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Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Various broadcasting applications /
Diverses demandes de radiodiffusion
HELD AT: TENUE À:
Sussex Ballroom Salle Sussex
Future Inns Cambridge Future Inns Cambridge
700 Hespeler Road 700, chemin Hespeler
Cambridge, Ontario Cambridge (Ontario)
October 21, 2008 Le 21 octobre 2008
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Various broadcasting applications /
Diverses demandes de radiodiffusion
BEFORE / DEVANT:
Michel Arpin Chairperson / Président
Rita Cugini Commissioner / Conseillère
Elizabeth Duncan Commissioner / Conseillère
Peter Menzies Commissioner / Conseiller
Stephen Simpson Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Cindy Ventura Secretary / Sécretaire
Joe Aguiar Hearing Manager /
Gérant de l'audience
Anthony McIntyre Legal Counsel
HELD AT: TENUE À:
Sussex Ballroom Salle Sussex
Future Inns Cambridge Future Inns Cambridge
700 Hespeler Road 700, chemin Hespeler
Cambridge, Ontario Cambridge (Ontario)
October 21, 2008 Le 21 octobre 2008
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PHASE I (cont'd)
PRESENTATION BY / PRÉSENTATION PAR:
Blackburn Radio Inc. 318 / 1815
United Christian Broadcasters Canada 384 / 2201
Frank Torres (OBCI) 455 / 2698
My Broadcasting Corporation 517 / 3040
INTERVENTION BY / INTERVENTION PAR:
Sound of Faith Broadcasting 563 / 3338
Forest City Radio Inc. 569 / 3370
Blackburn Radio Inc. 571 / 3400
INTERVENTION BY / INTERVENTION PAR:
Karen Elliott 572 / 3409
The Kiwanis Music Festival of London Inc. 578 / 3451
Orchestra London 584 / 3481
Fanshawe College 591 / 3519
University of Western Ontario 597 / 3546
Chad Hatcher 608 / 3596
Cambridge, Ontario / Cambridge (Ontario)
‑‑‑ Upon resuming on Tuesday, October 21, 2008
at 9:00 a.m. / L'audience reprend le mardi
21 octobre 2008 à 0900
1809 THE CHAIRMAN: Good morning. Order, please.
1810 Madam Secretary, could you introduce the next applicant?
1811 ASSISTANT SECRETARY: Thank you, Mr. Chairman.
1812 We will proceed with Item 6, which is an application by Blackburn Radio for a licence to operate an English‑language FM commercial radio programming undertaking in London. The new station would operate on frequency 91.1, Channel 216B1 with an average effective radiated power of 4000 W, maximum effective radiated power of 7000 W, with an effective height of antenna above average terrain of 106.5 m.
1813 Appearing for the applicant is Mr. Richard Costley‑White.
1814 Please introduce your colleagues and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1815 MR. COSTLEY‑WHITE: Thank you.
1816 Good morning, Mr. Chair, Members of the Commission and Commission staff.
1817 My name is Richard Costley‑White. I am the controlling shareholder and Chief Executive Officer of Blackburn Radio Incorporated. It is my honour and privilege to be here before you today presenting an application for an exciting new FM radio station in London.
1818 Now I would like to introduce our panel.
1819 With me today, to my immediate left, is the General Manager for our stations in Sarnia, Ron Dann. Ron was born and raised in London, is a graduate of the Fanshawe College radio broadcasting program and currently sits on their advisory board. His 25 years experience in the broadcast industry includes 11 years with Blackburn and covers such areas as operations, programming and sales. Ron will coordinate our responses to your questions today.
1820 Next to Ron is Walter Ploegman. Walter is our Operations Manager in Chatham and has been a radio broadcaster for more than 26 years, resulting in a Resume that includes experience as an on‑air host, music director and program director. Walter also oversees and manages our distribution of Canadian Content Development funds.
1821 To Walter's left is Sue Storr. Sue is the Program Director for CHOK in Sarnia. She also studied at Fanshawe College's broadcast journalism program and has spent the last 19 years in the broadcast industry as a reporter, news announcer and talk show host. Sue also taught broadcast journalism for 10 years at Lambton College. Sue will speak to our plans for news and public affairs programming.
1822 Finally, in the front row is Stephanie Lindau, Director of Community Relations in Sarnia. Stephanie has worked closely with the community service groups in Sarnia and surrounding area for more than five years. Stephanie will outline how we will approach community service in London.
1823 In the second row, starting from your right, is Jason Ploegman who is responsible for our new media initiatives and website development.
1824 Next to Jason is Debra McLaughlin, President of Strategic Inc. Debra has prepared many economic and market reports on new radio, television and other applications before the Commission. She conducted both consumer and economic research of the London market for us.
1825 Next to Debra is Carl Veroba. Carl was President and General Manager of CFCO‑AM, CKSY‑FM and CKUE‑FM for 20 years and now consults for us covering a wide variety of technical matters.
1826 Beside Carl is Marianne Fritz, the Vice President of Human Resources for Blackburn Radio. She is responsible for establishing proper guidelines in regards to our employment equity policies and oversees all hiring policies and practices.
1827 We are here today to present our proposal to add an exciting new station that will add to the London market with an adult album alternative format commonly known as Triple‑A.
1828 Blackburn Radio is the licensee of a number of radio stations serving markets in mid‑and southwestern Ontario.
1829 I am the great grandson of Arthur S. Blackburn who first brought radio to London in 1922, first as CJGC and later as CFPL‑AM. Later my grandfather, Walter J. Blackburn, brought one of Canada's first FM services on the air with CFPL‑FM in London in 1939.
1830 Today Blackburn Radio stations in Chatham‑Kent, Windsor, Sarnia, Wingham and Leamington operate in challenging circumstances and have done so for many years. We have learned that a combination of strong local service and prudent business practice leads to success.
1831 Our stations share an operating philosophy. They feature large newsrooms, community marketing departments and strong and autonomous local management. This permits them to reflect their communities with high‑quality news, to work with community groups, and to give attention to local artists in their programming.
1832 At the same time, synergies between our stations in the areas of news, programming and promotions allow them to control costs and enrich their service.
1833 Blackburn proposes to provide London a radio station that adds to the diversity of the city with a unique format that has never been available in London, comprehensive news and information from a new voice that knows London well, a commitment of 40 per cent of spins dedicated to Canadian performers, showcasing new and emerging talent through a commitment of 25 per cent of our Canadian content to these artists, CCD programs that have direct financial benefit to local artists, cultural and educational institutions.
1834 FREE‑FM will be locally owned, locally managed and programmed with a new and more diverse sound that will bring listeners back to radio.
1835 Now I would like to turn it over to Ron Dann to speak to the details of our proposal.
1836 MR. DANN: Thank you, Richard.
1837 Good morning, Commissioners.
1838 London is a growing vibrant city and is well positioned to weather today's economic turbulence. We believe that with strong growth in both radio revenues and profits, and strong economic fundamentals, London can support new radio choices.
1839 A review of the market assessments submitted by most of the applicants here today leads us to a single conclusion: London is lacking in diversity in a number of ways.
1840 The local commercial stations are held by three large companies, all of whom have multiple broadcast properties in the market. There are only three local radio voices.
1841 Most of the research indicates that London residents, regardless of their preferred music format, want to hear different music. They find there is too much repetition.
1842 When the Commission issued its call our market knowledge told us that London could easily sustain new radio choices and that there were three unserved radio formats, a youth‑oriented CHR, an older folk, a soft AC or easy listening format, and a rock‑based diverse adult format.
1843 To help us choose which format to propose, we commissioned Strategic Inc. to complete consumer research. They surveyed 900 respondents ages 15 to 64.
1844 I will now ask Debra McLaughlin of Strategic Inc. to outline the consumer format research.
1845 MS McLAUGHLIN: Thank you, Ron.
1846 When we survey a competitive market like London we use a multifaceted and iterative approach.
1847 First of all, we look at tuning trends in the market from BBM to identify any changes in radio usage across demographics. Given the robust sample BBM collects in these markets and that these data can be viewed over time, BBM is an excellent means of revealing gaps in service.
1848 In London there have been losses in tuning on a per capita basis in several demographics. Comparing spring data from 2008 to that from spring 2004 shows that tuning is down significantly in three groups, teens, adults 25 to 54, and adults 35 to 64.
1849 The largest loss of hours tuned has occurred among adults 25 to 54 and 35 to 64. To be specific, teens have lost approximately 69,000 hours, while tuning by adults 25 to 54 has declined by 640,000, and among adults 35 to 64 the decline is approximately 331,000.
1850 While teen tuning is off in almost every market across the country, the loss of tuning among the demographic ‑‑ typically the largest user of the medium, 25 to 54 ‑‑ is unusual and indicates that a cornerstone user group is not finding what they want.
1851 To better understand what was driving this loss of youth we looked at BDS data and specifically at the tracks being played.
1852 BDS reveals that while there appears to be a variety of services there is a significant overlap of what is being played across stations. According to BDS data from the first two weeks of October of this year under 3 per cent of artists in the market account for almost 20 per cent of the tracks played. Further, duplication among stations is as high as 20 per cent.
1853 These findings led us to ask respondents their impressions and we found that among them 63.4 per cent agree that they would listen more if programming they liked were available; 61.3 per cent thought stations in the market offered similar types of programming; 53.5 per cent felt there was insufficient variety in the music played; 61.1 per cent reported going to other sources to find their preferred music; and only 20.6 per cent described themselves as being very satisfied with radio.
1854 Finally, we tested the interests of each of the groups showing the greatest loss of tuning and specifically tested three formats, youth, easy listening and Triple‑A. It became quite clear that it was Triple‑A that would provide the programming to address the gap identified by respondents.
1855 Those reporting the highest interest in adult album alternative showed a higher likelihood to listen more and scored among the lowest in measures of satisfaction with current services. They reported a very low usage of radio compared to those interested in the other formats and they were also more likely to be tuning to spill services or completely tuning out.
1856 Over 80 per cent of London respondents stated that they would definitely or probably listen.
1857 MR. DANN: Triple‑A addresses the demand for greater variety through the provision of multiple genres, more artists and new music. It specifically serves 35 to 64, an age group that typically accounts for over half of the hours tuned to radio, and yet in London this group is tuning out of radio.
1858 Based on Strategic Inc.'s research and these facts, we concluded that Triple‑A was the best new format for London. We have reviewed the research from other applicants and we note that the findings of Strategic Inc. are confirmed by other data filed in these proceedings. For example, the research conducted by Hendershot Research on behalf of Forest City indicated that more respondents selected the Triple‑A format as most preferred than either pop oldies or CHR.
1859 Triple‑A is a format for music lovers. For those of us who grew up in the era of underground or freeform radio stations like CHUM‑FM or CHOM‑FM in the late '60s and early '70s, or CFNY in the '70s and '80s, the format is like a return to an era where diversity was the watchword of radio.
1860 Those formats like FREE‑FM were successful by playing a wide range of music, from blues and blues rock to folk rock, country rock and straight ahead rock 'n roll. They feature lots of interaction with musicians and audiences who are knowledgeable about music and mix a blend of the familiar with exciting new discoveries. They were not driven by format charge from the trade publications.
1861 FREE‑FM will have fewer repeats than any other London stations and go deeper into albums.
1862 FREE‑FM will sound different, diverse and unique. Artists like Steely Dan, Bob Dylan and Van Morrison continued to release new material, but they don't fall into current format options and they don't get played.
1863 Closer to home, Bruce Cockburn released an instrumental album in 2005 called Speechless which was largely ignored in Canada because it didn't fit the formats.
1864 Innovative musicians like Montréal's Rufus Wainwright or Nova Scotia's Ryan Neilsen faced the same problem: they don't fit formats.
1865 This music has merit. It's great music, it wins numerous awards, but if you live in London you will never hear it.
1866 The list is long. Artists like Jesse Winchester, Tracey Chapman, John Prine, John Hiatt, the Crash Test Dummies, Joe Jackson, the Cowboy Junkies, Jack Johnson, and many more.
1867 FREE‑FM will air old and new alternative material from rock artists like Robbie Robertson, Elvis Costello, Peter Gabriel, Squeezed, Pete Townsend and Radiohead, combined with the folk influenced music of Lynn Miles, Joni Mitchell, Jackson Brown, and blues artists like Keb Mo, Colin James and Sue Foley.
1868 FREE‑FM will address the interest in more niche music styles. The mix will also include all country from artists like Corb Lund, Emmylou Harris and a Be Good Tanyas, and even a bit of reggae from Bob Marley or Toots and the Maytals, or Ottawa's The Mighty PoPo.
1869 We used BDS to compare the playlists of the London stations with our proposal. Approximately 80 per cent of the music FREE‑FM will play is not being heard on London radio and the maximum duplication with any one station is about 12 per cent.
1870 FREE‑FM will provide a wide range of special‑interest programs, including a Sunday night blues show and a Sunday morning folk show.
1871 We have committed that a minimum 10 per cent of the music we play will come from Category 3.
1872 Not only will the music be different, but the way we present it will be different as well, a much more relaxed style without hype.
1873 Our commitment to serve the music fan will mean that one of the focuses of our spoken word will be the music itself. This presents an opportunity for the promotion of performers and releases not typical of other formats.
1874 Here is what Canadian artists, their managers and their labels have to say about our proposal.
‑‑‑ Video Presentation / Présentation vidéo
1875 MR. DANN: To talk about our commitment to Canadian artists I will turn to Walter Ploegman.
1876 MR. W. PLOEGMAN: Thank you, Ron.
1877 Mr. Chair and Commissioners, in approaching our support for Canadian talent in this application we thought long and hard about where to put our efforts and where to put our money.
1878 First of all, the recording industry has often told you that airplay for Canadian artists in general and for emerging artists is the greatest contribution that radio can make to Canadian content. We propose 40 per cent Canadian content for Category 2 music and 30 per cent for Category 3. We also propose that 10 per cent of our weekly spins will be dedicated to new and emerging artists like See Spot Run, The Tokyo Police Club, Tupelo Honey, The Joys and Hello Beautiful, and we propose an innovative program to support these artists.
1879 Every two weeks we will feature a new and emerging Canadian artist or band by putting their songs in regular rotation on the station, providing interviews and other on‑air information about the band and featuring them on our website, 981FREEFM.com.
1880 If the band agrees, listeners can download a feature track or demo, use a hot link to go to the band's web page and download other info on the artist, and we will pay them $2000 to help in production of their CDs or in promoting themselves. We will hook them up with our other rock stations to provide an additional boost.
1881 That is but one component of the substantial financial contribution of more than $1.5 million we will make above and beyond the basic requirement.
1882 The FREE‑FM New and Emerging contests will give artists the opportunity to be part of a southwestern Ontario‑wide initiative using all of the Blackburn stations. This project will involve live performances, a recording session for each of the regional winners and, ultimately, a CD that will be distributed free of charge to the participating artists for promotional purposes. Again, winners will be featured on air on FREE‑FM, on 981FREEFM and on other Blackburn stations.
1883 We will also provide support for musical performance for diverse musical styles with $105,000 over the term of the licence to both the popular Home County Folk Festival and the London International Blues Festival.
1884 Beyond this financial support there will always be indirect benefits to these festivals with live on‑site promotional support and on‑air support through interviews and dedicated features on the artists and their music.
1885 Our CCD plan includes supportive music festivals, events and performances in both the public and separate school systems, to ensure that these programs have the funds necessary to grow into the future. Events like the Elementary Arts Festival, the Variety Is Festival. Choralfest and Celebri will receive yearly financial contributions that will total $350,000 over the first seven years of operation.
1886 Finally, in keeping with Blackburn Radio's long‑standing support of post secondary education, we have dedicated $126,000 to continued support of journalism students at both Fanshawe College and the University of Western Ontario. Our programs will have a particular focus on women and multicultural students.
1887 Of course, we will also provide $360,000 over the term of license to FACTOR. We have asked them to direct this money to artists from London where possible and from Ontario.
1888 In keeping with our company's belief in strong local service through news and community support, FREE‑FM will also have a strong commitment to news with an emphasis on interactivity with our audience.
1889 To speak more about news, here is Sue Storr.
1890 MS STORR: Thank you, Walter.
1891 Good morning, Mr. Chair and Members of the Commission.
1892 Blackburn Radio has a long‑standing tradition as a leader in news and information. Blackburn has a total of 31 new staff covering mid and southwestern Ontario. We will bring the same dedication to comprehensive news coverage to London. With the newsroom of four persons, supplemented by a student intern and stringers in surrounding communities, we will ensure a full news service to our listeners.
1893 FREE‑FM will provide its listeners a regular schedule of newscasts starting at 6:00 a.m. until 6:00 p.m. in the evening at a late‑night wrap at 11:00 p.m. In total FREE‑FM will broadcast 102 newscasts every week, traffic and weather, sports and a daily commentary. The daily commentary will be made open to the listening audience who can also submit commentaries.
1894 Our daily free and interactive feature will be a 15‑minute segment broadcast three times per day where listeners will take part in conversation through e‑mail, text messaging, by leaving their comments on a specially designated listener comment line, or by calling in live.
1895 We will provide over five hours a week of pure news, with 75 per cent being local and a total of over 10 hours of information.
1896 The Blackburn network of stations are partners in news gathering by sharing the latest information from multiple locations across the south and midwest. Chatham‑Leamington, Windsor and Sarnia share upwards of 200 stories a month, partner in election and sports coverage and exchange stories on a daily basis.
1897 FREE‑FM will also offer a new and innovative interactive way for our listeners to access news, not only from London but from all of the Blackburn stations. Listeners will be able to access a central database for all online news content throughout London‑Middlesex.
1898 FREE‑FM will work with the broadcast journalism program at Fanshawe College to present a weekly program that will allow for a deeper study of local issues. With supervision from their outstanding staff and from our news director, the program will provide a tremendous learning opportunity for students in the program.
1899 Our news coverage will be supplemented by a wide range of other surveillance and community information involving service groups, multiethnic organizations and not‑for‑profit groups in the city.
1900 In Sarnia, our Director of Community Services is Stephanie Lindau who has helped establish these programs in our other branches and will do the same in London.
1902 MS LINDAU: Thank you, Sue.
1903 As the Director of Community Service it is my responsibility to develop contacts with all the not‑for‑profit groups, the various community organizations, as well as the municipalities to provide access through our stations to our listening audience.
1904 I work closely with United Way, the Autism Society, Bluewater Health, Breast Cancer Society and many more.
1905 Through the Community Services Department in all of the Blackburn radio stations, these organizations have access to a person who assists them with their needs when it comes to public events, fund raising and the news department.
1906 We provide detailed marketing plans for fund‑raising events, create long‑term awareness campaigns and assist with arrangements for on‑air interviews or press coverage.
1907 We act as MCs at events, speak on behalf of the nonprofit groups and connect personally with the community.
1908 I would be happy to further expand on this role during the question period.
1909 And now to sum up here is Richard Costley‑White.
1910 MR. COSTLEY‑WHITE: Mr. Chair, we believe that our application more than adequately addresses the Commission's criteria for evaluating new stations. The market can sustain new radio. There will be no negative impact on competitive balance. In fact, approval will ensure a better competitive balance with a new diverse voice in the market.
1911 The application is of high quality, with a strong business plan based upon solid research, strong plans for local reflection and the commitment to Canadian content above the regulated level. We propose a substantial package of Canadian Content Development initiatives focused on emerging artists and the London musical community.
1912 Blackburn started as a journalistic organization in this city two years before it was incorporated. We have been an integral part of the history and growth of London. Our proposal will bring a station to London that will add to the diversity of the city from a company that will be managed and locally owned with head offices located in the heart of London.
1913 Connections to the local health, education and arts community won't have to be established. Those connections have always been and will always be there, no matter what the future may hold.
1914 Nor will we have to establish credibility with the consumers or advertisers. We have always been a part of the larger London community with support for local charities, hospitals, education and the arts. London has been Blackburn's home and our base of operation in three different centuries.
1915 We hope that you will give us an opportunity to expand our contribution to the city with a new and diverse radio station.
1916 Thank you very much for your attention and we look forward to your questions.
1917 THE CHAIRMAN: Thank you for your presentation.
1918 I'm asking Commissioner Cugini to initiate the questions.
1919 COMMISSIONER CUGINI: Thank you, Mr. Chairman.
1920 Mr. Costley‑White and your colleagues, good morning.
1921 You know, I was reviewing the questions that I had prepared this morning and I said geez, you know, I don't have a lot of questions because your application was quite complete, and then you went ahead and answered some of them during the oral presentation so it might be a short morning. But that's not to say my colleagues won't have further questions.
1922 Like most times that I question applicants I like to start with format because it is essentially where it all begins and your choice of format.
1923 This is not the first application, that I have heard anyway, on the Triple‑A format. I absolutely understand why it's so attractive. You can provide a variety of music choices, and in your application you in fact say selections of new music, gold library, some folk, world beat, blues and jazz, and it casts a wide net in terms of where you can draw music from.
1924 But my question is this: When we look at the Triple‑A format why should we not think, you know what, this is just a death by a thousand cuts when it comes to adding musical diversity to a particular market?
1925 I absolutely appreciate the fact that in your oral presentation you did the overlap test or the duplication test with tracks that are currently being played in the London market, but that can change. We all know that that can change.
1926 So why isn't this a little bit of death by a thousand cuts when it comes to what's currently available?
1927 MR. DANN: When we conducted the research with Strategic Inc., what we found was there is a large segment of the population that is suffering from what we would refer to as chart fatigue and this audience that we are approaching is an audience that is not loyal to any one radio station at this point in time. They might be the P2 or possibly P3 listeners of any radio station and they have a tendency to punch around from station to station trying to find music that they like. In many cases what they are doing is they are going out of market to possibly a radio station from Kitchener. The use of the Internet to find music they like among this age group or this group is very high, or they simply don't listen at all.
1928 So the Triple‑A format that we are proposing based on the research that we found, there is a wide and diverse amount of music that goes into it, but Strategic Inc.'s research found that there is a high level of interest.
1929 First of all, rock and classic rock was at the top, but also in that mix was almost a 50 per cent interest amongst respondents in music like folk and reggae and blues. So what we are trying to do is approach a segment of the listening audience that simply is not finding what they want in the radio stations anymore. They have heard the top 100 hits a thousand times.
1930 They grew up in an era where albums were important as opposed to chart singles and they grew up in a time where the release of an album meant something. Now in most radio stations a popular artist, the top five or six records might be getting spun at any one time.
1931 This format allows us to go deeper into albums, to play albums that they remember and introduce them to new music that's not being played by any of the other radio stations. This group is interested in hearing new music, not only new music ‑‑ new and emerging talent, but new music from artists that simply aren't being played on radio stations anymore.
1932 Bands like Steely Dan and Bruce Cockburn still continue to release music, but they are not fitting in anywhere so they don't get played, and yet if they go to Alumni Hall or Centennial Hall, they sell it out. That's the audience that we are trying to approach, this audience that is disenfranchised or chart fatigued with the music that is being played.
1933 COMMISSIONER CUGINI: Because of the variety in your music ‑‑ and, like I say, when I do look at your playlist I will add some of my favourites are on here ‑‑ there has to be quite a bit of talent in threading this music together when it comes to the listener.
1934 MR. DANN: Yes.
1935 COMMISSIONER CUGINI: What kind of talent are you going to be able to attract to this market in terms of DJs that are going to be able to provide that kind of information that you are saying this target audience is looking for, not only to listen to the music but also to go deeper into the music that you will be airing?
1936 MR. DANN: Blackburn, with its history, is a well‑respected broadcast company and even since we have filed this application the number of people that have come forward to us interested in coming back to work for us if we are granted the licence has amazed me.
1937 But outside of that, we are a fairly deep company. We have radio stations in Windsor and Sarnia with top‑notch broadcasters.
1938 In Sarnia for example, in a market that has 116 different signals, including 76 from Detroit, we have top‑flight broadcasters, and in fact some of the broadcasters that are working in Sarnia have been hired from London.
1939 I have no concerns about hiring top‑flight on‑air talent to work at this radio station.
1940 COMMISSIONER CUGINI: What comes first your choice of format or the target demo in choosing? When you go into a market what do you say: You know what, I want to bring this format into this market? Or do you say this is the demography that is not being served and therefore what's the best format to serve that market?
1941 MR. DANN: We actually looked at it in two different ways.
1942 I came into the market ‑‑ and I grew up in the market and I still have family in London so I'm in London quite a bit and am familiar with the London radio stations and I had an inclination of what the three potential formats were. But beyond that I wanted some further verification in my own thoughts, which is why we ask Strategic Inc. to come into the market and give us their thoughts on what was going on in the London marketplace.
1943 I think I will ask Deb McLaughlin from Strategic Inc. to talk a little bit about her research and how it all came to fruition.
1944 COMMISSIONER CUGINI: Sure.
1945 MS MCLAUGHLIN: As I mentioned in the opening remarks, we take an iterative approach and we do start with demographics because, in the end, even if a music format has high appeal if there isn't a business case and that there isn't the population or a significant size in terms of the demographic it's not going to work for the applicant. So we do start with demographics.
1946 And as I outlined ‑‑ and I won't repeat, but we did find that there were huge losses atypically in some of the demographics that we often think of as being best served. Certainly, they are best served, in terms of being provided very focused stations and formats, but there are people who, as Ron has said, are disinterested in the high repeat factors, and listen ‑‑ they are the early adopters, as it were, of MP3 players in the older demographic, because they want the variety that they can't get.
1947 So we are not appealing to 35‑64 ‑‑ necessarily everyone. Some of them are very well served. We are appealing to those people who have said, "I am not listening to radio any more," or, "I am going to reduce my listening to radio for local news and information."
1948 As I have mentioned to you in other markets, I think that this is a trend. This isn't an isolated survey. If you look at the numbers, it started as far back as Fall 2004, and I think we are going to see that in a lot of markets.
1949 COMMISSIONER CUGINI: Yes, I have been called disenfranchised in various proceedings.
‑‑‑ Laughter / Rires
1950 COMMISSIONER CUGINI: I am going to go through some specifics on your Category 3 music commitment.
1951 I note that you do accept ‑‑ or are willing to accept as a Condition of Licence that 10 percent of the music played during the broadcast week will be Category 3 music. Is this going to be day‑parted at all?
1952 MR. DANN: No, it is going to spin through the entire format.
1953 It addresses that percentage of the population ‑‑ almost 50 percent ‑‑ who say that they want to hear this type of music. So we are quite confident that we can blend it in with everything else we are doing and keep the listener satisfied.
1954 COMMISSIONER CUGINI: In your oral presentation this morning you said that 30 percent of that Category 3 music will be Canadian.
1955 MR. DANN: Yes, it will.
1956 COMMISSIONER CUGINI: And you will accept that as a Condition of Licence?
1957 MR. DANN: Yes, we will.
1958 COMMISSIONER CUGINI: Now, in terms of the other formats that you have identified ‑‑ or the other music genres that you have identified in your application, do you have a percentage of how much of your playlist will be new music and how much will be gold selections?
1959 MR. DANN: Sixty percent of the music we play will be from the seventies and eighties, 20 percent will come from the nineties, and the remaining percentage will come from current music.
1960 COMMISSIONER CUGINI: Okay. Thank you.
1961 I know that you have provided us with a summary of your application in terms of commitments, and, specifically, I would like to talk a little bit about your CCD commitment.
1962 Even in this chart ‑‑ like I say, it's not new information, it is a summary. Just for the record, it is a summary of your commitments.
1963 You say that your over and above, or above and beyond seven‑year commitment is $1.5 million to CCD.
1964 MR. DANN: Yes, it is.
1965 COMMISSIONER CUGINI: Does that include the basic contribution?
1966 MR. DANN: No, it does not.
1967 COMMISSIONER CUGINI: So the basic contribution is over and above.
1968 MR. DANN: Yes.
1969 COMMISSIONER CUGINI: Is over and above the over and above commitment of $1.5 million.
1970 MR. DANN: Yes, it is.
1971 COMMISSIONER CUGINI: Now, because we always like to look at the projections and assumptions made in your business plan ‑‑ and perhaps in these times it is more important than ever ‑‑ in your business plan you project an audience share of 3.9 percent to 6.7 percent, which basically ranks you in the middle ‑‑
1972 MR. DANN: Yes.
1973 COMMISSIONER CUGINI: ‑‑ of all of the other applicants.
1974 But your revenue projections ‑‑ $1.2 million to $2.2 million ‑‑ over the course of the licence rank you second from the bottom, if we were to exclude the two religious applicants.
1975 Am I missing something there?
1976 If your audience projections rank you at just about the middle, have you underestimated your revenue projections?
1977 MR. DANN: We did two different models for our revenue projections. Based on our experience in launching rock‑based formats in three other marketplaces, we started with an inventory level of 34 percent, which is what we have traditionally found across the three other formats that we have launched.
1978 COMMISSIONER CUGINI: Inventory sell‑out level?
1979 MR. DANN: Inventory sell‑out level of 34 percent in the first year.
1980 We based it on a very conservative commercial rate of $42, and that's how we came up with our $1.2 million.
1981 Then we projected ‑‑ we took, essentially, the graphs that we have used in other markets and built that revenue over that seven‑year period of time to a level that ‑‑ to a business plan that we are comfortable with.
1982 We may have projected under, but our own experience of what we have done in other markets shows us that this path is something that we can do without putting undue stress on the sales team and still follow a business plan that we are comfortable with.
1983 COMMISSIONER CUGINI: The reason I ask is that, at times, when I look at these things, I think: Did they underestimate the revenue to minimize the potential impact on the incumbents?
1984 MR. DANN: That was not what we set out to do. As I said, we based it on a model of what we were comfortable with, based on our past history. There was no ‑‑ we didn't ‑‑
1985 The market share, when we were doing the revenue ‑‑ as I said, we did two different models. The second model was based on Strategic Inc.'s information, and her model may come closer to the numbers you are looking for.
1986 But, as I said, we based it on our own history, and our own business models, and our own business plans, and it may be even more prudent, considering the current economic times.
1987 We understand that this format is not what you would consider a blockbuster format. The radio stations in London have done a tremendous job of identifying their audience, identifying their advertisers, and we know that, in the middle of the pack, this radio station will be viewed by some as eclectic.
1988 So we took a very conservative approach, an approach that we were very comfortable with when we put together this business plan. We wanted to make sure that we could execute it and still remain viable in the marketplace.
1989 COMMISSIONER CUGINI: I see, from your business plan, that, essentially, you plan on breaking even by Year 3.
1990 MR. DANN: Yes. Slightly.
1991 COMMISSIONER CUGINI: What happens if you ‑‑ I mean, we do understand that these applications were filed some months ago, before the economic worldwide crisis. What happens if a third of your projections, or only two‑thirds of your projections are realized?
1992 MR. DANN: Like I said, we were conservative in our approach to what we did with revenue. We are still very optimistic about the London marketplace, right up to and including yesterday, when we had Debra McLaughlin continue to study the marketplace, and I think I will ask Debra to speak a little bit about the market for London for the coming years.
1993 MS McLAUGHLIN: The downturn in the economy in London actually preceded the downturn in the Canadian economy, because the second biggest employer ‑‑ or employment group ‑‑ is manufacturing.
1994 When we do an assessment on a market, we don't simply look at the current material from the Conference Board or RBC or the Bank of Montreal or any of our sources, we trend them.
1995 If you go back three reports for the Conference Board, for example, they started talking about a potential slowdown in the market.
1996 When we were factoring in, as we do ‑‑ we do the top‑down, as you know, and the client always does the bottom‑up. We took the share point value and we discounted it, because they were going to be a standalone and they weren't going to be able to develop the kind of leverage, being a standalone in this market, that their competitors would have.
1997 We also didn't grow the market, or the value of that share point, in the manner that you would do in a market that was expecting a lot of growth.
1998 If we were doing something out west, for example, there are a lot more indicators there.
1999 All that is to say that the degree wasn't known, but the direction was known. So, instead of growing the share point value, for example, as you would to reflect the average growth that has taken place in the years before in the radio industry, we only grew it by the rate of inflation.
2000 So we grew it by the rate of inflation, and we discounted it to represent that they would be a standalone.
2001 When we look at what the Conference Board is saying ‑‑ I am painting a negative picture only because the cautionary notes, that, I think, people would look for in a budget if you were going to the bank, have already been built into this model.
2002 In talking to the Conference Board, they have reduced the GDP for this market. In their most recent published it went from 2.6, I believe, to 2.2. Now it is down to 1.3.
2003 Importantly, that is still growth. It is not robust growth, but it is growth.
2004 So we tried to balance a very diverse market ‑‑ London is at .94 out of a 1 rating on diversity, and that is very high ‑‑ with the realities that the job loss in the first quarter, for example, in London was 3,000.
2005 We knew that when we wrote this application.
2006 So where that goes, we don't know. How long the recovery will be in the automotive sector, which is very important to this market, we don't know, because it is not tied to our economy.
2007 But we do know that this was coming, and we do know that it is going to be a little while to get out of it. So that informed our budgeting, really.
2008 COMMISSIONER CUGINI: Because, in these times, negative equals cautionary, equals conservative.
2009 MS McLAUGHLIN: That's right.
2010 COMMISSIONER CUGINI: Now I appreciate ‑‑
2011 MR. DANN: To further answer the question which I think you are asking, which is, "Can we sustain," I will let Richard answer that one.
2012 MR. COSTLEY‑WHITE: Yes, it is probably appropriate for me to chime in, as the owner.
‑‑‑ Laughter / Rires
2013 COMMISSIONER CUGINI: It's probably the one time you get to speak.
2014 MR. COSTLEY‑WHITE: Yes.
2015 I guess the answer that I would give you is that I am in this industry for the long term. I come from an ownership family, and we are used to weathering storms, and also enjoying the good weather, and it will come.
2016 I have budgeted the CapEx for this project, and I have also ‑‑ we have budgeted the working capital requirements that are there, and also put in a cushion.
2017 So from the standpoint of financing the project and getting it off the ground, we will be able to do it and sustain it.
2018 COMMISSIONER CUGINI: Thank you for that.
2019 Because we are talking about the market ‑‑ you know, you are facing quite a challenge. We know who the incumbents are. We know how strong those incumbents are in this market. You add to that 28 percent of out‑of‑market tuning. Ms McLaughlin did mention that you will be a standalone broadcaster in the London market. What challenges and/or opportunities does that provide you?
2020 MR. DANN: First of all, I am not sure that we really view ourselves as a standalone. We already have head offices established here in London. We have office space, and that would mean the sharing of accounts receivable and human resources, and all of these things have already been established.
2021 For a standalone, we are a fairly large company, with lots of resources available to us. Some of those shared duties would be things like accounting services, traffic services, and built into our business plan is a savings in engineering, simply because we have qualified engineers already hired by the company, and that is part of our business plan as well.
2022 Production services, when needed, in case of illness or vacation ‑‑ because the production service is already available outside, in our other Blackburn operations.
2023 We already have a regional salesperson who works with Blackburn, and is familiar to London advertisers, who deals with companies like TSE and Tim Hortons, the John Labatt Centre, Trial Management, and they would incorporate the London market into that as well.
2024 We have a great array of on‑air talent to share voices for commercial production, and, again, when needed in times of illness.
2025 We share in the ordering of promotional materials across all of our radio stations. We have found that larger coordinated buys on things like banners and signs and backdrops, even things like shirts, can have substantial savings for a company.
2026 We have regular branch meetings amongst all of our operations in the area of sales and programming, where they bounce ideas off each other, and promotional ideas.
2027 One of the biggest benefits that we have found has been indirectly, with CCD, where we have established great connections in Sarnia with some of these up‑and‑coming bands that are more than willing to come and do events for us, and get exposed to audiences.
2028 In fact, one of the bands that we have worked closely with, See Spot Run, opened for Bon Jovi at Bayfest.
2029 We pass that information along to other radio stations, in the hope that that will be further developed within them.
2030 We have regular meetings in engineering.
2031 We have tremendous resources and opportunities available to us.
2032 So, as much as we will be one station in London, we don't view ourselves as a standalone operation in any way, shape or form.
2033 COMMISSIONER CUGINI: So while Blackburn doesn't have a radio station yet in London, your head office is in London.
2034 MR. DANN: Yes, it is.
2035 MR. COSTLEY‑WHITE: I can comment on that, if you would like.
2036 COMMISSIONER CUGINI: Please.
2037 MR. COSTLEY‑WHITE: It reflects our historical roots there, and the fact that our head office is a fairly efficient head office, and the people who work in it have worked for Blackburn in the past and are wonderful employees, if I may say so.
2038 COMMISSIONER CUGINI: Mr. Dann, you did, of course, outline a number of synergies that would result, and speaking specifically about the newsroom, will there be sharing of stories with the other Blackburn stations and the London station, if granted the licence?
2039 MR. DANN: Yes, there will be.
2040 Because London is a regional hub for so much of what happens in southwestern Ontario, from transportation and education to medicine, there are stories of interest, whether it be traffic tie‑ups on the Bluewater Bridge, for transportation purposes, or health stories that happen in London that are of interest to outlying areas. Yes, we will share stories.
2041 Just to further expand on that, I will ask Sue Storr to comment.
2042 MS STORR: Thank you, Ron.
2043 If I can pick up on what Ron had mentioned about the sharing of information and the stories, our news directors in all of our Blackburn stations are in daily contact. They talk about stories that they have covered, upcoming stories that they would like to cover, and perhaps the passing of interviews back and forth.
2044 When Ron mentioned the Bluewater Bridge, some people may think that that's not of interest to London, but Windsor and Sarnia are the busiest border crossings when it comes to truck traffic, and quite often the bridge, especially in the summertime, is backed up. And when the trucks are backed up, or the bridge is closed, which we have seen happen, and this summer as well, that stops production. And if London is a manufacturing area, where a lot of the auto parts plants and supplies come from, then that just‑in‑time delivery doesn't work.
2045 When that happened, we were in contact with our Windsor news station, sharing the information and interviews, and passing the stories along.
2046 That doesn't mean that the stories that go to air are carbon copies; they are not. We pass the information along, and they write it to fit their audience ‑‑ their listeners.
2047 COMMISSIONER CUGINI: One other area that you touched briefly upon in your oral presentation is: You will offer a new, innovative, interactive way for listeners to access news.
2048 Could you expand a little bit further on that, exactly how that will happen, and whether the intention here is to have listeners submit news stories?
2049 Expand on that a little bit for me.
2050 MS STORR: I will, and what I would like to do is ‑‑ that is something that we are looking at with all of our Blackburn stations, and it involves our websites ‑‑ interactive that way.
2051 If I could, Commissioner, I will pass that to Jason Ploegman, who is actually working on that right now.
2052 COMMISSIONER CUGINI: As we speak?
‑‑‑ Laughter / Rires
2053 COMMISSIONER CUGINI: I see his computer up.
2054 MR. J. PLOEGMAN: That's why I have the laptop.
2055 Basically, what we have found is that news is one of the most important things to our listeners. Our website traffic is primarily for news content. It comes down to, people don't just want their news at the top and the bottom of every hour, they want it when they want it.
2056 What we have begun already developing is what I would call a central database of news content.
2057 Because, with the internet, it is so easy to transfer data, what we are effectively doing is, as news content goes to our websites, we store it centrally, and then what we could allow doing is not only getting traditional news content on our websites, but supplementing that with video and audio commentary, et cetera, and also allowing them access to our other branches.
2058 So, first and foremost, they would get their London news, but they would have the opportunity to look at Chatham, Windsor, Sarnia, Wingham news from any market.
2059 In addition to that, yes, there is a system that will be in place for them to submit video, audio, text information, which would then go through the system, and each individual news director could decided: Is it important? Should we post this information?
2060 COMMISSIONER CUGINI: So if listeners were to post their own stories, the news director would ultimately be responsible for vetting it before it goes on your website.
2061 MR. J. PLOEGMAN: Yes. Before anything goes up, the news director would vet it and decide its importance.
2062 MS STORR: If I could add to that, news among our Blackburn organizations is a 24/7 commitment. All of our news staff wear pagers. If news happens after hours, after 6 p.m., we have journalists ‑‑ we have news staff who will go and cover those events.
2063 So that information will be updated not only on the air, but on our websites as well.
2064 It is 24/7. We don't stop on Friday at 6 o'clock, we continue right through.
2065 COMMISSIONER CUGINI: Thank you for that.
2066 One final question from my end. Your oral presentation did say "radio choices" ‑‑ plural ‑‑ "new radio choices". How many radio stations should we license for the London area?
2067 MR. DANN: At least one for us.
‑‑‑ Laughter / Rires
2068 COMMISSIONER CUGINI: Shocker.
2069 MR. DANN: Yes, shocking.
2070 While we believe that our application for 98.1 really does address the diversity issue in the marketplace, we believe that there are other opportunities in the market. We believe that we could coexist with any of the other applicants. We don't really see much in the way of conflict, certainly, with the CHR stations or the Christian stations, and even the pop/oldies station. We are talking about completely different genres of music that we will be presenting.
2071 We believe that we could exist with two radio stations coming into the marketplace.
2072 COMMISSIONER CUGINI: So no more than two.
2073 MR. DANN: No more than two.
2074 COMMISSIONER CUGINI: Thank you all very much.
2075 Thank you, Mr. Chairman, those are my questions.
2076 THE CHAIRPERSON: Thank you, Commissioner Cugini.
2077 I would ask Commissioner Menzies if he has any questions.
2078 COMMISSIONER MENZIES: Thank you.
2079 I have a reasonably quick question. Your newsroom, how big is it? How does it compare to incumbents and competitors?
2080 MS STORR: For the applicants here, we are proposing the largest news staff with this licence application. We will have four full‑time news staff. We will have an intern summer student. As well, we will make use of stringers in outlying communities within our listening area, that are accredited journalists who perhaps work at the local community weekly papers.
2081 As I mentioned earlier, we have a news pool within our Blackburn stations that we can draw from when it comes to expertise.
2082 COMMISSIONER MENZIES: Why?
2083 MS STORR: Why will we have four ‑‑
2084 COMMISSIONER MENZIES: Why do you like having that number of news people?
2085 MS STORR: Blackburn, traditionally, is committed to news. We at Blackburn radio, and Richard Costley‑White, take news and information, and how it is presented and delivered to the audience, very seriously.
2086 In order to provide 75 percent local content, as we are suggesting in our application, we would provide 12.84 hours of spoken word. We can do that effectively and efficiently with four full‑time staff.
2087 We are serious about the news, and giving the audience the information they want.
2088 People can get news 24/7 by flipping on your internet, your TV ‑‑ there are all‑news station networks, but they can't get the local news, and they can get that from us 24/7.
2089 MR. COSTLEY‑WHITE: It is part of our company policy to provide that.
2090 I am sure you have heard the term many times "super service", and this is a component of what we try to do.
2091 COMMISSIONER MENZIES: One of the reasons I ask that is because I am still trying to get a handle on what your edge is. These things are difficult, trying to sort through everybody. There are lots of very good applications, and that sort of stuff, so what is your edge?
2092 I mean, why you? Why should you get to dance?
2093 MR. COSTLEY‑WHITE: We have presented ‑‑ I hope we have presented, and developed, a well‑researched and data‑driven case. It is very much data driven for our format proposal, and for our analysis of the market.
2094 We are confident that it will bring listeners back to radio and actually start growing the radio market again, which, as we have seen, has become a little soft.
2095 We are proposing the news coverage that we know Londoners want and expect from the Blackburn name. So there is a certain amount of, perhaps, family pride there.
2096 We have a great team, and a very supportive team in the region. We have the opportunity to bring incredible strength, enriching our programming, from our other operations.
2097 And we have the financial wherewithal to weather the storm.
2098 I guess, in summary, we know the community, and the community knows us, and we are here to participate.
2099 COMMISSIONER MENZIES: Thanks.
2100 We heard an argument yesterday, in part ‑‑ and you have addressed this in part, but I would like to touch on it again ‑‑ given the multiple ownership among the incumbents in the market, that it is very hard competing against them.
2101 What is your view on that?
2102 MR. COSTLEY‑WHITE: Our view is, when you look at the fact that we are competing in Windsor against what has been called the "death star", which is the Detroit radio market, and others, we actually have ‑‑ we are pretty good scrappers, actually.
2103 In Sarnia we get ‑‑ and I think it is on an unsuppressed reach basis ‑‑ we get 80 stations on the dial?
2104 MR. DANN: There are 116 different signals that come into the Sarnia marketplace. Seventy‑six of those are from the Detroit/Michigan area.
2105 MR. COSTLEY‑WHITE: So we know how to fight the good fight, as it were.
2106 COMMISSIONER MENZIES: Thank you. That's all.
2107 THE CHAIRPERSON: Commissioner Simpson?
2108 COMMISSIONER SIMPSON: Thank you.
2109 Good morning. I have a couple of questions, which all lead to a specific area of interest, which is the profile you have in your mind's eye, in terms of who you are programming to.
2110 The first question goes to the format. I am curious as to how you are going to ‑‑
2111 The album business is a curious one from my experience, in that it is so highly subjective, and it cuts in so many different ways. It is not like a standard rock and roll format, where there is a profile that is both, in demographic, but taste level ‑‑
2112 Because you are doing quite an across‑the‑board assortment in your programming, I am curious as to what this profile is in your mind beyond the pure demographic, in terms of who you are programming to.
2113 I am wondering if somebody could sort of paint me a picture of that.
2114 MR. DANN: I think what you are asking is, what does this person look like, and who is the listener.
2115 As we said, this person is an audiophile. They are a music fan. They are somebody who grew up in the seventies and eighties, primarily, who grew up at a time when album releases mattered.
2116 We were having this discussion last night, and I guess the person that this format is appealing to is that person who goes to a concert. At every concert you go to, there is that one song that every fan of the band knows, and yet was never a chart hit. Everybody who is a fan of that band knows exactly what the song is.
2117 As far as the profile from a demographic standpoint, I think I will ask Debra McLaughlin, who really did a lot of research into what this person ‑‑ who this person is, speak a little bit about that.
2118 MS McLAUGHLIN: As Ron said, the age group is 35 to 64. There will be tuning in the 25 to 34 range, in fact even younger, simply because new music and music for music fans knows know age boundaries.
2119 They have a range of education, so it's a very broad format. Sometimes you hear, with easy listening, that it's higher education, higher income, but this covers a range of incomes, and obviously it covers a range of occupations.
2120 They are defined more by a lifestyle, so they attract advertisers who are interested in people who are spending money on entertainment, and attending venues in leisure time.
2121 So they do have some spending differentials that you can identify.
2122 They change from market to market, because they are predicated on the composition of the market, so it's a little difficult to tell you without having that station on the air here, but I can tell you that in other markets where I have surveyed, some of them where there is a large student population, they have a lot of students in the upper end ‑‑ graduate students, people who are exploring music. They get into it.
2123 It has a lot of the early adopters, people who are using technology to find their music.
2124 But it also attracts people who predominantly use radio now just for news.
2125 I may not be clearing it up entirely. I guess what I am trying to paint for you is that, the way it is programmed, it is not the format as we know it today. Therefore, the audience it attracts doesn't fit into the little boxes that we usually stick audiences in.
2126 Is it attractive to advertisers? Very. Because what is very important about this group is that they are light users of radio. They tend to be light users of television.
2127 When you are doing a media plan, one of the things you look for is trying to balance those consumers who use traditional media in your media plan with the people who do not. And when you find a station that attracts what is Q1 or Q2 users of media, which are the lightest, they tend to get better placement on your media buy. They may only get a small portion, but it's because, once you get a station that attracts the light users, you are finding the rare advertiser, or the rare client ‑‑ consumer ‑‑ that you can't reach in other media. That's who this group tends to be.
2128 I don't know if that answers your question fully.
2129 COMMISSIONER SIMPSON: I am not sure that it did, either. I think that it further illustrated my question.
2130 Let me do this. Let's try it from a different angle. Let's talk about the advertiser.
2131 I found it interesting that in your prospectus you have upped, I would say more than ever so slightly, the ratio of your national advertiser to your ‑‑ beyond the traditional 80/20 split. It is up, by my bad math, at somewhere around 25 percent.
2132 I am wondering, rather than explaining to me why you have done that, if you could give me the elevator pitch to the national advertiser as to who your audience is, and why you think you are going to be able to capture that extra 5 percent.
2133 MS McLAUGHLIN: I will try to do it without the jargon.
2134 There is a whole group of consumers out there that you are missing ‑‑ if you are the agency ‑‑ that you are missing when you buy traditional media.
2135 If you look at the trends, both in television and in radio, what you see is a group of people who are falling off the map.
2136 Are they important consumers? Yes, they are. They are consumers who have a lot of money. They are consumers who, when they don't have a lot of money, are a very important point in the buying cycle, in the development of your customers.
2137 The customers who I am talking about are the people who are younger, who haven't formed their loyalties.
2138 You can get, with this station, a combination of those people. You can get the people who haven't formed their loyalties and the people who have a lot of money.
2139 What links them together is a love of music.
2140 When you look at the way this station will deliver an audience, it will have a lower reach than a Top 40 station, but it will have a longer listening period. And, most importantly, for the fragmentation that happens with all of the clutter that goes on with all of the media choices and how consumers are bombarded, this is active listening.
2141 You hear people talk about it all the time, but these are people who are tuning into the radio not for background and not to hear that familiar song necessarily, but to hear songs they love.
2142 Music is an important part of their life. It's not background, it's not filler, they are listening.
2143 If you, as an advertiser, have the choice to put your ad on a station that reaches a lot of people, some of whom will hear it, or in a station where people are actively listening, your money would be better spent putting it on a station where your ad will be heard and probably retained and actually transact or transform someone's behaviour. So I think you should advertise with this station.
2144 MR. DANN: I can't say it any better than that.
2145 COMMISSIONER SIMPSON: Thank you.
2146 I think what got me onto this line of questioning was that most of the time ‑‑ and I am now moving back to the programming ‑‑ most of the time stations narrow in on a demographic to the extent that they are able to find some type of a marketing term that captures what they believe is going to be the resonant core of the audience they are after.
2147 And I am still finding myself struggling with ‑‑ I understand exactly what you are talking about in terms of that subjectivity of how we build our iPod list that shows no rhyme or reason in terms of the music pattern or specific area of taste level. Which is, I must admit, also what I find intriguing.
2148 But this goes to my next question, which is to develop a programming model along this line where there is no resonant core, something you can sum up in an elevator pitch to a national rep house, for example. If that greatest weakness is also going to be your greatest strength, tell me a bit more about your ongoing programming approach, because this obviously is going to be an evolutionary process.
2149 You haven't got charts to guide you, you know, you are in grey water in terms of the need to constantly be pulling out and adding to your playlist and it is not being spoon‑fed to you through programming consultants that, you know, just go to the low‑hanging fruit of what is on the charts and what is popular.
2150 So how are you going to approach a long‑term process of programming so that you know that you are on top of your audience?
2151 MR. DANN: First and foremost, you are absolutely correct, it is an ongoing process and it will be an ongoing process. Probably one of the most important aspects will be the interactive feature with the website. We have heard a lot of the other applicants have similar plans and this station has the same plan.
2152 And first and foremost, will be a portal on our website that says, 'Is there an artist we are missing that you think we should be listening to?' And allow them that input, then we can research the artist and listen to the artist and see if it deserves to be part of our playlist.
2153 When you get past all of the blockbuster formats and you still find there is a large percentage of the population still looking for ‑‑ as you said, the album industry is certainly much different than it was a couple of years ago.
2154 But there still are people out there that are interested in new albums that come out. The one that strikes me most in the last year was the Bruce Springsteen release, which was a fantastic album. And yet, widely, only one song got played off that album, although people are saying it was one of the best albums he has ever released.
2155 There has to be interest in additional songs on that album and some of them did show up on the triple A charts. There are triple A charts that we can follow for new releases. And they are a wonderful eclectic mix of music, everything from R.E.M. to John Mellencamp to Bruce Springsteen to some folk artists as well. So we do have somewhat of a guide.
2156 But very important in all of this will be the interaction with the audience through the website, that we will allow them. Because, trust me, audio files have no problem voicing their opinions about music with a radio station. We fully expect that we have a long period of time for them to get used to us and us to get used to them.
2157 We anticipate a two or three‑year build as we get used to the music they like to hear from us, always open to the notion that we should be exploring new music at their direction.
2158 COMMISSIONER SIMPSON: Thank you very much.
2159 THE CHAIRPERSON: Commissioner Duncan, please.
2160 COMMISSIONER DUNCAN: I am interested in a couple of comments this morning. I notice that you indicate that you reviewed the research provided by the other applicants and found that they confirmed the research findings of Strategic Inc.
2161 And so I am particularly interested, given that we have applications for three youth formats, and I know you are not in a position to speak to their decisions, those applicants' decisions, but I am interested in the statistics that you gave and how I am to interpret it seems pretty obvious. But in light of the fact we have three youth applicants it is not so obvious to me.
2162 Where you say that the teens have lost 69,000 hours, adults 24 to 54 declined 640,000 hours, which is a huge difference, and 35 to 64 the decline is 331,000. So I am interested in a little more understanding of this and trying to understand as well why you are the only one here applying for triple A.
2163 MR. DUNN: Deb.
2164 MS McLAUGHLIN: Thanks. I point out those differences in tuning because obviously part of what you want to do is to establish where the potential is for growth. It is easier to get someone engaged in a media that they are familiar with, that at some point in their life they were engaged with than it is to get people who never used the media before or aren't currently using it.
2165 And so we had to look at the demographics and just break them up and see where the hours lost were. And it was actually sort of surprising to me to see the degree of the loss in this market. So in terms of having potential it seems to me ‑‑ and we did test youth, youth was never, even on the basis of measuring the hours lost, youth was not off the table as far as assessing in this market.
2166 But what ultimately decided was not the 69,000 versus the 640,000, it was when we went into the market and talked to consumers through the research. What we found was youth was had a lower score, I believe it was 75.7, I mention it in our brief, in terms of their interest in the format.
2167 When we express interest in the format we add together definitely listens and probably listens and we give you the blanket number of the probable audience or the potential audience. But contained in our 80.4 for the triple A format and the 75.7 is the breakdown of the definitely and the probably.
2168 There was a higher percentage of youth that only said they would probably listen and there was a higher percentage of the adults that said that they would definitely listen. That is an important differentiation from the perspective of putting together a business plan, because while youth was interested in having a format that they would listen to, they were less I would say firm in their opinions that they would actually go and listen.
2169 So while the interest was at a 75.7, when you are estimating who would really listen the numbers are significantly lower. And also when we went through, because we ask all of those points of, you know, would you listen more if a station was available? They were softer on their answers in that grouping as well. So it wasn't the 69,000 versus the 640,000 or just the overall interest versus ‑‑ it was a combination as we went through.
2170 We also looked at some of the music interests of that age group. It was also clear that some of that music was already available in the market, like modern rock, or they were looking for urban music that was edgy which we could never broadcast.
2171 And so the ability to actually really well serve that demographic didn't seem to be as clear as this very obvious group that typically, historically has been the biggest user of the media or radio, grew up with it, still looks to it and is not saying it is ineffective or not saying it just doesn't apply to us, it is actually saying if it could just get better we would use it. Whereas we found youths were saying, I don't know. Like, we would have to sell them on the whole medium.
2172 So it was a combination.
2173 MR. DANN: Because our format is largely a rock‑based format despite, you know, the varieties that we have incorporated into it, it is largely a rock‑based format. And that addresses the number one issue that they found in the research, that rock music or classic rock music in the London market is still extremely popular.
2174 COMMISSIONER DUNCAN: I am just wondering, just sort of as a follow‑up to your explanation, when you spoke to the young people that you spoke to would they have had a clear understanding of what the options would have been?
2175 MS McLAUGHLIN: Between triple A and ‑‑
2176 COMMISSION DUNCAN: Yes, triple A and what you were proposing for youth if you went in that direction?
2177 MS McLAUGHLIN: No, because we used a 900 sample and we asked everybody about how they viewed radio, would they tune more if the programming they liked were available, all that whole cast of questions.
2178 The only way that we split it out was when we actually got to the three demand questions, you know, how likely are you to listen and how interested are you in this music? So they would not have been voting, you know, triple A versus youth.
2179 And I don't only give the impression that they are isn't a market for youth radio, because I have appeared before you before and maybe even again to say there is, and I salute people and broadcasters who have, you know, in fact created youth and they can bring it back. As a long‑term sustainable service in this market, in a standalone capacity, we found that to be a little challenging.
2180 Every group has an expertise and there was a lot of expertise around this table in rock and in the formats. So for a lot of very good reasons we thought this was a better choice. So I don't want to suggest ‑‑ 75.7 per cent is a pretty high number for youth.
2181 COMMISSIONER DUNCAN: Thank you.
2182 THE CHAIRPERSON: Legal counsel.
2183 MR. McINTYRE: Thank you, Mr. Chair.
2184 I have two questions for the applicant today. The first question relates to the commitment made today with respect to Category 3 programming. I believe that you committed to a COL of 30 per cent Canadian content for Category 3.
2185 It appears that there may be a discrepancy in the application in section 1.1 you propose 40 per cent Canadian content for Category 3. So I am just wondering if you could clarify what your position is on that?
2186 MR. DANN: We will commit to the 30 per cent. And it may have been a typo, but we are comfortable with the 30 per cent for Category 3 music.
2187 MR. McINTYRE: Okay, thank you. And today you also confirmed for Commissioner Cugini an over and above CCD contribution of $1.5 million. I believe on page 30 of your application you provided a breakdown for the seven years of what you would contribute. Is that something that we could include in your condition of licence?
2188 MR. DANN: Yes, you can.
2189 MR. McINTYRE: All right. And the last thing is just to read into the record the undertaking to file updated proof of financing by October 30.
2190 MR. COSTLEY‑WHITE: We will do so.
2191 MR. McINTYRE: All right, thank you.
2192 THE CHAIRPERSON: Thank you. Ladies, gentlemen, thank you very much for your presentation.
2193 We will take a 15‑minute break, so we will be back at 10:30 with the next applicant. Thank you.
‑‑‑ Upon recessing at 1015 / Suspension à 1015
‑‑‑ Upon resuming at 1035 / Reprise à 1035
2194 THE CHAIRPERSON: Order please.
2195 Ms Secretary.
2196 ASSISTANT SECRETARY: Thank you, Mr. Chairman.
2197 As a reminder, I would like to ask everyone to please turn off your cell phones, beepers and Blackberries, as they are causing interference with the internal communication system that the translators are using. Thank you.
2198 We will now proceed with Item 7, which is an application by United Christian Broadcasters Canada for a licence to operate an English‑language FM commercial speciality radio programming undertaking in London.
2199 The new station would operate on frequency 98.1 (channel 251A) with an average effective radiated power of 2,904 watts (maximum effective radiated power of 5,206 watts, with an effective height of antenna above average terrain of 107.4 metres).
2200 Appearing for the applicant is Mr. James Hunt. Please introduce your colleagues and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
2201 MR. HUNT: Thank you. Good morning, Mr. Chair, members of the Commission, Commission staff.
2202 As you said, my name is James Hunt and I am the CEO of United Christian Broadcasters. With me for the presentation aspect this morning will be: Rev. Paul McPhail, he is the General Secretary of the Independent Assemblies of God International (Canada); Mr. Mathew Grieve, a local Canadian artist with the group His Season; and Curtis Butler, a local Londoner with some radio experience in the London market.
2203 Those who will be fielding some of the questions with me, unfortunately, Linda Korgamets, our CEO who does some consulting with PricewaterhouseCoopers, was called away so she can't be here this morning; Capt. Timothy Seibert, one of the Directors is here; Mr. Al Baker, Program Director as well as Operations Manager for our Chatham‑Kent licence; and Mr. Garry Quinn, the General Manager of New Projects.
2204 I would like to start off this presentation by sharing a short video which shows the wider context of United Christian Broadcasters and what we are part of.
‑‑‑ Video presentation / Présentation vidéo
2205 MR. HUNT: UCB Canada is a not‑for‑profit Canadian charity. And from what you have just seen, we are in a relationship with many similar UCB affiliates globally. Each UCB is totally autonomous but chooses to affiliate together to support each other, share resources, training, ideas, best practice, et cetera.
2206 Part of the success of UCB Canada having only come to air in Belleville five years ago and less than a year in Chatham‑Kent has to do with the strength of this affiliation, a network of shared learning.
2207 Using the 2001 Statistics Canada figures we know that 77.1 per cent of Canadians say that they have some form of Christian religious affiliation. Even if we only take a quarter of those responses as active in the Christian faith, that would be about 19 per cent of the total Canadian population or about six million people nationally.
2208 We know there is over 1,200 radio and audio services in Canada, that is in 2007, only 43 were Christian format radio stations broadcasting 24 hours a day. So only 3.6 per cent of all radio and audio services are of a Christian format serving, as I said with a conservative estimate, a population of about six million or 19 per cent of the Canadian population.
2209 And even within the Christian faith‑based stations there will be further variety when it comes to format, music, talk, language, et cetera.
2210 If we take the London community the trend is similar. We know that 74.18 per cent in 2001 claimed to be aligned to the Christian faith. Again, if we only take a quarter of those responses as active Christians that will be approximately 65,000 people in London.
2211 There are 639 churches in the greater London area, which would make their average congregation about 100 people. Do they not have a fundamental right at least to be able to choose a station on public radio that aligns to their faith?
2212 We also know that where there is a UCB station there are a number of people who listen who do not attend or are affiliated with a church. In addition, there is part of the population who listen to Christian radio who do not have any Christian affiliation. The Barna Research Group claims that 28 per cent of adults who listen to Christian radio in North America fall into this category.
2213 So there is absolutely no doubt in my mind that there is a need and a demand for a Christian station that covers the whole of London and surrounding areas where there is such a strong Christian community.
2214 If we touch briefly on radio revenues, nationally 71 per cent of the revenues in the English‑language markets come from five of the big operators. As I experienced within Canada and other countries that when a UCB station comes into a market most of the revenue generated through sales comes from new money into the industry.
2215 Businesses that want to be aligned to a family‑friendly stations, Christian businesses that want to be known as Christian businesses, as well as Churches who want to add to the tithe without concerns of commercials or content being offensive.
2216 We have also seen businesses which are targeting a captive loyal audience will use the Christian radio station to increase their reach. So I don't see UCB Canada dividing the revenue pie any further, but actually increasing it by tapping into a new market and bringing further competition into a market that we have already heard over the last few days is heavily dominated by a few big players.
2217 Another aspect that UCB stations bring is the inherent desire and focus to help people and their families. While all businesses need funds to operate and UCB Canada obviously is no exception, profit is not our driving force. We are a non‑for‑profit charity with our funds going towards achieving our charitable objectives rather than making a profit.
2218 For 2007 currently we have an excess in our disbursement quota of over $670,000. That basically means that we spend more than required by the Charities Directorate on our charitable objectives. It is not just about compliance, but it is why we exist.
2219 Our positioning statement is changing lives for good. We not only do this by getting involved in the community we are a part of, but on air as well as in the print media we address community needs and cover topics such as debt, depression, fear, parenting, teen suicide, alcoholism to name but a few. And we work with local support groups to educate and promote what is available locally.
2220 As you saw in the video, we also offer a prayer line for people to call. And we get requests from families, teenagers, prisoners, community leaders asking for prayer, information, literature.
2221 The station has been professional, entertaining, compelling, which goes without saying, but we are here to add value to a community beyond just broadcasting or looking for advertising dollars.
2222 As you have seen in the application, UCB Canada is here before you by invitation, invited by community leaders to submit this application on their behalf.
2223 We practise partnering with the local community, for the local community. Approximately 65 percent of our revenue comes from individual givers, which emphasizes the point I'm making, and even this London project so far the community has raised the funds to get us to this stage.
2224 I would like to hand over to Rev. Paul McPhail, who will be saying a few words.
2225 REV. McPHAIL: I'm Rev. Paul McPhail, from Chatham‑Kent, Ontario. I'm honoured to speak in support of UCB Canada's London application having experience firsthand with UCB Canada's work in a community.
2226 I was involved at an early stage, supporting many of their functions, and was invited, like many other church and business leaders, to business meetings, fundraising, information sessions and UCB Canada worked hard, and continues to do so, to involve the local community in what is taking place.
2227 I, as a longtime pastor and member of the Ministers Association in Chatham‑Kent affirm that UCB Canada has also had a positive impact on the church community. There's been more interaction and more cooperative efforts in the church community because of UCB Canada and the proactive role that they take in the community.
2228 UCB Canada has not sided with one denomination or group. UCB Canada has been professional in presenting well‑rounded religious programming, as well as providing local interest stories, events, news, sports, et cetera.
2229 As the national leader, the General Secretary of the Independent Assemblies of God Canada, I am involved in many communities, as we have 750 ministers and over 500 churches across Canada. Within London, Independent Assemblies of God Canada has a number of churches, including many multi‑ethnic African, First Nations, Slavic congregations.
2230 UCB Canada will be a positive addition to the London faith community. From what I have experienced of UCB Canada, they will be a uniting and welcomed addition to this community.
2231 Thank you. Thank you for your consideration of UCB Canada's application.
2232 MR. HUNT: Thank you, Paul.
2233 UCB Canada is also committed to Canadian content development and we have strong relationships with many artists, some of whom wrote letters to you supporting our application.
2234 If there are only 43 Christian formatted radio stations in Canada, the possibility for Christian Canadian content development is very limited, with very few funds channelled here. This is an area that is in need of focus locally, as well as nationally, if we are to grow and sustain this talent pool.
2235 I would like to call Matthew Grieve, from the group His Season, to say a few words.
2236 MR. GRIEVE: What I think is very important to understand is that for the artist radio can make or break you. With that said, for Christian artists this is not an exception. I have been singing all over the country for the last 15 years and have sung in over 1,200 churches in Canada. In fact, for a year‑and‑a‑half I was living my dream by being a full‑time Christian artists in Canada.
2237 We have seen that it was a tough road for many Christian groups before us but took the plunge anyway, and I would say that the lack of Christian radio in this nation is probably one of the biggest reasons that my group, His Season, and countless other groups and soloists, have not survived to make a living doing what they love to do.
2238 I say this knowing that in the United States over 1,400 Christian radio stations continue to pump out their Christian artists music and know that if we wanted to leave Canada and sing only in the United States our chances of being successful would be far greater. The royalties from one's songs, to the publicity that radio brings to the artists, and just in general the radios pushing local events, brings a credibility to the artist.
2239 Years ago, when Christian radio finally came to this country, so many of us were so excited about the future, but unfortunately for us Christian radio has, in most cases been, I'm sad to say, less that top‑notch, from programming to DJs to lack of bandwidth or the overall lack of professionalism that has been associated with many of these stations.
2240 All that said, I have had nothing but wonderful experiences in our dealing with UCB Canada. All that is lacking in many Christian radio stations in so many places in Canada can be found in this station, I believe. In my travels I have heard nothing but great things about them and know that their many listeners tune in regularly to back up what I am saying.
2241 Giving them the station is good for me, the artist, and, in my opinion, good for this country.
2242 MR. HUNT: Thank you, Matt.
2243 I would like to finish off with the last person in this presentation, and that's Mr. Curtis Butler. He's a local Londoner with some radio background in this market.
2244 MR. BUTLER: Well, good morning.
2245 UCB Canada has a proven record of success with the Christian radio market. Their flagship station in Belleville, Ontario is a B class licence, as is the Chatham‑Kent station. They now have repeater stations in two other cities and will bring another two more to air within the next few months. Their programming is uplifting, encouraging and promotes positive family values, which is a pleasant change from what many of the other stations offer.
2246 It should also be noted that UCB Canada's stations are being listened to not only by those who identify themselves as Christians, but also by listeners who simply do not identify their lifestyle by what's promoted through the music and talk on secular stations.
2247 Their staff have proven experience in the radio industry, UCB are avid supporters of Canadian talent development and their professionalism and the overall product that they provide is a complement to the other stations in their markets.
2248 London needs a Christian formatted radio station that can truly meet the needs of the Christian demographic, as well as those who enjoy this type of programming. We need a high‑powered, professional Christian station, backed by an organization that has the proven success that UCB does.
2249 Now one might say there's already a Christian station in London so why do we need another. I do not believe that the current provider of Christian programming to the London market is effective to the level that a station should be. I, for one, cannot receive their signal clearly in my driveway and I live 10 minutes from their transmitter. And even though they have been in the London market for over five years now, some Londoners are not even aware that we have a Christian station.
2250 The radio market in London already has a number of stations and formats. My concern is that some of the applicants' formats are similar to what we have in London and the market does not need more of the same by adding to this. One would wonder how many advertising dollars can there possibly be for stations targeting the same or similar demographics. The finances of a Christian station come primarily from listener donations which, in most part, would not take away from the current market.
2251 I would ask that you truly find favour with the application put forward by UCB Canada and I sincerely thank you for your time and for the privilege of speaking here today.
2252 MR. HUNT: Thanks, Curtis.
2253 I don't believe that by adding another pop oldies format or adult contemporary music format or hit radio, whatever it is, to the existing menu will serve the wider London community. There are already about 19 stations, if you take into account some of those coming from Stratford and out‑of‑market, in the market, with a fair amount of overlap, as we have already heard from a number of incumbents.
2254 For a city of this size, that has such a strong Christian community, it seems disproportionately unbalanced to have so many stations without there being one high‑powered Christian station.
2255 As requested, UCB Canada is able to provide this to the wider London community, as we have shown in the Quinte and Chatham‑Kent areas.
2256 That concludes our presentation, and thank you.
2257 THE CHAIRPERSON: Thank you very much, Mr. Hunt.
2258 Commissioner Menzies.
2259 COMMISSIONER MENZIES: Thank you.
2260 I would like to start by trying to build some context for us, in terms of your application.
2261 I'm struck by the 74 percent of Londoners with a Christian affiliation and my question really is to try to determine your ability to reach all of that, which you aspire to, I take it, from your presentation.
2262 I will put it this way, it's a little maybe unusual, but the first question is to find out more about you and the next one is to find out more about the audience that there is, so....
2263 One of the really interesting things about Christianity is the wide range of people to which it can appeal, and that means that among that 74 percent of Londoners ‑‑ and I will stick some categories on ‑‑ that there are people who would fall into the categories of Pierre Trudeau Christians, Jimmy Carter Christians, Tommy Douglas Christians, Preston Manning Christians, Shane Doan Christians, Cindy Claussen Christians, Ukrainian Orthodox, Sabitarian, Christians who don't watch TV and there's "Ned" Flanders and Homer Simpson Christians, right?
2264 So where are you guys in that? Where do you fit? What's your theological core?
2265 MR. HUNT: Okay, to start off with, those figures of 74 percent: since 2001, obviously, Statistics Canada no longer asks that question on their survey, so...and we took a conservative approach saying, "Let's say only a quarter of them are active in some form in the Christian faith".
2266 So I'm not proposing we will reach all 74 percent, but, if we are conservative, there's a number of that percentage which we would reach, and in a couple of areas.
2267 With the number of churches there are, there's already a network, so to speak, that we have access to that a number of other incumbents don't have: groups that meet regularly, weekly, if not more than that, and the ability to contact and be part of local ministerials and groups, et cetera. So in one sense there's a network in place that we can be part of.
2268 To go to your question about theology and where we are, Christianity, and the position of the stations that we look at, it's a lifestyle choice based on the Bible. And as you have said, there's interpretations of that, and I understand that. And within cultures there's ways of worship, as we clearly showed in the video, that we are very sensitive and aware of cultures, of diversity in local areas that would like to access Christianity in their preferred style.
2269 So what we would say, it's theology, it's based around the Bible, and it's as generic as that. So as Rev. Paul McPhail said, we will never be controlled by one group or influenced by one group because we are here to serve the wider Christian community.
2270 COMMISSIONER MENZIES: Okay. With the Assembly of God association, I was thinking ‑‑ and you can dispossess me of this notion ‑‑ that it had a Pentecostal association, in terms of that. Or is that just a part of the Board?
2271 MR. HUNT: That's my understanding.
2272 I will ask, actually, Rev. Paul McPhail, if he wouldn't mind answering some of that, being in the business.
2273 COMMISSIONER MENZIES: Yes.
2274 REV. McPHAIL: Mr. Commissioner, the Endocrine of the Assemblies of God has been in Canada since 1890 and they are sovereign congregations all across Canada. We have over 500. Many of them are Pentecostal, but you will find many that have Baptist, Presbyterian, Anglican. In fact, I spoke in a United Church on Sunday. That's our roots,
2275 And that's what I appreciate about UCB Canada is that they are able to work with many that accept a label of being Christian: Roman Catholic, Protestants, independent congregations. That's been my experience.
2276 COMMISSIONER MENZIES: Okay, thank you.
2277 It just came up because I googled you. I googled Assembles of God and Pentecostal was the first thing that came up, so I wanted to make sure.
2278 Thank you for that. That's helpful.
2279 In terms of that, in your application one of the things we need to clarify about it is we need a bit more detail on the nature of the programming, in terms of that. Like, how much of the spoken word is religious? Is it all religious?
2280 MR. HUNT: No, it's not all religious, and we can talk to some of that now.
2281 COMMISSIONER MENZIES: Sure.
2282 MR. HUNT: You are obviously going to want some more facts and figures about that ‑‑
2283 COMMISSIONER MENZIES: Yes.
2284 MR. HUNT: ‑‑ which we can give to you.
2285 It's not all religious. You know, even if we take simply news, and local news, it's not religious. It's news whether you are a Christian or a non‑Christian. We do interviews, we do street interviews, we do health things, we do something called table talk, where it's topical issues, and we invite people of different points of view and persuasions to discuss it.
2286 So it's not all religious in that sense, but, obviously, it's predominantly religious.
2287 COMMISSIONER MENZIES: Okay. And to clarify, I think you may have just answered the next part, because for any religious broadcasters the Commission requires some sense of its dedication to balance, alternative ‑‑
2288 MR. HUNT: Yes, yes, yes.
2289 COMMISSIONER MENZIES: ‑‑ views, that sort of stuff. You have just kind of mentioned that. We need something on the record regarding your intention for your programming to be consistent with the religious programming ‑‑
2290 MR. HUNT: Yes. No, I understand that.
2291 COMMISSIONER MENZIES: ‑‑ guidelines.
2292 MR. HUNT: I understand that. And, again, I will talk from what we are currently doing because that will be the basis of the foundation of what we are proposing.
2293 So even in the other two stations that we have, we solicit responses on air for different opinions. We have a call‑in, we have a dedicated comment line, we go out on the street and do topical things, where we interview people. And we target different opinions. I think it's healthy to debate. And from a Christian standpoint, it's healthy for people to know what they believe and why they believe it, so....
2294 COMMISSIONER MENZIES: And those are opinions from within the faith and outside the faith, as well?
2295 MR. HUNT: Yes, definitely...well, we just walk on the street, so it's not even targeting anyone within the faith. We will just speak to people, and particularly minority groups or particularly groups that show the diversity of the community we are in.
2296 COMMISSIONER MENZIES: Okay, thank you for that.
2297 Staff would probably like me to get you to accept ‑‑
2298 MR. HUNT: No, no.
2299 COMMISSIONER MENZIES: ‑‑ that as a condition of license ‑‑
2300 MR. HUNT: Yes, no problem.
2301 COMMISSIONER MENZIES: ‑‑ in terms of that.
2302 Thank you.
2303 You have obviously got a broad international base. Do you have a template for handling of complaints that arise? Or how do you managed those, typically?
2304 MR. HUNT: Are you talking complaints from the public, rather than internal ‑‑
2305 COMMISSIONER MENZIES: Yes, yes.
2306 MR. HUNT: ‑‑ employee complaints?
2307 COMMISSIONER MENZIES: Yes, public complaints.
2308 MR. HUNT: We do, and I will ask Al Baker to speak to that in a moment.
2309 We do. I wouldn't say it's an international template that we use because ‑‑
2310 COMMISSIONER MENZIES: Okay. I don't care if it is, I just ‑‑
2311 MR. HUNT: No, you just mentioned that, okay. You mentioned that, because, obviously, compliance is different in every country and in ‑‑
2312 COMMISSIONER MENZIES: Yes.
2313 MR. HUNT: ‑‑ different areas. So we do, roughly.
2314 Do you want to speak to that, Al?
2315 MR. BAKER: Yes.
2316 From time to time we get complaints. Mostly it's about the type of music or if, you know, a particular commercial that somebody may not like, you know, something along that line. And depending on what the complaint is, you know, the person will either get a phone call or a written response within a 24‑hour period of time.
2317 COMMISSIONER MENZIES: Okay.
2318 MR. HUNT: If I could just add something, sorry.
2319 COMMISSIONER MENZIES: Sorry. Go ahead.
2320 MR. HUNT: If I could just...the thought's gone out of my mind, so you carry on.
2321 COMMISSIONER MENZIES: Okay. Just as long as you have a complaints procedure for that, that's helpful.
2322 MR. HUNT: Sorry, what I was going to say ‑‑ I knew it would come back as you wanted to move on.
2323 What I would say is, actually, we are a station that has a really loyal listeners' base because it's a lifestyle choice. You know, as people might choose to be healthy and go to the gym and put that in the way they behave or what they do, or outdoor people, or whatever, for a lot of people it's a lifestyle choice.
2324 And we do get complaints, because rather than just change the dial to something else if they don't like something on the program, they will actually voice an opinion and say, "We don't like this" or "We don't like what we are hearing" or "We don't like the music" or "What about this for the kids?".
2325 So the feedback, actually, it's very positive, it helps us. But there is a fair flow of feedback from our listeners.
2326 COMMISSIONER MENZIES: Okay.
2327 You addressed it in your presentation, the incumbent Christian broadcaster here. They obviously have an application here to expand their capacities. They made it pretty clear in their presentation that they have a lot of technical challenges, in terms of that. They also made it fairly clear that if another Christian station came in that would pretty much be the end of them.
2328 I would you to address that and expand on your thoughts regarding how you feel about what they had to say and what you would like us to take away from that, in terms of a decision.
2329 MR. HUNT: Okay, and if other of the panel want to jump in, as well, it's fine.
2330 We were invited by, as I have mentioned, a group of community leaders saying, "Would UCB consider bringing a high‑powered, you know, Christian station to the community?" and put an application in on our behalf, those community leaders. We spent a long time debating with those leaders should we or shouldn't we because what's the impact going to be on the existing Christian radio station.
2331 So back in March I went and met with the chair of their board saying, "Let's do something together. Our heart is that there is a large Christian community in London that should be served, why don't we work together?" and the response was they chose not to at that time to pursue that avenue.
2332 It was a month before the closing date on this application, nothing had been put in, so rather than lose the opportunity ‑‑ and I said up front, I said, "We're going to go ahead and put something in because when is another opportunity going to come for an FM station in London. And we have been asked by a number in the community to do something, so we are going to put the proposal forward and it's obviously up to the commissioners to decide what's best use of that frequency".
2333 COMMISSIONER MENZIES: Have you talked since?
2334 MR. HUNT: No, other than just informalities and basic greetings. But there hasn't been on this particular application.
2335 And we purposely haven't gone out and surveyed the market. We do not want to create a "them and us" or people in the London market have to choose. We don't want to go down that road until the CRTC make a decision.
2336 COMMISSIONER MENZIES: Okay.
2337 Can you give me a few "for instances" on the community leaders who approached you to ask you to do this?
2338 MR. HUNT: I can. And, again, they have not wanted to put forward who they are because they are in the community and they want to support Christian radio. So they don't want to undermine one for the favour of the other, and I understand that.
2339 COMMISSIONER MENZIES: You don't have to ‑‑
2340 MR. HUNT: No, no, I ‑‑
2341 COMMISSIONER MENZIES: If they don't want their names, that's fine, but can you give me ‑‑ like, are they ‑‑
2342 MR. HUNT: Yes. Yes, that's not a problem.
2343 COMMISSIONER MENZIES: Well, that would be a bit a of a giveaway of the name is I asked you, "Is it the mayor?", but, for instance, are they political leaders?
2344 MR. HUNT: No, they are not political leaders.
2345 COMMISSIONER MENZIES: Are they business leaders? Are they firemen? Are they ‑‑
2346 MR. HUNT: They are a diversity of business leaders, church leaders, denominational leaders. So it was a smattering of people aligned with the Christian faith that hold, you know, positions of responsibility and employees in the local ‑‑ employers, sorry, in the local London market.
2347 COMMISSIONER MENZIES: How many would you say?
2348 MR. HUNT: Well, we only have started working with a panel of about 12. We didn't want to pursue anything further than that until ‑‑
2349 COMMISSIONER MENZIES: Okay.
2350 MR. HUNT: You know, because, again, we don't want to be divisive, so....
2351 COMMISSIONER MENZIES: Sure.
2352 I will come back to the application a bit, but I would like to know a little bit more of the organization's assessment about the strength of the Christian music industry in Canada, and if you foresee a time when Christian artists would perhaps have the same level of access to Christian radio as secular artists have to secular radio?
2353 MR. HUNT: I will kick off with that, and then I will hand over to Al Baker, and maybe, you know, Matthew, the artist, would like to talk to this, as well.
2354 MR. GRIEVE: Yes.
2355 COMMISSIONER MENZIES: I would like to hear from him.
2356 MR. HUNT: Yes.
2357 So I think Christian radio in this country is still in its infancy, if we look across the border where they have so much more. And, you know, the appeal to a lot of Christian artists to go across the border or to other countries is there because the financial appeal of how they can sustain what they are trying to do.
2358 So just proportionately they don't have access to the markets because a number of them choose that they don't try and market their product through secular stations.
2359 So I will ask Al to kick in there and see....
2360 MR. BAKER: Mr. Commissioner, I'm not sure if I understand exactly what it is you are asking. You are asking: how can we provide more time or ‑‑
2361 COMMISSIONER MENZIES: No, I'm not ‑‑
2362 MR. BAKER: ‑‑ what is the impairment?
2363 COMMISSIONER MENZIES: I'm going outside the fence on this a little bit. I'm just trying to get a broader sense from you. I'm taking this opportunity to get a little bit more data on the challenges that Christian artists are facing in Canada.
2364 To help make it a bit more specific, when you mentioned people going to the States, you also mentioned the relatively low number of Christian stations in Canada as a percentage of the overall numbers.
2365 Are the numbers in the U.S. that much better that Canadian artists are drawn to the States rather than having the opportunities here?
2366 MR. BAKER: Well, yes, there are some Canadian artists on American charts and a "for instance" would be a group called downhere, you know, and there are others. I believe that there is more opportunity down there, but the competition in the States is a lot stiffer.
2367 Because Canada never started licensing Christian radio stations until 1993, I think that's why. You know, there are only 43 right now. Christian radio has been active in the United States for, you know, quite a longer period of time, so people have had time to get into the genre. The genre has had an opportunity to develop down there through the medium of radio and it hasn't really had that much of an opportunity here. That's why it's in its infancy.
2368 I think there are two problems at work here, you know. I mean, because of the lack of Christian radio stations in the country, the avenue is not that prominent for Christian artists to get going. Okay? And also, I mean, without radio, why bother, you know? I mean, if they are having a hard time getting on an American station and there's no Christian radio station here, they are confined to churches, and so they stay unknown.
2369 COMMISSIONER MENZIES: So what would be the percentage of Canadian content in your music overall?
2370 MR. BAKER: Fifteen percent.
2371 COMMISSIONER MENZIES: Fifteen percent. That's kind of what I'm trying to get. It's applications here for ‑‑
2372 MR. BAKER: Yes.
2373 COMMISSIONER MENZIES: ‑‑ secular stations are ‑‑
2374 MR. BAKER: Thirty‑five.
2375 COMMISSIONER MENZIES: ‑‑ 35, 40 percent, and that sort of stuff, and obviously I'm just trying to get to the point that, at 15 percent, do you think that's enough space to encourage the pool of Canadian artists, Christian artists, that are there to really get the same leg up in Christian radio that secular artists are given in secular radio?
2376 MR. BAKER: Well, you have to bear in mind that not all Canadian Christian music endeavours are of the same quality, and I think that speaks to the stage of development that the Canadian Christian music industry is in right now. It's a little bit better than embryonic, but it's far from maturity.
2377 COMMISSIONER MENZIES: Okay. I would like to hear from the artist on this.
2378 MR. GRIEVE: You know what, I can tell you that if you want to choose to plant your feet in this country, as a Canadian artist, it's virtually a death sentence to you.
2379 I have been singing, as I said, in 1,200 churches, probably one of the busiest Canadian groups in the country. We have done that strictly basing ourselves in churches and coming to the market that exists there. There's been not a lot of help from Christian radio based on the fact, as already has been mentioned, that there's not a lot of them.
2380 There's a couple of great stations that do the job very well, some locally and some a little bit farther away, but with that said it's not been ‑‑ yes, there's a lack of some calibre, there's no question, based on probably the same fact: that there's not a radio to keep artists out there, keep them going, so people die along the way. But yet there is some phenomenal talent that's there.
2381 I mean, as far as the whole 15 percent, yes, I don't know if that's spectacular by any standards, but at the same point, I think that the cream would rise to the top in that percentage as well, I would hope.
2382 If there's any particular question that you would love to know, I don't know if I have missed....
2383 COMMISSIONER MENZIES: No, no, that's helpful. And just would you be looking for opportunities to play music that would be suited to your audience and your format from artists that wouldn't necessarily be designated as Christian? I think of, just off the top of my head, Paul Brandt, for instance, has some tunes out there that would be very well suited and attractive to your audience. Would you be looking to use people like that?
2384 MR. BAKER: Yes, we do play Paul Brandt. Paul Brandt crosses different genres, you know.
2385 COMMISSIONER MENZIES: Yes.
2386 MR. BAKER: Primarily he's a country artist. He also does some Christian stuff, and we play his stuff, too.
2387 COMMISSIONER MENZIES: Okay, thanks.
2388 MR. HUNT: If I could, could I just add something? And I don't obviously need to tell you what the minimum is, it's 10 percent of Canadian Christian artists, you know, CCD, for religious broadcasting, so we are going to have 15 percent. But over and above that, what we do try and do is, if there is a group that ‑‑ as Al mentioned, the professionalism is an important part because you can't just play shoddy stuff on air and expect you audience just go along with it, right, just because they are loyal.
2389 The other thing is with the affiliated network that we have is that we very easy can work with other groups in other countries when tours work or "Have you heard this latest CD?" Or, you know, groups from different countries coming here or groups from this country wanting to go to other countries to do a tour, we connect them. So it does have a benefit that way, as well.
2390 COMMISSIONER MENZIES: Thank you. That was helpful.
2391 In your application it states you intend to offer a minimum of 42 hours of local programming. Forty‑two hours is, in fact, the minimum you have to meet if you want to sell advertising. It seems to me that you haven't left yourself much of a margin of error.
2392 Are you still comfortable with the 42 hours of local or did we miss something, in terms of the breakdown in your application?
2393 MR. HUNT: I think it was more my interpretation of the question.
2394 We are not prepared to go ‑‑ as you said it's compliance ‑‑ before 42 hours. So that's the bare minimum we would even consider a condition of license. We are looking at 74 hours, possibly even more, of local content. I just interpreted the question that way, so in our proficiency questions that's how we have answered it.
2395 COMMISSIONER MENZIES: Right. Did you want to change your application? Do you want to stick with the 42 on your application? Would you like ‑‑
2396 MR. HUNT: No, no, no. In the deficiency we have said .8, .3 in our quotes. The application form states provide a commitment to minimum level. This stated 42 hours is minimum UCB is prepared to go.
2397 Local programming would be approximately 74 hours, so that can be a condition of licence, that's fine.
2398 COMMISSIONER MENZIES: Okay. But then just for the record can you break that down again for us in terms of spoken word, syndicated, news and surveillance ‑‑
2399 MR. HUNT: Yes.
2400 COMMISSIONER MENZIES: ‑‑ in terms of exactly what we are looking at?
2401 MR. HUNT: Can do.
2402 Al, do you want to take that?
2403 MR. HUNT: I'm sorry.
2404 While Mr. Baker is just trying to find his position, what again we have put in our deficiency ‑‑
2405 COMMISSIONER MENZIES: You don't have to give it to us right now.
2406 MR. HUNT: Oh, okay. I thought you wanted to hear it. Yes, not a problem.
2407 COMMISSIONER MENZIES: If you could give it to the Secretary this afternoon?
2408 Is that okay?
2409 MR. HUNT: We can.
2410 If they are wanting more definition than what's in the deficiency answers we have, we might even take a little longer than this afternoon, but we certainly can make arrangements to get it sooner.
2411 COMMISSIONER MENZIES: I will leave it to you to work it out.
2412 MR. HUNT: Okay.
2413 COMMISSIONER MENZIES: Good.
2414 And now that I know we are talking about 74 hours instead of 42 hours, I just want to know how you would focus your local programming in order to attract the audience that you will need to form the basis of your business plan.
2415 What's the main focus of your local programming?
2416 MR. HUNT: I will ask our Program Director to respond to that.
2417 MR. BAKER: We actively court different people in the community, different community leaders, say from a health unit, local city councillors, representatives of the United Way, things like that, to come onto our morning program and we have about a 10 minute interview segment that we do. This is something we actively pursue and are proactive about including in the programming.
2418 We also have community events, both prerecorded and live, that we offer to any nonprofit organization. If they are not‑for‑profit then they qualify for free airtime. So we promote any and all events, if it's like a concert series in the park or something or a yard sale or something along that line.
2419 COMMISSIONER MENZIES: What are your capacities for local news coverage in that sense?
2420 MR. BAKER: Well, we don't have a local newsperson on staff, but what we do is we can have ‑‑ the morning announcer would do a newscast and what we do is a couple of ideas actually, we have community stringers, you know correspondents feeding us information about local events, and we also have an arrangement with the local newspaper. They supply of stories in exchange for mentions.
2421 COMMISSIONER MENZIES: That would be the London Free Press?
2422 MR. BAKER: Well, I'm speaking in the context of our Chatham station right now.
2423 COMMISSIONER MENZIES: Right.
2424 MR. BAKER: But there are a number of ‑‑ I'm just saying these are avenues that we would pursue ‑‑
2425 COMMISSIONER MENZIES: Right.
2426 MR. BAKER: ‑‑ for this application.
2427 COMMISSIONER MENZIES: Okay.
2428 Just a couple of things on your CCD initiatives.
2429 It's not 100 per cent clear to us ‑‑ from what we know of them so far and that's why we want to clear this up ‑‑ that they would be 100 per cent qualified to meet our criteria.
2430 So could you elaborate on, for starters, the eligibility criteria for the most improved student award?
2431 Who would be selecting that student?
2432 MR. HUNT: That in the past has typically been the institution that we are working with for that award. They have the criteria to define that and we work with them.
2433 COMMISSIONER MENZIES: So it would be a third‑party thing ‑‑
2434 MR. HUNT: It's a third‑party, yes.
2435 COMMISSIONER MENZIES: ‑‑ that would be selecting. Thanks.
2436 Now, if somehow that initiative proved not to be eligible, how would you redirect the funding?
2437 MR. HUNT: Again if I could just use current examples of things that we are doing, in two weeks time we have a workshop for songwriters, so we got a prominent artist/songwriter spending a day doing workshops with a number of people who are aspiring to be songwriters or starting off and that evening having a concert as well. So there are quite a few avenues.
2438 As Matt mentioned, there is a real need in the market and so a shortage of trying to put the funds within that Canadian development, it's not difficult.
2439 COMMISSIONER MENZIES: To make a long story short, you would be happy to work it out with the staff to make sure it was going some place that was ‑‑
2440 MR. HUNT: Oh, yes. Yes.
2441 COMMISSIONER MENZIES: Okay.
2442 Also, we need a bit of a budget breakdown on the talent contest. For instance, how would the winners be selected and how will they be able to use the coaching and studio time.
2443 MR. HUNT: Are you wanting that now are to be provided later?
2444 COMMISSIONER MENZIES: You can get it to staff later.
2445 MR. HUNT: Yes. Okay.
2446 COMMISSIONER MENZIES: Not too later.
2447 MR. HUNT: No, I can do that today. I mean we know how we do it, so that's not an issue.
2448 COMMISSIONER MENZIES: That would be great. Thank you.
2449 Last couple of questions.
2450 I'm curious to know ‑‑ just hang on ‑‑ how does your business model work to inspire such high levels of donations and do you have any pledges in hand going into this?
2451 MR. HUNT: Within the London market we haven't solicited pledges in hand other than informal by ‑‑ some of the groups that we have spoken to ‑‑ businesses as well as churches ‑‑ said they would get behind it. Again I said we haven't actively solicited because I don't think there is a need to go down that road until, you know, you guys decide what the avenue is.
2452 Our listener base in any market we are in are exceptionally loyal. As I said, it's a lifestyle choice that's taken based on faith and so there is a choice of a preference of a radio station that they would like to listen to that is encouraging, brings hope, uplifting, positive, as well as brings news and things of current affairs that affect people every day.
2453 We do not do any kind of scaremongering or anything like that, you know, we will close if this happens.
2454 We have people that give a dollar a day, we have had that type of approach; we have people who give one‑time gifts, we have people who give monthly.
2455 So it's a sense of ‑‑ you know, people will invest where they are being fed. We are in financial difficulty now, we don't see hundreds of churches closing. Actually, in difficult times people often turn to some kind of faith‑based organization for encouragement. So in that sense people support what they value and are a part of.
2456 And we obviously have fund‑raising drives, we will do various events, but it's not manipulative or twist your arm, it's just straightforward, this is who we are, this is what we need to be on‑air.
2457 We did that in Chatham and we said: Bottom line, this is what we need before we even go to air. A number of businesses got on board and said we will give donations, some pre‑bought advertising that helped as well.
2458 COMMISSIONER MENZIES: It's true, there aren't a lot of atheists in foxholes whether they are economic or otherwise.
2459 But can you give me ‑‑ I'm just trying to figure out how much of your time is ‑‑ I'm curious to know, do you solicit on‑air? Do you solicit your donations off the air? How do you ‑‑ what's your business plan on that?
2460 MR. HUNT: It's both. It's both.
2461 We don't regularly solicit on‑air, other than saying we are a supporter based station and people understand what that is.
2462 The Church network is a great network to be part of, go and present, share what we are doing, get interviews, get people from the church, the pastors interviewed on air, we run regular features, different churches to a community. So that network is already in place, we don't have to go and knock on doors, we access it.
2463 You know, Garry has been involved in some of the marketing things as well, so I will ask Garry to jump in in a moment.
2464 So we do that, we present to businesses, we are a part of the Chamber of Commerce, we are part of Rotary clubs where we get opportunities because, as I have said, our motive is really to be a positive influence in the community. So there are a number of avenues that we do.
2465 Garry, I don't know if you want to add anything there.
2466 MR. QUINN: It's an honour to be here to appear before you as a panel and the CRTC, you know, just to put forward our application from an organization that I believe is quite capable of doing what we propose to do, but I am very passionate about the format of this radio station.
2467 You know, as James mentioned, it is people will support where they are being fed. And it is quite incredible when you think of ‑‑ when I look at Chatham for instance when we went in to set up a radio station in Chatham, it's incredible and it's unique and it's unprecedented for a group or company to enter a community to raise the total funds needed, a quarter or a half a million dollars needed to bring a radio station to air, and I'm sure our friends at Blackburn and Chatham and Quinte Broadcasting in the Belleville area would never use that business plan to start a radio station, but the lion's share of the funds that come together to bring this radio station to air comes from the local community.
2468 So why would Joe the plumber or whoever give to a radio start‑up like this? Because there is no opportunity for ownership in this, there are no shares available, there is no financial benefit for that person to be involved, but what compels people to give is the message and the music and the spoken word that resonates with them.
2469 And many of our listeners are new to radio, where some have not listened to radio stations because the message, the music, the spoken word doesn't align with what their beliefs are.
2470 So it's absolutely incredible to see people come forward with their times, their talents, their financial resources to help bring the station to air. In the Chatham area businesses came forward and offered furniture, equipment, office space, and again there was no financial benefit to them, but they seen the benefit that it would bring to the community.
2471 So we do bring a message and we do bring a value to the community that many community leaders see the need for and they support it financially.
2472 COMMISSIONER MENZIES: Okay.
2473 We have asked the other applicants, the economy is much more uncertain now than it was at the time when you put for forward your application. A large part of your business plan depends on donations. Accepting the fact that people will spend money where they are being fed, nevertheless they have to have money to do it.
2474 So have you taken a look at your business plan and revised it or reconfirmed? Because the donations come from peoples' ‑‑ this is all disposable income that's being sent your way. So are you still confident that your business plan would stand up if you had ‑‑ say your donations were one‑third of what you were looking at or have you in any other way had a chance to look at that and considered how times of economic uncertainty might in fact impact your business plan?
2475 MR. HUNT: Mr. Commissioner, I mean that question you have obviously asked a number of groups.
2476 COMMISSIONER MENZIES: Hopefully everybody.
2477 MR. HUNT: Yes. And we are at risk because it's disposable income, so I mean we understand that. So we have considered it.
2478 As you will see just from our staffing and set‑up costs, I mean it's very slim to start with. So we are not going with huge overheads.
2479 There obviously are overheads, but as Garry said, you know, historically Belleville, as well as Chatham, given people from the community coming in to build studios. People saying well, I will cover the material costs or a business owner saying I own this particular type of store, that will be our donation to you.
2480 So it's going to be tough. It will be tough.
2481 We also do monthly newsletters. We do, as we mentioned on there, this daily devotional. We are doing 60,000 a year within Canada, globally it is the biggest ‑‑ it's the second biggest in the world at 5.5 million every quarter.
2482 So there are ways of connecting and sustaining donor relationships which is ‑‑ it is vital, particularly during difficult times.
2483 So it will be tough, but I am confident that we will be able to weather it.
2484 As I said earlier, during tough times people often turn to the church for an area of hope and encouragement rather than just hearing the negativism ‑‑ what they perceive negativism all the time. So it is a potential time to grow listening audienceship that we then have to move to donors as time progresses.
2485 COMMISSIONER MENZIES: Okay.
2486 Thank you, gentlemen. That concludes my questions.
2487 THE CHAIRPERSON: Thank you very much, Commissioner Menzies.
2488 Commissioner Cugini...?
2489 COMMISSIONER CUGINI: Thank you very much.
2490 Just a couple of questions in particular for you, Mr. Grieve.
2491 I was just on your website and you are quite busy, especially on weekends, almost exclusively on weekends.
2492 Is that correct?
2493 MR. GRIEVE: Yes, 90 per cent of it. As I mentioned, being in churches is our bread and butter, that happens to be on the weekends.
2494 COMMISSIONER CUGINI: I noticed also that you are playing in Toronto at Missionfest. Just so you know, when you Google Missionfest the only link is to your site.
2495 MR. GRIEVE: Is it? Okay. That's good news.
2496 COMMISSIONER CUGINI: So that's pretty good.
‑‑‑ Laughter / Rires
2497 COMMISSIONER CUGINI: Are you sponsored ‑‑ are you funded at all by FACTOR?
2498 MR. GRIEVE: By, sorry...?
2499 COMMISSIONER CUGINI: FACTOR.
2500 MR. GRIEVE: No.
2501 COMMISSIONER CUGINI: So all your CDs are produced independently?
2502 MR. GRIEVE: 100 per cent.
2503 COMMISSIONER CUGINI: Okay.
2504 Mr. Hunt, I did hear you say earlier when you were speaking with Commissioner Menzies that there is an opportunity to connect Canadian artists if they want to tour abroad.
2505 Currently do your stations around the world play Canadian music? Like and I hear Matt Grieve in your stations around the ‑‑ in other stations outside of Canada?
2506 MR. HUNT: Commissioner, I don't know that answer, not knowing the program directors of the different stations. I mean, I know them but I don't know what is their playlist and their compliance issues within their country. They obviously have to play local artists as well.
2507 But we know his season pretty well and, you know, if Matt or any of the others say we are looking at a tour, can you connect us, it would be the easiest thing to connect from the UK to other parts of Europe to Australia, New Zealand, Philippines, Jakarta. It's really easy because each affiliate is totally autonomous and run themselves, but there has been a huge benefit in sharing what's hot and what's good, and these guys are good.
2508 So I would have no issue and it would be really easily done. So I can't say yes they do play, but you know I'm ‑‑ I don't know, they would need to answer that. I mean we have program director meetings and sharing things so you might be able to.
2509 COMMISSIONER CUGINI: I guess the first question to that should have been is there an opportunity for Canadian artists ‑‑
2510 MR. HUNT: Definitely.
2511 COMMISSIONER CUGINI: ‑‑ to submit their music for play across the UCB network?
2512 MR. HUNT: Definitely. Definitely.
2513 MR. BAKER: There is quite a bit of interaction between the program directors of the UCB stations around the world, and that's the answer to the first question. I mean people want to know what, you know, what each other is playing.
2514 Second, I have seen playlists from our Australian affiliates and they do play Canadian artists.
2515 COMMISSIONER CUGINI: Terrific.
2516 Thank you very much. Those are my questions.
2517 THE CHAIRPERSON: Thank you very much, Commissioner Cugini.
2518 On the same line I think, maybe Mr. Grieve could answer because he is collecting royalties and when royalties come back to Canada, sometimes it takes a long time before you see the cheque, but you know from which country it's coming from. So could you confirm if you are played in other countries?
2519 MR. GRIEVE: I would say that again 99.9 per cent would be Canadian played, if we are played.
2520 THE CHAIRPERSON: So even through your royalties you haven't been able to notice that you had been played, say in Australia as Mr. ‑‑
2521 MR. GRIEVE: Yes, that's correct.
2522 I mean, a group like us was actually invited to sing two years ago at the White House. We came down, the only Canadian group of 60 that were there for a Christmas thing. Nobody would have ever heard about that, not even anybody in Canada based on the fact again that it's ‑‑ I mean it's not for lack of talent in this country.
2523 I mean if you look right even in the secular market from a Celine Dion, a Michael Buble and a Shania Twain, the talent comes from Canada, it's just unfortunately there is no opportunity for the Christian ones. And I can see groups 10 times better than us that are floating around and didn't make it just from lack of being able to keep themselves out there and keep themselves busy. It's definitely work.
2524 THE CHAIRPERSON: Thank you.
2525 Commissioner Simpson...?
2526 COMMISSIONER SIMPSON: Good morning.
2527 I'm going to go back to a line of questioning that will, hopefully for all of the Commission and particularly myself, get a better understanding of your relationship with your Christian audience, how that translates into the relationship with Christian radio, their desire or ability to fund your endeavours and the like.
2528 So I will start off by going back to your initial presentation where you used a term that intrigued me. Again I'm pursuing this with respect to your economic model viability use of the station by your audience.
2529 You had said that you defined ‑‑ you used a term of defining active Christians in the community and I was wondering if I might get a bit of a cross‑section of what you define as an active Christian, beyond the obvious issue of them practising Christianity.
2530 MR. HUNT: I think I would use those synonymously as practising and active as the same.
2531 You put out a survey and you say, you know, what religious affiliation do you have and often people just by default, because there is no other religious affiliation they have on the paper, they put Christian. So I'm using practising and active as the same terminology.
2532 COMMISSIONER SIMPSON: On that line, of individuals who would consider themselves to be practising Christians, is there some kind of a percentage that actually goes beyond the daily practising of their belief to the point where they become demonstrative in the practice of their religion, you know, to the extent where they are showing up at church, to the extent that they are making, you know, outward gestures that do more than just practice their beliefs internally?
2533 MR. HUNT: I will answer that first from a broadcasting point of view and, Al, if you want to jump in, and then Reverend McPhail would be a good one to answer that as well.
2534 COMMISSIONER SIMPSON: Again, what I'm trying to do, if you will pardon the expression, divine an understanding of how much they are willing to put their money where their faith is.
2535 MR. HUNT: Yes.
2536 I think we make sure that ‑‑ one of our values is uniting the Christian Church, the wider church, the generic church I'm talking, so we will not align ourselves with an extreme activist group under a Christian banner because that doesn't help anybody from a broadcasting point of view. Yes, their point of view can be heard, but we are not going to align ourselves with it.
2537 What we have found, even in the church community, again if I just look at Belleville which has got a slightly longer track record, one of the values in the Christian faith is about giving, generosity, some of it is giving to your local church, what is known as a tithe, and others are getting beyond that. And when we go into a community there are some church leaders who are concerned that their finances will dip because we are soliciting funds from a prescribed pot.
2538 What we have actually found is that their finances increase, because during some of the spoken word there is teaching on this topic. We are neutral in our church affiliation, so it just goes back to this is the generic believe from the Bible and the Christian faith on giving, et cetera, and people have responded to that within their church. Over and above that it comes to the station.
2539 Al, I don't know if you want to respond or, Reverend McPhail, you want to respond?
2540 MR. BAKER: As with anything else there are some who give and some who do not and the same is true in this context.
2541 What we try to do is we try to get around to do presentations of our product in churches and let them know who we are, what we are about and how we can work together with them.
2542 Some churches, many churches, will donate ‑‑ they will take up specific collections a couple of times during the course of the year for our cause and they will donate that. In turn, churches get free advertising for their various functions. It is a partnership, it's a win‑win and we strive for a symbiotic relationship with as many churches as we possibly can.
2543 COMMISSIONER SIMPSON: Thank you.
2544 Pastor, please...?
2545 REV. McPHAIL: Yes. Many times when we look at groups we have a nucleus, so that's a small core of people, and within church communities that's what you are going to find. And you are also going to find a few that will associate on special events. And in around Christian radio I believe that you will find a nucleus that will be supported in each community, you will find people that will support the fund raising or some special emphasis, and then of course you will have some fringe that will not get involved no matter what you do. So that small nucleus is what we are talking about.
2546 Also within our Christian community there is a strong teaching not only on giving but also on tithing and so many of our churches, many of our ministries are involved in supporting other ministries. So UCB Canada supports each other.
2547 So that's part of your core support and that's what you will see as far as stability. No matter what happens economically you are going to see that stability. And that's what happens across the world, as we understand it in the church community.
2548 Thank you.
2549 COMMISSIONER SIMPSON: Thank you very much.
2550 That line of questioning was, from my standpoint, derived from looking at your pro forma and seeing a considerable percentage of the revenue coming from donations, 2 to 3 to 1 in terms of donations to advertising.
2551 I may be asking the obvious, but that is coming from experience in your revenue models from the other stations? Okay.
2552 Excuse me, I will just get my glasses back on.
2553 From the financials that you had put forward I was wondering if you could give me an insight as to your depreciation schedule, because I noticed that it is not your standard flat rate schedule that I'm used to seeing. I'm certainly not an accountant like Commissioner Duncan, but I'm wondering what's happening in years four and five, because I don't see a recapitalization at that point but I am seeing an increase in the ‑‑ a decrease and then an increase in the schedule and I'm wondering what's happening there.
2554 MR. HUNT: Mr. Commissioner, I'm certainly not an accountant either and our CEO, as I said consults with PriceWaterhouseCoopers, would have been able to rattle off without even thinking. So I don't know if I can answer adequately in this hearing and I'm happy to get back to you on that.
2555 I don't know if any of the other panel feel they can answer that.
2556 I do know, because my wife is an accountant, when she was looking at some of these she said, oh, that makes sense in year four and five for writing off computers and various other things. She said, that is how it works, but I'm afraid I cannot give you the detail on that. I can get it to you, but I just can't give it to you now.
2557 COMMISSIONER SIMPSON: May I ask for some advice here? I would like to know.
2558 What would be a reasonable request in terms of submission of that information? Would it be before the end of the hearing or is that possible or is it possible that it come in later than that?
2559 MR. HUNT: I'm sorry, who are you asking?
2560 COMMISSIONER SIMPSON: I'm actually asking staff.
2561 Oh, this is a poser. I actually have a good one going.
2562 MR. McINTYRE: I guess part of that would hinge on how fast you think you could get that information to us. Obviously the sooner the better.
2563 MR. HUNT: I mean I can make a call to someone who prepares the accounts, but I don't know if I'm going to get them immediately.
2564 So I will try to give it to you by the end of the hearing, but I cannot put my head on a block to say that will happen.
2565 Within a week easy, within a couple of days possibly, you know. I don't know what time scale you are working towards so you let me know what you think is reasonable.
2566 MR. MCINTYRE: I think by the end of the hearing, Phase IV would probably be the time that we would be looking for.
2567 MR. HUNT: Okay. I will certainly look at what we can do.
2568 COMMISSIONER SIMPSON: Not to make a mountain out of a molehill, but it just does put you into a loss position in what I believe is year six and it just sticks out so again my curiosity is ‑‑
2569 MR. HUNT: Yes, and I understand that. It is year six, you are quite correct.
2570 As I said, we are not‑for‑profit so we can't squirrel away funds some way and that's not our intention, but it shows a loss in that year of $5,000.
2571 COMMISSIONER SIMPSON: My last question is to do with the role of Christian radio from your perspective.
2572 We are seeing trends in this world that are causing ‑‑ I'm thinking in the areas of voting apathy, we are seeing clusters of people who share a mutual interests such as their nationality, their aggregation through interest groups and so on having a tendency to not turn out, you know, for the vote for example.
2573 This is an 80,000 foot level questions so it's nothing specific, but it is to try and get a sense of the role you are playing in the community, the role you are playing nationally and internationally in terms of trends.
2574 Are you finding, as individuals who are in the business of talking to Christians, and giving them product that they can consume at the other end, on radio, that as being a different kind of relationship with Christians than perhaps the traditional model, which was to have them come to you on a Sunday, for example?
2575 Are you seeing elevations in your interests and audiences, and are they corresponding to declines in other ways that they practise their religion, to the point where you are playing an active role?
2576 MR. HUNT: Thanks, Commissioner. I will kick off on that question, and, again, I will ask anyone to chip in.
2577 Mr. Seibert, just from a personal point of view, is a director and has been involved right from the beginning, so he might shed some light on that.
2578 We are definitely seeing a global trend of people leaving the traditional church.
2579 This is my personal opinion on this.
2580 Whatever the terminology is, "fluid church", "new church", we are seeing a number of people dissatisfied with what they have become used to as a form of practising their religion.
2581 Now, a number of churches are trying to address that, taking into account new media, new lifestyles, even different family structures in society nowadays.
2582 There is a church based just outside Toronto, which, to me, took me a bit of time to get my head around. There are a number of people who travel from Hamilton every week to go to Toronto, and that group said: Why are we going there? Why can't we just have our church in our community, with the main teaching being beamed in by satellite, and we will watch it on a screen?
2583 To me, how does that work? How do you build a relationship with the pastor?
2584 So the model is being questioned.
2585 And that is working really successfully, because they have relationships with the community, and then they beam in a certain teaching or the ethics they want.
2586 We are finding that a number of people, again ‑‑ and I would say globally, depending on what country ‑‑ third world countries are slightly different, and where there is persecution it's different, as well, in certain countries ‑‑ China, India, and various other ones.
2587 But there is in the greater western world a general discontent: Is church doing what it should do.
2588 That is from my perspective. Again, I would love to hear from Reverend McPhail on that.
2589 But people turning to media and saying, "How else can I be fed? How else can my faith be supported?" we personally ‑‑ and this is a UCB value ‑‑ we strongly support that everyone in the Christian faith is connected to and part of a local church.
2590 We are not trying to set up a church. We are not trying to take from a church. We do believe that that is the way people should connect to their faith on a regular practice.
2591 That is how I am seeing the trends nationally and globally.
2592 I wonder if you would like to respond to that.
2593 REV. McPHAIL: Yes, we are seeing a number of churches ‑‑ organizations ‑‑ that are changing. Some are downsizing.
2594 If you were to Google "Churches for Sale", you would find that there are all kinds of churches for sale across Canada. But at the same time, we are seeing quite a shift, as far as people getting involved in different types of worship, music, demonstrating their faith, as far as rolling up their sleeves and meeting social needs throughout the community, and doing that in the name of their faith.
2595 It is interesting for me, as a national leader, to walk into communities and find nucleus ‑‑ core groups in virtually every community, even isolated communities, that are very committed to their faith.
2596 That is where the answer is, as far as I am concerned.
2597 Yes, in different nationalities you will have a strong emphasis on a traditional church service and worship service, and in other groups it will be very informal. But, once again, it becomes a virtual church, and Christian radio helps in spreading that message.
2598 COMMISSIONER SIMPSON: Thank you very much.
2599 THE CHAIRPERSON: Commissioner Duncan.
2600 COMMISSIONER DUNCAN: Thank you. I have just a couple of questions.
2601 First of all, Mr. Grieve, I was curious to know how you came to be invited to the White House at Christmas.
2602 MR. GRIEVE: That was one of the few connections that we did have in the United States, in being involved in a massive convention down in Louisville, Kentucky, where 20,000 people show up every single night for five nights.
2603 We were involved with ‑‑ somebody heard us there, and that's how the door was opened. It was a very great opportunity.
2604 There were a ton of security checks, and a lot of things that we had to go through, but it was really memorable, for sure.
2605 COMMISSIONER DUNCAN: That's great. Thanks.
2606 I was just wondering, looking at your financial projections, if your station will make any contribution to either fund UCB Canada or UCB International.
2607 How are those organizations funded?
2608 MR. HUNT: I'm sorry, when you say "to fund UCB Canada" ‑‑
2609 COMMISSIONER DUNCAN: Or UCB International.
2610 I am assuming that they are national and international bodies, and I am curious to know if there are moneys going from this radio station to fund those.
2611 MR. HUNT: I will take the national one, to start with.
2612 There is not money going from one to the other. We are quite stringent on what we call "specified funds". If something is given for a particular project, or a particular ‑‑ like some of the repeaters that are about to come on air, those funds go to that community.
2613 For example, if we take "Daily Devotional", there are funds there that affect more than just one local station. So there is funding that comes into that, which we will use outside just the local station.
2614 There are synergies, as we said in our deficiency questions, on various things, as other applicants have said ‑‑ on shared services, finances, HR and such.
2615 Do we put a proportion of our operating costs to another station? Yes, we will look at that as the station grows, but not initially, because that is just something that ‑‑ they don't need a noose around their neck to start with.
2616 If we take the international, we do pay copyright and affiliation fees for this product. It is the sole copyright of UCB Canada. This person writes solely for UCB.
2617 So we do have some kind of affiliated fees linked to the proportion of copies.
2618 COMMISSIONER DUNCAN: Are those fees showing on your "General Admin" line, or are they ‑‑
2619 MR. HUNT: They are not shown in these projections, because we carry those fees already as a group ‑‑ UCB Canada.
2620 Again, we wouldn't put that expense in a station trying to start up, because it is a cost that they don't need and we are covering already.
2621 COMMISSIONER DUNCAN: So, at some point, would there be contributions going from your radio station here in London to UCB Canada or to UCB International?
2622 MR. HUNT: To be honest, I haven't even considered that. No, I don't see that.
2623 UCB Canada, as the incorporated body, has this arrangement with international affiliation fees and copyrights.
2624 So, no, I don't see that.
2625 COMMISSIONER DUNCAN: So their revenues ‑‑ UCB Canada and UCB International ‑‑ are through copyrights.
2626 Is that the idea? Is that how they are funded?
2627 MR. HUNT: UCB Canada ‑‑
2628 COMMISSIONER DUNCAN: ‑‑ and UCB International.
2629 MR. HUNT: UCB International is funded through copyright. A huge proportion is copyright. And they are funded by donations, as well, in the various aspects ‑‑ in the various countries that they have a legal entity in.
2630 They don't have a legal entity in Canada.
2631 COMMISSIONER DUNCAN: This is talking about International.
2632 MR. HUNT: Yes. Sorry, this is International.
2633 COMMISSIONER DUNCAN: Just so I understand, is UCB ‑‑ the station you are proposing in London, is it independent of, or is it a station owned by UCB Canada?
2634 MR. HUNT: It will be a station owned by UCB Canada.
2635 So the licence ‑‑ and jump in here, Garry or Tim, if you want to ‑‑ the licence holder will be UCB Canada.
2636 COMMISSIONER DUNCAN: Okay. Thank you.
2637 MR. HUNT: Does that answer your question?
2638 COMMISSIONER DUNCAN: It does, yes. Thank you.
2639 THE CHAIRPERSON: In your financial statements, I see that you have forecasted programming revenues. Are they revenues of programming locally ‑‑ obviously, locally produced ‑‑ that you will be selling to other radio stations?
2640 What will be the source of that revenue?
2641 MR. HUNT: Again, Al, if you want to jump in ‑‑ those are organizations that pay to be on our radio station. So they would be funds coming to us, to be on our radio station.
2642 THE CHAIRPERSON: So it is not programming that you are, yourself, producing and selling.
2643 MR. HUNT: No.
2644 THE CHAIRPERSON: It is programming ‑‑ it is time that is purchased ‑‑
2645 MR. HUNT: Exactly.
2646 THE CHAIRPERSON: ‑‑ by various Christian organizations ‑‑
2647 MR. HUNT: Yes.
2648 THE CHAIRPERSON: ‑‑ that are soliciting donations.
2649 MR. HUNT: Who are soliciting donations?
2650 THE CHAIRPERSON: Yes.
2651 MR. HUNT: No, they don't solicit donations.
2652 Well, I say no. There are times that they have, but we have a fairly stringent relationship with them on how that works.
2653 They sell product, but they don't necessarily solicit donations.
2654 I don't know if you want to add to that, Al.
2655 MR. BAKER: No, you just said what I was going to say, that from time to time they do, but they do offer a lot of product ‑‑ books, CDs ‑‑ of the various teachings. That is primarily what they do.
2656 THE CHAIRPERSON: I will ask legal counsel if he has any questions.
2657 MR. McINTYRE: Thank you, Mr. Chair.
2658 I have a question about your spoken word commitment. In your application, you submitted that you would provide 35 hours a week of spoken word programming. You also submitted your intention to abide by the guidelines in our Public Notice relating to balance and ethics in religious programming.
2659 What I was hoping you could provide us is a breakdown, per week, on the minimum level of balanced programming that you would provide, as well as the weekly amount of religious programming that you would provide within that spoken word commitment.
2660 MR. HUNT: We can do that.
2661 Just to clarify something about the spoken word, the 35 hours, that is syndicated spoken word. When I say "syndicated", it's teaching.
2662 We have more spoken word, and we can get the figures to you on that. There may be an additional 10 hours a week over and above that, but we will certainly give you the breakdown on that.
2663 MR. McINTYRE: Sure. If you could just specify how many hours, and just reiterate what you will be offering.
2664 MR. HUNT: Yes.
2665 MR. McINTYRE: And, I guess, also to that end, maybe a description of the type of balanced programming you will provide, as well.
2666 MR. HUNT: Yes, we can do that.
2667 MR. McINTYRE: If you could provide that to us by tomorrow, that would be great.
2668 MR. HUNT: Okay.
2669 MR. McINTYRE: I believe there was an undertaking requested by Commissioner Menzies to submit the budget for the talent contest, the CCD initiative. If you could have that for us by tomorrow, as well, please.
2670 There was, also, another undertaking to explain the depreciation expense in the financial projections you provided us.
2671 MR. HUNT: Yes.
2672 MR. McINTYRE: There was another undertaking that was mentioned relating to balanced programming in local programming. I guess that would be addressed in the undertaking that you said you would provide to us tomorrow.
2673 MR. HUNT: That was the breakdown of the 74 hours of local programming. Correct?
2674 MR. McINTYRE: Right.
2675 I think we actually have that information on our file.
2676 MR. HUNT: You do.
2677 MR. McINTYRE: So, unless there is anything else ‑‑
2678 MR. HUNT: No.
2679 MR. McINTYRE: Okay.
2680 MR. HUNT: Are you are saying that you are satisfied that we do not need to provide that again?
2681 MR. McINTYRE: That's right, yes. We have that information.
2682 I believe the only other undertaking is to submit the confirmation of financing for the radio station by October 30th, as the Chair outlined yesterday.
2683 MR. HUNT: I'm sorry, let me get some clarity on that.
2684 If we are wanting to amend our financing, is that what you are saying?
2685 MR. McINTYRE: No, just a confirmation that you currently have ‑‑ that your financing arrangements are still in place, in light of the financial markets.
2686 MR. HUNT: Okay.
2687 THE CHAIRPERSON: Mr. Hunt, gentlemen, thank you very much for your presentation.
2688 We will break now for lunch, and we will come back at one o'clock.
2689 MR. HUNT: Thank you.
‑‑‑ Upon recessing at 1200 / Suspension à 1200
‑‑‑ Upon resuming at 1305 / Reprise à 1305
2690 THE CHAIRPERSON: Order, please.
2691 Madam Secretary.
2692 THE SECRETARY: Thank you, Mr. Chairman.
2693 For the record, we wish to inform you that the Applicant Sound of Faith has submitted their revised financial projections in response to undertakings, and this afternoon it will be added to the public record, and copies will be available in the examination room.
2694 We will now proceed with Item 8, which is an application by Frank Torres, on behalf of a corporation to be incorporate, for a licence to operate an English‑language FM commercial radio programming undertaking in St. Thomas and London, Ontario.
2695 The new station would operate on Frequency 98.1, Channel 251B, with an average effective radiated power of 18,579 watts, a maximum effective radiated power of 48,000 watts, with an effective height of antenna above average terrain of 107.4 metres.
2696 Appearing for the Applicant is Ed Torres.
2697 Please introduce your colleagues, and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
2698 MR. E. TORRES: Good afternoon, Mr. Chair, members of the Commission, and Commission staff. My name is Ed Torres. I am the President and Co‑Founder of Skywords Radio, and the Chairman of CIDG‑FM.
2699 I would like to begin by thanking the Commission for entertaining our application for a new blues format FM radio licence to serve London.
2700 Seated to my right is my brother Frank Torres. Frank is the Chief Operations Officer at Skywords. Together we founded Skywords in 1991, and today it is a national radio company, with offices in several Canadian major markets, including Ottawa, Halifax, Markham, and our newest base of operations in Edmonton.
2701 To my left is Robyn Metcalfe. Robyn is the Vice‑President of Programming at Skywords.
2702 On Frank's right is London resident Greg Simpson. Greg has extensive radio experience in the London market, where he served as Music Director for CJOE, and for 14 years was Music Director at CFPL. During this time he was twice named Music Director of the Year by the Canadian Music Industry Awards.
2703 If our station is licensed, Greg will serve as Operations Manager of DAWG FM.
2704 Greg is also the Chairman of the Great Lakes Blues Society.
2705 In the second row, seated directly behind me, is Ron Ford. Ron is a chartered accountant and the Chief Financial Officer for Skywords.
2706 To the left of Ron is Aubrey Clarke, Director of Business Development at Skywords, and former National Sales Manager for Skywords.
2707 In the second row, to your far left, is Yves Trottier. Yves is the former Operations Director at Couleur fm in Gatineau. He held various program director positions prior to joining Skywords as the General Manager of Quebec Operations.
2708 Finally, beside Yves is Tod Bernard, the General Manager of Eastern Canada Operations for Skywords, and part owner in this application.
2709 On August 26th, the Commission granted this group its first broadcast licence. Radio Station CIDG‑FM will broadcast from the nation's capital, and will be the first all‑blues format commercial radio station in North America.
2710 The blues is what this application is all about.
2711 Our presentation today will illustrate that London can sustain an additional entrant into the market, which will increase plurality and provide the only independent news voice for St. Thomas and London.
2712 Our national network operations provide a natural infrastructure, which will assist us in fulfilling our strategic plan of being a national Canadian broadcaster.
2713 We provide a missing, highly desired, extensively researched radio option to the listeners of the region, and our format will help break and launch new Canadian blues artists through commercial airplay of their music on FM airwaves.
2714 We have received over 1,700 letters of support for our blues radio station applications, including letters from Dan Akroyd, Jack DeKeyser, a JUNO winner, Tom Lavin of the Powder Blues Band, the Grand River Blues Society, the Great Lakes Blues Society, and 670 expressions of support for this application alone.
2715 We have commissioned extensive formal research by Census, an independent, third party research firm, into the viability of our proposed format in 10 markets across Canada, including London.
2716 Further, we created an online survey at "bluesincanada.com", a website that we own, and it has generated hundreds of responses.
2717 Overwhelmingly, we found in our research that blues is the first music choice for 30 to 60 percent of people, and it is almost universally accepted as a second choice.
2718 Our London survey results surprised us. We know that London has a vibrant blues scene, championed by the Great Lakes and Grand River Blues Society, an exhibit at many blues fests, which attracts thousands of festival goers to the region every year.
2719 To speak firsthand about the blues in London, we are fortunate to have Greg Simpson, Chair of the Great Lakes Blues Society, here with us today.
2720 MR. SIMPSON: I was named Chair of the Great Lakes Blues Society a few months ago, and I have been a member of its Board since its inception, and a member of the Board of its predecessor for three years before that.
2721 I am also a former broadcaster, with 20 years of experience, and I have spent my entire life, since high school, in the music business in one way or another, always working with London as my home base.
2722 I have worked for record companies, production companies, and retail record sellers, and I am currently a freelance music consultant, working on a contract basis, presently, for Canadian Music Week and its Radioactive Conference, programming the latter and facilitating both events every March.
2723 In Canada there are hundreds of local and regionally based blues bands and performers, a relatively small number of whom have achieved national or international prominence. Unfortunately, most of these exceedingly talented musicians receive little or no airplay on Canadian commercial radio.
2724 Blues fans must rely on satellite radio and/or cable services to hear only some of the incredible wealth of domestic blues talent, while local and regional blues artists get virtually no airplay at all.
2725 Even the music channels offered through our cable TV package do not feature Canadian acts generally, as they are programmed, in many cases, out of the United States.
2726 The Great Lakes Blues Society, and others associated with us, present an average of 18 to 20 shows a year in London, and artists of the calibre of Jack DeKeyser, Cheryl Lescom and Chris Chown have proven to be popular attractions for us, but we are forced to use them, most of the time, in a support role, as our goal is to expand our audience. To do so we must look to Chicago, Detroit, and other American cities to supply us with our headline acts.
2727 The reason, we feel, is that very few of these artists receive any airplay at all on commercial radio. Even the CBC tends to ghettoize this forum, offering it only at late night on the weekends.
2728 A blues‑oriented FM radio station will go a long way toward providing the exposure that our Canadian blues musicians deserve.
2729 When one reviews the high calibre of entertainment available in the blues idiom, beyond those already mentioned, such as the Downchild Blues Band, Sue Foley, Powder Blues, Colin James, along with the late Dutch Mason and Jeff Healey, and then add to that list the fast‑rising younger talent, like Steve Strongman, Garrett Mason, Bill Durst, and so many others, all of whom deserve a national profile, one must come to the conclusion that the star‑making machinery can use a voice of its own to further that cause.
2730 There are Canadian record labels specializing in the development of great Canadian blues talent, but they must, increasingly, turn their attention south of the border to achieve their aims.
2731 The Great Lakes Blues Society has over 400 members, all resident in London and the nearby satellite communities, and attendance at our shows and other blues shows that we support in the market ranges from 100 to 1,200 attendees at each and every show.
2732 Our larger shows feature headline acts alongside domestic support acts, and our attendees come for the music and for the good times that we can offer them.
2733 At the heart of the good times, of course, is the music itself. Blues is universal in its appeal, and we find that blues fans are loyal and determined to support not only the music and the promoters of the shows, but give up tens of thousands of dollars a year to support the charities that we identify with each of our shows.
2734 Having a local blues‑based radio station will not only help us in our aims, but it will give us an opportunity to help our charities in a much stronger way than we could possibly imagine at this time.
2735 It is my belief that, despite solid support for the blues in every market, London is unique, in that the blues has always been an integral part of the local community, thanks in no small way to some dedicated music professionals who put their love of the genre above their own financial needs, in many cases.
2736 Having the support of a local blues music radio station would not only increase their odds of success, but would, obviously, increase the opportunities for many Canadian acts that have talent equal to that of others in any genre, but less opportunity for exposure, other than hitting the road and playing for what amounts to a not‑for‑profit exercise.
2737 In my role as Chair of the Great Lakes Blues Society, and as a consultant and resource to the broadcast and music industries at large, I applaud the CRTC's bold move to support the DAWG FM application in our nation's capital. I believe that London is every bit as sophisticated as Ottawa, and that it is, in fact, the best blues town in Canada. We want and deserve our own radio station.
2738 By awarding the Torres concern with this licence, it will not only enhance our own market, but, through the Great Lakes Blues Society partnerships and associations with other blues societies in the region, will enhance the genre throughout southwestern Ontario, from Windsor to Kitchener, and from Lake Erie to Tobermory.
2739 MS METCALFE: DAWG FM will be more than a radio station. It will be a community, a community of listeners who appreciate this indigenous art form, and a community of employees who will come together in a positive and enjoyable workplace.
2740 In employees we look for people with a passion for radio, and a team mentality, who will work together to come up with great products and amazing radio that is locally focused.
2741 How will we be different from a rock station? Well, DAWG FM's bark is worse than its bite ‑‑ no Metallica, no Guns N' Roses, no Van Halen.
2742 In its place you might find Derek and the Dominoes, Marvin Gaye, or Aretha Franklin.
2743 Our morning drive periods will have a rock edge ‑‑ a rock‑blues edge ‑‑ to get you up for the day and give you that energy to feed the kids and get them ready for hockey after you get home.
2744 Middays we will keep the energy up, but we will feature more R&B and swing, as we aim to be your office companion.
2745 Overnights, dim the lights ‑‑ Venus Fly Trap is going to get you through the night shift by laying down the R&B groove all night long.
2746 We like to say that we aren't the big "DAWG" on the block, but we have attitude. Our radio station will have a brand, and it will have a feel ‑‑ the feel of the blues. I would like to play you a sample of our feel.
‑‑‑ Audio presentation / Présentation audio
2747 MS METCALFE: Our station will be a good corporate citizen, engaged and connected with our community and environmentally responsible. Yes, the blues are green.
2748 We take pride in proposing that DAWG FM London will be the second carbon‑neutral radio station in Canada.
2749 DAWG FM promotions will be different. Instead of a week in Mexico on a beach, listeners will win a blues tour of Chicago, Memphis or New Orleans. Ratings promotion will see listeners whisked away on a cruise, but not just any cruise, it will be a blues cruise, bands on every level of the ship playing into the late hour.
2750 MR. TROTTIER: You have probably seen the Blues Brother movie, but have you ever checked the songs on the soundtrack? You will find no traditional blues songs whatsoever on that soundtrack. Instead, you will hear Ray Charles, Aretha Franklin and other soul and rhythm & blues artists.
2751 Well, that is indeed blues music and we are almost certain that most people do not realize that they are true fans of blues. Over the course of the last year we have been working on developing the blues brand for DAWG FM and we intend to continue doing so throughout the next decade.
2752 A blues radio station must reflect all the trends you find in this category of music. In consequence, we have planned focus groups prior to the launch of all of our radio stations. During such sessions we will play hundreds of songs to our target demo to ensure that we are on the right track. During those sessions we will also play different station blues ideas and promos to confirm and refine our station blues brand and identity.
2753 Throughout our research to date we have noticed that blues fans do not listen to a specific radio format. That is the reason that we feel the arrival of DAWG FM will not have a serious negative impact on one individual radio station but, rather, reflect slightly on the overall.
2754 With regard to music, take the example of Norah Jones. Norah Jones is a blues artist who has developed her own sound during her career. She does not play on rock stations and yet is one of the most popular artists on adult contemporary stations. On her entire catalogue we will choose the songs not on the basis of their commercial success, but on their compatibility with other titles in our blues repertoire like the song "What Am I To You."
2755 Our format will be different from existing formats. We will promote the best of both worlds; well‑known artists who play blues songs like Stevie Ray Vaughan, Eric Clapton and Jeff Healey, and at the same time we will be the promoter of local London blues artists, a blues station with a popular and commercial sound.
2756 MR. FRANK TORRES: Market Research into the London market was compiled by census research and focused on providing an objective and unbiased assessment of this prospective format. We believe that outsourcing this research objective to census provides a third‑party unbiased objectivity.
2757 That being said, the research found a number of indicators to suggest the DAWG format would be warmly received in the London market. First and foremost, almost half of the sample was unable to recall any local stations that played a fairly recognizable list of blues artists and, of those who could, 41 per cent could identify just one, yet many could name two or more stations that played country, rock and top 40.
2758 This research has also shown that almost six in 10 London‑area residents would consider listening to a new blues‑oriented radio station. Fifty‑nine per cent of people surveyed answered they would be likely to listen. Among this number 27 per cent stated they would be very likely to listen to such a station.
2759 Of the people who would be likely to tune into blues‑oriented stations nearly six in 10 answered that in doing so they would likely increase the total amount of time they spend listening to the radio, including 13 per cent who would be very likely.
2760 This suggested overall listenership would be augmented rather than cannibalized from existing stations. We have conducted this research in 10 markets across the country. The 59 per cent of persons likely to listen ranks London as the most blues‑friendly city in the country.
2761 MR. CLARKE: Our Canadian content development has been carefully designed to provide funding and promotion to Canadian national talent and nurture the future of musical development in the London region.
2762 Some of our highlights include: FACTOR will receive $80,000 annually that will go to fund blues‑genre artists. This is a substantial investment in musicians that will promote and help launch the careers and the music of emerging Canadian artists. Canadian Music Week will receive $45,000 annually to start a blues concert series and fund London‑area blues musicians to attend music industry conferences.
2763 The Great Lakes Blues Society would receive $25,000 annually to promote Blues in the Schools program. Students chosen to participate would receive professional instruction and education by professional blues musicians.
2764 Fanshawe College produces some of radio's great talents. Ten deserving students from St. Thomas wishing to attend the contemporary school of media at Fanshawe would receive a total of $2,000 annually for a total CCD contribution of $20,000 annually. The St. Thomas Bluesfest would receive $35,000 annually to bring local and regional Canadian blues performers to St. Thomas.
2765 MR. FORD: The Skywords Group has made multiple radio licence applications as part of our national radio network vision and strategy.
2766 We would like to outline our financial strength and capacity. In preparation of our business plan to embark on this national radio network strategy and prior to making these applications will reach an agreement with third parties to assist with the finances of the building and start‑up of operations of a number of radio stations.
2767 Skywords is a well‑financed and well‑managed operation with a strong balance sheet that provides resources to back national radio strategy on an ongoing basis.
2768 Upon the granting of the Ottawa‑Gatineau licence we began discussions with our corporate commercial bankers to explore the optimal use of our internal resources to fund a new radio station. Final negotiations are pending which would enable us to finance Ottawa‑Gatineau operations without needing to access third‑party funds. This further demonstrates our financial strength.
2769 MR. BERNARD: Since our Ottawa licence approval, almost two months ago, the overall positive response that we have seen from blues fans, blues societies, live music venues and of course Canadian and international blues artists has been truly overwhelming.
2770 On September 11 and 12 Robyn Metcalfe and I travelled to London to attend the Annual General Meeting of the Great Lakes Blues Society. We were given the opportunity to speak to the executive and told those present about the success we had recently had in getting a licence in Ottawa.
2771 We also spoke about our hearing this week and our efforts to bring a blues station to London. The executives of the Society responded with as much enthusiasm, cheering and applauding more than once. The following night Robyn and I attended the Watermelon Slim show at a live music venue called the Dawghouse, also in London.
2772 Here again, we were graciously given the opportunity to speak to the audience about our recent success in Ottawa as well as our efforts to bring blues radio to London. We again received cheers and applause more than once from the audience. And later through the evening we were approached by many and given enthusiastic words of encouragement and support. Many of those present provided letters of support which are part of this application.
2773 The following Friday Yves Trottier and I attended the Downchild Blues Band show in London. Again, the events promoters who are I support of this application were kind enough to let Yves and I take the stage and speak to the crowd. We talked once more about our recent success in bringing blues music to FM radio in Ottawa and our efforts to do the same in London.
2774 Those present responded to our news with much applause and kind and supportive words later that evening during the show. And again, many of those present provided letters of support, which are part of this application.
2775 And lastly, I would like to speak about the same kind of encouragement and support we recently had from the Ottawa blues community at a three‑part blues contest called "On the Road to Memphis" organized by the Ottawa Blues Society. I and other members of DAWG FM were honoured by the opportunity to act as co‑judges at the events. We were also given a chance to speak to the crowd at all three events and were met with the same high level of support and enthusiasm as we received in London.
2776 MR. ED TORRES: The approval of this application will add competitive balance to the London market. Of all the applicants for mainstream formats at this hearing alone, our application is the one that comes from a standalone operator of a single FM station.
2777 All of the other applicants have multiple stations where they can realize economy of scale and synergies from similar operations. The approval of this application will also accrue substantial benefits to the public and the nearly six in 10 Londoners that want to hear this music. We would like to say that we are the public's best friend.
2778 Our approval in Ottawa generated tremendous interest and support. We hope to expand on this in the question period, but to encapsulate it, we have attached a litter from Liz Sykes, President of the Ottawa Blues Society, about what the CRTC decision to licence DAWG FM in Ottawa has meant, and I quote:
"The buzz, and there certainly is a buzz, the thing I've noticed most since the announcement that the Ottawa licence was granted is the enthusiasm and excitement from both blues fans and musicians. Everyone's talking about it. People I don't know, but who know me from the Blues Society, come up and tell me how happy they are that we finally have a real blues radio station. Musicians are looking forward to a station where their local, regional, national CDs will be played on a regular basis. The fans are looking forward to the opportunity to hear those same CDs. And many people I know who are casual blues fans, that is they listen to and enjoy all genres, are anticipating the opportunity to tune into a blues station to hear something different from the same old same old that they find on most radio stations today. We have some of the finest blues musicians I've heard and I sincerely believe that the exposure that they and their music will receive on a dedicated‑to‑blues radio station will raise their profiles, both with diehard blues fans and with music fans who enjoy blues casually. These fans will come out to the clubs to hear the live music, they will purchase CDs from the musicians and the best part is that this is a win win win situation. The club owners draw larger crowds, so they win; the musicians become more popular and sell more CDs, so they win; and the fans have the opportunity to hear the music they enjoy, live, on CD and on the radio, so they are the biggest winners of all." (As Read)
2779 Blues have reached a tipping point thanks to the internet and the multiplatform delivery system that technology now provides. No longer is this music marginalized and pushed to the underground. The CRTC allowed us to be first to market with this format. We can proudly boast that Canada has the first all‑blues commercial FM station in North America. We hope that you will grant us the second DAWG licence.
2780 We look forward to your questions.
2781 THE CHAIRPERSON: Thank you, Mr. Torres. I will be asking the questions to your group, at least to start with, and I am sure my colleagues will follow‑up with their own line of questions.
2782 We will start by talking about your programming and plans because, obviously broadcasting, it is programming and it is all about the rest, and that quote is not from me, it is from the Fowler Commission, is how do you say, the support to programming.
2783 So my question has to do with local programming. And the first component will go to the music, but we will start with the oral portion of your programming, which is made up of news, weather, traffic, sports and other related verbal content.
2784 In your application you state that 22 hours and 34 minutes will be dedicated toward news. And you gave us some kind of a breakdown of what that programming will be all about. But you also talk about syndication. About what are you talking when you are talking about syndication in the context of this application?
2785 MR. ED TORRES: The reference to syndication, Commissioner Arpin, is because at Skywords we create syndicated but programming that we in turn provide to other radio stations, sometimes on a syndicated basis. What we want to do is we want to develop a blues show that we can in turn syndicate to other radio station.
2786 So this would be a blues program that is already CanCon friendly, so we would make it available to radio stations, for example, in Peace River or in the Yukon or in Calgary. So really, it is part of our mission to help spread the blues across the country. But the programs will be locally produced. So they will be syndication friendly, but produced locally.
2787 THE CHAIRPERSON: And obviously the spoken word will be generic because it cannot talk about London or Ottawa for that matter. It has got to be about the blues music maybe, but generic in content?
2788 MR. ED TORRES: Correct, yes. There is a number of show ideas that we have, but you are absolutely right, we wouldn't be able to talk about the weather, it would be a generic show but it might include a feature on a blues act who is touring Canada, for example.
2789 THE CHAIRPERSON: Now, what portion of your programming are you contemplating will meet that criteria of syndication?
2790 MR. ED TORRES: Well, I will have Yves ‑‑ because I think Yves has the exact breakout.
2791 So, Yves, do you want to handle that?
2792 MR. TROTTIER: Yes. At the most of it, it is going to be six hours per week for the syndicated shows.
2793 THE CHAIRPERSON: Six hours per week?
2794 MR. TROTTIER: Per week, at the most.
2795 THE CHAIRPERSON: At the most?
2796 MR. TROTTIER: Yes.
2797 THE CHAIRPERSON: So we are talking here 300 hours per ‑‑ on a yearly basis, you are looking at making available 300 hours of programming produced locally here in London?
2798 MR. TROTTIER: Yes.
2799 THE CHAIRPERSON: And will you be dong the same in Ottawa?
2800 MR. TROTTIER: Yes.
2801 THE CHAIRPERSON: And obviously, and if you were to be granted other license ‑‑ because I know that you have applied for numerous locations. Is it the same plan that you have for all the markets that you ‑‑
2802 MR. TROTTIER: Yes, we will split the work we will say. If we can do some shows in Ottawa and do the other shows in London and some of the shows can play in Ottawa and the other shows can play in London or Edmonton, whatever, so that is the plan.
2803 MR. ED TORRES: Generally, these would be one‑hour shows. So I mean, if we were to get six blues licences we might generate six one hour shows from six different markets. I think that would certainly add flavour to our stations if we could bring you live from Vancouver Saturday night or ‑‑ so that is the idea.
2804 THE CHAIRPERSON: Now, in your application, and it has to do with your spoken word to somehow be ‑‑ your plan is to implement the station in St. Thomas but to serve the London CMA, which includes St. Thomas. Am I right in making that statement?
2805 MR. ED TORRES: Yes. This application is unique in this respect. And again, I will ask for other people to support here. But our idea was when we looked at the market we thought there is a very strong news presence in London. You have three very strong incumbents that provide excellent news programming.
2806 And then we looked at the nearby surrounding areas, and Strathroy has its own local radio station. Some of the other communities have their own station where news and spoken word generates listenership. So we thought that St. Thomas is underserved. So our idea was to put a news bureau in St. Thomas on the street with a salesperson and a fulltime newsperson, but to have the station really originate from London, studios in London.
2807 THE CHAIRPERSON: So what you have in mind ‑‑ because that is not what the application says. The way both myself and our staff understood your application was to have the facilities based in St. Thomas.
2808 Now, what you are saying is the main facility, the master control and the main studios and the administration will be located somewhere in London. But you are saying that you will have a local office with programming facilities and one salesperson operating out of St. Thomas?
2809 MR. ED TORRES: Yes, correct. And on page 5 of our supplementary brief originating from studios in downtown London the station will operate on 98.1. So if there is confusion, we apologize.
2810 But our plan is to have the studios and the signal originate from London, Ontario, to have a news bureau in St. Thomas that will effectively provide a fulltime newsperson there to cover council events, sporting events, festivals, for there to be a point of contact.
2811 And we did that not because ‑‑ you know, we looked at it and we thought that with a population of 36,000 St. Thomas could use an electronic news voice. And when we surveyed the market we found that that was missing.
2812 MR. SIMPSON: Actually, part of my radio career included the City of St. Thomas back in the day when they actually had a station before it was basically hijacked into the city. And St. Thomas was so proud of that radio station. As a matter of fact, one of the applicants yesterday referred to the beginning of his career in the London market and it was in fact at the St. Thomas station.
2813 St. Thomas and London are very kind partners to each other. London keeps growing further north, south, east and west, as I am sure you know. St. Thomas has been through economic upheaval over the years and the majority of people in St. Thomas do their shopping in London, come to London for entertainment and so on.
2814 But we felt that London and St. Thomas should be partners in this application, because it is a city of 36,000 people and why should it not have a voice?
2815 THE CHAIRPERSON: I note that on the same page 5, I read your quote, "In 1994 CHLO became CHWK and the St. Thomas studios and the offices were closed and moved to London." Now, I did make a search of this earlier regarding ‑‑ now, what was CHWK? And CHWK is a radio station in Chilliwack and has been a radio in Chilliwack for already a good many years.
2816 Now, I discovered that CHLO has become over time CFHK‑FM.
2817 MR. SIMPSON: I believe that is a typo in the application, sir. It is CFHK that is being referred to, now known as Energy 103.1 in London.
2818 THE CHAIRPERSON: I see. And there again you are saying in 1994 and my source was saying 2002 that it had been moved from St. Thomas to London when Corus built their new facilities and moved all their radio stations.
2819 MR. SIMPSON: Sir, I could stand to be corrected. But having lived in London and monitored the situation there, I can recall the exact day that CHLO flipped to FM, can't recall the exact date, but the day, opening its days with the Hawk Boy and it was very soon after that that they moved into London.
2820 The new studios that Corus broadcasting is in were not the studios that they were in at the time. They were still working out of the London Free Press building, which was representative of their previous owners, Blackburn Broadcasting.
2821 THE CHAIRPERSON: Well, my source is the Canadian Communications Foundation website, which I did check, making a search with first CHWK and that is how I discovered it was in Chilliwack. And then started again with CHLO and I went through the whole story as it appears on the Canadian Communications Foundation website.
2822 MR. SIMPSON: Sir, I can ‑‑
2823 THE CHAIRPERSON: I am not saying that they are right, it is not necessarily the bible. But if you have an opportunity to inform them of the real story of CHLO, I am sure that they will be happy to update their website and make the necessary correction.
2824 MR. SIMPSON: Sir, I can guarantee and there are others in this room that can guarantee that no broadcasting undertaking has been operated from 133 Curtis Street in St. Thomas since 1994 I believe.
2825 THE CHAIRPERSON: I see. Anyhow, that being said, there is currently no radio station in St. Thomas.
2826 But obviously, you are referring in your submission to much smaller localities that have their own radio station. But generally speaking, they are much more remote from urban areas than St. Thomas will be from London because, as you know, there has been a great attraction to move from the outskirts back to the centre town. CFNY left Brampton go to Toronto.
2827 I could give you a list of five or six radio stations in the Montreal market, because I know them much more, but who have done the same.
2828 So what will assure the Commission that if we grant you the licence and you open up an office in St. Thomas that you will keep it up and running even in bad economic times?
2829 MR. ED TORRES: Well, I guess there is our history. We operate offices in several markets already across the country. I mean, to that end, we are willing to accept a condition of licence that would ensure that we continue to have an office on a going forward basis in St. Thomas and staff it and that we live up to the news and spoken word commitments, including the percentages of news stories that we would generate out of St. Thomas.
2830 So those are a couple of the things that the Commission should consider. Also, I mean, we are a young group. We have nothing but time ahead of us. And certainly, we have seen you already ‑‑ I think this is the fifth time, seven applications, we are going to see you a lot more.
2831 We have developed a national long‑term strategy to grow our business, which is our broadcast base business, so I think that can comfort the Commission that we are going to live up to our word.
2832 THE CHAIRPERSON: In replying to the question 5 of the deficiency letter ‑‑ and I apologize, your reply is not dated, so I can't refer you specifically to a given letter. But you are talking about synergies from various news bureaus and you are locating them in Vancouver and Moncton, Red Deer, Toronto, Ottawa, Montreal, Halifax and Fredericton.
2833 And I guess that letter was sent to the Commission sometime during the summer, because that was the time the other letters came to the CRTC and the other five, so my guess is that it is somewhere between May and July.
2834 In your oral presentation today you spoke about where Skywords is currently having office. Somehow it doesn't match. So are you contemplating opening up news bureaus in all the locations that I have just mentioned? Because that is what I am reading out of that reply to the deficiency letter.
2835 MR. ED TORRES: No, we are certainly not planning that type of expansion. But what we mean by the synergies is, for example, if there is a news story that breaks in Red Deer, we don't have an office in Red Deer, but we do have reporters in Edmonton.
2836 So if it is a major major news story we can dispatch a Skywords reporter to go and get a sound bite that we could then upload into our existing file transfer system, which would be available for our Ottawa station.
2837 The synergies now that we expect to realize are more in line with the Ottawa station. So there were certain synergies that Skywords brings to this undertaking, to a radio station undertaking.
2838 Now we have added synergies from the Ottawa operation, including engineering, volume discounts on transmitters, human resources, traffic, accounting and particularly in the area of news, because the Nations Capital is where the bulk of the political news emanates from.
2839 We are going to share that information very proactively with other stations that we could have.
2840 MR. F. TORRES: And just to complete the explanation on the possible conflict in the list of markets, our Maritimes is a perfect example. Our bureau is in Halifax. Out of that Halifax bureau is where we provide information for Halifax, Moncton and Fredericton.
2841 So heart office, one office, Halifax. Markets covered for the Maritimes, three markets. That's why there's a bit of a discrepancy there.
2842 THE CHAIRPERSON: Now let's talk a bit about music and availability of blues music.
2843 As you have stated, there is no Canadian on‑air ‑‑ because there is at least one licensee, there's currently no on‑air blues format radio station. And you also are saying that there's none in the ‑‑ because you are staying you were the first in North America, so I'm assuming that there's none in the U.S., and I will add to that Mexico, since Mexico apparently is still part of North America. Sometimes people forget about it, but it is. And you are saying in your oral presentation that even the CBC has ghettoized the blues in having it only late at night. Even today, with their eclectic Radio 2 format, it's not spread over all the place?
2844 MR. E. TORRES: There's more blues on the air, Commissioner Arpin, certainly since we started this process of trying to get our first licence back in Peterborough. So the broadcast community, I think, has come to the same conclusion that we have, that blues is readily available on satellite and on the internet.
2845 And it's come to the surface now. This edition of Vanity Fair, this month's Vanity Fair, and my wife wouldn't let me have it to bring it, but there is an article on Robert Johnson. The last time we were at a hearing there was a big Ottawa Citizen write‑up on Fred Litwin. So the blues have arrived.
2846 To talk more about the music specifically, we have Greg and Yves, and I don't know if you have thoughts on the answer.
2847 MR. SIMPSON: I do.
2848 One of the things in that presentation was the word "commercial" blues stations. There are blues stations or blues programs on college stations, university stations, low‑power localized stations throughout North America. In terms of commercial licenses seeking to compete in the commercial market, I think the statement is accurate.
2849 As for the CBC 2, the blues, I have been listening a lot because a good friend of mine just got hired as a programmer there, and I love the programming, but blues is a portion of their programming. I would call them ‑‑
2850 THE CHAIRPERSON: Well, since it's all types of music ‑‑
2851 MR. SIMPSON: Yes.
2852 THE CHAIRPERSON: ‑‑ it's only a portion of their programming.
2853 MR. SIMPSON: Yes, it's Triple A primarily is what the CBC 2 is offering. And what a great radio station, but they don't have to compete in the commercial marketplace as others choose to.
2854 THE CHAIRPERSON: But a lot of people are also complaining about their format switch. Anyhow we are not here to do ‑‑ we surely not here to talk about the CBC. The day will come.
‑‑‑ Laughter / Rires
2855 MR. F. TORRES: That's Phase III, is it?
‑‑‑ Laughter / Rires
2856 THE CHAIRPERSON: Regarding Canadian content, I note that in your application you are saying ‑‑ you are talking about, say, the Category 3 music, 25 percent Canadian content, and then music general 40 percent. And in replying to a question in deficiency, you gave an answer, but the answer that you gave is really confirming the statement made by the analyst in the question, which is not what I'm reading out of your page 29 of your brief, which I do understand that your commitment is for an overall 40 percent Canadian content, with a specific 25 percent for Category 3.
2857 Am I right to read it that way?
2858 MR. E. TORRES: I think we have tried to get that written out and explained in proper English, so we have our francophone operations director to handle that one.
2859 MR. TROTTIER: I just want to be clear about this point: it's 40 percent Canadian content on Category 2 music and also 40 percent Canadian content on Category 3, subcategory 34 music. The 25 percent that we are talking about, it's the minimum level of Category 3 music inside all our corporations.
2860 So we are going to play a minimum of 70 percent, of course, because we are a Cat 2 station, but we are going to play a minimum of 25 percent of Cat 3 music.
2861 THE CHAIRPERSON: In Category 3.
2862 MR. TROTTIER: In Category 3, subcategory 34.
2863 We have said 25 percent in that presentation, but since that we received our licence from Ottawa, and in Ottawa we have received a condition of license of 20 percent of subcategory 34. So we prefer to have a 20 percent condition of license for London, too, if I can ‑‑
2864 THE CHAIRPERSON: So your commitment is for...?
2865 MR. TROTTIER: Category 3 music, subcategory 34 ‑‑
2866 THE CHAIRPERSON: Or...? Yes.
2867 MR. TROTTIER ‑‑ a minimum of 20 percent.
2868 THE CHAIRPERSON: Twenty percent of the time?
2869 MR. TROTTIER: Yes, of the music that we are going play ‑‑
2870 THE CHAIRPERSON: Yes.
2871 MR. TROTTIER: ‑‑ during the week.
2872 THE CHAIRPERSON: Okay. And the Canadian content?
2873 MR. TROTTIER: Forty percent for Cat 2 music and 40 percent for Cat 3 music, too.
2874 THE CHAIRPERSON: Okay, that's for ‑‑
2875 MR. TROTTIER: That's clear now?
2876 THE CHAIRPERSON: Okay, that's clear.
2877 MR. TROTTIER: Okay.
2878 THE CHAIRPERSON: That's clear to me.
2879 MR. TROTTIER: And that is represented on our playlist.
2880 THE CHAIRPERSON: Okay, fine. Now Canadian content development contributions.
2881 In your application, per se, for each year you have various revenues, and obviously made up of national and local advertising, with a total for each year.
2882 Now in reply to a deficiency, you provided us with a new calculation. It's your appendix to your deficiency letter.
2883 Now if I'm taking year three in both instances and it goes ‑‑ because year one and two you have the same numbers, in terms of total revenue, but for year three, in your application, in your brief, you have $2,247,000 of revenue and in the appendix you have $2,201,000, and it goes on to year 3006 (sic), where you have in your application $3,123,000 and in your appendix $2,942,000 and you have based your contribution to CCD, the standard contribution, based on the formula developed by the Commission, on the revenues of your application.
2884 Which one should we make use of?
2885 MR. E. TORRES: I would like to offer that the response in deficiency is probably more accurate than the original one filed, without the opportunity to go through them line by line to find out where the discrepancy is. We could certainly undertake to refile our final CCD, if that was....
2886 THE CHAIRPERSON: Well, I would suggest that you refile the full breakdown of both revenues and expenditures because, obviously, in the appendix you only have a revenue line and a basic CCD line, while, obviously, in your brief you have all the other calculation, and finally your PBIT and everything.
2887 So I require that you provide us with your new financial projections based on the revenues that appear in the appendix so it will clarify.
2888 So as I said, year one and year two are similar, in terms of total revenues, but year three to seven, inclusive, are different.
2889 MR. E. TORRES: Yes, I can see that now. And fortunately we brought our CFO with us and we will get him hard to work on that tonight. We will undertake to have those, either the new financials or the correct CCD scheduled, before the end of the hearing.
2890 THE CHAIRPERSON: Okay. So a new CCD in full. Okay.
2891 Well, from what I have been able to see in both instances, the CCD seemed to total the same amount, but they don't match with the same revenue result.
2892 MR. E. TORRES: Yes, and it could be that there was something didn't transpose to the deficiencies response. Now looking at it a little more in‑depth, that might be the case. So we will undertake to get that sorted out for you before the end of the hearing.
2893 THE CHAIRPERSON: Now could you tell me more about DAWG Music Camp Initiative?
2894 MR. E. TORRES: Essentially, the DAWG Music Camp is with our partnership with the Great Lake Blues Society, where, really, we take the CCD money and the Great Lake Blues Society runs the "Blues in the Schools" program.
2895 So maybe, Greg, you want to talk about that.
2896 MR. SIMPSON: I would be proud to.
2897 The "Blues in Schools" program is something we picked up from a blues society in Michigan. We were inspired by it. It's something that the Great Lakes Blues Society began about four years ago. And in that time we have brought in people like the Reverend Robert Jones, from Detroit, who is a music educator and host of the number one blues program in Detroit radio; we have brought in Zydeco bands from Louisiana; and we have used local blues musicians, including many members of the Maple Blues All‑Stars, which is the all‑star blues band in Canada, to attend various elementary, high and post‑secondary institutions in London.
2898 We have got full support from the Thames Valley District School Board and from the London and District Roman Catholic School Board to do this.
2899 With last year's run of shows, with Chris Murphy and the Maple Blues All‑Stars, we, I believe, came to our 250th performance in the schools over five years.
2900 We offer this at zero charge to the schools, although many schools do step forward and offer to pick up certain of the costs involved. It is supported 100 percent by donations from members of the Great Lakes Blues Society and subject to raffles that we do at various shows, et cetera.
2901 We would like to expand upon this immensely. We would like to bring in artists of I would not like to say higher calibre but perhaps higher profile to visit the schools. Fanshawe and the School of Music at the University of Western Ontario have both benefitted from this, as have, as I mentioned, both Catholic and the Thames Valley District School Board schools at both the high‑school and elementary‑school level.
2902 It's pretty amazing when you go to Althouse College at the Western campus and see 300 grade one and two students going crazy over getting to play a washboard with a Zydeco band. It's something special.
2903 THE CHAIRPERSON: DAWG FM has made a commitment of five different scholarships per year. Now what I'm questioning is that these scholarships, from what I'm understanding, are not given back to the Great Lakes Blues Society or the DAWG Music Camp but they are predetermined by DAWG FM, so at the end of the day, those who are receiving the scholarship aren't they determined by the Torres family?
2904 MR. E. TORRES: No. That idea is based on a model that we use at my home Rotary Club, where, in concert with the high schools, the area high schools, we provide funding to five or 10 deserving students that want to go on to greater studies. So in our Rotary Club we use the scholarships to fund high school students that are going on to medical schools, because there's a need for doctors in our area.
2905 So what we have done, and what we propose to do, is partner with the area high schools, find deserving students that want to participate in the School of Media Studies at Fanshawe, and those deserving students, if they are deserving and they meet criteria.
2906 Now this will all be administered by the school, we will just write the cheque.
2907 THE CHAIRPERSON: So it will be the school who will make the selection ‑‑
2908 MR. E. TORRES: Yes.
2909 THE CHAIRPERSON: ‑‑ of the recipients?
2910 MR. E. TORRES: Yes, we will have no say in who the recipient is, we will just be there to present the cheque.
2911 THE CHAIRPERSON: Well, that surely clarifies the issue that we may have.
2912 Now also regarding the Fanshawe College contemporary media program, what you are proposing used to be in line with the previous CTD policy, but doesn't meet at least the letter of the new CCD contribution initiative.
2913 If the Commission was to conclude that your project with regard to the Fanshawe College School of Contemporary Media doesn't meet the spirit of the CCD, how will you reallocate the money?
2914 MR. E. TORRES: I believe what we would do if it didn't meet the CRTC's criteria, we would repropose a new initiative so that we wouldn't reduce the amount of funding. So we would find another initiative.
2915 And, you know, of course, I think what happens when you start this application process is you put your head together and you hit the street and try and find the most needy organizations, you try to put your money in the most effective places, and then after you have submitted your application 10 other people approach you. So there's already a number of places where we could reallocate funds, so we would propose to refile a CCD and keep that commitment in place.
2916 MR. F. TORRES: I think in this case, as well, our focus is kids, so we wouldn't be all that eager to just turn it over to another organization that is recognized. We would look at the development of the program that is kid‑specific, that puts music and instruments into their hands directly.
2917 THE CHAIRPERSON: Now could you tell us how much programming will be live‑to‑air versus will be voice track or automated, either in terms of number of hours or percentages?
2918 MR. E. TORRES: Robyn and Yves, do you want to handle that?
2919 MR. TROTTIER: We will be 24 hours, seven days live. The only times that we will not be live is when we are going to have our syndicated show that we talked about 15 or 20 minutes ago. So we are going to be live all the time, so it's easy.
2920 THE CHAIRPERSON: So you are not planning to make use of voice track ‑‑
2921 MR. TROTTIER: No, not at all.
2922 THE CHAIRPERSON: ‑‑ or automated?
2923 MR. TROTTIER: Yes.
2924 THE CHAIRPERSON: I have, really, a final question regarding the music. That was slipped to me. But in the application, you are saying 25 percent of your music will be Category 3, 70 percent will be Category 2, with some kind of a leftover of 5 percent.
2925 Do you have an idea of what will be that 5 percent?
2926 MR. TROTTIER: Yes, Commissioner. It's just because that we cannot play more than 30 percent of Category 3 music, so what we are going to do is go to a minimum of 70 percent of Cat 2 music, and the 20 percent minimum is to have a cap, I will say, between 20 and 30, to respect the condition of license.
2927 So we want to play 28 or 29 percent of Category 3 music.
2928 THE CHAIRPERSON: Let's look now at your financial or economic aspect of your proposal.
2929 In your submission you are saying that 51 percent of your year three revenues will be coming from new advertisers, and you provided us with a list of new investors in both St. Thomas and London.
2930 Are those newcomers the base of your new advertisers or have you identified other types of new advertisers?
2931 MR. E. TORRES: Yes, I think that St. Thomas retails ‑‑ and I will ask Aubrey to elaborate on this ‑‑ St. Thomas retailers will make up a significant amount of our new revenue because simply we will be their radio station.
2932 The other part of revenues will be from repatriated blues listeners, so all the blues bars, all the blues record labels, the industry that exists around the blues, which is, again, a multi‑million‑dollar industry, you know, advertisers, like, that are passionate about the blues. And if we look at the membership of the Great Lakes Blues Society, you are talking about some very professional people, in most blues societies, but you are also talking about people who have jobs, so we think that ‑‑ we are repatriating listeners, so that means we have to repatriate dollars.
2933 Aubrey, do you have...?
2934 MR. CLARKE: Yes.
2935 The list that you are referring to, are you speaking about the list where it talks about economic growth in the communities?
2936 THE CHAIRPERSON: Yes.
2937 MR. CLARKE: Right. Yes, that's not directly related to the new advertisers.
2938 THE CHAIRPERSON: No, absolutely.
2939 MR. CLARKE: Yes.
2940 THE CHAIRPERSON: There is, I think, 20 pages in your brief between that list and then your advertising assumptions.
2941 MR. CLARKE: Right, yes. So it's definitely not directly related, it was just showing how the community was growing in that list.
2942 We also have commitments, through Skywords, with a couple of clients that will be following us into the market who have given us commitments, as well. So those will be some of the new advertisers coming in there with us.
2943 THE CHAIRPERSON: Your financial projections have been based on various percentages of revenues. Surely it is the case for programming, sales and administration.
2944 Were those percentages based on some experience or industry benchmarks? How did you arrive at choosing these percentages?
2945 MR. E. TORRES: We did a lot of work with consultants. We certainly looked at the historical financial data in the London market, but also we made certain assumptions based on the fact that this would be a stand‑alone, single FM operation. So with the existing operation in Ottawa, there's an opportunity now to maybe share some of those costs. But we have done was we budgeted extra dollars in our promotions budget for year one and two moreso than a conventional radio station would because we needed to get the word out there about the format.
2946 Secondly, our programming costs are higher than the national average in the first years of our financials, if you drill down into the numbers, and that is, again, because we are going to have to do a lot of music research. We have already started that. But to get the music right, you know, we thought our costs, our expense lines would be higher than that of a traditional radio station.
2947 MR. F. TORRES: We have also ‑‑ we have had years of experience of selling into this market, so we have had everything from affiliates taking our spoken‑word content to even 30‑second preproduced commercial sales that we are doing up to this day. So we do have experience in actually selling in this market.
2948 THE CHAIRPERSON: And really my final question before going to my colleague.
2949 On page 43 of your submission, you make a statement of interest regarding launching your station with an IBOC component. Now, obviously, you are the first to refer to IBOC in this proceeding, and my guess is you probably were the first to refer to IBOC in a CRTC proceeding since the Commission has stated that as long as Industry Canada agrees IBOC it will be a technology that the Commission will be supportive.
2950 Are you seeking ‑‑ the CRTC, if we grant you a licence to authorize you ‑‑ to implement IBOC at this time?
2951 MR. E. TORRES: This application is for the FM licence, and we are, you know, anxiously awaiting for Industry Canada to make its ruling, its determination, but we have always been early adopters of technology. You know, we had a website in 1994, had an email address before the marketing director of Coca‑Cola in Canada had an email address. You know, we have created technology and we love technology. You know, we will surprise you when we hit the air in Ottawa with some of our technology.
2952 So, yes. I mean, while this is the application for the FM licence, you know, once we get direction from Industry Canada we are very eager to role that out.
2953 THE CHAIRPERSON: So eventually you will come back to us ‑‑
2954 MR. E. TORRES: Yes.
2955 THE CHAIRPERSON: ‑‑ is that what you are saying?
2956 Well, those were my questions, but I know my colleague, Elizabeth Duncan, wants to ask you a few questions.
2957 COMMISSIONER DUNCAN: I'm curious with respect to St. Thomas, and I'm wondering if we were to license the other applicant for St. Thomas what impact that would have on your projections.
2958 MR. E. TORRES: I think the other applicant is very experienced in St. Thomas and, you know, I think that it would have an impact.
2959 Aubrey, you have crunched the numbers and ‑‑ I mean, the St. Thomas revenue, I think we feel that ‑‑
2960 MR. CLARKE: I will take it.
2961 MR. E. TORRES: Yes.
2962 MR. CLARKE: St. Thomas, year three, is only about 14.6 percent of our revenue, so I don't think it will have a tremendous impact, although some. And we are used to competing in small markets, as well, too, through Skywords, so....
2963 MR. F. TORRES: I think that's the strength of this application, is the flexibility. In its present sense, we are contending that St. Thomas is underserved, if not unserved. If that changes, the beauty of this application is that, if we feel that St. Thomas becomes adequately served by another more centrally‑focused licensee, then we can easily shift focus back toward London, if that's what we feel the people of St. Thomas see fit.
2964 COMMISSIONER DUNCAN: You did offer to accept a COL to maintain an office, a news bureau there. So I'm assuming, then, that you would think the market could carry what you are asking of it, and the others, as well.
2965 MR. E. TORRES: Well, yes. I think in the event that you licensed the other St. Thomas application, we would likely keep the news bureau in St. Thomas and we would still feature stories from St. Thomas. I mean, it's the same CMA and, as Greg says, they are inextricably linked. And, again, you know, I think that the cost of the news bureau, you know, so close, it's not exorbitant, so we would continue ‑‑ if that was a condition of our licence, we would happily accept it and continue to operate there.
2966 MR. F. TORRES: It's very similar to our operations in the GTA. We have a main multi‑studio facility in Markham and we have a satellite bureau at the Buttonville Airport. We are airplane‑focused there and we can convert from airplane to ground base. And we have a third base at the Buttonville Airport, as well, and we find it a very cost‑effective way to operate: small satellite offices like that.
2967 COMMISSIONER DUNCAN: Thank you.
2968 Those are my questions, thank you.
2969 THE CHAIRPERSON: Commissioner Simpson.
2970 COMMISSIONER SIMPSON: Thank you.
2971 Going back to programming for a second, your audience demographic, as I understand it, you know, the core demographic is 25 to 54. And I was not around for the Ottawa hearing but I'm curious.
2972 You know, when I see the playlist and I hear samples of it, what strikes me is how much of what I would consider mainstream Triple‑A type music is actually blues by, I suppose, definition. I'm wondering if you could give me ‑‑ again, to satisfy my programming interest ‑‑ how you determined when so many others haven't in North America that blues is marketable, or should I say a good marketing tool to go at reaching the 25 to 54s from a different direction?
2973 MR. E. TORRES: It's a good question and I will try and address it and then ask everyone else to pipe in.
2974 Somebody has to be first, right. Columbus had a crazy idea to sail across the ocean. But when we started the research we started with focus groups. So we said to a bunch of 25 to 54‑year‑olds: What don't you like about radio? And then what came back was ‑‑ we also asked them what's in your CD collection. What came back, the common thread was the blues.
2975 So we took on ‑‑ we did the formal research and the formal research came out and invariably it confirmed what we thought, if you put this music together and if you branded it as the blues you could sell it, you can market it.
2976 We talked to experts. We talked to Tom Lavin. He said the exact same thing. He said look, I went to the record companies and nobody would touch me. He said when I had sold 100,000 CDs out of the back of my car and had gigs they all wanted to distribute my product.
2977 But we have also done the ground‑level work and maybe, Todd and Robyn and Greg, you can ‑‑ we have been to the blues bars, we have seen the demographic, we have seen the people and its 18 to 64, but really you know you have a very nice 35 to 54 demo there is. And those are really our people. And they have money, they love live music, they like to spend it, so I mean it has been missed.
2978 You heard the stats earlier about the 35 to 54 demographic that's leaving radio. Well, here we are to bring it back.
2979 Todd, I don't know if you want to talk about ‑‑
2980 MR. BERNARD: A lot of the live shows that we have attended during the research portions for the Ottawa applications, the application subsequent to that one, as well as post receiving the decision in Ottawa, you really do find quite a broad demographic at the shows.
2981 35 to 54 is certainly very well represented, but we are often surprised by, you know, the 25 to 49 component is there as well. Often by the second set of the show the dance floors will be quite busy with people up there dancing, and typically the surprising part of that is it is that younger demographic that you wouldn't normally associate with the stereotypical conception perhaps of a blues demographic.
2982 So young people do warmly receive the music as well once they are exposed to it.
2983 Something else that I have noticed, you see quite a lot of blues music believe it or not on television. It's sort of subconscious because you see it a lot in commercial advertisements. So I took to task to do research online and within ‑‑ although I didn't spend a terribly large amount of time, maybe six or seven hours, I was able to come up with about 30 U.S. national advertisers who use blues music to sell their products, their goods and services.
2984 So, you know, it occurred to me that the major advertising agencies in the United States, who again are doing work for these large clients, they recognize that blues music sells, that blues music is commercially viable. You know, they wouldn't risk their reputations and their clients' hard earned dollars on terribly expensive TV 30 second commercials if they weren't confident that those commercials would be highly effective.
2985 Again, in a fairly short order of time I came up with no less than 30 advertisers that I found on You Tube and on television who use both famous and recognizable blues artists, as well as just sort of a generalized blues tracks to their commercial programming.
2986 So again it indicates, to me at least, that if the big retailers are using blues music to sell their products and their goods and services that, you know, there is economic viability out there for the format if we can expose the format to the general public via a mainstream FM format radio station.
2987 MR. SIMPSON: One thing that I have noticed, both through observation and through personal experience, is the blues is probably, more than any other form, a form that is appreciated by multiple generations. Grandparents, their offspring and their children are all able to appreciate the basics of the blues.
2988 I know with my own particular children, all of whom are grown now, among the first artists they were discovering were people like Shannon Kurfman, who is a young blues artist that they could relate to in that she was similar in age to them. They are also fans of many other people their age who use the blues as a base of their music, but at the same time totally and completely appreciate the music of Muddy Waters and the music of the stars that emerged in the '60s and '70s like Eric Clapton.
2989 But you see it at our shows. We have a lot of members of our Blues Society who come to our shows ‑‑ and, by the way, not everybody that comes to our shows is necessarily a member of the Blues Society. Some will come out because they are in particular a Tinsley Ellis fan for example, but then they will join the Blues Society after the show. But they bring their teenage kids with them.
2990 When we do a blues festival you will see entire three generations of one family attending together and all appreciating the music on the same level, because the blues music is less than popular music, less about the personality and the marketing of the performer and more about the basic truth within the music, the basic feel of the music. Everybody, even me, under pressure can be made to dance.
‑‑‑ Laughter / Rires
2991 COMMISSIONER SIMPSON: That pretty much sums it up.
‑‑‑ Laughter / Rires
2992 COMMISSIONER SIMPSON: Thank you.
2993 One other question, at the risk of a bad pun, but turning blues into green.
2994 It was brought to my attention by people far smarter that in the economic analysis of your financial projections you had arrived at an equation that the one percentage point of audience share was financially equable to about $500,000‑plus, which seemed to be quite optimistic.
2995 I'm wondering, is that a Torres formula or is that driven more by a blues format scenario?
2996 How do you index that?
2997 MR. E. TORRES: I guess, you know, it has to do more with our internal workings and our ability to leverage relationships that we have.
2998 We have looked at all the financial projections of all of the applicants and we have looked at the share and what the total market revenue is, so when we put our financial projections together again we used the spot rate that we sell the market at and we used the percentage sellout that we think that we are going to achieve.
2999 We think that that puts us in year seven with a seven share, very much middle towards a lower end of the pack, which is where we would expect to be considering that the incumbents in this market are going to be quite strong.
3000 So we have heard the other financial projections and we think they have been understated, although we have gone on the conservative side in terms of our financials.
3001 COMMISSIONER SIMPSON: Right.
3002 MR. CLARKE: Our whole sales philosophy has a lot more to do with selling a lifestyle and selling a format, an experience rather than selling a share. Share a lot of times has to do more with the national dollar as opposed to the retail dollar and at Skywards we do a lot of promotional packaging with the way that we sell radio and that is some of what we are bringing to market, too, why we are able to achieve that revenue.
3003 COMMISSIONER SIMPSON: But it seems to me ‑‑ again this is getting into the relationships of national to local advertising ‑‑ it seems that your ratio of national sales is actually lower than most other proponents.
3004 MR. E. TORRES: Yes. The reason that it is is we employ our own in‑house national sales department at Skywards ‑‑ so we don't use IMS, we don't use CBS ‑‑ and it's something that we are good at.
3005 But for the purpose of putting the financials together ratings are what the agencies buy and in a startup we know that there is going to be a lag, particularly if you can't hit that September book. If you don't hit the September 1st period the agencies look at ‑‑ they disregard the rest of the rating.
3006 So in the worst case you got on the air at the end of the September ratings period you could be an entire year without having hard data for the agencies to bite onto. And even when you have that year one, a lot of the times ‑‑ and we have this experience because we have dealt with a lot of startup stations, so when the new licence got issued in Halifax, wow, they came out of the gate with a 22 share. We went back to the agencies and said: Look, one of our affiliates has a 22 share. They said: Well, we will wait until the next book. We will see how they do next September.
3007 So there is a lag time for the national and that's why the national is a little lower.
3008 COMMISSIONER SIMPSON: I'm sorry, what I'm hearing is that you are being very efficient and levering the relationships with the national advertisers because you have a different relationship through Skywards that gets you in front of them and you basically have two stories to tell?
3009 MR. CLARKE: Right. It all depends on what you look at as national too, right.
3010 Traditionally you think agency buys that buy the whole of Canada as national, but at Skywards we leverage a lot of business relationships. Like for instance online travel companies, right. They might have only done advertising in one market and we come to them with a whole business plan, a solution and we pull thousands of dollars away from their print and then we spread it nationally too, right.
3011 So it depends on how you look at it.
3012 COMMISSIONER SIMPSON: Thank you.
3013 THE CHAIRPERSON: Thank you.
3014 Legal counsel...?
3015 MR. McINTYRE: Thank you, Mr. Chair.
3016 I have just three undertakings to read into the record.
3017 The first is an undertaking to refile new financial projections, including CCD amounts based on revenues that appear in the appendix by tomorrow, as per the Chair's a request.
3018 MR. E. TORRES: Yes, we will.
3019 MR. MCINTYRE: The next is to identify another organization to receive CCD funding in the event the Fanshawe College initiative is deemed ineligible.
3020 Can you do that by tomorrow as well?
3021 MR. E. TORRES: Yes, we will.
3022 MR. McINTYRE: And the last is the common undertaking to file updated proof of financing availability by October 30.
3023 MR. E. TORRES: And yes we will.
3024 MR. McINTYRE: Thank you.
3025 MR. E. TORRES: Thank you.
3026 THE CHAIRPERSON: Before breaking I know that ‑‑ well, I first want to thank you for your presentation, but before breaking I know that our Secretary wants to make an announcement.
3027 ASSISTANT SECRETARY: Thank you, Mr. Chairman.
3028 We would appreciate it if you already know that you are not participating in Phase II to please come forward at break and advise either myself or Mr. Ventura.
3029 Thank you.
3030 THE CHAIRPERSON: So we will take a 15 minute break. We will be back at 2:45. Thank you.
3031 Thank you, Mr. Torres.
‑‑‑ Upon recessing at 1430 / Suspension à 1430
‑‑‑ Upon resuming at 1440 / Reprise à 1440
3032 THE CHAIRPERSON: Order, please.
3033 Madam Secretary...?
3034 ASSISTANT SECRETARY: Thank you, Mr. Chairman.
3035 For the record I would wish to inform you first of all that the applicant CTV Limited has submitted a copy of their sample day music log in response to undertaking. This document will be added to the public record and copies are available in the examination room.
3036 We will now proceed with Item 9, which is an application by My Broadcasting Corporation for a licence to operate an English‑language FM commercial radio programming undertaking in St. Thomas.
3037 The new station would operate on frequency 94.1, Channel 231B1, with an average effective radiated power of 2500 W, maximum effective radiated power of 7950 W, with an effective height of antenna above average terrain of 46.5 m.
3038 Appearing for the applicant is Mr. Jon Pole.
3039 Please introduce your colleagues and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
3040 MR. POLE: Thank you and good afternoon.
3041 Mr. Chair and Members of the Commission, it is our pleasure to be here today to present you the idea of awarding our company the privilege to serve the citizens of St. Thomas with a local radio station.
3042 Before we present our idea for this new station, I would like to introduce our panel.
3043 My name is Jon Pole and I'm the President and co‑owner of My Broadcasting Corporation. Our company owns and operates small market radio stations in Renfrew, Pembroke, Greater Napanee and in Strathroy. We have also been awarded a licence to serve Exeter, Ontario and the new station will be on the air launching later this year.
3044 Personally, I have 20 years in the radio business, starting as a part‑time announcer on a small AM station owned by my family. While I have worked in Toronto at CFRB 1010, the majority of my experience has been working in small and medium‑sized radio markets in Ontario like Renfrew, Pembroke, Sarnia, Chatham and Owen Sound.
3045 I also spent four years working as a radio sales consultant for other Canadian broadcasters like Craig Broadcasting, the Jim Pattison Broadcast Group, Newcap, Corus Entertainment and Harvard Broadcasting.
3046 To my immediate left is Andrew Dickson. Andrew is the Vice President and co‑owner of My Broadcasting Corporation. Andrew has a long career in media, including working in television and radio. Although working for a period in Ottawa at CKBY‑FM, most of Andrew's broadcasting experience was also working in small and medium‑sized markets in Ontario like Renfrew, Pembroke and Ajax. Andrew owns a publishing company for emerging Canadian writers as well as a successful printing company.
3047 To Andrew's left is Jeff Degraw. While Jeff looks fresh out of high school, he has been in radio for seven years and is the General Manager of our radio station 105.7 CJMI‑My FM in Strathroy/Caradoc. Strathroy is a community that borders the city of London and Jeff and his team have done an excellent job at providing outstanding local service for the area of Strathroy. In fact, Jeff's team was awarded the Chamber of Commerce Outstanding Business Excellence Award just last month.
3048 Now the reason we are here today, to present you our proposal for a local service for the city and residents of St. Thomas.
3049 Although our application is being considered by the Commission as a competing proposal, we really don't view it that way. While the other applicants are exclusively interested in the city of London, I can assure you that my broadcasting Corporation has no interest in London.
3050 We are the only applicant here today that has a plan to exclusively serve St. Thomas. Our signal and our programming will be designed to best serve only St. Thomas. The frequency we have chosen will not be strong in London and it best suits serving St. Thomas. No other applicant is seeking to use our chosen frequency of 94.1 FM.
3051 As well, news and information will be focused solely on the needs of St. Thomas.
3052 Although the city of St. Thomas is part of the CMA of London, much like our Strathroy market, we feel it is important to stress that St. Thomas is its own unique and independent community. We believe that we have a winning formula with our approach to super serving small markets in Ontario.
3053 Like most of our other markets, St. Thomas sits in the shadows of a large urban market. Our success in small markets has been to offer a local radio choice that fills a void, keeps residents connected to their community and protects the rural identity of the community.
3054 From a business standpoint, our stations offer small business owners the opportunity to be heard on radio for an affordable price and to speak to an audience that is literally minutes from their doorstep. It is our intent to bring the same level of community involvement, support and success to the city of St. Thomas.
3055 Our first approach to determine if St. Thomas could support its own local radio station was to review the economic capacity of the city and I will ask Andrew Dickson to give you a brief overview of our findings.
3056 MR. DICKSON: Good afternoon, Commissioners.
3057 You have already heard from other applicants yesterday and today about the city of London and its ability to support another radio station. We feel confident that our proposed station in St. Thomas will have little to no impact on the radio landscape of London. The success of our proposed station will be purely based on operating in and serving St. Thomas.
3058 As for the opportunity in St. Thomas, here are some quick statistics for consideration.
3059 Based on the 2006 census numbers the population is 36,110. That is a growth of over 8 per cent from the 2001 census, making St. Thomas one of the fastest‑growing communities in southern Ontario. The primary trading area consists of a population of over 55,000.
3060 With this population, it makes St. Thomas the 25th largest city in Ontario, yet it does not have its own dedicated radio station. In fact, it is the only city with a population over 20,000 in Ontario that does not have its own dedicated radio station.
3061 As you are aware, there are many examples of the communities with a much smaller population base yet have at least one dedicated radio station. Just in our group of stations alone, we can look at the town of Greater Napanee with a population of just over 15,000 and Exeter with a population of 9,000 and Renfrew with a population of just over 8,000 and it has two radio licences.
3062 The simple fact that St. Thomas is a short distance from London does not mean that it doesn't have its own identity, its own desire of maintaining that identity in the shadows of a major market, and its own need to communicate with each other in a timely and efficient manner.
3063 Although instinctively we recognize St. Thomas as a community in which our business model would work well, we do rely on a number of sources to substantiate the viability and financial sustainability in any particular market in which we are interested. These include the Financial Post Canadian Demographics Annual Report, a third‑party market survey, discussions with the local Chamber of Commerce, along with our experience in other markets.
3064 The FP Markets annual report indicates retail sales for St. Thomas at $470 million. 3 per cent of retail sales can be expected to be spent on advertising and approximately 12 per cent of those advertising dollars is spent in radio. Based on these widely held assumptions, the market can be expected to be worth approximately $1.6 million.
3065 With the growth expected in retail sales as outlined in the FP Markets report, potential radio revenue will grow to just over $2 million.
3066 While we believe that the FP Markets report gives us a fairly realistic snapshot of the potential growth of the market, as a small broadcaster working in small markets we always lean on the conservative side, which is why we have forecasted just over $500,000 of sales in the first year and only $676,000 by year seven.
3067 We are confident with this conservative approach that our goals are more than realistic and outside influences such as the economy will not drastically change the business model.
3068 We also contracted the company Tubman Marketing to do a phone survey of St. Thomas in order to get a sense of what radio stations were the most popular and whether radio was utilized as an advertising vehicle for local businesses.
3069 78 per cent of businesses surveyed in St. Thomas do not use radio to advertise. 77 per cent of those surveyed have not been approached to advertise on radio in the prior six months of the survey.
3070 For us, we looked at this information as the basis of a tremendous opportunity. It appears that the businesses of St. Thomas have been ignored and we look forward to reintroducing them to the power of radio.
3071 We have created a sale system that provides predictable outcomes. All of our sales teams are trained in the system and it is set up in a manner that is truly there to assist the small business owners in small communities. These are operations that would not be able to afford the advertising rates of the larger broadcasters but are trying to survive in a highly competitive market, particularly as they are located less than half an hour from the city of London.
3072 In order for us to succeed with a new radio station in this market, we need to have a team and product that is locally driven and locally focused.
3073 To discuss that, what will make this new station successful in St. Thomas, is a Jeff Degraw.
3074 MR. DEGRAW: Good afternoon, Commissioners.
3075 The success of small‑market radio is based on one simple principle, deliver relevant local information every day.
3076 As Jon mentioned, I am the General Manager of our station in Strathroy, Ontario. Strathroy is about the same distance to London as St. Thomas is to London and both Strathroy and St. Thomas sit in the shadow of London, yet they both have their own identity and are not London.
3077 While London radio provides both of these markets a variety of music formats, what they don't provide is any local information. So in essence, to the residents of St. Thomas and Strathroy, London radio is merely a jukebox.
3078 Our success in Strathroy has been based on being more than a jukebox. We deliver lots of timely, local information and we are heavily involved in the community.
3079 As mentioned, we were just honoured with the award for Outstanding Business Excellence, the highest award from the Chamber of Commerce. Our experience and research has demonstrated to us that, like Strathroy, the residents of St. Thomas are ready for a station to call their own.
3080 94.1 FM will provide a variety‑based music format drawing from gold music and today's contemporary hits. 94.1 FM will succeed because we will do what radio does best, deliver relevant local news and information and interact with our community on a street level, something that is currently unavailable in St. Thomas.
3081 94.1 FM will attend and report on local events, attend local meetings of the Chamber of Commerce, municipal meetings, business improvement meetings, school board meetings and more.
3082 Our newscasts will be primarily driven by local news and information that impacts daily life in St. Thomas. Currently the residents of St. Thomas don't have access to this information in a timely basis. The daily newspaper has a small subscription‑base and appears to be trying to do all things for all people with a mix of national, international and some local information, but there is currently no local radio station or no local TV station. 94.1 FM will fill this void.
3083 Local news and information is the foundation of this proposed service. We will provide a full local news service with full‑time and part‑time news staff. Our schedule includes 67 newscasts each week with over 90 per cent of the information being local.
3084 In many small markets the local arena plays a major role in both recreation and social activities. The new 94.1 FM will provide local sports updates for both minor sports and the Junior B hockey club. Our plan is to also provide play‑by‑play coverage for the St. Thomas Stars Hockey Club.
3085 We will also make extensive use of existing and new technologies to interact with our local audience. This includes an interactive website that will provide updated local news every day, including pictures and audios from interviews, streaming audio from the station, e‑mail groups, community event listings, charity profiles, and high school sports play‑by‑play exclusively streamed online and hosted by high school students.
3086 When you turn on 94.1 FM there will be no question that it's a St. Thomas radio station interested only in St. Thomas. We intend to be part of the community on air, online and on the streets.
3087 Our grassroots approach will also apply to our Canadian content development initiatives which are above and beyond the basic requirements for a small‑market radio station.
3088 On a local level, we look forward to working with the St. Thomas Chamber of Commerce, the Elgin/St. Thomas Homebuilders Association, along with the North American Railway Hall of Fame to initiate and provide ongoing support for a new music festival for the city. We will be contributing over $22,000 towards this over seven years.
3089 On a national level, we will contribute $7,800 over the seven‑year licence to FACTOR.
3090 Although we understand that our on‑air dedication towards Canadian content is not recognized as part of the CCDs, we do believe it is an important part of our responsibilities as a Canadian broadcaster.
3091 We produce two programs per week that provide Canadian artists exposure to our audiences in all markets.
3092 "Circles" is a celebration of our aboriginal communities. The program features a cross‑section of interviews with members of various First Nation communities. MyFM Circles delves into such diverse topics as native contributions to the arts, science, cuisine, sports and the effects First Nation culture has on our communities as a whole. Interviews are interspersed with music performed by Canadian aboriginal artists.
3093 "Sessions" is a program about a developing Canadian artist and their music. These could be musicians from across the province or right in our own backyard. This unique program will be one full hour of interviews, storytelling and great local music which is broadcast throughout all of MBC's radio stations.
3094 Further, MBC will commit as a condition of licence to air 38 per cent Canadian content.
3095 MBC is looking forward to providing a new, dedicated local radio station for the city of St. Thomas.
3096 MR. POLE: Our entire team at my broadcasting Corporation is committed to building local small‑market radio stations that are involved and interactive with the communities we serve. Unfortunately for the citizens and residents of St. Thomas, in the mid‑'90s, as a result of corporate radio consolidation, they lost their radio station to the city of London. It's gone, it's a shame, but it's a reality.
3097 We are excited to have the opportunity to bring local radio back to the residents of St. Thomas.
3098 94.1 FM will be owned and operated by a company that specializes in markets like St. Thomas. MBC has the experience, the skills and the systems to succeed in a small‑market environment.
3099 94.1 FM will provide news diversity to St. Thomas by providing daily local news coverage that is currently unavailable in the market.
3100 94.1 FM news will keep St. Thomas residents connected to St. Thomas.
3101 The addition of 94.1 FM to St. Thomas will have little to no impact on the London radio market. The station will live and survive in St. Thomas. The programming will fill a void of focus on St. Thomas. Technically, the signal has been designed to serve only St. Thomas.
3102 The addition of 94.1 FM will result in $35,000 in CCD initiatives over the course of the licence.
3103 From the Mayor's office to the Chamber of Commerce to hundreds of letters of support from the community, it's clear that the residents of St. Thomas are ready for their own local radio station.
3104 Mr. Chair, Commissioners, the city of St. Thomas deserves its own radio station and we hope that you agree that our company is the right group of broadcasters to bring local radio back to the residents of St. Thomas and keep local radio in St. Thomas for many years to come.
3105 We truly appreciate the time to provide you the information on our plans and we would be pleased to field any questions that you may have.
3106 THE CHAIRPERSON: Thank you, Mr. Pole.
3107 Commissioner Elizabeth Duncan will ask the interrogatories.
3108 COMMISSIONER DUNCAN: Good afternoon to you. I have a number of questions on your submission.
3109 First of all, I wanted to talk about your ‑‑ just hang on one second. I have the wrong thing here.
3110 COMMISSIONER DUNCAN: Okay, now I'm ready to start.
3111 I want to talk first of all about music format.
3112 I note that in your brief at page 5 you referred to:
"...a unique blend of gold‑based adult contemporary music in St. Thomas as you do in your other markets". (As read)
3113 In your application page 21 you referred to:
"... a unique blend of country, gold oldies and adult contemporary music that airs on each MBC station." (As read)
3114 The Tubman report concludes:
"... a radio station providing adult contemporary music with a strong focus on local news and events would be well accepted by the listeners and advertisers." (As read)
3115 So we first of all just wanted to clarify exactly which format it is or blend of formats that you are proposing.
3116 MR. POLE: For sure.
3117 Unfortunately, there is no clear definition, unfortunately, since I believe it was about the late '80s that the term "middle‑of‑the‑road" seemed to disappear in radio programming, but that's truly what our radio stations provide.
3118 Adult contemporary is sometimes the best way to describe it, depending on the charts, but on our stations on any given day you are going to hear the top country artist, you are going to hear some of the greatest classics from the '60s and '70s and, as well, the majority of the programming is the core AC artists like Elton Jon and Rod Stewart, Shania Twain, Celine Dion.
3119 But those other categories do fall into the mix so middle‑of‑the‑road would be the best definition. Unfortunately I'm not sure which group of radio programmers decided to get rid of that, but that would be the best description.
3120 COMMISSIONER DUNCAN: Okay. Thank you.
3121 I'm just wondering, and you touched on it in your remarks here this afternoon, you go through your calculation and your projection that the potential for radio sales in 2012 would be $2 million, and yet, as you comment, you very conservatively projected your revenues as $505,000 in year one, $578,000 in year three, growing only to $676,000 in year seven.
3122 So I'm just wondering ‑‑ and you referred to them as being conservative here. I'm just wondering how conservative you consider they are.
3123 MR. POLE: Well, it's interesting, because unlike most of the applicants our company ‑‑ unfortunately the two bigger shareholders are sitting right here and how it works for us when we put a business plan together for a radio station, we have to then walk down the street to the local RBC branch and convince their business manager that it's also a good business model.
3124 And I'm sure if I were to take some of the applications that come before the CRTC that are talking about losing money up to year six and giving $1 million, unfortunately our RBC branch, they don't buy into that, they want to see something that they know that we can deliver on and that's going to be a good return on their investment as well.
3125 So when we look at them ‑‑ and we keep them very conservative ‑‑ we base that based on our success in other markets.
3126 To give you some clear examples, Renfrew for example, which our is our most mature market ‑‑ and I'm sure your staff will be able to find the exact numbers but I won't be off by much ‑‑ I believe we suggested that the revenue projections for Renfrew, that the market could sustain upwards of $700,000 by year seven and so far we feel that this year we will be really close. We will be under that number, but really close to it.
3127 So that gives us confidence that when we look at the FP Markets and what that projected revenue could be that it is attainable by a local broadcaster.
3128 And if you go through some of our other markets, for example Pembroke, we believed at the time of our application that that market was going to be valued at around $3.2 million and we believe if we add our competition and our revenues together by the end of this year we will be somewhere between $2.5 and $2.8 million. So again, that market is on track to realize those numbers as well.
3129 And Strathroy, which is probably the most relevant to this conversation because it's very similar to St. Thomas, we believe that that market would grow to be worth perhaps as much as $1.1 million and this year, just in year or two, we will realize close to half of that.
3130 So when we look at that we say okay, we can do that in Strathroy, we realize that probably in St. Thomas that's conservative. We can go to the bank with it and they can be happy, but also we can realize that there is more potential there, you know, in good economic times and in bad economic times. We are not sitting grasping at stars, we are making it very conservative and, probably more importantly, realistic.
3131 COMMISSIONER DUNCAN: I can appreciate your approach.
3132 Just you started out by referring to Renfrew, which is quite a bit smaller I believe than St. Thomas.
3133 MR. POLE: Absolutely.
3134 COMMISSIONER DUNCAN: Just as a multiple of that, obviously this is going to be ‑‑ you would expect to be far more than $676,000 in year seven.
3135 MR. POLE: Correct.
3136 With the exception that the ‑‑ Strathroy again would be a good example of this. The one thing that differentiates the two markets is Renfrew is really an island to itself. We don't have a lot of other broadcasters coming in going after retail advertising dollars, whereas in St. Thomas you know clearly some St. Thomas businesses are advertising on London radio today and we would imagine they would continue to do so.
3137 In Strathroy for example, if we took our top 10 or 15 clients ‑‑ Jeff could probably hone this in a little better ‑‑ they also advertise on our station, but they still continue to spend a large percentage of their dollars advertising in London. So that's the one factor that we don't really have control over so we wanted to be conservative not to overstep our bounds.
3138 COMMISSIONER DUNCAN: Okay.
3139 I see on CTV this morning on Canada AM they were talking about the truck plant shutting down in St. Thomas
3140 MR. POLE: Yes.
3141 COMMISSIONER DUNCAN: I think it hasn't shut down at this point, has it?
3142 MR. POLE: I believe it's going to shut down, if I recall, in March.
3143 Is that correct?
3144 COMMISSIONER DUNCAN: Yes, okay.
3145 MR. POLL: March.
3146 COMMISSIONER DUNCAN: But I gather then, taking into consideration your conservative approach to your projections, that it's not going to have any impact really on what you have given us as projections.
3147 MR. POLE: I still feel very confident that our projections, even with that negative news, are still very realistic.
3148 From what I understand about that specific issue, is approximately one‑third of the employees of that factory are in fact St. Thomas residents.
3149 COMMISSIONER DUNCAN: Yes.
3150 MR. POLE: The other two‑thirds are from London and surrounding areas.
3151 So we don't know the exact impact it will have directly on St. Thomas, it is obviously going to have a fairly significant one, but again in our projections we feel that we have left enough buffer there that we can come in and still help the local merchants, maybe help them turn it around, because they are probably going to need us now more than ever before.
3152 COMMISSIONER DUNCAN: All right.
3153 I was curious to notice in your application that the population and the number of households in your principal marketing area is less than the population and the number of households in your 3 mV contour and I was just wondering why that would be.
3154 I can tell you what section that is in your ‑‑ 6.2 in your application.
3155 So just dealing with the population, it's 36,000 in your principal marketing area and 41,000 in the 3 mV contour.
3156 Maybe those are just typed in reverse?
3157 MR. DICKSON: No. What we based this on was the principal marketing area is strictly St. Thomas, which is the population of 36,110. The 3 mV area does overlap St. Thomas a little bit so we are going to be selling directly to St. Thomas.
3158 COMMISSIONER DUNCAN: Oh, okay. So you are not ‑‑ okay. So you won't be trying to sell out in the surrounding areas? There's nothing out there?
3159 MR. DICKSON: Not initially. Over time we might get into Port Stanley or Aylmer if sales reps are interested in doing that.
3160 COMMISSIONER DUNCAN: Okay. All right. Thanks.
3161 You refer to yourself as a specialist in small‑market radio and you indicate in your written submission that you:
"... have maximized the use of technology and developed innovative systems and synergies in administration, traffic and some components programming." (As read)
3162 So I'm just wondering if you wanted to confirm that you expect a benefit from those same synergies in St. Thomas and if you could just elaborate how they have been incorporated in your financial projections.
3163 MR. POLE: For sure.
3164 First, I will answer your first question, which is that we would confirm that we would be expecting to realize some of those synergies.
3165 I will let Andrew speak more to some of the specific examples in the financials, but I can tell you that one of the strengths we offer on the sales side is that we have a web‑based program for all of our sales reps, which basically connects them all, so that we can share information.
3166 I will give you an example. In one of our markets, in Napanee, last Christmas, Star Choice was going to advertise some co‑op money to sell some satellite dishes. All of a sudden, the other reps in the other markets had that information, and they could then go to the Star Choice stores in their local markets to see if co‑op dollars were available.
3167 So while that doesn't really affect our financials, it does on the revenue side.
3168 Certainly, in our company, our model is to try to take all of the day‑to‑day boring things about radio out of our local markets. What I mean by that is, things like sending invoices and paying bills, traffic scheduling, SOCAN reports ‑‑ things that don't make a difference to the local community, we try to move them to our head office. What that does is, it allows our staff in our markets to spend their time serving the community ‑‑ going to Rotary Club meetings, helping out with the parade, donating time to the schools.
3169 That is really what we try to do. That is certainly another example of the synergies that we maintain.
3170 In regards to the actual financials, I will ask Andrew to speak to how we spread it across the group.
3171 MR. DICKSON: The key areas, the back end, as Jon is talking about, the financial end and the HR part, that is all found under "Administration" and "General", and that is spread across all of the MBC radio stations.
3172 COMMISSIONER DUNCAN: Your head office, again, was it in Renfrew?
3173 MR. POLE: It is in Renfrew.
3174 COMMISSIONER DUNCAN: And it will be staying there?
3175 I just noticed that this community is so much larger.
3176 MR. POLE: It will be, unless someone in this room can talk my wife into moving somewhere else, and I don't anticipate that being possible.
3177 COMMISSIONER DUNCAN: That is easily understood then.
‑‑‑ Laughter / Rires
3178 COMMISSIONER DUNCAN: I also noted that you were projecting a profit in Year 1, which seemed optimistic to me. I was wondering ‑‑ I guess because your budget forecasts so conservatively ‑‑ but I was wondering if that has been your experience with the launch of your other stations, that you did show a profit in the first year.
3179 MR. POLE: I am very happy to say that, I believe, in all but one market we showed a profit in the first year, and certainly we have identified in that one market why it didn't, and it was, more or less, that we launched two radio stations in one year and we didn't have our eye on the ball as well as we usually do.
3180 That is not something that is out of character for our group of stations, no.
3181 COMMISSIONER DUNCAN: Aside from the upcoming closure of the truck plant, the current economic downturn, are you expecting that to have any other impact on your projections, or, again, you have enough cushion in there that ‑‑
3182 MR. POLE: We feel confident that our projections are realistic.
3183 As you have pointed out, it is a larger market than some of our other markets, and we hit those numbers in smaller markets.
3184 So we kind of look at it and say, with the economic downturn ‑‑ you know, it is a bedroom community, so the retailers think differently.
3185 We believe that we have enough cushion there.
3186 I know that Andrew was in communication with the local chamber as recently as earlier this week, and I think they provided some information that he would like to share with you.
3187 MR. DICKSON: Certainly, the President and CEO of the Chambers of Commerce of St. Thomas is somewhat concerned, and fielding a lot of calls from different media groups, but he had a few minutes for me last Friday.
3188 He sent me an e‑mail with a quote here: Job losses in manufacturing in the City of St. Thomas are significant, but it must be understood that the economic impact is a burden shared across all of the communities of southwestern Ontario.
3189 So, too, the residents of the city benefit from being in close proximity to changes in neighbouring communities and the fact that over 2,750 new jobs have been created here and in the communities of London, Woodstock, Stratford, Tilsonburg and Aylmer this year alone.
3190 Several agencies and associations within St. Thomas are actively engaged in projects and activities to maintain and grow local employment, and to reinforce and promote the continuing growth of the city and adjacent areas.
3191 For example, the St. Thomas Economic Development Corporation is active in marketing the community internationally through a regional partnership called the Southwestern Ontario Marketing Alliance. Currently, SOMA has offices in both Japan and Germany, solely for the purpose of attracting new local investment.
3192 Specifically, regarding the recent announcement about the Sterling plant closure, the Chamber says that the full impact of the closure will take about $98 million in annual payroll out of the region, with about a third through St. Thomas, and, as Jon said, two‑thirds from London and areas.
3193 He concludes by saying: "We will climb back."
3194 So they are quite optimistic.
3195 Also, Jon mentioned, I think, that right now they are going to need us more than ever to help get a bi‑local campaign going, and we have seen it in the Town of Renfrew, actually. I lived it, owning a business in Renfrew back in the late eighties that lost 1,600 jobs, in a population of 8,000, within a year and a half period.
3196 I was also on the town council at that time, and the ongoing joke was: The last one to leave the town, please turn off the lights.
3197 It was not a fun time to go through, but the town rebounded. The Economic Development Office dug their heels in, the mayor dug his heels in, and things moved along quite nicely, and it's a very prosperous little community now.
3198 I think this is a little hiccup, what is going on in St. Thomas, and it will come back.
3199 MR. POLE: I also would like to add that, generally, any time we have an application before the Commission, we are eagerly counting down the days to when we will get a decision. This is our first time being involved in a competitive environment, so if you guys take a little longer, and then we still have two years, by the time we actually get on the air, the economy may be back to where it was a week or two ago.
3200 COMMISSIONER CUGINI: Is that an official request to delay our decision?
‑‑‑ Laughter / Rires
3201 MR. POLE: On behalf of broadcasters everywhere, I would say yes, because I don't usually get to speak for them.
3202 COMMISSIONER DUNCAN: With regards to the proposal that we heard a little while ago from DAWG FM, are you prepared to have that competition in the St. Thomas market?
3203 Does that concern you at all?
3204 MR. POLE: It doesn't concern me. If I am being honest, I would prefer not to have competition, because I am a capitalist.
3205 However, competition doesn't bother us. I mean, in Pembroke we compete with Astral Media, and they are good competitors. We compete on the streets.
3206 In Renfrew, there is a community radio station that aggressively promotes itself, and does a great job, and we compete fine with them.
3207 Certainly, in Strathroy ‑‑ every radio station in London has a rep that would like to come and sell advertising in Strathroy, and some of them are successful and some of them are not.
3208 Competition isn't something that concerns us. Certainly, I would think, with the niche programming that they are suggesting for DAWG FM, both could easily survive and exist.
3209 COMMISSIONER DUNCAN: Do you have arrangements in place for additional funding if the results aren't as you have forecasted?
3210 Is that a problem?
3211 MR. POLE: It's not a problem. I don't think it's anything official that we have, but it is certainly something that we could arrange a letter for, if required.
3212 COMMISSIONER DUNCAN: That's not necessary, I just wanted to know that it was available to you.
3213 I notice that you have only forecasted $145,000 for capital assets, which looks low, but I am presuming that it is consistent with what you have had to spend in your other systems, and it is based on your experience.
3214 MR. POLE: Yes. Actually, that might be high for us, although we expect that, with a larger market, we may upgrade some of the things that we traditionally do.
3215 Our stations are all basically designed almost identical. If you go to any one of our stations, the studios are identical.
3216 So we are very confident that that number is achievable.
3217 Probably, over the years in Renfrew, we put everything together with duct tape and Band‑Aids, but we are spending a lot more money these days it seems, so I feel confident that that number is very realistic, and that's usually what we spend to put one of our stations on the air.
3218 COMMISSIONER DUNCAN: When you are making this investment, are you looking at having to refurbish the equipment in three or five years?
3219 MR. POLE: That is not something that we look at, although, certainly, we have done upgrades in all of our facilities over the course of four or five years, and it is certainly something that we deal with as needed.
3220 We try to buy, you know, not the best, but close to the best type of equipment, and certainly technology has come a long way and it is a little more durable than it was in the past.
3221 MR. DICKSON: The key components of that are, simply, computer software ‑‑ computers and that sort of thing. After three years they just need to get rotated around.
3222 But, generally, the equipment that we purchase seems to be hanging on.
3223 COMMISSIONER DUNCAN: I just have a couple of questions on programming. I noticed in your application that you had forecast 23 hours per week of syndicated programming ‑‑ 20 hours for a program called "Delilah" and 3 hours for "Canadian Hot 20" ‑‑ but then, in your July 18th response, you refer to 16.5 hours of syndicated programming.
3224 I just wanted to confirm that it is the 16.5, and what programs or types of syndicated programming you are planning on airing.
3225 MR. POLE: We can confirm that it is 16.5 hours.
3226 In regards to syndicated programming, at the present time ‑‑ and this is always subject to change at any notice, because, unfortunately, we don't control it, but at the present time we run the "Delilah" program, which, for those who aren't aware, is basically love and relationships and getting by, working with each other, and nice adult contemporary music mixed in.
3227 We run that each night from 9 until midnight.
3228 Other than that, we don't run any other syndicated programs; however, we have allotted in there that we may look at running something, whether it be a Canadian Top 20 countdown or something like Ryan Seacrest. We don't have any plans for that, but it's probably always best to sort of build that buffer in.
3229 COMMISSIONER DUNCAN: So, nightly 9 to midnight, is that Monday to Friday that you are referring to?
3230 MR. POLE: That is actually Monday to Thursday, and then Sunday night we run "Delilah" from 7 to midnight.
3231 COMMISSIONER DUNCAN: And that's your 16.5 hours, I take it.
3232 Is that a program where you would get paid for airing it ‑‑
3233 MR. POLE: No ‑‑
3234 COMMISSIONER DUNCAN: ‑‑ or do you buy it?
3235 MR. POLE: ‑‑ we purchase that program.
3236 COMMISSIONER DUNCAN: You mentioned 9.5 hours of MBC‑produced automated programming, and I am just wondering if they are produced in St. Thomas and count as your local programming on that station, or if they count as local programming in your other stations.
3237 MR. POLE: It is a bit of both.
3238 One program is something we refer to as the Weekend House Party, and that program, at present ‑‑ which doesn't mean that it wouldn't be produced in St. Thomas ‑‑ is currently produced in our Pembroke studio. It is a mix of songs you would hear at weddings, and you would dance to, and conversation.
3239 Out of the hour, there are some bits that run in all of the stations, and then each station also gets exclusive content each hour that is exclusive to them.
3240 So it is sort of a mix of both. We kind of like to call it the best of both worlds, where the announcer might be talking about, let's say, "Survivor", and that clip may run in all of the markets, but in the next break they may talk about the Strathroy hockey team. In St. Thomas they may be talking about a blood donor clinic. In Pembroke they may be talking about the Lumber Kings.
3241 So they get local content, but it is actually produced out of market.
3242 COMMISSIONER DUNCAN: I noticed two numbers for your locally produced programming, 103 hours a week and 100 in another spot, and I am just wondering what it is.
3243 I think that your July 18th letter said 100.
3244 There were 76 hours, I think, and 24 voice‑tracked.
3245 MR. POLE: That's correct.
3246 MR. DICKSON: The correct number is 100 hours, yes.
3247 COMMISSIONER DUNCAN: So that wouldn't, then, include ‑‑ just for clarification, that wouldn't include those programs that are produced in another system.
3248 MR. POLE: It would not.
3249 COMMISSIONER DUNCAN: Okay. Good.
3250 That is the same, then ‑‑ because I had wondered when I read about your "Circles" program ‑‑
3251 MR. POLE: Yes.
3252 COMMISSIONER DUNCAN: You refer to it as "A Celebration of Aboriginal Communities".
3253 I just didn't know whether there were Aboriginal communities in each of your licensed areas or ‑‑
3254 MR. POLE: There are.
3255 How that program works ‑‑ and it works very similar to our "MyFM Sessions" ‑‑ is that it is produced by each station.
3256 However, for example, to use "Sessions", because it is a little easier to understand ‑‑ "Sessions", we take the best artists from the Ottawa Valley and we produce a show with one of them that runs each week. We are in small markets, so we can run out of artists very quickly.
3257 So, as we have grown the company, what we do is, one week it is produced in Renfrew and it is shared with everybody. That means that the artist is not only highlighted in Renfrew, but they run it in Pembroke, and they run it in Strathroy and Napanee, and hopefully in St. Thomas, as well. Then, the next week it is produced in Strathroy, and they feed it back and we share it with everybody. And "Circles" is the same.
3258 COMMISSIONER DUNCAN: Again, the week it is produced in that community, it counts as local programming in that community.
3259 MR. POLE: I would suppose that, by definition, it would, yes.
3260 COMMISSIONER DUNCAN: I just wanted to confirm that your 38 percent Canadian content is both over the broadcast week and, as well, between the broadcast period Monday to Friday, 6 a.m. to 6 p.m.
3261 MR. POLE: It is.