safely licence two radio stations in this market.
4052 THE CHAIRPERSON: Two.
4053 I notice, just to get back to the market itself, you indicate that you expect to take 35 percent of your year two revenues, or about $456,000 from existing radio stations. And I was just wondering if you had attempted to break that down or could give us a breakdown by station?
4054 MR. OLSTROM: Commissioner Duncan, yes, we believe the revenues will be split amongst the radio stations.
4055 I would like to turn to Karen to give you a breakdown of where we believe those revenues would come from.
4056 MS BRODERICK: We have predicted approximately 35 percent would come from existing stations in the market. In a market this size it's unrealistic to think that we are not going to take a little bit from everyone. Given, though, that advertising revenues are driven by demographics we will probably take the most revenue from those stations that skew a little bit older.
4057 So if you want a breakdown in that order we would think that it would be CFDV, the Drive, would be ‑‑ you know because they skew, the oldest that would probably be at the top, followed by CKGY, KG Country, and then CHUB Big 105 ‑‑
4058 THE CHAIRPERSON: I just want to make sure I don't miss anything. CFDV is classic rock?
4059 MS BRODERICK: Yes.
4060 THE CHAIRPERSON: And did you offer a percentage or are you just saying ‑‑
4061 MS BRODERICK: I haven't broken it down specifically into percentages. This is just based on ‑‑
4062 THE CHAIRPERSON: By sort of the order?
4063 MS BRODERICK: ‑‑ their demographics and ‑‑
4064 THE CHAIRPERSON: Okay.
4065 MS BRODERICK: ‑‑ who they serve. It would be the Drive, KG Country, Big 105 and Z99 in that order.
4066 But having said that, the projected growth for retail sales in Red Deer is 37 percent over the next five years, so with that comes increased advertising revenue in the marketplace. So we don't feel, because of the growth and the robustness of the marketplace that a new station whether it's one or two new licences would have undue impact on any one of the existing stations.
4067 THE CHAIRPERSON: I thought perhaps you would have your biggest impact on CHUB, the hot AC. You don't ‑‑
4068 MS BRODERICK: Well, we look at it this way because ‑‑
4069 THE CHAIRPERSON: You are using their local names like Big 105 and Z99 and I just don't convert that quickly, sorry.
4070 MS BRODERICK: Sorry.
‑‑‑ Laughter / Rires
4071 MS BRODERICK: CFDV probably has the closest target audience to our station, our proposed station.
4072 THE CHAIRPERSON: Yes.
4073 MS BRODERICK: So that's why we feel that they would be the most impacted.
4074 THE CHAIRPERSON: Okay.
4075 MR. OLSTROM: And if I could just turn to Daryl for a moment to speak in turn musically, which differentiates us from the hot AC and the duplication, we found between what we are proposing with the River and what CHUB currently programs, that may help you gauge the impact.
4076 MR. HOLIEN: If you look at our playlist and what CHUB is playing we actually only have an 11 percent duplication across the market and that duplication was most prevalent in the currents and the 2000 to 2006 years.
4077 When it comes to a hot AC station they typically repeat their most popular tracks around 35 to 40 spins a week. A mainstream AC station, on the other hand, we are only looking at about 20 to 25 times a week and this allows for the service to have a larger library which in turn means less repetition, broader range of artists, fewer spins.
4078 Also, with the hot AC station they tend to play tracks from the Bon Jovis and the Aerosmiths and they also play some modern rock tracks from Linkin Park and Fall Out Boy. They also play some urban like the Black Eyed Peas or Akon which you certainly wouldn't hear on the River. So I think that shows how we are totally different from what they are.
4079 THE CHAIRPERSON: Okay. Thank you.
4080 In your deficiency response on March the 5th you identified 90.5 MHz as an alternative frequency but you indicated that it's not capable of meeting your overall objectives because it doesn't provide the same coverage. You also indicated that use of this frequency would have some impact on your business plans.
4081 So I am just wondering if you could elaborate on those statements.
4082 MR. OLSTROM: Commissioner Duncan, if I could ask Tina Svedahl to speak to what it will do with our business plan?
4083 THE CHAIRPERSON: Thank you.
4084 MS SVEDAHL: Thanks, Michael.
4085 When we looked at the difference between the two frequencies there definitely is a difference there but it's pretty modest. So our projections wouldn't change.
4086 THE CHAIRPERSON: Oh, they wouldn't?
4087 MS SVEDAHL: No, like a very modest change, if any.
4088 THE CHAIRPERSON: Oh, okay. So maybe when you answered the question you just hadn't really had the chance?
4089 MS SVEDAHL: Yes, when we really looked at the coverage in a little bit more detail it was clear that it was pretty modest.
4090 THE CHAIRPERSON: Okay. All right.
4091 That's great then. Thank you.
4092 Turning to CCD, I am just wondering if Harvard Broadcasting is willing to accept the imposition of a transitionary Canadian Content Development condition of licence which will expire when the amendments to the radio regs come into force?
4093 MR. OLSTROM: Yes.
4094 THE CHAIRPERSON: Thank you.
4095 And just wondering on an ongoing basis, what steps you will take to ensure that the beneficiaries of your CCD contributions continue to comply with the regulations and the disbursement of the funds? Would you be actively involved with them on an annual basis just to make sure the funds are going as you ‑‑
4096 MR. OLSTROM: Well, for example, with AMIA and the travel systems plan that we are involved in actually in our Calgary radio station which has ‑‑
4097 THE CHAIRPERSON: Yes.
4098 MR. OLSTROM: ‑‑ exceeded our expectations, we through our CCD coordinator in Calgary have an ongoing communication with AMIA to ensure that the funds are being distributed and there is an ongoing dialogue there.
4099 THE CHAIRPERSON: And the other part ‑‑ let me just turn to ‑‑
4100 MR. OLSTROM: If I could also add, Commissioner Duncan, that the recipients will also be required to file a report with us on an annual basis.
4101 THE CHAIRPERSON: Okay.
4102 But I guess I am concerned that you don't want to hear after the fact they have done it, disbursed the funds differently than what you anticipated. So will you be in contact with them sort of as a reminder?
4103 MR. OLSTROM: No, there will be ongoing discussion as there is ‑‑ as we currently do with our CCD contributions in other markets.
4104 THE CHAIRPERSON: Thank you. Thanks.
4105 MR. COWIE: I might just add, Madam Chair, that on that point we have letters of agreement from the recipients of these funds to in fact make those reports available to us on an annual basis.
4106 THE CHAIRPERSON: And have those been filed or would you file them with the Commission?
4107 MR. COWIE: They have not been filed, but we will.
4108 THE CHAIRPERSON: Okay, that's great. Thank you. I suppose we would need that by the end of the day today, if that's possible. Thank you.
4109 Now, I think that's all the questions that I have right now but I reserve the right to come back if I think of something else.
4110 MR. OLSTROM: Commissioner Duncan, if I could just follow up on one of your initial questions with respect to the comparatives between Vista and Clear Sky, and I don't think we got on the record the differentiation with Vista and I would like to ‑‑
4111 THE CHAIRPERSON: Oh, I didn't ask about Vista but I'm happy to hear it. Okay, go ahead.
‑‑‑ Laughter / Rires
4112 THE CHAIRPERSON: Just a minute there. Okay, go ahead.
4113 MR. OLSTROM: I would like to have Daryl speak.
4114 THE CHAIRPERSON: Certainly.
4115 MR. HOLIEN: If we look at the Visa application it's a breakdown of the eras and the currents and the new and emerging that will be the difference between us and them.
4116 Just to give you some numbers, the Vista application they are projecting 75 percent from the eighties whereas we would be 40 percent from the eighties.
4117 The River will be 20 percent current and the Vista application appears to be 15 percent current.
4118 The Vista will be 35 percent Cancon, the River will be 40 percent, and 40 percent of that or 16 percent of our total broadcast schedule will be new and emerging artists.
4119 THE CHAIRPERSON: So now I think you had told me earlier that the eighties would be 30 percent; is that correct? Did I get that right?
4120 MR. HOLIEN: No, if you look at ‑‑ what they should be. I'm sorry. It should be the seventies and the eighties the Vista will be a total of ‑‑
4121 THE CHAIRPERSON: Oh.
4122 MR. HOLIEN: ‑‑ a total of 75 percent, and if you take the seventies and eighties our total will be 40 percent.
4123 THE CHAIRPERSON: Okay, thank you.
4124 MR. HOLIEN: Okay, thank you.
4125 THE CHAIRPERSON: Appreciate that. Thank you, thank you.
4126 So now Commissioner Cugini will start.
4127 COMMISSIONER CUGINI: Thank you, Madam Chair, just a couple of follow‑up questions.
4128 I heard you when you said this is the single most popular format, over 75 percent of the songs on the AC chart are not being heard on Red Deer radio; out‑of‑market tuning a lot of that is going to AC stations. You used the word "more" a lot even in your video. But then when I look at your share projection you are at the bottom of the pack. You are actually second to last of all the applicants.
4129 So I have a little bit of a disconnect there that I would like you to fill in for me. If this is the most popular format in radio why are your share projections so low for this market?
4130 MR. OLSTROM: Commissioner Cugini, I would like to have Debra McLaughlin weigh in on that based on the research.
4131 COMMISSIONER CUGINI: Thank you.
4132 MS McLAUGHLIN: Our share projections are of course based on the consumer demand we did. And when we looked at the responses by demographic in the survey and factored in the discounts that we typically do, the mature share, not the potential for the mature format but the mature share is 9.2.
4133 Because there is some service to the older demographics, because CBC for example takes up quite a bit of hours of tuning in the market, it's unreasonable and it's typical actually for older portions of the market to tune or to switch as quickly. So if we were doing a younger format here that share or the discount we would apply would be less, but we have only assumed that 60 percent in year one of that mature share would come to us.
4134 So if we look at what is happening in the market, the shares that are there, those are established listeners. We are counting on getting people, a large proportion of our audience in fact, from out of market. When we look at it, 36 percent of our core audience, our overall audience actually, will come from end market tuning. We are going to have a tough time converting from people who are established in like what they want.
4135 24 percent of our total hours tuned are going to come from bringing people back to radio. That's a big chunk of numbers to convert people back to a medium. 40 percent is going to come from out of market.
4136 Because we are not thinking we are going to take from people who are using radio in the market, we are going to take it from people who are tuning out, getting people to tune back in, we have to be more conservative in that approach. We are actually trying to bring people back to radio and to the market, which is a little tougher angle than simply taking it from another station that's already in the market or converting people who are listening to radio now.
4137 COMMISSIONER CUGINI: And the assumption on the 24 percent who are currently not using radio, I guess on a sociology basis, are you assuming that these are people who are listening to their CDs, listening to their iPods, listening to internet radio? Where is that 24 percent of the population getting their music?
4138 MS McLAUGHLIN: Well, all of those in fact.
4139 In terms of estimating that 24 percent we didn't just pull that number out of the air.
4140 COMMISSIONER CUGINI: I didn't think you did.
4141 MS McLAUGHLIN: We actually asked people if they had the format that they ‑‑ a format that they liked, if the music they wanted with local news was provided to them what was their likelihood of tuning more to radio. So that encaptured people who currently aren't tuning at all, people who are tuning less. And over two‑thirds of the people who were interested in our format said that they would tune more to radio, so we know we can convert them.
4142 The conversion in that kind of ‑‑ if they are on satellite radio, for example, they have a subscription. They are not going to dump out of that because there is one single commercial station. If they have a robust iPod collection and an MP3 and their car can handle it they are not going to come to us.
4143 So realistically and watching how the performance in other markets has laid out when people introduce new formats, we know that this format has the greatest potential, which is why we think you need a format like that, frankly, in this market. But it's also going to take some time to build to that potential.
4144 COMMISSIONER CUGINI: Because of course the context of the question is you could be underestimating your potential and therefore underestimating your impact on the incumbents.
4145 MS McLAUGHLIN: Well, again, we are only expecting just slightly more than one‑third of our core audience to be coming from them. So what would the range there possibly be, 10 percent?
4146 And we are talking ‑‑ if you just look at the numbers in a real sense CHUB, for example, would lose 1.7 rating, like they are close to 19 rating or share points. That's not a big loss. I have got to think that with an aggressive sales team with two stations in the market already entrenched and relationships in place that that isn't going to really impact their revenues all that much.
4147 COMMISSIONER CUGINI: Okay, fair enough.
4148 I just want to hone in a little bit on your core audience. I know in response to deficiencies when you were asked this question you did say that the target and core audience is the 25 to 54 demo and you did also in your oral presentation today say that the two age groups noted 25 to 54 and 35 to 44 as having expressed a level of dissatisfaction with the existing services. But that's pretty broad.
4149 What is your core audience, and you have been asked this question before. Therefore, what is the median age of your average listener?
4150 MR. OLSTROM: Median age is ‑‑ median age, Commissioner Cugini, is 40.
4151 COMMISSIONER CUGINI: Are you skewing male or female?
4152 MR. OLSTROM: Female, obviously, with an AC format which tends to skew female.
4153 COMMISSIONER CUGINI: Okay, and just one parting remark, Mr. Cowie.
4154 I guess I'm going to have to suck it up. Toronto is going to be the former centre of the universe or already is.
‑‑‑ Laughter / Rires
4155 COMMISSIONER CUGINI: Thank you, Madam Chair.
4156 THE CHAIRPERSON: Commissioner Molnar?
4157 COMMISSIONER MOLNAR: Thank you, good morning.
4158 And I wasn't really clear from your comments if you were thinking Saskatchewan was going to be the centre of the universe or if it was here in Alberta.
4159 But I did want to speak to you about your regional expansion plans. I understand your desire to grow within this region and there is many people in this room today who have a desire to grow within the region. You mention in your statements, and I am just looking at page 14 of your comments right now where you mention that you will begin to achieve the efficiencies and economies of scale that are currently available to our competitors.
4160 You spoke briefly of some, I would suggest, relatively minor synergies that you would achieve with this station at this point and back office, but as you talk about your strategy for expansion, regional expansion, do you have a strategy as it relates to those efficiencies and economies of scale?
4161 MR. COWIE: We do, and it's being built in parallel with our plan to build the system. It goes beyond just economics.
4162 There will be a speak in this part of the world which requires strong local broadcasters who have a different voice than some of the large national players and so on. That's also part of the expansion that we are working on here, is that there be a diversity of voices in the west from strong, regional broadcasters like ourselves. And this is not to deter anyone else.
4163 But I just thought, and I really probably shouldn't have gone off as quickly on that as I did, but the perspective at the root of what we are trying to do is important because we have been around broadcasting a long time and the fact is ‑‑ and you will hear this from Elmer Hildebrand, you will hear it from others ‑‑ we cannot compete with large publicly‑funded companies in the acquisition of licences. We just can't. They have ‑‑ to put it more clearly, they have a lot more money than we do.
4164 We can build local stations. And you will note from a descriptive of what the Harvard stations are they are different in every market because they are built around the research that tells us what the people in those markets want.
4165 So some synergies are lost, I guess, in not having a cookie cutter format but we have no intention of doing that. We have ‑‑ our single focus has always been to serve the local markets, which is what we are doing.
4166 But we will put into effect all of the synergies that are available to us, that are available to others in the broadcasting industry today, short of in any way giving up our local service. And that will follow. You know this is not, as I said to Madam Chair, this is not for the timid.
4167 I suppose our vision could be completely wrong but I don't see ‑‑ there is nothing on the horizon that tells me that. You drive into Calgary today and there are signs right on the highway now, "Welcome to the New West". I mean it's ‑‑ what is going on here is real.
4168 We need to acquire synergies both in programming, because this will become ‑‑ will have a regional aspect to it, the western ‑‑ at least the Prairie provinces. British Columbia will be part of that but to a lesser degree.
4169 So we will want to get all the synergies we can in programming. We will make sure that we have ways of finding training and retaining the best people we can get and so on, but all of the stations will be local but they will, as an over kind of umbrella to all of that, be tuned into what part they play in the larger area which is the west. We will not go east of the Manitoba/Ontario border. They have their own reasons to deal with there.
4170 This is more of an opportunity and in our case it's something that we feel we have to do. We can be very comfortable with three radio stations in Regina that do very well but there is ‑‑ we are all born and raised in the west. You know, we have a great passion for our future. We see it before us now beginning to unfold as we always wanted it to but never thought it might.
4171 So the synergies will be there. We are already very well advanced in our connectivity in terms of computer systems and that sort of thing. But the real hard synergies of making sure that our costs are in line with where they need to be ‑‑ and I am reminded about this from others, just so you know, and the daughter of one of them is sitting at the table.
4172 But we made a hard conscious decision that you can't do it one or two stations at a time and try to put synergies there. Now, we are doing accounting right now out of Calgary for Saskatoon and Fort McMurray. So we have started. But really, there is more to it than that in the long run. There is a philosophy that has to be part of the synergistic thinking and so on, and getting the right people and the right programming and so on that's over and above the intensely local service.
4173 MR. OLSTROM: And if I could add too, some of the synergies obviously come when you add more licenses. So it allows you as you grow ‑‑ as you acquire each licence there is more synergies that can develop from that as well.
4174 COMMISSIONER MOLNAR: Right.
4175 And I think synergies can occur on two sides and you have touched on both. One are the costs, the operational efficiencies, being more productive and cost‑effective and you have touched on that and that will grow over time. The other one that I am not perhaps understanding well, and you mentioned it, is on the programming side.
4176 If you are to grow to become a regional ‑‑ you know, to really cover that north‑south corridor or the east‑west corridor within this economic region, do you see being able to contribute something particular, something new as it relates to programming or news or something by having that base, you know that coverage base?
4177 Do you see being able to cover things differently to add additional programming or what do you see being the advantage to our broadcasting system by having ‑‑ you know, you have that regional coverage?
4178 MR. COWIE: Well, the benefit to our listeners is that the connectivity to any one of our markets in the west from a news point of view is instant because, you know, presuming that we are able to acquire the licences that we propose to acquire; and that stories generally on the political level, public level will affect most of the stations in this region.
4179 So those will be dealt with by local stations, but if the big news story of the day is in Saskatoon, that will be instantly available in the other the stations throughout the west and so on.
4180 But, you know, these are automatic ways to proceed with those kinds of synergies.
4181 But the one that appeals to me too is that we will have some very small markets. We have acquired, subject to CRTC approval, the Yorkton market north and east of Regina which is a very small market and they're right in the middle of this huge agricultural boom in Saskatchewan right now.
4182 So, there's a story to be told there that's of interest across the west.
4183 So, you know, we're not going to do regional newscasts or anything like that. All newscasts will remain local in all of our markets, but they will have input from anywhere in the west that's all part of the region we live and work in.
4184 MR. OLSTROM: Ms Molnar, if I could just add a little bit.
4185 One of the choices we make when we go into these markets is to focus locally and local programming on those markets. So, when you do that there tends to be lesser on the synergy side of things from a programming perspective.
4186 We'd share ideas on a programming perspective, our programmers within our company do conference calls and we have an FTP site where they share ideas. There may be an opportunity to share ‑‑ if a feature's on our Red Deer station is created, we may want to share that of relevance to some of the other stations that fit formatically.
4187 But we do focus on the local market. So, from a programming perspective, you will find lesser synergies because we are so heavily focused and, as you can see by our business plan, we invest in programming.
4188 COMMISSIONER MOLNAR: Okay. Thank you very much, and I think I do understand. So, where you say here:
"Critical mass in Alberta is absolutely essential to our western regional growth strategy..." (As read)
4189 COMMISSIONER MOLNAR: That is simply for operational efficiency purposes?
4190 MR. COWIE: Well, in providing critical mass and making sure that our decision to stay in the west, to be a part of the ‑‑ and most of us were born and raised in the west ‑‑ be a part of this next time is important for us to be able to operate at a very high level, provide those local services and be a distinctive regional voice where we need to.
4191 And there will still be large national companies who own licences in western Canada, many of the markets we're talking about, and they're good local citizens by and large, but there is a different perspective, we think, of people who live and work out here, were born here.
4192 It's not any different than the Atlantic provinces, it's not any different than Ontario, Quebec. There is a need within those regions to talk to each other on the basis that you always have.
4193 So, it's a little bit of ‑‑ I guess we're dreaming a bit ‑‑ but at the same time, we're trying to face the realities of what's really going on here and things are changing very fast.
4194 COMMISSIONER MOLNAR: Thank you.
4195 That's all I have, Chairman.
4196 THE CHAIRPERSON: Commissioner Menzies.
4197 COMMISSIONER MENZIES: How big do you expect this market to get in terms of economic growth, and how much it can handle?
4198 Because it strikes me that, quick math in my head, there will be 125,000 people in Red Deer in 10 years if growth continues and that we might be back doing this again at some point.
4199 But what sort of economic growth do you foresee in the next five to six years?
4200 MR. OLSTROM: Well, I guess if there's frequencies you may be back here again at some point in time.
4201 I'd like to turn to Debra McLaughlin, and maybe Debra can give you some background on that, Commissioner Menzies.
4202 MS McLAUGHLIN: Well, we certainly looked at all of the publicly available data, all of the bank information and Stats Canada and, of course, Financial Post.
4203 Just in their 2007 document they predicted an increase of 37 per cent in the next five years on retail sales.
4204 The population trends for this market, we're sitting at about five per cent. That was the difference year‑over‑year in census and they have sort of flat lined it, I believe, between three and four.
4205 But, having said that, average incomes were expected to increase by 23 per cent in that same five‑year period I was talking about.
4206 And my most recent conversation with the Conference Board of Canada said that when it comes to this area, particularly with the changes that we've seen globally and the importance of the production of food, that they're having a tough time making those predictions because when you have one sector exponentially change, it doesn't allow you to use those projections out based on historical trends.
4207 So, right now we're all sitting here saying, is it the three, the four population growth, is it the 37 per cent, does it continue longer or are we going to have a big bubble?
4208 What they can say for sure that in terms of being an economic driver within the country, this area, not just Red Deer, is certainly forecast for the next 10 to 15 years to be it.
4209 Given the opportunities in this area and the fact that there are so many industries and expanding at that, you know, I'd like to put a number on the record, but I ‑‑ you know, I would probably end up saying, you know, I'd under estimate it.
