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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
Best Western Mariposa Inn
400 Memorial Avenue
January 26, 2009
Best Western Mariposa Inn
400, avenue Memorial
Le 26 janvier 2009
In order to meet the requirements of the Official Languages Act, transcripts of proceedings before the Commission will be bilingual as to their covers, the listing of the CRTC members and staff attending the public hearings, and the Table of Contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is taped and transcribed in either of the official languages, depending on the language spoken by the participant at the public hearing.
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:
Rita Cugini Chairperson / Présidente
Suzanne Lamarre Commissioner / Conseillère
Peter Menzies Commissioner / Conseiller
Candice Molnar Commissioner / Conseillère
Marc Patrone Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Lynda Roy Secretary / Secretaire
Francine Laurier-Guy Hearing Manager /
Gérante de l'audience
Eric Bowles Legal Counsel /
Best Western Mariposa Inn
400 Memorial Avenue
January 26, 2009
Best Western Mariposa Inn
400, avenue Memorial
Le 26 janvier 2009
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
|Nick Montague (OBCI)||7 / 34|
|Larche Communications Inc.||69 / 477|
|Bayshore Broadcasting Corporation||136 / 915|
|Newcap Inc.||192 / 1267|
|Debra McLaughlin (OBCI)||253 / 1637|
Orillia, Ontario / Orillia (Ontario)
‑‑‑ Upon commencing on Monday, January 26, 2009
at 0830 / L'audience débute le lundi 26 janvier
2009 à 0830
1 THE CHAIRPERSON: Good morning. It's such a well behaved crowd I'm looking forward to this hearing.
2 My name is Rita Cugini and I am the CRTC Regional Commissioner for Ontario and I will be presiding over this hearing.
3 Joining me on my panel are my colleagues Suzanne Lamarre, Regional Commissioner for Québec; Peter Menzies, Commissioner; Candice Molnar Regional Commissioner for Manitoba and Saskatchewan; and Marc Patrone, Commissioner.
4 The Commission team assisting us includes Francine Laurier‑Guy, Hearing Manager and Acting Manager of Radio Operations and policies; Eric Bowles, legal counsel; and Lynda Roy, Hearing Secretary. Please speak with Ms Roy if you have any questions with regard to hearing procedures.
5 À cette audience nous examinerons huit demandes de licence visant l'exploitation d'une nouvelle station de radio FM de langue anglaise à Orillia, et sept à Gravenhurst et Bracebridge.
6 At this hearing we will begin by examining eight applications to operate a new English‑language FM radio station in Orillia and seven applications for Gravenhurst and Bracebridge.
7 Certain applications are competing for the use of the same frequencies in both of these radio markets.
8 We will also hear an application to change the authorized contours of radio station CFBK‑FM Huntsville.
9 In light of the current downturn in the economy, as well as ongoing uncertainty regarding some of the major industries in southern Ontario, the Commission wishes to ensure that any application it may choose to license has the financial capacity to succeed. Therefore, the Commission requests that each applicant provide updated proof of financing for their proposals consistent with the Commission's policy regarding documentary evidence. A copy of this policy can be obtained from the public examination room. Applicants will have 10 days to provide the necessary documentation.
10 The Panel will then consider an application to renew the licence of radio station CJBQ Belleville.
11 In July 2005 the station's licence was renewed for a four‑year term instead of the usual seven years. This decision was based on the licensee's failure to comply with the Radio Regulations 1986 relating to the broadcast of Canadian content for Category 2 music.
12 It appears to the Commission that the licensee may have failed to comply with the same regulation during its current license term. It also appears that the licensee may have failed to comply with its condition of licence regarding its contributions to Canadian Talent Development for the 2006 broadcast year. The Panel wishes to inquire into these matters at this hearing.
13 Moreover, the licensee is expected to show cause as to why mandatory orders should not be issued requiring it to comply with the regulations of its condition of licence.
14 Finally, the Commission has received complaints regarding radio station CHSC St. Catharines. The complaints allege that the station has reoriented a significant portion of its programming to serve the Italian community of Toronto.
15 In addition, evaluations carried out by the Commission over the course of the licensee's current license term, which began in 2003, have revealed numerous instances of apparent noncompliance with the regulations.
16 The apparent breaches were related to the broadcast of Canadian content of Category 2 music, the broadcast of the third language programming, the filing of complete annual returns and the provision of logger tapes, program logs and music lists.
17 The licensee has been called to this hearing to show cause as to why a mandatory order should not be issued at this time.
18 The Panel wishes to discuss with the licensee the possible imposition of conditions of license regarding the nature of the local programming broadcast by CHSC. We will also have to clarify certain ownership questions.
19 I would now like to invite the Hearing Secretary to explain the procedures we will be following.
20 Ms Roy...?
21 THE SECRETARY: Thank you Madam Chair.
22 Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.
23 Please note that the Commission Members may ask questions in either English or French. You can obtain an interpretation receiver from the technician sitting t the back of the room.
24 Le service d'interprétation simultanée est disponible durant cette audience. Vous pouvez vous procurer un récepteur auprès du technicien à l'arrière de la salle. L'interprétation anglaise se trouve au canal 1 et l'interprétation française au canal 2.
25 The English translation is available on channel 1 and the French translation is available on channel 2.
26 When you are in the hearing room, we would ask that you please turn off your cell phones, beepers, and BlackBerrys as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators. We would appreciate your cooperation in this regard throughout the hearing.
27 We expect the entire hearing to take five days starting today until Friday. We will begin each morning this week at 8:30 a.m. and we will take an hour for lunch and a break in the morning and in the afternoon. We will let you know of any schedule changes as they may occur.
28 The Mariposa Centre will serve as the Examination Room where you can examine the public files of the applications being considered at this hearing. As indicated in the agenda, the telephone number of the examination room is 705‑329‑0855.
29 There is a verbatim transcript of the hearing being taken by the court reporter sitting on my right side. If you have any questions on how to obtain all or part of the transcript, please approach the court reporter during a break. Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.
30 THE SECRETARY: And now, Madam Chair, we will proceed with item 1 on the agenda which is an application by Nick Montague, on behalf of a corporation to be incorporated, for a licence to operate an English‑language FM commercial radio programming undertaking in Orillia.
31 The new station would operate on frequency 89.1 MHz (channel 206A) with an effective radiated power of 332 watts (non‑directional antenna with an effective height of antenna above average terrain of 13 metres).
32 Appearing for the applicant is Mr. Nick Montague.
33 Mr. Montague, please introduce your colleagues and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
34 MR. MONTAGUE: Thank you very much.
35 With me today is Christina Fisher and Mr. Barry White.
36 Good morning, Members of the CRTC, fellow applicants, fellow citizens of Orillia. Thank you for hearing our application for a broadcasting licence to service the City of Orillia.
37 The reason we are here today is to establish a new radio station for the City of Orillia to service this community. Twin Lakes Broadcastings made this application 18 months ago because we had a passion for this community and for this industry.
38 I personally have been involved in politics in this city, I have voiced concerns on behalf of industries in this city, I have been involved in service clubs in the past; other members of my team have set up businesses in this community and have worked many jobs here in this city.
39 I grew up listening to a radio station in this town called CFOR‑AM with announcers like Rusty Draper and a member of Mr. Larche's organization, Jack Latimer back then, who was a member of my old high school. These radio announcers put listeners and community first. They shaped me as a young man and I wanted to be like them, a radio person with a passion and a passion for this community.
40 It gave me a start, CFOR, and I want to continue what CFOR started, being the local radio station for Orillia playing what this community was shaped by, a combination of classic rock and country.
41 Orillia is made up of agricultural people and city people and they have been a great mix and have been able to cohabitate very nicely here.
42 Twin Lakes Broadcastings is locally owned by local owners here in the city. Offices for viewing our application were right here on Mississauga Street.
43 It has been said to know the community you have to be of the community. Only one applicant is truly from Orillia and that is the application of Twin Lakes Broadcastings with offices here in this city.
44 We ran a test market station to see if the market would hold a new radio station. Concerns were brought forward that the test market was run between 2006‑2007 on an LPAS licence. Visits were made from Industry Canada, technical adjustments were made according to the technical people. Mr. Therrien of Industry Canada made two visits.
45 When asked about the concerns that were put forward their answer was technically under the letter of the licence you are not doing anything wrong, but the CRTC will have the final say.
46 We exchanged e‑mails with Mr. Robert Cousineau and it was suggested that the test market station be taken off and, yes, this application be made at his suggestion. So here we sit.
47 We have designed to put things in order. Twin Lakes Broadcastings had and will continue to produce and air an independent artist show and include independent artist categories in regular rotation to show that Canadian content development is not just a monetary thing, not just a once a year thing, it's a year‑round activity.
48 The test station took the same mentality. We asked local artists to bring in their CDs. Using the Music Committee that we had we aired artists who would not get aired anywhere else on any other local station, bands like Doug Trucker Band, Urban Death Maze, just to name a few, got airtime, plus independent artists, like Kelly Brock who have won major awards and are not on the lists of the music services or consultants, were aired to prove that independent artists mattered to us and that we would like to promote them and continue being supportive of them. It's a mandate to be kept.
49 We are not doing a once a year contest thing where we say we have developed Canadian content or we have developed local artists through a contest. We do it 24/7, 365 days a year and it must be looked at for Canadian Content Development. It is also something that we want to keep constantly flowing throughout our station.
50 If approved, Twin Likes Broadcastings will put forth the promise of 40 per cent Canadian content on a 24‑hour basis to give Canadian and local artists the exposure that they so rightly deserve.
51 We would diversify our music by combining classic rock and country rock and it's something that has shaped this area. A lot of people in this area remember going to see the Good Brothers, David Wilcox, Max Webster, Teenage Head at the local high schools here and the services and record companies would have us play maybe one or two songs by each of these artists.
52 If you remember your roots as broadcasters, remember when Music Directors and Program Directors actually listened to an album and said yes to more than one cut? That is what we would like to do. We are not just going to look at music lists given to us by consultants and services. We would like to bring back what the listeners want, radio with a difference.
53 One of the greatest stories I ever remember is back in 1962 when Andrew Spence was with the BBC. Four nicely dressed young men came into his office and asked him to listen to a recording called "My Bonnie Lies Over the Ocean". He thought it's ridiculous, but hey, I will give it a listen to. He listened to it and said "Oh, it's quite good. It's worth a weeks' worth of airplay." Until he died The Beatles always thanked him for that one weeks' worth of airplay.
54 Classic rocks stations play few tracks from the '60s, none from the '50s. Twin Lakes Broadcastings has included music from the '60s and '50s in regular airplay because it's the music that shaped our sound, music by Carl Perkins, Roy Orbison, Jerry Lee Lewis, Johnny Cash, Chuck Berry and Elvis Presley are true classics and they are what shaped this community and what they listen to.
55 We would like to bring back AOR, album oriented, in this case radio, stations boasting 950 or even 1300 tracks on a playlist. Most iPods hold far more than that today. Twin Lakes Broadcastings would have a playlist larger than any other radio station, playing more tracks by bands like Max Webster, Toronto, bands that played high school circuit here from the '70s and '80s because this is what this community remembers.
56 It's what Orillians want. More diversification. Playing Sawyer Brown's "Betty's Bein' Bad" right next to Colin James "Dream of Satin". It's the new AOR. It's the new breed. To quote Hank Junior, we like old Whelan, but we love Van Halen. That's who we are.
57 Using blog formatting and knowing what our audience likes at what times and putting that into effect ‑‑ I have learned this from CFOR when they used to play country at night and light AC during the day ‑‑ local involvement in the creation of the music formats by saying yes to listener's requests.
58 Radio is the last personable media we have. I can't call a television station and tell them I like the John Wayne movie they played last night, can they do it again; but I can phone a radio station ‑‑ providing it's not syndicated or automated ‑‑ and say "Hey, I really like that Teenage Head song, can you play it?" And it can be done.
59 The use of the 89 second newsbreak at non major news hours is an idea that started with the test station and actually went back to something I remember from a former station that I worked at, because everything old is new again.
60 News does not stop at noon on weekends and most listeners have brought that concern to us over and over. Why does news stop at 6 o'clock at night and noon on the weekends. Part‑time newscasters, local school projects and clubs, co‑op programs looked into and supported by Twin Lakes Broadcastings with the local high schools would give the local community what they truly want, which is coverage of local news and sports and real weather updates.
61 There is too much syndication and not enough local involvement. Talking to councillors on the air Tuesdays after council meetings, talking to MPs and MPP's in Ottawa and at Queens Park to give the community the knowledge they need. These are things that this community has been asking for for years. Finally they have a chance to have it if this application is approved.
62 Local high school sports. I remember as a student at Park Street Collegiate Institute walking into the weight room and seeing pictures lining the weight room wall of all Ontario provincial wrestling champions and I took pride in that because I knew that was my school. I would like to do that, too.
63 Listening to sports it hurts me now that I don't even hear a local high school football score on any station in this area because I know we produce some world‑class athletes right here in Orillia.
64 Offering free PSA time to Green Haven, the women's shelter, organizing and executing four charitable events as a source of year‑round funding for not only Green Haven, the SPCA, the firefighters or any other charitable organization that would approach us. This is a community that is committed and needs involvement.
65 We talked to the people at Green Haven and ran PSAs on a test station. They were amazed that someone would actually take up their cause because no other radio station in the history of Green Haven has been involved with them.
66 Being involved with Soldiers' Memorial Hospital, returning the pet patrol to the on‑air series from the local SPCA again proves that this is local radio and this is what this community needs.
67 The tower locations and the patterns of broadcasters who have put forth their applications, if you look at these with a careful eye do you really see them servicing Orillia? I actually see companies that are looking to Orillia as a steppingstone to other areas, mostly 45 km to the south of here. Only one application has Orillia as its sole area of service, has Orillia as it's central core of its broadcasting pattern and it's looking for the power to service Orillia without protecting Kempenfelt Bay or Lake Rosseau.
68 That is the application of Twin Lakes Broadcastings.
69 I learned from a very, very respected man by the name of Jeff Walden(ph) at CKBB‑AM one thing: Look after your backyard and your backyard will look after you.
70 Local news first paid off when a listener called up saying they were looking for the local election results on November 4, 2006 and said "I tried all the stations in the area and got all the Barrie results, but not Orillia. Then I found your nice little show. The first thing on your news was the local election results and I thought finally a local radio station. Now, young man, I may not agree with all the music you play, but I heard Elvis and that was good enough for me so I'm staying right here."
71 That's what it's all about, having the listeners stay right here.
72 I have been in Orillia all my life, Ms Fisher, Mr. White, we have all been here virtually all of our lives.
73 I was a student at Park Street Collegiate, I attended Georgian College, I was an employee of CFOR, the only broadcasting firm to really service to Orillia, and have worked lived and, yes, I have even buried family here, as members of my team have. Twin Lakes Broadcastings is made up of Orillia, plain and simple.
74 Is a new station needed in Orillia? Yes it is. The new station should be one that will service the community as it really is, a slightly higher male demographic, and it's blue collar and full of people that mostly grew up here.
75 Yes, there are a lot of people who have moved here thanks to the casino and the OPP Headquarters, but most people in Orillia are Orillians from birth. Give them something that means something to them, weekly Orillia Terriers reports about their team, news about council and what affects them, the new rec centre, schools, water line issues, native issues presented by native broadcasters from the local high schools so a bursary can be set up by this company or help fund post secondary education in journalism and broadcasting by native students.
76 Be involved in the winter carnival like we were, involved in rotary fest, the Orillia fall fair, Leacock sidewalk sales and car shows, broadcast live from the streets of these events and be available for those that will support you, which is this community, and that is what's needed. It makes no difference where the owners are from, what really matters is that the owners of the new station are Orillians and have Orillia as their focal point.
77 Thank you.
78 Included in your package you will see some letters of support which never appeared on the web but that were posted from Green Haven, from high schools, from Members of Parliament. You can peruse those at your leisure if you would like.
79 Thank you very much for your time.
80 THE CHAIRPERSON: I'm used to microphones with a button that I have to turn on so that's what I was looking for.
81 Thank you Mr. Montague and your panel.
82 Just on the first housekeeping issue, with these interventions, you said that they were filed but they just didn't make it to our website. Okay?
83 MR. MONTAGUE: Yes, ma'am, they were. They were.
84 And I did get responses, I just did not see them posted on the website so I figured I would give you a copy.
85 THE CHAIRPERSON: Okay. That's great. Thank you very much.
86 I am going to start with asking the questions and then my colleagues may have supplementary questions.
87 The first line of questioning I have has to do with your choice of format and what kind of research went into choosing that format.
88 Because I did read your application, obviously, and I didn't find what other applicants submit as market research, usually done by a third party, usually through surveys of the citizens of the market that we are looking at, but I didn't see any evidence of that in your application.
89 MR. MONTAGUE: We combined the country/classic rock format with a format that was devised by Susquehanna Broadcasting in the United States. It has been run in numerous test markets in the United States. When we did independent surveys up here, I believe I mentioned in my supplementary brief that we did surveys at local malls and other areas of that nature. We found that that was very, very, very favourable. Plus, when we ran a test station we found that most people love the format.
90 THE CHAIRPERSON: Who conducted those independent surveys?
91 MR. MONTAGUE: Myself and a couple of other people that were working for me. Ms Fisher was one of them.
92 THE CHAIRPERSON: What was the sample size?
93 MR. MONTAGUE: Sample size is about maybe 100 to 200 people per time.
94 THE CHAIRPERSON: Did you record the demographics of that sample size?
95 MR. MONTAGUE: Yes, we did. Yes, we did. And your are looking at people who are anywhere between the ages of 20 and 60. We did not go underneath it. If people said they were 15 we didn't include them.
96 THE CHAIRPERSON: Do you have a breakout between male and female?
97 MR. MONTAGUE: It was approximately 65 to 35 male to female.
98 THE CHAIRPERSON: Okay.
99 How many questions did you ask?
100 MR. MONTAGUE: We asked 10.
101 THE CHAIRPERSON: One of the results of this independent survey that you did include in your application is that 63 per cent of respondents didn't believe Orillia had a local station.
102 MR. MONTAGUE: That's right.
103 THE CHAIRPERSON: What were some of the other findings of your survey?
104 MR. MONTAGUE: Some of the other findings of the survey was the fact that they found we had responses like "Our station moved", "Our station got bought out and was shut down."
105 One of the ones that I really thought was interesting was "The fact that with the amalgamation of stations in our territory it's a pity that we have to see all the Barrie people come up to Orillia for boat festivals."
106 THE CHAIRPERSON: You have gone into quite an extensive explanation as to the format and explaining it, but one thing still bothers me in that the Orillia market is served by CICX‑FM with a country format and CFJB. Now, it is from Barrie, but it comes into the market with a classic format. I chose these two because they ranked number one and two in this market.
107 MR. MONTAGUE: Yes. I understand. Yes.
108 THE CHAIRPERSON: So why choose a combination of the two formats that already are there?
109 MR. MONTAGUE: One of the reasons is because a lot ‑‑ one of the test questions that we put out was "Do you like the airplay of ..." ‑‑ and we did list both stations ‑‑ and the biggest comment that we got was (a) "If I can set my watch by the time that a song is played every day, obviously they don't know how to play what we want to hear."
110 The other one was "How come we can't hear...", and they would list a number of bands that would fall into our "format" because they are too country for the rap guys and too rap for the country guys.
111 We chose that combination of classic rock and country because the country that we are playing is hillbilly rock. It's more rocky than the regular pop. It's not Tim McGraw, it's not Carrie Underwood, it's more along the lines of the guys who are rock‑a‑billy artists and they don't get any airplay up here, and yet they are very, very ‑‑ they are very, very popular.
112 Guys like Steve Earle get one song played because that's all that they figure is deemed, whether it's on the country side or on the rock side. You know, there are bands out there ‑‑ you know, Ronnie Hawkins gets no play anywhere because he just fits in that crack.
113 We also noticed, too, that people who are rock 'n roll listeners, or rock listeners, said "How come it's only the same five songs? Why don't they play anything else by these guys?
114 THE CHAIRPERSON: But tell me what you're going to do, Mr. Montague?
115 MR. MONTAGUE: We are going to play what people are looking for. We are going to play the guys like AC/DC, but we are not going to play five songs by them; 25 AC/DC songs in our playlist, because people are tired of hearing "Back in Black" all the time, they would like to hear "Givin The Dog A Bone". People who like April Wine, but are tired of hearing just, you know, "You Could Have Been a Lady".
116 People who don't get to hear, you know, some of the stuff by bands like Toronto which were very, very popular in the late '70s, early '80s. People who listen to a '70s show get fed up by hearing just feel "Feel Like Makin Love" by Bad Company, they want to hear something from Elvis Costello when he was with the Attractions.
117 I walk through a Home Depot and I'm hearing far more wider variety of music from a classic rock exposé or a country rock exposé than I have ever heard on radio station that filters into Orillia.
118 And the other thing is, it's not Orillia. It's not Orillia any more. They don't talk about city council, they don't talk about the Orillia Terriers ‑‑ or the Couchiching Terriers as they are now called because they have to play out in Lake Couchiching. They don't talk about any of that.
119 I know exactly what's going on in Barrie. I know every single thing that's going on in Barrie, but I haven't heard about a water line break that's closed down West Street until it's way after the fact because it's not Orillia.
120 Orillia has lost its identity and that's the biggest problem.
121 THE CHAIRPERSON: So it will be through your spoken word programming that you will bring Orillia a news to the Orillia market?
122 MR. MONTAGUE: Yes. Spoken word programming is dominated by Orillia.
123 The old mandate ‑‑ I remember Evelyn Imaco(ph) years and years and years ago telling me this ‑‑ it used to be always "If it bleeds, it leads." But that's not true. If it's local it leads and that's what makes you a local radio station.
124 Leading with local news gives this town back its identity. Having somebody voice a concern saying "I'm being double charged for my water fees." "Really?" "Yeah." "Was it brought up at council?" "Yeah, it was." "Oh. Was it on the news?" "No. There wasn't really much about local council on the news. I think they said that they had a meeting last night. Didn't really cover anything though." "Oh." I don't know why.
125 THE CHAIRPERSON: I need a little bit more specifics in your commitment to spoken word programming.
126 I know in your application you said 21 hours and 12 minutes total and of that 3 hours and 1 minute will be pure news.
127 Is that still your plan?
128 MR. MONTAGUE: Yes, it is.
129 THE CHAIRPERSON: All right.
130 What are your staffing plans in order to provide this level of local spoken word programming?
131 MR. MONTAGUE: My staffing plans right now is a staff of three full‑time announcers, three part‑time announcers, a news director, two full‑time newspeople and two part‑time newspeople.
132 THE CHAIRPERSON: And that is going to be your full head count?
133 MR. MONTAGUE: Yes, it is.
134 THE CHAIRPERSON: Okay.
135 You are going to have to pay for all this.
136 MR. MONTAGUE: Yes, I am.
137 THE CHAIRPERSON: And when I went through your financial projections you are by far the lowest ‑‑
138 MR. MONTAGUE: Yes.
139 THE CHAIRPERSON: ‑‑ in terms of your programming expenses especially.
140 MR. MONTAGUE: Yes.
141 THE CHAIRPERSON: Only $10,000. And you are going to pay these 11 people with $10,000 and programming expenses?
142 MR. MONTAGUE: Oh, I'm sorry, I must have misconstrued, because programming expenses to me went for programming services and things of that nature. Administration would be the ‑‑
143 THE CHAIRPERSON: Okay. So you put the cost of your employees in administration?
144 MR. MONTAGUE: Yes, ma'am.
145 THE CHAIRPERSON: All right.
146 But that being said, your total operating expenses are also the lowest ‑‑
147 MR. MONTAGUE: Yes.
148 THE CHAIRPERSON: ‑‑ of all of the applicants.
149 MR. MONTAGUE: Yes.
150 THE CHAIRPERSON: How are you going to attract the kind of talent that you need in order ‑‑
151 MR. MONTAGUE: Attracting ‑‑
152 THE CHAIRPERSON: ‑‑ talent in terms of your on‑air announcers and your newspeople to provide the quality service that you claim Orillia lacks?
153 MR. MONTAGUE: One of the things that I have found is the fact that quality of broadcasters might not necessarily be a $40,000 a year announcer.
154 I mentioned Rusty Draper. Rusty Draper by far was not the most polished announcer ever heard. As a matter of fact, Rusty Draper, if most people in the radio industry heard him would go "Oh my, what is he doing on the air?", but he was local and he identified with the local people.
155 I have found, too, that there is a lot of talent right here in the city of Orillia and people are willing to come and not even "be part of a paid service" until finances escalate because they want to be part of their community radio station."
156 THE CHAIRPERSON: So do you anticipate volunteers?
157 MR. MONTAGUE: Some volunteers, co‑op programs through high schools. There is a massive, massive amount of talent in our high school theatre programs here.
158 I went through Park Street Collegiate and we a great theatre program. If it wasn't for my theatre teacher I probably never would have went into radio. There was radio club at Park Street ‑‑ as a matter of fact, I believe Mr. Latimer was part of it when he was a member of Park Street ‑‑ and it gave students a massive amount of knowledge.
159 And these part‑time people that you can get sometimes don't want to be paid, they want the chance to learn, they want the chance to develop, they want the chance to actually grow.
160 You know, college and university placement programs are utilized all over our province because there are people out there with talent, but they just don't have enough exposure through a community or a college radio station or a‑once‑a‑week air share or something like that. They need to be able to develop.
161 I was remiss in mentioning something, I'm sorry.
162 Mr. White may have to leave because he has a family obligation. So he may have to leave. I am remiss and I should have mentioned that at the beginning.
163 Again, paying an announcer $50,000 a year, you know, if you can get the same connection with your listener without paying $50,000 a year, why are you doing it?
164 MR. MONTAGUE: I worked for HBG Radio who is going to be appearing later. I was at a wonderful conference and their program people were doing an air check with one of their announcers and their programming people were not very kind to me. When I was asked my opinion I said, "You know, there was one comment that was made throughout this whole air check that's wonderful and that was the announcer said 'Are you having a cup of coffee with Bobby A.', and the listener said 'I have a cup of coffee with Bobby A. every morning."
165 If I could get that connection back, just like Rusty Draper did, I have done something that not CFJB, not CICX, not CICZ, not anybody has done, because they have been connected again back with their radio station.
166 THE CHAIRPERSON: Here is what you have to convince me of. You have a market like Orillia that has a fair share of out‑of‑market tuning, you have well‑heeled broadcasters in this market ‑‑ you have an incumbent who is a well‑heeled broadcaster, you have well‑heeled broadcasters that are coming into Orillia from outside the market ‑‑
167 MR. MONTAGUE: From outside the market.
168 THE CHAIRPERSON: ‑‑ we have other applicants who are saying "You know what, you can't look at Orillia in isolation, this is Barrie, it's Midland, it's the whole Simcoe County that is going to provide the advertising revenues for a station. So it's much bigger than just Orillia.
169 To me that would mean that if we license anything in this market we have to make sure that it is going to be well‑financed, as we said in the opening, that it is going to be professionally run, and it's going to have the kind of talent on the air that is going to allow it to survive. Because you are going to have to take listeners away from something.
170 MR. MONTAGUE: That is true, But even with not "high‑end talent" the test market station proved that it could hold its own for the small time it was on the air, because it did play local talent, it did play local artists, it did run local shows, it did provide local information, it did provide this city what it was actually asking for.
171 I just got an e‑mail on Friday about the Common Ownership Policy. Apparently Rock 95 may be in infringement of that, if approved. I would put it to the committee that possibly Mr. Larche would also be in infringement about if approved with his holdings in Midland and in Orillia. I'm not sure. I would have to research the policy further.
172 But again, if you walk away from a city just about 45 km south because there is 117,000 people there, the 40,000 people here that were serviced are not. The 40,000 people that are here in the core of Orillia, not counting what is out in Ardtrea, what is in Cumberland Beach, in Warminster, Hawkestone, they are not serviced.
173 There is no progression. When a high school comes to me after I say to them "We would love your support." They said, "Yeah, we tried to go to the local radio station and they say they don't get involved in co‑op programs." "Really?" "Yeah." "That's a good local radio station isn't it?" "Oh, yeah."
174 That's not a local radio station. That is not somebody who is looking after the interests of this community.
175 I always remember one time hearing Rusty Draper talk about having a father phone him on air saying "Hey, Rusty, my kid scored three goals Saturday morning at Housley Hockey with Wiseman." And he went "That is just fantastic", you know. "And what was the final score?" I'm not going to hear that with Ruth and Jerry or Jack and whoever or Tim and some girl that's their token laugh track, because they don't care about that.
176 But if a radio station opens up in this town it has to be about Orillia. I understand the greater good of being the central hub of Ontario, that every major highway goes through here, if you want to get to Toronto from North Bay you are coming through Orillia. If you want to get out west from Whitby you will probably cut through Orillia on Highway 12, but Orillia needs to be first and foremost for any radio station that comes in here.
177 When Rock 95 put their original proposals together it was the understanding that they would service Orillia and Barrie, and from my understanding the original proposals also said that they would be broadcasting from Orillia, which never happened.
178 THE CHAIRPERSON: Mr. Montague, remind me ‑‑ it may be in your application and I may have missed it ‑‑ are you planning to be live‑to‑air?
179 MR. MONTAGUE: Yes, we are.
180 THE CHAIRPERSON: For the entire broadcast week?
181 MR. MONTAGUE: We believe that we will probably ‑‑ if we do do any voicetracking it would be probably between 10:00 and 2:00 and possibly midnight until 5:00 ‑‑
182 THE CHAIRPERSON: Every day?
183 MR. MONTAGUE: ‑‑ or midnight until 6:00.
184 THE CHAIRPERSON: Every day?
185 MR. MONTAGUE: Yes.
186 THE CHAIRPERSON: Okay. Thank you.
187 MR. MONTAGUE: Saturday and Sundays would be live throughout the entire day and then during the summer months, through co‑op programs and through voluntary programs, we would like to be live 24 hours, because we find that this community between May 24th and September, Labour Day, needs to be live 24 hours.
188 THE CHAIRPERSON: By how much does the population swell in the summer?
189 MR. MONTAGUE: It would probably go from about maybe ‑‑ centrally 40,000 to about 80,000 to 100,000. This is a massive community of cottagers.
190 THE CHAIRPERSON: Okay.
191 MR. MONTAGUE: But the thing is, though, it's also a massive community of actual local 24/7 residents. We don't gear ourselves like some of the other people and become a cottage station and try and make the college station at year‑round station. We are a year‑round Orillia station. The cottagers come here, they know this radio station still relies on Orillia, it doesn't just rely on what are we going to rake in from Victoria Day until Labour Day. It relies on what it does 365 days of the year.
192 THE CHAIRPERSON: What do you mean what we rake in?
193 Are you talking about advertising revenues?
194 MR. MONTAGUE: Advertising revenues, yes.
195 THE CHAIRPERSON: Why not take advantage of the population swell?
196 MR. MONTAGUE: Well, you do, but the thing is, though, it's not going to ‑‑ we are not going to survive. We are going to survive on our local advertisers who support their local radio stations.
197 Their local radio station doesn't just become, like I say, a summer residents' radio station and then try and stretch it all year‑round. We program to the actual residents of the City of Orillia.
198 THE CHAIRPERSON: Because we started talking about revenue projections let's move on to a little bit more detail in that area and then I will have to come back to you on your CCD commitment. Don't let me forget.
199 MR. MONTAGUE: Mr. White will have to leave unfortunately, I'm sorry.
200 THE CHAIRPERSON: Okay. Thank you, Mr. White.
201 Here again your share projections seem to be quite high in comparison to the other applicants. In fact, you are forecasting a 12‑plus share of 5 per cent in year one, going to 10 per cent and then 25 per cent in year seven.
202 MR. MONTAGUE: Yes.
203 THE CHAIRPERSON: Once again, can you tell me what factors you considered in coming up with these share projections?
204 MR. MONTAGUE: We considered the share of the projections ‑‑ again, first off, we did it through retail and through our independent surveys that we did. We saw that most people were very, very in favour of a local radio station that would put Orillia first and we said that, you know, it would be a very, very good, good response that we could get these shares.
205 But the other thing that we found, too, is when we did run the test station the absolutely fantastic gravitating that came to us right away, people coming to us and saying "Yeah, I know you are only broadcasting, you know, within an 'X' number of block radius, but the thing is what you are doing is what this city wants. When do you get power? When do you get to go? When do you get to increase?"
206 And we did a wonderful survey at the Orillia Winter Fair ‑‑ 4,000 people went through. 4,000 people. Out of 4,000 that went through and saw a band with a simple window sticker, only 300 people did not know who we were.
207 THE CHAIRPERSON: Mr. Montague, listeners come from three places, the incumbent, out‑of‑market tuning, and we hear people say and then there are those who just simply don't listen to the radio so we are going to get them turned on, we are going to get them turned back on to radio.
208 Can you tell me in your projections how many listeners do you think you are going to be able to take away from the incumbent, from out‑of‑market tuning and how many do you think you are going to be able to attract in terms of the people who don't find what they want on the radio stations and are going to find it on yours?
209 MR. MONTAGUE: As far as actual listener numbers I would say we are probably look at maybe taking from the incumbent right now at least 2,500 listeners.
210 From the out‑of‑market stations, because they are dissatisfied, because they don't want to hear about Barrie all the time, because they really, really don't feel the need to say at 8:35 I'm going to hear the same song, I would suggest we are probably going to be taking about maybe 5,000 to 7,000 listeners.
211 And then for the people that really are looking for something that they don't find, probably another 1,500 to 2,000 listeners.
212 The biggest thing is, for the last almost 30 years since they have had the option of going country or rock they have had the option of going country to a limited state, rock for a very limited state. They haven't had the option of listening to what ‑‑ to anything that is different than the same playlist that has been given to them by BDS or whoever and going "This year our top 500 song is 'Stairway to Heaven. And this is 2009, which makes it an odd year, so this year's top 500 song will be "Hotel California. Next year is 2010, an even year, we will go back to "Stairway to Heaven."
213 People are tired of that. People want to hear "Hot Dog" by Led Zeppelin, the best country song ever created by a heavy metal band in history.
214 People want to hear something from a movie that triggered something, you know. One of my favourite movies is "Weird Science" because it was just a great '80s kid's flick. I don't hear anything by the band that did their theme song, even though if you played that theme song everybody would know that song.
215 Same thing with any Quentin Tarantino movie. People love Quentin Tarantino, they think Tarantino movies have the best soundtracks going. Never heard any of that stuff on here. "You guys are running that little station and I drove by and you were playing this really cool song from this movie. I remembered the movie, because I remembered the song."
216 Can't get that. Can't get that anywhere.
217 A very, very dear person ‑‑ he's a fellow broadcaster now ‑‑ ran a band, played my high school ‑‑ I helped set him up when I was in high school ‑‑ said to me one day, he said "You know, you're the only guy I ever heard play something from my first album." I said "Yeah, because I loved your first album. You guys played that at Park Street." He goes "Yeah. Nobody else will play that stuff. Even here where I work", he says, "they just said 'Well, you are not on the list." He said, "I thought it was pretty cool when I heard that."
218 THE CHAIRPERSON: Mr. Montague, we get it. We get it, but I really do need for you to drill down and give me specifics about your business plan.
219 Like I said at the very beginning of this hearing, these are very tough times and we need to license ‑‑ if we are going to license anyone we need to license the station that is going to be around by the time it's renewed.
220 MR. MONTAGUE: Exactly.
221 THE CHAIRPERSON: I really need to know very specifically the answers to the question.
222 What happens between your two and three for example, because your revenues grow by 366 per cent.
223 MR. MONTAGUE: Year two and three is when we look at and we seen where growth factors most in any radio station. If any radio station is going to falter, it will falter within the first two years. People like Citadel Broadcasting, people like Susquehanna Broadcasting, people like Alliance Broadcasting have all looked at the same thing and said if you are going to die it will be in the first two years. If you are going to have a growth spurt, it's going to be in year three. Year three is when you are going to make it. I said "Very good" and I said "Thank you very much."
224 THE CHAIRPERSON: But given ‑‑
225 MR. MONTAGUE: They said "Now, given the fact that you have already had a list ‑‑ on just six months of no power, you have had 12 clients on your air." I said "Yes." They said "That is an indication that you have already got the substantiability to win that market. You have already got what these people are dying for, and that is not 70 per cent of out‑of‑market advertising. You are looking at doing exactly what this community has asked for, 65 per cent local content."
