ARCHIVED - Transcript, Hearing 14 May 2010

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To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2010-146


Four Points by Sheraton

Toronto Airport West

6090 Dixie Road

Mississauga, Ontario

May 14, 2010


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

Telecommunications Commission


To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2010-146


Rita Cugini   Chairperson

Len Katz   Commissioner

Candice Molnar   Commissioner

Louise Poirier   Commissioner

Timothy Denton   Commissioner


Cindy Ventura   Secretary

Shari Fisher   Legal Counsel

Joe Aguiar   Hearing Manager


Four Points by Sheraton

Toronto Airport West

6090 Dixie Road

Mississauga, Ontario

May 14, 2010

- iv -





Pellpropco Inc.   280 / 1732



Chuck Lafleur   350 / 2265

Warren Parker, on behalf of various parties   367 / 2352



Pellpropco Inc.   384 / 2473

   Mississauga, Ontario

--- Upon commencing on Friday, May 14, 2010 at 0845

1723   THE SECRETARY: Good morning, just one small announcement before beginning.

1724   When you are in the hearing room we would like that you please turn off your cell phones, beepers and BlackBerrys as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators. We would appreciate your cooperation in this regard throughout the hearing.

1725   Thank you.

1726   And now, Madam Chair, we will proceed with item 4 on the Agenda which is an application by Pellpropco Inc. to renew the broadcasting license for the English-language commercial radio programming undertaking CHSC St. Catharines, expiring 31 August 2010.

1727   The Commission is concerned that the station may be operating in noncompliance with the Radio Regulations, 1986 (the Regulations), its conditions of licence and existing mandatory orders related to news, annual returns, request for information and Canadian talent development contributions.

1728   The Commission expects to clarify certain programming and technical issues related to CHSC's operation, including its programming service to the residents of St. Catharines and the Niagara region, its transmission facilities and the status of his studio facilities in the St. Catharines market.

1729   The Commission also expects Pellpropco Inc. to show cause why a mandatory order should not be issued requiring the licensee to comply with the Regulations and its conditions of licence and why the Commission should not consider recourse to additional measures, such as short-term renewal, suspension, nonrenewal or revocation of the licence in question.

1730   Appearing for the applicant is Eb Reinbergs.

1731   Please introduce your colleagues and you will then have 20 minutes to make your presentation.


1732   MR. REINBERGS: Thank you. Good morning, Madam Chairperson and Commissioners.

1733   Thank you for hearing us today. I would just like to run over our seating plan here.

1734   I have, to my left, Mr. Domenic Pellegrino; I have to my right Ms Merlyn Fernandes and going down the line, Mr. Domenic Torelli and Mr. Angus Gillespie.

1735   To the left of Mr. Domenic Pellegrino I have Mr. Gary Hooper and Mr. Stewart Hahn.

1736   As was just mentioned, my name is Eb Reinbergs and I act as counsel for Pellpropco Inc., the licensee in these hearings and the owner of CHSC-AM in St. Catharines, Ontario.

1737   Pellpropco Inc. is owned equally by two shareholders, Fabrizio Pellegrino and Terence Gertner. Mr. Pellegrino, Fabrizio Pellegrino, is the only Director and President of the licensee and Mr. Gertner is the Secretary and the Treasurer. Unfortunately, both Mr. Pellegrino and Mr. Gertner are unable to be here today.

1738   However, here today is Mr. Domenic Pellegrino who is employed by Multimedia Management Ltd. Multimedia and the licensee have entered into an operations management agreement whereby Multimedia manages the day-to-day affairs of the licensee. Dominic Pellegrino performs Multimedia's obligations under the agreement and is the most qualified person to address the concerns of the Commission here today.

1739   A little bit of background. CHSC is a radio station which began in 1967. Its target markets are residents in the St. Catharines/Niagara region, age 30 and older, who enjoy living in the area and who enjoy a touch of Italy in their lives.

1740   There are other AM stations in Niagara, but CHSC differs as it is more broad-based and more than just talk radio. It has diversified its programming to include Canadian music, Italian music, weather, news and sports. Each of these areas contributes to CHSC's formats of talk, talk and music, just music and news.

1741   The spoken word formats are essential to the station, as is the community element it brings.

1742   CHSC plays interspersed periods of Italian-language music in the afternoons. CHSC is an English-speaking radio station which allows Canadian artists of Italian heritage a place to showcase their talents.

1743   The station caters to the St. Catharines/Niagara region by discussing such legal topics -- sorry -- topics as sports, traffic and weather.

1744   It contributes to the community through the funding of entities like the Boys and Girls Club of Niagara and it plays music that a large subsection of the community enjoys, especially considering that there is no metropolitan area in Canada that has a higher concentration of Italian heritage residents.

1745   When last CHSC was before this Commission in January 2009, Mr. Domenic Pellegrino personally expressed his embarrassment and stated he was embarrassed at the deficiencies brought to its attention. Mr. Domenic Pellegrino has worked tirelessly to correct these errors and implement procedures to ensure that such errors will not be repeated.

1746   Our goal today is to bring to the Commission's attention the progress the licensee has made towards compliance in all areas of the licensee's obligations and to request a removal of the license to the benefit of the Niagara community and the station's listeners.

1747   As previously just mentioned by Cindy Ventura, there were a number of issues in the notice, six issues actually that were addressed, and we wish to address them as itemized in the Broadcasting Notice CRTC-2010-146.

1748   The first issue is in regards to the station's annual returns. The 2006-2007 and 2007-2008 annual returns were due to be filed by November 30, 2009. They were filed late due to circumstances outside of the station's control that delayed the preparation of the station's annual returns. As discussed in detail at the 2009 hearing, a flood at the station's premises destroyed all documents and records. As a result, the station required more time to complete financial statements and annual returns.

1749   All requisite financial returns have been filed and were done so forthwith upon receipt of the financial statements from the station's accountants. This may be seen in reference Tab A, a letter from the Commission dated January 21st, 2010.

1750   Mr. Torelli, as you will see, who is listed on our seating chart today, who is the station's accountant, is present and is available for any questions the Panel may have during the question-and-answer period.

1751   The second issue itemized in the Broadcasting Notice relates to the station's compliance with its condition of license to provide 20 minutes of weekend news broadcast in English. The Commission has raised concerns that this condition has not been met as a result of its monitoring of the station during a period in September 2009.

1752   Although the condition was not met during that period, our client is glad to inform you that this was an isolated incident caused by the newscaster responsible for making the newscast falling ill. The Commission was immediately informed of the situation and in order to safeguard against this situation happening again, a contingency plan has been implemented.

1753   The station has hired three English-language announcers to ensure that a backup announcer is always available and that this condition of license is always met.

1754   Furthermore, CHSC has hired two program managers, one for the English-language content and one for the Italian-language content to create an approved programming schedule. The weekend news broadcast is consistently done in English and it is dedicated solely to the local news of St. Catharines and the Niagara region.

1755   Mr. Gillespie, one of the news broadcasters, is present as you may see on the seating chart, and is available for any questions the panel may have.

1756   The third issue itemized in the Broadcasting Notice relates to the station's Canadian talent development/Canadian content development payment obligations.

1757   Under Commercial Radio Policy 2006-158, CHSC is required to upkeep its CTD obligations. As the Commission is aware, a change in policy was approved in 2006 which resulted in the CTD contribution being changed to the CCD. This change resulted in the reduction of our client's CTD/CCD payment obligations.

1758   Only through continuous correspondence between Mr. Pellegrino and Commission staff did our client become aware that although the regulations changed in 2006 they did not become effective until 2009 and the station could not take advantage of the lower payments under the new regulation until that time. Upon realizing the correct amounts being owed, Mr. Pellegrino remitted the requisite payments to satisfy the station's CCD obligations.

1759   Again, these are -- there are supporting documents for this in the tabs going A through J. As can be seen, the confusion here resulted from a change to Commercial Radio Policy number 2006-158.

1760   Mr. Pellegrino has taken steps to ensure his understanding of all policies and how to comply with them. We do not expect this type of situation to happen again.

1761   The fourth issue itemized in the Broadcasting Notice relates to the station's filing of audited financial statements. In the notice, the Commission noted that certain financial statements for the station had not been filed. It should be noted that circular number 404, August 23, 1994 states that radio licensees which do not have a total radio advertising revenue of more than $10 million for combined licensed radio undertakings may file unaudited financial statements.

1762   Although CHSC does not possess radio advertising revenue in excess of $10 million, it undertook to provide audited financial statements at the last hearing but has been unable to do so as a result of the destruction of its records. Unaudited financial statements have been compiled and were filed with the Commission forthwith upon the completion of those statements.

1763   CHSC has engaged Lanno Torelli LLP for this purpose and intends to continue this relationship on a going forward basis in order to ensure compliance. All financial statements for the previous years were prepared internally and could not be recalculated as the records have been destroyed. Mr. Torelli, CHSC's accountant, is present should the Commission have any further questions regarding that issue.

1764   The fifth issue addressed in the Broadcasting Notice -- and we had to read through the notice diligently to pick out two additional issues that weren't specifically itemized -- but the fifth issue addressed in the notice relates to the station's broadcasting of local content.

1765   The Commission has understandably placed an emphasis on local programming, as referenced in Commercial Radio Policies 2006-1 and 2006-14. In Notice of Consultation 2010-146, the Commission indicated that it wished to have some clarification with respect to the station's accomplishments in this regard.

1766   CHSC caters to the St. Catharines/Niagara community. The local community matters to the station, as they are the foundation from which it has built its roots. The flooding in the former premises caused many logistical issues for the station, but these have been resolved.

1767   Moving forward, integration into the St. Catharines/Niagara community is at the forefront of CHSC's intentions. Currently at this moment in time, CHSC broadcasts news from Niagara, employs much of its full-time staff from the St. Catharines/Niagara region, has sub-leased a new location located at 277 Welland Ave. in St. Catharines, and is building a studio on those premises.

1768   The station participates in community events with such entities as Club Roma, a St. Catharines-based charity, the Boys and Girls Club of Niagara and host and co-host many barbecues in the region.

1769   Also, the station ensures its weekend newscasts are 100 percent dedicated to the local news and the local area. In the future, plans are being prepared to have more local content, including live to air from barbecues and a re-initialization of the call-in show "It's Your Call" where local residents call in and express their comments on the news of the day.

1770   Last but not least, the sixth issue addressed in the Broadcasting Notice relates to the station's broadcasting towers. CHSC owns nine broadcasting towers located in Thorold, Ontario from which they can transmit. At the last hearing, the station was cited as having significant technical issues regarding the broadcasting towers.

1771   Mr. Dominic Pellegrino has made significant strides in repairing the towers and ensuring that they are in compliance with Industry Canada standards. Mr. Pellegrino has engaged HS Services and their provincially-certified engineers for the purpose of upgrading the towers and they have been working together directly with Industry Canada to ensure compliance.

1772   As a result of Dominic Pellegrino's and the station's efforts, Industry Canada has provided its approval subject to the Commission's approval for the broadcasting license. This may be seen in reference to Tab L, an email from Aaron Eaton from Industry Canada. At this time all repairs have been completed and implementation is scheduled to occur the first week of June.

1773   Furthermore, to ensure that any further technical issues are dealt with immediately and appropriately, CHSC has hired an employee to monitor the towers should an issue arise and call HS Services directly.

1774   As you can see, in conclusion, CHSC has made great strides towards 100 percent compliance with Commission rules, regulations and policies, as well as implementing procedures to ensure they continue to remain in compliance.

1775   To date, the annual returns have been filed and a reminder has been set to file them annually. Weekends have 20 minutes of news content each day, of which 100 percent of those 20 minutes consist of local news. A program manager has been hired to ensure compliance. All CCD payments have been made and will continue to be made on time. Unaudited financial statements have been delivered to the Commission and an accountant has been retained to produce and file annual financial statements in a timely fashion.

1776   CHSC is re-integrating itself, especially after the flood, into the Saint Catharines/Niagara community. The broadcasting towers in Thorold are repaired and safe for transmission purposes and engineers and other requisite advisors are ready to help when necessary, which is a major difference between where the station was last year and where it is today.

1777   Furthermore, CHSC has made significant strides acknowledging that long-term professional help and advice is necessary and the station is acquiring that help. Implementing procedures which will ensure that compliance is systematic is something that the station is also doing at this moment in time, as well as gaining the knowledge of the industry that is vital to any broadcaster.

1778   It is on this basis and for all of these many reasons that our clients request a renewal of its license for a period of five years.

1779   At this moment in time I would just like to introduce Mr. Dominic Pellegrino, who has a few remarks to make of his own.

1780   MR. PELLEGRINO: Good morning, Chairman and Commissioners.

1781   As you may recall, I was before the Commission in January 2009 and at that time I mentioned that I was ashamed to have been before the Commission with so many non-compliance issues. I also recall that one of the Commissioners wished me good luck in my work as I set off to meet the Commission's compliance requirements.

1782   I can now say that I am not ashamed to be here today because CHSC has worked hard since the last hearing to become compliant with the Commission's rules, regulations and policies.

1783   I pledge to you today my commitment to continue ensuring compliance with the letter and spirit of the Commission's mandate to ensure that quality programming is airing on CHSC and to ensure that the community in the St. Catharines and Niagara regions are well served by CHSC.

1784   Finally, I want to thank the Commission for its direction and guidance which has encouraged me to feel that I have become a true broadcaster.

1785   Thank you.

1786   MR. REINBERGS: Thank you. And at this moment in time we would like to invite questions and comments from the Panel.

1787   THE CHAIRPERSON: Thank you very much and good morning to all of you.

1788   Before we begin, I would like to know the role played by the other members of the panel in Pellpropco.

1789   For example, Ms Fernandes, what role do you fulfill?

1790   MS FERNANDES: I'm co-counsel with Mr. Reinbergs.

1791   THE CHAIRPERSON: I'm sorry. I didn't hear you.

1792   MS FERNANDES: I'm co-counsel with Mr. Reinbergs.

1793   THE CHAIRPERSON: Thank you.

1794   And Mr. Hooper...?

1795   MR. HOOPER: I'm the owner of HP Services, Thornhill, Ontario.

1796   THE CHAIRPERSON: Okay. And Mr. Hahn...?

1797   MR. HAHN: I was retained by Pellpropco to do the supplementary proof of performance. I am a broadcast engineer.

1798   THE CHAIRPERSON: Thank you very much.

1799   It just helps us to know when you answer the questions from which perspective you are answering our questions.

1800   I would like to first tackle the issue of the audited financial statements since you mentioned it twice in your oral presentation, and I would like to get a very detailed timeline, please. As you know, the mandatory order that we issued in 2009 required you to file audited financial statements for the broadcast years 2004-2005, 2005-2006, 2006-2007, 2007-2008.

1801   I would like to know, please, when did the flood occur exactly and how many of the documents that were required in order to compile audited financial statements were destroyed?