4210 COMMISSIONER MENZIES: That's fine. I didn't need number, I just wanted an assessment of whether it was a bubble or not.
4211 MS McLAUGHLIN: There's a bubble happening right now. How long that continues, we don't know.
4212 I mean, you know, does it become a trend or is it a bubble? But it's definitely a bubble at the moment, only time changes it into a trend.
4213 COMMISSIONER MENZIES: Yes, yes, I know. Economists have accurately predicted the price of oil three times in the last 30 years.
‑‑‑ Laughter / Rires
4214 COMMISSIONER MENZIES: Thank you.
4215 THE CHAIRPERSON: Commissioner Patrone.
4216 COMMISSIONER PATRONE: Thank you, Madam Chair.
4217 Good morning.
4218 I'm going to start by expanding on some of the questioning that was made concerning news and information programming.
4219 You spoke about the need to provide balance and reflect regional differences and an editorial perspective.
4220 Why did you feel the need to stress that in your presentation, and how will that be reflected in your news programming?
4221 MR. OLSTROM: Well, we believe that ‑‑ we conducted extensive consumer demand research on Red Deer. The research came back to us telling us the single most important element, and this comes up a lot of times, is local news and I believe in this survey it was over 94 per cent.
4222 There's a demand for local news. It's evident across all demos, young and old. The research we had conducted by Strategic Inc. showed us that 75 per cent of those surveyed believed that there was a need for diversity in sources of radio news and that that was important.
4223 We found there to be a clear void within the marketplace to serve that.
4224 Red Deer is not necessarily in need of more hours of news, it is in need of a different perspective, different sources of news.
4225 One of the key distinguishing features that we believe we'll have is our 10‑minute noon package, Monday to Friday, which will give us an opportunity to focus more in depth, it gives our reporters an opportunity to delve into stories a little bit more and, at the same time, gives us an opportunity to speak to the things that impact this market and this region which, petro chemical and oil industries, the service sector that Red Deer is, there will be a business report, an ag report, because agriculture obviously another important driver in this area.
4226 So, that will give us an opportunity to expand on that type of news and information as well within the market.
4227 You know, if I can speak to Harvard in particular. We operate in communities like Red Deer, Saskatoon, Fort McMurray, Regina which are all agricultural resource‑based communities.
4228 For example, 620 CKRM in Regina, our heritage AM radio station, is known as a community leader in news and information and we believe we're going to bring that passion, that focus to the Red Deer market and I guess give our perspective, Harvard Broadcasting's perspective on the west and on Red Deer.
4229 COMMISSIONER PATRONE: You're talking about longer formed stories, like investigative journalism?
4230 MR. OLSTROM: I don't know if ‑‑
4231 COMMISSIONER PATRONE: Do you have the staff for that?
4232 MR. OLSTROM: I believe we do have the staff. In these day and ages, you know, we multi‑task and we work harder and we believe that there's an opportunity to do more in‑depth stories.
4233 We're not talking 10‑minute stories, we're talking a story, instead of the headlines you're going to get maybe a minute and a half of a story that has a little bit more focus with an interview and that sort of thing that, you know, there is some more depth to it.
4234 COMMISSIONER PATRONE: Three reporters that you'll be able to put on the street?
4235 MR. OLSTROM: Well, yes, absolutely. Three and a half, there's a part‑time reporter ‑‑ news reporter/reader.
4236 COMMISSIONER PATRONE: I love those 0.5 reporters.
4237 You refer to your editorial staff as reader/reporters. Does that mean that they report as well as anchor. Are these people sort of interchangeable?
4238 MR. OLSTROM: Absolutely. There will be a news director, but he as well, or she as well will be involved in managing that department, but also doing the reading/reporting as well.
4239 COMMISSIONER PATRONE: Can you speak about your plans for monetizing the streaming audio part of your operation relative to news and information programming?
4240 MR. OLSTROM: We're looking at the website for the River as an extension of our brand and our on‑air product. It's an opportunity for us to do polls ‑‑ listener polls.
4241 For example, in Regina we're doing that currently on a couple of our radio stations where we have listener polls, both musically and say topic of the day and we are able to take that information and feedback and use that in our on‑air programming.
4242 So we're a link to the community, it's a 24/7 link. We're looking at this as more of a ‑‑ at least in Red Deer in the initial stages in terms of monetization, it is an added value for advertisers, so that we are able to offer something a little bit more because of the ‑‑ you know, maybe there's some incremental spending that we can acquire by giving that added value for our website.
4243 So, in terms of monetization, that's more where that's going to come out, at least in the initial stages with the website.
4244 We'll be streaming and providing community information, a lot of typical things that a website does.
4245 We've been involved with websites, starting in Regina, for a number of years, 10 years ‑‑ pretty close to 10 years and they've strictly been used as a listener benefit more than anything else, an extension of the radio station.
4246 So, the monetization, as I said, here in Red Deer is focused on adding that value for incremental spending potentially.
4247 COMMISSIONER PATRONE: Do your reporters file directly to the web ahead of ‑‑ I understand that you're going to have streaming audio but, for instance, if your reporter were to break a story ahead of the next scheduled newscast, would that individual be encouraged to file directly to the web or wait until the newscast goes ‑‑
4248 MR. OLSTROM: Potentially, yes, but I believe if the story is of significance, that is as you say a breaking story, that we would go to air with that immediately, or within ‑‑ you know, we're not going to cut the song off but we're going to, you know, as soon as we can we're going to jump in.
4249 Because if there is relevance to a story and importance to a story of that nature, absolutely, that's what we're there ‑‑ we're there to serve the community, not only from a music perspective, but from an information perspective as well.
4250 COMMISSIONER PATRONE: Will there be many opportunities for your reporters to be filing live from the scene?
4251 MR. OLSTROM: Absolutely, yes. I ‑‑ you know, I use that as example ‑‑ again, example, our heritage AM station in Regina. We do that all the time.
4252 If there's something happening, the reporter's out and at the scene and filing a report and getting it on the air as quickly as possible.
4253 COMMISSIONER PATRONE: I'd like to ask you a couple of questions concerning your initiatives as far as emerging artists are concerned.
4254 Your Made in Canada show, that's two hours on Sunday and then aired again...?
4255 MR. OLSTROM: On Wednesdays, yes, Wednesday evening.
4256 COMMISSIONER PATRONE: How will the Canadian artists be chosen? Who makes that decision; is it done by a committee, or is there one individual who will be designated with the job of screening CDs and that kind of thing?
4257 MR. OLSTROM: Maybe I'll turn to Daryl who's actively involved I guess in this aspect as it is right now and have Daryl explain to you how that process works.
4258 MR. HOLIEN: In Regina we receive a lot of great music from the recording companies and we're also on the street actively trying to encourage new and emerging artists to drop off their CDs, drop off their tapes, whatever they've got, and we select them as with their compatibility obviously to the format.
4259 If you look at the radio station in Regina right now, a new and ‑‑ you know, you hear there like Hayley Sales, you hear Justin Hines, Brian Melo, Susan McNeil. So, we would look at the same process at the station in Red Deer as well.
4260 COMMISSIONER PATRONE: And what percentage will be Alberta artists versus other artists, and will that show be aired at your other stations? Will the same show be aired in Fort McMurray and Saskatoon?
4261 MR. OLSTROM: The show is locally focused and developed and created for Red Deer. I guess if there was a desire to carry it in Fort McMurray, for example, where there would be some correlation with the Alberta artists, that would be worked out between the program directors.
4262 And I guess it's a potential, but also in Fort McMurray, you got to remember that, you know, we have our own programming, we're creating all our programming locally there as well.
4263 So, sometimes it doesn't work from a programming perspective.
4264 MR. HOLIEN: The percentage I'm not sure you can ‑‑ you have a control of the amount of music that is released. We don't ‑‑ we don't have the ability to say "x" number of per cent is going to be from here because we don't control the supply.
4265 COMMISSIONER PATRONE: I understand.
4266 Now, I see your scholarships will be awarded to ‑‑ well, half of your scholarships will be awarded to Aboriginal students.
4267 MR. COWIE: That's correct, yes.
4268 COMMISSIONER PATRONE: Can you talk a little bit about any other corporate or programming initiatives aimed at promoting diversity?
4269 MR. COWIE: Well, if we're talking across the face of what we do, we're active in three of our markets in mentoring programs for editorial youth in the news end of the business, so that would be young reporters and that's done in association with APTN.
4270 In addition to that we are supporters and founding supporters of ANF, which is the larger fund which is operated or also funded by APTN which is broader than just news mentoring for news reporters and writers. So, we're active in that.
4271 In Calgary, I'm not sure this would fall in the same category here, but in Calgary, one of the main cogs there of introducing new and emerging talent is a very widely cast program to bring new artists into a contest on an annual basis.
4272 And I'm going to have Michael explain that, because we were pretty sure going into it it would be a success, but it's been even more so than we thought at the beginning.
4273 COMMISSIONER PATRONE: Sorry, you jumped back from the diversity question to the emerging artists. Are you referring to ‑‑
4274 MR. COWIE: No, I'm sorry, but I lost the question.
4275 COMMISSIONER PATRONE: Well, my question was about diversity and corporate initiatives aimed at fostering.
4276 MR. COWIE: Well, diversity in a market can be presence alone. If, for example, a broadcaster like us goes into a market where there are two or three large national companies own literally all of the licences, we provide diversity by just being there.
4277 But, again, and the diversity comes from our locally focused programming which is both in news and musical programming.
4278 So, we believe that ‑‑ and that is at the root, by the way, of this whole strategy in the west, is making sure that companies like ours that are a different voice, we don't ‑‑ you know, and while we don't do editorials as programming, we do have an editorial voice that speaks to the west and that's heard as part of the diversity in the things we do.
4279 But within the basic of diversity is making sure we're in a place where we can be heard with a distinctively western view of what we're talking about on our radio stations.
4280 MR. OLSTROM: Commissioner Patrone, if I could just add to that. In our application points form on cultural diversity, 9‑11, following with the CAB best practices that we have a fairly detailed diversity policy.
4281 And we believe with this format in Red Deer, spanning as wide a demographic as it does, encompasses many cultural groups as well just with the format itself.
4282 COMMISSIONER PATRONE: Thank you very much. I have no more questions.
4283 Madam Chair.
4284 THE CHAIRPERSON: Thank you.
4285 Actually I do have a few questions.
4286 I'm just wondering, first of all, if your projections ‑‑ your financial projections were prepared on the basis of one or two licences on that assumption?
4287 MS SEVDAHL: Yes, they were prepared on the basis of two licences.
4288 THE CHAIRPERSON: Two. Okay, thank you.
4289 And I'm curious, I want to take advantage of the fact that Ms McLaughlin is here. I'm looking at a T chart, I guess I'll call it that, that shows the applicants and the existing players in the market and the formats that they have.
4290 And nobody serves the older demographic for men, they call older 35 plus, there's nobody in that block.
4291 And I'm curious to know, it seems all of the applicants are applying for ‑‑ well, not all of, I shouldn't say all of ‑‑ but many are applying for older women, 35 plus, nobody is in the men. Some people say it's heavily skewed female or lightly skewed.
4292 I'd like to understand that, because in evaluating the applications, you know, it perhaps is a significant point. I just ‑‑
4293 MS McLAUGHLIN: I, of course, don't have the chart you have, so I'll just speak generally to how we identified the skew to female.
4294 When we looked at the per capita tuning and the declines, we actually found that it was balanced between men and women, probably just slightly marginally more against men.
4295 And when we looked at the potential of introducing a service, we looked to the out‑of‑market tuning to find out what per cent of that out‑of‑market tuning was done by each of these groups.
4296 And what we found was that within ‑‑ and actually I'll just read some numbers for you so if anybody else would like to compare they can.
4297 In fall, yes, 2007 there were 412 hours of spill tuning or 412,000, rather, hours of spill tuning. Of that 206,000 or 50.1 per cent were in adults 25‑54. Within that, the majority came from women.
4298 So, we then recalculated this based on the spring numbers and the hours of tuning to out‑of‑market had increased, they went up to 430,000. Within that the hours tuned out‑of‑market by adults 25‑54 went up to 217,000 or 52.7 per cent.
4299 When we broke that down by female/male, again, the females represented the highest amount of that tuning.
4300 So, from an opportunity to bring people back to the market, it seemed that the greatest amount of tuning that was available to us was amongst women.
4301 When we looked at the profiles of the stations in the market, they were equally balanced against male and female. We have two male services, the rock, the classic rock and the modern classic rock and then we have a country and a hot AC. They tend to skew female and the others male.
4302 So, there was a balance that existed in the market and then the opportunity was the greatest amongst females.
4303 So, putting those two pieces together, plus the fact that AC is the highest in demand, made us choose this format.
4304 THE CHAIRPERSON: In your opinion, then, because I see some of what you are saying and what I'm looking at here, although both the classic rock stations, the rock classic and the classic rock stations in the market now ‑‑
4305 MS McLAUGHLIN: Mm‑hmm.
4306 THE CHAIRPERSON: ‑‑ they both show men younger, 35 and younger, but would you disagree with that; do you think there may be ‑‑ one or both of them is more middle appeal to older men?
4307 MS McLAUGHLIN: Again, as a researcher I'm hesitant to disagree with the numbers that you have there because I haven't seen them, but I would say that a classic ‑‑
4308 THE CHAIRPERSON: I don't actually have numbers, it's just in a big block.
4309 MS McLAUGHLIN: Okay.
4310 THE CHAIRPERSON: You're either under 35 or over 35 and these guys are all under 35, these two stations.
4311 MS McLAUGHLIN: If you look at the profile to a classic rock station, either by virtue at looking at how it does over the entire country using BBM data, or looking at an individual market basis, the skew is always male.
4312 If the skew is somehow not as strongly male in this market, I would suggest that the classic rock here is trying to fill part of that void of the AC by playing softer selections.
4313 In the introduction of an AC format into this market, we'll realign what people are playing. The classic rock already has a brand as a classic rock and, therefore, they are likely to fill that void serving males by skewing more towards a traditional classic rock format.
4314 THE CHAIRPERSON: So I'm trying to put more emphasis on the younger or older than 35, and from what I'm hearing you say, that maybe is just not a major consideration for advertisers or listeners.
4315 MS McLAUGHLIN: It's a younger market, Red Deer is a younger market. You can't come into this market and not recognize that. I believe it's six years difference between the median age in this market and the Canadian average.
4316 But the question becomes, if you skew too young you've got two issues. One, can you really recover sufficient hours of tuning amongst that group. Two, with the population base being as small as it is, to develop a solid business plan.
4317 Secondly, if you do that you're going to lose service to the upper end entirely because, unlike an AC format that can pick up some of the younger by simply including some more current hits as we have proposed, the older demographics are not going to tune to a younger program station.
4318 And, in fact, we asked ‑‑ recognizing the dynamics of this market, we asked not only, will you listen to the station, but if we added more current, would you listen to this station more, would your likelihood increase?
4319 And, in fact, the highest interest in the station when you add more current actually moves down in age.
4320 So, what we were trying to do is balance the loss of tuning across all demographics recognizing that that 12‑24 needs very specialized programming that we couldn't provide and have a business plan.
4321 By serving the 18‑49 and the 25‑54, principally 25‑54, with a skew somewhat older, we altered ‑‑ if you look at the typical classic or our AC format, the distribution as between hours of music would be around 10 per cent for current. We're offering 20 per cent, which means we're going to pull a little bit from that other end.
4322 Are we going to get the 35 plus, absolutely, because AC is their format of choice. But you can mix in ‑‑ and I shouldn't speak for Daryl or Michael ‑‑ but you can mix in the currents in such a way as to not turn it into a completely youth station and yet offer them something of interest.
4323 THE CHAIRPERSON: And your 35 plus is slightly female, then?
4324 MS McLAUGHLIN: Yes.
4325 THE CHAIRPERSON: Okay. Thank you very much.
4326 Thank you.
4327 I just ‑‑ if we were to decide on two licences, who would you ‑‑ which of the applicants would you consider to be the most competitive and which the least competitive, if you'd like to comment on that?
4328 MR. COWIE: Well, Madam Chair, we've debated that question in our group and our thinking is that the format we're proposing is broad enough that it can come into the market and sit in the middle and we would be able to compete against the incumbents in the market.
4329 THE CHAIRPERSON: That's fine. Thank you.
4330 Counsel, any questions?
4331 So, this is your two minutes to sum up. Thank you.
4332 MR. COWIE: Well, thank you, Madam Chair, and for listening to that long ‑‑
4333 THE CHAIRPERSON: It was very helpful and interesting. Thank you.
4334 MR. COWIE: ‑‑ discussion of the new west. I presume you'll be hearing more about it.
4335 THE CHAIRPERSON: I wonder if we'll both live long enough for me to give the return speech about Nova Scotia. I'm just not quite sure.
4336 Do you have any vision along those lines?
4337 MR. COWIE: Yes, I think Nova Scotia is doing just fine.
4338 Madam Chair, Members of the Commission, we firmly believe that 100.7, the River, is the right choice for Red Deer.
4339 Why? Our format main stream AC is by far the most popular musical format in Canada today, yet it is not available to the residents of Red Deer.
4340 Licensing Harvard will fill this void and provide the Red Deer radio audiences with access to a format that enjoys unrivalled popularity in the rest of the country.
4341 Our choice of formats creates a real opportunity to repatriate tuning. The River will bring back those who are tuning less to radio in Red Deer and repatriate tuning that is going to out‑of‑market stations. In fact, the proposed main stream AC format offers the greatest opportunity to repatriate the largest group of disenfranchised listeners.
4342 The River alone among the proposals before you can draw our audiences back to local radio from both the 25‑54 and the 18‑49 demographics.
4343 Our consumer demand research showed that interest in this format was consistently high across all demos, not just our core of 35‑54 target audience.
4344 Our commitment to CCD is uniquely local, providing both Red Deer only organizations and regional associations with the funding they need to develop artists from this area.
4345 Our investment ranks at the top of the list among competing applications, $1‑million over seven years.
4346 The River is also committed to Canadian content and new and emerging Canadian artists. Our commitment of 40 per cent CanCon, with 40 per cent of that being dedicated to new and emerging Canadian talent will provide meaningful exposure to Canadian artists within a highly popular format that will attract large audiences.
4347 And, finally, licensing Harvard in Red Deer will provide us with an opportunity to bring our western independent perspective to consumers who say they want choice in news and music.
4348 With the addition of Red Deer to our other markets, we will be able to enhance our service to all of our western stations, recognizing the growing synergies between Alberta and Saskatchewan and roots that go well beyond shared economic bases.
4349 Red Deer is a key contributor to the economy of Alberta, all of the applicants agree, and evidence supports that this is one of the fastest growing markets in the province.
4350 To that end, a company serious about being a western regional broadcaster, such as Harvard, needs this market to provide the service that is both locally and regionally reflective for all of the markets we serve.
4351 The synergies we have begun to develop through our recent expansions will be increased and our entire operation will be enhanced well beyond that which will show up on a balance sheet.
4352 Madam Chair, Commissioners, Red Deer is another important step in our western regional growth strategy, a step that we hope you will allow us to take.
4353 So, we thank you for your consideration and we look forward very much to participating in the remainder of this very important hearing.
4354 Thank you.
4355 THE CHAIRPERSON: Thank you, Mr. Cowie, Mr. Olstrom and your team. I appreciate it.
4356 And we're going to take a 15‑minute break, so we'll be back around 11:10.
4357 Thank you.
‑‑‑ Upon recessing at 1051 / Suspension à 1051
‑‑‑ Upon resuming at 1112 / Reprise à 1112
4358 THE SECRETARY: We will now proceed with Item 10, which is an application by Radio CJVR Ltd. for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer.
4359 The new station would operate on Frequency 100.7 MHz, Channel 264C1, with an average effective radiated power of 56,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 161.1 metres.
4360 Appearing for the Applicant is Gene Fabro.
4361 Please introduce your colleagues. You will then have 20 minutes for presentation.
4362 Thank you.
PRESENTATION / PRÉSENTATION
4363 MR. FABRO: Good morning, Madam Chair, Commissioners and Staff. Thank you for allowing us this opportunity to appear before you again.
4364 Before we begin our presentation for a new FM licence in Red Deer, I would like to introduce the members of the team.
4365 I am Gene Fabro, President and owner of Fabmar Investments Ltd. of Calgary, Alberta. My family and I have been in business for over half a century, and through our holding company, Fabmar Investments Ltd., we have, for the past 25 years, invested heavily in a broad cross‑section of industrial activities, including land development and home building, manufacturing, woodlot management, oil and gas exploration, coal resource holdings, office and retail buildings, and, for the past 18 years, radio broadcasting.
4366 To my left is Dean Sinclair, a broadcast veteran, whose 30‑plus year career includes programming, on‑air, sales and senior management experience.
4367 Dean has provided input and direction for our proposed pop/CHR musical format.
4368 Next to Dean is Robert Hutton, Executive Vice‑President and General Manager of one of Canada's leading research firms, Pollara Research.
4369 Robert's team conducted a consumer demand and advertising study to assist us with this application.
4370 On my far right is Linda Rheaume, Administrative Manager for Radio CJVR's two Melfort stations, CJVR‑FM and CKJH‑AM, and our FM station in Whitecourt, Alberta, CIXM‑FM.
4371 Linda has been a part of our team for the past 17 years.
4372 Next to Linda is Kevin Gemmell, Station Manager and General Sales Manager of our two Melfort stations.
4373 Kevin has been with our company for over 12 years.
4374 And to my immediate right is Ken Singer, who is Radio CJVR's Vice‑President of Broadcast Operations.
4375 Ken has been in the broadcast business for over 40 years, and is currently a member of the Canadian Association of Broadcasters' Radio Sector Board.
4377 MR. SINGER: Thank you, Gene.
4378 Good morning, Madam Chair and Commissioners. CJVR's proposed new station, Hot 100 FM, will have a highly beneficial impact on listeners within Red Deer and the surrounding corridor communities. It will strengthen Alberta's private radio sector, and further advance the objectives of Canada's Broadcasting Act.
4379 Hot 100, with its unduplicated pop/CHR music format, will yield many important benefits to Red Deer's underserved 18 to 44 demographic, to new and emerging Canadian artists, to the region's arts and cultural organizations, to the local business community, and to Red Deer's radio market as a whole.