226 Target Broadcast has been in contact with us, we would like to initiate them as a national buyer. We have seen resurgence in restaurants and establishments in this town that have gone away and come back and tripled. We have seen that people who were advertisers with local radio stations who have since left because they got dismayed by the fact that the local radio station was no longer local said "Yes, within year two, if you are still here within year two, yes, we would sign a contract."
227 That was one of the major things with research, was companies saying "If you are still here in two years we want to be with you, because then we know you are here." That is why there is such an increase.
228 THE CHAIRPERSON: And who are some of these advertisers?
229 MR. MONTAGUE: Country Produce was one of them. When I talked to Country Produced they said "Man, you used to write some of the best commercials I ever did, Nick, but I can't advertise with these guys."
230 I talked to certain car dealers and they are very, very dismayed in the fact that the local radio stations, number one car dealer advertiser, is in Barrie and is everywhere. Everything they do is part of Barrie. I said "Really?" They said "Yes. I don't sell cars to a lot of the Barrie guys, I sell cars to people in Washago, I sell cars to people here in town. There are too many car dealers and Barrie, why would I throw my money in there and get buried underneath a whole bunch of Barrie car dealers."
231 THE CHAIRPERSON: And you are confident that there are enough local advertisers, local businesses ‑‑
232 MR. MONTAGUE: Yes, I am.
233 THE CHAIRPERSON: ‑‑ in Orillia to generate almost $640,000 in advertising revenues in year three?
234 MR. MONTAGUE: Yes, I am.
235 THE CHAIRPERSON: As a consequence of your revenue projections, obviously, your PBIT in year three is 54 per cent, increases to 72 per cent by year four, and 87 per cent by year seven.
236 MR. MONTAGUE: Yes.
237 THE CHAIRPERSON: Which I'm sure makes you the envy of every broadcaster in this room.
238 MR. MONTAGUE: It very well could be.
239 THE CHAIRPERSON: Do you know of another market the size of Orillia where the radio broadcasters in those markets are enjoying this level of PBIT?
240 MR. MONTAGUE: I would not say in this particular position. I would not say here in Ontario, no, but I do know markets that have done this.
241 THE CHAIRPERSON: Earlier you said that you are not going to concentrate on breaking in ‑‑ or taking advantage of, is the term I would use ‑‑
242 MR. MONTAGUE: Yes.
243 THE CHAIRPERSON: ‑‑ of the population swell in the summer. However, in your application you said 35 per cent off your year two revenues would be generated from seasonal buyers.
244 MR. MONTAGUE: Yes, they would. But that is not necessarily summer.
245 THE CHAIRPERSON: Then when is it?
246 MR. MONTAGUE: We also have a very, very peak winter season here. So I have two peaks that I can take extreme advantage of.
247 THE CHAIRPERSON: So you will be taking advantage of the ‑‑
248 MR. MONTAGUE: I will be taking advantage of them, but I'm not going to take advantage of them in adjusting my programming.
249 THE CHAIRPERSON: Okay.
250 And who are these seasonal buyers?
251 MR. MONTAGUE: Seasonal buyers are marinas are very seasonal, and so are our ski resorts are very seasonal. We have a number of ‑‑ I wouldn't say resorts, but we have people who do resort business around here as well.
252 THE CHAIRPERSON: And you have already spoken to them and ‑‑
253 MR. MONTAGUE: Yes, I have.
254 THE CHAIRPERSON: ‑‑ there was enthusiastic ‑‑
255 MR. MONTAGUE: Very enthusiastic because, again, a lot of the people who are coming up to partake of their services are looking for more local than regional. They want to know what's going on not necessarily at the Barrie Molson Centre, but they would like to know what's going on with the Orillia Community Centre because they probably have ‑‑ because they have children that going and utilize ‑‑ or did utilized the programs that are there.
256 They want to know what is going on with the brand new recreational facility, when is it going to be up and running, when is it going to be functional, so they can continue their children's activities.
257 THE CHAIRPERSON: Okay.
258 I am going to ask you the CCD question.
259 Your total commitment is $58,000 over seven years.
260 MR. MONTAGUE: Yes, it is.
261 THE CHAIRPERSON: Right.
262 And I know there has been correspondence between you and the staff over the issue of the basic contribution and the over and above.
263 MR. MONTAGUE: Yes.
264 THE CHAIRPERSON: I just want confirmation from you that you do understand that ‑‑ I don't have the total here ‑‑ I apologize.
265 MR. MONTAGUE: It's Monday.
266 THE CHAIRPERSON: That $43,543 represents your total over and above ‑‑
267 MR. MONTAGUE: Yes.
268 THE CHAIRPERSON: ‑‑ commitment over the course of seven years.
269 MR. MONTAGUE: Yes.
270 THE CHAIRPERSON: And you will accept that?
271 MR. MONTAGUE: Yes, I will.
272 THE CHAIRPERSON: Thank you.
273 Another area, and it may have been as a result of your enthusiasm ‑‑ is the area of employment equity in your application form.
274 I notice here that you have checked off "Would the licensee be subject to the 1996 Employment Equity Act?" and you said yes. But that applies only to if you have over 100 employees.
275 MR. MONTAGUE: Yes. We would be well under that.
276 THE CHAIRPERSON: You would be well under that, now that we have done the head count.
277 So what you do need to supply to the Commission are your employment equity and cultural and diversity reflection plans.
278 MR. MONTAGUE: Yes.
279 THE CHAIRPERSON: And specifically it's section 9 of the application form.
280 MR. MONTAGUE: Yes.
281 THE CHAIRPERSON: Are you prepared to file that with us?
282 MR. MONTAGUE: Yes, I am.
283 THE CHAIRPERSON: And would you be prepared to file that with us by the end of the day today?
284 MR. MONTAGUE: I wouldn't be back at my office to do that by the end of the day, but by the end of, say, tomorrow.
285 THE CHAIRPERSON: I think that would be fine.
286 We will have legal counsel check that.
287 MR. MONTAGUE: Thank you.
288 THE CHAIRPERSON: Do my colleagues have any further questions?
289 Okay, Commissioner Patrone.
290 COMMISSIONER PATRONE: Thank you for your presentation today.
291 MR. MONTAGUE: Thank you very much for having us.
292 COMMISSIONER PATRONE: A couple of questions. I appreciate your enthusiasm for trying to introduce new artists into radio airplay. I was wondering if you had a formal or organized way of doing that, whether you would be actively soliciting new artists or approaching new artists in the area?
293 How would that work?
294 MR. MONTAGUE: One of the things we did was we actually went to one of the local music stores who was very instrumental in helping out a number of local artists and all we did was we said "Hey, if there is a local artist out there that has a CD we would love to hear it." And we were inundated. It was unbelievable the amount of artists who came forward and said "Man, we have a CD that nobody will listen to."
295 So we were openly, openly given CDs by local bands that we would listen to. And as a Music Committee, I mean like I'm going back to the old adage of instead of looking at the lists that get sent to you every week or whatever and looking in Spin Magazine or whatever, actually becoming music directors again and actually listening to an album.
296 Kelly Brock, who is an independent artist out of B.C. ‑‑ has no airplay here whatsoever ‑‑ sent us her CD. Her management team Tracey Kaye sent a positive intervention for us ‑‑ and the first thing she said is "By the way, we are pushing track three." We listened to it and we went "Okay, track three is really nice. We really like track 12 and we like track nine, too, so we are going to play all three."
297 Kelly phoned us in February, just after her baby was born, and said "I really would like to thank you guys (a) for allowing me to be on‑the‑air, allowing people in Ontario to be exposed to what we do out here."
298 And she had just won the John Lennon music writing competition, which is a very, very prestigious writing competition. She had just won the ‑‑ she was voted best female vocalist at the B.C. Music Awards as well.
299 And then said "Thank you very much for actually listening to the whole album and not just playing the track we told you to."
300 COMMISSIONER PATRONE: Okay.
301 MR. MONTAGUE: We found that because we asked local artists were far, far more willing to come forward, independent artists were far willing to come forward because we asked. That's all we did.
302 COMMISSIONER PATRONE: So you would be approaching them.
303 MR. MONTAGUE: Yes. That's all we did, we just asked.
304 COMMISSIONER PATRONE: The other question I would have for you is on the news front, Mr. Montague.
305 As I heard your staffing commitments I'm just trying to keep track of how many people and I very quickly realized that it would be one of the biggest radio newsrooms that I have ever encountered.
306 MR. MONTAGUE: It is a big radio newsroom, but it is also a learning experience for a lot of the people.
307 COMMISSIONER PATRONE: Right, but economics being what they are we are talking about it being a training ground for a young broadcaster.
308 Did you happen to touch base with any broadcasters? Did you try to organize anything with any ‑‑
309 MR. MONTAGUE: I have been in contact with Humber College.
310 Georgian College used to have a radio broadcast program in Barrie. They no longer have it because no radio station would be willing to allow them to learn through them.
311 So I have also been in contact with Georgian College staff and I asked them about reinserting their broadcasting curriculums and they said if they had a broadcast station that they could work out of, yes, they would be more than happy to try and reinstate that curriculum that was lost. It was in Barrie, but the Orillia campus would be more than happy to try and put something together.
312 Lakehead University has yet to respond, but I do know they do have a journalism course that they would like to utilize out of Lakehead. And again, that is one place where we could really, really gravitate and utilize a lot of manpower.
313 Just because a lot of its staff had said we have it doesn't mean a lot of it is paid.
314 COMMISSIONER PATRONE: Right.
315 MR. MONTAGUE: You can get a lot just by teaching, and get good quality. That is the biggest thing. The amount of quality that is out there that is, you know, just dying for a chance is amazing.
316 COMMISSIONER PATRONE: Thank you very much.
317 Thank you, Madam Chair.
318 THE CHAIRPERSON: Commissioner Menzies...?
319 COMMISSIONER MENZIES: I have a couple of questions for you
320 I just want to confirm, you operated an illegal radio station?
321 MR. MONTAGUE: I would not use that term, sir, only because, as Monsieur Therrien said to us, if you read the letters of the low power announce service, the letters of the law were adhered to, it is the interpretation that would be, as I say, open to discussion. So when I discussed it with Mr. Cousineau, Mr. Cousineau said to me, he said "Perhaps" ‑‑
322 COMMISSIONER MENZIES: Okay. I don't need the whole story, I just need your ‑‑
323 MR. MONTAGUE: Yes. So we are here at his recommendation.
324 COMMISSIONER MENZIES: You were broadcasting from around November 21, 2006 until ‑‑
325 MR. MONTAGUE: March 1, 2007.
326 COMMISSIONER MENZIES: That was after you had ‑‑ and you ceased broadcasting because...?
327 MR. MONTAGUE: Because of the discussions we had with Monsieur Cousineau, yes.
328 COMMISSIONER MENZIES: Okay.
329 Your independent research, you mentioned that you were involved in it.
330 MR. MONTAGUE: I was involved in some of it, yes.
331 COMMISSIONER MENZIES: I'm trying to understand how you being involved in it makes it independent research.
332 MR. MONTAGUE: Well, I was involved in asking some questions.
333 COMMISSIONER MENZIES: Yes. Well, if you are asking the questions it's ‑‑
334 MR. MONTAGUE: Yes.
335 COMMISSIONER MENZIES: Is that your interpretation of independent?
336 MR. MONTAGUE: It would be, yes.
337 It's not a service that was utilized, it was an independent.
338 COMMISSIONER MENZIES: I'm sorry?
339 MR. MONTAGUE: We did not utilize any service.
340 COMMISSIONER MENZIES: But you said it was an independent.
341 MR. MONTAGUE: Yes. We as an independent. We are not a service.
342 COMMISSIONER MENZIES: How can you be independent of yourselves?
343 MR. MONTAGUE: Well, again, I have ‑‑ we have people that we asked to go out and do the surveys. We are not a service, we are not a company, we are not Nielsen.
344 COMMISSIONER MENZIES: When you mentioned in terms of staffing, I'm having a little bit of difficulty understanding that there is all that quality out there that wants to work for free. I don't know a lot of quality that wants to work for free.
345 MR. MONTAGUE: There is a lot of quality that would like a chance to be exposed.
346 COMMISSIONER MENZIES: Well, potential ‑‑
347 MR. MONTAGUE: Yes.
348 COMMISSIONER MENZIES: ‑‑ is what you are referring to.
349 Okay. Thanks.
350 Why did you choose to apply for a commercial license given your very strong community orientation?
351 MR. MONTAGUE: Everybody needs to make a living, sir.
352 COMMISSIONER MENZIES: Well, not all of your staff do apparently.
‑‑‑ Laughter / Rires
353 MR. MONTAGUE: No, but I don't expect to see a lot of my staff in two years. I expect them to go beyond me. I really do. If I don't expect my staff to exceed what I can teach them or what I can do, then there is really no ‑‑
354 COMMISSIONER MENZIES: That kind of gets to my point.
355 Why wouldn't you create a business proposition in terms of a community or campus radio station which provided you with employment? These things are possible ‑‑
356 MR. MONTAGUE: These things are possible, but this ‑‑
357 COMMISSIONER MENZIES: ‑‑ and that you act as a training facility.
358 MR. MONTAGUE: Also, this city is growing and we would probably, I would say within year three to five, either be asking for more power as the city grows or branching off.
359 COMMISSIONER MENZIES: Well, if you ask for more power then you are broadcasting to Barrie; right?
360 MR. MONTAGUE: If the city grows, I mean, you have to cover the city properly so everybody can hear you properly. If our city grows we might ask for 500 watts.
361 I'm not saying I want to go into Barrie. I'm definitely not saying that at all, but I may want to branch out into television.
362 In 1951 the CRTC offered a television licence to Orillia; it declined and it went 45 km south. Now, due to its new owners, it's gone even further south ‑‑
363 COMMISSIONER MENZIES: All right. Okay.
364 MR. MONTAGUE: ‑‑ but the expansion is there.
365 COMMISSIONER MENZIES: Honestly, I don't need the whole history of it, but I understand what you're saying.
366 Thank you very much.
367 Those are my questions.
368 THE CHAIRPERSON: Commissioner Lamarre...?
369 COMMISSIONER LAMARRE: Merci.
370 I have questions that I'm sorry to announce are mostly technical.
371 MR. MONTAGUE: That's fine.
372 COMMISSIONER LAMARRE: So if your consultant is around you may want to bring him in or you may want to take the questions yourself.
373 You have touched a bit with Commissioner Menzies about the station that you operated from November 21, 2006 to March 7, 2007. You said it was a low power station.
374 MR. MONTAGUE: A low‑power announcement, LPAS, yes.
375 COMMISSIONER LAMARRE: So how much power was it?
376 MR. MONTAGUE: One watt.
377 COMMISSIONER LAMARRE: One watt.
378 Now there is something that puzzles me about your choice of transmitter site for your station and I will tell you where I'm coming from so it's easier for you.
379 There are currently in and around Orillia existing broadcasting or radio communication towers, yet you are proposing to go on the rooftop of an existing building and build on that building, from what I understand, a short tower and install the antenna.
380 Now, Industry Canada in January 2008 published their new National Antenna Tower Policy and this policy very much aims at encouraging site‑sharing agreements among broadcasters and radio communication operators and they are doing it in such a way, when you read the policy, that you are licensed much easier when you do go to an existing tower and your life is much more difficult when you choose to build a new tower.
381 So what was the rationale for you to choose to build a new tower on an existing building?
382 MR. MONTAGUE: At the time of the application it was before that policy had been encouraged. Our application was actually made in 2007.
383 COMMISSIONER LAMARRE: Okay.
384 MR. MONTAGUE: So now, in 2007 as well Mr. Bruce Duncan of the City of Orillia who is involved right now in constructing a brand new tower site on Benner Street, they approached us then, before anybody else, about having space on that tower and it is a viable option for us to look at that tower which the City of Orillia had offered to us before anybody else.
385 We had made our application, though, using the existing coordinates and the existing facilities that we had to make our application. We would have to ‑‑ if the site was not acceptable, we would have to reapply for a different site. But at the time of the application, which was before the Industry Canada policy was issued, that was the site that was available. That was the most economically feasible as well for us.
386 COMMISSIONER LAMARRE: And if I understand correctly you are not project manager of that tower being built. It's a different party that is experienced in tower building ‑‑
387 MR. MONTAGUE: Yes. Yes.
388 COMMISSIONER LAMARRE: ‑‑ that has approached you and you know that this was coming and they are the ones taking care of that?
389 MR. MONTAGUE: I have not been notified of that, of any of that. So I was not privy to the fact that that tower site might not be acceptable.
390 COMMISSIONER LAMARRE: Okay. So as far as you know so far that tower site is acceptable?
391 MR. MONTAGUE: According to Industry Canada, yes, it is.
392 COMMISSIONER LAMARRE: Okay.
393 The other thing, in reply to a Commission question where we asked if frequency other than 89.1 megahertz would be suitable for your application you said no. You said no other frequency is allocated or available for this area, plus failing to be approved for this frequency will mean termination of the new undertaking.
394 Do you still maintain that position today?
395 MR. MONTAGUE: As far as I know, I know of no other frequency that has been allocated to Orillia.
396 Now, my friends from Information Radio have brought forth a different frequency. I have not researched it. I really don't know what the infringements would be contour‑wise, I don't know what the ramifications would be to go on that different frequency.
397 If Industry Canada said that this would be an acceptable frequency then it is an acceptable option, but I was not notified of it because, again, it was not one that was allocated to Orillia.
398 COMMISSIONER LAMARRE: Okay. Okay.
399 Speaking of infringement, because you brought it up, referring to your contour map which is in your ‑‑
400 MR. MONTAGUE: Yes.
401 COMMISSIONER LAMARRE: I'm sure you have noted or your consultant may know to ensure that you know that there is a small area within the contour that will receive interference from the existing stations. You are aware that was in that area ‑‑
402 MR. MONTAGUE: Yes.
403 COMMISSIONER LAMARRE: ‑‑ you will not get ‑‑
404 MR. MONTAGUE: Clear signals.
405 COMMISSIONER LAMARRE: ‑‑ clear signals.
406 MR. MONTAGUE: Yes. I was aware of that. We had been a notification with the CBC, we have been in notification with Mr. Jackson, and we had also had notification with another multicultural station as well about that. CBC came back to us and said as far as we can see we don't really see a foreseeable problem because of the power ratio and everything like that and the density of your contours.
407 COMMISSIONER LAMARRE: But you will be receiving interference though.
408 MR. MONTAGUE: We understood that.
409 COMMISSIONER LAMARRE: You understand that.
410 MR. MONTAGUE: Yes.
411 COMMISSIONER LAMARRE: And you accept the situation as it is?
412 MR. MONTAGUE: As it is. There's not much we can really do about it, it's the nature of the beast.
413 COMMISSIONER LAMARRE: To finish off, when you were saying that, you know, if the city expands you may be looking at higher power. Did I hear you say that what you would be contemplating would be to go from 200 to 500 W?
414 MR. MONTAGUE: Well, we have applied for 300. If we did expand possibly to 500.
415 We cannot see the need for more than 1000 W. We just cannot see it, because again, for more than 1000 W ‑‑ even at 1000 W, at least with where our towers are situated, even if we did ‑‑ with the approval of the Commission and Industry Canada, even if we went to the Benner Street tower 1000 W, as Madam Chair suggested or my friend suggested, you know, you are broadcasting into Barrie then and that's way beyond what our scope is. Our scope is the City of Orillia.
416 So at 500 W I mean we would be definitely well on the edge of going the distance that we really, really need to go.
417 COMMISSIONER LAMARRE: Thank you.
418 Those are my questions.
419 THE CHAIRPERSON: Commissioner Molnar?
420 COMMISSIONER MOLNAR: Thank you.
421 I have just one question for you.
422 Commissioner Cugini asked you about your financials and your projected PBIT. Year three it's 54 per cent, it's rising to 87 per cent by year seven. I have heard you here talk about your strategy for programming your station using co‑op, using volunteer high school students, and so on, and then returning what one might view to be excess profits to you as the owner.
423 I would like to understand better your strategy coming in here, your thought process. One could look at this and say did you give thought to reinvesting any of these profits that you are generating from the Orillia market back into Orillia through programming, through sponsorships or promotion? Did you give thought to returning it to the broadcasting system through CCD or otherwise.
424 Explain to me your rationale for the financials that you provided here that would return those back, you know, basically not to the system but to you as the owner.
425 MR. MONTAGUE: To me as the owner.
426 I don't really look to see myself setting myself up as, you know, a broadcasting Moses Znaimer or anything like that, believe me.
427 As you have heard in our presentation, we look to put back through bursaries through ‑‑ for native broadcasting development in journalism and broadcasting. We look to put back to the high schools as well through assistance through co‑op programs as well. We also look to charities that we have made personal company commitments to such as Green Haven, the women's shelter, such as the SPCA, the firefighters.
428 We are looking at myself, if I draw what most of you people here would consider a very meagre salary just to support myself and my four wonderful children, that is all I look for.
429 This company is looking to substantiate, further down the road expand for the City of Orillia in other endeavours, whether it be television, whether it be new age communication, internet broadcasting.
430 We streamed when we were on air, we found people in Florida who are snowbirds who were extremely happy because they could listen, people in England e‑mailed because they had family and friends in Orillia.
431 I think any revenues returning to the station are not personal revenues for me or personal revenues for shareholders. I think the revenues go back into (a) maintaining equipment, maintaining employees, maintaining stability and then returning back into community. That is so what willingly ‑‑
432 COMMISSIONER MOLNAR: Excuse me.
433 Can I just confirm that what you are returning back to employees, returning back in equipment and so on, are those costs contained within your financial forecast?
434 MR. MONTAGUE: I believe they are.
435 COMMISSIONER MOLNAR: They are?
436 MR. MONTAGUE: Yes. There is profit‑sharing for our employees, profit‑sharing program that we would like to utilize because you always ‑‑ if you're an owner you always perform that much better if you are an owner. So profit‑sharing is one that really was one means that most of us thought through very, very highly.
437 Promotions within the company as well, you know, certain standards, performance bonuses, things of that nature would be also utilized.
438 Our promotions expenditure, we look at creating four major events in the city for charitable organizations.
439 COMMISSIONER MOLNAR: And do you have the cost of those promotions and events contained within your forecast today?
440 MR. MONTAGUE: I would have to re‑look at them, I really would have to. I believe they are, but I would have to re‑look at them.
441 COMMISSIONER MOLNAR: Those are my questions.
442 THE CHAIRPERSON: Thank you.
443 Just a couple of questions that I had forgotten to ask you earlier, Mr. Montague. This is a question I will be asking all applicants.
444 Whenever we license anyone in any market we always give them two years from the date of the decision in which to launch. Sometimes people come to us and ask for a years' extension and we usually give that as well. So a licensee could have up to three years to launch.
445 I would like to know whether if you are licensed in what timeframe do you plan to launch this station?
446 MR. MONTAGUE: If the Commission were to approve this licence, with everything that we have put in place already we would like to launch within six months.
447 THE CHAIRPERSON: Okay. Thank you.
448 And you did hear me say in my opening remarks that we will be asking all applicants for updated proof of financing.
449 Will you file that within 10 days?
450 MR. MONTAGUE: Within 10 days.
451 THE CHAIRPERSON: Thank you.
452 Those are all my questions.
453 Legal counsel...?
454 MR. BOWLES: Yes. I only have a few quick questions.
455 I noticed that in your presentation this morning you raised as a commitment a 40 per cent level of Canadian content.
456 Can you assist us in pointing out where in your application that 40 per cent is reflected?
457 MR. MONTAGUE: I believe we actually increased it in this presentation. We actually did, only because we noticed that with independent artists coming forward and things of that nature it would increase our Canadian content to 40 per cent.
458 If it please, I'm sorry, Ms Fisher has a rather ill tummy and has asked to be excused.
459 THE CHAIRPERSON: They are dropping like flies, Mr. Montague.
460 MS FISHER: I'm so sorry.
461 THE CHAIRPERSON: Go ahead. Go ahead.
462 MR. MONTAGUE: My family trade is butchering.
463 THE CHAIRPERSON: Mr. Montague, you do realize that your commitment will have to stand at 35 per cent Cancon. You can't change your application at this stage.
464 MR. MONTAGUE: No. I understand that, yes.
465 THE CHAIRPERSON: Thank you.
466 MR. BOWLES: Just one last quick question, if the Commission were to grant your application, would you be willing to abide as a condition of licence to the revised Equitable Portrayal Code?
467 MR. MONTAGUE: Yes.
468 MR. BOWLES: That will be all.
469 THE CHAIRPERSON: Well, thank you very much, Mr. Montague, for your presentation this morning.
470 MR. MONTAGUE: Thank you very much for hearing us.
471 THE CHAIRPERSON: We will be taking a 15‑minute break.
‑‑‑ Upon recessing at 0950 / Suspension à 0950
‑‑‑ Upon resuming at 1010 / Reprise à 1010
472 THE CHAIRPERSON: Order, please.
473 Madam Secretary...?
474 THE SECRETARY: We will now proceed with item 2 which is an application by Larche Communications Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Orillia. The new station would operate on frequency 89.1 MHz (channel 206B1) with an average effective radiated power of 1,000 watts (maximum effective radiated power of 3,300 watts with an effective height of antenna above average terrain of 147 metres).
475 Appearing for the applicant is Mr. Paul Larche.
476 Please introduce your colleagues and you will then have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
477 MR. LARCHE: Thank you very much.
478 Good morning, Madam Chair, Commissioners and staff. My name is Paul Larche and I am the President of Larche Communications Incorporated, or LCI for short.
479 It is a privilege to present before you today an application for a new FM radio station to serve Orillia.
480 Please allow me to introduce my panel.
481 On my right is our Vice‑President Mora Austin. She is General Manager of our Orillia station CICX‑FM and our Midland operation CICZ‑FM. Mora has worked with CICZ‑FM for 20 years.
482 On Mora's right is Linda Young. Linda Young is General Sales Manager for CICX‑FM and she is an Orillia native and has worked with us for 10 years.
483 On my right is the famous Jack Latimer who is the morning show host of CICX and the Program Director. Jack has worked at CICX for over 15 years and through several ownership changes and different capacities as well, including announcer, program director and station manager.
484 Sitting on Jack's left is Marilyn Wideman who is our company's Comptroller and Director of HR.
485 Just before we get started, just for clarification, Orillia is CICX, as in "X" marks the spot; and Midland is CICZ. I know it can sometimes get a little confusing, so "X" equals Orillia "Z" equals Midland and we will drop the FM on our call letters during this presentation.
486 Madam Chair and Commissioners, we welcome this opportunity to present before you today an application for a new FM radio station to service Orillia. Welcome to our market.
487 As the owner of Orillia's current incumbent station, CICX, we certainly have the most intimate knowledge of the market and the most at stake. Our purchase of CICX closed one year ago next week. If someone would have told me that I would be in front of the CRTC in a competitive hearing for Orillia within 12 months, well, you could have knocked me over with a feather; yet here we are.
488 Purchasing Orillia was a lifelong goal of mine. I was the General Manager of Telemedia in 1995 of CICX along with CICX Midland. I know the market intimately. It's a terrific community.
489 When Telemedia decided to sell these stations I would have loved to have purchased both, but I just didn't have the money. Because of the unique circumstances of radio in Simcoe County I believe the only way both stations could prosper in the long run was if they could synergize.
490 And make no mistake, the radio market in Orillia is unique. It has one incumbent station, but this city of 43,000 is effectively serviced by six radio stations. The other stations in the county actively promote their stations, provide coverage of local news, participating community events and sell advertising. They have ingrained themselves over the years and will not easily be dislodged.
491 Indeed, our stations do the same in Midland and Barrie. You can't survive otherwise. These markets are not silos.
492 And even if you add up all the tuning for the six radio stations, 35 per cent of the market tuning goes to primarily Toronto stations. Agencies and national advertisers will often buy the market on Barrie and Toronto spill.
493 Retail sales are higher than average because one of the reasons is this cottage country. The population swells to a million in the summer, but it's been difficult for all stations to monetize this fact because we are not rated in the summer.
494 Some will claim that as a result of high retail sales this market should be producing an additional million dollars in radio advertising. The reality is that most of those dollars just aren't there.
495 In the spirit of full disclosure, when the call was issued for Orillia we debated a lot internally about applying or, frankly, just intervening against the other applicants on the basis that the market can't sustain a new player at this time. Based on our financial knowledge and history of the market, we could not connect the dots to see how the market met any type of entry criteria, yet by issuing the call the Commission obviously saw the market differently and I know it's extremely rate that the CRTC issues a call and doesn't award at least one licence.
496 So we made the decision to apply. Indeed, approval of this application would put a financial strain on our company at this point in our evolution, but the strain would be manageable compared to the alternative of the Commission licensing a new entrant.
497 So we intend to put before you today a plan for an outstanding new radio station to serve Orillia. We know it must stand on its own merits, but we also intend to return during Phase II to intervene against all applicants, not on the quality or the substance of their applications, but on the market's ability to sustain a new entrant, particularly in this unprecedented economic downturn.
498 We will keep our arguments concrete and based strictly on fact. We will not hypothesize or deal in abstract terms or ideas. There is just too much at stake for us.
499 So let's start with some background on our company and what we have been up to since we last appeared in front of you.
501 MS AUSTIN: Thanks, Paul.
502 Good morning, Commissioners.
503 Madam Chair and Commissioners, I have been working with Paul at CICZ in Midland since he purchased the station in 1996. The station was in pretty rough shape back then, primarily because of the competitive state of radio in Simcoe County and the limited signal that the station had; it barely covered Midland. That's why we applied for a power increase at the same time as the purchase. One was conditional on the other.
504 In approving our application, the CRTC stated in its decision that the power increase"
"... will enable CICZ to complete with regional Barrie stations which currently receive significant tuning in the Midland market." (As read)
505 Over the next several years CICZ, under the KICX brand, became a radio success story, improving its level of quality, service and revenues. It has also won critical acclaim by its peers. This past September KICX was once again chosen as country station of the year by the Canadian Country Music Association. This is the sixth time in the past seven years that we have been honoured with this award.
506 CICZ has won 18 industry awards in the past 12 years, something I and the staff are very proud of.
507 The purchase of CICX was very strategic to us. As a stand‑alone operator in Midland, we were at a disadvantage against the two other combos in the region. And, frankly, this was the same situation that Rogers faced when they owned CICX. That's one of the reasons we entered into a local sales agreement with Rogers, to assist both operations in positioning themselves against the two established combos.
508 Rogers purchased CICX in 2002 and rebranded the station as "Lite FM", a soft AC format. In 2004, they changed the format again to their "JACK FM" brand. Over this time, CICX was often rated number one with listeners 12‑plus and with the lucrative advertising demo of 25 to 54, yet it could not monetize these numbers. In fact, radio advertising revenues for Orillia essentially remained flat between 2002 and 2007, despite a 22 per cent increase in retail sales.
509 Why the disconnect? There are several reasons, some of which Paul had touched upon earlier. One main reason was that while CICX offered a strong Orillia audience, it did not offer a strong Simcoe County audience. This put the station at an extreme disadvantage against the other five stations actively selling radio advertising. This was essentially the same unfortunate position CICZ was in 12 years ago.
510 As the facts of our client research bear out, 89 per cent of Orillia advertisers want to reach a strong Orillia audience, but also want to tap into the over 200,000 residents that live within a 25 minute drive. We knew and understood this and, frankly, we learned it the hard way.
511 So within the first few months of owning CICX we undertook some bold moves. They were strategic and expensive, but we knew they were vital for our long‑term success.
512 We first conducted extensive market research. The research determined that Orillia was a country music town. It also determined that Midland was more of a Classic Rock/Classic Hits market and that this format would also appeal to the region.
513 So in March we "transferred" the successful KICX brand from 104.1 in Midland to 105.9 Orillia. As such, we could now offer Orillia residents a local country station to call their own and Orillia advertisers with a strong local audience, as well as a strong regional audience. Our intent was to break the station out of stagnant radio revenues.
514 I'm happy to report that CICX was the most listened to station in Orillia in the most recent fall ratings, despite all the changes that we made.
515 At the same time, LCI launched a new Classic Rock/Classic Hits format on CICZ in Midland that we call "The DOCK ‑ The Greatest Rock & Roll of All Time". We believed that in the long term, these changes would position our company for success, but we also knew it was one step backwards to get two steps forward.
516 And it truly was one step backward, especially on our revenues. Many advertisers wanted to wait and see how the changes affected our ratings. Linda can tell you more about that.
518 MS YOUNG: Good morning, Commissioners.
519 I can talk loud, but not that loud.
520 Before even relaunching the stations we took a financial hit on CICX. Rogers was spending a significant amount of intercompany advertising dollars with us, purchasing airtime for cellular, cable, some of our other Rogers products. We lost that money right away.
521 Rogers was also generating a significant amount revenue with their telesales run department out of Sudbury. Although we have tried to recapture that revenue, we just don't have the resources to pull that off.
522 Moving the KICX brand format from Midland to Orillia allowed us to "transfer" many of the KICX "regional" advertisers to CICX. We essentially moved half million dollars from CICZ to CICX, but unfortunately we could not recoup the lost Rogers revenue.
523 In fiscal 2008 our revenues were down 6.50 per cent.
525 MR. LARCHE: Thanks, Linda.
526 This transfer in revenue allowed CICX to post a positive PBIT margin in 2008, albeit less than half the Ontario average and 5 per cent less than in 2007. Unfortunately, as a result of the transfer, CICZ's PBIT was negative. Combining both put our PBIT margin at less than 1 per cent in 2008. So you can appreciate why we are very nervous about the introduction of a new entrant.
527 But despite our challenges, we are here before you today to apply for a new radio station. We have put together a terrific application that meets and exceeds the CRTC's criteria on every front.
528 Jack Latimer will take you through our plan.
529 MR. LATIMER: Thanks, Paul.
530 Good morning, Commissioners. It's a great honour to have you in my home town, the City of Orillia.
531 I have been working off and on in Orillia in radio for 36 years. I know this community.
532 It's my pleasure to introduce you to 89.1 SUN FM. Orillia is known as "The Sunshine City", that's why we chose the brand "SUN FM".
533 The overall feel and tone of the station will be unmistakably Orillia. This will be the station's unique selling proposition. SUN FM equals Orillia. The music, programming and information will address their needs and interests first and foremost.
534 SUN FM will offer a fresh, unique and locally targeted hot adult contemporary format to listeners in Orillia, particularly to women 18 to 49. Our research confirmed that this is the most underserved demographic and would repatriate most out‑of‑market tuning.
535 The music on SUN FM will be more youthful and energetic than most AC formats, with a much more current edge. The station will feature artists such as Matchbox 20, Maroon 5, Fergie, Avril Lavigne, Nelly Furtado, James Blunt and Sheryl Crow.
536 Where SUN FM will really shine ‑‑ pardon the pun ‑‑ is in its focus on serving Orillia and Orillia only. SUN FM's programming will be 100 per cent locally produced and originated.
537 In today's age of iPods, Satellite Radio and other emerging technologies, terrestrial radio's true and only edge is being local, informing, reflecting and discussing local and regional content.
538 SUN FM will offer Orillia listeners over 16 hours in comprehensive and local spoken word programming reflecting this community. This includes over 8 1/2 hours of news programming.
539 LCI will hire two full‑time news people for SUN FM. They will work from CICX‑FM's current newsroom, but their focus will be on SUN FM and Orillia. This will increase LCI's newsroom in Orillia from two full‑time to four full‑time employees.
540 The synergies will allow us to offer more comprehensive local news and information. We will cover more news conferences and newsworthy events.
541 We will also produce Orillia‑based daily programming such as "Orillia At Noon" and the "Orillia Sounding Board". "Orillia At Noon" will be a live weekday current affairs program devoted to reflecting Orillia , what is happening from a lifestyle, news and cultural perspective.
542 There will be time available to local politicians, newsmakers and public service groups. We will also solicit comments from listeners.
543 The "Orillia Sounding Board" will give residents of Orillia an opportunity to voice their opinions and views regarding local issues of importance. Listeners will be invited to call in and record their feedback. The following day we will air an edited version of the comments three times a day.
544 SUN FM will provide many more spoken word programs, such as local business reports, entertainment reports, local interviews and pre‑produced public service announcements called "Community Clips".
545 I am very proud to be working with KICX‑FM. Mora mentioned some of the awards the station has won, I believe largely in part to our continued dedication and promotion of Canadian music. We view the artists we play as our partners and friends. The better they do, the better we do.
546 This will be the same for SUN FM. We will pay particular attention to Canadian emerging artists. Among other things, we will air a program titled "Artists of the Month" ‑‑ I said "Artists of the Month" ‑‑ featuring a new Hot AC performer ‑‑ you guessed it ‑‑ every month.
547 I would like to now pass it back to Mora to discuss our CCD initiatives.
549 MS AUSTIN: Thanks, Jack.
550 LCI is dedicated to providing assistance toward the growth and development of the Canadian independent recording industry and are therefore committing a total of $175,000 over the first license term.
551 First, we will contribute $10,000 per year to FACTOR.
552 We will also provide $5,000 per year to go towards the purchase of new musical instruments and equipment for the Mnjikaning Kendaaswin Elementary School.
553 We have also committed $5,000 per year to the Orillia Jazz & Blues Festival to develop and maintain this outstanding festival that features local and regional performers.
554 SUN FM will also host the Orillia talent search at a cost of $5,000 per year.
555 It should also be noted that as part of the purchase of CICX from Rogers LCI committed to spend $240,000 over the license term in CCD initiatives. If this application were approved, LCI would be committed to spending $415,000 in direct initiatives between the two stations.
556 LCI is committed to promoting Canadian artists. Just two months ago CICX treated 2,000 listeners to a free concert just down the street at the Casino Rama Entertainment Centre. We featured Canadian country superstars George Canyon and Beverly Mahood, along with new Canadian emerging artist Alex J. Robinson. We then did the same show in Sudbury the following evening. The cost to us was $25,000.
557 This was not a CCD initiative. It was an investment we made in bringing our listeners and artists together to celebrate great Canadian music. We consider this one of our mandates.
559 MR. LARCHE: Thanks, Mora.
560 Madam Chair and Commissioners, the hallmark of a successful radio station always starts at the community level. The Broadcast Act wisely makes that one of our mandates and we work hard to hold up our end of the bargain. Our track record speaks for itself.
561 Some of the rhetoric from other applications may question our level of service to Orillia. Nothing can be further from the truth.
562 One of the first things we did after purchasing CICX was to augment the amount of local and regional content. We added live announcers and increased the number of newscasts by 20 per cent.
563 CICX and LCI have sponsored and promoted countless community events and activities in Orillia, including the Orillia Perch Festival, the Orillia Winter Carnival, the Orillia Beatles Celebration, the Orillia Fall Fair, The Mariposa Folk Festival, Soldier's Memorial Hospital's Golf Tournament, The Orillia Blues and Jazz Festival, the Orillia Rotary Club Festival of Trees, and many more.
564 We have the support of local and provincial government, dignitaries and service groups as outlined in our positive letters of intervention.
565 Just last month CICX raised over $20,000 for the Salvation Army through our Christmas penny drive. Also in December LCI pledged to raise $500,000 for the new Simcoe Muskoka Regional Cancer Centre. Just a few weeks ago the readers of the local newspaper, "Orillia Today", chose CICX as "Orillia's Favourite Radio Station" and Jack Latimer was chosen as favourite announcer. Orillia Chamber of Commerce also honoured us with a "shop local" campaign.
566 I am extremely proud of the job our staff have done in just one year. That's what good radio is all about.
567 But in order for us to sustain this level of service and commitment we need to ensure that we are on good financial footing and, frankly, the implications of a new entrant into Orillia at this time would threaten our ability to provide these services.
568 We mentioned our deteriorating PBIT margins earlier and now we are facing a deteriorating economy, maybe one of the worst in our lifetime. Like many broadcasters, our current sales are tracking behind last year so now we are in a position of reducing costs. Our company has cut expenses and reduced our staff by three positions and I don't want to reduce any more.
569 At the outset of our presentation I said that we have the most intimate knowledge of the marketplace ‑‑ and the most at stake. I certainly hope you can appreciate the position I'm in as a result of this call.
570 At the risk of overdramatizing, I, naively, never considered the possibility of a new entrant into Orillia so shortly after our purchase. I took comfort in the fact that the numbers just didn't add up that well for a stand‑alone, but that we were in a unique position to make it work. In hindsight, knowing a new entrant was on the horizon I'm not sure I would have purchased the station.
571 Let me make it clear: I am not afraid ‑‑ we are not afraid of good, healthy competition. It's better for the system and the consumer and it keeps the business fun. But at what cost? Quality? Service? Community involvement?
572 This may not be the time for a new entrant, not until CICX and LCI get on stronger financial footing, not until the full repercussions of this economic downturn are understood.
573 But should you decide Orillia needs a new station and that market forces will balance things out, then we respectfully submit that you choose ours. Not only will it have the least amount of financial impact on us, but we also believe it's the most realistic. We know and understand the market better than anyone else.
574 Too often in the competitive hearing process applicants propose significant programming benefits and expenses that, unless made a condition of license, do not make it to air, or the community. We take our role as custodians of the radio frequencies that belong to the Canadian people very seriously. We strive to only to promise what we can and will deliver.
575 At the end of the day Orillia will be the real winner should our application be approved. It will have two great radio stations to call their own, without the possibility of a reduction in service to the local community, without the possibility of hurting a small independent broadcaster, and with all the possibility of meeting the objectives of the Broadcast Act to deliver quality programming of high standard, to be varied and comprehensive, to enlighten and entertain, and to enhance our local and national identity.
576 Thank you.
577 THE CHAIRPERSON: Thank you, Mr. Larche and to your colleagues for your presentation this morning.
578 I will ask Commissioner Menzies to lead the questions.
579 COMMISSIONER MENZIES: Thank you.
580 I would like to start with clarifying where this application puts you in terms of the common ownership policy.
581 When you acquired the Midland station ‑‑ rather than the call letters I will call it Midland and Orillia just for clarity because I know I will make fewer mistakes that way.
582 But when you acquired the Midland station you were authorized for a power increase that puts you into the Orillia market. I just, at least for the record, read from paragraph 12 of that Midland decision on the acquisition of assets and licence amendment for CICZ‑FM.
583 It says:
"The Commission notes that as a result of these changes CICZ‑FM's coverage will be substantially improved and expanded such that Barrie and Orillia will be encompassed within the station's primary 3000 microvolt per meter service contour." (As read)
584 That indicates to us that as you have that station, you have the incumbent station in Orillia, if you were to add this station that that would put you in contravention of the common ownership policies.
585 Do you agree?
586 MR. LARCHE: No.
587 COMMISSIONER MENZIES: Okay. Why not?
588 MR. LARCHE: I believe that we are entirely compliant to the common ownership policy according to CRTC's policy. The market is defined as the smaller of the 3 millivolt contour where or BBM cell and in this case the BBM cell is Orillia, is smaller.
589 We don't have two stations in the market. Midland is its own market. We have the radio station there that we pay our own rent, it has its own newsroom, it has its own staff and our Orillia station has all of its own amenities as well.
590 There are definitely synergies and we do sell them together, but the common ownership policy does not define common ownership as selling in the same market and as far as we are concerned we believe that we are entirely in compliance with the common ownership policies.
591 COMMISSIONER MENZIES: Okay. If you were found not to be in compliance, what actions would you propose?
592 MR. LARCHE: Well, again, I guess I would have a little difficulty in finding how we weren't in compliance according to your policy.
593 COMMISSIONER MENZIES: I'll tell you what I'll do, in terms of the frequencies and that, as you might have noted from the first discussion I have a colleague here who is much more knowledgeable about that than I am and we can defer that part of the discussion to her.
594 I'm not saying that you don't have a case, I'm just saying that if upon everybody looking into it's found that you don't have a case, do you have any proposed solutions to that?
595 COMMISSIONER MENZIES: Well, I think if it was found that we didn't have a case, and assuming that we had an opportunity to, you know, fully discuss the policies, then I think we would definitely want some exemption to it because of the unique circumstances in the market.
596 COMMISSIONER MENZIES: Okay.
597 MR. LARCHE: But that's not our main focus here. We believe that we are totally in compliance, otherwise we wouldn't have applied.
598 COMMISSIONER MENZIES: Okay. Thank you. I needed to address that and now we will move on and discuss the application itself.
599 That was a reasonably cheerful presentation for people who clearly would rather not be here. I think we understand that. So you have made that clear.
600 Just help me understand a little bit more that if Orillia is that uninspiring a market why did you buy the station again?
601 MR. LARCHE: Well, first of all, Orillia is a great market, it's not uninspiring. It's a healthy, vibrant market and, as I mentioned at the outset, I was the manager of the station here back in the mid‑90s and went Telemedia decided to sell some of its stations I would have loved to have purchased both.
602 Orillia is unique in radio in, frankly, a lot of Ontario and I have had the good fortune of working in radio from Timmins down to Toronto and everywhere in between. This is a very, very competitive radio market. There is one incumbent, but essentially you have six radio stations that are actively selling and promoting.
603 We knew that and I believed that I was in a unique position to maybe make it fly a little better than another person because I would have the synergies of our Midland operations, which is just a half‑hour's drive down the road. So some of our back‑end costs such as administration and traffic of commercials and engineering and things like that would give me the advantage of somebody coming into this market and not having that opportunity.
604 But please don't interpret that we don't think that this is a good, strong, viable radio market; it is.
605 COMMISSIONER MENZIES: Okay.
606 In your presentation today you addressed this in part in terms of saying that you ‑‑ although you would rather not at the moment, you do agree that competition tends to serve people and advertisers better when there is genuine competition for their affections and their accounts.
607 But then the two options you have laid in front of us are either no licence, and some might say like a local monopoly, or option plan B is a local duopoly where you have both licences.
608 So can you help explain a little bit about what some might perceive as those two points of view being in conflict?
609 MR. LARCHE: Absolutely. Good question.
610 Again, from the perspective of the first question, a lot of what we are talking about today is the fact that what we put in our application is that this market, from a retail sales, from an advertising sales point of view had been stagnant between 2002 and 2007. We, again, believed that we were in a position to make some things happen that could change that and as a result we actually increased sales in the past year. Unfortunately we lost it over on the other side.
611 But even before we bought the radio station and ‑‑ you know, Rogers are a good broadcast company, they were subsidizing some of the sales, which is something that they could do that we couldn't do. We knew all of that getting into it and we knew that the PBIT was well below industry average, but we felt that, you know, given two or three years with some of these bold changes that we talked about, although we would take a step backwards, in time we would move forward.
612 And we don't really have ‑‑ it's not a duopoly because we don't have two radio stations in this market currently, we have one that sells into the market, but it's based out of Midland.
613 COMMISSIONER MENZIES: But you would have if this application was ‑‑
614 MR. LARCHE: If this application was approved, yes, absolutely.
615 COMMISSIONER MENZIES: Okay. That's the duopoly I was referring to.
616 MR. LARCHE: Yes.
617 The second part of your question was why would we have that.
618 Well again, we believe that if you allow someone else to come in, especially with the fragile PBIT that the station is in right now and has been for the last 10 years, let alone the economy, that the repercussions on us would be devastating to our company.
619 COMMISSIONER MENZIES: Okay. On that point, I don't want to sound heartless because I'm not, but from a technical point of view what would be wrong with a new competitor coming in, you and that competitor fight it out, even if you lose ‑‑ I'm not saying that's a desirable thing, but some would argue, and perhaps others will this week, that the worst thing that happens is you and another radio station fight it out for a number of years, the people of Orillia get better served, the advertisers get better rates, at the end of it if one of you fails nobody is any worse off than they were today, in fact you would have worked much harder to gain the affections and accounts of the local people.
620 MR. LARCHE: Well, that was heartless by the way.
‑‑‑ Laughter / Rires
621 COMMISSIONER MENZIES: Well, sometimes life is cruel. These are sort of Darwinian facts of life I understand.
622 MR. LARCHE: Yes. Absolutely.
623 COMMISSIONER MENZIES: But business, as much as you can love it, sometimes doesn't love you back.
624 MR. LARCHE: Absolutely. As I said, we do not shy away from competition but the Commission has made it abundantly clear over the years that it wants to make sure that the incumbent is not going to be put in a position of having to reduce services that it's providing to the market and the high level of programming. Bringing a new radio station into this market now would do that to us.
625 You can't come in here and surgically pick radio advertising from just the Barrie stations or untapped revenue that is not touched upon. It will have an affect on us.
626 And we will survive. I mean, I love this business, we are going to be in here for the long‑term, but it will have an effect on our business. We will have to cut back on some of the services and the quality of programming that we put out. The Commission has made it clear many times that that is something that they are quite concerned with.
627 COMMISSIONER MENZIES: Okay. Well, on that point, if you do get the licence that kind of goes to resources to be able to launch a new station.
628 If you got the license, when would you anticipate launching?
629 I will let you answer. Rather than give you two part questions I will just let you answer that.
630 MR. LARCHE: Most likely in 12 to 18 months.
631 COMMISSIONER MENZIES: Okay.
632 And would the resources required to launch that station have a negative impact on the resources that were available to your existing stations? In other words, would you have to layoff somebody in Midland and somebody at your incumbent station in Orillia in order to hire a couple of people to work at your new station?
633 MR. LARCHE: No.
634 COMMISSIONER MENZIES: Thank you.
635 One of the issues that will be raised I expect during the week is that diversity is one of the criteria that we judge on and it will be argued I expect by others that they will bring more diversity in terms of news voices, bring more diversity in terms of advertising options, et cetera, et cetera, to the market and before they do that, assuming they do it, or they have already done it, I want to give you the opportunity to defend that and explain to us how a new licence for you would genuinely add something diverse to the market. And I'm not particularly talking about music.
636 MR. LARCHE: Understood.
637 We would not obviously be introducing a new voice as in a new news voice from a new company, however we would be hiring people specifically for SUN FM and SUN FM's newsroom. What that will do is, it will provide additional resources for SUN FM, but also additional resources for CICX‑FM. So the net result is that both radio stations will be in a better position to service Orillia.
638 But the second part of your question where you talked about again how would the station differ from another player coming in, maybe not particularly related to music, is that this radio station would be very much focused on Orillia.
639 The signal is quite limited, the 3 mV contour just barely encompasses the cities. It makes much more strategic business sense for us to really focus that radio station completely on Orillia and what's going on in Orillia, you know, and doing what we do with CICX.
640 But with CICX there is no doubt we do have a regional constituency as well that we service to, but this would allow us to again just offer better service on CICX as well as SUN FM.
641 COMMISSIONER MENZIES: Okay. How would your sales team operate in terms of that? I mean are they going to be calling on the same people? Are they going to be competing with each other for advertising or, you know, would a single sales force be selling them, sort stopping when you hear something you like sales approach? Well, I have this and I have this and I have this. I'm not trying to be facetious about that, but where they have a number of options to sell.
642 Would it be the same sales force selling both stations or would it be two sales teams competing against each other for the account?
643 MR. LARCHE: It would be one sales team.
644 COMMISSIONER MENZIES: Okay. How does that better serve the advertising?
645 MR. LARCHE: Well, we take the approach in advertising that you want to at the end of the day make sure that that client's cash register is ringing. If you have different options to prevent to that advertiser, depending on who their target customer is, what their overall objectives are, how they compete in the market, to be able to go to them and to offer them an opportunity for a blend between a few radio stations or maybe one station in particular to meet their needs, I believe is eminently better for the client than to have two or three sales people going in and just clamouring for their radio station at the expense knocking down the other.
646 COMMISSIONER MENZIES: Okay. Now, on that point, in year two in your plan you show that the new station would be taking 60 per cent of its revenue from the old station and I'm trying to understand how that makes sense for you.
647 MR. LARCHE: No. We said 60 per cent of the revenue would come from money that is being spent by advertisers in radio in the market, but not ‑‑
648 COMMISSIONER MENZIES: Okay.
649 MR. LARCHE: ‑‑ not all from the incumbent. A lot of that would come from the Barrie radio station.
650 COMMISSIONER MENZIES: I'm sorry. So that's advertisers in the market spending money outside the market.
651 MR. LARCHE: Yes.
652 COMMISSIONER MENZIES: It's not money that is staying in the market. Okay. That helps me clarify that.
653 On your newsroom, you would be adding two people you said?
654 MR. LARCHE: Two full‑time.
655 COMMISSIONER MENZIES: Two full‑time.
656 MR. LARCHE: Yes.
657 COMMISSIONER MENZIES: And there are two part‑time I believe in the application.
658 MR. LARCHE: Yes.
659 COMMISSIONER MENZIES: So basically, just so I understand, that's a single newsroom, so on the upside that's a real expansion of news service overall to Orillia between the two stations.
660 Your critics would probably say: Yes, but they are not really competing with each other. They might be covering more stuff, but there isn't as much competition between them to see who gets things first, who gets the best, who gets the most accurate stuff.
661 How would you respond to that criticism?
662 MR. LARCHE: Well, I think we do look at other media other than radio as a news source in this town. of course the newspaper, but the other radio stations, as we mentioned at the outset, all of them do cover, you know, newsworthy stories from Orillia as well as they do from Midland and for Barrie and we do the same.
663 So I think just having those additional resources would, you know, allow us to do it better.
664 COMMISSIONER MENZIES: And how about your marketing departments. How would they work? Would they be competing for events? There are a number of obviously community events of that sort of thing that you are involved in now ‑‑
665 MR. LARCHE: Yes.
666 COMMISSIONER MENZIES: ‑‑ and that you propose to be involved in. Again, would you be doing more or would the teams be competing to be the primary sponsor for, say, The Perch Festival?
667 MR. LARCHE: Well, I think we would have to look at it on a case‑by‑case basis. It might make more sense for a country station to be backing up one event that maybe an AC station that skews more female, it might be better for them to do another event.
668 But I think by and large, you know, we would again try to make sure that at the end of the day we are trying to satisfy the organizer who is doing this. How can we help them make their event successful; do we want one station or both stations involved and how do we blend that, but the end result is how do we make the organization the winner in the process.
669 COMMISSIONER MENZIES: Okay.
670 I just want you to expand, if you could, give us ‑‑ as the incumbent we are assuming you know the local market pretty well and can you just break down for me how much of the local advertising spend is spent locally and how much loyalty do you think Orillians have for local media?
671 How much money is ‑‑ what is the advertising spent coming out of ‑‑ how much money do Orillia businesses spend on advertising and how much of that is spent locally and how much is spent outside of the BBM market?
672 MR. LARCHE: Well, again, we are not privy to the Barrie stations revenues. I can give you, you know, our estimate.
673 COMMISSIONER MENZIES: Okay. Your best guess.
674 MR. LARCHE: Well, we believe that between us and the other radio stations there is probably $2 million being spent in Orillia.
675 COMMISSIONER MENZIES: Being spent by Orillia businesses?
676 MR. LARCHE: By Orillia businesses on radio.
677 COMMISSIONER MENZIES: Okay. And how much of that is being spent on radio outside of Orillia?
678 MR. LARCHE: I guess I don't understand the question, but ‑‑
679 COMMISSIONER MENZIES: There is $2 million being spent basically, how much of it are you getting and how much are the other guys getting?
680 MR. LARCHE: I'm probably getting two‑thirds of it and they are getting a third.
681 COMMISSIONER MENZIES: Okay. How much of that third that is being spent outside do you think a new station of yours could get back?
682 MR. LARCHE: Well, we think that we would be able to generate ‑‑ I think in our first year we ‑‑ or our second year we would be doing around half a million dollars.
683 We think that 60 per cent of it would come from the current radio advertisers, and that includes some of it would be from CICX, but probably a large portion of that would be from the Barrie advertisers, and the rest of it would be from the fact that you have introduced a new service.
684 And listen, we understand that any new service will introduce some new dollars to the market, it won't all come from other broadcasters.
685 COMMISSIONER MENZIES: You mentioned before that the contour was very limited, so I'm assuming that your audience, your listening audience, is entirely Orillia?
686 MR. LARCHE: Yes.
687 COMMISSIONER MENZIES: And there is nothing outside that you anticipate or that you can reach?
688 MR. LARCHE: Well, yes, we couldn't reach. It would be an Orillia audience. That again would be the station's unique selling proposition. We could charge a lower rate for the radio station and offer, you know, those clients that really don't have any interest in reaching anyone beyond Orillia, this would be an attractive medium for them.
689 COMMISSIONER MENZIES: Your business plan calls for incrementally lessening but nevertheless losses over the entire seven years of the plan.
690 I know it's really difficult to try to ‑‑ it's probably difficult enough to try to stretch a seven‑year plan out, but if you extrapolate that beyond the seven years, when do you see your new station, if it were approved, making money and what do you think the upside is?
691 I mean, you would be putting a lot of money into the station, you would be impacting your existing stations, it's clearly a significant investment ‑‑
692 MR. LARCHE: Definitely this application we are looking at it on the long‑term.
693 Just as we said at the outset, all the changes we had made when we purchased CICZ, all of these changes were made for the long‑term. It would cost us on the first license term, but I feel very confident that towards the end of that license term we should be breaking even and certainly in the second license term we should be in a good financial position.
694 COMMISSIONER MENZIES: Now, would you see the PBIT on that new station being equivalent to what you have been experiencing with the incumbent?
695 You mentioned that the incumbents profitability was roughly half recently of the Ontario average.
696 MR. LARCHE: Yes.
697 COMMISSIONER MENZIES: How would you see both that station, and obviously for the purposes of this application, the new station, how would you see them fitting into the Ontario average? Do you think this area can meet the Ontario average, exceed it, or will it ‑‑ at best information we have right now, will it remain below it?
698 MR. LARCHE: Well, the Ontario average, if we are going with approximately 25 per cent, I think that would be probably unrealistic to expect that from this market. Many broadcasters have tried and given it a different ‑‑ you know, through different formats, different policies, different ways of selling it, have never been able to get it much more than the low teens.
699 But again, we are in this position because we reacted to a call that we believe if we didn't get the station that our PBIT would definitely be in negative territory.
700 Frankly, the PBIT amount on CICX this past year is not that much, it wouldn't take ‑‑ it wouldn't take anybody coming in here with a projection of half a million and up to just take 15 or 20 per cent of that from us would put us, you know, at a negative PBIT, or certainly a break even. When you combine that with CICX it would put us under.
701 So I look at it in the context of the PBIT probably would not be to the Ontario average come the end of the license term, but it certainly should be, when the stations are combined, something that we feel we can definitely manage and build upon in the second term.
702 COMMISSIONER MENZIES: Okay. I think my final question on this just kind of summarizes a bit of the issues I'm trying to get you.
703 Let me put it this way: Revenues haven't increased in this market for six years, seven years; the format for the station has changed many times. It's kind searching for an identity, searching for a place, searching for something that will inspire those revenues to grow.
704 What is it about this market that's caused that? It seems like it's not bad but there is nothing kind of happening here. What is it that suppressed the market gaining some kind of identity and therefore a real foothold and an ability to kind of take off as a really sound market for local radio?
705 MR. LARCHE: The biggest reason I think, as we said in our presentation, is it is just a very competitive radio market. We are not the ‑‑ when you look at the financials of the market you are looking at the incumbent financials, you are not looking at necessarily what comes out of the market.
706 What Rogers had did, and Telemedia prior to that, was to, you know, play around with different formats that all did very well in Orillia but, frankly, all the other radio stations coming into the market also do very well in this market.
707 I mean the Barrie stations are very good radio stations. You know, I think we have a pretty good station in Midland. And when you go knock on the advertisers' door and you tell them "Listen, you know, I have a 20 share of the market in Orillia and you should advertise with me and here is my rate", and then the next guy comes in and says "Well, I have an 18 per cent audience in Orillia, but I also can deliver to you all of these listeners in Barrie and all these listeners in Midland and throughout cottage country in the summertime who listen to our radio station", that's very, very compelling to a local advertiser.
708 Obviously the station, you know, has generated some revenue, there is a market there, but when you come into the market and you can't compete against that, even at a reduced rate, you kind of hit a glass ceiling. I think that's what Rogers ran through over the years that they had the radio station.
709 The reason we have basically transplanted or moved our successful KICX station from Midland to Orillia was because we knew that Orillia liked country music, was a country town and we would hold onto the number one position, but we also knew that we would bring, along with it, an opportunity for additional advertising and to give some of the local advertisers an opportunity to, with their local station, reach people just beyond the city limits.
710 So I don't that's a long‑winded answer to your question but, you know, one of the other reasons that I think people think there may be more money in this market than there frankly actually is is retail sales. Retail sales, if you look at Orillia and if you look at Collingwood, and if you look at a lot of these college towns, is way ahead of a national average, way ahead, but then if you look at income it's usually below.
711 What's the disconnect there? It's because retail sales are so much driven by a lot of people, the tourist and cottagers that come up here in the summertime. These people are buying their groceries, they are buying their boats, they are buying their gas, they are buying, you know, clothes with retailers in this area.
712 Unfortunately, we have never been able to monetize that, none of the radio stations have here, because we are not rated in the summer. We can't prove to an advertiser that "X" amount of people are listening to it and you can reach them. So what happens is a lot of times the national advertisers will just buy on Toronto and Barrie spill.
713 So there is a disconnect between ‑‑ I think people will say that market should be generating $3 million and it's only doing $2 million, so there is $1 million that is just kind of floating around there in unclaimed dollars. That's just not the case.
714 Sure, there are some, but you have to take into account the unique circumstances of the market; extremely competitive in an area that's very much driven by tourists and cottagers in the summertime, and also in the shadow of Toronto where, again, 35 per cent of the tuning goes before you have even turned your transmitter on.
715 COMMISSIONER MENZIES: Okay.
716 Thank you very much for being very frank with your presentation and your answers. It's greatly appreciated.
717 That concludes my questions. I believe my colleagues have some.
718 THE CHAIRPERSON: Thank you.
719 I think we will go Commissioner Lamarre, first.
720 Thank you.
721 COMMISSIONER LAMARRE: I have a few questions regarding all aspects of your submission.
722 Clearly your consultant has provided you with a contour that pushed the envelope as much as he could with 89.1 and that's what you base your business plan on.
723 You were asked also whether or not you would consider another frequency to be viable and in reply to the Commission's deficiency you did identify a frequency possibility, but states that there was too much interference coming in with that frequency, that therefore you did not consider it viable.
724 Do you still maintain that today?
725 MR. LARCHE: Yes, I do.
726 COMMISSIONER LAMARRE: Now, to go back to the Common Ownership Policy issue, you make the point that in your opinion since what had to be looked at was the smallest of the two, the two being the 2 mV contour or the market.
727 Would you be able to supply us with a map ‑‑ because a picture is worth 1,000 words ‑‑ showing those 2 mV contours, the limitations of those markets and show us on that map why ‑‑ and it can be more than one map. You can have more than one map ‑‑ and show us why you think that you do not meet the criteria that makes you in infringement of the Common Ownership Policy?
728 MR. LARCHE: Absolutely.
729 COMMISSIONER LAMARRE: Can you provide this to us by...?
730 MR. LARCHE: Can I have a week?
731 COMMISSIONER LAMARRE: End of the hearing?
732 MR. LARCHE: End of tomorrow?
733 I'm going to be around here for a few days. If you can just give me a few days I'm sure we can pull a map together for you.
734 The end of the week maybe?
735 THE CHAIRPERSON: That would be fine.
736 COMMISSIONER LAMARRE: That would be fine.
737 MR. LARCHE: Okay.
738 THE CHAIRPERSON: You should provide it as well to all the other applicants in these proceedings?
739 MR. LARCHE: Yes.
740 THE CHAIRPERSON: Thank you.
741 COMMISSIONER LAMARRE: And, lastly, it's a minute technical detail, but I would like to have ‑‑ and if you don't have the answer you can give it to us later on ‑‑ you have submitted the realistic contours for your proposal in Orillia and can you confirm that those realistic contours were calculated based on a receiving antenna height of 9 m?
742 MR. LARCHE: I can get back to you on that.
743 COMMISSIONER LAMARRE: Yes, I know. I know. Because it's not written down on the map so I just want to confirm.
744 MR. LARCHE: Okay.
745 COMMISSIONER LAMARRE: And, finally, on the official contour map I just want to draw your attention ‑‑ I'm sure your consultant has but I just want to make sure you hear it a second time, that there are areas where you will be receiving interference and actually this interference may not even be present here today because some of it is predicated on power increase on the part of other incumbents that are out to get an increase.
746 So you realize you are going to have to work with that?
747 MR. LARCHE: Yes, we are aware of it and, again, our consultants told us that that was the best possible contour that they can give us within, you know, the parameters set out by Industry Canada and regarding our parameters, so we understand that.
748 We also understand that every market has little spots that, you know, you can't sometimes penetrate as well as you can, but overall we feel very confident that we would cover the City of Orillia and the surrounding areas.
749 COMMISSIONER LAMARRE: Oh yes, you will.
750 MR. LARCHE: Fine.
751 COMMISSIONER LAMARRE: But you understand that there is a trap here with those areas of interference in the sense that those interference areas may not be there when you go on air ‑‑
752 MR. LARCHE: They could come up ‑‑
753 COMMISSIONER LAMARRE: ‑‑ and they could come up afterwards.
754 MR. LARCHE: Yes.
755 COMMISSIONER LAMARRE: Okay.
756 MR. LARCHE: We are aware of it.
757 COMMISSIONER LAMARRE: Okay. And you are willing to live with that?
758 MR. LARCHE: Yes.
759 COMMISSIONER LAMARRE: Okay.
760 Those are my questions. Merci.
761 THE CHAIRPERSON: Thank you.
762 I think now that Commissioner Lamarre is sitting on this side of the table applicants might be well advised to bring their engineering people.
763 Commissioner Molnar...?
764 COMMISSIONER MOLNAR: Thank you.
765 I have questions on a couple of different topics.
766 One of the things that we need to consider in this proposal is whether the market is well served today and you are the incumbent so I would like to understand how local is the existing CICX.
767 I say that based upon the discussion we had about the fact that this is in fact a market that includes all of Simcoe County. Your contours include Midland, Orillia ‑‑ Orillia, Barrie ‑‑ I'm sorry, that's a private joke on how I was saying Midland earlier ‑‑ Midland. But your contour today for your existing market contains all of those major centres.
768 I looked at what you spoke about today about doing sponsorship and doing concerts in Sudbury and I'm trying to ‑‑ can you just give me a little bit more information about your Orillia station today?
769 How much, for example, of your programming is directly local to Orillia, how much of your promotion and sponsorship is targeted to the community of Orillia?
770 MR. LARCHE: Orillia is the market we focus on first. We do cover, obviously, the region, but Orillia we understand and appreciate that this is our home market, it's a great market, we want to be here, so certainly most of the promotions and events that we do, anything that's going on in Orillia we are absolutely definitely part of it. I think you can tell by a lot of our letters of support that we do a good job.
771 We increased the amount of news that we do when we took the station and I'm hoping that we provide what the community wants in terms of the news; that's certainly what we aim to do, to tell them what's going on within Orillia, but also things that affect them in the region.
772 But you know, our main focus is always to be Orillia first and then a regional station second.
773 I think you have to ‑‑ you know, we could say that we do that and others could say that we don't, but you have to look at the facts. I mean this is a very competitive market and, you know, we still maintain the number one position, the most listened to station in the market. If they didn't feel that they were getting good service or they could get it somewhere else, they would go do that.
774 People in this town, you know, again we mentioned that just last week even the local newspaper, their readers, said that we were their favourite radio station, that Jack here was their favourite announcer. You know, we can't doing that bad a job at servicing the community.
775 We have a letter of support from the Mayor and City Council endorsing our application, as well as the local MPP and several service groups.
776 So, you know, it's hard for us to say that we provide "X" amount of percentage to Orillia on any one time because it will move around. We try to be more often than not more Orillia than anywhere else and some days, depending on what's going on, it's all Orillia. Other days there might not be that much going on in Orillia, but there might be something going on in Midland that affects people in Orillia.
777 But I would just come back to the facts and I think the facts support that, again, we can't be doing that bad a job. You know, we get great recommendations.
778 COMMISSIONER MOLNAR: You are the best of the only.
‑‑‑ Laughter / Rires
779 MR. LARCHE: Well, not really, because again there are six radio stations that compete in this market that are ‑‑ they are certainly not out‑of‑market stations by Orillia.
780 COMMISSIONER MOLNAR: Do they provide local news ‑‑
781 MR. LARCHE: Yes, all ‑‑
782 COMMISSIONER MOLNAR: ‑‑ about Orillia?
783 MR. LARCHE: All of these stations will touch upon news events that are going on in Orillia that they believe would be important to Orillians. It's not their main focus, but they certainly do.
784 COMMISSIONER MOLNAR: So you would have no way of giving me any kind of ‑‑ and I realize this is a bit off the top, but any kind of estimate for example in your spoken word ‑‑ I will use spoken word and I will use promotions ‑‑ as to what amount of it is targeted specifically to the community of Orillia?
785 MR. LARCHE: Spoken word, we would try to focus at least 50 per cent of our overall programming towards Orillia and then the remainder would be between the rest of the market. Again, some days that can be less, some days it can be more.
786 Certainly in terms of promotion this is the most active market. We are promotionally, I would say 60 to ‑‑ 55 to 60 per cent of the promotion and marketing we do is focused on Orillia.
787 COMMISSIONER MOLNAR: Okay. Thank you.
788 I have one other set of questions I would like to follow up on and that is related to the capacity of the market.
789 You spoke about the retail sales and the million dollars that may or may not be available.
790 In the applications before us there have been three potential sources of revenue ‑‑ four I guess.
791 One being existing advertisers out‑of‑market, and you have spoken about that.
792 Another is advertisers who aren't today with radio. Again, I think you spoke about that a bit.
793 The other two potentials that have come forward to us are economic growth and population growth in the market and how that could help to sustain a new station coming in.
794 I would like your comments, recognizing commenting on economic growth at this time is a little bit of a challenging issue, but I would like your comments about the potential or the capacity of this market going forward to grow based on population and the economy.
795 MR. LARCHE: Well, there is no doubt that central Ontario, Simcoe County is a growth area. Orillia is again a town that is also going through a good level of growth, but not much higher than I would say the ‑‑ certainly Orillia wouldn't be much higher than what the Ontario average.
796 But is there an opportunity for dollars because of growth down the road? Absolutely. Absolutely.
797 We are banking on it, frankly. You know, we are not ‑‑ you know, we are not where we need to be to be successful financially, so we are banking on one of the things that this market will do is grow and that we can tap into that.
798 COMMISSIONER MOLNAR: Do you want to comment at all on the economy?
‑‑‑ Laughter / Rires
799 MR. LARCHE: Listen, you know, as a Canadian I am concerned. You know, it's very scary. I don't think anyone here on either end of the table really knows where we are going, but it's not looking too good.
800 But as an owner of a business, you know, where the buck stops with me and, you know, it's my house on the line and being responsible for, you know, a payroll between all our stations of somewhere around 45, 50 people, I am terrified right now. I'm very, very concerned.
801 Like I said, we have already had to make some cuts. We are tracking, our sales are tracking behind where they were last year.
802 We launched a new station in Sudbury and the price of nickel up there has plummeted by 80 per cent since when we were approved.
803 So my comment on the economy from a personal point of view is one of concern and that's why we are making the case here that a new entrant at this time could be devastating to our company.
804 COMMISSIONER MOLNAR: Is there any reason to believe, based on your knowledge of this area and the different economic drivers within area, that this economy would be able to recover more quickly or less quickly than Ontario in its totality? Like are there any particular or unique factors related to the economic drivers within this Simcoe County and Orillia particularly that we should consider?
805 MR. LARCHE: Well, on the labour side there is definitely a lot of manufacturing throughout the area and depending on if its automotive related, you know, there have been layoffs in that area as well.
806 But also this is kind of the play land for Ontario and people buy a lot of toys around here, boats and snowmobiles and Sea‑doos. The numbers coming out of the Toronto Boat Show last week are scary at how much of a decrease there has been in the purchase of boats and again those recreational vehicles and stuff like that.
807 How is that going to impact on tourism this summer? Obviously we will have to get through it but, you know, it would certainly appear to me that those retail sales, which we believe a large part are driven by the cottagers and the tourists that come up here, you know, there is going to be a big impact.
808 Now, I am speculating a little bit, I will tell you right now, because I just don't know, but common sense would tell me that if, you know, all the boat dealers and the snowmobile dealers and those guys in this area are crying because of what's going on, then it's going to have ripple effects throughout the region.
809 COMMISSIONER MOLNAR: Thank you.
810 Those are my questions.
811 THE CHAIRPERSON: Thank you.
812 Commissioner Patrone...?
813 COMMISSIONER PATRONE: Thank you, Madam Chair.
814 I want to thank Mr. Larche and everyone else there for your frank and honest appraisal.
815 You tend to like an applicant to inspire confidence so when I hear you say that you are terrified it makes me a little concerned, too. When I look at your PBIT forecast and I see that you are expecting to lose money for seven straight years, the duration of your licence, and you express uncertainty also around profitability of Midland going forward, it makes me wonder whether you really want to take this on, this added burden around this period.
816 I can also appreciate the fact ‑‑ and I want you answer this ‑‑ but there must have been a certain amount of concern, looking at the fact that the call had gone out, as to whether or not you wanted to apply or not and so you found yourself kind of between a rock and a hard place: Do we let somebody else come in or do we try for that licence as well?
817 Can we talk a little bit about some of those points?
818 MR. LARCHE: Absolutely. Those are excellent, excellent observations.
819 And you are absolutely right; on your second point you are right.
820 I will go back to your first point.
821 Listen, it would have a devastating impact on our business, but our business would survive. We would have to cut, we would have to make the changes that we need to make. These are not ‑‑ you know, this was not in the plan a couple of years ago when I decided to buy Orillia. We did not see the economy turning, we did not see that there would be a call issued. We felt quite confident that there wouldn't be. So, you know, we undertook some bold, strategic long‑term moves that we knew would take us back a step.
822 I do prefer looking long‑term than short‑term, but sometimes out of necessity you have to go short term.
823 As I mentioned at the outset in full disclosure, there was a lot of internal debate: Do we apply? Do we not apply? We believe that over time if one is issued that it has to be us because that will put us and our company on a stronger financial footing for the long‑term.
824 But if you decide that you are going to approve someone and it's not us, I mean we are going to survive. We are going to continue to grow and to be innovative and to try to do all the things that a business person and a broadcaster has to do to react to the environment.
825 I'm not going to sit here and tell you that if you put somebody in here we are out of business; no, not at all. We are going to have to make some cuts.
826 The point I'm trying to get across is that, you know, those cuts will, you know, have an effect on the quality of the product that we put out to a certain point, but we are not going anywhere. You are going to see my face for many, many years.
827 I have made it clear ‑‑ this is the first time I have presented in front of you, Commissioner, but I have made it clear to some of the other Commissioners here that I love this business, our staff, we have an absolute passion for it, we think it's the best business in the world to be in, you know, and over the years we have had some highs and we have had some lows and we are definitely getting into a period now where we are little concerned but, you know, we will survive and we will come across.
828 COMMISSIONER PATRONE: Thank you.
829 That sounds like a Gloria Gaynor song, but I appreciate it.
830 MR. LARCHE: Do you want me to sing?
‑‑‑ Laughter / Rires
831 COMMISSIONER PATRONE: No.
832 I want to ask you a little bit about demographics, because in our analysis of the Orillia market we have found that a little over a third of the population is either the tail end or past your target audience, which is aimed primarily at 18 to 49‑year‑old women.
833 Does that worry you going forward, that in fact the people that you are targeting, especially if you are looking at a lot of retirees coming in, and so forth, that you have kind of missed the boat on a good chunk of the population which has already passed the point at which it is going to be listening to Fergie and some of these artists that you are going to be playing on your proposed station?
834 MR. LARCHE: Not really. I mean when we conducted the research we went out and put forth ‑‑ I think there was four different formats, one that skewed a little older and, you know, the one that came back that said: Listen, you know, this is going to repatriate the most out‑of‑market tuning, this is going to for the long‑term give you some success in this market to bring some listenership from outside inside the market, was the Hot AC format.
835 Frankly, I told you earlier that I would like to take a long‑term view. I would rather put my money on maybe a generation younger and have them for the next 10 or 15 years than to be working on the flip side and, you know, heaven forbid, we hope that all the retirees are going to be around here for a long, long time, but I would rather be focusing on that middle, you know, that thirty‑something woman right now is where we think we could really make an impact.
836 COMMISSIONER PATRONE: I have one last question, Mr. Larche, and it has to do with your question around summer audiences.
837 You talked about the fact that a lot of people buy toys and boats and the rest of it and I imagine there are people in the radio business who wish some of those toys were purchased during the ratings periods when actually measurements are taking place in spring and fall.
838 But I want to ask you about that because I believe the number a million came up at one point.
839 Did I hear that figure correctly, that the population ‑‑
840 MR. LARCHE: Yes. The estimates are that the population ‑‑ in Simcoe County the population is around ‑‑ if you took the whole county it's approximately 350,000 people and then that will swell to close to a million in the summertime, particularly on a weekend.
841 COMMISSIONER PATRONE: And it would be awfully nice to be able to monetize those retail sales figures as well as the summer numbers.
842 MR. LARCHE: Do you know how?
843 COMMISSIONER PATRONE: I'm sorry?
844 MR. LARCHE: Do you know how?
845 COMMISSIONER PATRONE: Well, funny you should ask because you may be aware of these personal people meters that are coming out ‑‑ and I realize that we are talking about perhaps two years down the road, I don't know exactly, but these types of technological developments and advancements are coming that are going to allow people to measure numbers a lot more effectively and accurately, especially if people of course are wearing these things and they are driving up from Toronto on the weekends so you get to read more of those numbers.
846 Do you anticipate that this might provide a boost as far as being able to monetize those summertime figures going forward?
847 MR. LARCHE: If it happens it would be great. Certainly when we first heard about people meters we thought this is exactly what we have been hoping for.
848 But then, upon talking to BBM, they made it clear that, you know, this was going to be for the major markets only, that secondary tertiary markets were not going to be encoded. So even if somebody comes up here with a people meter in the next two years, we won't get counted on it at all.
849 Now, does that mean that that's going to be the situation three or four or five years from now, I hope not. I hope there is a way for us to be able to monetize those listeners, as I'm sure, you know, Mr. Bingley is in the same boat.
850 It's very frustrating. It's very frustrating when you are down talking to a Toronto agency and you can't translate those listeners who you know are listening to you into money.
851 I'm sorry for the long‑winded answer.
852 COMMISSIONER PATRONE: That's all right.
853 MR. LARCHE: We hope it comes, but we have been told the technology isn't there and it's not in the plans at this point in time.
854 COMMISSIONER PATRONE: Thank you very much.
855 THE CHAIRPERSON: Thank you.
856 Mr. Larche, just I need confirmation that you are able to provide updated financing within 10 days?
857 MR. LARCHE: Yes.
858 THE CHAIRPERSON: Thank you.
859 Legal counsel...?
860 MR. BOWLES: Thank you, Madam Chair.
861 I only have a few questions for you today.
862 My first question relates to the Canadian Content Development contribution.
863 I believe that the $175,000 CCD contributions you spoke to in your presentation today is inclusive of both the required basic contribution and the over and above amounts.
864 Is this correct?
865 MR. LARCHE: That is correct.
866 MR. BOWLES: That is correct.
867 So on the basis of these calculations I am surmising that you are over and above amounts that total $172,000 and that would be broken down to $25,000 in year one and then $24,500 from the second through to the seventh year of the license term?
868 MR. LARCHE: That is correct.
869 MR. BOWLES: Would you be willing to accept these over and above amounts as a condition of licence?
870 MR. LARCHE: Yes.
871 MR. BOWLES: And if the Commission should deem it advisable, would you be willing to abide by a condition of licence that tells you to direct these funds to the initiatives that you outlined in your application?
872 MR. LARCHE: Yes.
873 MR. BOWLES: Just to be a little more specific with respect to your proposed contributions to FACTOR, on the basis of numbers that we have before us your over and above contributions to FACTOR would appear to be $10,000 in year one and then $9,700 in the following years.
874 Would you be willing to commit to this as a condition of licence?
875 MR. LARCHE: Yes.
876 MR. BOWLES: Thank you very much.
877 I have a more expansive question I guess with respect to the Common Ownership Policy.
878 In the event that the Commission finds that approval of your application would conflict with the Common Ownership Policy, you mentioned earlier on that you would request an exemption.
879 For the purposes of the record, could I ask you to expand a little bit on this request and how you would justify the exemption?
880 MR. LARCHE: Again, I think we are totally compliant, but if we had to somehow justify that this is not in line with the policy, you know, I would ‑‑ a couple of things I would say is, if you are defining my market has anywhere within my 3 mV contour, then, you know, you are putting me at an unfair advantage. I have a responsibility to Midland and I have a responsibility to Orillia.
881 If you are saying that, you know, you are in one market, I don't enjoy the same benefits that another broadcaster would where they can place their station wherever they want and put all their resources under one roof, so I don't have that advantage.
882 You know, if there was a discussion or some type of dialogue that went back and forth, I would say that: Listen, we do not have the benefits of having like three radio stations under one roof, which is what you are really I think trying to get at, is that we would have the unfair advantage.
883 We would have some advantages certainly on the sales side, but we certainly don't have all the other advantages that other operators would have. I mean our cost base is just much higher and our responsibilities are much broader.
884 MR. BOWLES: Thank you.
885 My last question is, I believe you undertook in response to a question submitted by Commissioner Lamarre to provide a realistic contour map.
886 MR. LARCHE: Yes.
887 MR. BOWLES: Can you specify a date by which you would be willing to commit to this?
888 MR. LARCHE: What is Friday?
889 MR. BOWLES: Pardon me? I believe that is the 30th.
890 MR. LARCHE: Does anybody know?
891 MR. BOWLES: I believe that is the 30th.
892 MR. LARCHE: How about the 30th?
893 MR. BOWLES: I believe that would be fine.
894 MR. LARCHE: And you are looking for a realistic ‑‑ the predict or the estimates?
895 COMMISSIONER LAMARRE: What I'm looking at in order to be able to sort out this ownership issue is to have a map with your 3 mV contours of your two existing stations, the one in Midland, the one in Orillia, and the one you are applying for.
896 MR. LARCHE: Yes.
897 COMMISSIONER LAMARRE: And layer that over the ‑‑
898 MR. LARCHE: The BBM themselves, yes.
899 COMMISSIONER LAMARRE: ‑‑ BBM markets and show us what you think we should be considering in order to estimate whether or not you are meeting the Common Ownership Policy. That is on the basis of the (inaudible) contours' F(50,50) curves, because we do have realistic contours. You submitted that.
900 MR. LARCHE: Yes.
901 MR. BOWLES: So you are committing to provide this by Friday?
902 MR. LARCHE: Friday.
903 MR. BOWLES: Okay. Thank you.
904 That's all.
905 THE CHAIRPERSON: Well, thank you very much, Mr. Larche, and to your colleagues for your presentation this morning.
906 We will be taking a 10‑minute break.
907 MR. LARCHE: Thank you.
‑‑‑ Upon recessing at 1130 / Suspension à 1130
‑‑‑ Upon resuming at 1145 / Reprise à 1145
908 THE CHAIRPERSON: Order, please.
909 Madam Secretary...?
910 THE SECRETARY: Thank you, Madam Chair.
911 We will now proceed with item 3 which is an application by Bayshore Broadcasting Corporation for a licence to operate an English‑language FM commercial radio programming undertaking in Orillia.
912 The new station would operate on frequency 89.1 MHz (channel 206A) with an effective radiated power of 21,000 watts (non‑directional antenna with an effective height of antenna above average terrain of 169.3 metres).
913 Appearing for the applicant is Ross Kentner.
914 Please introduce your colleagues and you will have 20 minutes for your presentation.
PRESENTATION / PRÉSENTATION
915 MR. KENTNER: Thank you, Madam Secretary.
916 Madam Chairman and Commissioners, my name is Ross Kentner, General Manager of Bayshore Broadcasting. With me today are Deb Shaw, Bayshore's Assistant General Manager; Rob Brignell, Manager of Marketing and Development; Kevin Brown, Bayshore's General Sales Manager; Lois Reid, our Business Manager; Rick Ringer, who is our Operations Manager at the new station in Wasaga Beach; Mariane McLeod, who is News Director in Wasaga Beach.
917 We have Jeff Vidler in the back row of Angus‑Reid Strategies, formerly of Solutions Research Group, who was responsible for our format demand research; and also Michael Fockler, Programming and Regulatory Affairs for Bayshore Broadcasting.
918 As well, in the audience today is Mr. Douglas Caldwell, who is the owner of Bayshore Broadcasting Corporation.
919 It is our pleasure to come before you today to share Bayshore's vision for what we hope will be Orillia's newest radio station, Sunshine 89.
920 This group of enthusiastic broadcasters has been together for quite some time and has helped Bayshore grow from two stations in Owen Sound to a group of six full‑service radio stations in less than 10 years. We operate in markets from Goderich and Port Elgin on the Lake Huron shoreline to Owen Sound and Wasaga Beach on Georgian Bay.
921 Each of our stations operates in much the same fashion: namely a dedication to providing high quality local news and information, as well as music programming with a broad, family friendly appeal.
922 When the Commission announced a call for Orillia, Bayshore saw an opportunity to expand into a market naturally suited to its long‑term business plan. In fact, Orillia has always seemed like a logical extension for the Bayshore family.
923 The City of Orillia is very similar in size and composition to Owen Sound and comparable populations and growth patterns, economic development and demographic profiles.
924 We have operated radio stations in the Central Ontario region for many years. This area is home to all of us. As such, Bayshore is uniquely positioned to provide a truly diverse alternative to the three current regional broadcasting groups, while at the same time reflecting our appreciation for this very special part of Canada.
925 Madam Chairman, the Commission has repeatedly stated that certain factors are relevant to the evaluation of applications and Bayshore has undertaken to thoroughly address each of these factors in our Supplementary Brief.
926 Moreover, we are confident we have met and surpassed the Commission's expectations, fulfilling each of the criteria set out in the CRTC policies. We certainly look forward to discussing these details with you this morning.
927 MR. BROWN: Prior to submitting this application Bayshore carefully evaluated the Orillia market using a number of different research methods. We studied the economic strength of the market using data from Statistics Canada, the Financial Post, the Orillia Economic Development Office, and other sources. We analyzed the competitive state of the market, examining current BBM figures and conducting our own audience tuning study via Jeff Vidler and Solutions Research Group.
928 Deb Shaw and I visited Orillia on numerous occasions to speak with retailers, advertisers, listeners, community groups and the local politicians. We looked carefully at the impact Sunshine 89 would have on the existing commercial radio stations in Orillia and Simcoe County.
929 We listened to the existing radio stations and quickly realized we could add to the diversity of musical format and news voices in Orillia.
930 We are confident we can make a valuable contribution to the development of local and regional musical and spoken word talent in the area.
931 Our business plan reflects the economic realities of the Orillia area. We have undertaken a retail survey and we have provided realistic financial projections in our business plan.
932 And last, but certainly not least, we examined how Bayshore could make a meaningful contribution to the objectives of the Broadcasting Act, through local and regional programming.
933 MS SHAW: What we found through all of our research was that audience desire is strong, local radio station offering news and information focused primarily on Orillia, while retailers are seeking a cost‑effective way to target Orillia customers.
934 Bayshore recognizes there are currently several radio stations providing Orillia with some semblance of news and surveillance. However, these stations, mostly based in Barrie, are regional in scope and they consider all Simcoe County their service area. These regional services are a major concern to listeners in Orillia. For example, according to Solutions Research, more than half the adults surveyed can't seem to find a radio station that plays the type of music that suits their tastes.
935 What is even more troubling to us is that less than 30 per cent of survey respondents said radio was their primary choice for news and information.
936 Bayshore' s own advertiser survey showed that over 60 per cent of retailers want a station that is more locally‑based than exists currently. Many said that advertising was simply too expensive on regional radio stations.
937 There is a clear desire among listeners and advertisers for a radio station that Orillia can call its own.
938 MS McLEOD: Bayshore is confident that Sunshine 89 is the right radio station for Orillia. Our market visits and audience research have told us that highly localized news and information is what's most vital to listeners in Orillia. In fact, a letter to the Commission from Orillia's Mayor, Ron Stevens specifically requests that the CRTC license a station that will:
"...primarily focus its programming on local news coverage and events."
939 This is what Bayshore Broadcasting does best.
940 Our news teams have won RTNDA awards for Best Small Market Newscast the last two years running and have received other awards for our coverage of news stories and public affairs issues.
941 Madam Chair, while many radio stations cut back their on local news coverage, Sunshine 89 plans to carry 10 hours and 32 minutes of locally produced news weekly, and that includes 8 hours and 20 minutes of core news programming each week.
942 These minimum commitments are significantly higher than any other applicant for this market and specifically address Mayor Stevens' request for localized news coverage.
943 Fully three‑quarters of this news coverage will be stories of local importance, including Municipal Council meetings, school and hospital boards, news conferences, emergencies locally, and so on.
944 As we do on our other Bayshore stations, in addition to the news coverage, Sunshine 89 will broadcast a one‑hour open‑line style program each weekday, covering topics of local and national importance, allowing citizens to call in and question local experts in the fields of politics, health and social services, or groups associated with community involvement.
945 Moreover, each Saturday morning we plan to put all of this news and information into context with a one‑hour program we will call "The Saturday Morning Review", delving deeper into the stories and the issues behind our daily newscasts. The "Review" will offer insight and opinion from Bayshore newscasters, as well as extended and in‑depth interviews with local newsmakers.
946 On Sunday mornings we will carry a one‑hour public affairs program dedicated to providing area First Nations people with a forum for them to share culture, history, news and their experiences.
947 Bayshore is proud of this promise of performance. In total, Sunshine 89 will offer almost 21 hours of news, information, and enriched spoken word programming, representing as much as 16.5 per cent of the broadcast week.
948 MR. RINGER: Sunshine 89 will play a variety of Pop and Soft Rock Adult Contemporary songs from the 1960s through today. The station will target a broad 35 to 64 audience, skewing female 35 to 54. Songs from artists like Michael Buble, The Police, Otis Redding, and Jann Arden will provide listeners in Orillia with a relaxing musical alternative to existing local and regional stations.
949 Beyond the mainstream Soft AC music format, several of our other stations have also been experimenting with unique theme programs throughout the week, offering blocks dedicated to Folk, Oldies, Big Band, and Jazz and Blues music. Sunshine 89 will continue this concept by producing 28 hours per week of specialized theme programs.
950 Bayshore's research has shown that there is an interest and desire amongst the proposed target audience for this type of specialized programming. For example, 53 per cent of survey respondents expressed their interest in hearing Jazz and Blues on our proposed station.
951 But Sunshine 89 will be much more than just a music jukebox. We are proposing a minimum of 2.5 hours per week of dedicated, enriched spoken word programming tailored to the Orillia audience. Segments centred on healthy living, entertainment, community events, and the local arts scene will appear at regularly scheduled times throughout the broadcast week.
952 We are particularly proud to offer two unique enriched spoken word features exclusive to Bayshore. The first, known as the "Lakelands Explorer", is an extension of our award‑winning Georgian Bay Explorer series. These daily two‑minute programs written by our own research staff in conjunction with local historians will provide a glimpse into the city's rich history, from Champlain and the area's original inhabitants to Leacock and to the Orillia Opera House.
953 The other feature, the "Orillia Reading Series", may be the first of its kind on commercial radio in Canada. For 30 minutes each week we will offer a forum for writers, poets, and authors to showcase their talents and share insight into the creative writing process.
954 According to Solutions Research results, almost 50 per cent of respondents are interested in listening to short stories, poetry readings and light comedy from authors in the Orillia area and other parts of Canada. These results are highly encouraging and suggest that our "Orillia Reading Series" will be an overwhelming success with our listeners.
955 MR. BRIGNELL: 54. Members of the Commission, Sunshine 89 has allocated $50,000 per year to the development of Canadian Content over and above the basic requirements of the CRTC. We have attempted to target groups and individuals in Orillia that might not normally receive funding for musical and spoken word projects. For example, our Aboriginal Training and Development Fund will encourage First Nations youth to explore careers in broadcasting, music, and journalism through educational guest speakers, musical concerts and post‑secondary bursaries.
956 As well, the "Orillia Lake Country Reading Series" will provide support and exposure to aspiring journalists, authors and poets through open‑mic style events held throughout the year in area bistros, nightclubs, and coffee shops.
957 Our partner in this venture, Newplace Literature, has held events in both Barrie and Orillia over the past several years with impressive attendance and media attention.
958 We will provide funds for local high schools so they may enhance their music programs. We will work with the Orillia Blues Festival to expand and promote the event, as we have done successfully in other markets. We will partner with the Leacock Festival and record some of their spoken word events for future airplay on Sunshine 89. And we will work with FACTOR to develop local and regional musical artists so they may become national and international stars.
959 In total, Bayshore has committed $350,000 over seven years to Canadian Content Development in its many forms.
960 MR. KENTNER: Bayshore has designed a business plan and long‑term strategy that is realistic and achievable even in today's difficult economy.
961 Madam Chairman, Bayshore has identified what it considers to be the two most important issues facing applicants at this hearing.
962 The first, audience and retail demand for local news and information, we have already addressed.
963 The second, and perhaps more crucial, is today's economic environment. Consumers and advertisers are tightening their belts.
964 In light of this, Bayshore has looked at a worst‑case scenario based on a theoretical 10 per cent and 15 per cent reduction in first year revenue.
965 Maintaining the same financial commitment to both programming and CCD, we determined the station could take an additional year to year and a half to realize positive PBIT. As a broadcasting group, Bayshore is fully prepared to absorb any additional losses without impacting our local news and programming plans.
966 Frankly, we are confident in our financial forecast. Bayshore has launched three new radio stations in the past three years, utilizing similar programming and business models. In each case, the new stations are operating at or above revenue levels forecast in our business plan.
967 Based upon our proven track record, the Commission should be confident that Bayshore will achieve each of the goals established in our promise of performance and business plan for Orillia.
968 We have a management team with in‑depth knowledge and experience in small markets here in central Ontario.
969 We have strong ownership with the financial resources to support this operation.
970 We will offer a music alternative and specialized theme programming heard nowhere else in the Simcoe County region.
971 We will provide the local news voice Orillia has clearly said it wants and needs.
972 Bayshore's Sunshine 89 will be a radio station that Orillia can truly call its own.
973 Thank you for you time. We look forward to your questions.
974 THE CHAIRPERSON: Thank you, Mr. Kentner and to your colleagues for your presentation this morning.
975 Commissioner Patrone...?
976 COMMISSIONER PATRONE: Thank you, Madam Chair.
977 Thank you Mr. Kentner for your entire presentation and for your team's presence here today.
978 In a way you jumped on my first question which was on the capacity of Bayshore to absorb issues related to the economy. I want to ask you a little bit more about that.
979 Regarding the retail survey that was done, for instance many of those numbers were compiled before much of the economic upheaval that has happened and I'm wondering to what degree you feel that you can absorb losses beyond what you already stated to break even in year four without making cuts.
980 We have heard from some of the other applicants suggesting that that may be a reality that they face, but you seem to be suggesting that staffing cuts are a measure that you don't anticipate having to take if things get worse.
981 MR. KENTNER: We are unequivocal of that. We came to win this hearing. We have a great plan here and what we did was, we looked at what would happen if our revenue projections ‑‑ which are really quite conservative in relation to certainly those who are not experienced in this market at this forum ‑‑ and we looked at what 10 per cent less and even 15 per cent less in the first year would do. It postpones positive PBIT for a year to a year and a half and Bayshore is fully prepared to live with that.
982 COMMISSIONER PATRONE: About a third say that they felt that radio advertising is too expensive because of the wide coverage areas.
983 Can you speak a bit about adapting your rate card for small markets?
984 MR. KENTNER: I would like to turn the question over to Kevin Brown.
985 Thank you.
986 MR. BROWN: The way that we would put together our rate card ‑‑ and we have worked one out at this point ‑‑ it is based on similar markets that we have worked with in the past few years, including Goderich, Port Elgin and Wasaga Beach, all very small markets as well. We have found ‑‑ I guess Wasaga Beach is probably the best example because it's also close to Barrie so it's the same type of scenario where we have found that Barrie rates reflect the audience that they gather for the advertiser and our rates reflect the audience that we do, for more the mom‑and‑pop shops that comprise in the community.
987 COMMISSIONER PATRONE: In your revenue forecast you are estimating total radio advertising capacity in Orillia to be in the $3.1 million range in '07.
988 Is the estimated $900,000 surplus in unclaimed revenue above and beyond that $3.1 million? There is an element of clarity that I was seeking as I was reading your supplementary brief.
989 In other words, is a $900,000 over and above or is that just part of the...?
990 MR. BROWN: No, it is part of, yes.
991 COMMISSIONER PATRONE: Okay.
992 Concerning further aspects of your business plan, Bayshore's goal will obviously be to repatriate listeners away from out‑of‑market stations. That will ultimately be the measure of your success.
993 By year two you estimate that 15 per cent of the revenues generated by your proposed station will come from out‑of‑market stations.
994 Could you tell us how you came up with that figure?
995 MR. KENTNER: By all means.
996 I would like to defer to Jeff Vidler, though.
997 MR. VIDLER: One of the questions we asked in the survey is current listening patterns, what station is currently your favourite station, which serves as a proxy for audience share and it's by looking at the results to that question cross tabbed by the potential weekly reach listeners that we were able to come up with an estimate of how much of that audience currently listens to other stations or what stations they listen to.
998 COMMISSIONER PATRONE: Were you able to glean which of those other stations you expect those revenues to come from and why those stations?
999 MR. VIDLER: Again, based strictly on tuning ‑‑ and perhaps others can speak to based on the discussions with advertisers and retailers in terms of where they are currently advertising ‑‑ but based on tuning alone if you look at page 43 of the format study, this shows the radio stations that are currently listened to most often by the potential weekly reach audience for the Soft AC format that Bayshore has proposed and you can see that it's really ‑‑ the number one station is KICX in Orillia at 16 per cent.
1000 COMMISSIONER PATRONE: Okay.
1001 MR. VIDLER: But there are a number of other stations with relatively the same percentage or a slightly smaller percentage of tuning.
1002 CHEZ‑FM, 15 per cent out of Barrie, 12 per cent to Rock 95 out of Barrie, 7 per cent to Kool 107.5 out of Barrie, B101 out of Barrie 7 per cent as well, and so on down the list. So it is really kind of spread in terms of tuning impact across all of those different stations.
1003 MR. KENTNER: If I might, Commissioner, I would like to just make the point however that if you refer to the chart on page 24 of our supplementary brief, the impact on the Orillia station is only 1 per cent, so that the concern that this broadcaster is not going to be severely damaged by an entrant who is on an entirely different format really doesn't hold water in this analysis.
1004 COMMISSIONER PATRONE: Thank you for that.
1005 I want to ask you a little bit about administrative synergies that you may be able to gain from relative to your other property, specifically Wasaga Beach.
1006 Are we looking at payroll, accounting, human resources, that kind of thing?
1007 MR. KENTNER: Exactly.
1008 Lois Reid can probably comment on our head office activities in Owen Sound and then perhaps others who are working in Wasaga Beach could talk about some of the synergies they see.
1009 MS REID: Most of the synergies that will come from the Owen Sound office will be the administration, the traffic, accounts receivable, accounts payable, all that will be done from the Owen Sound office still in the admin end of it.
1010 COMMISSIONER PATRONE: I want to ask you, then, a question that came up earlier relative to the demographics of this area.
1011 As you aware, or may be aware, the population is aging generally speaking and when you look at the age breakdown of the people in the area a little over a third is either at the tail end or past or targeted demographics and I'm just wondering what challenges you think that might represent to your operation going forward and how you intend to deal with those challenges.
1012 MR. KENTNER: Well, I think we are the applicant who is targeting the oldest demographics and beyond that we have our specialized programming in the evening which again tends to attract listeners who are even older.
1013 Would anybody else like to speak to that?
1014 MR. FOCKLER: Thank you.
1015 Commissioner, I think what you bring up, the tail end of the demographic, falls directly in line with the premise for our radio station, as Mr. Kentner intimated, both with the daytime Soft AC format and our evening specialty programs.
1016 So in final response to your question, it's not a challenge at all, it's something that we welcome and we specifically designed for this application.
1017 COMMISSIONER PATRONE: Do you anticipate being able to monetize the internet or a related website to your station?
1018 MR. KENTNER: We are putting a lot of energy into our websites at this point in time. We have just completed a complete redesign of our existing stations and we also are just launching one for our brand the Bayshore Broadcasting News Centre.
1019 But Kevin could perhaps speak about monetizing it more.
1020 MR. BROWN: We hope to monetize it.
‑‑‑ Laughter / Rires
1021 MR. BROWN: However. reality is that we are not finding a lot of money with revenue through the internet at this point. We sell some skyscrapers and banners and that and we have sold our streaming, but I wouldn't want to rely on the internet, no.
1022 COMMISSIONER PATRONE: I appreciate your honesty about that. Other people are having mixed levels of success.
1023 Go ahead.
1024 MR. VIDLER: Excuse me.
1025 I might just add that monetizing our internet properties has not been the priority. The priority for our radio station has been to get the news and the information out to the internet crowd. We also utilize it for streaming and for podcasts of some of our unique spoken word features.
1026 COMMISSIONER PATRONE: I want to get to news a little later on, but I'm going to ask you a bit about diversity because, as you know, the CRTC strives to bring added content diversity to the various markets.
1027 Can you talk a little bit about how Bayshore will bring a distinctive voice to the Orillia market relative to perhaps what's already been proposed and what's already available?
1028 MS SHAW: I think the diversity comes from a news centre and announcers that are dedicated to just the Orillia market. It will have its own news director and its own news staff. The announce staff will live in this community, work here and diversity of voice.
1029 COMMISSIONER PATRONE: And play here too, I anticipate.
1030 As part of the Radio Regulations there are new commitment requirements for subcategories 31 and 34, concert and jazz and blue music respectively. Will Bayshore be able to meet the increased weekly Canadian content requirement for subcategories 31 and 34?
1031 MR. KENTNER: I don't think we will have a problem at all.
1032 Rick Ringer, who is actually executing some of this programming in Wasaga Beach, could comment on that.
1033 MR. RINGER: Well, I believe, as Mr. Kentner has stated, we don't have a problem in maintaining this kind of programming in Wasaga Beach already. It has added a great flavour to our radio station there. It has also expanded the abilities and, frankly, the payrolls of some of our existing staff. As well, we have been able to find some other members of the community who have been well‑suited through their interest and experience, let's say in jazz and blues music, to be able to output but these programs on the air already in Wasaga.
1034 COMMISSIONER PATRONE: As far as cultural diversity is concerned, can you please tell the Panel how Bayshore intends to implement the CAB's best practices for diversity in radio in order to reflect Canada's ethno‑cultural minorities, aboriginal peoples and persons with disabilities into your programming?
1035 MR. KENTNER: Anyone who would like to comment on this can.
1036 I would just say, I personally view it as a great opportunity in Orillia where there is a very significant and high profile native population that we can actually engage and work with. We do serve a number of Reserves in other parts of our markets.
1037 But we have not had a lot of success in recruiting people of native ancestry for broadcasting and we are very anxious to improve on that.
1038 In the discussions we have had with people at the Mnjikaning Nation here I am confident that they have some good ideas and there was a lot of ‑‑ I think a lot of chemistry there. We look forward to the possibility of working with them and definitely to get more of them employed.
1039 The one thing that we were told was, please don't do a whole lot to segregate us, but bring us into ‑‑ make us part of your newscasts and make us part of your staff. That will certainly be a prime objective for us.
1040 COMMISSIONER PATRONE: Will the weekend public affairs program be a repackaging of stories covered during the week? All candour, will there be any live elements to them?
1041 MR. KENTNER: You go ahead there.
1042 MS McLEOD: At this point the Saturday morning review is to be original programming. Some of it might be based on some stories that have been carried throughout earlier in the week. For example, if there were a municipal council meeting and one of our reporters had done a longer interview with perhaps the Mayor or a Councillor on a hot topic but that those comments hadn't made it to the air earlier in the week, then we could have the opportunity to use those comments on the weekend.
1043 COMMISSIONER PATRONE: You have allowed for editorial comments to be aired in your proposal and I'm wondering about whether or not there will be a venue for public response and rebuttal relative to those comments?
1044 MR. KENTNER: Bayshore has been in the business of editorial comment I want to say for probably 40 of the 48 years I have been there. The first premise is that it is always incumbent on us to offer like time for a response or a different point of view. We advertise that fact.
1045 And it is one of the best ways of engaging the community, when you throw something out there and various people want to take a different point of view, we facilitate that. Sometimes we invite them to record it on the air, other times we read what they provide us, as they do on the CBC National for example.
1046 But that's a very important part I think of what Orillia is looking for at this point in time.
1047 Commissioner Menzies asked the question, you know, why have things ground to a halt in this marketplace and nobody seems to be saying the obvious, that it's being very well served by a large number of regional operations but there is no local broadcaster any more. The bedrock of local broadcasting is news and public affairs.
1048 COMMISSIONER PATRONE: I know it was in your supplementary brief, can you remind me again of your staffing commitments relative to news and information programming?
1049 MS McLEOD: We will have a total of three people in our newsroom, as we do currently in Wasago Beach. Two of them will be dedicated to weekends and then three days through the week. They are also reporters. We will have one staff member who does the morning show exclusively Monday to Friday.
1050 MR. KENTNER: If I may, the one thing that I would like to leave people with is that the important thing ‑‑ what has happened to news in radio in Canada is we have, you know, the two man news department and the three‑minute newscast. Even if you are, you know covering those newscasts, who is covering the beats? Who is at City Council? Who is at County Council? Who is at the school board?
1051 I admit it, sometimes it's a struggle but Bayshore staffs all of these events in the communities in which we are operating and that, in our mind, is why we will be successful in this market, because it is what people are missing.
1052 I just see recently where a member of Council complained, writing in "Orillia Today" that he hadn't, you know, been heard as a councillor on the air in months and he was complaining about that.
1053 In our markets people know their councillors by their voices because they hear them on the air. It's very important.
1054 COMMISSIONER PATRONE: You said that Orillia's news department will be separate and distinct from Bayshore's other radio stations.
1055 I'm wondering about what news synergies, if any, you expect to be employed. What I'm talking about is perhaps sharing resources, airing stories of interest in your various stations. Will you be sending reporters out to certain areas? For instance, if they are between communities that are served by adjacent Bayshore stations.
1056 Can you talk a little bit about that?
1057 MS McLEOD: Yes, yes, and yes.
1058 We already work really closely with the stations that we have in Goderich and Port Elgin and the three stations in Owen Sound sharing sometimes things like commentaries, as Ross touched on, and stories that touch on our common borders.
1059 For example, the radio station in Owen Sound has quite a large newsroom and sometimes we will send reporters to events that we can't get to because we are small and our people are working hard.
1060 COMMISSIONER PATRONE: It comes in handy, doesn't it?
1061 MS McLEOD: It's very handy, absolutely right.
1062 COMMISSIONER PATRONE: But I do see in the box mentioned in that same area of your supplementary brief that there is no reference to international news.
1063 Does that mean zero mention of, say, the mid‑east war or catastrophes in Asia?
1064 MS McLEOD: Absolutely not. When Benazir Bhutto was assassinated that was our lead story that morning, but the rest of the newscast was filled up with coverage of the municipal councils that had taken place the day before.
1065 MR. FOCKLER: Commissioner, I think that was just an oversight on that page.
1066 COMMISSIONER PATRONE: Okay.
1067 MR. FOCKLER: The national and international news would be 10 per cent.
1068 COMMISSIONER PATRONE: Thank you. I appreciate that.
1069 Will stringers be used, unpaid stringers, volunteers, or will it be strictly paid staff?
1070 MR. KENTNER: We find that people seem to want to be paid to be a stringer.
1071 But, yes. I will say this, we would like more than we have now and I, being of the old school and one of the people who remember the days of stringers, I am really high on developing more and certainly the Orillia area there are a lot of outlying communities that the only way they will really benefit is if there is somebody in the community who, for example, is a regular contributor to the open line at noon or who does voices for newscasts when there is a story in their area. Definitely we want to pursue that.
1072 I think also we have definitely indicated here that we will have a native correspondent.
1073 COMMISSIONER PATRONE: Yes, that was my next question, because you of course mentioned the fact that you have been having great difficulty in trying to incorporate aboriginals into your operation up to this point and I see you have ‑‑
1074 MR. KENTNER: Can I share a short story?
1075 COMMISSIONER PATRONE: Sure.
1076 MR. KENTNER: Chief Ralph Akiwenzie came to see me recently, he's a good friend, and he was sitting in my office and we were chatting away and he was telling me about his shopping list for the feast he was going to have for the Council staff the next day and I said gee, "Gee, Ralph, could you just give me a few details because I would love that to go on the news." "Oh my gosh, no", he said. "You don't want people to think I'm buying votes."
‑‑‑ Laughter / Rires
1077 MR. KENTNER: It's very hard to get news from Reserves because they consider themselves Nations and you don't get to sit in on Cabinet and they say you don't get to sit in on our Council meetings.
1078 COMMISSIONER PATRONE: And yet you have committed to a First Nations issues reporter.
1079 MR. KENTNER: I think that's the way to start getting some inroads.
1080 COMMISSIONER PATRONE: Will that person be an aboriginal person?
1081 MS SHAW: I think in our first discussions with them what they were clear in presenting to us was they didn't want our news staff going and covering their meetings because, as Ross just spoke to, they see themselves as a nation and not sitting in on Cabinet, but they were saying that if they we gave them the opportunity they would provide us with someone who would be interested in providing what they wanted to let out, so just knowing that balance of what is common news and what is protected within their make‑up I guess.
1082 COMMISSIONER PATRONE: I'm going to be wrapping up fairly soon. I have just a couple of more questions.
1083 In your open line show you refer to "fair and balanced representation". I think you touched on this already, Mr. Kentner, but what editorial checks and balances are in place to ensure that in fact all the various opinions that tend to surround any issue find air time on your station?
1084 MR. KENTNER: We have a three‑person committee made up of myself, Manny Paiva, the News Director and Kevin Bernard the Assistant News Director in Owen Sound.
1085 Now, we have quite a few people contributing to editorials. I do typically two a week and then the rest are distributed among how many journalists we have in the different centres. Nine.
1086 What we do is, we try to work about two days ahead. For example, somebody was assigned to write something on the budget that's coming down today. I have already done something for later this week that deals with the fact that I am refusing to participate in this recession and other people are doing other things along those lines.
1087 So there are three senior people who are looking at both what we should be doing.
1088 One of the things we try and avoid is, for example, running a topic which is really of no interest in Wasaga Beach from Owen Sound or vice versa. So that takes care. And sometimes there will be different editorials run in different places.
1089 But where something is of ‑‑ for example, something about the budget is going to apply across the board ‑‑ and I believe today's editorial commended Dalton McGuinty for finally resolving ‑‑ or bringing forth legislation about the strike at York University and that ran in all of our centres.
1090 Again, as I say, what we are trying to do is provide an opportunity here to bring legal counsel in if we feel that we are pushing the envelope, but essentially three of us feel that we have a balanced piece and very often there is some backing‑and‑forthing between that committee and the writer before we accept the piece.
1091 COMMISSIONER PATRONE: And the question that every applicant is being asked of course is when do you anticipate being able to launch your undertaking?
1092 MR. KENTNER: Bayshore has launched three stations in three years, one of them took less than six months.
1093 I don't deny the challenges here where we are dealing with the CBC and probably the need for a combined antenna, but I think that we would certainly want to be on the air within a year. That would be our plan.
1094 COMMISSIONER PATRONE: I know my colleagues have questions of their own for your organization so I thank you for your answers.
1095 Madam Chair...?
1096 THE CHAIRPERSON: Thank you.
1097 Before I turn it over to Commissioner Menzies, did I hear you right, Mr. Kentner, you have been with Bayshore for 48 years?
1098 MR. KENTNER: I started when I was 10.
‑‑‑ Laughter / Rires
1099 THE CHAIRPERSON: I was just going to say well, both you and Bayshore are doing something right.
‑‑‑ Laughter / Rires
1100 THE CHAIRPERSON: Commissioner Menzies...?
1101 COMMISSIONER MENZIES: I was actually going to ask on that if you had refused to participate in previous recessions as well.
‑‑‑ Laughter / Rires
1102 MR. KENTNER: Well, you know, I think that most thinking Canadians now, looking at their depleted RRSPs are actually looking toward the upside, looking toward the rebound and saying how can I position myself best now for the turnaround which all indications are is going to be not that far down the road and probably a nice bounce to that rebound.
1103 Our feeling anyway is that we want to be prepared for what's coming next, not for ‑‑ or not get totally mired in what are of course difficult times right now.
1104 COMMISSIONER MENZIES: Thanks. I will try to work on that.
1105 In your supplementary brief you made an estimate that there is $3.1 million available for radio advertising in the Orillia market.
1106 First of all, you said you came to that using generally acceptable formula.
1107 Can you help me understand what those generally accepted formula are.?
1108 MR. KENTNER: I could walk you through the formula very quickly.
1109 The total retail sales in Orillia's principal market area is $711.4 million. The retailers' average advertising expenditure on all advertising media based on 2.9 per cent of total retail sales is $20.6 million, the share allocated to radio advertising is estimated in most markets to be 15 per cent, thereby your $3 million.
1110 COMMISSIONER MENZIES: Okay. Thanks.
1111 Now, that's reasonably at odds with the estimate we were given from Larche who said about $2 million. Given he has been active in and around this market for quite some time ‑‑ you are not that far away ‑‑ can you help us explain the difference? Because, you know, $1 million here, $1 million there make quite a bit of difference; right.
1112 MR. BROWN: I can't speak to Mr. Larche's formula or where he got the $2 million, but these are the methodology that we have used in every market that we have gone into and they have proven to be accurate.
1113 The Financial Post Survey of Markets is what it's based on and retail sales and 15 per cent for radio.
1114 So I don't know why there is the difference, but we are very confident of the figures that we have presented.
1115 COMMISSIONER MENZIES: Okay.
1116 The next question was on the survey. I think it was on page 34 of your supplementary brief where you mentioned you surveyed 30‑plus Orillia advertisers and 27 per cent said they were open to advertising on a new format with more local and with a softer appeal.
1117 I mean that's still 30‑plus I'm taking of the I guess it's 32, that's still only eight guys and my assumption is that you would need a lot more than that to make a go of it and I just want to know that in your past experience with your other ventures is that about the size of the survey that you have done and how accurate have those surveys proven to be?
1118 MS SHAW: I think when Kevin and I and Ross and Rob spent a lot of time in Orillia we talked to a lot of people. When Kevin and I specifically came with a number of questions to go in to get a feel, we weren't doing this survey to find out information for our application, we were doing it internally to find out if we wanted to make the application.
1119 So we feel very comfortable that we talked to enough people and a cross‑reference of people to put our money where ‑‑ it's on the line for the application. We took this very seriously. We spent a lot of time and a lot of money in the preparation for putting in an application.
1120 So although it's a few people, we had a good cross section of small businesses on the main street, the mall, car dealerships, local event organizers and that type of thing.
1121 We also talked in fairly general terms with a lot of people that we didn't conduct the survey with. We just came and spent weekends and weeks here over the last year or two.
1122 We are fairly familiar with the market because it is close to home and it's a place that we all have been spending time recreationally and going through and comfortable with, but we wanted to get a feel that when you go out on a Thursday night how busy is a restaurant. So it wasn't just talking to these specific people, these are just the people that we more formally interviewed at that time.
1123 COMMISSIONER MENZIES: Is this consistent with your past practice, you know, in investigating opportunities for licensing before and has that proven successful or has your research, or your investigation perhaps a better word, been supported?
1124 Just hang on, let me get it right.
1125 Once you have started up in, for instance, Port Elgin, Wasaga Beach and Goderich, did you find out that the feedback you got from your initial investigations proved to be the case?
1126 MS SHAW: I will let Rob Brignell speak to this more in just a moment, but I think that the difference was when we added our first station in Owen Sound it was the country station, we were familiar; Port Elgin we were very familiar, and so as we have gotten a little bit further from home we have gone into more extensive investigation I guess.
1127 But I will turn it over to Rob for further comment.
1128 MR. BRIGNELL: I was very involved in our Port Elgin application. I managed that radio station. I was also very involved in the Goderich application, I managed that radio station as well.
1129 even in Port Elgin we knew that market reasonably well, but we spent a good six to eight months unearthing things that we didn't know just to make sure of our application.
1130 In Goderich I want to say, I spent pretty close to a year going back and forth talking to people, looking for the ins and outs. We had an entire team go down to Goderich and span out across the entire area, collected information, talked to retailers and our results came back and we exceeded our expectations in those markets. It was based on the intel that we got just walking the street and talking to people in business.
1131 So we are very confident that the surveys that we do in market support and encourage us to go forward with those applications.
1132 COMMISSIONER MENZIES: Okay. Thank you.
1133 In your estimates of sources of revenue you estimate I believe a 15 per cent first‑year impact on the local incumbent, if I read correctly, 10 per cent in year two, which I'm guessing is roughly about the same amount of money.
1134 And you say you are not going to fight on rate for advertising?
1135 MR. BROWN: What we are saying is that Barrie has an established rate card which would be much higher than ours because rate cards are based on audience cume. You know, the more people you reach obviously the more value to the rates.
1136 I don't have a copy of the incumbent's rate cards, but some of the people that we talked to in Orillia were telling us they were paying approximately $35 per commercial for local service and what we are projecting is revenue based on 2 1/2 minutes per hour at an average cost per minute of $25, which is approximately $15 for a 30‑second commercial. So that would be the difference.
1137 COMMISSIONER MENZIES: So you are going to be ‑‑
1138 MR. BROWN: We are going to be ‑‑
1139 COMMISSIONER MENZIES: ‑‑ cheaper.
1140 MR. BROWN: ‑‑ less expensive, yes.
1141 COMMISSIONER MENZIES: Less expensive, sorry. I didn't mean to use ‑‑
1142 MR. BROWN: That's okay.
1143 MS SHAW: Less expensive than the regional broadcasters that cover a much larger area.
1144 COMMISSIONER MENZIES: But that would be a rate challenge for Larche, too. No?
1145 MR. BROWN: No.
1146 MS SHAW: Our information ‑‑ sorry, Kevin ‑‑ is that, with the retailers that we talked to, our local rate card seems to be fairly in line with what they are paying on the local ‑‑ or what it's been perceived ‑‑ The DOCK or the Country station.
1147 COMMISSIONER MENZIES: Okay. So the $35 you referred to, that was Barrie?
1148 MS SHAW: Yes.
1149 COMMISSIONER MENZIES: Okay. Thanks.
1150 Now, the other thing is, in your estimate, your estimates of revenue, you are talking about 30 per cent coming from money that's currently going out of the market.
1151 Did you take into account what Larche might be taking from its fairly recently reconfigured operation in Orillia, what it might be taking from that out‑of‑market pool as well, or is this assuming that Larche is going to basically stick with what it has and you will be the primary winner ‑‑ repatriater of out‑of‑market revenue?
1152 MR. FOCKLER: In our calculations we considered the Larche Midland station as being an out‑of‑market operator, as with the four Barrie radio stations.
1153 COMMISSIONER MENZIES: Okay. I was just referring to the ‑‑ I'm sorry I wasn't clear ‑‑ the Orillia Larche station.
1154 MR FOCKLER: The Orillia Larche station is considered as "C" the existing station on that chart that you are referring to.
1155 COMMISSIONER MENZIES: Okay. This is my fault because I'm not explaining it properly.
1156 Are you assuming that the Larche Orillia station will be taking no advances into that out of market ‑‑
1157 MR. BROWN: No. Oh, no. We understand that he will make advances as well, 3 per cent, 5 per cent a year.
1158 COMMISSIONER MENZIES: Okay.
1159 MR. BROWN: Yes.
1160 COMMISSIONER MENZIES: Thanks. That's what I meant.
1161 Last, your stations seem to have had a lot to do with beaches ‑‑
‑‑‑ Laughter / Rires
1162 COMMISSIONER MENZIES: ‑‑ and water. There seems to be a certain synergy there.
1163 Now, I assume you all have boats and things and fish, but in terms of that one of the issues that was raised earlier by Commissioner Patrone and was discussed and there was some frustration about is this ability to monetize the summer audience.
1164 I would like your perceptions on that and how you works in Goderich, Wasaga Beach and that and is that ‑‑ do you think it's workable here, if it does work?
1165 MS SHAW: Go ahead.
1166 MR. BROWN: I was just going to say, the formula that we work on is we try to find advertisers that will advertise with us 52 weeks a year. That's the game plan so we have that base month after month.
1167 There are peaks. For example, winter can be a real tourist month for us as well. This year has been excellent in terms of skiing. In our Wasaga market Blue Mountain has done phenomenal and it has generated more income onto our station in that way.
1168 I see it the same way up here as well, that summertime will have its peaks, wintertime will have its peaks, there is snowmobiling, that type of thing at this time of year, Horseshoe Valley obviously. So there are peaks.
1169 Even though we won't get those ‑‑ I know what Mr. Larche was saying about the BBM, it doesn't reflect the swell, but we have lived with that in the entire history of Bayshore Broadcasting.
1170 For example, Sauble Beach, which is near our home market of Owen Sound, swells every summer, but we have never been able to capitalize that in the ad agencies of Toronto even though they know because they come themselves and see it. But, you know...
1171 MS SHAW: I would add as well that we don't rely on national sales other than for a very small percentage of our advertising revenue. So I hear what Mr. Larche is saying when you are competing on a national front, but most of ours is local advertising revenue.
1172 COMMISSIONER MENZIES: Okay. Thank you.
1173 THE CHAIRPERSON: Commissioner Lamarre...?
1174 COMMISSIONER LAMARRE: Merci, Madame la Présidente.
1175 Mr. Kentner, I do take your point that you don't want to participate in the recession.
‑‑‑ Laughter / Rires
1176 COMMISSIONER LAMARRE: Nonetheless, I realize that you are also realistic and think that you may be dragged into it kicking and streaming, but still, in your presentation you make the point in paragraphs 65, 66 and 67 that:
"As a broadcasting group Bayshore is fully prepared to absorb any additional losses without impacting our local news and programming plans." (As read)
1177 I know you touched on this issue with my fellow Commissioner, Mr. Patrone, but I'm not sure I understand the answers yet so that's why I'm asking for a couple of clarifications here.
1178 When you are saying that you are going to absorb the losses, that would be the losses of the new station in Orillia and that "without impacting local news and programming plans", would that relate only to the local news and programming plans in Orillia or to all of your stations?
1179 MR. KENTNER: You have asked a very broad question here and I can just answer it on the basis of experience, that we are in this for the long term. It takes a tremendous amount of effort and money to attract quality talent and when you part it out, you know with the rise and fall of the economy, we certainly try and avoid that.
1180 What we have said here, we are not trying to introduce new evidence or change our application, we are just saying we took the trouble to run what would happen, like project what would happen with a 10 or even a 15 per cent reduction in first‑year revenues and it would postpone our positive PBIT for a year to a year and a half.
1181 We are just saying, you know, we would absorb those without any consequence to our news and programming plans, because if we don't do those things we won't have the audience that we need to sell. I would say that's a general philosophy.
1182 I am just very, very fortunate to have the gentleman behind us who never ask questions, you know, when we don't meet our objectives, but I would like to perhaps get on the record, if Kevin would, that actually at this point in time ‑‑ and we are at January ‑‑ we are not behind last year across our properties in sales.
1183 COMMISSIONER LAMARRE: But my question, if I may, was a little bit more specific, at least I thought about it as being more specific.
1184 When you are saying ‑‑ I understand your philosophy that you have attracted talent, you have attracted the audience, you don't want to lose that because of a short‑term downfall or profit ‑‑ or losses instead of profit, but when you say "it would not impact the local news and programming plans", would that be the local and programming plans of the Orillia station or throughout your entire network of stations, that you were going to protect that?
1185 MR. KENTNER: Well, specifically it was designed to cover this situation right here, but I believe that we would not be reducing our plans elsewhere.
1186 You have to appreciate that three of our stations are still, you know, being established. The three Beach brand stations in Port Elgin, Goderich and Wasaga Beach are new operations. If we were to start cutting them back we would lose face with our audience and faith with the audience.
1187 COMMISSIONER LAMARRE: Okay.
1188 Continuing on the fact that you do have several stations, some of them have been on air for a short period of time, how does that play out, the location of those stations? You are ending up with quite and interesting network, from reading it.
1189 Now, if I drive through the area of Simcoe County and Georgian Bay, does that mean that with this Orillia station, if it gets approved, that Bayshore will be present just about anywhere where there are vacationers?
1190 MR. KENTNER: No. There are none of our stations audible in Orillia.
1191 But aside from that, the Orillia station is designed to serve a small city and a very, I would say, you know, cosmopolitan type of city with a great arts and letters history. The kind of programming that we are proposing, especially spoken word, is tailored exactly to this community and is very different from what we are doing in other centres.
1192 MS SHAW: If I could add something, I think when you refer to a Bayshore station our hope is that if you are in Orillia and familiar with Bayshore Broadcasting you would recognize it by the content, meaning that if you are listening to a station in Orillia you know that you are listening to an Orillia‑based station, and if you drive down and you get to Wasaga Beach you know you are in Wasaga Beach. The commonalities of the Bayshore brand, if you will, is what we take great pride in our news and information and representing the communities that we are serving and operating in.
1193 COMMISSIONER LAMARRE: Okay. So basically what you are telling me is that all of those stations that you do have are not interchangeable, even though you should be able to recognize the brand throughout?
1194 MS SHAW: They are not at all.
1195 I think that the synergies that we enjoy when you talk about recruiting staff, we have had great opportunities for promoting from within. When you look at our Program Director for the Beach station in Port Elgin who started as a cruiser boy, as he refers to it, and moved up, we have had some tremendous opportunities for staff moving along and that's how we have been able to keep the Bayshore brand of our operations, because we do have people that we have relocated by promoting to the other services so the Bayshore family feel or the identity that we take pride in is recognize through there.
1196 But certainly they are not interchangeable on‑air. They have separate news directors and announce staff and totally separate entities.
1197 MR. FOCKLER: And we don't use the word "network".
1198 COMMISSIONER LAMARRE: You don't use the word "network", okay, so I won't.
1199 So that you're not disappointed I'm going to have to ask a couple of technical questions here.
‑‑‑ Laughter / Rires
1200 COMMISSIONER LAMARRE: In reply to deficiency questions, in your October 14th letter you provided realistic contours and could you please confirm what was the reception antenna height for those calculations? Usually they are on label, but they are not.
1201 Just give a call to your consultant and come back with the answer, and hopefully the answer will be 9 metres.
1202 MR. FOCKLER: Madam Commissioner, perhaps we could respond to you within the next 24 hours.
1203 COMMISSIONER LAMARRE: Yes.
1204 MR. FOCKLER: Would that be appropriate?
1205 COMMISSIONER LAMARRE: Yes. It's Figure 8.
1206 MR. FOCKLER: Thank you.
1207 You wished for the antenna height?
1208 COMMISSIONER LAMARRE: Receiving antenna height.
1209 MR. FOCKLER: Receiving antenna height.
1210 COMMISSIONER LAMARRE: Receiving antenna height.
1211 MR. FOCKLER: Thank you.
1212 COMMISSIONER LAMARRE: Now, you have also been asked if other frequencies beside 89.1 MHz would be suitable for your application.
1213 You have identified two possibilities, but at the same time you have rejected them because they weren't sufficient to meet your service objectives.
1214 Do you still maintain that today?
1215 MR. KENTNER: I think that we qualified that, if I'm not mistaken. We have said that would not provide exactly the same service to Orillia and environs that we would view as optimal service and I think you will agree that we did a better job than some applicants of serving the Orillia market on 89.1 in our technical brief.
1216 But I believe that we indicated that if we had to use one of the other facilities that we would be willing to do and it would probably just mean that we would have to scale down some of the parameters of our ‑‑ not the programming. We said that we are not going to change our programming plans, but probably our top line, which would again postpone positive PBIT somewhat.
1217 MR. FOCKLER: Madam Commissioner, just to reiterate what we said in the response to that letter that you are referring to, the Commission in their call for applications put out a call for the Orillia market, to specifically serve the Orillia market and that's what we attempted to do with the 89 frequency. Should we be granted another frequency, we may, in terms of the contour itself, be forced to limit other outlying areas such as Washago or Atherley or places that are kind of on the periphery of Orillia itself that we had planned to serve with this application.
1218 COMMISSIONER LAMARRE: It seems from your answers that you are fully aware of the issues regarding the alternate frequencies that you have identified.
1219 MR. KENTNER: Yes.
1220 COMMISSIONER LAMARRE: Okay.
1221 Now, lastly, with the one application that you did put forward, if I can refer you back to Figure 7 of your engineering brief, which is your main coverage area map.
1222 Obviously your consultant has drawn your attention to the fact that you will be receiving interference in parts of your protected contour. Now, I want to make sure that you realize that part of this interference may not be there if you launch in a year from now and it may arrive two or three years later because incumbent stations have increased their power which they can rightly do so.
1223 So you are aware of that situation and you accept it?
1224 MR. KENTNER: Yes.
1225 COMMISSIONER LAMARRE: I said "last", I shouldn't have said that because you did tease my curiosity here when you talked about the challenges of implementing it if you were, as planned, on CBC's tower.
1226 You talked about replacing an antenna?
1227 MR. KENTNER: I really have not explored that in detail with the CBC. We have a letter of agreement with them that we can co‑site. Typically that will involve a new combined antenna. And if we are, you know, fortunate enough to receive a licence, that will be our first stop.
1228 COMMISSIONER LAMARRE: Thank you.
1229 Those are my questions, Madam Chair.
1230 THE CHAIRPERSON: Thank you.
1231 Just a couple of follow‑up questions. I have to take you back to your commitment to Category 3 programming.
1232 I believe in your supplementary brief you said that you would do as much as 12 per cent or 16 hours as a weekly commitment and it will include all the subcategories of concert, folk, jazz and blues.
1234 MR. KENTNER: Yes.
1235 THE CHAIRPERSON: Okay.
1236 MR. KENTNER: Rick will answer that for you.
1237 THE CHAIRPERSON: You do know that as a result of the 2006 Commercial Radio Policy we did up the Cancon commitment of subcategories 31 and 34 and that is that if you do concert programming you have a requirement to do 25 per cent Cancon of subcategory 31 and 20 per cent Cancon from subcategory jazz and blues.
1238 Will you accept those as conditions of licence?
1239 MR. KENTNER: Yes. We have now become aware of those content requirements and we will accept those as conditions of licence.
1240 THE CHAIRPERSON: Okay. Thank you.
1241 Just another point of clarification.
1242 In your application you said you would do 85 hours of live‑to‑air programming. Is the rest all voicetrack?
1243 MR. RINGER: Madam Chair, the bulk of the remaining hours would be the recorded specialty programming in the evening from 7:00 to 11:00.
1244 THE CHAIRPERSON: That would be the only time that you would not be on the air live?
1245 MR. RINGER: Not necessarily.
1246 THE CHAIRPERSON: Okay. So why don't you tell me the hours during the broadcast week in which you would be live and the hours in which you wouldn't.
1247 MR. RINGER: We would be on live from 6:00 a.m. to 6:00 p.m. six days a week; 6:00 a.m. to 7:00 p.m. on Fridays when we would institute the carefree highway programming for the cottage country traffic moving into the area.
1248 THE CHAIRPERSON: Okay.
1249 Then my final question is: Are you able to provide us with updated financing capacity within 10 days?
1250 MR. KENTNER: Yes, Madam Chair, we can do that.
1251 THE CHAIRPERSON: Okay. Thank you.
1252 Legal counsel...?
1253 MR. BOWLES: I believe I only have one simple question, a housekeeping matter.
1254 With respect to the revised ‑‑ actually not revised, the newly approved Equitable Portrayal Code, can you confirm whether you would be willing to abide by that as a condition of licence and as it is amended from time to time?
1255 MR. KENTNER: Yes.
1256 MR. BOWLES: Thank you.
1257 That's all.
1258 THE CHAIRPERSON: Well, thank you, Mr. Kentner and to all of your colleagues for your presentation this afternoon.
1259 We will now break for lunch and we will come back at 2 o'clock.
1260 Thank you.
‑‑‑ Upon recessing at 1255 / Suspension à 1255
‑‑‑ Upon resuming at 1400 / Reprise à 1400
1261 THE CHAIRPERSON: Madam Secretary...?
1262 THE SECRETARY: Thank you, Madam Chair.
1263 We will proceed with item 4 which is an application by Newcap Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Orillia.
1264 The new station would operate on frequency 89.1 MHz (channel 206B1) with an average effective radiated power of 1,000 watts (maximum effective radiated power of 3,300 watts with an effective height of antenna above average terrain of 147 metres).
1265 Appearing for the applicant is Mr. Mike Keller.
1266 Please introduce your colleagues and you will have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1267 MR. KELLER: Thank you.
1268 Good afternoon, Madam Chair, Commissioners and Commission staff.
1269 I am Mike Keller, Vice‑President of Industry Affairs. I was recently appointed to this position after 30 years in radio and television, starting in north eastern Ontario. Most of my experience has been in small and medium‑sized markets in Ontario and Alberta.
1270 Before we begin our presentation, I would like to introduce our team.
1271 Seated farthest to my left to my left is Glenda Spenrath, Newcap's Director of Operations.
1272 Next to Glenda is Scott Broderick who is Director of our Ontario radio operations. Scott has 22 years of experience in radio sales and management.
1273 Next to Scott is David Murray, our Chief Operating Officer.
1274 Beside Dave is Steve Jones, our Vice‑President of Programming.
1275 To Steve's right is Jen Traplin. Jen works at our Alternative Rock station in Ottawa, LiVE 88.5, has a strong background in radio news and is involved in the planning and promotion of our Ottawa CCD initiative known as "The Big Money Shot".
1276 We are here today to present our application to provide a programming option to Orillia, a high quality alternative choice that will bring a new editorial voice to the market, along with a fresh new musical sound, putting an emphasis on new and emerging artists.
1277 MR. BRODERICK: Good afternoon, Commissioners.
1278 Orillia presents an interesting challenge to a new entrant, one that will take adequate resources, clear branding and excellent execution.
1279 In the context of the current economic times, we know that the present record‑high levels of profitability in the radio industry are likely to decline over the next 12 months. However, we remain confident that we can offer a programming alternative in the Orillia market. The resources available to us, both financial and expertise, will allow us to ride out these uncertain economic times.
1280 Last Tuesday the Bank of Canada issued a statement as part of its announcement of an overnight bank rate cut. It noted that Canada's economy is projected to contract through mid‑2009, with real GDP dropping by 1.2 per cent this year on an annual average basis. But the Bank also projected that real GDP would rebound, growing by a full 3.8 per cent in 2010.
1281 While the first part of that statement is of great concern, their projection of a rebound in 2010 with good growth gives us confidence. By the time a decision is rendered on this process and a new station is on the air we will be in 2010, coinciding with the rebound in the economy. A new FM station will be poised for a successful launch and the incumbent broadcaster will be well placed to take advantage of a better economy.
1282 We have a great deal of experience and success in markets the size of Orillia. We have developed a simple approach to these markets, one that we will bring to the Orillia marketplace.
1283 We will provide the highest quality signal possible. At this hearing our proposed capital expenditures are more than double most of the other applicants and about 40 per cent higher than the next closest applicant.
1284 We conduct research to ensure the right approach. Steve Jones will speak to this a little later.
1285 We invest in people and programming. Our proposed spending on programming over seven years is the highest proposed in this proceeding, in most cases more than double the other applicants, with only one applicant even close.
1286 This approach has meant success to us in markets as diverse as Cornerbrook, Newfoundland; Kentville, Nova Scotia; and Red Deer, Alberta.
1287 We are also extremely confident in the Orillia market's ability to sustain a second local radio station. Retailers have identified this market for growth of their businesses. In 2008, commercial developments to a value of $20 million were approved, including a Wal‑Mart Centre, a new Giant Tiger and a new Shopper's Drug Mart. This interest in the market reflects its strategic placement with two highways available to Toronto and its economic stability with a strong public sector.
1288 In an e‑mail received today from Robert Lamb, the Manager of Economic Development for the City of Orillia, we learned that Lakehead University has plans in 2009 for a $40 million, 80,000 square foot multi‑purpose facility right here in Orillia. The City itself has $10 million in infrastructure changes planned, including an $8 million extension of West Ridge Boulevard. There are also potential plans for a new library and a twin pad arena.
1289 To paraphrase Commissioner Menzies in an earlier dialogue in these proceedings, Orillia, with one of the strongest retail economies in the Country, fully 29 per cent ahead of the national average and 40 per cent ahead of the provincial average, is not at all "uninspiring".
1290 We believe that Orillia is well poised to rebound with the economy in 2010 and we are ready to invest in that future.
1291 Part of our approach, as I said, is to investigate the appropriate format to provide and now, to tell you how we chose our musical format, here is Steve Jones.
1292 MR. JONES: Although Orillia has only one station licensed to the community, finding the right format opportunity was a bit more complicated than it would be in other markets. That's because Orillia is inundated by radio stations that are not licensed to serve this market, yet provide strong signals that serve the larger communities of Barrie or other communities in the region.
1293 We have provided the following chart based on S4 2008 BBM results demonstrating that 83 per cent of the tuning in Orillia is done to stations that are technically out‑of‑market signals. These stations are not licensed to serve Orillia, but their 3 mV contours blanket the community and they take the majority of listening.
1294 The owners of the local station, CICX‑FM, are smart broadcasters who know their market well. They have recently reformatted their Orillia station as a Country station that provides service not only to Orillia, but also throughout Simcoe County.
1295 In addition, their Midland station was reprogrammed to a Classic Hits format, also serving all of Simcoe County, including Orillia.
1296 The result is two strong radio stations that together account for 27 per cent of the total radio tuning in the Orillia market, and do well in nearby communities like Barrie and Midland.
1297 The two radio stations licensed to Rock 95 Broadcasting, a Rock station and a Hot AC station, also perform extremely well here in Orillia. They both cover the Orillia market with their 3 mV contours and together they account for 19.5 per cent of Orillia tuning.
1298 Clearly this market is more complex than most single station markets.
1299 We contacted Mark Kassof to conduct a 300‑person survey of Orillia residents age 18 to 64. Mark asked respondents about their interest in nine different types of music and the perceived availability of these types of music on the radio in Orillia.
1300 The combination of interest in the format and availability of the format creates a number that allows us to estimate the potential success of that format in the community. We call that number the "percent of format void".
1301 In Orillia, the largest "percent of format void" was for two formats, Classic Hits and '60's and '70's Oldies. However, shortly before this research was commissioned, Larche Communications launched CICZ‑FM as "The DOCK", playing Classic Hits. Mr. Kassof wisely cautioned us that because this station was new listeners had not yet developed a familiarity with it, resulting in a lower than expected "percent of format void".
1302 Mr. Kassof indicated that in his opinion, this "percent of format void" would dramatically decrease as The DOCK became a better known radio station.
1303 For that reason, we turned to the next highest "percent of format void", CHR or Top 40. The CHR format has the largest "percent of format void" among 25 to 44‑year‑old listeners, and while 35 per cent of the market overall said they were completely satisfied with their local radio choices, only 21 per cent of CHR fans said they were completely satisfied.
1304 Newcap Radio has had tremendous success in the CRR format over the past few years. HOT 89‑9 in Ottawa is the number one station in Ottawa with female listeners, and it's the absolute leader in 18 to 34‑year‑old listeners.
1305 In Sydney, Nova Scotia, our CHR station, 101.9 The Giant, launched last spring and debuted as the market's number one station in the S4 ratings. The station was a winner across all demographics.
1306 A similar story has played out at 99.1 HITS‑FM in St. John's, where the station recently captured number one among 25 to 54‑year‑old listeners in addition to being the number one station for a long time among younger demos.
1307 The reason for this success is simple: the CHR format is an exciting format driven by new music, cutting edge trends, and emerging artists. CHR is one of the best formats for providing the exposure that develops emerging artists into stars. The CHR listeners crave the "next big thing", and that's why we are able to make the largest commitment to new and emerging Canadian artists of any of the applicants for a younger audience at this hearing, 15 per cent of all selections.
1308 "The Buzz", as we have dubbed this proposed station, will draw from the hottest new artists across a wide range of genres, pop, hip hop and alternative rock. If we were on the air today we would be playing Canadian stars like Kardinal Offishal, Nickelback, and Finger Eleven; emerging Canadian artists like Kreesha Turner, Belly, and Marianas Trench; and international artists like Lady GaGa, Beyoncé and Kings of Leon.
1309 The Buzz format is so fresh that the sample music list from our application will certainly be out of date by the time we go on the air. New songs by established artists consistently reinvigorate this format and brand new emerging artists move the format forward every single week. Whether by existing artists or emerging artists, there is always a fresh supply of new material to keep the CHR format fresh.
1310 To give you a better feel for our station's personality and our proposals for Canadian Content Development, here is Jen Traplin.
1311 MS TRAPLIN: Thank you, Steve, and good afternoon.
1312 A radio station appealing to the generation of people who grew up with the internet, music on their iPods and cell phones and multiple entertainment choices has to be more than just a jukebox. Our listeners can find their preferred music in many other places, it has to be lively and topical and bring added entertainment and information.
1313 We will do this in a number of ways, through our on‑air scripted features, through relevant conversation from our announcers, and through our use of interactive technologies to make The Buzz our listeners' home. All will place a premium on including the audience.
1314 Here are a few of our proposals:
1315 Every week day, "The Buzz Cut" will introduce a new song and profile the artist with some bio on the artist. We will ask for audience input as well as to whether it should be added to our playlist. The show will regularly feature new and emerging artists.
1316 While most stations have closed door music meetings to make choices for what is to be added or changed on the weekly music list, we will do ours live on‑the‑air every Sunday evening, asking for audience feedback. Our listeners will know and have input as to why some songs are added and others are not.
1317 And we will keep up with their thirst for technology with the "techBuzz", a daily briefing on the latest gadgets, computers and interactivity.
1318 We will also bring a strong emphasis on responsibility to the environment. On air we will run a daily feature called "Enviro‑Buzz" with tips to our listeners as to how they can make a difference. But we will also make a difference in our own operations with the use of hybrid vehicles, Segway Human Transporters and bicycles, instead of the traditional SUVs. We will talk about these initiatives and ask our listeners for their suggestions as well.
1319 While many feel that news is not welcome to this audience, our experience and our research tells us differently. While music is definitely the strongest attraction for CHR fans, local Orillia‑focused news is second.
1320 Our news gathering will have two components, a team of three full‑time professionals augmented by stringers who will work the traditional beats and ensure that our audience knows everything they need to stay on top of their community.
1321 But we will also have a street team who will be all over the city, getting the beat of the streets and bringing that to the air. Their input will not only add to our newscasts, but will provide fuel for our announcers' talk and also for our features.
1322 We will also make a difference in the lives of the emerging artists in Orillia with our CCD initiatives. We decided that aside from our contribution to FACTOR we would like to focus on creating the next star from Orillia through our "Rising Star" initiative. Somewhat patterned after our Ottawa initiative "The Big Money Shot" and our Calgary "Big Rock Star", we will identify a new and emerging artist from the area who will get a major shot in the arm with $40,000 to finance music and video production, coaching and touring. The exact mix will be worked out with each winner depending on what their needs are.
1323 Our support has already meant new opportunities for many artists with particular note for St. Joe's Mission, A Plot Against Me, Sojourn and Benefit of A Doubt in Ottawa and The Matt Blais Connection and the Dudes in Calgary.
1324 In all, we will contribute $350,000 over the course of the licence term, enabling us to contribute to the development of seven different artists in the Orillia area.
1325 Now here to sum up is David Murray.
1326 MR. MURRAY: Thanks Jen.
1327 Good afternoon, Madam Chair, Members of the Commission.
1328 As Scott mentioned at the outset of our presentation, these economic times present challenges to our industry, but regardless of the economic times all of us have to eat, all of us need housing and our appliances wear out and need replacing, our homes need maintenance, we need new clothing and we will continue to use our cars to get around. Life goes on. All of these kinds of activities require advertising and radio continues to be the best local choice.
1329 While we believe that national sales will soften for the next year, we expect that local sales will continue to be strong.
1330 The Government of Canada will announce a program of stimulation of our economy this week. Although we don't yet know the exact details, we do know that it will include massive investments in infrastructure, meaning many jobs and more economic activity.
1331 Scott mentioned the Bank of Canada predictions of short term pain with a rebound in 2010. Newcap is well positioned to launch a new station. With substantial resources we can finance the cost of a new station out of cash flow if needed. We have the programming expertise and the sales experience in this format and in this size of market to be successful.
1332 And our proposed format is very different from the incumbent's, appealing to a different demographic group. Not a single hour tuned will come to The Buzz from Kicks Country.
1333 In its application, another applicant noted the strong historical growth of retail sales in Orillia. FP Markets most recent projections show that the per capita retail sales are 29 per cent above the national average and 40 per cent above the provincial average.
1334 The same applicant also stated Orillia was flat in radio sales. They suggest that this is an argument against providing new radio to Orillia.
1335 We believe that the same data leads to a very different conclusion: There is not enough local radio with enough choice in format. If you don't like Country music you are forced to listen to out‑of‑market stations.
1336 As our chart shows clearly, 83 per cent of tuning goes to out‑of‑market stations. No wonder there is a problem converting local retail sales to radio dollars.
1337 The listeners and local business owners in Orillia deserve more local service.
1338 Our experience is clear: If you bring local choices and you provide a quality product, listeners will come to you and advertisers will want to reach those listeners.
1339 The low level of radio revenues to retail sales is not a problem, it's an opportunity for a new radio station to find advertising with no impact on the incumbent.
1340 We will provide a strong alternative to the existing radio choices, the local Country station, the Midland Classic Hits station and the Barrie Rock, Hot AC and Soft AC stations.
1341 We believe that our application is worthy of licensing because:
1342 One: It will provide a much different format, based on comprehensive research with an emphasis on new and fresh sounds.
1343 Two: We propose a strong investment in programming, over $4.6 million over the course of the licence.
1344 Three: We provide a new editorial voice to the area, not one present in Barrie or Midland.
1345 Four: We bring a strong investment in new and emerging artists, both in our playlist and on our CCD. Fully 15 per cent of our weekly playlist will be devoted to new and emerging Canadian artists.
1346 Five: We have the resources, expertise and commitment that will enable us to deliver on our promises.
1347 With 83 per cent of the tuning leaving the market, listeners and advertisers are ready for a new choice in Orillia and Newcap Radio is ready to meet their needs.
1348 We would be pleased to reply to your questions.
1349 THE CHAIRPERSON: Thank you, Mr. Murray and to your colleagues for your presentation this afternoon.
1350 I will ask Commissioner Lamarre to lead the questioning.
1351 COMMISSIONER LAMARRE: Merci, Madame la Présidente.
1352 Good afternoon, members of the panel.
1353 I would just like to thank you for providing us with the seating place arrangement that you have. It's so much easier for somebody like me who has trouble pinning down faces with names. So that is going to make it a lot easier for me this afternoon.
1354 I must say, I had planned my questions in a certain way, but your presentation sort of answered some of the questions and at the same time brought some others, so I will try to still follow a logical sense to all of this and address both representations today and what you have submitted to us so far.
1355 Now, you are making a strong case for the type of programming you will be offering and also for the fact that you will foster emerging and new artists. So from the get‑go I would like to understand how you define an emerging artist and if "new" comes with "emerging" or if it's separate, if new and emerging are the same?
1356 MR. JONES: Our definition of an emerging artist is still in flux as there hasn't been a defined answer from the Commission yet, and we await that. But in the interim we have used a working definition as an artist who is appearing in the first year of their chart history.
1357 COMMISSIONER LAMARRE: Okay. That would apply ‑‑ when you say "new and emerging artist", those two qualifications come together?
1358 MR. JONES: Yes.
1359 COMMISSIONER LAMARRE: Okay.
1360 You have explained how the research was done, how it got you to the choice or format that you were proposing to implement here in Orillia.
1361 Now, can you provide me with some thoughts more specifically how you would address the needs and expectations of the audience in Orillia with that format?
1362 MR. JONES: Well, our research was conducted amongst 300 Orillia residents 18 to 64, so we tried to choose a broad demographic that would allow us to survey not just the prime 25 to 54 advertising demographic, but also the demographics that represent the shoulders to that, the 18 to 24s and the over 55 audience. So we tried to get a very wide demographic picture of what the market was interested in hearing.
1363 That led us to our choice of format. Now, no format will satisfy everyone, but this one appears to be the format that is most in demand and right now most not being heard in Orillia.
1364 COMMISSIONER LAMARRE: And what in your programming scheme, of which you have spoken a little bit in your presentation, do you think will help you attract the audience here in Orillia?
1365 MR. JONES: It really does come down to being local. We have seen in this research that there is an audience not only hungry for this music, but that same audience is hungry for news about Orillia.
1366 When asked about non‑musical elements on the radio, they ranked Orillia news as the second most important element after music on the radio. These same listeners rated Ontario news and Toronto news and Barrie news quite low, in fact below the market average.
1367 So there is an audience out there that is hungry for information about their community and also hungry for this very same type of music.
1368 That same audience is also highly unlikely to listen to the incumbent radio station. So there is a bit of a gap there in that there is a group of people who want the music and want the information, but can't get both from the same radio station presently.
1369 COMMISSIONER LAMARRE: Which you will be offering.
1370 MR. JONES: That's exactly what we would be offering to that group of people.
1371 COMMISSIONER LAMARRE: I'm sorry if the intro is going to be a little bit long.
1372 If I can refer you to page 10 of your supplementary brief, you state there that launching a CHR station in Orillia "would have absolutely no impact on the existing Orillia station KICX 106."
1373 Then you have appended to your application a letter dated May 30th from your researcher, your consultant, that predicts that "the audience share of KICX will not change after The Buzz is launched." Again you mentioned that in your presentation this afternoon.
1374 That's one way of looking at the impact on the incumbent. Another way is in regards to revenues.
1375 In your financial predictions for year two of the operation, you forecast that 10 per cent of your advertising revenues would derive from KICX revenues prior to the launch of The Buzz.
1376 So I guess I have a twofold question here. How can you reconcile that with your statement that there is going to be no impact and, second, what's the basis of this prediction that in the second year of the lunch you would get 10 per cent ‑‑ you estimate you would get 10 per cent of those revenues?
1377 MR. MURRAY: Thank you.
1378 Well, the answer to our question no impact, we were referring to programming and audience, et cetera, so we did look at revenue independently from that in those questions.
1379 Now, we believe the impact on the incumbent broadcaster would be, you know, very minimal. As a matter of fact, their revenue would probably increase as ours increased.
1380 I'm going to pass it over to Scott Broderick to talk about how we derive revenue and how that would work.
1381 MR. BRODERICK: I think that it's important to note that 10 per cent, it is a percentage of a universe which we don't believe it is a fixed universe. We believe that universe will expand. If you licence an additional radio station in the marketplace there is going to ‑‑ you are going to essentially double the number of people on the street talking to local retailers about local radio solutions. That activity alone is going to grow the business significantly because of the differences in the two radio stations.
1382 Not all of the questions that we ask are going to be answers that we like and sometimes another radio stations might be a better solution. In this case, because they are so divergent, such different formats, we are going to find ourselves in a position where we might be recommending a purchase on the other Orillia station because it is very different.
1383 So we expect our entry into the marketplace will expand the pie. So the 10 per cent that you are seeing there is 10 per cent of an expanded universe. We have seen this in virtually every single one of our other markets where we have launched a new station and we have managed to grow the revenues in those markets.
1384 COMMISSIONER LAMARRE: In those other markets where you have seen this happen, where they similar sized markets is Orillia?
1385 MR. BRODERICK: Do you want to take that, Dave?
1386 MR. MURRAY: Yes, sure.
1387 Some of the markets where we have seen a new station actually cause revenue to increase is where we have had stations come in against us so we knew exactly. So when Pattison launched its new FM in Red Deer our revenue on both of our FM stations went up and the universe went up dramatically. It was just more stimulation. It forced us to be better at everything we do because the competition increased.
1388 The same thing happened in Moncton we saw back in ‑‑ I think it was in 2000 or 2001, four licences were awarded to Moncton, the revenue went up almost 30 per cent almost instantly. Our revenue increased in Moncton in that next year.
1389 The same thing happened to a smaller scale when "The Goat!" in Lloydminster launched their new station in Bonnyville, the revenue on our Bonnyville station went up because there was more people on the street talking to more businesses and, you know, competition is good, it makes everybody sharp.
1390 Actually, when Mr. Larche launched his new FM station in Sudbury ‑‑ I think it was around July 2008 ‑‑ the back half of 2008 was by far the best part of Sudbury's growth for us and our revenue went up.
1391 So our experience is that competition is very positive for the market. We don't want you to license multiple stations in all of our markets, I'm not saying that, but we don't fear that competition and activity. As Scott indicated, we will produce increased results.
1392 COMMISSIONER LAMARRE: Okay. Remaining on the topic of revenues, your business plan is based on a number of issues and hypotheses and one of them is the potential for The Buzz to attract Orillia listeners who are currently tuning into established out‑of‑market stations and, while attracting them, you are also going to attract advertising dollars that comes along.
1393 Now, can you be more specific as to how much revenues you expect to derive from those out‑of‑market advertising dollars?
1394 MR. MURRAY: Sure. I think I will let Scott tackle that one.
1395 MR. BRODERICK: Well, I think based on our estimate ‑‑ and it is pretty consistent math across the country, retail sales in Orillia alone ‑‑ forget about the region, Orillia alone ‑‑
1396 COMMISSIONER LAMARRE: Yes...?
1397 MR. BRODERICK: ‑‑ $692 million. An average of 3 per cent of that would be invested in advertising and radio consistently gets somewhere around 12 per cent of that.
1398 So this should be a $2.48 million, $2.5 million radio market. Now, clearly the one station is not generating that kind of revenue so the remainder of those monies are either not being spent on radio or leaving the market, chief among them is probably the Barrie market. I think they are aggressively selling in this marketplace.
1399 The challenge I think, the Barrie market is only 2 1/2 times the size of Orillia and is priced accordingly. It trades nationally somewhere around $16 cost per point, Orillia sells around $9 cost per point. So Orillia retailers, in order to reach Orillia residents are being forced to purchase a larger share of the region than they otherwise would have to. If they were given a local solution it would be a lot more efficient to buy Orillia.
1400 In retail generally accepted principle is location, location, location. They understand that by getting the right location ‑‑ because somewhere around a five mile radius they are going to get about 80 per cent other revenue and it's all about location and geography.
1401 So if you are forced to buy the region ‑‑ I know one of the surveys that was presented said oh, 89 per cent said would you not want more? Well, given a choice and if it costs the same, yes, of course you want more. But the efficiencies of buying locally, if you do the math, frankly, you could probably buy both Orillia radio stations in terms of the affordability as opposed to being forced to buy the entire region just to reach Orillia.
1402 COMMISSIONER LAMARRE: Okay. You have just explained to me how it is working out in the field, but let's do the math now.
1403 MR. BRODERICK: Yes.
1404 COMMISSIONER LAMARRE: How much annual revenues do you expect to be reeling in from the out‑of‑market advertising?
1405 MR. BRODERICK: Again, the entire amount, because we do not expect to touch the incumbent, in fact we expect that they will increase. So our first year projection is just over $1 million, I think $1.25 million, that entire amount would probably be repatriated.
1406 MR. MURRAY: Yes. We are estimating clearly revenue would come from newspapers and other people that just aren't going to radio because they can't get the 18 to 34 audience that we are going to super serve. If they need those people they are not getting it on radio perhaps, or sufficiently. So it's probably not 100 per cent, but a lot of it would come from repatriation and many other sources that we always get money from.
1407 COMMISSIONER LAMARRE: So if I understand correctly, you estimate that there is about $1 million that is being expatriated from Orillia to other markets, to stations out of this market, and that you would be able as a new station, local station in Orillia, to get that much of it?
1408 MR. BRODERICK: In combination with Larche.
1409 COMMISSIONER LAMARRE: Okay.
1410 MR. BRODERICK: Because, as I said, I think that having another station is going to increase the activity and I think we will both be well poised to put local solutions in front of local advertisers that they are going to find very efficient.
1411 MR. MURRAY: You see, I think something that is probably the case that probably confuses this market is that, you know, if the Barrie stations and Midland stations are selling to Orillia retailers, probably some of that revenue or maybe all that revenue that they sell is being credited to Barrie or Midland. So Orillia might look like it has a radio revenue of, I don't know, $600,000 or $700,000 when in fact it is probably closer to $2 million, it is just not being credited to Orillia. So we are going to get, ourselves and Larche, are going to get more of that.
1412 I think we heard Mr. Larche say this morning that he doesn't intend to increase his sales force, he is going to continue on even if he gets this licence. You know, we are going to have eight people on the street and those people are going to be stimulating the benefit of radio. We very much will be recommending Larche to them, as we will be recommending the newspaper to these clients if that is what they should buy.
1413 We train our people and we hammer it and hammer it that you are radio professional ‑‑ you are advertising professionals and you need to recommend what is best for that client, even if it is not us. We do that and it works because we gain their trust and we get their repeat business, et cetera.
1414 COMMISSIONER LAMARRE: Okay. If I can just get one last kick at this with a specific question.
1415 On year two of your business plan you expect that 40 per cent of the total revenue would be generated from existing advertisers that currently do not advertise in the market. So that amounts to about $471,000 a year two.
1416 Can you be more specific as to which station out of the Orillia market will be on the losing end of this? If you are gaining this, who is going to be on the losing end?
1417 MR. MURRAY: What I was just asking Mr. Jones was I believe our research shows where our 12 per cent that we are estimating would come from so now might be ‑‑ obviously the answer to your question is we don't know, but ‑‑
1418 COMMISSIONER LAMARRE: But your best guess...?
1419 MR. MURRAY: But our best guess ‑‑ there might be a clue here.
1420 MR. JONES: If we can relate audience share to potential revenue we can see that our biggest impact is on the out‑of‑market stations, particularly Rock 95 in Barrie; to a lesser degree The DOCK in Midland, and then from there it is really just a small amount from stations like B101 in Barrie and a couple of the Toronto stations that lose share. So it can't be directly connected to say that if we take three share points from Rock 95 that we will take "X" number of dollars, but there is I guess the biggest relationship between audience loss and potential revenue impact would probably be with that one station.
1421 COMMISSIONER LAMARRE: Yes. I get your point. Thank you.
1422 Now on the programming expenses, you have mentioned even in your presentation this morning that you are proposing the highest seven‑year expenses as compared to other applicants. That seems to be in line with what I was reading about this.
1423 Can you be more specific?
1424 Let's take year one for example, when in year one you plan to spend $602,000 of programming expenses, ramping up to 719,000 in year seven.
1425 What does that include, those programming expenses?
1426 MR. MURRAY: I will ask Glenda Spenrath, wherever she is, to give you the details. We definitely have that detail.
1427 MS SPENRATH: Sure.
1428 Of the $602,000, the lion's share of it is salaries of course. We have budgeted $440,000 for that and that would include a staff complement of nine full‑time people between news and programming and then two part‑time provisions. One would be for the street team on the programming side and the other would be for salaries for stringers on the news side.
1429 Then, in addition to that, we have the regular programming type items, we have broadcast news, we have programming features, we have royalties, and then wrapping up the amount we have all of the other types of costs that come into that, your meetings, your training, automobile costs for the hybrid vehicles and travel and supplies.
1430 COMMISSIONER LAMARRE: So you would have nine full‑time people working ‑‑ you said news and...?
1431 MS SPENRATH: News and programming, yes.
1432 COMMISSIONER LAMARRE: News and programming.
1433 MS SPENRATH: Yes.
1434 COMMISSIONER LAMARRE: Earlier I heard that you would have eight people selling the advertisements.
1435 Did I hear that correctly?
1436 MR. BRODERICK: We would start with fewer, but we would build it to eight.
1437 COMMISSIONER LAMARRE: You would start with...?
1438 MR. BRODERICK: Fewer.
1439 COMMISSIONER LAMARRE: Fewer.
1440 MR. BRODERICK: But we would build it to eight. I mean you kind of have to hire ‑‑ because the activities produce the results we would probably start with four and then add five.
1441 We have gone through something similar in Ottawa where we started with six and we are up to 12.
1442 MS SPENRATH: Yes. Our budget contemplates four salespeople at the start, at the outset, ramping up.
1443 COMMISSIONER LAMARRE: Other than the nine people looking after programming and the news?
1444 MS SPENRATH: Yes.
1445 COMMISSIONER LAMARRE: Those our different people?
1446 MS SPENRATH: Yes, that's correct.
1447 COMMISSIONER LAMARRE: Okay.
1448 MS SPENRATH: And of the nine in news and programming the split would be the three full‑time news and then the six would be announcing staff.
1449 COMMISSIONER LAMARRE: Okay.
1450 You mentioned about part‑time people being hired for...?
1451 MS SPENRATH: Two different areas. One would be the street team people on the promotions and programming side and the other would be stringers to assist on the news side.
1452 COMMISSIONER LAMARRE: A question that I'm sure you have the answer for, even though it's not spelled out in your brief, so that's why I need clarification.
1453 In your October 1, 2008 letter to the CRTC, on page 5, in reply to the question about the Canadian Content Development, you replied that:
"The allocation of the basic CCD will be made to qualifying local initiatives which will be determined by the local management of the station in the year that they are payable." (As read)
1454 Am I correct in assuming that you are referring to the portion of the basic CCD that does not go to FACTOR?
1455 MS SPENRATH: Yes, that's correct, the other 40 per cent that's not required.
1456 COMMISSIONER LAMARRE: So the 40 per cent. Thank you.
1457 So you are committing to providing 60 per cent of the basic CCD to FACTOR?
1458 MS SPENRATH; Yes, that's correct.
1459 COMMISSIONER LAMARRE: Okay.
1460 Now, referring you to your application, actually the application form, you have not specified on the form whether you would be willing to adhere by condition of licence to the CAB's Sex Role Portrayal Code. Mind you, it could be our fault because it has been updated to the Equitable Portrayal Code while our form still isn't.
1461 So I need to ask you this, if you would be willing to adhere by condition of licence to the new Equitable Portrayal Code that has replaced the Sex Role Portrayal Code as the CAB ‑‑
1462 MR. MURRAY: Yes. Yes, we will.
1463 COMMISSIONER LAMARRE: Okay.
1464 MR. MURRAY: And that was your fault.
‑‑‑ Laughter / Rires
1465 COMMISSIONER LAMARRE: When the CRTC admits to a mistake take it.
1466 Now, throughout your submission I notice that you are talking about an on‑air date of 2009 but during your presentation you said 2010. So am I to assume that if you were a successful applicant in this hearing that you would be shooting for an on‑air date of 2010 and not 2009?
1467 MR. MURRAY: We would put the station on as quickly as we could likely. But by the time ‑‑ you know, here we are into whatever month this is, January, so if approval came out in April or May or something, then you are going to get into the winter months so it very easily could spin over into the first quarter of 2010 before it was launched.
1468 We are not going to delay ‑‑ we didn't mean by that we would delay the process. We put them up very quickly, you know, as we did in Sydney and in Kentville and in Fort McMurray. They were launched within seven or eight months.
1469 COMMISSIONER LAMARRE: For instance, you don't find yourself facing unusual construction delays with the implementation of a transmitter or ‑‑ your objective is to do it as quickly as possible, so you would expect the end of 2009 or sometime in 2010?
1470 MR. MURRAY: That's right.
1471 Yes. We are finding normal timelines for ordering equipment and such.
1472 COMMISSIONER LAMARRE: Okay.
1473 Now, on the technical aspect of your application ‑‑ let me just grab what I need here.
1474 COMMISSIONER LAMARRE: You have been asked whether or not the frequency you applied for was the only suitable one for your application and in your reply you have, if I am correct, identified other possibilities but noting that they were not as interesting as far as the reach of the coverage was concerned.
1475 Is that to say that you would not consider any other frequencies than the one you have applied for?
1476 MR. MURRAY: I think basically what we have looked at is 89.1 as being the best frequency and when I look at ‑‑ I well just sort of ramble on a little bit if you don't mind.
1477 When I look at our map and compare it to some of the other applications I would hope that we would get more than this theoretical coverage and we would definitely maximize ‑‑ you would make the best use of that frequency if we were successful.
1478 But to answer your question specifically, you know, if in your wisdom you decided that you would approve another applicant and Newcap and told us to go find another frequency, we would be pleased with that and we would be confident that through the jigs and reels we could find another frequency that is better.
1479 Quite often when you go looking and you are rushed for time and you are trying to hit application deadlines it is more difficult to get to scope out exactly what all the alternatives are so quite often we have seen this happen where you have approved ‑‑ in Calgary there was one, you know, you approved it, CHUM I think it was at the time, you said but you need to go find another frequency, and they did.
1480 So I would think we could find another acceptable frequency.
1481 COMMISSIONER LAMARRE: Keeping in mind, though, that usually the one frequency that everybody is shooting for at a hearing is usually the easiest, the better and ‑‑
1482 MR. MURRAY: Yes, we would like that one.
1483 COMMISSIONER LAMARRE: You would like that one, okay.
‑‑‑ Laughter / Rires
1484 COMMISSIONER LAMARRE: You were talking about contours.
1485 Before we get there, I have to ask you this because it just so puzzled me when I saw the reply.
1486 October 8th you were asked to provide realistic contours, which you did, of your coverage. And you were asked if you were expecting reception problems because it seemed that the town of Orillia was not entirely encompassed into the realistic contour.
1487 Your reply was that your "proposed parameters were similar ‑‑ and you used the word "similar" which was a cautious thing to do:
"... to the existing CBC station operating from the same transmitter site near Orillia." (As read)
1488 So you don't expect to have reception problems so immediately that brought to my mind this question: Are you actually planning to combine to CBC's antenna and transmit at the same power?
1489 MR. MURRAY: I think I would have to get back to you on that. I don't know the answer to that question and we don't have our engineering consultant with us.
1490 COMMISSIONER LAMARRE: Okay. If you could just get back to us.
1491 MR. MURRAY: We can find that out I'm sure tonight and get back to you tomorrow.
1492 COMMISSIONER LAMARRE: Okay.
1493 And to go back to your contour but not the realistic one, the theoretical one, I just want to draw your attention ‑‑ and this should not be a surprise to you if you were here this morning ‑‑ an element of that contour that I'm sure your consultant brought your attention to, but still I want to make sure I have it on the record ‑‑ is that there are some small zones of interference within that contour that you will have to live with, and not only will you have to live with that, some of these zones may not be there when you will go on there and just appear at a later date when incumbent stations increase the power that they can rightly do because of the way their station is licensed.
1494 You are aware that this situation can happen.
1495 MR. MURRAY: Yes, we are.
1496 COMMISSIONER LAMARRE: Okay. And you accept it?
1497 MR. MURRAY: Absolutely.
1498 COMMISSIONER LAMARRE: Just to make sure I'm not leaving anything out before I let my turn go.
1499 In your programming information you used a term that I have not seen before and that sort of troubles me.
1500 When you are talking about the hour of news content you say you are going to have 'three hours of pure news".
1501 MR. JONES: That term "pure news" has kind of come about in previous hearings where we have provided the total number of minutes or hours designated as news content and the question has been put back to us as how much of that is actual news and how much of that is a newscast that includes weather and sports and public service announcements.
1502 So that's where the term "pure news" comes from. It's not necessarily there to designate hard‑hitting news or any specific type of news, but it is news exclusive from weather, sports or other kind of surveillance.
1503 COMMISSIONER LAMARRE: Okay. Thank you for that precision.
1504 And you have planned for 91 hours of local live‑to‑air from 6:00 a.m. to 9:00 p.m. on weekdays and 9:00 a.m. 4:00 p.m. on weekends.
1505 Is that correct?
1506 MR. JONES: Yes, that's correct.
1507 COMMISSIONER LAMARRE: And that remains?
1508 MR. JONES: Yes.
1509 COMMISSIONER LAMARRE: That remains. Okay.
1510 Those are all my questions.
1512 THE CHAIRPERSON: Thank you.
1513 Commissioner Molnar...?
1514 COMMISSIONER MOLNAR: Thank you.
1515 I would like to turn to your financials for a minute and I have a question regarding your revenue projections.
1516 Before you was Bayshore and when they were here their estimates ‑‑ they told us that today Barrie is paying $35 per spot today for the Barrie, which gives you as well Orillia, and that their estimate for Orillia itself was $15 per spot.
1517 When I look at your numbers, you are estimating $41 growing to $48 per minute.
1518 MR. BRODERICK: That's a per minute and I think the rates that Bayshore may have been referring to is that's generally for 30‑second commercial.
1519 COMMISSIONER MOLNAR: Right.
1520 MR. BRODERICK: So we are in line with Barrie pricing in terms of we are about half, a little under half the size. So if they are charging $45, $20‑$21 seems like a fair amount. Which the return per minute then would be around $41.
1521 So I think the number you are looking at there is our revenue per minute, not per spot.
1522 COMMISSIONER MOLNAR: Yes. And I understand that.
1523 MR. BRODERICK: Oh, okay. Good.
1524 COMMISSIONER MOLNAR: So I was looking and I believe what Bayshore said is they are projecting $15, which is in line with what Larche is charging today. So I double that. So that's $30.
1525 You are still 33 per cent above.
1526 MR. BRODERICK: Are they saying $15 per minute or per commercial?
1527 COMMISSIONER MOLNAR: Per spot.
1528 So if I double that for a per minute rate ‑‑
1529 MR. BRODERICK: Oh, I see what you are saying. Okay.
1530 COMMISSIONER MOLNAR: ‑‑ I'm getting to $30 per minute versus $40 growing to $48 per minute.
1531 I would wonder if you could provide me any sort of support to understand what is the capacity. Are we talking $30 per minute or are we talking $40 per minute, because it is significant. I mean if I was to drop your revenues by 30 per cent you have a much different picture here.
1532 MR. BRODERICK: Our estimates are based on experience in similar sized markets.
1533 We did a launch in Sydney this past year, we estimated $915,000 first year revenue and that's based on a percentage of sell out. We did $1.2 million; in Kentville we estimated $930,000, we are going to finish the year at $1.1 million; Fort McMurray we estimated just over $1 million and we are going to finish around $950,000; Carbonear we estimated $600,000, we finished around $1 million.
1534 So it's based on our experience in other markets in terms of percentage sell out.
1535 Again, I can't speak to what Larche's pricing strategies are and inventory management. Now, remember it is sold in combination with a Midland station so the $15 may be the portion of revenue that they attribute to the Orillia station. I'm not sure that it's a fair attribution.
1536 But at the end of the day $20 is a fair rate for this market ‑‑ in our estimation it's a fair rate for this market and we have a fair amount of experience in similar sized markets and we are really ‑‑ our track record is pretty good at predicting the stuff.
1537 As I said, I can't speak to their pricing strategies but this is in line with other similar sized markets.
1538 COMMISSIONER MOLNAR: So you have no information on what the incumbent's rate card would be or what the price is in the market here today?
1539 MR. BRODERICK: Well, I can tell you that $15 is not something that they share publicly I don't think. The number that I have heard is up to $45 for KICX so at $15 ‑‑ as I said, I ‑‑
1540 COMMISSIONER MOLNAR: I guess we do have to be careful because I know that I as well have sort of swung between 30‑seconds in a minute.
1541 MR. BRODERICK: Yes.
1542 So as I say, from our observation, as I say, Larche and KICX, their rate card is higher than that. So as I said, if $15 is the going in position it may be as a result of selling because they sell combo with Midland. So maybe they are showing $50 on Midland and $15 for Orillia, I don't know how they are distributing those revenues.
1543 So really it's a tough question to answer from the outside, you have to go in and actually look at their books.
1544 But as I said, from the outside looking at this market, a $20 rate is a very fair rate and, as I say, if you compare it to Barrie it's about half and it's similar to what we would charge in similar sized markets.
1545 COMMISSIONER MOLNAR: Okay.
1546 Just one more question on that.
1547 MR. BRODERICK: Actually, Dave just mentioned, I mean another barometer could be, say, nationally. Nationally Barrie sells at $16 cost per point, Orillia sells and a $9 cost per point. So it's about half.
1548 As I said, without getting into Larche's books and seeing how they split the revenue between Midland and Orillia it's very difficult to answer the question, but nationally we do have access to that information and, as I say, the ratios work pretty well specific to the Orillia market.
1549 COMMISSIONER MOLNAR: Okay.
1550 The only other question I have on this relates to what we heard about advertisers' desire to have the full Simcoe County and in these applications and the frequency that is being looked at it is particular to Orillia.
1551 As a new entrant with only Orillia, how do you view that to impact your ability to generate those revenues?
1552 MR. BRODERICK: As Dave pointed out, I mean is it a problem or is it an opportunity? Frankly, if I was a retailer in Orillia and I'm buying Barrie stations because it's the only option available to me and there is an opportunity to buy just my market ‑‑ and as I said, there is a localization to retail and the opportunity to efficiently buy the Orillia marketplace to me would be a wonderful opportunity to say "Okay, so instead of spend ‑‑ if Barrie was $40 a spot and in order to get a good schedule in place I have to buy 30 commercials, that's $1,200 a week. And if I could take that $1,200" ‑‑ and again, this works in Larche's favour, if you could take the $1,200 a week and buy only Orillia, you could buy both Orillia stations for the same amount of money or you could save half of that money and target specifically the Orillia marketplace.
1553 Our information suggests that Orillia lives and shops in Orillia. In fact, the daytime population of Orillia is higher than the registered population. So I think it's a great opportunity for retailers.
1554 To expand the service to them to me is ‑‑ put it another way. To not expand the service, you know. How could one of the most robust economies in the country ‑‑ and the radio market hasn't kept up. And that's because the level of service hasn't been expanded. The economy keeps expanding, but the level of radio service to the community hasn't expanded, so it won't increase until we start to license more stations because they are going to continue to be forced to buy out‑of‑market radio stations.
1555 As I said, I think as a retailer in Orillia the opportunity to buy Orillia radio stations is one that we welcomed and it would be far more efficient.
1556 COMMISSIONER MOLNAR: Those are my questions.
1557 THE CHAIRPERSON: Commissioner Menzies...?
1558 COMMISSIONER MENZIES: I have a couple of questions I just want to continue on that line and just do a little bit of devil's advocacy before it comes back.
1559 So if two stations are good instead of one, why not three? I mean everything has a certain point where it is should we license more than one or is just one more what you are saying?
1560 MR. BRODERICK: One appears to be the right number at this time. I have to say that part of our dialogue has been ‑‑ you know, been cautious.
1561 We think one is still the cautious because I think that the economy is so strong here. From a retail perspective we have never ‑‑ honestly, sitting in a number of these panels, have not seen retail sales figures like this almost ever. This is a vibrant market.
1562 COMMISSIONER MENZIES: Okay. I just want to follow up on that, because I was actually going to ask you for examples of where the overall buy had grown after there was a new entrant and then you gave some.
1563 You mentioned Red Deer and Moncton for instance and at first I thought Red Deer, well I'm not sure. I mean, Red Deer has been a kind of exceptional market in terms of its growth. But when you mentioned Moncton, that was interesting to me.
1564 So where I'm stuck is somewhere in between Larche's presentation that if you arrive it won't be the death of them, but it will hurt them, and your presentation that says hey, I mean like they should be holding a parade for us when we arrive in town because they are going to make a lot more money because we are here.
1565 I understand that these are advocacy positions, but it's a really important part of this argument I think for us to understand that.
1566 So that I fully understand what you're saying ‑‑ just confirm my understanding. What you are saying is that when you arrive it creates more options for people who currently don't advertise with Larche because of their format but advertise out‑of‑market, there is more people making sales calls, there is more buzz around ‑‑ and we could use Moncton or anything else, there is more buzz around radio advertising so it peaks and people start trying things and people who haven't advertised before start trying things.
1567 How long does not bubble last or is it a bubble? Is it a trend?
1568 MR. MURRAY: Let me first say that we have the utmost respect for Mr. Larche, we think he is a terrific broadcaster and I believe he will do exactly what he says he will do and believes everything he has told you, but naturally he is going to have the conservative, you know, leaning in this hearing.
1569 He would prefer not to have new competition and its probably a little bit of a difficult thing for him to believe that us coming in is going to dramatically improve his business.
1570 I don't think we think that, we just think there will be more opportunity for him. Clearly we are not going to share probably any listeners so we are going to be after a completely different advertising client.
1571 But having said that, you know, the combination of our young slanted female listener and Larche's older female listener will make a very attractive combination purchase for many advertisers. I mean it's a prime core demo.
1572 And we will be recommending him. As Scott said, the most efficient buy for advertisers in Orillia would be to purchase the two Orillia radio stations. So we train our people, like I said before, to advise their clients on what is absolutely the best for them and we will get huge benefit because they will trust us and they will buy from us again and again and again.
1573 So I really believe that Orillia radio revenue will go up dramatically if a new entrant is put in there, particularly if it's Newcap because I think we do do exactly what I'm telling you we do, and I think Mr. Larche's station will benefit.
1574 I think if I could paraphrase something I said earlier, which is just the opportunity to dominate geographically, which is what this would offer, there is a lot of geography in retail and that opportunity to just absolutely narrow in ‑‑ and it's a military principle that when applied to marketing you put all of your resources and you focus them and I think the results ‑‑ to answer your question specifically, is it a bubble or is it sustainable. It's very sustainable, because the results that the advertisers see they want to repeat.
1575 COMMISSIONER MENZIES: Okay.
1576 Your business plan, from what I took from your presentation based on a particular format that we have ‑‑ we don't regulate format so somebody else might ask this question so I will ask it: What's to keep you ‑‑ and I'm not fishing for a COL here, trust me ‑‑ what's to keep you from flipping your format a year from now and launching as something else and having, judging from the business plan, an entirely different set of scenarios unfold?
1577 MR. JONES: Well, our entire application was rooted in that research that pinpointed the best opportunity so that's where we see the greatest opportunity to attract listeners and from there sell those listening ears to advertisers.
1578 We don't see how that necessarily will change in the next year or two. We have pinpointed the greatest opportunity and plan to build a radio station to serve that opportunity and we have seen in the past in other markets where the end result is much more successful even than our research may have predicted. The stations are adopted by fans and become part of their life and we don't see any reason to look at any other format besides the one we have applied for.
1579 COMMISSIONER MENZIES: Okay.
1580 MR. MURRAY: Dave makes a good point, that CHR music is on a tremendous upstream, it's a bit of a cyclical format but it always seems to stick around and survive. It's really the mass appeal format. Since radio started using recorded music instead of having the orchestra play live in the studio, it has been Top 40 music, stations like 1050 CHUM, the first one in Canada, and today almost every city across Canada has a Top 40 radio station that becomes the catchall pop music radio station that is extremely mass appeal.
1581 COMMISSIONER MENZIES: Okay.
1582 My last question: Your proposal indicates that this is about a $3 million radio market, somewhere between $2.5 million and $3 million. I think I read $3 million in your proposal and I think you said $2.5 million today. That isn't really the point right now, but it also indicated that it had been growing by 5 per cent annually and it's going to grow at $150,000 per year into the future.
1583 That's in contrast to what we heard from Larche, who said that ‑‑ not just based on predictions but based on historical data ‑‑ the market hasn't grown in seven years. It has been flat for seven years.
1584 So help me understand the contrast between the incumbent's experience ‑‑ and that was an experience with Rogers beforehand, and these are all operators that have some expertise ‑‑ and your projections or your estimation that the market has actually been growing by 5 per cent a year?
1585 MR. MURRAY: Well, I think that with so many out‑of‑market tuning in that market, so we have CICX, or I'm not sure if it changed its call signs along the history, but KICX Country today only has 17 per cent of the market or thereabouts. So the amount of revenue that CRTC is seeing credited to Orillia is a fraction of the Orillia revenues.
1586 So I don't think you could make any statistical inference about its growth or lack of growth from that small amount. I would suggest that it appears to me that the rest of the money must be going to and being credited to Midland or being credited to Barrie. So you would have to look at the ‑‑ and you can't, it doesn't exist.
1587 We are assuming that because we have seen our revenue grow in our 70 radio stations across the country at 4 per cent or 5 per cent a year, there is no reason to believe that the Orillia radio revenue would be different, particularly in light of the strong retail sales numbers that we are seeing.
1588 So the answer is we don't know and I would suggest that Mr. Larche doesn't know either. He only knows what he has seen credited to his station.
1589 COMMISSIONER MENZIES: Thank you.
1590 THE CHAIRPERSON: Commissioner Patrone...?
1591 COMMISSIONER PATRONE: Thank you, Madam Chair, and good afternoon.
1592 My question has been touched on a little bit having to do with format and I can well appreciate how it is that Newcap wants to do something quite different from what Mr. Larche has been providing in that particular market, but we have spoken a little bit about demographics and so I wanted your view on whether or not this youth‑driven format might be at odds somewhat with the overall demographics being, you know, a good chunk of which is sort of 50‑plus.
1593 Do you want to comment on that?
1594 MR. JONES: Certainly.
1595 There are a couple of different kind of alleyways we could go down with that particular issue, one of them is the need for radio as an industry to continue to make itself relevant to a generation that grew up in large part without radio. For a lot of people under the age of, you know, 20 or 30 radio was in the car, but it wasn't necessarily something you had under your pillow at night going to sleep on a transistor radio listening to some far‑off AM radio station like a lot of kids did in the '60s and '70s.
1596 We need to continue to put content on the radio that reaches that young listener and bonds them to our media for the future; for the future of our station and for the future of our industry.
1597 Another avenue to go down would be the fact that these radio stations, as mentioned a little earlier, tend to start out as a youth‑driven format but evolve into a much more mass appeal and mass acceptance format.
1598 Hot in Ottawa is a good example of a radio station that has almost since the day it turned its transmitter been number one with teenagers and 18 to 24 or 34‑year‑old listeners, but this past summer was the number one 25‑54 radio station in Ottawa, has been a top three 25‑54 performer for about a year or two, and a top five performer for a couple of years. So that station has become adopted by the community, by the 25‑54 demographic and, as the station ages, since that station has been on the air for about five years, those people who were 25 are now 30 and are staying with the radio station.
1599 COMMISSIONER PATRONE: A format like that one I expect would be popular amongst people driving in for instance. We have spoken a little bit about the challenges associated with trying to monetize the seasonal audiences vis‑à‑vis ratings periods and who is reading the numbers that are coming in and being able to monetize all that for your advertisers.
1600 Do you have any thoughts about that?
1601 MR. JONES: I don't have any thoughts specific to monetizing that transient audience, although I do agree with you that the Top 40 format being mass appeal and pop‑based is one that would probably be appealing to a lot of people who would come in on a temporary basis, but as would a country format. You know, there are people who love every type music and really this market is inundated by almost every type of music so I think ours would stand alone as a popular choice but not take away from any others.
1602 COMMISSIONER PATRONE: Newcap has an extensive network of stations and I'm wondering if Orillia will benefit on the news and programming as far as synergies go with other stations. I have heard you speak in the past about being able to provide sort of a way for stations to access each others material in the case where there is a dramatic regional story, the national story, other part of the country.
1603 Is that something that you see coming into play here?
1604 MR. JONES: Yes, not formally, but definitely in regular practice our news people will have access to stories that would break anywhere in the country and likewise our newspeople in other markets would be able to draw on the talent and experience of our team here should a breaking story happen in Orillia that deserves coverage in, you know, Calgary or Halifax or anywhere else in the country.
1605 Most of the synergies from a news and programming standpoint are in expertise, in being able to share the experience that we have gained in different markets with the staff here.
1606 For example, Hot 89.9 in Ottawa, very success Top 40 station, very close by, that expertise can be of assistance.
1607 Our experience with Canadian content development programs in Calgary and Ottawa, we can translate that into success here based on that experience.
1608 The other area of synergy would be a syndicated program like our "Canadian Hit 30 Countdown" which we produce in Ottawa with the Mauler and Rush morning show. We run that on a variety of Top 40 and Hot AC stations across our group and we would make that kind of programming available. But that's a very small kind of drop in the bucket considering that we have put forward a proposal that is virtually 100 per cent live and local.
1609 COMMISSIONER PATRONE: Yes, that was my next question, about whether or not you see many of your shows that might have been packaged elsewhere in the Newcap system being aired in Orillia.
1610 MR. JONES: We don't do that a lot. We do that with "Canadian Hit 30 Countdown".
1611 The only other instance I can really think of that would be something like that is like the winners of our "The Big Money Shot" contest in Ottawa or "The Big Rock Star" in Calgary. Those artists quite often end up having their songs played on similarly formatted radio stations across the country.
1612 So although it's not mandated and it's not a prerecorded program, it is one of the benefits of having similarly formatted radio stations across the country and one of those synergies that would allow an artist who otherwise might not get any airplay to get a significant amount of airplay.
1613 One of the things that happens in radio programming is that programmers look to the charts to see what's popular. For example, last year a band from Ottawa called "The Prefect" had a song that gained airplay on a number of Newcap formatted Rock stations and it gained enough airplay to break into the top 50, at which point a lot of other programmers across the country take notice of that song and actually listen to it, where they otherwise might not have even bothered giving it a shot.
1614 That song eventually went on the chart fairly significantly. We see more that hopefully in the future with those program.
1615 COMMISSIONER PATRONE: So you basically broke that artist.
1616 MR. JONES: Well, we like to think we had a hand. I think the artist talent speaks for itself, but I think we had a hand in it.
1617 COMMISSIONER PATRONE: Thank you very much.
1618 MR. BRODERICK: Commissioner, in terms of monetizing, it's important for us to know that ‑‑ we don't necessarily understand that comment and maybe we have a lot to learn, but in our other markets the retailers and our radio station, we do monetize seasonal activity in marketplace despite the lack of ratings, because it's generally accepted.
1619 I will give you an example. Charlottetown. The population booms in Prince Edward Island over the summer and the economic activity booms and the radio activity booms and there is absolutely a desire on behalf of the radio station and to the retailers to monetize that.
1620 So as I said, we can't speak specifically to this market but would fully intend to monetize that seasonal boom that takes place.
1621 COMMISSIONER PATRONE: Those are my questions.
1622 Thank you, Madam Chair.
1623 THE CHAIRPERSON: Thank you.
1624 Just one final question: Will you be able to file with us updated financial capacity documentation within 10 days?
1625 MR. MURRAY: Definitely. We will probably have that by tomorrow, I would think, too.
1626 THE CHAIRPERSON: Okay. Terrific.
1627 Those are all the questions we have for you this afternoon.
1628 Mr. Murray and your to team, thank you once again for your presentation.
1629 We will be taking a 15‑minute break.
1630 See you at 3:30.
‑‑‑ Upon recessing at 1515 / Suspension à 1515
‑‑‑ Upon resuming at 1535 / Reprise à 1535
1631 THE CHAIRPERSON: Order, please.
1632 Madam Secretary...?
1633 THE SECRETARY: We will now proceed with item 5 which is an application by Debra McLaughlin, on behalf of a corporation to be incorporated, for a licence to operate an English‑language FM commercial radio programming undertaking in Orillia.
1634 The new station would operate on frequency 89.1 MHz (channel 206B) with an average effective radiated power of 2,900 watts (maximum effective radiated power of 10,000 watts with an effective height of antenna above average terrain of 231 metres).
1635 Appearing for the applicant is Debra McLaughlin.
1636 Please introduce your colleagues and you will have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
1637 MS McLAUGHLIN: Good afternoon, Madam Chair, Commissioners, Commission staff. My name is Debra McLaughlin and I am President of Strategic Inc. I am here today with my partners and a team of trusted professionals to present an application for a new independently owned Orillia radio station, "Orillia's Own".
1638 While the Commission most frequently sees me here in support of other applicants, I am, for the first time, proposing a service in which I am an owner. My professional life has given me direct experience in radio and television broadcasting and I am very proud to be here today as a potential new entrant to the system with a unique vision of radio.
1639 Now I would like you to meet the rest of the group. In a departure from the traditional presentation format, each member of our team will introduce themselves.
1640 MS LAURIGNANO: Good afternoon.
1641 My name is Carmela Laurignano and I am delighted to be here as part of a new team and a new vision for radio.
1642 Many at the Commission know me for my role at Evanov Communications Inc. where I oversee the daily operations of eight radio stations. With this new endeavour I move to a more meaningful ownership role and will be in a position to apply the many years of experience I have in opening radio stations and operating them.
1643 I have a home in Orillia and, if successful in this process, I will be able to expand the relationships with a community that I know very well as a result of my 20 years as a resident of this market.
1644 MS MALCOLMSON: Good afternoon.
1645 My name is Ellen Malcolmson and I am the President and CEO of the Canadian Diabetes Association. I also serve on several boards, including GO Transit, St. Joseph's Health Centre and Women's Habitat.
1646 I bring to this ownership group a wealth of hands‑on experience in business and corporate governance, including over 25 years at Bell Canada where I held a number of senior executive positions, including Senior Vice President of Customer Experience.
1647 MS THOMPSON: Good afternoon.
1648 I am Heather Thompson and for 12 years I was the morning show co‑host and news director of the local Orillia station. In total I have over 30 years experience in media and public relations and have lived in the Orillia area for over 14 years.
1649 My experience on‑air and in the community gives me a unique perspective into what is lacking in Orillia radio and a genuine understanding of just how meaningful a truly local radio voice will be to the residents of Orillia.
1650 MS LEGUE: Hello, I am Suzanne Legue. Like Heather, most of my adult life has been spent as a communications professional in Simcoe County. For 16 years I was the senior reporter and a news anchor at CKVR Television in Barrie and I continue to work in Simcoe County as the Senior Director of Corporate Communications at Royal Victoria Hospital.
1651 I am very pleased to have had input into both the programming and the plans for community reflection.
1652 MS HOCHSCHILD: Good afternoon.
1653 I am Valerie Hochschild. I have over 15 years experience in radio here in Canada and in the United States, both on‑air and as a music programmer. In fact, one of my first jobs in Canada was at ROCK 95 in Barrie.
1654 I have worked closely with Debra and her team to develop the music playlist and the AAA radio paradigm.
1655 MR. MALCOLMSON: Good afternoon.
1656 My name is Rob Malcolmson. I am a partner at Goodmans LLP and the head of the law firm's Media and Communications Practice Group.
1657 Over the past 20 years I have appeared before you on countless occasions as regulatory and corporate counsel to both small broadcasters and large multimedia companies.
1658 It is not often that the Commission has the opportunity to consider an application that combines true diversity of ownership with the depth of management and programming expertise that Debra and Carmela's team offer.
1659 MS FORGERON: My name is Lynn Forgeron and I will oversee the financial aspects of Orillia's Own. My past experience includes providing start‑up organizations with management, strategic and operational services.
1660 Funding strategies, negotiation of financing arrangements and treasury management are core aspects of my work history. I am privileged to bring to this group a depth of experience in financial management and business planning.
1661 MR. GORMAN: My name is Zachary Gorman and I am here to represent two interests, that of youth and that of new emerging artists. I can speak with experience on both and I am excited to be here to discuss how we can bring new listeners to radio through the inclusion of new artists.
1662 MS MELODY: Hi. I am Sarah Melody, a Simcoe County resident and, like Zach, I am a local artist and during my five years in the music industry I have received a number of awards.
1663 One of my singles is in rotation on MuchMusic, but I haven't been able to get any airplay on local radio stations. I'm here to speak to the importance of exposure on radio and the impact a station like Orillia's Own can have on the career and opportunities for artists like myself.
1664 MS McLAUGHLIN: Thank you everyone.
1665 That concludes our introductions. I will now begin our presentation.
1666 Orillia presents unique opportunities and challenges for radio operators. The community lies in the shadow of one of Canada's fastest growing cities and its economic growth and demographics are inextricably linked to Barrie.
1667 At the same time, however, Orillia has its own unique local identity and history that is so clearly separate and distinct from its larger neighbour to the south.
1668 Like many of the markets in central Ontario, Orillia has a diverse economy. It has been the beneficiary of the Ontario government's program to decentralize head offices and, as such, is the home to the OPP headquarters.
1669 It is a tourist destination with some of Ontario's best skiing and golf courses nearby.
1670 The lakes that border Orillia are part of one of Canada's busiest marine waterways the Trent Severn.
1671 Casino Rama is the most profitable gaming resort in the province and draws in excess of 12,000 visitors each day.
1672 These four seasons leisure pursuits mean that Orillia has a steady flow of year‑round tourist traffic.
1673 Continuing confidence in the strength of the retail market, and in particular its ability to weather short‑term economic challenges, is reflected in the opening of new outlets. Wal‑Mart has just opened a new super centre, Shopper's Drug Mart is opening a new store and retail space is generally expanding.
1674 With new developments in housing and new educational facilities, Orillia's trends do not reflect the expectations associated with smaller markets in this turbulent economic environment.
1676 MS LAURIGNANO: Thank you, Debra.
1677 Today residents of Orillia have access to spill stations from Barrie and Larche's Midland, Orillia FM combo. The Larche stations orient their programming towards Barrie and brand themselves as central Ontario radio stations. This has left a major gap in local service.
1678 Orillia's Own has been designed to fill this void by offering unique music and locally focused programming. Instead of replicating the formats of Barrie and other spill stations or trying to position ourselves as a larger than local, we have chosen to offer a radio station that is focused first on Orillia.
1679 Orillia is like many markets in Canada where there is a growing group of consumers who are clearly not happy with their listening choices. This dissatisfaction with radio is reflected in the fact that they are tuning less or tuning out of radio all together.
1680 Per capita hours are down across the board and in particular are down among those who traditionally use radio most, adults 25 to 54.
1681 Feedback from the community, informally through residents and formally through customer research, shows that listeners are tired of cookie‑cutter music formats featuring limited playlists and high repetition.
1682 AAA, the format proposed for Orillia's Own by design counter programs against the prevailing trend of small playlists and high repeats of a few artists and tracks.
1683 Val and Zach will expand on how our approach differs.
1685 MS HOCHSCHILD: Thank you, Carm.
1686 AAA provides the depth and breadth of music that consumers told us was missing in the Orillia market. For example, the average playlist of stations in this area is approximately 750 tracks. Ours is 1,300.
1687 While most services are focused on a single or at most a couple of music genres, our AAA will play several. And while we will play artists found on other stations, you will hear a greater representation of their work on Orillia's Own. Instead of only playing the single being promoted by the record label, we will examine the entire CD and play a broader selection from new releases.
1688 Orillia's Own will offer alternative selections from mainstream artists as well as music from artists who are not currently charting. Non‑charting performers include new and yet to be established musicians, as well as familiar artists who are not at the top of the charts right now but are nevertheless of great interest to music fans.
1689 Some of these performers will still be producing new music, while with others we will simply explore more of their catalog than is currently represented on radio.
1690 One of the compelling elements of this format from a business perspective is that while the brand can easily and quickly be established, there is a great deal of flexibility within the AAA format.
1691 For in example, Orillia our examination of audience data at the time of filing showed that there were two predominant stations, the DOCK from Midland and Rock 95 from Barrie.
1692 A review of media‑based data revealed that both of these services had an emphasis on gold‑based hits. We will therefore counter program by placing a stronger emphasis on current music.
1693 Orillia's Own will offer alternative programming that will not duplicate what is already available. This means that Orillia's Own offers the greatest level of sustainable diversity of all the applicants before you. In fact, Orillia's Own has the lowest duplication with existing services of all the applicants at just 9.1 per cent. I have attached this analysis for your review.
1695 MR. GORMAN: Thanks, Val.
1696 I originally interviewed on behalf of Orillia's Own because as an artist I know firsthand that any station that offers such a significant commitment to Canadian and new and emerging artists is something to be celebrated, 40 per cent Canadian content and 20 per cent to new and emerging are remarkable numbers.
1697 My enthusiasm for this application ‑‑ not entirely fuelled by my mother's participation ‑‑ led to the discussion with Valerie and her decision to include content that will specifically address the interests of a young audience.
1698 This programming block will run from 9:00 p.m. to 3:00 a.m. on Friday and Saturday nights. I have named it "The Blackboard Jungle", after the iconic 1955 movie which celebrated the rebellion of youth while at the same time introducing rock 'n roll to an entire generation of movie goes.
1699 The Blackboard Jungle will provide live‑to‑air programming from clubs, showcase local artists, give exposure to niche music genres and share background information on the music, the artists and the CDs.
1700 While the program I am proposing is new, there have been recent examples of programs in other markets that cut through the noise and draw young listeners in. I would be happy to discuss these, if you wish.
1702 MS THOMPSON: Thanks, Zack.
1703 One of the glaring needs of this community is for local reflection and spoken word. As a resident and Orillia‑based broadcaster I am particularly excited by the station's plan for spoken word programming.
1704 My involvement in the community has made me acutely aware of how much the loss of coverage of local stories and issues has been felt in the local community. There is rarely an event that I attended or a cause that I work on that someone does not approach me to voice their concern about not hearing what is happening in the community on radio.
1705 Orillia's Own will give our community its local voice back.
1706 The key ingredient in our news and spoken word is not just how much news but the stories that are covered and the perspective that is offered. Our perspective will be local, local, local.
1707 Three‑quarters of all new stories will have Orillia as their primary focus. This focus on true local as opposed to regional news will reintroduce community reflection that is needed and missed. At noon we will offer an extended newscast which will allow us to cover in more depth key subjects affecting Orillia.
1708 Our perspective will also be new and different. This ownership group represents an opportunity for a new voice. In my view, this is critical to the health of the system and especially important in maintaining public trust. In order for the public to put faith in what they hear, there must be a belief that a variety of viewpoints are being represented. Diversity of voices is the only audible check and balance in the system.
1709 When in the interest of the bottom line broadcasters have one news voice reading the same story on stations that cover the same market, something important is lost to the system and the public feels a little less confident that it is hearing the whole story or, at the very least, multiple views of that story.
1710 Licensing Orillia's Own will ensure that residents of Orillia do have a choice in their news sources and, as a result, they will hear a broader representation of the events and issues that shape their world.
1711 Our spoken word content will also reflect this more local focus. In recent discussions with a local OPP officer I once again heard the lament for the loss of Orillia's local voice in favour of a regional focus.
1712 There was a day when as part of the regularly scheduled morning show local newsmakers and community leaders would drop by the local station to discuss informally, on‑air things that their organization was doing in the community or events that would affect residents. While not strictly an interview segment, listeners could count on hearing what was happening locally and in real time.
1713 This is the type of local reflection that has been lost in Orillia and that our format will provide.
1714 Suzanne will now take you through our feature programming.
1715 MS LEGUE: Thank you, Heather.
1716 We have plans for several innovative spoken word features that which will make Orillia's Own truly a locally community service.
1717 Recognizing the importance that Canadians place on health and on wellness and the challenges facing our aging population, we will produce "Dr. On Call". This two minute feature will provide health organizations such as Soldiers Memorial Hospital here in Orillia with the opportunity to reach out directly to the community.
1718 We will air pre‑produced segments detailing recent developments in health care, disease prevention and new local treatment options. This feature offers practical insights into ways our audience can improve or maintain their good health.
1719 "Postcards from the Heartland" is an opportunity to showcase Simcoe County tourist attractions, some well‑known and some yet to be discovered that are within a day's drive of Orillia. "Postcards" will provide listeners with travel options that are accessible and affordable.
1720 We are also proposing two extremely local features, "Mariposa Minute" and "Hometown Heroes" and they will run interchangeably. In combination, they will celebrate the proud history and character of Orillia and showcase the achievements of Orillia area citizens. We like to say that these are ordinary people making an extraordinary contribution to this community.
1721 Frequently we all hear that the media never covers good news stories and these two features in particular will provide a welcome positive contrast to that trend and they will give listeners a new perspective on community life and instill pride in their hometown.
1723 MS LAURIGNANO: Orillia is a market I know very well, it is growing and attracting business at all levels. Even with a downturn in the economy you have heard prior presenters describe positive market conditions so I will not belabour the optimistic nature of the economic indicators.
1724 Retail sales activities strongly suggest that this is a very underdeveloped radio advertising market. The full value of the local market in radio is not being captured today because the incumbent station has an undeniably regional focus.
1725 Licensing Orillia's Own will develop local radio advertising revenues and this competition will be good for the advertising market as a whole.
1726 We received many letters of support from both local and national advertisers and have received requests for pitches and offers of advanced booking subsequent to our initial interviews with local businesses. In fact, we received well over 40 letters from advertisers.
1727 Our business plan is predicated on the demand we identified and the potential for development of this market.
1728 We had the current rate cards for several of the stations selling into Orillia. Because each of these services had a primary market of Barrie, we discounted the rates on these cards to reflect the value of the smaller Orillia market. We applied sell out rates to our inventory and are in line with those of other launches we have been involved with and then multiplied the sold units by the average revenue to reach our yearly revenue figure.
1730 MS FORGERON: The math is not complicated and the process by which we arrived at our revenues is not only simple, but is also used industry‑wide. We also tested our estimates by expressing them as a share of total revenues. We are confident that our revenue projections are reasonable, reflective of the market's potential and readily achievable.
1731 The many feature program Suzanne described to you are advertiser‑friendly and typically sell out.
1732 We have plans to utilize the internet to create a multimedia opportunity for our clients and we have created special programming for youth that will allow us to tap into a secondary advertising stream.
1733 Finally, we have proposed a very broad format. While we have described our core demographic as being 25 to 44, in fact the range of music we will play will attract an audience from both younger and older demographics.
1734 In this smaller market our diverse programming will attract people across several age groups, which in turn will make us eligible to be included in many product and service campaigns.
1736 MS MALCOLMSON: When this application was put together a decline in consumer spending and confidence was anticipated. Admittedly, though, the depth of the decline was not accurately predicted by anyone, including the banks and investment houses. Fortunately, we constructed our model with margins that could sustain shortfalls in revenues while maintaining a high level of service.
1737 The short‑term challenges notwithstanding, our belief in the viability of our proposal has not changed. My years of senior management experience have taught me that a good idea properly executed will survive adverse market conditions. Orillia's Own is grounded in solid business principles and will be executed by a group of experienced professionals.
1738 As a result, it will find its way to profitability even in these times of market upheaval.
1739 Finally, I would be remiss if I did not point out that the proposal by Orillia's Own has created an opportunity for local ownership and, in particular, ownership by local women. This, in my opinion, constitutes a significant contribution to the community, to a designated group and to the system as a whole.
1740 MS McLAUGHLIN: Thanks, Ellen.
1741 At every step of the development Orillia's Own has been designed with the residents of Orillia foremost in our planning. Our collective experience tells us that local is the brand that is missing in this market and local offers the greatest opportunity for building a business case.
1742 We agree with Mr. Larche that in order to make a station work in this fragmented market of Orillia you have to have a reach that extends beyond the city and permits residents who work outside of Orillia to carry the signal with them.
1743 Where we differ is in the orientation of our programming. We think the way to distinguish a service from the stiff competition provided by the Barrie stations is not to try to replicate their regional programming offerings, but instead lay claim to something they can never be, that is Orillia's Own.
1744 What some may see as a weakness, we see local as a strength and a means by which to establish our uniqueness. We do not see how offering music that duplicates in whole or in part an existing format addresses either the need for variety or the complaints over high repetition and narrowly focused formats.
1745 Given the proximity of Barrie to Orillia and the gap in local reflection, what Orillia needs and what we offer is a distinct music format and a truly local voice.
1747 MS LAURIGNANO: Many elements of our application stand out as being unique, not only when compared to others in this process but also when compared to applications heard recently in other markets.
1748 So in our assessment is the decision comes down to three options:
1749 license no one and leave Orillia in its underserved state allowing revenues that belong in Orillia to be divided by Barrie and regional stations;
1750 license an already established broadcaster offering, in whole or in part, the same programming and in many cases an existing news voice;
1751 or license us and introduce diversity in programming, diversity in perspective and diversity in ownership.
1752 If in it's wisdom the Commission decides to grant us this licence, you can be assured that we will make good on all the commitments made in this application and described today.
1753 We are committed to expand choice for listeners, increase diversity in the market, improve opportunities for Canadian artists, develop new hours of tuning and support, enhance and reflect Orillia to Orillians.
1754 Madam Chair, Commissioners, we have the knowledge, the financing and the experience to breathe new life into the Orillia radio market and fill a glaring void in local service. As such, Orillia's Own represents the best use of frequency of all the applications before you.
1755 Thank you and we would be pleased to answer any questions that you may have.
1756 THE CHAIRPERSON: Thank you, Ms Laurignano.
1757 Ms McLaughlin, I do agree it is nice to see you sitting in the front row, we are used to having you do this when you speak.
1758 Mr. Malcolmson, I hope you have noted that it took a group of women to let the lawyer speak in the oral presentation.
1759 I will hand you over now to Commissioner Molnar.
1760 COMMISSIONER MOLNAR: Thank you. Good afternoon.
1761 First of all, can I address my questions to you, Ms McLaughlin?
1762 MS McLAUGHLIN: Carmela is going to actually be the quarterback.
1763 COMMISSIONER MOLNAR: Okay.
1764 MS LAURIGNANO: I think I get another shot at trying to explain how to pronounce my last name.
1765 COMMISSIONER MOLNAR: That was my next question.
1766 MS LAURIGNANO: I think the last time it was too detailed of an explanation.
1767 So Lori nano.
1768 COMMISSIONER MOLNAR: Lori nano.
1769 MS LAURIGNANO: Very good.
1770 COMMISSIONER MOLNAR: Excellent.
‑‑‑ Laugher / Rires
1771 COMMISSIONER MOLNAR: I have Midland down and now I'm going to have Laurignano down.
1772 MS LAURIGNANO: That's right. Well, that's one version of my name anyway. As I said before, it's been done in many variations.
1773 COMMISSIONER MOLNAR: Thank you.
1774 Just one more question before I get into my set questions and that's for Mr. Gorman.
1775 You made a reference to your mother.
1776 MR. GORMAN: Yes. Yes, I did.
1777 COMMISSIONER MOLNAR: Is she also part of the panel?
1778 MR. GORMAN: Yes. That's my mother, Debra. Debra.
1779 COMMISSIONER MOLNAR: Oh, I see.
1780 MR. GORMAN: Yes.
1781 COMMISSIONER MOLNAR: Well, that's excellent.
1782 MS LAURIGNANO: Darn, we were going to have a quiz. You spoiled it, Zach.
‑‑‑ Laughter / Rires
1783 COMMISSIONER MOLNAR: Okay.
1784 I have a few questions here just to clarify some elements of your application and I'm going to start right off with a simple question related to target audience. I know you did make reference to the target audience in your opening comments here.
1785 In your application you describe the station is being:
"...AAA format that combines several compatible genres of music to adult audience 25 to 54 with a core audience of 25 to 44." (As read)
1786 In the supplementary brief you mention that you serve adults 18 to 54 and a core audience of 25 to 44.
1787 So I see in these opening statements you also identify your core demographic as 25 to 44.
1788 That's correct?
1789 MS LAURIGNANO: That is correct.
1790 If you would like just a bit of a further explanation on all these numbers and how they all fit together, I will ask Debra to address that question.
1791 COMMISSIONER MOLNAR: Okay.
1792 MS McLAUGHLIN: Actually, we will just clarify why there is a variation.
1793 This selling demographic is 25 to 54. There is a cohesiveness across that group in terms of their buying patterns and advertisers that seek to reach them.
1794 The core audience in terms of programming is 25 to 44.
1795 In reality, because of the market ‑‑ and it's the only station that's non‑country if it was licensed ‑‑ it would probably reach 18 to 54.
1796 That didn't help, did it?
1797 COMMISSIONER MOLNAR: No, but it's in the minutes.
1798 MS McLAUGHLIN: Yes, okay.
1799 COMMISSIONER MOLNAR: It's in the transcript. Thank you.
1800 The application as well states that as part of your music playlist you would be considering playing some world beat music which, are you know is Category 3 music.
1801 So can you tell me the number of hours per broadcast week that you would intend to devote to Category 3 music and in what sub‑genres as well?
1802 MS LAURIGNANO: Okay. I will be happy to answer that one.
1803 The Category 3 music is going to be blended throughout all the day parts so there isn't any block programming per se, it will be part of the music blend throughout the broadcast day, including the prime time hours.
1804 We expect that 10 per cent of our music library ‑‑ or what is heard on‑air will be from Category 3, with the balance being Category 2.
1805 With regards to the actual percentage of subsets of Category 3, it would be approximately 5 per cent folk, 3 per cent blues, 1 per cent jazz and 1 per cent world.
1806 COMMISSIONER MOLNAR: Would you be willing to commit to a condition of licence to play 10 per cent Category 3?
1807 MS LAURIGNANO: We would be prepared to accept that as the condition of licence, provided that it's tied into the format. Seven years is a long time, we don't expect or anticipate to flip the format, but we think it's appropriate for the format and in the event that the format were to change for whatever reason we would come to your for ‑‑
1808 COMMISSIONER MOLNAR: You would come back to the Commission?
1809 MS LAURIGNANO: Yes, of course.
1810 COMMISSIONER MOLNAR: Right. Okay.
1811 Another question of clarification relates to the level of live‑to‑air programming you propose with your station.
1812 In a letter October 17th you state that you will be live‑to‑air:
"... all live‑to‑air with the exception of 15 hours."
1813 However, in the programming grid that you provided us you show that you will provide both voicetracking periods Monday to Friday 9:00 p.m. to 12 p.m. and Sunday from 7:00 p.m. to 12 p.m., which totals 20 hours of voicetracked programming.
1814 So would you be able to just clarify for us your plans related to that?
1815 MS LAURIGNANO: Yes.
1816 The plans are that the 126 hours will be all local programming; live‑to‑air programs will be 115 hours of the week.
1817 I'm sorry, 111 for the week. Then Sunday through Thursday we will voicetrack 9:00 p.m. to midnight, and with the Friday and Saturday being voicetracked ‑‑ I'm sorry, live‑to‑air as well. That's the youth program.
1818 So anyway, the short answer is 111 live‑to‑air and then 15 voicetracked, and the voicetrack would fall from Thursday to Sunday ‑‑ or the other way around, Sunday through Thursday.
1819 COMMISSIONER MOLNAR: Do you have a plan as to how your station would remain responsive to the community in case of an emergency or otherwise through the periods that you are using voicetracking?
1820 MS LAURIGNANO: Yes. I will ask Heather to answer that question.
1821 MS THOMPSON: Yes, we will have our Program Director and the News Director, we will be exchanging our cell and home numbers and be on an emergency contact list for the community, and the neighbouring townships as well I should add. So it would not only be Orillia but it would be Severn, Oro‑Medonte and Ramara Townships.
1822 COMMISSIONER MOLNAR: 7/24?
1823 MS THOMPSON: Yes. Thank you.
1824 Okay. I would like to turn now to your business plan, beginning actually with looking at your programming expenses.
1825 Maybe before I do that I would just like to ask how many employees you plan would be working at your station and how many of those would be related to programming versus in other capacities such as sales, admin, and so on.
1826 MS LAURIGNANO: Okay. We have a total of 25 employees, 20 of whom are full‑time, five are part‑time.
1827 Of those, 11 full‑time would be in the programming, which includes the news full‑time and four would be part‑time. So 15 would be in the programming.
1828 COMMISSIONER MOLNAR: So if we were to look at your programming expenses then, is that an extrapolation based on your planned manpower?
1829 MS LAURIGNANO: Yes, it is.
1830 COMMISSIONER MOLNAR: It is?
1831 I'm sure you have looked at your application in comparison to the others before us ‑‑
1832 MS LAURIGNANO: Yes.
1833 COMMISSIONER MOLNAR: ‑‑ and doing that comparison would show that your programming expenses look relatively high in comparison to the other applications before us.
1834 MS LAURIGNANO: Yes. I should explain that within that there is also things like fees and that kind of thing there.
1835 But yes, that was by design. We believe that the investment has to be in the programming. That's how we are going to, you know, get the brand going, the product going, build that loyalty. So absolutely that's done by design.
1836 And by experience as well. We know ‑‑ I know firsthand that that will make the difference how successful you become in the end.
1837 COMMISSIONER MOLNAR: Would you be able to, with the 15 ‑‑ 11 full‑time, four part‑time in programming, just give me a sense how many of those are related to news versus on‑air?
1838 MS LAURIGNANO: Yes. There are four people in news.
1839 Heather can give you what their duties and responsibilities would be and how we would intend to cover it.
1840 MS THOMPSON: Actually there would be four ‑‑ I'm trying to think how to term it. It's actually 3.5 bodies, because we would have two full‑time, a news director and an afternoon news anchor, and then there would be one full‑time reporter and then there would be a part‑time reporter who would help to cover weekends and do any extras, or if someone was sick or whatever within the newsroom. So it actually works out to 3.5.
1841 COMMISSIONER MOLNAR: It's four people, three full‑time positions, one freelance half‑time position.
1842 COMMISSIONER MOLNAR: All right.
1843 So you have seven persons that are on‑air?
1844 MS LAURIGNANO: Yes.
1845 COMMISSIONER MOLNAR: Just for my own benefit, you mentioned that it's by design. Did you build your costs and then look if the revenues could support it?
1846 MS LAURIGNANO: No, we actually went the other way. We projected the revenues first.
1847 We went to a number of factors that helped us to lay some assumptions about what kind of revenue we could garner and then from there fit the format and then how could we deliver that format in a most effective way and that would be in the staffing and through other investments and so that's how the plan was built, from the viability of the business venture into the actual plan to implement it and to realize it.
1848 COMMISSIONER MOLNAR: Okay. I do want to turn to revenues and obviously getting a sense as to whether or not Orillia can support an additional station and how much market capacity there is is one of the key issues before us. So I have a few questions related to the revenue line.
1849 Let's begin with some for clarification.
1850 You projected 30 per cent of year two revenue would be generated at the expense of local radios.
1851 Does that mean the one incumbent here in Orillia or what is your definition of a local radio station?
1852 MS LAURIGNANO: Okay. Our definition of the local radio revenue is advertising dollars that are being spent by Orillian businesses among all stations, including the incumbent's and the out‑of‑market stations. So it's local revenue that is either staying in market or going out of market and perhaps is being reported in other markets but it originates from here.
1853 COMMISSIONER MOLNAR: So 30 per cent of your revenue would be revenue that is spent today by advertisers with radio?
1854 MS LAURIGNANO: That is correct.
1855 COMMISSIONER MOLNAR: Do you have some estimate as to how much of that would be spent with the incumbent station?
1856 MS LAURIGNANO: Yes, we do. I will give you ‑‑ our estimate is that of the 30 per cent that is coming from those sources that I have just identified, 80 per cent would come from stations other than Mr. Larche's two stations, so that 20 per cent of the 30 per cent would be from the two stations of Mr. Larche.
1857 So I can actually break it down into figures.
1858 COMMISSIONER MOLNAR: You said 80 per cent of this 30 comes from someone ‑‑
1859 MS LAURIGNANO: Other than the two Mr. Larche stations, which are the Midland and the ‑‑
1860 COMMISSIONER MOLNAR: Right.
1861 MS LAURIGNANO: And with regard to the impact on the two Mr. Larche stations, the 20 per cent or approximately $76,000 in year two, most of it would impact the Midland station because of the niche type of format that the local station has in terms of country music. It is a very narrow niche, both in terms of an advertiser base and in terms of listeners so we believe that the impact will be less on that than will be on The DOCK's, which is the other station that is being marketed in the area.
1862 COMMISSIONER MOLNAR: Okay. Thank you.
1863 And you explained a little bit your assumptions as to why you believe it's more the Midland than the Orillia?
1864 Can you tell me what portion of the listening audience of your proposed station would be comprised of listeners who currently listen to out‑of‑market stations and which stations?
1865 MS LAURIGNANO: Yes, we can.
1866 I will ask Debra to address that.
1867 MS McLAUGHLIN: I there have to ask you for clarification.
1868 When you say out‑of‑market, are you just talking about Barrie or are you including Midland?
1869 MS LAURIGNANO: I include Midland in out‑of‑market.
1870 MS McLAUGHLIN: Okay.
1871 So we estimate that the impact or the percent of our audience that would be coming from the country station ‑‑ I'm jut trying to find it here on my chart ‑‑ would be about 5 per cent.
1872 COMMISSIONER MOLNAR: From KICX?
1873 MS McLAUGHLIN: Yes. The reason being of course that a country listener tends to be a more loyal fan to the format that they listen to. We estimate that about 20 per cent of our audience will come from Midland and the rest will come from Barrie stations and development of new hours.
1874 I think that's really an important part of our application, because when we looked at this market and we tried to decide on the format we started looking at BDS and media‑based data to find out what was being played in the market. At the same time we were also examining BBM trends.
1875 When you look at the BBM trends in terms of per capita ‑‑ we referred to them in our presentation, we certainly put it in our supplementary brief ‑‑ but there was a large decline between the ages of 12 to 54.
1876 What we noted post filing ‑‑ and obviously the book just came out this fall ‑‑ that there had been a recovery across several demographic groups in terms of hours tuned. The demographic that we propose to serve as our core, 25 to 54, remains down. In fact, the largest decline in tuning remains in that group.
1877 So we offer the option for real choice in the market and we have provided a format that tested extremely well.
1878 And to verify in fact that we had hit a format that not only offered diversity and offered variety of choice, the large proportion of the approximately 9 out of 10 people who said that they would listen to this station if licensed, I believe it's around 69 per cent ‑‑ and I will confirm that for you ‑‑ said they would listen more if this licence was granted.
1879 So we anticipate that the numbers I gave you in terms of bringing hours from other stations to be the relative estimates, but we always also offer the potential to grow these hours in the market.
1880 COMMISSIONER MOLNAR: Okay. That's fair.
1881 I would like to turn to the issue of advertising spending, then, that is associated with the audience.
1882 Do you have an estimate of the amount of annual spending by Orillia advertisers in out‑of‑market stations?
1883 You have said that 5 per cent of your listeners potentially could come from the incumbent. I would like to get a better sense as it relates to the advertising dollars.
1884 If your listeners, if your audience is today tuned to out‑of‑market stations, do you know how much Orillia businesses are advertising with those out‑of‑market stations?
1885 MS LAURIGNANO: We of course are not privy to the recording that is done by stations. Even the Barrie stations are published in a consolidated report which includes Barrie, Orillia, Wasaga, et cetera. However, there are established formulas and conventional wisdom about what our market should produce based on a number of indicators.
1886 We are struck also by the fact that Orillia would appear to be such an anomaly. We looked at similar market across the country with similar populations who are perhaps even more isolated and don't have the bigger pool around them, and in similar markets for example like Woodstock, you know, which is close to London and would serve a proxy Orillia, Barrie, Woodstock, London and, you know, in some cases they have three commercial radio stations that apparently are thriving and surviving.
1887 So we know what it should be or what it could be and we sincerely believe that it has been underdeveloped.
1888 I know Commissioner Menzies is looking for the divine answer on this, I don't know what it is, but we know for example that prior to Mr. Larche's tenure with the current station right now there was a local marketing agreement where I believe he was representing the Rogers station at the time in combination with the Midland station. So in fact the status quo has been around for seven years and I don't know if that explains, you know, why things have gone that way. I'm not really sure.
1889 But there are very clear indicators as to what the station should get and we have done some analysis of where we think our revenue will come from vis‑à‑vis Orillia and Barrie.
1890 That question was asked before and I think Debra can enlighten us into some of those highlights that we identified that would help us achieve our business plan in terms of revenue.
1891 COMMISSIONER MOLNAR: Let me just ‑‑ and I will give you the opportunity to do that.
1892 But we have heard two things, we have heard the Orillia market is underdeveloped and we have heard that it's sold in regional plays and therefore it's not accounted for as Orillia revenue.
1893 MS LAURIGNANO: Right.
1894 COMMISSIONER MOLNAR: Those are two very, very separate outcomes, if you will.
1895 MS LAURIGNANO: Yes.
1896 COMMISSIONER MOLNAR: One is, you know, the advertisers are advertising, they are just advertising with someone else, and the other is they are unserved.
1897 So what is your sense?
1898 MS LAURIGNANO: Our sense is that it's is a combination of both actually. It's a combination of both, that on the one hand it is underdeveloped and on the other hand a lot of the revenue is going out of the market because of the programming choices.
1899 Again, you know, Country is an excellent format, it serves a number of people, but not everybody likes Country so not everybody is listening to it. We understand it's the number one rated station in the market, but the fact is that, you know, the majority of people are tuning outside for something different.
1900 MS McLAUGHLIN: And if I can just add to that.
1901 We, like many of the applicants before you, looked at the Financial Post data, we figured out what the average radio market would be worth in terms of the retail sales that are generated in this market, and when we filed that was about $3.1 million to $3.2 million.
1902 Subsequently, there is new data that is out and there has been a small decline. When we look at it there was $711 million worth of retail sales, now it's down to about $692 million. That doesn't really appreciably change the radio market in terms of what this could generate.
1903 We estimate that currently ‑‑ and it's obviously just a guesstimate ‑‑ but based on the rate cards, based on our monitoring of the station, that Mr. Larche is selling in the area of $1.1 million in this market. So that leaves anything in the area of $1.5 million to $2 million to be developed.
1904 When we were breaking this down we went into our year two revenues and said: How much would come purely from Orillia of that $1.2 million that we are planning and how much would come from Barrie? That is a combination of the money going to Barrie stations that are getting the additional money simply because they can get into Orillia and have effective reach, and part of that is from advertisers who are in Barrie who take the money that they might spend on Orillia and put it on a Barrie station because they are efficient.
1905 And when I break it down based on the $1.2 million, about $764,000 of that comes from Orillia advertisers, which is a combination of new advertisers, the money would take for Mr. Larche's station, the increased radio advertisers ‑‑ or increased radio revenue for advertisers already there, and from other media.
1906 So our breakdown turns out to be 40 per cent from Barrie, 60 per cent from Orillia. And I gave you $764,000 as the money coming out of Orillia, that leaves $509,000 coming from Barrie.
1907 It's important to note that that money is, as I say, originally targeted, in our estimate and based on our experience, and between us we couldn't even ‑‑ last night we attempted and we don't know if it's fatigue or just the fact that we have been in the industry too long ‑‑ we could count the number of times we have estimated markets across this country and the value, either in this process or for budgeting purposes for our clients.
1908 So in our experience these are very credible numbers and they are very realistic.
1909 COMMISSIONER MOLNAR: I just want to make sure I understand what you just told me.
1910 Sixty per cent of the revenue is associated with Orillia advertisers that are advertising in out‑of‑market stations today.
1911 Is that what you told me, of what you are forecasting to generate
1912 MS McLAUGHLIN: No. Sorry.
1913 COMMISSIONER MOLNAR: Don't be sorry.
1914 MS McLAUGHLIN: How about if I just read these numbers very slowly into the record and we will see if that makes sense. I will do it in the way that we have looked at it and it has to do with the way the Commission asks us as applicants to source our revenue.
1915 So we have 30 per cent of our revenue which is in year two, which is about $382,000, we say that is coming from local stations. Our definition of local includes Midland, it includes obviously Mr. Larche's Country station and all of the Barrie stations.
1916 We say, as Carmela mentioned, that 80 per cent will be from Barrie stations. That's equivalent to $305,000. 20 per cent will be from a combination of the Midland and Orillia station. That total is $76,000. Of that we believe three‑quarters of that will come from the Midland station, because when we lay out our demographic profile against the Midland station it's most closely associated and we believe there is loyalty in terms of format.
1917 We believe 20 per cent of our revenues will come from increased budgets by current radio advertisers. We think 50 per cent of that will come from people in Barrie, from advertisers in Barrie, because they will see an opportunity to efficiently target their businesses to Orillians and they would have otherwise spent that on Barrie stations. That's $127,000.
1918 We think 50 per cent of that increased budget will come from Orillia advertisers who are currently either with Mr. Larch or with Barrie stations, and that's another $127,000.
1919 Which brings us to the new advertisers, which we say 20 per cent of our $1.2 million will come from new advertisers. 100 per cent of those are in Orillia. That is based on our going door‑to‑door and talking to advertisers and getting their reaction. That accounts for $254,000 of our revenue.
1920 And, finally, we have other media and we have said that that's 30 per cent. We suggest that 20 per cent other of that is from other media that is currently in Barrie which includes regional newspapers, that people will cut back their ad size and put some money on this new Orillia station, and 80 per cent will come from Orillia.
1921 So the money in terms of dollars is $76,000 will come from Barrie, and $305,000 will come from Orillia.
1922 In order to come up with these estimates we met with, as I said, advertisers in the market, but we also met with an online radio station ‑‑ and they are here in the audience today. I think they put in a very complete intervention on our behalf ‑‑ and they too found that just being available on the internet that they were being approached by advertisers to say can we advertise with you because if you are local you want to be local.
1923 And an important part of advertising is not just being on a radio station, it's being on a radio station that is being listened to and local news and information gets the most highly focused tuning of any aspect within the radio spectrum. So they want to be associated with that and that's not present today.
1924 So with all those sources and how we broke it out, I hope I haven't confused you, but we were very thorough in the way we put this together and we think that none of these numbers are out of line with what anybody would expect in this market.
1925 COMMISSIONER MOLNAR: Okay. I stopped writing it down and I will get it from the transcript later.
‑‑‑ Laughter / Rires
1926 MS McLAUGHLIN: It's just such an important point and we have the advantage of being fifth, but we also have the advantage of having constructed in this manner.
1927 COMMISSIONER MOLNAR: Yes.
1928 You have obviously been very diligent in putting forward your revenue forecasts and I am aware you are very experienced, as you noted, in doing this. One of the other questions that I have relates to the revenue per tuning share or the rate card information.
1929 Let me just use rate cards maybe as an easier way of getting to this.
1930 It appears that everyone in the market today is selling a region and so there isn't an Orillia‑only ‑‑ Orillia's Own rate card. We have heard some of the applicants put forward numbers in the range of $15 per spot, $30 a minute.
1931 Your estimate, I think it is ‑‑
1932 MS LAURIGNANO: I can tell you, we have $43 in year one and then it goes up to ‑‑
1933 COMMISSIONER MOLNAR: $45?
1934 MS LAURIGNANO: ‑‑ $45, I'm sorry, and then it goes to $54 in year two, and so on.
1935 COMMISSIONER MOLNAR: Rising to actually $73 by year seven.
1936 MS LAURIGNANO: By year seven, right.
1937 COMMISSIONER MOLNAR: Very significant increases ‑‑
1938 MS LAURIGNANO: Yes.
1939 COMMISSIONER MOLNAR: ‑‑ in the price per minute. Obviously that swings wildly the profitability of these stations and if we look at your revenue per percentage share in comparison to some of the other applications you are very ‑‑ you are high in comparison to others.
1940 MS LAURIGNANO: Yes, we are high in comparison, but we don't believe we are high for the market.
1941 The share and the per share rate effects for the most part national business because that's, you know, what is looked at when you are trying to establish gross rating points.
1942 And, let's face it, Orillia is not a major national market, in fact only 10 per cent of our revenue accounts for national business, the rest is going to be local.
1943 COMMISSIONER MOLNAR: Yes.
1944 MS LAURIGNANO: With regards to local, less is more in a lot of cases and you can often garner a bigger rate or a larger rate than you could by offering more.
1945 I will tell you, the best example I ever had was you could have a radio station that says "I have a million listeners and my rate card is $25" or if you are a car dealer and somebody comes to you and says "I have 100 car buyers and my rate card is $1,000", well, the guy is going to go after whoever has the car buyers, because that's his business.
1946 So with local it will be something that is going to be highly desirable that will deliver results, that will be very effective.
1947 We looked at the published rate cards and I can't believe that there is that much of a disconnect between what they are publishing and what they are getting.
1948 You know, we looked at the average rate here for a 30‑second, it appears to be anywhere from $35 to $45 from what we saw in published rates as well as having spoken with advertisers who are purchasing it.
1949 So it's in line with the market we believe, it's in line with what advertisers ‑‑ we had face‑to‑face interviews with over 40 advertisers, local advertisers here, and said "You know, if this were the case how much would you be willing to pay?" and this was totally acceptable to them.
1950 I can give you examples in other markets, you know, like Hawkesbury, Ontario where we operate a station that, you know, we get that and the population there is 10,000 and it doesn't have a Barrie nearby.
1951 So it's a matter of how you sell it, how you package it.
1952 And sure, when you first introduce a service you may have to give value‑added and, you know, put promotions and put all kinds of things in place, but we are very, very confident that we can get that rate.
1953 The other thing is, if you are looking at inventory sell‑out we have a lot of room to expand and to adjust those rates where the client will get more for the value of their expenditure.
1954 So in other words the integrity of the rate card will be kept, but they may get like bonus spots with, you know, a six‑month commitment or if they buy "X" number of spots there will be incentives for them as well.
1955 So in our view it's not out of line, it's very achievable.
1956 COMMISSIONER MOLNAR: I'm sorry?
1957 MS LAURIGNANO: In our view it's not out of line, it is achievable and it is realistic and we will get that rate ‑‑ or those rates over those years.
1958 COMMISSIONER MOLNAR: Okay. Fair enough. I heard you and I heard you based it on your experience, you based it on speaking to local advertisers and that's fair.
1959 What did you base your rate of growth on in that rate card?
1960 MS LAURIGNANO: Well, we estimated a couple of things. The rate of growth was based on two things.
1961 One was on how the station will establish itself and the growth. Unlike some formats, you know, it's not something that explodes right away so you don't ‑‑ you know, some stations from day one will have that big burst and then like peter off after that.
1962 So it's a combination of that this is, you know, a service that will be readily embraced and it will have a slow growth but consistent, which is more or less keeping in with ‑‑ I think it was ‑‑
1963 Do you remember the percentage? Actually I can provide that for you, but they were actually percentage breakdowns. We assumed just a percentage growth year‑over‑year in combination with the fact that there would be bigger spurts of growth between one year and others and not just the same right across the board.
1964 I don't have those assumptions with me, but I could certainly provide them if you wish.
1965 MS McLAUGHLIN: The other thing that we didn't tie it to was the anticipated growth in the market in terms of population and our signal, unlike some of the other applicants that chose to have their signal strictly in Orillia, we think we can develop the share because, as we have said in our presentation, residents will be able to take the signal with them.
1966 When choosing where our signal would go we looked at the mobility of the workforce and according to 2006 Census data almost 50 per cent of the 50 and plus workforce works outside of the municipality and so we will be in a position to serve Orillia and the surrounding areas. And the population growth in Orillia has exceeded that of Ontario. And Oro‑Medonte and the other townships, that's also growing rapidly. And as the population goes up, so too does the value of the advertising because you are reaching them.
1967 So in combination with perhaps a larger signal than some of the people who have appeared before you and the population growth that is anticipated in this area, we thought that the increases that we had were reasonably reflective of what the market would permit us to grow it at.
1968 COMMISSIONER MOLNAR: Give me just one second, I just need to figure out what this is.
1969 COMMISSIONER MOLNAR: So it's a 60 per cent cumulative growth rate over the seven years in the rate card revenue. I understand the population, the market is growing up. So your revenues will grow with ‑‑ well, I guess it doesn't grow directly with population, but 60 per cent growth in the rate card rate.
1970 You believe that's reasonable?
1971 MS LAURIGNANO: I believe absolutely it's reasonable. It's a combination of we believe that this market rate here it's lower than what is being sold in the market right now, or at least what is being represented.
1972 There will be relationships established that a lot of businesses will start small and they will grow with the radio station. And we know this from experience, you know. We have had cases in our history that said "Well, show me that it works and then I will do something." And sometimes we show them it works and it does work when it's local because they will see the cash register ring. And these are retailers, so as their business grows we have been able to, you know, force the rate card up year after year and it does work.
1973 MS McLAUGHLIN: The other thing that I would like to add is that we went to national advertisers not because we thought they were going to necessarily be in any way a major part of our budgeting, but they have a view of markets across Canada, particularly national ones, and they are able to show us and were able to share with us some of the rates and the way things had changed.
1974 One of the things that they did note that gave us some encouragement for Orillia was that the Barrie stations rates have grown significantly. And in our presentation today we said to you they are inextricably linked and that goes for the radio market. We have treated all of the Barrie stations in all of our assumptions as continuing to sell. That's why we picked a format that was different as well to them.
1975 Because they are not going to go away, they are not going to stop broadcasting, they are not going stop selling in this market, but as long as their rates are being pushed up, ours can come in after them. We will still be lower. We never once anticipated approaching their rates because in fact we think that's part of the problem in why this market has been not growing and that is because with a regional aspects the rates are focused on what's happening in Barrie.
1976 But a local station who is pricing their inventory on the cost per point ‑‑ and I think you heard earlier from another applicant that the ratio ‑‑ or the difference is 16 for Barrie and 9 for Orillia ‑‑ that 16 has not been flat. That 16 has been growing quite healthily.
1977 So we ran by these advertisers ‑‑ as I say, they plan nationally, they plan multi‑markets, and their conclusion was that we would be able to make that. It is spread over seven years.
1978 It is also a factor of our sell‑out rate. We aren't approaching sell‑out at any point in that time.
1979 As Carmela mentioned to you, one of the ways to get an advertiser, and particularly in local, and we have found this works remarkably in other markets with other clients that I have ‑‑ is to add value and that value is simply "Here is five more spots on the week." What you do is you push the rate up of your unit rate and you add a few more spots.
1980 Psychologically, they are getting a deal; we are keeping the rates, the value of the rates in this market high, it doesn't change anything; and from a local advertising perspective it works wonders.
1981 So our rates are sort of a combination of all those things and tested, as best we can without coming in and actually coming in and actually running the station.
1982 MS LAURIGNANO: I would just like to add one more thing and that is that these spot rates are average, an average of what we intend to produce per minute. However, one of the differences in our proposals and one of the pillars of our format that we are proposing is that it's going to be very rich in features and special programming, some of the features that Suzanne described, such as "Doctor On Call", "Postcards From The Heartland", our newscasts as well, we intend to have remote broadcasts from locations.
1983 Our selling philosophy is going to be quite different than some others in that we have found that in combination with the local aspect, when you can offer ownership or people can associate with, you know, owning the 8 o'clock newscast or "Doctor On Call", you can get a premium for those spots.
1984 So the $45 a minute is very cheap on here, it's not nearly what we are going to get. Again I speak from experience and I just know that that's the case. So that's an average spot.
1985 COMMISSIONER MOLNAR: Okay. Thank you.
1986 Two quick questions before I leave.
1987 You mentioned just now that you speak from experience and this is a unique panel sitting before us.
1988 Can I just ask what will be your involvement and your involvement, Ms McLaughlin, in the operation? You said there would be 20 employees, will you be involved in the day‑to‑day operations of this radio station?
1989 MS LAURIGNANO: I will be definitely involved as a shareholder, which I am; I will definitely be involved in the control of the company, being on the board. I will definitely be involved in the launch of the corporation ‑‑ of the radio station and in having some oversight capacities.
1990 But I'm going to keep my day job for sure. I have every confidence that, you know, I have been there, done that in terms of numbers of stations that, you know, one can operate without physically being there 100 per cent, but I think that I can offer a lot in making sure that it gets, you know, up and running the right way.
1991 I will sure have it on when I'm at home in Joyland Beach at my house, you know, and make sure that we are delivering it.
1992 So I don't think that you have to physically be there, but I would certainly have oversight interests in it for sure.
1993 I would never presume to speak for other women, so Debra...?
1994 MS McLAUGHLIN: Yes, I will have involvement with the station, particularly in the areas that I have expertise in and that is in developing advertising revenues, having worked at an ad agency and sold radio and television for years, as well as making sure that the programming is meeting the needs. I am predisposed to research so I will be continuing to do that with this station.
1995 COMMISSIONER MOLNAR: Okay.
1996 My final question is: If you were approved when would you plan to launch?
1997 MS LAURIGNANO: We would plan to launch within the allotted time, very definitely within the two years, if not sooner. We don't have a plan for say a few months or anything like that, but we would certainly get to work on it right away.
1998 COMMISSIONER MOLNAR: Okay. Thank you.
1999 Those are my questions.
2000 THE CHAIRPERSON: Thank you.
2001 Commissioner Lamarre...?
2002 COMMISSIONER LAMARRE: Merci, Madame la Présidente.
2003 I have just a couple of technical questions. I don't want to leave anybody out.
2004 Looking through your submission I noticed that you were asked at one point to provide ‑‑ or it was provided at the time of the application ‑‑ I'm sorry if I can't give you the exact thing, but your file crashed on me on my computer, that's why I was going around with the books here. So I made the notes and hopefully ‑‑
2005 MS LAURIGNANO: We can sympathize.
‑‑‑ Laughter / Rires
2006 COMMISSIONER LAMARRE: Hopefully I made the correct notes.
2007 In Appendix 4F of your application you provided the realistic contours. What is missing on the label of that map is the height of the receiving antenna that was used for the calculations.
2008 So if you could confer back with your consultant and have that confirmed, I would appreciate it.
2009 MS LAURIGNANO: Yes, we will do that.
2010 COMMISSIONER LAMARRE: The other issue is about the availability or non‑availability of alternate frequencies for your planned station should you be approved.
2011 Reading from a letter that was sent from your consultant, two alternate frequencies have been identified, 101.7 MHz (channel 269) and 104.9 MHz (channel 285).
2012 Now, that letter clearly said that more engineering studies need to be done to develop fully the contours.
2013 So what I would like to know is just how secure do you feel that contours developed on these frequencies would be adequate for your business plan, especially considering the fact that you have made the point that you are looking not just at Orillia the city, but you are also looking at the commuting area for people from Orillia?
2014 Do you have any more data than that on those potential frequencies?
2015 MS LAURIGNANO: Right. It's a very good observation in that we ‑‑ well, obviously we would prefer to have the use of the one that we have applied for because we have explored all those possibilities.
2016 Beyond the opinion being offered by Mr. Moltner in that letter we have not done it any further and, quite frankly, I'm not in a position to answer that question. We would have to look at how it pans out.
2017 But we are heartened that there may be other options, not only for us but for others as well and we would certainly look at it.
2018 COMMISSIONER LAMARRE: That's a fair answer. That is a very fair answer.
2019 MS LAURIGNANO: Thank you.
2020 MS McLAUGHLIN: Mr. Moltner had to suffer through the same recitation that the Commission just did in terms of our sources, so we have some confidence that he at least understands the issue in terms of where we are generating our revenue.
2021 COMMISSIONER LAMARRE: Thank you for pointing that out.
2022 Now, on your coverage contour map, which I have a hard copy of so it's easier, I just want to draw your attention ‑‑ as Mr. Moltner probably did but I just want to make sure that it's fully understand ‑‑ that there are zones of interference you would be receiving from incumbent existing stations, but it also shows the future interference coming from either future incumbents on using allotments that are currently not used or existing incumbents that would increase their power, as they would be rightly allowed to do.
2023 So you understand that you may go on‑air, not see that much interference ‑‑ or see some of it in the first place, and then at one point in time see some interference growth within those areas?
2024 MS LAURIGNANO: Yes, we are aware. We have been made aware.
2025 We are also optimistic that as we go along some mitigating solutions may come upon us and others as well, but we are fully aware of the potential of what you have just described, yes.
2026 COMMISSIONER LAMARRE: Okay. Thank you.
2027 Those are all my questions.
2028 THE CHAIRPERSON: Thank you.
2029 Commissioner Patrone...?
2030 COMMISSIONER PATRONE: Thank you Madam Chair.
2031 Good afternoon all.
2032 You are proposing a fairly eclectic mix of music and I'm wondering what convinced you that there is a strong enough market to warrant having a format like this in this area?
2033 MS McLAUGHLIN: Well, first of all, it is an established format and I guess the eclectic part of it would come from the fact that it defies current trends and that is very narrow focus.
2034 By virtue of that design we think that it has a great potential in many markets. It is our understanding that it has launched in some markets in Canada. The response to it in Vancouver is overwhelming. I have been getting calls from people saying it's doing great, it's sounding great.
2035 It is successful in the U.S. by virtue of the fact that it does offer something different.
2036 We went into some detail ‑‑ and as I always seem to drive people crazy with the numbers I won't go through the numbers with you per se ‑‑ but we did go through some detail in terms of what is offered in this market in our supplementary brief ‑‑ yes, in our supplementary brief and then we mentioned it again this afternoon when we read it.
2037 But really what we are offering here is a different approach to radio. We are not offering non‑mainstream music, we are offering music that is familiar inasmuch as the artists would be known, we are offering music that people would recognize or have purchased the CD and know the track but not expect to hear it on radio.
2038 We would also be offering new artists, and there is a real appetite for new artists. You may be aware ‑‑ and I'm sure it's been mentioned by others ‑‑ but this town has a lot of festivals in it and they are really well attended, they are attended by people in the market from outside the market, and the focus of most of those festivals are new music.
2039 So it may come across as eclectic in its description, but it's really a very seamless format and it scores very high. It scored very high in this market. Eight out of 10 people said that they wanted to listen.
2040 Importantly ‑‑ and I had mentioned this before ‑‑ that almost 70 per cent of the people who said they would listen said they would listen more.
2041 In the demographic that is tuning the least to radio in this market, and that is 25‑44, we are serving a population that represents over 60 per cent ‑‑ 63 per cent of the total population, and when you put all that together it's a fairly compelling argument.
2042 They have Rock, they have AC, they have Hot AC, all of those choices are there, and if you look at the list of stations listened to in this market, you know, everything is just about covered.
2043 So how are you going to build a business case? How are you going to serve this market? The only thing you can do is to program something different.
2044 So we have been testing this across Canada in various markets. This is not the first time the Commission has heard about this format and I think we have some real market examples now, Vancouver being the latest, of how strong the reaction is to a broadcaster and a station that actually takes a different approach.
2045 It's great to have a whole lot of narrow focuses and they do an excellent job, but there is a really significant growing population in this market and every market in Canada that is saying I don't want to hear that song again, I want variety.
2046 And that's the key to this format, and in combination of course with the spoken word. We didn't back that out.
2047 COMMISSIONER PATRONE: Speaking of your spoken word commitment, I wanted to ask you a little bit about diversity of voices in terms of editorial checks and balances to ensure that that remains in place.
2048 How are you going to do that, editorial checks and balances relative to diversity.
2049 MS LAURIGNANO: Okay. With regards to that, we will have programming guidelines that are preset, non‑negotiable, some of which, you know, are standard and some of which will be adapted for the area here.
2050 The Program Director and the News Director will have a say in the supervision and the reporting of how these measures are being implemented, what the results are, what kind of recommendations we are going to give back.
2051 The other really big thing that we are counting on is that because it's local we are going to be establishing a system with the public that they will let us know and that communication is going to go to the top. So i's not just somebody can bury it anywhere.
2052 We have a very aggressive internet strategy where we expect feedback. We have, you know, announcements that will go on if we have a comment ‑‑ and, as Heather said, we expect people to walk in the door and tell us, you know, that this thing was not appropriate or, you know, you should do this, you should do that. So there is going to be a lot of communication.
2053 We also have a lot of eyes and ears on the ground already. You know, we have a network of people who are residents who will keep our feet to the fire and make sure that we are delivering all those things. So it's a combination of all sorts of things.
2054 COMMISSIONER PATRONE: You mentioned that three‑quarters of all your news stories are going to be local.
2055 Are those three‑quarters of all taped pieces or three‑quarters period of every news story you do?
2056 MS LAURIGNANO: No, three‑quarters of every story regardless. We will always lead with an Orillia story, unless of course there is some catastrophe or something that is going on.
2057 We are very well aware of Orillia's position geographically and how it relates to the other areas which is, you know, why that signal is important to us and the access to other places is important.
2058 For example we know that 8,000 of the 14,000 workforce for Orillia works outside of city proper so it would have been very foolish of us to come into this with one hand tied behind our back and pretend that we are just, you know, broadcasting to the city limits.
2059 You know, we know that people have to be able to take their radio with them, they want to know ‑‑ you know, when they are driving to work and from work, when they are shopping, it's a big trading area, there is a lot of entertainment and cultural activity that's outside of Orillia that people will go to, and vice versa.
2060 So, you know, it just can't be a one‑way street where the Barrie stations have access to this market and for some reason this market should be relegated to a secondary position; the highway should go both ways.
2061 MS THOMPSON: May I also add that one of the comments that I get is from people that are concerned that they are not hearing the Orillia content in their news and one of the things that appears to be missing, or is missing, is the fact that the Larche station in Orillia does not consistently cover meetings and news conferences, and that being Orillia City Council, Oro‑Medonte, Ramara, Severn, and even meetings such as the local Police Services Board.
2062 So those are things that Orillia's Own would do with that reporter, and we would.
2063 To me radio is about sound and so those actualities from meetings and events are very important to add to the story and to have the local people, their voices on the air so people can hear their comments or their opinions.
2064 So that's how we are going to have that 75 per cent local Orillia focus in the news.
2065 COMMISSIONER PATRONE: Thank you very much.
2066 Oh, I'm sorry. Go ahead.
2067 MS McLAUGHLIN: Can I just add this?
2068 COMMISSIONER PATRONE: Absolutely. Go ahead.
2069 MS McLAUGHLIN: One of the features of our application is that we have proposed an aboriginal mentoring program and we thought this was really important in terms of this market and that will certainly be, as far as we can see, one of the strongest checks and balance in terms of reflecting the diversity of this market in particular.
2070 Carmela of course has had years in broadcasting in Toronto with reflection of third language or ethnic language stations so there is a wealth of experience there.
2071 But the aboriginal mentoring program will bring into mainstream radio this opportunity for this community to be reflected in its entirety. I think it's one of the reasons Chief Emery wrote us the letter, that was the element that excited. We weren't just coming in and we weren't going to tell their stories, we were going to have them tell their stories.
2072 COMMISSIONER PATRONE: Those are my questions. Thank you very much.
2073 Madam Chair...?
2074 THE CHAIRPERSON: Thank you.
2075 I do have a few questions and, as most of you know, whenever we do have artists in the room I can't resist asking you guys some questions. So both of you or either of you can answer.
2076 I would like to get more of a sense of the music scene in Orillia and throughout Simcoe County since this is where you are from.
2077 And I do have a specific question for you Ms Melody.
2078 You do say that your music is currently on rotation on MuchMusic but you don't get on radio and why do you think you will get on this radio station?
2079 MS MELODY: That's correct. Like I have been sending my songs to radio for the past five years that I have been in this industry, spent countless amounts of money on radio promoters who continue to say that their relationship with the station will get me on their station.
2080 I have also sat down with music directors and said "Here is my single, what do you think? Will your add it?" And always I get the response, " I love your song, it fits the format, but you are up against this, this and this and this and it's usually the Cancon legislation where I'm up against the Nickelback, Avril Lavigne and I have to share that 30 per cent with them on the radio station. So if Avril Lavigne has a new single out, then my single gets bumped back.
2081 So within my own community, though, I have had not that much support from the stations and while I do have lots of support in other parts of my industry when it comes to touring, when it comes to television, I always have that support behind me, but radio, I don't have any of that support.
2082 Does that answer your question?
2083 THE CHAIRPERSON: Well, what attracted you to this application?
2084 MS MELODY: First off because it's an all‑female ownership. As a young female entrepreneur in my industry that's run by men it's great to see that there is more opportunity out there for young females.
2085 I also studied at Harris Institute in Toronto and I took the recording arts management program where I learned the business of my industry, so I'm also involved with that. Actually, one of my instructors who is here today was Liz Janik from Iceberg Radio and I am just continuing to be involved in that.
2086 But this format also attracted me because AAA means that artists can continue to make albums not just singles, because I can give them my CD now and they will play the single, but in addition to that they will play some song that maybe no one else has ever heard. So that could also help the music industry with the life of the album no longer being a single driven market.
2087 THE CHAIRPERSON: Is Melody your real name?
2088 MS MELODY: Melody is my middle name.
2089 THE CHAIRPERSON: Very cool.
2090 Mr. Gorman, if you could expand for me a little bit on the music scene in this area?
2091 MR. GORMAN: I'm not actually from Orillia, but as an artist I would have to agree with Ms Melody that this format in particular will benefit artists as it does offer more variety and doesn't necessarily focus on a single or one song. It kind of looks at the artist as a whole.
2092 So I think this format has a great opportunity to help artists in this country.
2093 THE CHAIRPERSON: Did you participate in coming up with this sample playlist?
2094 MR. GORMAN: No, I did not. I did not take part in that playlist.
2095 THE CHAIRPERSON: Okay.
2096 I was going to fault you for not putting "I Will Possess Your Heart" by Death Cab for Cutie on the playlist.
2097 MS LAURIGNANO: Consider it done.
‑‑‑ Laughter / Rires
2098 THE CHAIRPERSON: Okay.
2099 MS LAURIGNANO: Indeed.
2100 THE CHAIRPERSON: Good. It's done.
2101 Okay. Seriously, I would ask this question of you even in spite of the economic situation in which we find ourselves, but this market has been described as highly competitive, we have a considerable amount of out‑of‑market tuning in this market, you would not only be a stand‑alone broadcaster in this market, but you are a first timer. Collectively I absolutely acknowledge and respect the years of experience that you bring, but nobody knows you as a broadcaster and you are coming into this market with, although an established format, not one that is widely available throughout Canada, as opposed to coming into this market with a format the some would characterize as a safe format.
2102 This is a really tough hill for you to climb. Why do you have the confidence that you could do this at this time in this market with this format?
2103 MS McLAUGHLIN: Because we have done our homework. That's the short answer.
2104 When we looked at this market we know everything that's been said here today. There hasn't been a single surprise. We don't expect one before the end of this process either.
2105 All radio markets in Canada are tough. There is a lot of stations in a lot of markets in Canada. Orillia, however, has an undeveloped advertising market. Retail sales is an indicator of the potential of a market. It is a known, it's known to everyone in this market. There is no reason to presume that this is anomalous in that nature.
2106 So there is, first of all, the potential to develop it.
2107 Secondly, this format is the safest of the formats, because in order to compete you can't offer something that's the same.
2108 We are proposing to tap into the dissatisfaction that we found. We are not proposing to convert a rock listener who is quite happy with the radio station coming from Barrie over to us, we are offering something really, really different.
2109 And, you know, I have to look at the years of experience that I have had and that Carmela has had when you ask about confidence.
2110 We have been in hearing after hearing, we have had some of the largest broadcasters in Canada ask for our advice, take our advice, put it to work, execute it and it happens. We have had some of the smallest and it has worked.
2111 So we have a confidence that we did the exact same homework that we would have done for any other client. We applied the exact same strategies, the exact same knowledge, the exact same best business practices and we came up with this formula.
2112 In the end, before we even proceeded, before we put pen to paper in terms of research or commissioning it, we did a sensitivity analysis to say what if we are off, because it doesn't matter what has happened before, what is going to happen in the future.
2113 And we looked at the Ontario economy and the Ontario economy led the slide as it were. This started way back in 2006 and, you know, there was all sorts of indications at that time that it was slowing down because manufacturing was starting to hurt, so you know, as Ellen said to you, we knew that there was going to be a continued decline, the degree to which none of us knew.
2114 But we looked at the sensitivity, if we were off by 10 per cent, 20 per cent, 30 per cent, 30 per cent being an extreme case. And we remained confident, not that we would be profitable in the same timeframe, but we could generate the revenues, that we didn't have to cut back on any of the elements of our programming that we think are necessary to develop an audience to the station.
2115 And at the end all it does is defer profitability at 10 per cent by one year; at 20 per cent I think it defers it by two years. I would have to ask Lynn to confirm that. As shareholders what we would decide to do is not get paid back. We are prepared to do that.
2116 We have watched radio unfold in this country and there are many excellent broadcasters and I think that they do a fantastic job at serving the interests of niche audiences, but we think there is something more that can be there and so it was time to put our money or where our mouths have been for over 20 years. And everything that we have done and everything that we have worked on has led to this moment.
2117 We are here applying because we have absolute confidence in ourselves. Others have, other broadcasters, and now we are just looking inward and saying we can do it.
2118 MS LAURIGNANO: And I don't think that there are any guarantees; anybody can fall, big or small. I think the assumption in some of the old world order is getting rearranged to some degree so there is no guarantee that a bigger, you know, giant won't fall. They might and have a bigger hit.
2119 In our case, we don't have the risk of being overexposed, we have the passion, we are putting our own money, as Debra said, and it's a commitment that we all have made here to you and to ourselves and to everybody else that we are in it for the long run and we do have the resources.
2120 Even with the economy, I mean golly gee, you know, it's cyclical to some degree. You know, we understand it's probably going to get worse before it gets worse(sic) and you hear all that, but even the Great Depression you know, after the big crash it bottomed out, you know, like four years later.
2121 So, you know, it's going to come around again. We understand that it may not be close, it may not be, you know, within the next month or two months, there are a lot of things we don't know, but we know that our commitment is not dependent on that.
2122 We can weather the storm and that's really the test of, you know, endurance, if you are prepared to do it both financially and if you have the heart to do it and I think we have both, our group does.
2123 THE CHAIRPERSON: Thank you for that response.
2124 I know this is going to seem like a bit of a downer, but now I do have to ask the housekeeping questions.
2125 Specifically, your commitment to Category 3 music. You will accept a condition of licence that if you broadcast any from subcategory 31, 25 per cent of that will be Canadian?
2126 MS LAURIGNANO: Yes, we will.
2127 THE CHAIRPERSON: And 20 per cent Cancon of subcategory 34?
2128 MS LAURIGNANO: Yes, we will.
2129 THE CHAIRPERSON: And are you able to provide updated proof of financing within 10 days?
2130 MS LAURIGNANO: Yes, we are.
2131 THE CHAIRPERSON: Okay.
2132 As part of your oral presentation this afternoon, you included an "Orillia Applicant Sample Playlist Duplication in Market Chart" and by what we see here obviously that you just compared data that was available in all applications, so just for all applicants it's now part of the public record and copies are available in the exam room should any applicants wish to comment in Phase IV of these proceedings on your findings here in this chart.
2133 That's it for this afternoon.
2134 Thank you very much, Ms McLaughlin, Ms Laurignano and your panel ‑‑
2135 MS LAURIGNANO: Thank you, Madam Chair.
2136 THE CHAIRPERSON: ‑‑ for your application this afternoon.
2137 We are adjourned for the day and we will see you at 8:30 tomorrow morning.
‑‑‑ Whereupon the hearing adjourned at 1710, to
resume on Tuesday, January 27, 2009 at 0830 /
L'audience est ajournée à 1710, pour reprendre
le mardi 27 janvier 2009 à 0830
REPORTERS / STÉNOGRAPHES
|Johanne Morin||Jean Desaulniers|
- Date modified: