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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO-TELEVISION AND
Various broadcasting applications /
World Trade and Convention Centre
Room 200 E
1800 Argyle Street
Halifax, Nova Scotia
May 28, 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
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.
Canadian Radio-television and
Various broadcasting applications /
Rita Cugini Chairperson
Elizabeth Duncan Commissioner
Peter Menzies Commissioner
Marc Patrone Commissioner
Cindy Ventura Secretary
Joe Aguiar Hearing Manager /
Anthony McIntyre Legal Counsel
World Trade and Convention Centre
Room 200 E
1800 Argyle Street
Halifax, Nova Scotia
May 28, 2009
- iv -
TABLE OF CONTENTS
PAGE / PARA
Acadia Broadcasting Limited 5 / 31
HFX Broadcasting Inc. 75 / 478
Frank Torres (OBCI) 158 / 1007
Parrsboro Radio Society 242 / 1552
Halifax, Nova Scotia
--- Upon commencing on Thursday, May 28, 2009 at 0930
1 THE CHAIRPERSON: Ladies and gentlemen, good morning and welcome to this public hearing.
2 My name is Rita Cugini, I am the CRTC Regional Commissioner for Ontario, and I will be presiding over this hearing.
3 Joining me on the panel are my colleagues: Elizabeth Duncan, Commissioner for the Atlantic Region; Peter Menzies, Commissioner; and Marc Patrone, Commissioner.
4 The Commission team assisting us today includes Joe Aguiar, Hearing Manager and Manager of English Radio Operations; Anthony McIntyre, Legal Counsel; and Cindy Ventura, Hearing Secretary.
5 Please speak with Ms Ventura if you have any questions with regard to the hearing procedures.
6 At this hearing the panel will examine three applications to operate a new English-language FM commercial radio station in Halifax.
7 Au cours de cette audience, le comité d'audition examinera trois demandes visant à exploiter une nouvelle station de radio commerciale FM de langue anglaise à Halifax.
8 We will also consider an application to increase the effective radiated power of radio station CICR-FM Parrsboro.
9 In light of the current economic situation, the Commission wishes to ensure that any applicant it may choose to license has the financial capacity to succeed. The Commission, therefore, requests that each applicant provide updated proof of financing for their proposal, consistent with its policy regarding documentary evidence.
10 A copy of this policy can be obtained from the Public Examination Room. Applicants will have 10 days to provide the necessary documentation.
11 Before I turn things over to Ms Ventura, I would be remiss if I didn't say a few words about the former Chairman, Charles Dalfen, who, as many of you know, passed away suddenly on Tuesday. Some of us had the honour of working with Mr. Dalfen. He was a devoted father and grandfather. He was devoted to public service, to his career, and, on a very personal note, he will be sadly missed. Our thoughts and prayers are with all who loved him.
12 Thank you.
13 Ms Ventura...
14 THE SECRETARY: Thank you, Madam Chair, and good morning.
15 Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.
16 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 communications systems used by our translators.
17 We would appreciate your cooperation in this regard throughout the hearing.
18 Please note that we will be starting at 8:30 a.m. tomorrow morning.
19 We will take an hour for lunch and a break in the morning and in the afternoon.
20 We will let you know of any schedule changes as they occur.
21 Suite 204 will serve as the Examination Room, where you can examine the public files of the applications being considered at this hearing.
22 As indicated in the agenda, the telephone number of the Examination Room is 902-420-2094.
23 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 de trouve au canal 1 et l'interprétation française au canal 2.
24 Interpretation services will be available throughout the duration of the hearing. English interpretation is available on Channel 1, and French interpretation on Channel 2.
25 There is a verbatim transcript of this hearing being taken by the Court Report sitting at the table to my right. If you have any questions on how to obtain all or part of this transcript, please approach the Court Reporter during a break.
26 Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of this hearing.
27 Now, Madam Chair, we will proceed with Item 1 on the agenda, which is an application by Acadia Broadcasting Limited for a broadcasting licence to operate an English-language FM commercial radio programming undertaking in Halifax. The new station would operate on Frequency 105.1 MHz, Channel 286C, with an effective radiated power of 45,000 watts, non-directional antenna, with an effective height of antenna above average terrain of 224.1 metres.
28 Appearing for the applicant is Mr. Jim MacMullin.
29 Please introduce your colleagues, and you will then have 20 minutes to make your presentation.
30 Mr. MacMullin...
31 MR. MacMULLIN: Thank you, Madam Secretary.
32 Madam Chair, Commissioners, my name is Jim MacMullin, and I am Vice-President of Acadia Broadcasting.
33 With me today is Comptroller Peter Scholten; John Wiles, Station Manager at CKBW Bridgewater; Chris Pearson, Sales Manager, also from CKBW; Gary MacDonald, News Director in Saint John; Bobbi Lee Betteridge, Promotions Director in Saint John; Jeff Vidler of Angus Reid Strategies, formerly with Solutions Research Group; and Michael Fockler, Regulatory Affairs for Acadia Broadcasting.
34 Also in the audience today is Mr. John Irving, President of Acadia Broadcasting Limited.
35 I might add at this point that this same core group has been together for a number of years, and has appeared before the Commission on several occasions, as Acadia becomes more involved in the Canadian broadcast industry.
36 Each person here has been an active participant in developing the Acadia application for a New FM radio station in Halifax. Our company operates five radio stations in Atlantic Canada, and three stations in Northwestern Ontario, under the name Northwoods Broadcasting.
37 All of our stations operate in the same fashion, namely, a high commitment to quality programming that emphasizes local information and community involvement. We believe that we can bring this broadcasting philosophy to Halifax and provide a truly unique radio station for local audiences.
38 In the few minutes we have before you, Acadia would like to tell the Commission why we believe that Acadia has the best application, and how we have endeavoured to meet the standards of excellence that the Commission requires for approving a new radio licence.
39 MR. WILES: The New FM will be a full service, local radio station, catering primarily to a 35 to 44 demographic, with a Triple A format, also known as "Adult Album Alternative".
40 This distinctive format encompasses the best music across many genres, spanning rock, pop, adult contemporary, blues and roots music.
41 These music styles are heard nightly in local clubs and restaurants. Many national and international artists began their careers in Halifax - The Trews, Sloan, Joel Plaskett and others. This is the right format for Halifax.
42 Acadia is committed to the inclusion and promotion of both new and established Canadian artists. To that end, Acadia has committed to 40 percent Canadian content in its musical selections over the broadcast week.
43 Acadia has further committed to a weekly average of 20 percent of Canadian content dedicated to new and emerging artists, as defined by the CAB.
44 Acadia emphasizes that these are minimum commitments, and will endeavour to exceed these minimums whenever possible.
45 We will also produce two specialty programs, "Roots & Blues Saturday Night" and "The Massive Maritime Music Show", which will feature artists, music and interviews that would otherwise not be played on mainstream radio.
46 But embedded in the format will be more than just music. Our experience has told us that audiences are interested in style and form, production values and presentation. They want information related to the music and their lifestyle.
47 This radio station will not be a music jukebox. The all-important morning and drive-time segments will be packed with information, particularly weather and driving conditions.
48 In severe weather or emergency conditions, additional staff will be on the air to provide the necessary information, such as school closures and cancellations.
49 MR. MacDONALD: Commissioners, at a time when many broadcast operations have reduced local news coverage, the New FM station plans to carry a total of 9 hours and 31 minutes of news weekly.
50 A full 80 percent of this news total will be stories of local and regional importance.
51 Local and regional coverage will be comprised of municipal council meetings, school and hospital boards, news conferences, emergencies, and so on.
52 Now, each Sunday morning we plan to put all of this news and information into context, with a half-hour program called "This Week in Halifax", delving deeper into the stories and issues behind the daily newscasts.
53 For example, this week the program would include stories about increased video surveillance in the city's downtown core, and parental concerns over recent youth violence at a local high school.
54 Each week the program will conclude with a segment offering access to those involved in the issues, including minority groups and individuals, thereby adding an alternative editorial voice for the community.
55 MS BETTERIDGE: The true strength of the radio station will be its continuous presence in the community. This will be apparent when listening for less than an hour, any hour, and knowing without a doubt that this is a radio station originating in Halifax, Nova Scotia, and this program could not possibly originate anywhere else.
56 Staff members will be encouraged to join community organizations, service clubs and committees.
57 On-air community announcements will cover a myriad of fundraising events, such as Saturday morning carwashes, bake sales, and other similar events. Many of these events will be reported, live, on-location broadcasts, using station promotional vehicles.
58 We have found this form of active participation by local radio to be immensely popular in other radio markets, and we know that it will work in Halifax, too.
59 MR. WILES: With respect to Canadian Content Development, Acadia is pleased to offer a fiscally responsible benefits package totalling $700,000 over the term of the licence. Acadia developed these initiatives in conjunction with the Solutions Research Group report, which polled potential core listeners on a variety of eligible CCD options.
60 For example, we will provide a free concert featuring both well-known and local up-and-coming artists.
61 Another initiative will expose local acts to audiences via nightclub performances.
62 And a third initiative will allow artists to record, perform or promote their music locally and across Canada.
63 We understand that commitments to Canadian content extend far beyond the cash contribution in our application. Acadia recognizes and embraces the spirit and intent of the development of Canadian talent as originally envisaged by the Commission many years ago.
64 We believe that this intent is reflected not only in the initiatives proposed in our application, but throughout our programming and promotional efforts as well.
65 Our annual cash contribution of $100,000 to Canadian Content Development represents the absolute minimum level of our commitment.
66 Acadia is proud of its accomplishments with regard to commitments to Canadian talent with its other radio stations, and we fully intend to meet and exceed our commitments in Halifax.
67 MR. PEARSON: Prior to submitting this application, Acadia carefully evaluated the Halifax market. There were a number of specific factors that we examined. For example, we studied the economic strength and competitive state of the market, we looked carefully at the impact our New FM station would have on the existing commercial radio stations, and we spoke to many people living in the Halifax area about what they want to hear on local radio.
68 We are confident that we make a valuable contribution to the development of local and regional talent.
69 We have a detailed market survey which clearly shows listener demand for our proposed music format.
70 Acadia's core strategy focuses on programming and community involvement as its first priority. Our experience has proven that this ultimately leads to success in sales and marketing.
71 And last, but certainly not least, we examined how Acadia could make a meaningful contribution to the objectives of the Broadcasting Act through local and regional programming. The Commission has repeatedly stated that these factors are relevant to the evaluation of an application. Acadia has thoroughly addressed these factors in our supplementary brief.
72 MR. SCHOLTEN: Members of the Commission, the revenue and operating forecasts for the proposed New FM station are based on our many years of experience with Acadia's other radio stations.
73 In our financial forecasts we have clearly shown how Acadia intends to finance the operation of a live-to-air music format, and the attendant costs that are incurred with this type of local programming.
74 From an economic point of view, I am convinced that we have conducted due diligence in the Halifax market. According to our research, we determined that the proposed music format and the local economy can support our financial forecasts.
75 Our business plan includes employing 16 full-time and 3 part-time professional broadcasters. We have taken great care in preparing our business plan to present financial forecasts as they relate to the format and the target audience.
76 In Year 1, Acadia forecasts total revenue to be approximately $1.4 million. Of that amount, nearly half, 48.2 percent, will be allocated to program expenses, compared to the most recent market average of 31.1 in Halifax. That should tell you where our priorities lie.
77 Local programming is the bedrock of our financial planning strategy. As a result of our research, we are satisfied that we can enter the advertising market without causing undue harm to the other commercial broadcasters.
78 However, should our revenue forecasts fall short, or should our expenses be greater than forecast, I can assure you that Acadia has the financial capacity to meet all of the objectives of the business plan, and we will provide additional funds to augment broadcast operations should they be required.
79 We are confident that Acadia's management team can achieve the strategic goal of growing the business, and understands the resources required for starting a new radio station.
80 MR. MacMULLIN: Commissioners, I would like to conclude by simply stating that Acadia proposes a bright, friendly, informative and involved FM radio station for Halifax. Hopefully we have projected this sense of community in our presentation. It is the very heart and soul of our application and our company.
81 We have presented a reasonable business plan and a program proposal that describes how Acadia would increase the diversity of voices in Halifax, and we sincerely believe that our proposal is the best fit for the entire region.
82 The people with me here today, and many other staff at Acadia, have worked long and hard on this application. We would not have made any statement to the Commission today or in the application without the absolute intent of implementing the Promise of Performance.
83 The Commission should have no concern that, should our application be approved, the New radio station will sound any different from what we have presented today.
84 Thank you for your attention, and we will be pleased to answer any questions you have.
85 THE CHAIRPERSON: Thank you, Mr. MacMullin and your colleagues for your application this morning. I will ask Commissioner Patrone to lead the questioning.
86 COMMISSIONER PATRONE: Thank you, Madam Chair.
87 Welcome, and thank you for your presentation. My questions will be touching on all aspects of your written and oral presentations, and I was particularly interested in your commitment to the local music scene, because, as you well know, it is a big part of what makes Halifax Halifax.
88 You speak in your written submission of the importance of fostering an intimate relationship with the local music scene, so, naturally, you can appreciate the challenges that many artists have with respect to getting their material heard on radio.
89 What mechanisms do you have in place for evaluating maritime artists - and I am talking about emerging artists - when they present their material directly to you for consideration for airplay?
90 MR. MacMULLIN: Commissioner, we are already quite involved, in many aspects, in most of our markets, particularly in Nova Scotia, with the music industry associations and the ECMAs.
91 We have an award-winning program, hosted by a very knowledgeable and involved producer and program host out of our Bridgewater operation, and, having said that, I think I am going to let John Wiles, whose music roots run very deep, and who has contacts throughout Nova Scotia, Halifax and beyond, speak to that.
92 John, perhaps you could pick it up from there.
93 MR. WILES: I would envisage something very similar to what we are currently using in Bridgewater. Jonathan Crouse is the gentleman that Jim just mentioned, and I will say that he has not won an award yet, but he has been nominated several years, consecutively, by both Music Nova Scotia and the EMCAs. He is the type of person who gets out and gets to know these people personally, interviews them, gets to know their music, and then comes back and brings that back to the radio station, and brings into music meetings what he thinks is the most - are the closest things to what our format is, which will fit within those bounds.
94 We also have, currently, three hours a week that we use at the Bridgewater radio station, where he highlights others that may not be suitable for regular airplay.
95 We do have that process in place now, and we would certainly intend on continuing something very similar to that.
96 COMMISSIONER PATRONE: If they do have a CD, or whatever, that is brand new, they can take it to the station? There is a mechanism in place where there is a specific person that they can present this music to and perhaps get it evaluated?
97 MR. WILES: There certainly is, Mr. Commissioner, and not only that, but there are others on staff, as well. I certainly encourage people to be involved in local activities, and, in particular, local music, and we actively seek out a lot of people who have CDs, and, in this day and age, we also seek them out on the internet, to see what they might be coming up with, because you will get highlights of what they may be planning on MySpace pages and that sort of thing.
98 COMMISSIONER PATRONE: Thanks, I appreciate that, and I want to touch on that a little later, as well.
99 I noticed during your written submission that you mentioned that listeners are encouraged to call in with their music request, whether it is a local artist or whatever. Is that anytime of day, or is it sort of a specific show that you have in mind for that?
100 MR. WILES: At this point in time, we do have a specific show in mind, as far as our "All Request Lunch" that we had planned as part of our programming, but we would certainly take listener requests and suggestions in a broader sense, as well.
101 COMMISSIONER PATRONE: I also appreciate the impressive list of fundraising and charitable events that Acadia has taken part in in Saint John and Dryden, Ontario, for instance. If awarded the licence - and I realize that there is a reference in here, but Acadia will be adding Halifax local charities, like the IWK and that sort of thing, specifically, to its stable of charitable organizations that it will be involved in?
102 MR. MacMULLIN: Most definitely. As we said in our presentation and throughout our supplementary brief, our core philosophy and foundation in all of our markets is product and community involvement first, which will, as we have proven time and again to ourselves and the communities, lead to success for those organizations and for us from the business aspect of the radio station.
103 We have with us today our Promotions Director from Saint John, Bobbi Lee Betteridge, who could probably speak a little more to that. You have seen the list, and that is not a complete list.
104 MS BETTERIDGE: As you can appreciate, Mr. Commissioner, it is a very busy department, our Promotions Department, and we will do exactly the same thing, should we be successful in Halifax. It takes a lot of hard work to be as community involved as we are. It's through the contacts that we have made, it's through my position on committees that we sit on, that we are intimately involved with them, and we certainly plan on doing the exact same thing in this market.
105 COMMISSIONER PATRONE: You mentioned briefly the internet during an earlier comment. As far as your business case goes, to what degree have you had success in incorporating the web component in what you have done up to this point, and what are your plans with respect to trying to monetize that going forward?
106 MS BETTERIDGE: Our websites - we do radio very well. The website is sort of a learning thing, but we have made great strides in that, and we get great support from our senior management in getting the technology and the training that we need to make our website successful.
107 We realize that websites are certainly what our listeners are doing. They are involved in social networking groups and things of that nature, so we have created Facebook groups for both of our radio stations in Saint John - even for our street team, for the summer cruisers.
108 We are trying to reach our listeners while they are doing the things that they are doing. We have announcer pages through our website. There is the News Department, and they now can comment on the website.
109 We are certainly making it an extension of our on-air brand.
110 MR. MacDONALD: Commissioner, if I may, as far as the news website is concerned, we do dedicate specific pages for news content, which we update on a regular basis.
111 As well, we are looking at some other avenues to explore. We are enhancing our websites with audio.
112 For example, "Halifax This Week", once the show goes to air, would be available on the website, as well, for an extended period of time.
113 COMMISSIONER PATRONE: Great. Thank you. I wanted to ask you a little bit about your news operation a little later on, with respect to the web. You have sort of touched on that now, and I appreciate that.
114 In your analysis of the area's population, you provide some information regarding the population growth by 2010. Was that analysis done before the recession, or was it done after it began?
115 MR. MacMULLIN: It would have been last fall, most certainly, as we prepared the application, beginning in October.
116 Jeff Vidler, who is with us this morning, from Angus Reid Strategies - probably Jeff has those dates on tip of tongue.
117 Do you, Jeff?
118 MR. VIDLER: Yes, the research was conducted in November of last year, so in terms of the audience research that was conducted, we were looking at sort of in the middle of the recession, if you like, but the downturn was beginning.
119 COMMISSIONER PATRONE: It also speaks - and I am speaking of your written submission - to the resilience of Halifax in the face of a recession.
120 There will be those who will argue that this isn't the time to license anyone, because of the economic downturn. How would you respond to that general question - and I will be asking more with regards to that.
121 MR. MacMULLIN: Keeping in mind that the economy has been - I guess "difficult" would be a good word for most of the country, the maritimes has been affected probably least of all. We see that in Saint John. While we have no hard facts and figures available on actual economic dollars and cents right now, the general conversation is, yes, things are a little slow, but it's not devastating like it is Ontario west, for example.
122 The other thing is, while we are here at this hearing today, the economy is beginning to turn. Even the U.S. reports are saying that, by later this year, it will start to improve slowly, but start to improve.
123 From today to the day that the New FM station gets put on the air is probably a year and a half away, so we are quite confident that, with the resiliency of Halifax, and the maritimes in general, and given that timeframe, the business plan we have put together will be quite functional and successful.
124 COMMISSIONER PATRONE: As you are aware, the CRTC tries to be sensitive to the interests of incumbents relative to adding competition. In the last few years we have seen the addition of two new commercial stations, an AM to FM conversion, and a format change for CJCH. Do any of those factors give you cause for concern, as far as the licensing of another undertaking?
125 MR. MacMULLIN: We are certainly aware of the competitive nature of Halifax, and we face a small scale version of that in our Saint John operations. Our approach to programming, product and community involvement, which has led to our successes, is something that we have been able to do exceptionally well.
126 In recent acquisitions, we have seen the improvement of that kind of programming and community involvement lead to more successes from the business end and the sales and marketing of the radio stations.
127 Coming into Halifax, the recent figures that were released in the financial summary - I realize they were August 2008, but it was very, very encouraging to see that.
128 And, again, given the timeframe of from hearing to going live being an 18-month process or so, we feel that when we come into the market with what is available by our projections - and Peter Scholten can speak to this in much more detail than I can, but we would not have applied had we not been able to identify a format that was available to us, and that we knew we could do well with, because a singer/songwriter format is near and dear to our hearts, and we have a lot of expertise among the staff in the company right now.
129 The other thing is, we are aware of the Commission's criteria for not creating any undue hardship on incumbents. We, too, have been in that situation, and, truthfully, we wouldn't have applied had that been something that was not sensible or practical for us to do and would not give us the opportunity to succeed.
130 MR. SCHOLTEN: Mr. Commissioner, Jim referred to the latest results. We have the CRTC financial database system for the Halifax radio market, which was released recently. That shows - and the trend has been - that as licences have been added to markets, instead of the revenue being split or levelled out, it tends to show that there have been increases in the overall market for radio.
131 Year over year, 2007 over 2006, there was a 20 percent increase - almost a 21 percent increase in the local time sales in the Halifax market.
132 Going with these latest numbers, `08 over `07, there was another increase of almost 11 percent, again in local sales.
133 So it tends to generate new business for a new entrant into the market.
134 COMMISSIONER PATRONE: That is certainly encouraging to see, when you consider the capacity of a market to grow the advertising pie, rather than cannibalize the revenues of incumbents.
135 MR. SCHOLTEN: Mr. Commissioner, could I add to that, as well?
136 COMMISSIONER PATRONE: Yes, of course.
137 MR. SCHOLTEN: I would just like to say that I am very proud of our Sales Department and the way we do business. Currently, in our maritime stations, as of the first eight months in our fiscal year, we are actually running at 5.9 percent, at target, above last year's sales, which is very encouraging.
138 COMMISSIONER PATRONE: One of the factors that we also consider is out-of-market tuning, and currently, in Halifax, we are looking at a very low rate of out-of-market tuning, which might tend to suggest that those who are listening to radio in Halifax are listening to Halifax radio, they are not listening to a whole lot of radio coming in from outside.
139 But it also might lead some to question the capacity of the market to grow any more. In other words, there is not much room to repatriate out-of-market tuning.
140 MR. SCHOLTEN: Mr. Commissioner, as a result of some of the data that we have taken from the Financial Post "Markets - Canadian Demographics", we have come up with a formula that can drill us down to what the radio market would represent based on total retail sales.
141 The projection of the Financial Post for the Halifax market in 2010 was $5.8 billion, of which, historically, there tends to be 13 percent spent on advertising in general. Of the advertising that is spent, 15 percent goes to radio. Using those numbers, it would give us a market in Halifax of about $25 million.
142 With the recent data on 2008, the market currently is shown as $23 million.
143 So we see some room. There is some untapped revenue on the table. In our first year we are only proposing to take half of that.
144 COMMISSIONER PATRONE: I believe that untapped figure was slated at $1.5 million. Do you maintain that to be the figure that you stand by at this point?
145 MR. SCHOLTEN: Yes, based on the numbers that we have received on 2008.
146 COMMISSIONER PATRONE: You say that you have received those numbers. Can you give me a little more detail about how that number was reached?
147 MR. SCHOLTEN: Again, I am using the 2010 Financial Post projection for the total market. Using the formula, I come up with 25 - almost $25 million - $26 million. If we compare that to the $23 million that was shown as the actual figure, there is $3 million on the table.
148 COMMISSIONER PATRONE: There were analyses done by both Acadia and PHD Canada?
149 MR. SCHOLTEN: PHD did the analysis, as well.
150 We took two approaches to coming up with our revenue. One was from the ground up, using a rate, the number of spots in an hour that we would sell, based on 18 hours a day, seven days a week, and 52 weeks.
151 That gave us local revenue of $1.3 million.
152 We added a small component for national sales. We are the new guy in the market. Agency business is generated from ratings. Being the new guy in the market, we would have to develop those ratings and get our tuning share, and those dollars would come later.
153 The PHD study worked on the relationship, with their history in the business working with agencies, between tuning and market share.
154 Jeff Vidler, I think, is a little more familiar with how that relationship works, if Jeff could take it from here.
155 MR. VIDLER: The PHD model - and this is something that they have observed over many years and have, I think, submitted at previous licence applications for radio several times over the past years.
156 It comes from their observation as a media buying agency that a radio station's share of revenue is roughly equal to the average of its 18 to 49 audience share and its 25 to 54 audience share.
157 Those are the two main buying demographics. You average the share of those two demographics, and then discount any out-of-market tuning or tuning to non-commercial stations that you can't buy.
158 So, again, if you convert that simply to the buyable share, what the advertiser can buy, then that should give you an estimate of the revenue potential for the radio station.
159 That is the top-down approach that Peter was referring to, and, in fact, it did come down to $1.4 million, or, fundamentally, almost exactly the same point as the brick-by-brick build-up that Acadia did themselves.
160 COMMISSIONER PATRONE: Right. Acadia's analysis was done independent of PHD's?
161 MR. VIDLER: That's right.
162 COMMISSIONER PATRONE: And I believe there was a 10 percent difference.
163 Just out of curiosity, who had the more optimistic forecast, was it Acadia or was it the consultant?
164 MR. MacMULLIN: I believe it was PHD.
165 MR. VIDLER: PHD did estimate a little over $1.4 million, and they had also discounted, recognizing at the time that they did the calculations - again, looking at November, early December, and at that time the downturn was evident, they projected a decline in revenues of 5 percent for the Halifax market for this year.
166 So that was factored into it, as well.
167 COMMISSIONER PATRONE: You have touched on this a little bit, but in your projected ad revenues, Acadia forecast an 8 percent compound annual growth in revenue between Years 4 and 7, which is in line with the annual growth registered between 2004 and 2008.
168 Staff is wondering how realistic your level of growth projections are, considering that we are in a recession.
169 MR. MacMULLIN: As I stated earlier, by the time we get to air, if we are successful in the application, we feel that the state of the economy will be dramatically improved. As we are seeing, it is already beginning to at least stabilize, if not move slowly forward.
170 And the maritimes, again, being somewhat less affected - it's such a dramatic scale - a difference of about 10 percent here is what we are hearing from people, compared to the 25 or 30 percent that a lot of western provinces and areas are going through.
171 The other thing is, we are forecasting a very small percentage of national business in Year 1. The obvious reason, which Peter Scholten touched on, is, as we are the new kid in town, national business will be a little slower to come our way, simply because we will have to go through at least one, if not a couple of ratings periods to establish ourselves in the market, to attract more of that national business.
172 Of course, as Chris Pearson alluded to, with our sales approach and the training systems and the method we use, which will be implemented here as well, we will certainly be busy on the streets of Halifax, targeting all of the typical advertisers, and, of course, looking for those that would be especially attracted to listeners of this kind of format.
173 COMMISSIONER PATRONE: But you also would have been entering an already contracted - potentially contracted radio market.
174 MR. MacMULLIN: Certainly, but things change as time goes on. Like I said, our approach - and we will contact the clients. A lot of our focus will be -
175 Because this format is truly unique in the demographic and the lifestyle of the listeners, as we have explained pretty well, especially in the PHD report, which you read, we have identified and observed -
176 Chris, maybe you could help me out with this.
177 He did a little observation of likely kinds of businesses that would be attracted to this format because of who is listening to us.
178 COMMISSIONER PATRONE: I want to get to the format in a minute, if that's okay -
179 MR. PEARSON: Sure.
180 COMMISSIONER PATRONE: -- even though your answer is going to revolve around the economics of it.
181 But I do want to ask you something concerning your forecast.
182 In 2008, a 1 percent 12-plus tuning share in the Halifax area generated, roughly, $241,000 in ad revenue. In Year 3 of your economic forecast, you project that the proposed station would generate $348,000 per 1 percent in tuning share.
183 Considering the `08 numbers, is your forecast overly optimistic?
184 MR. MacMULLIN: I thought we took a rather conservative approach, but -
185 MR. MacMULLIN: Again, this is a really unique economic time in our history. When we prepared this, the world, as it is today, was dramatically different, much more normal, if you would, since the applications were filed and the economy has done what it has done to us.
186 We don't have any available hard, accurate data for the last six months even that we could draw on, only from conversations from industry colleagues and business people we have spoken to.
187 Again, we are a year and a half away from anybody putting a station on the air.
188 So, no, I don't think it is overly optimistic. I think we were pretty realistic and fiscally responsible when we made that plan.
189 MR. FOCKLER: Commissioner, in addition, we have revisited some of our revenue numbers, based on the current economic situation, and even forecasting a 10 percent or a 15 percent decline in overall revenue trending across the seven years, we feel that we still have a strong model, which will be functional.
190 And this predicates everything on the quality of the expenses that we had laid out in the supplementary brief.
191 What it ultimately works down to is that our break-even year may move by one or two years. However, Acadia is prepared to sustain those losses for as long as it takes for the economy to turn around.
192 COMMISSIONER PATRONE: In terms of its impact on the market - and you sort of alluded to this, or were beginning to with your comments about the format - Acadia has determined that there would be less than .8 percent tuning share impact on any incumbent radio station.
193 MR. SCHOLTEN: Yes, that's correct, Commissioner.
194 You are reading from, I believe, the supplementary brief at page 31.
195 There is less than 1 - 8 percent impact on any of the other existing incumbents.
196 COMMISSIONER PATRONE: Point eight percent, as I read it.
197 MR. SCHOLTEN: Thank you.
198 COMMISSIONER PATRONE: The top 8 stations in the market would not be unduly disrupted.
199 When you consider that the projected source of ad revenues for the New FM's first two years in operation are 38 and 20 percent, respectively, can you provide a rationale as to why you think the impact of the New station would be spread so broadly?
200 Because that seems to be the focus of your analysis, that no one station is going to be hit all that much harder than the other stations.
201 How did you reach that determination? Does that speak, again, to the format?
202 MR. PEARSON: I would like to comment that I think where that comes from, Mr. Commissioner, is the psychographic of the listeners. Currently there is no station in Halifax that is dedicated to that psychographic, so those particular listeners - and I am not a programmer, but from a sales point of view, they would be listening to various stations that are available at this point.
203 But once we do our Triple A format, that would become the popular station for them.
204 And then we have identified the types of businesses, possibly, that would have an interest in that psychographic.
205 COMMISSIONER PATRONE: I wanted to ask a little bit about your format choice, as well, because in your research you found that more than half of those surveyed seemed to have an issue locating a station that they really feel comfortable with.
206 I believe the figure you came up with was 54 percent.
207 Could you speak to the level of dissatisfaction and how you intend to address that?
208 MR. MacMULLIN: I will ask Jeff Vidler, who was with Solutions Research Group, who did that survey, to jump in here and provide you with that answer.
209 MR. VIDLER: I can certainly speak to some of the numbers that are behind that, and I think that perhaps the Acadia team can talk about some of the plans they have to reach those disaffected listeners.
210 But, you are right, in the research there were two questions we asked in relation to satisfaction. One was the extent to which people felt that they could find a radio station that consistently played the kind of music that satisfied their tastes. Indeed, 52 percent of the potential weekly reach listeners to the Triple A station said that they agreed that they could not find a station that currently satisfied their interests.
211 That was higher than the 18 to 64 average, which was about 40 percent.
212 A similar kind of percentage, a similar kind of gap, also emerged in terms of reflecting the lifestyle of the listeners, in terms of DJs or hosts talking about things that interest them.
213 So the same kind of gap, as well, expressed general dissatisfaction with the existing options that are available to this particular psychographic.
214 COMMISSIONER PATRONE: Were these people who were already listening to radio but just weren't that happy with the selections available, or were they, in your opinion, people who had sort of given up on radio and said, "If something were to come along that really grabbed my interest, then I would be gravitating toward radio listening."
215 MR. VIDLER: The vast majority of them currently listen to radio in the market, but they are also above average in terms of their consumption of some of the more, I guess, non-traditional audio alternatives.
216 Fifty percent of them had recently listened to podcasts, internet-only radio, satellite radio, compared to only 40 percent - 41 percent of the overall market of 18 to 64.
217 So they are looking for other alternatives than what is currently available to them, but they are radio listeners, nonetheless.
218 COMMISSIONER PATRONE: I would like to ask you about what distinguishes your application, relative to its format, to perhaps your competitors during this hearing.
219 For instance, in your application you put a 50 percent weighting on selections from 2000 onward. Why did you choose that approach rather than broadening it to, say, a period of time before that?
220 Was this directly aimed at attracting the age group that is perhaps a little on the younger side? Is that what was behind that?
221 MR. WILES: Mr. Commissioner, it is not necessarily aimed at attracting a younger age group; actually, we are probably targeting a little older age group, but they are people who are still very active in pursuing new music, who like new music. They like to hear what is coming - new out there.
222 That is the sort of approach that we want to take, which is why we are looking at a lot of newer music in the format.
223 COMMISSIONER PATRONE: I was comparing your application to the other Triple A format application, and the sample playlist appeared to me to be eclectic, but still included a number of songs like "Wonderwall", "Heart of Gold", "Where the Streets Have No Name", "One Headlight" - songs that, as you are aware, are currently the staple on Halifax classic rock radio.
224 It must be, to a degree, tempting to rely on those songs, but I have to ask, what is going to attract the new listeners to your station, rather than simply taking listeners from people who are already hearing those songs elsewhere?
225 MR. MacMULLIN: As John alluded to, the particular demographic and lifestyle choices of the audience that we want to target - they love to discover new things, so we will offer a very wide range of stuff that is not available, and the duplication will not be overly strong against any format.
226 Some of the songs you mentioned, if sonically they fit, then some of that older music - gold, if you would, will certainly be in the lighter rotations.
227 We have also devoted 40 percent to Cancon, and 20 percent of that number to emerging artists. So, as you can see, our focus will be on finding, especially, local and regional artists who can fit this sound, and who we can play on playlists, as well as in any specialty programming that we have submitted.
228 But the music - while certainly the format, and music, is a key component, the whole thing is one big package. It is the music, and then it is the other aspect of the spoken word and the involvement of the announcers in the newsroom, and the information that we will direct, again, very specifically at this target group, giving them the lifestyle and community information that they want, and use, and look for.
229 We will be as interactive as we can be on the air, and on the web, as Bobbi said a while ago.
230 We will be out in the community, visible, offering them time to support their causes and their organizations and do good things in their community.
231 So we look at it as much more - to attract that audience the music is certainly critical, but we have to look at the whole thing as one complete package of everything that we deliver, so that the music is to their liking, and the things we talk about and get them involved in are to their liking and interests as well.
232 COMMISSIONER PATRONE: Yes, I want to get to information in a minute.
233 Staff asks if you could submit a sample music list that is representative of the musical format, including one hour during the morning drive, one hour during the afternoon drive, and one hour during the non-peak period.
234 Could you endeavour to do that?
235 MR. MacMULLIN: Yes, we certainly could.
236 By the first of the week?
237 COMMISSIONER PATRONE: Sure.
238 Just out of curiosity, of the 20 percent that you delegate toward emerging artists, have you given any consideration to including, within that 20 percent, a component of Halifax or Nova Scotia emerging artists?
239 In other words, is that something that you might consider?
240 MR. WILES: I would think that a significant percentage of that new and emerging artist component would be from Halifax. They would certainly be the ones that we are more familiar with, and that would be familiar to the audience, as well. So they would have that in their favour.
241 It's the type of people that they can see performing locally, and we think that would create, certainly, a synergy between the audience and the performers, as well, and make it worth our while to include a significant component in our programming.
242 COMMISSIONER PATRONE: I want to talk a little bit about your news and information, because I see in your written submission that there is a commitment to provide high quality news.
243 When you look at the ownership structure of your organization, at the very top of the ownership food chain, of course, is the name of Mr. Irving. I want to ask you, to what degree do you put a premium on the independence of news voices?
244 In other words, being able to ensure, and put mechanisms in place that ensure the fact that your reporters are out there producing journalism that is unencumbered or unaffected by the corporate structure that governs your organization.
245 Can you talk a little bit about that?
246 MR. MacMULLIN: Absolutely. Each and every news director, and newsperson, to some degree, has total autonomy to make editorial decisions in the content of what gets put in the newscasts and specialty news programs.
247 We have a pretty strongly worded and clearly defined news policy and level of standards.
248 I could go on, but Gary MacDonald, who can bring you right up to speed on all of that stuff, is here, so we should let Gary tell you about it.
249 MR. MacDONALD: Clearly, we adhere to the Code of Ethics of the Radio-Television News Directors Association of Canada. That is the governing policy of our newsrooms across our group, and that is what we strive to achieve each and every day.
250 As far as any sort of top-down interference directive, or anything like that, there is absolutely none. Each newsroom operates independently, and, as I say, according to the Code of Ethics of the RTNDA.
251 MR. MacMULLIN: I should also point out, Mr. Commissioner, I guess because you brought it up, that Acadia Broadcasting - yes, it is owned by Mr. Irving, but it is a totally independently run company, with me as the chief executive, if you would.
252 Station managers have a lot of autonomy. We have no affiliation with any other media companies - or any of them owned by this part of the family that owns Acadia Broadcasting.
253 That is on file with the Commission from a few years ago.
254 COMMISSIONER PATRONE: I appreciate that. I asked because you are in a scenario, and in a market, where the owner is often a newsmaker, and, in that kind of milieu, it is important to have structures and mechanisms in place, which you know, that ensure that the independence of editorial voice is all important in the newsroom.
255 MR. MacMULLIN: You have my assurance that that is, indeed, the case, and I am sure some days it is embarrassing when he is the lead story.
256 COMMISSIONER PATRONE: What other factors do you say are important attributes of a high quality news operation, as you have committed in your written and oral submissions?
257 MR. MacMULLIN: Again, I am going to let Gary jump in, because Gary is taking on a much bigger role with our group now, in the fact that he is working with all of our news directors, in every one of our stations.
258 We have recently come back from a trip to the Ontario group, where he has explained to them the policies, the processes, the expectations, even to the point where we are standardizing equipment and meeting regularly.
259 Gary, you can certainly speak to that.
260 MR. MacDONALD: I am in the process of re-working newsroom policy to broaden it a bit, as far as bringing in all of the stations in the group.
261 Again, what we do on a day-to-day basis is based on the Code of Ethics of the RTNDA. We are all members of the association, as well, and fully supportive of the organization.
262 In addition to that, we have started a series of conference calls. I do a conference call with all news directors in the group on a monthly basis, and we are talking about things like writing styles, and audio quality, story ideas, story development ideas, those sorts of things, to try to bring a much more professional approach to all of the stations in the group.
263 COMMISSIONER PATRONE: You spoke a little bit about your staffing commitments. Could you give me a breakdown of who is in the newsroom, the number of reporters in the field versus anchors, and that kind of thing?
264 MR. MacDONALD: In Halifax we are proposing a newsroom of three full-time people, including the news director, and one part-time person.
265 Through a given day, Monday through Friday, one person would be covering off the morning desk, one person would cover off the afternoon desk, and we would have another person available for floating, as far as any sort of news conferences, meetings, those sorts of things, or breaking news.
266 In addition, we would have the ability to call in that part-time person to bolster our coverage.
267 COMMISSIONER PATRONE: And you will be mixing and matching reports and stories from various newsrooms, I take it, because that is the process that you are involved in right now.
268 Is that correct?
269 MR. MacDONALD: No. We may share stories within our group from time to time, if they are of interest outside the Halifax market.
270 More importantly, there may be a bit of sharing of stories between Bridgewater and Halifax, for example, just because of the overlap, where you would have a story of regional interest, in that vein.
271 But, overall, Halifax will be a completely independent newsroom, operating on its own accord.
272 MR. MacMULLIN: But having said that, Gary, Halifax is a port, and we have one in Saint John, too. So, obviously, if there is a story relating to port business, or some piece of business - a story of interest around shipping that applies to both, those are the kinds of things that we would look for and make sure that the Halifax newsroom would know that, if it's a port story locally, our news people in Saint John, and the people in Saint John who work in the port, would have some interest in it.
273 So we would, most certainly, make sure that if it didn't go CP, it got to the newsroom in Saint John.
274 COMMISSIONER PATRONE: And your staffing commitments on weekends...?
275 MR. MacDONALD: We would have a part-time person filling in.
276 COMMISSIONER PATRONE: Acadia has proposed 9 hours and 31 minutes of news and surveillance programming per broadcast week. Of that, 6 hours and 57 minutes is identified as core news.
277 Can you confirm that you are referring to pure news, as identified in Public Notice 2000-14, which is to say, local, regional, national and international events of the day, not including weather, traffic, sports and entertainment?
278 MR. MacDONALD: That is correct.
279 COMMISSIONER PATRONE: Okay. I know that my colleagues will probably have some questions for you, as well.
280 Those are my questions. Thank you.
281 THE CHAIRPERSON: Thank you.
282 Commissioner Duncan...
283 COMMISSIONER DUNCAN: Thank you, Mr. MacMullin and your team, and welcome to Halifax. Even though it is close to New Brunswick, you are still guests, and we are glad to see you.
284 I have a couple of questions. I am wondering, are you operating a Triple A format in any of your other systems, or is this going to be new?
285 MR. MacMULLIN: This would be a first Triple A for us.
286 COMMISSIONER DUNCAN: I think I read in your supplementary brief that even though you have a station in Bridgewater, this will be an independent station.
287 Are you expecting any synergies as a result of Bridgewater and Halifax being so close together?
288 MR. MacMULLIN: The only synergies will be the administrative items that we handle for all stations out of Saint John, which are primarily accounting and payroll functions. That will stay in Saint John, even for the Halifax station.
289 There may be some opportunities or interest by advertisers, in one market or the other, who may want to get something in the other market, but Halifax will run as a totally standalone, independent station, and the Bridgewater stations will run that combo there.
290 COMMISSIONER DUNCAN: With your expanding number of stations, which are now -
291 How many is it now that you have?
292 MR. MacMULLIN: As of now we are eight.
293 COMMISSIONER DUNCAN: With that number of stations, do you have the ability for a station to pick up a news item that is of interest?
294 Say there is a news item involving the Saint John port, as you say -
295 MR. MacMULLIN: Right.
296 COMMISSIONER DUNCAN: -- do you have access from all of your other stations to get that news item, if they want to air it?
297 MR. MacMULLIN: I don't think we have the access yet, but I do think, technologically, that we have the ability.
298 MR. MacDONALD: Through the software that we are using in our newsrooms, for example, here in the maritimes, each station can access the other's in queue or story line-up.
299 We are currently working on making the Ontario link, as well. That is a networking IT issue which is well above me, but we are in the process.
300 COMMISSIONER DUNCAN: So I would think that sharing stories would be a possibility and -
301 MR. MacMULLIN: Again, stories that would have a common interest.
302 In our northern Ontario operations, forestry is a pretty big part of the economy up there, and, of course, in New Brunswick, in the two markets we have there, they have forestry operations.
303 So, again, those common kinds of things that would have interest, and maybe even impact on those operations, we would look for, yes.
304 MR. MacDONALD: An example of that would be that last week, for example, in St. Stephen, there was a demonstration involving a group surrounding the Agent Orange controversy at Base Gagetown, and we actually shared resources in covering that story. I went down to lend a hand to our St. Stephen operation, because I wanted a specific - a more local angle for Saint John.
305 So there was a sharing in that respect, and because there is an overlap and we have people living in St. Stephen, and making the drive every day to Saint John to work, for example, there will be an overlap of stories that we can share from time to time.
306 COMMISSIONER DUNCAN: I can see that all of that is in the interests of the listeners and your advertisers.
307 MR. MacDONALD: Absolutely.
308 COMMISSIONER DUNCAN: Very positive.
309 I notice in your - just bear with me a second while I find the place.
310 I am referring to your sources of revenue, and I notice that in Year 1 you are projecting taking 38 percent from existing stations, and in Year 2 that is going to drop down to 20 percent. And I'm just curious. It is obvious to me that you have done a thorough job on your projections, but I'm just curious how you -- why that would be? Because once you establish somebody as a client you're not --
311 MR. MacMULLIN: But I think the short answer -- and any of my colleagues who feels the need to jump in, by all means go ahead -- but I think in the first year when we get there, in the radio industry, in any market, there are a certain segment of the business is, you know, that are strong and avid radio users and they would be local and regional clients and some national.
312 And once -- in the first year, once you start to attract some of that business, the ones you have will tend to stay with you if you're doing the job for them, which we take great pride in doing.
313 And we will focusing, as I said, on a lot of businesses that are not being approached or at least not using radio stations -- they're not being approached, because I don't know if that's the case -- at least not apparently using radio in this market that with the lifestyle, again of the target audience, we see a lot of potential in attracting a lot of those new ones.
314 So, we think we'll get more growth in that area in the longer term than we will, you know, after we have a share of the traditional radio users.
315 COMMISSIONER DUNCAN: I'm sure that you can understand why I'm just seeking, that looks a little odd that your revenue from existing stations would decline unless people are just going to kick tires and then move on. I don't know. I can't imagine that's what you're advocating, so...
316 MR. MacMULLIN: Well, there's probably some of that. Again, I think when you first launch a station the strong radio users will -- who are always the most aggressive business people it seems in the community -- are always looking for new ways to get to new places.
317 So, they will certainly come and we're counting on, you know, a fair percentage of them staying and some of them moving on and then it will kind of level out in the second year as we become a more familiar entity in the radio business.
318 COMMISSIONER DUNCAN: M'hmm. I'm just going to go back to a question -- I think it was Mr. Fockler that answered and said -- he was addressing the fact that if revenues don't materialize like they're initially anticipated to do that it's still -- your business case is viable.
319 And I see that you're projecting a turnaround in year five. And so I'm just wondering, if it were off 10 to 15 percent, you're probably going to be the full seven years maybe into year eight --
320 MR. MacMULLIN: Yeah.
321 COMMISSIONER DUNCAN: -- before you see a positive?
322 MR. MacMULLIN: As Michael said earlier, yes. We certainly have the means to ride over a little longer slow period, if necessary, to get it there and if instead of year five it was year six or even into year seven, we will certainly be there and make sure that it's operational.
323 None of the -- the only thing that would change if revenue went down would be, we would have less revenue. The operating plan as we put it forward would stand.
324 COMMISSIONER DUNCAN: Okay. So, you'd just be prepared to fund the loss. Okay.
325 What I wanted to ask you about as well is, I'm just going to go back to Mr. Patrone's question on the market share.
326 And so the market share, based on your year three revenue, you're looking at 44 percent higher than the current revenue per percent share in Halifax in year three.
327 And so I just wanted to make sure. I understand you use the Financial Post and that all sounded reasonable to me, I just wondered, did you look at that or did you consider that, like what type of growth were you projecting for the market as a whole?
328 Maybe you've got that number there. It's just that right now in 2008 a one percent 12 plus tuning share is worth $241,000 in revenue.
329 In year three, based on yours, you're looking at $348,000 which is a 44 percent increase over the current 2008 number and --
330 MR. MacMULLIN: And by year three we would certainly think that we would be established in the market and, you know, confident that we would have a sizeable audience.
331 And, again, it goes to the question I answered a while back. I think a large part of it is our national projections in the first year are extremely low and after we've been through multiple BBM periods we'd like to see our share up there, as we said, around the five percent, hopefully higher, we'll certainly work towards that, and that would drive that number a fair bit by year three.
332 COMMISSIONER DUNCAN: So, you're actually very optimistic about the Halifax market as a total, as a whole?
333 MR. MacMULLIN: We're pretty comfortable coming here.
334 COMMISSIONER DUNCAN: Not just your station.
335 MR. MacMULLIN: As I said earlier, I don't think we'd be at the table if any indication that we saw economically or no opportunity for a format that we think is going to fit with the population research we did, we probably wouldn't be here today.
336 So, yes, we're very confident.
337 COMMISSIONER DUNCAN: Now, the last question I have, I don't know, I'm assuming you've had a chance to look at the competing applications.
338 And I'm interested in your perspective on a stand-alone station because, as you know, in the Halifax market we have a number of larger systems, CTV, Newcap, Rogers.
339 I'm just wondering, are you going to be expecting in three years to come to the Commission and say that we need another licence to compete?
340 MR. MacMULLIN: What am I going to do in three years? Ah... Perhaps, I don't know. Maybe Halifax will be a lot bigger and really booming by that time. We can only hope for that for everybody who is here.
341 Can I say unequivocally will I be here in three years looking for another licence? I can't answer that question today. I don't -- it's not on my plate today, I guess would be the only way I could answer that.
342 We've been in a stand-alone situation prior in St. John. CHSJ operated against three commercial competitors for a very, very long time until 2001 and, you know, it wasn't pleasant at times and, you know, when the books were good it was a little better in those years.
343 We know how to deal with that. We know we're efficient operators. Having a combo in a market this size would certainly be nice.
344 So, I won't say no I won't be here, but I won't tell you today yes because I don't see it in the short term future.
345 COMMISSIONER DUNCAN: Yes, but I don't think I was really meaning it like that. I think I was just trying to get a feel for the fact that you are comfortable in this market as a stand-alone station having read the comments in the competing applications?
346 MR. MacMULLIN: Yes.
347 COMMISSIONER DUNCAN: Okay, thank you.
348 Madam Chair, those are mine.
349 THE CHAIRPERSON: Commissioner Menzies.
350 COMMISSIONER MENZIES: Thank you.
351 I just want to come back at this revenue item again and expand my understanding I hope of your sources.
352 At year one new advertisers 35 percent. Can you help me understand again, I mean where that's going to come from, that's $500,000 of revenue in year one.
353 And I understand the argument about some market growth and there is always some market growth initially when you get good competitors, but that seems high to me.
354 MR. MacMULLIN: Go ahead.
355 MR. SCHOLTEN: That 35 percent, we see -- or the format that we're presenting here, that there's a demand for advertisers to reach that demographic that we're trying to reach currently that are not using radio and we see that there's money on the table that is available to radio advertisers, that we would definitely be approaching those advertisers that would really suit the demographic that we're attracting as far as listeners.
356 Perhaps --
357 COMMISSIONER MENZIES: Maybe you could like give me a for instance. I'm not asking for the exact name of the client, but maybe the categories because, you know, the people who are operating in this market right now are generally pretty good operators and I'm just having trouble imagining them leaving $500,000 lying around for you.
358 MR. PEARSON: I think, Mr. Commissioner, drawing from the strengths that we have in the Bridgewater market, in a smaller market, that we don't have a lot of big box stores and businesses.
359 We deal a lot with independent, you know, mom and pop operations, so to speak, that makes up a great deal of our revenue there.
360 I'm sure that will be a big focus initially with us as well too, as well with the bigger businesses and bigger advertisers, but we really do have a lot of strength in dealing with smaller independent.
361 And I think with this psychographic, there's a lot of opportunity there because we've sort of determined through our research and the way we look at them that they like to deal with, you know, more of a specialty independent type of business that attracts them, something different.
362 So, I think that amount of money, even though it sounds like a lot, for me it really doesn't because of the fact that I know how our sales were made up and we very much have to make it up through those types of businesses and we'll be very focused on that.
363 COMMISSIONER MENZIES: Can you categorize those businesses for me at all? I mean, is it retail business, is it hospitality industry, is it automotive -- probably not -- but, you know, cell phones, iPods, technology, help me.
364 MR. MacMULLIN: Chris, if I might. I mean, we put a pretty good example of Chris' observations in the brief, as you no doubt read, but non-traditional advertisers or a big box like an IKEA store which traditionally doesn't use a lot of radio.
365 Once they see the audience that, you know, we're targeting and are confident that we can attract, IKEA would be a good example, but that's furniture in general, and other furniture advertisers will advertise too.
366 But this audience would be more likely to be an IKEA shopper than a shopper at the Brick, for example. Not to say they won't go to a main stream, you know, big box franchise store, but their preference would be an IKEA and they would be do-it-yourselfers.
367 And, so, you know, landscape kind of businesses or the building suppliers, traditional and the smaller independent ones. These people would like to deal with independents, will deal with the chains when there's no other alternative for them.
368 So, that's who we're really going to focus on. For entertainment businesses, for furniture and appliances, nutritional businesses, GNC Centres, those kinds of things, health and wellness kind of opportunities. They're very focused on those kinds of businesses and like to deal with independents.
369 So, that's where we're counting on the bulk of that 35 percent coming from.
370 COMMISSIONER MENZIES: Okay.
371 MR. MacMULLIN: Did that --
372 COMMISSIONER MENZIES: In your -- I know Commissioner Duncan just touched on this, but also in your -- I have a slightly different read on it and I want to check if I'm reading it correctly.
373 Even though you said in your presentation that, you know, you won't do any undue harm to existing operators in taking 38 percent of your revenue in year one from -- you're taking it from existing stations, right, which is, I don't know, talking about $600,000, something like that.
374 And then year two, this is the way I'm reading this chart -- let me see if I can get this right. You've got (a) new advertisers 35 percent in year one and 20 percent in year two, right; (b) existing advertisers, obviously zero in year one and 35 percent in year two.
375 So, I'm assuming that a number of those new advertisers in year one are now going into the existing advertisers pile in year two, and same with the existing stations, 38 percent, some of that's also going into existing advertisers as well.
376 So, you're taking 38 percent from existing stations in year one. I'm assuming that then goes into the existing advertisers category. And then in year two, you're going to take another 20 percent from existing stations.
377 So, you take 40 percent of your revenue in year one from existing stations, those then become existing advertisers for you, and then you're going to continue to be able to -- not that there's anything wrong with this -- but you're going to continue to be able to take clients away from existing advertisers in year two.
378 Am I reading that correctly?
379 MR. MacMULLIN: That's how that chart reads, yes.
380 COMMISSIONER MENZIES: Okay, thanks.
381 And 0.8 percent in terms of market share sounds very modest, but based on your calculations of each share point being worth more than $300,000, that is real money.
382 So, I guess what I'm trying to get at is your overall impact on the existing stations. I still need some convincing that this market is going to grow enough in the next year and a half to leave that much money out there for you, given that your competitors will know you're coming and will be wanting to be locking it up.
383 So, if I was your banker, how could you convince me that this would be so?
384 MR. MacMULLIN: Banker? Hmm...
385 I guess with our calculations what we've shown is there is an available almost $3-million in the market as we prepared this application.
386 And in our projections of taking 1.4-million in year one of that, that leaves $1.5-million of radio -- available radio advertising dollars in the market for all the competitors.
387 So, I guess that's the approach that we took in saying it won't be any undue hardship on the incumbents and it still does leave a fair piece of the available radio dollars in the market for everyone to pursue.
388 As I said, we're convinced that Halifax and the Maritimes, again, is not in as big a downturn as the rest of the country and it's quite capable of riding this out, I think even the current day situation. And, again, I have no hard facts and figures to back this up, but puts the Halifax market in a pretty enviable position compared to a lot of other Canadian cities and provinces at this point in time.
389 And as it starts to turn and we're 18 months away, that $25-million that's in the market in 2011 is quite likely to be more than the 25-million it is today by our projections.
390 COMMISSIONER MENZIES: Okay. And just one final point on that. Yes, I mean I think we can all agree that Halifax is in better shape than many other markets at this point.
391 But when you look at year one now, what can I relate that year one to? I mean, you said a year and a half, so maybe that's 2011. Does that look like 2007 in your business plan; is that what we're looking at, or are we looking at that average between '03 and '08, something? Is that the type of period that we're looking at for Halifax?
392 MR. MacMULLIN: I'm just consulting with Peter and he said, yeah, that would pretty much be the assessment, he said that would be a fair comment.
393 COMMISSIONER MENZIES: Okay, thank you very much.
394 THE CHAIRPERSON: Commissioner Duncan.
395 COMMISSIONER DUNCAN: I have a follow-on because obviously Commissioner Menzies and I are interpreting that information differently.
396 This is on your revenues, and I think it's important that we understand where those revenues are coming from.
397 So, I'm just going to tell you what I see and then I'm going to ask you to have a look at it and maybe you could submit some clarification, so we don't misunderstand.
398 Because what I interpreted, your new advertisers in year one were 35 percent, the next year you're saying your new advertisers are 20 percent. I'm assuming those are different people, different companies.
399 Your existing advertisers are in year one none because you're starting out, in year two they're 35 percent. I assumed that was all of those new advertisers in the first year moving into that category.
400 Commissioner Menzies is assuming that part of that -- I don't know, that I guess you lost some of those and part of the 38 percent moved into there.
401 So, could you just have a look at it and -- because it's important that we understand the impact that your model is going to have on the other stations in the market, and you can submit that as well, if you would, by Monday, unless you want to depart now.
402 MR. MacMULLIN: I think I'll submit it on Monday. I'm just going to consult with my colleagues and make sure that, you know, our answers were correct. I'm reasonably certain they were, but I'll double check and I will submit that by Monday.
403 Peter does have a comment.
404 MR. SCHOLTEN: I should have jumped in when Jim quantified Mr. Menzies' question saying that the chart read correctly in his interpretation.
405 I would agree with your interpretation, that the 35 percent existing advertisers in year two is a combination of the retention of the new advertisers and the existing stations.
406 So, of those two, we're saying that 63 percent of our total, that we're going to retain about 50 percent of that or the 35 percent.
407 Going forward we would have, again, 20 percent in new advertisers and a mix again, taking less of a number from the incumbents and moving forward.
408 COMMISSIONER DUNCAN: Okay. So, actually you're saying the 35 percent is a mix of both, which was what Commissioner Menzies had interpreted it to be.
409 MR. FOCKLER: Madam Commissioner, perhaps we should leave this for clarification by Monday.
410 COMMISSIONER DUNCAN: And Staff would be happy to show you what we're looking at so that -- in case we picked up your numbers incorrectly.
411 MR. MacMULLIN: No. We'll have you a clarified submission by Monday.
412 COMMISSIONER DUNCAN: Okay, thank you very much.
413 Thank you, Madam Chair.
414 THE CHAIRPERSON: Thank you.
415 I just have a couple of housekeeping questions and then a couple of other questions of a more general nature.
416 Just, can you confirm that within 10 days you will be able to file updated proof of financing?
417 MR. MacMULLIN: Yes.
418 THE CHAIRPERSON: Thank you.
419 As far as your format is concerned, you make it sound like not shutting up about "Death Cab for Cutie" is a bad thing.
420 THE CHAIRPERSON: And I could have nit picked and said, too bad you didn't put, "I Will Possess Your Heart" on your playlist.
421 But one of the things obviously about the target audience of this format, and when I look at the graph that we have of the incumbents in this market, it seems that just about everyone is going after the same target audience. Of course it's the most lucrative from an advertiser's point of view and so on.
422 We've touched upon this with just about everybody on the Panel, but we know what the Halifax market is like, we know who the incumbents are, we know who they're targeting, we know what the economic situation is, we know that out-of-market tuning is very low.
423 So, my question is really why, why here and why now? You will be a stand-alone station in this market, and I appreciate that you have a very similar situation in St. John, but this is going to be very tough.
424 MR. MacMULLIN: We're always up for a challenge, I guess.
425 There would have been two stand-alones here anyway had a previous successful applicant launched. So, that was something that we had in mind.
426 We are a deeply rooted Maritime company. We operate out of St. John, New Brunswick, most of us are born and bred. Halifax is a very important flagship station for us, it showed the opportunity. We thought that the economy could bear it. It's certainly not going to be totally painless for everybody, but it can certainly handle it.
427 And identifying the format, because the social or societal shift in the way of people living today with 50 being the new 30 in blue jeans and sports jackets instead of suits and ties, there's an abundance of people in that age group and that lifestyle in this population in this part of Nova Scotia.
428 So, we saw an opportunity, we wanted to have a flagship station in Halifax and we're confident that we can be successful at it simply by bringing our philosophy and our method of operating to the market in the community, in the news, in the programming and the music and everything we do.
429 We thought we had a very solid plan in place and that's the reason we're here today.
430 THE CHAIRPERSON: Do you think you're the only one who can be successful in this market. And I ask the question in the context of, do you think if we blow our brains out, could we licence more than one as a result of this process?
431 MR. MacMULLIN: Well, we figure there's $2.9-million left out there, so if we shared that we could both do 1.4; couldn't we?
432 Could two stations be successful? I would assume so in the long run. I guess format would have to be a factor. If you licensed the two of the same format, that would certainly be a challenge for both.
433 THE CHAIRPERSON: Sure.
434 MR. MacMULLIN: But there's a lot of good operators who could succeed as well as we think we can.
435 THE CHAIRPERSON: One final question and it's a col point.
436 You say in your application that you will do four percent of Category 3 music and you will commit to that as a condition of licence?
437 MR. MacMULLIN: Four percent.
438 THE CHAIRPERSON: Four percent?
439 MR. MacMULLIN: Yes.
440 THE CHAIRPERSON: And will you commit that 10 percent of that four percent will be Canadian?
441 MR. FOCKLER: Commissioner, I believe that at some point we had certainly agreed to it, but we'll be striving for well beyond that.
442 THE CHAIRPERSON: Right. But the minimum is 10 percent?
443 MR. FOCKLER: The minimum is 10 percent.
444 THE CHAIRPERSON: And you will commit to that as a condition of licence?
445 MR. FOCKLER: That will be a condition of licence, yes.
446 THE CHAIRPERSON: Thank you.
447 Legal counsel?
448 MR. MacINTYRE: Thank you, Ms Chair.
449 I just have a couple of questions, one sort of similar relating to Canadian content.
450 In your presentation this morning you re-stated your commitment to 40 percent Canadian content in musical selections over a broadcast week.
451 In your letter to us dated February 20th, you said specific to Category 2 that you would commit as a col to 40 percent Canadian content not only during the entire broadcast week but also between 6:00 a.m. to 6:00 p.m. Monday to Friday.
452 So, I just wanted to confirm that commitment still stands.
453 MR. MacMULLIN: That's correct, yeah.
454 MR. MacINTYRE: And one other small point of clarification. In your application you refer to providing I guess six hours and 57 minutes of "core news".
455 Just to be clear, would this fall under the definition of pure news that we have?
456 MR. MacMULLIN: Again, that's correct.
457 MR. MacINTYRE: Okay. And I think the last thing is just to read into the record the undertakings.
458 I believe that you undertook to provide a sample music list by the beginning of next week.
459 MR. MacMULLIN: Yes.
460 MR. MacINTYRE: Can you give me a day for that?
461 MR. MacMULLIN: John.
462 MR. WILES: I believe Monday.
463 MR. MacINTYRE: Monday. If that suits the Commission. Okay, that would be fine.
464 The second undertaking, other than proof of financing, is the clarification by Monday as well of sort of this question about advertising revenues as --
465 MR. MacMULLIN: Yes.
466 MR. MacINTYRE: -- Commissioner Duncan requested.
467 MR. MacMULLIN: Yes.
468 MR. MacINTYRE: Great.
469 Thank you. That's all.
470 THE CHAIRPERSON: Well, thank you very much, Mr. MacMullin and your colleagues for your presentation this morning.
471 We will be taking a 15-minute break.
472 MR. MacMULLIN: Thank you.
--- Upon recessing at 1055
--- Upon resuming at 1114
473 THE SECRETARY: We will now proceed with item 2 which is an application by HFX Broadcasting Inc. for a broadcasting licence to operate an English-language FM commercial radio programming undertaking in Halifax.
474 The new station would operate on frequency 105.1 MHz (channel 286C) with an average effective radiated power of 32,000 watts (maximum effective radiated power of 45,000 watts with an effective height of antenna above average terrain of 224.5 metres).
475 Appearing for the Applicant is Mr. Bill Evanov.
476 Please introduce your colleagues and then you will have 20 minutes for your presentation.
477 Mr. Evanov.
478 MR. BILL EVANOV: Thank you.
479 Good morning, Madam Chair, Commissioners and Commission Staff.
480 My name is Bill Evanov, President of Evanov Communications Inc. Before beginning our presentation, let me introduce the members of our team.
481 Seated to my immediate right is Carmela Laurignano, Vice-President of HFX Broadcasting Inc. and a shareholder of HFX. To Carmela's right is Paul Evanov, Vice-President Programming. Paul will lead the panel today and act as quarterback.
482 Next to Paul is Dan Barton, Program Director for HFX Broadcasting in Halifax. Next to Dan is Ky Joseph, Vice-President of Sales for the Evanov stations and a shareholder of HFX Broadcasting.
483 To Ky's right is Chris Edelman, our Regional Sales Manager.
484 In the back row, immediately behind me, is Sean Moreman, our in-house legal counsel. Seated next to Sean is Debra McLaughlin, President of Strategic Inc., the company that conducted our consumer demand focus group and economic research studies.
485 Next to Debra is Rob Malcolmson of Goodmans LLP, our legal counsel. And, finally, next to Rob is Trevor Romkey, Sales Manager from the Halifax area.
486 I will now turn it over to Paul to begin our presentation.
487 MR. PAUL EVANOV: We are delighted to come forward today with an application for a new radio station that, in our view, will accomplish two major objectives.
488 First and crucially, we are proposing a format that addresses a significant need in the Halifax market. Our investigation shows that disenfranchised listeners in Halifax are looking for significantly more variety than is available to them now and are enthusiastic about the prospect of a Triple A station.
489 The new station will target a broad 35-64 demographic with a core of 35-54 audience and a female focus.
490 Response rates to the proposed Triple A format were very high among the target demographic. Importantly, 81 percent of the respondents to the consumer demand research reported they would listen to the Triple A service we are proposing.
491 Second, in addition to serving a disenfranchised audience, licensing HFX will rectify the current competitive imbalance in the market and strengthen an independent broadcaster that has a track record of innovation and bringing new diversity to the system.
492 Halifax has always been a unique market in which a handful of major players control the vast majority of tuning. When we entered the market as a stand-alone in 2006, five of the seven stations were controlled by CTV/CHUM and Newcap. Each of these companies owned two stations and had a 50/50 partnership in another. One other player, Maritime Broadcasting, controlled the other two stations in the market.
493 Today not all that much has changed. As the chart attached to this presentation demonstrates, four operators control eight of the nine commercial radio stations. These four operators: CTV/CHUM. Newcap, Rogers and Maritime Broadcasting each have two stations and control 67 percent of tuning while our stand-alone has a five share according to BBM, fall 2008.
494 Awarding HFX a licence to operate a second station will allow us to benefit from comparable operating efficiencies and synergies to our competitors. This in turn will enable us to continue to be an innovator in the development of new formats and strengthen our independent editorial voice.
495 In our presentation today, Debra will describe the research that showed us what was missing in the Halifax market. Dan will give you a full description of the format and programming we're proposing. Carmela will discuss the ability of the Halifax radio market to accommodate a new entrant, and then Ky will speak to the sales potential of the format.
496 Finally, I will conclude by explaining in more detail why granting HFX a licence for New FM is good for Halifax listeners, good for the market and, most importantly, good for the broadcasting system.
498 MS McLAUGHLIN: Thanks Paul.
499 Focus groups conducted in the fall of 2007 revealed a distinct dissatisfaction with Halifax radio choices. Respondents in the 35 to 64 demographic told us that Halifax radio is irrelevant, boring and lacked innovation. There was too much repetition, not enough diversity and not enough different musical genres.
500 They wanted to hear more new music and more new artists, including Canadian artists. They were quite clear that the missing ingredient was variety and that other media were increasingly taking the place of radio in their daily lives.
501 Satisfaction was particularly low in the 25 to 64 age group. Almost half of this group said there was little on the radio they wanted to listen to; 63 percent reported that all Halifax radio sounds the same and 52 percent switch stations frequently to find something they like to listen to. Barely a quarter were very satisfied overall with Halifax radio, but 68 percent said they would listen to the radio more often if the programming they liked were available.
502 MR. BARTON: We knew there was a strong demand for Triple A from operating a station in the market.
503 Our experience has shown that there is a clear desire for musical variety in the 35 plus demo and this is what led us to Triple A. Triple A has a broader, more diverse playlist than most other formats and tends to appeal to adults rather than teenagers.
504 Musical selections are drawn from a range of genres, including more current tracks from adult contemporary, rock, country and folk, world music, alternative and some blues. It's a more expansive music mix with more artists, more genres, a deeper exploration of artists' repertoire and a balance between current, recurrent and gold selections.
505 Our new Triple A station will fill a gap in the market and distinguish itself from other services in a number of ways.
506 First, it will offer a larger playlist; 1500, compared to the market average of 897 and at least 600 artists compared to the market average of 381.
507 Second, our station will have a higher representation of current music, new artists and emerging artists than found elsewhere in the market. In fact, 40 percent of our playlist will be devoted to current selections.
508 Third, our playlist will include Category 3 music for 10 percent of the schedule, adding even more diversity to the market.
509 Halifax radio listeners have asked for variety and that's what we'll deliver. Our research shows significant playlist duplication between several of the stations in Halifax today.
510 Because the essence of Triple A is to provide listeners in Halifax with choices not found in the mainstream, New FM will provide a largely unduplicated list of artists.
511 Less than four percent of our playlist can be heard in Halifax today.
512 In response to consumer demand for more Canadian artists, New FM will commit to 40 percent Canadian content during the broadcast week, with fully 16 percent of its schedule devoted to new and emerging Canadian artists.
513 Finally. let me say a few words about our feature programming and spoken word. Our research showed that listeners sought spoken word programming that was focused less on celebrity gossip and more on the music itself. In response, we have proposed three different music-based features, each of which will contribute directly to exposure for Canadian artists.
514 "Focus" will showcase Canadian talent by telling listeners the story behind the artist or music being featured. After a one or two-minute spoken word section, a track by the artist will be played. We'll air "Focus" five times daily, seven days a week.
515 "Canadian Dream" will be an hour-long program that airs twice a week and will profile Canadian artists, both new and established, through music and discussion.
516 And, based on ongoing feedback from our audience, "Spotlight" will address niche interests and a wide range of unrepresented genres by focusing on a different style or era for six hours each week.
517 Listeners also said they wanted more predictable newscasts, more locally relevant information and more timely and comprehensive traffic and weather reports. So New FM will offer newscasts twice an hour in the morning and evening drive times and throughout the day.
518 Fully 80 percent of each newscast will be devoted to local stories.
519 Moreover, New FM will guarantee listeners that traffic and weather will be reported live on the quarter hour during the morning and afternoon drive times. Our news, traffic and weather schedule will give listeners the predictability and currency that they've identified as lacking in the market.
521 MS LAURIGNANO: Thanks, Dan.
522 Halifax. the Gateway City, is and remains the dominant economic centre of the East Coast. As a port city. it offers access to worldwide markets with a commensurate economic impact. But beyond the port and ocean-related industries like transportation and energy, Halifax also has a diverse economy with major growth sectors ranging from information technology. to aerospace and defence, to environmental industries.
523 One of the notable elements of the Halifax economy is the steady pace of its growth. When we filed our application it was anticipated that Halifax's steady rate of GDP growth would continue at an average of 2.6 percent up to 2013. Revised estimates released this spring show that the market did not reach this level last year, nor is it expected to do so in 2009.
524 However, starting in 2010, Halifax like many stable markets in Canada is expected to return to the pre-recessionary estimates. Thus, while current economic trends have certainly had an impact on Halifax. we believe that as the global economy begins to correct, Halifax will be well positioned for recovery.
525 The radio market also remains healthy. Average year over year growth for the last five years has been 6.5 percent according to the CRTC's financial summaries. Significantly, from 2006 to 2007, year over year increases of local sales jumped by 20 percent, while national sales rose by five percent. This suggests not only that there was pent-up demand, but that the two new entrants who came into the market during that period successfully developed new revenue streams.
526 MS JOSEPH: Our projection, based on the response from the consumer demand study, is that the estimated reach of New FM would place it fourth in the market, while the estimated 12 plus share will rank it in seventh place. We will be targeting a 35-64 demographic, which our research shows is under served, particularly the female audience, since a number of the current stations in the market skew male.
527 Our data show that the impact of a new station will be spread over a range of local stations with no one service accounting for more than one-sixth of New FM's audience. As such, our impact on incumbent stations will be minimal at best.
528 We expect that while growth in ad revenue will be slow in the short term, the Halifax radio market will return to the steady incremental growth trend that was forecast prior to the downturn, allowing us to develop new revenue streams.
529 Our projections are appropriately conservative, but we are optimistic about the viability of New FM, given the degree of demand from our core audience, the solid fundamentals of the Halifax market and the efficiencies that operating a two-station combo will provide.
530 MR. PAUL EVANOV: HFX Broadcasting has had considerable success with its youth contemporary station which we introduced in Halifax in 2006. We may, however, have been the victims of our own success. While we effectively stopped the decline in the reach of radio among the 12 to 34-year-old demo, our competitors moved quickly to occupy the niche we had developed.
531 CTVglobemedia's CJCH, formerly an oldies station, has relaunched as an FM with a CHR format which Wikipaedia describes as a "copycat" of our youth format.
532 Meanwhile, Rogers has publicly announced plans to turn CFDR into a youth targeted alternative rock station should its purchase be approved by the CRTC. Like CKHZ-FM, both of these services target the youth market.
533 Unlike our stand-alone, however, the operators of these services have second stations in the market giving them the opportunity to counter program and realize efficiencies that our stand-alone cannot.
534 Moreover, because these operators target an older, more lucrative demographic with one station, they have the luxury of flipping the formats of their second stations to invest in the younger, less affluent youth demographic.
535 We recognize that format changes and programming adjustments are part of the competitive dynamic and we are prepared to compete, but we believe the Halifax market needs to be balanced so that the operators have relatively comparable resources at the local level.
536 The Commission in the past has specifically recognized the importance of achieving a competitive balance in the market including, for example, when it approved Newcap's application for second FM services in Ottawa and Calgary, CTV/CHUM and Rawlco in Edmonton and, most recently, Astral in Ottawa.
537 Accordingly, we believe that a second licence for HFX will redress the competitive imbalance that exists in Halifax. While we cannot benefit from the kinds of economies of scale and efficiencies that are available to national operators like CTVglobemedia, Newcap and Rogers, approval of a second licence will at least allow HFX, as an independent operator, to strengthen its position.
538 As or more importantly it will give HFX the opportunity to continue to develop niche formats that add much needed diversity and innovation to the system.
539 In conclusion, approval of our application for a second FM station in Halifax will bring the following benefits to the Canadian Broadcasting system:
540 1. A new format to meet the needs of a disenfranchised audience and fill a clear void in the market.
541 2. Strengthen an independent broadcaster that has a track record of programming innovation and a willingness to take risks to extend service to under served demographic groups.
542 3. Inject $2.1-million of new CCD money into the system with an emphasis on investment in the local community.
543 4. Add balance to a radio market that is currently dominated by four "twin stick" players, which in turn will stimulate the growth of radio revenues to the net benefit of all operators.
544 In sum, we believe that licensing New FM will fill a significant need for variety in the Halifax radio market and strengthen an independent operator with a long term commitment to adding musical diversity and editorial independence to the system.
545 Thank you for your attention. We are pleased to answer any questions you may have.
546 THE CHAIRPERSON: Thank you very much, Mr. Evanov and your colleagues for your application this morning.
547 I will ask Commissioner Menzies to lead the questions.
548 COMMISSIONER MENZIES: Thank you.
549 What I get from this presentation is -- and there are a couple of words on page 3 of your oral presentation this morning, right at the end, it says:
"This in turn will enable us to continue to be an innovator ..."
550 And as we go further you talk about you want us to restore competitive balance, which I guess implies that when we gave a licence before that things were imbalanced somehow.
551 I mean, are you really saying that we should not license single independent operators in markets where there are owners with multiple stations?
552 If we adopt that thinking, that closes a lot of people, including you, from a number of markets in the future and I'm just -- I'm being slightly hyperbolic to make a point, but I kind of want to get to the nub of that issue right off the bat.
553 MS LAURIGNANO: No, we are not saying that at all.
554 As you know, we have come before you a standalone and we, like others, only have that opportunity when we are allowed to enter the arena at that level, short of, you know, going out to buying some holdings which are expensive and not necessarily available.
555 No, we are not saying that at all and we are not saying that we should be licensed at the exclusion of anyone else, but we just believe that -- nor are we saying that we should be the only one licensed here for that matter.
556 We believe that each market has to be assessed on its own merits. Halifax is a little unique in terms of the ownership structure and that in our case we believe that we would benefit from the competitor imbalance, as I say, not to the detriment of anyone else to the system.
557 But in our case it makes business sense for us now, given the standing in the market, given the economic conditions, given the competitive -- I don't want to say attack, but shift in formats, we believe that we would benefit and the system would benefit from having an equal playing field.
558 COMMISSIONER MENZIES: All right. So your existing station came in and had some success in exploiting that youth demographic and the other guys did what they do and adjusted and competed and that's -- how is that a problem for us?
559 MS LAURIGNANO: Well, it's a problem for you because we have to make some adjustments along the way at some point -- you know, not that we are not able to react right now, that possibility is there -- that we also don't see it as a problem, but we see that licensing us is a benefit in that we have identified that other underserved market which in effect is a niche market, that AAA format that we have talked about. So it's a question of helping the system, helping us and being a win-win situation from our point of view.
560 COMMISSIONER MENZIES: Okay. I understand how it works for you, I understand your argument on the system.
561 How does it work for the public?
562 MS LAURIGNANO: It works for the public because, one, we can introduce a new service, as we said, which is in that niche format and add diversity with the format.
563 I understand that we may not necessarily be the operator, or that anybody else can do it as well, but in this case that is our proposal. So I mean beyond that I can't really -- I can't really say. I just say that licensing us would serve the public interest because we will offer diversity, both in format and in continuing to serve the niche which is our youth format.
564 COMMISSIONER MENZIES: Sure, but we --
565 MR. P. EVANOV: If I can just --
566 COMMISSIONER MENZIES: Sure. Go ahead.
567 MR. P. EVANOV: Sorry about that.
568 If I could just add on to that, when we came in in 2006 there was -- you know, youth, as we have stated, the youth listening was declining and almost next to nothing. We came in, we innovated, we went after the youth, we committed to what we said and we delivered to the youth because that was an audience that wasn't being served properly. They were very unhappy with radio in this market.
569 And in the Toronto CMA we did the same thing years ago with our Top 40 youth-oriented radio station. When we launched that it was very successful and we had two other competitors at the same time, you know, Rogers and Corus, come at us with similar formats to go after the youth.
570 So again, it's competitive and, as we have said, we can take on a challenge, we have our whole careers.
571 In that market after 2 1/2 years, you know we all battled, one station flipped to country, another flipped to another format, a Jack format, and there we were still there serving the youth demographic. Had we flipped or had we not been able to be consistent and serve that youth demographic and flipped off, those two companies would have flipped off the youth, we perhaps would have, and then there we go, the youth demographic there would have been not served again and unhappy with radio.
572 So the same thing could happen in Halifax here. It was an underserved market, we came in and served it. Again, it's competitive and that's fine, but with them, if they go off that format and then the youth aren't served any more, then they are the ones that are going to suffer.
573 In the same aspect of this format, the AAA format, like Carmela said, if it's us or somebody else, right now there is a need. Over 81 percent of people said they are unhappy and they would like this format. So there is a demographic that is unhappy now and we are proposing a service to them that is needed in this market right now. So, again, we have to bring it back to the listener in the audience is -- by that happening I think we are doing them, the listener and the people of Halifax, a disservice.
574 MS LAURIGNANO: Yes.
575 And we have had some experience with this situation before where the flip for other broadcasters has been transient and if we abandon them than the demo is abandoned again, which is what we have built here to begin with.
576 We have had experience in other markets where we took that youth demographic, built an audience and then other broadcasters, and certainly within their right to do so, flipped their format.
577 COMMISSIONER MENZIES: Sure. Okay.
578 We are kind of focused on the format and just two things.
579 I mean, first of all, we don't regulate format so you can change it and other people can change it whenever they want, so it's only relevant, at least to me, in terms of whether it works for your business plan.
580 And if it is a good, viable business opportunity -- and others seem to agree -- so what is to stop the existing stations from -- I mean what's to keep them from doing it?
581 MS LAURIGNANO: There is nothing to keep them from doing it, nor should there be necessarily.
582 The imbalance is in the ability to react or to put another plan in place when you are one play -- when you have one possibility where the other ones have two.
583 So for someone like us to flip format for one thing would be an option and that's certainly possible, however we have to look at what kind of format we can do, keeping in mind that those other broadcasters who are programming right now have a good share or have those more lucrative formats already in place. They are entrenched, they have been for a long time, so we would have to compete directly against them on that basis.
584 COMMISSIONER MENZIES: Isn't the real advantage, though, of having more than one station is it's a sales advantage, right, because you have multiple platforms and audiences to sell to somebody.
585 MS LAURIGNANO: Absolutely.
586 COMMISSIONER MENZIES: Buy this I will give you 18 to 24; buy this I will give you 35 to 64.
587 MS LAURIGNANO: Well, there are two things. The sales absolutely as one.
588 The other thing of course is the synergies, because in our case where we took a hit -- which we don't know how it's going to result later on, but an initial hit when the station flipped format to come against us. We lost half of our share. So that translates into impact certainly from a sales point of view, and a dual combination because it's a combo, but also it affords synergies. There is a lot of cost savings as well on the other side in having that dual scenario, because operationally you can realize a lot of efficiencies as well.
589 COMMISSIONER MENZIES: But just not to belabour the point too much and then we will move onto something else, but if this AAA format is such a good business opportunity and if you have, as you described, had a good start with your youth format but you have had that audience attacked pretty vigorously, why don't you just take your existing licence and make a AAA format?
590 Well, for two reasons. One is, the AAA is also a niche format, it's not a broad format. It's different so it's going to take a lot more work and a lot more dedication, a lot of development to get there as well. It's not something that you just jump into, it's not a popular format like Rock format where there isn't -- in this case here, as I said, the other players are fairly well entrenched so for us to go head-to-head with the format that has been in here for a long time, where the business relationships are there, would not make a lot of sense.
591 So the flip is not that easy to do in terms -- or you can't realize the benefits right away, and that's assuming that everybody else will stay in their position.
592 So it doesn't really matter what we do, we are always in that situation where you are a standalone or where you have just one operation versus two.
593 COMMISSIONER MENZIES: So the primary issue with standalone versus being an owner of more than one, is it synergistic or is it sales?
594 MS LAURIGNANO: It's both. It's both.
595 COMMISSIONER MENZIES: Not even 60:40, 50:50?
596 MS LAURIGNANO: I think we can actually tell you, break down what we figured the synergies that would flow our way would be in this kind of scenario.
597 I think Paul can speak to that --
598 COMMISSIONER MENZIES: Okay. It's okay.
599 MS LAURIGNANO: -- if you want, or we can take --
600 COMMISSIONER MENZIES: No. You have answered the question, I don't want to put you to any more work on that.
601 Just to move on to your percentages and Canadian content, you are committed to 40 percent Canadian content of which 40 percent, 16 percent of your schedule, is to new and emerging artists.
602 Is that a commitment or are we talking condition of licence request here on that?
603 MR. P. EVANOV: The Canadian content would be a condition of licence of course --
604 COMMISSIONER MENZIES: Yes.
605 MR. P. EVANOV: -- and the new and emerging, I don't -- it depends what realm. I mean, we are committed to doing that because we know what --
606 COMMISSIONER MENZIES: You don't have to say yes.
607 MR. P. EVANOV: -- and it works for the format, but I think it's a bigger thing in considering a condition of licence for that.
608 COMMISSIONER MENZIES: Yes. You don't have to say yes, I just wanted to know --
609 MR. P. EVANOV: Well, I'm not going to.
610 COMMISSIONER MENZIES: -- where we were to categorize it.
611 So what did you say?
612 MR. P. EVANOV: We would take a condition of licence for the Cancon of course --
613 COMMISSIONER MENZIES: Yes.
614 MR. P. EVANOV: -- but not for the new and emerging.
615 COMMISSIONER MENZIES: Okay. Good. Thanks.
616 Now, I'm just trying to get a sense of the sound of this in -- I think it's in paragraph 30 and your supplementary brief, you refer to spoken word as providing "a more mature sound with more focus on local issues".
617 I'm trying to understand what that would sound like and how that serves our interest in local reflection and that.
618 So can you give me some kind of for instance on what that spoken word sounds like during the day so that we are talking about something local as opposed to, like you mentioned, celebrity gossip. I take it we are not debating Jon And Kate Plus 8 the next morning, but what are we talking about? What are your people going to be talking about in the more mature sound and local issues.
619 MR. P. EVANOV: I will have Dan walk you through the programming and all the spoken word.
620 MR. BARTON: Thanks, Paul.
621 One of the mandates that we have corporately with HFX Broadcasting is we are an interactive radio station and that will be regardless of format.
622 With our existing radio station here, Z103.5, we are very interactive throughout the day and yes, we do cover the celebrity gossip because it does have appeal to the younger demo, but we also cover issues of the day.
623 So I will give you an example of one that we covered recently on Z103.5 and how that would reflect on the new radio station.
624 With the upcoming provincial election one of the election platforms put out by one of the parties was curfews for children under the age of 16. What we put out to our audience is we wanted to hear from the under 16s, how do you feel about that? How does that affect you? We wanted to hear from younger parents how do you think that that is going to be enforceable? Is it something that could be done.
625 Taking that from an older perspective, if we were going to take some other election issues we might talk about things like employee apprenticeship, which is being offered up by one of the parties on their platform. That has serious business impact on getting a rebate tax-wise on bringing younger people into your business.
626 That would be the tack that we would take on the AAA radio station, whereas on the youth radio station we would be reminding our audience, hey, this could be a chance for you to really get in the door in businesses in Nova Scotia if this thing comes through.
627 So we try to take those local issues, make them demographic-specific, but also get the interaction back from our audience: How do you feel about it? It's so much more important to us that we reflect them by allowing them to speak than just talking to them.
628 COMMISSIONER MENZIES: So how will you be getting that? How will they be speaking to you?
629 MR. BARTON: We take them on the air by phone, we communicate with them via e-mail, text message, through our website. Again, that's a model that we use across the board. We make ourselves extremely interactive.
630 One can make the assumption with an older demographic it would probably be more phone calls, which again we record and edited for broadcast, because we want to make sure we don't have any little slip ups there as far as language, but that's the main way we interact with our audience, is we will put an issue out there, tell us what you think, throw the phone number out, and we will hear those interactive calls throughout the day.
631 COMMISSIONER MENZIES: Okay. Thanks.
632 I'm curious about in paragraph 59 in your supplementary you make a reference to "television's sharp decline in this market". That somewhat relates to listenership opportunities and revenue opportunities.
633 I'm just interested in your view on what the -- is a temporary phenomenon? Do you see that as a permanent phenomenon? Do you see it continuing? And where do you see the primary causes of that happening in this market?
634 MR. P. EVANOV: Just in regards to the decline in television?
635 COMMISSIONER MENZIES: Yes.
636 MR. P. EVANOV: I think I will let Debra go on it a bit more from a research point what she found, but I think just television is declining in general, given all the other options out there, and people's time and sensitivity to time and time management, being able to sit down in front of the TV for an extended period of time and watch items, so that maybe PVRs are so popular right now.
637 But to give a clear idea from some of the research in the market as to why it's down, I will ask Debra to speak.
638 MS McLAUGHLIN: Television has become less local generally across the country and in the Maritimes we find that the tuning is down, particularly because there is a -- I wouldn't want to describe it as a sense of isolation, I think it would be better described as a sense of cohesiveness across the Maritimes and when you lose that localization people tune to other media and other sources to find information.
639 And television here, I think, unless there is some sort of investment or regulatory requirement, will probably remain as it is now. There is no incentive. So I do think that that tuning, that loss in tuning, is there to stay.
640 COMMISSIONER MENZIES: So that's an opportunity for you, though, in terms of radio?
641 MS McLAUGHLIN: Absolutely. Absolutely.
642 COMMISSIONER MENZIES: Thank you. Okay. That answers that point.
643 In your programming I want to get a better understanding of what happens in terms of local content reflection, that sort of thing, during the non-drive hours.
644 The chart I looked at, basically there is only one newscast between -- after the 9:00 a.m. one until the 4:00 p.m. one. I think there is one at noon
645 So what's going on in there in terms of local?
646 MR. P. EVANOV: I will have Dan explain.
647 We have a high commitment to spoken word, not just with news but throughout the whole day, so Dan can walk you through it.
648 MR. BARTON: Yes. Thank you.
649 If I break down our spoken word actually, yes, the pure news is three hours and 41 minutes, as you mentioned correctly, so it's every half hour during morning drive right up until 9:00 a.m. The next newscast is at noon and then the next newscast after that is at 4 o'clock and then every half hour through the drive time.
650 What fills that gap or what gives that local reflection is our announcer talk. We have pledged 5 hours and 15 minutes of that per week. Because, again, beyond us just presenting the news we want that feedback on the local issues of the day.
651 And perhaps something that might be seen as lighter fare that's very community oriented, we would have a member of our street team out at that community event and broadcasting back to us what was happening so we can talk to the organizers of that event, various things like that that are very demographic-specific but aren't necessarily just included in the newscast.
652 You know, ironically, our announcer talk is almost twice of what our news commitment is, strictly for that reason, we want to be able to present that local reflection throughout the day, not just in the specific newscasts.
653 So that it covers everything from lighter issues to, again, giving the local audience their chance to speak out on it.
654 COMMISSIONER MENZIES: Okay. So how do you keep in touch with what's going on in the community in terms of that?
655 I mean, I know you have your feedback loops in terms of your phone calls and that --
656 MR. BARTON: Yes.
657 COMMISSIONER MENZIES: -- but when I looked at your chart of your staffing you have one reporter.
658 MR. BARTON: Yes.
659 COMMISSIONER MENZIES: And it's a pretty big city with a lot going on and we are talking here about, you know, the opportunity to fill a void that television is leaving in terms of local reflection and that sort of stuff --
660 MR. BARTON: Yes.
661 COMMISSIONER MENZIES: -- and you have all this time during the day when you are going to talk about it. How do you really -- how do you get a feel for the place? It's a complex city, you know, it works on multiple tiers with the student population, the government, industry, the shipping industry, all that sort of thing.
662 How do you do that with one reporter?
663 MR. BARTON: We have a great deal of experience with that actually with our current operation here in Halifax where we have two news reporters, but our entire staff is community involved. From our promotional street team, our on-air staff is mandated to not just come in and do your show and go home, they are mandated to go to community events and connect with the community as well.
664 So we are connected to local committees from Crime Stoppers to Bryony House, to -- I mean the list goes on and on.
665 Our entire staff is committed to being community involved and bringing that back, so that it's not strictly a news reporter that's bringing things back in. The news reporter's role, in our mind, is not just gathering news but making sure that it fits editorial guidelines. Our entire staff gets out, connects with the community and brings that back.
666 COMMISSIONER MENZIES: Okay. So you have your two existing reporters and this third reporter, do we have a three-person newsroom now or one two-person newsroom and one one-person newsroom?
667 MR. P. EVANOV: No, currently we have a two-person newsroom with the other staff and the new station would actually have a three-person newsroom, two full-time and one part-time reporter.
668 MS LAURIGNANO: Okay. If I can just add to that?
669 This is a case where --
670 COMMISSIONER MENZIES: Okay. But I'm sorry, let me --
671 MS LAURIGNANO: Sorry.
672 COMMISSIONER MENZIES: Maybe I need to be corrected because when I read it on your list it had one reporter. It had one news announcer and one --
673 MS LAURIGNANO: One news director/announcer.
674 Do you have the breakdown there?
675 MR. P. EVANOV: Also we have a news director which would also be a reader which would do either the morning or the afternoon news run; then we also have another full-time news reader, which aside from reading news would also collect and gather information and news to deliver; and then we also have a part-time news reporter as well.
676 MS LAURIGNANO: Right.
677 MR. P. EVANOV: So it would be a staff of three in the newsroom for the New FM.
678 MS LAURIGNANO: That's right.
679 That would be additional to what we have now. So this is where those synergies would come into play. So while each station would have its own news director and the newscasts would be individually prepared for the different stations and delivered even at different times according to the schedule, the things like the gathering of the news could be shared and that is part of the synergies that we will be counting on to add.
680 COMMISSIONER MENZIES: Okay. But your news director and your news reader are also news gatherers as opposed to just readers?
681 MR. P. EVANOV: That's correct.
682 In what we submitted in Schedule C in the deficiencies under Titles it has News Director/Reader and News Reader -- News Director/Reader, they are all in the newsroom.
683 We have a three-person newsroom, two of them read the news as well as gather all the information. So it's really a team of three, it's not -- they just don't read the news, somebody doesn't give it to them and they read it.
684 COMMISSIONER MENZIES: Okay.
685 MR. P. EVANOV: They are involved in the whole process as well.
686 COMMISSIONER MENZIES: Okay. Thanks.
687 In year one of your revenue projections you include an estimate of a hundred and seventy-two five from market growth, 15 percent, and an equal amount for advertisers' budget increases.
688 Now, you addressed some of the changes in the long-term forecast for Halifax economic growth, I mean this year and is expected to be zero, which compared to other places is pretty good.
689 But when you are basing your year one what does that year one look like in terms of past years? Does it look like 2007? Does it look like 2006?
690 That's what I'm trying to get an idea of, because surely year one isn't this year if you are making those sorts of predictions with 15 percent growth, market growth.
691 MR. P. EVANOV: I'm sorry.
692 First I'm going to ask Debra to give an overview and then Ky to walk through how we came to the projections in the numbers.
693 COMMISSIONER MENZIES: Okay.
694 MS McLAUGHLIN: I'm sorry, I just want to make sure I understand your question exactly.
695 You are talking about where --
696 COMMISSIONER MENZIES: I could tell by your looks that I wasn't sure. Feel free to say "Can you do that again?"
697 You have estimated 15 percent market growth of your revenue will come from market growth in year one and I'm saying economic growth in Halifax this year is expected to be 0 percent, so I'm going to assume that you are not expecting 15 percent market growth to happen in an economy that is not growing.
698 Is that right?
699 MS McLAUGHLIN: That's absolutely correct.
700 And when you are putting together this kind of projection you have to look to the future and depending on how long, for example, the Commission took to make this decision, you know, pushes it out even further. So you are looking two to three years down the road.
701 If we look at 2010 the Conference Board has projected GDP growth and retail sales growth and continues to about 2.7, 3.8 the next year.
702 Importantly, for what we are doing here, the retail sales are projected to continue to grow this year. They are moderate growth, it's 2 percent this year, but we have looked two years and three years forward in terms of estimating where the market will be and when you add it up cumulatively the 15 percent.
703 COMMISSIONER MENZIES: So would it be fair for me to assume that for these numbers to be working we would need to be talking about an environment in which there was at least 2 percent GDP growth?
704 MS McLAUGHLIN: Absolutely, Yes.
705 COMMISSIONER MENZIES: Okay.
706 So do you have any fixed idea -- we are much more expeditious these days and if we had a decision on this soon -- when would you be prepared to launch or when would you be thinking about launching?
707 MR. B. EVANOV: I would think in 2011. Perhaps going into 2012, but probably 2011, not in 2010.
708 COMMISSIONER MENZIES: Okay. Thank you.
709 You also foresee for your revenue 35 percent coming from other media.
710 Can you break that down a little bit in terms of where you see that other media and how much of it is TV? Are we talking about TV, newspapers, outdoor, that sort of thing?
711 MR. P. EVANOV: Yes. Ky will give you a full breakdown.
712 MS JOSEPH: Okay. And 35 percent from other media?
713 COMMISSIONER MENZIES: Yes.
714 MS JOSEPH: Okay.
715 One of the ways -- and I will ask my Regional Sales Manager, Chris Edelman and then Trevor Romkey, Sales Manager to go deep into these discussions because they are quite deep.
716 One of the factors we look at is the market that we are going to be serving, the 35 to 64 demographic, and in that we identify the categories that index high in terms of those consumers using specific products or services. We call those P1 categories. So a P1 category is defined by us as a Priority 1 category and our philosophy in the Evanov Radio Group is to own them all and own them deep, so we go after every single one.
717 And I will ask Chris Edelman to give you a detail on exactly the breakdown of where that 35 percent comes from.
718 MR. EDELMAN: Yes. So what we do -- and this also kind of gathers into our 50 percent of new advertisers, our strategy as it lines into the 35 percent.
719 In the case of this New FM what we did is we looked at our proposed P1 business categories, our Priority 1 business categories, and we uncovered approximately 50 priority business categories with upwards of 300 subcategories. To be specific, this includes furniture stores, home and garden, health, photography, fine dining, recreational vehicles, travel, hardware, the list sort of kind of goes on from there.
720 Taking this strategy we did this when we entered Halifax the first time and we were very successful in attracting new advertisers using this model by targeting our first priority categories.
721 We actually even developed a package that is conducive to new advertisers to come and try radio for the first time and we have a bunch that, you know, continued to stay on air with us today. Once again, to get specific, Mortgage Centre, Canex, R/T Collision, and the list goes on.
722 Now, to address your question specifically, working into our 35 percent we once again dive deeper into our P1 categories that has proven not only to bring in new money, but also take money from existing media.
723 Trevor, would you comment further?
724 MR. ROMKEY: Thanks, Chris.
725 Specifically other media, when we are referring to that, the lion's share of other media comes from traditional print, in this case the Chronicle Herald, Metro, weeklies like The Coast. We see the lion's share of the revenue coming from that.
726 For instance, in the last week or so some of the categories, the very categories that Chris has mentioned, play a large part in advertising these particular traditional media and we feel that we have a particularly strong opportunity with New FM to go after these particular advertisers.
727 So for instance in furniture, Forbes Bros., Ashley Furniture; in home reno, Home Outfitters and Wacky's Flooring were all in The Chronicle Herald; corrective eye surgery like LASIK MD.
728 Home and garden, Baker's Greenhouses. We actually spoke to Tracy Baker, one of the owners of Baker's Greenhouses, and she indicated she was very excited about the idea of a radio station that focused on a 35 to 54 demographic with a slight skew towards female, which is specifically what we are talking about in the New FM. She indicated a willingness to move existing print media advertising into radio with that type of opportunity.
729 Other new media that -- or other medias that we might draw from would be cable, the TV Guide for instance, which we feel is a bit of a stressed media and we feel there is an opportunity there.
730 In particular, again just looking at that particular media outlet, we identified these P1 category opportunities in Souls in Motion, The Fireplace, GreenWay Systems, Capital Health, The Hearing Institute, Ashley Furniture again, Metro Suzuki, these are all the types of businesses that we have identified are specifically targetable with the demographic that we are discussing, as well as -- that would be sort of the secondary and then as well there is direct-mail flyer media.
731 Radio provides a more demographic-specific and environmentally friendly opportunity. And we saw again other P1 opportunities in The Bay and Golf Town, The Source, Home Outfitters. These are all companies that are currently advertising through that particular media.
732 A small percentage might come from Internet advertisers as well.
733 COMMISSIONER MENZIES: Okay.
734 MS JOSEPH: Commissioner Menzies, can I just add to that?
735 Although this is a different demographic that we are proposing to serve with the AAA, it is nonetheless an underserved market and a niche market and I just want to comment on our success, because we have had success in these market in the last two years.
736 Of the 483 clients in the two full years of service that we have been on the air, 315 were retail clients, 144 were completely new to radio, 51 were a result of taking money from other media, 90 were a result of both increased budgets in radio and some impacts on other stations. So 200 of the 315 local clients were completely new to radio.
737 We use the same formula whenever going into a market to project revenue.
738 COMMISSIONER MENZIES: Does that hold up, two or three --
739 MS JOSEPH: I'm sorry?
740 COMMISSIONER MENZIES: Does that hold up three or four years down the road? Because, I mean, I can see the immediate impact of market growth when you get any new media in a market because people who have tried other things and they haven't worked are going to be -- they are going to be willing to give it a go and see if it works, right, but doesn't hold up down the road in terms of continuing to be able to attract people who are new to radio?
741 MS JOSEPH: Well, I have been in radio for 15 years and it holds up every year --
742 COMMISSIONER MENZIES: Good.
743 MS JOSEPH: -- and that is why our sales teams have continual new direct business development budgets, because -- they would like not to, but yes, that is the only way that we are able to generate revenue on a year-to-year basis. There is attrition and because of attrition you have to go out there and source new revenue.
744 COMMISSIONER MENZIES: Yes. Thank you.
745 MS LAURIGNANO: If it just my add, sometimes they don't hold up for us but they do hold up for the system because they become radio advertisers, they become used to the medium and maybe their target audience changes or they want to add to it so they may not -- we may not be able to keep them as clients, but they will go to other radio stations and advertise as well.
746 COMMISSIONER MENZIES: And I'm sure they are grateful to you for that.
747 MS LAURIGNANO: Absolutely.
748 COMMISSIONER MENZIES: You actually answered two questions in one there.
749 I just want to go into your CCD or little bit.
750 You have listed a number of beneficiaries that you intend to spend your money on, but what we are lacking is a breakdown in terms of a budget for each one.
751 Can you give us some idea, for instance, you know, University of King's College journalism program, there is one for Acadia music program. Do we have some -- there is $300,000 in initiatives there, spending initiatives on your part.
752 Can you give us an idea of how much it's going to who?
753 MR. P. EVANOV: Yes, for sure.
754 Sean will give you a breakdown.
755 MR. MOREMAN: Actually, Commissioner Menzies, I think your question is more specific at the university level as well as the remaining initiatives.
756 Our plan with our CCD initiatives to establish the endowment is to leave the actual payouts at the discretion of the universities, but they are aware that each one of the payments has to be made either to students in journalism in the case of King's College or music students for Dal and Acadia.
757 COMMISSIONER MENZIES: Okay. How much money are you endowing?
758 What I'm trying to get at is, out of the $300,000 each year that you have allocated and then you have all these beneficiaries listed. I mean, are nine of them getting $10,000 a year each and one of them getting $210,000?
759 You see what I'm trying to get it?
760 MR. MOREMAN: There was a Schedule D that had been attached to our financial statements which you should have in your materials.
761 COMMISSIONER MENZIES: Oh, okay.
762 MR. MOREMAN: However, each of University of King's College, Dalhousie University and Acadia is getting $20,000 per year over seven years.
763 And if the Commissioners don't have this, or staff, we are quite prepared to refile this schedule.
764 COMMISSIONER MENZIES: If you could, because I don't think we did. Certainly I didn't so it was a question.
765 MS LAURIGNANO: Just for the record, it was identified as Appendix 8A in the original application, but we would be very happy just to leave a copy with the Secretary.
766 COMMISSIONER MENZIES: Appendix AA?
767 MS LAURIGNANO: Appendix 8A.
768 COMMISSIONER MENZIES: Appendix 8A.
769 MS LAURIGNANO: Yes.
770 COMMISSIONER MENZIES: Thank you.
771 MS LAURIGNANO: And it's titled "Description of the Proposed..." --
772 COMMISSIONER MENZIES: I'm thinking of the Hearing Institute advertising there.
773 COMMISSIONER MENZIES: And with all of those initiatives I understand that, you know, registered post secondary, but I'm curious for instance with the King's journalism program, how is that particularly helpful to broadcast industry as opposed to other industries outside of your or our field of vision?
774 MR. MOREMAN: Certainly being in radio music is often an important part of what is put out over the airwaves, but as well spoken word components are equally important to many people and many demographics. We have heard Dan this morning talk about the news and information and the local components that belong there.
775 So certainly assisting individuals to pursue a career in journalism ties in directly with the spoken word component in order to allow broadcasters to deliver the local news and information content that is equally important to listeners.
776 COMMISSIONER MENZIES: I'm still not quite on that. How does it tie through?
777 I mean, if the money is going to a student who is, you know, interested in magazine or online journalism, how does that -- I'm still not quite sure how that benefits directly to the broadcast industry.
778 MR. MOREMAN: It is our understanding of the journalism programs in the "J" schools across the country that there are necessarily majors declared.
779 Certainly if a student chooses to pursue print after the fact of getting this endowment maybe it doesn't certainly achieve the call of broadcasting, but there are so many careers available to these students at the time they are receiving the endowments and one of the courses of study they would take is certainly broadcasting.
780 You know, I am a lawyer and it's the same thing as being -- I don't work in a firm, I work in broadcasting. So there are so many options that are available to these students that we think that overall over the course of the seven years certainly the bulk of it will indirectly benefit the broadcasting system for the reasons that I just discussed.
781 COMMISSIONER MENZIES: I understand what you are saying.
782 And with the various festivals that you will be funding, can you describe to me how those arrangements work?
783 I just want a little assurance that these are true fund -- clear funding initiatives and not marketing initiatives.
784 MR. MOREMAN: We have had conversations which each of the remaining beneficiaries and they do have a clear understanding that the money is to be spent on performance fees and directly on Canadian talent.
785 They are aware and have committed to not spending that money on administrative costs or otherwise.
786 COMMISSIONER MENZIES: Okay. Thank you very much.
787 You have a very clear reference in your presentation today, and had a couple of other references to your use of Category 3 music, which I think you said 10 percent today.
788 Is that correct?
789 MR. P. EVANOV: Yes, 10 percent is correct.
790 COMMISSIONER MENZIES: Ten percent.
791 In the supplementary brief I kind of picked up a hint that there might be third language music or something.
792 Are you going to use any third language music at all?
793 MR. BARTON: The way the Category 3 would break down is half of it would be jazz and blues, half of it would be folk and world music. So as far as how much of that would be foreign-language music, that's really going to depend on feedback from our audience.
794 COMMISSIONER MENZIES: Sorry, the Category 3, half of it would be folk and blues?
795 MR. BARTON: Half of it would be jazz and blues, half of it would be folk and world music.
796 COMMISSIONER MENZIES: Okay.
797 Now, are you intending to capture that as a condition of licence, the Category 3?
798 MR. BARTON: Yes, we are at 10 percent.
799 COMMISSIONER MENZIES: Okay. Thank you.
800 And what level of Canadian content will you be playing within Category 3?
801 MR. P. EVANOV: Commissioner Menzies, I believe we are prepared to commit to the minimums of Canadian content, which is 10 percent.
802 COMMISSIONER MENZIES: Okay.
803 MR. P. EVANOV: So 10 percent of the 10.
804 COMMISSIONER MENZIES: Okay. Thank you. So we have that on the record.
805 Thank you very much.
806 THE CHAIRPERSON: Commissioner Patrone...?
807 COMMISSIONER PATRONE: Thank you, Madam Chair.
808 I am interested in efforts by your company to incorporate the Web, not only in its ability to draw advertising through that medium, but using news and so forth.
809 Can you talk about any strides that you have made in regards to that?
810 MR. P. EVANOV: Definitely.
811 The website for us has been an integral part of our radio stations across the country for years now. We have always looked at it as an extension of the radio station and more of a marketing tool than anything else, live streaming, being interactive, providing -- especially with our youth stations -- a direct link with our audience. Obviously they are on the computers all the time, while they are on chatting they are listening to the live stream or else they are going on finding out about contests.
812 We also have items set up for like a VIP section so they can win front-of-the-line tickets and stuff they are not able to access otherwise going through the website.
813 I will have Dan explain a little bit more on some of the usage of the website.
814 It's an integral marketing tool, not just for the youth station but also for the AAA station.
815 We use it to help interact with the audience on both levels, take requests, profile the announcers, have access to the newsroom and promote contests on there in more detail. You can get all the information out on the air and you go to the website and read up on more information there.
816 Plus it has links to weather, information, news as well. So it's really comprehensive of what else goes on in the radio station.
817 It's so important that we have our annual Summer Rush concerts in the Toronto area and here in Halifax in the summer and so instead of just having a segment on the station website we have created an entire new website called summerrush.com where they can go on there and all the information is on there, because that's where they go to look for it.
818 So it's very important to us to make that investment to set those items up. Our listeners can have access to it.
819 MR. BARTON: Yes. And it even goes beyond reflecting on what's on the radio station. We see it as another source of content in addition to that.
820 We have used it to actually promote local artists where, with their permission, we have posted video of either their performance or a music video that they have had produced so that it can also be accessed via the website which, you know, obviously can't be accessed via the airwaves although the song can.
821 We use it in terms of interactivity to run polls for example. So we will run a weekly poll to allow our audience to give their feedback on it.
822 We do that sort of thing on the air as well, but with this older demographic format in particular, if you are like me -- and everyone else at the table cover your ears -- if you are not working and you are trying to call a radio station you don't necessarily want your boss to know, but you can always log in online and fill out the poll and you are good to go.
823 We have announcer blogs on there so that we have a chance for our listeners to really get a taste for who our on-air staff is, both on the air and off.
824 So it's additional content, extra entertainment for them that helps them connect to the radio station, but we also enable them, through the website, to connect to us.
825 COMMISSIONER PATRONE: Do your reporters file directly to the web and is the news portion of what you do updated regularly?
826 MR. BARTON: I can tell you with the "Z" format in Halifax we do provide information. It's not really strictly hard news, it's actually far more entertainment oriented because of the demographic.
827 COMMISSIONER PATRONE: All right.
828 Do you still -- I'm sorry.
829 MS LAURIGNANO: If I could just add, the other thing that we use -- unfortunately, like many other broadcasters, we have not been able to monetize that get. However, as Paul and Dan have indicated, it is a tool that we used and we often include it as a value-added for clients, which can often help us force the buy up a little bit, give us a competitive edge, especially in the case where the websites are very, very popular and they get that traffic that we can substantiate, then that becomes a plus for us.
830 So we really looked at it as part of the existing condition that we try to embrace. You know, we can't compete with it so we try to use it as best as we can, including using it as a means of distribution, which is also important because, when the research is done hopefully whether they have heard it over the Internet or in the car or wherever, that reporting will be accurately back.
831 COMMISSIONER PATRONE: Yes, that was sort of my next question. It had to do with being able to sell ads directly to the website or whether that's sort of part of the package that you offer to potential advertisers.
832 What mechanisms do you have in place to allow local emerging artists to submit material for on-air consideration?
833 MR. P. EVANOV: We have an extensive history of promoting up-and-coming and new Canadian artists throughout our entire company.
834 I will have Dan explain how we will do it on the New FM, but also how we have done it in the last two years here in Halifax.
835 MR. BARTON: Yes. Thanks, Paul.
836 It's really something that's near and dear to my heart and it's something that's near and dear to us as a company.
837 It's not enough to just let them drop off a CD. When we first launched Z103.5 there was such a pent-up demand for that format, from artists in that format who just couldn't get heard on radio in Halifax.
838 I mean the most outstanding example to me is Classified who is now signed to a major label doing an international tour. Three years ago he couldn't get played on Halifax radio anywhere. Once we showed up and we have Classified on the air, and then some of his crew starts coming in, it really became this thing of "Really, will you listen to my track?" "Yes, we will listen to your track." "It might get played?" "Yes, it might get played."
839 But we went a step beyond that. If we weren't going to play your track -- you know, programmers love to say this "Well, I'm sorry, but, you know, it doesn't quite fit our format." -- we try to give guidance whenever possible.
840 I have had artists bring in CDs or send me MP3s before that the song is good but the production is not quite there, so I give them tips. And I have had on more than one occasion a remix come back that "Hey, you have nailed it. Fantastic. Let's play that."
841 It's really important that these artists have some guidance of not just "Well, did it hit your radio station or not", but "What does it take to get played on Canadian radio?" It's one of the most asked questions when you go to seminars at Canadian Music Week and at East Coast Music Awards, "How do I get played on radio?"
842 We as broadcasters should be offering that guidance and that's something that we do.
843 I had a chat with Chad Hatcher last night and we were talking about, you know, with this new format -- and Chad is going to be appearing on our behalf in Phase III of this hearing -- we talked about the number of artists that could really benefit from this sort of format in Halifax.
844 Matt Anderson I had mentioned earlier, Matt is originally from north of New Brunswick, he is now based in Halifax, he is a fantastic singer/songwriter. When I contacted him about this radio station he said "There is a station that might play my music?" "Yes." He was so excited and he couldn't say enough great about us. His letter of support got filed for us, along with several others.
845 So we know that that pent-up demand is out there for this format as well, particularly because it covers such a wide variety of genres, it covers deeper cuts for Adult Contemporary, Rock, Alternative, Jazz, Folk, World Music, Blues. I mean those artists are there waiting to be heard and they know from our history as a broadcaster that they will get that opportunity and that feedback.
846 COMMISSIONER PATRONE: And when you consider the emerging artist segment in your application says 16 percent.
847 MR. BARTON: Yes.
848 COMMISSIONER PATRONE: Do you see any benefit in incorporating an element built into that 16 percent of local emerging artists? So in other words the global number would be 16 percent, but do you see any benefits, perhaps not only to this undertaking but to the local music scene to say, you know, of that we are going to guarantee that these artists or this percentage of local artists are going to be incorporated into our playlist?
849 MR. BARTON: I can see what you are saying, but I think that's kind of a double-edged sword, because what happens if we have a local artist here -- let's say that that rule were in place for all radio stations across Canada and Classified were still just coming up and he didn't have his major label deal yet, well, he would get played here in Halifax but what's the incentive for a radio station in Toronto to play him if they have to make sure they are fulfilling only local when they are covering Canadian new and emerging artists?
850 We are committed to making sure these artists are heard not just on the local stage but the national and international stage as well.
851 COMMISSIONER PATRONE: Can you talk about perhaps what might distinguish your AAA format from what we saw from the other applicants who also proposed a similar format?
852 MR. BARTON: I can tell you that programming wise there is actually a significant amount of difference. It seems the only similarity we share is that we are both calling it AAA.
853 The target audience is different. Acadia's looking at 35 to 44 with a broad target 25-54; ours is skewed slightly older because we found there was a greater demand there with a core of 35-54 and a broad target of 35-64.
854 Our new and emerging commitment is doubled theirs. They are saying 8 percent of their overall playlist, we are saying 16. That is something we firmly believe in. It wasn't an arbitrary number we pulled out of the air, we actually did an analysis on Z103.5 in Halifax and found that's roughly the number that we are meeting and sometimes exceeding that.
855 Our Category 3 commitment is 10 percent while theirs is 4 percent. Our spoken word commitment is 17 hours 19 minutes overall, while theirs is 11 hours and 38 minutes.
856 And I think most significantly, when you take a look at the playlist our duplication with what is already in the market is less than 4 percent. When I took a look at their duplication analysis on their application they were 20 percent with a single radio station, just with Q104. They also duplicated other stations in the market.
857 So the impact that our licence would have on this market on existing stations is minimal; theirs is very significant. We are offering something that is not currently in this market.
858 COMMISSIONER PATRONE: The last question has to do with your revenue forecasts.
859 As I read it you are forecasting a profit in year three, albeit a small one?
860 COMMISSIONER PATRONE: I'm wondering if that's a little on the optimistic side, given the state of the economy. But by the time you launch we will sort of still be in the recovery stage.
861 MS LAURIGNANO: When the financial projections were put together, you know, we were aware that the economy was shifting and that there was a downward turn. We didn't know the extent. That was just sort of the beginning. We went at it that way.
862 However, given that we expected to recover, that the tide will turn, perhaps not as fast as we think right now, but also economies have a way of bouncing back fairly fast once they hit bottom, so we may very well be where we originally projected by the time we launch, which, as Bill indicated, would be around 2011 or even the beginning of '12, depending on the time line that the decision came down and the time that we would be given to implement it.
863 So, you know, at best it's always a projection, but we are very confident that it is a fairly accurate projection.
864 Also, we factor the point that it is not relied strictly on just, you know, getting a share per point, that it's retail driven, that it's a new stream of revenue. So we know that we have the building blocks. We may have to work harder and maybe increase inventory, but the bottom line I think we are very confident that we can achieve.
865 COMMISSIONER PATRONE: Thank you very much.
866 Madam Chair...?
867 THE CHAIRPERSON: Commissioner Duncan...?
868 COMMISSIONER DUNCAN: I do have just a few questions.
869 First of all, I just wanted to clear up on the emerging artists.
870 In your comments:
"New FM will commit to 40 percent Canadian content during the broadcast week with fully 16 percent of its schedule devoted to new and emerging." (As read)
871 So that is 16% of your total schedule?
872 MR. P. EVANOV: Yes, that's correct.
873 MR. B. EVANOV: Yes.
874 MR. P. EVANOV: Ten percent of the total schedule.
875 COMMISSIONER DUNCAN: Okay. All right.
876 I'm just wondering -- just a second. Bear with me here a second.
877 With respect to your CCD commitments and the parties that you are proposing to make contributions to, the Aboriginal Media Education Fund and the Deep Roots Music Festival, are those -- I hope you can hear me all right, I am back from the microphone here -- are those for initiatives in the Halifax area or are they on a more national scale -- or what is the intention there?
878 MS LAURIGNANO: The intention is to devote the funds to the regional area.
879 COMMISSIONER DUNCAN: Regional?
880 MS LAURIGNANO: Yes, regional.
881 And we do have that undertaking. Actually, I will file the complete 8C schedule I was talking about that has the amounts, the descriptions, as well as letters of understanding with the third parties that we have spoken with.
882 COMMISSIONER DUNCAN: Okay.
883 So when you speak regional -- because I don't recall reading it, I'm sure it's there --
884 MS LAURIGNANO: Well, the first effort would be for the local, the second effort would be for Nova Scotia, third effort would be Maritime, fourth would be for, you know, wherever it's possible. And it may not be possible in the first year of the licence term, but that's certainly the intention as we move forward and as these organizations get the funds to start establishing some of these things.
885 COMMISSIONER DUNCAN: Just following along on the CCD initiatives, Mr. Moreman, you mentioned that you would be -- you know, that you have made arrangements with the groups and they understand clearly what their obligations are, but, you know, as time moves on people may lose sight, you know, staff turns over, whatever.
886 I'm just wondering, is it your intention or how is it your intention -- how are you going to monitor that on an ongoing basis?
887 MR. MOREMAN: It has been our experience, firstly, that when it comes time to pay these out people have forgotten that they were one of our beneficiaries, so they are firstly reminded of their obligations when the payment is made.
888 If the Commission so requires, we can get an accounting or a firm commitment from all of these beneficiaries at the time.
889 MS LAURIGNANO: I would just like to add to that.
890 We view this as an investment so we track -- we track it. We make sure that we are in touch with them. And we have developed relationships with a lot of them and we often go beyond just a monetary where there is, for example, support on-air for the initiatives or other things that we can do or other collateral support that we can give them.
891 So we really view it as an investment and try to track the returns and evaluate them.
892 COMMISSIONER DUNCAN: So would your staff then, situated in Halifax, remain aware of the obligations?
893 MS LAURIGNANO: Yes. Actually, Dan and I meet a couple of times a year in person just to see what the initiatives are, how they were going, what they are doing, making sure that he does, you know, attend the events that even some of the money goes to support, or it goes into development strategies for some other recipients.
894 For example, with Halifax we are in a unique position of having to have asked and have approved a fund to be allocated in the future, but over the seven years, and that has been a terrific asset for us and for some of those groups that have emerged since where they can come to us and we can evaluate them on an ongoing basis and award them some money that they need to either start or to fund or often it's a lifesaver or a life raft for some of these --
895 COMMISSIONER DUNCAN: Thank you.
896 I think my last questions revolve around -- you know, I have read in your statement, and in your comments today of course again, the importance to you of having a second station.
897 I'm just wondering, when you applied for the Halifax market -- let me ask you this first.
898 Do you operate as a standalone in a similar situation in any other market?
899 MS LAURIGNANO: Yes, we do. We do in part.
900 Well, in terms of programming there is a bit of a synergy between our Ottawa and Hawkesbury station. Some economies of scale there, because it's a similar format and we are able to share some things. But as a stand-alone model, no, this would be very unique as market.
901 COMMISSIONER DUNCAN: Okay. And so you are not operating any AAA formats?
902 MS LAURIGNANO: No, we do not.
903 COMMISSIONER DUNCAN: Okay.
904 So when you applied for the Halifax and were licensed -- and I certainly commend you on the good job, I live in the market and I know it has been very successful and I think has brought about change in the market which you have highlighted, and I think that's positive for the young people.
905 I'm just wondering, though, when you were licensed in the Halifax market were you -- did you anticipate that this might happen?
906 You referred to Toronto there earlier, Mr. Evanov, I think you said there was a similar situation there.
907 MR. P. EVANOV: Yes. We are not surprised at all --
908 COMMISSIONER DUNCAN: Not at all.
909 MR. P. EVANOV: -- by what happened. And obviously being in that situation before, you know, obviously it's competitive and people flip formats, so we definitely didn't know exactly would happened and a flip would happen, they go after that format specifically, but we didn't think we would be doing this format and even in the reaction we are getting and doing as well as we are and all the other broadcasters who just sit by and, you know, let us have our moment in the sunshine.
910 MR. B. EVANOV: However, if I can just add, what has happened now is something called the perfect storm, it has come together and there are two issues.
911 One is the consolidation issue has come together with probably a major economic downturn and that has created the situation of today which makes it much more difficult, you know, when you are competing in a market. And even the major broadcasters are taking a bit of a hit in this market so they are going to turn to where there is ready available money and we had ready available money and audience.
912 And as a standalone I guess we are competing with -- if you take that particular station, they have to FMs, one is the giant in the market forever so they leverage, if you want, the big giant and by the little one, and also, you know, they have access to CTV Television which they own, and to the 'A' Channel which they own, and the Globe and Mail which they own. So it's a pretty big competitor.
913 MR. MOREMAN: And Commissioner Duncan, just we think it is important to add, coming back to your original question of other markets where we operate, this is the only market in which we are the only company that operates as a standalone. Other markets differ on that level, as Bill was talking about the consolidation, but it's particularly acute here in Halifax.
914 Second, whether we anticipated what is going on right now, the timing of our filing is also important to note in that we believe we triggered this call. Our application today is not reactionary to what is happening on the format front, this is something that we considered would happen, as Paul said, pretty much from the get-go. It just happened to coincide with the time of our filing, but we were anticipating this all along.
915 MS JOSEPH: Actually, if I could add to Mr. Evanov's point, with another station basically duplicating our format, as per Wikipedia, as a standalone in this market, we understand the dynamic of the competitiveness, and to share revenues is one thing, but to lose revenues altogether because of the efficiencies that the other broadcasters can offer -- and I want to be very clear on this, that they are offering efficiencies. They are offering discounting. In some cases we have even seen, "Buy this station and get free on this station," just to be able to generate -- take that revenue away from us entirely.
916 So it is really important, from a company standpoint, to be able to be competitive and to be able to access that broader demographic in order to compete in this market.
917 COMMISSIONER DUNCAN: Thank you. The other point I wanted to cover with you is staffing. I notice here, in Schedule E -- and I think it is probably again submitted, where you list the staff positions that will be shared with the existing FM stations.
918 I am wondering, I think your current station, of course, as everybody does, is a unique station, and now you are applying for a Triple A that will be unique, and yet you are going to have these positions -- seven positions -- we will discount the accounting and A/R, I suppose, and human resources -- except that they are all going to feed into your programming, based on what was said earlier.
919 I just wonder, is it possible to come up with programming -- for these same people to adequately program both of those services?
920 MR. P. EVANOV: In regards to the shared positions -- first off, both stations' programming would be separate -- very different audiences, very different demographics. Our current station, Z103, has its programming staff in place.
921 For the New FM, we would have completely separate programming, a separate program director, a separate music director, a separate news director, separate news staff, separate announcers, separate production. All of the programming aspects would be completely different.
922 The only shared positions that we have, in order for synergies and cost effectiveness, are that of general manager, sales manager, a sales coordinator, engineering, and reception, which really don't fall under the -- obviously the GM does, but they don't really fall under the programming aspect. Each station is different, with its own programming.
923 So we found synergies and cost savings with these positions.
924 We already have a building. We have a second floor that is vacant, so reception would make sense.
925 One engineer -- there is no need to hire a second engineer. Cost savings for engineering, in that sense.
926 The sales coordinator -- and whatnot.
927 The programming is completely separate for both of the radio stations.
928 COMMISSIONER DUNCAN: I was picking up on two things. I think Ms Laurignano said that the gathering of the news might be common -- would be something that would be common, and then I think Mr. Barton mentioned, in response to Commissioner Menzies' question, that you get your ideas from all of your staff. You ask all of your staff.
929 I guess that's really where I was coming from.
930 MR. P. EVANOV: Yes, we do have two completely separate newsrooms, but if we are lucky enough to have the second station, all of the staff would contribute, as they do -- our staff now live, eat and breathe the radio station.
931 So there are different news departments, but, again, if something happens on the New FM radio station and staff are out there -- if they are at an event or see something, and they can see that it might benefit the New FM, or even, "Hey, this might work out for Z103," they will relay that information to the news director or the program director, in that sense.
932 Dan could give you a good example of a real-life situation that happened about a month ago, or a couple of weeks ago, with a fire.
933 MR. BARTON: If I could clarify, the actual "all staff" -- all hands in -- had to do with how are we community involved. How do we connect with that community to help reflect that community.
934 What I was referring to was that all of our staff gets community involved, as opposed to -- they don't actually all contribute programming to the radio station.
935 I can see the connection or the line because it's the community involvement that helps us to generate the on-air content to reflect our audience, but it is more about using the entire staff to connect with the community.
936 The example that Paul was talking about was the fire out in Porters Lake, which was, I guess, several months ago now.
937 But rather than just report on the fire in Porters Lake, we decided to delve deeper into it and say, "What can we do to help?"
938 There were several people that had been evacuated from their homes. They were allowed to eventually go back, but they were evacuated from their homes and were being kept at a shelter.
939 The two things that they were lacking were changes of clothes for their children and food. So rather than just reporting that story, our promo team was really proactive with it. They loaded up the vehicles with T-shirts and chips, and whatever they could take out there, and they had a change of clothes for the kids, and they had something for them to snack on, which helped make it just a little more bearable, because I can only imagine how scary it is to be evacuated from your home and wonder what is happening to it.
940 It was a welcome distraction for them, and we felt that we were doing a little something more for the community, so, quite frankly, it made us feel good too.
941 And it wasn't just a news event, it was a staff event.
942 COMMISSIONER DUNCAN: Thank you very much. Those would be my questions.
943 THE CHAIRPERSON: Thank you. Just a couple of cleanup questions, and then a couple of more general questions.
944 On your CCD contribution -- and I am looking at page 10 of your financial projections that you filed, specifically Schedule 1, and you have over and above amounts for each of the seven years. Will you accept those as Conditions of Licence?
945 MS LAURIGNANO: Yes, we will.
946 THE CHAIRPERSON: Thank you. Will you be able to file updated proof of financing within 10 days?
947 MS LAURIGNANO: I have it with me, and I would be happy to leave it with our great Cindy at the end of this session right now.
948 THE CHAIRPERSON: Even better.
949 And we like it when you compliment our staff. Thank you very much.
950 THE CHAIRPERSON: Mr. Evanov, you talked with -- I think it was Commissioner Patrone -- about the differences between you and the Acadia application, and based on your answers, could we license both of you?
951 MR. P. EVANOV: I will let Mr. Evanov Sr. answer that one.
952 MR. B. EVANOV: Well, you could, but no --
953 THE CHAIRPERSON: Oh, we can do anything we want --
954 MR. B. EVANOV: Exactly.
955 THE CHAIRPERSON: -- but what would be prudent?
956 MR. B. EVANOV: I mentioned before the perfect storm, and, in your opening remarks, I think, you mentioned, when you were questioning Acadia, "Why now, at this time," et cetera.
957 We came in as an independent standalone broadcaster, probably at a good time, and I think we paid our dues, and we worked hard and we created a 10 share in the market and provided a good service.
958 We repatriated young people back to radio.
959 I believe that the Commission should always license independent standalone broadcasters in markets, versus the big guys, but there are times to temper it and there are times --
960 So even though we believe that, we don't believe that right now is the right time. I think that perhaps two years from now, when conditions change, might be a better time.
961 If we are lucking enough to be licensed and be able to compete with the others in the market with two stations, that's great, but right now it would be really, really --
962 I know that the independents won't agree with me, or the standalones, but it would be really tough for somebody new in the market at this particular time.
963 So I would say, right now, no; later on, anybody could be licensed, whether it's a blues format or whatever.
964 THE CHAIRPERSON: To that end, I didn't want to belabour the point, as Commissioner Menzies said earlier, about the question of you being a standalone operator in this market. You have been before us in other proceedings where you have been the newcomer, or would have been the newcomer, and have said: Don't worry about it, we can stand up to the big boys. We do it in Halifax. We do it in other markets, as well. We can compete. We have the big broad shoulders to be able to do it.
965 And, in a most recent proceeding, you also presented a similar argument that you are presenting here and asked us to license a second service.
966 Looking at it from our point of view, if we grant you the licence here, how does the rest of the industry not interpret our decision as saying "Independents need not apply", because the Commission is only looking at providing competitive balance in markets these days, even in these tough economic times?
967 MR. B. EVANOV: Keep in mind that we are still a small broadcaster, an independent. I am not Astral getting a licence in Ottawa. So I don't think there would be a problem or an outcry of any kind.
968 I think that we have come here, we have paid our dues, and I am saying to you that, yes, you should always consider licensing an independent broadcaster, whether it's Acadia or whether it is the Torres application or anyone else.
969 I have to think of my company right now, how I am going to compete with the giants in the market, and I have picked the biggest giant to compete with, and I will do everything possible in order to compete with them and preserve the format and the radio station that we have created.
970 MS LAURIGNANO: And I would like to add that I think we would definitely come to be character witnesses for you, in terms of what you do for independent broadcasters. We would definitely not be here had we not been given that first opportunity.
971 But you are the Commissioners, and we are on this side, and we have been in the situation where CHUM got licensed and Newcap got licensed, when we were the standalone offer.
972 I think that's where your wisdom comes in, that you have to balance, in the end, what is good for the system, and there is an opportunity to strengthen or to actually even grow some businesses.
973 In our case, it has helped us, from being a small, little, regional operator to having more geographic areas and access to bigger markets.
974 I am sure that it takes the wisdom of Solomon to balance everything. I don't think you can look at it as being black and white. I think that the Commission has done what, in its wisdom, was right, which, in hindsight, was pretty good.
975 We always sort of take it personally -- you know, "Darn, we should always be the one to get the licence," but we have come before you over and over again and we have gotten those licences, and, thankfully, we are in the position now where we can ask you for that second stick, for the same reasons that we heard from other broadcasters who are national and who do a good job at that particular level.
976 MR. B. EVANOV: Also, I think that this particular market -- each market is very different, and you will assess what to do in every market, and we think that Halifax is very unique at this particular time.
977 THE CHAIRPERSON: Thank you.
978 One final question, Ms Laurignano: Why isn't there a TRAM report for this market? It's a pretty major market, why isn't there one generated for this market, as the incumbent here?
979 MS LAURIGNANO: I think that Ky may have some more history, but my understanding of the particular situation here is that, first of all, the data is collected by a company that is called McCay Duff, and it is a voluntary service, where the broadcasters may voluntarily give sales information on a month-per-month basis, which is usually broken down into national and retail.
980 That information is then passed on to the Radio Marketing Bureau, which puts it into a spreadsheet and publishes that information in the aggregate, without divulging any particular source.
981 My understanding, historically -- I understand that there is a measure in place where, beyond people agreeing that there has to be a quorum of the number of operators agreeing -- so two-thirds in the market should agree to participate, and after that, that information is put out.
982 In the case here, in the past, as you are aware, there were three operators a while back, two of whom had an LMA, a Local Marketing Agreement, which really was the one operator.
983 So there was never an agreement to get that consensus about the two-thirds going forward, or the other one would not agree because, if one was one-third and the other one was two-thirds, then you could sort of -- they could see what the other competitor was doing, and they were not willing to divulge that.
984 I understand that there have been some discussions. We have not really been formally approached in any way --
985 THE CHAIRPERSON: That was going to be my next question.
986 MS LAURIGNANO: We would not be adverse to it.
987 I am not really sure where it stands. I am not sure if Ky has any more to add to that.
988 MS JOSEPH: Yes. By the same token, I know that a lot of broadcasters use TRAM as an indicator, and certainly when applying for radio stations we have looked at it, but from our own business standpoint we don't use TRAM.
989 You have heard us talk about projections and how we do it from the street up, and obviously there is a relation in terms of share. But, aside from that, it really isn't something that we use.
990 THE CHAIRPERSON: So you don't use it as one of the factors in determining whether or not you will enter a market?
991 MS JOSEPH: We do. When we are applying for a licence, that is something, certainly, that Strategic Inc. uses. But from a company standpoint, on a day-to-day basis, to look at TRAMs, that's not really something that we look at.
992 THE CHAIRPERSON: Yes, I understand that you would look at a number of sources for the information to --
993 MS JOSEPH: Yes, but it's funny that you would bring it up, because I actually was speaking with RMB about TRAM just last week.
994 THE CHAIRPERSON: Okay.
995 And we have no questions from Legal Counsel, so you are done for the day. Thank you very much for your application.
996 MR. P. EVANOV: Thank you very much.
997 THE CHAIRPERSON: We will now break for lunch, and resume at 2:00 p.m. Thank you.
--- Upon recessing at 1244
--- Upon resuming at 1408
998 THE CHAIRPERSON: Madam Secretary...
999 THE SECRETARY: Thank you, Madam Chair.
1000 For the record, we have been informed by Frank Torres, OBCI, that Intervenor No. 5 listed on the agenda, East Coast Blues Society, will not be appearing in Phase III, since East Coast Blues Society is part of the Applicant's panel in Phase I.
1001 Also for the record, Acadia Broadcasting Ltd. and HFX Broadcasting Inc. have submitted proof of financing in response to undertakings. These documents have been added to the public record and are available in the Public Examination Room.
1002 We will now proceed with Item 3, which is an application by Frank Torres, on behalf of a corporation to be incorporated, for a broadcasting licence to operate an English-language FM commercial radio programming undertaking in Halifax.
1003 The new station would operate on Frequency 99.1 MHz, Channel 256B, with an average effective radiated power of 14,223 watts, maximum effective radiated power of 35,000 watts, with an effective height of antenna above average terrain of 118.5 metres.
1004 Appearing for the Applicant is Mr. Ed Torres.
1005 Please introduce your colleagues, after which you will have 20 minutes for your presentation.
1006 Mr. Torres...
1007 MR. E. TORRES: Good afternoon, Madam Chair, Members of the Commission, and Commission Staff. My name is Ed Torres, and I am the President and Co-Founder of Skywords Radio, and the Chairman of CIDG-FM.
1008 I would like to begin by thanking the Commission for entertaining our application for a new blues format FM radio licence to serve Halifax.
1009 Seated to my right is my brother Frank Torres. Frank is the Chief Operations Officer at Skywords. Together we founded Skywords in 1991. Today it is a national radio company, with offices in several Canadian major markets, including Ottawa, Edmonton, our head office in Markham, and offices here in Halifax, on Cogswell Street.
1010 To my left is Yves Trottier. Yves is the former Operations Director at Couleur FM in Gatineau. He has held various PD positions, prior to joining Skywords as the General Manager of Quebec Operations.
1011 To the right of Frank is Natalie Fournier. Natalie is a Halifax resident, and the Base Manager for Skywords operations here in Halifax. We have been providing services in this market since 2005.
1012 In the second row, seated directly behind me, is Ron Ford. Ron is a chartered accountant, and the Chief Financial Officer for Skywords.
1013 To the left of Ron is Aubrey Clarke, the Director of Business Development at Skywords, and former National Sales Manager.
1014 In the second row, to your far left, is Todd Bernard. Todd is the General Manager of Eastern Canada Operations for Skywords, and part owner in this application.
1015 And to the left of Todd is Kim O'Brien, a Halifax resident, a blues musician and musicologist, and the sitting President of the East Coast Blues Society.
1016 On August 26th the Commission granted our company its first broadcast licence. Radio station CIDG-FM was set to broadcast from the nation's capital, and would have been the first blues format commercial radio station in North America.
1017 The licence is before the Commission for reconsideration.
1018 Our presentation today wants to illustrate that Halifax can sustain additional radio choice, that DAWG FM will provide a fresh, new, independent editorial voice in Halifax, that we will provide a missing, highly desired, extensively researched radio option to the listeners of the region, that our format will help break and launch new Canadian blues artists through commercial airplay of their music on FM airwaves, and that our national network operations provide a natural infrastructure, which will assist us to provide a high quality service in Halifax through the synergies we can realize.
1019 The concept of our blues radio station proposals has excited Canadians from coast to coast -- blues performers, blues societies, blues festivals, venue owners, and music fans in general have provided over 350 expressions of support for our Halifax application alone.
1020 MR. F. TORRES: We have commissioned extensive formal research by Sensus Research, an independent third party research firm, into the viability of our proposed format in 10 markets across Canada.
1021 We also created an online survey at "bluesincanada.com" that has generated hundreds of responses.
1022 Overwhelmingly, we found in our research that blues is the first music choice of 30 to 60 percent of people, and it is almost universally accepted as the second choice.
1023 Interestingly enough, research by other applicants in Edmonton, Vancouver and Halifax shows strong interest in this music.
1024 We commissioned additional new research for Halifax. The survey results were consistent with findings in other major Canadian markets. Key findings were:
1025 Nearly 60 percent of residents said they would likely listen to an all-blues radio station, including 19 percent who said they would be very likely to listen.
1026 Of the people that were likely to listen to an all-blues radio station, 51 percent said they would likely increase the total time they spent listening to the radio.
1027 DAWG FM will increase hours tuned in the market, rather than cannibalize existing radio formats.
1028 In addition, 63 percent of people surveyed indicated that most radio stations offer similar types of programming.
1029 News and information were an important factor in what station Halifax residents listen to, with most respondents ranking local news as more important than national or international.
1030 The analysis also shows that listeners of an all-blues radio station are more likely to make large purchases than non-listeners, and have a higher average disposable income.
1031 DAWG FM's demographic is firmly placed in adults 35 to 54, with a secondary demographic of adults 25 to 34.
1032 Interest in the format is significantly higher in these groups than in the general population.
1033 DAWG FM has also received input from less formal research sources, including our interactive online "Program DAWG FM" application, which allows listeners to sample our Canadian blues artists on our website and provide programming suggestions.
1034 Combined with our online survey, there is a preponderance of evidence supporting an all-blues radio station for Halifax.
1035 Halifax has a vibrant blues scene, championed by the East Coast Blues Society, and exhibited at the many area blues fests, which attract thousands of festival goers to the region every year.
1036 To speak firsthand about the blues in Halifax, we are fortunate to have Kim O'Brien, President of the East Coast Blues Society, with us here today.
1037 MR. O'BRIEN: What is blues music? That's like asking, "What is the colour blue?" There are as many shades of each as can be imagined.
1038 The blues began as the voice of the dispossessed in the slave fields of the American South, as a combination of field hollers, work songs and spirituals.
1039 It was brought into sharper focus by country blues artists in the Mississippi Delta, from musicians like Mississippi John Hurt, Son House, and Robert Johnson.
1040 It followed Southern Blacks who moved northwards into big cities, especially St. Louis, where W.C. Handy wrote "St. Louis Blues", and especially Chicago, where it was electrified, amplified, and deified.
1041 In time it became rock and roll, through Chuck Berry, The Rolling Stones, Led Zepplin, The Yardbirds, and Eric Clapton.
1042 Indeed, blues became the basis for almost every form of modern popular music.
1043 The melancholy aspect of this music found a natural home on the East Coast, a part of Canada that often feels dispossessed from the rest of the country, but it also knows what is real and what is important.
1044 Halifax and the East Coast is home to a thriving blues scene. The East Coast Blues Society has in its membership 36 member artists and bands. Many of these artists bring their sound to the world through recordings and international touring. The others keep a vibrant legacy alive.
1045 This is the home of Dutch Mason, a man dubbed by blues legend B.B. King as Canada's prime minister of the blues.
1046 Today, one of Canada's fastest growing blues festivals is named after Dutch, and attracts top international talent every year, such as James Cotton, Buddy Guy and Bonnie Raitt.
1047 What is sad is that we hardly ever get to hear any of these artists on radio, even to promote this major international blues festival. We don't hear Dutch, nor do we hear his son Garrett, an emerging Canadian blues star in his own right, despite his winning the Juno for best blues artist in 2005.
1048 We scarcely hear East Coast Music Association winner John Campbelljohn, CBC Rising Star winner Ross Neilsen, Maple Blues winner Shirley Jackson, and other local recording artists on commercial radio. And we don't hear the reigning senior statesman of East Coast blues, Joe Murphy.
1049 We may hear them occasionally on CBC, usually late on weekend evenings. CBC has a very broad mandate and simply cannot serve the blues community adequately.
1050 When the East Coast Blues Society told our members, both musicians and fans, about DAWG FM coming to Halifax, the virtually universal response was, "Finally!"
1051 Almost immediately, DAWG FM showed their support for local artists on the Halifax blues scene. Mr. Bernard, of the DAWG ownership group, came to address our annual general meeting. He also visited various blues clubs around the town to talk to patrons, artists, and fans about how DAWG FM will work with the local blues community.
1052 Mr. Torres asked for recordings of local musicians to be put on their streaming website now, which illustrates the exposure to East Coast blues artists that DAWG FM Halifax will provide.
1053 The proposal that the Torres group has put together will be of enormous help in carrying out the Blues Society mandate. We are pursuing several initiatives right now to promote blues music throughout Atlantic Canada.
1054 We are working with local blues musicians and educators on "Blues in the Schools". DAWG's financial commitments will greatly help with this wonderful program.
1055 We also plan on having a region-wide competition to select a band to be the local headliner at the Dutch Mason Festival, and also at the International Blues Festival, held in Memphis, Tennessee every year.
1056 With DAWG's financial support through CCD contributions and promotional support on-air, these initiatives will become greatly more easily realized.
1057 We know that they have already supported an Ottawa-area band to go to the IBC challenge in Memphis.
1058 And DAWG FM, I can tell you, has found open arms here on the East Coast.
1059 MR. BERNARD: DAWG FM proposes a blues radio station focused on serving the large community of Halifax.
1060 DAWG FM's music will be composed of two main components: at least 70 percent will be Category 2 music, and a minimum of 20 percent will be from Category 3.
1061 The Category 2 music will include pop blues, with artists like Joe Cocker and Van Morrison; blues rock, with Stevie Ray Vaughn, Jeff Healey and Eric Clapton; rhythm & blues, with Stevie Wonder, Jully Black and Marvin Gaye; soul, with Aretha Franklin and Smokey Robinson; and a few rock artists, like Colin James, Steve Miller and Lynyrd Skynyrd.
1062 Each song will be chosen to appeal to a wide audience, while maintaining a tone that fits well within the mandate of the blues station.
1063 Forty percent of the music in this category will come from Canadian artists such as David Gogo, Jack Dekeyser, and the Downchild Blues Band, as well as maritime artists like John Campbelljohn, Garrett Mason and others. We will play them in high rotation to promote local talent and to give DAWG FM its local feel.
1064 DAWG FM will play a minimum 20 percent of Category 3 special interest blues music, including classic blues performers like John Lee Hooker, and emerging Canadian artists like Ross Neilsen.
1065 DAWG FM is a commercial radio station that plays mostly popular music within the broad scope of the blues brand. A blues radio station must reflect all of the trends and variations that are found in this category of music.
1066 However, it is important to highlight that DAWG FM will not only attract diehard blues fans, but will have mainstream appeal without impacting the other stations in the market.
1067 Our strategy is simple: play the blues cuts from well-known and established artists in combination with similar music from lesser known Canadian and international blues musicians.
1068 Our artist showcases will feature new and emerging Canadian blues artists, as well as the classics of the genre.
1069 Live concerts will be a staple of Friday night and weekend programming.
1070 With its vibrant blues scene, Halifax, on most weekends, hosts a number of Canadian blues artists in live performances. DAWG FM will be there to record these concerts for broadcast, both to Halifax and other markets.
1071 For example, a live recorded program, such as "A Blues Night in Halifax" featuring John Campbelljohn, will be broadcast on our other DAWG FM stations and offered to other commercial stations who are interested, both in Canada and the United States.
1072 Similarly, a live "Blues Night in Ottawa" could be broadcast on our Halifax station, and also distributed across the globe.
1073 The end result: we will provide exposure for local blues artists beyond their home regions and export Canadian content to the world.
1074 DAWG FM will educate and inform. "This Blues for You" is a spoken word feature that will highlight blues artists in an hour-long interview-based format.
1075 All of the station's program features will be made available to other stations in Canada and abroad through the Skywords distribution and syndication network.
1076 DAWG FM will fill an important community need as a reliable and constant promoter, presenter and sponsor at the many blues festivals in the area, and will actively reflect the live music scene on-air.
1077 MR. TROTTIER: The research shows that our demographic is keenly interested in news and information. DAWG FM will meet this need with a locally focused news department, with frequent and informative newscasts, and through the production of locally reflective spoken word programming.
1078 Our commitment to news includes four full-time news reporters, and one part-time reporter.
1079 Further, DAWG FM will benefit from the assistance of four part-time Skywords reporters.
1080 Together, they will produce 5 hours and 32 minutes of pure news every week.
1081 Programming at DAWG FM will benefit from the existing Skywords team in Halifax and elsewhere. The network will assist with several elements of programming, such as local traffic, weather, national and international news, financial reports, snowmobile and ATV trail conditions, national sports and so on -- programming that we are already providing across the country.
1082 Traffic reports will air four times an hour in the morning and afternoon drive. Our "DAWG Days" event calendar will provide four updates per day on the various happenings and events around Halifax.
1083 Business reports, entertainment reports and constant weather forecast updates will be a daily staple on the station.
1084 This infrastructure will allow DAWG's announcers and journalists to concentrate on local content. DAWG FM will provide a comprehensive package of 23 hours of spoken word programming each week.
1085 MR. CLARKE: Our Canadian content development plan has been carefully designed to provide funding and promotion to Canadian blues talent and nurture the future of musical development in the Halifax area.
1086 FACTOR will receive $45,000 annually, which will go to fund blues genre artists. This is a substantial investment in musicians that will promote and help launch the careers and the music of emerging Canadian artists.
1087 "Canadian Music Week" will receive $14,000 annually to start a blues concert series and fund Halifax area blues musicians to attend music industry conferences.
1088 The East Coast Blues Society will receive $45,000 annually to promote the "Blues in the Schools" program. Students chosen to participate would receive professional instruction and education by professional blues musicians.
1089 Music Nova Scotia will receive $50,000 annually toward advancing the careers of music industry professionals in songwriting, publishing, live performance, representation, production and distribution, and to help ensure that Nova Scotian musicians are heard on the world stage.
1090 Pier 21, Canada's immigration museum, will receive $40,000 annually to fund music education summer camps, March Break camps, and will create a Pier 21 Blues Festival fundraiser.
1091 The East Coast Blues Fest would receive $20,000 annually to bring local and regional Canadian blues performers to Nova Scotia.
1092 The total CCD contribution is $1,498,000.
1093 MR. FORD: As the Skywords group has made multiple radio licence applications as part of our national radio network vision and strategy, we would like again to outline our financial and operational strength and capacity.
1094 We have commitments to fund our proposal for this application in excess of the amounts needed.
1095 In our application we provided you with evidence of the availability of funding from Mr. Dwek's venture capital company. He knows our company and this business plan well, as he is our External Public Chartered Accountant.
1096 Based on his knowledge, he and his associates are willing to financing the building and start-up operations of a number of radio stations as part of this national radio network strategy.
1097 Even through the economic downturn, Skywords' year-over-year revenues are up 30 percent as of October of this year. Consequently, our profit margins are also high.
1098 Our Halifax operation, which started in October 2005, has maintained its healthy progress. The profits derived from our ongoing operations provide us with the backbone to support these radio start-ups.
1099 This demonstrates our financial and operational strength and "dawged" determination.
1100 MS FOURNIER: The local economy has been holding its own very well during these economically challenging times, and growth is expected to return in the near future, as stimulus and recovery measures implemented by governments and central banks worldwide begin to gain traction.
1101 One of the reasons for the market's relative stability during the recent downturn is its diversification in employment sectors, including retail trade, public administration, health care, educational services, professional, scientific and technical services.
1102 These categories count for half of all employment here, and are shielded from the current recession.
1103 Halifax's strong commercial and industrial construction sectors have more than offset a recent slowdown in new home starts. We have seen an increase of 20.9 percent in non-residential building investment, which outpaces the national average. Overall, construction values saw a healthy increase of 4.2 percent in 2008, and residential construction and home sales are expected to increase in 2010, according to CMHC.
1104 Halifax's rate of employment is also a good indicator of the market's economic stability. In March 2009, the HRM's unemployment rate was at 6.2 percent, according to StatsCanada, well below the national rate of 8 percent.
1105 Furthermore, Halifax's full-time workforce increased by a health 10.1 percent from March 2008 through March 2009.
1106 The Conference Board of Canada also sees Halifax recovering from the recent global downturn in GDP in the near future. In its recently released "Canadian Outlook Economic Forecast: Spring 2009", the Board predicts that Halifax's GDP growth will remain flat for the balance of 2009, compared to a decrease of 1.7 percent nationally.
1107 Halifax will then see a return to GDP growth in 2010, increasing to 2.7 percent, and then increasing to an average of 3 percent annual growth for the period 2010 through 2013.
1108 Many of the world's leading businesses recognize the strength of our economy and talented employment pool. The Greater Halifax Partnership, which oversees HRM's economic development, cites many examples of "Big Business" that are expanding their Halifax operations to create highly skilled, high-paying jobs.
1109 The financial report on Halifax radio, released by the Commission, shows ongoing growth in revenues between 2004 and 2008, with growth averaging 8.2 percent over the period.
1110 While profitability dipped with the addition of new radio early in the period, margins increased in 2008, with a PBIT of 15 percent. We are confident that the market can absorb new radio, particularly in a format that will attract new listeners who are affluent and who feel that they are underserved.
1111 MR. E. TORRES: The strength of this application is its diversity. DAWG FM will add a new news voice to Halifax. It brings a new music choice that is not widely available in the market, and it will create a full-service commercial broadcaster that brings together a community of blues and live music fans.
1112 Our application will encourage competition and expand choice and service to the market.
1113 The approval of this application will benefit the nearly 6 in 10 Halifax persons surveyed who want to hear this music. It will benefit Canadian blues artists by celebrating their work. It will repatriate listeners from satellite radio and the internet.
1114 Simply, we want to provide another option for a preset that is different from the ones that currently exist on your car tuner. We don't think we will be Station No. 1, but our different feel and brand appeal will certainly put us on that first row of presets.
1115 The blues have reached a tipping point, thanks to the internet and the multi-platform delivery systems that technology provides. The CRTC approved our application to bring the blues format to Ottawa. That decision allowed Canada to boast that we have the first all-blues commercial FM station in North America, and we hope that you will grant us a second DAWG licence.
1116 We look forward to your questions.
1117 THE CHAIRPERSON: Thank you very much, Mr. Torres and your colleagues, for your application this afternoon.
1118 It is Commissioner Duncan's turn to lead the questions.
1119 COMMISSIONER DUNCAN: Good afternoon. I am going to start with the questions that I have, in the order I have them in, and I have a few questions from your presentation, but I will incorporate them as I go along.
1120 I am going to start with programming. I would like to give you another opportunity to describe the similarities and differences between your proposed format and the format of the Halifax incumbents. In particular, I am interested in what percentage of your music is currently available in the Halifax market.
1121 MR. E. TORRES: Certainly. The duplication analyses that we have done, not just in Halifax but in most of our markets -- and we have focused mainly on classic rock stations -- they show that there is a duplication, an overlap, of about 10 percent, and that is mainly going to be in our Category 2 music, which makes up 70 percent of our playlist.
1122 So there is, approximately, 10 percent duplication, but one thing our research shows -- and maybe I will ask Yves and Frank to comment on this -- is that the blues, the music that we are proposing -- the fans of that music have a very wide interest in music.
1123 So, in that way, we are going to be the least impactful on the incumbents with this station, because our research shows that blues fans listen to country, they listen to the CBC, they listen to some Top 40. They have an eclectic music taste outside of their initial desire to hear the blues.
1124 MR. F. TORRES: I think the magic of this format is that listeners will immediately recognize the artists. They will recognize the Eric Claptons and The Rolling Stones.
1125 But what we are playing, the actual music selections that we are playing, are music selections that are blues selections. So they are selections that aren't currently played, and that's why, despite the fact that we can play popular artists, the actual music is very seldom heard.
1126 So you get the benefit of the immediate recognition of the artist, and then the additional benefit of the "Wow" factor -- "I haven't heard that song before, and I kind of like it."
1127 MR. ED TORRES: We are going to play Eric Clapton's "Layla", but that's going to be one of our low rotation songs.
1128 You may hear cuts from his "Me and Mr. Johnson" album, which was widely ignored by commercial radio, but it has great appeal to our P1 listener, and we know that our P2 listeners are going to hang in there and listen to that because it's an Eric Clapton song.
1129 COMMISSIONER DUNCAN: I am interested when you refer to your duplication analysis and you say that it mainly focuses on classic rock stations. What would be the reason for that, that you wouldn't look at the other stations?
1130 MR. E. TORRES: We have looked at -- in our initial application -- and, as you know, we have applied for a number of these formats. The initial BDS runs that we did, we did them against all of the formats, and, really, classic rock was the only one that showed any sort of duplication level above 5 percent.
1131 So we just haven't bothered, because we know that the other formats -- country turned out to be 3 percent, CHR is almost negligible, and adult contemporary comes in at around 5 percent.
1132 COMMISSIONER DUNCAN: Thank you.
1133 How would you compare your music to the other applicants here?
1134 I notice that Acadia Broadcasting is proposing to include blues and roots in their line-up.
1135 MR. E. TORRES: Frank touched on this. Our music is going to be very much focused on the tracks, and the individual tracks have to mesh into the feel and the brand of the radio station, which is going to be melancholic at times, but it is going to be swingy at times. It is going to be all of the things that blues are.
1136 As long as the track fits into the feel of the radio station, that is really how we would qualify whether or not that track is going to appear on the radio station.
1137 To compare it to a Triple A, if they are going to play 4 percent blues music, then that will overlap with us to the tune of 4 percent.
1138 With respect to the rest of their playlist, we are not going to play Celine Dion, we are not going to play a Bryan Adams' acoustic track, we are going to focus and concentrate mainly on those bluesy feel tracks.
1139 MR. F. TORRES: I would like to hear Kim's input, being that he is here and he is a blues fan, on what we have heard across the board -- and Halifax is certainly no exception -- which is that blues lovers won't buy a piece of the music here and there. That won't get them to throw away their satellite radios. That won't get them repatriated back to FM radio. What they need is a true blues, full-service radio station.
1140 Kim, would you agree with that?
1141 MR. O'BRIEN: Absolutely.
1142 There is some blues in the market. There is Holger Petersen's CBC show on Saturday night. Another local station has the Dan Aykroyd syndicated show for a couple of hours on Sunday night, and the local university has an hour or two every Tuesday afternoon.
1143 This is inadequate on several levels. None of those particular times is what we would call high listenership hours, plus the fact that they really don't do anything to promote local artists. Mr. Petersen tries to promote Canadian talent, but he is limited because he has an entire country to fulfil, and the syndicated show -- Dan Aykroyd -- is only the established artists, so it doesn't help this market develop talent to a sufficient degree.
1144 Also, this format will explore the various genres of the blues. A lot of people think of the blues as, sort of, you warm up the bath and I'll break out the razor blades, but, in truth, there are probably people in this room who love the blues who don't even know that they love the blues. There is Jump Blues, Swing Blues, Texas Blues, Chicago Blues, Delta Blues, New York Blues, West Coast Blues, Texas Swing Blues. This is the type of thing that we can really explore. This is the kind of music that is going to have enormous appeal to blues artists and blues fans, who are rabidly loyal to the genre.
1145 MR. E. TORRES: And Triple A stations talk about new music from old artists. We would do that, but it would be blues artists. We wouldn't play the latest Anne Murray track, but we would play a fair amount of new artists -- a lot of Garrett Mason, a lot of Ross Neilsen, a lot of John Campbelljohn.
1146 Blues artists are very prolific. We have submitted before that, for the Maple Blues Awards, they sometimes have to sift through hundreds of CDs, and those are just the ones that qualify.
1147 Certainly, since we started streaming blues on "bluesincanada", our website, we have been getting submissions on an almost daily basis.
1148 So the content is out there, and blues artists are producing it.
1149 COMMISSIONER DUNCAN: I know, because I had the pleasure of hearing your presentations before, and watching your video and listening to the music. I am just wondering, given that you were licensed in Ottawa -- and I know that there are different factors that influence these decisions, but considering all of the places that you have applied for, what is it that makes you think that Halifax -- is there something that Halifax and Ottawa might have in common that you think would be a better fit, or do Canadians in general want this product?
1150 MR. E. TORRES: At the risk of alienating anyone in Halifax by drawing comparisons to Ottawa --
1151 COMMISSIONER DUNCAN: Good plan.
1152 MR. E. TORRES: As you know, we did the research first, the formal research, in markets across Canada. The markets that have tested the highest for people's likeliness to listen to blues are Halifax, Ottawa, Edmonton and Vancouver.
1153 And the blues scene here is very vibrant, and historically it has produced great artists, like Dutch Mason.
1154 So, for that singular reason, Halifax is a great blues market.
1155 MR. BERNARD: I would add to that that back in December of `08, at a Monkey Junk show in Ottawa -- and, from earlier in the presentation, Monkey Junk is the Canadian blues band that just recently took down third place at the International Blues Competition in Memphis, out of, I believe, 93 bands.
1156 I had a conversation with Steve Mariner, who is their front man, and we were talking about the various applications that we had undertaken to date, and were ongoing, and he said to me, "You know where you guys have to be?" He said, "You have to be in Halifax."
1157 Now, this was before the time that this process had been Gazetted, so I was chomping at the bit to tell him, "Guess what? We are applying in Halifax." But, again, because it was not public information at that time, I didn't tell him that.
1158 This was the front man of one of Canada's most up-and-comining, premiere blues bands, as evidenced by their recent success, telling us, without having been prompted beforehand, "You guys need to be in Halifax."
1159 So that answers why Halifax, why Ottawa -- those two in particular.
1160 MR. CLARKE: And there is also the BBM data that rates Holger Petersen's Saturday night blues show as number one in the market for adults 25 to 54, in that time block.
1161 That all shows that there is a strong interest in the market for blues.
1162 MR. O'BRIEN: One further similarity is that Ottawa has a fairly well-known and established blues festival. Nova Scotia has the Dutch Mason Blues Festival, as I alluded to earlier, which, in the last five years, went from 2,000 attendees to 15,000, with 18,000 expected for this summer.
1163 So, again, that is a similarity, very successful blues festivals in both markets.
1164 COMMISSIONER DUNCAN: Thank you.
1165 I noticed in your February 16th reply that you described your core audience as male or female, 41 years old, employed, with above-average income.
1166 I just want to clarify, because this seems so narrow, is this your median listener age, and, if not, what is your core target?
1167 MR. CLARKE: Yes, that is our median listener age.
1168 Our core target is adults 25 to 54, leaning more to the males, 35 to 54, and females, 25 to 34.
1169 COMMISSIONER DUNCAN: So 25 to 34 --
1170 MR. CLARKE: Yes, 25 to 54 would be our main target, and if you divided them up by females and males, you would see that the females tend to be a little younger than the males.
1171 COMMISSIONER DUNCAN: Okay.
1172 MR. E. TORRES: Let's not divide people.
1173 MR. E. TORRES: By the way, higher than average income -- Halifax and Ottawa, vis-à-vis Ottawa -- if we are looking for similarities between markets, higher than average education, Halifax and Ottawa.
1174 Those are two things that have shown up in our research, and, anecdotally, we know that listeners to our station are going to be higher educated, and they are going to have a higher than average income.
1175 COMMISSIONER DUNCAN: Thank you.
1176 On page 39 of your supplementary brief you explain that mainstream blues, which you have described as Category 2, rock blues and rhythm and blues from the fifties and sixties, and soul, will be approximately 80 percent of your playlist.
1177 I just wanted to understand the reference to the fifties and sixties. I don't know whether I read it incorrectly, or...
1178 MR. E. TORRES: I am on page 39, and I am looking for the reference.
1179 COMMISSIONER DUNCAN: It is right under "Mainstream Blues -- Category 2, rock blues and rhythm and blues from the fifties and sixties, and soul, will make up approximately 80 percent..."
1180 Maybe the way to ask the question is, just give the age, because the earlier applicants mentioned that their music, generally, I think, would be more current.
1181 MR. E. TORRES: I think what this is is, it's a category of music that the Commission defines -- the Commercial Radio Policy defines as being Category 2 music.
1182 It's Category 2 music if it's rock blues and if it's rhythm and blues from the fifties and sixties.
1183 COMMISSIONER DUNCAN: Okay. Do you have a breakdown for your music from different periods?
1184 MR. E. TORRES: Yves, I don't think we have broken it down specifically between --
1185 We are in the process right now of identifying and categorizing all of our songs. We have the music scheduling software, and Yves can talk to that.
1186 MR. TROTTIER: The main thing right now is to make the best mix of all of the music, between Stevie Ray Vaughn's blues rock songs, and then after that you have Aretha Franklin with soul songs. How can you mix that?
1187 Right now what we are doing is, we are trying to figure out how we are going to do that. Perhaps we are going to have a rhythm and blues show at lunchtime, or whatever, but that is what we are doing right now.
1188 COMMISSIONER DUNCAN: I suppose, once you get launched, you would be dependent on feedback from the audience, certainly.
1189 MR. TROTTIER: Yes, for sure.
1190 COMMISSIONER DUNCAN: They would direct that. Okay.
1191 Now, in the "Long tail of the DAWG", in your brief at page 46, you talk about creating revenue opportunity for local artists. I am wondering how that program would work.
1192 You are talking about their works being on the internet, and I am wondering, administratively, how the money would be collected and how you would manage that.
1193 MR. E. TORRES: Our idea with the "Long tail of the DAWG" is to provide an outlet where -- and I notice that some of the other major broadcasters have picked up on this and started recently -- buy from iTunes, right from the radio station's website.
1194 That is basically our program, but we want to start it at a more local level. So where you may not be able to find a local artist's track, or an emerging artist's track on iTunes, you will be able to find it on our website. You will be able to download it, and that will create a revenue opportunity for an emerging artist, because the station's core listeners, and the local people, are buying those tracks.
1195 Just to continue that example, my kids download music, and 20 percent of the music they download is high school bands from the area. So they share music between each other.
1196 Really, that is the genesis of that.
1197 How we would track it is going to be Ron's responsibility. There will have to be full reporting, and, again, our idea is to make this really revenue neutral for the station, revenue positive for the artist.
1198 COMMISSIONER DUNCAN: So it's developing.
1199 MR. E. TORRES: Yes.
1200 COMMISSIONER DUNCAN: Turning to cultural diversity, in your brief, I notice that you comment briefly on cultural diversity, but in the application, at Section 9.11, the Commission is looking for more detail, and I am wondering if you would undertake to provide --
1201 I had written down here June 4th, which is Thursday, but maybe by Monday --
1202 I don't know if it really matters. Legal will fix a date if he is not happy with mine -- just to give us the detail that is requested in 9.11 of the application, which is to elaborate on your plans to implement cultural diversity best practices.
1203 MR. E. TORRES: We will undertake to do that.
1204 COMMISSIONER DUNCAN: Thank you.
1205 The other applicants might give you some idea there. I am surprised, you have probably been called on to do this before.
1206 MR. E. TORRES: No, this is a first for us.
1207 COMMISSIONER DUNCAN: Is it?
1208 MR. E. TORRES: Yes.
1209 COMMISSIONER DUNCAN: All right, then.
1210 MR. E. TORRES: We thought that we were pretty culturally diverse.
1211 COMMISSIONER DUNCAN: Yes, I see that. Okay.
1212 Speaking about the CCD initiatives -- first of all, I noticed a comment here, and I had eliminated this question, and now I have put it back on there.
1213 This has to do with your Pier 21 initiative. Initially you referred to it including an education aspect, and you mentioned that today in your opening remarks, but in your deficiency response of -- whatever date it was, because I have eliminated it -- you no longer mention the educational aspect of it.
1214 So I am curious to know what your position is.
1215 If you would just bear with me a second, I will find that reference on the deficiency.
1216 It is the answer to Question 2(e) in your letter of February 16th. It's on the third page.
1217 MR. E. TORRES: Pier 21 -- I will give you some background on it. While it sounds odd that CCD funds would be made available to a museum, it goes to celebrating cultural diversity. Pier 21, as you know, Commissioner Duncan, was the landing spot for a lot of immigrants from Europe. I have worked with Pier 21 on various fundraising committees, and they do two events that we thought might be CCD eligible, and we want to help them promote music education. That was the first part of it.
1218 So if it wasn't mentioned in the deficiencies, that is certainly part of what the CCD is going to be used for.
1219 And the second part is that they do a Canada Day Festival that they have been wanting to add a music component to. What it does is, it celebrates ethnic music, it celebrates local music, and we thought it could celebrate blues music as well.
1220 So the funding is to be used for those two reasons.
1221 COMMISSIONER DUNCAN: Okay. I can see by the wording here in your response that you are well aware of the restrictions, or the requirements. So, with respect to the education component, you will be certain that it complies with that?
1222 MR. E. TORRES: We absolutely will.
1223 COMMISSIONER DUNCAN: Education there, I assume -- I don't think it is the Department of Education, it must be the Pier 21 Society that --
1224 MR. E. TORRES: Yes, that's correct. It's their own summer camp that they run, and the music camp. So it is separate from any board of education.
1225 COMMISSIONER DUNCAN: Thank you.
1226 With respect to Music Nova Scotia -- and this is at page 47 of your brief -- I want to be careful about this, because you don't actually describe, I didn't think, what the project that you were going to be working on was doing.
1227 You say that Music Nova Scotia has been working to foster, develop and promote the full potential of the music industry in Nova Scotia, and that it is devoted to advancing the careers of music industry professionals in songwriting, publishing, live performance, representation, production and distribution, and to help ensure that Nova Scotian musicians are heard on the world stage.
1228 I am wondering if you could be more specific about the initiatives that will be undertaken with your funds, your CCD funds, and how these expenditures will satisfy the criteria.
1229 MR. E. TORRES: With Music Nova Scotia, they fill a need -- they provide a service similar to FACTOR, but on a more local level.
1230 FACTOR, in fact, funds Music Nova Scotia and so Music Nova Scotia then in turn takes the FACTOR funds and provides them to artists. They have very strict criteria, as FACTOR does, with respect to what the funds go towards.
1231 So, in that respect, we were satisfied that they meet all of the criteria set out in Commercial Radio Policy to be eligible for CCD.
1232 Now that said, they're going to be here tomorrow as a supporting intervener and they could probably give you more details. But certainly we -- our thrust to them was, we would like the funds to promote blues musicians, help them record songs, get their songs distributed and to assist them in being able to perform live at venues. So, to pick up some of those costs, so...
1233 But they will be here tomorrow --
1234 COMMISSIONER DUNCAN: All right.
1235 MR. ED TORRES: And they can provide you with a much better answer.
1236 COMMISSIONER DUNCAN: Right. Just then one point on that. I'm sure that you realize that, for example, we wouldn't approve money for agents or lawyers, for example, so -- but we can discuss that with them tomorrow too, if you like.
1237 So, and we want to just confirm that all of the monies in your CCD program will be paid to independent third parties, direct expenditures?
1238 MR. ED TORRES: Yes, absolutely.
1239 COMMISSIONER DUNCAN: And we also were wondering if we could get a detailed budget breakdown.
1240 MR. ED TORRES: Of the CCD contributions?
1241 COMMISSIONER DUNCAN: Particularly, yes, of the Music Nova Scotia one.
1242 MR. ED TORRES: Okay.
1243 COMMISSIONER DUNCAN: And I was wondering as well how you intend on an ongoing basis -- if you heard my question this morning -- to ensure that, you know, with staff turnover and as time passes on that people remember that this is the purpose of these funds.
1244 How do you propose to ensure that, that they don't lose sight of it?
1245 MR. ED TORRES: Yeah, and it's a very good question. And, you know, our CCD, we've structured it to try and assist the blues artists and our intention is to have each CCD recipient sign a memo of understanding that would detail the terms of how the CCD was going to be applied so that it is eligible for the Commission.
1246 That would be filed with our annual report to the CRTC and, on an ongoing basis, you know, our programming department would be liaising with a lot of these CCD -- we would get feedback directly from artists and CCD recipients because, again, it's in our genre.
1247 But the idea is to have a formal memo of understanding, that will be filed with the Commission every year.
1248 COMMISSIONER DUNCAN: Thank you.
1249 Now, I'm going to turn to your economic -- to the economics of your application. And you mention in your brief and you mentioned here today again about the synergies that will be derived from your existing Halifax broadcast operation.
1250 And I'm just wondering if you could just give us a little better -- elaborate more and give us a description on your existing operation, the location, the staffing. Is that location where you would intend to locate your studio?
1251 And if you could describe the efficiencies that you built into your projections in terms of both revenues and expenses.
1252 MR. ED TORRES: Sure, okay.
1253 Last question first. The financials are based on the radio station being a stand-alone entity. So, there's no cost sharing. The budgets are all based on DAWG FM employees, not Skywards employees.
1254 Having said that, there are some synergies that we'll realize on the revenue side.
1255 As an overview of the operation here, we have full and part-time reporters, we have a small office on Cogswell Street that we sub-let from Z103, so we provide traffic reports to a number of stations here, Moncton, Fredericton.
1256 We provide weather reports throughout the Maritimes, including Yarmouth and Mirimichi. We also provide business reports in and around Prince Edward Island, through New Brunswick and through Nova Scotia.
1257 The sales of the Halifax market are handled primarily out of our Toronto office. We've got strong national and regional demand for Halifax and our operations here have been profitable, within months after start-up.
1258 So, that gives you kind of an overview of what we do here.
1259 And the efficiencies, when we look at the synergies that we can realize, we talked about news synergies because we have reporters already in this market. Because we already know who some of the clients are, some of our existing clients, there's a sales synergy that we'll realize. So, we have great market knowledge.
1260 COMMISSIONER DUNCAN: I'm just wondering, so your forecasts don't include any cost sharing, but would you say that your projected revenues reflect the fact that you do have these news reporters on the street here in Halifax, or not news reporters, sorry, sales force here?
1261 MR. ED TORRES: Yeah, the revenue is -- the way we come up with the forecast is, we looked at historically when we open up a market what kind of percentage of sell-out we've been able to achieve and we start with the total available inventory. That's how we come up with the revenue numbers.
1262 We also look at the financial -- the CRTC financial numbers to make sure that our projections are in line with what the market is.
1263 COMMISSIONER DUNCAN: Could I just -- my questions might not follow quite in the sequence, but I'll just follow along with the way that I had written them when I -- and probably won't come back, some of them.
1264 But you explained that Skywards provides services to radio stations in exchange for commercial radio air time which you aggregate and sell.
1265 And I understand, as you just mentioned, that you provide services to radio stations in the Halifax market, you mention in your brief specifically Dartmouth but -- in the Halifax market.
1266 And, so, I'm wondering how is that going to impact the business you're currently doing?
1267 MR. ED TORRES: Well, we think it's going to have a positive impact on the Skywards business. Certainly we saw in Ottawa -- when we were awarded the licence, we saw a positive impact.
1268 And, so, while you may think, well, does that not put you in a position to compete with your other radio stations, would that not make them think twice about taking your service?
1269 You have to understand, because we sell air time, we can't go and take the local sales client from the radio station that's our affiliate. So, we have to be very careful. We have to develop new business, business that can't be challenged by the radio station. So, you know, we call the bake shops, right, we call the advertisers that aren't doing radio.
1270 Here in Halifax we have great -- we've had great success leveraging relationships with Hakim Optical who does very little radio, but they do a lot of print. We have an established relationship with them. So, when we arrived in Halifax, we brought them as a launch sponsor. So, a client that was doing no radio in this market is suddenly spending 25, $30,000 annually.
1271 PJ's Pets is another example. Very heavy into print, tried us for four weeks on a very local basis in Edmonton. We leveraged that local buy into a buy that's now a national buy.
1272 You know, the Snowmobile Association of Nova Scotia had never done radio before, Duralite.
1273 So, these are all clients that we've been able to sell into this market and they're clients that we will go back to and say -- because invariably selling 10 seconds of air time, and any sales manager will tell you that, I think it's the toughest part of radio.
1274 We can't do a jingle, we can't do a live remote, we can't do any type of promotions. For the most part that's -- we could go to Hakim now and when they open a new store here, or we could do an annual remote live broadcast sale promotion.
1275 Those are the kind of synergies that Skywards will bring into the market.
1276 COMMISSIONER DUNCAN: So, the Skywards spots, the spots you're getting there and selling are generally 10 seconds; is that what you're saying?
1277 MR. ED TORRES: Yes.
1278 COMMISSIONER DUNCAN: But then your own radio station they'd be longer, just so that I understand.
1279 MR. ED TORRES: Well, I mean, we wouldn't jeopardize the Skywards buy that's being handled by a rep in Toronto, but what we would do is we would leverage the relationship that we have with the Hakim buyer and we would say, look it, can we do a remote for you? Do you want to stencil our van? You know, can we make you the official eyeglass provider, you know.
1280 So, again, we're looking to leverage existing relationships, not at the risk of cannibalising our existing revenue.
1281 MR. FRANK TORRES: And just to try to provide a simplified term to it, it's an upsell vehicle, it's a tremendous upsell vehicle with a lot of opportunities to market, cross-promote that we simply don't have at our disposal right now.
1282 With the radio station at full service, then it's an upsell for a lot of our existing customers.
1283 COMMISSIONER DUNCAN: But it won't harm your relationship with your existing -- with the existing radio stations; is that right?
1284 MR. ED TORRES: Well, it shouldn't because they weren't getting the local Hakim buy before we arrived. Now, all of a sudden we've brought this advertiser to radio. So, you know, it shouldn't under -- if our affiliates are reasonable, and they are, we're really not competing against them. We're trying not to compete against them.
1285 MR. TROTTIER: Well, the other thing can happen too, we have to give more services to our own station here in Halifax, so we have more services to give to other stations.
1286 So, perhaps we're going to have more station with us in the Maritimes because we're going to do more business report and maybe we can do business report for the Maritimes itself. So, we can offer different services, so maybe we're going to have other station will go with us.
1287 So, that will be a positive impact on Skywards itself, not just for the radio station.
1288 COMMISSIONER DUNCAN: So, when you're using the Hakim example, you're not currently promoting or selling their products in this market?
1289 MR. ED TORRES: Yeah, they're currently an advertiser, so that they're buying 10 seconds.
1290 COMMISSIONER DUNCAN: Here in the Halifax market --
1291 MR. ED TORRES: Yes.
1292 COMMISSIONER DUNCAN: -- through you?
1293 MR. ED TORRES: Correct.
1294 COMMISSIONER DUNCAN: Okay.
1295 MR. ED TORRES: Yeah.
1296 COMMISSIONER DUNCAN: All right, then if you think that's going to be done. Okay. All right then.
1297 So, then in your -- I notice what struck me looking at the projections of the three applicants that, you know, the projections aren't all that much different, they're in the same ballpark.
1298 And I think you had 50 percent attributed to new clients, people not currently advertising in the market, I think that's what your percentage -- which is quite high, and I'm assuming that that's because of your current relationships at Skywards that you're going to be able to do that.
1299 MR. ED TORRES: Yes, and I've just given you four examples of clients --
1300 COMMISSIONER DUNCAN: M'hmm.
1301 MR. ED TORRES: -- that advertise with us. One was sourced out of Edmonton through our Edmonton office. The other -- yeah, the other three were sourced out of our Ottawa -- or our Ontario markets, and including the Snowmobile Association of Nova Scotia because of a relationship that we have with the Ontario Federation of Snowmobile Clubs.
1302 COMMISSIONER DUNCAN: So, if I was a listener, or I am a listener in fact, in the Halifax market, would I hear your reports that you're doing for your clients currently through Skywards; would I hear those reports duplicated on your new station, the identical report or...?
1303 MR. ED TORRES: No, no. Every one, every station gets a custom report. So, there's no duplication of reports. And it means our labour costs generally at Skywards is higher than a radio station per inventory.
1304 So, if you were to look at the financials of Skywards the programming line is a lot heavier, you know, it's closer to 45 percent as opposed to 38 percent with the radio station.
1305 COMMISSIONER DUNCAN: Okay. So, you're saying that it will have no negative impact on your current business and it could be positive -- would be positive?
1306 MR. CLARKE: Yes, it would -- it would be very positive for us.
1307 We do a number of promotions as well too that Skywards develops. I'm a Director of Business Development there, so it's my job to come up with creative ideas.
1308 I could give you an example. We helped Coffee Time with their flip-to-win promotion, right, and what we do is we get the partners involved in that. And what happens is, say, we'll get you five partners, we'll get you product for your flip-to-win promotion and you spend your advertising budget with us.
1309 Now all we have to give them are 10-second tags, but by us having the radio station now in Halifax we'll also be able to get more revenue to go toward 30-second inventory, right, which is increasing the amount of money that we normally get from them.
1310 COMMISSIONER DUNCAN: M'hmm.
1311 MR. FRANK TORRES: I think just for one final point on that, not to belabour it too much, but because we go out and source non-traditional radio clients or non-existing -- non previously existing radio clients, what we find is that because of the nature of the quality of the service that we give them, we open the doors to radio to them and they often end up buying our affiliates as well.
1312 So, we'll introduce PJ's Pets into a market and they'll -- our campaign will be successful and then we will recommend other radio stations for them to buy in the market, and they'll make that buy and maintain our buy.
1313 So, it absolutely becomes new money end over end and that's why our projections are set up that way.
1314 COMMISSIONER DUNCAN: Okay. And that's what you're referring to when you say, non-traditional, it's people that are generally not --
1315 MR. ED TORRES: Yeah. And, again, we -- I mean, sometimes in describing Skywards we sometimes think that people don't get what we're all about because we're really a radio station --
1316 COMMISSIONER DUNCAN: I feel like I've asked you some of these questions before.
1317 I think you might be referring to me there.
1318 MR. ED TORRES: No, no. Well, I mean --
1319 COMMISSIONER DUNCAN: I'm trying very hard.
1320 MR. ED TORRES: We essentially are an out source for the radio station, we deliver all our content through the Internet. A lot of the times you don't realize you're listening to a Skywards report or a Skywards advertisement.
1321 So, and we do this all under the surface, but the underlying -- the linchpin to the business model is we can't take money out of the pockets of the radio stations. If we do, we wouldn't have affiliates.
1322 So, non-traditional is where we have to be.
1323 COMMISSIONER DUNCAN: And why do you suppose that those advertisers that you refer to as non-traditional are not advertising on radio in Halifax, because they don't have sales teams here that think of these people or do you have a unique way of identifying them, or...
1324 MR. ED TORRES: I think in the case of the examples that we've given you, you know, and if you were to look at a broad cross-section of our advertisers, they would fall into two categories. They are, they've been overlooked by radio stations or they've come to radio as a result of an existing relationship that we've built, not necessarily in this market but elsewhere.
1325 COMMISSIONER DUNCAN: M'hmm. Okay, all right. I won't belabour it, I'm just sort of thinking to myself here that maybe when you come into the market and were established in the market then your relationship with some of these other stations might change in as much as they might think, well, you know, that was our client, we identified them first.
1326 MR. ED TORRES: It's -- and, I mean, that's a very important question and I think it's certainly something we grappled with when we decided strategically that we needed to get into radio station ownership.
1327 We can follow a U.S. example and that's the one of Metro Networks, which is owned by CBS Radio, and it does business with 8,000 radio stations.
1328 In fact, it was doing business with about 4,000 Clear Channel radio stations, which Clear Channel when it hit 4,000 and Clear Channel finished their consolidation they said, wow, we have to start our own traffic division because this is a competitive force.
1329 The Clear Channel traffic network only ever got up to 300 affiliates. So, Clear Channel is still using Metro/CBS reports.
1330 Astral operates Orbit Media and, so, we're not the only people providing a service like this in Canada. Astral provides the House of Blues Show that Kim referred to, that's a Dan Akroyd show, they provide it to Rogers in Ottawa and, as a result, Astral gets that inventory to aggregate and sell.
1331 Well, Astral has four stations -- well, three stations in that market. Rogers has five. So, you know, there's -- it's not a unique case, it happens.
1332 Astral is -- and Astral's being doing it under Orbit which was previously Sound Source for 20 years.
1333 COMMISSIONER DUNCAN: Thank you. That's helpful.
1334 I notice that you mention about your website will be commercialized, and I think again you commented to some extent on that earlier.
1335 And I'm just wondering if you can provide us with a breakdown of the portion of your projected revenues that are attributed to that?
1336 MR. ED TORRES: We haven't put any of the Internet revenues, the multi-media revenues into the financials. So, this is strictly for the radio station as a stand-alone. We've done that with all of our applications.
1337 Although the Internet's going to be a very integral part of what we do, we're already seeing some of the interviews -- some revenues from the Blues in Canada website which we started to stream Canadian content blues music on two or three months ago. So, we're already seeing revenue from that.
1338 But for the purposes of these applications because it's hard for us to get a handle on how we're going to -- what level that Internet will be monetized at, and I think we have these discussions every day at our office, and it's a conundrum I think for print, it's a conundrum for everyone.
1339 So, we've again taken a conservative route towards forecasting our revenues and we've left it out.
1340 COMMISSIONER DUNCAN: Those three. And would that be the same then when you refer to the syndication of some of the shows, revenues from that are not included in here?
1341 MR. ED TORRES: Yes. And, again, we took a keep it simple approach to the financials.
1342 Certainly if we make any money from syndicating shows, which is going to be very central to what we do. When we produce something on DAWG FM in Ottawa or in Halifax, we're going to use our already existing Skywards distribution network. So, if it's a specialty program or if it's a news feature, anything, spoken word feature, we're going to put it up there and see what kind of revenue we can drag out of, you know, one of our affiliates in Prince George.
1343 COMMISSIONER DUNCAN: But, again, it won't be in revenues, possibly in a different company, or it's not going to be reported in your radio revenues?
1344 MR. ED TORRES: It's not part of our financials right now, but certainly there will be a charge for the syndication to Skywards, so...
1345 COMMISSIONER DUNCAN: You're going to sell it to Skywards?
1346 MR. ED TORRES: Yeah. Well, we -- with most of our agreements when somebody -- when a third party provides programming, we'll possibly joint venture it, so, we'll split the profits. So, there will be revenue in the hands of DAWG FM and there will be revenue in the hands of Skywards.
1347 COMMISSIONER DUNCAN: Okay.
1348 MR. FORD: I think just to add onto that, currently it's still very new to us as to what the actual effect was going to be. That's the reason why we decided to be more conservative in our projections.
1349 But certainly if it does materialize then it will appear and if it's a source that's sourced out of the DAWG operations, it will be DAWG's revenue.
1350 COMMISSIONER DUNCAN: Okay. Thank you.
1351 I noticed with respect to your online survey there's a page in your brief at page 38 and you make the statement that in arriving at your conclusions that 89 percent of the respondents had indicated that they would increase their time spent listening to radio of an all blues format radio station if one existed in Halifax market.
1352 And I noticed one of the comments on the list looks to me to be clearly from a Toronto resident. And, so, I just wonder, are you able to -- like, when you did this assessment, were you able to restrict it to people from the region, from the city?
1353 MR. ED TORRES: We haven't. That was our original survey and certainly we've talked about using surveys to narrow in on a certain area for our applications.
1354 So, we've talked about it, but that is a very broad survey, of course. We don't -- we ask for the people to volunteer their information where those comments are coming from. So, we do know how many have come from Halifax, we do know how many come from Toronto, but certainly, you know, the comments -- and we just cut and paste the first hundred comments I think on that.
1355 COMMISSIONER DUNCAN: But you're satisfied that 89 percent is referring to the Halifax market?
1356 MR. ED TORRES: Well, I think that our research that we've done in Halifax which, the professional, the independent research, that speaks to the Halifax market with respect to out of market tuning.
1357 I think that with the survey, because it was on a Blues in Canada website, you know, you have to look at those results. They're obviously not scientific and obviously there's a lot of blues fans that are driven to that site, so you may end up with a higher than...
1358 But I think it's fair to say that, you know, if you asked a hundred people, hey, would you increase your time listening if we gave you more choice, they'd probably say yeah.
1359 COMMISSIONER DUNCAN: Now, from your point of view because your format is, you've clearly indicated, quite unique from the other two applicants, and from your analysis of the market, would you think that the market could -- could you succeed in this market if we licensed two?
1360 MR. ED TORRES: I certainly think that we could and, again, we could for some of the other points that we've talked about.
1361 The fact that we already have an operation here. We have great market knowledge. We have people on the ground. There's certain synergies that Skywards is going to bring.
1362 But also that -- one point that we really haven't made is the audience. The blues audience is very loyal and the marketing to that blues audience, you know, we've encountered blues venue owners, blues fans, blues festivals, they all can't wait for us to get licensed because they're going to spend their money with us.
1363 And, so, in terms of coming to the market with already a very loyal fan base that has higher than average disposable income, I think those are the reasons -- the three main reasons why we think the market probably can support us and another applicant.
1364 COMMISSIONER DUNCAN: Okay. It's always a dicey question because you wonder, you know, about the answer, but --
1365 MR. ED TORRES: We try and dance around it.
1366 COMMISSIONER DUNCAN: -- I appreciate you're trying to answer it. Thank you. Because it is unique and I see that it is unique.
1367 I just want to just take a second here. I noticed in your comments, you're talking about region-wide competitions to select a band to be the local headliner in the Dutch Mason Festival and the International Blues Festival in Memphis.
1368 And here I think you're talking about -- yes, you are talking about your CCD initiatives. But I don't suppose the CCD money would be used to finance people going to Memphis, is that -- or do you interpret that differently than I would?
1369 MR. ED TORRES: No, no, I think that's an excellent question.
1370 No, I don't think the CCD funds would be used for that. I think what we -- and I'll give you an example.
1371 In Ottawa, the Ottawa Blues Society who we partnered with -- very closely with to put the Ottawa application together, when we got the licence issued on August 26th they were re-energized. They're a bunch of volunteers and they go through their highs and lows.
1372 The energy that they got from that licence application made them do two things. First of all, the secretary of the Ottawa Blues Society went out and bought a licence plate that says 101.9 DAWG FM. So, it's already taken.
1373 The second thing that they did was they put together a very quick blues band competition, so -- and this is, again, they were inspired by the licence issue and they weren't going to do the blues competition, they usually do it, it's a big hassle to organize. Inspired, they in two weeks put together a blues band competition, the winner of which would go to Memphis.
1374 They asked us to judge, so Todd and Yves and I acted as judges as well as members from the Ottawa Citizen and, so -- and they sent that band, Monkey Junk, and lo and behold they came in third, right.
1375 So, they competed against bands from across the world and really did Canada proud.
1376 Monkey Junk's music is now airing on CBC. So, last Saturday I got a call from somebody, just heard your band Monkey Junk playing on CBC. So, they're getting national exposure now as a result of a licence that you issued on August 26th.
1377 So, I think that that's where the strength of the radio station comes in, it comes in the support that we're going to be able to provide to the East Coast Blues Society and they're going to, in turn, you know, make that support realized for artists.
1378 COMMISSIONER DUNCAN: Thank you.
1379 MR. ED TORRES: I get excited when I tell that story.
1380 COMMISSIONER DUNCAN: I notice you mention a few times, and I believe in your brief as well, about Canada and abroad. So, are you currently selling into the States or...
1381 MR. ED TORRES: We do syndicate programs in the United States and it's -- they're mainly spoken word features.
1382 The interesting -- the interest that we've received from abroad just on the blues side has been very, very intriguing and positive. So, we have an inquiry from Argentina that wants some syndicated programming, a radio station in Capetown, South Africa, a Spanish radio station and they want to reciprocate.
1383 So, they want to send us their blues material and they want us to send them their (sic) blues material.
1384 And the beauty of what we do through Skywards is we have that distribution network already set up. So, it's just a page, you enter your member ID, boom, there's your show.
1385 So, I mean it's very exciting. We are chomping at the bit to get our Ottawa station on the air so, again, we can realize some of that potential.
1386 COMMISSIONER DUNCAN: Thank you. And I think this is my last -- that was my -- I think that's it.
1387 I just wanted to -- Mr. Ford, when you were speaking about even though -- even through the economic downturn Skywards' year over year revenues are up 30 percent as of, it reads March. Is it March of this year?
1388 MR. FORD: That's correct.
1389 COMMISSIONER DUNCAN: Okay.
1390 MR. FORD: March, 2009.
1391 COMMISSIONER DUNCAN: Yes. Thank you.
1392 So, those are my questions. Thank you very much.
1393 MR. ED TORRES: Thank you.
1394 THE CHAIRPERSON: Commissioner Patrone, please.
1395 COMMISSIONER PATRONE: Thank you, Madam Chair.
1396 I'll throw out a question about the format as well because it is interesting that you can describe "Layla" as a blues tune, because I know that there are purists out there -- perhaps your musicologist, I can see him smiling -- but who would argue that that's not a blues song at all.
1397 And I know you're not probably going to play Metallica, but it appears that the definition is so broad that it could encompass almost anything if you're including songs like that. You're not just -- and I realize that the idea of playing nothing but 12-bar blues all day may get extremely repetitive.
1398 But can you talk a little bit around how you're going to manage to live within the blues -- and I use I guess the term loosely as you have -- without gravitating towards what, you know, Q104 is doing, say?
1399 MR. ED TORRES: Excellent question and I know that you're going to get a lot of people jumping in on this, so I'll get my two-cents in here.
1400 It has to do mainly with the track. And really what we're trying to be is -- if you go to a blues festival, so I saw Matt Anderson who's an East Coast music award winner, fantastic blues artist, he was playing in my home town in Trenton and he opened up first song was a band, The Wait, right.
1401 So, if you go see a blues artist and you go to a blues concert, you have to expect that you are going to get some what the classic rock guys have taken and called classic rock.
1402 So, we have to paint it with a broad brush. It's a commercial radio station, it's not a CAT 3 radio station.
1403 And, so, "Layla", again while it may appear on the playlist, it's going to be diametrically opposed to where Q104 would put it on their playlist. They're going to put that in high rotation in their morning drive, we're going to stick it in the overnights and we're going to hope that people don't get too upset.
1404 You know, on the other hand, some of Eric Clapton's more bluesier tracks are going to be what we air in morning and afternoon drive periods.
1405 MR. BERNARD: With respect to "Layla" in particular, you know, it's definitely got a rock & roll feel to it, the electrified version of course, but if you listen to the lyrics of that song the lyrics themselves are bluesy type lyrics.
1406 And, again, that's -- when we're looking at, you know, what kind of tracks will fit within the format that we're -- the broad format that we're trying to develop, you know, the bottom line it will come to the operations director and the programming department, does that track have a bluesy feel to it, does it have a bluesy element to it?
1407 So, again, in the case of "Layla", that song again, while, you know, the lay person might consider that a rock song -- and Kim maybe you might want to correct me if I'm mistaken -- you're not going to find very many, you know, purist type blues fans I would say that would be offended or put off by hearing a song like that. Again, because in that particular example the lyrics are quite bluesy when you listen to them and understand what the song's all about, even though when, again, you listen to the electrified version, you know, it's not necessarily your standard 12-bar blues song with respect to the progressions and whatnot, but it's an example of a song that does definitely fit the intended bluesy feel of the station's programming, I would argue.
1408 MR. TROTTIER: But I think you're referring to rock tracks that we put -- that we have put in our playlist, but mainly we're working on our playlist on a daily basis right now and change is coming day after day.
1409 But the main thing is to understand that when you're going to a blues concert you're going to hear some rock songs, but go well with the blues spirit and it's those songs that we're going to play and our spirit that probably cause, you know, certain question right now, but when you're going to hear this station it goes well with the other songs.
1410 That's the main thing, right. So, so far we have made a lot of research about those songs with our blues fans to be sure that our P1 listeners don't change channel if they're listening to that song.
1411 So, we're working on it right now, but I can assure you that when the station will be on air, everything will fit very well.
1412 MR. O'BRIEN: Muddy Waters wrote a song in 1975 called "The Blues Had A Baby and They Named the Baby Rock & Roll".
1413 I don't want to get into a music breakdown of "Layla", although it is based on the pentatomic blues scale with a flatted 5th when he plays the guitar.
1414 Having said that, you will get as many different answers as I said earlier, what is the blues, what is blue? I guess the challenge here is to say if the blues had a baby and they named the baby rock & roll, is it -- okay, that's the first generation and how many generations do you go down before it doesn't look anything like it's progenitor.
1415 I think rock & roll -- you talked earlier about the 50s and 60s. I mean, "Johnny Be Good" was just 12-bar blues at quadruple the speed, exactly the same structure.
1416 This is something that they will be struggling with and there are purists already, there are purists who don't think you should be playing anything except acoustic blues with harmonica that was recorded in 1927 by Alan Lomax.
1417 There are purists in every form. There are some people in classical music who think, you know, good music died with Beethoven.
1418 This is something that -- as you've said, this is something that will be ongoing.
1419 COMMISSIONER PATRONE: Yeah.
1420 MR. O'BRIEN: Certainly if we and the Blues Society can be of any help in terms of refining what that might be and where -- what lines may or may not be crossed. It's a moving line, it's a moving target.
1421 COMMISSIONER PATRONE: Yeah.
1422 MR. O'BRIEN: But I think it would be easily identifiable as within and outside the family.
1423 COMMISSIONER PATRONE: Okay, thank you.
1424 I want to ask you one other question, just a quicky relative to the website and your plan to include a portal that allows listeners to download emerging artist tracks.
1425 And I think you mentioned it was going to be revenue neutral for you. So, does that mean that it's not a revenue source for you, or would all the proceeds go to the artist? Do you maintain some of it to manage the site, or do you see it as a revenue generator for your company?
1426 MR. ED TORRES: Oh, the initial phase that we've planned for would be, you know -- I mean, instead of the artist getting three-cents for a download from iTunes, they give the artist 97-cents and use the three-cents for maintenance of the site because we're going to need someone to update tracks and there's going to be some administration that comes out of it.
1427 So, that's how our initial model is set up.
1428 It's an idea. I think it will work well because, again, our P1 listener is not -- is going to find -- they find it difficult to find the music because it's mainly not out there in the public domain as other types of music are.
1429 So, our idea is just to make that easier for the listener.
1430 MR. TROTTIER: I have experience being program and musical director of a CAT 2 -- a CAT 3 station, and I can assure you that it's completely different of an AC station or a rock station because you're playing different music.
1431 So, the listeners are calling all the time at the radio station to know what's the title and everything, and we have phone calls from the people -- the record -- the people who sell the records to know what song it is. So, it's all the time -- it's completely different of a popular radio station.
1432 And I think it will be the same thing for our station, that that's why we'll simply say to the people, go to our website and you can buy that. So, it will help those artists to sell their album, their CDs and I think it will have a great success because it will be completely different of an AC station.
1433 Because a lot of time the people going on web and download for free, everybody knows that, you know, the songs, but our artists a lot of time they are not on those websites. So, they will have money from our website.
1434 COMMISSIONER PATRONE: You're referring to BitTorrent and the rest of those sites?
1435 MR. TROTTIER: Yes. Well, we know -- I don't know exactly because I don't do -- I'm not that kind of generation, but my daughter do that.
1436 But I'm pretty sure that blues artists from Maritime right now, I don't think they are on those sites right now, so the people cannot download free their music.
1437 But that's a good thing, so they can go -- they can be on our website and have money for that.
1438 COMMISSIONER PATRONE: Thank you very much.
1439 THE CHAIRPERSON: Thank you.
1440 Commissioner Menzies.
1441 COMMISSIONER MENZIES: I'll try to be quick.
1442 How soon would you launch if you got a licence?
1443 MR. ED TORRES: We were targeting 18 months for Ottawa and I would assume that we would target a similar time frame, 18 months.
1444 COMMISSIONER MENZIES: From the time of the decision?
1445 MR. ED TORRES: Yes, correct, from the time of the decision.
1446 COMMISSIONER MENZIES: And we heard quite a bit earlier, discussed a lot about the difficulties of an independent, the challenges faced by an independent in a market where there are multiple ownerships by large groups.
1447 What's your view on that and how can you convince us that a company of your size won't get squashed by the big guys?
1448 MR. ED TORRES: Well, you know, we've been doing this for 17 years, we already are in the market, we already operate a profitable enterprise in the market that sells radio advertising.
1449 We have a number of synergies that we can use from our existing radio station. We think that, and our strategic plan on owning a radio station is going to be beneficial to our associated broadcast company, so...
1450 And, again, the nature of the audience, because the audience is -- doesn't have this as an option because the advertisers that are looking to sponsor blues-related festivals, venues, they don't have that option.
1451 For those three reasons, our market knowledge, the synergies, because of the audience and the audience desire to have music, that's going to ensure our profitability.
1453 MR. FRANK TORRES: I think also markets like Halifax and a lot of major markets across Canada are very top heavy with multi-station ownership groups and quite well funded ownership groups, but it seems to me they're weak in the middle.
1454 And in our conclusion, as I've mentioned, you know, we don't necessarily need DAWG FM to be the number one preset, but we'll be the number two preset.
1455 And to us, and if you look at our financial and our reach calculations, we think we will provide a very solid, very stable middle, upper middle and that's where we can exist quite happily and stay out of the feet of the giants and take our place in the market and provide a good service for Halifax residents.
1456 COMMISSIONER MENZIES: Thank you very much.
1457 THE CHAIRPERSON: Thank you.
1458 I do have a couple of follow-up questions.
1459 Are you able to provide us with updated proof of financing within 10 days?
1460 MR. ED TORRES: We have that here and we can provide it at the end of this hearing.
1461 THE CHAIRPERSON: Excellent. Thank you. So, within 10 minutes?
1462 And because I know that you never get tired of talking about your format, I am going to ask you a couple more questions about that and ask you to be quite specific.
1463 You are committing to 20 percent Category 3. And based on Mr. O'Brien's various sub-categories of the blues, and I haven't written them down, what I'd like to know is, since sub-category 34 of our content category says that blues includes classic blues, Delta blues, Chicago blues and contemporary blues music, what I would like to know is how does that definition limit you in what you want to accomplish with this radio station and why, therefore, is it only 20 percent of Category 3, why didn't you go to the upper limit of 30?
1464 MR. TROTTIER: First of all, it's 20 percent minimum, so it will be probably in real life 28, 29 percent.
1465 So, we have to play 70 percent to keep our CAT 2 licence, so the perfect goal that we have in mind is 71/29. So, we'll play near 30 percent of CAT 3 on the station.
1466 THE CHAIRPERSON: But that also includes the one hour of Sunday morning Canadian gospel music --
1467 MR. TROTTIER: Yes.
1468 THE CHAIRPERSON: -- does it not? And thereby even decreasing by one hour music that is solely blues oriented as described in our categories.
1469 MR. TROTTIER: Yeah, but blues music it's one of the only music was divided in CAT 2 and CAT 3 by the CRTC, in fact, because rhythm and blues is in CAT 2, blues rock is in CAT 2, soul -- so, there's a lot of blues music in fact also in CAT 2.
1470 So, it's not true that you cannot play blues and blues is not just CAT 3, blues is in CAT 2 too.
1471 I just give you the example of Downchild Blues Band. Downchild Blues Band "Flip Flop and Fly" is a CAT 2 song, but in fact we'll play more than 70 percent that is blues, but it's not CAT 3 blues, it's --
1472 MR. ED TORRES: I think -- yeah, it's --
1473 THE CHAIRPERSON: I think you guys are going to have a challenge when you categorize your music.
1474 MR. TROTTIER: Well, we already have this discussion with Steve and it's -- we have to listen to songs by songs, is it a CAT 2, is it a CAT 3, is it -- but this job is already done, it's visible, we can do that and we know that we will be able to have a blues station with 70 percent of CAT 2 music.
1475 THE CHAIRPERSON: Is this one of the reasons why you won't commit to the 30 percent Category 3 --
1476 MR. TROTTIER: No.
1477 THE CHAIRPERSON: -- just in case there is that discrepancy between what is considered a CAT 2 and a CAT 3?
1478 MR. TROTTIER: Yes, just want to be sure that we're going to respect the licence. We can say 25 with five percent gap. But in Ottawa we have a condition of licence of 20 percent, so we figured have that -- we should have that same condition of licence for Halifax as well, so...
1479 But our main goal is going to be to have 71 and 29 percent.
1480 But I will repeat that, this 30 percent of CAT 3 music we'll not only play at night or Sunday night, whatever, we'll play between six and midnight seven days a week.
1481 THE CHAIRPERSON: And, you know, I hope you can appreciate that one of the reasons we keep coming back at this is, for example, the Ottawa Blues Fest this summer -- and I know you guys don't program the Ottawa Blues Fest -- but, two of the headliners are Stone Temple Pilots, who I don't consider to be a blues band, and Kiss.
1482 MR. TROTTIER: We'll not play those artists though.
1483 THE CHAIRPERSON: No, but you know, that's what I mean. So, when I see something like that, well, you know what, blues is just a catch-all.
1484 MR. TROTTIER: No, it's -- I think it's not the same thing, because for the festival it just has changed the way to do the festival to catch a lot of people and they simply keep the name because it is very popular.
1485 But if you want to have success for a radio station, your music has to be tight and make sense. If you're too large, or whatever, you will not have success.
1486 MR. ED TORRES: Yes.
1487 MR. TROTTIER: So, it's -- you have to work on this on a daily basis and with your listeners as well and it will be very... well --
1488 MR. ED TORRES: Let me just, yeah, pick up on a couple of thoughts because, I mean, if we look at the Blues Fest, it started off as a blues festival and, you know, the management of that took it in a different direction.
1489 They still have Joe Cocker performing as a headliner and they have a number of local acts on stages around the festival, so...
1490 But it's interesting that they've kept the Blues Fest and the blues -- that blues festival is a way to bring people out and, again, it talks to why this format is going to be commercially viable.
1491 Frankfurt has had a River Fest, it's a small community of maybe 5,000 on the Trent River, they've had a River Fest since I've lived in Trenton for 15 years and nobody ever goes. It's on a long weekend in July, they have a bunch of performers.
1492 They called it a blues festival three years ago and all of a sudden the Frankfurt Blues Festival is pulling 15,000 people to the Trent River on a holiday weekend in July.
1493 MR. O'BRIEN: You raise a really good point and, honestly, as far as the Ottawa Music Festival, I would agree with you. I actually had to delve pretty deep to find -- I actually almost sent them an e-mail saying, can you tell me where I can find the Ottawa Blues Festival.
1494 In the categorization it is hard because the Rolling Stones album 1969 called, "Let It Bleed" had a song on that called "All My Love's In Vain". Now, was that a CAT 2 or a CAT 3, because the song was written by Robert Johnson. It was performed, actually quite well, by the Rolling Stones. So, is that a rock song or is that a blues song because it was sung by...?
1495 Led Zeppelin had a song called "Travelling Riverside Blues" which, again, was written by Robert Johnson in the 1930s.
1496 It is very difficult to categorize blues unless you say we're only going to have the original artist; i.e., Robert Johnson or Howlin' Wolf or Muddy Waters, but contemporary blues artists cover those songs, rock stars, rock bands cover those songs.
1497 You're right, it is very difficult. I would suggest that if you've got 29 percent which is identifiable as classic blues there's going to be spill-over. It's the nature of the category.
1498 Ray Charles is considered a great blues artist or a great soul artist or a great -- depending on who you ask.
1499 It is difficult, that's why --
1500 MR. TROTTIER: It is --
1501 MR. O'BRIEN: -- they say blues is the --
1502 MR. ED TORRES: It is hard to categorize those songs and that's --
1503 MR. O'BRIEN: It is very difficult to categorize those songs especially when you have --
1504 MR. TROTTIER: But we're working on this since two years now and I can tell you that when I'm listening to blues songs right now I can categorize in 10 seconds probably. No, we're pretty good at this at this moment, I will say.
1505 THE CHAIRPERSON: Thank you very much for those answers.
1506 Completely changing gears now, why did you choose 99.1 as the frequency?
1507 MR. ED TORRES: Very good question.
1508 THE CHAIRPERSON: Very frankly.
1509 MR. ED TORRES: Very good question.
1510 We looked at the two available frequencies and we thought that there would be a number of applicants on the other frequency.
1511 We thought that through engineering and some fancy engineering that we could make best use of the spectrum by co-channelling with an existing station in Nova Scotia.
1512 So, that's -- really the short answer is the frequency works for us, gives us excellent population counts and it maximizes use of the spectrum, because we have engineered it -- our engineers have also created the Parrsboro engineering document.
1514 MR. FRANK TORRES: If there's one thing we've learned a great deal of recently it's about engineering and frequencies and maximizing the spectrum.
1515 THE CHAIRPERSON: So have I.
1516 MR. FRANK TORRES: And the first thing we did upon choosing that frequency was contact Parrsboro within -- and they're here today and hopefully they'll give their version of the agreements that we have in place, because what we thought would maximize the use of the spectrum, and Parrsboro agrees, is to co-channel with them and to correct any interference issues that they have.
1517 And the initial Notice of Public Hearing, the applications weren't considered mutually exclusive, technically mutually exclusive. That was something that came in an amended notice.
1518 And the moment we got that notice, we were suite surprised by it because we had designed the whole plan specifically to exist as a co-channel with Parrsboro and we did submit further documentation in the hopes -- in conjunction with Parrsboro, in the hopes that the Commission would uphold the fact that our philosophy on it is to mutually co-exist and to correct any interference issues that Parrsboro may have.
1519 And, again, we just feel that that is the absolute best use of the spectrum is not to close out one channel for Halifax when we can co-exist with a channel in Parrsboro and provide a service right up and down the province.
1520 THE CHAIRPERSON: So, what is the agreement in place right now with Parrsboro and what technical amendments have you made in order to be able to co-exist with that community service?
1521 MR. FRANK TORRES: The Commission suggested that we submit a specific interference map that shows interference zones that Parrsboro would receive from us and that we would receive from Parrsboro.
1522 Accompanied with that, we both sent individual documents that stated that we had an agreement in place whereby we would correct our complaints of interference that were generated because of our co-existence and that we would cover engineering costs for that, which again is very easy to do when you're both working with the same engineers. Everything is completely above board and we have -- we have each other's interests at heart.
1523 And as recently as last week, we contacted the Commission to see if there had been a formal decision or if it was going to be considered mutually exclusive or considered co-existent, and we're basically -- and it was suggested to us to make our case and put everything on the record here, but...
1524 And I'm hoping that the Parrsboro submission will be right in line with what we've said, but we did agree to work cooperatively and co-exist.
1525 THE CHAIRPERSON: So, from your perspective, does it boil down to us being able to license you on 99.1 for Halifax end market and Parrsboro will continue in that community on 99.1 as well?
1526 MR. FRANK TORRES: Yes. And I believe Parrsboro is applying for --
1527 THE CHAIRPERSON: Yes.
1528 MR. FRANK TORRES: -- an upgrade to their signal. Absolutely. And they've identified --
1529 THE CHAIRPERSON: We could do both.
1530 MR. FRANK TORRES: I'm sorry?
1531 THE CHAIRPERSON: We could do both.
1532 MR. FRANK TORRES: Yes, absolutely. And we've identified regions based on our predict maps that may show interference and we would alleviate those, those regions so that they can provide the service to the community, which we think is absolutely -- absolutely credible and a certain place in our industry and we think commercial broadcasters need to always look towards community broadcasters to see where we can support them and co-exist.
1533 THE CHAIRPERSON: Okay. Well, thank you very much.
1534 Legal counsel.
1535 MR. MacINTYRE: I just wanted to clarify the dates for the two undertakings, not the proof of financing which we have today.
1536 The first one I guess was the -- where information is required in the application form in section 9.11.
1537 And the second was details on the Music Nova Scotia initiative, included in that a budget breakdown.
1538 So, any date -- does Monday work?
1539 MR. ED TORRES: Yes, we can undertake to have those filed with the Commission by Monday.
1540 MR. MacINTYRE: Okay. Thank you. That's all.
1541 THE CHAIRPERSON: Well, thank you very much, Mr. Torres, and your colleagues for your application this afternoon.
1542 MR. ED TORRES: Thank you.
1543 THE CHAIRPERSON: We will take a 15-minute break.
1544 Thank you.
--- Upon recessing at 1549
--- Upon resuming at 1612
1545 THE SECRETARY: Thank you, Madam Chair.
1546 For the record, Frank Torres, OBCI, has submitted proof of financing in response to an undertaking. This document has been added to the public record and copies will be available in the public examination room.
1547 We will now proceed with item 4 which is an application by Parrsboro Radio Society to amend the licence of the low-power community Type B radio programming undertaking CICR-FM Parrsboro.
1548 The licensee proposes to change the authorized contours by increasing the effective radiated power from 50 watts to 500 watts (non-directional antenna with an effective height of antenna above average terrain of 24 metres).
1549 The station would continue to operate on frequency 99.1 MHz (channel 256).
1550 Appearing for the Applicant is Mr. Ross Robinson.
1551 Mr. Robinson, you have 20 minutes to make your presentation.
1552 MR. ROBINSON: Thank you.
1553 Madam Chair, the Commission and Commissioners, I'm Ross Robinson, I'm here to represent Parrsboro Community Radio.
1554 The Parrsboro Radio Society operates of CICR-FM at 50 watts currently, need and have applied for an ERP increase to 500 watts in order to provide the coverage to the surrounding community of Parrsboro.
1555 These are the boundary lines of which are laid out by the Parrsboro & District Board of Trade and encompass: Southampton, Cannan, Five Islands, Bass River and Apple River and Port Greville, to name a few.
1556 Our local events involve all of these areas, tying us closer together in our local events and tying us closer together in our district with a community radio station that has already seen great results and listener feedback from our Parrsboro town operation.
1557 With respect to another application being heard -- which has been heard in the setting to the Commission; namely, Frank Torres, the application to operate a commercial FM undertaking on the same frequency of 99.1 MHz out of Halifax, both our and Mr. Torres have exchanged written non-compliant letters under the eye of two technical consultants so that the Commission can consider these two applications as totally independent of one another and not mutually exclusive from the technical standpoint.
1558 And both stations, if approved, will co-channel each other to the maximum spectrum using the final details which will be documented by Industry Canada appropriately.
1559 We ask the Commission to favourably consider our application as the communities that are and will be served by this community undertaking approval are presently not represented by any other broadcaster, public, private, commercial, community or university campus.
1560 And, thus, approval of this application will provide the area which is very rural with a voice on the FM and information spectrum in their residents as well as significant tourist population which is presented predominantly during the summer months.
1561 I thank you.
1562 THE CHAIRPERSON: Thank you very much, Mr. Robinson, for your presentation here this afternoon.
1563 One thing I'm not clear about in your application is the difference between the communities you serve now with your licence --
1564 MR. ROBINSON: Yes.
1565 THE CHAIRPERSON: -- the way it was granted and -- the difference between that and what additional communities you will serve if we approve your power increase.
1566 MR. ROBINSON: The additional communities are just our surrounding communities, which is probably border line within 45 to 50 kilometres which the main focus spot is Parrsboro, and in our district --
1567 THE CHAIRPERSON: But you serve Parrsboro now, obviously.
1568 MR. ROBINSON; We serve Parrsboro, but Parrsboro is part of this district underneath the Board of Chambers. All the events that tie into each separate little community here ties in with Parrsboro.
1569 If there's something going on in Avongate, Parrsboro goes down. If Avongate -- if Parrsboro is having something, Avongate comes.
1570 Same with Porkerville, Southampton, Five Islands, Economy and Bass River. They're all in the community area.
1571 And with the closures of like South Compton Community Care Centre, we have a lot of, in our rural area, seniors, and the seniors would have to drive to town then find out that this was closed or -- due to lack of physicians that we have in our small town.
1572 But with the information we can get out to them with the events -- local events and important things like that to our seniors, that makes a big difference. We have them calling all the time. We can get you in our car, but we don't want to set out in our car and listen to you, we want to be in our house listening, so...
1573 THE CHAIRPERSON: By how much will the population increase that will be able to hear your radio station if we grant you --
1574 MR. ROBINSON: The population will probably double.
1575 THE CHAIRPERSON: It would double?
1576 MR. ROBINSON: Double.
1577 THE CHAIRPERSON: And, I mean, the reason I'm asking these questions is because, you know, essentially you were just licensed. I mean, you launched 17 months ago, you launched October, 2008.
1578 MR. ROBINSON: Yes, we did.
1579 THE CHAIRPERSON: And you're coming back to us with a power increase that will take you from an unprotected status to a protected status in a relatively short period of time.
1580 MR. ROBINSON: Yeah.
1581 THE CHAIRPERSON: And we want to get to the main elements as to why it is that you have applied for this power increase.
1582 And typically when applicants come before us with an application such as yours there are two reasons: They can't adequately serve their community, and they are in such dire need financially that they just can't make it if they don't get the power increase.
1583 And these are the two main criteria, and I don't see any of that in your application.
1584 MR. ROBINSON: I'm sorry, I -- at the time when we applied for the application for the 50 watts we were told to go in as a low power.
1585 We have been on the spectrum doing special events for the Parrsboro and surrounding area since 1999 and we've served our community each year as a special events radio, sometimes doing three to four months of special events each year.
1586 When we -- we waited until we had a permanent place we could move the radio station, we went with 50 watts, we figured we may be able to cover those areas. We've had complaints right along about not being able to reach the people.
1587 It was suggested to us to go at 50 watts at the time due to we didn't have enough money raised to buy the equipment. It's been all volunteers. We didn't have a place to put the radio station.
1588 There was a lot of factors that maybe weren't wrote in the technical brief that should have been. I apologize for that.
1589 We're all volunteers, no paid position whatsoever, but we do a great service to the community.
1590 THE CHAIRPERSON: And how will the service to the community be enhanced, because if you're now going to serve double the number of people, you're going to have to provide these people with some kind of programming that is reflective of the community that they live in, and how are you going to do that?
1591 MR. ROBINSON: Okay. The events that unfold here in our community, such as closures, cancellations, all these areas come to -- all these little communities come to Parrsboro, whether they see doctors, to go to school, any event that's going on like the theatre -- live theatre, Ship's Company Theatre, the events that are happening there. We have all different programs for seniors, different testings that they do for rural people for water. All of the benefit for the community.
1592 One thing I do want to make clear, we're not increasing our power really to become a protected site, we're increasing our power to become a Bible for the rural area, just to be able to get to these people that need to know about what's happening in the area.
1593 THE CHAIRPERSON: Will any of those volunteer positions become full-time or even part-time paid positions?
1594 MR. ROBINSON: We were looking at that already and, yes, there's definitely going to have to be one paid position.
1595 I don't know if I'm doing something down here or --
1596 THE CHAIRPERSON: You're popping your "ps" there.
1597 MR. ROBINSON: I'm sorry. I'll stay back a little bit.
1598 THE CHAIRPERSON: Okay.
1599 MR. ROBINSON: Okay. Definitely going to have to be one paid position. Right now there's about 10 or 12 of us and we're getting pretty tired of trying to keep everything going.
1600 THE CHAIRPERSON: I appreciate that it's not a licence renewal hearing, but I do have your revenue projections from your original application and I'm just wondering if you can generally tell us how you're tracking, comparing today to what you had projected at the time that you first applied?
1601 MR. ROBINSON: As you know, a small community and especially with the economy as bad as it is, it's really hard to draw a sponsorship from small business.
1602 Everybody enjoys bingo. We decided we'd develop a radio media bingo for the community, we're also giving the money back by prizes given out. It really took a real good spin for the community. It gave us enough money to pay our power, pay for the rent for the place and also it looks now that we would be able to hire someone to help us with the administration, keeping all of our books and stuff like that.
1603 And that's what we projected. Although we are still out there if someone does want to come sponsor with us, but we don't -- we do not want to push them. We had about two businesses closing up in our area.
1604 I guess that's the way we're going to raise our money and I do believe a lot of people travel in from these communities to play the bingo. So, if you have someone in Avongate that's travelling up and says, you know, I'm sorry, Ross, we couldn't play bingo that weekend because the roads were bad, we couldn't get up there, or...
1605 It's a real close community, this whole spectrum. What I'm saying is it's not like -- we know pretty near everybody from each community, so it's a close place.
1606 THE CHAIRPERSON: But, for example, just to be specific, this would be -- if you launched in October, this would be year two --
1607 MR. ROBINSON: Yes.
1608 THE CHAIRPERSON: -- of your operations. And originally you had projected $49,250 in revenue.
1609 MR. ROBINSON: M'hmm.
1610 THE CHAIRPERSON: For this year.
1611 MR. ROBINSON: Yes.
1612 THE CHAIRPERSON: Are you close to achieving that or are you under -- are you under or over that amount for the year?
1613 MR. ROBINSON: We're probably going to be over.
1614 THE CHAIRPERSON: By 10 percent?
1615 MR. ROBINSON: Probably about 10 percent.
1616 THE CHAIRPERSON: Probably about 10 percent?
1617 MR. ROBINSON: Yeah.
1618 THE CHAIRPERSON: Okay.
1619 MR. ROBINSON: We also received a non-forgivable grant from the government that gave us money towards our equipment, new equipment purchase, it was approved, of 25,000. So, that definitely helped us out.
1620 THE CHAIRPERSON: Is that from the provincial government?
1621 MR. ROBINSON: Yes, it is.
1622 THE CHAIRPERSON: Okay. I want to talk to you about the agreement that you have in place with the Torres application.
1623 And in your oral presentation this afternoon you had exchanged written non-compliant letters. What does that mean, non-compliant letters?
1624 MR. ROBINSON: Oh, non-compliant letters means that, at first I was a little worried about interference with the -- Halifax is two hours away, two and a half hours away from Parrsboro.
1625 The territory that I did have a chance to look at by our technical guy, Brian Sawyer did our technical brief, and at the time I didn't know that both of these technical briefs were being done by the same company, and they re-ensured me, showed me the -- I'm not -- I really don't understand all them, so -- but they do, so they pointed out I guess the exact interference lines which --
1626 THE CHAIRPERSON: That's why it's good to hire experts.
1627 MR. ROBINSON: Yes, so...
1628 THE CHAIRPERSON: And have you filed these letters with the Commission?
1629 MR. ROBINSON: The letter of...?
1630 THE CHAIRPERSON: With the Torres -- with the Torres Group, have you filed this agreement with the CRTC?
1631 MR. ROBINSON: I think they have.
1632 THE CHAIRPERSON: Okay.
1633 MR. ROBINSON: I think they have, yes.
1634 THE CHAIRPERSON: We probably should have asked them earlier, but they're in the room, so we're going to ask you guys in Phase IV.
1635 So, it's your understanding -- they said to us earlier this afternoon that from their perspective this agreement from a technical perspective would allow us, the Commission, to approve both their application for the use of 99.1 in Halifax as well as the power increase that you are applying for and you would operate on 99.1 in Parrsboro.
1636 Is that your understanding?
1637 MR. ROBINSON: Yes. Yes, it is.
1638 THE CHAIRPERSON: Do you know if the contours upon which this assessment was made are based on realistic contours or theoretical contours?
1639 MR. ROBINSON: I would say realistic. They pointed that out very clearly.
1640 THE CHAIRPERSON: What if on paper it all looks great, even if it is based on theoretical contours, but once you are up and running you discover that there is more interference than had been anticipated even by the experts; what will happen then?
1641 MR. ROBINSON: I do believe then we have the window of opportunity to work that out with each other. I trust in good faith that we'll both be honest with each other and it will work out.
1642 THE CHAIRPERSON: And they have indicated to you that they are willing to work this out with you?
1643 MR. ROBINSON: Yes, they have.
1644 THE CHAIRPERSON: In light of the call for commercial applications in Halifax, have you been able to do any work to find an alternative frequency for yourself in Parrsboro?
1645 MR. ROBINSON: We have asked Brian Sawyer to look at that option for us. He did not get back to me with another frequency channel, but he said he -- there was one out there. He did not get back to me though.
1646 THE CHAIRPERSON: And you don't know if that would be something that would be available to you on a low-power basis or if it would be at a full-power basis?
1647 MR. ROBINSON: No, I don't.
1648 THE CHAIRPERSON: Okay.
1649 I wonder if my colleagues have any further questions.
1650 Commissioner Patrone.
1651 COMMISSIONER PATRONE: Thank you, Madam Chair.
1652 Just in regards to the oral presentation, Mr. Robinson.
1653 MR. ROBINSON: Yes.
1654 COMMISSIONER PATRONE: You say that presently, if I refer to the last paragraph, the communities are not represented by any broadcaster, public or private -- public, private, commercial, community. Is that correct?
1655 MR. ROBINSON: Yes.
1656 COMMISSIONER PATRONE: I mean, CBC is presumably available out there; is it not?
1657 MR. ROBINSON: Well, in some places CBC does not come in, in some of the hollows that lie within the Economy/Moose River area and also down towards the terrain of Avongate, Apple River.
1658 I've tried them myself and the way the contours of the land is shaped --
1659 COMMISSIONER PATRONE: Is valley.
1660 MR. ROBINSON: -- there are hollows there. But, honestly, with my car radio on, and I drive down with 99.1 on, I can get it, but if you get out or if you selected another channel, you would not be able to get back to our frequency.
1661 COMMISSIONER PATRONE: So, it must be a unique area then not to be able to reach CBC Radio and those types.
1662 MR. ROBINSON: It's a real different terrain, if you take a look at it on the map. It's like a -- like Cape Breton's Cabot Trail, but it's like a mini Cabot Trail and goes into gullies and --
1663 COMMISSIONER PATRONE: Can you get New Brunswick signals?
1664 MR. ROBINSON: In some places you can, yes.
1665 COMMISSIONER PATRONE: But not consistently?
1666 MR. ROBINSON: Not consistently.
1667 COMMISSIONER PATRONE: Okay. That was the only question.
1668 MR. ROBINSON: The closet radio station is CKDH in Amherst and we couldn't even get them and I know they're switching to FM now, but we couldn't get them in those areas.
1669 COMMISSIONER PATRONE: Yet no one from your community has spoken to the CBC about this, about trying to improve their coverage in that area.
1670 MR. ROBINSON: Okay.
1671 COMMISSIONER PATRONE: Yes.
1672 MR. ROBINSON: Yes.
1673 COMMISSIONER PATRONE: Okay, thank you.
1674 MR. ROBINSON: Thank you.
1675 THE CHAIRPERSON: Commissioner Duncan.
1676 COMMISSIONER DUNCAN: I do have one question, Mr. Robinson.
1677 I can't actually see the places on the map because I can't read it and we can't find a magnifying glass.
1678 So, I'm just wondering, can you assure me that these communities: Southampton, Cannan, Five Islands, Bass River, Apple River and Port Greville are within your proposed 3mV contour?
1679 MR. ROBINSON: Yes, they are.
1680 COMMISSIONER DUNCAN: They are?
1681 MR. ROBINSON: M'hmm.
1682 COMMISSIONER DUNCAN: Thank you very much.
1683 MR. ROBINSON: I have problems seeing them myself, so...
1684 COMMISSIONER DUNCAN: Thank you.
1685 THE CHAIRPERSON: Legal counsel.
1686 MR. MacINTYRE: Thank you, Madam Chair.
1687 Hi, Mr. Robinson. Just we were wondering if you could file some proof or make a filing with us regarding the details of the arrangement that you have with Torres with respect to the frequency.
1688 MR. ROBINSON: Yes. Yeah, we can.
1689 MR. MacINTYRE: Is there a date that you could provide that by?
1690 MR. ROBINSON: Frank Torres and I could meet and get something drawn up for you, sure.
1691 MR. MacINTYRE: Okay. Sorry, sir, what was the date that you said?
1692 MR. ROBINSON: Probably 10 days. I don't know.
1693 MR. MacINTYRE: Okay. So, 10 days.
1694 MR. ROBINSON: Okay.
1695 MR. MacINTYRE: Okay, great. Thank you.
1696 THE CHAIRPERSON: Well, thank you very much, Mr. Robinson. Those complete our questions.
1697 MR. ROBINSON: Thank you. I'm sorry for -- yes...
1698 THE CHAIRPERSON: For what?
1699 MR. ROBINSON: I don't know.
1700 MR. ROBINSON: Anyway, thank you.
1701 THE CHAIRPERSON: You did great.
1702 MR. ROBINSON: You guys are great. Thank you.
1703 THE CHAIRPERSON: Thank you.
1704 THE SECRETARY: Thank you, Madam Chair.
1705 This concludes Phase I.
1706 We have now reached Phase II in which Applicants appear in the same order to intervene on competing applications, if they wish.
1707 Acadia Broadcasting Ltd., HFX Broadcasting Inc., Frank Torres on behalf of a corporation to be incorporated and Parrsboro Radio Society have indicated that they would not appear in Phase II.
1708 This concludes Phase II.
1709 Thank you, Madam Chair.
1710 THE CHAIRPERSON: Thank you very much.
1711 Then we are hereby adjourned for the day and we will see you all at 8:30 tomorrow morning.
1712 Thank you.
--- Whereupon the hearing adjourned at 1634 to resume
on Friday, May 29, 2009 at 0830
Monique Mahoney Jean Desaulniers
Sue Villeneuve Beverley Dillabough
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