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              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

                      SUBJECT / SUJET:

 

 

 

 

 

 

 

Competing radio applications and other broadcasting

applications / Demandes concurrentes en radio et autres

demandes en radiodiffusion

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Provencher Room                       Salle Provencher

The Fort Garry Hotel                  The Fort Garry Hotel

222 Broadway Avenue                   222, avenue Broadway

Winnipeg, Manitoba                    Winnipeg (Manitoba)

 

June 3, 2008                          Le 3 juin 2008

 

 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

 

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

 

 

                 Transcript / Transcription

 

 

 

 

Competing radio applications and other broadcasting

applications / Demandes concurrentes en radio et autres

demandes en radiodiffusion

 

 

 

 

BEFORE / DEVANT:

 

Len Katz                          Chairperson / Président

Peter Menzies                     Commissioner / Conseiller

Marc Patrone                      Commissioner / Conseiller

 

 

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Cheryl Grossi                     Secretary / Sécretaire

Michael Craig                     Hearing Manager /

                                  Gérant de l'audience

Peter McCallum                    Legal Counsel

                                  Conseiller Juridique

 

 

 

 

 

HELD AT:                          TENUE À:

 

Provencher Room                   Salle Provencher

The Fort Garry Hotel              The Fort Garry Hotel

222 Broadway Avenue               222, avenue Broadway

Winnipeg, Manitoba                Winnipeg (Manitoba)

 

June 3, 2008                      Le 3 juin 2008

 

- iv -

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

PRESENTATION BY / PRÉSENTATION PAR:

 

Evanov Communications Inc. (OBCI)                   5 /   27

 

Newcap Inc.                                        89 /  520

 

Native Communication Inc.                         157 /  919

 

YO Radio Management Inc.                          218 / 1243

 

 

PHASE II

 

No interventions / Aucune intervention

 

 

PHASE III

 

INTERVENTION BY / INTERVENTION PAR:

 

Jack Shapira                                      290 / 1722

 

Assembly of Manitoba Chiefs Secretariat Inc.      296 / 1745

 

Aboriginal Peoples Television Network             300 / 1770

 

Nostalgia Broadcasting Corporative Inc.           322 / 1875

 

 

PHASE IV

 

REPLY BY / RÉPLIQUE PAR:

 

YO Radio Management Inc.                          337 / 1949

 

Native Communication Inc.                         339 / 1967

 

Newcap Inc.                                       342 / 1978

 

Evanov Communications Inc. (OBCI)                 343 / 1989

 

 

 

 

 

             Winnipeg, Manitoba / Winnipeg (Manitoba)

‑‑‑ Upon commencing on Tuesday, June 3, 2009 at 0929 /

    L'audience débute le mardi 3 juin 2008 à 0929

1                THE CHAIRPERSON:  Good morning, ladies and gentlemen, and welcome to this hearing.

2                Je m'appelle Len Katz et je suis vice‑président des télécommunications au CRTC.  Je présiderai cette audience en compagnie de mes collègues, Peter Menzies, conseiller, et Marc Patrone, conseiller national.

3                Joining me on the panel are my colleagues Peter Menzies, on my left, Commissioner, and Marc Patrone, National Commissioner, on my right.

4                The Commission team is assisted by Hearing Manager Michael Craig who is also Senior Radio Analyst, Peter McCallum, our senior legal counsel and Cheryl Grossi, our Hearing Secretary.

5                Please speak with Ms Grossi if you have any questions with regard to hearing procedures.

6                At this hearing we will begin by examining four applications, three of which are to operate a new English‑language FM commercial radio station in Winnipeg and, the fourth, an application to operate an English and Aboriginal‑language native Type B radio station in the same market.

7                Some applications are competing technically for the use of the same frequencies.

8                Next, the Panel will consider an application to operate an English‑language FM commercial radio station in Humboldt, Saskatchewan.

9                We will then proceed to and examine an application to renew the licence of radio station CFAR Flin Flon.

10               In August, 2004 this station's licence was renewed for a four‑year term rather than the customary seven years due to its failure to comply with the radio regulations of 1986 relating to the broadcast of Canadian content for Category 2 music.

11               This decision was also based on the station's noncompliance with its condition of licence to broadcast a minimum of 2 hours of Cree‑language programming during each broadcasting week.

12               It appears the station may have failed once again to comply with the regulations and its conditions of licence during the broadcast week of November 5 to 11, 2006.  The Commission will examine the situation and expects the licensee to show cause as to why a mandatory order should not be issued at this time.

13               I will now invite the hearing secretary, Cheryl Grossi, to explain the procedures we will be following.

14               Ms Grossi.

15               THE SECRETARY:  Thank you, Mr. Chairman.

16               Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.

17               Le service d'interprétation simultanée est disponible durant cette audience.  Vous pouvez vous procurer un récepteur auprès du technicien a l'arrière de la salle.  L'interprétation anglaise se trouve au canal 1, et l'interprétation française au canal 2.

18               When you are in the hearing room we would ask that you please turn off your cell phones, beepers and Blackberries, as they are an unwelcomed distraction and they cause interference on the internal communication systems used by our translators.  We would appreciate your cooperation in this regard throughout the hearing.

19               We expect the hearing to take approximately two and a half days, starting today, until Thursday.  Starting tomorrow, we will begin each morning at 9:00 a.m., we will take an hour for lunch and a break in the morning, and in the afternoon.  We will let you know of any schedule changes as they may occur.

20               Salon A will serve as the examination room where you can examine the public files of all the applications being considered at this hearing.  As indicated in the agenda, the telephone number of the examination room is 204‑946‑6535.

21               There is verbatim transcript of this hearing being taken by the court reporting sitting in the table in front of me.  If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.  Please note that a full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.

22               Now, Mr. Chairman, we will now proceed with item 1, which is an application by Evanov Communications Inc. on behalf of a corporation to be incorporated for a licence to operate an English‑language FM commercial radio programming undertaking in Winnipeg.

23               The new station would operate on a frequency of 104.7 Mhz., channel 284B with an average effective radiated power of 6,500 watts, maximum effective radiated power of 10,000 watts, and an antenna height of 206.1 metres.

24               Appearing for the applicant is Bill Evanov.  Please introduce your colleagues and you will then have 20 minutes to make your presentation.  Thank you.

25               MR. EVANOV:  Thank you very much.

26               Before we begin, previously we have appeared in front of the Commission with the Commissioner Katz and Commissioner Menzies.  Today, for the first time we are meeting Commissioner Patrone, so we would like to say good morning and buongiorno.

‑‑‑ Laughter / Rires

PRESENTATION / PRÉSENTATION

27               MR. EVANOV:  So officially, good morning Mr. Chairman and commissioner, my name is Bill Evanov, and I am the President of Evanov Communications Inc.

28               On my left is Ky Joseph, Vice‑President of Sales; on Ky's left is Sean Moreman, former News Director and our in‑house legal counsel; on my right is Ted Silver, Ted is former PD News Director for 292 in Montreal for 15 years, and Ted currently is PD for The Jewel in Ottawa; besides Ted is Gary Gamble, our PD and News Director for The Jewel in Newmarket; in the back row to my left and on your right is Chris Edelman, Regional Sales Manager for ECI; next to Chris is Debra McLaughlin from Strategic Inc., the author of our consumer demand and economic research; next to Debra is Mike Kilbride, our Vice‑President of Finance of ECI.

29               We are here today to present an application for a new easy listening format to serve Winnipeg.

30               Ky Joseph will begin with some facts about the market that support our choice for format.  I will then walk you through how the music on our proposed station has been tailored to Winnipeg.  Gary Gamble will speak to our extensive plans for spoken word and news programming and our internet strategy.  Chris Edelman will then address the consumer advertiser demand and Sean Moreman will take you through our CCD initiatives. Finally, I will address why we are the best choice for this market.

31               MS JOSEPH:  The initial fact that jumped off the page for us when reviewing Winnipeg was the number of major corporate radio operators active in this market.  Not only are all the majors present, for the most part, they have reached their maximum FM ownership and none of them is a standalone in this market.  They offer a range of formats and, despite significant duplication in music across services, cover some to some degree all major music genres.

32               The fact that struck us was, despite having all of these choices, listeners were clearly not satisfied.  The decline in hours being spent with radio by residents is the clearest indication of this.

33               Beyond simply losing time spent with radio among youth, hours of tuning were lost in older demographics.  Tuning among those aged 18 to 49 years, as well as 25 to 54 and 55 plus was down.  And with just over 40 per cent of the population in the 40 plus age group, this results in a decline in Winnipeg overall.

34               Winnipeg is also a highly competitive radio market.  Although retail sales are forecast to increase at a rate that exceeds the provincial average, it is in fact only in the last two reporting periods that Winnipeg radio services have realized double digit PBIT margins.

35               So the challenge of Winnipeg was three‑fold; identify a format that provides variety with minimal duplication of existing services, create programming that addresses a dissatisfied demographic and, because of the intense competition, find a broad enough format that can attract sufficient levels of advertisers while at the same time not disrupt Winnipeg's radio profitability.

36               MR. EVANOV:  In order to determine what was possible in this market we looked at the formats currently available and did an extensive analysis of what they were playing.  Clearly missing from this market was a broad‑based easy listening service.  While there was smooth jazz, The Groove, many other component parts of the new easy listening format such as adult standard, soft pop, folk and international were missing.

37               Using Mediabase we also determined that the soft portion of the mainstream AC chart was the underrepresented.  In fact, at the time of filing less than 50 per cent of the Mediabase chart was covered.

38               Looking at the tracks charting nationally the week of May 14 we could see the clear absence of several light or soft AC songs listed in the top 120 tracks according to BDS but absent in this market we found soft AC songs like Josh Groban's Awake, Norah Jones The Story, Anne Murray and Nelly Furtado collaboration on Daydream Believer and k.d. Lang's I Dream of Spring.

39               These songs are not a fit for the formats of the existing stations, but they are clearly popular and present an opportunity for a new entrant.

40               The format that could provide these missing music selections and genres is contemporary or the new easy listening, a format we have both the understanding and experience to operate.

41               As the Commission knows, we have three stations playing variations of this format in markets both big and small.  Because the essence of the format is soft melodic music it transcends location.  Listeners from a range of cultures and ethnicities and from both major urban and small markets find it appealing.

42               The sound of the station is often familiar, highly engaging, even if it is not identified as a primary service by a consumer.  Because of the variety, familiarity and range, it is often listed as one of the stations listened to at some point of the week.

43               The inclusion of multiple genres and coverage of many eras means that the programming can be tailored to suit a market without losing the overall feel of the service.  For example, in Ottawa we tend to play more AC and AC gold.

44               On CKDX‑FM in Newmarket we play more instrumental and international music.  These programming skews are made in consideration of two important criteria; listener feedback and non‑duplication with other services.

45               In fact, one of the key elements behind our success, thus far, has been in finding music and creating formats that are both of great interest to listeners and unduplicated in the competitive landscape and we plan to create just such a service in Winnipeg.

46               Ted.

47               MR. SILVER:  Our proposal for Winnipeg, while falling under the same general format descriptor as some of our other stations, that is new easy listening, will be unique to the market and unique among our services.  For example, here we will play considerably less instrumental, no jazz and minimal blues.

48               In fact, our proposed breakout for the market is as follows:  65 per cent easy listening and 35 per cent soft AC.

49               The easy listening can be further defined as follows:  adult standard 25 per cent with music from artists like Tony Bennett, Frank Sinatra and one of the new crooners Carly Simon.

50               Soft pop, 30 per cent; artists such as the Carpenters, Neil Diamond and Air Supply would make that up.  Folk music, 5 per cent, with artists such as Winnipeg's own James Kellehan along with Joan Baez, Bruce Cockburn and others.  International, 5 per cent, with artists such as Julio Iglesias, Sarah Brightman and Andrea Bocelli.

51               As mentioned earlier, a weekly review of the BDS data over the past five months has consistently pointed to a section of the AC chart that is not being played and artists that, while already represented, have portions of their catalogue that we can play without duplicating that which is in the market.

52               Borrowing from the triple A programming strategy, we will look deeper into artists catalogues and play more cuts from even recent CDs.  Some softer AC services will play a single from a popular CD while we will play multiple tracks.

53               So while a classic hits station in Winnipeg may play Rod Stewart's Maggie May, we will play selections from his Great American Songbook, Volumes I through IV.  Cyndi Lauper's Girls Just Want to Have Fun is also a staple of AC classic hits, however we will play selections from her tribute to American Standards.

54               Similarly, Michael Bolton's When a Man Loves a Woman would be heard in the market, but his contemporary renditions of Summer Wind and That's Life would only be heard on an easy listening service.

55               We will play AC artists that, while still recording, get very little air time.  Bruce Cockburn, for example, has both a new album out and is touring.  His manager will tell you he is doing this without the support of Canadian radio.

56               As mentioned earlier, Anne Murray released a duet CD last year.  And yet coverage of this contemporary and current music is hard to find on radio in Canada.

57               Marc Jordan, Amy Sky, Joni Mitchell, k.d. Lang and even Susan Aglukark are talked about, but rarely heard.  Not surprisingly, these artists and their catalogues test remarkably well with consumers.  What is missing is a format that can incorporate both their current and classic performances.  New easy listening is that format.

58               On our new service you will hear music from such musical icons as Barbara Streisand, Toni Braxton, Frank Sinatra, Celine Dion and Bette Midler.  You will also hear contemporary artists such as Sarah McLaughlin, Dido, Josh Groban and Michael Bublé.  While you might hear the latter on other stations, you will not necessarily hear the same selections.

59               Michael Bublé is largely known on AC services for Save the Last Dance and Home.  On our service we will play his non‑charted music and rely on his voice and his unique sound to keep the listener engaged.

60               Groups such as the Bee Gees, Air Supply, ABBA, Bread and even Il Divo will be heard.  Canadian easy listening artists including Serena Ryder, Molly Johnson, Matt Dusk and Lhasa de Sela will be played.

61               Our commitment to play 40 per cent Canadian content over the broadcast week will in itself distinguish us from the others in the market.

62               Now, Gary Gamble will speak to our spoken word content.

63               MR. GAMBLE:  One of the opportunities that is clearly evident in this market is the provision of a  new independent news voice.  The consumer study indicated a demand for more local coverage.  And eight out of 10 respondents reported being interested in having greater diversity in their news sources.  ECI is well positioned to provide booth of these.

64               Our plans for spoken word include six hours of pure news over 84 newscasts, the highest of any applicant before you.  In total, aside from announcer talk, we will provide 14.1 hours of news, surveillance and spoken word features.  We expect that fully 60 per cent of our newscasts will be covering local and regional Winnipeg stories.

65               Winnipeg is culturally diverse.  ECI's experience in working in small and large communities and our track record of serving the multicultural population in markets like Toronto will serve us well in Winnipeg.  We will be able to bring full cultural representation to the stories that we air.

66               To accomplish this task we have six reporters and two interns in the market who will investigate and report upon what is happening in Winnipeg, providing a mature and balanced view of these local stories.

67               Having accurate, timely and comprehensive weather reports was especially important, ranking first among all programming elements.  Our new station will fill this station with enhanced weather reporting in both our on‑air and website presentation.

68               Our website will be a major component in providing our listeners with information.  Rather than viewing the internet as a competitor of commercial radio, we see it as an extension of our radio service featuring up‑to‑date local news stories, including school closures or urgent road closures as well as a news archive and sports scores.  We will also make interviews and other features available to be downloaded.

69               As part of our commitment to new and emerging artists we will also have a dedicated page with artist biographies and information about the recording of these artist albums.

70               MR. EDELMAN:  The emphasis on local news, enhanced surveillance and our choice of format was driven by consumer research.  We hired Strategic Inc. to test the music we propose, assess the satisfaction with existing services and to identify programming elements that contribute to the choice of radio stations.

71               Over 600 interviews were conducted and the research revealed that the majority of persons in Winnipeg were less than satisfied with the radio choices they had.  Four out of 10 agreed that radio stations sounded alike.  Five our of 10 agreed that they found themselves turning to other sources to find the music they like.  And only three out of 10 reported being very satisfied.

72               When asked about the music mix being proposed six out of 10 say that they were interested.  When asked if they would listen six out of 10 stated that they would definitely or probably listen.  Interest in the format was highest among females and correlated to age, with the oldest demographic reporting the greatest likelihood of listening.

73               Interest in this format was also evident among advisers.  I came into Winnipeg to meet with advertisers personally and to get a sense of what was missing and what a station would have to offer to attract advertising dollars.  As is the case with most markets where there is high concentration of ownership among the radio stations, there was interest in having more competition.

74               Secondly, interest in this demo was clearly evidence while at the same time there was a frustration at not being able to efficiently reach this group.  CBC and News Radio were identified as having the best reach in this demo. The first does not carry commercial content and the second was seen as being overly expensive.

75               MR. MOREMAN:  In addition to serving the interests of consumers the proposal by ECI advances the opportunities for Canadian artists and the development of content.  As Bill mentioned, we will play 40 per cent Canadian content over the course of the broadcast week.  We will commit 30 per cent of our Canadian content or 12 per cent of our total schedule to new and emerging artists.

76               Given the breadth of our format, we will be able to present more artists.  And more artists means more tracks and more music overall.

77               In addition to meaningful airplay, our proposed station for Winnipeg will invest $1.4 million into local Canadian content development.  The list of institutions we will support is detailed in our supplementary brief and we would like to highlight how truly local and diverse our proposals are.  They represent both large and small organizations in the City as well as established and fledgling events.

78               We have attempted once again to ensure the broadest inclusion of cultural influences and provide funding support to the widest group of eligible recipients.  Support has been given to education to through AMAF and the University of Manitoba.

79               We have allocated funding to grassroots festivals such as the Winnipeg Folk Festival, Manito Ahbee and Folklorama.  We are offering support to Gay Pride and enhancing the investment in the Canadian catalogue of instrumental music, an initiative that is having terrific results and receiving rave reviews from musicians.

80               Finally, we are going to extend our capital concert program from Ottawa to Winnipeg.  This concert provides an opportunity for new and emerging Canadian artists to perform in a large concert, large‑venue format alongside headlining artists.

81               In addition to the obvious exposure, opportunities that events of this size create, there is also the promotional value new and emerging artists receive through being part of the marketing campaign associated with such an event.

82               MR. EVANOV:  In closing, I would like to summarize that distinguishes our proposal for this market from that of other applicants and why we feel we are the best use of the frequency.

83               First, we represent true diversity.  We have no other radio or media holdings in this market, so we are a new voice.  In the City where the interest from consumers and having a variety of sources of news is very high, this should be a key consideration.  We offer the best diversity in terms of our music, as the chart included in your materials indicates.  Our format is largely unduplicated.  The music we play is not available and, among the playlists of the applicants before you, we have the lowest duplication against that which is available in the market.

84               Our plans for spoken word will expand information programming by replacing pop cultural banter with relevant and mature dialogue. And we represent both the highest commitment to news and information programming.

85               We bring a heightened sensitivity and experience in bringing cultural diversity into mainstream radio.  Our music list includes international tracks and our news reports will draw on our connections with multicultural communities across Canada and abroad to fully represent and serve the cultural mosaic of the communities we serve.

86               We have the experience of successfully launching stations, competing in markets dominated by large broadcast interests that operate multiple formats.  Our CCD commitments are local and demonstrate the importance we place on the celebration of our multiculturalism.

87               ECI has the highest commitment to both Canadian content and new emerging artists of all the applicants.  ECI is financially very very strong, generating substantial positive cash flows over all and, as such, are sufficiently prepared to enter this market.

88               For all those reasons, we feel we are the applicant to be licensed in this market.  We thank you for the opportunity for presenting our application to you.  My team and I would be happy to answer your questions.

89               THE CHAIRPERSON:  Thank you very much.

90               I have a couple of questions initially, and my colleagues may have some as well.

91               I am going to start with your submission this morning.  On page 3, near the bottom, you talk about dissatisfied demographics, that your research has shown that notwithstanding all the radio broadcasting in this market that consumers and listeners are dissatisfied.

92               Can you expand upon that and elaborate on where you found this research and how you went about getting it?

93               MR. EVANOV:  Yes.  First, we have noticed a decline in listenership in the Winnipeg market over the last couple of BBMs.  And because of that, and we analyzed that, then we asked Debra, our researcher, to really look into it.  And I think I will ask her to really respond to the question.

94               MS MCLAUGHLIN:  Thank you, Bill.

95               There are two bases for our conclusion.  The obvious one up front is that if you look at what is happening in terms of the average hours per capita in this market you will see that there is a decline.  It is not over one survey, it has been a continuing decline.

96               When we filed the research the 12 plus all persons average hours per capita indexed at 97, so it was less than it was in fall 2004.  In the spring we checked again, obviously this was available post this filing, and the index had dropped to 89.

97               In terms of real hours, in fall 2007 there had been a loss of approximately .6 hours per week per population.  By spring that had changed to a two‑hour loss per person, so that is fairly significant.

98               We looked at it across the demographics and what we noted was, certainly among the older ones who tend to spend more time with radio, by comparison in 1994 teens spent 8.5 hours, adults 35‑64 spent 20.2.

99               So the largest group of people, both in terms of the population and in terms of the time they spent with radio, were indexing very low.  So that gave us concern or reason to believe that there was some sort of disconnect going on between the population and the radio services they had.

100              We went into the market through a standard customer research or consumer research peace and we asked satisfaction questions.  So we asked them how they felt about radio, did they think radio sounded alike, could they distinguish it?  We found that significant numbers thought all radio sounded alike.

101              We asked them if they had to go to other sources in terms of finding the music they liked.  Again, significant numbers found that they had to go to other sources.

102              And then we asked them, after this battery of questions, if they could describe their satisfaction with radio.  Only three out of 10 said they were very satisfied, and that's a very low score.  It isn't saying that radio isn't satisfying some people, but in terms of meeting all of their needs, the conclusion would have to be that they're not.

103              So coupled with the actual tuning behaviour as reported by BBM and our own further investigation we concluded that there was an opportunity.

104              THE CHAIRPERSON:  Okay, so if we accept that and then move forward on page 4 where you talk about clearly what is missing in the market is a broad‑based easy listening service.  And then you go on to identify certain genres I guess; light or soft AC songs, and you listed a bunch of songs.  And then you say toward the end of page 4:

"These songs are not a fit for the format of the existing stations, but are clearly popular and present an opportunity for a new entrant." (As Read)

105              If they are popular, wouldn't that be one of the reasons why the existing formats are looking at this type of music as well?

106              MS MCLAUGHLIN:  Maybe it would help if I just explained the sources of that data, because that may be the confusion.

107              In order to determine what isn't being played in the market we took BDS and Mediabase, both of those are syndicated services that record all of the music being played in the market based on playlists submitted by the stations.  They also create, based on national performance, a list of the top‑charting music.

108              So one of the ways to look at a market is to take those nationally charting songs and compare it to the list of the songs being played by the stations in the market.  And we can see what nationally is popular and then we can extract from the list of all the songs being played in the market those that are being duplicated on the chart, which leaves you a list of songs that do not get played.

109              And what we found when we ended up with this list of songs, that there was a group of songs that could all be classed into soft AC.  And Mr. Silver is probably better able to explain how those get classified.

110              But, in fact, there was a whole list of songs that a programmer could find a common thread in that would be available on a new easy listening station, but clearly had been decided by the programmers in this market not to be put on their stations.  Therefore, our conclusion was that they felt it didn't fit their format.  So it is popular nationally, not available in Winnipeg.

111              MR. SILVER:  If I can just elaborate a little bit on that.

112              In the AC market here you have a couple of stations that more or less play to that area, and each station has to make its own decision as to what its sound is going to be.

113              The mainstream AC station in the Winnipeg Market is CKY, it is a typical mainstream adult contemporary radio station and, if you look at its playlist, it is representative of what you will see pretty well across the country in terms of that style.

114              So they are making decisions.  They can't play all the records, for one, and they are making decisions as to where they want to be.

115              The evolution of AC, certainly over the last five to 10 years has been to a slightly more upbeat pop, contemporaries, light rock sound.  And these artists that we mention here that, although they appear on the AC charts, don't appear on the radio in Winnipeg, represent more the softer side that the local stations have chosen not to play, because their sounds are slightly more edgy.

116              So that would explain why these ‑‑ they may be popular artists and popular songs, but that would be the reason why they are not being played here.

117              THE CHAIRPERSON: Okay.  So CKY is one of those stations here that are offering a form of light music.  Would you say that CFWM and CFZZ and CFRW also play some form of light music format?

118              MR. SILVER:  Very different.  Perhaps light by definition, as opposed to a rock station.  CJZZ, which was actually the Groove, I believe it is CJGV now, it is a smooth jazz, instrumental based, very soft, but really very different to what a mainstream AC would be.  It really is much softer, much more relaxed and a little bit farther off the beaten path in terms of being the core of what AC is.

119              The other one was I think CFWM, which is Bob, that is one of those classic hits pop rock stations that is a lot more edgy than a mainstream AC station would be.  It is sort of in the middle between adult contemporary and rock usually, depending on the market and where you are.

120              The other one I believe was an oldies station, an AM oldies station, which is centred on 1960s rock oldies, Rolling Stones, Beatles, Mitch Ryder & The Detroit Wheels and that sort of thing.

121              Very different sounds relative to what AC is here in this market in CKY and what we are proposing.

122              THE CHAIRPERSON:  What age group are you targeting, what is your median age group?

123              MR. EVANOV:  Our median age group would be 53.  And if you take a station as the one mentioned, CKY, their median age is 43.  And our target demo would be 45 plus with the core demo being 55‑64.

124              THE CHAIRPERSON:  So you are looking at 55 to 64 ‑‑

125              MR. EVANOV:  As the core, but overall 45 plus.  Whereas CKY, as we have mentioned, the median age is 43, so they are definitely programming younger and much more edgier.

126              MR. SILVER:  And their core would be 35‑44 female.

127              MR. EVANOV:  Yeah.

128              THE CHAIRPERSON:  Okay.  Let me move onto getting a better appreciation for the 126 hours of primetime programming a week.  I am trying to understand how the hours all add up I guess.

129              You have identified 100 hours of local programming, including I think it is 18.3 hours of spoken word in your application.  Can you sort of fill in the gaps there as to how we go from those numbers to 126 hours of prime hour listening?

130              MR. EVANOV:  Yes.  Well, we start with the spoken word component and, as you mentioned, it is 18.3 hours.  The balance is basically made up with a format which is an easy listening format.

131              And even of that, that breaks down to 65 per cent would be easy listening, which would be adult standards, soft pop, show tunes, folk and the other 35 per cent would be a very light soft AC that is not played in the market by the other radio stations.  That is the music component.

132              If we go back to the adult standards, the adult standards would rotate on the basis of perhaps three or four per hour, but you have got a combination of two types of adult standards; one is the legends, whether it be Sinatra or Tony Bennett, and the other one whether it be Melissa Manchester or Rod Stewart or Barry Manilow also singing, you know, the music of Gershwin, Sammy Cahn, Jimmy Van Heusen.

133              So the music is the difference that makes up the balance.

134              THE CHAIRPERSON:  I guess what I am looking for is if there is 100 hours of local programming, as per your application, there is 26 hours ‑‑ if I take 18 hours, times seven days you get 126 hours ‑‑ there is still 26 hours there of I guess what would be ‑‑

135              MR. EVANOV:  Oh, okay.

136              THE CHAIRPERSON:  ‑‑ non‑local programming, if I can call it that ‑‑

137              MR. EVANOV:  No.

138              THE CHAIRPERSON:  ‑‑ is local?

139              MR. EVANOV:  Okay, all the programming is local.  There is 126 hours in the week, of which we said we will do a minimum of 100 hours per week of local.  We left the 26 hours more or less open in case ‑‑ you know, seven years is a long time in the life of a licence and certain challenges could come up from competition in the market or great opportunities could come up.

140              And I guess what we wanted was the flexibility, that should something maybe in year five or year six come up, that we don't have to go back to the Commission, that we have said that we will do a minimum of 100 hours of local.  As it is with all our stations now, even in the past when we have said we will do a minimum of 100 hours local, the fact is we have been doing 126 hours of pure local on all our stations.

141              So it is more than likely we will do 126 hours, and we are saying about a minimum of 100 hours.  And it is only for flexibility purposes.

142              THE CHAIRPERSON:  Okay.  You also have a component of live‑to‑air I would imagine?

143              MR. EVANOV:  Yes.

144              THE CHAIRPERSON:  Can you expand upon what will be live‑to‑air and what will not be?

145              MR. EVANOV:  Okay.  The full day, from 6:00 in the morning until 9:00 at night, we will be with live announcers.  We have set aside the evening program to do some voice tracking, which is limited voice tracking in terms of the schedule and also not at primetime.

146              Probably a number of reasons for this in terms of strategy of a radio station.  But one of the reasons is we work with a lot of interns and we bring a lot of co‑op students in and we mentor students.  And this is probably where we train them to be broadcasters.  We don't put them on the air live, but we work with them and we teach them how to do a break or a cut‑in or to announce.  It is pre‑recorded, they listen to it, once or twice they redo it, redo it, then we put it in as a voice track.

147              Whereas if you are a station in a major market you can't take the chance of putting ‑‑ let's say someone from the broadcast school just live and cold, I think it is unfair to them, so it is a perfect way of training them.  So we have kept that option open for voice tracking so that when we do have co‑op students we can, on a rotational basis, teach them how to announce, to record, to do the voice tracks.  And this is at night time.

148              THE CHAIRPERSON:  This would be the 9:00 to 12:00 slot at night?

149              MR. EVANOV:  The 9:00 to 12:00 slot at night.

150              THE CHAIRPERSON:  Okay, thank you.

151              You have identified amongst your CCD plans an outreach program.  Can you expand upon the outreach program as to how it would be managed, what would be included and how you believe it would qualify under our new policy as well?

152              MR. EVANOV:  Okay, what I will do is ask Sean Moreman, who is the author of our CCD, to comment on that.

153              MR. MOREMAN:  Commissioner Katz, I believe you are speaking about the outreach program associated with the Folk Festival, is that correct?

154              THE CHAIRPERSON:  Yes, I guess, among others.

155              MR. MOREMAN:  I mean, there are several ways that we have outreach programs associated to our CCD, I just wanted to know which one specifically you are talking about.

156              THE CHAIRPERSON:  Well, we have got a new radio policy I guess, and the issue here is there is an outreach program you propose I guess as part of the catalogue of instrumental music, among other things, the Folklorama.

157              And the way our new policy reads, there must be clear directive finishers and must be allocated to support, promote training and develop Canadian musical and spoken word talent, including journalists.

158              So I just want to get a better understanding as to how your proposal for the outreach program will meet those obligations and criteria.

159              MR. MOREMAN:  You mentioned in there the Folk Festival as well as the catalogue. Let met start with the catalogue.  Let me start with the catalogue.

160              The catalogue is, as you know, an initiative that we started with our Ottawa station.  Its purpose is to promote instrumental music to both radio programmers as well as the film and television industry.

161              Mr. Silver mentioned actually in the Owen Sound hearings that instrumental music is often a bit of a cottage country industry with people recording in their basements and not getting a lot of radio airplay.  So they don't have the exposure to programmers or other industries that would like to source instrumental music.

162              What the catalogue does is it gives them that meeting place where they can put up their music, sample their music, and the people who want to source it out can go and visit, find out the type of music they want and setup a meeting between themselves.

163              What the catalogue has been already quite successful in doing is getting a lot of artists to be included on the catalogue and there has been quite a bit of interest expressed from both radio and other media in the catalogue and it has been used for that purpose.

164              Where it stands right now, several of independent production companies are putting samples onto the website so that it can be heard on the internet.

165              However, you wouldn't be able to find that right now by going and accessing the website, because two aspects of it are still in beta testing.  Firstly, there is the artist uploading from their PC and then there is also consumer testing about how well it will work and how well it will be accessed.  So we are still in testing on that, but it is happening.

166              THE CHAIRPERSON:  Is there a timeframe for when the tests will be completed and it will actually be launched?

167              MR. MOREMAN:  I believe Debra would be able to answer that question, as she is our contact with that.

168              MS MCLAUGHLIN:  Yes.  Right now, there is a panel of users.  As you can appreciate, there has been a group of people who come in and used it a great deal, artists who have discovered in uploading it.  So the panel has been created and they are feeding back.  We think within a month both the upload feature and the actual consumer end listening.

169              What has happened is people ‑‑ it was ready to go, but it was setup so people could put samples up one at a time and these production companies want to dump 20 samples at a time, which is a different kind of system you have to set up to incorporate that sort of mass transfer of data.

170              So that is what has caused the delays, but we are hoping within a month it will be up.

171              THE CHAIRPERSON:  Okay.

172              MR. MOREMAN:  So carrying on, the people who have contributed to the catalogue, we have the full list of AMIA, the B.C. and Manitoba Music Association will be placing their links on the website soon, and CCIM.  The catalogue will also be making a pitch to the Alberta and B.C. groups at artist development seminars which are hosted by those organizations.

173              We have received a number of accolades from artists who have used the catalogue and have received contacts from both radio programmers and the film industry, such as James Cohen, Paul Blissett and established artists such as Canada Brass.

174              We have also been able to establish links with other similar cataloguing services in the United States, such as NewMusicLabel.com, which profile and upload music of artists down there.

175              And the catalogue has been promoted on the Ottawa contribution dollar at events such as POPCOM in Berlin.  The Department of Heritage took the catalogue with it on a trade junket to Japan and they just presented in the United Kingdom.

176              More locally, at the Toronto International Film Festival there was also a booth set up by the catalogue, so that the film and television industries could find out about the catalogue and start to source materials there.

177              And it's our understanding that Canada Brass has, in fact, received a contact from someone in the film industry through the Toronto International Film Festival.

178              So, all of that to get specifically to your question, what we're contributing now.  All of what I've just talked about is on the Ottawa media dollar.

179              What we hope to do is to improve the services, improve the promotion of the catalogue at going forward.

180              One of the plans is to make it a bilingual website, right now it's in English only.  Recognizing that, you know, we do live in a bilingual country, that is one of our objectives and that is somewhere where the money that will be contributed will definitely go.

181              But we feel that evidence has shown that it is a worthwhile endeavour, that there are instrumental artists who are seeing the benefits of the catalogue, however, everything, you know, every new endeavour takes time to set up, the process is rather slow and won't happen overnight.

182              We're just starting to see the benefits now and we feel that it's a legitimate and worthwhile effort to allow it to carry forward in order to improve.

183              THE CHAIRPERSON:  And you are confident that it fits within our new policy?

184              MR. MOREMAN:  Most definitely.  The policy requires the promotion of local Canadian talent.

185              That's exactly what the catalogue does.  It's a world wide medium that each of those artists can promote his or her works to the world by taking it to places like Japan, Pop Common, Germany, the United Kingdom and events in Canada.

186              That is nothing but promotion of Canadian talent.

187              Carrying on to the other aspects of the outreach program as you call it, from a pure policy point of view, we feel that all of our initiatives do qualify.  All the fees will be paid to Canadian talent directly.  Each of the initiatives has indicated that none of the monies will be used for administrative fees or to pay past liabilities.

188              THE CHAIRPERSON:  Can I assume that the back end of your presentation this morning speaks to a playlist in part or in total?

189              One of the things that we would like to see is a playlist from you.  I don't think you filed one with your application.

190              MR. EVANOV:  We thought we had filed one.  We didn't attach one today to the speech, but we will following ‑‑

191              THE CHAIRPERSON:  Could you ‑‑

192              MR. EVANOV:  We will submit one to the secretary.

193              THE CHAIRPERSON:  If you feel you have, perhaps at the break you can check with staff and just clarify that.

194              MR. EVANOV:  I will and if they haven't been, we will provide that.

195              THE CHAIRPERSON:  Thank you.

‑‑‑ Laughter / Rires

196              THE CHAIRPERSON:  Perhaps we can spend a bit of time talking about your audience projections and your share of market and how you went about coming up with these.

197              Maybe it's just my statistical background, but when I look at your seven‑year share of market it literally goes up the same amount every year over seven years to get to doubling from year one to year seven, I guess.

198              MR. EVANOV:  Yes.

199              THE CHAIRPERSON:  Is that just my math or there was some art behind that science?

200              MR. EVANOV:  There's some pretty good art behind the science.  And I think I'll ask Debra to first comment on it and then we'll go to Ky Joseph who's our Vice‑President of Sales.

201              So, Debra who did the research, perhaps you can talk about the share.

202              MS McLAUGHLIN:  I will speak to audience share and how that's developed.  How it translates into the revenue spread sheet, Ms Joseph will deal with.

203              When we go into the market and ask respondents to our survey their degree of interest in this service, we ask them ‑‑ they have five options:  definitely listen, probably listen, probably not listen, definitely not listen and no answer.

204              We take each one of those responses by demographic and project out a likely amount of people in the population.

205              So, for example, if 10 per cent of the people said they would definitely listen, we would apply to ‑‑ and the demographic in which the 10 per cent was reported and then we would discount it.  You obviously discount less for definitely listen and more for probably listen.  So, we have a higher discount level.

206              These discounts are applied.  They are added up to create a reach figure by demographic.  We do that for each gender and each demographic, we add it up, and what we get is a reach per cent for the market and that we have reported.

207              We then go back and look again by each demographic and gender and age based at the average hours tuned in the market and to this type of format where it exists, and then we create a relationship between the hours spent in this market with this potential format based on the tuning to a similarly formatted station in another market.

208              That allows us to project the total hours tuned.  From that we simply divide it by a projected total hours for the market at the time of launch and we get a share figure.

209              Now, that share figure is considered to be a mature share, which is not to say that it can't grow after that.

210              Obviously when you enter a market you are not going to get your mature share, you have to build your brand, you have to get the information out to consumers.  So, we discount that mature share to represent the first year and then we grow it.

211              Again, the growth rate on the audience share is based on experience within that format, that demographic and we look to other markets and, fortunately, in this format we can look to Canadian markets.

212              So, for example, the share estimate in this case was ‑‑ the mature share was discounted to being only 60 per cent in year one.  That was predicated on two understandings.

213              First of all, that this demographic, the 45 plus, are not necessarily early adopters or adopters, so they're not going to leap into this format if they are listening to other stations in the market.

214              But there is a group of listeners who are so disenfranchised, who have simply tuned out, that we think we can get right away.

215              So, we've taken that mature share and estimated year one share to be only 60 per cent.

216              We have estimated a significant growth in year two, a slightly declining growth in year three and then very minimal growth years four through seven.

217              Now, that's how we got to the audience share.

218              And then I give it to Ms Joseph who uses her experience in sales to say this is how it's going to translate into dollars, and I'll give it to her to answer that.

219              MS JOSEPH:  Thank you, Debra.

220              If you notice in our sales expenses, ours as compared to all of the applicants is the highest.  We incorporate the highest commissions of all broadcasters to develop new business.  As a matter of fact it's a strategy of being stand‑alone in every market that we serve.

221              To that point we train our sales reps to specifically locate the categories that fit the audience demographic and then we dig deep locally to find whatever business we possibly can to get them all on the station.

222              Our sales reps' budgets are ‑‑ we've got ‑‑ basically we've got a formula that includes a standard budget and a new business development budget and all bonuses and commissions are linked to both.

223              So, what I'm trying to say is that from a ‑‑ you know, as you had mentioned that the increase year over year has not decreased, like in year four for example like Newcap's has, and the reason for that is because of our template that we use from a direct local sales point of view.

224              We're going to have to come into this market and develop the local market and we've already seen national advertisers respond to the economic shift of the older demographics.

225              A perfect example of that would be, you know, five years ago Additionelle, for example, who targeted a mature female, they bought 25‑54, they're now buying the 35‑64 female specifically because they're realizing that they have to be more niche in their approach to target those specific consumers.

226              And in 2013 baby boomers will be over 50 per cent ‑‑ will be over 50, excuse me, and they will represent 55 per cent of all discretionary income.

227              And we're noticing that ‑‑ actually there's, you know, there's a million reports that you can find, research reports that indicate that it's actually the baby boomers themselves, in some cases, that are responding to starting up their new businesses.

228              And it is forecasted that they will be successful because one, they understand the needs of, you know, of the baby boomer because they're baby boomers themselves; and, two, they are people who have a lot of experience, they're executive that are perhaps in their third career at this stage in their life, but they realize that there's a real business opportunity.

229              And we're seeing that more and more and there's a lot of research to prove that.

230              THE CHAIRPERSON:  What do you forecast the annual growth in radio advertising revenue to be over the next seven years, roughly?

231              MS JOSEPH:  Well, we forecasted roughly three per cent would be the market growth.

232              THE CHAIRPERSON:  Year over year?

233              MS JOSEPH:  Year over year.

234              THE CHAIRPERSON:  Okay.  And what impact would your entry have on the existing incumbents in the marketplace?

235              I think I read somewhere 35 per cent is where you'd, I guess, borrow from their revenue sales and the rest will be incremental?

236              MS JOSEPH:  Well, there were two factors that we looked at.  First, obviously, was the research.  When trying to determine impact, you would identify the respondents that indicated that would probably or most likely listen to the station and of those 60 per cent, they said currently that their favourite radio station ‑‑ really it's a cross‑section of over 10 stations in the market with no one specifically standing out.

237              As a matter of fact, No. 1 was CJOB, but when we went out into the market ‑‑ and Chris Edelman can speak a little bit about this ‑‑ when we went into the market and talked to advertisers we got several stations that they're either currently advertising on or have advertised and, for one reason or another, they didn't get a response.

238              The response from those advertisers was very favourable to the station that we would bring to this market.

239              You'll notice also on page 20 in our impact survey that No. 2 was other, and other means that respondents couldn't name a specific radio station.

240              So, we've also ‑‑ in our research we've also realized that, you know, of the out‑of‑town, there's 10 per cent tuning out‑of‑market and we believe that based on drops in hours tuned and tuning out‑of‑market that we will be able to repatriate those listeners and, therefore, we believe that it wouldn't be so significant over all of those stations.

241              I mean, we're talking about $625,000, it represents about a per cent and a half of all radio revenue.  With the growth, we believe that it will be absorbed by the growth.

242              And, again, you know, we're looking to bring a station to the market that is not currently here and there is a real need from advertisers as I would like perhaps Chris Edelman to tell you a little bit about, what we found on the streets.

243              MR. EDELMAN:  Thanks, Ky.

244              Yeah, so going back to that 35 per cent of local radio stations based ‑‑ and, as I mentioned earlier on before, you know, I've been in Winnipeg making relationships with advertisers and retailers in the area, and based on my conversations with advertisers, there was a real cross‑section that came up.

245              So, our 35 per cent would not come from one particular service, but from six to 10.  I mean, I heard every radio station under the sun mentioned as being used occasionally, maybe, sometimes, even this year, not next year, et cetera.

246              And as Ky also pointed out, that this 35 per cent represents a mere 1.5 per cent of the total Winnipeg radio market.

247              So, it's really insignificant in the big picture things.

248              Now, specifically, I'll share with you a couple of stories that I came across with dealing with particular people that do make these decisions in the marketplace.

249              One being David from David Hoffman Optical.  He targets ‑‑ when I asked him if he would place a value on the baby boomer generation he described that the baby boomer generation is a very important segment to his business.

250              He uses newspapers and tries to reach this group with occasionally using CJOB but finds it too expensive.  So, he usually keeps his dollars to the Sun and the community newspaper.

251              So, that might be an example of how we might impact one service, but it's very marginal and very minimal, most of his dollars are going into newspaper and community newspaper.

252              He said that if affordable he would allocate a much larger percentage of his media dollars, so away from print, into radio stations that targeted specifically the baby boomer generation.

253              Now, there's a few other interesting stories that I came across that I'd like to share with you.

254              I spoke with Audra Lazoski(ph) who works for McKim, Kriegan, George(ph), previously known as McKim Communications.  She's a media planner and represents a whole bunch of clients within the area.  To name a few, Manitoba Hydro, Warehouse I, Polo Park Shopping Centre, the Blue Bombers.

255              And sometimes her plans include radio and sometimes they don't.  She was very engaged in our conversation about a possible new radio station that would specifically target the baby boomer generation.

256              I can quote her by saying, and she said that she might be listening here today, that:

"A radio station that targeted the baby boomer would open up a world of option for her clients.  It would give her the justification to increase her clients' budgets."  (As read)

257              MR. EDELMAN:  The first client that came to her mind immediately was the Lottery Casinos of Winnipeg.

258              Currently she recommends doing loyalty programs using print and direct mail and newspaper, radio has never been a part of the equation.

259              If your service were to be available, she would one hundred per cent include us in her plans.

260              So, after canvassing the area and speaking with the retailers, the evidence was clear, there's a true demand for something that specifically and cost effectively targets the baby boomer generation.

261              THE CHAIRPERSON:  And I don't want to put words in your mouth, am I to assume that you're saying that out of all the radio stations in the greater Winnipeg area, all 19, 20 or whatever, there are none that target the baby boomers right now?

262              MR. EDELMAN:  Yeah.  Okay.  I'm not saying that there are ‑‑ if I look at a BBM ranking on, you know, 45 plus demographic on a wide base, what we're speaking to today, CJOB does do a good job at delivering them.  The question in the mind of retailers is, do they get it cost effectively.

263              CJOB over all adults 12 plus is the No. 1 radio station in the market.  There's a premium to be paid to be associated with that service.

264              So, when we're coming in as an entry specific to the baby boomer or 40 plus demographic, we come in and be much more cost effective to reach their target audience.

265              Does that clarify it?

266              THE CHAIRPERSON:  What you're telling me is the advertisers will look at the audience, but then also look at price and will opt for a lower price if they can get the reach at a lower price.

267              MR. EDELMAN:  Yeah, it's a measure of efficiency.  So, with their dollar there's a higher likelihood that every investment, or everything that they put into advertising will in large part go to their target demographic.

268              So, it's a much more efficient buy at this point.

269              THE CHAIRPERSON:  So, how sensitive is your business plan to the notion that if you were licensed and CJOB did see some erosion of their advertising revenue because of the efficiency of the model, the cost price, that they'd lower their price of advertising and impact your business?

270              MS JOSEPH:  I think I can answer that question.

271              With ‑‑ just speaking about CJOB specifically, their efficiencies really lie in the younger end of the 45 demographic, where ours, our core demographic is 55 to 64.

272              You do need the broad range in order to bring in the revenue and to make the business plan, but it's unlike ‑‑ I can only say that it's unlikely that that would happen, that they would decrease their rates and, if they did, it really wouldn't impact our business plan whatsoever because ‑‑ because the impact is not sufficient on that station.

273              We're going to be ‑‑ as I mentioned, 65 per cent of our revenue is coming from completely new dollars to radio and that is the strength of our company, quite frankly, is to bring in local revenue.

274              THE CHAIRPERSON:  Where does the 35 per cent of other media come from, is that newspaper?

275              MS JOSEPH:  It comes from a cross‑section of media and, again, because Chris Edelman was the one who did the street level demand study, I'll ask him to speak on that.

276              MR. EDELMAN:  Okay. So, the 35 per cent as outlined coming from other media is, in our estimations, comprised of print, flyers, direct mail, outdoor media and TV.

277              Now, I guess I'm at a huge bias to say so, but radio in my opinion is the most cost‑effective media option to speak to a targeted demographic.

278              We teach this to retailers and get them to expand or take money from other media and place it into radio.

279              Now, also Winnipeg which is considered to be a mature or full market, we need to plan on taking money out of other media in order to realize our revenue goals.

280              Direct mail or flyers are very expensive and do not target specific demos.  And newspapers are simply not a part of everyday life of people as they used to be.

281              So, I would see us making a dent into the Winnipeg Free Press and the Sun specifically as the majority of the other media dollars.

282              THE CHAIRPERSON:  Okay.

283              MR. EVANOV:  The only thing I would like to add, if I could.  If you take our Newmarket station, and we've analyzed it, it's just a very strong local sell, but 70 per cent of the clients that advertise on that radio station are brand new radio.  They've never been on radio before, never spent their money on radio and we brought them into radio.

284              THE CHAIRPERSON:  Can you spend a few minutes providing us with an understanding of how correlated your business plan is with your format?

285              Is there a correlation there at all?  I mean, obviously it's audience, tied to audiences, but if your format changed tomorrow and you had the same level of audience, how would that impact your business plan?

286              MS JOSEPH:  Well, from a revenue standpoint, you'll see that 20 per cent of our revenue comes from national business.  National business is really the only thing that advertisers look at in terms of sheer numbers.

287              But even in our projections for national, we factor in national business that might not be traditionally considered national, and I know that sounds a little convoluted, but I'll try and explain.

288              Our experience with national advertisers and new business development opportunities, like we realize there's a real opportunity there for direct response business.  We have been able to fish in the U.S. for businesses that spend upwards of $600,000 on our stations.

289              They're national, they've actually ‑‑ we brought them in most cases to Toronto first and it spilled over on all of our stations that we've got, Halifax and Ottawa, Newmarket as well and even Hawkesbury.

290              So, they're a national advertiser that are now spending across the board, across Canada.  They would include products like Hero Tabs, which is a male enhancement product, perfect for this demographic; Zanarax, Intimax and they spend a heck of a lot of money in radio.  They didn't before.

291              This is the kind of thing I'm talking about, when you really push your sales team to develop new business, they go in and they develop it.

292              So, it's national but technically it's not national from an advertising agency point of view.

293              So, aside from that we, again, focus on local business.  The beautiful thing about local business is, I mean there are pros and cons, but the beauty is that it's not really tied to a ‑‑ it's not tied to a cost point, it's not even tied to an audience share.

294              What they're looking for is a return on their investment and if we can bring the audiences, and we've shown with all of our stations that play the same type of music, that the hours tuned are significantly high.  So, for that reason our advertisers are getting responses and we're seeing re‑bookings for, you know, two, three, four years on our stations because of that.

295              So, if we don't get the audience share, per se, the business will still be developed.  We stand strong with that claim because we've been able to do that.

296              THE CHAIRPERSON:  But there is a very high correlation between your target audience, the genre, the format you're playing and the advertisers that actually advertise on your station.

297              MS JOSEPH:  Yeah.

298              THE CHAIRPERSON:  You won't get people in the, I don't know, 55 to 64 age group looking at Vesta Motor Bikes.

299              MS JOSEPH:  That's correct.  You're correct.

300              THE CHAIRPERSON:  Okay.

301              MR. EVANOV:  But there is a whole a market.  They will look at Mercedes and Jags and everything else.

302              MS McLAUGHLIN:  Commissioner Katz, I might just be able to clear this up, because when we go into the market to do research, we don't just research one format.

303              So, I think the question that ‑‑ or the answer that might help you understand the possibilities for a new entrant in this market lies in the fact that we look in other areas to see if there were other opportunities.

304              Ultimately having examined tuning losses across several demographics, looking at what the playlists were currently in the market, the conclusion was that this filled that hole that existed.

305              Respecting the three issues, the three challenges that Ky identified in the outset of  the presentation, that being the fact that the market isn't particularly as robust as others that the Commission has looked at recently and, again, probably will look at this week.

306              It is a profitable market, it is not the most profitable market, it has had some challenges, it is in a growth phase, but how long that lasts we don't know.

307              So, you want to get a format that's going to have a solid base in terms of being able to develop a business plan, serve an under served demographic and not duplicate and cause unnecessary impact against the other stations.

308              Having said that, this was the ideal format, but there were other demographics where the tuning had declined, there were other opportunities,  they just weren't, given the competitive balance in the market, going to have as little impact as this one.

309              So, could the format shift, and could they achieve shares of similar levels and find an advertising base?  The answer is yes.

310              THE CHAIRPERSON:  Those are my questions.

311              Commissioner Menzies.

312              COMMISSIONER MENZIES:  Maybe just to follow up on that, Ms Joseph, could you help me understand a bit about how you would train the market ‑‑ the advertisers to be attracted to this 55 to 64‑year‑old age group, given that, traditionally, that is not an age group that is considered to be attractive to advertisers?

313              MS JOSEPH:  It is actually not that it's not attractive to advertisers, it is attractive to advertisers.

314              Whenever we come into a market, we research the market from a street‑level advertiser demand point of view, and the demand is very strong here to target consumers 45‑plus in this marketplace.  So it is, in fact, there.

315              Another thing that we would look at, of course, is the baby boomer generation.  We have seen it already.  The shift has been very, very slow, but even from a national advertiser point of view, advertising dollars are now streaming upwards because these advertisers realize that there is a heck of a lot of money there.

316              There is a really interesting research piece that I found in Reuters Life! from Toronto.  It was the Canadian Newspaper Association that commissioned this poll through Ipsos Reid.

"The baby boomer generation, once the dominant influence on everything from fashion to haircuts to music, is getting older and feeling increasingly ignored by advertisers, even though boomers have money and are willing to spend it."

317              What has happened through this research is that we know that, in many cases, it's the baby boomers themselves who are getting inheritances.  There are trillions of dollars that the baby boomer generation will get from inheritances, not to mention their own wealth.

318              The saying is true, "Sixty is the new fifty," and people are working well into what would be considered retirement age.

319              Maybe not you, by the look on your face ‑‑

‑‑‑ Laughter / Rires

320              MS JOSEPH:  ‑‑ but it is a fact.

321              So these very clever, very smart executives and business people are going into business to respond to the economic shift.

322              There are, like I said, thousands of research pieces that you can find, even on Google ‑‑

323              COMMISSIONER MENZIES:  I wasn't disagreeing with that, I was more trying to get to ‑‑

324              What you said at the beginning was that there is no need to re‑train advertisers.

325              MS JOSEPH:  No.

326              COMMISSIONER MENZIES:  But we constantly get this 25 to 54 ‑‑ 25 to 54 is the market that is the most attractive to advertisers.

327              MS JOSEPH:  It would be easier to have a station that is 25 to 54, there is no doubt about that, but our company has never gone for easier.

328              We have proven that there are a lot of advertising dollars ‑‑ local dollars ‑‑ that no other radio stations go after, from the younger end to the older end, and we have found that there is a real market there, and we fish there and we get the money.

329              It's not training the advertisers, it's training our sales people to go out there and get the dollars.  The advertisers are already there.  They have told us that.

330              COMMISSIONER MENZIES:  This touches a little bit on Commissioner Katz' question.  If it is such a good idea, and there is demand by advertisers wanting this demographic, it kind of makes you wonder why nobody else is doing it.  But more important is, what if you convince us that it's really a good idea, but you also convince competitors currently in the marketplace that it's a really good idea, and somebody shifts, or more than one person shifts format and starts to fish in your pond?

331              Do you have the flexibility to adjust to that?

332              MS JOSEPH:  Absolutely, and I am saying that from experience, because we have been faced with that same situation in Toronto, with CIDC, with our station there.  Not one, not two, but four stations flipped format to try to compete against us because they realized that there was an opportunity there, and then they flipped again.

333              We are still there, and we are very, very strong in terms of audience share.

334              MR. EVANOV:  If I may add, if we are licensed and we begin the process, we will be entrenched, and once you are entrenched you are a little tougher to knock off.

335              Right now most people still have their eyes going down the middle, where the big money still is.  They feel that it's easier, but there are, maybe, a dozen people going down the middle, and we thought that we would go for the upper end.  There is probably just as much money there.

336              And slowly, as the whole market moves, down the road I can see what you are saying happening, to a degree.  Some people may say:  Let's go after the older market now, because they are the majority of the market.

337              But by then we will be solidly entrenched, and we are a good operator, and we have no fear of competition in the market.

338              COMMISSIONER MENZIES:  Okay.  Thanks.

339              How many additional licences do you think this market can bear, and how many did you assume in your business plan?

340              MR. EVANOV:  The other three applicants are targeting much younger than what we are targeting, so we don't see running into them on the streets very often, or running after the same advertisers.

341              I guess we assume that you will probably license two of these, and the two will probably ‑‑

342              We don't have a concern.  We know we are going to make it.  We know who the clients are that will spend money with us.  We know who we will convert and bring to radio.

343              We are not going there to take away major dollars from any particular radio station in town, so we don't have a concern in terms of reaching our projections.

344              Basically, you will decide ‑‑ I know that the PBIT for the last couple of years has been in the double digits.  It's a good market now.  We don't know what is coming down the road, but definitely, I think, there is room in the market for one station that doesn't duplicate anybody, which is ours, and then, I guess, there could be room for another station that does duplicate.

345              So I would say that perhaps you are looking at licensing two.

346              COMMISSIONER MENZIES:  Regarding your news and spoken word format, you said that you would replace pop culture banter with relevant and mature dialogue.  You also mentioned, in terms of your news, that it would be different, or that it would be a new, independent, voice.

347              I am always curious to know how it will be a new voice and not just another voice.

348              Do you understand what I mean?

349              MR. EVANOV:  Yes.

350              When we came into the market, we listened to all stations and the newscasts and what was going on ‑‑ and I think that I should really let Gary Gamble respond to that, because he did that part of the research.

351              COMMISSIONER MENZIES:  He had his light on first, too.

‑‑‑ Laughter / Rires

352              MR. GAMBLE:  Thanks very much.

353              When we first came in, as Bill said, we took a look at it and monitored the music stations, and noticed that, traditionally, most music stations have their three minutes at the top of the hour, where they provide you with news headlines, and they possibly have a news update at the bottom, and they fill in your basic traffic reports throughout the day ‑‑ throughout the morning clock, for example.

354              In our Newmarket and Ottawa stations, we have trained our announcers that, because we are doing such a mature format, our talk has to be of a mature nature, also.  We are not going to be talking about pop culture.

355              News and information programming ranks very, very high, especially here in Winnipeg, with weather being the top, at 93 percent.  That's what people want to hear.

356              What we do is, we provide a five‑minute newscast at the top of the hour, which, of course, is 60 percent local.

357              As I was listening and monitoring these stations, there certainly wasn't 60 percent on any of the music stations that I heard providing local news.

358              Let me draw a picture for you.

359              A five‑minute newscast at the top of the hour and a one‑and‑a‑half minute update at the bottom of the hour is what we are working on.

360              Then, our announcers, instead of talking about pop culture and entertainment and the usual type of morning show talk and banter that you hear on stations, across the country, not just here in Winnipeg ‑‑ we are replacing that with quick snippets of what people want to hear, whether that's weather updates, whether that's talk about the transit dispute that is on right now, lifestyle, a little bit about health, a survey ‑‑ that sort of thing, in very, very quick snippets ‑‑ school closings, and if there is a major traffic problem, we are going to get in with that.

361              It is more of the talk that people want to hear.

362              If we go on the air and say, "It's 15 minutes past eight o'clock.  It is 10 degrees outside.  Here are the current numbers for the dollar," that's more of a mature thing that people want to hear, who are driving to work in the morning, who don't necessarily want to hear about Britney Spears, for example.  They want to hear more about those types of things that are current to their lifestyle.

363              We will be running programming throughout the day, also, like "Health Watch", and book reviews, and that sort of thing.  If there is a health matter that should be of concern to people who are driving to work in the morning, and we can do a quick snippet about it, we will do that.

364              Our announcers are trained to work with the news department, to find out what they are working on, and if they can take those news stories and talk a little bit more about them throughout the hour, and add in some other community events, or things that are happening throughout the hour ‑‑ make it a little bit more of what people, we feel, in our demographic, who will listen to our type of music, really want to hear when it comes to news and information.

365              We also do that by backing it up with a full news staff of six people:  a news director, who also covers the morning show; an afternoon news person; two part‑time news announcers; and two stringers.

366              For example, if we have a five‑minute newscast and we have a stringer out on the road who has a report about Prince Edward's visit yesterday, or an update on the transit strike, or an update on sports, about the Blue Bombers' training camp opening this week, he will throw that in and make that five‑minute traditional newscast a little bit more full as to what we feel news really should be, and then, throughout the hour, keep expanding on news, school closings, bus cancellations and that sort of thing.

367              COMMISSIONER MENZIES:  Thank you very much.

368              I have one, quick, final question.

369              When you said that your business plan would stand up among two new licences, did you mean two or two plus the Native Type B?

370              MR. EVANOV:  We meant two plus the Native.

371              COMMISSIONER MENZIES:  Thank you.

372              THE CHAIRPERSON:  Thank you, Commissioner Menzies.

373              Commissioner Patrone.

374              COMMISSIONER PATRONE:  Thank you, Mr. Chair.

375              Good morning.  I want to start off with a couple of questions related to format.  Specifically, you spoke about the appeal of this particular format toward ethnicities, various cultural groups, that kind of thing.  Do you have any evidence to back that up, or is it largely anecdotal?

376              MR. EVANOV:  To begin with ‑‑ and I will ask Debra in a moment to address some of the research ‑‑ we operate a multicultural radio station in Toronto, broadcasting in 30 languages.  That station has tentacles, or a network, throughout the country, in terms of reaching various communities.

377              So that is available.  The sources and information are available to our staff here in Winnipeg, in terms of when we are on the air with this programming.

378              Also, we tailor the music to the particular market.

379              I will give you one little example.  In the Toronto area we play things that most English broadcasters don't.  If there is a great song by Andrea Bocelli in Italian, we will play it.  If Feliciano wants to sing in one of the Latin languages, in Spanish, or even in Italian ‑‑ Que Sera Sera ‑‑ we will play it.

380              We would take the same attitude here that relates to the population in this particular area, whether it be Ukrainian or German or whatever.  If there is something popular and something elegant ‑‑ Nana Mouskouri is another singer who sings in four or five languages.  We will play that particular music.

381              That relates to the people who live within the area, and that is how the music ties in with them.

382              It's not that we are an ethnic station, I am not saying that, but there is a respect for that type of culture.

383              Debra?

384              MS McLAUGHLIN:  We test for cross‑cultural appeal of formats by two measures.  One is based on mother tongue, another is ethnic heritage.  And within the context of the survey, with respondents on the phone, we asked them both of those questions.

385              So we can then take the answers to the mother tongue and ethnic heritage and cross‑tab them against interest.  When we do that ‑‑ on pages 16 and 17 of the consumer demand study, you can see that, for example, in mother tongue, only 76 percent of the core audience to this service actually had mother tongue English.  The rest were spread across several languages ‑‑ obviously, the second official language, French, and the rest were spread across Ukrainian, German, Dutch, et cetera.

386              If you just take that breakout and index it against the market, in terms of how the distribution falls out within the population, we actually index higher on our interest among cultural groups than many formats would, and that is, as Bill said, something that they have direct experience with, because the response ‑‑ and I often review the responses for them at the station ‑‑ from consumer feedback is typical of this type of format.

387              COMMISSIONER PATRONE:  Do you program some of the music to reflect that cultural diversity?

388              Is that correct?

389              The cultural makeup of, say, any given market.

390              MR. EVANOV:  That's what we do, wherever possible.

391              COMMISSIONER PATRONE:  Can you talk about how you would manage to incorporate diversity into your hiring practices?

392              MR. MOREMAN:  If you refer to our application, Commissioner Patrone, I believe that we have our Diversity and Employment Policy included in the application.

393              One of our strengths as broadcasters is to bring in a variety of people at the management levels.  Ms Joseph, here today, is a good example of women in senior positions within our company.  We don't see a lot of that, still today, in the broadcasting industry, and Ms Joseph certainly isn't the only one within our company.

394              We actively encourage applications from not only ethnic and gender backgrounds, but sexualities, religions ‑‑ and the list goes on ‑‑ not only, again, relating to our ethnic station in Toronto, but across the board.

395              And we believe that we are quite successful in attracting a variety of people within our ranks, and hope to do so in the future.

396              COMMISSIONER PATRONE:  You spoke about support groups like Gay Pride and that sort of thing.  Could you talk a bit about how that support tends to manifest itself?

397              MR. MOREMAN:  Specifically, to this application, it is a CCD initiative.

398              And I was going to say something before to your question about programming cultural diversity, so I will talk about the diversity within our CCD initiatives, as well, very briefly.

399              We believe that there is cultural diversity represented not only on‑air, but through our CCD initiatives.

400              One thing that stands out is, both the Folk Fest and Folklorama have people who perform not only in English, but in a variety of cultures and languages during the show, in 200 performances at Folk Fest.

401              And there are a number of international visitors who come to enjoy the Canadian talent in their home language.

402              So our funding will be there to support that cultural diversity.

403              We also have two Native Canadian endeavours that are being represented through AMEF and Manito Ahbee.

404              On the AMEF front, there is actually some cross‑over to the programming side in the news aspect.  We have an agreement in principle with AMEF to set up a mentoring program, so that a Native individual from Manitoba ‑‑ from Winnipeg ‑‑ will be in our newsroom as one of the interns that Mr. Gamble mentioned before.

405              Their sole job won't be only to find Aboriginal stories, but that certainly will be within the ambit of their responsibilities.  So that will be reflected in the newscasts ‑‑ perhaps not every single one, but there won't be an absence of Aboriginal stories.

406              To come back directly to your question about Gay Pride as a CCD initiative, we feel that cultural diversity goes beyond merely ethnicity, religion, or gender ‑‑ the obvious differences ‑‑ and that we need to support and celebrate other differences, as well.

407              So what this contribution does is, it certainly meets the objectives, as I explained to Commissioner Katz, of promoting Canadian talent on the stages, but it is there to show our support for the inclusion of an often under‑represented group.

408              COMMISSIONER PATRONE:  You spoke a little bit about news there, so I will ask a question related to that.

409              There will be six reporters, and those individuals will be out on the street, covering stories?

410              MR. GAMBLE:  There will be two full‑time on‑air staff, and one of them will be covering mornings and one of them will be covering afternoons.  Both of them will be covering the noon hour newscast, which will be ten minutes long.

411              The other two will be covering part‑time newscasts midday, and then we will have two stringers, who will be dedicated to being out on the streets and getting a call for an assignment to cover something and report back.

412              Also, as Sean mentioned, our mentoring program and internship program has worked out very well, especially for our station in Newmarket.  At any given time in our programming department we have two to four interns, who are available either for news or learning the board ‑‑ future broadcasters ‑‑ and what we do in the news department is that we take them from the beginning, directly out of college, and show them what a news story is all about, how a news department works, how to gather a story, how to follow up on it, how to chase after local news, which, of course, is not really available on a wire service, how to make those calls to the police department, and sit in on city council meetings ‑‑ how to work it right from the very beginning.

413              We have been very successful with the internship program.  I would say that in the last 18 months, in Toronto alone, we have hired 10 of the interns that we brought into the program.

414              COMMISSIONER PATRONE:  Do you have an evening reporter?

415              MR. GAMBLE:  News will run until seven o'clock in the evening, but our news department will always be on hand.  It's actually the part‑time reporters who will come in.

416              If something is breaking, and it is urgent information that has to get out, our announcers are trained, first of all, as they work closely with the news department, to get on the air and start not just introducing music, but now their focus turns toward getting this news story on the air.

417              And as soon as we can get a news reporter in to cover that on a more frequent basis, we will do that.

418              COMMISSIONER PATRONE:  Do you have any plans for longer form stories?

419              I know you said that one of your newscasts will be 10 minutes long.  That's a fair amount of airtime, as you know.

420              Will you have investigative pieces, and that kind of thing, or will it just be straight ahead?

421              MR. GAMBLE:  No, that ten minutes of news, especially at noon, and in all of our newscasts ‑‑ if there is news that is of a headline‑type delivery ‑‑ if it's on a national basis, first of all, that we are getting on the wire, we are going to take that story ‑‑ not rip and read it, but we are going to qualify it and make sure that what we are reporting, first of all, is accurate, and second of all, if it has any relation at all to Winnipeg, we will follow up on it.

422              Sixty percent of that newscast, also, which runs ‑‑ out of the ten minutes, about six minutes of direct news will be local stories.  Also, within that ten minutes, we will be focusing two minutes on an agricultural report, and also on sports.  Of course, weather will be included.

423              We feel that ten minutes of relevant information, which is not available on any other music station right now, is going to keep people updated.

424              If you are listening in the morning and you are getting music and information, and we are carrying it through midday, and following up in the afternoons, we feel that has pretty well got it covered.

425              COMMISSIONER PATRONE:  I want to ask a quick question about emerging artists.

426              To what degree will you be able to incorporate emerging artists into this particular format?

427              Obviously, you will be talking about older artists, in many cases.  Emerging artists being new, how do you face that challenge?

428              MR. EVANOV:  First of all, the people coming forward with new CDs and new recordings are no longer older.  They are much younger, yet they are singing this type of music.

429              And I will ask Gary, in a moment, to talk about a new Canadian emerging artist who sent music to Afghanistan.

430              Our commitment is probably the highest.  It is 12 percent overall new and emerging artists, and what we are planning to do in Winnipeg is that, when we launch emerging artists, we will not only play the song, but we will do, maybe, a 15, 20, 30‑second bio, or provide some information that is attached to that particular song, so that the audience understands that it's a new song, it's a new singer, and something interesting about it.

431              That will be done for about two to three weeks, and it will rotate as the new ones come in.

432              We have no trouble ‑‑ we have the highest commitment, I believe, of all the applicants for new and emerging, and we do that only because we are getting this input.

433              Gary is going to tell you about one now.  Gary received a phone call ‑‑ and it's a fascinating story.

434              MR. GAMBLE:  About a month ago I received a call from a friend of mine in a local studio in Newmarket.  She said, "Look, I've got this young singer ‑‑ "

435              And we receive a lot of music.  We have a lot of music that comes our way.

436              She said, "You've got to hear this young kid sing."

437              He won the York region talent competition, which is called "The Rising Star Competition", just north of Toronto.

438              So I got a hold of his CD.  I was further told that he had done this song ‑‑ it was around Mother's Day that we received it.  The song is a cover of the Il Divo's "Mama".

439              He sent a few copies ‑‑ I think about 100 copies to Afghanistan, to the troops over there, mothers of Canadian soldiers.  The song was so popular that he ended up sending 5,000 copies of this particular song.

440              I thought, "I have to find out more about this young kid and what it is that he is doing."

441              We interviewed him on the air.  He has not released to the public a song yet.  What got me was, when I heard him, this young kid sounds ‑‑ he is the next Josh Groban.  He should be on Canadian Idol.

442              To top it all off, he is 16 years old.

443              We had him on the air.  He had never recorded anything before, except for this one song, and he is just ecstatic about how well he is being received.

444              This is one young kid, who is 16 years old.  We are going to follow him and help him out as much as we can.

445              MR. EVANOV:  And his name ‑‑ because we have talked about him, we should recognize him ‑‑ his name is Daniel Panetta.

446              COMMISSIONER PATRONE:  I will listen for him.

447              Could you talk a bit about your efforts to monetize new media, and your success as far as that is concerned, as it is directed to that particular platform?

448              MR. EVANOV:  We will start with the internet, obviously.

449              Gary, I think you can elaborate on that, as well.

450              MR. GAMBLE:  Our internet ‑‑ our websites have grown drastically, as with any other internet website, but especially in radio.  People in this day and age are looking for as much information as they can get.

451              Our internet background ‑‑ we consider it a companion of our radio station, a total extension of what it is that we do on the air.

452              Our website will feature local news, as we are reporting it on the air.  Immediately, as soon as we can, we get it on our website.

453              Also, there will be archived stories.  So if you want to check on what it was that we reported on two or three months ago, you will be able to click on the date and find that news story.

454              Along with that are our community events, weather updates to the minute, links to traffic cameras, and, of course, our emerging artist bios and that sort of thing.

455              It is a complete information website, more than just putting up our logo and "Here is what we play," and "Here is the next time you can win a car."  It is more of a direct portal for information, which we will load on there as much as we possibly can.

456              COMMISSIONER PATRONE:  Are you selling ads directly through the web?

457              MS JOSEPH:  I can answer that.

458              We will not sell advertising on the web that will not include an on‑air component.

459              It is obvious that the younger demographic spends a lot more time with the internet than the older demographic.  Having said that, though, the older demographic is certainly using it a lot more than they used to, and it is actually one of the categories that stands out for new business ‑‑ electronics, computers ‑‑ that category.

460              To answer your question, we believe that there will be revenue linked to the internet.  However, it's within our revenue projections.

461              COMMISSIONER PATRONE:  Thank you.  Those are my questions.

462              THE CHAIRPERSON:  Thank you very much, Evanov Communications.

463              MR. McCALLUM:  Mr. Chair, could I ask a question or two?

464              THE CHAIRPERSON:  I'm sorry.  Yes, please, counsel.

465              MR. McCALLUM:  I have a couple of very fast questions, if I may.

466              Your Schedule 5 is your financial plans, and there is a line for over‑and‑above contributions.  I would assume that you would have no difficulty in making the line "Over‑and‑above contributions to Canadian Talent Development" a Condition of Licence, if the Commission wished you to do that?

467              MR. EVANOV:  Yes.

468              MR. McCALLUM:  Thank you.

469              Vis‑à‑vis the Outreach Program for the Winnipeg Symphony, could you explain, first of all, what that initiative is, and where the money for that initiative is going?

470              MR. EVANOV:  I will ask Sean to comment.

471              MR. MOREMAN:  When we spoke with the symphony, we understood that not only do they play music, but they try to engage people in music, which is what they call their Outreach Program.

472              We believe that the money that will be used for the Outreach Program will basically be a forum for them not only to play music for people, but to engage the audience and educate them about the music and that sort of thing.

473              To answer what I presume will be your next question, how does it qualify, we believe that it is part of the promotion of music, and that it will engage people in their performances and encourage them to go and see them.

474              MR. McCALLUM:  If, by chance, the Commission determined that it did not qualify, could you say how you would redirect the money?

475              MR. MOREMAN:  We would have to engage in new conversations with the symphony to see whether they could use the funds in a manner that would qualify, perhaps through the purchase of instruments or another way.

476              And if they were unable to apply the money to ways that qualify, we would redirect it back to FACTOR.

477              MR. McCALLUM:  Thank you.

478              The same question vis‑à‑vis the Canadian Catalogue of Instrumental Music.

479              You may be aware that, in the case of Fairchild, CJVB Richmond, in a decision issued in 2007, the Commission looked at something that was maybe not identical, but similar.  It was the Canadian Association of Ethnic Broadcasters.  The Commission said that the initiative proposed by CJVB Richmond, Fairchild, would not qualify for Canadian Talent Development.

480              Can you say whether your catalogue is similar or different to that initiative?

481              MR. MOREMAN:  Our understanding is that it is different, in both its approach and its purpose.

482              Debra, I believe, will speak more to the differences.

483              Without repeating my answer to Commissioner Katz on the catalogue from before, I will refer you back to the transcript on why we believe that this particular initiative, the Canadian Catalogue of Instrumental Music, qualifies under the policy.

484              MS McLAUGHLIN:  My understanding ‑‑ obviously, I am not privy to the thinking of the Commission in terms of why it disqualified, but my understanding in terms of the catalogue for ethnic music is that it stalled because of limited participation.  There wasn't really the promotion or the response being received.

485              But in terms of the Canadian Catalogue of Instrumental Music, it is actually putting money in artists' pockets.

486              We have people responding, saying they have made sales, they have made contacts.  They now are in talks regarding providing their music, or licensing their music for soundtracks.

487              I would think that that is the goal of the policy, to actually increase opportunities for Canadian artists, and exposure.

488              I am not sure if that track record existed for the Catalogue of Ethnic Music.  I cannot comment on that, but I do know, having spoken with broadcasters who participated in it, that they were somewhat disheartened by the progress in the ethnic music catalogue.

489              MR. McCALLUM:  Thank you.

490              If, by chance, the Commission decided that that initiative did not qualify, how would you redirect the funds?

491              MR. EVANOV:  FACTOR.

492              MR. McCALLUM:  Thank you.

493              Thank you very much, Mr. Chair.

494              THE CHAIRPERSON:  I would like to follow up on one question that I think I asked you a couple of weeks ago in Ottawa, and that is with regard to the third adjacent frequency issues.

495              Should your frequency bump up against that policy, can you confirm that you do recognize that there are some implications there, as well, that may cost some funds, all the way through to, if it can't be rectified, you don't have priority on that frequency?

496              MR. EVANOV:  We have looked at the frequencies.  We have identified three available frequencies in this market that could be used, which would not alter our business plan.  They would be 106.3, 104.7, and then, also, 88.7.

497              MR. MOREMAN:  To answer your question perhaps more directly, Commissioner Katz, we are aware of the policy as it relates to third adjacencies, and we will do everything necessary to rectify those situations, even if it includes moving or fixing it on the frequency we have actually applied for.

498              MR. EVANOV:  I'm sorry, I misunderstood the question.

499              Mr. Chair, before we leave, we would like to read something into the record as part of our presentation, just to wrap up, if that's possible.

500              THE CHAIRPERSON:  Certainly.  By all means.

501              MR. EVANOV:  Thank you.

502              Evanov Communications is a strong, well‑financed broadcaster.  We believe that the proposal we have presented is the best of all the applicants before you.

503              In addition to benefiting the market by introducing diversity of ownership and news voices, as well as the highest levels of Canadian content and new and emerging talent, we believe that licensing ECI's application will benefit the system in the long term by strengthening an independent voice in a crowded radio spectrum.

504              As we told the Commission during the Vancouver hearings in February, ECI needs to become a national broadcaster to remain competitive in the age of consolidated ownership.  Large markets, such as Winnipeg, are integral to the national business strategy.

505              ECI sees the importance of setting stakes in these markets in three distinct ways.

506              Firstly, we would gain critical mass of listeners that would allow us to compete with large broadcasters for increasingly valuable national advertising dollars.

507              Secondly, the spectrum is becoming more and more limited in larger numbers.  In the two largest English markets, Toronto and Vancouver, there are no more frequencies available to be used.

508              As a result, the only way for us to expand will be to purchase assets, which we can only do with the revenues generated through large market revenues.

509              Thirdly, the revenue generated through large market stations will allow us to serve the less lucrative, underserved markets across the country.

510              ECI has the financial means, as well as the desire to plant roots in these markets.  We have competed with the large five corporate broadcasters in Toronto and other large markets, and have overperformed our share in smaller markets.

511              We are able to recognize what our listeners want from their local radio station, and we are prepared to deliver it to the markets across the country.

512              Thank you very much.

513              THE CHAIRPERSON:  Thank you very much.

514              It is 11:10.  We will reconvene at 11:20.

‑‑‑ Upon recessing at 1110 / Suspension à 1110

‑‑‑ Upon resuming at 1125 / Reprise à 1125

515              THE SECRETARY:  We will now proceed with Item 2 on the agenda, which is an application by Newcap Inc. for a licence to operate an English‑language commercial FM radio programming undertaking in Winnipeg.

516              The new station will operate on Frequency 106.3 MHz, Channel 292C1, with an effective radiated power of 100,000 watts, non‑directional antenna, antenna height of 223 metres.

517              Appearing for the Applicant is Rob Steele.

518              Please introduce your colleagues.  You will then have 20 minutes to make your presentation.

519              Thank you.

PRESENTATION / PRÉSENTATION

520              MR. STEELE:  Thank you very much.

521              Good morning, Mr. Chair, Commissioners and Commission Staff.  I am Rob Steele, President and Chief Executive Officer of Newcap Radio.

522              Before we begin our presentation, I would like to introduce our team.

523              Seated to my immediate left is David Murray, Newcap's Chief Operating Officer.

524              Next to David is Randy Skulsky.  Randy is the General Manager of our Winnipeg stations CKJS‑AM and CHNK‑FM, known as Hank FM.

525              Randy has 15 years in radio, all of them here in Winnipeg.

526              Next to Randy is Simone Gillies, the News Director for our Winnipeg station.

527              Simone is a native of Gimli, Manitoba, and a graduate of Red River College's Creative Communications Program.

528              In addition to her work with us, she also has worked with Global News in Winnipeg, as well as in radio sales.

529              Next to Simone is Steve Jones, Newcap's Vice‑President of Programming.

530              To his left is Jen Traplin.  Jen is the afternoon drive announcer of our alternative rock station in Ottawa, Live 88.5, and is involved in the planning and promotion of our CCD initiative known as "The Big Money Shot".

531              We propose to bring that initiative to Winnipeg with this application, and Jen is here to explain the programs.

532              In the second row, to your left, is Glenda Spenrath, Newcap's Director of Operations.

533              Next to Glenda is Scott Broderick, who is Director of our Central Canadian Radio Operations.

534              Beside Scott is Mark Kassof, who conducted research for us into this market.

535              Winnipeg is a very important market for us.  We have invested over $6 million in capital expenses in this market, acquiring an ethnic AM station, CKJS, and a specialty music station, Hank FM.

536              This application represents a substantial increase in our investment in this city.

537              We will inject an additional $1 million in new capital spending in the marketplace.

538              We will also make a significant investment in program spending, with $5 million in program spending over the course of the licence term.

539              We will also make a serious investment in Canadian Content Development of $2.8 million over the next seven years, providing support to the many emerging artists in this community.

540              Our CCD contributions will also fund the development of new Aboriginal journalists in our industry.

541              Our investment will increase our newsroom to five full‑time persons, along with stringers and our network of news gathering in the 18 ethnic groups that we serve.

542              This strengthened newsroom will allow us to provide an enhanced news alternative to the CBC, CTV, Canwest, Corus, Rogers and Astral.

543              I would now like to call upon Randy Skulsky to describe the market of Winnipeg to you.

544              MR. SKULSKY:  Thanks, Rob, and good morning, Commissioners.

545              Winnipeg is an important Canadian centre, with a long cultural, social and economic history as the gateway to the west.

546              Winnipeg is the seventh largest market in the country.  Its population continues to grow at a good pace.  According to Statistics Canada, the CMA population was 694,000 people in 2006.  It is projected to grow to 730,000 by 2012.

547              The population in the city skews younger than the national average, and one of the fastest growing segments of the population is young Aboriginal people.

548              The 2006 census reports that about 10 percent of the population has reported Aboriginal identity.  This is two and a half times the national average.

549              The Manitoba economy has been quite robust over the past few years, and the Conference Board projects GDP increases of 3.4 percent in 2007 and 3.8 percent in 2008.  This strength has been led by significant increases in exports, a substantial increase in farm receipts, and growth in a number of manufacturing sectors.

550              Retail sales have been strong in Winnipeg, and are projected to increase by 21 percent over the next five years.

551              The Winnipeg radio market has shown steady growth in terms of radio revenues, with an average annual growth rate of 5.6 percent between 2002 and 2006.  We are confident that the market can support a new station, particularly one that can rely upon its existing operation to share facilities and back office functions, and, of course, one that has picked a viable format opportunity.

552              MR. JONES:  Mr. Chair and Commissioners, when we started to review this market last May, we commissioned research from Kruger Media and concluded that the format to propose was alternative rock.  That research was conducted over a year ago.

553              Six months later, Mr. Asper commissioned research from the same researcher, and the conclusion was a different kind of alternative format, as I am sure they will outline for you.

554              When these applications were Gazetted and we had a chance to review the only two studies that looked at more than one format, we realized that the opportunity is clearly some kind of alternative format.

555              When we examined the music playlists that we had proposed and that Mr. Asper proposed, we saw that there would be significant overlap.  Many of the core artists would be the same.

556              What would set our station apart is that we will focus exclusively on alternative rock, while the Asper application includes elements of hip hop, rap and pop.

557              In January of this year we commissioned Mark Kassof & Company to do some ongoing research for our existing FM station, Hank FM, to get a sense of how it fit in the market.  In the process, we discovered an opportunity for a classic‑based alternative in Winnipeg.

558              However, this ongoing research wasn't specifically designed to find format opportunities.

559              After the Winnipeg applications were Gazetted, we commissioned additional research from Mr. Kassof, the same type of format‑finder research that we presented in many of our applications.

560              He tested nine formats, including four alternative formats:  Triple A, pop alternative, alternative rock, and classic alternative.  What he found was that the best opportunity for an alternative station was in classic alternative.

561              We took his research and Mr. Kruger's research into account when we decided that our best opportunity was a classic‑based alternative station, devoting about 80 percent of its playlist to the alternative songs that Generation X and Generation Y grew up with, the alternative rock of the eighties and nineties, along with strong support for new music, including local artists and emerging Canadian artists.

562              We also confirmed the format opportunity by looking at various tuning trends in various age groups from BBM.

563              The chart below shows the declines in hours tuned by various age groups, and by gender, from 2005 to 2008, for both Winnipeg and for Canada nationwide.

564              We also checked the hours tuned in each of the demographic groups.  What they show are declines in tuning in almost every group except 45‑plus.

565              The biggest declines in tuning are among 18 to 34 men, the core of an alternative rock station.

566              While women in this group have also declined in tuning, the decline is considerably less than among men.

567              The station we propose, which we are calling Live 106.3, will appeal to a broad alternative rock audience.  Young men and women aged 18 to 34 find both today's alternative rock and the alternative rock of the eighties and nineties of interest.

568              For the generation who were forming their musical tastes in 1990, when a new sound emerged from garages and basements across North America and, in fact, the world, alt rock is their mainstream.

569              While the epicentre of this new sound may have been Seattle, with grunge acts like Pearl Jam and Nirvana, many others came from around the U.S. and the U.K.

570              Canada's contribution to this sound is immense.  In the early 1990s, music critics and fans dubbed Halifax as Seattle of the North.  Moncton's Eric's Trip became the first Canadian act signed to Sub Pop Records, the legendary record label, home to Nirvana, Soundgarden and Mudhoney.

571              While bands like Sloan and Thrush Hermit led the way on the east coast, Econoline Crush, Bif Naked, Crash Test Dummies, and The Watchmen all put Winnipeg's thriving alternative rock scene on the map.

572              This generation loves rock, but they don't find what they want on Winnipeg radio.

573              Over the past two years, the classic‑based alternative format has grown across Canada and in the United States, and is led by successful, classic‑based, alternative stations in Boston, Los Angeles, Philadelphia, Cincinnati, Kingston, and Calgary, where Newcap's Fuel 90.3 is experiencing solid growth.

574              Live 106.3 will derive its music from a number of sources and eras.  Fifteen percent will be classic alternative rock from the late seventies and eighties, with bands like The Clash, The Payola$, U2, The Ramones, The Police and Depeche Mode.

575              Alternative rock acts from the nineties will make up the biggest part of our playlist, at 50 percent.  This includes Nirvana, The Tragically Hip, Weezer, Our Lady Peace, Pearl Jam, The Matthew Good Band, and Stone Temple Pilots.

576              And alternative acts who emerged in the past eight years will make up about 15 percent of the playlist, including bands like Coldplay, The White Stripes, Three Days Grace, and Arcade Fire.

577              The remaining 20 percent of the music we will play will be new releases and emerging artists.  Many of the artists noted above are still making great music.  Every day there are new Canadian and international songs to profile.

578              There is also great music being made by Winnipeg artists like The Weakerthans, The Inward Eye, Hot Live Guys, Quinzy, Sick City and The Details.

579              The Winnipeg Alt Rock scene as many acts that will be natural fits for this station.  We have seen this same trend emerge in Ottawa where our alternative rock station, LiVE 88.5 has played over 100 Ottawa area artists over the past three years.

580              Alternative fans live and breathe new music.  They know the artists and their songs and they are constantly on the lookout for new trends and new bands.  We will meet this need with a full range of speciality programs and with a very active website.

581              On Live 106.3 we will take an aggressive interactive approach, as we do with our alternative rock station in Ottawa, LiVE 88.5, and our Calgary classic alternative station, Fuel 90.3.

582              Using our website, various social networking tools, SMS text messaging and many other aspects of new media we will become completely integrated with our active audience.

583              Here to speak about our CCD is Jen Traplin.

584              MS TRAPLIN:  Before I talk about our CCD initiatives I would like to describe some of the other ways in which we support the local music community and I will speak directly in terms of what we do in Ottawa.

585              LiVE 88.5 currently has a minimum of seven local bands in steady rotation through all day parts.  Each local act receives up to 15 radio spins a week on LiVE 88.5 as well as a heavy promotion for upcoming shows.

586              We also have a daily feature we call the Indie Spotlight which highlights other local musicians who otherwise wouldn't be receiving any radio promotion in Ottawa.  We also have created a strategic alliance with an Ottawa venue called the LiVE Lounge, a music venue in which we are responsible for booking talent and recording live shows.

587              When a band is scheduled to perform with the LiVE Lounge they receive at least two weeks of radio and web promotion, they are paid for each show and they take home recordings of their entire set free of charge.

588              In addition, in Ottawa our major CCD initiative is called the Big Money Shot, in Calgary, it is Big Rock Star.  In both cases working bands and solo musicians perform at music venues.  In Ottawa's case, at the LiVE Lounge, in front of a live audience and a panel of judges.

589              Annually 45 local bands compete in Ottawa and every year 15 of them win at least $5,000 or more.  In Calgary 25 bands compete annually with every single band walking away with at least $1,000.  All prize money in spending is approved by Newcap representatives to ensure the funds are used for the purpose of developing the careers of local musicians.  Funds awarded to the winners are used to provide what is needed for each specific band.

590              For instance, in Ottawa, St. Joe's Mission used some of their $50,000 prize money to develop a USB drive that delivers the latest band info, tour dates and new songs directly to their fans.  Currently, they are negotiating with representatives at Sony for the use of this technology for other Canadian artists.

591              They also recorded a new album with producer Russ Mackie who has worked with Alanis Morisette and Kim Mitchell and they have signed a contract with Indie label Bhurr Records.

592              After winning $40,000 in talent development funds, the members of The Prefect quit their day jobs to become fulltime working musicians.  Currently, they are recording full‑length album with Juno Award Winning producer Gavin Brown.  Gavin has worked with Billy Talent, Three Days Grace, Thornley and The Tea Party.

593              The money has also allowed them to hire one of the country's top radio trackers to work one of their singles in the next few weeks.

594              As well as the extensive support these winning bands receive from Newcap, we also provide them with great opportunities to showcase their talent with performances at HOPE Beach SummerFest in front of 30,000 people, and a Canadian music week where they perform in front of hundreds of industry reps.

595              We propose a Big Money Shot in Winnipeg as well.  Each year we will hold contests over a period of six months at local venues.  Our listeners will then choose the top 10 bands who will each receive $6,000 to advance their careers. The grand champion will receive $100,000 in talent development funds.

596              The band will also have airplay support from Newcap stations across the country, from St. John's to Halifax, Moncton, Fredericton, Ottawa, throughout Alberta and hopefully in Winnipeg.  We have committed $1.12 million over the term of the licence to the Winnipeg Big Money Shot.

597              In all, we propose to contribute $2.8 million for the term of the licence to CCD over and above the basic amount here in Winnipeg.

598              Simone.

599              MS GILLIES:  Before I begin to discuss some of the proposed news components on LiVE FM, I would like to explain how our newsrooms currently operate and in detail how LiVE 106.3 will contribute to create news programming and will provide a fresh alternative to other local news providers.

600              Within our existing stations we have two distinct newsrooms in operation.  Mr. Bob Harris and I worked to produce news on Hank FM providing primarily local news with some reporting on national and international issues.

601              Now, at CKGS we broadcast in several languages other than English.  Filipino director Lito Taruk plays the largest role in CKJS's news programming.  His primary focus for the station is providing relevant news to Winnipeg's almost 40,000 person‑strong Filipino community.

602              However, because of the diversity of the remaining ethnic programming on CKJS, we essentially have 17 other people working in the news department.  They cater to the distinct cultural and ethnic groups in Winnipeg providing not only local content, but community news and information regarding their respective homelands.

603              With Live 106.3's news staff we will employ a news team of five journalists and several stringers.  This gives us the opportunity to better provide coverage of local, provincial and international news.

604              While each station will continue to have its own focus, our capabilities to gather news will be greatly expanded allowing us more overall coverage off issues and more depth in reporting.  News staff will have the ability to tap into existing station resources and ensure a continued connection and sensitivity to the diverse nature of our city.

605              With LiVE's larger news team we will have time to spend in the community provide live in‑person interviews and instant feedback.  As well, by operating 24 hours a day we will have the opportunity to have constant feedback from our audience through text messaging, email and phone.

606              LiVE FM will provide seven hours of newscasts a week with a total of 94 newscasts. The station will provide news in the evenings, Monday to Friday, as well as throughout the day on the weekend with full newscasts at times that many stations either don't have news or are reliant on broadcast news.  In contrast, our news team will be constantly active with 75 per cent of the news we broadcast being locally focused.

607              In addition, we also plan a full range of services to the community throughout the day and evening.  In fact, each night at midnight we are going to offer a special feature, Arrive Home Safe, with information, advice and, most importantly, discounted fares home from Winnipeg clubs, concert halls and other venues.

608              We also offer a unique interactive program we are calling Realtime.  Every Saturday night we will invite listeners to takeover the radio station, talking to us about topics and issues that concern them.  In all, we will provide over 20 hours of spoken word each week.

609              MR. MURRAY:  At the beginning of this presentation Randy mentioned that the fastest growing segment of Winnipeg's population is Aboriginal people.  And Aboriginal youth make up an ever increasing part of this growth, yet there is little reflection of this presence in radio and television, other than on NCI's station.

610              Part of the problem is that we do not have trained staff that can step into jobs in our industry.  For this reason, we propose an annual contribution of $160,000 over a seven‑year licence term.  That money will be used to fund Aboriginal students to follow a two‑year course in broadcasting journalism at Red River College.  We expect that this will support the development of over 50 new young journalists for our industry.

611              As Rob mentioned at the outset, Winnipeg is an important market for Newcap.  We have invested here by acquiring two stations with difficult mandates an ethnic station and a niche speciality service.  We knew going in that we faced a challenge.  We invested in improvements in our technical plant, in our radio facilities and we have expanded service with more service to more ethnic groups and in better programming on Hank FM.  We are ready to devote additional investments in the market.

612              We have examined the market both through analysis of tuning trends and through ongoing surveys using two different research companies.  The conclusion is clear to us, the underserved audience in the market is the 18 to 44 group and particularly 18 to 34.  Within this group tuning by men has fallen significantly.

613              The clear need is for an alternative format that appeals to this group.  And the best format to reach them is a combination of classic alternative and local emerging alternative artists.  We will provide a new music alternative that Winnipeg wants.

614              With three new journalists supported by stringers we will provide a reinforced newsroom with newscasts throughout the day, evenings and weekends.  We are particularly proud of our CCD initiatives that are double the amount proposed by the next closest applicant.  And we are not merely throwing money, but taking an active role to develop both new alternative rock acts with a program that will make a difference in the careers of hundreds of Winnipeg artists and to develop over 50 Aboriginal journalists over the course of the licence term.

615              Newcap knows the Winnipeg market well.  Our AM station, CKJS, serves 18 different ethnic groups every week and we have a good understanding of the concerns of over 20 per cent of the community whose mother tongue is other than English or French.  We believe that we can marry that knowledge with our expertise in providing rock formats across Canada to ensure an excellent station that can reflect the diverse makeup of the City.

616              We would be pleased to reply to your questions.

617              THE CHAIRPERSON:  Thank you very much.

618              Commissioner Menzies is going to lead on this application.

619              COMMISSIONER MENZIES:  Thank you. You mentioned $1 million capital investment that you would make if this application was successful. What would that $1 million build, what would it look like?  It is a capital investment, not an operating investment, right?

620              MR. MURRAY:  Well, most of the money would go towards the technical plant itself, the transmitter and the facilities around that.  We, of course, would need a lot of new studio equipment as well and we are also anticipating that we would have to move from our existing location to new studio facilities.

621              COMMISSIONER MENZIES:  Okay, thank you.  In your research, I know it is a pretty narrow difference, but the research you filed with us said your format had good appeal in the 35 to 44 crowd.  But then you downplayed them in your primary target zone, went with the younger group, I think it was about a 1 per cent difference between the older group and the younger.  And I want to know why you went with basically your one and three, your first and third place audiences, and moved the second down as a lower priority?

622              The reason I am asking is because it is helpful in determining impact on CJKR and CITI.

623              MR. MURRAY:  Right.  I think I will ask Steve Jones to answer that question.  Thank you.

624              MR. JONES:  The alternative format traditionally has its strongest appeal, 18‑34.  It does reach higher than that, it does go up to 44, there is a significant 35‑44 component, especially as that generation we spoke of, that generation that was forming musical taste around the time that the Seattle grunge explosion happened, that group of people is now almost 40.

625              And so there is a significant amount of tuning in that older demographic.  But the core of the format I think remains 18‑34 and that is why we speak probably more about that demographic than we do about the 35‑44.

626              I can address the specific overlap and how that might impact City or Power.  And Power is a unique radio station.  It is a very successful radio station that manages to cover a lot of  different territory from new alternative rock to Eric Clapton's Cocaine and Led Zeplin and AC/DC and it marries all those together in one radio station.  Traditionally, that is a difficult task, but they manage to do it very well.

627              But because they are so broad they are not devoting a lot of their playlist to the classic alternative and new alternative music that we would be playing.  There is some cross‑appeal between classic rock and new rock and they manage to do it, but there definitely is an opportunity for a radio station here focusing strictly on the alternative music and not playing any of the traditional classic rock acts, like the Led Zeplins and AC/DCs and Pink Floyds and Aerosmiths.

628              And our crossover with Power would likely be about 30‑40 per cent and that would be primarily in the new music, the new artists.

629              With City, the crossover is maybe about 5 per cent maximum, it is very small and that is because our format would focus almost exclusively on music from 1990 and newer.  There is only a small component of our music that is pre‑1990.

630              City, being a classic rock station, is based heavily in the 1970s and 1980s, plays a lot of classic rock by bands like Zeplin and Aerosmith and Pink Floyd and other ones we have mentioned.  They only touch on the grunge era and hardly pay any homage to that kind of music and that is because it just doesn't fit their format perfectly.  So the crossover with City would be about 5 per cent and that would be primarily in the Police, REM and the Clash and that kind of thing.

631              COMMISSIONER MENZIES:  Okay, so 5 per cent on City and you said 30‑40 per cent on Power?

632              MR. JONES:  Yes, about that.

633              COMMISSIONER MENZIES:  That is a pretty high percentage.  Can you help us as to how that qualifies as diversity?

634              MR. JONES:  It is a fairly high percentage, but what we are focused on ‑‑ and, sorry, that high percentage is based primarily on that newer music that they are playing.  We are focused exclusively on alternative rock and almost exclusively on classic alternative rock.  And a lot of that classic alternative rock isn't being played consistently on Power.

635              There is a large chunk of music that is not being exposed.  They are playing songs by Nirvana.  But playing Smells Like Team Spirit or Come As You Are is pretty standard at rock radio.  But going deeper into the Nirvana catalogue, going deeper into the Pearl Jam catalogue and other bands like that, that doesn't happen on those radio stations.

636              There is a significant diverse component to what we are offering here and 70 per cent is a fairly significant number.

637              COMMISSIONER MENZIES:  You mentioned in your presentation your radio's application in terms of similarities along those lines.  Do you have similar percentages where you could breakdown in terms of similarity and differences between them?

638              MR. JONES:  Yes.

639              COMMISSIONER MENZIES:  We need to get an understanding of how you are the same as them and how you are different from them and vice versa.

640              MR. JONES:  Absolutely.  It is difficult, because in the application we put forward a three‑hour sample playlist.  And to take two‑three hour snap shots and compare them for exact overlap probably isn't fair.

641              What we did do is looked at the three‑hour sample playlist they provided and the actual playlist on our classic alternative station CFUL in Calgary and compared.  And about 62 per cent of the songs on the YO group's application were being played on our classic alternative.  And those were, again, mainly bands like Pearl Jam and Weezer, Blink‑182, The Cult and Beck.

642              What was substantially different is that the YO application takes a different turn and combines components of hip hop and rap, and I am sure they will have a better grasp on exactly what that entails.  But that is the kind of music that we would simply not focus on.  Exclusively on alternative music.  We don't see the correlation as strong between those two kinds of music.

643              COMMISSIONER MENZIES:  Okay, thank you.  I have a series of specific questions here. You have been pretty good, actually, at answering a couple of my question with one answer so far.  But these next ones, just try to keep reasonably specific on or we will be here all morning. Actually, we have already been here all morning.

644              Now, you have outlined a fairly sharp philosophy for programming.  But this is where we need some specifics on how it applies.  For instance, how will your content be designed to reflect the tastes of an audience that subscribe to an extreme lifestyle?

645              MR. JONES:  Well, the lifestyle is hardly extreme by their standards.  I think it is what you measure it against.

646              COMMISSIONER MENZIES:  But it is the marketing name for it.

647              MR. JONES:  Right.  So how will we reflect that?

648              COMMISSIONER MENZIES:  Yes.

649              MR. JONES:  Our programming on all our stations, again I will keep it brief, reflects the audience thereafter.  The country music audience demands a certain kind of approach and we taken that approach on our country stations to be successful.

650              So with a station like this, in Ottawa for example, we do a lot of promotion that appeal to that kind of listener.  In fact, our motto in Ottawa is "live for the moment" is "live for today."

651              And one of our most successful promotions there is a flyaway promotion called 24 Hours in Vegas where we take a planeload of listeners and we fly to Las Vegas and we don't provide hotel room.  You have 24 hours to live for the moment in Las Vegas and fly home the next day, and accomplish what you can while you are there.

652              It is the kind of for better or for worse, right?

‑‑‑ Laughter / Rires

653              MR. JONES:  And I can't talk about it, because apparently what happens there stays there.

654              COMMISSIONER MENZIES:  Of course.

655              MR. JONES:  But other promotions like that that involve ‑‑

656              COMMISSIONER MENZIES:  Let me be more specific.  How would it influence news, sports, entertainment, surveillance packages, lifestyle, health and education fillers, that sort of thing?

657              MR. JONES:  Really, it influences everything we do.  We have to put everything we do through that filter.  So while the news stories on Hank FM may focus one direction, the news stories on this station would focus on another.

658              And maybe, Simone, you are best qualified to answer that question.

659              MS GILLIES:  Yes.  We are looking at having our news be different from other stations by providing news that targets and identifies with our target demographic, which is a younger demographic.

660              News being reported on other stations, however, it is not necessarily ‑‑ the news now is not necessarily reflecting the interests of this younger demographic.  For instance, if you were looking at gang violence in the city it affects everybody, it affects young and old.

661              But our demographic might be more interested in knowing who gang violence is affecting people in clubs or whether they are going to go downtown, in the downtown area, rather than how it is affecting, you know, a homeowner in St. Vital.

662              COMMISSIONER MENZIES:  Are there any specific challenges that building your content around this type of audience ‑‑ are there any specific challenges you face by doing that?

663              MR. JONES:  I don't think the challenges in this demographic are any different than they are in ‑‑ they are different challenges, they are no more difficult than they are with any other demographic.  You put yourself in that mindset, you have a keen understanding of who you are speaking to and a keen understanding of the issues that affect them locally and you go forward with that in mind.  And the challenges are there, but they are no more difficult to overcome than they would be for any other specific.

664              COMMISSIONER MENZIES:  Okay. If you are trying to build something edgy that means you get toward the edge on things.  So what sort of safeguards do you have in place to make sure you don't fall over the edge?

665              MR. JONES:  Well, it goes back to educating your staff, to understand what the target of the radio station is and what the mission of the station is.  You know, with on‑air interaction it would involve recording listeners who call in and not taking live calls, you know, on the air.  And it really does go back to understanding your audience and understanding your market.

666              COMMISSIONER MENZIES:  So your interactive content won't be live?

667              MR. JONES:  I am saying if someone calls into the radio station to request a song you would probably record that call and play it back in between two songs as opposed to taking that call live on the air.

668              COMMISSIONER MENZIES:  Okay.  And you are going to use online content on the air as well?

669              MR. JONES:  Absolutely, online content is completely integrated with a radio station like this, yes.

670              COMMISSIONER MENZIES:  Is there anything traditional about your newsgathering format or is it non‑traditional?

671              MS GILLIES:  We are going to be using text messaging, online, email, all the latest technologies that are, you know, kind of a platform for the generation and the target demographic for the station.  So we are hoping to get response and feedback from our listeners and make them a part, give them a voice, make this forum for them to discuss topics.

672              It will be traditional newsgathering.  We will be adding three fulltime reporters.  We are going to use Hank FM's ‑‑ myself and Bob Harris as well, to create a five‑person new steam with a news director sending us out, going out and reporting on different stories, assigning stories.  And then we will come back, reconvene and split the news essentially between the two stations for what is appropriate for each station.

673              Obviously, people how are listening to Pearl Jam and Depeche Mode will have a different interest than people who are listening to Hank Williams Jr. and Carrie Underwood.

674              COMMISSIONER MENZIES:  Okay, thank you.  Can you explain the transition of your scholarship program, how it was originally in your written application and then in your clarification response it went from 20 students to 8, for instance.

675              MR. MURRAY:  Yes.  I am going to ask Glenda Spenrath to answer that question.

676              MS SPENRATH:  Yes.  When we initially put the application together and we contacted the college we came out with a general amount that would be, you know, appropriate and serve their purposes and fulfil their needs.

677              When we returned later to flesh out the details of how we could precisely put the scholarships together, it was felt that ‑‑ and in discussions with the dean of that college as well as other Aboriginal industry people that I discussed ‑‑ that providing these scholarships alone would not help these students to get through the program.  It was more another challenge that they have as being able to afford to leave home to move into Winnipeg to take the classes.

678              So it was felt that more of a full scholarship would enable the students to enter and continue through and finish the program.  So in that regard we decided to reduce the number of scholarships to provide larger scholarships to make it a full coverage for the students.  And again, this was in consultation with the people from Red River College.

679              COMMISSIONER MENZIES:  Okay, thank you.  Are those one‑year or two‑year scholarships? Are the students supported, once they are selected, are they supported for one year and then have to reapply for a second year or when they are accepted do they get pushed right through?

680              MS SPENRATH:  They would be one‑year scholarships, but they would be open to either entering students or returning students.

681              COMMISSIONER MENZIES:  Okay.  And how is the funding administered and how are the recipients selected?  Who is going to do that?

682              MS SPENRATH:  On the second part of your question, on how the recipients will be selected, that will be something that we will discuss with the college, but it would be the college representatives that would do the selecting, because they understand the requirements of the program and the criteria as far as the administration of the scholarship goes.

683              The details haven't been finalized.  It would be myself dealing with the college on that.  I envision that probably I would recommend setting up a trust account because it is a very large amount when you take a look at the term of the licence.  We are talking about $1.12 million going towards these Aboriginal students, so it is substantial.  And so I think if we had a trust account set up that, between ourselves and the college, that we administer and disperse the funds throughout the program.

684              COMMISSIONER MENZIES:  Okay, so you would just send the college the money and then the students would apply to the college and..?

685              MS SPENRATH:  Well, we would be putting money into the account and the students would apply.  The college would consult us and advise us as to who the candidates are.  I mean, I need to know that all of the expenditures are qualifying.

686              COMMISSIONER MENZIES:  Right.

687              MS SPENRATH:  And so we would have the student submit a budge and review the budget in advance so that we have an opportunity to make sure that they are going to be qualifying expenses.

688              And then typically the expending of the funds would be direct to ‑‑ primarily, as much as we can ‑‑ direct to the supplier, whether that be the college for the tuition, whether that be to the college for the room and board of the dormitory or whether it be for rent or for laptop or any other books or equipment, as much as possible our expenditures would be to the supplier from the account.

689              And we would keep track, per student, on the expenditures so that we know that we have reached the total individual scholarship amount.  And then there would also be a per diem living allowance as well.

690              COMMISSIONER MENZIES:  Okay, thank you.  If your application was successful, would you accept this over and above program as a condition of licence?

691              MS SPENRATH:  I am not sure if I understand the question.

692              COMMISSIONER MENZIES:  Would you accept having your dedication to this program being written in as a condition of licence?

693              MS SPENRATH:  If it counts as qualifying CCD, yes.

694              COMMISSIONER MENZIES:  Thank you. You touched on this a little bit, but it is a pretty health city in terms of steady economic growth, but not sort of a universally vibrant advertising market.  What convinces you that your impact on Power and City will be as small as you predict?  I think it was one point that you predicted on each of them.

695              MR. MURRAY:  You talking about 1 per cent audience or I don't quite understand.

696              COMMISSIONER MENZIES:  I think that is what I have, just let me check.  Yes, you have ‑‑ yes, audience share.

697              MR. MURRAY:  Steve.

698              COMMISSIONER MENZIES:  You have City at 12.5 share before launch and 11.5 after.

699              MR. JONES:  Yes.  We impact City I think rather minimally.  City's a classic rock radio station rooted in the 1970s and 1980s, the music is based on heritage artists like Rush and Led Zeplin and Pink Floyd and Aerosmith and our listeners really are looking for a different sound than that.  So the impact, although they are rock stations, the impact is relatively small.

700              And the impact on Power, again, Power as I mentioned earlier is a very very broad radio station and, you know, they are able to be that because they don't have any kind of competition for that audience.  They will need to focus their radio station if there is another competitor licensed in this market.

701              And so our impact ‑‑ they will be able to maintain a strong audience, a very healthy share.  At the same time we will, we believe, you know, gain a fairly reasonable share as well.

702              COMMISSIONER MENZIES:  But if you have got a 30‑40 per cent crossover in playlists ‑‑

703              MR. JONES:  I prefer to think of it as a 60‑70 per cent unique playlist, but...

704              COMMISSIONER MENZIES:  Well, just help me understand how you arrived at the two points for Power.  I can understand one point, with the 5 per cent crossover with City, I just need to understand more about how you come to two points with the 30‑40 per cent crossover.

705              MR. JONES:  Right.  And I think the best answer I can give you on that is that they focus their radio station and they will maintain a strong audience.  They are a heritage radio station with far more elements going for it than just music.  A radio station needs a lot more than just a music playlist to be successful.  So they will continue to be a very strong radio station after we launch.

706              COMMISSIONER MENZIES:  Okay, thank you.  In terms of advertising, according to the TRAM report, radio advertising in Winnipeg has fallen.  Can you explain that?  Is it a negative bubble or is it a trend?

707              MR. MURRAY:  I think it is clearly just a trend.  Now, if you look at the last five years it has grown by I think 5 per cent per year, so quite often you see the ups and downs in markets.  And, you know, Montreal is down as well and I think Ottawa has minimal growth, you know, and that growth moves around the country, you know, from time to time.  So I would say it is just a trend.

708              COMMISSIONER MENZIES:  I suppose you wouldn't be here if you thought otherwise.

709              MR. MURRAY:  Well, no.  I think the answer to that question is we would be here anyway.

‑‑‑ Laughter / Rires

710              MR. MURRAY:  We certainly believe in the long‑term potential of Winnipeg.  You know, you have 700,000 people, you have the $8.5 billion in retail sales and projected to grow 21 per cent. So, you know, Winnipeg is going to be very healthy and a great market to do business in.

711              COMMISSIONER MENZIES:  Would your business plan stand up if we licensed say, as indicated in the previous conversation, handed out two new licences plus a Native Type B or is your business plan built on a different expectation?

712              MR. MURRAY:  Right.  Our business plan, it assumes you would probably licence two.  We were aware of a couple of frequencies being available.  I would like just to say a little bit about those frequencies though.

713              Like the question of frequencies is an important one and, you know, 106.3 is a C class, full‑power frequency, it would provide full coverage to basically everybody in the coverage area.  And 104.7 is an option, that it is limited in power and height and would not necessarily provide reliable coverage to everyone in Winnipeg.

714              We have experience right now operating Hank FM on a low‑power frequency and, you know, we felt that we have suffered on revenue growth on that basis.  So 104.7, rather than 106.3, could dramatically affect our business plan.  I think we have said that in our deficiency.

715              But if you are asking sort of how many ‑‑ you know, are we comfortable that two licences could be approved ‑‑ like you said, Winnipeg is a bit of a mysterious market in that, you know, 700,000 people, retail sales of $8.5 billion, and with only $35 million in radio revenue it is certainly much lower per capita than other cities that we operate in like Edmonton and Calgary, Edmonton with $82 million, Calgary with $96 million.  You know, we are not quite sure why this is, but it is real and it is also supported low impeded margins.

716              So when you look at the financial results for the market ‑‑ having said this, Newcap believes that in the long‑term the market can sustain two new licences.  However, what the statistics might be suggesting is that you should be careful in licensing independent operators.

717              In 2002 the Commission licensed two independent operators for Winnipeg, one of them was CKVN‑FM and it struggled significantly. Eventually, we purchased that station and it became Hank FM.  And, as I suggested, we are still struggling with that.

718              But we have approval now to increase its power, the speciality licence is still a little bit of a challenge but, you know, we are committed to continuing to provide service, you know, just like we did in Newfoundland and Charlottetown where we lost millions of dollars for many years, we stuck with it until we found a solution and kept going.

719              The second licence that was approved in 2002 to an independent operator was a smooth jazz licence licensed to the Asper Family. And even with the synergies and power of Canwest Global they also struggled financially and ended up selling that to Corus in 2007.  Newcap was also in on the bidding for that station so, you know, we are aware of what their financials were.

720              So in summary, we believe that our application is the best use of 106.3.  And with the synergies, you know, provided by two existing stations in Winnipeg and also the support of a national radio company, listeners will be well served for many years.

721              COMMISSIONER MENZIES:  I kind of served you a fat pitch there, didn't I?

722              MR. MURRAY:  Thank you.

‑‑‑ Laughter / Rires

723              MR. MURRAY:  Did that seem contrived?

724              COMMISSIONER MENZIES:  Just to clarify.  What percentage do you see being shaved off your business plan if 104 was the only one available?

725              MR. MURRAY:  Twenty to 30 per cent.

726              COMMISSIONER MENZIES:  Okay.  And just on independent, I mean, did you have anything to support that beyond just these two incidents?  I mean, it could be argued that the format on the smooth jazz was the issue, not independent local ownership.  I mean, independent local ownership, one would think, would have its appeals in some areas, it would have its plusses, maybe it has its minuses, but it would have its plusses too.

727              What I need is maybe a little bit more to go on than just these two local incidents. Is it a trend across the country that you are trying to point us to or..?

728              MR. MURRAY:  No, not at all.  I think what I am suggesting is that Winnipeg, you know, with 20 some radio stations, 700,000 people and only $35 million in revenue just seems very odd to us.

729              We don't know, you know, we can't really tell you why that is but, you know, we do see, you know, Calgary growing sometimes at double digit rates and everything growing rapidly.  Vancouver and Toronto and Montreal and Ottawa, Winnipeg just seems to be very slow to grow.

730              Now, like I say, we strongly believe in Winnipeg and we know we can do a good job for listeners here, but we are just throwing that caution up.  We also recognize that, you know, diversity and ownership is something that the Commission values.  So that is ‑‑

731              COMMISSIONER MENZIES:  Okay, but is it just that all the bigger companies can easily gang up on a small independent or is there something else ‑‑ some hard data reason for it, or is it just that's been the experience in Winnipeg?

732              MR. MURRAY:  Yeah, I think, I don't know.  Perhaps Randy could talk a little bit about, you know, the competition that he's feeling in Winnipeg in that regard, but there's nothing that we can put our ‑‑ we don't have any research or statistics that would tell us exactly why that exists.

733              COMMISSIONER MENZIES:  Okay, that's good enough.  That's what I needed.

734              What would you do ‑‑ well, let me skip to this.  Your programming expenses are higher than YO's but several points lower than Evanov's, I think 1.25‑million over seven years.

735              What explains the difference in that area.

736              MR. MURRAY:  I think I'll hand this to Glenda to talk about how our programming is built.  I don't think we can comment too much, we don't have a lot of detail on the other applicants other than just the raw numbers.

737              COMMISSIONER MENZIES:  Yeah.

738              MR. MURRAY:  So, you know, we know we've invested significantly in programming in this market and, Glenda, perhaps you could give some of the details of that.

739              MS SPENRATH:  Yes.  I can't speak to how Evanov's numbers were derived, however I do know that our numbers are based on our experience, not only with our stations here in Winnipeg, but with all of our stations, we know that it takes a certain number of people to operate a programming department.  We're looking in this case at a staff of 14 in total, three in the news, nine in programming and then part time as well, so the equivalent of 14.

740              And, in addition, there's all the other trappings that go with the programming department, yeah, having the vehicles, the promotion, you know, having some of the programming features that we may purchase from time to time.

741              So, I mean for ours it was more based on our experience in operating our stations and the salaries and the people that are involved in that.

742              COMMISSIONER MENZIES:  Okay.  And just wanted to ask, when you said in your presentation that in Ottawa LIVE 88.5 has played over a hundred Ottawa area artists over the past three years, then you went on to talk about sort of how much play.

743              In that instance in Ottawa, is that part of your CCD initiative?

744              MS TRAPLIN:  Absolutely.  It is part of the CCD initiative, it's part of the ‑‑ the overall package that these winning bands in the Big Money Shot will receive.

745              They're guaranteed radio play not only in Ottawa, but on other Newcap stations as well.

746              And it's also not just the competing bands, it's local bands that we have booked for shows at the Live Lounge, the venue which we promote and we help operate.

747              So, we've had ‑‑ in the past we've been running the Big Money Shot, we're in our third year now, so already we've seen just under a hundred competitors and on top of that have had a dozen more local bands who have not been in the competition as of yet who are also receiving radio air play based on the shows that we book for them.

748              COMMISSIONER MENZIES:  Okay.  And who's going to be the next big hit band out of Winnipeg?

749              MS TRAPLIN:  Out of Winnipeg?

750              COMMISSIONER MENZIES:  Yeah.

751              MS TRAPLIN:  Hard to say.

752              MR. JONES:  There are a lot of really good candidates.  Winnipeg has a great rock scene.  There's a band called The Mission Light.  We mentioned in our opening statement a variety of live bands.  The Quinzy, the Hot Live Guys.

753              There's a great alternative rock scene here and I think that if we're licensed, we'll help you catalyst to ‑‑ Winnipeg's an amazing town, and not to buy up more time.

754              COMMISSIONER MENZIES:  It's got a great tradition for that.  I'm wondering who the next big one would be.

755              MR. JONES:  It's an incredible city for creating new music.

756              COMMISSIONER MENZIES:  According to Ron Evans, 25 per cent of Manitoba's youth population under 15 is Aboriginal.

757              Now, you spoke about some of your commitment and the Aboriginal student's fund in journalism at Red River College.

758              Do you see these students becoming part of your staff down the road and have you created any internship opportunities for them as part of this?

759              MR. MURRAY:  Yes, we certainly hope that they will become part of our staff and an intern program will be part of our initiative.

760              COMMISSIONER MENZIES:  Okay.  How do you see that demographic trend forming your programming and your business plan in the years to come?

761              MR. JONES:  I think as far as our programming goes, it's important as we started out with in this line of questioning earlier which is that you recognize who your audience is and who your community is and how to reach them.

762              The issues that that growing group of people are faced with and how those issues impact the rest of the community would certainly impact our programming as far as our news selection, as far as the kind of stories we're able to talk about.

763              The challenges or problems they face, if there's things we can do as a radio station to be involved in various solutions to those problems and challenges.  There's a lot we can do from a content point of view, from a publicity point of view, from a public service point of view to help communicate with that group of listeners.

764              As far as our business plan, I don't know if I can comment on that.

765              MR. BRODERICK:  I think just as an example one of the best prediction of future behaviour is past behaviour.

766              In Ottawa we have access to just a wonderful asset in terms of the students at Algonquin College in the broadcast program there,and so ‑‑ and whether this is popular thinking or not, I mean, rather than have internships, we prefer to pay them.

767              So, our street team, so while they're going to school they work part time for the radio station.  We give them training.  Some of them actually will host programs while going to school, usually late at night, we don't give them a morning show right out of the gate.

768              But I think we've had a lot of success, and then we place those people in other Newcap stations.  We just placed a producer in Thunder Bay.  There's a young man working here in Winnipeg that came through that program.  We just placed here with Hank FM.

769              So, we've had a lot of success doing that, not as much as an internship, but actual paid work while going to school.

770              COMMISSIONER MENZIES:  But I assumed that there would be some pay with the internship.

771              MR. BRODERICK:  Generally, no.

772              COMMISSIONER MENZIES:  But is that part of your ‑‑ okay.  At least we cleared that up.

773              So, would you ‑‑ let me put it this way.  Would you see those students working part time for your station and eventually full time, in terms of it's one thing to plant the seed and it's another thing to reap the harvest, right.

774              And I'm assuming that you're going to be doing that.  But, if you're not, let me know.

775              MR. SKULSKY:  Recently we just had an intern from Red River College come and work with us in the past three months in the sales department, promotions, in creative.

776              We've gone back to him because we now have a sales position available and asked him if he would be interested in applying because we found that he would be a valuable asset to our team.

777              So, from the internship we now see that we can bring him into the sales department.

778              COMMISSIONER MENZIES:  Do you see that, like that demographic trend being reflected in your staffing, say 10 years from now?

779              MR. SKULSKY:  Yes, I believe we would continue to do that.

780              COMMISSIONER MENZIES:  I'm not asking for a sort of condition of licence, I'm just trying to get a sense of your ability to adapt to the community's needs.

781              MR. SKULSKY:  Absolutely.  Presently we have three Aboriginal people on our staff, so if the need is there, is the opportunity is there, absolutely we will.

782              COMMISSIONER MENZIES:  Sorry, how big is your staff?

783              MR. SKULSKY:  We have 30 full time.  We have an additional 20 part time, and then we have our ethnic producers which are a volunteer base.

784              So, we have, if you put them all together, a staff of around 76 for both radio stations.

785              COMMISSIONER MENZIES:  Okay, thank you.  That concludes my questions.

786              THE CHAIRPERSON:  Thank you.

787              Commissioner Patrone.

788              COMMISSIONER PATRONE:  Thank you, Mr. Chair.

789              Good afternoon.

790              I want to start with an economic question.  You spoke about being slightly perplexed about the relatively modest growth of the ad market in Winnipeg relative to other markets.

791              What has your research found about being able to derive advertising revenue from the targeted demographic that listens to this particular type of format.

792              MR. MURRAY:  I think I'm going to start, ask Glenda Spenrath to start the answer to, you know, where our revenues coming from sort of thing, and then Randy will, you know, add some colour to that as well.

793              MS SPENRATH:  I guess from, you know, the pure mechanical point of view when we take a look at what kind of revenues we could possibly generate out of a market we start first, I guess, with a bottom‑up approach.  We take a look at what inventory we have available to us, what our experience has been in launching stations as far as what we could realistically ‑‑ the volume that we could sell in our initial years.

794              And from there discussing with the general manager in this market, for example, discussing with ‑‑ what an appropriate rate would be, given that we have no ratings and given that, you know, that it is an entry level station.

795              From there, you know, the math tells us that we can ‑‑ we can reasonably expect to maybe $1.9‑million in revenue.

796              From that again we take a top‑down approach afterwards where we would take a look at other market indicators.  Retail sales for example in this market are $8.5‑billion in 2008, I think 9.2 is expected in 2009.

797              So, that would give us, based on industry standards and what happens, a certain portion would be ‑‑ would naturally go to the radio market from that.

798              Based on the market research we've done, we expect to get, you know, a five, six market share which again would give us a certain portion of the pie.

799              Both of these happen to bring us to the same point which is always good.

800              From there we look for other corroborating sources of information.  We look at like  the Conference Board of Canada, they tell us that the revenues should grow ‑‑ the retail market should grow over the next five years in this market by approximately five per cent per year.

801              If you look at where the retail sales are now, the incremental growth alone would give another half billion dollars in revenues to this market.

802              And our share of that, based on historical trends in radio, would been that there's available another $1.8‑million for radio advertising.

803              As far as how we go and make ‑‑ how we expect to generate that considering that our audience is 18 to 34, which I think is really your question there.

804              COMMISSIONER PATRONE:  Mm‑hmm.

805              MS SPENRATH:  I'll maybe have Scott speak to that aspect.

806              MR. BRODERICK:  I think that really was what you were asking, right, it wasn't the amount ‑‑

807              COMMISSIONER PATRONE:  It was, yes.  Go ahead.

808              MR. BRODERICK:  It was specifically that demographic.

809              COMMISSIONER PATRONE:  Yes.

810              MR. BRODERICK:  And I think that we have some experience selling this demographic.  Both of our stations in Ottawa are youth targeted, one is a CHR station, one is an alternative and we've gone from almost ‑‑ well, zero revenue in five years to close to $10‑million this year.

811              And the story that we tell is really ‑‑ because people say, oh they have no money.  Why would I advertise with you, they have no money.  And our answer is, that's because they spent it.

812              But the good news is they get paid this Friday and they will spend it again.

813              And, so, it's really knowing which advertisers to talk to because these people do have money and they spend it and, in fact, it's the first generation that has negative savings, minus three per cent savings.

814              And, you know, they're not afraid of debt whatsoever.  So, they are a more attractive group than first glance would provide.

815              COMMISSIONER PATRONE:  You spoke a little bit about realizing some synergies between your other properties.

816              Can you talk a little bit about those savings, how you intend to realize those savings and would it be possible for you to re‑invest any savings back into programming?

817              MS SPENRATH:  We do experience synergies.  The synergies are typically in the areas of the technical and administration, not so much sales because sales is variable.  At this point in time I think we're probably re‑investing all of those synergies into our existing stations based on their results today.

818              But the synergies that we would expect to enjoy have been built into schedule 7.1 and 7.2 already.

819              COMMISSIONER PATRONE:  Will there be any back and forth interchange of reporters as far as the news team is concerned?

820              MS GILLIES:  Yes.  We are planning on hiring three more that would make three plus Bob Harris and myself.  We're going to split the responsibilities for going out and collecting news between the five, come back and spend time discussing which report would applicable for either station.

821              It just gives us more resources at this time, there are just two of us there.  It doesn't give us enough opportunity to get out and collect stories as much as I would like to.

822              I'm a recent graduate of the creative communications program, so I certainly would love to get out.

823              COMMISSIONER PATRONE:  So, they're filing to all radio stations, all Newcap stations?

824              MS GILLIES:  Well, we file within the three.  The two FM stations and, as well, if there were international stories or stories within the ethnic community that are being reported on CKGS, certainly those would be made available to the two FM stations as well.

825              COMMISSIONER PATRONE:  And would Newcap stations outside the region also have access to those items, assuming there was some national interest?

826              MR. MURRAY:  Yes.  I think you've heard us say at other hearings that, you know, all of our stations use KLZ News System, so we ‑‑ all of our stories are posted on somewhat of a bulletin board on the Intranet and all of our stations across the country have access to them.

827              Now, radio being a very locally focused business ‑‑

828              COMMISSIONER PATRONE:  Mm‑hmm.

829              MR. MURRAY:  ‑‑ you know, we're not sharing a whole lot of stories on the local side, but if somebody has a particular interest or spin on a national or international story, then that would be available to all of our stations.

830              COMMISSIONER PATRONE:  Right.  So, if there was a story in Winnipeg that had an impact on someone in Halifax, then...

831              MR. MURRAY:  Absolutely.

832              COMMISSIONER PATRONE:  Q104 could access that story.

833              MR. MURRAY:  That's right.  And our news people would ‑‑ you know, are well aware of, you know, where we are in our station.

834              So, if they see that, they would also contact Halifax and say, you know, we've got this great story that we know you're going to be interested in.

835              COMMISSIONER PATRONE:  I'd like you to tell me a little more about the Aboriginal journalism program.

836              Was Newcap in contact with the Aboriginal population in regard to developing this program?  How did that come about?

837              MS SPENRATH:  Well, I have been in contact with a fellow from the National Aboriginal Recording Industry Association and I basically, unsolicited, I just gave him a call and asked, you know, what it is that is needed, you know, please tell me.

838              And we had a good conversation and what came out of the conversation was that we need an opportunity to help ourselves and to be able to just throw money at us and without training, it does nothing for us.

839              And, so it come out of basically my discussions with him, with Curtis and they said, you know, like if we can get to the point where we can start training our own people, that would be fantastic, but first of all we need to get the initial people trained.

840              Another discussion that we have had with some of our Thunder Bay people is that we've had a couple of organizations ask if they could come and have their people job shadow and just come and learn about our practices and our jobs from just coming in and watching.

841              COMMISSIONER PATRONE:  That was my next question as to whether or not Newcap will be able to apply a more hands‑on approach apart from funding a program like this as far as incorporating Aboriginal journalists, young journalists into their news operations.

842              MS SPENRATH:  Yes, and it's something we've been doing for quite some time in other areas.  Like I think over to Alberta where I live and we routinely have people in from the Aboriginal communities to job shadow.

843              We also bring schools in, Aboriginal schools in for tours and we sit down and have discussions with them about careers in broadcasting.

844              MR. BRODERICK:  If I could just add further to Commissioner Menzies' question, I think they relate, which is we're going to have to compete for these people, like I said, because I think that they're going to be sought after.  I mean, they'll be young talented people with a great education, graduating.  We compete with all the other broadcasters.

845              So, as opposed to us making room for them, I see it a little differently, I see we're going to have to compete for these people because I think that they're going to have a lot of options available to them.

846              COMMISSIONER PATRONE:  A question about the music choices.  You spoke about Newcap's commitment to play more album tracks than, say, perhaps other stations.

847              How are these other album tracks chosen, is there one individual who makes that call or is it a corporate decision?

848              MR. JONES:  Very few of our programming decisions are made corporately.  Our company's very much on the local level.

849              These are ‑‑ the people who work in the community we serve know the market best.  So, the music decisions are made in local music meetings, the music director, the program director often times there are producers.  We really do have a very kind of collaborative approach to the music meeting.

850              The people who know the target best and know what we're trying to accomplish get together, decide what songs are added each week.

851              For the Gold Library and we talked about some of the album cuts or maybe ‑‑ you know, more deeper cuts by these bands, we do a significant amount of investing in music research in every market we serve, especially in major competitive markets like this.

852              We do ongoing music testing and call‑out style research that allows us to get a better handle on what songs from the past remain popular today, because a hit sometimes 20 years later doesn't taste quite as good, but certain songs taste even better.

853              COMMISSIONER PATRONE:  My last question.

854              Have you been able to monetize Newcap's websites in other markets and to what degree do you anticipate being able to do so here?

855              MR. JONES:  Just to start with, our online strategy corporately is pretty aggressive and on radio stations that target a younger listener, it's not even a matter of thinking of the Internet or new media as something separate.

856              For these younger listeners who grew up with this technology, turning on the computer and firing up the Internet is as second nature as taking a deep breath of fresh air, it's just what happens when you get up each morning.

857              So, we try to look at it like that and make sure that what we're doing is reaching those people, using the latest technologies, integrating what we do into the website, streaming our signal, you know, just taking advantage of it at every turn to serve the audience.

858              Now, there are opportunities where that can be monetized.  To date it hasn't been extremely significant, but Glenda can probably address, or Scott can address how we're attempting to do that.

859              MR. BRODERICK:  Yeah.  I think that one of the interesting things, I was just on a panel last week at Algonquin, there was a publisher of the Ottawa Citizen, myself and then the general manager for CTV Ottawa, and that was one of the questions that was asked there.

860              And the truth is, of all those three major media, none of us have yet to really significantly monetize it, and my fear is that it's going to be a difficult proposition because there's not new consumers avail ‑‑ there's new media and as Steve mentioned, I mean.  So, we're going to use these tools, we're going to develop relationships with our listeners, but they're still the exact same consumer.

861              So, I think that it's going to be difficult for all of the media.  To suggest that somehow there's new revenue opportunities for the advertisers when it's the same consumer, we're just finding new ways to interact with them and I think that that's going to be the challenge.

862              Where we have monetized is with text messaging.  We've registered three short codes, two in Ottawa specifically for those radio stations and that is a preferred method of communication with a younger gener ‑‑ they would rather text you than call you.

863              And, so, we've ‑‑ for generations we said, phone us, phone us.  Well, they'd rather text us.  And, so, we have been able to monetize that.  And I see some potential there as far as the websites, say, minimal banner, that sort of thing and not a lot different than what the newspaper and television people are going through right now.

864              COMMISSIONER PATRONE:  So, you're not selling ads directly to the web?

865              MR. BRODERICK:  Not as a separate...

866              We've just recently reclaimed, but we were on a national basis but, frankly, it was ‑‑ it was an eye opening experience where GM in 2006 bought 72 weeks worth of radio.  In 2007 they bought six weeks worth of radio, but in 2007, they had a front page banner on our website for the entire year.

867              And that was sort of a bell weather for us and so we reclaimed that inventory just recently, we put it in the hands of our local sales people as a tool that they can use on behalf of the local clients since 80 per cent of our revenues come from local sources.

868              So, we would be sort of usurping our own efforts and the efforts of our clients by separating that inventory and allowing separate access.

869              So, that's a decision we've just come to this year after, frankly, some eye opening experiences last year.

870              COMMISSIONER PATRONE:  Those are my questions.  Thank you very much.

871              Mr. Chairman.

872              THE CHAIRPERSON:  Thank you.

873              I've got a few questions as well.

874              Just picking up on this topic of text messaging and SMS, how do you validate when something comes across, the accuracy of the information that's being sent to you by some of these people?

875              MR. JONES:  If you're thinking from a news point of view, if a news tip came in ‑‑

876              THE CHAIRPERSON:  Yes.

877              MR. JONES:  ‑‑ via SMS text messaging?  I think the responsibility falls back on us to make sure that we treat that as a lead and not a story.

878              If we receive a tip that a building is on fire, the responsibility comes back on the journalist to make sure that's actually happening and not to go on the air and report it.

879              THE CHAIRPERSON:  Okay.  I want to spend a few minutes on your economic and financial data, and I believe I had heard Ms Spenrath talk about the derivation of the market share statistics in getting to six per cent, but I also notice that you have the six per cent running flat across all seven years.  Was that an art or a science that you came to that number?

880              MR. JONES:  The 6 percent audience share, as in previous applications, we don't believe that when you bring a new service to a market that it takes seven years to necessarily achieve a significant audience.  If you are bringing a new service to a market that's hungry for that service you can achieve your ratings projections relatively quickly and sustain them give or take with some up books and some down books over the course of seven years.  So that's why we project that to be steady across that period.

881              MR. MURRAY:  If I could just add, I mean those 6 percent shares are average annual shares.  There is four books a year in a city like Winnipeg.  So you know you are going to have ups and downs all the time.

882              But when you launch and you spend, you know, several hundred thousand dollars making that initial additional launch and you are out telling everybody about it, the share comes immediately.  That has been our experience.

883              THE CHAIRPERSON:  Okay.  So then when I look at your financial projections and I notice, as you have indicated, your strong commitment to CCD, Canadian Talent Development, of $2.8 million but I also look across your seven years and your net income over the seven‑year period is negative and doesn't seem to breakeven until, based on this trend, until probably year 10 or 11 or 12.

884              It sort of strikes me as odd that you would go into a business that wouldn't see accumulative breakeven until year 10 or 12 based on this data and yet you have got strong, strong commitments to Canadian talent and to programming as well.

885              MR. MURRAY:  Right.  Clearly, you know, we believe that our projections are somewhat conservative.  We hope to do better than this.  However, we certainly would not compromise any of our commitments.

886              As you have indicated, you know, if you add up the seven years we are operating seven years at a loss, but we run our business on cash flow and this is projecting to be cash flow neutral at year three and then continuing from there.  So we are fairly happy with a $300 or $400,000 positive cash flow in year seven and growing from that period on.

887              I hope that answers your question.  I mean, it's what ‑‑ it is what it is.

888              THE CHAIRPERSON:  All right.

889              Some people think they are very aggressive and you are obviously looking at the first couple of years very aggressively, which is why you are digging a hole for yourself but it's taking a long time to come out of it.  And that's your decision and your business plan, obviously, as well.  I would imagine that given the size and scope of Newcap you have got the financial wherewithal to carry you through, unlike a smaller player who perhaps couldn't.

890              MR. MURRAY:  Yes, there is no question.  I mean, I can give you an example.  You know, we bought stations in 1989 in Newfoundland at a bargain price it appeared, but by the time the dust settled we had ‑‑ you know, we were $17 million in the hole until, you know, we purchased our competitor and started to turn that business around, broke even in 2001 and now are making substantial profits.

891              But we are in the business for the long haul.  We have been doing it now for 23 years and ‑‑ pardon?  Yes, since 1985 and, you know, we have our share of success and we have our share of stations that are in the development stage.  And we are very happy with that, providing those services.

892              THE CHAIRPERSON:  Those are my questions.  I believe Commissioner Menzies has got a follow‑up question.

893              COMMISSIONER MENZIES:  I just had one point of clarification.  When I asked the question regarding the airplay in Ottawa I just want to clarify that airplay ‑‑ I asked the question if that was part of your CCD and I'm not sure if your answer contained the clarity that it needed.

894              You understand that airplay doesn't have a monetary value, so that ‑‑ I just wanted to clarify that.

895              MR. MURRAY:  Yes, clearly ‑‑

896              COMMISSIONER MENZIES:  You haven't calculated that into the ‑‑

897              MR. MURRAY:  No, absolutely not.  But I would like to make the point that, you know, we are providing with no charge hundreds of spins to all of these emerging artists in Ottawa.

898              Perhaps Jen or Steve can talk a little bit about this.  I think this is an amazing program.

899              MS TRAPLIN:  This would be ‑‑ the radio spins would be over and above what they are receiving in terms of the money that they would be awarded for winning in a competition.  It's just one of those added bonuses.  We also have a feature which we call the Indie Spotlight which is more opportunity.

900              And of course none of this ‑‑ we are not charging the bands for any of this.  You know, there are a number of different services that we provide for them that are over and above the prize money that they would win.

901              MR. JONES:  And may I add just to close this, that that's the one case, kind of coming back to Commissioner Patrone's question from earlier, that the one case where there is mandated airplay corporately, where we do say to the radio stations on a local level, "This is a project that this company believes in and here is the song and it should be played on the radio station."

902              COMMISSIONER MENZIES:  Okay, thank you.

903              THE CHAIRPERSON:  Does counsel have any questions ‑‑ no?  I tried.

904              MR. MCCALLUM:  No, thank you, Mr. Chair.

905              THE CHAIRPERSON:  Would you like to wrap up at all with a final statement?  You are certainly free to.

906              MR. MURRAY:  Yes, that would be great.  Thank you very much.

907              Mr. Chair, Commissioners, Winnipeg is a very important market.  We entered this market through the purchase of struggling stations.  We knew it would be a challenge to operate an ethnic station and especially form it with a poor signal but we invested significantly and you heard us say we have spent over $6 million already.

908              This proposal would see us commit another million dollars in capital and almost $5 million in programming costs.  We are proposing on top of that an additional $2.8 million in CCD over the seven years, nearly double or double the next large proposal.

909              We believe that our support of aboriginal journalists at one of Canada's best schools for broadcast journalism will have a very positive result for our industry.  This proposal will allow us to significantly expand our investment in news and three additional fulltime journalists, news stringers and aboriginal news interns.  We will be able to broaden and deepen our coverage and make news better on all three stations.

910              We have conducted extensive research to be sure that we get the format right.  Classic alternative acts combine with our demonstrated commitment to local and emerging artists.

911              We really believe we are onto something very significant in CCD with our Big Money Shot markets.  Our Ottawa station has supported over 100 Ottawa bands already in its first three years and will give seven winners their shot at stardom through cash and major on‑air support across Canada.  Calgary is right behind them with their program and we think Winnipeg artists deserve a similar program.  For these reasons we believe that our proposal is the best use of frequency 106.3.

912              Thank you very much for your time and for this opportunity.

913              THE CHAIRPERSON:  Thank you very much.  It is now 12:45.  We will adjourn until 1:45.

‑‑‑ Upon recessing at 1245 / Suspension à 1245

‑‑‑ Upon resuming at 1429 / Reprise à 1429

914              THE SECRETARY:  Please be seated.

915              We will proceed with Item 3 which is an application by Native Communications Inc., NCI, for a licence to operate an English and Aboriginal languages native Type B FM radio programming undertaking in Winnipeg.

916              The new station would operate on frequency 104.7 MHz (channel 284A) with an effective radiated power of 3,000 watts (non‑directional antenna/antenna height of 121.6 metres).

917              Appearing for the applicant is David McLeod.  Please introduce your colleagues and you will have 20 minutes to make your presentation.

918              Thank you.

PRESENTATION / PRESENTATION

919              MR. McLEOD:   Thank you.  Tansi, bonjour, aniin.  Good afternoon, Mr. Chairman, Mr. Vice‑Chair.  Bonjour, mesdames et messieurs.

920              My name is David McLeod.  I work as the Chief Executive Officer for Native Communications Incorporated.  Also here today, joining me is our Program Manager.  Rosanna Deerchild is sitting to my right.

921              We are also privileged to have Jules Lavallee join us.  He is the resident Elder for the Red River College.  He is sitting to my immediate left.

922              Also with us is Ryan Bruyere.  He is the elected spokesperson for the University of Winnipeg Aboriginal Student Council and board member for the University of Winnipeg Students Association.

923              Tasha Spillett, University of Winnipeg, Student Association Co‑President, was originally scheduled to be here but due to an important family matter asked Ryan to be here on her behalf today.

924              Firstly, I would like to sincerely thank the Commission for the opportunity to be here to formally present our plans for a Type B native radio undertaking in Winnipeg on frequency 104.7 at an effective radiated power of 3,000 watts.

925              Native Communications Incorporated has received an outpouring of support from major organizations once word got out about our application.  We have received support from the Assembly of Manitoba Chiefs, the Aboriginal Languages of Manitoba Incorporated, the Minister of Culture and Heritage and Tourism and Sport, Eric Robinson; city councillor Dan Vandal.

926              We have also received support from many individuals including people in the field of youth development who are interested in the new station as a potential career opportunity for youth.  We have had positive media coverage from both CBC radio and the Winnipeg Free Press.

927              Other notable letters included broadcasters, other broadcasters such as the Aboriginal Peoples Television Network and the University of Winnipeg Community Campus Radio Station, CKUW.  Our cause has gained much momentum and we feel greatly privileged to be here today.

928              I would like to begin with a brief overview of our history.

929              NCI began in Thompson, Manitoba in September of 1971 as the vision of community people who strongly believe that First Nation and Métis people should have a voice in the local media.

930              NCI's humble roots began with the purchase of on‑air time with a local AM radio station.  Over the last 36 years NCI has become a leader in Aboriginal radio in North America.  We currently operate an extensive radio network of 59 radio transmitters throughout Manitoba of which two transmitters are 100,000 watts.

931              NCI's core radio service is a blend of Aboriginal languages and English and a mix of Aboriginal and country music.  This format, particularly within northern Manitoba, has proven to be very popular, as evident by our continued growth and financial success.

932              The scope of our provincial reach is neck and neck with that of CBC radio.  Our success has greatly been achieved because of our long history in serving our communities throughout Manitoba and the revenue from radio advertising and bingo operations.

933              As a non‑profit radio station all the profits of our media bingo contribute directly to our operating costs.  Overall, I can truly state that we are an integral part of the Aboriginal communities throughout Manitoba and it is no accident that NCI has grown and prospered with properties and studios in both Thompson and Winnipeg valued over $1.7 million and we also employ 34 people.

934              Research has been very important in our decision‑making process.  Over the last six years we have conducted informal and formal research in order to assess our audience and our annual planning.  Research clearly shows the need for a radio station to reach Aboriginal youth in Winnipeg.

935              The need for NCI 2:   We are here today because our research and the research at both the federal and provincial government levels have noted a dramatic ongoing rise in the Aboriginal youth in Winnipeg.  Currently, Winnipeg's Aboriginal youth do not receive a radio station that meets their needs.  A 3,000 watt transmitter in Winnipeg is vital to our future and to the relevancy within the Aboriginal population, particularly with the youth.

936              We want to ensure that our mandate as an Aboriginal broadcaster is met and sustained for years to come.  According to Statistics Canada and a press release issued in January 2008, the highest Aboriginal‑populated urban city in Canada is Winnipeg with just under 70,000 Aboriginal people accounting for one in 10 persons being Aboriginal.  Statistics Canada notes that the Aboriginal population in Winnipeg is still growing at a rate of 34.4 percent.  Manitoba south is expected to continue to have record growth of its Aboriginal population with an increase at 42.6 percent.

937              Record numbers of young, Aboriginal people have moved to urban centres like Winnipeg, seeking to improve their life aspirations.  Approximately 51 percent of First Nation's people now live in major urban cities like Winnipeg.  It is estimated that 11.1 percent of the southern population was Aboriginal in 2004.

938              At this rate of growth the Aboriginal population in Winnipeg is estimated to grow as high as 160,000 people by 2017.

939              The question of why NCI needs an urban Aboriginal radio station is clear.  The population and audience exists and will continue to grow very quickly over the next 10 years.

940              Other research conducted in October of 2004 by Probe Research Incorporated surveyed NCI's current and potential listenership in Winnipeg.  Three focus group sessions were held with group participants divided into three significant focus groups.  They included group one, a latent audience indicated they would probably tune in; group two, NCI fans, regular listeners; group three, Aboriginal up and comers.

941              We recruited people from post‑secondary Aboriginal student associations to give us their insight of what they wanted for their programming.  The study revealed that NCI must give significant attention towards group three, the up and comers.  There was a notable challenge in gaining Winnipeg Aboriginal listeners.  Not surprisingly, younger participants stated that their reason for preferring a given favourite station was based almost entirely upon music programming.

942              There was also an indication that musical taste changes referred to a growth or broadening of their musical tastes.  NCI was described as a mom and dad station or the station listened to back home.

943              The up and comer group noted a wish for a second Aboriginal station to be added to the airwaves featuring more contemporary Aboriginal music along the lines of more popular rock and popular music stations.  This information was highlighted to our board of directors in 2004.

944              The Probe Research study also noted that NCI was clearly distinguished from other Winnipeg radio stations with unanimous indication that no other broadcaster offers NCI's type of programming in terms of language and a focus on Aboriginal news and community events.  It was also clear that NCI is regarded as a valued and integral part of the Aboriginal community.

945              The most recent data from May 2008 is entitled "Radio Listenership and Newspaper Readership among Aboriginal People in Manitoba" which was conducted independently for the province by Probe Research.  The report clearly highlights that the urban Aboriginal audience has very different programming needs than the rural audience that is our provincial network.

946              According to a 2005 study with approximately 500 participants, NCI reaches 67 to 69 percent of the Aboriginal population outside of Winnipeg.  This number is greatly reduced in Winnipeg because the needs of the urban population are so different than those in the north.  The 2008 data also noted that out of 130 listeners 18 years of age and older they were choosing other stations to listen to on a much higher basis due to the music and other ‑‑ due to music format.

947              In response to this data and statistical information the NCI Board of Management has committed to NCI 2.  We want to demonstrate our excitement and commitment to this project by making several commitments in our application.  We want to commit to the development of broadcasting careers, Aboriginal youth and Aboriginal musicians who are pursuing a music career.  We also want to make a commitment towards "Made in Manitoba" music.

948              Also, with the rise of the Aboriginal population comes the rise of a new market.  We have met with advertising agencies locally and in Vancouver and we see this as a growing need.  Through our research we believe that our revenue will grow over the next seven years.  With up to 2,700 university college students now enrolled in post‑secondary studies we know that there will be radio stations targeting our audiences ‑‑ sorry ‑‑ we know that advertisers will want to target Aboriginal people.  Our sales team has estimated a steady growth in sales over the next seven years.

949              I would like now to ask Rosanna Deerchild, NCI Programming Manager, to share an overview of our programming plans.

950              MS DEERCHILD:  Tansi Aniin, bonjour and hello.

951              My name is Rosanna Deerchild and I am originally from O‑pi‑pon‑i‑piwin Cree Nation in northern Manitoba, also known as South Indian Lake, Manitoba.

952              I currently reside in Winnipeg and today I am pleased to share with you and humbled to share with you our plan for a new voice in urban radio.

953              For over 30 years NCI has been the voice of Manitoba's Aboriginal people.  We started out as way for northern trappers to get messages back home to their families and have grown to a radio network that links 95 percent of this province.  That's a lot of messages.

954              NCI has undergone many changes in the past three decades but our purpose remains the same, to reflect our community, the Aboriginal community.  But it's become clear that a part of that community is not being heard.

955              As my colleague, David McLeod, outlined, Statistics Canada can tell us that Aboriginal youth between the ages of 18 and 30 is the fastest growing population in this country.

956              Over the next decade Aboriginal youth will represent a much larger share of the youth population and will account for an increasing share of entrants into the workforce.

957              Stats can also tell us that more of these young people are choosing to make urban centres their home, yet currently there is no radio station in Winnipeg specifically for and, more importantly, by Aboriginal youth.  And while NCI is an entrenched part of the Aboriginal community, our current format does not fully reflect the young urban experience.

958              Our research tells us that while we reach 69 percent of the on‑reserve population on a regular basis in Winnipeg, we only reach 7 percent of the Aboriginal population in the 18‑to‑25 age demographic.  So while the face of Winnipeg is becoming young and Aboriginal, they are still without a voice.

959              Our young people face a great number of challenges.  A lack of job and education opportunities, gang pressure, suicides, alcohol and drug abuse are just some of the barriers facing them today.

960              In spite of that, our young people continue to overcome those barriers.  They are more aware of where they come from and where they want to go.  They are more educated, ambitious, goal oriented and socially and politically aware.  More than ever they want to be heard.  They want to share their stories.  They want to share their voice.  And while statistics can tell us their numbers, they cannot tell us their stories.

961              NCI 2 will be the place for those stories.  From music to spoken word it will be the voice of the new urban nation.

962              Musically, Aboriginal youth don't want to listen to the country music we currently air on the network.  Genres such as pop, rock and hip hop are the choice genre for the 18 to 30‑year old demographic.  Our music mix will consist of 40 percent Canadian content, 20 percent of which will be Canadian artists and 20 percent Aboriginal artists and music.

963              During our evening sound music will be 50 percent Aboriginal music content.  NCI 2 will play nationally‑recognized groups such as Team Rezoffical, Red Nation and War Party or the soulful sounds of Martha Redbone to the rock sounds of Stevie Salas, Jimmy Lee Young and Derek Miller.  We will also provide local music artists such as Fresh I.E., Mood Ruff, and established bands like The Weakerthans and Inward Eye.

964              But urban youth want more than just music.  They want to speak.  They want to raise their voices.  NCI 2's spoken word content will be driven by this need.  We know that the best way to reflect the urban Aboriginal voice is to simply ask them.

965              Our youth‑driven program will include news and current affairs with a strong focus on Aboriginal people, not just the bad news, the headlines, but the good news as well; live call‑in shows for and by Aboriginal issues relevant to them; cultural features; language promotion as well as broadcasting partly in Cree and in Anishinabe will promote Aboriginal language learning.  And we will also have job and education awareness.

966              Members of the Commission, we have a tremendous opportunity here today.  We can open the door to a new generation of broadcasters and storytellers.  To many of our nations it's the storytellers who keep our history, our language and our identity alive.  We must give voice to all these stories, and we believe native communications is the best organization to do that.

967              Ekosi, and thank you.

968              I also would like to now introduce Ron Bruyere, our youth spokesperson ‑‑ he was spokesperson for the University of Winnipeg Aboriginal Student Council and board member for the University of Winnipeg Students Association ‑‑ to share some of his thoughts.

969              MR. BRUYERE:   Thank you.  Good afternoon everyone.  Thanks for this opportunity.

970              First of all, I would like to say hi to the Commission and say hello to everybody.  I am 29 years old and I am from the Sagkeeng First Nation but I currently reside in the city of Winnipeg for education purposes.

971              I am the elected spokesperson for the University of Winnipeg Aboriginal Student Council and I am also an active board member for the University of Winnipeg Students Association.

972              Today, I am pleased to assist my fellow community members at NCI for this significant and historical initiative called NCI 2.  As a student leader on campus and a youth leader in a community I have been selected to report to you our unique perspective.

973              I represent a growing segment of Winnipeg's youth population.  There are currently 2,700 post‑secondary Aboriginal students enrolled in the three major institutions within the city of Winnipeg, not taking into account the world demographics.

974              I have behind me the support of the University of Winnipeg Aboriginal Student Council and the University of Manitoba Aboriginal Students Association and the National Aboriginal Caucus of the Canadian Federation of Students and we extend our support in this hearing to NCI, Manitoba's first and only Aboriginal‑owned and operated communications network.

975              Following discussions with some students and student leaders, it became apparent that there is an institutional dissent in regards to the campus services that is available to many other groups.  We highlighted three main areas of concern; (a) that there is a lack of radio coverage of Aboriginal events and news at all these institutions, (b) that training opportunities for Aboriginals to engage ourselves within the communications profession is very limited, and (c) the overall campus radio Aboriginal programming.  There is very nil or next to none.

976              We feel it is important to have work experience, training and career development opportunities to assist our growth as First Nations, Métis and Inuit citizens.

977              Mainstream networks and local media all usually forget our perspective.  If and when Aboriginal youth issues are discussed there is usually Aboriginal youth as the perpetrators.  There is nothing encouraging said about Aboriginal youth whether it is our history, culture and, most importantly, our identity.  Instead of becoming a perpetrator of crime, why not extend to us the opportunity to perpetuate positive encouragement for the enhancement of our identity and meaningful place within Winnipeg and beyond?

978              Identity is the heartbeat of this initiative, which is why I am a proponent of NCI 2.  For years we as students at the UW worked vigorously on revamping our constitution.  In the end, the core of our discussions focused solely on indigenous identity.  That experience taught me that as a people we must know our identity to thrive in an urban environment.

979              We as First Nations, Métis and Inuit youth have been longing for an avenue of expression for quite some time.  Unfortunately, expressing ourselves is seen as a disturbance through vandalism, graffiti, crime, et cetera.

980              These are the cold, hard facts of growing up marginalized in an urban environment.  We need to use this energy for positive growth for the young ones, because all they know is the city.

981              I was lucky to have lived in my home community for some time as a teenager and I was lucky to obtain the sacred tools of survival, that being honesty, courage, respect; love, sharing, humility and truth.  It is crucial to share our stories with fellow Canadians.

982              Sharing is a big part of who we are as Anishinabe.  We need Winnipeg to hear our voices in a positive manner, whether it is through the arts, culture, language celebration or music.  We want to share with you a bit of who we are as Aboriginal youth and dismantle the stereotypical tag.

983              We feel that NCI 2 would be an excellent opportunity for all Winnipeggers to embrace and learn as we do the Aboriginal experience.  Many youth are forgetting the sacred principles that were bestowed upon us by our ancestors and it is showing that Aboriginal youth are adopting the wrong lifestyle, a lifestyle that is foreign to our traditions.

984              I have been there.  I have seen the stakeholders of the streets manipulating our young minds into a cycle of dysfunction and dependency.  I was once there and now I am speaking for them, which was a directive of mine in university, to make positive change.  And now I ask you to do the same for youth who cannot speak for themselves.

985              Thank you.

986              MR. McLEOD:  I would like now to ask Jules Lavallee, the resident Elder from the Red River College, to share some thoughts.

987              MR. LAVALEE:  Bonjour.

‑‑‑ Native language spoken / Langue autochtone parlée

988              MR. LAVALEE:  My name is Coming Thunder and I am here today because I sincerely believe that what is being proposed here today is something that is very needed by the City of Winnipeg, the urban youth; the urban Aboriginal youth.

989              Oral tradition is very important to our culture.  This oral presentation is something that is also equally as important for our way of life to survive, to continue to survive, to continue to thrive.  So this oral tradition has always been a form of communication among Aboriginal people.  Storytelling, as was mentioned here earlier, was a way of keeping our culture alive.  Culture among my people is defined as a way of life.  Culture is the essence of the people, the Anishinabe.  Culture is defined in our languages.

990              What pleases me is that right out front we are saying this station, this radio station would promote languages, the original Aboriginal languages like Ojibway, like Cree, Dakota, Déné, Inuit.  Many languages and many people who speak languages, you know, could also listen in and tune in.

991              Music, songs and stories need to have an outlet.  And our focus will be youth.  We will always be focussing on youth in promoting the music but also sharing the stories over the radio.

992              The Aboriginal World View is currently and has been for approximately five to ten years, as far as I know, is being defined by universities and colleges because of the large numbers of Aboriginal youth applying to enter colleges and universities and who are presently there.

993              So, perhaps, you know, this will also be a way of beginning, you know, to define to the larger population in Winnipeg that Aboriginal World View.  Because essentially I do believe once someone knows who they are they begin to have a certain pride.

994              I've always been there whenever I've been called upon by organizations, Aboriginal as well as non‑Aboriginal to offer Elder services.  More and more private sector corporations as well as public sectors are starting to employ elders to be part of those corporations to offer guidance.

995              We are the keepers of those stories.  We are keepers of the teachings.  And we appreciate whenever we are asked, you know, to share those stories and to share those teachings.

996              And I used to see a long time ago that the youth and the elder would get together when I was much younger myself.  And we would sit with the grandfathers; we would sit with the grandmothers.

997              And we would listen to their teachings about life.  We would listen to their stories about life.  We would listen to them.

998              And they would always tell us about the essence, the essence of our culture being our language.

999              So, it brings me back again, you know, and it really excites me.  It really excites me to know that, you know, we are on the threshold of forming this communication network for our youth because always as grandfathers, as grandmothers, you know, we see ourselves as being the support of our sons, our daughters, our grandsons and our granddaughters.

1000             And so today I sit here at this table and I thank you very much, honourable members of the Commission for allowing us to take this opportunity and be given this opportunity to present this very exciting news that we want to share.

1001             We want to tell the good story.  We want to talk about the good things because there is a good story.

1002             Too much of the media, you know, sensationalizes certain things that occur among the Aboriginal people.  And it's always bad news.  It's always bad news.

1003             But we want to celebrate the good news and this is why we're here to present our idea of how we can implement a communications system, you know, that will be vital and necessary for our youth in the city of Winnipeg.

1004             With that I say (Aboriginal language spoken) to all of you, a big thank you for listening to what I have to say.  (Aboriginal language spoken).

1005             MR. MCLEOD:  (Aboriginal language spoken) Thanks Jules.

1006             I'd just like to take a few moments just to go over some of the NCI achievements that we've established over the years.

1007             As a non‑profit broadcaster and registered charitable organization, NCI has achieved what many would think impossible.

1008             NCI has built a provincial radio network that reaches 95 percent of the province.  We have built transmitters in outlying communities where many commercial broadcasters would simply not go.  This has been done and it is a tremendous achievement on both a technical planning and as well as a financial level.

1009             NCI has established the National Aboriginal Top 30 Countdown which is a two hour program that is reaching its two year anniversary.  This program is currently heard on six of our sister stations and now reaches listeners seven provinces wide.

1010             The program is also an intricate tool in creating an Aboriginal music industry.

1011             NCI has successfully run a media bingo operation that has awarded prizes to Manitobans that have reached 1.3 and 2.9 million dollars.  I would like to note that all the profits from our bingo operations go directly into our operations and our growth.

1012             We have also had a substantial impact in promoting Aboriginal talent.  We began our annual NCI Jam Talent Show with 170 people in attendance and now draw over 2,300 people annually.

1013             We have also been a major media sponsor of the Manito Ahbee Festival that now draws 12,000 people over three days.

1014             I believe we have built a unique successful radio network that is sometimes asked for guidance as well from our sister stations across Canada.

1015             These are only a few examples of our achievements and contributions to Manitoba's broadcast industry.  We are proud of both our achievements and the fact that we have retained a healthy bottom line in the process of meeting our mandate.

1016             Our success has not been achieved by accident.  We strongly believe in research and that research has brought us to where we are today in the hopes of acquiring a type B Native radio station license.

1017             I'd just like to take a moment to go over some of our commitments as well.

1018             To demonstrate NCI's commitments towards our application we have worked towards initiatives that will support several causes that will serve ‑‑

1019             THE SECRETARY:  David, would you please wrap up?  I'm sorry.

1020             MR. MCLEOD:  Yes.  Yeah.  Just be a couple minutes.

1021             To demonstrate NCI's commitment towards our application we have worked towards initiatives that will support several causes that will serve Winnipeg if NCI is granted a local license.  They include:

1022             NCI will commit $25,000 over the next 10 years in media scholarships for Aboriginal youth pursing a broadcast career.  The scholarships will be awarded annually in the amount of $2,500.

1023             NCI will produce an annual compilation music CD that will feature Canada's best Aboriginal youth talent aged 29 years of age and under.  The CD will be distributed to Aboriginal radio networks, university and college radio stations across Canada.

1024             NCI will partner with the Manitoba Audio Recording Industry Association, MARIA, for a seven year period to hold an annual talent show that will be broadcast live for young and up‑and‑coming artists and give the opportunity for them to win an all expense paid trip to the Aboriginal Music Camp, otherwise knows as AMCAMP held annually.  NCI will contribute $17,500 to this weeklong music career camp over a seven year period.  This partnership will ultimately assist several young Aboriginal performers in their pursuit of a professional music career in the music industry.

1025             Through our discussions with MARIA we have also agreed to work very closely together to ensure that Manitoba recording artists not currently being heard on much of the commercial radio stations that exist within Winnipeg will receive airplay.  NCI too will offer unique opportunities for future Aboriginal broadcasters that will eventually fill the void we currently see in mainstream media.

1026             Thank you.

1027             THE CHAIRPERSON:  Thank you very much.

1028             Commissioner Patrone will lead our examination.

1029             COMMISSIONER PATRONE:  Thank you, Mr. Chairman.

1030             Welcome.  Thank you for your presentation.

1031             I'd like to ask you first off a few questions about your oral presentation.

1032             Can you speak to the degree to which the youth has managed to hold on to its cultural roots when it tends to move to urban centres in Winnipeg or has there been a degree of assimilation which perhaps you feel uncomfortable with?

1033             MR. BRUYERE:  Well, last time I checked I'm still red.  It doesn't matter where you are and my culture sticks with me.  And I feel the same way for a lot of other youth, that there's still strength and humility that drives us.  And our urban environment does not alter who we are.

1034             But there is others though, there are some people that are products of assimilation, I guess, I can ‑‑

1035             COMMISSIONER PATRONE:  Are you able to speak to that a little bit?

1036             MR. BRUYERE:  Yes, I guess I could speak about that.

1037             Assimilation is a weapon.  And you know, we're the objects, I guess basically that it's used to dignify its existence on.

1038             And yes, there is youth that do need to be, you know, steered in the right way.  And I believe that NCI2 would be the tool to combat that.

1039             MR. LAVALLEE:  The two universities in Winnipeg, the University of Winnipeg as well as the University of Manitoba as well as Red River College have Native Studies.  And it's all culture‑based.

1040             And many of our students, you know, especially students that are from the urban Winnipeg area, many of those students have not had an opportunity, have not had an opportunity to learn about their culture.

1041             So, it's through those courses, through those departments of Native Studies that many of our students, you know, are being reintroduced to the Aboriginal culture.

1042             And in the evaluations of my courses, both at the University of Manitoba as well as Red River College, the students always, you know, talk about how precious their experience in learning about their culture, learning a little bit about their language, has been to them.  It has been kind of an incentive and an inspiration for them.

1043             COMMISSIONER PATRONE:  What indication do you have that NCI2 would generate the desired audience numbers from the targeted group?

1044             MR. MCLEOD:  I think what we've done is we've done focus groups, we've done phone surveys on two levels, actually three times working with research from Probe.

1045             We believe if people are, as stated, if Aboriginal music is represented with contemporary artists in the same type of genres that we're going ‑‑ that will put the Aboriginal music performers on the same level as those mainstream stars.

1046             So what that in fact does, it creates an Aboriginal music industry and it creates Aboriginal stars.

1047             I've often compared it sometimes to the French community as well.  And if you go to Quebec you'll see performers that are stars within the province very similar to what you'll see in the Aboriginal community.  There are stars that exist within the Aboriginal community.

1048             COMMISSIONER PATRONE:  You spoke about some of the challenges facing the youth when they enter the urban communities.  Can you talk a little bit about the degree to which youth feel disadvantaged or disenfranchised by the lack of a local radio voice at this time?

1049             MR. MCLEOD:  In speaking with, for example, CKUW, it's been difficult.  I think what you need to ‑‑ what we are going to be doing is creating an environment in which Aboriginal youth will feel welcomed and they'll feel at home in, in terms of beginning a broadcast career or finding out what radio is all about.

1050             So, I think just the very fact of establishing the station will be a first step.  And I think Rosanna, do you want to say a few words?

1051             MS DEERCHILD:  Well, like any community the Aboriginal young people in Winnipeg are seeking a place to voice their stories.  They're looking for a place to belong.  They need a sense of ownership.

1052             It's one thing to say our radio station attracts Aboriginal listeners but it's another thing to say we want to give a radio station to Aboriginal youth in a sense that they can build.  We want to have an Aboriginal youth council that will advise us as to what our programming will sound like, what that reflection will look like.

1053             Not having that voice right now just doesn't make any sense in terms of we're talking about a community here that has no voice, nowhere to put their voice.  That doesn't make any sense.

1054             We need to have that voice for Aboriginal youth.  It needs to be driven by Aboriginal youth about Aboriginal youth.

1055             COMMISSIONER PATRONE:  Could you talk a little bit about your news gathering initiatives, proposed staffing levels and how it intends to focus on Aboriginal youth?

1056             MS DEERCHILD:  Well, in the early stages of NCI2 of course we will be sharing much of our resources with our current staff complement.  There is currently a journalist on staff and then there's also me.  I have an extensive journalist broadcast history.  So we will be using that.

1057             But in terms of what kind of content we will have on our news programming, it will have a strong Aboriginal focus which is not something that you will find really anywhere on our dial, on the Winnipeg dial.  It will encompass both good news and bad news, the challenges that we face and how we overcome those kinds of challenges.

1058             MR. MCLEOD:  I just wanted to add to that.  We have a good relationship with Tec‑Voc High School, with Red River College, with ABC, with school divisions in the north come through for a lot of work experiences.  And particularly it's a lot of youth; it's usually youth.  So, part of ‑‑ those relationships are already formed and I think NCI2 would fit the needs of those work experiences.

1059             In terms of employment as well we'd be hiring four fulltime employees immediately and we'd be working with part‑time staff and volunteers of course from the youth that are in the communities.

1060             COMMISSIONER PATRONE:  I have some questions specific to your written application.  NCI has proposed 61 hours of Aboriginal language programming.  At the same time it is committed to ensuring 40 percent of its music is performed or composed by Aboriginal artists.  Will all of this music, and if not, a percentage of this music be in the Aboriginal language or one of the Aboriginal languages?

1061             MR. MCLEOD:  Yes.  What our experience has been in terms of music, there isn't a lot of Aboriginal music that's recorded in language.  But a lot of the songs speak to the community.  Example, some of the hip hop songs will talk about life in the reserve, life in an urban setting.

1062             So, it's not so much the genre of music, it's what's the stories that are being said or the messages that are being presented in those songs.  So, a lot of the connection is made that way but there are some artists definitely who do record in their language.

1063             COMMISSIONER PATRONE:  Now 61 hours of Aboriginal programming equates to less than half the broadcast week.  Does this 61 hours include both Aboriginal language and music performed by or composed by Aboriginal artists?

1064             MR. MCLEOD:  Well, a lot of the ‑‑  the Aboriginal language I guess just to go there, generally what we found in our research is that people like hearing Aboriginal languages in the evening.  And generally when we have Aboriginal language we like to have more Aboriginal music content.

1065             So, during the day we would have a mixture of the Aboriginal artists with mainstream artists which we found in our current station experience has worked very, very well.

1066             So, we have a formula that works well that other networks across Canada have actually come to us asking how do you guys do it, you know.  And I think the formula will definitely work.  I'm very confident that it will work.

1067             We have also looked at other models in North America.  There is a Latino station based out of Los Angeles, Latino 96.3, that uses positive messages, positive music and really short hits of information towards youth.

1068             So, there is a model that exists in terms of what we think could be accomplished in the States.  Nothing exists in Canada right now that has the type of programming, the direction we want to take.

1069             COMMISSIONER PATRONE:  So, you feel that the formula will work despite the fact that your targeted audience will be very different, a different group.

1070             MR. MCLEOD:  Yes.  Our experience has been with NCI1 right now at our network is that we actually have a lot of non‑Aboriginal listeners because they're looking for something different.

1071             I can give you an example.  If we give away ten prizes, last week we'll have eight out of ten ‑‑ eight out of the ten will be non‑Aboriginal walking through the door.  And so there are listeners I think seeking alternatives to the commercial stations.

1072             COMMISSIONER PATRONE:  I have a question for you regarding that a little later on.

1073             Are you able to at this point provide for us a precise breakdown of Aboriginal spoken word, Aboriginal language and music in terms of number of hours?

1074             MR. MCLEOD:  Yes.  Every week we'd have ten hours of Aboriginal language.  But it's not ‑‑ the language is interspersed with the music.  So, you're going to hear those breaks with the language as well.

1075             COMMISSIONER PATRONE:  I'm not sure I understand.

1076             MR. MCLEOD:  Well, I guess when we put our application in, we wanted to break it down.  We could say we're doing ten hours of language a week.  But that's spread out throughout our evenings in terms of talking in between songs, ten minute interviews, giving community announcements, doing an interview.  So, that's what it would add up to.

1077             I'm not sure if that satisfies your question.

1078             COMMISSIONER PATRONE:  Would you be prepared to accept those terms as a condition of license?

1079             MR. MCLEOD:  Oh, definitely.  Like I say, the example we've seen in the Latino station out of Los Angeles is they have a lot of Spanish on their station.  So, definitely, that's part of our mandate, that's part of our mission.  That's definitely part of why we're here today.

1080             COMMISSIONER PATRONE:  As far as Canadian content is concerned, NCI has committed to 40 percent across the broadcast week and from 6:00 a.m. to 6:00 p.m. Monday through Friday; is that correct?

1081             MR. MCLEOD:  Yes.  I was on the Manitoba Audio Recording Industries Association board for two years and that experience opened my eyes to how much great music is made in here in Manitoba.

1082             So, I hear a lot of artists that sometimes have to go to the States to get recognized before they get air play.  And I think we would definitely want to make sure that some of these artists get heard.

1083             And there's even non‑Aboriginal artists that are recording songs thematically about the Aboriginal community which we've seen Sierra Noble.  We've seen that with Troy Westwood.  Little Hawk?  Yeah, Little Hawk is his name.

1084             So, we see that happening in Winnipeg as well.  And I believe that's directly in response to the rising Aboriginal population.

1085             COMMISSIONER PATRONE:  NCI has advised the CRTC that it would prefer this level of commitment take effect after the second year of operations as far as the conditions of license is concerned.  Is that still the fact?

1086             MR. MCLEOD:  Well, what we were going to do is we're going to be building our library.  What we expect to do is we're going to be building a library with indigenous music as well.

1087             There's music that's done in Australia, there's music done in New Zealand, there's music in South America that really speaks to the Aboriginal ‑‑ to the indigenous community throughout the world.  So what we're going to do is going to be building our library over the next year.

1088             We'll be working with Brian Wright‑McLeod as well out of Toronto.  He wrote the encyclopaedia of Aboriginal music and also has one of the largest collections of Aboriginal music in North America.

1089             COMMISSIONER PATRONE:  The Commission's approach with respect to the Native Broadcasting Policy is that any condition of license relative to Canadian content applies to weekly levels.  Would NCI be prepared to accept a weekly level of Canadian content as a 40 percent condition of license, in other words at the 40 percent level, rather?

1090             MR. MCLEOD:  I think as leaders in Canada within the Aboriginal community and the broadcast industry at large, I would like to see us make that commitment and be used as an example to the other broadcasters of what is possible.

1091             COMMISSIONER PATRONE:  You spoke a little bit a minute ago about the challenges facing NCI relative to its catalogue and the collection of ‑‑ could you talk a little bit about the challenges that it may face relative to meeting this level of Canadian content?

1092             MR. MCLEOD:  I think the challenges are ‑‑ what we have seen over the particularly the last 10 years is the advent of home studios and people being able to make quality recordings at a low cost.  We are seeing a lot more Aboriginal music being produced now.

1093             We are receiving demos from northern communities that actually sound better than some of the studios when they purchase airtime to record in.  And so we are seeing some amazing recordings come through and I think that is happening on a worldwide scale.

1094             So I think that we are going to see a real boom in Aboriginal music.  And, as I mentioned, the Aboriginal Peoples Choice Music Awards has 6,000 people attending right now in Winnipeg.  And think about it, in 10 years I can see 25,000‑30,000 people being at those award shows.

1095             So we have seen that grow with our own talent show.  As I mentioned earlier, we had 170 people at our first one, now we have 2,300.  I can see things growing immensely.  And we see it day to day, we see the growth day to day.  It is funny to read the surveys and the studies, but outside of that we see it, we see the community growing and we see activity increasing.

1096             And we see youth graduating from university and college a lot more than we did 10 years ago.  So we are seeing increases on every facet and I think that is unique to Winnipeg.  It is happening here, this is the centre of Canada and its is interesting that it is happening here.

1097             COMMISSIONER PATRONE:  Have you been able to gauge the potential impact on the Winnipeg market given your proposal to play 60 per cent commercial hit radio?  Do you have any audience projection figures?

1098             MR. MCLEOD:  I think in terms of revenue, we have looked at our audience, the momentum growing.  I think the financial impact will not be high in terms of the commercial radio stations.  But I do think after seven years we do have our financial goals that we have put in place.

1099             I think word of mouth will be really strong in terms of our growth.  I think our website initiative will be part of our growth.  I think being out in the community and representing the reality of the community will ‑‑ it is going to snowball, as it has when we served the north over the last 36 years.

1100             COMMISSIONER PATRONE:  But are you able to gauge at this point the impact on other stations in the market or have you done ‑‑

1101             MR. MCLEOD:  I think the other stations aren't really concerned about our audience as much in terms of reaching the Aboriginal community.  We are targeting an audience that is underserved right now and that is our goal.

1102             So I don't think, you know, our goal is to see how much we will take away from another station.  I think our goal is how we can serve our audience.

1103             COMMISSIONER PATRONE:  And to what degree do you think the young urban Aboriginal population is underserved in Winnipeg right now?

1104             MR. MCLEOD:  We did tours of our facilities of up to 30 students.  Norway House, one time we had 50 students come through at once. So we see a lot of students coming through.  I think we would have a very high impact on students.

1105             Just seeing a young Aboriginal person seeing another Aboriginal person in the studio, like Gerry Barrett, for instance.  Shaneen Robinson is a graduate from Red River College.  She just receive her degree in communications from the University of Winnipeg as well.

1106             A young person, people walk into the studio, she is actually a role model and just was awarded a few weeks ago ‑‑ she is in the national role model program for Aboriginal peoples now.  So it is great to see the momentum even within our building and with our staff.

1107             COMMISSIONER PATRONE:  I have a couple of questions related to our frequency.  NCI is proposing to use Channel 104.7.  CFQX‑FM is on 104.1.  Are you aware that, as the new entrant, NCI would have to accept responsibility for remedying complaints related to third adjacent channel interference?

1108             MR. MCLEOD:  Yes.  I would like to just highlight a few points.  Our technical manager, Mr. Waboo, he is in Vietnam right now, he just got married, but he gave me some notes.

1109             We acknowledge the proposal undertaking is a third adjacent to CFQX‑FM on channel 281C in Selkirk, Manitoba.  As such, an area of third adjacent channel interference to CFQX‑FM is possible from the proposed station.  The applicant, NCI, will investigate the complaints and be responsible for remedying complaints related to third adjacent channel interference within the proposed station.

1110             Furthermore, CJNU‑FM has been temporarily using the frequency 104.7 since 2006 with no complaints or interference from listeners regarding the third channel adjacent to CFQX.

1111             COMMISSIONER PATRONE:  Further to that, due to possible third adjacent channel interference in the proposed transmission site, you are aware of course that it would be in a populated area.  Are you aware that NCI may be responsible for fixing interference problems for a large number of receivers?  And if you are aware of that, then is NCI able to absorb such costs, if necessary?

1112             MR. MCLEOD:  I believe, yes.  What we would do is we would work with D.E.M. Allen and Associates and we would see what the issues are and we would look at that with our technical manager as well, yes.

1113             COMMISSIONER PATRONE:  Just for my understanding, which Aboriginal languages would be focused on?  Would it be Cree, Ojibway and..?

1114             MR. MCLEOD:  Yes, Cree and Ojibway would be the main two languages.  Cree is the number one language spoken throughout Canada right now that is thriving.  So Cree, and Ojibway would be the other language.  We would also have guests on to time that would speak other languages.

1115             We have had guests come in from different places in the United States or throughout the North.  We have had Inuit speakers, we have had Dakota speakers, we have had people from many other parts of Turtle Island come and speak on the air.

1116             COMMISSIONER PATRONE:  Thank you very much.

1117             Those are my questions, Mr. Chairman.

1118             THE CHAIRPERSON:  Thank you, Commissioner Patrone.

1119             Commissioner Menzies, do you have any questions?

1120             COMMISSIONER MENZIES:  Thank you. You spoke a bit about your revenue.  In terms of national and local on your chart, how much of that is advertising and how much of it comes from other sources?

1121             MR. MCLEOD:  Well, right now our bingo revenues are doing very very well.  Our advertising revenues have steadily increased, particularly over the last five to six years.  We have had a lot of clients that recognize that there is money within the Aboriginal community that they want to seek out as advertisers, particularly the car dealerships, you name it.

1122             We visited agencies in Vancouver. We currently have Tim Hortons aboard.  We are meeting with Live Nation in Vancouver in a few weeks.  They are recognizing that a lot of Aboriginal people are going to concerts from throughout Manitoba, so we are meeting with them as well.

1123             So it is nice to be at a time in history now where people are recognizing our audience.

1124             COMMISSIONER MENZIES:  Just in terms of your revenue projections it is $240,000 ‑‑ well say local, under local you have got $240,000 in year one and then $526,000 in year seven.  Is that all advertising in that chart?

1125             MR. MCLEOD:  Yes, that is.  That will be all advertising.  I think over the next, particularly seven to 10 years, we are going to see a rise of advertisers seeking the Aboriginal audience and we want to be there for those advertisers.

1126             COMMISSIONER MENZIES:  Right.  Which lead to my next question.  If there is a rise of advertisers seeking the Aboriginal audience, particularly in the Winnipeg market where the demographics are strongly in your favour, have you anticipated that there might be a rise of interest in your audience among commercial broadcasters that could fragment your audience?

1127             MR. MCLEOD:  We have already seen that to a small degree already.  And that I think is healthy, competition is healthy.  I don't see any problem with that.

1128             COMMISSIONER MENZIES:  No, neither do I, competition is great.  I am just looking for some assurance that if some of the larger commercial operators start fighting with you over your audience that you have got the strength to fend them off and the core product firm enough to keep your audience and keep your financial projections in place and, to make a long story short, survive.

1129             MR. MCLEOD:  It is a very good question.  And I believe we will survive, we will ultimately do very well.  Our experience has been, with some of the commercial broadcasters, is that it is short‑term, it is never long‑lasting and it is sometimes show face.  But we are not there to show face or for, you know, to make a short‑term commitment, we are there for the long haul.  And I think our audience will recognize that.

1130             And again, if you are listening to the radio station, you are hearing Aboriginal people, you are hearing Aboriginal artists that nobody ‑‑ it is hard to compare to that.  But it will be interesting, if we are granted the licence, in 10 years to see ‑‑ it is going to be an amazing place where things will be at at that time.

1131             COMMISSIONER MENZIES:  Okay.  I would like your view, as an experienced broadcaster, on how many new licences you think the Winnipeg market can handle?

1132             MR. MCLEOD:  I think we have heard that a lot today, we have heard that there is a lot of radio in Winnipeg.  And, you know, where are things going to go?  I think Winnipeg can handle two more stations.  I think we are dead on where we are today with the two applications.

1133             COMMISSIONER MENZIES:  I assume that includes you?

1134             MR. MCLEOD:  Yes, definitely includes us.

‑‑‑ Laughter / Rires

1135             MS DEERCHILD: Well, we certainly hope so.

1136             MR. MCLEOD:  Yes, I think that would be a gift, yes.

1137             COMMISSIONER MENZIES:  So is that you plus two or you as one of two?

1138             MR. MCLEOD:  It depends on which two that the Commission picks.  It is hard to say.

1139             COMMISSIONER MENZIES:  Put it this way, does your business plan stand up?

1140             MR. MCLEOD:  Yes, I feel really confident.  We are here today not ‑‑ with three years of planning, we are here with 36 years of experience, we are here with money in the bank and cattle on the range ready to go.

1141             And I would also like to mention we have had an extreme amount of support from the Aboriginal community.  We have 27 letters, we even had more that came past the deadline.  But that makes us very confident as well, how much support we have in the community.  It is amazing, people recognize the need for it, as Jules mentioned.

1142             COMMISSIONER MENZIES:  You may have touched on this earlier and forgive me if I'm going back over it.  But you spoke quite passionately about the need for an urban Aboriginal voice versus the voice you have that is serving your other markets right now.

1143             Would there be any crossover in terms of the content?  Like, to what extent would your content here be exclusively urban?  Would you be using some of that content at your other stations or vice versa?

1144             MR. MCLEOD:  I think in terms of community announcements, I think we would do it in terms of news we would do it, we would have a crossover.  But basically we want NCI 2 to sound completely different than the other station, we want them to be two entities onto their own.  So, yes, for information sharing, for sure.  But as programmers we want it to sound like it is targeting youth.

1145             COMMISSIONER MENZIES:  And what would be different about your news voice in terms of ‑‑ you spoke about good news as well as bad news.  But I think we all know, with most media, they don't report when airplanes land safely.

1146             Let me put it this way.  Bad news is easy to report on because it happens and it makes a big splash.  Good news requires a lot more resources to put into it, in terms of that where would you find those?

1147             MR. MCLEOD:  I think we would begin by, you know, as Rosanna pointed out earlier, just giving a voice to the newsmakers. I think that mainstream media is coming along a bit. I think there has been definitely some improvements.  I think generally the Aboriginal community would probably say not enough, but there have been some improvements.

1148             But basically it is giving a voice to the other side of the story.  You can have a negative story and leave it at a negative story, but you could go that extra step to see what is the Aboriginal community doing to deal with that or what is the family doing to deal with that?  There is a lot of extended families within the Aboriginal community and I think that those stories aren't heard.  So there is another level of the story that is not heard.

1149             MS DEERCHILD:  And I don't mean to disagree with you, Commissioner ‑‑

1150             COMMISSIONER MENZIES:  No, feel free.

1151             MS DEERCHILD:  ‑‑ but I don't believe good news is more difficult to find than bad news.  Bad news simply makes the headlines because it is what sells the papers.  That is what makes people turn on your radio station or your news program, they want those sensation headlines.

1152             When I say Aboriginal urban youth to people, they will say baggy pants, gang member, bling, whatever the language is that they want to apply to that particular image.  However, I am sitting right next to a person here who does not fit that stereotype.  He is a good news story.  His whole graduating class is a good news story.

1153             We have Shaneen Robinson who is on our airwaves during our day sound who is a good news story.  She is 28 years old, she is the recipient of a national Aboriginal role model, she is the recipient of an environmental award here in Manitoba, she has been the recipient of the Helen Betty Osborne.  Good news story, Aboriginal youth, right there.

1154             I don't believe that the good news is harder to find, it just needs a commitment and we need a forum for those stories be vocalized.

1155             COMMISSIONER MENZIES:  Okay.  Do you have the resources to do it?

1156             MS DEERCHILD:  I believe that our community is the resource to do it.  I mean, anecdotal evidence points to the fact that this is something that they want, this is something that they want to invest in, this is something that they want to take part in.

1157             So the resources will come from the people that support our initiative here at NCI 2.  And the community has supported us throughout the past 36 years in helping that news happen.

1158             COMMISSIONER MENZIES:  I think I meant the bodies.

1159             MS DEERCHILD:  The bodies.

1160             COMMISSIONER MENZIES:  The reporters.

1161             MR. MCLEOD:  Yes.  To answer that question, there are people that are working within newspaper, there are graduates coming out of Red River College and other training centres.  So I think we are approached quite often for young people looking for jobs.  And yes, I believe that that will ‑‑ we can find the people.

1162             And I also think that we won't be able to hire everybody at some point who wants those jobs in the industry, so that is where I hope mainstream as well steps up and, you know, reflects the reality of Winnipeg as well.

1163             COMMISSIONER MENZIES:  Okay, thank you.

1164             THE CHAIRPERSON:  Thank you, Commissioner Menzies.

1165             I have got one question and it relates back to your financial economic data.  When I look at your statement, the first two years or thereabouts you are losing money and you also have come capital investment as well because you have got a large depreciation in the first year.

1166             When you look at that, how deep a trough are you digging before you come out I guess is the basic question?  How much money do you have to invest in salaries, manpower, operations and capital before you start to go cash flow positive?

1167             MR. MCLEOD:  The first part of the costs would be the transmitter site, of course, and we would be putting an extension, we would actually be building an extension on the back of our building.  That cost would be just over $500,000.

1168             And our next cost would be hiring the staff and we would be hiring four people as well at a fulltime rate, so we are looking about $140,000‑$150,000 between those four positions.  And we would have a budget as well for part‑time individuals.

1169             So that is how we would begin.  And, as mentioned earlier, this is not a funded entity as well.  I think the stereotype we are getting a lot of is, oh, you must be getting funding for this.  No, no this is an investment to meet our mandate.  This is an investment in the people we serve.  This is an investment in our future, so we remain relevant and we serve our mandate.

1170             And again, we are non‑profit so the money we make goes into our operations, which I really pride our organization on, because we wouldn't be where we are today I think if we were just out for the dollar.

1171             THE CHAIRPERSON:  So if you have to invest $500,000 in infrastructure and you have another $100,000 of losses in the first two years, which includes your hiring and everything else as well, that is about $600,000.  Are you going to a bank and borrowing some money or do you already have all that money set aside somewhere?

1172             MR. MCLEOD:  Again, we have been working towards this for three years.  We definitely have the money, yes.  I think once the licence is approved we would proceed, our chief financial officer and our board would workout a plan.  Yes, to answer your question, we have the funds to do this ourselves.  We have been working towards this for three years.

1173             THE CHAIRPERSON:  Okay.  Now let's hypothesize and suggest that you only get 50 per cent of the revenues that you forecasted in the first two years.  Do you still have the money to carry you through for the first two to three years?

1174             MR. MCLEOD:  Yes, we do.  Our revenue increase over the last three to four years has been significant with our network.  As I mentioned earlier, we are seeing a lot of clients who want to reach the whole province.

1175             And if you want to buy an ad that will reach the whole province, you could only go to NCI Radio to do that.  You can't go to a commercial station and get the entire province.  So we are seeing a lot of clients who are very interested in our network for those reasons.

1176             And we also have continued growth plans as well in terms with our website development.  We are going to be seeing more revenues being gained through that.  And, as mentioned, we are visiting agencies in Vancouver in Toronto as well who are interested in what we can do because nobody else can do what we do.

1177             THE CHAIRPERSON:  And I commend you for it and I don't think your operating expenses are very high.  I just want to be comforted with the fact that revenues are a questionable item in the marketplace based on the economy, based on a lot of things as well.  And I just want you to assure us that if in fact your revenue forecasts don't materialize in the early years, we are not going to be back facing each other again trying to figure out what to do with the situation we are in.

1178             And so if you have that fund of cash that gives us an awful lot more of a relief, notwithstanding the fact we don't want to see you lose money either in this proposition as well, that is not the intent here.

1179             MR. MCLEOD:  Yes.  We own our properties, we have a beautiful two‑storey building on Inkster that is worth almost $900,000, we own that building.  And we have two properties in Thompson we own that are worth probably $800,000.  We outright own these.  It is our revenues, again, our revenues go into our operations.

1180             I think, like I say, the stereotype of funding or the stereotype of are they making money?  I think we know, we do, we know how to make money and we have to make money to do what we do.  So we are an interesting place, because we have to balance making money with serving our mandate and it is a juggling act.  And we are prepared to do that juggling act.  I don't think a lot of other people would be prepared to do that, but we are and I think we are very good at it as well.

1181             THE CHAIRPERSON:  We are in similar situation, we have to juggle as well.  And so far we have been pretty good at it as well and we want to continue that record.

1182             Counsel.

1183             MR. MCCALLUM:  Yes, just for clarity if I may.  As I understand it, about 50 per cent of the Category 2 music that you propose that is Canadian content will be Aboriginal content.  How much of this music will be Aboriginal‑language content?

1184             MR. MCLEOD:  Again, there will be a small percentage of it will be Aboriginal‑language content.  But again, we are looking for content that speaks to the community.  We want to find songs that have positive messages.  We don't want to lean towards songs that are basically copying mainstream themes.  You know, we want to find music that speaks to our audience or will inspire them as well.  And that is part of our mission and mandate is to reach young people and inspire them.

1185             So it is not so much about the language, it is about the artists themselves, what they have to say in their music.

1186             MR. MCCALLUM:  So what would a small percentage of the 50 per cent be?  Would you be talking about say 20 per cent of that 50 per cent, is that what it is?

1187             MR. MCLEOD:  Yes, I think it would be around 10 per cent.

1188             MR. McCALLUM:  Around 10 ‑‑

1189             MR. McLEOD:  Yeah.  And ‑‑

1190             MS DEERCHILD:  You have to understand that this is a library that we have to build.  As Mr. McLeod outlined earlier, many of our artists face challenges in getting their music recorded professionally, so that is something that we have to take into consideration.

1191             A lot of them don't music in language, simply because it doesn't sell.

1192             So, in order to get language music, we would have to support the production of language music.

1193             So, in our earlier years that might be something we could explore, but not at this time.  So, yes, it might seem like a small percentage, but it's still a bigger percentage than anywhere else.

1194             MR. McLEOD:  Yeah.  And language isn't used to define Aboriginal music.  I mean, if you look at the Canadian Aboriginal Music Awards held in Toronto or if you look at the Aboriginal Peoples Choice Music Awards, a low percentage is done in language but the community recognizes that music and it turns into major award shows that are broadcast, you know, nationally on APTN and gather thousands ‑‑ like here in Winnipeg it draws at least 6,000 to the awards show.

1195             So, it's not so much about the language content, it's about the artists themselves.

1196             MR. McCALLUM:  So, that's like 10 per cent of 50 per cent which is like five per cent overall; is that right?

1197             MR. McLEOD:  Yeah.  I think it's not our ‑‑ it's not our place.  I'd leave it ‑‑ I respect the artist.  If they record in their language or not, that's their decision.

1198             But in terms of us choosing the music, I think that that's our ‑‑ what our mission is is to choose the best music that's out there.

1199             MR. McCALLUM:  And if the Commission decided to impose then five per cent of all Category 2 selections to be music in Aboriginal language as a condition of licence ‑‑

1200             MR. McLEOD:  Yeah, yeah.

1201             MR. McCALLUM:  ‑‑ would that be acceptable?

1202             MR. McLEOD:  I don't understand ‑‑ I don't understand ‑‑ I would say I would prefer not to have that commitment but I don't understand why that commitment would exist.

1203             MR. McCALLUM:  What I'm saying is, if the Commission wished that to exist, I'm not saying that it will or will not at this point in time, I'm just saying, if the Commission thought that was important, can you adhere to such a condition?

1204             MR. McLEOD:  I'd say no we couldn't at this time.  I think that's something ‑‑ like I say, like the Aboriginal Music Awards, they don't judge on language to define Aboriginal music, they judge on is  the artist Aboriginal.

1205             And in the community ‑‑ even in the Aboriginal community, non‑Aboriginal people are welcome in those circles if they are part of the Aboriginal community.  So, to put up walls in that, I'm very uncomfortable with that because it ‑‑ we're putting up walls in front and around artists and I just ‑‑ I don't feel that the time is ‑‑ this is a time for that.

1206             MR. McCALLUM:  Would it be like an objective even if it is not a condition?

1207             MR. McLEOD:  I think if we find Aboriginal music ‑‑ the bottom line is, is it a good song.  I don't think we're going to put a song on because it's an Aboriginal language song, we're going to put it on if it's a good song.

1208             MR. McCALLUM:  Thank you, Mr. Chair.

1209             THE CHAIRPERSON:  Thank you very much.

1210             We're about to conclude.  If you'd like a two‑minute wrap‑up to summarize your application, you're certainly welcome to, it's at your discretion.

1211             MR. McLEOD:  Sure. I'd just like to say in conclusion NCI2 will greatly add to he diversity of radio ownership in major urban centres within Canada.

1212             We are certain NCI2 will become an important and integral part of the radio industry here in the city.

1213             We want to serve a significant growing, yet marginalized population.

1214             I would again like to thank the Commission and I would like to ask our Elder just to say the last few words, please.

1215             MR. LAVALLEE:  I liked Peter Menzies' question and it gave me a lot of time to think about it.

1216             In terms of how do we assure ourselves that we're going to be telling the good news story.

1217             One of the things I always share with my students at the college is, when I get up in the morning I say this is going to be a good day.

1218             When it's raining or it's 40 below, I go outside and I say, this is going to be a good day.

1219             So, it's just a matter of turning a primarily negative experience that we as Aboriginal people have been going through for a long, long time now.

1220             There's a lot of negativity among the young people and what I hope that we can accomplish through the media is to be able to tell our young people that you can determine whether this is going to be a positive day, a good day or whether this is going to be a bad day or a negative day.

1221             I think we can determine that.  All of us I believe have some understanding of that, depending on where you happen to be on this given day.  The whole world could be falling apart around you but you can say, this is going to be a good day and it will be a good day.

1222             And that's the good news story that we hope to be able to tell.  But there's a lot of positive things that are occurring in the Indian world, and that's the story that we want to tell.

1223             Among the youth we see graduates, we see graduates who are gold medal students, we see graduates who are going into international trade, people ‑‑ students going into medicine.  We want to tell those good stories, okay.

1224             We have doctors, we have lawyers.

1225             Yes, we have 10,000 young people on a waiting list across Canada, waiting to get into universities and colleges.

1226             I hope that somehow we can be supportive of those 10,000 that are waiting also, who may be living in the City of Winnipeg.

1227             So, I wanted to thank you very much, Peter, for allowing me an opportunity to reflect on that good news story that we say we're going to tell, and we will tell it.

1228             Thank you very much.

1229             THE CHAIRPERSON:  Thank you very much.  And we appreciate your appearance here today, particularly the Elder as well.

1230             Thank you very much.

1231             We'll adjourn for five minutes to allow the next group to come up and, so, don't stray too far away.

1232             Thank you.

‑‑‑ Upon recessing at 1507

‑‑‑ Upon resuming at 1517

1233             THE CHAIRPERSON:  Thank you very much.

1234             Madam Secretary.

1235             THE SECRETARY:  Thank you, Mr. Chairman.

1236             One reminder, when you are in the hearing room, we would ask that you please turn off your cell phones, beepers and blackberries, as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators.

1237             We would appreciate your cooperation in this regard throughout the hearing.

1238             We will now proceed with Item 4 which is an application by YO Radio Management Inc. for a licence to operate an English language FM commercial radio programming undertaking in Winnipeg.

1239             The new station would operate on a frequency of 106.3 MHz, channel 292C1 with an effective radiated power of 100,00 watts, non‑directional antenna, antenna height of 223 metres.

1240             Appearing for the applicant is David Asper.

1241             Please introduce your colleagues and you will then have 20 minutes to make your presentation.

1242             Thank you.

PRESENTATION / PRÉSENTATION

1243             MR. ASPER:  Thank you.

1244             Good morning, Mr. Chair, Commissioner Patrone, Commissioner Menzies and Commission staff, welcome to Winnipeg.

1245             My name is David Asper and I'm the Chairman of YO Radio Management Inc.

1246             I appear as a private individual offering to make a private investment that is completely separate and independent from my business at CanWest.

1247             Let me emphasize at the outset that nothing about this application and nothing about the operation of the station, if we are to be successful, will in any way intersect with the business of CanWest, a licensee of the CRTC.

1248             About 30 years while attending the University of Manitoba and working part time as a camera operator at CKND TV here in Winnipeg, I wandered one day into CJUM, the campus radio station, just to see what it was all about.

1249             Before I knew it I wound up as the six o'clock news person and since then I have to confess that radio has been part of a passion.

1250             It only seems like yesterday when I was fortunate enough to land a huge scoop and get the last interview with the very popular retiring Mayor of Winnipeg, Steven Juba for my newscast.  It was a huge moment in my life.

1251             I went on in life to practise law, but even then I was able to pursue my interests in radio by being given the opportunity to do occasional feature work for CBC here in Winnipeg.

1252             And, as a lawyer, my cases were often the subject of radio news, including spending a good deal of time in the studio with radio legends such as Peter Gzowski during the David Milgaard case.

1253             I know that many years have passed since those days, but in my view radio remains as vital a component of Canadian media as ever.

1254             I continue to see this in whether in the local sports context arising from my association with and potential interest in the Winnipeg Blue Bombers, or nationally in the course of my business and on related matters in CanWest.

1255             I believe in the radio medium with all its diversity and in its future.

1256             When this team put the application together before you now, I was sold, both as a businessman as well as a radio lover and I hope you will be too.

1257             I'm here to tell you that although we intend to convince you with our words, we deeply believe that if you grant this licence to us, we will convince you with what we do and the contribution we will make to our community and to the industry.

1258             So, let's get to the business at hand.

1259             I'd like to introduce the members of the YO Radio team who were instrumental in preparing the application for our new independent FM radio service for Winnipeg.

1260             To my right is Brian Wortley, President of YO Radio Management.  Brian has had over 26 years in the radio business, primarily in sales, seven years with Craig Broadcasting as General Manager and Sales Manager and 10 years in Winnipeg with QX104 FM Hot 103 FM in sales, and then General Manager and Sales Manager for 99.1 Cool FM in Winnipeg.

1261             Most recently Brian was the director of local sales for the Winnipeg Free press.

1262             To Brian's right is Howard Kroeger, President of Kroeger Media Inc., which is based in Winnipeg.

1263             Howard is best known for the development and launch of the Bob FM classic hits brand and the Hank FM alternative country format in Canada and numerous markets throughout the United States.

1264             Howard's company, Kroeger Media Inc. was commissioned to do a complete and comprehensive perceptual research study in order to determine the best format opportunity in the Winnipeg marketplace.

1265             To my left is Lisa Stiver our legal counsel and to Lisa's left is Kevin McDougal, Research Manager for one of Winnipeg's most prominent research companies, Probe Research Inc.

1266             Kevin's company was commissioned to do an economic impact analysis of Winnipeg to determine the viability of a new FM undertaking in this market.

1267             And directly behind me is Louise Nebbs, Director of Finance for YO Radio Management.

1268             Also behind me is Mark Lewis who's been assisting us with regulatory and legal matters.

1269             Brian.

1270             MR. WORTLEY:  Thank you, David.

1271             Mr. Chair, we are delighted to welcome you to Winnipeg, Manitoba, crossroads of North America and, it goes without saying, the favourite city of those of us seated at this table today.

1272             We are especially delighted to take the next few minutes to introduce you to 106.3 FM, YO Radio's proposal for a fresh, new independent FM radio service in the pop alternative format.

1273             It is a proposal that has been created exclusively in Winnipeg, by Winnipeggers, for Winnipeg.

1274             Our goals for our FM application of the pop alternative format are very straight forward.  We want to fill a notable gap in the Winnipeg radio market by designing and delivering a service that caters to a younger 18 to 34 demographic.

1275             At the same time, we want to deliver a service that provides a stronger focus on spoken word programming with the emphasis on quality news and information content.  If it is a fund raiser or a community event, it will be heard on 106.3.

1276             It goes without saying, but it is important to note that his radio station will reflect the values that are held by the family that owns and operates it.

1277             David Asper is well respected for his generosity to charities such as the United Way, his support of the University of Manitoba Bison Sports, the Heart & Stroke Foundation, just to name a few.

1278             The people involved in the radio operation live in the neighbourhoods of Winnipeg and are connected to this community.

1279             Our music consultant is from Winnipeg.

1280             In other words, there is a strong desire and passion to give back to this city we call home.

1281             And now to the reason we are here, our idea.

1282             What this hearing is about today is finding the very best concept for a new station to serve the Winnipeg market.  We believe that we have a winning formula in our approach.

1283             106.3 FM is the culmination of extensive in‑depth research to discover the largest un‑served format and the greatest opportunity in our community.  At a time when some would have you believe that radio faces grave problems, we believe that radio has a bright future built on a commitment to do what radio does best, target market, localized service and live connection, the key word being local.

1284             You will see further on in our presentation our intention to local artists, local ownership and local spoken word, in a sense stepping back to a time when radio was a relevant source of a community's life.  We have lost this connection with the 18 to 34 age groups.  For these people radio has lost its relevance.

1285             In the most recent BBM survey in the categories of "other" women 18 to 34 share was 10.1 percent of shared hours.  With men 18 to 34 the share was 7.7 percent.  This is where 106.3 will shine with local announcers that are not live ‑‑ that are live, not piped in from another city.

1286             Our spoken word content will be local with such features as Streets, a lively look at Winnipeg's local history as seen through the street names that grace our city; Daily Profile, a feature that focuses on young Winnipeggers who are making a difference in our community, whether social, cultural, economic and/or political walks of life.  106. 3 will provide for young Winnipeggers a platform to be heard.

1287             And finally, which we believe is groundbreaking for a music radio station, The Week, a one‑hour public affairs program that discusses major issues of the previous week in Winnipeg and Manitoba, providing another opportunity for young Winnipeggers to voice their concerns and opinions.

1288             At this time I would like to play a small montage of one of our spoken word features called "Streets".  Nick?

‑‑‑ Audio clip / Clip audio

1289             MR. WORTLEY:  So how do we repatriate this group to commercial radio?

1290             First, with the music that they want to hear; second, with an interactive platform for them to connect with and feel like they are part of this radio station and; third, support of our local artists.  This station will be grown organically overtime and more importantly it will be sustainable growth for years to come.

1291             Of course, for a new entrant in a consolidated market to succeed you need the right team, the right execution and the right idea.  Here to best describe how we decided on the right idea is Howard Kruger.

1292             MR. KROEGER:  Thanks, Brian.

1293             Mr. Chair, we are very excited about the prospects of bringing a pop alternative format to the city of Winnipeg.

1294             The pop alternative format is best described as a unique hybrid of current, recurrent and gold‑based music.  It will resonate with a younger, 18 to 34 listening audience, a group that has an overwhelming exposure to music from a range of platforms because pop alternative music selections identify with their very broad music tastes.

1295             My research and programming experience over the years has been that new ideas and new approaches can give birth to some tremendous opportunities, especially when market conditions create a perfect storm.  This was the case when we had the fortunate opportunity to develop and launch CHUM Group Radio's BOB‑FM in March of 2002 right here in my hometown of Winnipeg.  It was the first of its kind, adult hits formatted station in North America that was an immediate success.  This success was repeated a year later in other markets as well, such as Ottawa and London, and of course a similar reaction eventually met JACK‑FM in Vancouver and Calgary.

1296             Success with a format eventually crossed the border and took off in the United States.  The reason for the success of this format had everything to do with the art and science of programming and a fertile landscape that was ready for something new and refreshing.

1297             Like nearly all the major broadcasting markets in Canada, Winnipeg has many of the mainstream format opportunities covered.  We have classic rock, active rock, hot AC, mainstream AC, Top 40 radio, country, classic hits and news talk and information.

1298             We also have to take into consideration that today's average radio listener has a very sophisticated musical palate; television, iPods, satellite radio, movies, videogames, CD box set compilations and various peer‑to‑peer file sharing services have all provided them with a vast depth of songs to choose from and explore.

1299             You have to remember that almost every song that has ever been recorded over the last 100 years has now been digitized and is now accessible with a click of a mouse.  Today, it's not unusual for someone to discover the music of an already established artist alongside a just new and emerging artist for the first time.  Whether it's been around for 50 years or 50 hours the average music consumer has instant access to anything that they would like to listen to.  And as a result of the many available choices for music the taste for a shared variety of musical styles has exploded and another opportunity has been created.  Variety has now become a niche format itself.

1300             This is what our thought process was while going into the field to search for various format options in Winnipeg.  Kruger Media Inc. conducted a comprehensive market study in December of '07, at the end of December '07, in which we interviewed 600 residents of Winnipeg between the ages of 18 and 54 with the age and gender of the respondents to study the statistically representative habits of the population stats of Winnipeg.

1301             We examined the potential appeal of six different radio formats which were Triple A, pop alternative, news talk/sports/music, rock‑based CHR, which we call bump; hip hop and rhythmic‑based AC.  We examined these potential formats as they were not currently being offered in Winnipeg.  And for each of these format groups we investigated and we produced six audio montages comprised of music that best exemplified the format choices we were trying to present.

1302             Of these six formats we examined pop alternative came back as the top format choice in Winnipeg.  When played an audio montage that best described the sound of this format, 35 percent of the people between the ages of 18 and 54 responded by saying they would listen often to a station that played music such as this and 46 percent said that it could be their favourite radio station.  Of people between the ages of 18 and 34, 52 percent said that they would listen often to a station that played music such as this.

1303             The format will attract slightly more women than men.  Roughly 54 percent will be women and 46 percent men.  The format basically is 50‑50 when it comes to gender.

1304             3 percent of the format's appeal will come from 18 to 34 year old ‑‑ I'm sorry, 63 percent of the format's appeal will come from 18 to 34 year old adults and it will feature a mix of current, hip hop, pop and alternative rock hits along with older music from the same styles.

1305             The format plays some current hits but is not a CHR.  It plays some current alternative but it is not an alternative rock.  It plays some older alternative rock but it's not a classic rock station. And it plays some older pop and some hip hop hits but it's not a classic hits station.

1306             Basically, the listeners to this format are adventurous listeners with eclectic music tastes who are willing to hear new music along with their familiar favourites, regardless of style.  They don't see hip hop and rock as opposites.  Rather, they prefer the best of both styles of music.

1307             With a pop alternative life group our research shows us that some long held stereotypes such as only men prefer hard rock and women prefer softer rock are actually erased.  In the pop alternative world we find that both women and men like rock as well as pop and hip hop, dance and other styles of popular music.

1308             This is also a music format that provides ample space for both Canadian content and the showcasing of emerging artists from the Canadian music scene.  But beyond the music our market research reveals a very strong interest in spoken word programming within the 18 to 34 year old age group with an emphasis on local information, including local news, weather and traffic reports.

1309             We are therefore proposing this part of our application to provide over 16 and one‑half hours of spoken word programming each week, strongly focused on what's happening in the Winnipeg community.

1310             To this end we developed a number of spoken word features that will accompany our leading edge pop alternative music selections and we are especially excited about our daily profile and weekly profile programming segments.  These segments will be focusing on the young people of Winnipeg and how they are making a difference in our social, cultural and political life.

1311             At this time we invite you to listen to a brief audio presentation about our new independent FM radio station 106.3 FM.

‑‑‑ Audio clip / Clip audio

1312             MR. WORTLEY:  Mr. Chair, our research indicates that 106.3 would be welcomed by young Winnipeggers age 18 to 34 but our market and audience research points to much more than this.

1313             Kevin McDougald from Probe Research to explain.

1314             MR. McDOUGALD:  Thank you, and good afternoon.

1315             First of all, the Winnipeg market, as stated by the Conference Board of Canada just a few months ago, is firing on all cylinders and is posed for robust economic growth with respect to all indicators in the 2009 to 2015 period.  This growth will also translate into significant increases in retail sales, boosting the local advertising market.

1316             Second, while our region's population is also projected for continuing growth over those years, the 18 to 34 demographic is actually expected to grow ‑‑ pardon me ‑‑ at a faster rate than the general population of Winnipeg.

1317             And third, the Winnipeg radio market currently stands at just under $38 million with consistent growth experienced year over year for the past five years.  This growth is expected to become even stronger in the years ahead.

1318             When we add these factors together; strong, economic growth, a steady increase in our target audience and a very robust radio market, we see a very comfortable fit for an independent, youth‑focussed radio service here in Winnipeg.

1319             MR. WORTLEY:  Mr. Chair, the strength and prosperity of the Winnipeg economy and the local radio market means that 106.3 FM will have a very modest impact on existing radio services.  In part, this is because the introduction of new radio services tend to grow the advertising pie rather than slice it into smaller portions, and our research supports this trend for Winnipeg as well.

1320             We expect to launch 106.3 with a six share of tuning but no single radio station will experience a dramatic drop in their audience share.  Instead, the impact of 106.3 FM will be spread across a number of different stations in the market.  Similarly, 106.3 will have only a minor impact on existing Winnipeg radio revenues.  By far the bulk of our revenues, 75 percent, will come from a combination of expanded radio advertising budgets, advertisers who are new to radio and other non‑radio media such as outdoor and print.

1321             Mr. Chair, I am certain that you and your colleagues are aware of the Winnipeg story ‑‑ music history.  It doesn't seem like that long ago when my friends and I would be taking in Neil Young or Burton Cummings at the River Heights Community Centre.  We were also home to such luminaries as Crash Test Dummies, Chantal Krevaziuk, Holly McNarland, Remy Shand, and the list goes on.

1322             The Winnipeg music scene continues to develop and promote many rising stars, including Jodie King, Doc Walker and J.C. Campbell.

1323             After meeting with numerous local bands and artists, it became abundantly clear that the two areas of commonality that they all share as a challenge was a platform to showcase their talents and revenue.  YO Radio has some very special plans to address these concerns and bolster this great tradition of Canadian music heritage.

1324             As a major commitment to the local music scene, we plan to book the Park Theatre venue over on Osborne Street every Friday night every week of the year to create a showcase for emerging Winnipeg and area musicians.  Each group will also be given tickets for the show, for their friends, family members and booking agents and this will be a major first step for most of these performers, but more importantly a springboard for their music career that they may not have been afforded to them in the past.

1325             In total, 104 local performers will play the Park Theatre over the course of a year, 728 over the course of our licence term and 28 performers will have their production of their first CD paid for over that same term.  From on air, website, live venue, airplay and financial support, these performers will be in a position to take the next big step, going national/international.

1326             To create additional awareness, 106.3 FM will broadcast the entire evening from the venue.  The evenings will also be recorded and edited for future airplay on Sunday night, to be known as "The Best of Friday Night at the Park".  For 12 of these Friday Nights at the Park we will run a talent contest judged by professional musicians and music industry executives.  These contests will be enhanced by our association and commitment to MARIA, Manitoba Music, through their extensive database of musicians and bands.  Our website, a full slate of promotional announcements and on‑air interviews with performing artists will ensure a high level of participation and attendance.

1327             Three winning artists will be awarded the costs of a recording session, will be added to our emerging artists' rotation and promoted on our website.  Our vision is that this Winnipeg talent incubator can feed into larger contests such as Canadian Idol.

1328             We are very proud of the great music tradition of Winnipeg and especially proud to make this contribution to local and emerging talent.

1329             Mr. Chair, Winnipeg is home to the largest population of Aboriginal Canadians in Canada at over 68,000 people, roughly 10 percent of the city's population and 30 percent of those people are under the age of 30.  YO Radio believes that our presence in the local market carries with it a responsibility to provide career opportunities for the Aboriginal youth of our city.

1330             We are therefore ‑‑ we have therefore established an agreement with Robertson College, an accredited vocational school in western Canada, to provide four full scholarships in each year of our licence term to qualified Aboriginal youth in the college's Radio, Broadcasting, Administration and Marketing program.  This course has been designed for the students to learn all aspects of the radio industry, from on air, production, creative writing, sales and administration.  We believe that this training is a direct and proactive way of getting more reflections of the Aboriginal community on the air and not just limited to YO Radio's operation.

1331             MARIA, Manitoba Music, through their Aboriginal music program will administer the scholarships and select the recipients while 106.3 FM will provide opportunities for these students at the station.

1332             With our commitment to FACTOR of $210,000, our Aboriginal scholarships of $325,948 and Friday Nights at the Park of $506,100 the YO Radio commitment to the development of Canadian content exceeds one million dollars over the course of a seven‑year licence.

1333             In short, we think that 106.3 is a great vehicle for promoting rising talent in Winnipeg whether for music or for a career in radio.

1334             Dave.

1335             MR. ASPER:  Thanks, Brian.

1336             As you can see, Commissioners, we are extremely enthusiastic about our application for this new, independent pop alternative radio station for the city of Winnipeg.  We truly believe that YO Radio and 106.3 will make a very important contribution to the diversity of voices in our community and will ultimately make a difference for the young people of Winnipeg, our emerging local talent and Aboriginal youth in particular.  We hope that you share our enthusiasm for what will be an outstanding service to our community and we would be very happy now to answer any questions you may have.

1337             Thank you.

1338             THE CHAIRPERSON:  Thank you very much for your presentation.

1339             Commissioner Menzies will lead the questioning.

1340             COMMISSIONER MENZIES:  Thank you.  A couple of formalities here early on.

1341             We need confirmation from you that you are familiar with the 2006 Commercial Radio Policy regarding calculation of your basic CCD obligations and that you are willing to operate under a transitional CCD condition of licence until those amendments to the Radio Regulations come into force.

1342             MR. WORTLEY:  Yes.

1343             COMMISSIONER MENZIES:  Okay.  You have to say it.

1344             Your application binds you to an annual over and above of 148 ‑‑ I think ‑‑ 864 ($148,864) is the total.  Close to half of that is based on the Friday Nights that you just spoke about and then there is the $46,000 going to Robertson College for the scholarships.

1345             How would you adjust those in terms of ‑‑ like what if Friday Night at the Park doesn't cost out the way you are estimating it to cost out right now?  What if it only costs $60,000?  How would you adjust the commitment?

1346             MR. WORTLEY:  I'm not sure.  You mean if it didn't cost out as much as we had anticipated or less?

1347             COMMISSIONER MENZIES:  Yes, if ‑‑ you have got it priced out at about 70 some‑odd thousand.

1348             MR. WORTLEY:  $72,000.

1349             COMMISSIONER MENZIES:  $72,000.

1350             MR. WORTLEY:  Right.

1351             COMMISSIONER MENZIES:  What if when the costs come in it's only $60,000?

1352             MR. WORTLEY:  Well, the costs that we applied to this were direct costs of venue rental, production, lighting and it's a fixed contract with the Park Theatre to which we pay.  So that fee is a fixed rate per month that we pay for the year.  So there would be no fluctuation.

1353             Now, there are some indirect costs that we would be willing to absorb, i.e. line charges, but that cost to the Park Theatre would be paid to the Park Theatre for that venue.

1354             COMMISSIONER MENZIES:  Okay.  What I really need is just a commitment that if for some reason that particular project wasn't able to continue that the contribution would still be made and that you would have a plan B of where to send it.

1355             MR. WORTLEY:  Yes.

1356             COMMISSIONER MENZIES:  And what might plan B be?

1357             MR. WORTLEY:  Well, there are a number of opportunities.  We could obviously top up our FACTOR commitment.  We could add additional scholarships for the school.  I am fairly confident that this will be our major promotion.

1358             COMMISSIONER MENZIES:  Okay.  You are happy ‑‑

1359             MR. WORTLEY:  Or perhaps another venue.

1360             COMMISSIONER MENZIES:  Right, okay.  But you are happy to stick to the $148,864 as your annual commitment?

1361             MR. WORTLEY:  Yes.

1362             COMMISSIONER MENZIES:  Okay, thank you.

1363             On the Friday Night at the Parks a large part of that involves $45,000 for CD production and promotion.  We need to more closely define the term promotion because we need to understand exactly what you mean by it.  For instance, who would determine its value other than yourselves and what would be your plan B should the Commission rule that part of the contribution ineligible?

1364             MR. WORTLEY:  $15,000 would go to, obviously, the production of the CD.  We priced it out through ‑‑ in Canada and it's approximately $15,000 towards the development of their CD of the winners.

1365             COMMISSIONER MENZIES:  Right.

1366             MR. WORTLEY:  If that program were not ‑‑ if you did not deem that program to be part of our CCD what would we do; was that your question?

1367             COMMISSIONER MENZIES:  Yes, just because of the vagueness around the definition of the word promotion.  That's really it.

1368             MR. WORTLEY:  You know, I think that word promotion is ‑‑ I would say it's not as accurate as it could have been.

1369             I think the promotion comes from the on‑air component of the artist.  But there's no hard dollars attached to that.  The $15,000 goes right to the production of their CD.  There's no other costs over and above that.

1370             COMMISSIONER MENZIES:  Okay.

1371             In terms of the Robertson College initiative we also need some assurance to make sure that arrangement in combination with your proposed arrangements with Harmony couldn't ultimately be ruled by the Commission or seen to be providing a financial benefit back to your radio ‑‑

1372             MR. WORTLEY:  Right.

1373             COMMISSIONER MENZIES:  ‑‑ by covering the normal costs of doing business.

1374             The phrase is:

"CCD policy and previous Canadian talent development policy have emphasized that payments should be made to third parties, should not be self‑serving and should be incremental.  That is over and above the normal costs of doing business." (As read)

1375             So, I'm not saying that's the case ‑‑

1376             MR. WORTLEY:  Right.

1377             COMMISSIONER MENZIES:  ‑‑ but I want to make sure that you're application is tight in that area so that the Commission would find you in order.

1378             MR. WORTLEY:  Right.  Which is why we've associated with MARIA and they will administer the scholarships and the money will go directly to MARIA.

1379             COMMISSIONER MENZIES:  Okay.

1380             MR. WORTLEY:  When they have scholarships.  Now known as NoManitoba Music.

1381             COMMISSIONER MENZIES:  And that's completely separate from your proposed arrangements with Harmony.

1382             MR. WORTLEY:  Correct.

1383             COMMISSIONER MENZIES:  Okay, thank you.

1384             Okay.  If this application and your initiative with Harmony are both approved do you expect your radio will benefit from synergies between the two?

1385             MR. WORTLEY:  I think there could be but I should mention that the business plan of YO was designed as a standalone.  But I do see some synergies there that we could certainly work with Harmony on.

1386             COMMISSIONER MENZIES:  So, just so I have it straight the YO business plan is fine on its own but it would be better with?

1387             MR. ASPER:  Well, maybe I can jump in because Brian, the process just so you know in terms of the vision began with Harmony.  And when the call for applications arose Brian was able to convince Brian, the team were able to convince me as the investor that there was a standalone opportunity.

1388             And that's how this evolved.  It began with Harmony and this came later.  And they were constructed on a standalone basis.

1389             COMMISSIONER MENZIES:  Okay.  That's just what we needed to make sure that we had there.  And just for the record too where would you see those synergies if they came about though?

1390             MR. WORTLEY:  Primarily in the administration side of the business, creative writing, traffic, production.  I see some synergies there.

1391             COMMISSIONER MENZIES:  News?

1392             MR. WORTLEY:  Pardon?

1393             COMMISSIONER MENZIES:  Would news be a component or not?

1394             MR. WORTLEY:  No, I don't see synergies with the news department only because the news for Harmony would be primarily delivered by students.  And the commercial side of YO would have professional newscasters.

1395             So, I wouldn't see it at the beginning anyway.  Perhaps down the road in an internship or a practicum that may be.  But I don't see that synergy there.

1396             COMMISSIONER MENZIES:  Okay.  Through your scholarship program and through a potential association with CJWV, would you allow or encourage the students in training there to do so at both stations?

1397             MR. WORTLEY:  Yes.

1398             COMMISSIONER MENZIES:  Okay.

1399             You already answered that one.

1400             Now, under the play list, the play list used in your, like Kroeger in your research, is a little harder, it appears to us anyway, to be a  little, somewhat harder‑edged, Nirvana, Stone Temple Pilots, Pearl Jam, Blink 182, than the more exhaustive play list in your application which has Tom Petty, Neil Young, Lenny Kravitz, Nickelback.

1401             Now, that seems like it might skew slightly older.  And I'm just trying to get a feel for your format.  Like are you day parting it?  Is part of the day Pop and part of the day Alternative or is it all Pop Alternative all the time?

1402             MR. KROEGER:  It's all Pop Alternative.  Every fifteen minutes at the radio station would be a representation of what the format is.

1403             And I think one of the things and I've had lots of experience with, you know, variety‑based formats and one of the things when you look at one hour of music it might skew things a bit.  But really I think it's a sum of its parts.  And I think what you have to look at is, you know, what you would get after let's say six hours of music.

1404             And, no, the minute a station starts, in this type of format the minute it starts getting, you know, maybe to the edge of something you soften it up with a Pop or you change the ‑‑ it's all about left turns to be honest with you.

1405             COMMISSIONER MENZIES:  All about left turns?

1406             MR. KROEGER:  All about left turns because it's, you know, as you're programming ‑‑

1407             COMMISSIONER MENZIES:  (Laughter) You know what happens when you do that, you just ‑‑

1408             MR. KROEGER:  Pardon me?

1409             COMMISSIONER MENZIES:  You keep going around and around and around.

1410             MR. KROEGER:  Yeah.

‑‑‑ Laughter / Rires

1411             MR. KROEGER:  That's a good point.

‑‑‑ Laughter / Rires

1412             MR. KROEGER:  The whole idea of the format is the element of surprise.  And the songs, you know the actual play list of this format is roughly 900 to 1000 songs.  And the placement of the genres and the types of music are hard‑clocked into the hour.

1413             So, you won't run into a case where the, you know, radio station sounds like a rock station for 15 minutes and then it sounds like an AC station for 15 minutes.  That wouldn't happen.

1414             COMMISSIONER MENZIES:  Okay.

1415             If they were both on the air now how would it sound different from Newcap's application?  What would be the defining characteristics of the ‑‑

1416             MR. KROEGER:  Well as described this morning if you take a look at Alternative Rock and Alternative Pop, Alternative Rock as presented this morning it's really more of a narrower niche format that is skewed male, sometimes as much as 70 percent male, 65 to 70 percent male.

1417             COMMISSIONER MENZIES:  Sorry, you're talking about them.

1418             MR. KROEGER:  I'm talking about Alternative Rock.

1419             COMMISSIONER MENZIES:  Newcap.

1420             MR. KROEGER:  Yes.  And the way Alternative Rock would be in this market, I think, based on my knowledge of the market and how many years I've spent here is that the way it was described today I think it would have more of an impact on one radio station.  I believe it was Power 97 that was being talked about today.

1421             Pop Alternative, on the other hand, it's a variety‑based format that crosses multiple genres of music.  And it does take into account people's evolving music tastes.  And that's one of the things that really has to be understood.

1422             The format itself is closer, 50 percent male, 50 percent female.  In the case of Winnipeg it was 54 percent female, 46 percent male leaning.

1423             And the thing that has to be understood about this format is that people's music tastes have evolved quite a bit over the last ten years.  And the theory has always been that peer‑to‑peer file sharing has had a lot to do with it.

1424             It's awakened people's musical tastes.  I mean, you know, I'm an average guy, I've got ‑‑ well, average when I say I have a few thousand record albums in my basement that I haven't brought up since, you know, in 12 years.  And I do remember that, you know, when peer‑to‑peer first, when Napster first raised its heads, I mean myself and all my peers, all my friends were making mixed tapes and putting all these songs together.

1425             That expectation of variety has transcended into a very successful format, i.e. Bob FM, Jack FM.  And it shows in our research that there is a huge taste for that type of format, a wide format.

1426             You have to understand also that every format, once it's been sliced and diced, I mean as I mentioned in the opening we have Hot AC, we have Soft AC, we have Mainstream AC, we have classic rock, we have Classic Hits.  Along comes a format that ends up having variety as its niche.

1427             So, I guess in some ways you could say that Alternative Pop might be a niche format but it's a niche in as far as variety goes and it attracts a larger base?

1428             COMMISSIONER MENZIES:  Are we boxing ourselves in in this conversation by talking about formats?  Like, I'm getting the sense from you that we're talking about a format for something that isn't necessarily formattable.

1429             MR. KROEGER:  It's formattable.

1430             COMMISSIONER MENZIES:  So, how would you, if it's that free‑flowing how would you ‑‑

1431             MR. KROEGER:  It has boundaries.

1432             COMMISSIONER MENZIES:  Like is there three of these and then one of these and then two of those and then one of these and you ‑‑

1433             MR. KROEGER:  Essentially, yes.  What you have to do when you're putting the music clocks together for a format like this, I mean you have to make sure that you're having the proper eras represented in the hour.

1434             It's not just ‑‑ that's one of the things about these types of formats.  It's really not playing everything you want.  It is a case of playing ‑‑ each song has its right place in the play list.

1435             And you know, if you're trying to represent cross or multiple genres of music you want to make sure that, you know, every 15 minutes is a good representation of your radio station.

1436             And if your boundary is on the rock side of things, let's say that it's a group like Nirvana over here and on your pop side of things it's Avril Lavigne over here.  And somewhere in the middle would be a new song by an emerging artist like the Weakerthans.  That's your 15 minutes and there's your representation of what the format it.  And that's represented every quarter hour, every hour throughout the day.

1437             MR. ASPER:  Commissioner Menzies, just part of this I guess from a business perspective is ‑‑ because I had the same question, frankly, when this concept was proposed.  There's got to be some cohesion and some rationale, some understanding to what the programming proposition is.

1438             And it can go and I think Howard's right that there are boundaries.  And what I think he is describing is what young people have been doing, I mean you and I probably did it when we were young, was creating a mix but not throwing into that mix some song that turns you off the whole mix because it's outside the boundaries.

1439             And I think that sort of describes because as the business proposition, you know, obviously you've got to sell it to the public and make it a good advertising environment for advertisers.  And in that respect it's got to be comprehensible.  And I hope that Howard is conveying that because when you hear it it makes sense.

1440             COMMISSIONER MENZIES:  Okay.  I just haven't heard it yet.  But it is beginning to make sense.

1441             But this is much more female friendly than Newcap's is one of the things I heard, right?

1442             MR. KROEGER:  Yes.  Yes.

1443             COMMISSIONER MENZIES:  But the age group the 18 to 34, let's move on to this next one, how do you satisfy both of those or what is your ideal listener, what does she look like?  And what, I mean does she have a university education, a household income, $100,000 up ‑‑

1444             MR. KROEGER:  You know, that's an interesting question because, you know, I've been in this business a long time and what we've often tried to do over the years is sort of, you know, put this picture of what the ideal listener looks like.  I don't think there is such a thing as an ideal listener.

1445             I think what happens is that the last, I'd say the last 10 years of the way music is listened to, the way it's exposed, I mean you look at video games for example.  Video games are taking over radio is, you know, the top way to expose new music.  I mean it's accounted for over a billion spins for new artists over the years.

1446             So, what's happened is that you have people that they just, they listen different.  And a variety‑based format has people from all walks of life attracted to it.  It has people who, you know, cross all areas of the economic ladder, all jobs, all professions.

1447             COMMISSIONER MENZIES:  Okay.  Maybe I just ‑‑ what would your advertising sales guy describe your ideal, your listener like to somebody that he's trying to sell an ad to?  Because I guess I'm trying to get it from a more commercial point of view.

1448             MR. KROEGER:  Okay.

1449             COMMISSIONER MENZIES:  I know you have a really broad range.  But you've got a car dealer that you're trying to sell some ads to and he needs to know who listens to your station, right?

1450             MR. KROEGER:  Yes.

1451             COMMISSIONER MENZIES:  And you've got to give him some kind of breakdown.  So, that's more or less what I'm trying to get at.

1452             MR. KROEGER:  Okay.  The format strength is 18‑34.  It's very strong, it has very, very strong demo appeal 25‑34 and very, very strong 18‑24 and 35 plus.  The core of the format would be 18‑34.

1453             The people that would be listening to this format, they really ‑‑ it would be a 50 percent male, 50 percent female.

1454             COMMISSIONER MENZIES:  Okay.  Should I advertise the Mercedes I have on the lot or should I advertise the KIA's that I have on the lot?

1455             MR. KROEGER:  Pick your target (laughter).  And I have to say, I think ‑‑

1456             COMMISSIONER MENZIES:  Can you sell them both for me?

1457             MR. ASPER:  I don't know that you can disaggregate the music proposition from the spoken word proposition that is inclusive as to the type.

1458             I think Howard can, you can give basic demographic categories but I think the type of listener and the type of proposition we'd be making to the salesperson, and again this is why I look at it from a business perspective, is that we're trying to engage people.  And we're trying to stimulate intellectual activity, people likely to listen to the commercials and react to them.

1459             And I think that, you know, you have to include that in the overall environment of the station of what's being proposed here.

1460             COMMISSIONER MENZIES:  Okay.

1461             And that sort of segues to another question about the spoken word.  I generally ask this of everybody.  To what extent is your voice new, like different as opposed to just another voice among the crowd?  What will be its distinguishing characteristics?  What would people, you know if we asked people, you know what's different about your radio in terms of the spoken word, what are they going to say?

1462             MR. KROEGER:  Well, there is a, as a new editorial voice we will be approaching ‑‑ well, first of all there's the spoken word quotient of it.  And I've been in this market for many years and I can't remember one station that ever did a focus on some of the historical importance of the city of Winnipeg, you know the fact that you can go see the Seven Oaks Massacre happened ‑‑ we were talking about this last week and Brian didn't even know it happened around here (laughter).

1463             But there are certain areas of the city that are very, very interesting.  And what we want to do is we want to bring that out in our spoken word commitment.

1464             And as a new editorial voice I think we're also going to be taking advantage of what our listeners perceive as news.  You know, what we want to do is we want to not just deliver the news to them but have them bring it to us for discussion and through different methods of texting and instant messaging.

1465             And I think this kind of opens up a bit of a philosophical discussion in that you know the media is having a very difficult time reaching listeners right now and engaging them in what is perceived to be meaningful content as far as news goes.

1466             David, maybe you have a comment on this.

1467             MR. ASPER:  Well, again, it goes back to why I'm sold on this application.  There's two parts to it.

1468             I happen to firmly believe as a core element of society that we are not doing a good job generally teaching civics and teaching identity and sense of place whether it's in the education system or even through the media.

1469             And part of this proposition includes a very intensive focus on our city.  And it starts with something that seems a bit superficial like the names of the streets except that you take the one example that we gave, Lagemodière, and you wind up into the early history of the Red River Settlement and Louis Riel and it can expand from there.

1470             And I think that's an important part and contribution to democracy, to ultimately engaging our children and our younger members of society and having them ultimately shed their apathy and get themselves engaged.

1471             Commissioner Menzies you know this well from your previous life, when a newspaper gets reduced to a five minute herald.  And media are scrambling like crazy to get people engaged.  And I think that's a very valuable basic proposition that is core to this application and that will help make it successful, commercially successful.

1472             The question of news, I was at and am fortunate to participate in the Canadian Media Research Consortium that undertakes research projects for the University of British Columbia School of Journalism under the tutelage of Donna Logan.  And I was at a conference last week looking at the question of news.

1473             And we're all stuck in a bit of a paradigm about what news is and the structure of news and it comes at the top of the hour or the bottom of the hour and somebody sits and reads it and tells you what they think is news.

1474             And what we have increasingly is, and one of the struggles in media is to get younger people to somehow get engaged with it and get aware of the world.  And it's an age‑old problem.

1475             So, while the concept complies with the regulatory environment in which an application is made for the provision of the news service, one of the interesting things that came out of the conference last week was that the discussion of what is news is almost as newsworthy and engaging as what actually is the news itself because the dialogue began with, well, is Britney Spears' latest outbreak news because young people tend to get attracted to that.  And is that valid versus Max Bernier's exploits on the hill or versus environmental change or whatever it is?

1476             And if you just preach one segment of that either it falls outside the regulations as what qualifies as news or it may alienate a listener because it's masterpiece theatre syndrome about what I think you should think is news.

1477             So, one of the things that intrigued me about the idea in this application is yes, we will comply and we will look like the provision of news as is required under the regulations.  But the hope is and maybe it's naïve ‑‑ I have teenage kids and a lot of what I think is proven to be naïve about influencing their lives ‑‑ but the hope is that if we can provide a forum to get young people engaged in dialogue that we can expand what they think is news, what we think is news.

1478             And it's something for the Commission down the road and I know it's a subject for the Commission to be considering, as to what it thinks is news because maybe it's time that we had the people tell us what's news as opposed to us telling them.  And it's an intriguing proposition.

1479             COMMISSIONER MENZIES:  I understand that.  I guess what I'm trying to get at too, and I think that's a very noble mission but also in terms of the application I'm not just talking about news.

1480             I'm talking about your voice beyond news, you know, your DJ chat, your whatever else is going on in terms of that.  And it's one thing to sort of say here's where we're going.  We need to practically know how are you going to get there in terms of some of the projects you've got in place to actually, to pull it off because it's not easy.

1481             So, to get back to the original what would people say about you?  If three years from now I walk down the streets of Winnipeg and I say, what makes YO Radio different, what would you want them to say back?

1482             MR. KROEGER:  Engaging radio station.  It's not ‑‑ the announcer talk is not all about back‑selling the last song.  The content is about the stories behind the songs.  The content is about where we live.

1483             There's also things that ‑‑ I mean most of the things that the radio station would be talking about I would hope would be things that aren't heard on as many other ‑‑ on many other radio stations.

1484             I mean the whole idea of you know, roll the songs and don't talk, I mean this is the antithesis of that.  In fact if you look at our ‑‑  the amount of minutes that we have scheduled for announcer talk, 450 minutes per week, that wasn't even calculating, you know, back‑sells or anything like that.  That's announcers coming on the air talking about local issues, talking about local things, local content.

1485             COMMISSIONER MENZIES:  Okay.  Thanks.

1486             MR. WORTLEY:  If I could just add one more thing, Mr. Commissioner.

1487             COMMISSIONER MENZIES:  Sure.

1488             MR. WORTLEY:  From a personal point of view I would like, if you walked up the street and asked someone about our radio station, I would like to hear them say this is our radio station, this is a local radio station that supports our local performers.  And I think that for me would be a very distinguishing factor for our station.

1489             COMMISSIONER MENZIES:  Good.  Thank you very much.

1490             In your research you had a very high passion index for this format among young people.  The general demographic trending for Winnipeg is for an aging population.  And I just want to know how much you've considered that and if you're comfortable that there's enough growth, I think it's about 10 percent growth in the age group you've targeted to support your business plan in the long run.

1491             MR. KROEGER:  From a format standpoint, quite comfortable with where the target is going.  We have a choice to either follow the target or let the target follow through us.

1492             But no, there is a very large unfilled in this marketplace of 33 per cent, and there is something called a passion number and this passion number is ‑‑ this rivals anything that I ever saw for Classic Hits formats like Bob and Jack in a market.

1493             COMMISSIONER MENZIES:  And it will stand up for some time.

1494             I have asked this of other people.  How capable are you of adjusting or how much do you feel you would have to adjust if somebody else, perhaps someone in this room, looked at it and said boy, that is a good idea.  It's such a good idea that I think I should flip my format to it.

1495             MR. KROEGER:  Good question.  I think being architects of the format, I would be quite easy with competing on that level.  I mean, it's not just about ‑‑ experience tells you it is not just about competing head‑to‑head with someone on a format like this.  There are different interpretations of everything.

1496             Someone could have a different interpretation of this format.

1497             But I would feel quite confident if somebody were to try to figure it out.

1498             COMMISSIONER MENZIES:  Okay.

1499             In your presentation you described the Winnipeg market as firing on all cylinders right now, and I just wanted to get that put in context with the fairly recent TRAM reports that we have asked other applicants about which haven't been that positive for Winnipeg lately.

1500             Do you see that as a short‑term negative bubble or do you see it as a long‑term trend?

1501             MR. WORTLEY:  Well, those are trends. We have been through the ups and downs of trends, and typically over the last five years the radio has experienced some good strong growth averaging 5 per cent growth year over year.

1502             What is key here ‑‑ and I'm glad you asked me that question because I know it dovetails with our business plan.

1503             I'm sure you have had an opportunity to look at our business plan, and the difference between the other applicants is we have built a business plan that is conservative in nature and is built to take some of those downturns.

1504             COMMISSIONER MENZIES:  Okay.

1505             MR. WORTLEY:  So I'm hoping, and I'm pretty confident, that this trend right now in the marketplace is temporary.  However, if we do experience that somewhere down the road, I believe our business plan is insulated from a downturn based on its conservative nature.

1506             COMMISSIONER MENZIES:  Thank you.

1507             Your forecast regarding market impact, it is pretty evenly distributed among Winnipeg's basically top five stations and CKY.

1508             How did you come to that conclusion?  I think it's almost a ‑‑

1509             MR. KROEGER:  Based on the format's demo appeal when we looked at, you know, who the station would impact.

1510             I mean, the average when we ran a duplication analysis, the average duplication if you took the basic like the Hot ACs in this market and the CHRs and the Classic Rock stations and the Active Rock stations, it was roughly about 20 to 22 per cent.

1511             So any time you have a new player coming into the market, especially with a format like this, you're going to have people who are ‑‑ there are going to be tire kickers, but at the same time remember we found a 33 per cent unfilled for this format and with passion for the format extremely high.

1512             So a lot of that share point that we have coming from CITY‑FM, the share point we have coming from Hot, the share point we have coming from Q, those are all basically people that were what we call second preference listeners to those radio stations anyway.  We are providing an option for them.

1513             I think that is one of the most interesting aspects of this format, or any variety‑based format, in that when it lands in a market it doesn't necessarily ‑‑ it doesn't kill anybody.  It kind of lands quite nicely and softly amongst all the players.

1514             COMMISSIONER MENZIES:  Okay.  So it was essentially an estimate based on your experience and knowledge of the local market?

1515             MR. KROEGER:  Yes.

1516             COMMISSIONER MENZIES:  Thank you.

1517             Your programming expenses are $2.7 million over seven years.  Those are a lot lower than Newcap's at $5.7 million and Evanov's at $7 million for over the seven years.

1518             To what do you attribute that efficiency?

1519             MR. WORTLEY:  The programming budget was designed basically what we needed in the marketplace in the radio station to deliver the kind of product that we were saying we would.  Those were based on today's salaries.

1520             There are some economies of scale in there; i.e., where you might have a program director and, slash, midday host; a news director, a news person that is also doing your traffic reports.

1521             But again, those are salaries that are fairly standard here in Winnipeg today and I believe very fair and very accurate as to how we would run the radio station.

1522             COMMISSIONER MENZIES:  Okay, thank you.

1523             How many licences do you think should be issued from this hearing in Winnipeg?  We could go from zero to three or four.

1524             MR. WORTLEY:  I think that the market could sustain two licences.

1525             COMMISSIONER MENZIES:  Two and a Native B?

1526             MR. WORTLEY:  I'm sorry?

1527             COMMISSIONER MENZIES:  Two plus a Native B or two including ‑‑ two total?

1528             MR. WORTLEY:  Ourselves and one other.

1529             COMMISSIONER MENZIES:  Yourselves and one other.

1530             MR. WORTLEY:  Right.

1531             COMMISSIONER MENZIES:  That's very generous of you.  A lot of people say one.

1532             Is your business plan built around that assumption?

1533             MR. WORTLEY:  Yes, it is.

1534             COMMISSIONER MENZIES:  Would your business plan stand up if we license more?

1535             MR. WORTLEY:  Yes, it would.

1536             COMMISSIONER MENZIES:  Okay.

1537             I have to touch back on one thing.  At the very beginning we were talking about the CCD, and I just wanted to make sure, as I did with Newcap, that you understand that an on‑air component of promotion can't be monetized and counted as a CCD contribution.

1538             MR. WORTLEY:  Yes, we are aware of that.

1539             COMMISSIONER MENZIES:  Understood. Good.

1540             I was going to ask you about the native demographic, but you touched on that.

1541             Newcap cautioned us about licensing an independent, given that the last two we licensed here got sold fairly quickly.

1542             I wanted to make sure that you had the opportunity ‑‑ and I bet you did, too ‑‑ had the opportunity to address it.  So far I have handed out a couple of fat pitches today, and I thought I would end by handing you one.

1543             So would you like to address that?

1544             MR. ASPER:  Well, Newcap is dead wrong.  If Newcap was correct, there would not be a radio system in Canada or an independent television system in Canada, all of which began with a single licensee.

1545             I'm not suggesting for one minute that we aspire to anything beyond that, but it does start somewhere.  I believe that we have submitted to you a business plan, market research that demonstrates a conservative assumption.

1546             I am prepared to invest in this thing because we have taken a conservative approach.  We are not trying to shower you with affection and dollars that we think are unreasonable in Canadian content development.  That has certainly been done in many markets unsuccessfully.

1547             We think we have given you a pragmatic stand‑alone application and you can judge for yourselves.  We are prepared to take ‑‑ I am prepared to take the financial risk on it and I think it speaks for itself.

1548             COMMISSIONER MENZIES:  Thank you.

1549             I do have one ‑‑ that goes beyond my last question.  I'm sorry, I missed this one earlier when we were talking about formats because we overlooked the possibility of overlap format with CJKR and CKMM.

1550             Where do you see yourself sitting in terms of format overlap with them?

1551             MR. KROEGER:  Once again, that 22 per cent duplication analysis, that touched on those formats as well, those radio stations.

1552             COMMISSIONER MENZIES:  Sorry, the 22 per cent...?

1553             MR. KROEGER:  What we did is we have taken the playlist for our format and we did ‑‑ we wanted to find out what the duplication analysis would be on all the other formats and it pretty much evens out to about 20 to 22 per cent.

1554             COMMISSIONER MENZIES:  20 to 22 per cent on each of those stations?

1555             MR. KROEGER:  20 to 22 per cent, yes.

1556             COMMISSIONER MENZIES:  Thank you.

1557             No more questions for me.

1558             THE CHAIRPERSON:  Thank you, Commissioner.

1559             Commissioner Patrone...?

1560             COMMISSIONER PATRONE:  Thank you, Mr. Chairman.

1561             Good afternoon.

1562             Just in looking at the economic data that you have provided for us, if I read it correctly you are forecasting a profit in year three of your seven‑year business plan and it goes up to 18.6 per cent by year seven.

1563             Is that correct?

1564             MR. WORTLEY:  Yes.

1565             COMMISSIONER PATRONE:  That's quite bit more optimistic than some other applicants.  Is the optimism well‑founded, in your view?

1566             MR. WORTLEY:  I believe it is.  I have been fortunate enough to be involved in to start‑up radio stations, one in Winnipeg obviously with COOL‑FM, and typically what happens with a start‑up is in terms of your national advertising, they will wait two or three books before they will start making any commitment to you.

1567             So there is a period of what we call traction, where we are building relationships with our advertisers, we are building the audience and usually by year three that is where you really should start making an impact.

1568             That goes with any business.  Year three is where it usually starts shining.

1569             COMMISSIONER PATRONE:  I want to move over to YO Radio's editorial commitment with respect to its news operation.

1570             Can you talk a little bit about staffing levels, number of reporters you expect to have in the field, who is doing what, that kind of thing?

1571             MR. WORTLEY:  Certainly.  We will have two news people in the station Monday to Friday.  They will be responsible for the news‑gathering and for the reporting of news at the radio station.

1572             On the weekends we have backed off of news.  The reason ‑‑ and that's not to say we won't be covering any stories, but in terms of a formal newscast, because of our spoken word component that we have moved into the weekend, i.e. Daily Profile, which gives an hour wrap‑up of the news of the week prior, New Tube.

1573             Our spoken word component is a little more intense on the weekend, so we chose to do that as opposed to an actual formal newscast like we will be doing Monday to Friday.

1574             COMMISSIONER PATRONE:  And I understand, Mr. Asper, you spoke at the beginning of your presentation about the fact that it is very much independent of your interests with CanWest.

1575             But regardless of that, do you anticipate any synergies with regard to the news operations?

1576             MR. ASPER:  I guess it is conceivable that management will come to me and say maybe we want to subscribe to the CanWest News Service or to other products that CanWest provides.  My bias is to not do that.

1577             Frankly, if you accept the proposition ‑‑ and this is what I am buying into as an investor ‑‑ that this is going to be a very, very intensely local operation with a hugely disproportionate local to national and international, there is nothing that CanWest can really provide it other than the local Global station.

1578             COMMISSIONER PATRONE:  Well, that would be at.  If, for instance ‑‑

1579             MR. ASPER:  But I don't anticipate any interaction between the two, frankly.

1580             COMMISSIONER PATRONE:  So if one of your Global reporters has a story, for instance, that no one on the radio side had, there wouldn't be any pressure, for instance, for that reporter then to file for the radio operation?

1581             MR. ASPER:  No, absolutely not.  Absolutely not.

1582             The Commission has an editorial policy in place with respect to my other CanWest business on the division of responsibilities ‑‑

1583             COMMISSIONER PATRONE:  Yes.

1584             MR. ASPER:  ‑‑ and I mean I respect that and understand the issue.

1585             COMMISSIONER PATRONE:  You talked about listeners telling you what news is.  I believe that was the philosophy.  But I'm just wondering to what degree might there be a practical application for that and how might that manifest here with this operation.

1586             MR. ASPER:  Well, if you think for example that we have an issue locally about pig farms and the extent to which pig farms and the excrement from pig farms is seeping into the soil and polluting Lake Winnipeg.  That is the news story, that is the headline.  You know, my hope would be that in order to distinguish ourselves there may be a contrarian view, which is to question is that really true.  And as one of the anecdotes, for example, there is a water sewage treatment being proposed and there is two ways to do that.

1587             I think you have to take the temperature of your audience to find out is there some part of the story that they are more interested in as opposed to the way you are telling it or the way the authorities want you to tell it.  I think you need to get input from your audience.

1588             I suspect, my instinct tells me that the demo that we are targeting is a contrarian group and you need ‑‑ and that is where I think not only the engagement occurs but the diversity in the marketplace, which across everything else is essentially saying the same thing, repurposed.

1589             COMMISSIONER PATRONE:  You spoke about the one‑hour public affairs program.

1590             MR. ASPER:  Yes.

1591             COMMISSIONER PATRONE:  Who will produce that?  Will that be done by the news staff?

1592             MR. WORTLEY:  Yes.

1593             COMMISSIONER PATRONE:  When will it air?  Will it just air the one time or will it be ‑‑

1594             MR. WORTLEY:  Yes.  I believe it airs...

1595             MR. KROEGER:  The Week will air Sunday morning 8:00 a.m. to 9:00 a.m. and Weekly Profile is Saturday 8:00 a.m. to 8:30.

1596             COMMISSIONER PATRONE:  Will that be an entirely taped segment or will there be live elements to it?

1597             MR. KROEGER:  It will be produced.

1598             COMMISSIONER PATRONE:  So packaged?

1599             MR. KROEGER:  Yes.

1600             COMMISSIONER PATRONE:  In the segment that was aired I heard Beethoven, AC/DC in the promo tape.

1601             I am suggesting you probably won't go as far as Beethoven, but how old will the oldest tune be?

1602             MR. KROEGER:  The oldest gold will probably be going back ‑‑ there will be a handful of titles that will date back to about 1986, but the majority will be '89 and over as far as gold.

1603             COMMISSIONER PATRONE:  So you probably wouldn't play the AC/DC tune, because I think that was ‑‑ I seem to remember that was a 70s?

‑‑‑ Laughter / Rires

1604             MR. KROEGER:  No.  Actually that particular song was ‑‑

1605             COMMISSIONER PATRONE:  Maybe it's my memory.

1606             MR. KROEGER:  The one we used was 1992.

1607             COMMISSIONER PATRONE:  Oh, okay.  I had better catch up on my AC/DC.

1608             I know you have touched on this a little bit, but are there enough people whose tastes are eclectic enough really to buy into something like this in which I notice you have Notorious, BIG and then I believe Guns 'n Roses in there in the same segment.

1609             MR. KROEGER:  Absolutely.  First of all, think about the iPod, think about people's personal taste.

1610             The other thing you have to look at, too, is think about the success of the Bob format which was created here in Winnipeg, or the Jack format.  When those formats came out and you had AC/DC going into Huey Lewis and the News, I mean that was sacrilege.  But really it's not a big deal.  Abba into The Clash.  It's really not a big deal.

1611             What happens is that we took this format and we played a sample of it to a group of people that told us that yes, we would listen to this format.

1612             What happens is that we created this montage of what this radio station would sound like and we played it to narrow down what we call the preference one listener, okay.  And we say please take a listen to this radio station and tell us if you would listen to it often and if it would be your favourite choice.

1613             For those people who said they would listen often and it could be their favourite radio station, they are what we call preference one listeners.  Of these people who told us they like this format, we found that there was a percentage of void for this type of format of 33 per cent in the marketplace, which is extremely large.

1614             COMMISSIONER PATRONE:  So you are suggesting there is a lot of people out there with extremely varied tastes?

1615             MR. KROEGER:  Exactly.  And it goes back earlier to what I was talking about, about how these last people ‑‑ there has been a silent revolution going on as far as how people listen to music and what their musical expectations are, and that is really why these variety‑based formats work.

1616             Just think of the mixed tapes that we all made as kids ‑‑ or some of us still do.  You think of these hour‑long tapes of different strings of songs.  This is a format.  This is what people would like to hear.

1617             Once again, if I could compare the two, if I would compare the success once again of a variety hit based format like Bob or like Jack, which was probably one of the biggest commercial radio stories in North America maybe three years ago, that's all that this was based on as well.  It was based on a variety of tastes.  It was based on everything has been sliced and diced.  We want variety.

1618             COMMISSIONER PATRONE:  Okay.  Those are my questions.  Thank you for your answers.

1619             Mr. Chairman...?

1620             THE CHAIRPERSON:  Thank you, Commissioner Patrone.

1621             I have a few questions myself, if I can indulge the group for a few more minutes.

1622             I think the first question is to Mr. McDougald actually.

1623             On page 16 you talk about the marketplace and the growth in the marketplace.

1624             MR. McDOUGALD:  Yes.

1625             THE CHAIRPERSON:  And in the third paragraph you say:

"And, third, the Winnipeg radio market currently stands at just under $38 million with consistent growth experienced year‑over‑year over the past five years and this growth is expected to become even stronger in the years ahead."  (As read)

1626             Can you put some numbers to the past, the current and the future?

1627             MR. McDOUGALD:  Well, first of all, speaking with regard to the Winnipeg market, you are asking about radio revenues or in terms of the general economy?

1628             THE CHAIRPERSON:  Well, you are talking about $38 million of current market for radio.  So I am assuming it is that context you are referring to when you say it has experienced consistent growth year‑over‑year over the past five years.

1629             So how has that $38 million grown over the last five years with a compound rate and how do you see that going into the years ahead?

1630             MR. McDOUGALD:  Bear with me for just one moment while I just look that up.

1631             THE CHAIRPERSON:  Certainly.

‑‑‑ Pause

1632             MR. McDOUGALD:  Well, basically if I could speak to ‑‑ I'm not an expert myself on radio per se, but if I could speak with regard to the local market conditions, as noted earlier, the Conference Board of Canada is predicting strong growth in various areas.  They are predicting strong growth in per capita disposable income, about 25 per cent for the years 2007 to 2015.  They are also expecting similar growth in real GDP in the market.

1633             Furthermore, they are expecting quite strong growth in total retail activity in the area of about 44 per cent, I believe.

1634             Now, that stands to grow the pie, as it were, I believe over the next few years, especially when you consider that against the backdrop of what is happening here in Manitoba where we have a labour shortage, literally jobs that cannot be filled, and also if you consider Manitoba's economy which is well diversified and has traditionally been quite stable.

1635             MR. WORTLEY:  Mr. Chair, perhaps I could add to that.

1636             THE CHAIRPERSON:  Please do.

1637             MR. WORTLEY:  Our business plan was based on, predicated on the fact that the Winnipeg radio revenues would grow approximately 3 to 5 per cent year over year, which is about consistent with what has transpired in the last five years.

1638             THE CHAIRPERSON:  So it has been consistent.  So when you say earlier above on that page it's firing on all cylinders, it has been firing on all cylinders for the last five years and will continue at the same rate and the same pace.

1639             Is that what you're saying?

1640             MR. WORTLEY:  That is what the research has said to us and that is what we anticipated with regards to the revenue growth.  So we dovetailed the radio growth with the economy and we saw that it would deliver somewhere between a three and a 5 per cent increase year over year.

1641             THE CHAIRPERSON:  Okay.

1642             I'm going to come back and I guess this is a question for you, Mr. Asper.

1643             You have identified yourself as a private individual looking forward to this initiative and I commend you for it.

1644             I'm just trying to understand why you are doing it.  I recognize the fact that your legacy and your family's legacy goes back to radio as well.

1645             The reason I asked the question is because later on in your opening remarks, on page 3, you talk about your association and potential interest with the Winnipeg Blue Bombers and sports in general.

1646             Do you see this radio station ‑‑ I won't say morphing, but becoming a sports venue as well?

1647             MR. ASPER:  No, not at all, Mr.Chair.  I used that as an example of how I see radio remaining its relevance and its vitality in a local market through the coverage of sports, the engagement of fans and sports.