1802   MR. PELLEGRINO: When the flood occurred, is that -- that's the time the CRTC asked for financial statement return.

1803   THE CHAIRPERSON: I need a month and a year, Mr. Pellegrino.

1804   MR. PELLEGRINO: Well, it was before the 2000 -- I have no record here, but before -- Mr. Dominic? What year is the --

1805   MS FERNANDES: Commissioner Cugini, I believe the flood occurred in 2008. I'm unsure of the month, but we can provide that to the Commission.

1806   THE CHAIRPERSON: Thank you.

1807   The reason I ask this is also because the flood seemed to contribute to the non-compiling of financial records in order for your auditors to provide us with an audited financial statement for the broadcast year 2008-2009.

1808   So if it occurred in 2008 how is it that the records for the following year were destroyed?

1809   MR. PELLEGRINO: Because when the flood happened and all the papers were in files, so all the papers were destroyed, not just that year or two years.

1810   THE CHAIRPERSON: Even future records were destroyed?

1811   MR. PELLEGRINO: Yes, and previous records.

1812   MS FERNANDES: Sorry.

1813   Commissioner Cugini, I have just confirmed with my accountant, Mr. Torelli, the 2009 audited statements are based on the 2008 and prior statements. So without those records they had to reconstruct some of the prior statements as well in order to move forward.

1814   THE CHAIRPERSON: So you will not be able to comply with the mandatory order to provide us with audited financial statements?

1815   MR. PELLEGRINO: At the time when you were asking me a question regarding the return of the financial statement, well, I'm not in accounting so I say yes. But when I went back to the office and I talked to my accountant, I found out that yes -- it was my mistake to say yes. The answer should be that I will consult with my accounting in order for me to provide you what you are asking.

1816   But you know I say yes, but that was not my thing to say because I'm not an accountant. So that's what happened exactly.

1817   THE CHAIRPERSON: Now, what measures have you taken to ensure that financial records going forward will not be destroyed by any force majeure, act of God?

1818   MR. PELLEGRINO: Well, we have a storage place in our studio and Mr. Torelli is in charge of the accounting on a weekly basis -- basically weekly and he has the records, all the papers himself.

1819   THE CHAIRPERSON: And it's a secure location?

1820   MR. PELLEGRINO: Yes, in his office and my office.

1821   THE CHAIRPERSON: It's fireproof and flood proof?

1822   MR. PELLEGRINO: Yes, exactly.

1823   MR. REINBERGS: Madam Chair, Mr. Torelli would actually like to add a few comments with respect to that.

1824   THE CHAIRPERSON: Thank you.

1825   MR. TORRELLI: Yes, it was for the 2008 records that we had to request additional or copies of the bank statements from the bank to reconstruct the '08 records.

1826   THE CHAIRPERSON: Okay. Thank you very much.

1827   I would now like to move on to the issues of programming and in particular again what appears to us to be an incident of noncompliance, and that is the case of the English-language newscasts on the weekends.

1828   So your English-language newscaster was ill on the two weekends that the Commission monitored your station?

1829   MR. PELLEGRINO: I remember well that particular Friday that this accident occurred; the particular day that I write back to CRTC saying that there was a problem. Mr. Lafleur, was there and Mr. -- the news man, Mr. Gillespie was there. And I showed them the letter that I was sent back that they are supposed to produce this -- I got a review and something happened. He was not there.

1830   So I said, "What happened, guys?" So the answer was that they would not feel too well and they left and they went home. They went away at 11 o'clock instead of stay over.

1831   That accident happened in the Woodbridge studio, because at that time we use the Woodbridge a little bit, and the way I said in the last hearings we are going to use until we are ready in St. Catharines.

1832   So I don't know what happened at that particular time, but at that particular time it was Mr. Lafleur and Angus work in the radio station in Woodbridge and was supposed to leave on the top --

1833   THE CHAIRPERSON: Okay. Mr. Pellegrino, you didn't provide an English-language newscast on September 20th, which is the weekend that we monitored, because you say that somebody was ill.

1834   That's fine --

1835   MR. PELLEGRINO: Exactly.

1836   THE CHAIRPERSON: -- things happen.

1837   MR. PELLEGRINO: Yes.

1838   THE CHAIRPERSON: And then you did not provide an English-language newscast on Saturday the 26th.

1839   So in that week period you didn't take any measures to ensure that the following week, in case this person was still sick, somebody else could fill in for him or her?

1840   MR. PELLEGRINO: No, it's not a particular week.

1841   THE CHAIRPERSON: Do you understand that the two weeks that we monitored CHSC, on those two weeks there was no English-language newscast.

1842   MR. PELLEGRINO: It was a Saturday and a Sunday.

1843   THE CHAIRPERSON: I have Sunday the 20th and Saturday the 26th.

1844   MR. PELLEGRINO: Okay. So it was two days, yes.

1845   And I asked them the question, why the news is not there and they told me they don't do it because they not do it because they were sick that particular week. Now, I don't know about the second week, but the particular week that they are calling they left and they went home early.

1846   THE CHAIRPERSON: And what measures have you put in place to ensure that you will always have somebody available to provide an English-language newscast?

1847   MR. PELLEGRINO: I hired Shantelle, which is a news lady, and I hired Nick Montague, and also we have Mr. Angus and Floriana(ph) and we have Michael -- Michael Dimaggio(ph) with us. So we have one, two, three, four -- four English news at the moment and also we have two or three in Italian that -- you know.

1848   MR. REINBERGS: Madam Chair, as outlined in our presentation, as a result of that situation Mr. Pellegrino now has three English news broadcasters, so he always have a backup in that situation if it were to occur again.

1849   THE CHAIRPERSON: Now, I know in one of these tabs that you included in your oral presentation there is an employee list and as soon as I find it I would like to go through it. I know I don't have the numbers here.

1850   MR. REINBERGS: Tab H.

1851   THE CHAIRPERSON: Thank you.

1852   MS FERNANDES: Madam Chair, I believe it's Tab H for your reference.

1853   THE CHAIRPERSON: Thank you. Sorry, my copy doesn't have the letters on the tab.

1854   Legal consultants; that is you, Mr. Reinbergs?

1855   MR. REINBERGS: Yes.

1856   THE CHAIRPERSON: But you are not a full time employee of Pellpropco?

1857   MR. REINBERGS: No, I am not.


1859   MR. REINBERGS: Actually, the station has a number of legal consultants. It had another consultant, Mr. Robert Buchan in Ottawa, who also lends -- and an employee, Al, who is also a legal consultant.

1860   Pardon?

1861   MR. PELLEGRINO: I might add --

1862   THE CHAIRPERSON: Okay. I just want to go through this list.

1863   Trina, full time or part time?

1864   MR. PELLEGRINO: Trina is a full time working in St. Catharines.

1865   THE CHAIRPERSON: Kevin...?

1866   MR. PELLEGRINO: Kevin used to be -- until I see him here yesterday he used to be my employee, but now we have Mr. Gary Hooper.

1867   THE CHAIRPERSON: So Kevin doesn't work for you anymore?

1868   MR. PELLEGRINO: As of yesterday that I see him now.

1869   THE CHAIRPERSON: Okay. Angus...?

1870   MR. PELLEGRINO: He is here at the moment.

1871   THE CHAIRPERSON: Okay. Full time?

1872   MR. PELLEGRINO: Yes.

1873   THE CHAIRPERSON: Nick...?

1874   MR. PELLEGRINO: Yes, full time.

1875   THE CHAIRPERSON: Giovani...?

1876   MR. PELLEGRINO: Full time -- Mr. Belalavente(ph).

1877   THE CHAIRPERSON: Frank...?

1878   MR. PELLEGRINO: Yes, full-time.

1879   THE CHAIRPERSON: Kim...?

1880   MR. PELLEGRINO: Kim gives us some contracts once in a while.

1881   THE CHAIRPERSON: On contract?

1882   MR. PELLEGRINO: Some contract. He's working with a different company, with a different station but he give us some --

1883   THE CHAIRPERSON: And Domenic is you?

1884   MR. PELLEGRINO: Yes.

1885   THE CHAIRPERSON: Christina...?

1886   MR. PELLEGRINO: Yes, she works in the Woodbridge office.

1887   THE CHAIRPERSON: Full time or part time?

1888   MR. PELLEGRINO: Yes. She is my daughter-in-law.

1889   THE CHAIRPERSON: Full time or part time?

1890   MR. PELLEGRINO: Full time.

1891   THE CHAIRPERSON: Patrizia...?

1892   MR. PELLEGRINO: Four days a week.

1893   THE CHAIRPERSON: Michelina ...?

1894   MR. PELLEGRINO: Full time, my wife.

1895   THE CHAIRPERSON: Shantelle...?

1896   MR. PELLEGRINO: Yes. She is no longer with us as of a couple of weeks ago because we hired Mr. Michael. He is another news guy.


1898   When were these people hired? How long have these people been working for you?

1899   MR. PELLEGRINO: Well, Fabrizio owns the station. Al has worked from the first day that we buy the station in 2002; Trina 2002; Kevin 2002; Angus 2002; Nick is about eight months, six months -- eight months, something like that; Giovanni is about three months; Frank is about six months; Kim just part time; Dominic, I'm there every day; Christina, she is there every day; Patrizia, she is there four times a week -- and about a year ago Patrizia. Michelina is from 2002 and Shantelle for a year.

1900   THE CHAIRPERSON: And who on this list is responsible for providing English-language newscasts? Who gathers the news, who produces the newscast and therefore who is ultimately responsible?

1901   MR. PELLEGRINO: Mr. Angus is responsible for the news, together with Mr. Nick Montague, and Michael DiMaggio(ph). I remember the last name.

1902   THE CHAIRPERSON: Michael...?

1903   MR. PELLEGRINO: DiMaggio(ph).

1904   THE CHAIRPERSON: I don't have a Michael on my list.

1905   MR. PELLEGRINO: Okay. Well, he just comes three times a week. He's part time. I don't feel to put them in there.

1906   THE CHAIRPERSON: Okay. And who is responsible for ensuring that the newscast and its content is in compliance with the Regulations and the COLs?

1907   MR. PELLEGRINO: Nick Montague is a well experienced man on the radio business and he is the manager to do that. Plus, Mr. Angus would be asked from the 2002.

1908   THE CHAIRPERSON: Who is it that ensures that the newscast is in fact local to St. Catharines and the Niagara region?

1909   MR. PELLEGRINO: You have attached a log there that --

1910   THE CHAIRPERSON: I'm sorry, I can't -- can you please speak up a little bit? I can't hear you.

1911   MR. PELLEGRINO: Excuse me.

--- Pause

1912   MR. PELLEGRINO: Well, Mr. Angus himself and also Mr. Nick Montague, but both of them they make sure that they comply with those regulations. Our news reflects only St. Catharines' recent news.

1913   THE CHAIRPERSON: What facilities do you have to get the news?

1914   MR. PELLEGRINO: I have the facility in Toronto with the internet and everything. For the past month we broadcast from a new office in St. Catharines which now Mr. Gary Hooper is hired to build a nice studio for the St. Catharines' area which is --

1915   THE CHAIRPERSON: Do you have reporters that go out and interview people in the St. Catharines and Niagara region?

1916   MR. PELLEGRINO: Well, at the moment because of the situations that create -- you have to understand that the last time I was at the hearings back in January till now I have been working so hard day and night to comply with --

1917   THE CHAIRPERSON: So have we, Mr. Pellegrino, to prepare for this hearing.

1918   MR. PELLEGRINO: Yes, okay, but I'm saying that I did the best I could to make sure that everything is in compliance.

1919   THE CHAIRPERSON: I appreciate that comment, but you have to understand that we also need to be reassured that the work you have done and the measures you have put in place are concrete and they are measurable and we can actually see them.

1920   So for example in your oral presentation when you say, just as an example:

"Annual returns have been filed and a reminder has been set to file them." (As read)

1921   What does a reminder mean? Does that mean a reminder comes up on your calendar that says file annual returns by November 30th?

1922   I don't know what that means.

1923   MS FERNANDES: Yes, Commissioner Cugini. It means that there is an Outlook calendar and a reminder is set two months in advance that the annual returns will be due.

1924   They will also be in contact with Mr. Torelli on a reasonable basis to provide any data that he may need and Mr. Torelli will be instructed shortly to keep in contact with them. Mr. Torelli is retaining all their information in files.

1925   So it will be a responsibility between Mr. Pellegrino and Mr. Torelli to communicate with each other and ensure going forward that they are in compliance with the timelines set by the Commission.

1926   THE CHAIRPERSON: I also don't know what it means when it says:

"Mr. Pellegrino has taken steps to ensure his understanding of all policies and how to comply with them." (As read)

1927   What are those steps?

1928   MR. REINBERGS: One of the things Mr. Pellegrino has informed us over the past year, he has taken this opportunity to read through all of the Regulations, all of the legislation and the policies that the Commission has and a number of the notices.

1929   We were actually amazed by, I guess, his undertaking in that regard and he has actually informed us that he will continue to do so.


1931   MR. REINBERGS: I would also like to add, I think, I don't know what support Mr. Pellegrino had at the hearing last year. I know he did have competent counsel, but he has taken the last year also to build a team and that team here is represented by everybody that is sitting up here.

1932   He has accountants, he has engineers, he has counsel and he realizes that he cannot undertake the operation of the station on his own.

1933   THE CHAIRPERSON: Okay. Thank you for that.

1934   Now, in terms of studio facilities, you have just leased or recently leased space in St. Catharines?

1935   MR. PELLEGRINO: Yes.

1936   THE CHAIRPERSON: It is a full-fledged radio station? It has all of the, like I say, facilities and equipment necessary to operate a radio station?

1937   MR. PELLEGRINO: Yes. Well, okay.

1938   The place has been leased and we do it right now by way of phones and lines by the phone, by the fax.

1939   And Mr. Gary Hooper, who I have in my hands a contract for him to build a studio -- if you would like to have a copy in your file? I don't know if you have one.

1940   But a studio that will be an amazing studio -- it will be up-to-date studio for St. Catharines for people to come there and record and interview and whatever it takes to be a studio like it was before on 26 Queenston Street. It's not that large because we don't need so much space. But it is a nice size that we can build a nice, a very good studio there.

1941   I have a copy of the contract and we rent a place. And we hope and think --

1942   THE CHAIRPERSON: I have here under Tab J an agreement to sublease.

1943   MR. PELLEGRINO: Yes.

1944   THE CHAIRPERSON: So this is the agreement to lease the premises on Welland Street in St. Catharines?

1945   MR. PELLEGRINO: Yes.

1946   THE CHAIRPERSON: And this is effective May 1st.

1947   MR. PELLEGRINO: Yes.

1948   THE CHAIRPERSON: From where have you been broadcasting up until now?

1949   MR. PELLEGRINO: At the last hearings we have I mentioned to you, to the Chair, that I will use the Woodbridge facility in the meantime; that I comply with all mandatory orders; and I will do my best to build a nice studio in St. Catharines as fast as I can.

1950   Now, all my energy up to now has been issued to mandatory orders and finally at the end -- we have been there for months at no -- free of charge at that place, but finally we have the location there. We have the leasing. We have the place. We are going to build a nice studio and we use both Woodbridge and St. Catharines studios.

1951   THE CHAIRPERSON: So you will keep the Woodbridge studio?

1952   MR. PELLEGRINO: Exactly, yes.

1953   THE CHAIRPERSON: So explain to me the function of the Woodbridge office if your studio facilities will be in St. Catharines?

1954   MR. PELLEGRINO: The facility in St. Catharines -- in Woodbridge --

1955   THE CHAIRPERSON: In Woodbridge.

1956   MR. PELLEGRINO: It will be -- as you know, we do some Italian programs on the weekend. So it will be used for the weekend.

1957   It will be for the Italian program.

1958   THE CHAIRPERSON: Okay. So it's only used for the weekend programming?

1959   MR. PELLEGRINO: Yes.

1960   Excuse me, Ms Chair, can he say something? He would like to say something.

1961   THE CHAIRPERSON: Of course.

1962   MR. HOOPER: Yes, Commissioners.

1963   There is a temporary facility that has been set up at the actual transmitter site in St. Catharines where they broadcast English-language broadcast programming from. I have seen that as I have been in there working at the transmitter site.

1964   It is a temporary studio until they got a facility in town, which they have now got, and we are contracted to build two rooms in there, a production studio, an on-air studio and a booth for them to be able to --

1965   THE CHAIRPERSON: Well, help me to understand why you need two facilities. Why do you need a facility in Woodbridge for the Italian-language programming and a facility in St. Catharines?

1966   MR. PELLEGRINO: First of all is travelling and is going to take lot of effort to five or six people to traveling you know, Friday, Saturday and Sunday.

1967   And even if we are -- even if we do programs from Woodbridge in Italian, we committed to the St. Catharines listeners, St. Catharines area we do news every hour, even in Italian, on Italian program.

1968   On top of the hour we do news with St. Catharines content.

1969   THE CHAIRPERSON: So you can't find Italian-speaking people in St. Catharines to do the news?

1970   MR. PELLEGRINO: I don't find Fabrizio there.

1971   THE CHAIRPERSON: I'm sorry...?

1972   MR. PELLEGRINO: I cannot find Fabrizio there.


1974   MR. REINBERGS: Madam Chair, it is my understanding that it is also a matter of convenience. There are some employees that Woodbridge studio is a little bit easier to get to, especially on the weekends.

1975   I know that it is a little bit easier to get to by the President of the company, Fabrizio Pellegrino, as well as Domenic Pellegrino as well. So as a matter of convenience they also have the Woodbridge facility.

1976   THE CHAIRPERSON: It just seems odd when it is a St. Catharines station that your primary location wouldn't be St. Catharines and you would save yourself some money by only having one, because it does go to the issue of accessibility by the community and for the community by presence. It goes to presence in the community that you are licensed to serve.

1977   How are you not splitting in half your efforts to reflect the community you are licensed to serve?

1978   MR. PELLEGRINO: If I might, like I said, Friday until 12 o'clock until Sunday night we just do Italian program. So the studio in St. Catharines will be open to the public, but not to the radio facility. I mean is Italian program and if somebody has to come on the air it will be -- it will be in Woodbridge facility.


--- Pause

1980   THE CHAIRPERSON: Now, you did cite some examples of how you contribute to the community and how you reflect the community with various call-in shows, and so on.

1981   MR. PELLEGRINO: Yes.

1982   THE CHAIRPERSON: Can you detail for me any other examples of programs that are specifically targeting the St. Catharines and Niagara region population?

1983   MR. PELLEGRINO: Well, to start, I forgot to mention that we have been at Club Roma. We have a studio and we have a facility there to do program after the hearings in Orillia.

1984   So not all the programs would be coming from the towers set up -- emergency studio -- but also we have the space at Club Roma, which we work together closely with Club Roma on a weekly basis. We do announcements and everything.

1985   We have Boys and Girls Association in Niagara that we contribute all the time.

1986   We participate in all the Italian meetings and all the donation meetings of any nature. Even Russian sometimes we go there because they listen to our radio station. So we are involved with the community.

1987   Myself personally, I attend to most of the functions, you know, because they send us email with all the facilities that day -- all the functions they do. So I am there all the time because they invite us to be there. So we are there.

1988   We are present in St. Catharines. The only difference is the two days of Italian that we usually facilitate in Woodbridge. Everything else is Niagara region, directed to the program --

1989   THE CHAIRPERSON: Including the newscasts --

1990   MR. PELLEGRINO: Everything is --

1991   THE CHAIRPERSON: -- on the weekend?

1992   MR. PELLEGRINO: On the weekend we do -- it is a touch program, a program in the --

1993   Yes, we have the logs that we do so much of international news, so much of St. Catharines' news in Italian, but it talks about what happened in Niagara. We don't do -- in Italian program in the top of the hour, we don't just do Radio Vidi Quattro(ph) from Italy. We put Radio Vidi Quattro(ph) and Patrizia Bottoni(ph) -- she will come in and she mentioned three or four things that happened in -- whatever happened that particular time of the day in St. Catharines via internet. So she found it through internet.

1994   So we do that. We do that every hour. Prior to the --

1995   THE CHAIRPERSON: I'm sorry, what is the length of time of your newscasts?

1996   MR. PELLEGRINO: Seven minutes.

1997   THE CHAIRPERSON: Of those seven minutes how many stories would be about St. Catharines and the Niagara region?

1998   MR. PELLEGRINO: I would say three minutes, two minutes sports and the rest is international.

1999   MR. GILLESPIE: If I can just interject, on weekends when we do news and review for the St. Catharines area, it is at minimum 75 to 80 percent and usually 100 percent. The reason it can be that high is because what we do is we gather a lot of the news stories which happened throughout the whole course of the week.

2000   I am on Monday through Friday, on in the mornings, and obviously, as you can well imagine, you can't make up the news. Some days from Niagara I might have two stories, the next day I might have seven or eight. If I do have seven or eight, that is my priority, always has been.

2001   I was born and raised in Niagara and I have always made that commitment. In fact, there have been a number of people who have come up to me in public and stated that they really do appreciate that and I am very happy to say that I have always been dedicated to that.

2002   Typically, if I could just briefly say, Monday through Friday a typical newscast might have about 10 stories in it. On average, if you were to take it say over the course of a week or a month, it would probably breakdown, of the 10 at least four would be local -- by local I mean Saint Catharines/Niagara.

2003   After that there is regional, national and international and typically on average there would be about two of each of those. That would take up about seven to eight minutes.

2004   I do major newscasts in the morning and then a couple of minutes of sports, again very much dedicated, whenever I can, to local sports. In fact I go all the way down to covering Junior C hockey. That is something, to be quite honest, I don't know of any other station that does that. I'm not trying to toot the horn there, but I do what I can.

2005   Again, getting back to your question about the weekend, it is typically about seven minutes and that will air a minimum of three times. If it happens to be a bit shorter, then I guess they would do the weekend programming. Nick would decide if it was a little light they would air it a fourth time, to make sure that there was the full 20 minutes there.

2006   THE CHAIRPERSON: So in terms of providing news, Mr. Gillespie, the function of News Director is split between yourself and then the person who would do the news on the weekends?

2007   MR. GILLESPIE: That's correct, yes. I would take full responsibility for it Monday through Friday up until the time that I leave.

2008   And then Nick Montague, who is in fact filling in for me today, he would take the torch from there because he is also there. Sometimes I believe that he does show up on weekends as well.

2009   THE CHAIRPERSON: Mr. Gillespie, you -- so you are responsible Monday to Friday?

2010   MR. GILLESPIE: That's right.

2011   THE CHAIRPERSON: From where do you transmit -- just a minute, Mr. Pellegrino.

2012   From where do you transmit your show?

2013   MR. GILLESPIE: As of right now I am in the new studios. I have been -- as Mr. Pellegrino said, I have worked in Woodbridge for a long period of time. I did commute, and then there was a period of time when I was, as Mr. Hooper said, at the transmitter site, and there was a short period of time from Club Roma as well.

2014   My personal preference right now, honestly, I like being at the transmitter site as opposed to Woodbridge simply because I live in Niagara and I really just could do without the hours' drive and I had no problem being out there. There was -- I was able to function quite fine out there.

2015   THE CHAIRPERSON: And now you are in the new facility?

2016   MR. GILLESPIE: That's correct.

2017   THE CHAIRPERSON: Are you also responsible for the music programming Monday to Friday?

2018   MR. GILLESPIE: No, I am not.

2019   THE CHAIRPERSON: Who is responsible for that? Who puts together the playlist?

2020   MR. GILLESPIE: That would be Nick Montague. He is their Program Manager.


2022   How would you describe your core audience Monday to Friday in the mornings? I ask this because I was listening one morning and I was confused because I had Bing Crosby, followed immediately by REM.

2023   MR. GILLESPIE: Oh, so you are talking about a music question?

2024   THE CHAIRPERSON: I'm talking about the music. Who is your core audience?

2025   MR. GILLESPIE: Well, we have always considered it -- again, we are getting out of my territory because I literally am news, but we have always branded ourselves as over the age of 30. And male and female, the demographics I think have always been pretty equal.

2026   There is no doubt that we have an extremely wide range of music on there and it has just always been like that since I have been there, since day one.

2027   THE CHAIRPERSON: I'm going to move on to the technical issues before we talk about the request that you have made to change one of your conditions of license.

2028   I do appreciate the fact that you did include in your oral presentation measures that have been taken to correct some of the technical issues. But one thing you don't mention, and I am hesitating a bit because I am a bit out of my element here -- is the issue of powering down between daytime and night time, your contours.

2029   It's my understanding that for the most part AM stations that are required to this can do this with a remote control module and that this station has not been doing that for a period of time.

2030   MR. HOOPER: You are correct in that there are changes between day and night coverage based on a pattern, not power in this particular instance. CHSC is licensed to 10 kW both night and day so there is no power down as such.

2031   The pattern between day and night is very similar. The protections that CHSC was originally charged with and that was put on in 1967 are very, very different than what they are today.

2032   This certainly doesn't excuse the fact that they haven't been changing the pattern. But the reason they haven't is because of the failure and the lack of maintenance over the years.

2033   And I think this goes back long before Mr. Pellegrino's ownership of the radio station and the fact that there were so many pieces and parts and a very complex nine tower array that were not functioning and had simply degenerated to the point where it never could.

2034   So what I was charged with was the responsibility to resurrect the nine tower day/night switching capability which has been done. A lot of hours of work and a lot of rebuilding. This was coupled with the fact that predecessors in terms of the people in charge of the technical had not maintained any, any documentation. So there were no diagrams, schematics or anything else to begin repairs with.

2035   Mr. Pellegrino was quite shocked at this because he is not a technician. He didn't know. You know, when you hire someone to do that job that's their responsibility, but it obviously had never been done. So that has been corrected.

2036   There is now a new remote control system installed. The pattern change equipment and circuits have all been rebuilt and it works fine. The tower lights -- all of the bulbs in the towers have been changed.

2037   THE CHAIRPERSON: That has been changed? That has been rectified?

2038   MR. HOOPER: They have been done, yes.


2040   MR. HOOPER: So everything that was required has been addressed. I have worked very closely with Industry Canada over the past two and a half months reporting to them on a daily basis as to what we accomplished at any given night, because we tried to work over nights to minimize the impact on programming.

2041   So the technical issues have been addressed. We are proud of the way the place looks now. It actually looks like a radio station.

2042   THE CHAIRPERSON: Can you therefore explain to me what it means on page 8 of the oral presentation? You say:

"At this time all repairs have been completed and implementation will occur the first week..." (As read)

2043   Implementation of what?

2044   MR. HOOPER: Implementation of those systems. This is in agreement with Industry Canada.

2045   The reason for this, when you have had -- if I can use an analogy of an old car that has been restored and taken on the highway, something might break and myself and my company had been pre-committed to build a radio station in Ottawa, where we are at the moment. We are building a radio station for Torres Brothers.

2046   We don't want to be that far away and have the systems functioning which haven't functioned for many, many years because something is going to break, which is going to then cause the radio station to be off the air. It will mean our traveling back here to repair it, analyze the problem. They could be off for an extended period of time.

2047   So Industry Canada thought it was wise that we wait, given the length of time it hasn't operated and given the minimum impact on any other broadcaster. Because the patterns are so similar and there is no power down requirement, they suggested that we wait until we come back, which is June 1, to turn it on.

2048   THE CHAIRPERSON: Okay. So your broadcasting certificate has been renewed by Industry Canada?

2049   MR. HOOPER: Yes, it has.

2050   THE CHAIRPERSON: For what. Time?

2051   MR. HOOPER: I believe a year.

2052   THE CHAIRPERSON: One year, okay.

2053   And will Industry Canada then, you know, at the end of that year, come in and, I don't know, audit the repairs and the implementation that has taken place to ensure that it can continue to renew your certificate?

2054   MR. HOOPER: Certainly. Yes, we welcome that.

2055   THE CHAIRPERSON: Okay. Thank you.

2056   MS FERNANDES: Commissioner, for the Commission's reference we have included in our presentation materials the emails updates as what has been going on, on the property and with the towers.

2057   THE CHAIRPERSON: And is this information -- this has come in since the filing of the renewal application?

2058   MS FERNANDES: It's including Aaron Eaton's email of the broadcasting certificate renewal, subject to your renewal.

2059   THE CHAIRPERSON: Okay. Thank you.

2060   MS FERNANDES: Okay? So it's at the back under Tab L.

2061   THE CHAIRPERSON: Thank you.

2062   Okay. Let's move on to your request to have your condition of license removed.

2063   As you know, the Commission does not typically entertain changes to conditions of license when it finds a licensee to be in noncompliance. So can you please tell me the rationale for having the condition of license removed that you have requested?

2064   MR. PELLEGRINO: When I asked that particular change I was thinking to myself it says this refers to a 15 percent to the language.

2065   THE CHAIRPERSON: No. You have asked us to:

"...not re-impose the condition of license that requires CHSC to refrain from broadcasting any ethnic or third-language programming between six AM and noon Monday to Friday." (As read)

2066   You have asked us to remove -- to not re-impose that condition of license. Can you explain to me the rationale why?

2067   MR. PELLEGRINO: Well, I believe that any station that has a commitment -- a condition of license decreasing value and we are not going to -- we are not going to do third languages because we already do 15 percent in the afternoon so I don't see why we have to -- we cannot do it because we use a 15 percent in the afternoon first of all.

2068   And ethnic, we -- you are saying that the music we are going to play?

2069   THE CHAIRPERSON: It's your request.

2070   MR. PELLEGRINO: My request is to remove that because of the value of the license. It goes down.

2071   MR. REINBERGS: Madam Chair, as you may begin to see that this station is not the same station that was sitting before you in January in 2009. At that time Mr. Pellegrino did not necessarily have the controls that he had over I guess programming, content, even a grasp of his obligations at that time.

2072   Things have significantly changed since then. His obligations under the license, he now completely understands what those obligations are and he is able to meet those obligations without the condition being imposed on the license.

2073   It is my opinion that he is absolutely correct in that any station that does have a condition imposed on it does suffer some -- whether it be a director in direct devaluation, if we can call it that, and it is time I do not think that the condition is warranted or required.

2074   THE CHAIRPERSON: Will the removal of this condition -- or how will the removal of this condition improve the advertising sales of this station, for example, or will it?

2075   MR. PELLEGRINO: It will not change the sales because we already have now an English program. So I don't see what's changed in sales. I mean what we do now we do it in future. I imagine we would do better because I have more time maybe to devote on sales.

2076   But again, it is nothing that we are thinking to do because for our experience right now that we have, we know exactly how to run -- you know, how to run the station. So I would say that it doesn't change any revenue.


2078   MR. REINBERGS: Actually, Madam Chair, through discussions that I have had with Mr. Pellegrino, he has informed me that his next order of business, inclusive of everything that is still on the table, is to increase advertising revenue.

2079   The condition that has been imposed has placed some restrictions on some of the partners that he has had on the table in the past. He has had to change some programming.

2080   He did -- I believe, Mr. Pellegrino, you did have some partners in Punjabi, some Punjabi programs and the like.

2081   Because of the condition his financial revenues have decreased over the past year in trying to meet those conditions and if the condition were removed he would be able to focus on some of those partnerships again and he fully expects -- well, not necessarily those partnerships, but he would have the flexibility to look towards other avenues to increase his advertising revenue.

2082   THE CHAIRPERSON: But am I correct in my understanding that the only other language in which you broadcast currently is Italian?

2083   MR. PELLEGRINO: Yes.

2084   THE CHAIRPERSON: And you would want to see increasing or adding other languages too?

2085   MR. PELLEGRINO: No.


2087   MR. PELLEGRINO: No, whatsoever.

2088   THE CHAIRPERSON: Okay. We are going to switch gears here for just a minute and I'm going to pass you off to Vice Chairman Katz who has additional questions. But I may come back to you.

2089   MR. PELLEGRINO: Thank you.

2090   THE CHAIRPERSON: Thank you.

2091   COMMISSIONER KATZ: Good morning.

2092   I would like to come back to your list of employees in Tab H for a moment, if you can pull that down. You went through the list of the employees and identified them as full time or part time as appropriate.

2093   What I would like to know is how many are independent, because I heard a number of them being "my wife", "my daughter". How many are actually independent people that are getting salary and payroll deductions?

2094   So if we can go down the list, and just give me the names of those that are fully independent, not related at all?

2095   MR. PELLEGRINO: Well, I personally myself get some draw.

2096   COMMISSIONER KATZ: I understand you all get salaries. I just want to know how many are independent of you and your family.

2097   MR. PELLEGRINO: It's three people.

2098   MR. REINBERGS: Tell them the names.

2099   MR. PELLEGRINO: Yes. Fabrizio Pellegrino.

2100   MR. REINBERGS: No, who's not family.

2101   MR. PELLEGRINO: Oh, who is not family, okay, Almanyaka(ph), Trina, Kevin, Angus, Nick, Giovani, Frank, Kim, Patrizia, Shantelle. Well, she's not there anymore.

2102   COMMISSIONER KATZ: Shantelle is not there anymore --

2103   MR. PELLEGRINO: No.

2104   COMMISSIONER KATZ: -- and Kevin is not there anymore either.

2105   MR. PELLEGRINO: Yes. I see him yesterday in the street here.


2107   MR. PELLEGRINO: I have been calling every day but he never answered the phone, so that means that --

2108   COMMISSIONER KATZ: So the ones that are independent than our Trina, Angus, Nick, Giovanni, Frank, Kim who is part time and Patrizia?

2109   MR. PELLEGRINO: Exactly.


2111   I'm going to ask staff to give you a copy of your financial reporting from 2005 to 2009 that is, in fact, confidential. So it's not going to be distributed at all. But I would just like to ask you a couple of questions with regard to the data that is on here.

2112   This is the data that we have that comes from your annual filings and it identifies your revenues, your expenses, your staff levels and your profitability from 2005 through 2009. As you can see on here, your business has changed dramatically over the last five years in terms of the revenues that you have been getting.

2113   Can you explain what has changed in your business that would cause that change in your operations?

2114   MR. PELLEGRINO: The dramatic change, it's this year, this last 12 months, the last report. Before that I think we are in line with the sales of 500,000 or 600,000. But the last year is because of all the complaints that I have to do and office to build and everything else.

2115   So in three months -- two months before the hearings, before I have to appear on the Commission, I found out that this Punjabi program was in breach with the regulations of the CRTC. So I immediately seized their operations so that take away from the company a substantial income.

2116   COMMISSIONER KATZ: Okay, you are not understanding me. I'm not looking at your income or your profit. I'm looking at your revenues.

2117   Your revenues have changed dramatically from 2005 to 2009 materially. And if I draw a line on the chart I would think that that revenue would go down to basically zero at some point in time in the future if I just draw a line. I don't want to suggest what the numbers are because they are confidential, but over time the angle of this revenue erosion is substantial.

2118   I'm just wondering whether there really is a going concern here and a real business or are we looking at a business that is winding down in fact?

2119   MR. PELLEGRINO: Well, one of the reasons maybe it's just because of you know, when you change programming you have to rebuild the program and the audience for that program.

2120   COMMISSIONER KATZ: This is five years, from 2009 to 2005.

2121   MR. PELLEGRINO: I don't understand what's changing year by year. I mean how much was five years ago? How much was five years ago here?

2122   MR. REINBERGS: Commissioner Katz, through some of these -- it's my understanding from some of the discussions that I have had with Mr. Pellegrino, is that previously he has been the focus or the primary salesperson also for the station. Over the past year, as you may understand, his primary focus has changed towards compliance and he has been unable to direct his efforts toward sales.

2123   He actually has informed me that he -- I believe last year he had 41 issues that he had to deal with, compliance issues, and today we are here discussing a much lower number. He is actually very happy that after today he will be able to focus more on sales and get things on track.

2124   There have been significant changes in the programming of the station as well and it has required him to focus on that and to redirect some of his sales efforts as well. Yes, you do see a trend.

2125   COMMISSIONER KATZ: So that would explain perhaps the drop in sales from 2009 over 2008.

2126   If you go back to 2005 and look at 2005 over 2006, Mr. Pellegrino was in fact the salesperson and, yet, there was a deterioration.

2127   2007 over 2006 was a further deterioration. He was still the salesperson.

2128   It was only in 2008 that in fact he got involved in all these compliance matters where he was offside, and perhaps at that point in time I can appreciate his focus may have changed. But what I'm looking at here is a story that basically says this business is winding down, not winding up.

2129   My question is, before we relicense or consider relicensing this operation is there a going concern here, is there any hope of turning this thing around and why has this resulted the way it has?

2130   MR. HOOPER: Commissioner Katz, if I could suggest from a technical point of view -- and I don't for a minute think that technical is sales -- however, I was called in originally when the station had a three-day failure of their transmitter. When we resurrected the transmitter, got it fixed up and back on the air, we noticed that there was only 55 percent modulation of the carrier.

2131   Now, I don't listen to the station myself. I never did. But for people who would be trying to listen to it, if that was a degeneration that occurred over time, and I suspect it is, the listenership would go down substantially because you could barely hear the station. You couldn't hear it a few miles away.

2132   We have now got the transmitter operating the way it should. The positive peaks in the modulation are well over 100 percent which is legal, permissible and that's what we are doing. The negative peaks are limited at 100, which is the law, but the station now can be heard throughout Niagara whereas before it could not.

2133   COMMISSIONER KATZ: But we are not looking here at a blip that happened once or twice in the last year. I am looking at a five-year trend.

2134   MR. HOOPER: Okay. Well, I suggest that this has been going on for years because if the maintenance -- the lack of maintenance that we saw at the station is typical of the way that it was operated throughout, I can see where things were just let go to the point where inevitably it quit. But before it quit it would have been a steady decline in terms of its coverage, absolutely.

2135   MR. PELLEGRINO: And --

2136   COMMISSIONER KATZ: Go ahead.

2137   MR. PELLEGRINO: Yes. Well, I would like to mention that we purchased this company under bankruptcy. It was under bankruptcy for five years before us, and now we operated for eight or nine years and we never approached the bank for a credit line or anything like that. So we spend according to the income. We did not overspend.

2138   We do not go to the office in the morning and sit in there and play cards on a computer the way it was happening for the past three or four years in St. Catharines with the managers that we have over there. That caused the decrease over the sales in St. Catharines itself where managers were going to the studio and playing poker on the computer to increase the sales.

2139   I remember that we had three or four sales -- two ladies in there too. And Kim -- Kim(ph) mentioned that they were full time job with us. Well, for incompetence with the general manager over there, which is here present tonight -- today -- the things went down. Yes, you're right.

2140   But we never asked anybody -- we are not a bankruptcy company. We never go bankruptcy because we work hard. We get up in the morning at four o'clock and we go home at six.

2141   COMMISSIONER KATZ: If you have no revenues, Mr. Pellegrino, then what you are going to do is just keep reducing your cost and your expenses in line with your decreasing revenue.

2142   MR. PELLEGRINO: We have a revenue, Mr. Katz.

2143   COMMISSIONER KATZ: I'm just looking at the numbers in front of you here and it basically says it has dropped and continues to drop every single year.

2144   MS FERNANDES: Commissioner Katz, if I may, if you are looking at the previous years and you are looking at the management style that was in place, I believe my client was feeling very alone and he was on his own doing multiple tasks.

2145   And as my senior counsel has mentioned, now he has realized that he needs a team around him to help him so that he can focus on the areas that he does well and that other people will focus on those areas that need to be focused on for compliance measures and to service the community adequately and properly.

2146   With that help we know that the revenues will be going up, because he will be focusing on sales, which is what he has been doing on managing the general aspects and having people report to him so he can oversee in an appropriate manner.

2147   Moving forward also, the reintegration into the community is going to help. Over the years with the technical issues and things there was a steady decline.

2148   But this is definitely a going concern. There is definitely commerciality here. Our client is significantly committed to this radio station. Over the numerous conversations we have had, I have seen a substantial amount of passion for this radio station, for the community and to move forward in a more profitable manner.

2149   COMMISSIONER KATZ: All I can tell you is I'm looking at data and information and I am not convinced.

2150   Again, I will speak to the expenses in 2008 and 2009, what you have before you with regard to programming and technical. I appreciate and heard that he is now looking at building up the technical expertise. But when I look at the expenses that are there, it obviously has dropped as a result of the drop in revenue in order to try and keep the operations of solvent as possible, to the extent that it is, and basically I am not convinced that this is sustainable.

2151   So you are going to need to convince me that there is a sustainable business here, notwithstanding the fact that there are additional people that are brought on board. But again they are on contract. They are here for a period of time as well and if the revenues aren't there, then the cost of maintaining these people will have to be considered as well.

2152   So it all, from my perspective, starts with revenue and a business. Is there an audience? Is there a business? How do you generate revenue?

2153   Hiring staff is one solution, but if you haven't got an audience hiring salespeople doesn't do it either, because no one is going to advertise on your station if you haven't got an audience. So that's where it all starts from, from my perspective.

2154   Let me ask you another question, Mr. Pellegrino.

2155   You have a location in Woodbridge that you talked about. Is that a home office or is that an independent leased location?

2156   MR. PELLEGRINO: The building is owned by the same person that owns the license, which is Fabrizio Pellegrino, and the radio station it's the second floor of that building.

2157   The first floor is dedicated to a restaurant, which is his wife Christina's, and the building is his. It's Fabrizio's.

2158   COMMISSIONER KATZ: Okay. So you are basically paying rent to the owner or the licensee?

2159   MR. PELLEGRINO: No, he doesn't pay anything -- the owner.

2160   COMMISSIONER KATZ: There is no rent?


2162   COMMISSIONER KATZ: Okay. Those are my questions.

2163   THE CHAIRPERSON: Just a few follow up questions.

2164   I note in your oral presentation, and you did submit the letter that you have paid off the balance in terms of the CCD contributions to the Boys and Girls Club and that those CCD contributions to the Boys and Girls Club will be used to buy musical instruments.

2165   I would like to know, please, what measures you have put in place going forward to ensure that CCD payments will be in fact made in a timely manner.

2166   MR. REINBERGS: I just wanted to stress again that it's my understanding that the reason why the CCD payments were not made in the first place was because of a misunderstanding by Mr. Pellegrino.

2167   There was a reduction in the amount that the station owed. He didn't understand that that reduction did not -- did not affect his payments until 2009.

2168   So at all times he was ready and willing to pay what he thought was the amount that was owed. We have included some correspondence with Commission staff with that respect. Once he fully understood what his obligations work he made the payment immediately.

2169   So I don't want to try to frame this in a manner in which he did not know that the money was owed at the time. It was more his understanding of how much he had to pay at that time and why.

2170   Going forward again, he has a wonderful relationship with his accountant who is building some expertise in this area as well. And also he has familiarized himself with the amount of his payments as well as the timing of all payments so that this issue does not raise its ugly head again in the future.

2171   THE CHAIRPERSON: So Mr. Torelli, you are aware of the regulatory requirement and the amounts of CCD contributions and when and to whom they are to be paid?

2172   MR. TORELLI: Yes.

2173   THE CHAIRPERSON: Is your knowledge of the regulatory requirement therefore in your opinion all that we need to not issue a further mandatory order in this regard?

2174   MR. TORRELLI: I would hope so, yes.

2175   THE CHAIRPERSON: Okay. I want to also get a little bit more clarification of just how much Italian-language programming is provided.

2176   I believe I heard you say anyway from 12 noon Monday to Friday --

2177   MR. PELLEGRINO: Two o'clock on Friday.

2178   THE CHAIRPERSON: Okay. Why don't you give me the times that you provide Italian-language programming?

2179   MR. PELLEGRINO: Okay.

2180   THE CHAIRPERSON: Monday to Friday and then Saturday and Sunday.

2181   MR. PELLEGRINO: No, 15 percent to the language.

2182   THE CHAIRPERSON: Tell me what time from Monday to Friday does Italian-language programming start on your station?

2183   MR. PELLEGRINO: There is no Italian programming start at that particular time of day.

2184   THE CHAIRPERSON: Tell me what time the Italian-language programming starts --

2185   MR. PELLEGRINO: Friday at 2 o'clock until six.

2186   THE CHAIRPERSON: Yes...?

2187   MR. PELLEGRINO: And then it's Saturday nine to four, 4:15 and Sunday 9:30 to five o'clock.

2188   THE CHAIRPERSON: So there is no Italian-language music played Monday to Friday before 2:00 p.m.?

2189   MR. PELLEGRINO: This is a third-language program, the one I gave to you now.

2190   THE CHAIRPERSON: Right. This is what is broadcast in the Italian language?

2191   MR. PELLEGRINO: 15 percent of it in third --

2192   THE CHAIRPERSON: Mr. Pellegrino, please listen to my question. Okay?

2193   MR. PELLEGRINO: Okay.

2194   THE CHAIRPERSON: Monday to Friday before two o'clock, right? You said Friday from two to six p.m. is Italian language.

2195   MR. PELLEGRINO: 15 percent, yes. That includes the 15 percent of third language, yes.

2196   THE CHAIRPERSON: I understand Monday -- I know Monday to Friday, from what Mr. Gillespie told me, is all English. What happens at 12 noon on Monday?

2197   MR. PELLEGRINO: We play mixed music with English commercials -- English news, English -- English part, sports, and just music is mixed music. Is Canadian talent in there, is in English and a mix of international music.

2198   THE CHAIRPERSON: In what languages typically would that --

2199   MR. PELLEGRINO: Canadian music. I mean English language.

2200   THE CHAIRPERSON: The international music comes from which countries?

2201   MR. PELLEGRINO: From English music Canada, U.S. and Canada and Italian.

2202   THE CHAIRPERSON: Okay. So you do play Italian music Monday to Friday?

2203   MR. PELLEGRINO: Yes, just songs.

2204   THE CHAIRPERSON: Just songs. No spoken word programming?

2205   MR. PELLEGRINO: No.

2206   THE CHAIRPERSON: At all?

2207   MR. PELLEGRINO: No.

2208   THE CHAIRPERSON: The spoken word programming in Italian is only Friday from 2:00 to 6:00, Saturday 9:00 to 4:00 and Sunday 9:30 to 5:00?

2209   MR. PELLEGRINO: Yes.

2210   THE CHAIRPERSON: And in those periods is it all Italian music?

2211   MR. PELLEGRINO: Yes. On the top of the hour though is news.

2212   THE CHAIRPERSON: Music.

2213   MR. PELLEGRINO: Yes.

2214   THE CHAIRPERSON: Is it all Italian music during those time periods?

2215   MR. PELLEGRINO: Yes.


2217   The newscasts obviously you have answered the question. They are all in Italian.

2218   MR. PELLEGRINO: Yes.

2219   THE CHAIRPERSON: These, too, follow the seven-minute format of a newscast? It's a seven- minute format?

2220   MR. PELLEGRINO: Yes. Like Mr. Angus says, yes, it is seven minutes, but it could be shorter. It could be longer, depending on the --

2221   THE CHAIRPERSON: Okay. On average it is seven minutes.

2222   MR. PELLEGRINO: Exactly.

2223   MR. REINBERGS: Madam Chair, I just wanted to correct something. You just mentioned that the newscasts were in Italian on the weekend. No, they are English on the weekend.

2224   MR. PELLEGRINO: No, they are Italian. It's not ---

2225   THE CHAIRPERSON: Okay. Are they Italian or English?

2226   MR. PELLEGRINO: Yes, Italian.

2227   THE CHAIRPERSON: All Italian.

2228   MR. PELLEGRINO: Yes, and that 15 percent of content.

2229   THE CHAIRPERSON: All right. So you never exceed the 15 percent requirement?

2230   MR. PELLEGRINO: Not after the hearing, the mandatory orders.

2231   THE CHAIRPERSON: Okay. And who is responsible for ensuring that that spoken word programming does not exceed 15 percent?

2232   MR. PELLEGRINO: Well, eventually it's been --

2233   THE CHAIRPERSON: Not eventually. Who today is responsible?

2234   MR. PELLEGRINO: Today it's principally Tony and Floriana Pellegrino(ph).

2235   THE CHAIRPERSON: Okay. And they are completely aware of the regulations and the requirements?

2236   MR. PELLEGRINO: As you know, Floriana(ph) is working 27 years in this industry with another company before. So yes, she is.

2237   THE CHAIRPERSOLN: And in your opinion that's all we need to know in order not to issue another mandatory order requiring you to comply with the 15 percent?

2238   MR. PELLEGRINO: No, we do. I think we comply with the regulations of the 15 percent.

2239   THE CHAIRPERSON: Okay. So let's go back to the question of the seven minutes average of Italian-language newscast on the weekends that is produced and broadcast from your Woodbridge studio.

2240   MR. PELLEGRINO: Yes.

2241   THE CHAIRPERSON: Okay. Of those seven minutes how many minutes would be stories about St. Catharines and the Niagara region?

2242   MR. PELLEGRINO: Three minutes.

2243   THE CHAIRPERSON: And the rest?

2244   MR. PELLEGRINO: And the rest is international and sports and weather and traffic.

2245   THE CHAIRPERSON: Okay. So you do surveillance material as well during the newscasts?

2246   MR. PELLEGRINO: Exactly, yes.

2247   THE CHAIRPERSON: Okay. I think those were the only other detailed questions I had.

2248   Legal counsel, do you have any questions?

2249   MS FISHER: I just wanted to get you to confirm, Commissioner Cugini had asked for an undertaking to provide the date of the flood which led to the destruction of the 2008 documents.

2250   So if you could provide the month and year that that occurred?

2251   MR. PELLEGRINO: Okay.

2252   MS FERNANDES: We will undertake to do so.

2253   MS FISHER: When can you provide a by?

2254   MS FERNANDES: Two weeks.

2255   MS FISHER: Two weeks? That's fine.

2256   THE CHAIRPERSON: Well, thank you very much. Those are all the questions we have for you at this time.

2257   MR. REINBERGS: Thank you.

2258   THE CHAIRPERSON: Madam Secretary, that completes Phase I, right?

2259   That's all you had to say? Okay. Then we will take a 15-minute break. Thank you.

2260   MR. REINBERGS: Thank you.

--- Upon recessing at 1005

--- Upon resuming at 1028

2261   THE SECRETARY: Thank you. We will now proceed to Phase II in which the intervenors appear in the order set out in the Agenda to present their intervention.

2262   For the record, the Commission has been informed that Armand Romagnoli listed on the agenda will not be appearing at the hearing.

2263   We will now begin with Mr. Chuck Lafleur.

2264   Mr. Lafleur, you may now begin and you have 10 minutes for your presentation.


2265   MR. LAFLEUR: Thank you very much.

2266   Good morning, dear Commission Members, chers membres de la Commission. Merci de me permettre l'opportunité de vous adresser ici aujourd'hui.

2267   My name is Chuck Lafleur. I was an employee, an on-air announcer of 1220 CHSC from May of 1994 until August of 2007 and again from January of 2008 until August 2008 and most recently from September 2009 until February of 2010.

2268   I left because I had not been paid in over five weeks as of February, despite several promises by Mr. Pellegrino that I would be.

2269   First off, let me clarify something. There was no flood at 36 Queenston Street. I will have more on that later in my presentation.

2270   Secondly, it quite honestly astounds me that 1220 CHSC has moved into new studios at 277 Welland Ave. in St. Catharines from the transmitter site, the exact same week as this hearing has been scheduled.

2271   You were told at the meeting on January 30, 2009 that CHSC was in the process of moving into new studios at that time as well.

2272   When I first joined 1220 CHSC the station was very much respected and appreciated in the community. When someone needed promotion for their events through either on-air mentions, announcer appearances or live remote broadcast, 1220 CHSC was constantly called on to provide assistance.

2273   That began to change with the purchase of the station by Mr. Dominic Pellegrino. One by one longtime valuable staff members were either let go or left of their own volition and the deterioration of the station could be seen on an almost daily basis by the remaining employees.

2274   Pay cheques that were returned by the bank, of which I have several copies that I have personally in my collection if you would like to look at them; the elimination without any notice of employee group benefits, the expectation by Mr. Pellegrino that all on-air staff would work statutory holidays with no additional time off or pay.

2275   As for the on-air product, it too saw a steady downward spiral with the elimination of all contests, eventually fewer and then eventually no remote broadcasts to help out such wonderful causes as the Alzheimer's Society, the United Way, the Niagara Grape and Wine Festival, Toque Tuesday for our local food bank, the Multicultural Folk Arts Festival, to name but a few. There was also a gradual decline of the equipment used for on-air broadcasting.

2276   However, the true crossroads for this once vibrant station occurred in May of 2008, a full two years ago, when the station was forced to move out of its longtime location at 36 Queenston Street in St. Catharines, by not a flood but a bailiff's notice. Please note Mr. Pellegrino made absolutely no mention of the bailiff's order at the hearing in January 2009, citing instead "concern for the employees because of a problem with the roof".

2277   Immediately upon the eviction from 36 Queenston, the station began broadcasting from the transmitter site located some 15 minutes from St. Catharines.

2278   Shortly thereafter, another visit by the bailiff took place, this time accompanied by the Niagara Regional Police to confiscate all of the equipment which had been removed from the building at 36 Queenston Street. Shortly after its seizure, all of the equipment was auctioned off, as was described in a story in the St. Catharines Standard newspaper.

2279   CHSC then broadcast live entirely from Woodbridge, 120 km away from St. Catharines for the entire summer of 2008. There was, as was mentioned previously this morning, a brief return to St. Catharines from a room at Club Roma on VanSickle Road.

2280   For the one week that I broadcast from Club Roma the broadcast studio was located in the bridesmaid's change room, a small room with a table, two chairs and a loveseat. The equipment consisted of a mixer, a computer and a microphone, with no production capabilities.

2281   There was also no sales office, which really was not needed seeing as there was not one local St. Catharines/Niagara salesperson employed by CHSC.

2282   This is contrary to Mr. Pellegrino's claim at the January 2009 CRTC hearing that CHSC employed four salespeople at that time. There has not been a Niagara salesperson employed by CHSC since April of 2008 when the previous sales manager, who is here today, was relieved of his duties.

2283   I was part of a play-by-play team in January 2009 when 1220 CHSC began broadcasting Niagara Icedogs OHL games. The hockey team sold the advertising for the broadcast. The hockey team paid the announcers. The season ended in mid-April of 2009. However, commercials from the hockey broadcasts continue to air on CHSC long after the season had ended, actually up until now or the last time I listened.

2284   When I returned to CHSC in September of 2009, I was instructed to continue to play the hockey commercials just so it would appear if the station were monitored by the CRTC that there were local ads on the air.

2285   Also, Mr. Pellegrino stated at the hearing of January 2009 that a new sports show entitled "Hockey Night in Niagara" had begun airing the week prior to the hearing. That show never did air, not once. So again, local content that was promised you did not happen.

2286   From October of 2008 until August of 2009, CHSC once again broadcast all 24 hours of its programming from Woodbridge, which was still 120 km away from St. Catharines. There was no on-air announcer during the morning show from January 2009 until August 2009, with the exception of a few weeks when Mr. Bill Wilson, who is present today, returned to the airwaves to do the morning show until he was not paid and decided to leave on a few occasions.

2287   In August 2009 there was a return to the transmitter site. I was asked at that time that Mr. Pellegrino to return to work for CHSC; promised that the current location was only temporary by him. Nine months later there still were no new facilities as of last week.

2288   Then magically a new studio has begun operating at 277 Welland Ave. in St. Catharines as of this week, just days before the hearing before you today.

2289   The conditions of the transmitter site were as follows. The building was about 800 metres off a dirt road with the only access being what could best be described as an all-terrain vehicle trail. There was no heat in the building through the winter months I was there, other than two space heaters that the news person and I brought in ourselves.

2290   There were absolutely no washroom facilities. There were dangerous electric coils clearly exposed. Mr. Warren Parker, who is here as well, could vouch for that. And to keep it really interesting, horses and coyotes roamed the nearby fields.

2291   With a move back to the transmitter, there were no recording facilities available for the news person to record the five-minute news of the week feature that was recorded on Fridays and aired on Saturdays and Sundays on CHSC, the required local news content we have heard about this morning.

2292   Hence, as was noted by the CRTC in a letter to Mr. Pellegrino, there are two dates in question, September 20, 2009 and September 26, 2009, when no local Niagara/St. Catharines news aired on either of those weekend dates, as was clear in the Commission's monitoring of the station on the dates in question.

2293   In January of this year, as I was in Woodbridge attempting to get paid once again at the Woodbridge Studios, Mr. Pellegrino showed the news person and I the letter, told us directly that he would tell the CRTC -- and this is an exact quote:

"The person who was supposed to do the news was sick those days and the problem has been taken care of".

2294   I received a copy of a letter from St. Catharines MP, Rick Dykstra, who expresses his deep concerns over the lack of local presence by 1220 CHSC in the City of St. Catharines. Copies of the letter from a very respected Member of Parliament are available for you today, if you wish. I believe our MP's views are shared by many, many others in the St. Catharines and Niagara area.

2295   Last year, as I mentioned, the St. Catharines Standard newspaper carried a story which detailed the bailiff's auction of the building housing 1220 CHSC and its contents. At no point in the article is there any mention of a flood. Again, copies of that article are available to you today, if you so wish.

2296   In a letter dated March 25, 2010 from Lanno Torelli, Mr. Torelli states to the Commission that he had been informed by the owner of the company, that being Mr. Pellegrino -- he ran the operation, despite what you may hear otherwise -- that during the year ended August 31, 2008 the company's premises were flooded. The company's records and documents, the statement claimed, were damaged or destroyed.

2297   The truth of the matter is there never was a flood. There was a leak in the skylight in the production studio and main and only damage being to the antiquated production board. And I ask you, how many radio stations do keep their company's records and important documents in a production studio in the first place?

2298   The morning show is now broadcast from Woodbridge, yes, still 120 km from St. Catharines, with the only spoken content to be broadcast out of St. Catharines being the hourly newscasts with Angus Gillespie --

2299   THE SECRETARY: Mr. Lafleur, I'm sorry.

2300   It's the Hearing Secretary. Could you just slow it down, just a little bit for the interpretation?

2301   MR. LAFLEUR: Certainly, thank you. My apologies.

2302   The morning show is now broadcast live from Woodbridge still -- you know the distance from St. Catharines, with the only spoken content to be broadcast out of St. Catharines being the hourly newscasts from six a.m. until noon, a total of roughly one hour per day.

2303   There is no station presence whatsoever in St. Catharines/Niagara. They are no interviews with any members of the community. As of last week there was no phone service available for the listeners or clients, if there were any, to call into St. Catharines/Niagara at the transmitter site, and no Niagara email address.

2304   There is now but one staff member, the news person who is here today, to attend or be involved in community events. All other staff work out of Woodbridge.

2305   Now, while there were music and program logs in the Woodbridge end of the operation, when I was last at the transmitter site working on air in February, there were no music logs. We saved the song playlist that was put together each day on the computer, but there were no printed records of any songs played on the morning show.

2306   In addition, the commercial program log was the exact same one copy that had been in use on the morning show for over five months. There had been no new program logs from August of 2009 until my departure in February 2010.

2307   A quick note to pass along: It was stated earlier this morning that Mr. Kevin McMillan, the former technician/engineer for CHSC is no longer employed. In February Mr. McMillan entered hospital for hip replacement and treatment for terminal cancer, which unfortunately he suffers from. He was released from the hospital, was paid with two cheques by Mr. Pellegrino and they were both returned by the bank. That is the reason he is no longer employed by CHSC.

2308   In closing, as someone who was with 1220 CHSC in its heyday when helping out and becoming involved in countless charitable causes and events in and around Niagara and St. Catharines, made us all feel very proud of our radio station, it is terribly sad to see the decay of this once beloved Niagara institution as it continues to not serve the community for which it is licensed to serve.

2309   That is why, Members of the Commission, I ask that you do not renew the license for Mr. Pellegrino's operation of 1220 CHSC. The current ownership may argue that they meet or exceed all Canadian content requirements and have a new studio, which I remind you again they moved into just this week, but I ask that you look beyond those aspects of the application.

2310   No local studio for almost two years, no program logs, no music logs, unfathomable working conditions, the business practices of the applicant and a complete lack of station and announcer presence in St. Catharines and Niagara should, I believe, far outweigh the fact that enough Canadian content is played on the air.

2311   And what capabilities does this new studio process? Can commercials be recorded in a production studio? Can guests be interviewed or recorded over the phone? Are there any other staff members, other than the one news person, working out of the building? Are there music logs, program logs?

2312   I sincerely believe it would be better to have 1220 CHSC sold to someone else or go off the air entirely than to see what it has become.

2313   I would again like to sincerely thank you for the opportunity to speak to you here today.

2314   Merci beaucoup, mesdames et messieurs.

2315   THE CHAIRPERSON: Well, Mr. Lafleur, thank you very much for your participation in these proceedings today. Before I pass you on to Vice Chairman Katz, I'm just going to pick up on the very last thing you said:

"I believe it would be better to have top 20 CHSC sold to someone else or go off the air entirely."

2316   You obviously have a passion for radio --

2317   MR. LAFLEUR: Absolutely.

2318   THE CHAIRPERSON: -- you obviously have a passion for AM radio in particular and, as you know, or as you may guess, we don't often hear such passion for AM radio.

2319   Can you tell me, please, in your opinion and with your years of experience, what is the value of AM radio given the almost 100 percent penetration of FM; satellite radio, podcasts, iPods, and so on?

2320   What place in our broadcasting system does AM radio still hold?

2321   MR. LAFLEUR: I think there is certainly, Madam Chair, certainly a niche for AM radio in the context that 1220 CHSC operated in up until the purchase by Mr. Pellegrino and his group, is that there really is no station in Niagara that focuses the way CHSC used to on the local content.

2322   There was -- scarcely a couple of hours would go by before we would have someone in for an interview, promoting upcoming events, charitable organizations, public service announcements, live interviews.

2323   I honestly strongly believe -- and you are right, I do have a passion for AM radio -- that there is still a place in this world for AM radio that focuses on local and helps out people. That is one of the reasons I got into this business almost 30 years ago, obviously to earn a living, but also I felt it still helps out people.

2324   The letters that we have received over the years of thanks from the various organizations, whether it be Royal Canadian Legions, whether it be any of the causes that I mentioned, make it all worthwhile.

2325   So I honestly from my heart believe there is still a place and that local content in no way in no way is being served by CHSC unfortunately at the moment.

2326   THE CHAIRPERSON: Thank you. Vice Chairman Katz...?

2327   COMMISSIONER KATZ: Thank you, and good morning.

2328   MR. LAFLEUR: Good morning.

2329   COMMISSIONER KATZ: I have just a couple of questions for you.

2330   First of all, I can attest to the fact that you do have an on-air voice.

2331   MR. LAFLEUR: Thank you very much.

--- Laughter

2332   COMMISSIONER KATZ: Are you still doing radio today?

2333   MR. LAFLEUR: Yes, I am. Yes. I am doing Niagara Icedogs hockey in the wintertime and in the summer I switched to do lacrosse play-by-play in the summer for a different radio station, still in the business.

2334   COMMISSIONER KATZ: Okay. In your remarks this morning you talked about being employed through various times between 2007 and 2010 and the last period is September '09 through February 2010.

2335   In your submission, whatever date you filed it, there is no date on here, but when you filed your submission back in earlier this year there was a reference to a period you actually worked, it says here, from September '09 until October '09 and again December to February.

2336   MR. LAFLEUR: That's correct.

2337   COMMISSIONER KATZ: There was a break there for a month and yet you didn't refer to it here.

2338   Did something happen?

2339   MR. LAFLEUR: Actually I was paid. Eventually I was paid six weeks later by cheque and the cheque was cleared. I mentioned to Mr. Pellegrino when I left in October of 2009 that if I were paid I would go back to work at the transmitter site. Eventually the cheque was cleared that he had provided me with.

2340   You can understand why I would be a little weary about accepting cheques from Mr. Pellegrino, but the cheque did eventually clear and at that point we were in contact and I went back to work in December.

2341   COMMISSIONER KATZ: This is a show cause hearing and the onus is on the applicant to show cause why their license should continue and there should not be any other mandatory orders or other initiatives by the CRTC.

2342   So I will leave it to the applicant to defend themselves based on what you have said, but I must say that you have made some serious allegations bordering on misrepresentation here as well.

2343   So all I can say is it will be up to the applicant to defend themselves. But the issue as to the lack of filing of information that was or was not attributable to water damage will play heavily at the end of the day and some of this, obviously, as well.

2344   But I don't have anything more, because like I said, it's up to the applicant to defend themselves rather than to me to challenge any of these things at this point in time.

2345   So those are my questions.

2346   THE CHAIRPERSON: I think those are all the questions we have for you this morning, Mr. Lafleur.

2347   Again, thank you very much for your participation.

2348   MR. LAFLEUR: You're welcome. Thank you very much for the opportunity. Thank you.

2349   THE CHAIRPERSON: Madam Secretary...?

2350   THE SECRETARY: Thank you. I would now invite Warren Parker on behalf of various parties to come forward to the presentation table.

--- Pause

2351   THE SECRETARY: Mr. Parker, you may now begin and you have 10 minutes for your presentation.


2352   MR. PARKER: Madam Chairman, Members of the Commission, staff, good morning to our applicants. Buongiorno.

2353   I am Warren Parker, a broadcaster since 1966, primarily working in the engineering side of the broadcast business.

2354   I am very thankful to the Commission for allowing me to speak today and to speak on behalf of the colleagues with me.

2355   With me is Mr. Gerald Lee of Geleco Electronics, a broadcast supply firm and also Mr. Gerald Lee, Jr. of Geleco at the end of the table.

2356   Mr. Tom Christie is at the far right. Mr. Tom Christie is a longtime broadcaster and General Sales Manager at CHSC for most of the term of this license until the studio operations were stopped in the spring of 2008.

2357   Mr. Chuck Lafleur, who you have just heard from, is with me as well, a veteran employee of CHSC and longtime announcer.

2358   And Mr. Bill Wilson of Bill Wilson Music Services is the music programmer of many years and the person responsible for music programming and the music lists at CHSC and he was with the station, again, until earlier this year.

2359   We are not a group of disgruntled employees, but I have assembled instead a cross-section of just some of the many persons or companies who have encountered serious difficulties in obtaining payment for our goods and services with this applicant Pellpropco Inc., and the many companies that carry on the broadcast services generally referred to as 1220 CHSC.

2360   In reviewing our intervention, you may think that we have come to you, and asking the Commission to act as a collection agency. We know that this isn't your mandate, but as we explain our dilemma and not just the one or two isolated incidents, but a deliberate pattern of doing or not doing business that has continued in a similar manner for not just the course of this license but previous years, I believe you will understand our concern.

2361   You will see how improper business practices destroy the inherent trust that has been a broadcast standard in Canada since it began. And we vehemently disagree with the applicant's reply to our intervention that these matters, and I quote, "are quite simply not relevant to CHSC's license renewal".

2362   Indeed, I believe all matters being discussed here today are in one way or another related to the improper business practices of this company. Simply not paying your bills or paying their salaries have led to these continued problems.

2363   We have all experienced, as Mr. Lafleur just pointed out, this repetitive cycle of having our payments in the form of a cheque returned from the bank NSF. Then we are issued another cheque to cover that, and the blame is the banks of course.

2364   Then we have that cheque returned and it's usually followed by more excuses from the bank or some problems. And sometimes to keep an announcer on the air there is a cash transaction, usually in a lesser amount, just to keep them employed.

2365   I say banks, because the cheques are issued from different banks, indeed different company names or even numbered companies. And this has been going on for some years.

2366   And when the arrears of these unpaid wages or invoices gets to be too great and the frustration is just too much, when legal action is taken, either through the Labour Board for the employees or the courts for service companies like Mr. Lee's or myself, the company simply ignores it. Now, that company is here today and they are asking you to carry on business for another license term.

2367   Our group comes from different areas of the broadcast business, offering different talents and services. Yet, the common denominator is we have all done business with this applicant and we have all been treated the same way. Since filing our intervention, it has been surprising that many other companies have approached me with the same problem.

2368   Just yesterday, Mr. Oliver(ph), who is the holder of the mortgage on the transmitter lands, approached me and would like to bring his information into attendance, but it is of course last-minute. He is here if you would like to ask him questions regarding the outstanding mortgage that hasn't been paid on the transmitter lands and building for the last two years.

2369   Again, he is at the same situation as us. How far do we go? How much do -- how long do we wait?

2370   Why should a company not pay its employees? Well, usually I have found over my business that has gone on since 1974, you do have a shortfall in cash flow and you have to make up at times.

2371   But why would you want to lose all your valuable assets, your sales staff, your announcers, your studio facilities, your offices? Why would you let everything that you have in St. Catharines go?

2372   Well, we find that there is a pattern of selective accounting with this company. It is very interesting that new studio offices and facilities were acquired in Woodbridge during the period of this license. More recently, there have been large sums of money committed to the submission of the supplementary proof of performance and technical requirements needed for Industry Canada.

2373   It is written in the intervention reply that there are now 13 employees and now, this week there are new studios in St. Catharines. And as was indicated just recently by Mr. Hooper, he has spent a great number of hours, obviously at great expense to at the last minute before this hearing revitalize the transmission facilities and towers to keep things in compliance.

2374   So we don't think it is a cash flow problem. It's more selective accounting.

2375   We want to bring this pattern of selective accounting that has been allowed to grow and expand, as even the Commission has encountered in the non-filing of annual returns and the non-payment of the CTD/CCT funds, to a close. We believe the only answer to this is a revocation of the license. That will end this cycle of accounting madness.

2376   My business is a small broadcast technical support company. Let me give you an example of the stress it causes for me.

2377   First, you go out and do the work. Basically they are off the air, chaos, and I go out and we spend some hours, find out where the trouble is and put them on the air.

2378   You submit an invoice and then you try and collect your money and of course you spend more time trying to collect the money than you spent doing the work. While you are trying to collect money you can't serve other clients that need your services.

2379   So then this is followed by court costs or collection fees or legal fees and of course more lost time while you do this.

2380   Then it comes to income tax and GST time. Well, now you have a mess, because what has happened is you have sent an invoice, you may have got a cheque, maybe NSF; you may have got a cheque for half of that amount which may follow through and you have all these NSF charges and the rest.

2381   How do you account for that? In my small business it becomes a nightmare. Last year it cost me $4,400 to do my year-end and that is about $2,000 more than usual because of this situation.

2382   THE SECRETARY: Mr. Parker, you have one minute remaining. Please conclude your presentation.

2383   Thank you.

2384   MR. PARKER: Then I will simply say that my company has experienced these accounting difficulties. I am a very small company.

2385   Others, I'm sure, have exactly the same and it is probably on a much grander scale. I suggest that this is probably one of the main reasons why audited financial returns cannot he submitted, not due to a supposed flood. That is why our group is here today to intervene.

2386   In conclusion, our group here have the knowledge of the inner workings of the company. They are all part of the business, but have concluded their business with Pellpropco.

2387   We can give you an insight in a truthful and unbiased manner for any questions that you wish to ask. Please ask, because we have the inside knowledge of what has gone on during this period of license.

2388   I would like to ask one question or have you ask Mr. Pellegrino one question: Will you honour the payment of our outstanding bills; if he will, when and how? If he will not honour our bills, we request that you please ask him for the surrender of the license until which time he is able to do so.

2389   I thank you for your attention. I appreciate it.

2390   THE CHAIRPERSON: Mr. Parker and your colleagues, thank you very much. I know this couldn't have been a piece of cake for you to be here with us today, so I do want to express our appreciation for your participation,

2391   And I'm going to ask Commissioner Molnar to begin the questioning.

2392   COMMISSIONER MOLNAR: Thank you, and welcome here this morning.

2393   I also appreciate that you understand we don't operate -- and as you noted you have some services, some activities; some actions with Pellpropco today as it regards credit agencies, court proceedings, Labour Board proceedings and so on -- and we are not in a position to involve ourselves in those proceedings. I understand and appreciate you understand that.

2394   I just have a couple of questions.

2395   Mr. Parker, can you tell me -- I looked at the intervention that you filed. How long have you had a business relationship with Pellpropco?

2396   MR. PARKER: With Pellpropco since Pellpropco took ownership of the radio station in 2002. My previous involvement with the radio station was basically since I moved to St. Catharines in 1973.

2397   In the early years, in the seventies in the Niagara area there were four radio stations. There was CKTB, CHSC, CJRN and CHOW in Welland. It's ironic that Mr. Hooper was the engineer at CJRN Radio in Niagara Falls and Mr. Rollie Brundell was engineer at CHSC.

2398   We all, from an engineering standpoint, worked hand-in-hand because we were sole engineers at radio stations. So if one went on a holiday someone else was from another radio station helped out in those times. So I have had a relationship with CHSC since 1973.

2399   Now, Mr. Hooper has made notice of how the deteriorating conditions of the CHSC facilities have been. I think what I have laid out here indicates that exact situation.

2400   When you help someone out, usually business is an exchange of money for services. And when money is not there, all you can do is withhold your services. This leads to a situation where the facilities basically go into a downward spiral.

2401   And until this last month or so, things had deteriorated to the point where CHSC was off the air for a period of three or four days due to lack of maintenance. Again, I go back to my statement, it was because of non-payment. It is very simple, a person reaches a point where, as Mr. Lafleur did, you say: I won't work any more until you pay me.

2402   And then you go back and, if there is payment there, you work.

2403   COMMISSIONER MOLNAR: So do you, at this time, continue to provide services?

2404   MR. PARKER: My services stopped in the spring of 2008. What was happening at that point was, in January 2008, over the winter period, there was a period of -- if you recall 2008, we had a warm spell in January. Snow on the roof of the studio building had leaked into the production facilities and caused damage to the production console.

2405   Basically, the roof was dripping water.

2406   Is this a flood? No.

2407   From that time, I was asked to come in to evaluate the damage. My first situation was to contact the insurance company to see about the damage. I found out that the insurance company had not been paid, so they were not going to honour any of the facilities.

2408   At that point I was asked to evaluate the damage, and I gave them a figure. I said: This console, unfortunately, needs a lot of hours of work to be redone.

2409   I sat down -- and that followed in early February. I sat down with the accountant, or the bookkeeper, with Mr. Tom Christie, who was the general manager, or the general sales manager at that time, and Mr. Kevin McMillan, the engineer. I indicated all of my invoices, and they approved, they said: Okay, these are exactly what is owed.

2410   And at that point I said: Until these are cleared, there will be no further services.

2411   So I have not done any further work until that time.

2412   Now, when the bailiff seized the studio facilities in May of 2008, I was asked by the bailiff to provide a list of what equipment -- and I was involved with the bailiff at that time, in a capacity to secure equipment that was at the radio station.

2413   But since that time there has been no further work with the station.

2414   COMMISSIONER MOLNAR: Thank you.

2415   I have a question for Mr. Christie.

2416   You were the general sales manager -- and I am not certain, based upon your exit from the company, to what extent you can speak about your activities at that company.

2417   Do you have any contractual limitations on what you can speak to us about here today?

2418   MR. CHRISTIE: No, I am open to any questions you have.

2419   I am a broadcaster. I have been in the industry for over 30 years. I was the former general sales manager of Hitz FM in St. Catharines, as well as Giant FM -- which is now Giant FM, which, at that time, was Spirit FM, in Welland, and then I was hired by Mr. Pellegrino in 2005, where I was the general sales manager for the company for approximately three years.

2420   COMMISSIONER MOLNAR: Approximately three years. So you left in 2008?

2421   MR. CHRISTIE: That is correct. I was terminated on March 14th. According to the Record of Employment, it was due to severe budget restraints.

2422   COMMISSIONER MOLNAR: In your time with the station, the focus of the sales -- was it focused on securing sales within the St. Catharines/Niagara region?

2423   MR. CHRISTIE: My responsibility was to find out how we could grow the local revenue, and Mr. Pellegrino's responsibility was to generate revenue through his Italian community and through Italian programming.

2424   COMMISSIONER MOLNAR: Okay. Thank you.

2425   Those are my questions. Thank you all for coming.

2426   THE CHAIRPERSON: Commissioner Poirier...

2427   COMMISSIONER POIRIER: We didn't get some of the reports that Mr. Pellegrino was supposed to provide us for two consecutive years, and he attributed that to flooding.

2428   I think it was 2008 and 2007.

2429   So were there two times roof problems with the building, or only one time, to your memory?

2430   MR. PARKER: There was one occurrence of a roof problem, in January, and I would say that it was in the January 6 to 8 period. I could go back --

2431   I do have documented photographic evidence of what was done, because that was part of my basis to go in and to analyze the damage.

2432   There was one room, and it was basically a skylight that was in the room, roughly above the console, and a backup of snow and the warm January temperatures caused a leak in this roof and there was water damage to the console.

2433   At the time I took several pictures, and I have those pictures with me, and the damage was to that only -- one occurrence.

2434   COMMISSIONER POIRIER: Can you give me the precise date of the water damage that happened?

2435   MR. PARKER: Between the 6th and the 10th --

2436   COMMISSIONER POIRIER: Of January of what year?

2437   MR. PARKER: 2008.

2438   COMMISSIONER POIRIER: 2008. And nothing happened in any other year?

2439   MR. PARKER: No, not that I am aware of.


2441   THE CHAIRPERSON: I have just one question for you, Mr. Wilson. When Pellpropco appeared before us in January 2009, you were the music director?

2442   MR. WILSON: Yes, I was.

2443   THE CHAIRPERSON: I am pretty sure, if my recollection is correct, that you were touted as the person that was going to ensure compliance --

2444   MR. WILSON: Yes.

2445   THE CHAIRPERSON: -- with all of the COLs.

2446   MR. WILSON: Yes.

2447   THE CHAIRPERSON: Can you please tell me what instruction you received from Pellpropco that would empower you to be able to ensure that your on-air staff and the news people would, in fact, be in compliance?

2448   MR. WILSON: Just to guarantee, really, the Canadian content levels, which I did.

2449   During the morning show, between 6 and noon, I always guaranteed at least 50 percent Cancon, because I knew that during the rest of the day, when they did the Italian programming, it might vary. So I wanted to be absolutely sure that I was up between 6 and noon on --

2450   THE CHAIRPERSON: And were you provided with the proper equipment to be able to monitor the amount of Canadian content?

2451   MR. WILSON: Right from the beginning we have had the MusicMaster scheduling program, and it was on a computer at the station. Eventually, when they needed computers, that got removed, but I have always held it on my laptop.

2452   So I have the program at home and I maintain all of the logs on that.

2453   THE CHAIRPERSON: And when did you leave CHSC?

2454   MR. WILSON: Just at the end of December, because of non-payment.

2455   THE CHAIRPERSON: Okay. I think those are all of our questions.

2456   COMMISSIONER POIRIER: No, I have another question.

2457   I would like to know if you -- by that time, you were able to receive complaints by listeners. Did you have a telephone number where people could phone, and did you have proper logs, so that if you received complaints, you could give a follow-up on complaints?

2458   MR. WILSON: The only time I had any calls or feedback from listeners was when I was on the air. I would often give out my e-mail address, if people wanted musical requests, or anything they wanted to do with the music.

2459   There were a couple of times when I had e-mails from listeners, just saying, you know: I have noticed that the programming has deteriorated.

2460   This was when they carried Punjabi programming.

2461   I said: Well, that's not up to me. I look after the music here, and, yes, it is unfortunate that this has happened, but I will put your request in and see what we can do.

2462   I mean, eventually, the programming did disappear, but that was because of being over the limit of international programming.

2463   COMMISSIONER POIRIER: And no phone number.

2464   MR. WILSON: No phone number, no.


2466   THE CHAIRPERSON: Gentlemen, those are all of our questions for you this morning. Once again, thank you very much for your participation in these proceedings.

2467   Madam Secretary...

2468   THE SECRETARY: This completes Phase II for Item 4.

2469   THE CHAIRPERSON: All right. I think we will take a 15-minute break before moving on to Phase III and the licensee's reply to interventions.

2470   Thank you. We will be back in 15 minutes.

--- Upon recessing at 1110

--- Upon resuming at 1128

2471   THE SECRETARY: We will now proceed to Phase III, in which the applicant can reply to all interventions submitted for its item.

2472   Please reintroduce yourselves for the record, and then you will have 10 minutes for your reply. Thank you.


2473   MR. REINBERGS: Madam Chair and Commissioners, I would like to start off by saying that we have had an opportunity to discuss during the past few minutes, before you came back out, and we have welcomed the comments today that have been made by the intervenors.

2474   However, we respectfully disagree with some of the factual assertions so eloquently asserted by Mr. Lafleur and his colleagues.

2475   I would like to note and point out that there is an underlying financial element to all of the assertions that have been made by the intervenors here today.

2476   Mr. Pellegrino could address each and every one of these factual assertions here today on a person-by-person basis or on a case-by-case basis, and could provide you with numerous reasons as to why some of the individuals here are claiming that they haven't been paid.

2477   We could also provide additional reasons as to what company owes them what moneys, and so on and so forth.

2478   But I put it to you today that this is not the forum for that discussion, nor is today the time for that discussion.

2479   Let us not forget that the licensee purchased the licence out of bankruptcy, and the answer to the complaints raised here today is not to deny the renewal of the licence, to the detriment of the station and its employees and its residents.

2480   I would like to highlight, as well, that the station, as put forward today by Mr. Pellegrino, does not operate with any form of bank credit at all. There are no bank loans, there are no lines of credit. It is fully financed by the owners of the station.

2481   Mr. Pellegrino informed me during the break that all of the amounts that are claimed to be outstanding by the intervenors here today total an amount less than $20,000.

2482   Again, he could address each scenario with respect to each ex-employee, and with respect to each entity, on a case-by-case basis, and we would invite any questions you have with respect to that during the question and answer period.

2483   To highlight some of the things that we brought to your attention today, in our package and in our presentation, and during the question and answer period, we addressed the local presence and local programming issues.

2484   Also, with respect to the flood, we respectfully disagree with some of the comments made by the intervenors. It should be noted that the intervenors were employees of the company, and not necessarily privy to what financial records were destroyed and what damage occurred with respect to the records of the station.

2485   With respect to a financial issue, we can put forward -- to address Mr. Katz's issues raised earlier, we will undertake to provide you, Mr. Katz and the Commission, with a financial projection prepared by the station's accountants, going forward three years, to try to address some of the concerns you have.

2486   At this moment in time, I would like to open up the floor. However, there is one other issue that I would like to bring to your attention before we sum up.

2487   With respect to the technical issues that were raised today, yes, Industry Canada has informed us that they have provided us with a one-year licence renewal. However, that is to be extended to five years, based upon the renewal provided by the Commission.

2488   So once the Commission provides us with a renewal, Industry Canada has said that they will match that time period.

2489   So all of the technical issues have been addressed.

2490   Again, I do not wish for Mr. Pellegrino to address a number of the statements made here on a case-by-case basis, but I do open up the floor to any questions you may have.

2491   COMMISSIONER KATZ: If you are going to submit something, I would suggest to you that it be as fulsome as possible, and would include every single assumption that was used to derive every number on that page, going right back to how the applicant will generate the income necessary to sustain the business, as well as including all of the expenses and the assumptions behind the expenses.

2492   One thing I failed to ask you earlier -- now that you have brought it up -- is your general admin expenses and what is contained in that, because that appears to be the largest component of all your expenses, notwithstanding the fact that you have made your programming and technical costs, as well. But it appears that all of your costs are included in general and admin.

2493   If those are consulting fees, if those are payments made to third parties, please identify every single one of them clearly, both on a retrospective basis, going back to 2005, as well as going forward to the years you intend to provide us with information.

2494   MR. REINBERGS: We have had the opportunity to address this issue with the station's accountant, who is here today, and he has informed us that he will have those documents ready to be presented to the Commission within 60 days.

2495   THE CHAIRPERSON: Can you meet the June 14th deadline that we have asked other licensees before us over these last couple of days to do?

2496   MR. REINBERGS: Yes, we can.

2497   THE CHAIRPERSON: Thank you very much.

2498   Commissioner Molnar...

2499   COMMISSIONER MOLNAR: Thank you.

2500   I wanted to ask Mr. Torreli -- and I am looking at the appendix where you speak of the financial statements for the year ended August 31, 2008.

2501   As you know, we looked at a document this morning that incorporated the historical results for the station for the past five years, including 2008.

2502   So this document would incorporate the financial results that you prepared for the company.

2503   Is that correct?

2504   MR. TORRELI: Which document?

2505   COMMISSIONER MOLNAR: What was submitted to us in the annual return is what was presented on the document that we looked at this morning.

2506   So those would be the financial results that you prepared.

2507   You prepared for the company the financial results that were submitted to the Commission for the year ended 2008?

2508   MR. TORRELI: We prepared the financial statements for `08 and `09 that we provided to the client.

2509   COMMISSIONER MOLNAR: Okay. I was reading in the submission, in the attachment here, that, Mr. Torreli, you are a licensed chartered accountant.

2510   MR. TORRELI: Correct.

2511   COMMISSIONER MOLNAR: And you state in your document, "We were informed by the owner that the company's premises were flooded. The company's records and documents were damaged and destroyed."

2512   So you had no documents besides the bank records upon which to build this statement.

2513   Is that correct?

2514   MR. TORRELI: Partially. What we had were some records, and I think they went up to, if I recall, January -- we had some records up to January `08, and then there were no other documents -- or amounts posted to those entries.

2515   Then what we did was, we requested copies of the bank statements from the bank, and from those bank statements we carried forward until the end of August of `08, and from that basis we prepared the August `08 year end statement.

2516   COMMISSIONER MOLNAR: So what confidence do you have that this is a complete record of the revenues and expenses of this company?

2517   MR. TORRELI: That's why, based on our letter, we can't provide an audit, because an audit entails doing certain tests and procedures to make sure the numbers are correct, and we just couldn't do that.

2518   COMMISSIONER MOLNAR: Okay. I would like to ask -- because, as Mr. Katz mentioned this morning, the financial results of this company appear to change dramatically over time, and 2008 is another year where we have seen a relatively dramatic change in the financial results from the year before.

2519   We see it in 2009.

2520   Again, you prepared those statements in 2009?

2521   MR. TORRELI: Correct.

2522   COMMISSIONER MOLNAR: When you move forward in 2010, I would like to see the bridge between -- the actual results in 2009 and the forecasts that are put forward from then forward.

2523   Essentially, what I am saying is, the revenue projections that are created for 2010 need to build on this base.

2524   MR. TORRELI: Yes.

2525   Normally cash flows, or financial forecasts, are prepared on that basis.


2527   MR. TORRELI: We start with the starting point of August of `09 and continue forward.

2528   COMMISSIONER MOLNAR: Very good, because if there are any financial operations of the company that are not reflected in these financials, such as other sources of revenue or otherwise, I don't want them showing up in a forecast going forward.

2529   The other thing, as well -- and I am sure that you are aware of this, but what we heard this morning is that, essentially, there has been a team built. You know, we have engaged with the accounting firm, engaged with the lawyer. We have hired three English programmers, two program managers.

2530   You provided a lot going forward, a lot of commitments --

2531   MR. PELLEGRINO: Yes.

2532   COMMISSIONER MOLNAR: -- upon which we should have some assurance that this corporation -- it's not just you, Mr. Pellegrino, but it is an organization that we will have assurance in, and will ensure you operate in compliance going forward.

2533   So, clearly, this financial forecast needs to support the costs of this entire team, which, when I look at the financial results from the past, clearly could not support.

2534   You know, just the basis that this forecast needs to be realistic, building from the financial base we have seen here in 2009.

2535   MR. REINBERGS: Commissioner Molnar, I would also like to state that during the break we had an opportunity to discuss some of the comments that were made during the first phase of today's hearing, and Mr. Pellegrino has informed me that over the past two to three years he has been doing a cleaning of house, if I may put it in those terms, which is evident from a number of the intervenors here today, as they are past employees and ex-employees.

2536   That housecleaning also included a cleaning of the previous sales team that was in place. He has now put together a new sales team and that also may go towards part of the explanation as to the decrease in the revenues.

2537   MR. PELLEGRINO: As you know, the particular three or four years that Mr. Katz mentioned regarding the decrease of the sales really and truly was the fault of the General Manager.

2538   It wasn't directly from us but there a decrease because of the sales team in St. Catharines. We have three salespeople and a gentleman who is here today was the General Sales Manager at that time for three years. So I gave him a portfolio of $50,000 and he brought it down to $5,000 in three or four years.

2539   COMMISSIONER MOLNAR: I have no more questions, thank you.

2540   THE CHAIRPERSON: Vice-Chairman Katz.

2541   COMMISSIONER KATZ: I just want to follow up Mr. Torreli as well.

2542   The financial business plan that you are going to be providing us with, it will include a balance sheet and a cash flow statement as well?

2543   MR. TORRELI: It will include a balance sheet, a financial cash flow statement and an income statement.

2544   COMMISSIONER KATZ: Okay. And I thought I heard someone just say that Mr. Pellegrino doesn't have any bank loans or bank commitments at all. What we have heard this morning is an investment that Mr. Pellegrino is prepared to make in this business in order to turn it around.

2545   How is it being financed?

2546   MR. PELLEGRINO: First of all, it's being financed by the sales revenues of the station itself. The station is not in that bad a shape as maybe the sheets show.

2547   We have family that invested -- when we bought our station we invested $1 million mortgaging our houses to bail out the company, which was in bankruptcy.

2548   So it's about eight years now that we operate without -- not a bank account, without asking any credit like most of the people do. We didn't ask for a line of credit. We work with our own capital.

2549   I don't want to disclose it here. Maybe if you ask me to disclose it, I will do it.

2550   We have different companies, different incomes, but the station itself has to be good enough to support itself with a new sales team, new staff, new projections and new things.

2551   I told you before this year I learned to be a broadcaster and thank you to the Chair and thank you to you guys.

2552   COMMISSIONER KATZ: What does it mean when you say the company is not as bad financially as the numbers would reflect?

2553   I'm looking at numbers. This is a business. Is this business incorporated?

2554   MR. PELLEGRINO: Yes.

2555   COMMISSIONER KATZ: It's incorporated?

2556   MR. PELLEGRINO: Yes.

2557   COMMISSIONER KATZ: So the numbers are what they are. When you say that the business is better than what the numbers show, I don't understand what that means.

2558   I can't quote the numbers here because they are confidential but you have them in front of you --

2559   MR. PELLEGRINO: No, what I'm saying --

2560   COMMISSIONER KATZ: -- and they clearly show this business is not what I hear you saying it is because I see it on paper.

2561   MR. PELLEGRINO: I'm saying with the numbers shown there, this year we're not going to close shop because there's not enough funds. We will not do that.

2562   We went through last year a lot of changes. The change of Punjabi program cost us $500,000 in income. So we have to cancel those. In order to accommodate those in the first place, we did something wrong at that time. So then after that we have to cancel those. So we come back to the income, the receivables.

2563   But what I'm saying is that we will not close or ask any -- we don't need any funds to go ahead and reach the goals that we want to reach and to be the -- every radio station has a sales of $1 million, $1.5 million, $1.2 million. I'm not stupid, I know that.

2564   COMMISSIONER KATZ: Who made the decision to reduce the programming expenses by over 90 percent over two years?

2565   MR. PELLEGRINO: I'm sorry, I don't understand that.

2566   COMMISSIONER KATZ: Who made the decision -- if you look at sheet of paper and look at your programming expenses in 2007 and look at it in 2009, it went down by 90 percent.

2567   Who authorized that decision? Was it yourself?

2568   MR. PELLEGRINO: No. I have an accountant. I have a --

2569   COMMISSIONER KATZ: You have an accountant. An accountant doesn't make investment decisions for programming.

2570   MR. PELLEGRINO: Hold on.

--- Pause

2571   COMMISSIONER KATZ: Who made the decision to reduce your technical expenses by 95 percent?

2572   MR. REINBERGS: Vice-Chair, if you could give us just a moment. We're just finding out the answer to that question.


--- Pause

2574   MR. REINBERGS: Mr. Pellegrino is informing me that he makes these decisions -- sorry. The decisions are made by the shareholders of the licensee. It would be Fabrizio Pellegrino as well, mainly Fabrizio Pellegrino. Yes.

2575   COMMISSIONER KATZ: And how is Fabrizio Pellegrino related to Mr. Pellegrino here?

2576   MR. REINBERGS: He is his son.

2577   COMMISSIONER KATZ: And he is here acting on behalf of the corporation, Mr. Pellegrino?

2578   MR. REINBERGS: Yes, Mr. Pellegrino is.

2579   COMMISSIONER KATZ: And he does not have the ability to respond to the question?

2580   MR. REINBERGS: Well, the question was who makes those decisions and the answer is the shareholders of the licensee would participate in the making of those decisions with information supplied by Mr. Domenic Pellegrino.

2581   COMMISSIONER KATZ: Okay. So I'll ask the next question.

2582   Why were those decisions made to substantially reduce the programming expenses and the technical expenses associated with providing a public broadcast service to the public for which it was licensed?

--- Pause

2583   MR. PELLEGRINO: Maybe this was the time when Punjabi took over. So, you know, if we broker time to other people, like now, we have a half-hour brokered here, one hour there. So when we do broker, you know that you eliminate the announcers to do the program, the music director and everything. So the expense has gone down considerably.

2584   COMMISSIONER KATZ: But the one expense that didn't go down was general administration.

2585   So again, I will ask you, Mr. Torreli, when you file your information to be very specific and let us know exactly what expenses went into administration in general, retroactive to 2005 that is on here, and when you project out as well what those expenses would be recovering and serving.

2586   MR. TORRELI: Just to clarify, you want a breakdown of the general admin expense from '05 and on?


2588   MR. TORRELI: Okay.

2589   COMMISSIONER KATZ: Yes, please.

2590   MR. REINBERGS: I would also like to make, if you don't mind, one additional point addressing your concern earlier --

2591   THE CHAIRPERSON: Go ahead.

2592   MR. REINBERGS: -- and that is on the accrual basis of accounting, and I know I don't have to bring that to your attention, but it shows really, I guess, the financial position of the company today.

2593   And where Mr. Pellegrino has expressed that the company is doing better than what you see on the financial statements, he is expressing his understanding of where the company is going, his understanding of what future sales may be, what contracts he may be entering into over the next little while, and all of those would not be reflected in the financial statements but would give him a sense of where the company is going and what the financial well-being in the future is and may be.

2594   COMMISSIONER KATZ: But what is the year-end for this corporation?

2595   MR. PELLEGRINO: August.

2596   COMMISSIONER KATZ: August. So you are already into May of the following year.

2597   Can I ask you to file six-month actuals for the first six-month period as well as when you file your submission for the years going forward as you are going to forecast?

2598   MR. TORRELI: Well, typically when you do a forecast and we are already in an in-term period, we would show the year ended August '09, the actuals up to, say, six months, like you suggest, and then forecast from there.

2599   COMMISSIONER KATZ: Okay. So can we see a breakdown not just of this current year's estimate but the six-month actual --

2600   MR. TORRELI: Yes.

2601   COMMISSIONER KATZ: -- as well as the six-month stub period to get to your year end August 2010?

2602   MR. TORRELI: Yes.


2604   This is a corporation, so let me ask you this question, Mr. Torreli.

2605   How does this corporation file with CRA if the documents have all been damaged? What does CRA do to deal with this issue?

2606   MR. TORRELI: Well, normally you don't file the documents that are damaged with CRA, you file year-end tax returns.


2608   MR. TORRELI: And those --

2609   COMMISSIONER KATZ: Does the corporation not have to file audited statements with CRA?

2610   MR. TORRELI: No. There's no requirement that all companies have to file audited statements.

2611   COMMISSIONER KATZ: Okay. So the documents that were filed with CRA are the same as the documents that we have before us as well?

2612   MR. TORRELI: Correct. The statements that I presented are the statements that are included with the tax returns.

2613   COMMISSIONER KATZ: And you filed those statements with CRA on behalf of the corporation?

2614   MR. TORRELI: I believe I would have filed the last '09. I'm not sure about the prior years.

2615   COMMISSIONER KATZ: You didn't file the '08 one?

2616   MR. TORRELI: No -- '08, I believe, yes. Sorry.

2617   COMMISSIONER KATZ: Okay. So you filed the '08 one as well.

2618   And you worked with whatever data you had available?

2619   MR. TORRELI: Correct.

2620   COMMISSIONER KATZ: Whatever you were given.

2621   Did you physically see the soiled documents that obviously were damaged by the water?

2622   MR. TORRELI: No, I didn't.

2623   COMMISSIONER KATZ: You did not?

2624   MR. TORRELI: No.

2625   COMMISSIONER KATZ: So who would have seen those documents, just yourself, Mr. Pellegrino?

2626   MR. PELLEGRINO: I guess so, me, my secretary and the people who work over there eventually. This flood was next to the room of Trina Thompson. It was an attached room, so the water went there and in the files.

2627   COMMISSIONER KATZ: So you didn't bring the box with the documents to Mr. Torreli in order for him to see what he can extract himself?

2628   MR. PELLEGRINO: No, just the bank statement and --

2629   COMMISSIONER KATZ: So what did you actually use, Mr. Torreli, in order to come up with your statements?

2630   MR. TORRELI: Certain of the documents, the bank statements, had already been input into the computer program that the client was maintaining and I believe the lady Trina was updating those records. And those were updated, if I recall, up till the end of January, like I mentioned earlier.

2631   From January on we had no records. So we requested copies of the bank statements from the bank and we rolled forward from the January '08 numbers we did have and reported all the activity per the February to August '08 bank statements and prepared the statements on that basis.

2632   COMMISSIONER KATZ: So why wouldn't that be sufficient for your firm or for yourself to provide a clear audited report?

2633   MR. TORRELI: Well, when you do an audit, without getting into complexities, you are basically saying that all the numbers on the statements are -- you are stamping them saying that they are correct numbers.

2634   COMMISSIONER KATZ: But you are also saying they were provided by management to you and they represent fairly the information that is contained?

2635   MR. TORRELI: Yes, but you're also confirming and doing the work involved to verify that the numbers are correct.

2636   And when you're -- in a lot of cases -- in this particular case there were opening balances that we had no records of that supported what made up those opening balances and I wasn't in a position to get the information to make that clean audit report.

2637   COMMISSIONER KATZ: Wouldn't the opening balances be those of the prior year's closing?

2638   MR. TORRELI: Yes, but normally there's --

2639   COMMISSIONER KATZ: And they were audited.

2640   MR. TORRELI: No, they weren't audited. They were never --

2641   COMMISSIONER KATZ: The previous year's closing wasn't audited?

2642   MR. TORRELI: None of the statements have ever been audited. That's the problem. That's why I couldn't do the audit.

2643   MR. REINBERGS: If I may, under the applicable corporate legislation there is no requirement, as the company is -- the licensee is a private corporation, to file with CRA -- or to prepare, sorry, audited statements. And under Commission Circular number 404, there is no requirement to prepare audited statements.

2644   The reason why Mr. Pellegrino agreed to provide audited statements last year at the hearing in January of 2009, which was a misunderstanding by him, was because it was first mentioned at that time.

2645   But my understanding of the legislation is that there is no requirement.

2646   COMMISSIONER KATZ: And no one has seen the damaged documents at all?

2647   MR. PELLEGRINO: Sure, I see the documents but we threw -- you know, it was no use to keep documents like that. There was nothing in there. You want me to keep for -- what's the purpose? I mean it was -- there was water in there. It was full of water.

2648   COMMISSIONER KATZ: Well, some documents can be kept and retained, and it depends what they are, and dried out as well.

2649   I had an experience of having a flood in my house, so I know exactly how to dry documents out. But that was my situation, not yours.

2650   But if what I hear is there is no one who is going to attest to it, then we will just have to accept the information at this point in time.

2651   Thank you.

2652   THE CHAIRPERSON: Mr. Torreli, I know that we had handed you probably a lot more work than you had anticipated doing but that June 14th date is a pretty firm deadline.

2653   As you know, the licence does expire at the end of August and we will need time to evaluate the application, everything we heard today and the information that you provide us. So please, it's a firm deadline.

2654   Just one final question and I'm a bit confused over the claim that Industry Canada said that it will automatically extend its licence. I have here an email dated April 28, 2010, which simply says:

"It is therefore Industry Canada's intention at this time to renew the CHSC Broadcast Certificate for a period of one year." (As read)

2655   Is there other information since April 28 to indicate that Industry Canada will extend that Certificate beyond one year?

2656   MR. HOOPER: In my conversation with Aaron Eaton, the Industry Canada's Inspector, what he told me was that given the equipment that we had repaired, the systems we had repaired would not be activated until June because of the delay, that they couldn't certify that everything was to their specification.

2657   Second part, the --

2658   THE CHAIRPERSON: Until such time as it is implemented?

2659   MR. HOOPER: Until such time as it is implemented.


2661   MR. HOOPER: He told me: At this time what I can do is extend for one year. When you have everything proven, in other words, when it's turned on and we see that it's proven and all that is done and we see that, then we will give you the extension. That's what he told us.

2662   THE CHAIRPERSON: Okay. So it's dependent more so on the technical plan being implemented and being implemented in such a way that is acceptable to Industry Canada?

2663   MR. HOOPER: Exactly.

2664   THE CHAIRPERSON: Okay. Thank you very much for that clarification.

2665   Well, I think those are all our questions for you this morning. Once again, thank you very much. It couldn't have been an easy morning for you but I do appreciate all your frank answers to our questions. Thank you.

2666   We are adjourned -- no, Madam Secretary.

2667   THE SECRETARY: This concludes Phase III of item 4 on the agenda.

2668   This completes consideration of items 1 to 4 on the agenda.

2669   I would like to indicate for the record that the interveners who did not appear and were listed in the agenda as appearing interveners will remain on the public file as non-appearing interventions.

2670   Also, there are four non-appearing applications on the agenda of this public hearing. Interventions were received on some of these applications. The Panel will consider these interventions along with the applications and decisions will be rendered at a later date.

2671   This completes the agenda of this public hearing.

2672   Thank you, Madam Chair.

2673   THE CHAIRPERSON: Thank you, Madam Secretary.

2674   As is customary, we do truly do with to thank all participants in this proceeding.

2675   As you know, it is not just us who put together a hearing. We have everyone from interpreters to court reporter and, of course, probably the best staff in the public service, our CRTC staff.

--- Applause

2676   THE CHAIRPERSON: Thank you very much.

2677   We are adjourned.

--- Whereupon the hearing concluded at 1157


____________________      ____________________

Beverley Dillabough      Sue Villeneuve

____________________      ____________________

Monique Mahoney         Jean Desaulniers

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