4380 Through its unique programming format, Hot 100 will bring fresh diversity and greater listener choice to the local radio market, while fulfilling many of the stated listening needs and preferences of Red Deer's 18 to 44 listenership spectrum.
4381 Our music format will attract back to local radio the high percentage of listeners 18 to 44 who currently turn to non‑radio sources for their music.
4382 As well, Hot 100 will repatriate a significant number of the 52 percent of Red Deer residents aged 18 to 44 who tune to out‑of‑market stations in search of their music preferences.
4383 The net effect of repatriating former radio listeners from alternative audio sources, and from out‑of‑market stations, will increase local tuning hours and strengthen Red Deer's private radio sector at no expense to existing stations.
4384 Hot 100 will, in effect, complement rather than compete with Red Deer's other radio stations.
4385 Further, the appeal of Hot 100's unique format will attract new advertising dollars to Red Deer's radio market, with minimal impact on local stations.
4386 Beyond the music, our spoken word programming will provide daily reports on the relevant news, events and activities happening within Red Deer and the surrounding communities.
4387 As a further means of keeping our listeners well informed, CJVR will produce a series of daily, special, spoken word features, focusing on a range of topics of interest and relevance to Red Deer's steadily growing population.
4388 MR. GEMMELL: Madam Chair, approval of Hot 100 will result in the direct expenditure of a minimum of $1 million on locally focused Canadian Content Development initiatives over the licence term.
4389 CJVR has also committed to a $1 million, indirect, on‑air expenditures budget to assist local arts and cultural groups in their endeavours to promote and support local talent within Red Deer and central Alberta.
4390 CJVR brings to Red Deer a rich legacy of accomplishment and commitment to talent development. Hot 100 is equally dedicated to maintaining that legacy through the implementation of a creative and inclusive game plan that reaches out to local talent across an eclectic mix of artistic endeavours.
4391 The promotion and exposure of new and emerging artists has been a priority of CJVR for decades. Hot 100's commitment and sense of priority in this regard is no less, as evidenced by the initiatives set out in our supplementary brief.
4392 By way of example, Hot 100 has committed to play a minimum of 40 percent Cancon. Of this figure, no less than 40 percent will be by new and emerging artists.
4393 Hot 100 will further enhance the careers of these new and emerging artists through the creation of a series of special, music‑based programs, totalling over 17 hours of in‑studio productions, all of which will air in prime time across the broadcast week.
4394 In keeping with CJVR's deep‑rooted sense of community, Hot 100, through its daily program schedule, special musical and spoken word programs, newscasts, specially produced vignettes, and numerous other initiatives, will ensure that Red Deer's growing cultural diversity is well reflected.
4395 Also, in recognition of Red Deer's pride in its vibrant cultural industries, and its designation as cultural capital of Canada, CJVR will establish a full‑time Arts and Culture Coordinator to cover the area's many cultural activities and events.
4396 MR. FABRO: Madam Chair, the establishment of Hot 100 will provide Red Deer's business community with an alternative advertising vehicle that will enable them to target and serve the various age groups within the region's underserved 18 to 44 demographic on a more cost‑efficient basis.
4397 As well, the addition of CJVR's proposed new pop/CHR formatted station will increase ownership diversity, establish a competitive balance within Red Deer's highly concentrated radio market, and provide a distinct, alternative, editorial voice.
4398 From CJVR's perspective, approval of Hot 100 for Red Deer will ensure the presence of a strong, independent, radio voice, at a time when smaller broadcasting entities are rapidly disappearing through increasing ownership concentration.
4399 Approval of Hot 100 will result in the creation of 16 full‑time and 2 part‑time jobs within Red Deer's radio market, having a positive impact on the local market economy, which has a growing concentration of small businesses.
4400 For all of the foregoing, Hot 100, more than any other applicant, will best optimize the utilization of the 100.7 frequency through the implementation of its unduplicated music format, which will fulfil the programming needs and preferences of Red Deer's underserved 18 to 44 listenership spectrum.
4401 Madam Chair, a comprehensive consumer demand study, conducted by Pollara Strategic Insights, one of Canada's leading market research companies, clearly illustrates the need for a new FM station that will fulfil the programming voids and listener preferences of Red Deer's underserved and ever‑growing 18 to 44 demographic grouping, and, in particular, those 18 to 34.
4402 MR. HUTTON: Pollara's survey of 506 Red Deer residents between 18 and 64 brought to light the extent of local audience fragmentation, in terms of the number of listeners turning to non‑radio sources for their music, and the extent to which local listeners are tuning to out‑of‑market stations in search of their musical preferences.
4403 Pollara's survey did not start out with any preconception of market needs or format. We looked at the market comprehensively to understand satisfaction, loyalty, and the gaps and alternatives driving demand in the marketplace, and then connected the dots to determine where the market could best be served.
4404 We started by measuring the listener satisfaction level of Red Deer residents relative to their current radio choices. Pollara found that radio dissatisfaction levels are notably higher among adults 18 to 34, at 31 percent, as compared to those listeners 35 and older.
4405 Evidence of the overall level of dissatisfaction with existing local radio choices is reflected in the fact that 69 percent of residents stated that they would listen to radio more often if the programming they liked was available.
4406 Fifty‑nine percent agreed that most radio stations do not provide enough musical variety, and 63 percent said that they choose sources other than radio to find the music selections they like.
4407 In identifying by age group those listeners who are turning to alternative sources to find their musical preferences, Pollara's study shows that 52 percent of adults 18 to 34 go elsewhere to find their music, followed by 32 percent of those 35 to 44.
4408 With such a high proportion of residents 18 to 44 turning to other sources for their music preferences, there is both a significant need and an exciting opportunity to attract these disenfranchised listeners back to radio.
4409 This reality is borne out by Pollara's study, which indicates that 74 percent of listeners who currently turn to non‑radio sources for their music said that they would frequently or occasionally listen to Hot 100's music format.
4410 With respect to out‑of‑market tuning, Pollara asked respondents the question: During the last week, what radio stations did you listen to?
4411 While Red Deer's four originating stations were at the top of the 17 most mentioned stations, 44 percent said that they listen to out‑of‑market stations.
4412 Next, respondents were asked the question: Of these radio stations, which station did you spend the most time listening to?
4413 The end result showed that 52 percent of out‑of‑market tuning is done by adults aged 18 to 44, which represents both a format and a repatriation opportunity within this age grouping.
4414 Combined with the finding that, across all demographics, no significant loyalty to current stations exists, clearly there is unmet demand, causing pockets of dissatisfaction, driving this key and growing segment out of the market and to non‑radio sources.
4415 Indeed, given the trends and growth in this key demographic, we believe that this disenfranchisement can only continue, unless a strong alternative is provided.
4416 MR. GEMMELL: Madam Chair, Red Deer's strategic location midway between Calgary and Edmonton affords local businesses easy access to a trading area of more than 200,000 people, and a distribution capacity of over 2 million people within a 90‑minute drive.
4417 Among the many key indicators which reflect the area's vibrant and growing local market economy are the following:
4418 The population of the Red Deer central market area grew by 11 percent between 1996 and 2001, compared to Canada's national average of 4 percent, and is projected to grow to 125,000 by 2010.
4419 Red Deer's employment growth rate of 4 percent in 2006 exceeded the national growth rate of 2 percent, while the region's unemployment rate, as of February 2007, was 3 percent, compared to 4 percent for the same period in 2006.
4420 Investment in rural and urban real estate development has sustained record levels, with permit values ranging from $250 million to $300 million over the past four years, and a similar pace of development is expected to continue.
4421 Local retail sales are estimated by FP Markets to be $2.3 billion for 2007, some 142 percent above the national average, and are projected to increase to $2.6 billion in 2009, and grow to $3.2 billion in 2012.
4422 And FP Markets estimates the average family income in Red Deer in 2007 at over $96,000, while the average household income is estimated at more than $86,000, and a per capita income of $35,000, which is 23 percent above the national average.
4423 Madam Chair, FP Markets estimates that total market advertising expenditures are approximately 4 percent of retail sales.
4424 CJVR, in using a conservative retail sales figure of $2.25 billion, anticipates that total advertising dollars available to all media in the Red Deer market in Year 1 of operation will be $90 million.
4425 Based on the FP Markets report, CJVR estimates that 16 percent, or $14.4 million of that $90 million, should be obtainable by local radio. We believe that the four existing stations garner approximately $12 million of that amount, which leaves $2.4 million in untapped radio advertising dollars available to new market entrants.
4426 Given the strength of the local market economy, CJVR is confident that the Red Deer market can readily accommodate our proposed new FM station, with very minimal impact on the four existing stations, which are owned by Newcap Broadcasting and the Pattison Broadcast Group.
4427 MR. SINCLAIR: Madam Chair, Hot 100's pop/CHR music format was born out of the diverse musical tastes of Red Deer's underserved 18 to 44 listenership spectrum, which, in large part, is forced to tune out‑of‑market or seek other audio sources to satisfy their musical needs and interests.
4428 In assessing the music voids in Red Deer's radio market, Pollara employed a multi‑level approach to identify the most preferred music format for a new local station.
4429 Ultimately, three musical montages were tested ‑‑ pop/CHR, pop music, and Top 40 ‑‑ of which pop/CHR was the clear choice by a wide margin.
4430 CJVR's Hot 100 will be a current‑hit music station, aimed at the 18 to 44 female pop music fan. With a core 25 to 34 audience, the median listener will be a 29‑year‑old female, who loves the latest pop music, news and trends.
4431 Hot 100 will focus more on the pop side of the CHR spectrum, in contrast to a full‑service CHR, which includes many of the rock sub‑formats.
4432 The station will concentrate on newer releases, with a basic catalogue that spans the past 15 years.
4433 Its pop/CHR format will include a skilful blending of pop, hot AC, light urban and Top 40 product.
4434 Further, Hot 100's hit‑driven format will concentrate on breaking new music, with most of the airtime devoted to the past three years.
4435 The station will feature weekly and daily music countdown shows, and special programming to highlight the latest new and emerging Canadian talent.
4436 Given Red Deer's current menu of FM music formats, which include two rock stations, a country station, an AC station, and a nearby classic hit/soft AC station, Hot 100, with its pop/CHR format, will be a very different radio station that will nicely complement Red Deer's local radio spectrum.
4437 Here is Hot 100 AM.
‑‑‑ Audio clip / Clip audio
4438 MR. SINGER: Madam Chair, a further key component to Hot 100's unique musical agenda centres around the creation of a series of special music‑based programs that will be produced in‑studio and aired in prime time across the broadcast week.
4439 These windows of opportunity within Hot 100's program schedule will be devoted to the on‑air promotion and exposure of Canadian music, and will feature many new and emerging artists.
4440 As detailed in our supplementary brief, these special programs include Hot 100 FM's "Release Party", "Hot Canadian Coast‑to‑Coast", the weekly "Canadian Hot 20", and "Hot Canadians on Track".
4441 Over the course of a week, Hot 100 will have a total of 17 hours and 15 minutes of special programming dedicated to exposing 100 percent Canadian music.
4442 Hot 100 commits through its Canadian 40/40 initiative to play a minimum of 40 percent Cancon, applied to both the entire broadcast week and the period between 6 a.m. and 6 p.m.
4443 Of the 40 percent Cancon, no less than 40 percent of the selections played will be by new and emerging artists.
4444 In an average week, this represents 16 percent of Hot 100's total weekly playlist.
4445 MS RHEAUME: Madam Chair, Hot 100 will provide its listeners with inclusive, locally relevant, community‑focused informational programming that will accurately reflect Red Deer, its people and its culture through the daily coverage of local events and activities happening within the city and the surrounding corridor communities.
4446 In the same fashion that Hot 100's pop/CHR format will meet the musical needs of Red Deer's underserved 18 to 44 age groups, we will fulfil the spoken word priorities that local residents have told us about through our extensive research.
4447 To ensure that its objectives are met, Hot 100 has devised an inclusive plan to keep a finger on the pulse of activities within Red Deer and the surrounding area. This will be achieved in a number of ways, including the production of a series of special spoken word features that will be aired daily on Hot 100.
4448 In addition to reflecting the Red Deer region's cultural diversity on a daily basis through its musical and spoken word programming, Hot 100 will also employ a full‑time Arts and Culture Coordinator to keep residents well informed of the many cultural events and activities happening throughout the area.
4449 In total, Hot 100 will provide 2 hours and 22.5 minutes of pure news, and a total of 12 hours and 19.5 minutes of spoken word programming each week.
4450 MR. SINGER: Madam Chair, approval of CJVR's application will significantly impact local Canadian talent, as Hot 100 implements its creative and meaningful array of direct and indirect spending initiatives and special program undertakings designed to develop, promote, and expose local talent.
4451 CJVR brings to Red Deer in Hot 100 a proud legacy of excellence, achievement and commitment to talent development that has significantly impacted the careers of many successful Canadian artists. It will be Hot 100's goal to further that legacy, which first took root on the Saskatchewan prairies 41 years ago.
4452 CJVR's CCD plans over seven years call for a minimum direct expenditure of $1 million, indirect on‑air expenditures of $1 million, plus the daily, hard, on‑air currency afforded to new and emerging artists.
4453 The nine direct expenditure initiatives include the FACTOR Talent Fund, "Music Business 100.7", "Opening Act", "Horizons Unlimited", the Red Deer College Steinway Project, Red Deer College music scholarships, Red Deer Symphony, Red Deer Canada Day, and Red Deer Discovery Diversity Day.
4454 MR. FABRO: Madam Chair, our Red Deer proposal is the tenth application that CJVR has presented to the Commission over the past two years in our ongoing efforts to expand our radio business beyond Melfort, Saskatchewan and Whitecourt, Alberta.
4455 When my family established CJVR as the broadcast arm of Alberta‑based Fabmar Investments Ltd., our intent was always to grow the business by expanding CJVR's brand of radio to other markets.
4456 We are successful business people, who think strategically, and have used our financial resources and management expertise to develop solid business plans and many enterprises for more than 50 years.
4457 We have a tremendous passion for radio, a tenacious will to succeed, and have no doubt whatsoever that we will be successful should we be granted a licence in Red Deer.
4458 My family has ensured that each of the 10 applications placed before the Commission has been very complete and highly competitive, with many significant public events and serious financial commitments to Canadian Content Development.
4459 This is evidenced by the fact that, despite having only three radio stations, CJVR consistently puts $1 million in direct Canadian talent expenditures on the table.
4460 CJVR's 41 years of broadcast experience, when coupled with Fabmar's business acumen, financial resources and creative entrepreneurship, places our company in a better position than most to assume new broadcasting responsibilities.
4461 Approval of Hot 100 is very important to CJVR in its need to grow, enhance its competitiveness, achieve operating efficiencies, and position itself as a viable licence alternative with a strong, independent, radio voice.
4462 Madam Chair, after decades of serving a coverage area in northeastern Saskatchewan that is geographically over 1.5 times the size of Vancouver Island, CJVR is up to the task of successfully operating in any radio market.
4463 We, therefore, urge the Commission to afford us that opportunity in Red Deer by approving Hot 100 FM.
4464 My colleagues and I will be happy to answer any questions the panel may have. Merci, thank you.
4465 THE CHAIRPERSON: Thank you, Mr. Fabro. Commissioner Patrone will be leading the questions.
4466 COMMISSIONER PATRONE: Thank you, Madam Chair. Good morning, all.
4467 I am going to start by asking some questions based entirely on the oral presentation, and then move on to some more formal questions.
4468 First off, how do you appeal to both an 18‑year‑old and a 44‑year‑old radio listener?
4469 MR. SINGER: Thank you for that question, Commissioner Patrone.
4470 When you look at the initiatives that we have incorporated into our programming, we have tried to be as inclusive as possible. I would have to say that there are more things in common amongst those demographics than there are dissimilarities.
4471 Most definitely, because we have distributed our features throughout our broadcast week, we are not giving a steady diet focused at one particular aspect of the demographic, and then, at another time of the day, switching to another demographic.
4472 We think it is an important reflection of the community that we have incorporated into our application, and we have carefully looked at the distribution of those elements.
4473 If you would like to address, other than the spoken word initiatives, how the music encompasses the broad demographic, I could certainly ask Dean to comment on that, as well.
4474 COMMISSIONER PATRONE: Having an 18‑year‑old at home, and me being in my forties, I can say that there is a fairly wide gap there in terms of musical tastes. That's why I asked you the question.
4475 MR. SINGER: Do you want us to elaborate on the musical component of that appeal?
4476 COMMISSIONER PATRONE: Please.
4477 MR. SINGER: Dean, could I ask you to comment on that?
4478 MR. SINCLAIR: Sure. Thanks, Ken.
4479 Commissioner Patrone, one of the things to think about with this format is what we are going to do with the market. It is a reflection of bringing more balance back to the market.
4480 The way the market sits right now, in terms of the four incumbent stations, is that each of those radio stations has a very wide base. If you look at the generality of the formats they serve, and look at the rating success they enjoy, one could argue that they enjoy a lot more success than normally you would afford that format in markets where there is more competition.
4481 One of the things that we look at with the 18 to 44 audience ‑‑ and we talk about that ‑‑ and we really talk about a core of 18 to 34, and we talk about our median and our bullet of a 29‑year‑old female ‑‑ is that, when we develop a format, we start from the inside and work out.
4482 It is daunting if you look at both ends. As you talked about personally, from one end of an 18‑year‑old to somebody in their forties, it is a bit of a stretch.
4483 However, if you start from the middle and work outward, it is a little easier to take into play. You will find that there are more similarities and commonalities than there are differences that way.
4484 That is how we work with it. We really focus on 18 to 34, 25 to 34, and spread it out a little bit beyond that.
4485 COMMISSIONER PATRONE: You also spoke about growing the advertising pie. We have seen relatively recent signs of retail sales growth levelling off in Red Deer. Does that give you cause for concern, in terms of your own advertising projections?
4486 MR. SINGER: I think the number one belief that we have in growing the advertising pie is that traditionally we have seen, when new players have entered the marketplace, that radio revenues have actually increased.
4487 Also, you must remember that our focus is largely on attracting an audience that has gone away from local market radio. So by attracting those listeners and those hours tuned back into the market, we are certainly offering some value to the local advertising market that isn't there currently.
4488 I could ask Kevin, if you wish, to elaborate further on that.
4489 MR. GEMMELL: I would like to elaborate on perhaps the retail sales standpoint.
4490 As was stated FP markets indicates 2009 retail sales will be 2.6 billion. But we actually, in noticing the slowdown as we prepared this business plan, the slowdown coming although we don't anticipate it's going to last much more than the next six months, we went with a retail sales figure for 2009 of 2.25 billion and then extrapolated the 4 percent and the radio share of the pool. It still left plenty of headroom based on our analysis of the Red Deer radio stations.
4491 The other side of things, and we have talked about this at previous hearings that Commissioner Cugini has ‑‑ I will sound like a broken record to you.
4492 In the case of the Edmonton market between 2004 and 2006 three new licences signed on in that market and in 2003 the average market revenue was 4.3 million per station. At the end of 2006 according to CRTC reports the market revenue grew with the addition of stations and it was still 4.3 million, average per station.
4493 So new radio dollars are spurred with the excitement of a new radio station signing on.
4494 COMMISSIONER PATRONE: I want to ask you a little bit about your programming.
4495 MR. FABRO: Can I just finish off ‑‑
4496 COMMISSIONER PATRONE: Sorry.
4497 MR. FABRO: ‑‑ what you had asked about the recent slowdown?
4498 COMMISSIONER PATRONE: Yes.
4499 MR. FABRO: In an economy ‑‑ we had predicted this in some of our other businesses about eight months ago that it's going to be a flat spot. We think that it will probably be another, anywhere from eight months to 18 months when we start ‑‑ the economy starts to rock and roll again.
4500 But I think in the long term, as mentioned by a number of the applicants here today, that Alberta and western Canada certainly are very strong and we don't have any concerns whatever over the long term.
4501 And if there was to be ‑‑ if we predict wrong we have the financial resources to handle any slowdown.
4502 COMMISSIONER PATRONE: Thank you.
4503 In terms of your daily features ‑‑ moving over to programming ‑‑ could you talk a little bit about the topics that are going to be discussed in these features? I understand that these will be produced locally. Will they be produced by your editorial staff, your reporters, that sort of thing?
4504 MR. SINGER: Yes, they will be produced locally by our local ‑‑ our staff that's at Hot 100 FM, and it will be a combination of our news staff ‑‑ we have plans to hire a fulltime arts and cultural coordinator which will ‑‑ he or she will be taking on a lot of those responsibilities. But within our pool of on air talent they all will have some responsibilities for various features, the production of those, even some of the writing duties.
4505 So it's an all encompassing plan utilizing the talent in our building.
4506 COMMISSIONER PATRONE: Everybody pitches in.
4507 MR. SINGER: Everybody pitches in and I think we have ‑‑ you know, we have planned carefully because it is a substantial amount of spoken word programming ‑‑
4508 COMMISSIONER PATRONE: Yes.
4509 MR. SINGER: ‑‑ we are planning. But we have also taken into account the other duties within the radio station and it's well within our grasp to do this.
4510 COMMISSIONER PATRONE: You have spoken about your emerging artists initiative ‑‑ confirm that is 40 percent of the 40 percent Cancon designated towards emerging artists.
4511 MR. SINGER: Right.
4512 COMMISSIONER PATRONE: What constitutes in your view an emerging artist?
4513 MR. SINGER: I will ask Dean to give you our definition for that.
4514 MR. SINCLAIR: Sorry, Commissioner Patrone, I want to make sure I have it verbatim. Pages ‑‑
‑‑‑ Laughter / Rires
4515 MR. SINCLAIR: No, I'm just kidding.
4516 Our definition is we consider an artist emerging until about 12 months after they have achieved a Top 30 hit chart in Canada or a certified gold record for the first time.
4517 COMMISSIONER PATRONE: And how are these artists chosen as far as your staff is concerned? Will there be one person who picks the artist featured on any given day?
4518 MR. SINGER: Well, we will have a program director and music director who will be ultimately responsible for all of the music we play on the station, but our practice has been that our music is ‑‑ it's certainly managed by our program director who is often the same as the music director. But we also involve other members of our on air staff in a consultative basis in the music meetings.
4519 Further to that, we have plans to reach out and talk to other new and emerging artists in the marketplace as well and engage them in some of our assessment of the new music. With the scope of our over 17 hours of new and emerging programming I am quite confident that once those features hit the air our phone will be ringing and our emails will be coming that are suggesting, "Hey, include me in this as well".
4520 We also plan, through some of our new media planning, to engage the listeners in evaluating their favourites in some of these programs, for example. There are some exciting opportunities on that platform to receive more one‑on‑one listener feedback than we have in the past.
4521 So it will be a collaboration of a number of areas and most definitely we are going to be promoting on the air, not just playing the music but promoting opportunities to be parts of these specialized programs, no different than we promote the availability of FACTOR funding to make a new and emerging artist aware of our scope.
4522 Later today in fact we are going to have appearing, thankfully on our behalf, a new group from the Lacombe/Red Deer area, Soul Side Inn, who are a new emerging artist who just in our discussions with them are very excited about the possibility of such a radio station. So the groundwork has already begun even though we don't have a licence as of yet.
4523 But just in our discussions out there I think the news will spread fairly quickly that there is opportunities for exposure on Hot 100 FM.
4524 COMMISSIONER PATRONE: You will be hiring the 16 full‑timers and two part‑timers locally; is that correct?
4525 MR. SINGER: Yes, our intention is of course to begin with a station manager and a program director who then will recruit and develop their talent, with the focus on local. It's been our experience that, you know, within our marketplaces if we can develop people they have a better feel for what is going on in the communities that we serve. Without question talent is going to be the number one thing we are looking for but we always give preference to people that have some experience in the market in terms of growing up there and knowing other people in the market.
4526 COMMISSIONER PATRONE: Could you talk about your initiatives relative to encouraging diversity and your hiring practices?
4527 MR. SINGER: M'hm.
4528 Well, there is no question that because our focus is local that we consider the community to be its own ethnicity.
4529 I knew I was going to have trouble with that today. No more hard words.
‑‑‑ Laughter / Rires
4530 MR. SINGER: But you know, in our efforts to reflect what is going on in the marketplace, in our mind it's very difficult not to do that in terms of being all inclusive. Certainly, from our viewpoint of hiring and wherever we can have a reflection of that local culture, again, we will take that into account.
4531 It's not a challenge to reflect what is going on in the community if we are as inclusive as our plan is. That's our feeling, is that we are not ‑‑ I don't think we could be accused of being fairly narrow in our approach. We are very broad in that approach.
4532 And also, you know, we have a policy with our on‑air programming and our news to be balanced and fair and give a fair representation in our content.
4533 COMMISSIONER PATRONE: Back to format for a minute.
4534 How does your application ‑‑ could you please differentiate ‑‑ I'm having trouble with words too ‑‑ your application from say that of CHIP Media and L.A. Radio's proposals?
4535 MR. SINGER: Well, I will speak in general terms and perhaps Dean can talk about the specifics in the elements of the music programming.
4536 But we believe on a general basis that our application offers a more diverse approach than the others on several levels; number one, high quality musical programming that will fill existing voids in the market, and our particular pop/CHR format offers an 80 percent component of music that's currently not available in the market.
4537 We offer the best musical choice to repatriate listeners back into local Red Deer listening, thus strengthening the Canadian broadcasting system. We feel our diverse CCD initiatives, a million dollars in direct expenditures for those initiatives, is all encompassing in the market and our diverse line up of special programming also offers much more diversity than the other applicants. And our locally‑relevant community focused programming is again very diverse.
4538 In comparing format to format I can ask Dean to comment further on that.
4539 COMMISSIONER PATRONE: Please.
4540 MR. SINCLAIR: Thanks, Ken.
4541 Commissioner Patrone, the way I would describe it for Hot 100, it's a hit radio station, hit‑based radio station, a female draw, plays the hits, plays them a lot, really draws from the pop side of the Top 40/CHR culture, whatever term you want to put on it today.
4542 My understanding of ‑‑ you referred to the other two new music applications before you. The CHIP Media one, my understanding is it's an urban alternative format. So it would skew a little bit more to the left than us and really make ‑‑
4543 COMMISSIONER PATRONE: To the left?
4544 MR. SINCLAIR: To the left. If you were ‑‑ I'm sorry. If you were drawing a graph on the scale and let's say you went to ‑‑ you took a bullet point in the middle and went to the left and said this is rock all the way to the left, so you took the left side of your gauge as rock, and if you went down that term you would start off with light rock, modern rock, new rock, alternative rock and then you would eventually get down to classic rock.
4545 And if you went to the other side of the scale you would go along the pop venue all the way to folk and instrumental music down the road.
4546 So the way that we understand that particular application borrows a couple of the elements that we researched in the market. But our finding was that there wasn't enough of that type of music that would sustain a format for us in terms of the audience we wanted to go after. And I would say that it's probably a little more male leaning and younger, 12 to 34.
4547 With respect to the L.A. Radio Group application I had a little bit of trouble trying to follow the bouncing ball whether it was new rock or Top 40 or the combination of modern rock and CHR because it changed a little bit. But my understanding is in terms of new music, which would be a focus, a lot of that is offered currently in the market by Z99.
4548 COMMISSIONER PATRONE: Moving over to CCD contributions, as you probably know, the Radio Regulations as they now relate to CCD development or CC development are being amended. Is CJVR willing to accept at this time a transitional condition of licence as it applies to CCD contributions until the changes are fully implemented in the Radio Regulations?
4549 MR. SINGER: Yes.
4550 COMMISSIONER PATRONE: Going back to the listeners that you intend to target, how much more evidence have you been able to glean that this group is underserved in Red Deer?
4551 MR. SINGER: Well, our very comprehensive survey conducted by Roberts' company POLLARA, uncovered that very, very clearly and I will ask Robert to elaborate on that if you wish.
4552 MR. HUTTON: Sure.
4553 Commissioner Patrone, our study found that across the board there were high levels of satisfaction, but when we divided it by age group and by genre we found that there were certain pockets of dissatisfaction where there were an opportunity. And when we looked at it in the sense of where people were and which groups were looking out of market and to alternative sources, that's really what drove our choices.
4554 For example, we found that there was a dissatisfaction with the level of urban music played in the marketplace. However, when we looked at that in terms of the size of that market and that particular demographic there wasn't sufficient to support a station on its own.
4555 So in effect what we did is we took pieces here, pieces there, pieces there; put it into a format that best served what we felt was a demographic that had a certain level of dissatisfaction and where the demographic ‑‑primarily tuning out of market to alternative sources, which was also by the way a demographic that is key to the Red Deer market and one which is increasing in the Red Deer market, and looked at that in terms of our genre choices.
4556 Does that answer your question?
4557 COMMISSIONER PATRONE: Yes, it does. Thank you.
4558 From which specific existing Red Deer stations does CJVR expect to garner its tuning and how much would it garner from each source?
4559 MR. SINGER: Well, from a ‑‑ I guess we can start that discussion, and I can ask Dean to chime in here. From a musical point of view, I guess that is likely a good place to start in terms of the sharing of audience and, again, reminding you that our first focus is on those listeners that are tuning to out of market and non‑traditional forms of radio. But certainly, there will be some spillage within the market.
4560 I will ask Dean to comment on that.
4561 MR. SINCLAIR: Thanks, Ken.
4562 Commissioner Patrone, I would say that the majority of the music this radio station will play isn't offered on any radio station in the market right now. So in terms of where we would get audience from I think ‑‑ and also using the landscape of each of the stations enjoying a wide range of audience right now whether it be male or female, we would get some tuning from probably three of the stations, say for the country station to some degree, but I think it would be quite limited.
4563 This opportunity is really about bringing something new to the market. So if you were singling out a station you could say, well, there is a couple of tracks you would hear maybe on the current rock station, maybe a couple of tracks on, you know, the AC station. If there were music on the AC station that we would share with it would probably result from our gold universe, the stuff that we would go back into which isn't really a main thrust of the radio station.
4564 Does that help?
4565 COMMISSIONER PATRONE: Yes. And further to that, given the possibility that there will be some overlap ‑‑
4566 MR. SINCLAIR: Sure.
4567 COMMISSIONER PATRONE: ‑‑ why do you think in year two that only 1 percent or $16,000 will come from existing Red Deer stations?
4568 MR. SINGER: I will ask Kevin to comment on that.
4569 MR. GEMMELL: Thank you, Ken.
4570 Mr. Commissioner, in year two we expect most of our dollars to come from renewals, first off. Year one our anticipated local budget is 1.15 million plus national 1.296 and then an increase. We will see a re‑signing of most of our year one revenues or approximately, actually, 70 percent of our year one revenues or 811,000 of our year two revenues.
4571 We will see an increase in new radio revenues as we continue to repatriate listeners from out of the market and those new radio revenues will come from other non‑regulated sources, television, newspaper, et cetera, outdoor.
4572 We see a small amount from the existing radio stations because we are just not taking a large amount of their listeners because of out of market repatriation.
4573 So you know our second year is going to cause very minimal impact. The more significant impact would actually come from the first year, but in our case that's only 5 percent.
4574 COMMISSIONER PATRONE: And further to those ‑‑ oh, I am sorry, sir.
4575 MR. SINGER: I would just like to add too and perhaps, Robert, if you feel you wanted to add something ‑‑ good.
4576 Part of our consumer demand study included a retail advertiser study which also questioned some agency buyers as well. There were clear references to dissatisfaction with the number of choices in the market and a number of advertisers indicating that they don't use radio currently, they would be coming back to radio should there be a station such as Hot 100 FM introduced.
4577 COMMISSIONER PATRONE: That speaks somewhat to my next question but I will ask it anyway, given the strength of the two incumbent ownership groups in the Red Deer market.
4578 How do you expect to achieve a PBIT of 37 percent between years four and seven, such that it would outperform the market? Are these overly rosy projections?
4579 MR. SINGER: I don't think ‑‑ I think the projections are solid. They are based also on the projected growth for the market. You know, as mentioned at the outset, we used Financial Post projections and intentionally slowed those projections down because of what is currently going on in the market in Alberta. There is a levelling off after ‑‑ I think in our year three we are ‑‑ I think we did the slowdown on the first couple of years.
4580 In fact, FP had projected increases of 15 ‑‑ for the years '07 through '09 they had projected increases of retails growth of 15 percent, 13 percent and 12 percent. We downsized those to 12 percent, 10 percent and 10 percent and then by the year 2010 we have projected or we have used their projections, I guess, as our forecast.
4581 So we have pulled back on the throttle for the first few years and then evened it out down the road, anticipating that this is a bubble and that things will level off.
4582 Again, you know, our projections are again based on creating new advertising dollars for the market. We are encouraged with the anticipated growth of the market, not just from population but also the retail growth which of course drives the advertising plan for all radio stations.
4583 MR. HUTTON: And I would just like to jump in on that for a moment, Ken, just to connect with your previous question, Commissioner.
4584 And indeed, our advertising demand study showed that there is pent‑up demand in the key demographic that we are addressing. The advertisers are happy with the radio choices in the market but they don't have enough choices addressing that particular demographic.
4585 So we strongly feel, based on the advertiser demand study that we did, that we will actually be growing the market here and that there is demand and advertising dollars either not being spent in the marketplace or going elsewhere that we will be attracting.
4586 COMMISSIONER PATRONE: You are talking about the demographic that you are currently targeting?
4587 MR. HUTTON: Exactly, yes.
4588 COMMISSIONER PATRONE: Advertising wise?
4589 MR. HUTTON: Exactly.
4590 COMMISSIONER PATRONE: Over to the news operations side:
"CJVR is committed to establish a network of trained community correspondents." (As read)
4591 COMMISSIONER PATRONE: Is that correct?
4592 MR. SINGER: Yes, that is correct.
4593 COMMISSIONER PATRONE:
"They will file regular reports on events and activities within Red Deer." (As read)
4594 COMMISSIONER PATRONE: Are we talking about stringers? Are they paid, are they part‑timers or from broadcasting or journalism schools? Who are these individuals? Where will they come from?
4595 MR. SINGER: They are not paid. They are volunteers. Who they are is anything and everything. I guess within our planned coverage area we anticipate there is a lot of people out there with pride in their communities and their organizations that they belong to. They may be retired school teachers; they may be any walk of life. Some may have some background in some form of communication. We are not anticipating that there is a bunch of ready‑made broadcasters and journalists out there. Really, what we are looking for is a contact, somebody that is on the ground in those communities.
4596 You know, as much as we would love to have the resources to have a man in the field out there in every particular sector it's impossible. But we can draw on these eyes and ears of the radio station in these communities as people that ‑‑ I guess they are the ones being interviewed is what they are.
4597 We are not expecting that we would find people that could write readymade ‑‑ made for broadcast stories but they certainly would make good interviewees and they can feed information to us about things going on in their community. And we plan to filter that into the various features that we have planned as a part of our overall gathering mechanism because ‑‑ I mean, clearly our focus is on local. And who is more local than the people that actually live and work in those communities?
4598 Now, from a training point of view, yes, we will offer some type of training, sort of the "What are we looking for 101" lesson in terms of these are things and the ideas that we have but, you know, certainly we want to leave the content up to them to feed to us. But the idea is our news team, our news director will go out to these markets, visit these communities and talk about our idea to incorporate some local community eyes and ears, give them some sense of how the information will be used and encourage them to give us as much information as they can as it occurs in these communities.
4599 And I suppose, you know, through this whole exercise we may find others that say, "Hey, I would like to do that too". So we plan to start small and grow this community, this pool of community correspondence.
4600 MR. GEMMELL: And if I might just interject, Mr. Commissioner, this is based entirely on the model that works in our operations in Saskatchewan and also in Whitecourt. We have been running features from community correspondence for the 10 ‑‑ well, close to 15 or 20 years or more and we currently have a list in excess of 40‑plus communities. We do serve 100 communities in Saskatchewan but we do have stringers in at least 40 communities that we can call on regularly and that file reports regularly with us.
4601 COMMISSIONER PATRONE: I'm sure they come in handy. I think I heard Mr. Singer say that you leave the content up to them.
4602 Is that correct, sir?
4603 MR. SINGER: Well, I mean, we are not going to handout assignments like we do in our newsroom, I guess is what I am saying, because they are volunteers but they are go tos. I mean, just recently we had a very serious natural gas explosion in Nippiwin just an hour away from Melford in our coverage area and we dispatched a news person over there immediately. But in that hour that it took our news person to get to the scene we had a number of people that we contacted by phone. We had them on the air long before our reporter got to the scene, which was tremendous.
4604 And then, you know, again just naturally people that have been, as Kevin mentioned, giving us their information of what is going on in their community. We are phoning the radio station. We were using their ‑‑ in some cases putting them on the air with us, giving their point of view of what had happened.
4605 It was a tremendous day. It was one of those A‑plus days for radio because it was happening in the market. It was an unfortunate situation but most definitely it demonstrated the connection we have with the communities we serve and we didn't ‑‑ you know, we didn't really have to make any announcements about, boy, if you are in the market let us know what is going on. It was coming in, in spades.
4606 COMMISSIONER PATRONE: I understand the use of eyewitnesses when you are talking about a breaking story like the one you just described. I am just wondering how you managed to maintain a level of editorial integrity when you are talking about unpaid stringers who are partially trained.
4607 MR. SINGER: Yes.
4608 COMMISSIONER PATRONE: Does that give you any source for concern?
4609 MR. SINGER: Well, I think our news director is going to have to and will take that into account, that these are what you say; eyewitnesses. They are not news experts. According to what this eyewitness saw that's ‑‑ you know, receiving information from the listening public is nothing new to our news teams.
4610 And for sure, it goes beyond news. I mean there ‑‑ I mean information about what is going on at the school in a community is again maybe not as news‑oriented but it still is news to our listeners, you know, in terms of it is useful; it's relevant.
4611 COMMISSIONER PATRONE: Right.
4612 Can you talk a little bit about possible cost savings and other synergies created from the addition of a new station to your group?
4613 MR. SINGER: Yes, I can, and just on a general basis. I will ask Linda to comment on this in specifics.
4614 But on a general basis, you know, one of the synergies that ‑‑ we have heard this question asked of many this week ‑‑ that I don't think has been raised yet, and that is the synergy created by adding another radio station in the human resources area. And we work hard to recruit locally and to recruit a strong staff, but one of the real opportunities is by adding another station and a team is to offer more of a choice for our future employees, our current employers, that we have opportunities within our company to expand and use your talent in other markets.
4615 You know, when we launched our Whitecourt station a couple of years ago we implanted a couple of our senior people from our Saskatchewan operations into there but, you know, there is a great deal of opportunity as we recruit now just by adding one more station to say we have other choices.
4616 So it gives us a little strength when we are competing with the bigger players who can offer, you know, a dozen different opportunities to grow within. As I say, it's a real value to us in terms of attracting and developing and maintaining strong people, is by adding to the stable.
4617 So it's an unmeasurable ‑‑ from a monetary point of view I can't measure what that is worth but Linda can certainly give you the specifics of the measurable components of those synergies.
4618 MR. FABRO: And just before you do, Linda, I just wanted to kind of comment on what Ken said there.
4619 In all our businesses we like to show our employees opportunity and growth and it kind of goes the other way. If you don't have opportunity you tend to start losing employees. They get picked off by those that do.
4620 I think we are trying as hard as we can to grow our business in radio. We have been stymied quite a bit lately but it's very important for us to survive. We have a growth opportunity so that kind of relates to what Ken answered earlier. We want to show growth.
4621 COMMISSIONER PATRONE: Is there an employee ownership program in the works here?
4622 MR. FABRO: In terms of equity, ownership?
4623 COMMISSIONER PATRONE: Yes.
4624 MR. FABRO: No.
4625 COMMISSIONER PATRONE: Go ahead, please.
4626 MS RHEAUME: Thanks.
4627 As far as the synergies that we will realize with the addition of Red Deer to our existing stations, synergies will come from the accounting, accounts receivable ‑‑
4628 COMMISSIONER PATRONE: Okay.
4629 MS RHEAUME: ‑‑ accounts payable department which will be handled centrally out of our Milford location.
4630 We will have some synergies with traffic department by having the ability of having backups from each station, you know, in the event that holidays, sickness, those kind of things, because our computers are tied together.
4631 We don't really anticipate cost‑savings synergies per se with our programming and news department as each station has their own fleet of staff. But you have the synergies of sharing ideas, knowledge, voices; news stories.
4632 Technical duties will be shared. We do have a chief engineer that will oversee all of the areas and then have a part‑time engineer in each area.
4633 And then the HR synergies as Ken has already said, you increase staffing pool, training, knowledge; the ability to promote from within.
4634 We will see as far as dollar‑wise, if you were to run Red Deer as a standalone station compared to adding it to our chain that we already have, we would save about three and a half people at roughly $190,000 to $200,000 a year.
4635 COMMISSIONER PATRONE: In wrapping up, further to that, do you see any benefit in reinvesting any potential savings from that synergy, those synergies you were referring to back into programming?
4636 MR. SINGER: That is our intention, that it certainly would assist us in raising the level of talent in providing more locally‑relevant programming. It all goes back to improving the operation to make us that more competitive.
4637 Just one more ‑‑ and Linda touched on it briefly, just the sharing of ideas. You know, with our station in Whitecourt and a station in Red Deer if we were fortunate enough to get a licence, it really just doubles the number of ideas for Alberta stories. You know, we sometimes ‑‑ we try to use those synergies between our Saskatchewan and Alberta station now but, you know, there would be more things in common between two Alberta stations most definitely.
4638 And without question news, you know, every minute it's a changing situation. I think that the synergies between Red Deer and Whitecourt would certainly be greater than what we are enjoying now between our Saskatchewan stations and Alberta.
4639 MR. FABRO: Commissioner Patrone, just to comment on the reinvestment, we have done that in Saskatchewan. We have taken very little money out of that operation. But in fact, we invested heavily in it to make sure that we had a good operation both in terms of hard capital assets as well as training and development of our staff and we would do the same thing here because we believe in the business and every nickel we put in we are going to get 7 percent back.
4640 So it's about growing the business and that's why, for example, in Saskatchewan I believe we have the largest coverage area in Canada, as I mentioned in our opening that we have the FM coverage area that we expanded a number of years ago to be right now one and a half times the size of Vancouver Island.
4641 So we have put our money where our mouth is and we continue hopefully to do that.
4642 COMMISSIONER PATRONE: Those are my questions. Thank you very much.
4643 Madam Chair.
4644 THE CHAIRPERSON: Commissioner Molnar.
4645 Thank you.
4646 COMMISSIONER MOLNAR: Thank you.
4647 I just wanted to follow up a little bit on what you were just saying, Mr. Singer, about expansion and the values of having for example two stations in Alberta. I have been trying to understand. I understand why there is a desire to expand the number of locations where, you know, broadcasters can be and I appreciated the discussion, the obvious, very clear discussion on the synergies from an operational perspective that are there. I'm trying to understand.
4648 You mentioned in your opening remarks that this was, I think, the 10th application you made and I wondered if you actually had an expansion ‑‑ a strategic expansion plan that would, say ‑‑ you know, besides simply increasing the number of stations that we have we are trying to do this in some kind of manner where we are going to be able to have some synergies as it relates to the news gathering, to the programming we collect, to the emerging artists we can support; or what else is there besides the cost savings that could occur with your expansion plans?
4649 MR. SINGER: Well, I will begin and Gene can certainly give you his point of view of our overall plan.
4650 These synergies are ‑‑ even the ones that we are enjoying now between Saskatchewan and our station in Whitecourt, we have realized some good savings there already. So we have got a taste for this in terms of ‑‑ you know, Linda's administration area is better utilized now because we are now operating three radio stations from that hub. We definitely have ‑‑ you know, we have senior management that ‑‑ like I'm involved with all of the stations and I'm able to do that because we have another station now with three in our group.
4651 Our plans are, of course, still to have ‑‑ our program director and our programming staff will make their own decisions in the marketplace based on the CJVR corporate philosophy of course. But definitely, that backroom synergy every time we add a station becomes more effective to us.
4652 We see our competitors utilizing shared programming synergies, I guess, by you know combining news operations and so on. We do that in Melford between our AM and our FM but we don't have an intention. We think those local markets are that different that we can't really do that kind of a synergy, at least the way we view it today.
4653 One of the things that, as I say, gets back to the value of all of this is being a more attractive group of ‑‑ we are more attractive as a broadcasting group because we have other choices within our stations. It's difficult to attract people to Melford, Saskatchewan when they can work in Kelowna and, you know, nice markets ‑‑ with bigger markets.
4654 I must say that we have got a great track record but, you know, we have a number of senior people who have been with us in excess of 30 years in our company, many 15 and in the 20‑year range.
4655 You know, we are only going to be able to sustain those kinds of human resources if our company grows. It's very important. And it seems our business when I got into the business was all independents and now there is a handful of us left. It's increasingly difficult to attract people to job opportunities within a small group compared to a bigger group.
4656 So the human resources thing is ‑‑obviously, the most important thing we have got going for us is our people and we feel that given another licence just makes us stronger and we can also develop our craft of serving the markets we serve and being better at it as we increase the level of talent.
4657 MR. FABRO: Maybe I can just comment on your strategic comment.
4658 I think what ‑‑ we made a strategic decision to stay west of the Ontario/Manitoba border and to work in markets less than those major cities of Vancouver, Calgary, Edmonton, Winnipeg. We believe we can operate more effectively in the smaller markets until such time as we have enough horsepower to move into the big ones and maybe that's five to ten years out but you never know. And the number of calls that came out in the last two years were significant, and so that's why we have been before you so many times because actually the opportunities rose.
4659 We believe in Western Canada, my family is from here. As mentioned by many of the applicants here during the terms of the hearing, it's strong, it's going to be very strong, it's not going away.
4660 There's $60‑billion of investment in the oil sands alone and there's another hundred billion, that's like a hundred thousand million, if you realize how big that is, and it's just like a bomb going off in Alberta and across Western Canada.
4661 And, so, it's very safe here compared to the rest of Canada, the rest of the world in terms of what's going to happen with the economy.
4662 So, we want to stay in this area, we want to grow this business. So, strategically we'd like to stay in the west and we'd like to concentrate on the smaller market.
4663 So, that's kind of ‑‑ I think that's what you're getting at. It's hard to ‑‑ we're also in the development business and we go everywhere and we find dirt ‑‑ what we call dirt ‑‑ everywhere.
4664 You can't do that in radio, you have to go where the radio opportunities lie and, so...
4665 And I guess from a management's perspective ‑‑ Ken didn't touch on this ‑‑ but we can easily travel from, now with the way the airlines have set it up and WestJet came in, we can easily travel quickly to a bunch of markets in Western Canada very quickly and manage this.
4666 So, it's not as difficult as it may sound to manage these operations as a group in Western Canada.
4667 MR. SINGER: Commissioner Molnar, if I could just add one more, and we were just talking about this this morning about synergies.
4668 One of the areas that ‑‑ you know, we do these things without sometimes realizing that they are in fact synergies.
4669 For years our Melford radio stations have run a country music show called Canadian Coast to Coast which just last year, we're proud to say, won the Canadian Radio Program of the Year Award and basically it's exposure of new and emerging artists in the country genre.
4670 And we have been doing that show ‑‑ it began in our AM days when our AM station played country, and when we launched the FM we moved our format to the country format ‑‑ to the FM.
4671 That program really has been a showcase for a tremendous amount of new artists and they're not just Saskatchewan, but preference has been, of course, to the local new and emerging artists.
4672 When we launched our Whitecourt station with a country format, we decided to broadcast ‑‑ that program is now broadcast on both stations, but now it's a melding of Saskatchewan and Alberta new and emerging artists, and we certainly play artists from all over Canada in the program.
4673 But, again, our focus now is two regions and it's doubled the exposure for these artists.
4674 I mean, in fact I just got some numbers from our music director. In our active library of ‑‑ in our Saskatchewan stations right now we have 105 Saskatchewan artists that are actively played on our playlist each week.
4675 And our Alberta library, in less than two years has now amassed 40 active Alberta new and emerging Canadian artists.
4676 So, you know, when you talk about combining the resources to offer better exposure for, in this particular case, Canadian artists, I mean, it's very powerful.
4677 And the attraction of those artists to our radio station, I mean we've won many awards for our Canadian programming. It's because obviously we're doing something different than the others, and we're being recognized.
4678 So, it's a valued and recognized synergy that now we have two country radio stations ‑‑ we're not proposing that for Red Deer, of course ‑‑ but just as an example, where we've, you know, used the talent and we've used just the concept of offering exposure, now it's got that much greater because we have another licence.
4679 COMMISSIONER MOLNAR: Thank you. And I think that's an excellent example of the kind of thing I was looking for, to see if there were ways besides the operational ways where, in fact, expansion could be used, you know, to enhance some of the objectives of the broadcasting system.
4680 I think that's an excellent example.
4681 I have just one more question.
4682 It's just a question of clarification.
4683 On page 10 of your opening remarks you speak of your CCD, the direct expenditure, and beside it in the table is indirect expenditure.
4684 Could you explain to me what the indirect expenditure is?
4685 MR. SINGER: Well, in formulating our Canadian talent plans, we ‑‑ we've heard it mentioned in the past, and I think again at this hearing, that the Canadian talent initiatives shouldn't become an auction item. We look at it as a science more than an auction.
4686 We feel that to make our Canadian ‑‑ our CCD plans as inclusive as possible is very, very important, and we feel that there's far more to it than the direct expenditure.
4687 These artists ‑‑ and you've heard it from other applicants ‑‑ they're after ‑‑ they need exposure, air‑time exposure is tremendously valuable to them, so it isn't just the cash.
4688 In our plans we've kind of got three levels. I'd just like to clarify that our indirect expenditures is one level of non‑cash commitment, but there's also the hard on‑air currency, we call it, and that is the exposure of artists through programs like our new and emerging program, 17 hours and 15 minutes a week.
4689 Those have a value and, you know, we've estimated roughly $200,000 a year is the value of the exposure, the resources we need to put those special programs on the air, and we don't include that in our indirect because we feel that's a cost of producing some programming.
4690 But just, you know, in terms of quantifying, you know, there is tremendous value there to artists for exposure.
4691 Now, you were asking the question about our indirect. With each of our nine projects we have direct expenditures, but we are also committing another million dollars to help those organizations promote themselves. So, it isn't just, here's the cheque, go away, don't bother us anymore.
4692 As an example, with FACTOR where we're committing $225,000 in direct cash expenditure to FACTOR, we're also committing $6,000 a year for air time for FACTOR to promote the idea that, hey, these funds are out there, why aren't you taking advantage of them?
4693 You know, we've heard people complain that FACTOR ‑‑ we're putting money into FACTOR but, you know, none of that money is flowing back into my market.
4694 Well, I think we as broadcasters have to take a stand and make people aware of this and promote it one‑on‑one as well with our new and emerging artists in the area to say, are you applying for FACTOR funds?
4695 So, every one of these initiatives is ‑‑ it's very important to offer the on‑air promotion as well. And our letters of support, as you'll see from our CCD partners, have all acknowledged how important that is.
4696 So, we feel that one goes hand‑in‑hand with the other, and these are all minimums.
4697 I mean, our experience in Canadian talent and promoting local community‑driven events is that things come up that nobody ever planned before and if, you know, the help is needed, it's our role as a local broadcaster to see what we can do to make this a success.
4698 So, all of our initiatives need an on‑air component, they won't stand alone, and the FACTOR program is an example of that.
4699 MR. FABRO: Commissioner Molnar let me just add to that.
4700 What we've also indicated is that with our computer system we can actually track how much air time we give to the promotion of these nine initiatives and we're willing to submit that to the CRTC as a piece of information. I know ‑‑ and we would be willing to make that a condition of licence, of course, but I know right now it's not regulated, but we can do that.
4701 And that's what we said in our opening, we'd like to do that to show you how much we are committing in addition to the million dollars of hard cash, another million dollars in actually promotion events on the radio.
4702 COMMISSIONER MOLNAR: Thank you very much.
4703 I'm not certain that there's a need for a condition of licence. I'll leave that to our legal.
4704 THE CHAIRPERSON: I have a few questions for you. And I'd just ‑‑ I apologize if some of them have been answered and I've missed it, but I'm interested, first of all, with respect to the Pollara research.
4705 You indicate on page 9 of your opening remarks that you'll,
"... fulfil the spoken word priorities that local residents have told us about through our extensive research." (As read)
4706 THE CHAIRPERSON: And I was just curious to know exactly what you found there, how you asked the question, what type of information people were looking for.
4707 MR. SINGER: Well, I'll ask Robert to cut in any time you like with any additional information but, just generally, one of the questions in addition to measuring the musical tastes was developed to get a sense of what attitudes towards radio are concerning things like news and information, local content, even the question of independent and locally owned was posed to our over 500 respondents.
4708 And I don't know, Robert, do you want to give specifics on that aspect?
4709 MR. HUTTON: Well, sure, Ken, I'll jump in on that.
4710 Madam Chair, the question was how important would you say the following are to you in choosing a station and it was relatively open‑ended in that sense, and we read them a list on rotation of the various elements.
4711 No. 1, of course, was weather updates, very important, 62 per cent said weather updates are very important, which perhaps is not surprising.
4712 And going down the list of in terms of relative importance, news and information about the City of Red Deer was next, 67 per cent found that very important, 44 per cent somewhat important.
4713 So, clearly ‑‑ and, again, going down the list, community reports on events and activities in and around Red Deer, 35 per cent very important, 49 per cent somewhat important.
4714 Diversity in the sources of community news, information, and activities, news and information about the Calgary/Edmonton corridor, arts and entertainment news from Red Deer and area.
4715 So, quite clearly what people were telling us is community‑based news, news about the area, news and information about not only the area but the corridor that they're in was a very important factor, extremely important factor, in fact, in choosing a radio station to listen to in this market.
4716 THE CHAIRPERSON: Now, in making those comments, is that specific to the age group that you're proposing to target?
4717 MR. HUTTON: That was across the board.
4718 THE CHAIRPERSON: Across the board.
4719 MR. HUTTON: Yes.
4720 THE CHAIRPERSON: So, you didn't try to break down which ‑‑
4721 MR. HUTTON: Well, actually we did and, frankly, we found not a whole lot of difference. It was really very consistent straight across the board.
4722 THE CHAIRPERSON: Okay. Just switching now ‑‑ thank you.
4723 With respect to the CCD, you've got nine projects and it's a very commendable list. I expect that on an ongoing basis you'll stay involved with these organizations to make sure that they do continue to see that the commitments are expended in accordance with the policy?
4724 MR. SINGER: Absolutely, and we've had those discussions with our partners that we've indicated on our application that, No. 1 is, we've got a responsibility that all of these initiatives qualify by CRTC definition and, as Gene just mentioned, you know, we are fully prepared to file a comprehensive report each year, given an opportunity to implement these nine initiatives, as to how the money was used, specifics about our on‑air promotion, not just the cash.
4725 And we certainly know that this is kind of ‑‑ you know, it's interesting, as we've done these 10 applications how many community players we've had discussions with who are just, you know, they're dumb founded, like why we're doing this and, because nobody has come forward to do this before.
4726 And, you know, they're of course delighted, some of them you know more than others, but they say, well, we don't under ‑‑ like, why would you do that for us? And we say, well, that's a part of our mandate to serve the community.
4727 And, you know, they're obviously excited about the money but, as I mention, they're just as excited about having a partnership with a radio station.
4728 And in our current operations we developed those partnerships not just as one that writes a cheque and puts some PSAs on the air, we get involved with these organizations.
4729 I mean, many of our staff are on boards or on committees involved with these organizations because, you know, we ask them, do you need some other help? They said, would you help us with this? We need somebody to work on a fund‑raiser with us, or a board of directors.
4730 You know, we don't go into these CCD initiatives just with the dollars and cents and on‑air commitment in mind, we think that, you know, we're trying to develop relationships with these groups and organizations.
4731 THE CHAIRPERSON: Thank you, Mr. Singer.
4732 MR. FABRO: Just ‑‑ Madam Commissioner, just ‑‑ we also, we dole it out over the period of the licence period, so if they're bad, then we've had to review that.
4733 THE CHAIRPERSON: Change.
4734 MR. FABRO: But I think it's kind of like what Ken was saying, it creates a bond between the community and the station. It's not just the one‑way street. Those people love us for this and they listen to us because of it.
4735 So, there is a bit of ‑‑ we get something out of it too.
4736 THE CHAIRPERSON: Thank you. That's helpful.
4737 MR. SINGER: And hopefully we get some new music to play.
4738 THE CHAIRPERSON: Yes. I just want to ‑‑ 16 full time and two part‑time employees. You know, that's a substantial number of people. Obviously you've considered that.
4739 MR. SINGER: Well, we consider it to be substantial, of course, but the truth of the matter is, if you're going to commit to local service in the true sense of the word, at least the way we understand it, that's what it takes.
4740 We hope that we could be successful in the Red Deer market and improve upon those numbers because, clearly, as the market grows the demand on our resources is going to grow.
4741 There's no question also that we need quality people that are involved in the community and those are 16 people that do more than turn the microphone off and on at the appropriate time.
4742 I think that our plans are always to be developing future members of our team and hopefully we'll see opportunities with some growth to add to that 16 number.
4743 THE CHAIRPERSON: I notice, because you're projecting such a high percentage of your ‑‑ well, almost virtually all of your revenue to come from people who are not currently listening ‑‑:
"Advertisers who do not currently advertise; new revenue that will result from increased spending; and other media." (As read)
4744 THE CHAIRPERSON: But your listeners are not currently listening to other stations. You're going to be repatriating your audience?
4745 MR. SINGER: We feel that our greatest opportunity is the repatriation of listeners who have gone away from local radio.
4746 THE CHAIRPERSON: So, when I look at your projections, are you ‑‑ although you are showing a fairly substantial increase in year two in revenues ‑‑
4747 MR. SINGER: Mm‑hmm.
4748 THE CHAIRPERSON: ‑‑ are you expecting it's going to take quite a while to ramp up to attract these people back?
4749 MR. SINGER: I don't ‑‑ you know, I ‑‑ I mean, if you look at our shares or hours of share of the market, I think it's a ‑‑ you know, it's a reasonable ramp up from the point of view of, I mean, whenever you launch a new radio station you, of course, create some immediate interest in it. The challenge is going to be to engage those people to listen to your station at all times.
4750 So, again, we think it's the mix of, it's not just the music. There's no question radio today is challenged with providing something to get those people back from satellite and non‑traditional sources, and we feel the best element is the locally involved community relevant programming.
4751 Now, on the actual I guess projections of will they switch their dial, Robert's survey, Pollara's survey indicated very, very positively that, give me that music and I will switch and give me the spoken word and I will switch.
4752 And maybe I could ask Robert to give you some figures on that.
4753 MR. HUTTON: I was just waiting to jump in on that one, Ken, so thanks.
4754 And indeed that's quite so, that when we asked people if they would listen to this new station or definitely listen, we got very good response rates.
4755 Of course, it's fair to say that when you ask a question of will you listen to a new station, there's a difference between I'll pop in and try it out and I'll be loyal to that station.
4756 So, we asked about this format in comparison to other potential formats also that we could have proposed in the marketplace.
4757 And the pop CHR mix received 85 per cent positive rating as opposed to 77 per cent for a pure pop mix and 68 per cent for top 40.
4758 So, looking in that context, I think it's clear to say that, particularly those people who are not being served in the marketplace now, have a very good view of this potential format.
4759 THE CHAIRPERSON: Thank you.
4760 In preparing your projections then, did you base it on the assumption that one or two licences would be granted?
4761 MR. SINGER: Well, it's interesting because we started with trying to evaluate what kind of revenues were available in the marketplace, and in doing so we did establish there is room for two.
4762 So, yes, we did project our revenues there would be likely or possibly another player.
4763 THE CHAIRPERSON: And did you have a sense of which would be the most competitive and the least competitive? Can you comment on that?
4764 MR. SINGER: Well, I think ‑‑ you know, we're certainly ‑‑ we feel our approach is strong enough to compete with any other player, but I guess, you know, there's always that balance, like, what is best for the market, and not just the incoming new players but the incumbents.
4765 And, clearly, you know, getting that balance of a format that's serving a younger ‑‑ I don't think it would do anybody much good to format or to approve two applicants that are going to serve the same audience.
4766 And, so, I guess ‑‑ I mean, and, again, I think we have to look at the things beyond the music format in that element as well, but we feel that we have the resources and the programming to compete with any of the applications.
4767 THE CHAIRPERSON: Thank you.
4768 I just want to refer again to your presentation, and at the bottom of page 7 you say:
"The station will concentrate on newer releases with a basic catalogue that spans 15 years." (As read)
4769 THE CHAIRPERSON: And then on the top of the next page you say:
"Further Hot 100's hits driven format will concentrate on breaking new music with most of the air time devoted over the past three years." (As read)
4770 THE CHAIRPERSON: So, what we're looking for is a breakdown of music in terms of percentage of your playlist that will be devoted to music from various decades?
4771 MR. SINGER: Sure. Dean, could you give that breakdown.
4772 MR. SINCLAIR: Thanks, Ken.
4773 Thank you, Madam Chair.
4774 We talk about the 15‑year era range, it's really what the whole catalogue would encompass, so the radio station would have a playlist of about five to 600 songs. Its real emphasis is on breaking and playing new music, 75, 80 per cent of that music would be within the last two years.
4775 And this is a station that would spin hits at probably about 50 times a week, if not more. So, the bulk of the universe that we would play, 80 per cent of the music you'd hear on the station would be that current.
4776 When we talk about fleshing the demo out to 15 years, it's really to help augment some of the gold, it's an essence of gold and that's really a spice thing.
4777 If you took a basic 12‑record hour, I would surmise that roughly nine of those songs would be within the last 18 to 20 months and the rest filled out after that.
4778 THE CHAIRPERSON: Okay. Thank you very much. I think that covers it.
4779 Legal, did you have any questions?
4780 No, okay.
4781 So, this is your two minutes. Thank you.
4782 MR. FABRO: I'll just direct your attention to our screen here, it might help you as we go through our summary here.
4783 Madam Chair, here are the reasons why CJVR is the best choice for Red Deer.
4784 Research has confirmed that Red Deer's 18‑44 demo has no significant loyalty to any stations in the market, depends on non‑radio sources for their music and tune extensively to out‑of‑market stations.
4785 Based on that research, our unduplicated pop CHR format will bring back to radio those 18‑44 tuning to non‑radio sources and will repatriate their out‑of‑market tuning.
4786 Our format, more than any other applicant, will complement, not compete with existing stations and will result in increased hours tuned and bring new radio dollars to the market.
4787 We will bring the greatest level of program diversity and listener choice of any applicant, with 80 per cent new music while ensuring the presence of a strong independent radio voice.
4788 Despite having only three small market stations, CJVR has once again committed to a minimum of $1‑million in direct CCD initiatives and we will commit to report annually on $1‑million in indirect expenditures.
4789 More than any other applicant, all nine of our locally focused CCD initiatives will benefit new and emerging Canadian artists.
4790 We will play the most music by new and emerging Canadian artists, 16 per cent of our weekly playlist.
4791 We will locally produce and air in prime time over 17 hours weekly of specially music‑based programs dedicated exclusively to Canadian artists.
4792 We are among the highest weekly spoken word programming, over 12 hours, all directly relevant to Red Deer's cultural community.
4793 We are the only applicant with a dedicated full‑time arts and culture coordinator, one of 18 new hires.
4794 Our 41 years of broadcast legacy brings to Red Deer 52 provincial and seven national awards for CCD and programming excellence.
4795 As life‑long Albertans and with over 50 years of business successes, my family's depth of financial resources and established commitment to radio, will also mean success in Red Deer.
4796 Approval in Red Deer will allow us to achieve greater operating efficiencies in our Whitecourt, Alberta and Melford, Saskatchewan stations.
4797 Madam Chair, rest of the Commissioners, it is for these reasons that, and many others outlined in our application, that CJVR, more than any other applicant is best choice for Red Deer.
4798 Thank you, merci.
4799 THE CHAIRPERSON: Thank you, Mr. Fabro, and your panel.
4800 MR. FABRO: Thank you.
4801 THE CHAIRPERSON: We're going to take a one‑hour break, so we'll be back at a quarter to two.
4802 Thank you.
‑‑‑ Upon recessing at 1246 / Suspension à 1246
‑‑‑ Upon resuming at 1345 / Reprise à 1345
4803 THE SECRETARY: Good afternoon. For the record, Clear Sky Radio has filed today, in response to undertakings, revised spoken word commitments and an estimate of unscheduled spoken word announcer talk.
4804 These documents have been added to the public record, and copies are available in the Public Examination Room.
4805 Also for the record, Golden West Broadcasting has filed today, in response to undertakings, its live‑to‑air commitments for Drumheller and Red Deer.
4806 These documents have also been added to the public record, and copies are available in the Public Examination Room.
4807 We will now proceed with Item 11, which is an application by Touch Canada Broadcasting (2006) Inc., the general partner, 1188011 Alberta Ltd. and Touch Canada Broadcasting Inc., the limited partners, carrying on business as Touch Canada Broadcasting Limited Partnership, for a licence to operate an English‑language FM commercial radio programming undertaking in Red Deer.
4808 The new station would operate on a frequency of 100.7 MHz, Channel 264C1, with an average effective radiated power of 56,000 watts, maximum effective radiated power of 100,000 watts, antenna height of 161.1 metres.
4809 Appearing for the Applicant is Charles Allard.
4810 Please introduce your colleagues. You will then have 20 minutes to make your presentation.
4811 Thank you.
PRESENTATION / PRÉSENTATION
4812 MR. ALLARD: Thank you.
4813 Madam Chair, Commissioners and CRTC Staff, my name is Charles Allard and I am a director and President of Touch Canada Broadcasting (2006) Inc., the general partner of Touch Canada Broadcasting Limited Partnership, the Applicant.
4814 It is a pleasure to see the Commission back in Edmonton.
4815 We are pleased to be here today to have the opportunity to apply for an FM frequency for a contemporary Gospel music radio station for the City of Red Deer, a city in which several of us on the panel either have business enterprises or grew up in the neighbouring farmlands.
4816 I would like to introduce our panel here with me today.
4817 On my right is Allan Hunsperger, founder and Director of Development for Touch Canada and its predecessor entities.
4818 Next to him is Bev Karbonik, our Business Manager.
4819 To my left is Malcolm Hunt, Network Programming Director.
4820 And next to him is Richard Burrows, Retail Sales Manager.
4821 Behind me, to my right, is Leroy Harder from the Gospel Music Association of Canada.
4822 And directly behind me is Maureeta Percy, Vice‑President of Ipsos Reid.
4823 For ease of reference, we have attached a seating chart at the end of the presentation.
4824 We had also planned that Jachin Mullen, a well‑known Red Deer Gospel recording artist, would be a panel member, but Jachin had the opportunity to possibly secure a label arrangement in Los Angeles, so Jachin gave us a short video of his remarks.
4825 MR. HUNSPERGER: With the introduction of adult contemporary Gospel music in Edmonton over 14 years ago in the AM format, we have been pleased with the growth of and the general awareness and acceptance that we are starting to see in Alberta.
4826 This is shown in our Ipsos Reid report, which shows that over one‑third of all Red Deer residents have heard of or listened to one of the Touch Canada three radio stations in Calgary and Edmonton, and we get almost daily requests from people to bring Shine FM to Red Deer.
4827 There is no question in our minds, given the Ipsos Reid report and our own discussions with Red Deer residents, that there is a demand and a need for a full‑powered Gospel radio station in Red Deer.
4828 We are confident that there would be a very positive response to a Gospel radio station in this market.
4829 If we were to be successful in obtaining a licence for Red Deer, it would also improve our company synergies and enhance the long‑term viability in Canada for this niche Gospel music format.
4830 In addition to diversity in programming, our proposed station would bring more diversity in advertising. By this we mean that we would actually increase the amount of advertising dollars spent on radio in the Red Deer area.
4831 Our experience at our existing stations in Edmonton and Calgary, and especially with our sister station in Grande Prairie, is that this genre attracts businesses that do not typically advertise on mainstream radio.
4832 Many of these advertisers are business people who enjoy Gospel music and are willing to utilize radio advertising to ensure that the format has a base of revenue in order for it to succeed and flourish.
4833 We have successfully established the Gospel format in Edmonton, Calgary and Grande Prairie, and our desire is to duplicate that success in additional markets in western Canada.
4834 This genre of music not only provides an alternative format by a Canadian broadcaster, but also fills a need, according to those polled in our market research study.
4835 To further explain our survey results, I would like to call on Maureeta Percy, Vice‑President of Ipsos Reid.
4836 MS PERCY: Thank you, Allan.
4837 Ipsos Reid was commissioned by Touch Canada to conduct a survey with a random sample of 400 adults from the Red Deer area to determine the market potential for a contemporary Gospel music radio station.
4838 Telephone interviews were conducted between January 4th and January 13th, 2008.
4839 Interest in such a station in Red Deer is strong and encouraging. Based on a brief description of the potential new station featuring Gospel artists, a total of 29 percent of all respondents indicated that they would listen to the station either regularly or occasionally.
4840 Eighty‑five percent of those who expressed interest in the new station are likely to become daily listeners, for an average of almost 52 minutes per day.
4841 Additionally, almost 2 in 10, or 19 percent of those who say they will listen to the new station, indicated that their radio listening habits will increase if the new station were to be licensed.
4842 The potential audience for a new Gospel music radio station in Red Deer closely mirrors the current audience for Christian programming. Almost one‑quarter, or 23 percent of Red Deer residents currently listen to or watch this type of programming, and over one‑third, or 36 percent of all Red Deer residents currently listen to Christian music.
4843 Presently, 40 percent of such listeners say they are not satisfied with the amount of this type of music being played on the radio in Red Deer, indicating a further demand for this format.
4844 If the station existed today, it would likely become a popular radio station in Red Deer. Assuming that the 29 percent of Red Deer residents who indicated that they would be likely to listen to the new station do so at least occasionally, it has the potential to attract a significant audience.
4845 The new music radio station featuring Gospel music is likely to have broad appeal across most demographic segments. However, it does skew more to women. Sixty‑five percent are likely to become regular or occasional listeners, compared to 35 percent among men.
4846 MR. HUNSPERGER: Thank you, Maureeta.
4847 Richard Burrows, our Retail Sales Manager, will now share with you our view of the market in Red Deer.
4848 MR. BURROWS: Thank you, Allan, and good afternoon. With a population of approximately 86,000 for 2007, and a projected population of 136,000 by the year 2031, Red Deer is presently the third‑largest city in Alberta.
4849 Our existing Shine FM stations in Calgary and Edmonton do not reach the Red Deer market, and it is a significant hole in our coverage area of the major corridor that has begun to unfold between Edmonton and Calgary, Alberta's two largest cities.
4850 Red Deer is the only region on the Canadian prairies with access to more than 2 million people within a 90‑mile drive, and the trading area of Red Deer is over 200,000 people, with approximately 183,000 in the .5 mV range contours from the main frequency that our application is based upon.
4851 Red Deer has above‑average levels of private sector investment, and the new business starts have fuelled a growing and diversified economy, which has been the hotbed for growth in small businesses.
4852 Red Deer has a thriving business industry, which is anchored by, firstly, a strong tourism and recreational market; secondly, a strong agricultural and agriculture processing centre; thirdly, an expanded manufacturing industry; fourthly, a prime distribution hub; fifthly, a strong development and construction industry, representing a strong commercial and real estate market; and lastly, an oil and gas sector which saw a slowdown in 2007.
4853 The City of Red Deer was extremely well laid out by its early planners, which used the natural land surrounding Red Deer for its parks and recreational areas, and the Red Deer area has all of the amenities and services that make for an excellent quality of life.
4854 The area is rich in entertainment, recreation, and cultural opportunities, and provides a first‑rate level of health and educational facilities.
4855 Eighty‑seven percent of radio tuning in Red Deer is to FM frequencies, compared to 13 percent for AM.
4856 There are 9 full‑powered FM radio stations that are listened to in Red Deer, and that includes 2 CBC and one local station in Lacombe.
4857 We have conducted several meetings with business people in Red Deer in the past several months, and have talked to many more over the last several years about possibly coming to Red Deer.
4858 Most of these companies are looking forward to having another full‑powered FM media outlet in the City of Red Deer, and we are confident in our ability to sell advertising in the Red Deer market with many of our existing clients in Calgary and Edmonton.
4859 The cornerstone of our start‑up marketing strategy for Red Deer consists of selling packages to at least 20 to 25 business parties that are interested in hearing a full‑powered Gospel radio station in Red Deer.
4860 This is very similar to our recent start‑up in Grande Prairie, which we are pleased to say has been almost at a break‑even point in the last six months.
4861 Revenues are based on a start‑up radio station scenario, and our experience in Calgary, Edmonton and Grande Prairie markets. We believe that the Red Deer market will be able to handle an additional conventional radio format as well as a niche adult Gospel contemporary format.
4862 The Red Deer area economy has been strong and robust for the last several years, with a slight slowdown in the latter part of 2007 for the oil and gas industry and the residential sales area, but these areas are starting to see the market rebound.
4863 In 2007, according to the Financial Post, Red Deer achieved over $2.3 billion in retail sales. We believe that we can establish a successful Gospel music station in this healthy market.
4864 MR. HUNSPERGER: Thank you, Richard.
4865 There is no one else in this country who has had more experience in programming Gospel music radio than our Network Program Director Malcolm Hunt.
4866 MR. HUNT: Thanks, Allan.
4867 I remember back to the early nineties, when Gospel radio first came to Alberta. It was right here in Edmonton, on AM 930 CJCA, where the people of this province first had an opportunity to hear this format.
4868 I also recall the huge outpouring of support we received from the Red Deer region.
4869 We did many remote broadcasts from Red Deer businesses and events, and they were always well attended and successful.
4870 As the years have passed, the interest in the Edmonton station waned in Red Deer, simply because we could not offer them the kind of local content they desired.
4871 Shine FM Red Deer will change that and offer a service that the people of Red Deer can call their own.
4872 The strength of Canadian Gospel music artists, and the industry as a whole, is directly impacted by the number of radio stations playing the format. Ask any artist we play and they will tell you that the more radio stations that are licensed, the more coverage, the more music sales, the more concert possibilities they have.
4873 Touch Canada broadcasting is 100 percent committed to the Gospel music format. It's what we do, and we have had more than 14 years of experience in developing a product that sounds and is operated professionally.
4874 Shine FM Red Deer will be a local radio station. It will air nearly 27 hours of spoken word programming each week. Breaking that number down, over 3.5 hours will be devoted to news and surveillance. We will commit to at least 60 percent local news and sports during our information segments.
4875 Well over an hour each week will be human interest features. Topics will range from finance, family and technology, to ski reports and local organizations contributing to our community events spotlight.
4876 Just under 7 hours will be made up of local reflection and announcer content. This will include information about the artists we play, local festivals, sporting events, and topical news items that may affect the residents of the Red Deer area.
4877 The final 15 hours of our spoken word will come from brokered programming.
4878 Shine FM Red Deer will be committed to Canadian content. At our current operations in Calgary, Edmonton and Grande Prairie, we average 18 percent weekly.
4879 We also acknowledge the improvements that our artists are making in creativity and production, and foresee higher percentages of Canadian content in the future.
4880 We would also like to correct section 8.4 of the Touch application, where we committed to a minimum of 5 percent for emerging Canadian artists, because, after a further review of the Commission's 2006 Radio Policy, we believe that almost all of the Canadian music played by Touch Canada would qualify as emerging artists.
4881 We are all very proud of our track record with respect to Canadian Content Development. A total of $140,000 will be allocated to CCD over the licence term. Recipients will be: required amounts to FACTOR, and the Gospel Music Association of Canada.
4882 GMA Canada has seen incredible recent growth, and will again be hosting their annual GMA Week and awards presentations this October in Calgary. This week is vital to the growth of Canadian talent in Canada, and features conference workshops, a talent competition, as well as a huge networking opportunity for the participants.
4883 Leroy Harder, from GMA Canada, is here on our panel today, and will explain what their organization does and why it is so important.
4884 MR. HARDER: Thank you, Malcolm.
4885 GMA Canada exists to foster and promote Canadian Gospel music. They do this through the annual GMA Canada Week, which consists of training sessions in songwriting and artist development, the Shine FM Cross‑Canada Talent Search, and the Covenant Awards, now in their 30th year.
4886 This week also provides opportunities for artists and industry to network to further both those working on the industry side, as well as the careers of the artists.
4887 GMA Canada has contracted Slyngshot Productions to produce and promote this annual event, and through the CCD funding from Shine FM, GMA Canada has been able to assist artists from across Canada in establishing careers in the following ways.
4888 First, the Shine FM Cross‑Canada Talent Search.
4889 A Canadian Idol‑style competition with over 250 entries this past year, Slyngshot Productions and GMA Canada were able to give out prizes valued at over $20,000. These prizes immediately, and in the long term, make an impact in artists' lives, including development deals with Canadian labels, showcase opportunities in front of labels, managers and agents, and other practical prizes, such as photo and design, instruments and recording equipment.
4890 Having Shine radio stations in Edmonton, Calgary and now Grande Prairie has been a key component in this competition, both attracting and informing the core demographic interested in the competition, and resulting in submissions more than doubling this last year.
4891 Second, the Canadian Christian Music Conference.
4892 The CCD fund enabled the CCMC to double its lineup of speakers and clinicians, without creating unreasonable costs for the conference attendees. This allowed the conference to absorb approximately $120 per attendee for registration, while, at the same time, registrations doubled this last year.
4893 Third, the Annual Covenant Awards.
4894 The CCD fund enabled the production and presentation of the Covenant Awards to be raised to a higher standard, thus raising the bar for the entire industry. The industry, as well as the artist community, is challenged to increase their skills and presentation, pushing all towards excellence.
4895 MR. HUNSPERGER: Thank you, Leroy.
4896 We had asked Jachin Mullen, a Gospel artist from Red Deer, with one DVD and six CD releases, to express his experience, but unfortunately he cannot be with us today, so he provided his presentation on DVD, which we would like to play now with the Commission's permission.
‑‑‑ Video presentation / Présentation vidéo
4897 MR. MULLEN: Hi, my name is Jachin Mullen, and I really appreciate the opportunity to talk to the CRTC today on behalf of Shine FM.
4898 I really believe that we need a Shine station in Red Deer.
4899 I am a local artist and, as a local artist, I really need to firm up the base of my support and have more people locally hear my music.
4900 I have made six CDs and one DVD, and this is my last project open, and it has been played by Shine in Edmonton. I am so appreciative of what they have done for me, because my music has got out there. People have bought my music on the website, "JachinMullen.com", because people have listened to it on the radio and wanted to support a Canadian artist.
4901 As you know, for Canadian artists, sometimes it is hard to make a living and to pay for our projects. This is my sixth project. I have been doing this for a long time, and, still, there are a lot of people who don't know who I am.
4902 I really appreciate Shine being a part of helping me get my music out there, and I would like to see a Shine station in Red Deer.
4903 The second reason why I would like to see a Shine station in Red Deer is because I would like the opportunity to turn on the radio and have the option of Shine in Red Deer. I like the music, and I like what they talk about. That is just my personal opinion, but I would like to have that for me and for my family.
4904 The third reason is, I have actually worked with young people in the City of Red Deer. I worked with hundreds of them, for three years, and if there is one thing that I would like to see for young people, it is that they would have the option to have something that they could listen to on the radio that would have good values.
4905 Again, I apologize that I couldn't be with you in person today. I would have loved to have had that opportunity but because of opportunities with my music that I am trying to obtain, and I appreciate that you would still watch this video.
4906 Thank you very much for your time. God bless.
4907 MR. HUNSPERGER: I thank Jachin for doing that for us.
4908 One of the other areas that we are very proud of in our existing operations is our work with local charities.
4909 Bev Karbonik, our Business Manager, will share some details concerning how we have helped charities in the cities that we are now broadcasting in.
4910 MS KARBONIK: As Allan mentioned, Touch Canada Broadcasting is very proud of its partnerships with very deserving charities in the markets it currently serves.
4911 In Edmonton and Calgary, we have assisted in raising over $5 million for these charities. Many of these organizations tell us that our radiothons for them are their biggest fundraising events of the year.
4912 For example, our initial radiothon for the Mustard Seed Ministries in Calgary raised $175,000 in 2003, and that has grown to $425,000 in 2006.
4913 With the help of many volunteers, these radiothons have helped meet the needs of these charities, which, in turn, have helped many who have nowhere else to live but the streets. These moneys help them get off the streets and change their lives.
4914 We now have many success stories, and these people are now helping others find a better life.
4915 If licensed in Red Deer, we fully intend to search out worthy charities, including a street mission, to assist in a similar fashion.
4916 MR. ALLARD: Thank you, Bev.
4917 Madam Chair and Commissioners, with your approval and our ability to provide the infrastructure, including personnel, programming, marketing and the financial backing to sustain such a station, we are confident that we can establish a successful Gospel voice in this market, thereby satisfying the needs of the 29 percent of Red Deer and area residents who desire our kind of format, which will restore and increase diversity within this market.
4918 Touch Canada has been committed to the Gospel format since we started broadcasting in April of 1994 on AM 930 CJCA in Edmonton, Alberta.
4919 We have no plans or intentions of changing to other formats, as we believe that there is a market for today's Gospel music.
4920 We are a regional broadcasting company, and we feel strongly that adding a station in Red Deer is a logical fit for our company.
4921 Thank you for allowing us this opportunity. We would be happy to answer any questions you might have.
4922 THE CHAIRPERSON: Thank you, Mr. Allard. Commissioner Menzies will be leading the questioning.
4923 COMMISSIONER MENZIES: Good afternoon, and thank you for that.
4924 I will try to go through these questions as efficiently as I can.
4925 Your target audience is described as 30 to 35, but, overall, you say that 80 percent of your audience will be over 35. That is not necessarily inconsistent, but I would like a little clarification on exactly what the target audience is, and how that number works.
4926 MS PERCY: In terms of the demographics, we have four demographic breaks. We have 18 to 34, and within that age group, if we look at the 18 to 34‑year‑olds who say they will listen to the station regularly or occasionally, it is on the mark with that age group.
4927 Similarly, 35 to 54 ‑‑ 46 percent of those say they will listen to the radio station regularly or occasionally, compared to 44 percent in the overall market.
4928 And 55‑plus is 27 percent, and 30 percent of those people say that they will listen regularly or occasionally to the radio station.
4929 So we are pretty much on target with the demographics.
4930 COMMISSIONER MENZIES: So you are aiming at a 33 to 35‑year‑old as your sort of median listener, but you expect a lot of your listenership to be older than that.
4931 MR. HUNSPERGER: That's true. Because we are niche programming, we really reach all kinds of ages, from the young person to the older person.
4932 But when we are on the air, we are zeroing in to the 33 to 35 age group.
4933 COMMISSIONER MENZIES: Young families.
4934 MR. HUNSPERGER: Yes.
4935 COMMISSIONER MENZIES: Thank you.
4936 In terms of your CCD contribution, I want to clarify ‑‑ $140,000 is the number you gave. What is your over‑and‑above?
4937 MS KARBONIK: Only $1,000 a year is what we require in the over‑and‑above.
4938 COMMISSIONER MENZIES: Okay. So that is just ‑‑
4939 MS KARBONIK: It does include the over‑and‑above portion, yes.
4940 COMMISSIONER MENZIES: It includes that. Okay, thank you. And all of that is in your financial projections.
4941 Could you expand a little on your advertising strategy?
4942 Your presentation could be read two ways, and I want to make sure that we read it the right way.
4943 You say:
"Many of these advertisers are business people who enjoy Gospel music and are willing to utilize radio advertising to ensure that the format has a base of revenue in order for it to succeed and flourish."
4944 On the one hand, I could read that as implying that this is almost philanthropic on the part of the advertisers, and it implies that the format isn't commercially viable.
4945 On the other hand, it implies that they have a great passion for the music, and it provides a very stable format of passionate advertisers.
4946 Could you help me figure that out?
4947 MR. BURROWS: I think your second comment is probably the truer one.
4948 The people who advertise with us really, in part, do it because they want to support what we are doing. They love the station, and it becomes a part of their lifestyle, so they want to support their favourite radio station.
4949 COMMISSIONER MENZIES: Thank you.
4950 Would your advertiser be described along commercial lines, then, or along lines of taste and passion?
4951 Would they be auto dealers? Would they be realtors? Would they be retailers?
4952 MR. BURROWS: Commercial. We have all of those in our other radio stations: home builders, auto dealers, small retail stores.
4953 COMMISSIONER MENZIES: So you would be drawing from all segments.
4954 MR. BURROWS: Yes.
4955 COMMISSIONER MENZIES: How would you incorporate this in terms of a regional sell?
4956 You mentioned that you would be able to sell Red Deer to advertisers in Calgary and Edmonton. How would that work?
4957 Couldn't that provide a little tension for your relationship with Red Deer advertisers?
4958 MR. BURROWS: We have numerous clients who advertise on our existing radio stations who have stores in Red Deer, so they would love the opportunity for us to be there so they could advertise in Red Deer.
4959 COMMISSIONER MENZIES: For your brokered programming, do you have any contracts secured for that?
4960 I noticed in your financial projections that that was an area that you saw some growth in after the first year, but how secure are your forecasts for both Canadian and non‑Canadian brokered?
4961 MR. HUNSPERGER: We have talked to the agency that we deal with on brokered programming, and they indicate to us a desire for that.
4962 For example, most of the brokered programming that we have on CJCA they don't pick up in Red Deer, because we have to change our signal at dusk, and we change it to go north. So Red Deer doesn't hear it.
4963 We do know that there are ministries that are interested in that market in Red Deer, but they never, and we never, sign contracts with them before we actually have a licence.
4964 COMMISSIONER MENZIES: How would you describe how strong a market Red Deer would be for that type of programming compared to Calgary and Edmonton?
4965 MR. HUNSPERGER: Red Deer is the centre of the Bible belt of Alberta.
4966 If there is a centre of Bible belt in Alberta, it's Red Deer.
4967 COMMISSIONER MENZIES: Thank you.
4968 In terms of synergies, your admin and general expense forecasts are pretty low as a percentage of revenues, which kind of leads us to assume that you expect to gain considerable synergies in that area with your other operations.
4969 Is that the case?
4970 Is that a fair assumption?
4971 MS KARBONIK: Yes, it is.
4972 Most of our administration will be done in our head office in Edmonton, with one full‑time person in Red Deer.
4973 COMMISSIONER MENZIES: Can you expand on your synergies?
4974 Is that the main area of synergy? Will there be other synergies?
4975 MS KARBONIK: We also have synergies with creative and production.
4976 I will have our Programming Director talk about the synergies in programming, but the majority of administration will be done at head office, with minimum in Red Deer.
4977 MR. HUNT: Just to add to that, of course, our production and creative comes out of our head office now for our existing stations, and there will be some programming synergies in terms of the Program Director ‑‑ that's me. I am in Edmonton, but I also oversee the operations on our network.
4978 So those types of synergies, in terms of programming, are what we will have in Red Deer.
4979 COMMISSIONER MENZIES: So you would be the Program Director in Red Deer, as well?
4980 MR. HUNT: Yes, I am the network Program Director. I do have a local person in each of the markets.
4981 COMMISSIONER MENZIES: So you get more work if you win this?
‑‑‑ Laughter / Rires
4982 MR. HUNT: It's kind of a Catch‑22, yes.
‑‑‑ Laughter / Rires
4983 COMMISSIONER MENZIES: Do you think this proposal would be viable on its own, without the synergies that you have?
4984 MR. HUNSPERGER: Yes, we do.
4985 COMMISSIONER MENZIES: Because?
4986 MR. HUNSPERGER: Just because of the demand.
4987 Red Deer has always ‑‑ I wouldn't want to use the word "bug", but, in many ways, they have bugged us since we went on the air in 1994 and we never saw such a response to people getting on the ball, writing letters wanting this thing to happen. They even made a DVD of me and played it in their community meetings and church meetings and, "Hey, we have an opportunity maybe to have a gospel music radio station in Red Deer". We have businesses that we have talked to and these businesses are ready to jump in.
4988 And I look at Red Deer much in the same way as we looked at Grande Prairie. We have the same enthusiasm and the same business support that these people will but synergies help us because, as you know, we barely breakeven in our operation. And so synergies help us to start seeing a little bit of a profit and hopefully that little bit of a profit can increase as we add more stations.
4989 COMMISSIONER MENZIES: Okay. How would you describe Red Deer culture? I mean you mentioned sort of the heart of the Alberta Bible belt in terms of that. That can mean different things to different people.
4990 But overall how would you describe ‑‑ what would be the defining characteristics of Red Deer from your point of view, or how you would describe it to outsiders like us?
4991 MR. HUNSPERGER: Yes. Well, Red Deer is still small town in many ways even though it's a city of, you know, 80‑plus thousand people. A lot of people are farming people, rural people coming into Red Deer. Red Deer services that whole area.
4992 You take ‑‑ now Sylvan Lake, for example, is becoming one of Canada's vacation ‑‑ where people are buying properties on the lake and those properties have shot up immensely.
4993 Red Deer is kind of ‑‑ half of Red Deer are Calgary Flames' fans and half of Red Deer are Edmonton Oilers' fans. So you know they are not big enough to have their own thing yet but they are getting to that place where they are wanting their own thing.
4994 So I think it's very much family. They have a lot of churches in Red Deer. It's very much ‑‑ if you would think what is Alberta you would think largely of what Alberta used to be 10, 15 years ago would be Red Deer. And I'm not saying they are behind the times but I am just saying that the metropolitan stuff hasn't quite hit Red Deer.
4995 COMMISSIONER MENZIES: Okay. Thank you.
4996 When you spoke ‑‑ you gave us a percentage of local on your news and sports. You said 60 percent in your presentation. Just so we are clear on that, 60 percent of your news and sports would be local?
4997 MR. HUNT: Correct.
4998 COMMISSIONER MENZIES: Is that what you said?
4999 MR. HUNT: Yes.
5000 COMMISSIONER MENZIES: Is that 60 percent of your news will be local and 60 percent of your sports will be local?
5001 MR. HUNT: Correct.
5002 COMMISSIONER MENZIES: Okay, thank you.
5003 MR. HUNT: Except for the surveillance which will be 100 percent Red Deer.
5004 COMMISSIONER MENZIES: Good. Good idea, probably be helpful.
‑‑‑ Laughter / Rires
5005 COMMISSIONER MENZIES: How would you define local then in terms of that? Are you talking about the corridor or just the city of Red Deer or the region we have heard earlier this week, you know the central Alberta market, being a market of 200,000 people? So are you using that as your definition of local?
5006 MR. HUNT: Absolutely. You know, what we define as local in terms of news is what affects the residents of the area that we are serving.
5007 COMMISSIONER MENZIES: So Red Deer, Red Deer County ‑‑
5008 MR. HUNT: Correct.
5009 COMMISSIONER MENZIES: ‑‑ to the west of the mountains, east to the river?
5010 MR. HUNT: Yes.
5011 COMMISSIONER MENZIES: And what would you then call regional?
5012 MR. HUNT: Well, regional would be, you know, through the corridor of Edmonton, Calgary.
5013 COMMISSIONER MENZIES: So it's sort of a north‑south corridor rather than an east‑west?
5014 MR. HUNT: Yes.
5015 COMMISSIONER MENZIES: Okay, thanks.
5016 What does your ideal listener look like? How much ‑‑ is it a he or a she? Is it married or single? What type of household income, a sort of demographic breakdown on that.
5017 MR. HUNSPERGER: It's a married lady who is a professional who has two children, married and drives a van.
5018 COMMISSIONER MENZIES: Okay.
‑‑‑ Laughter / Rires
5019 MR. HUNSPERGER: Has a mortgage, probably a holiday trailer. Between the two of them, the husband and wife, they are making over $100,000 a year, $150,000, and they are concerned of everything that's happening in society and they want their best for their kids. They have seen how the baby boomers ran their life and a lot of them want a different life than what the baby boomers had. It's much more ‑‑ much more family. It's surprising how it's much more family and a willingness to try to have that family togetherness.
5020 And I think that's really important. When they marry they want to make sure that they have married someone that they are not going to end up divorced like perhaps their parents were and they really want that solid type of life. Some of them who had worked when they start having their children they don't go back to work. They want to raise their children.
5021 So they are very much ‑‑ you know, I guess what you would call a wholesome ‑‑ fun‑loving people who work hard and are sometimes living in homes that they left ‑‑ what their parents are living in. They have worked hard and are making good money here in Alberta and are living in nice homes almost like the ones they left when they got married.
5022 COMMISSIONER MENZIES: Thank you.
5023 In terms of your research can you give me a little bit more detail about the detail of its accuracy and any time you are defining ‑‑ even self‑defining a niche format ‑‑ I would think that the accuracy of your research would have to be very precise in terms of that.
5024 So can you just help me understand the precision of the research?
5025 MS PERCY: The margin of error with the sample of 400 is plus or minus 4.9 percent.
5026 COMMISSIONER MENZIES: Okay, and you are confident that that ‑‑ you are carving out a relatively small niche for listenership and you are confident that that number works for you?
5027 MS PERCY: Yes, that's a reasonable number. I think if we were to double the sample size to 800 you would only increase your margin of error by about 1 percent. So it's a decent sized number.
5028 COMMISSIONER MENZIES: Okay, thank you.
5029 I just want to touch on this. I know you touched on this in your presentation and in your application but just to go through it one more time.
5030 Do you have the institutional strengths to cope with adversity if, for example, like in the first year you don't get the listenership that you are looking for. You are already projecting, I think, a 38 percent shortfall in year one and we want to know that you have pockets deep enough to cope with that.
5031 MR. ALLARD: I think that's what we projected in Grande Prairie and thank goodness it came at a lot less. Yes, we do have ‑‑ the pockets are deep enough.
5032 COMMISSIONER MENZIES: You said that Grande Prairie is breaking even after six months?
5033 MR. ALLARD: It's at almost the breakeven point.
5034 COMMISSIONER MENZIES: And it's been on the air for six months?
5035 MR. ALLARD: It's been on the air for six months.
5036 COMMISSIONER MENZIES: So I mean, are you still sticking ‑‑ would you still stick with that 38 percent then in Red Deer, given the experience you ‑‑
5037 MR. ALLARD: Well, the market is a little bit more fragmented in Red Deer. So there is a little overlap with other stations. So I think we would like to stick with the 38 percent.
5038 COMMISSIONER MENZIES: Okay, thank you.
5039 Were you going to ‑‑
5040 MR. HUNSPERGER: I was just going to say that we projected close to that deficit in Grande Prairie as well for our first year. But I think the key has been that the sales department has put together these packages that we pre‑sell businesses that they really like. I mean once we get the licence then we have a dinner and we invite these business men together and it worked very successfully in Grande Prairie and we are obviously planning to do that in Red Deer.
5041 COMMISSIONER MENZIES: Okay. You mentioned 27 hours of spoken word. Is that all locally produced or where does that come from and how does ‑‑
5042 COMMISSIONER MENZIES: Just want to confirm that.
5043 MR. HUNT: No, it's not all locally produced because 15 hours of that is brokered spoken word, for starters.
5044 COMMISSIONER MENZIES: The brokered ‑‑
5045 MR. HUNT: Yes.
5046 COMMISSIONER MENZIES: ‑‑ okay is in that?
5047 MR. HUNT: Yes.
5048 COMMISSIONER MENZIES: Okay, thank you.
5049 Can you describe ‑‑ you have got a significant number for Contra in your financial plan. Can you tell me what a typical Contra arrangement would look like and how you account for Contra?
5050 MS KARBONIK: It's considered just like a regular broadcast order. We consider it just like cash. We have a Contra agreement that's produced.
5051 COMMISSIONER MENZIES: What would you be Contra‑ing; cars, trucks?
5052 MS KARBONIK: It's promotional items, prizing.
5053 MR. BURROWS: If we are lucky some restaurants.
‑‑‑ Laughter / Rires
5054 MR. HUNSPERGER: Yes, that's right.
5055 COMMISSIONER MENZIES: Okay, just a couple of more points here.
5056 COMMISSIONER MENZIES: I just wanted to get a sense, and just to confirm ‑‑ sorry, I think I answered that. You answered that question.
5057 When you talked about emerging artists you said you wanted to upgrade your commitment to a minimum of 5 percent for emerging Canadian artists because on further review of the 2006 policy you think that almost all of the Canadian music artists played by Touch Canada would qualify as emerging artists.
5058 What does that mean for a number for us? Does that mean you are upgrading your emerging artist quotient to 18 percent, which is your Canadian? Where does that leave us with that?
5059 MR. HUNT: Well, you have asked the question of other applicants in this hearing of their definition of emerging artists.
5060 COMMISSIONER MENZIES: Right.
5061 MR. HUNT: And our definition of an emerging artist is a Canadian artist that is their first radio‑ready project. If we look at our definition of it, it's 5 percent.
5062 But if we look at the definition from the review it would seem that, you know, none of our artists chart, in terms of Canadian artists; chart the way that mainstream artists do. So in essence all of them are emerging artists, if that makes sense.
5063 COMMISSIONER MENZIES: Yes. No, I understand it in terms of that they be emerging artists, in terms of the broader culture.
5064 MR. HUNT: Correct.
5065 COMMISSIONER MENZIES: But they wouldn't necessarily be emerging artists in terms of the gospel music world, would they?
5066 MR. HUNT: No.
5067 COMMISSIONER MENZIES: So you could be an established artist in the gospel music world and still be qualifying sort of with the CRTC as an emerging artist in terms of the broader culture.
5068 MR. HUNT: Right. From our definition it would be 5 percent.
5069 COMMISSIONER MENZIES: Okay. So 5 percent of ‑‑ so we have it right. 5 percent of your Canadian content ‑‑
5070 MR. HUNT: Correct.
5071 COMMISSIONER MENZIES: ‑‑ will be what you see as emerging, the artists who are emerging within the gospel music genre.
5072 MR. HUNT: Correct, correct.
5073 COMMISSIONER MENZIES: But that would represent, according to the 2006 policy, virtually all of your Canadian playlist.
5074 MR. HUNT: Yes, it's kind of a confusing thing where we are talking about our specialty, you know, category of music compared to the Category 2 music that pretty much everybody else plays. It's difficult.
5075 That's a hard thing for us to answer because it is different for us because we are such a new industry and a new, you know, musical ‑‑ yes, we are basically a new music industry in Canada. We have only been around since 1994 in terms of radio.
5076 COMMISSIONER MENZIES: Okay, I understand.
5077 Did you have something else to add or ‑‑ no?
5078 Okay. That concludes my questions. Thanks.
5079 THE CHAIRPERSON: Commissioner Cugini.
5080 COMMISSIONER CUGINI: Thank you.
5081 I'm just going to continue on this path. It's not so much that it's new. It's just that, like you said before, the music just doesn't chart.
5082 MR. HUNT: Correct.
5083 COMMISSIONER CUGINI: Right? I mean it's not necessarily brand new.
5084 MR. HUNT: No, but that 5 percent that we are talking about would be.
5085 COMMISSIONER CUGINI: Yes.
5086 MR. HUNT: You know, people that are making their first CD.
5087 COMMISSIONER CUGINI: It is too bad that Mr. Mullen isn't here because I was curious to find out about the gospel music scene in Red Deer. Are there opportunities for artists like Mr. Mullen to perform live in Red Deer?
5088 And perhaps ‑‑ yes, I can see you jumping for the mike.
5089 MR. HARDER: Well, I worked at a label for many years and one of our biggest tracks that we actually developed was from Red Deer, so it's a bit close to my heart in this city that has created a lot of artists in this genre.
5090 As far as venues it's primarily through the church, but a lot of them spill north and south to Calgary and Edmonton for venues. So there is a lot of ‑‑ although I was surprised even in Red Deer with the group that we promoted how many times they were playing in Red Deer with their local people and promoting their own concerts.
5091 COMMISSIONER CUGINI: I mean I realize it's probably a chicken‑and‑egg kind of discussion in the sense, like get the gospel music radio station in the market and it will provide opportunities for artists to ‑‑
5092 MR. HARDER: But surprisingly ‑‑
5093 COMMISSIONER CUGINI: ‑‑ to perform live in the city.
5094 MR. HARDER: But surprisingly, even without the radio there it's a very artistic culture that really has fostered a lot of Christian music artists.
5095 COMMISSIONER CUGINI: Like Mr. Mullen.
5096 MR. HARDER: Like Mr. Mullen and his cousins who would sing in a band.
5097 The other thing is that the President of the GMA is actually relocating to Red Deer, so the GMA presence will be very strong in Red Deer as well.
5098 COMMISSIONER CUGINI: And the Gospel Music Awards how big of an event is that?
5099 MR. HARDER: We had attendance of close to 1,500 last year and artists included Paul Brandt, Brian Doerksen, Starfield; many of the biggest artists in gospel music. And even crossover artists, obviously Paul Brandt being the prime example.
5100 COMMISSIONER CUGINI: Did he start as a gospel music artist?
5101 MR. HARDER: He started as a country artist, got discovered in a competition in the mainstream.
5102 COMMISSIONER CUGINI: Okay.
5103 MR. HARDER: And has crossed over into doing ‑‑ like the Risk album has a lot of gospel content.
5104 COMMISSIONER CUGINI: And we have all discussed how you too started off as gospel music in your former appearances.
5105 Thank you, Madam Chair. Those are all my questions.
5106 MR. HUNSPERGER: May I just add to that?
5107 COMMISSIONER CUGINI: Of course.
5108 MR. HUNSPERGER: Commissioner, the thing that excites me is, yes, we are sad that Jachin couldn't be here today because he is a great guy and I know you and him would have had a great conversation. But I think the thing that excites me the most is that there is actually a label company in Los Angeles that heard his music and gave him a call and said, "If you want to talk to us be here Tuesday".
5109 So in some ways we are excited to see young people getting opportunities in the U.S. market, but on the other hand we really, really want to continue to help these young artists that they can successfully make it and even live here in Canada.
5110 Red Deer also ‑‑ by the way Cindy Morgan, who is a top artist in the contemporary gospel field, married a young man from Red Deer and they live half their life in Red Deer and half their life in Nashville. She now has become a landed immigrant of Canada and she so much wants to raise her children in the Canadian market versus in the U.S.
5111 So I think that the more and more we can supply that kind of genre the artists like that ‑‑ we will even attract American artists.
5112 One more thing is Natalie Grant, for example, who is the female artist in contemporary music married a young man from Edmonton here, and Bernie Herms who has now moved onto Nashville is one of the top producers not only in gospel music but also in other formats and genres as well.
5113 So we are excited to see a lot of great talented young people that are involved and every time we add a radio station it encourages more to say, "Hey, maybe I can have a chance of seeing a dream come true".
5114 COMMISSIONER CUGINI: Well, thank you. And I hope for Mr. Mullen's sake CRTC hearing; signing a label in L.A. wasn't too much of a decision.
‑‑‑ Laughter / Rires
5115 COMMISSIONER CUGINI: Thank you.
5116 THE CHAIRPERSON: Commissioner Patrone.
5117 COMMISSIONER PATRONE: Thank you, Madam Chair. Good afternoon.
5118 I also have a format‑related question. Of course, gospel is an interesting format because it's typified more by the message rather than by any stylistic aspects of the music. So I mean you can have an artist like P.O.D. for instance which is sort of hard, alternative type of music and Amy Grant. You have got some very wide stylistic differences there and I'm just wondering where Shine FM would position itself relative to stylistic aspects of the format.
5119 MR. HUNT: It's a great question because when we first started we tried to, with our radio station, be everything to everybody. And partway along we realized that that just wasn't possible. We were pleasing very few instead of actually targeting on the ‑‑ casting the widest net in terms of the music.
5120 So adult contemporary no matter where you do the research, whether it's in the States or up here in Canada, is the largest. And you can actually stylize Christian music in that where it does have a large component of adult contemporary. Much like you mentioned P.O.D. there is a rock component of it.
5121 Of course those others, they are sort of like the niche within the niche, the rock and the hip hop and those types of genres of music. So I don't think it would ever be proper to have a hip hop radio station for gospel music but certainly when it comes to adult contemporary that casts the widest net and that's why we have chosen that format to play.
5122 COMMISSIONER PATRONE: You were asked earlier about the health of the gospel music scene in and around Red Deer. I'm just wondering if you have any sense in terms of the supply and availability of music of the overall health of the gospel music industry in the country.
5123 MR. HUNT: Perhaps maybe Leroy would like to talk about this too, but I think that's steadily growing. As we see, you know, more radio stations, more opportunity for the artists to get air play and sell their music and actually make a living out of this. You know, the artist that we had on our panel when we were in Vancouver is another artist that just completed another project. And I think that it's definitely alive and well and growing.
5124 The GMA Canada week is a great testament to the fact that it is growing and it's getting bigger and better. So I don't know if Leroy would like to speak about that at all.
5125 MR. HARDER: Yes, even evidenced by the submissions for the award show, which is kind of an indicator of what is going on in the country, it has risen exponentially in the last three years. The number of albums coming out in spite of our MP3 issues that we are dealing with; downloads and all that kind of stuff, which we all know about, sales are way down among the main players.
5126 More and more artists are figuring out how to make it a local and spreading it out that way. So the scene is growing exponentially.
5127 COMMISSIONER PATRONE: Do you have any sales figures nationally?
5128 MR. HARDER: I am sorry, my president would. I don't have those with me.
5129 COMMISSIONER PATRONE: To what degree do you think Shine FM will be able to attract those who might not normally be into the faith aspect of what the station stands for?
5130 MR. HUNSPERGER: Well, we have said before, and we believe this, that you know, 60 percent of our audience ‑‑ well, over 60 percent of our audience wouldn't necessarily consider themselves church people but they enjoy the positive refreshing sound. We have even had other artists who are in ‑‑ like maybe have a nightclub band or whatever and I've heard them dial onto our Shine FM and listen to a song and say, "Wow, I like the lyrics. I like the way they put that together" or whatever.
5131 So what's happening in our music is the quality of it and the talent of it is what is attracting people as well as the message and that kind of thing is growing as we continue to see it. We are very proud of some of the talented aspects of the music.
5132 COMMISSIONER PATRONE: You also spoke about Red Deer being the Bible belt in Alberta and I take it you hope to draw mainly on the faith community for the bulk of your audience.
5133 Do you have any numbers in terms of the community in and around Red Deer?
5134 MR. HUNSPERGER: Not really, but the faith community definitely is a core group to our radio and of course we know that we probably get 4 percent perhaps of the populous, 4 or 5 percent of the share in that area that would be that, and then you start reaching out to the other people. It's hard to tell because we are not into a measurement. So it's a guess game in many aspects.
5135 COMMISSIONER PATRONE: I just meant maybe in the overall church‑going community in and around Red Deer, whether those figures are available.
5136 MR. HUNSPERGER: I don't know. There are still a lot of church people that listen to country music. So I just don't know.
5137 You know, it's ‑‑ what we try to do is we are trying to get more Canadians involved in radio and the more you can get Canadians involved in radio the more you are going to get people to listen.
5139 MS PERCY: Yes, I would just like to add to that as part of our study, and I believe the whole report was filed with the CRTC, but we discovered that the two most popular FM stations currently in the Red Deer market are CKGY, KG Country and 105.5 FM or the Big 105 which plays pop music.
5140 According to when we looked at listeners who said that they would likely listen to the new gospel radio station either regularly or occasionally, we found there is a statistically significantly higher proportion of them who currently listen to country or the existing pop station. And I think that goes back to Leroy's comments earlier where he was saying there is a lot of crossover between gospel and country. So they are amenable to one another in that marketplace.
5141 COMMISSIONER PATRONE: Those are my questions. Thank you very much.
5142 Madam Chair.
5143 THE CHAIRPERSON: Thank you.
5144 Commissioner Menzies has another.
5145 COMMISSIONER MENZIES: I actually need to refer you to our legal counsel because we need to go back over this emerging artist item in terms of just the wording in your presentation, saying you would like to correct section 8.4. It brings up the issue as to whether you are actually making a substantive change to your application or whether you are just trying to correct our impression, and to save all of us a lot of time and trouble legal will speak directly to you.
5146 MR. MORRIS: Just to make it ‑‑ in response to Commissioner Menzie's questions you were saying that the definition that you used, you would still be doing 5 percent a week of artists who had never had something, a radio?
5147 MR. HUNT: Correct.
5148 MR. MORRIS: So you are okay with that definition?
5149 MR. HUNT: Yes, absolutely.
5150 MR. MORRIS: You are not changing your application?
5151 MR. HUNT: No, we are not changing.
5152 MR. MORRIS: Okay, great.
5153 MR. HUNT: More just a clarification of what we had said compared to. It's obviously been something that has been talked about a lot over the last couple of days. So we just wanted to clarify that.
5154 MR. MORRIS: Okay, that's great.
5155 Just one more question just in relation to your Canadian content contribution. Just wanted to clarify the over and above amount which should be exclusive of the basic amount. So if you give us a number of the over and above amount only per year for the seven year licence term? Would you be able to do that either today or ‑‑
5156 MS KARBONIK: Yes, I can give it to you right now. I mean it's $1,000. We don't hit over $1.25 million till later in the year.
5157 I can you the exact figures as soon as we finish here.
5158 MR. MORRIS: Okay, that would be great. Thank you.
5159 THE CHAIRPERSON: We are a little bit out of order here. I have a couple of questions.
5160 I am just wondering, at the top of page 11, the bottom of page 10 you say:
"As the years passed the interest in the Edmonton station waned in Red Deer simply because we could not offer them the kind of local content they desired." (As read)
5161 THE CHAIRPERSON: And I am just wondering, is that in reference to spoken and music? Is it spoken word as well you are referring to there?
5162 MR. HUNT: Yes, I am referring to the whole radio station.
5163 THE CHAIRPERSON: Oh.
5164 MR. HUNT: I mean Edmonton is an Edmonton‑focused radio station and we couldn't offer, you know, the Red Deer people the kind of local content that they would like.
5165 THE CHAIRPERSON: So covering local events or that kind of thing you are referring to.
5166 MR. HUNT: Correct.
5167 MR. HUNSPERGER: We originally even did live on locations in Red Deer because Red Deer wanted that, but realized it wasn't local enough so it wasn't working.
5168 THE CHAIRPERSON: And this is, I take it, quite some time ago, is it?
5169 MR. HUNT: Yes, that was the early nineties when we first signed on in '94 here in Edmonton.
5170 THE CHAIRPERSON: Okay.
5171 So Edmonton and Calgary what is the timing of those two stations?
5172 MR. HUNT: Signed on here in '94 and we signed on in December of '97 in Calgary.
5173 THE CHAIRPERSON: And just recently in Grande Prairie?
5174 MR. HUNT: Yes, December.
5175 THE CHAIRPERSON: Just in case I don't ‑‑ I know that Mr. Harder came and he explained the GMA's program but is your CCD, the $140,000, in addition to any monies you have committed elsewhere for CCD to go to GMA? It's not a duplication is it?
5176 MS KARBONIK: No, the 140 is the entire amount, not all to GMA. No, it's ‑‑
5177 THE CHAIRPERSON: Some is going to FACTOR and some is going ‑‑
5178 MS KARBONIK: Yes, yes, the required minimum is going to FACTOR.
5179 THE CHAIRPERSON: The reason that I am asking is the GMA the description is written as those are projects that are already underway.
5180 MS KARBONIK: We do have some projects with GMA in our previous licences with them, yes.
5181 THE CHAIRPERSON: But this is additional funding going for the same projects?
5182 MS KARBONIK: Yes, just particular for this licence, yes.
5183 THE CHAIRPERSON: That's fine, thank you.
5184 And just a quick thing on the ‑‑ just put the right word that you refer to it as ‑‑ the Contra trade revenue. And I think I have asked this a touch before, but I just want to make sure that the associated expenses are in the ‑‑ probably in the sales ‑‑
5185 MS KARBONIK: Yes, they are.
5186 THE CHAIRPERSON: ‑‑ and advertising promotion line?
5187 MS KARBONIK: Yes, they are.
5188 THE CHAIRPERSON: Okay. That concludes our questioning. I don't know if counsel has another question ‑‑ no. That's fine.
5189 So I guess first of all I want to ask you how many licences or did you give consideration to how many licences do you think the market could support at this time?
5190 MR. HUNSPERGER: Well, we believe that whatever the Commission decides we are such a niche market that we don't hurt anybody else really and we kind of stand on our own. So we believe that if you put one or two mainstream in there plus us it works.
5191 THE CHAIRPERSON: Thank you.
5192 And so this is your two minutes if you would like to tell us why we should go ahead with this.
5193 MR. ALLARD: Thank you, Madam Chair and Commissioners.
5194 We believe that the proposal we put before you today should be licensed for the following reasons:
5195 We will have a minimal impact on the incumbent Red Deer broadcasters as our target audience does not in large part listen to radio today because they cannot find the content that they desire on existing stations and our experience in the markets we now serve is that most of the advertisers we will attract do not currently utilize radio.
5196 We know that what you licence is what will be broadcast in Red Deer five, ten or twenty years down the road. Touch Canada is deeply committed the gospel music format; in our 14‑plus years of existence have never even considered requesting a change of format.
5197 All conventional broadcasters, including those at this hearing, do their market research to find out what format would likely be the most profitable for them. There is nothing wrong with that. It's a business. However, we do our research only to find out if there is enough interest in a gospel music station to make it economically viable.
5198 We serve those who feel disenfranchised from the conventional broadcasting system. Our success in Grande Prairie where we have reached close to a breakeven point in six months is evidence that there is a desire for non‑conventional services in Alberta.
5199 Licensing Touch Canada will bring diversity to the Red Deer market both in musical content and news content. All our stations are family orientated. You will never hear song lyrics that promote violence, drug use or any other antisocial behaviour. You will never hear songs that demean young women or any other group. The news on our stations is never sensationalized or gossipy in nature, as is the case on many other radio stations today.
5200 We are a small, regional Alberta broadcaster currently operating stations in Edmonton, Calgary and Grande Prairie. Red Deer is a natural fit for our company. We have applied for licences in other provinces, specifically in Saskatchewan and B.C. but thus far have been unsuccessful. We have to ask ourselves if we are not successful with this Red Deer proposal if indeed there is any future for small companies in the Canadian broadcasting system or has the time come when only the big chains can succeed and thrive. I hope not.
5201 Thank you.
5202 THE CHAIRPERSON: Thank you very much, Mr. Allard and your panel.
5203 We are going to take a break for 15 minutes.
5204 But I wanted to just draw everybody's attention. We are quickly approaching Phase II because the next applicant is the last for Red Deer. So if you are not intending to participate would you please let the hearing secretary know? Thank you.
‑‑‑ Upon recessing at 1451 / Suspension à 1451
‑‑‑ Upon resuming at 1509 / Reprise à 1509
5205 THE SECRETARY: Madam Chair, I have some announcements.
5206 For the record L.A. Radio Group Inc. has filed today in response to undertakings the estimate for amount of announcer time. This document has been added to the public record and copies are available in the public examination room.
5207 Also, for the record, Touch Canada Broadcasting 2006 Inc. has filed today in response to undertakings the yearly CCD O&A contribution for seven years. This document has also been added to the public record and copies are available in the public examination room.
5208 And finally, for the record, Harvard Broadcasting Inc. has filed today, in response to undertakings, its contributions to CCD. This document has also been added to the public record and copies are available in the public examination room.
5209 We will now proceed with Item 12, which is an application by CHIP Media 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 264C1) with an average effective radiated power of 56,000 watts (maximum effective radiated power of 100,000 watts/antenna height of 161.1 metres).
5210 Appearing for the applicant is Darryl Quibell. Please introduce your colleagues and then you will have 20 minutes to make your presentation.
5211 Thank you.
PRESENTATION / PRESENTATION
5212 MR. QUIBELL: Thank you.
5213 Madam Chair, members of the Commission and Commission staff, thank you for your time today and the opportunity to present.
5214 My name is Darryl Quibell and I am President of CHIP Media. I would now like to introduce the CHIP Media team.
5215 To my left is Trevor Sevcenko, a director of CHIP Media and a resident of Red Deer for the past 17 years. Trevor is a telecommunications engineer graduate and in addition to his duties as director will serve as our chief engineer responsible for all facets of the technical and infrastructure development of our new station. Trevor is active in the community, including past volunteer work with the Big Brothers, Big Sisters and the youth and volunteer centre.
5216 On my right is Michael Williams. Michael has worked in the radio industry for the past 14 years, including seven years in Red Deer. During that time he was also owner of two separate companies in Red Deer. Michael was responsible for the creation of our application and has been one of our original shareholders. Since the filing deadline he has been appointed to the CHIP Media board of directors and to the position of vice‑president. Should our application be successful he will act as general manager for the station.
5217 I myself began my radio career in Red Deer in 1988 working in the industry for almost 20 years, except for a three‑year period where I left to start my own company. As detailed in our executive summary, I have spent my entire adult life in Red Deer, raising my family and contributing back to the community through volunteer work with the United Way, Red Deer Minor Hockey Association and Red Deer Lacrosse Association. Again, under the premise that our application would be successful, I would act as Director of Sales for 100.7 CHIP FM.
5218 CHIP Media Incorporated was created by the individuals here today for the purpose of this application. Although this would be considered a new company, both Michael and I bring not only a strong radio background and a hands‑on understanding of the central Alberta radio market and what it would take to build a successful company, but also extensive entrepreneurial and management experience. We are very honoured to be here today.
5219 We look forward to bringing our passion for radio to everyone involved in the development of CHIP 100.7 and to give young people an option they have been craving for years.
5220 Considering our place on the agenda we won't go into great detail as to the socioeconomic state of Red Deer, as you have heard it from the previous seven applicants in addition to having it detailed within our supplementary brief.
5221 However, we will be happy to answer any questions you may have as it relates to any of our provided information regarding Red Deer and central Alberta as a community.
5222 I will now turn things over to Michael who will take us through the presentation.
5223 MR. WILLIAMS: Good afternoon. Over the last 14 years I have been fortunate to have worked alongside some very successful individuals and companies in Lethbridge, Red Deer, Nanaimo, British Columbia and currently in Calgary.
5224 This experience has given me an insight to the workings of many different radio operations. I do spend a great time in Red Deer as I have family there and so I am still very familiar with the central Alberta radio market. Should our application be successful I would relocate back to Red Deer to manage the day‑to‑day operation of CHIP.
5225 Before I begin the overview of the station we prepared a brief audio segment.
‑‑‑ Audio clip / Clip audio
5226 MR. WILLIAMS: Our objective today is to take our 20 minutes and explain to the Commission who we are, what we intend to bring to central Alberta radio as operators and, most importantly, why we feel that we are the best candidates to launch a new station in the market.
5227 In developing our application we went at the process differently than many companies as we did not conduct research to determine a suitable format to propose. We chose our format based strictly on our knowledge and understanding of the radio landscape which we cross‑referenced with BBM data and news market research to verify and fine tune our direction. With two rock stations, a country and a hybrid AC already serving Red Deer, it was apparent to us that an urban alternative format would have very little crossover with the existing stations.
5228 We conducted market research only within our 12 to 34 target demographic, aiming for a balanced response within the sub‑demos and gender. As we knew what format we would be applying for we saw no relevance in soliciting information from individuals outside our demo.
5229 Although we were very much aware that a classic hits light AC format was a likely ‑‑ it has been proposed by many of the applicants this week ‑‑ we felt that the youth‑based audience was far more defined as an underserved market and better coincided with the CRTC's mandate to repatriate listeners and create diversity and available programming.
5230 BBM's statistics also confirmed this rationale. With teenage weekly TSL much less than the provincial average it wasn't a case of if young people were looking for an alternative to the existing stations in the market it was how much they were listening to something other than what Red Deer radio had to offer. Add to the fact that according to their 2007 census Red Deer has a median age of 33 and a mode of 21 and we have the makings of a solid case.
5231 Our research verified our thought process. 30 percent of our respondents indicated they are dissatisfied with the current landscape. Over 80 percent would like a true mix of new music, reflective of their varying tastes, just like they choose with their iPods and MP3 players.
5232 With 59 percent of our survey respondents indicating that this format would definitely or probably be their favourite station, we are confident in our direction. Metaphorically speaking, CHIP will add the missing playlist on the giant iPod that is central Alberta radio.
5233 MR. QUIBELL: Now, looking at the scenario from the outside point of view, the question may be asked: If this format you proposed is such a financially viable option why have none of the existing radio operators in the area chosen to go after it?
5234 The answer is really quite simple, and Michael and I know this from our years working in the market. All radio companies are driving tremendous revenues maintaining the status quo. There is no reason for them to change or to include the underserved audiences in their programming. Even L.A. Radio Group stated that they have doubled their first year projected revenues.
5235 Is there money to be made in this demographic? Certainly.
5236 Is it worth the risk for either Newcap or Pattison to abandon their lucrative formats for no clear reason? Not a chance.
5237 However, it does provide CHIP with an opportunity to offer a forum for that demographic and build a financially successful business with minimal impact to the existing companies.
5238 MR. WILLIAMS: In our brief we discussed our agenda to repatriate listeners back to local commercial radio. You know, since our filing there has been a realization by our group that we may have misspoke. Repatriation may not have been the correct term. The reality is that a large portion of our target audience has never had a local station that they can identify with. Our mission will not simply be to bring some listeners back but also introduce many of them for the first time to a station that is local and reflective of their new music preferences.
5239 In order to accomplish this it is essential that we play what our listeners tell us they want to hear which will ultimately be determined by emerging styles and trends.
5240 We acknowledge that targeting 12 to 34 will require careful thought and programming acumen. Obviously, there is no simple way to create equal appeal to both sides of the demo as a teenager and young adult have varied tastes and preferences. However, we believe that it can be done by incorporating the following strategy:
5241 Our morning show will offer a wide audience appeal, fun rather than funny, entertainment based with music selection focusing primarily on top hits of the day.
5242 Mid‑day show content will be more workplace oriented, incorporating our full playlist with a strong focus on community activity.
5243 Afternoon drive will be hot and upbeat, music intensive, featuring jams and remixes of current hits while evenings will be interactive, engaging and targeted primarily to the 12 to 24 audience with a heavy emphasis on requests and caller feedback and relevant topics.
5244 Our emerging artists' exposure will be evenly distributed among all day parts.
5245 Building loyalty among these listeners will require us to provide them with an engaging experience that's important and interesting in their lives.
5246 Although music is a key component of what we propose, CHIP is about more than just playing the charts. By giving our audience the chance to interact with us by phone, email, text and posting through our website message board their feedback will help shape our playlist.
5247 We realize and understand that Red Deer isn't Vancouver, Toronto or even Lethbridge. This feedback will give it a sound and identity that is unique and representative to central Alberta.
5248 CHIP will attempt to create a true partnership with the community and surrounding area using the medium to create awareness for public service organizations that may not otherwise have the means to get their message heard. We will speak on that in greater detail shortly.
5249 We will provide exposure for Canadian emerging artists of various genres including hip hop, R&B, alternative rock and pop. By dedicating 30 percent of our 40 percent Canadian content commitment to emerging artists and the multi‑tiered strategy outlined in our brief and supplementary filings, we will give these artists a legitimate opportunity to be heard and to obtain the familiarity to our audience that is often needed to gain recognition and acceptance.
5250 Our news packages will be sharp, quick hitting and objective, focusing on both local and international events. We will use our station website to provide more complete story information.
5251 What will make our news packaging engaging to our target market is the feedback that we will air from our listeners. We will conclude many of our newscasts with listener comments on previous stories obtained from emails, text messages and phoning our comment lines, identified as our sound off feature, described in our written presentation.
5252 Our announcers will also have the freedom to discuss and provide their opinions should they feel so compelled. We want to create dialogue and provide a forum to foster that discussion and debate. If we want the next generation to care about what goes on in both their neighbourhood and the world outside it, they need to be provoked to think and encouraged to voice those thoughts.
5253 CHIP Interactive will also be a key element of our overall business strategy. As detailed in our brief, we will attempt to make this component a true extension of our brand and product. Although offering streaming audio, podcasts and detailed news and entertainment information is crucial. In order for this to happen we must provide content that's unique to our audience and gives them the option to communicate both with us and each other.
5254 As mentioned, a message board on our station website will allow listeners to interact with our announcers in real time by email or SMS. Listeners won't have to deal with a busy signal or shyness about being put on air if they choose to interact with us.
5255 Use of social networking software will allow our listeners to create a CHIP network where they can upload new and emerging artists they want us to hear and post their audio and text comments on Everything CHIP. They will even be able to entertain each other by posting their own videos, audio clips and text comments.
5256 Although our research may be skewed by the fact we conducted it on a social networking website, the reality is that an overwhelming percentage of our target market uses the internet for social networking. We want to incorporate that trend into our overall strategy. This last element we believe will allow us new and creative ways to offer different types of contests, games and promotions that will engage our community in ways that have never been seen before in the radio market.
5257 Currently, the plan is to use third‑party software to develop these elements. Many companies are selling generic platforms used by sites such as YouTube and Facebook. However, considering how fast technology is changing ‑‑ for example, Facebook went from relative obscurity to a household name in under 12 months ‑‑ by the time CHIP would hit the air there might be a new YouTube or Facebook that is the preference of our audience. CHIP's listeners will be among the first to discover and implement these new interactive platforms and because of that CHIP Media will be extremely vigilant to monitor new and emerging communication technologies.
5258 CHIP will offer 101 hours per week of live to air, including six nights per week of evening programming. We believe that this is where the younger side of our target audience discovers radio and to have the opportunity to interact with our announcers builds loyalty to not only the station but also the medium as a source for entertainment and information. As such it is essential to our long term business success to be live and not implement voice tracking in this crucial day part.
5259 In terms of our music strategy our plan is for CHIP to adopt a major market CHR/Top 40 approach which simply means taking the hottest new songs of the day and giving them a high amount of airplay. We will take chances on breaking both Canadian and international artists. Even if they don't end up reaching the Top 10 on the national charts we will give them enough airplay to let our listeners decide if it's not their Top 10 hit.
5260 Currently, existing Red Deer stations offer very large playlists which, in our opinion, is consistent with their objective to cast as wide a net as possible that will maximize their reach to the 18‑plus market. Obviously, it has worked well for them from a business standpoint but it is our belief this is a big reason why young people aren't tuning in to the local stations on a regular basis and out of market, CHR and alternative stations are receiving such strong support in our research.
5261 If our listeners want to hear the new Wyclef songs six times a day then that's what we will play. As demonstrated in our deficiency response, our entire musical programming strategy is built around the premise of what generations of young people have indicated. Play us what you think is hot. We will let you know if we agree and then play the heck out of it until the next new hot song comes along.
5262 This is the same way that many of us in our youth responded to artists such as Elvis, the Beatles, KC and the Sunshine Band, Wham! and the Backstreet Boys.
5263 Even though the music has changed the mentality of the youth remains the same. Instead of buying 45s, LPs or even CDs, today's young people obviously download and save to their MP3 player. People have obviously had on demand access to their favourite music. They just have other options to find out what's new, hot and to be entertained. Terrestrial radio can still fill that void but it has to engage and provide content that the listeners care about. They need input and a sense of control. Our platform will offer it to them.
5264 We are not trying to be all things to all people with our application. We have clearly identified our target, what our research said they wanted and we will adhere to the trends in new music and entertainment to ensure that we continue to be a relevant part of their lives.
5265 MR. QUIBELL: Regarding our CCD we have clearly outlined an innovative strategy that hopefully the Commission will see that while we may be unable to match our competitors in terms of dollar value, we have made up for it by offering a wide range of initiatives to provide assistance to many different genres under the CCD umbrella.
5266 In particular, our Sunday Night Lights high school show and our Audition for Tuition programs may provide opportunities for individuals who may not otherwise receive a chance to showcase their talents through some of the more traditional scholarship programs. The initiatives are clearly outlined in our brief.
5267 What we didn't include is the indirect contribution amount. As this is our first endeavour into this forum we were unable to properly estimate a price tag for the amount of on air exposure we will be providing emerging artists, the on air time we would be providing our Sunday Night Lights program, or the space we will be allocating on our website. To say it's worth $500 or $600,000 would simply be a premature statement.
5268 MR. SEVCENKO: CHIP's format will complement the central Alberta radio landscape, not only offering Red Deer programming and song selection they have never been exposed to on commercial radio, but it will also have little to no effect on small market stations located within the proposed 70 Dbu contour including Sunny 94 in Lacombe, Q14 in Stettler or either of the old stations.
5269 Technology will play a key role in streamlining our operations to make them as cost‑efficient as possible.
5270 Our wireless network will allow staff to communicate with our office from remote locations. Whether it's sales, booking an order, news filing a story to the system, or an announcer on remote this will save time, money and unnecessary admin costs.
5271 In addition to the program components discussed so far, our vision for this station was to use the power of radio to provide as much exposure for local community groups, organizations and events as possible while still maintaining a major market sound for the stations.
5272 With great power comes great responsibility and although I would like to take credit for that sentiment, I believe Spiderman actually said it first.
5273 Seriously though, Darryl, Michael and I have been active in Red Deer for many years, volunteering through sports, charities and community groups. We have given this matter a great deal of thought and discussion.
5274 We determined in order to achieve these objectives we need to be able to integrate the community into our programming. Our solution was to use wireless networking to provide a completely mobile mid‑day show. From 10 a.m. to 2 p.m. weekday, CHIP will be broadcasting its mid‑day show live from a different remote location. By incorporating the venue, organization or event as a setting our announcer will be able to tie in where they are broadcasting from and what's going on as part of their show. They will also be able to conduct brief interviews, reinforce details or even give their guests the opportunity to introduce the next song whether it's the United Way, Kickoff, the last ticket push for the Kinsmen Dream Home or opening day for high school football CHIP will be there.
5275 CHIP will be committed to promoting cultural awareness and diversity within the community and also within our own company. We will be very committed to employment equity and will endeavour to provide opportunities for women, aboriginals, visible minorities and the physically disabled.
5276 In order for this to become a company that truly represents the diversity of society we understand that merely providing employment to these groups isn't enough. We also need to give them a chance to advance within the company in order for them to be leaders of our tomorrow.
5277 In addition, should our application be approved we will have a written employment standards and policy guideline available to all of our employees prior to the hiring of our first staff member.
5278 In our brief we also discussed how Red Deer has been proactive in addressing the problem of bullying as it relates to the younger demographic.
5279 We would like to reiterate our commitment to working with central Alberta school districts to develop an ongoing anti‑bullying public service announcement campaign, designed to increase understanding and tolerance of ethnic and cultural diversity as well as educating listeners on support options should they find themselves in bullying situations.
5280 MR. QUIBELL: With the strong growth of central Alberta retails sales since 2000 and the economic forecast continuing positive, we believe the market can withstand at least one and likely two stations. Obviously, we would like only one licence granted and for that to be us. But in the event that the Commission sees fit to licence two stations that would have minimal impact on our overall business plan.
5281 Being local and very familiar with the business side of radio, we are extremely confident in our ability to meet our submitted revenue projections. We are confident that our understanding of the Red Deer radio advertising market is superior to any other applicant. As the director of sales I will use the trust built over 20 years of working in this market to establish partnerships with local advertisers and ensure that they receive a return on their investment. The direct contact I have had with many local businesses has indicated a tremendous amount of support for our proposed station.
5282 Ultimately, our ratings will determine what type of support we receive from national advertisers so it will be up to our skill and expertise in building a quality on‑air product to ensure that we retain a strong base of advertising clients on both a national and local advertising basis.
5283 I believe our application and research demonstrates that we are the right group to launch a new station in Red Deer. We will now be happy to answer any questions you may have.
5284 THE CHAIRPERSON: Thank you for your presentation.
5285 Commissioner Cugini will lead the questioning.
5286 COMMISSIONER CUGINI: