ARCHIVED - Transcript, Hearing 6 October 2010
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Volume 1, 6 October 2010
TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO-TELEVISION AND
To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2010-551
Saskatchewan A Room
Saskatoon Inn Hotel & Conference Centre
2002 Airport Drive
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
To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2010-551
Stephen Simpson Chairperson
Elizabeth Duncan Commissioner
Candice Molnar Commissioner
Cindy Ventura Secretary
Crystal Hulley Legal Counsel
Michael Craig Hearing Manager
Saskatchewan A Room
Saskatoon Inn Hotel & Conference Centre
2002 Airport Drive
October 6, 2010
- iv -
TABLE OF CONTENTS
PAGE / PARA
Golden West Broadcasting Ltd. 5 / 28
Fabmar Communications Ltd. 73 / 499
Golden West Broadcasting Ltd. 129 / 875
Humboldt & District Chamber of Commerce 134 / 908
Humboldt & District Hospital Foundation 147 / 983
Mayor Malcolm Eaton - City of Humboldt 153 / 1024
Fabmar Communications Ltd. 163 / 1088
Golden West Broadcasting Ltd. 167 / 1116
Corus Audio & Advertising Services Ltd. 170 / 1136
- vi -
Undertakings can be found at the following paragraphs:
316, 360, and 834
--- Upon commencing on Wednesday, October 6, 2010 at 0905
1 THE CHAIRPERSON: Good morning. I would like to call this hearing to order, please.
2 My name is Stephen Simpson, I am the CRTC Regional Commissioner for British Columbia and the Yukon and I will be presiding over this hearing for the next two days.
3 Joining me on the Panel are:
4 - my colleague Commissioner Duncan, who represents the Atlantic Region and Nunavut;
5 - to my right is Commissioner Molnar, who is the Regional Commissioner for the great provinces of Saskatchewan and Manitoba.
6 The Commission team assisting us includes Michael Craig, who is the Hearing Manager, over there; and Crystal Hulley is legal; and Cindy Ventura is our Hearing Secretary and most of you know her. Please speak with Ms Ventura if you have any items or questions regarding the proceedings over the next two days and she will be sure to vet your questions and get them into the right hands.
7 At this hearing we will study two applications to operate a new English-language commercial FM radio station in the Humboldt market. These applications are competing for the use of the same frequency.
8 We will study the proposals in light of the cultural, economic and social objectives set out in the Broadcasting Act, as well as the Commission's policies and regulations flowing from it.
9 The Panel will base its decision on several criteria, including the state of competition, the diversity of editorial voices in the Humboldt market and the quality of the individual applications.
10 We will also consider the market's ability to support a new radio station, the financial resources of each applicant and the proposed initiatives for Canadian Content Development.
11 We will also be hearing a television application where we will examine an application by Corus Audio & Advertising Services to operate an English-language specialty television channel that would be known as LOCAL1.
12 Corus has proposed that the new channel would provide local information customized for each community in which it is distributed.
13 So with that done I would now like to invite our Hearing Secretary, Ms Ventura, to explain the procedures that we will be following.
14 Ms Ventura...?
15 THE SECRETARY: Thank you and good morning.
16 Before beginning I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.
17 When you are in the hearing room we would ask that you please turn off your cell phones, beepers and BlackBerrys as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators. We would appreciate your co-operation in this regard throughout the hearing.
18 We expect the hearing to take approximately a day and a half. We will also be starting tomorrow morning at 9:00 a.m. We will take a lunch, breaks in the morning and in the afternoon. We will let you know of any schedule changes as they may occur.
19 Room 234 will serve as the examination room where you can examine the public files of the applications being considered at this hearing. As indicated in the Agenda, the telephone number of the examination room is (306) 373-2735.
20 Le service d'interprétation simultanée est disponible durant cette audience. Vous pouvez vous procurer un récepteur auprès du technicien à l'arrière de la salle. L'interprétation anglaise se trouve au canal 3, et l'interprétation française au canal 2.
21 Interpretation services will be available throughout the duration of this hearing. English interpretation is available on Channel 3 and French interpretation on Channel 2.
22 We would like to remind participants that during their oral presentations they should provide for a reasonable delay for the interpretation, while respecting their allocated presentation time.
23 There is a verbatim transcript of this hearing being taken by the court reporter sitting at the table in front of me. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break. Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.
24 Now, Mr. Chair, we will proceed with Item 1 on the Agenda, which is an application by Golden West Broadcasting Ltd. for a broadcasting licence to operate an English-language FM commercial radio programming undertaking in Humboldt.
25 The new station would operate on frequency 107.5 MHz (channel 298C1) with an average effective radiated power (ERP) of 59,000 watts (maximum ERP of 96,000 watts with an effective height of antenna above average terrain of 164.1 metres).
26 Appearing for the applicant is Mr. Lyndon Friesen.
27 Please introduce your colleagues, after which you will have 20 minutes to make your presentation.
28 MR. FRIESEN: Thank you and good morning, Commissioners and staff.
29 I am Lyndon Friesen, President of Golden West Broadcasting.
30 With me today is Elmer Hildebrand, CEO of Golden West Broadcasting; Ken Goldstein, President of Communications Management; Dave Lehman, our Manager of Online Media; and Tim Thibault, Owner/Operator of Humboldt Sign Services in Humboldt.
31 We are pleased to be here today to tell you about the exciting new local FM radio service that we want to bring to Humboldt, Saskatchewan.
32 Golden West continues to be singularly focused on the smaller, more rural markets on the prairies. Local radio is what we do all day, every day, 24/7. Broadcasting is our only business. We understand Saskatchewan and small Saskatchewan towns.
33 Because local radio is what we do, we know Humboldt will reap terrific benefits from a Golden West radio station. We have been here before. In June 2008 Golden West applied to establish an FM radio station for Humboldt, but our application was denied. Now, two and a half years later we still believe passionately that the Humboldt area deserves its own radio station.
34 It's worth mentioning that the last Humboldt hearing it was made clear to us that the Commission expects hard evidence and expert data that supports our revenue calculations, economic impact, audience assessment and even format selection.
35 While intuition and market knowledge have served us exceptionally well, we contracted experts to conduct an economic study and a formal format study. These two studies confirmed what we already knew to be true, that Humboldt does need a Golden West radio station.
36 What you will hear from us today more than addresses the concerns from that original denial in '08 and clearly demonstrates that we will bring Humboldt a complete FM local service.
37 Humboldt is a vibrant, diverse and thriving community that is experiencing growth in almost every sector. What greater testament to the growth of that city than the arrival of that iconic much loved Canadian franchise Tim Hortons. Construction has already started, with the opening slated for later this month.
38 According to Saskatchewan health, in 2009 the City of Humboldt's population grew to 6000, suppressing that of the City of Melfort. Humboldt community leaders have repeatedly stated they fully expect this economic development and growth to continue. Further indicators of this growth, there is a new hospital project, new seniors retirement housing, a new hotel, the addition of a new spray water park, just to name a few. And let's not forget all the potash mining going on in that region.
39 This is the kind of growth that a Golden West radio station and online community portal further enhances. Our commitment to bring local programming to Humboldt is clear, from our staffing levels to the funds we will spend on local programming, $2.1 million over seven years.
40 Local content is what makes local radio viable and is only possible with that level of investment. To us, local programming is the lifeblood of our business.
41 Humboldt will get our unique brand of intensely local community radio service in their own backyard, up to the minute community information and a service providing local businesses, non-profit organizations, emergency services, sports teams, music and cultural arts groups all with a tailor-made promotional vehicle and an ongoing opportunity for countless organizations to have their voices heard.
42 A local radio station is a terrific way to get their message out to the people they need to reach in their community and eliminates the reliance on Saskatoon stations and other out-of-market operators to provide information to and for Humboldt.
43 The people of Humboldt have spoken. It's unmistakable from all the support letters received by both applicants here today that the community wants and needs their own FM station. We were certain of this in '08 and even more so today.
45 MR. HILDEBRAND: Our original application in 2008 was denied. The pivotal reasons for that denial having more than addressed in this new application.
46 The signal overlap. The original directionality of our signal has been altered to ensure there is no significant overlap or encroachment with the Saskatoon BBM market. This alteration also satisfies the common ownership objection tabled at the time of the hearing and particularly in light of the revised Common Ownership Guidelines released by the Commission in June of 2010.
47 Golden West has extensive long-term experience in the communities of similar or smaller size. Rosetown, Kindersley in Saskatchewan and Boissevain in Manitoba.
48 While we anticipate modest revenue gains in the first few years, from our perspective a market the size of Humboldt is able to sustain its own radio station using economies of scale.
49 Our newest FM station in Drumheller, which went on the air in April of 2009, is a perfect example where revenue achieved in the first year of operation was in line with our original projections.
50 We tend to be conservative in our projections and promises and then we go above and beyond both in developing our audience and in growing our business.
51 As we do in all other markets, we will generate our revenue locally. For many retailers and other local businesses, having access to their own radio station is cost effective and gives them a much-needed local advertising vehicle to reach their customer base.
52 Consider, too, that it takes well over an hour to drive between Humboldt and the nearest centre that has any significant size.
53 To ensure the accuracy of our revenue projections we contracted Communications Management to examine a number of questions relating to the Humboldt radio market, including the definition of market area and a determination of the degree to which Humboldt is a separate market, distinct from Saskatoon and Melfort. The results are summarized in the research notes that accompany the application.
54 I will now ask Ken Goldstein to elaborate.
55 MR. GOLDSTEIN: We began by analysing a study prepared for the Saskatchewan government by two experts at the University of Saskatchewan. The study divided the province into functional economic areas or FEAs.
56 In that study the Humboldt area was defined as being separate and distinct from the FEAs for Saskatoon and for Melfort. We then used the boundaries for the Humboldt area from that study as the starting point for calculating demographic and economic data for the market. In fact, we adjusted the area to make it slightly smaller in order to conform more closely to the contour for the proposed transmitter.
57 As indicated in the research note, there are approximately 22,000 people in the market area and retail sales are estimated at about $200 million.
58 The next step was to estimate the factor for radio advertising as a function of retail trade for the areas of Saskatchewan located outside of Regina and Saskatoon. Using that factor we could then estimate that the potential for radio advertising in the Humboldt market was in the general range of $1.1 to $1.3 million annually.
59 Now, since those estimates were prepared some months ago, the Commission and Statistics Canada have released radio data for 2009 and Statistics Canada and other sources have also released more recent data on population and retail sales. Based on the more recent data, the estimated potential for radio advertising in the Humboldt market still appears to be in the range of $1.1 to $1.3 million.
60 We believe that the Golden West revenue projections for Humboldt are realistic and fit within the estimated potential for the market.
61 Now, in the case of local demand and impact on others, our research note clearly establishes that the trading area is separate from Saskatoon, separate from Melfort, and of course the discussions that people have with local businesses indicate that they feel that way as well.
62 There is, without question, sufficient demand to support the entry of a new Golden West FM station in Humboldt.
63 Now, the application form asks about impact on existing broadcasters. Since there are no existing broadcasters based in Humboldt the literal and precise answer is that none of the projected revenues will come from existing radio broadcasters.
64 However, one intervenor, in both 2008 and 2010, claimed it would suffer losses from the establishment of a new station. We would be prepared to discuss those claims in detail with you at the appropriate time in this hearing, but let us just say that these claims of economic damage are greatly exaggerated. In fact, even that intervenor now admits in 2010 that it overstated the impact claims it made in 2008.
65 MR. FRIESEN: Another element of the 2008 denial dealt with our choice of format. In this application, using both our own market observations and the data collected by Kroeger Media's professional format survey, we will establish a variety hits format.
66 This format will provide more musical diversity, increased opportunity for local editorial voices and, quite simply, more choice. This format has the most appeal to those who go to the radio most to get their news and information. It has the widest appeal to the most residents of Humboldt.
67 In these markets were choice is limited, it is our intention to target a wide core audience. Rather than be exclusive, we deliberately take a broader, more inclusive approach.
68 In order to obtain the most accurate data, the survey we commissioned was a random survey completed between October 24th and 30th of last year. The population statistics are in line with StatsCan's population statistics for the area.
69 We used a 95 percent confidence level with a plus or minutes 7 percent confidence interval, meaning that we are 95 percent sure our results are accurate within 7 percent.
70 This research demonstrates this format is consistent with the data and reflects the musical tastes of a large segment of the adult radio audience.
71 The general target is 18-54, the core is adults 35-54, almost even between males and females but skewing slightly to female. We expect strong secondary tuning from the 18-34 demo, particularly 25-34.
72 The goal to current ratio would be approximately 80 percent Gold, 20 percent Recurrent and Current. This variety hits format is a terrific alternative to distant out-of-market radio signals, satellite radio, the Internet and, as a result, we will also expect to repatriate listeners who had no alternative but to seek out other sources.
73 In the final analysis, in our world the format is significant, but what is even more essential is bringing intensely local programming to the people of Humboldt.
74 MR. HILDEBRAND: In the matter of Canadian content and emerging artists, in addition to committing to a minimum level of 40 percent Canadian content, we will broadcast a weekly 30-minute made in Saskatchewan program showcasing local musical talent.
75 Going one step further, we will create a special Saskatchewan music category as part of our regular daily music rotation, ensuring that 3 percent of our musical selections feature emerging artists.
76 We commit to $48,000 in over and above contributions over the first license term. After the FACTOR contributions, all remaining funds stay in Humboldt. They will go to the Saskatchewan Music Festival and for a battle of the bands style for an on-air contest, for locally merging musicians.
78 MR. FRIESEN: Golden West offers extensive shared back room functions like senior management, payroll, new media engineering, technical and IT support. At the same time, Golden West's reputation for hiring local continues unabated, as it will in Humboldt.
79 We anticipate hiring nine local staff, five in management and sales, administration; four in programming, both on-air announcers and news, all of whom will work out of a fully operational studio and offices in Humboldt. Over time, as the radio station becomes established and revenue increases, we expect to add even more staff to conduct local surveillance and seek local content.
80 As a reference point, we launched Drum FM in Drumheller in April of '09 with a staff of nine. That has already grown to 10. Our radio station in Rosetown, near Saskatoon, has a staff of 12.
81 Hiring local creates new local career opportunities and ensures our staff is highly reflective of the cultural diversity and demographic makeup of that community. Local staff have deep roots in the community and they are finely attuned to the current issues and activities, above and below the radar.
82 We will be live-to-air or live-assist for at least 82 hours a week, from 6:00 A to 6:00 P Monday through Friday and 6:00 A to 5:00 P on weekends. Live-assist simply means that an on-air announcer is working on an alternate project in the building while at the same time being able to break in on-air and take phone calls at any moment. This also means we are not reliant on canned or repeat programming from another market.
83 The pulse of the community is its people and content is the cornerstone of keeping the people connected; local news and information, local weather and local surveillance. Out-of-market media covers only extraordinary or tragic events. Day-to-day local activities receive little or no attention.
84 We will report on all the activities that happen locally, regionally, all delivered from a local perspective. We commit to broadcasting a total of 836 minutes of spoken word, of which 347.5 minutes are dedicated to pure news. Everything else is sports, local sports, weather, surveillance and announcer talk, talk that's about Humboldt and area events, interviews with community leaders, promoting local concerts, events and initiatives relating to local organizations. It's really about sharing day-to-day stories about the people of Humboldt, stories only meaningful and relevant to them.
85 Here is just an example of how one of our newscasts will sound.
--- Audio clip
86 MR. FRIESEN: Now, I will ask Dave Lehman, our Manager of Online Media to tell you about the community portal that we will also bring to Humboldt.
87 MR. LEHMAN: We believe that understanding and integrating new media is a critical part of any media company's business plan. A community portal is a natural extension and enhancement of the local news and information that we gather for radio and radio is the ideal and most effective way to continuously drive and build traffic to a website.
88 The website we develop and maintain in each of our markets is termed a community portal because of the singular and deep focus on the community. It's not just a radio station website. The portal is updated throughout the day, including evenings and weekends, focusing only on local news and information that is relevant to the community.
89 News stories include additional information such as photos, video and other multimedia elements. Live weather provides accurate, up-to-the-minute information on changing conditions, forecasts and severe weather warnings.
90 Self-service classified and business director provide service around the clock.
91 All these items quickly become essential services that are an integral part of our audience's daily lives. It is a powerful method of interacting and communicating with the entire community, not just for Golden West, but also city departments and other community groups and organizations.
92 To date we have developed just such a community portal as this in 13 of our markets. We continue to be astounded by the growing traffic to these portals and the extent to which they are woven into the social fabric of each community. Our portals very quickly become the go-to site for up-to-the-minute local news and information.
93 We will develop humboldtnow.com as a source of exclusively local news, information, resources and entertainment delivered online by the radio station directly to the residents of Humboldt.
94 We feel strongly that a full-service community portal is critical to providing an effective and successful service to the community of Humboldt. Gathering and producing the local content for a community portal takes commitment and an incredible amount of effort and significant financial support, not to mention the cost of maintaining a technical infrastructure.
95 Ultimately success can only be achieved with relentless attention and focus by the feet on the street, the local news reporters, announcers and staff day-in and day-out.
96 Now I will turn things over to Tim Thibault, a Humboldt resident and local business owner.
97 MR. THIBAULT: I own an advertising company in Humboldt and as part of our product line we provide reader boards and mini-billboards in Humboldt and area. To date the competing applicant has had little to no impact on my revenues. My customers regularly comment on the lack of diversity in advertising options, which makes it difficult to organize any sort of strategic campaign.
98 As the Director of the Arts and Culture Society in Humboldt I am actively involved in the performing arts in the region. There has been little support of the kind you would expect from a radio station claiming to have been servicing Humboldt for 40 years.
99 When issuing press releases for upcoming concerts we have never been contacted by the nearest radio station in Melfort to obtain further details or report about the event. The most they have offered was their rate card.
100 In contrast, our local paper provides excellent coverage for the larger all ages show featuring some of Canada's top talent groups like The Stereos who performed in the 2009 Grey Cup half-time show and Acres of Lions who have gone on record saying their Humboldt experience was not only great but legendary.
101 Humboldt's annual two-week music festival encompasses performing arts from the entire region. In reviewing programs dating back 10 years there has been zero involvement from the nearest radio service.
102 As President of Humboldt Cops, the citizens on patrol program, I recognize the need in having access to a local newsroom and on-air personalities, especially on weekends when it is important to relay information to the local residents as quickly as possible.
103 As a former volunteer fire fighter for 10 years, I know firsthand how precious the need is for timely and live coverage, to have continuous updates on local active weather, local states of emergency or detours due to traffic accidents.
104 Golden West has made it clear they are committed to hiring a full complement of local staff and investing considerable dollars in local programming. Humboldt doesn't just want any radio station, they want the right radio station and Golden West will bring the right radio station.
105 MR. FRIESEN: Community and business leaders know a local radio station builds and binds a community together and Humboldt wants this for their community.
107 MR. HILDEBRAND: Humboldt is a perfect fit for our corporate culture. Golden West has built a solid reputation for being committed to the local community and this new FM station and community portal for Humboldt continues that philosophy.
108 Decade after decade we have demonstrated local radio is what we do and have always done. We have a unique ability to successfully create synergies, forge strong local relationships and to grow right along with the community. We are committed to investing in Humboldt now and in future by bringing the community the full-service local radio station they so richly deserve.
109 MR. FRIESEN: That concludes our presentation and we are ready for your questions.
110 THE CHAIRPERSON: Thank you very much, gentlemen, for your presentation.
111 I always knew that Humboldt's most famous export was Glenn Hall. Having grown up in a hockey league that only had eight teams I was always partial to the goalies and I thought he was one of the greatest.
112 But I would also like to share with you that we had the distinct pleasure of visiting Humboldt yesterday and, unbeknownst to any of us, it was named after Baron Friedrich, I believe Heinrich, von Humboldt, which I'm sure is going to make our Chairman very happy.
113 THE CHAIRPERSON: I just have two quick questions before I turn things over to Commissioner Duncan.
114 How many markets does Golden West operate in where their population base is 6,000 or less?
115 MR. FRIESEN: Offhand it's probably about a half a dozen. In the range of half a dozen. Probably six.
116 MR. HILDEBRAND: Well, we can --
117 MR. FRIESEN: We can count them. Altona.
118 MR. HILDEBRAND: Altona is where we started many years ago and has a population of 3,700 people. Boissevain is about 2,500, Shaunavon is under 6,000, Drumheller is under 6,000. So we have --
119 MR. FRIESEN: Rosetown.
120 MR. HILDEBRAND: Rosetown is very much under 6,000, as is Kindersley.
121 MR. FRIESEN: Kindersley.
122 MR. HILDEBRAND: So we have about half a dozen, seven markets that size.
123 THE CHAIRPERSON: Mr. Thibault, my curiosity. I was very pleasantly surprised to hear that you are operating an advertising company. I presume this is predominately outdoor advertising.
124 MR. THIBAULT: Predominantly, yes.
125 THE CHAIRPERSON: How long have you been operating this business?
126 MR. THIBAULT: Since '05.
127 THE CHAIRPERSON: Yes, okay.
128 Thank you very much.
129 MR. HILDEBRAND: Mr. Chair, since you are inserting into the process here Glenn Hall, a long-time NHL goalkeeper, I need to insert here that I was a goalkeeper in the Southeastern Manitoba Hockey League so I relate to that.
130 THE CHAIRPERSON: You have stopped a few pucks in your time, Elmer.
131 MR. HILDEBRAND: Yes. I got hit in the head too often.
132 THE CHAIRPERSON: Thank you very much.
133 I would like to turn things over to Commissioner Duncan. Thank you.
134 COMMISSIONER DUNCAN: Welcome and it's nice to see everybody again.
135 We certainly did enjoy our trip to Humboldt. It certainly did underscore the distance between Saskatoon for one and Humboldt, but it was a very nice visit and we were disappointed to miss Tim Hortons. That's a reason to come back, right.
136 But I'm going to start first of all with the local programming. Your application has provided us with a lot of detail so these are more just for clarification.
137 But you were mentioning, and you mentioned again today, about the 82 hours live-to-air weekly and I'm assuming the remainder will be voice tracked?
138 MR. FRIESEN: Much of the late evening hours and overnight are voice tracked.
139 COMMISSIONER DUNCAN: And from your comments this morning, it's all done in-house.
140 MR. FRIESEN: It's all done in house.
141 COMMISSIONER DUNCAN: All done in-house. All right.
142 So I'm sure that you know that FM undertakings serving more than one radio station are required by condition of licence to refrain from soliciting or accepting local ads when they have less than 42 hours of local programming per weekend. That's, as I say, in communities with more than one station.
143 If we only license one station in Humboldt it would be a single station market and that condition wouldn't apply.
144 You are proposing to do 126 hours a week of local programming. What level of programming would you be prepared to commit to by condition of licence?
145 MR. FRIESEN: To the 126 hours.
146 COMMISSIONER DUNCAN: By condition of licence?
147 MR. FRIESEN: Yes.
148 COMMISSIONER DUNCAN: Okay. Thank you very much.
149 First of all I would just like to have just sort of a general conversation with you, actually with you explaining to me, if you would, about how the Humboldt market will be better served in terms of musical diversity by out-of-market stations.
150 I will start by saying that yesterday on the car radio we had a lot of luck finding country stations, country music, but I don't think we had a lot of luck finding much else. But anyway, so we are wondering how your proposed format will bring musical diversity to that market from what they are already receiving. We heard country, but the reports show that there is many more stations going in Humboldt and a large variety of formats.
151 MR. FRIESEN: You know, I think most of the Saskatoon radio stations are heard well in Humboldt and so while there is a fair bit of diversity coming out of the Saskatoon market very little of that -- and again, musically, as I said in our oral presentation, music is very important, but what's really important is the rest that we wrap around it. That's, I think, what's interesting and what's useful and important to Humboldt.
152 The musical format that we chose deals with a very broad range of audience. It's not narrow. It's not selected to -- those kind of formats are available and I think most of them are out-of-town tuning, as I said in my oral presentation.
153 This will be a broad format of music well-known to all of us, both playing a lot of Gold music and some current and we think that's going to have broad appeal.
154 COMMISSIONER DUNCAN: Thank you.
155 I know that you operate three stations in Saskatoon and so I would like to understand how your existing stations in Saskatoon will be impacted if you receive the licence for Humboldt.
156 MR. HILDEBRAND: I think we should point out that the three stations in Saskatoon are not Golden West stations, they are stations that are outside the Golden West family, though they are in my family. So they would not be in any way impacted. So the process would not be overlapping at all.
157 COMMISSIONER DUNCAN: So no economies of scale with those systems?
158 MR. HILDEBRAND: Not with Saskatoon, no --
159 COMMISSIONER DUNCAN: Okay.
160 MR. HILDEBRAND: -- because that's a separate entity. They operate on their own.
161 The synergies would he would be with Rosetown, Kindersley, Moose Jaw, Weyburn, Estevan, Swift Current, Shaunavon and all of those places there. That's where the Saskatchewan synergy would really, really take place, in the rural non-metropolitan areas.
162 COMMISSIONER DUNCAN: Okay.
163 MR. HILDEBRAND: When I say non-metropolitan, outside of Regina and Saskatoon.
164 COMMISSIONER DUNCAN: Okay.
165 So how would you anticipate -- I would be interesting to hear, then, your comment -- how the revenues of CJWW, which I understand offers country, news and talk format, will be impacted given the emphasis your new station is going to place on local news and information.
166 MR. HILDEBRAND: I don't expect that it will have an impact on the revenues of the Saskatoon radio stations, because the Saskatoon radio stations basically generate the revenue out of Saskatoon. The Humboldt operation will generate the revenue from Humboldt and surrounding area.
167 COMMISSIONER DUNCAN: So I had a similar question with regards to CJMK. So what you are saying is that those stations don't solicit or generate revenue from Humboldt market?
168 MR. HILDEBRAND: Not as a rule, no.
169 COMMISSIONER DUNCAN: Okay.
170 The advertising rates in smaller markets like Humboldt, would they be significantly lower than rates in Saskatoon?
171 MR. HILDEBRAND: For sure.
172 COMMISSIONER DUNCAN: What percentage lower? How much lower do you think they would be?
173 MR. HILDEBRAND: I'm only guessing now because I don't --
174 COMMISSIONER DUNCAN: Sure.
175 MR. HILDEBRAND: -- think I have the data with me, but they would probably be in the area of a third of what they would be in major markets and in some cases less, because in prime time in major markets the rates are significantly higher than they would be in smaller markets.
176 COMMISSIONER DUNCAN: So the rates would be a third? Not a third less, but a third?
177 MR. HILDEBRAND: Right.
178 COMMISSIONER DUNCAN: Yes.
179 So do you think, then, that there will be an incentive for Saskatoon businesses to place advertising on the Humboldt station?
180 MR. HILDEBRAND: I don't see why. I mean, again, our whole process in Humboldt will be to serve Humboldt and we would expect to generate some regional advertising, advertisers that sort of want to cover the entire province, but we wouldn't anticipate, nor have we budgeted, any revenue from Saskatoon businesses to advertise in Humboldt.
181 COMMISSIONER DUNCAN: Okay. So you then won't be directing any marketing activities to that market?
182 MR. HILDEBRAND: None at all.
183 COMMISSIONER DUNCAN: Okay.
184 MR. HILDEBRAND: I might add, in some of our markets, you know the smaller markets, we work toward trying to keep the business there.
185 The example I use in southern Manitoba, we have a number of large centres in the U.S., shopping malls who want to advertise on our smaller stations in southern Manitoba inviting people to go shop in Grand Forks and Fargo, and we turn that business down because we feel as a local radio station we want our listeners to spend their money in our local communities, not to go and spend it outside of the market.
186 COMMISSIONER DUNCAN: Okay.
187 MR. HILDEBRAND: That's sort of our basic philosophy.
188 COMMISSIONER DUNCAN: Very credible. Thanks.
189 This is sort of a longer question, but just bear with me, I'm sure you are going to be familiar.
190 In its supplementary brief Fabmar indicates it:
"... expects a new station serving Humboldt and surrounding areas would reduce the local sales revenue of its Melfort stations by 15 percent and reduce its regional and national business by 20 percent." (As read)
191 They go on to state:
"These losses would jeopardize..."
192 And I'm quoting:
"These losses would jeopardize our ability to maintain the current level and quality of local and regional programming." (As read)
193 In your application you have indicated that in year two you expect from existing radio stations -- and you mentioned it this morning -- to generate no revenue. Advertisers currently not on radio to generate 80 percent of your revenue, increased spending by current advertisers 10 percent and other media 10 percent.
194 It's quite different perspectives from both parties so I'm just wondering how you would reconcile these two positions.
195 MR. FRIESEN: You know, I may get Ken to help us with some of the math but, you know, we operate in these kind of proximities in other places in the province. Estevan and Weyburn are about the same distance apart. We treat them and we know that they are two distinct separate markets. There is some crossover maybe, but they are distinct, separate markets.
196 And, you know, our sense from spending the time we have in Melfort and Humboldt, we also realize that those are two separate markets and there is enough room for both of us to exist without encroaching or impeding on the other's position is our view. We have just not seen that. We have not experienced that in other places.
197 So while the numbers can be -- and they are all very speculative. While they can be debated, we have just from experience seem that that impact is very, very low.
199 MR. GOLDSTEIN: We have analyzed these numbers going back to the 2008 application and intervention. At that point in 2008 Fabmar said that a new station that was then proposed would cost them 80 percent of 16-1/2 percent of their local revenues.
200 They had presented at the hearing a chart showing seven areas that they considered the Humboldt market. Of those seven areas three of them are either wholly excluded or partially excluded from the market area that Golden West will serve.
201 In the current proceeding Fabmar has now reduced that from 80 percent of 16-1/2 percent to 54 percent of 16-1/2 percent. However, if you read the Insightrix study filed with the Fabmar application at page 2 it says the impact would be minimal.
202 So I think that -- I know one wants to claim harm and one wants to try to say, you know, this is better than the other because there will be less of this or more of that, but the fact is that we have analyzed these markets, we have looked at the retail trade, all of the projected advertising revenue that we have come up with, that range of $1.1 to $1.3 million as the potential, is based solely in Humboldt and surrounding area, but in that market of 22,000 people. It doesn't go into Melfort, it doesn't go into Saskatoon.
203 If you look also at the study in the Fabmar application you will see that there is -- I could find the page but I won't take the time now -- you will see that there is an answer to one of the questions: Would you increase your budget? The majority said yes. Would it stay the same? And the rest of them said yes. Would it go down? No.
204 So I think that the station can be accommodated without doing any significant harm to the Melfort stations.
205 MR. HILDEBRAND: I think also to add to that, when we did the monitors of the Melfort radio station there was relatively very little Humboldt advertising on the Melfort radio station, so that would indicate to us that there wouldn't be a significant loss of revenue.
206 COMMISSIONER DUNCAN: My next question was sort of related and I think you have covered it, but I might just ask it in case there is something you want to add to it.
207 Their concern is, as you have mentioned, with the substantial negative effect on their revenues and what I was wondering about was the unexploited potential that you see in the Humboldt trading area.
208 I guess you have addressed that because you have told us that your retail sales revenue that you have done is all with the area that you have proposed to be served, all within that area.
209 MR. GOLDSTEIN: That's correct.
210 COMMISSIONER DUNCAN: Okay.
211 MR. HILDEBRAND: Yes. I think it's also fair to say that we have developed relatively sophisticated sales processes for smaller markets that we spend a lot of time and effort on developing and honing and then implementing in these communities so that we see business that we will generate from advertisers that generally don't use radio, or they haven't been exposed to radio. So there is, from our perspective, a huge potential in that unexploited market.
212 COMMISSIONER DUNCAN: Thank you. That's very helpful.
213 My next question relates to audience share and market share and you are projecting 3 percent growth in audience share starting at 18 percent and reaching 36 percent in year seven. Fabmar is projecting 34 percent in year one growing to 43 percent by the end of the license term. However, when I look at the revenue projections you are projecting 125 percent growth in revenue over the first license term as compared to Fabmar's expectations of 56 percent growth. So their tuning is much higher than yours, but the revenue is much lower.
214 So I'm just interested to know how you would explain the differences between the audience share in terms of projected revenue.
215 MR. FRIESEN: Our experience across our entire area that we serve in small communities, it's very evident that the amount of -- first of all, all of our markets do not get measured, because at the end of the day we find that that has very little to do with actual revenue. So the numbers and the percentages of audience really are not something that we spend a lot of time with.
216 What we spend time with is providing service, and effective service, to both the audience and especially the advertiser. So we need to make it.
217 So that's where we get our projections from. It's from the experience.
218 The audience numbers are very important to us, but they don't directly, in our case, translate into sales. Community service and our service to the community directly impacts the sales growth.
219 COMMISSIONER DUNCAN: Okay.
220 MR. HILDEBRAND: I think also it's reasonable to put on the record that when you are projecting audience levels out seven years, I mean only a magician would even --
221 COMMISSIONER DUNCAN: Sure.
222 MR. HILDEBRAND: -- assume to be accurate there, you know. So we have to -- you put numbers in there, but it's impossible to do that with any measure of preciseness.
223 So, as Lyndon says, we have basically been able to get ourselves involved and totally enmeshed in the community and when we do that the audience is there. When we do that, then the advertisers are there. So it's a sort of a simple wheel that we know that if we do this this will happen and this will follow.
224 So I mean, as I said earlier, we generally tend to be somewhat conservative in our projections and, you know, over the years we show that we could, in most instances, beat our projections when it comes to developing revenue.
225 COMMISSIONER DUNCAN: So if I'm understanding you correctly, really that you are placing less emphasis on the number, your percentage share.
226 MR. HILDEBRAND: Yes. Right.
227 COMMISSIONER DUNCAN: It's really your experience and the emphasis is on the revenue that you are projecting based on the --
228 MR. HILDEBRAND: Right.
229 COMMISSIONER DUNCAN: Okay, that's fine. I understand.
230 MR. HILDEBRAND: Right.
231 COMMISSIONER DUNCAN: And so then the likelihood, based on what you have just said, I was wondering about the likelihood of achieving 125 percent growth in revenue over that first license term.
232 What I heard your last remark was that you are quite confident that you would achieve that.
233 MR. FRIESEN: We are very confident.
234 COMMISSIONER DUNCAN: Right.
235 MR. FRIESEN: We know that the level of service that we will provide to a community like that will translate into that kind of growth.
236 COMMISSIONER DUNCAN: Just sticking with the revenue for a minute, do your revenue figures include revenues from your online activities?
237 MR. FRIESEN: No, our online activities are all done separately. They are all recorded separately and so we have not made a projection in terms of online revenues.
238 COMMISSIONER DUNCAN: So then on the other side of that, then with the employee expenses, the nine employees that you will have in Humboldt, they are involved, I take it, in online, but are their salaries fully captured in the projections on the expense side?
239 MR. FRIESEN: They are fully captured within the projections that we have put together.
240 What we have -- how we have grown that over the years has been to take existing staff and make them a multimedia reporter --
241 COMMISSIONER DUNCAN: Yes.
242 MR. FRIESEN: -- and they are the ones that contribute to it, but all of their energy -- they are actually radio employees.
243 We employ -- nobody has a job in our organization that is exclusively online on the on-air and program and news side. We have exclusive salespeople.
244 But that likely wouldn't happen in the first while. Our plan is to put the radio station together, get it up and going and provide this as a community service. And we know from our experience elsewhere that when that starts to grow, then it creates a value to the community and then we will start marketing it.
245 COMMISSIONER DUNCAN: So your community portal, when did you expect to start that up then?
246 MR. FRIESEN: We will start that immediately.
247 COMMISSIONER DUNCAN: At the beginning, okay.
248 MR. FRIESEN: Yes.
249 COMMISSIONER DUNCAN: Yes.
250 I was curious to know if you have statistics on the number of homes in Humboldt and the surrounding areas that would be able to access that service, your online portal?
251 MR. FRIESEN: You know, I don't have numbers.
253 MR. GOLDSTEIN: One could extract those numbers and if you want them I think I could probably get them over the next few days, but I would say that you probably are in the -- counting the towns and the rural, and so on, you are probably in about the 70 percent range.
254 COMMISSIONER DUNCAN: So you would have to have high-speed Internet to get that; right?
255 MR. GOLDSTEIN: No.
256 MR. FRIESEN: No.
257 MR. GOLDSTEIN: No.
258 MR. FRIESEN: Tim, maybe you can help us with this
259 MR. THIBAULT: Yes. Actually, I worked for a web development company as a part-time thing. My background is IT.
260 Within the Humboldt area the organization that I worked for was in the cattle industry and the majority of their market were cattle farmers so we had to develop websites that were very user-friendly on a dial-up modem.
261 That being said, what we found is the majority of the market in the Humboldt area has full access to the Internet. SaskTel is going to be rolling out their 3G network in Humboldt in October -- well I guess in this month is what they have it slated for -- so with your Rocket Stick you will be able to access high-speed.
262 We do have wireless carriers as well. Access Communications is opening a new office in Humboldt. They are also an Internet provider. So the Internet access is very abundant within the area.
263 There are some sketchy areas where you get into some of the hills and stuff where, you know, you may have to put, you know, a 100-foot tower up to actually be able to pull the radio frequency and if you are on a wireless connection, but aside from that the infrastructure is very, very good within the province. So the only reason people don't have good Internet access is by choice.
264 COMMISSIONER DUNCAN: Okay. Very good. Thanks very much, that's helpful.
265 So the nine new employees, are those full-time positions?
266 MR. FRIESEN: They are all full-time positions.
267 COMMISSIONER DUNCAN: Full-time.
268 Looking at the two applications, Fabmar is proposing to serve 20 percent more people than Golden West, 11,440 versus 9,508 in the 3 mV contours. I know that you have to be concerned about the common ownership policy, so I looked at the maps, because 20 percent is a big difference.
269 So, from my view of it, it looked like Cudworth, Prud'homme, Meacham and Viscount are all communities within the 3 mV contour of the Saskatoon FMs and so they would have a local radio station. I'm going to ask you to confirm this in a second.
270 If that is the case, with the numbers that I have here, which I can give you in a minute if it's necessary, then that 20 percent drops to 7 percent. And of the communities listed in both your applications, comparing them both, only Annaheim, serving 218 people, is outside of the 3 mV contour of the Saskatoon station and of your proposed Humboldt station -- is closer to Melfort I guess.
271 At any rate, so I'm just wondering -- I can give you the numbers I have for the communities. I'm interested in your comment -- you don't have to give it to me right now, you could look at it and give it to us in the morning -- about whether that 20 percent discrepancy -- it's not really a discrepancy --
272 MR. FRIESEN: Difference.
273 COMMISSIONER DUNCAN: The 20 percent less number of people that you are prepared to serve than Fabmar is addressed because the difference, 13 percent there, is served from the Saskatoon stations.
274 Are you following my question?
275 MR. FRIESEN: I think I am.
276 COMMISSIONER DUNCAN: Yes.
277 MR. FRIESEN: Our quick observation is that I think they are contoured. It goes a little wider towards Saskatoon.
278 Ken, do you have a comment?
279 COMMISSIONER DUNCAN: I think it does as well.
280 UNIDENTIFIED SPEAKER: Yes, definitely.
281 COMMISSIONER DUNCAN: And I think that's why they are encompassing those and you are not.
282 MR. GOLDSTEIN Yes. I think it does a little, but I think that the -- obviously we measure two contours here and --
283 COMMISSIONER DUNCAN: I'm sorry, I missed that. You measure two --
284 MR. GOLDSTEIN: You measure two contours --
285 COMMISSIONER DUNCAN: Yes.
286 MR. GOLDSTEIN: -- you measure the 3 and the .5 I believe.
287 COMMISSIONER DUNCAN: Five, yes.
288 MR. GOLDSTEIN: So obviously no one can make these contours -- at least I don't know an engineer yet who can make these contours stop at the edge of one rural municipality and not go into the other. So I think the key is to examine not so much the contour itself, but the principal marketing area that each applicant has established.
289 And there are differences in approaches, so I don't think that contour -- it's useful for some purposes, but in terms of the marketing I think that's perhaps a better comparison.
290 And the principal marketing area in the case of this application is slightly less than the Humboldt functional economic area as defined by that study by the people from the University of Saskatchewan.
291 So it's entirely Humboldt-oriented, it does not go to Saskatoon and it does not go to Melfort.
292 COMMISSIONER DUNCAN: I just want to look and give you the reference in the application, if I can find it quickly, that addresses this.
293 MR. HILDEBRAND: While you are looking for that just a comment.
294 COMMISSIONER DUNCAN: Yes.
295 MR. HILDEBRAND: Again, historically we have found that most of our business is generated within a 50 mile radius of the studio, then in the 50 to 75 mile radius there will be some business generated, but the further you get away from the studio the less business you will generate.
296 So that may also answer why we are looking to a smaller basket of people than they might be.
297 COMMISSIONER DUNCAN: I guess what I was thinking about was people being served and it's 6.2 of the applications and it does ask:
"Please provide quantitative estimates of the population within the service contours, as well as an estimate of the population within the area to which the station's principal marketing activities will be directed." (As read)
298 So the numbers are dealing with the principal marketing activity.
299 MR. HILDEBRAND: Right. Yes.
300 COMMISSIONER DUNCAN: So my concern was -- okay.
301 I guess my concern, I'm looking at two applications, one proposes to serve 20 percent more people than the other.
302 MR. GOLDSTEIN: Well, I'm looking at the Golden West application now 6.2 and the principal market area, as of the 2006 census, has 20,486 people, which is now up to about 22,000; and I'm looking at the principal marketing area for the other application which says 11,440.
303 So I think there is some different ways of defining it obviously in the mind of one applicant versus the other, but it is the 3 mV/m contour that is the 9,508 versus the 11,440, but the principal marketing area number is different than that.
304 COMMISSIONER DUNCAN: Right. So principal marketing is giving an emphasis to the -- let me rephrase my question.
305 So looking at the first column, the population in the 3 mV contour, right, the number on Fabmar's application is 20 percent higher and so I'm concerned about people getting service. So I looked at it and thought well, those people in those communities I have identified that fall within what appear to be the Saskatoon contour when I look at those maps, they are being served, albeit not by this new Humboldt station, but they are being served with a local radio station.
306 MR. HILDEBRAND: That's right.
307 COMMISSIONER DUNCAN: Would that be the case?
308 MR. HILDEBRAND: That's right, yes.
309 MR. FRIESEN: Right.
310 COMMISSIONER DUNCAN: Yes. So would you be interested in looking at it and confirming that the numbers are not 20 percent but some other number that is not served?
311 For example, what I did, I took Cudworth has 738 residents -- I think we got these off of their websites, the municipality's websites -- Prud'homme 167, and Meacham 90 and Viscount 251.
312 So when I took that difference away from the 20 percent it reduced the difference between the number of people you are proposing to serve versus the number of people Fabmar is proposing to serve to 7 percent. I could clearly see why 218 people, the population from Anaheim, are outside your contour, they are not on the Saskatoon side. Those people do not have a local radio station and will not in this proposal here that you have made, this 218.
313 MR. HILDEBRAND: True.
314 COMMISSIONER DUNCAN: But if you can bring the number down, or at least confirm or improve on that number, that would be helpful, as long as you understand what -- I'm making my point.
315 MR. FRIESEN: I think I do and we will undertake to get that.
316 COMMISSIONER DUNCAN: Thank you. Thanks.
317 So tomorrow morning, if you could, that would be great.
318 MR. FRIESEN: True.
319 COMMISSIONER DUNCAN: So my second last question was -- and I think that you have addressed it -- it was concerning the quote in Fabmar's application.
"Golden West had underestimated the potential impact that its proposed station would have on the audience and advertising revenues generated in Humboldt and surrounding areas by CJVR-FM and CKJH-AM in Melfort." (As read)
320 And you have addressed that and unless you wanted to add anything to it I think I have the information I need on that. Okay.
321 So my last question is just that it would he helpful for us if you would like to summarize why you believe your application to serve Humboldt is stronger than that of Fabmar's.
322 MR. FRIESEN: Well, thank you.
323 We have a different approach in that we overspend on surveillance news on-air and the whole live-to-air process differently than what we have seen in the other application.
324 We will give Humboldt more local service, because when we have more feet on the street, the community, they benefit big-time. So if there is one difference that I think you need to take into account it would be that one difference.
325 We plan to spend $2.1 million in the term on programming, while the other applicant will spend only $2.9 million --
326 UNIDENTIFIED SPEAKER: $1.9 million.
327 MR. FRIESEN: -- over the term.
328 And so there is a significant difference and that is all about service to the community.
329 COMMISSIONER DUNCAN: What were those numbers again, please?
330 MR. FRIESEN: My numbers say over the -- no, I used the wrong number. I'm sorry here.
331 Okay. So we are going to spend $2.1 million over seven, they are going to spend $975 --
332 COMMISSIONER DUNCAN: Thousand.
333 MR. FRIESEN: Thousand over the first seven year term.
334 COMMISSIONER DUNCAN: Okay. Okay.
335 MR. FRIESEN: Which in their case is 30 percent of their revenue, in our case it's 50 percent of our revenue will be invested back into those services.
336 COMMISSIONER DUNCAN: Okay.
337 MR. FRIESEN: So that's to us the significant element.
338 What our role is in those communities is to provide them incredible local service just about their communities and their regions and we think if we do that well, if we serve them well, we will be looked after.
339 That's the significant difference over any other company.
340 MR. HILDEBRAND: Well, I think just to underline that, our plans always are and always have been to do things for the long run. So we are not looking for a short hit, we are looking for the long run and that's why we invest in the local people, that's why we invest in the local training, and that's how we can develop the local business.
341 Having been doing this for over 50 years, as you know, we just know that this works and if we spend the money it comes back later on. So you have to do this first and later on you get the benefits, and all the while the community is really getting the benefit.
342 COMMISSIONER DUNCAN: Thank you very much. Thank you for your patience in answering my questions.
343 MR. HILDEBRAND: Thank you.
344 COMMISSIONER DUNCAN: Thanks. That's it, Mr. Chairman.
345 THE CHAIRPERSON: Thank you very much.
346 Commissioner Molnar...?
347 COMMISSIONER MOLNAR: Thank you.
348 Good morning. I just want to follow-up some more.
349 I know you have been talking with Commissioner Duncan about the cross impacts on the Fabmar stations that exist in that region and I just want to continue that because I feel that between these two applications there is very, very significant differences in what are viewed to be the cross impacts.
350 So first of all, a matter of clarity, your economic analysis that said there was $1.1 million to $1.3 million potential in that market, did you say that the Golden West application is for some segment of that, that in fact the area you would serve is less than full $1.1 million to $1.3 million?
351 MR. GOLDSTEIN: No. What we did was start with the definition of the Humboldt market that came from the study for the Saskatchewan government and then we took off some rural municipalities that were in the southern, eastern part that wouldn't be reached by the signal.
352 COMMISSIONER MOLNAR: Okay. So you modified that functional economic area to match?
353 MR. GOLDSTEIN: Exactly. As a matter of fact, it's called in to report "the modified functional economic area".
354 COMMISSIONER MOLNAR: Okay. Okay.
355 MR. GOLDSTEIN: But then the calculation of the retail trade, the calculation of the radio revenue potential, was all on the modified area.
356 COMMISSIONER MOLNAR: Okay. So let me begin by one of the things that troubled me somewhat.
357 You mentioned that you monitored the FM station out of Melfort and found a very small amount of advertising, 3.9 percent I believe you said.
358 Did you monitor the AM station?
359 MR. FRIESEN: I can't answer that today, but I will let you know by tomorrow morning.
360 COMMISSIONER MOLNAR: Okay.
361 MR. FRIESEN: Yes.
362 COMMISSIONER MOLNAR: Because there is both an AM and an FM station.
363 MR. FRIESEN: Yes. My sense is we did both, but -- my sense is we did both. I have to go back and look.
364 COMMISSIONER MOLNAR: And that 3.9 percent reflects both?
365 MR. FRIESEN: That reflects our whole survey, our whole monitored. So I will have --
366 COMMISSIONER MOLNAR: So you are going to confirm that that is --
367 MR. FRIESEN: That it was both stations.
368 COMMISSIONER MOLNAR: That it was both AM and FM?
369 MR. FRIESEN: Yes. I will confirm that with you.
370 COMMISSIONER MOLNAR: Okay.
371 MR. FRIESEN: I can't right now because I don't --
372 COMMISSIONER MOLNAR: Okay.
373 MR. FRIESEN: My sense is that we did, but I have to go back and check it, which I don't have.
374 COMMISSIONER MOLNAR: Yes.
375 Because certainly we might have some -- we certainly have some different views as to how much of the advertising potential in Humboldt is already served, but some of it is served.
376 I mean we know that those Melfort stations are deriving revenue and providing some services to Humboldt. An example I suppose -- and that's why I asked about the AM is I know that they provide the Humboldt Broncos games on their AM station and run Humboldt advertising in large part through that segment. So it's surprising that there would just a 3.9 percent of advertising coming from the Humboldt market.
377 MR. FRIESEN: That was our estimate based on what we literally heard on two separate monitors that we provided. So again, what it is we don't know until we are able to look.
378 What we do know is what we heard and that was an estimate just drawn from that.
379 COMMISSIONER MOLNAR: Okay. And you understand that if you were successful and went into this market that they would still be there. They potentially would still hold, you know, the licence to run the Humboldt --
380 MR. FRIESEN: For sure. For sure.
381 COMMISSIONER MOLNAR: -- Broncos and everything else.
382 MR. FRIESEN: Yes.
383 COMMISSIONER MOLNAR: Yes. So you would be sharing --
384 MR. FRIESEN: Of course we are aware of that.
385 COMMISSIONER MOLNAR: -- the economic potential in Humboldt.
386 MR. FRIESEN: Of course.
387 COMMISSIONER MOLNAR: Okay. So this $1.1 to $1.3 million would be shared, if you were successful between your local station and the regional station that also serves Humboldt to some degree?
388 MR. GOLDSTEIN: Yes, except I think it's important to point out if you go back to the document that was filed by Fabmar at the 2008 hearing where they listed seven areas, not all of those areas are completely contained within the Humboldt market as we have defined it. But the broad answer to your question is yes.
389 COMMISSIONER MOLNAR: So I just want to ensure, then, when I'm looking at your revenue forecasts, your revenue projections -- and this information is not confidential; correct?
390 MR. GOLDSTEIN: No.
391 COMMISSIONER MOLNAR: Okay.
392 Where you are projecting to grow the revenue by year seven to $900,000, how does that compare to the market capacity of $1.1 million?
393 Is that just inflation-adjusted? Like how much of that market, of that advertising market have you projected you are going to obtain?
394 MR. GOLDSTEIN: Well, the $1.1 to $1.3 million is last year.
395 I would point out that the retail trade in the Humboldt area over the last half a dozen years has gone up from about $150 or $160 million to about $200 million and so it's based against that approximately $200 million that you get a $1.1 to $1.3 million.
396 If the retail trade grows up by a comparable rate -- and as a matter of fact what I hear about the economy of this province, and particularly the potash industry, it might go up even faster -- we won't be dealing with $900,000 out of $1.1 million in 2015, we will probably be dealing with $900,000 out of $1.6 million in 2015.
397 So the $1.1 or $1.3 million is a benchmark against which you do a reality check for your projections. It doesn't mean the benchmark is fixed, the benchmark will grow as retail trade will grow.
398 MR. HILDEBRAND: Yes. As the community grows the business for the radio stations, both Fabmar and ours, would continue to grow. So the pie continues to grow.
399 Again, as I said earlier, when you are projecting seven years out I mean you are doing this with a lot of faith that the province will still be here and we expect it will be.
400 But going forward our projections certainly are conservative because we think that under normal environments that we have seen in the province we will be able to do considerably better than that in real terms.
401 COMMISSIONER MOLNAR: I understand you view your estimates to be conservative, I'm just trying to understand if these estimates -- based on the economic projections you have for Humboldt, if we could license a new station and there would be enough capacity to continue the business plan of the existing station at the same time?
402 MR. HILDEBRAND: In my estimation without a doubt you could do that, yes, there is room.
403 COMMISSIONER MOLNAR: There is room?
404 MR. HILDEBRAND: Yes.
405 COMMISSIONER MOLNAR: And is there anything that you have filed that I can look at to say that room exists?
406 MR. HILDEBRAND: Nothing in the numbers you have.
407 MR. GOLDSTEIN: Well, I think the analysis we --
408 COMMISSIONER MOLNAR: The $1.3 million?
409 MR. GOLDSTEIN: -- the $1.1 to $1.3 million, as I say, you do that as -- we come at this many different ways. We come at it from retail trade, we come at it from population, we come at it from incomes and then you have to do a reality check. The reality check is the most recent year for which you can do data. What does it tell you? How do the projections look?
410 An earlier question that I thought was a very good question about the growth that's projected for the revenues for the Golden West station, they are within the envelope of the benchmark. I think that's the key finding here, they are within the envelope of the benchmark. We expect the benchmark will grow, but you have that comfort level that they are within the envelope.
411 I think you -- I would take it --
412 COMMISSIONER MOLNAR: Excuse me, if I could just interject --
413 MR. GOLDSTEIN: Yes.
414 COMMISSIONER MOLNAR: -- that's where I don't have a comfort level, because it's within the envelope, but it doesn't -- the benchmark is the total market and you would be sharing that market. That's my point.
415 MR. GOLDSTEIN: Yes.
416 COMMISSIONER MOLNAR: It appears to almost encompass the total.
417 So unless we know or have faith that the market will grow substantially --
418 MR. GOLDSTEIN: Well, first of all, in the first year if you add up the two projected -- well, first of all, we don't have to add the two projected revenues because what we are talking about here is not adding two applicants for Humboldt, we are talking about, if I understand your question correctly, adding the Golden West application to Humboldt, to that portion of the Humboldt market that really goes to Melfort. I think that's the intent.
419 And if you take a look at the numbers, they are well below the benchmark which is last year well into the next few years.
420 So I think -- do I have faith that this province is going to grow? I do. I'm from Winnipeg, but I have done a lot of work in this province with a lot of media and this province is going to grow and I think the potential is there.
421 So I wouldn't get hung up on the $1.1 or $1.3 million going forward, I think it's just a reality check and I think there is room to accommodate their Humboldt share and a real brand-new station.
422 MR. HILDEBRAND: I would like to add to that.
423 So if we are looking at $1.1 to $1.3 million availability of advertising revenue today, we are only projecting $400,000, so that leaves them to get $900,000 in addition. There's still room. So going forward it would appear there would be lots of room for our station, Humboldt, plus Fabmar's regional service that would also provide service there.
424 So the community would then be served by a local station and the regional station and together they could generate up to $1.1, $1.3 million.
425 Even in year six we are only just about halfway there. By year six we would assume that it would have grown a little bit at least.
426 So I think any way you look at the numbers there is room to provide a local service plus a regional service and we would see this as complementary to the area where they would have two choices as opposed one.
427 COMMISSIONER MOLNAR: Thank you.
428 So I have to throw out this question, although I'm somewhat anticipating the answer.
429 If we can have a local and a regional, why don't we just throw out two local licences?
430 MR. HILDEBRAND: Well, I mean I guess you could do that, too.
431 We think that there probably should only be -- if you are licensing something in Humboldt today there should only be one. And you could license two, but I think that would not necessarily provide the same service because there would be a lot of rate cutting at that point that would drive prices down and wouldn't necessarily benefit the community in the same way.
432 We recently -- I think we have referred to Drumheller here a few times where the Commission licensed an application for Golden West and so now Drumheller has two operators. Drumheller is not much larger.
433 Down the road that probably doesn't work. Even though we have been able to meet our projections at this point we don't see it -- in small communities for the long-term benefit it probably will end up with only one operator.
434 COMMISSIONER MOLNAR: But it will end up with the strongest operator at the end.
435 MR. HILDEBRAND: Well, you know, I guess we will have to see how that plays out, but -- or who has the most commitment to the area.
436 COMMISSIONER MOLNAR: Thank you.
437 Those are my questions.
438 MR. GOLDSTEIN: Might I add one brief point to expand on that?
439 In the given case you have a regional operator based in Melfort that provides some service into Humboldt. Were you to license two local stations in Humboldt, one of which was also owned by the same regional operator, I think you would have a bit of a structural imbalance.
440 I think that the best opportunity for diversity in this market is to license Golden West and have Golden West as a strong local operator and Fabmar as a strong regional operator.
441 THE CHAIRPERSON: Thank you very much.
442 I have just a couple of quick questions to clean up.
443 Mr. Friesen, you had mentioned previously to the Commission that the strategy of having a web portal is becoming increasingly more important to how you approach a marketplace and build your presence and build that relationship with the community.
444 When you are sizing up a market for entry by your company, how much does the revenue of the Internet site factor into the viability of making your move?
445 MR. FRIESEN: You know, while we see it as very, very important in our strategy, it's about providing more of a full service to the community. We have to, we think, be where the people are. If they are texting, we have to be texting; if they are online, we have to be online. I think that service has to be there.
446 Like Elmer said earlier, it's going to take a lot of investment before we get -- and a lot of investment in the product, in the content on the Internet before we see the revenues that we think are going to play out.
447 We already see great growth where we have been in a place for a long time. In some of the communities we have been 5 to 7 years, we are starting to establish terrific revenues.
448 So it's a little bit chicken and egg. We have to put a huge investment into that product before we see revenue, so we don't factor in that at all. In fact, in this case we haven't even considered it. We don't see the revenue there in the short term at all.
449 THE CHAIRPERSON: Are those revenues -- I'm sorry, go ahead.
450 MR. HILDEBRAND: Go ahead.
451 THE CHAIRPERSON: Are those revenues rolled into your balance sheet for the radio station or are they kept separate?
452 MR. HILDEBRAND: Well, they are ultimately rolled into the corporate balance sheet, but they are not part of the individual station revenue because it's not a revenue that needs to be reported to the CRTC annual return. So it's a separate entity, but certainly in our corporate balance sheets they are all rolled in, yes.
453 THE CHAIRPERSON: Getting into the way back machine, going back to December of 2009 and your original application, I'm looking at -- in your Appendix 8D, Table 4, which was produced by Kroeger Media, you had in your market analysis or surveying you had asked the Humboldt market for their preferences or top of mind recalls as to their preferences for how they get their music off commercial radio and in that table you had indicated that there were three stations that were in pretty much a three-way tie for first place, CJDJ -- I'm glad I'm not on the air to say that -- CFMC and CFWD.
454 My question is this: Although this question was about music choice, music preference and with respect to listening over the air, I couldn't help but notice when you add up the percentages there is a gap of 20 percent before you get to the universe of 100. There is the 20 percent gap between the 80 percent of the respondents and an undeclared 20 percent and I'm just wondering if that's because it may be the CBC, which is not a music station, or whether they are getting their music from other sources other than radio?
455 MR. FRIESEN: My estimate would be it would be from all of those.
456 Satellite is another consideration that we factor in. We find in the rural areas, certainly in Saskatchewan, there is a high level of -- where there is less choice or -- the more rural it gets the more satellite has some penetration. So that's certainly been our observation.
457 MR. HILDEBRAND: I think also the less local service there is the more satellite there is. If there is a vibrant, dynamic local service that sort of moves the satellite out of the picture, but if there isn't that, then there is no reason for the people to be loyal to any station because the outside the market stations, they are not going to have any local information about -- Saskatoon for example won't have anything about Humboldt unless there's a big fire, an accident or some other calamity, but they won't have anything about the school board or the municipal activities or all of those things that make small communities tick.
458 And so once you have that local service then the satellite listener backs off, the satellite then replaces the CD in the car. But absent a local service then the satellite companies, you know, they have their biggest chunk of audience in areas where there is little service.
459 THE CHAIRPERSON: Surprisingly, we weren't in town 15 minutes yesterday and in doing the coffee shop conversations we did hear surprisingly right off the bat that satellite via cable was a choice that some of the market was going to.
460 MR. HILDEBRAND: Yes.
461 THE CHAIRPERSON: It was quite surprising.
462 May I just pick your brains for a second, Mr. Thibault, just on -- this has nothing to do with broadcasting, it's my curiosity.
463 You had mentioned that G3 and openly G4 is available in Humboldt --
464 MR. THIBAULT: Yes.
465 THE CHAIRPERSON: -- and you had mentioned that the Rogers Rocket Stick would be a usable device in the market.
466 One of the reasons why this hearing is not being held in Humboldt is that we found that there wasn't satisfactory cell service. As a matter of fact we, between the three of us, have both TELUS and Rogers and we were getting hashmarks yesterday.
467 What is the cell service like there?
468 MR. THIBAULT: The cell service in Humboldt is not great. It never really has been and with the new 3G network we are hoping that that will rollout.
469 For SaskTel service it's great coverage, but as far as Rogers and other carriers go, that's probably the number one complaint that we have from people visiting Humboldt, is my phone doesn't work.
470 You know, I can't answer to why that is, other than the fact that we do have good SaskTel coverage, but every other carrier, no.
471 MR. HILDEBRAND: That's why I have to have two phones when I'm in Saskatchewan.
472 THE CHAIRPERSON: Welcome to the club and I may be looking at three.
473 Thank you very much for that, that's very helpful.
474 Well, I think that concludes things. I would like to take -- my watch says we are 25 after 10:00, I would like to take a 20-minute break and convene again at 10:45.
475 Thank you very much.
477 MS HULLEY: I have undertakings to read into the record.
478 For Golden West, I have two.
479 The first was in response to Commissioner Duncan in reference to 6.2 of the applications and the 20 percent difference in the number of persons served. Provide comments on how many of this percentage is served by other local stations, for example from Saskatoon.
480 The second, in response to Commissioner Molnar, confirm that your monitoring of Humboldt advertising on the Melfort stations included the AM station.
481 I would ask that those undertakings be filed by 9:00 a.m. tomorrow morning, if that's acceptable.
482 MR. FRIESEN: Thank you.
483 Yes, it is.
484 MS HULLEY: Thank you.
485 That's everything.
486 THE CHAIRPERSON: The lawyer can't have the last word, the Chairman has to.
487 THE CHAIRPERSON: We will convene again in 20 minutes.
488 Thank you very much.
489 MR. HILDEBRAND: Thank you.
490 MR. FRIESEN: Thank you.
--- Upon recessing at 1027
--- Upon resuming at 1103
491 THE CHAIRPERSON: Order, please.
492 First of all I would like to offer my apologies for the interruptions, the technical delays. Our Hearing Secretary tells me it has something to do with federal-provincial transfer payments and --
493 THE CHAIRPERSON: -- Saskatchewan is holding out now that they know a few of us are in town.
494 Madam Secretary, would you please introduce our next presenter?
495 THE SECRETARY: Thank you, Mr. Chair.
496 We will now proceed with Item 2 on the Agenda which is an application by Fabmar Communications Ltd. for a broadcasting licence to operate an English-language FM commercial radio programming undertaking in Humboldt.
497 The new station would operate on frequency 107.5 MHz (channel 298C1) with an effective radiated power of 100,000 watts (non-directional antenna with an effective height of antenna above average terrain of 164.1 metres).
498 Appearing for the applicant is Gene Fabro. Please introduce your colleagues and then you will have 20 minutes for your presentation.
499 MR. FABRO: Thank you and good morning, Chairman Simpson, Commissioner Molnar, Commissioner Duncan and CRTC staff. Welcome to Saskatoon and thank you for allowing us this opportunity to appear before you once again.
500 Before we begin our presentation for a new FM licence for Humboldt, I would like to introduce myself and the members of the team.
501 My name is Gene Fabro, I am President of Fabmar Communications which we will refer to today as Fabcom, which is a company owned by my family.
502 Twenty years ago we purchased CJVR-AM, now known as CKJH-AM based in Melfort, Saskatchewan. Since that time we have launched CJVR-FM in Melfort, CIXF-FM in Whitecourt and CHWK-FM in Chilliwack, B.C.
503 To my right is Dean Sinclair, a broadcast veteran whose 30 year career includes programming, on-air, sales and senior management experience. He is a Professor of Media Studies at Humber College in Toronto specializing in radio. Dean is also General Manager of Humber College's radio station, 96.9 FM. Dean has provided us input and direction for our proposed classic rock music format.
504 Next to Dean is Lang McGilp. Lang has over 12 years of market research experience working with some of Canada's largest research firms, including Ipsos Reid and is currently Vice President of Research Services for Insightrix Research services of Saskatoon. Lang and his team undertook our research in preparation for this application.
505 On my far left is Dave Marcoux, who has been with our company for almost 10 years. As Sales Manager for all of our Saskatchewan stations, David oversees our team of account executives that sell advertising for CJVR and CKJH in the key communities which include Humboldt.
506 Next to Dave is Brian Kusch. Brian has been with our company for over six years and has been a territory account representative for Humboldt for three of those years.
507 Brian and his young family live in Humboldt and are actively involved in the community. He is a Director of Humboldt Chamber of Commerce, played a key role on the Humboldt Hockeyville Committee this past year, is on the host committee for the Royal Bank Cup coming to Humboldt in 2012, and over the past few weeks has been very busy with the Humboldt Hospital Foundation's fund-raising efforts that culminated with a 7-day radiothon where CJVR and CKJH helped raise over $150,000.
508 With all of his community involvement we sometimes wonder when Brian has time to sell advertising, but he's doing a great job for us and will be part of our senior management team at our new Humboldt station, should we be approved.
509 To Brian's right is Linda Rheaume, Administrative Manager for Fabcom and Station Manager for our two Melfort stations, CJVR and CKJH. Linda has been with us for the past 19 years.
510 To my immediate left is Ken Singer who is Fabmar's Vice President of Broadcast Operations. Ken has been in the broadcast business almost as many years as our first Saskatchewan radio station has been on the air, beginning in 1967 right here in -- Ken began his career in 1967 right here in Saskatoon.
511 Ken oversees all the management of our four radio stations and will quarterback our presentation team here this morning.
513 MR. SINGER: Thank you, Gene.
514 Before we begin I would just like to recognize one more member of the Fabcom team that is with us today and sitting in the audience, and he is Bill Wood who soon will be celebrating his 37th year with our company. Bill has been our Morning Host for most of those years and is Program Director of our Melfort stations.
515 Mr. Chair and Commissioners, Fabmar Communications is pleased to appear before you today to seek CRTC approval to bring the growing community of Humboldt and area their first locally based radio station that they can call their own.
516 If approved, Fabcom's classic rock Q107 will provide important benefits to Humboldt and surrounding communities. The public interest of the Canadian broadcasting system will be strengthened by ensuring ownership diversity and competitive balance within Saskatchewan's broadcasting community.
517 Just as importantly, approval of this application will ensure essential ongoing stability and growth for Fabcom's Saskatchewan regional operations that have provided four decades of quality local service to the Humboldt region.
518 Fabcom, as a local Saskatchewan heritage broadcaster, has been an integral part of the everyday lives of thousands of individuals and families throughout northeast Saskatchewan. Although Humboldt, with a population of less than 6,000 people does not have a radio station physically based in the city, Fabcom's CKJH, along with CJVR and its FM rebroadcaster located nearby in Dafoe have played a key role as Humboldt's local radio stations.
519 The residents of Humboldt have relied on the Fabcom stations to meet their needs. The Saskatoon stations do not reflect the identity of Humboldt. The CJVR/CKJH team serves on community committees, boards and fund-raisers. We are sponsors, promoters, builders, providing the connecting link between Humboldt and its neighbouring communities.
520 Since 1975 our stations have been the voice of the Humboldt Broncos, providing live play-by-play of over 1,000 junior hockey games over the past 35 years. We look forward to being the host radio broadcaster of the Royal Bank Cup when Humboldt will be the site for this Canadian Junior A championship in 2012.
521 The citizens of Humboldt have shown their desire to have this application approved. The 48 letters of support submitted as part of the public process all attest to Fabcom's record of daily involvement of community activities and events in and around Humboldt.
522 In his letter of intervention, Humboldt's Mayor Malcolm Eaton writes, and I quote:
"CJVR-FM and CK750-AM have been a strong radio presence in our community for many years. We are very pleased with the support they have provided to the business community and to the events and activities that occur in Humboldt. Fabmar Communications have a very successful track record in working with markets such as ours. They know our community and our region."
523 End of quote.
524 Fabcom has witnessed firsthand how Humboldt's population and major economic sectors have experienced constant growth, especially over the past 20 years. Fabcom contracted Insightrix Research to conduct an economic assessment, as well as a survey of local businesses, to determine the level of interest in advertising on a new Humboldt station.
525 MR. McGILP: The data positively identified Humboldt as a major trading centre with a growing population of almost 6,000, for a total regional population of approximately 29,000 within its trading area. The Humboldt region, with a diverse economy including agriculture, large-scale manufacturing, potash mining, health and education, has seen significant growth in the housing sector.
526 The Insightrix survey of 121 business people, including a series of in-depth interviews, showed 8 in 10 businesses use newspaper as a form of advertising and that 4 in 10 currently use radio to advertise. On that note, CJVR and CKJH are the most commonly used radio stations.
527 Of the respondents who used radio, 76 percent expressed that they were either somewhat or very satisfied with the choice of radio stations available to them, with 72 percent indicating CJVR and 70 percent indicating CKJH as their stations of choice.
528 Among respondents who do not currently advertise on the radio, 32 percent indicated that they would be very likely to use radio if a local station were established in Humboldt. Sixty-two percent indicate that they would increase their radio advertising with the establishment of a new Humboldt station.
529 Evaluating how Q107 will impact the advertising revenue currently flowing to the Melfort stations, 75 percent of current clients indicates that they would shift some of their advertising to the new station, 14 percent said they would move all of their advertising and 11 percent stated they would continue with the same level of advertising on CJVR and CKJH.
530 Overall, 62 percent of respondents said they would likely increase their advertising with the introduction of a new station.
531 MR. MARCOUX: We realize that a significant portion of our Humboldt territory revenues derived by a new Fabcom Humboldt station would be at the expense of our Melfort operations. At the same time, we see several opportunities whereby in year one Q107 would attract brand new advertising dollars as follows: Some of our existing clients would likely allocate additional dollars to the new station, resulting in incremental revenues estimated at $25,000.
532 Q107 would likely attract new local advertisers to radio from other media, producing a total of $25,000 in new revenues. New national and regional clients would account for $90,000 in first-year revenues for Q107.
533 The overall net potential for Q107 would yield incremental revenue gains of $140,000. After year one we estimate that our annual revenue growth would be between 7 and 9 percent for the first license term.
534 MR. SINCLAIR: In January Fabcom invited Humboldt residents to participate in an online listener survey. Four hundred and thirty-five respondents offered us their personal preferences for the proposed new FM station.
535 Of the 15 different stations and satellite services listened to over a seven-day period, CJVR and CKJH were mentioned by 94 percent. When asked to identify their favourite station, Fabcom's stations combined were mentioned by 27 percent. Sixty-nine percent of the respondents indicated they were satisfied or extremely satisfied with the present radio choices in Humboldt.
536 When asked to evaluate 10 different music formats, including sample core artists for each, the five choices in the top range were classic rock with 74 percent, and then '80s and '90s retro pop, after that hot adult contemporary, then '70s pop rock and, finally, country.
537 After evaluating these choices we eliminated hot country as this format is already being programmed by CJVR as well as Saskatoon stations. We also eliminated '70s pop rock and '80s and '90s retro pop as these formats are available from Saskatoon stations and from Fabcom's CKJH that programs oldies. Finally, we eliminated hot adult contemporary. This is the same format of Saskatoon's C95 FM.
538 Classic rock was the first choice, with a 25 to 49 demographic and the second choice for the 50 to 54 age group. Since almost 70 percent of Humboldt's population is older than 25, classic rock is the best format choice for the Humboldt market.
539 Here is how Q107's classic rock format will sound.
--- Audio clip
540 MR. SINCLAIR: Fabcom also accepts as a condition of licence that Q107 will play a minimum of 40 percent Canadian content. This will be applied to both the entire broadcast week and the period between 6:00 a.m. and 6:00 p.m.
541 Q107 will locally produce the following 6 hours and 40 minutes of special Canadian music-based programs each week: Great Canadian Rocks, Canadian Rock 'n Roll Roots, and Q107's Canadians on Track. Our supplementary brief will give you details further on each of these programs.
542 MR. KUSCH: Meeting the needs of our listeners and reflecting the communities we serve with local information is a mandate of all Fabcom stations.
543 The format for Q107 will include at least 12-1/4 hours of spoken word programming weekly, with over 5-1/2 hours of local news packages, including weather, sports and farm information.
544 Each of our five daily major information packages will include 90 seconds of farm news. Fabcom's Agriculture Director, Alice McFarland(ph), will host a daily 10-minute farm show, along with regular reports.
545 As part of our hourly programming, a further 252 scheduled weather reports will air each week. Like all Fabcom stations, Q107 will have an emergency on-air procedures plan to provide weather warnings and other public safety messages when conditions warrant.
546 Q107 will keep Humboldt and area listeners up-to-date and informed about current and upcoming local news and events with these daily features, including Community Update, Humboldt City Beat, Humboldt Connections, Humboldt Chamber and Tourism Reports, Q107 Listener Feedback and Q107 School Reports.
547 As the voice of the Humboldt Broncos, some hockey games will air on Q107 along with daily Bronco reports.
548 MS RHEAUME: Approval of Fabcom's application will yield significant benefits to local Canadian talent in Humboldt and surrounding areas with the following types of initiatives, the development and enhancement of educational and training skills, direct funding to local talent, a dedicated indirect on-air expenditures budget to assist in the promotion and development of local artists, and the creation of windows of opportunity for Canadian artists to gain on-air exposure through the special music-based programs mentioned.
549 Over seven years Fabcom will commit a minimum indirect CCD budget of $322,000 for the promotion of local concerts, performers and artistic programs.
550 A further $42,000 in direct CCD expenditures, of which $39,000 is over and above the basic, will be expended over the licence term as follows: $9,600 will be contributed to FACTOR that has committed to reinvest all of these funds in Saskatchewan talent; $27,400 will be directed to Q107's Horizon Unlimited initiative that will render financial assistance to musical talent in the Humboldt area at three development stages, including a starter, intermediate and senior level; and $5000 in scholarships available at the University of Regina School of Journalism.
551 MR. SINGER: Mr. Chair, the Fabcom proposal for a new classic rock FM service is the best choice and the only choice in licensing one station for Humboldt and here is why:
552 Fabcom's application meets the Commission's criteria for a new licence and is founded on solid professional research of hundreds of area residents and business people.
553 We have a firsthand awareness of the business community support for local-based radio that is founded on the very long-term relationship between Humboldt retailers and our Melfort stations.
554 Our financial forecasts are based on the hard evidence of 44 years of selling in Humboldt and further supported by the Insightrix retail study.
555 Fabcom's established advertiser base in Humboldt allows for a rapid new station start-up.
556 As Humboldt's local radio stations CJVR and CKJH play an active role working together with local volunteers, organizations and committees to help Humboldt grow and prosper. Humboldt will benefit with the creation of five new local full-time and one part-time position.
557 Fabcom's application optimizes the 107.5 MHz frequency, extending Q107's classic rock music format to the more than 32,000 persons living within the stations .5 mV coverage area.
558 Conversely, the Golden West proposal utilizes the same frequency or their alternate frequency. Utilizing those frequencies are restricted in order to satisfy the common ownership regulations and does not make full use of the spectrum. By using a directional antenna, Golden West's proposed signal will serve almost 6,000 less compared to the Fabcom signal.
559 MS RHEAUME: The impact that a new Humboldt station would have on our regional service currently provided by CJVR and CKJH is paramount in deciding which one of these two applications should be approved.
560 By choosing Golden West over the Fabcom application our current Humboldt and territory revenues would decline by at least 80 percent. These losses represent 15 percent of Fabcom's total local Saskatchewan sales.
561 In addition, the licensing of a Golden West station would erode the overall regional audience share of CJVR and CKJH, resulting in a further 20 percent loss of national business.
562 The combined revenue losses would jeopardize our ability to maintain the current level and quality of local and regional programming.
563 Approval of the Fabcom application will give Humboldt a station that would provide an even greater degree of locally focused programming, increase programming diversity and listener choice, and protect Fabcom's substantial investments in providing over four decades of quality local service to Humboldt and region.
564 MR. SINGER: Canada's private broadcast sector is rapidly evolving from a collection of independently owned entities into commonly owned multiple licence holders. To assure that smaller independent radio voices are maintained amidst larger ownership concentration approval of the Fabcom application is more important than ever.
565 In Saskatchewan 35 of the 39 mainstream commercial radio stations are owned and/or controlled by three of the industry's larger operators as follows: Golden West Broadcasting with 16 stations; Rawlco Radio with 13; and Harvard Broadcasting with 6.
566 MR. FABRO: Mr. Chair and Commissioners, central among the many positive elements that Fabcom brings to the table is my family's firm commitment as owners to provide a high quality local station that the residents of Humboldt can call their own. We hope you will carefully consider the following points and approve our application for these reasons.
567 Fabcom has been providing quality service to Humboldt and area for 44 years.
568 Q107's classic rock format will best serve Humboldt's 25 to 54-year-old demographic.
569 Q107 will provide over 12 hours of local Humboldt information.
570 On demand, Q107 will implement Fabcom's emergency on-air procedures, providing a first response public to service Humboldt.
571 Q107 will provide 40 percent of Cancon throughout the week.
572 Saskatchewan local talent will benefit from Q107's $354,000 CCT support.
573 Fabcom's technical proposal optimizes the 107.5 frequency.
574 Humboldt will benefit from the creation of five new full-time and one part-time position.
575 With Fabcom's considerable resources already in place, we are best positioned for a rapid start-up.
576 Approval of Fabcom's application will provide ownership diversity.
577 Licensing Golden West to serve Humboldt would have a serious financial impact on Fabcom.
578 Finally, clearly Humboldt wants Fabcom's Q107.
579 We respectfully ask the Commission to approve our application to establish a new classic rock FM station to serve Humboldt and surrounding regions.
580 Thank you for this opportunity.
581 Our panel would be happy to answer any questions you may have. Merci.
582 THE CHAIRPERSON: Thank you very much, Mr. Fabro.
583 First of all, just satisfy my curiosity, you are currently broadcasting the Humboldt Bronco games.
584 Is that correct?
585 MR. SINGER: That's correct, yes.
586 MR. FABRO: That's correct.
587 THE CHAIRPERSON: Would it be your intention at any point to consider moving those broadcasts to the Humboldt station?
588 MR. FABRO: Probably we wouldn't. We would move some of them, but because of our large coverage area on our AM we would probably leave it on the AM stations.
589 THE CHAIRPERSON: Okay.
590 MR. SINGER: I might just add that given approval of a Humboldt licence, however, it would allow us to carry more games because in addition to Humboldt we carry two other SJHL teams --
591 THE CHAIRPERSON: Yes.
592 MR. SINGER: -- and this would just give us a little more flexibility. Should Humboldt get in playoffs, then we can do additional games, and so on.
593 THE CHAIRPERSON: Thank you.
594 The last question before I turn things over to Commissioner Molnar, in your statement to the Commission regarding financial impact you have referred to percentiles such as 75 percent of current clients, 11 percent stated, 62 percent stated.
595 Are you comfortable telling the Commission what percentage of your advertising comes from Humboldt right now or is that something you would like to submit later?
596 MR. SINGER: We have indicated, both in 2008 and in our application, that approximately 15 percent of our local Saskatchewan revenue would be affected should Golden West have this application in Humboldt.
597 So we have submitted that percentage of our -- as a percentage of our local advertising.
598 THE CHAIRPERSON: Okay. Thank you very much.
599 Commissioner Molnar...?
600 COMMISSIONER MOLNAR: Thank you.
601 Good morning everyone. I want to continue on a little bit from where Commissioner Simpson was and talk about your current operation of the regional station. Is it fair to describe Melfort as the regional station?
602 MR. SINGER: Yes, I think it is because, really, we serve a great deal of communities, and Humboldt is one of them within that region.
603 So, yes, we have always thought of ourselves as a regional service, and that was the game plan when we applied for our FM several years ago, as well, for Melfort, putting in repeaters to be able to provide the regional service with that signal.
604 COMMISSIONER MOLNAR: You mentioned just now that about 15 percent of your local revenue from Humboldt would be affected.
605 MR. SINGER: No, 15 percent of our overall revenue comes from Humboldt, of our overall local advertising comes from Humboldt.
606 COMMISSIONER MOLNAR: So is that local Humboldt advertisers or businesses advertising into Humboldt? That's what you define as local?
607 MR. SINGER: Yes, and we define them as Humboldt and, you know, the surrounding area; the Humboldt territory, yes.
608 COMMISSIONER MOLNAR: Is that 15 percent roughly equal between your AM and FM stations?
609 MR. SINGER: There would be just slightly more on the FM than there is on the AM. The FM is usually about a 52 to 48 percent split, more in favour of the FM.
610 COMMISSIONER MOLNAR: Can you tell me, if about 15 percent of your advertising revenue is coming out of Humboldt, what proportion of your current spoken word programming would be directed to the Humboldt market?
611 MR. SINGER: I don't know if I could give you a quantified figure for that, but we treat Humboldt the same as we do all of the centres we serve. We have community information on our stations on an hourly basis, and if there are events going on in Humboldt, they will most definitely be a part of our spoken word.
612 And we monitor that carefully. Our Program Director is very adamant about us reflecting more, so we don't sound like we are just a Melfort radio station, because we are serving a much larger audience than Melfort.
613 And our news stories are -- we cover news events in Humboldt as they develop. So on some days we may not have a Humboldt news story, but on other days we would.
614 And our weather information is certainly always encompassing Humboldt and the Humboldt area.
615 But anything to do with, of course, the Broncos, as being the voice of the Broncos, too -- you know, this year our regular season is approximately 28 hockey games, so that's a lot of content for Humboldt right there, just on the hockey side, plus our sports coverage of Humboldt, as well, on sportscasts and reports and so on.
616 COMMISSIONER MOLNAR: So if I sort of boil that down, you don't have any objectives or metrics or anything to say, as a regional station: This is our objective, to ensure that we are reflecting all the different communities in our region, or providing them adequate reflection.
617 MR. SINGER: We do have the objective that we try to be balanced in our whole coverage area, that we are not just talking about one segment of our coverage area.
618 As I say, our announcers are far beyond -- I mean, their program preparation includes information about what is going on in our coverage area, and Humboldt, of course, is a big part of that and always has been.
619 So we don't have a percentage, but I can tell you that, in any given week, you are going to hear a fair amount of promotion for things and events that are going on in Humboldt.
620 And having Brian, who lives and works in Humboldt, he is the eyes and ears of the radio station in Humboldt. So we have probably more information flowing to us because we have a person in the community, as opposed to, you know, phoning out for information.
621 But we have been there a long time, Commissioner Molnar, and our experience is that people just expect that -- you know, if something is going on, we are getting a fax about it, or we are getting an e-mail or a phone call, or Brian is getting a phone call, or someone is stopping him on the street saying, "Can you get this on the air for us?"
622 So the content is -- if we are aware of it, it's on our stations, if it's in Humboldt and region. So I would say that it's pretty predominant.
623 MR. FABRO: Before you ask your next question, I would just like to add one thing. It's kind of funny, when we do the weather reports -- and I have asked this many times, "Why don't we just talk about two or three locations around our coverage area?" There must be 12 or 15 different communities where they mention the temperature and what is going to happen in that region. It is almost mind-boggling how much we cover as a regional station. You really have to listen to us to understand it.
624 MR. SINGER: And I --
625 COMMISSIONER MOLNAR: Just for the record -- because I do have a number of questions, I am going to continue. For the record, I have listened, and that's one of the benefits of streaming your station.
626 Where I wanted to get to was, I was trying to understand your programming strategy today as a regional station and how that would change if you were awarded a local radio station in Humboldt. Would that change the programming on your existing stations, or your strategy?
627 MR. SINGER: No, it certainly wouldn't because we recognize that Humboldt is a potential market not only for listenership to a new station, as proposed, but we are offering two distinctly -- two more format choices in our country music and in our oldies format on our AM.
628 So we have certainly recognized that we can still maintain some listenership in Humboldt, but the bulk of the Humboldt listenership, from our research, would be to the new station. What would change is, Humboldt would have a radio station whose focus is solely Humboldt and area, compared to our regional service, which is Humboldt and all of the other communities that we serve.
629 So Humboldt benefits by receiving a station -- or now having a station that they can call their own, and our regional service wouldn't change one iota because, again, we are talking about three distinct audiences here.
630 COMMISSIONER MOLNAR: Thank you.
631 What about if you were not successful and we were to license Golden West instead? Would that change how you were to program your existing regional station?
632 MR. SINGER: From a content point of view, absolutely not. Again, we have made the commitment to serve that area. We have invested in a repeater transmitter that takes our FM into that area. And we know that, regardless of format going into that market, we have two strong formats that are still going to receive some attention from listeners.
633 Most definitely, we would continue to do our commitment to the hockey broadcasts as one item, and our content direction would be exactly the same as it has been for the last four decades.
634 COMMISSIONER MOLNAR: Thank you.
635 I want to move on to the issue of regional advertising. It appears from your application that roughly 20 percent of regional and national advertising sales also are coming from Humboldt, or projected to come from Humboldt, which would be at risk if we were to license someone else, and I am not exactly sure that I understand what is regional. How do you define regional advertising?
636 MR. SINGER: We have local advertisers, which are, of course, the community business people, and all else would fall into either regional -- regional might be a Crown corporation, such as SaskTel, which buys radio right across the province.
637 And, then, national advertising, the farm chemical dealers, would be probably the biggest single category in our part of the province.
638 We did that and, you know, it's purely an estimate. National business is a little hard to predict.
639 As Mr. Hildebrand pointed out, so are most of these figures a little hard to predict, based on a turbulent economy and so on.
640 But national business is usually based on market-by-market. You noted that there is a new Tim Hortons going up in Humboldt. Currently there is no national business from Tim Hortons; well, there will be, because Tim Hortons is going up.
641 COMMISSIONER MOLNAR: Right. Mr. Singer, I am comfortable with what is national, a little less comfortable with what we define as regional. I am aware from looking at your website that you have, for example, sales staff in Saskatoon.
642 MR. SINGER: Yes.
643 COMMISSIONER MOLNAR: So the purpose of having sales staff in Saskatoon is to what, drive the regional business?
644 MR. SINGER: I will let Dave answer that.
645 MR. MARCOUX: We do sell in the Saskatoon market, but it is more based on a client need, such as perhaps CUC that has a big concert in town.
646 The population of Saskatoon maybe doesn't support selling out 14,000 seats, so they would buy our markets, as well as Mr. Hildebrand's markets.
647 We are not going to stop people shopping locally outside our local markets. We do our best to tell people to shop locally in all of the markets we cover, but when people come to Saskatoon, whether it's for shopping or visiting, there are hotels that they stay at, they go to shows -- you know, whatever is happening in Saskatoon. That's where we get some of the Saskatoon business from.
648 Also, Mr. Hildebrand has a rep for Kindersley and Rosetown and Saskatoon.
649 There is business that comes out of here. We have a lot of farm and ag business that comes out of Saskatoon. So that's why we have a rep in Saskatoon.
650 MR. SINGER: I might just add a little further clarification. Our definition of regional also is that those are clients who use an advertising agency to do their placement.
651 So it's similar to the national structure, only it is more locally based. There are several advertising agencies here in Saskatoon, and Regina, that make up what we call our regional.
652 I guess it shouldn't be confused with regional service. Regional advertising is locally handled -- I guess, call it national business.
653 COMMISSIONER MOLNAR: So you are not selling Saskatoon advertising to a Saskatoon audience, you are selling it to your regional audience.
654 MR. MARCOUX: That is correct.
655 Also, on our AM station, we have the University of Saskatchewan Huskies that we, obviously, have Saskatoon merchants on, and some rural businesses also.
656 COMMISSIONER MOLNAR: So if you were to be in Humboldt -- and Humboldt, of course, is marginally closer than Melfort to Saskatoon -- would you see that growing?
657 MR. MARCOUX: The Saskatoon -- again, it would go to the needs of the client. It's all based on client needs. If they need that area of support, whether it is agriculture or, again, a major event coming to Saskatoon -- I mean, I have been selling for 28 years and I don't turn a lot of advertising down.
658 It's all based on client need and what that business is, and what he needs -- you know, what he considers his client base to be, where they come from, whether it's hotels, restaurants, major events, that sort of thing.
659 I hope that answers your question.
660 COMMISSIONER MOLNAR: Yes, thanks.
661 I want to move on. Your application shows five incremental positions and a positive PBIT by Year 2, I think you have estimated, if you were to be granted the licence in Humboldt, and very significant revenue transfers from your Melfort station -- your existing stations.
662 What I wasn't able to really understand from your application is whether or not Fabmar, or Fabcom, as you were called today, is better off with or without the station licensed in Humboldt.
663 MR. SINGER: I think we are better off with it, and I believe that we have indicated that we see opportunities to grow our revenue.
664 I think, initially, the incremental revenues are quite small, but we see tremendous potential for Humboldt, with the growth of the community.
665 We see, most definitely, a strengthening of business in Saskatchewan overall, and definitely -- you know, we wouldn't be here today if we didn't think that this would be a good investment for us, and a feasible investment, because I really do recognize that -- if we have to look at the two scenarios, our losses certainly would outweigh our gains. It would have a greater impact on us --
666 Or, I'm sorry, it's the other way around.
667 COMMISSIONER MOLNAR: Just to be clear -- and I will try to be brief with my questions, and perhaps you could do likewise --
668 MR. SINGER: I'm sorry.
669 COMMISSIONER MOLNAR: I understand that you would be better -- if someone is licensed in Humboldt, obviously, economically, it is better if it's you. If no one is licensed in Humboldt, are you better off?
670 Are you better off being licensed in Humboldt, or no licence awarded at all in Humboldt?
671 MR. SINGER: I would have to say that we are better off being licensed in Humboldt, and so is Humboldt better off.
672 COMMISSIONER MOLNAR: Right. Humboldt is clearly better off.
673 MR. SINGER: Yes.
674 COMMISSIONER MOLNAR: That leads me to something that, I think, confused me somewhat. You understood in 2008 that there were radio broadcasters looking at Humboldt --
675 MR. SINGER: Yes.
676 COMMISSIONER MOLNAR: -- so why didn't you make an application yourself?
677 If you are better off by having a licence there, you know the market very well, you knew there was other interest in the market, why was your application simply in response to someone else?
678 MR. SINGER: I would have to say, first of all, that we weren't aware, until the application was actually Gazetted, that there was an application filed in Humboldt. We were not aware that that application was before the Commission until it actually appeared on the Commission's website in 2008. It was filed in `07.
679 So, at that point, we didn't have an option of applying. At least, from our interpretation, we didn't have that opportunity. So we, obviously, took the next option, which was: Let's see if we can intervene against this.
680 Because we have been in this market --
681 COMMISSIONER MOLNAR: I'm sorry, Mr. Singer, I am not asking why didn't you apply in 2008, I am saying, why didn't you apply between 2008 and this one, which, in your application, you say is in response to knowing that somebody else was digging around.
682 MR. SINGER: I guess where I am going with that -- and I'm sorry if I am a little wordy here. I am trying to get to that point, but --
683 Coming away from that, and when that application was denied, we knew at that time that our next move was: We are going to have to file an application at some point here, because we don't want this opportunity to get away from us.
684 And that wasn't that long ago, really.
685 And as the Commission is aware, we have been very, very busy filing applications over the last few years. Humboldt was always on our mind as an opportunity down the road and, most definitely, the research that was done, and just being in the market and seeing that this community is getting stronger and stronger, encouraged us that now is the time to do it.
686 We don't think that prior to 2008 was the time to apply for a licence in Humboldt.
687 So that was the thought process. We always knew, in the back of our mind, after going through the hearing in Winnipeg in 2008, that we were going to have to get moving on an application, and we did start to make plans at that time.
688 Definitely the Golden West filing made it -- you know, it just tightened the window. We said: We had better get this in there, like, right now.
689 But I can assure you that our discussions have always been that, within our coverage area, Humboldt was probably our next -- it was definitely our next opportunity to do something within our coverage area and establish a local station.
690 COMMISSIONER MOLNAR: Moving back to your application, you provided estimates of revenue and of audience share for your new classic rock proposal. To what extent do your estimates of audience share influence your revenue projections? Are they correlated in any way?
691 And I am saying this because Golden West before you -- and I know that you were all in the room -- said that audience share doesn't necessarily correlate to advertiser activity in a market.
692 So are these correlated numbers?
693 MR. SINGER: I would have to say that I would agree with the Golden West comment on that, because our numbers -- our financial numbers, first of all -- we will talk about financial and audience share -- our financial numbers are all based on the hard, actual evidence of what we are doing and have been doing in the marketplace, where --
694 COMMISSIONER MOLNAR: I am going to ask you more about your revenue numbers. I just want to --
695 MR. SINGER: Okay.
696 COMMISSIONER MOLNAR: So if your audience share looks aggressive or not, that is not going to influence the revenue projections.
697 MR. SINGER: Our audience share numbers were developed from the online research that we did in preparation for this application.
698 COMMISSIONER MOLNAR: I want to move on to the revenue numbers. I am certain that you have reviewed the Golden West application, as well, that was filed, and know that your numbers appear to be less optimistic, more conservative -- whatever. You know, your revenue projections are quite a bit lower, and your cross impacts are significantly higher in the estimates.
699 I want to address both of those, and I want to start with the issue of the cross impacts, the impact that this station, a new station in Humboldt, would have on Fabcom.
700 I am going to tell you that I have looked at your application, and I have looked at it, and I like playing with numbers, so...
701 COMMISSIONER MOLNAR: You say that 54 percent of total revenue in Year 1 would come from existing Fabcom stations.
702 MR. SINGER: Yes, correct.
703 COMMISSIONER MOLNAR: Your customer research indicates that 59 percent of advertisers would spend more, and that 75 percent would retain some advertising on your Melfort stations.
704 When I look at all of those numbers, and when I look at the customer research upon which it appears your revenue cross impacts are determined, I don't understand the math, to be honest. So can you, maybe, tell me how your estimated cross impacts have been derived?
705 MR. SINGER: Okay. It started with us taking a historic look at the clients, client-by-client, in the Humboldt and area -- territory -- and because we have been doing business with them for a long time, not just a little time, we do have a sense and a relationship with each of these clients to know what their targeting needs are.
706 Going through that process, we quantified a number of clients who would switch all of their business -- and, again, we are predicting, we are looking at their type of business -- would take all of their advertising business and switch it to a Humboldt station -- to our new Humboldt station.
707 Then we looked at the ones that would likely increase their budgets, and by both our Melfort stations and our Humboldt stations, and we put them into another category.
708 Then we looked at ones that are using our Melfort stations and using some Saskatoon stations -- and there are a number of those types of clients -- and determined how a Humboldt station would impact their spending.
709 So, really, we are taking this broad list of clients that we do business with, and we put them into these areas, and projected over a period of years, starting with Year 1 in Humboldt, with a new radio station, how that would impact our Melfort revenues.
710 So those numbers are really derived from doing a one-on-one look at every client that we have been doing business with in the market.
711 COMMISSIONER MOLNAR: So the customer research was not used to derive your revenue estimates.
712 MR. SINGER: No, the customer research was used to give us a sense of -- that was our projection, and we talked to some of our retailers -- the process I just described -- but we also wanted Insightrix to do some in-market studying and, really, I didn't really find a big surprise there. I think it did complement what we had gone through in doing our own evaluation.
713 Clearly, there are advertisers there who will definitely want to maintain their advertising on our Melfort station, but they may be reducing that revenue to allow them to buy now three Fabcom stations instead of two.
714 So it's a little difficult to just -- it's not black and white, but definitely there was a correlation between us doing our own evaluation, based on real spending, and the Insightrix study that talked to advertisers that were currently active on our stations, advertisers that have never used our radio stations and have used other media.
715 Perhaps I could have Lang, from Insightrix, comment more on that, if you wish.
716 COMMISSIONER MOLNAR: If you wouldn't mind, just briefly help me.
717 Again, I see this result that says that 11.4 percent would continue all of their advertising on the Melfort stations, and 75 percent would continue some of their advertising on the Melfort stations, and yet the resulting impact says that 54 percent of the revenue would leave, and that is a confusing bit of information.
718 MR. McGILP: I can certainly speak to the survey that we did. In terms of how the sales forecasts worked, I wasn't part of that process, but certainly the research did show that there would be an interest in spending more money in that market.
719 But in terms of the sales projections...
720 COMMISSIONER MOLNAR: If you were to look at this market research, could you come up with something that would say that 54 percent of the revenue would move, based on your market research, or anything in that range?
721 MR. McGILP: We didn't go into a line of questioning asking how much revenue would you move if the station were to be established, but certainly we do see a trajectory of saying that some of the shift would take place.
722 I mean, when we have three-quarters of the people saying that they are going to move some of their dollars over, that does suggest a shift.
723 At the same time, we had 6 out of 10 people who currently advertise with Fabmar say that they would, potentially, advertise more with Fabmar, increase their wallet share.
724 So I think that there are some opportunities there.
725 Where the sales projections came from, in terms of how conservative -- you know, my colleagues were on that, and I am not sure about the process on that, but I think it does show that there is opportunity in the market.
726 COMMISSIONER MOLNAR: Could I ask you to comment -- Golden West, just before you, was talking about their estimated economic capacity for the Humboldt market, in the range of $1.1 million to $1.3 million, being the economic capacity of the market to support radio.
727 Have you done any work, or would you be able to comment on that in any way?
728 MR. SINGER: I think that our experience there is the best research you could actually find. We knock on doors every day there. We know the potential of the market for our radio stations.
729 In that many years you do get a sense of what the market -- or how much money the market will dedicate to our two Melfort radio stations.
730 I recognize -- again, back to the Insightrix research -- that the most commonly used medium in Humboldt currently is newspaper. So that encourages us to think, if you have a locally focused radio station on the ground in Humboldt, that there is a great opportunity to increase radio spending.
731 I am a believer that if there is $1.5 million in advertising revenues in Humboldt, having a local new radio station in the market will derive a lot more than we are getting currently as a regional station. So there is no dispute over that at all.
732 But, again, the best research, from our point of view, today is: What is the real spending in the market. We have a good sense of that.
733 The number one factor here for an advertiser in Humboldt right now is that they have to buy our radio station, or they choose to buy our radio station, because we do have a fair listenership in Humboldt. But they are also paying to be broadcast to areas that -- you know, they are reaching Melfort, and for a lot of those Humboldt businesses, they don't need Melfort, but we are charging them our rate for that coverage.
734 So the appeal of a new local station is going to be more affordable for Humboldt businesses that aren't interested in that full coverage, and that will create new opportunities as well.
735 Again, that is the process of going back through this list and saying: What kind of advertiser would turn our Melfort station off, as far as an advertising resource, and put all of their money into Humboldt?
736 Again, we did it on pure numbers, based on actual clients and their history of spending with us.
737 COMMISSIONER MOLNAR: So that same process led you to the conclusion that it would be 54 percent if you were the licence holder, and 80 percent if Golden West were licensed.
738 MR. SINGER: Correct.
739 COMMISSIONER MOLNAR: One-by-one you looked at them?
740 MR. SINGER: Yes.
741 COMMISSIONER MOLNAR: Just to be clear, let's assume in this case that Golden West was licensed and you were to lose 80 percent of your local revenue out of the Humboldt market. You would continue to do all of your programming into Humboldt, carry all of the Broncos games and everything, absent advertising support?
742 MR. SINGER: We would do the best we could, but we certainly would feel the financial impact to give us the resources to do those things.
743 MR. FABRO: I think that our commitment wouldn't change, but we wouldn't have the funds in order to contribute as much to Humboldt as we could previously.
744 COMMISSIONER MOLNAR: Okay. I have a better idea of how you determined your cross impacts. Incremental revenue, however, is relatively small. I think you forecast incremental local revenue at $50,000. That looks like a pretty small amount of incremental revenue, if you were to dedicate yourself to that community, and, as you said, it would have lower rates than your Melfort station and so on.
745 One of the questions that I wondered was: In your application you propose one incremental sales position, I believe. Do you believe that you could get more local revenue if you had greater sales staff dedicated to Humboldt?
746 MR. SINGER: The business plan for start-up is, yes, with one salesperson, but we would hope, as the market grew, that we could add more resources.
747 Right now, and for the past several years, we have had one rep dedicated to Humboldt and territory, but definitely, if the business warrants it, we would be happy -- I would love to have that problem, to have to add another salesman sooner than later.
748 COMMISSIONER MOLNAR: I lost my little sheet with everyone's name, but I understand that you are the sales rep for Humboldt today --
750 MR. KUSCH: Yes.
751 COMMISSIONER MOLNAR: -- and that you would be dedicated to the new Humboldt station. So would you be selling for the Melfort station and the Humboldt station?
752 MR. KUSCH: I think we would look into that, but I think the plan is to replace the Melfort stations, CJBR and CKJH -- replacing my position with somebody else, and I would be dedicated to the Humboldt radio station.
753 COMMISSIONER MOLNAR: Okay, thanks.
754 As it regards the synergies between Melfort and Humboldt, you would be having five incremental positions to run Humboldt and a number of synergies with Melfort.
755 Do you do the same functions -- you listed all of the functions in your application that you would do at Melfort. Do you do those same functions for the B.C. and Alberta stations out of Melfort?
756 MR. SINGER: I will ask Linda, our Administration Manager, to speak to that.
757 MS RHEAUME: Thanks, Ken.
758 For Whitecourt we have the same synergies, as far as traffic, admin -- traffic and admin are your main synergies.
759 In Chilliwack we have a creative writer that works in Chilliwack for the Chilliwack station; whereas in Whitecourt the commercials are written in Melfort, talking to the clients in Whitecourt.
760 So the main synergies between traffic and admin are all the same in all the stations.
761 COMMISSIONER MOLNAR: Just to repeat myself -- sometimes it takes me more than once to ask a question to understand the answer.
762 You are not proposing any synergies on the sales side between the two?
763 MR. SINGER: I should point out that we have clients that do want to buy the full regional service. It's almost on a case-by-case -- like the assigned salesperson to that particular client, because they are interested in --
764 If we had the Humboldt station, we might have one salesperson dealing with that client.
765 I guess that Dave could elaborate more on that, but definitely we see the opportunity here just to be a stronger sales force by adding another radio station, most definitely.
766 And our ability to offer clients more choices within our region, now, if we had somebody who just wanted the Humboldt market, we could do something for them in that regard.
767 COMMISSIONER MOLNAR: Fair enough. And I assume that your financial projections and your sales and promotion costs in there reflect the cost of supporting that revenue, regardless of where that person resides.
768 MR. SINGER: Yes, that's correct.
769 COMMISSIONER MOLNAR: Fair enough.
770 I have a few detail questions, but before I go on to that, I just wanted to ask you about the new media. I believe that was one of the synergies that you had identified, that you would support the website from Melfort.
771 MR. SINGER: Each of our four radio stations has its own website. We do use our promotion person in Melfort to coordinate a lot of the functions for those four websites, but within our Whitecourt station and our Chilliwack station, we also have a person in charge of portions of the duties associated with their own website.
772 So it's not all one person doing all things, but there are some functions that we can administer from Melfort for all four.
773 COMMISSIONER MOLNAR: And you are aware that Golden West has proposed quite an aggressive new media platform, a community portal?
774 MR. SINGER: Yes.
775 COMMISSIONER MOLNAR: Do you want to tell us a little bit about what yours would look like?
776 MR. SINGER: I think, when you talk about new media, it is always work in progress. As we speak, we are developing some new elements for our websites, our four websites. We have just undertaken on three of our four stations a new streaming service that will offer us some new revenue opportunities that we didn't have in the past.
777 Definitely it's hard to keep up to that train, I find, but we do the best we can.
778 Our goal is to engage our listeners with our website, and we are doing a lot of that through our loyal listener databases and so on. Our Saskatchewan stations have over 10,000 loyal listeners in our database that we do a fair amount of weekly contact with, and we are using that database as part of our marketing efforts, for sure.
779 So streaming, contesting -- and we are doing, you know, news and sport headlines.
780 In Chilliwack we are undertaking a similar format to a local portal, called "mychilliwacknews.com", and that is just about to be unveiled, and we are kind of using that as, I guess, the guinea pig for the other markets, to see how that unfolds, and then we would develop that as a new look and a new functionality for our Saskatchewan and Alberta websites.
781 COMMISSIONER MOLNAR: Okay, thanks.
782 I just have a few detail questions here.
783 Local programming -- and you heard Commissioner Duncan ask this to Golden West -- there is a requirement in markets with more than one station that there be a minimum amount of local programming in order to solicit advertising, and that minimum amount is 42 hours. That is the minimum amount required in the case of a non-single market station.
784 Would you be willing to accept a condition of licence, if you were successful in this, to a minimum amount of local programming?
785 MR. SINGER: Our commitment is to provide 126 hours of local programming.
786 COMMISSIONER MOLNAR: Would you be willing to accept that as a condition of licence?
787 MR. SINGER: Yes, we would.
788 COMMISSIONER MOLNAR: Okay. Thank you.
789 In your news programming you have proposed 2 hours and 12 minutes of pure news per broadcast week. Could you give us some breakdown and tell us, of this amount, how much would relate to local news and local reflection versus that which would be regional, national and international?
790 MR. SINGER: Our components would be at least 90 percent local, and the rest would be -- the remaining 10 percent would be international and regional/provincial.
791 We also, as part of our news commitment, are providing a great deal of ag news. So, in addition to our 2 hours and 12 minutes of pure news that we indicate on the chart that was submitted with our application, the ag news makes up another 87 and a half minutes a week.
792 So, I guess, realistically, our pure news is the combination of both of those, which would give us a total of --
793 COMMISSIONER MOLNAR: The ag news is unique to Humboldt?
794 MR. SINGER: Yes, it would be. It would be produced by our agricultural reporter, Alice McFarlane, who does all of our ag programming in Melfort, but she would produce a special program that would air on the Humboldt station, which would be separate from the Melfort station's program.
795 COMMISSIONER MOLNAR: To say it's raining?
796 MR. SINGER: Yes, this is more the hard news of agriculture, not weather related.
797 COMMISSIONER MOLNAR: Well, that's hard news of agriculture right now, "It's raining again."
798 MR. SINGER: Yes.
799 Alice McFarlane, by the way, just won a Canadian farm writer award this past weekend for her work in agricultural reporting, so we are kind of proud of that and hope we can bring that to Humboldt.
800 COMMISSIONER MOLNAR: Thank you.
801 I just have one more question, and it relates to your CCD commitments. Do you have with you the revised Appendix 8(a) that you filed with us detailing your CCD commitments?
802 MR. SINGER: Yes, I do.
803 COMMISSIONER MOLNAR: Great.
804 I am interested in the CCD that is over and above the basic, and what normally occurs is that we like to see the commitments by year and in total, so that Commission Staff can track it each year, to determine if people are meeting their commitments.
805 MR. SINGER: Yes.
806 COMMISSIONER MOLNAR: We have had some problems, to be honest, in looking at this file, to understand what is your CCD commitment by year in over and above.
807 Just to confirm, your total over and above CCD commitment is $39,000. Is that true?
808 MR. SINGER: Correct, yes.
809 COMMISSIONER MOLNAR: If we look at Appendix 8(a), we see one line that says, "CCD that is over and above the basic," and it shows, in amounts per year, $6,000 in Year 1, $5,500 in Year 2 --
810 Do you see that line?
811 MR. SINGER: Yes.
812 COMMISSIONER MOLNAR: So $6,000 in Year 1, $5,500 in Year 2, $5,500 in Year 3 -- $5,500 each year thereafter.
813 Is that your commitment?
814 MR. SINGER: Yes, it is.
815 COMMISSIONER MOLNAR: In over and above.
816 MR. SINGER: Correct.
817 COMMISSIONER MOLNAR: Okay. So, then, if we wanted to understand your commitment by initiative, we look down to the next line, which says, "Total direct CCD," and I understand that your commitment there to FACTOR includes basic and over and above.
818 But you can see, if we look at the total numbers there, that they don't align with the numbers above.
819 Can you see that?
820 This total direct CCD would be your basic and your over and above, and yet it shows in Year 1 the total amount to be $4,900 versus the $6,000 that you have said you would be spending in the first year.
821 MR. SINGER: I know that we answered this in a deficiency question, and I would have to review that.
822 Would it be possible for us to give you an evaluation of this, because I am not really sure how this has unfolded here.
823 COMMISSIONER MOLNAR: I think it is certainly something we would appreciate receiving.
824 MR. SINGER: Yes, we could do that later today, if you like.
825 COMMISSIONER MOLNAR: Okay. What we need is the CCD that is over and above the basic, by initiative, by year.
826 MR. SINGER: Okay.
827 COMMISSIONER MOLNAR: Reconciling to those amounts each year, and to that total, $39,000.
828 MR. SINGER: Okay.
829 COMMISSIONER MOLNAR: Which, I believe, this was intended to do, but the math doesn't work. So if you could provide us a revised --
830 MR. SINGER: Yes.
831 I do know that we were asked about that in one of our deficiencies and --
832 COMMISSIONER MOLNAR: And I think this is what you provided us as an answer, so we are still confused. If you could just re-file that, we would appreciate it.
833 MR. SINGER: We would be happy to offer some clarification on that.
834 COMMISSIONER MOLNAR: Thank you very much.
835 Those are my questions.
836 THE CHAIRPERSON: Commissioner Duncan, go ahead.
837 COMMISSIONER DUNCAN: I have just a few questions.
838 I am just wondering, your local programming is 126 hours, of which 44 hours are live.
839 MR. SINGER: Yes.
840 COMMISSIONER DUNCAN: I am just wondering, is the balance all voice-tracked or is it some other...
841 MR. SINGER: It would be live-assist. In other words, it would be produced in the radio station in Humboldt. We don't have plans to carry programming originating from any of our other stations.
842 So it's all locally produced, and, primarily, it would be our low audience hours that would be voice-tracked.
843 COMMISSIONER DUNCAN: Thank you.
844 The extra positions that you are hiring, will they all be resident in Humboldt?
845 MR. SINGER: Yes.
846 COMMISSIONER DUNCAN: They will all be.
847 If I look at your Appendix 1 of your supplementary brief, you list shows like "Great Canadian Rockies".
848 MR. SINGER: Yes.
849 COMMISSIONER DUNCAN: Is that program produced, or will that program be produced in Humboldt?
850 MR. SINGER: Yes.
851 And that's a typo, it's "Great Canadian Rocks". I have been reminded of that about a hundred times this week.
852 COMMISSIONER DUNCAN: It immediately brought Chilliwack to mind, so that's why I asked.
853 Thank you very much.
854 Thank you, Mr. Chairman.
855 THE CHAIRPERSON: Thank you, Commissioner Duncan.
856 Before we break for lunch, are there any other matters of business, Madam Secretary, or items for the record?
857 MS HULLEY: I can confirm for the record the undertaking.
858 THE CHAIRPERSON: Okay.
859 MS HULLEY: The undertaking in response to Commissioner Molnar's question was to provide clarifications on the CCD: the total seven-year over and above CCD contribution that is proposed; the over and above CCD contribution breakdown per broadcast year; and the specific amounts per broadcast year that will be devoted to each initiative for the over and above CCD contributions.
860 And you undertook, I believe, to file that by the end of the day today.
861 MR. SINGER: Correct.
862 THE SECRETARY: We would accept 9:00 a.m. tomorrow morning, if that's acceptable. That's when Golden West's undertakings are due.
863 Thank you.
864 THE CHAIRPERSON: Madam Secretary, is there any other business?
865 THE SECRETARY: Thank you, Mr. Chairman.
866 This concludes Phase I for Items 1 and 2 on the agenda.
867 THE CHAIRPERSON: Very good. It is quarter after 12, just slightly past by my watch. I would like to break for lunch, please, and we will be back at 1:30.
868 Does that sound reasonable for everyone?
869 Great. Thank you very much.
--- Upon recessing at 1217
--- Upon resuming at 1338
870 THE CHAIRPERSON: Madam Secretary, would you please do the honours and introduce the next presentation.
871 THE SECRETARY: Thank you, Mr. Chair.
872 We have now reached Phase II, in which applicants appear in the same order to intervene on competing applications, if they wish.
873 We will begin this phase with Golden West Broadcasting Limited.
874 Please reintroduce yourselves for the record. You have 10 minutes for your presentation.
875 MR. FRIESEN: Thank you. I am Lyndon Friesen, President of Golden West Broadcasting. On my left is Elmer Hildebrand, CEO of Golden West Broadcasting. Next to him is Ken Goldstein, communications management; Tim Thibault, a resident of Humboldt and in his own business; and Dave Lehman is our online manager for Golden West.
876 We will take just a few moments to make a few points in response to this morning. I would ask Ken Goldstein to open with a few comments.
877 MR. GOLDSTEIN: You have in front of you a comparison that we have prepared, based entirely on material that is on the public file, and I will just touch on three highlights. The first is the comparison of the commitment to the community, both in dollar terms and employment terms.
878 Second is the fact that we believe the Fabcom format and audience research is severely flawed, because it is inconsistent with BBM findings as to hours tuned; and we also found that, apparently, in the application, where you are supposed to do 12-plus, they didn't do 12-plus, they did total population, which, of course, introduces an error into all subsequent calculations.
879 Finally, there is the key issue of market impact. It was 80 percent, and then it was 54 percent, and page 2 of the Insightrix survey says that there would be minimal cannibalization on existing Fabmar stations. I think the distance between minimal and 54 percent is a lot farther than the distance from Humboldt to Melfort.
880 MR. FRIESEN: Thank you, Ken.
881 Now I would ask Tim Thibault to make one final comment.
882 MR. THIBAULT: As someone who knows our community and the support we have for our local hockey team, and in consideration of Fabmar generating most of their advertising revenues due to their support and carriage of that team, the Humboldt Broncos, and their commitment to continue broadcasting their games, I believe they have grossly overstated the impact that a local Humboldt FM station would have on the revenues that they are receiving from their other stations.
883 MR. FRIESEN: Now, Dave Lehman would like to make a comment about new media.
884 MR. LEHMAN: A station website can be an effective promotional vehicle for a radio station, but it is not a service to the community. However, a locally focused community portal website is a true community service, and it would be a tremendous benefit to all of the businesses, organizations and residents of Humboldt.
885 MR. FRIESEN: And, of course, it wouldn't be complete if we didn't ask Elmer to make a few candid comments.
886 MR. HILDEBRAND: Just some observations. It would appear that the Fabmar application is really more about serving Saskatoon. Their coverage in Saskatoon will certainly provide a very listenable signal for the city.
887 Their format is also more designed for an urban audience than a rural one.
888 And we know, even from Melfort right now, that they are often targeting Saskatoon. Their sales manager lives in Saskatoon, they have huge billboards in the City of Saskatoon, and a few years ago they made a $250,000 donation to the Saskatoon Huskies. As a result, they are the exclusive broadcaster of the Huskies in Saskatoon.
889 So our guess is, should this application by Fabmar be approved, they would concentrate even more on Saskatoon, at the expense of Humboldt. Thank you.
890 MR. FRIESEN: We think it is obvious that the choice will be between two distinctly different offerings of service, one which seems to be more of a regional approach to service, and ours, which we know is intensely local.
891 But at the end of the day we would ask that you only consider one thing, and that, I guess, is what is important for all of us here today, and that is not what is good for Golden West or not what is good for Fabcom, but only consider what is good for Humboldt. Then we think the rest will make a lot of sense.
892 We thank you so much for listening to us today.
893 THE CHAIRPERSON: Thank you very much for your presentation.
894 Madam Secretary...
895 THE SECRETARY: Thank you, Mr. Chair.
896 We will now proceed with Fabmar Communications Ltd.
897 Please reintroduce yourselves for the record. You have 10 minutes for your presentation.
898 MR. SINGER: I am Ken Singer, Vice-President of Broadcast Operations for Fabmar Communications Ltd.
899 We have no comment at this time. We will reserve our comments for Phase IV. Thank you.
900 THE CHAIRPERSON: Thank you very much.
901 THE SECRETARY: Thank you.
902 This completes Phase II for Items 1 and 2 on the agenda.
903 Now, Mr. Chair, we will proceed to Phase III, in which intervenors appear in the order set out on the agenda to present their intervention.
904 We will begin with the Humboldt and District Chamber of Commerce.
905 Would you please come forward.
906 Appearing for the Humboldt and District Chamber of Commerce is DonnaLyn Dyok.
907 You may now begin. You have 10 minutes for your presentation.
908 MS DYOK: Good afternoon. My name is DonnaLyn Dyok, and I am the Executive Director for the Humboldt and District Chamber of Commerce.
909 Our chamber works for our members as a partner for business growth, ensuring that the Humboldt area is the best place to do business.
910 I am here today to give you some facts about our community and the relationship that our chamber has with one particular member, that is, Fabmar Communications Ltd.
911 I would first like to tell you a little bit about the City of Humboldt and, most importantly, about the growth that our business community is experiencing.
912 Humboldt is a dynamic, growing city, located in central Saskatchewan. It has a population of over 5,900, and a trading area in excess of 27,000 people.
913 The city and its surrounding trading area welcome the tremendous economic growth seen over the past several years, and are working to ensure that it continues to provide exciting opportunities into the future.
914 With all of the amenities of a larger centre and the desired lifestyle offered by a small city, Humboldt is an attractive place to call home.
915 Our chamber currently has 181 members. We have more than doubled in members over the past seven years. I believe that this is due not only to the growth of our community, but to the progressiveness of it. Businesses are getting smarter, more involved, and realizing the benefits of being involved in the community and in organizations such as the Chamber of Commerce.
916 Humboldt is being recognized provincially for the growth that we are experiencing, which is evident in the appointment of the Humboldt chamber to the provincial chamber's Growth Strategy Task Force, a group of highly respected business people and chamber representatives that is dedicated to identifying and addressing issues to barriers for growth in our province.
917 Although we are the smallest community represented around this table, we are highly respected and our input is valued.
918 Humboldt was also recently awarded one of two pilot projects in our province for the Third Quarter Initiative, employing workers ages 50 to 64 to help address the current and expected labour shortage.
919 These things are not happening by accident. Humboldt is on the map in this province as a growing and progressive community that is embracing the growth that our province is experiencing.
920 As of July 1st, 2010, there were 1,045,622 people living in Saskatchewan, an increase of 4,887 people over the past quarter, and 16,498 people over the past year. That is the largest quarterly increase in Saskatchewan's population since 1982 and the largest year-over-year increase since 1953.
921 The year-over-year growth rate of 1.6 percent is the highest of any province in Canada.
922 Although we do not yet have Humboldt's data for 2010, we do know that our trading area is experiencing the same growth trend that our province has been experiencing.
923 Fabmar has been a member of the Humboldt and District Chamber of Commerce as far back as we have recorded, which is 11 years. They currently have a staff member on our Board of Directors, and have had representation on the Board in the past, as well.
924 They have been proactive in their approach to the Humboldt market by recently relocating a full-time staff person to our city. They are involved in our community and have representation on many local boards and committees. They know Humboldt and have become the trusted and most local radio station we have.
925 They are quick to cover events and newsworthy topics that pertain to Humboldt, and strive to include Humboldt amongst all of the other communities that they have to cover.
926 Humboldt is a community that comes together when there is a common cause. One such cause would be our quest to win the national Hockeyville Competition in 2009. Many citizens, young and old, hockey fans and not, jumped on board and worked to make sure that Humboldt gave every effort to be the top contender in this competition.
927 Fabmar Communications was with us every step of the way, making sure that their entire listening audience knew when and how to vote for Humboldt.
928 More recently was their involvement with the Humboldt and District Hospital Equipment Campaign, with their radio blitz and Have-a-Heart Run.
929 Along with assisting and planning the run, they were alongside the runners from the beginning and cheering them on at the end.
930 Fabmar Communications has been present in our community for a long time. They know our businesses, our organizations, and our citizens, and we all know them.
931 In 2012 Humboldt will host the national RBC Cup. How perfect it would be to have a supportive and local radio station actively involved. We know that Fabmar will take on this role wholeheartedly.
932 As I am here today on behalf of our chamber members, I would like to share with you the thoughts of a few of our Humboldt businesses and organizations.
933 Bob Johnson, President of the Humboldt Broncos, told me:
"The Humboldt Broncos Hockey Club feels that with the growth of our region, it is very important to have a local radio station that is focused on the City of Humboldt and surrounding communities. CJVR/CK750 has done a great job covering the Humboldt Broncos, but they have two other SJHL teams to cover, as well. Having a radio station right here in Humboldt would help us stay connected to our fan base and give us much more exposure in our market."
934 Richard Kosokowsky of South 20 Dodge Chrysler said:
"Having an established local radio station would be a great thing to have. Right now we are often confused about where to advertise and which station is reaching the Humboldt area. It is very important to our business to have a radio station based in Humboldt, and it should be a priority."
935 Jeff Bunko, owner of Sears Humboldt and Heim-Sinn Dekor told me:
"Ultimately, with our community growing, we need to be branded as a separate entity, and what better way to be branded than with our own local radio station."
936 Paul Kneeshaw of Misty Gardens said:
"Businesses can reach more people effectively through local news and local happenings. The type of music doesn't matter so much, as people will listen because it's immediate and it is local. It's important to everyone who lives here to have a station focused on local news."
937 And, finally, Greg Velanoff of Canadian Tire said:
"Humboldt and its surrounding area is a rapidly growing marketplace. Currently there are limited publication options available to businesses and other organizations to communicate with the region's population, due to its rural postal coverage. One or more local radio stations gives us access to a much larger and currently underserved population base, to inform them of local sales events and news more often and more cost effectively than what can be achieved with print ads alone."
938 Clearly, our business community is in support and anticipation of a local radio station, and it is the opinion of the Humboldt and District Chamber of Commerce that a local radio station is an essential component to our growing community.
939 Thank you for the opportunity to share our perspective with you here today.
940 THE CHAIRPERSON: Thank you very much, Ms Dyok.
941 How long have you lived in Humboldt?
942 MS DYOK: I have lived in Humboldt since early 2005.
943 THE CHAIRPERSON: And you came from where?
944 MS DYOK: I actually moved around the province quite a bit, working with AG Company, but I had been in Watson, which is half an hour out of Humboldt, for about six years prior to moving to Humboldt.
945 THE CHAIRPERSON: And what is it about Humboldt that you like and made you move there?
946 MS DYOK: Well, I was ready to start my family and we were looking for a centre that was going to provide us with everything we needed for our family needs.
947 I moved to Humboldt, as I have moved around to a lot of other places, and very quickly have called it home. Not originally being from there, I still have a very strong passion for the community and it is my plan to stay there, raise my children there, and have a career there.
948 THE CHAIRPERSON: In addition to the chamber, how many active service clubs are there in Humboldt? I am thinking Rotary and others.
949 MS DYOK: There are a lot of clubs in different aspects. When you talk about the well-known ones, when you talk about the Rotary Club and that kind of thing, we don't have a lot of those right now, but there are so many different groups doing different things for projects.
950 For example, the Have-a-Heart Run that just went on, that was a committee that was thrown together to put on this run to raise funds for the hospital, and it brought over 300 runners. Some had never run before for a common cause.
951 Hockeyville was another thing; a committee that was thrown together, with people that are very interested in seeing a community get together and do things.
952 So although we don't have a lot that meet regularly, there are, very, very often, groups getting together and promoting things that are pertinent at the time.
953 THE CHAIRPERSON: You have 181 members. What percentage of that membership would be retail versus institutional or other?
954 MS DYOK: I don't have that exact number with me today, so it would be --
955 THE CHAIRPERSON: A guess?
956 MS DYOK: A guess? Probably 50 or 60 percent.
957 THE CHAIRPERSON: And are they all pretty much in Humboldt, or are they further afield? I am thinking local versus regional.
958 MS DYOK: Yes, we probably have about 90 percent that are based right in Humboldt. We are Humboldt and District, and that is something that we are actually working on with some of the surrounding communities, to make us more regional, and we are working with the provincial chamber on ways of doing that.
959 So we do have members -- there are a few that are out of Saskatoon, Englefeld, Watson, Muenster of course, St. Gregor -- some of the surrounding areas, as well. But that seems to be coming in the last couple of years a little bit more.
960 THE CHAIRPERSON: Is the chamber the dominant service organization or community group in Humboldt?
961 MS DYOK: No, I wouldn't say we are dominant. We also have an enterprise region that is based out of Humboldt that covers a large area around. They are doing a lot of work with businesses and industry, as well.
962 There are several organizations, but I would hope that the chamber would be one of the most respected.
963 THE CHAIRPERSON: On the first page of your submission you indicate that Fabmar, or Fabcom, is a significant supporter of Humboldt, in terms of its community activities. That I understand as a corporation. Which of the two entities, the AM or the FM, or both, do you enjoy the most support from?
964 MS DYOK: Both, equally.
965 From the chamber side, when we are talking about promoting things that are going on in Humboldt, I know that we usually do it fifty-fifty, so that we are hearing it on both stations.
966 THE CHAIRPERSON: My final question -- just to put you on the spot, because I love to do that -- you are very gracious with your indication of past support that you have enjoyed and that Humboldt has enjoyed with respect to Fabcom's -- I've got to get used to that -- Fabcom's support of the community, but I noticed that, in the end, you were basically supportive of the introduction of a radio station to the community.
967 Are you deliberately distinguishing between the two? Are you sitting on the fence or is the chamber endorsing an application?
968 MS DYOK: As the chamber, we are very excited and anticipate a local radio station in Humboldt, whether it be Golden West or Fabmar.
969 We have history with Fabmar, so we are able to sit up here today and talk about that past history, and we don't have that with Golden West.
970 So, at the end of the day, the members of the Chamber of Commerce would like to see a radio station in Humboldt.
971 THE CHAIRPERSON: Very good.
972 Commissioner Duncan, do you have any questions?
973 COMMISSIONER DUNCAN: No, thank you.
974 THE CHAIRPERSON: Commissioner Molnar?
975 COMMISSIONER MOLNAR: No, thank you.
976 THE CHAIRPERSON: Thank you very much.
977 MS DYOK: Thank you.
978 THE CHAIRPERSON: Madam Secretary...
979 THE SECRETARY: Thank you.
980 We will now proceed with the Humboldt District Hospital Foundation Inc.
981 If you would like to come forward...
982 Please introduce yourself, after which you will have 10 minutes for your presentation.
983 MS BUNKO: Thank you.
984 Good afternoon. My name is Lorrie Bunko, and I have been the Executive Director for the Humboldt District Hospital Foundation for nearly two years. Prior to that I worked for another, active, non-profit organization in Humboldt.
985 The Humboldt District Hospital Foundation focuses on a large rural area that has well over 27,000 people. Our boundaries reach to the northern tip of the arm of Lake Lenore, west as far as Prudhomme, south down by Nokomis, and east as far as Kamsack.
986 Our efforts focus primarily on raising funds to purchase medical equipment for the Humboldt District Hospital. On average, we spend $200,000 per year.
987 Just recently our organization completed a $1.8 million equipment campaign for our new hospital. We accomplished our goal within 17 months of introducing the campaign to the public.
988 When reflecting back to when we were developing our marketing strategy for the campaign, the question was asked: How will we reach out to over 27,000 people in our hospital-user district?
989 It was determined that media was going to be an imperative component of the campaign. We identified CJVR/CK750 as one of the three primary media resources.
990 A meeting was called with the identified media groups to discuss our campaign and to request their assistance in keeping the public informed and up to date on our progress.
991 The support we received from CJVR/CK750, along with others, was a tremendous boost to our campaign, and we can't thank them enough.
992 Not only did CJVR/CK750 provide us with frequent news coverage and affordable advertising, they also provided us with ideas, suggestions and volunteerism.
993 In the last week of our campaign, prior to reaching our $1.8 million goal, CJVR/CK750 offered to bring their station to Humboldt for a 72-hour radio marathon at no cost. From Monday, September 20th until Saturday, September 25th, CJVR/CK750 was with us from 6:00 a.m. to 6:00 p.m. Aside from airing their regular news, advertising and music, they interviewed our staff at our hospital, volunteers and many more.
994 The word rapidly spread throughout the area, and more and more people tuned in throughout the week, realizing that Humboldt had a spot on the airwaves for a week.
995 Donations were coming in as people were listening throughout the week. We began the week needing to fundraise $150,000, and by the end of the week we had reached our goal and then some.
996 We strongly believe that CJVR/CK750 made a positive impact in the last part of our campaign.
997 Some may think that any station could have come in and made the same impact. We would have to disagree, and I will provide you with explanations as to why.
998 In order to even begin a 72-hour radio marathon, the station needs to have knowledge about the organization itself, knowledge about the topic of what is to be discussed, and knowledge about the target area. The station needs to have a vested interest in the cause, as the message being relayed is that much more powerful.
999 The station also needs to have a passion for the organization's mission.
1000 Brian Kusch, who is the salesperson for CJVR/CK750 from the Humboldt district, lives in Humboldt with a young family. He knows the importance of having exceptional health care available. Mr. Kusch can personally relate to the goals of the Humboldt District Hospital Foundation.
1001 I will provide you with the scenario of a station from outside our district that knows very little about us.
1002 In late winter, a request for proposal to host a radio marathon was sent to three radio stations. CJVR/CK750 acknowledged the RFP almost immediately, one never responded to us, and the other made me feel that we were not important enough to focus on and we were too small for their level of radio.
1003 As Executive Director of the Humboldt District Hospital Foundation, I am a strong believer that effective marketing has to involve print and radio. These two go hand-in-hand. People need to be able to read about an event or news in their local paper, and they need to be able to listen to the event or news on their local radio station.
1004 As a charitable organization, we work with limited dollars. We want to ensure that our dollars that are available for marketing and advertising are used to their maximum potential. As our events or projects are focused to our district, we need to work with local advertising agencies. Although CJVR/CK750 does their best right now in fulfilling our needs, it is still not the same. We need our own local station, so that district residents and abroad can listen to current events and news in our large rural area.
1005 Why Fabmar Communications? Fabmar Communications has a proven, established working relationship with local organizations and businesses in the Humboldt district. The trust and partnership is already there. Having Fabmar Communications make Humboldt as one of their homes only seems to be a natural fit. Everything else will fall into place if you, the CRTC, approve Fabmar Communication's application.
1006 Thank you.
1007 THE CHAIRPERSON: Thank you very much for your presentation.
1008 Commissioner Duncan...
1009 COMMISSIONER DUNCAN: Thank you, Ms Bunko, for coming and for telling us all that Fabmar has done to assist your foundation. Congratulations on your successful fundraising efforts.
1010 MS BUNKO: Thank you.
1011 COMMISSIONER DUNCAN: I am sure that everybody is excited about that.
1012 Would you agree with the previous lady that appeared from the Chamber of Commerce, Ms Dyok, that a radio station is your top importance?
1013 You are supporting Fabmar, but your key point is that you need a radio station, that Humboldt needs its own radio station?
1014 MS BUNKO: We need a radio station; however, the partnership -- like I said in the last part, the partnership is already there, and when you are doing something like this and bringing something like this into a district that's new, it's always nice to have a partnership, and to see faces. I believe that's very important. We see it in business all the time.
1015 COMMISSIONER DUNCAN: Thank you very much. I think that your testimony is clear. That's good. You have been successful, and I am happy for that. That's great. I appreciate your comments.
1016 I don't know if the Chair has any more questions.
1017 Thank you.
1018 COMMISSIONER DUNCAN: Thank you very much for coming to the hearing.
1019 Madam Secretary...
1020 THE SECRETARY: Thank you.
1021 We will now proceed with Mayor Malcolm Eaton of the City of Humboldt.
1022 If you would like to come forward...
1023 Mayor Eaton, you may now proceed. You have 10 minutes for your presentation.
1024 MR. EATON: Thank you very much.
1025 I am very pleased to appear today on behalf of the City of Humboldt. Thank you very much to the Commission members and staff for this opportunity to be part of this very important process, and welcome to Saskatchewan.
1026 Discussions about a radio station for our community have been going on for some time. This topic is part of a much larger conversation about how, as a growing economic region, our community is changing. We no longer have the small-town communication network that let everyone know what was going on at the rink, or the seniors' centre, or the school, or the church. We are a growing, vibrant, progressive city, and we need the information and advertising and programming that a local radio station can provide.
1027 We hear this constantly from our businesses, our schools, our community groups and organizations, our seniors, minor sports groups, and visitors to our city.
1028 We appreciate very much the support and services provided by the Melfort radio station, and the Saskatoon radio stations, as well. However, we believe it would be beneficial, of course, for a local radio station to provide that support and those services directly from our community.
1029 I have written letters of support on behalf of our community for both applications. In those letters I pointed out the significant growth and development that is occurring in all aspects of our economy, the significant population growth we are experiencing, and the potential of further growth and development resulting from expansions in the potash industry in our area.
1030 Let me share today just a bit more detail about that growth and development.
1031 We are an important service and retail centre for our region.
1032 We are one of Saskatchewan's gateway immigration centres.
1033 We are part of the Iron Triangle, which includes several manufacturers that market agriculture equipment internationally.
1034 We are opening a new hospital within the next two months, which will service the health care needs of a large region.
1035 A new $25 million high school and community college facility is under construction. It will be attached to our existing recreational and cultural centre, which includes our arena, our curling rink, an indoor pool, and convention and meeting facilities.
1036 A new 94-unit senior housing complex is under construction.
1037 The city issued 57 new residential housing building permits so far this year, and total building permits for all categories are well over $40 million.
1038 The new 84-room Canalta Hotel opened at the end of August.
1039 St. Peter's College, six miles down the road, in the community of Muenster, is undergoing a $15 million renovation to accommodate additional University of Saskatchewan programs.
1040 Canadian Tire opened a store last year, on a new 30-acre commercial development, with more stores on the way.
1041 Finally, as has been previously mentioned, the long-awaited Tim Hortons is half finished, and hopes to be serving coffee and donuts by early November.
1042 The potash mine, PCS Lanigan, 30 miles away, is a major economic driver in our region and has been for several years.
1043 The proposed new BHP Billiton Jansen Lake potash mine project is also within 30 miles of our city, and will be an even greater economic influence in our region for years to come.
1044 Certainly all indications are that this growth and development of our city and our region will continue for the next few years.
1045 As you have already heard, in March we received word that our bid to host the National Junior "A" Hockey Championship, the Royal Bank Cup, was successful. In May 2012, Humboldt will welcome players, parents, fans, scouts and college recruiters from across Canada and into the United States. This is just one example of the energy and enthusiasm there is in our community for hosting, sponsoring and celebrating special events.
1046 Humboldt is centrally located, and has a reputation for having the facilities and resources to host conferences, conventions and special events.
1047 We recognize that both Golden West Broadcasting and Fabmar Communications have a proven record of success in the community radio business. Golden West has several stations in Saskatchewan communities, and in my conversations with municipal colleagues in those communities, they certainly speak highly of Golden West's radio station work in their local community.
1048 And, of course, Fabmar, as you have heard today, has a long and very positive relationship with our community through its CJVR station in Melfort and its support of many, many community events and activities.
1049 We recognize that a radio station is a business and must operate and be supported by a solid business plan. We believe, though, that it is also about building community spirit, supporting community events, and helping communities become great places to work, live, and raise families.
1050 I am here today to simply express our community's strong support for the granting of a radio licence for the City of Humboldt and region. We appreciate the considerable research and effort that Golden West Broadcasting and Fabmar Communications have devoted to proposing a radio station for our city. The work that is going on here today is certainly detailed and impressive.
1051 I thank you for your consideration of my remarks in your deliberations, and I shall be pleased to answer any questions.
1052 THE CHAIRPERSON: Thank you very much, Your Worship. I understand that Tim Hortons is going to be up against one of the best coffee shops, just up the street from the new hotel.
1053 I just have one question of interest. With all of the development going on, what is your mill rate?
1054 MR. EATON: All of our commercial businesses had a 5 percent reduction in taxes this year, simply because of the increased tax base that is moving in.
1055 The commercial tax rate I can't give you off the top of my head, but we are doing quite well. Compare our tax rates to anybody's.
1056 THE CHAIRPERSON: Yes. I was quite impressed with the new hotel.
1057 Commissioner Molnar, I think, has some questions for you.
1058 Thank you.
1059 COMMISSIONER MOLNAR: Thank you, and welcome, Mayor Eaton.
1060 I just have a comment before I ask my questions. I have lived in Saskatchewan my whole life, and I have told a number of people this story, that in one of my previous jobs I drove the province, and I took great pride and I told many people that I used to know where every Tim Hortons was in this province, and I think, with what has happened with our economy in the last three years, I may now know, maybe, 75 percent. It's so nice to hear of a boom that attracts something like a Tim Hortons into cities like Humboldt.
1061 Tim Hortons is actually, I think, a great indication of the growing economic powers in very many of our communities.
1062 You have laid out in your submission a number of examples of how the community is growing and prospering, and if you sat here this morning, you will know that we have heard that over and over. So accepting that as true -- and we have seen market research and so on to suggest that the Humboldt economy can support a radio station -- we are left with the struggle of who to license.
1063 As you point out in your remarks, we recognize that both Golden West and Fabmar have a proven record of success. Is there anything more, from your position, in your community, on a radio station?
1064 Both are quality broadcasters, so you would be satisfied with either station being licensed?
1065 MR. EATON: Certainly, the conversations we have had as a city council, trying to reflect the views of our community, is that we believe it is time for us to have our own radio station.
1066 Certainly, as I indicated in my presentation, I have talked to municipal colleagues in other communities, and Golden West does a great job.
1067 Our experience with the Melfort station has been a tremendous experience. I have lived in Humboldt for almost 30 years, I raised a family there, I was a school principal there, I have been involved in many groups and organizations through the years. I get a phone call every Tuesday morning from their news director about what is going on in Humboldt. We have many connections with the Melfort radio station.
1068 We are very regional in nature, and we take a very regional approach. The Northeast Region is the region we belong to, and Melfort is the centre of the Northeast Region. We are part of the Northeast Region in our urban municipalities' network, among other things.
1069 Having said that, certainly there is a lot of value to the history, the partnerships, the experience, the relationships, and so on and so forth, that have gone on with the Melfort radio station. From my perception, it has been a very successful relationship, given that they are the Melfort radio station and they are trying to provide services to Humboldt, Nipawin, Tisdale, and many other small communities.
1070 I have no doubt, though, that if Golden West is the successful applicant, they are going to embark upon the same journey. I would expect that and would hope that they would embark upon a journey to meet the needs, establish the relationships, create the partnerships, and do everything they can to truly be our local radio station.
1071 It's a hard choice that you have to make, and we value very much --
1072 COMMISSIONER MOLNAR: It was a hard question that I asked you, as well.
1073 MR. EATON: It was a hard question.
1074 MR. EATON: We value the previous relationship --
1075 COMMISSIONER MOLNAR: Thank you. You can leave it like that.
1076 Thank you very much.
1077 MR. EATON: Thank you.
1078 THE CHAIRPERSON: You are a politician, you are used to those questions.
1079 MR. EATON: This is one of the harder ones. Usually I am not on the fence.
1080 THE CHAIRPERSON: Thank you very much, Your Worship. I appreciate you coming before the hearing today.
1081 Madam Secretary...
1082 THE SECRETARY: Thank you very much.
1083 This completes the list of appearing intervenors and Phase III for Items 1 and 2 on the agenda.
1084 Now, Mr. Chair, we will proceed to Phase IV, in which applicants can reply to all interventions on their application. The applicants appear in reverse order.
1085 We will begin with Fabmar Communications Ltd.
1086 Please come forward.
1087 Again, please reintroduce yourselves for the record. You will then have 10 minutes for your presentation.
1088 MR. SINGER: Good afternoon. I am still Ken Singer, Vice-President of Broadcast Operations, at least until the end of this hearing, for Fabmar Communications, and I have with me Lang McGilp, who is with Insightrix Research Inc. in Saskatoon.
1089 Thank you for this opportunity. We would just like to make a brief comment on a few of the points raised by Golden West in Phase II.
1090 First of all, dealing with the research point on how advertisers would allocate their budgets should a new Humboldt radio station be established, I would ask Lang to give some comment on that.
1091 MR. McGILP: Certainly. Thanks, Ken.
1092 Essentially, overall, the statistic that has been quoted, the 59 percent, is taken a little bit out of context, with all due respect.
1093 The research overall is a sound, scientific approach that has been used, following fundamental practices, which have been outlined in the methodology of the report; and the statistic itself is relating more to the customer base that Fabmar is currently servicing in Humboldt, as opposed to not really having a relation in terms of what the market potential might be or anything of that nature.
1094 MR. SINGER: Further to the research criticism, there was a comment that our audience projections are unfounded, as we are not using BBM data.
1095 We are not members of BBM. I am not aware of any BBM data for the market of Humboldt, so that is why we didn't use that as a source.
1096 We feel that our online survey, with over 450 responses, which is extremely high, indicated to us quite clearly the share of listenership for the classic rock format. We based our share on that particular projection.
1097 I don't think we were questioned on that this morning. We were questioned on the revenue, but not how we arrived at the share. And our application does give full details as to how we arrived at that share.
1098 Turning to the comment about our revenues in Humboldt, especially that derived from Humboldt Broncos Hockey play-by-play, I would make it very clear that if we could live on the revenues of Humboldt hockey, that would be wonderful. That is not our chief source of revenue in the Humboldt market.
1099 The suggestion that we are trying to become a Saskatoon station is totally unfounded. Number one, to become a Sasktoon station, you have to have a signal that penetrates Saskatoon, and I am talking about a quality signal.
1100 If you look at the technical study done by D.E.M. Allen, we are far from being in a technical position to compete with Saskatoon Radio.
1101 Turning to our involvement in Saskatoon, criticism of us being the voice of the University of Saskatchewan Huskies is quite surprising, considering that more than 10 years ago the Huskies said to us: Nobody in Saskatoon is interested in broadcasting our games. Would you be interested?
1102 We stepped up to the plate. We stepped up to the plate because the players on the University of Saskatchewan Huskies come from all over this province. Their families listen to those broadcasts. We get e-mails and letters at every game, saying, "Thanks for doing these games." Nobody else would do them.
1103 Interestingly, Saskatoon Radio would love to have those games now.
1104 Why do we have billboards up? It's part of our broadcast agreement with the University of Saskatchewan Huskies. The billboards promote the Huskies' broadcasts, that's it. They are only up during football season.
1105 I would also mention, just getting back to the roster of the U of S Huskies -- and it has been noted over, at least, the 10 years that we have been broadcasting the games -- that a high percentage of the players on the U of S Huskies -- and I certainly can find data for this -- have come from the Humboldt high school. They must have an amazing high school football program in Humboldt, because it is always amazing to me to look at where these players come from, and Humboldt always seems to lead the list. Even more reason, because Humboldt is a key part of our coverage area for our two Melfort radio stations.
1106 Regarding the fact that our sales manager currently lives in Saskatoon, I would also like to point out that he also lives in Melfort. He has a home in both cities, and spends more time in Melfort than he does in Saskatoon.
1107 And I don't think that has any relevance to our business plan for the market of Humboldt, no more than it does to the Drumheller station that Golden West operates, which has a morning newsman that lives in Calgary.
1108 Those are my comments and responses. I appreciate the opportunity to respond today. I would like to close by thanking the Commission for a very fair opportunity here today, and I would thank our intervenors, who travelled from Humboldt today to appear on our behalf.
1109 Thank you.
1110 THE CHAIRPERSON: Thank you very much, it's much appreciated.
1111 Madam Secretary...
1112 THE SECRETARY: Thank you.
1113 We will now proceed with Golden West Broadcasting Limited.
1114 Please come forward.
1115 Please reintroduce yourselves for the record. You will then have 10 minutes for your presentation.
1116 MR. FRIESEN: I am Lyndon Friesen of Golden West Broadcasting, and beside me is Elmer Hildebrand, the CEO of Golden West Broadcasting.
1117 I just want to end with one comment, and that's a comment of thank you. Thanks for hearing this, thanks for letting us tell you all about our intentions for Humboldt.
1118 And we especially want to thank the intervenors, as well, for coming out to support their community, because at the end of the day that's what is important.
1119 Elmer has one more comment.
1120 MR. HILDEBRAND: Thank you.
1121 It was interesting to note that the Chamber of Commerce presentation indicated that the Fabmar organization moved somebody to Humboldt after we had applied for the previous application here. We would just note that for the record.
1122 I also want to thank everyone. I think that the intervenors were all positive that they want a radio station for Humboldt. And, as Lyndon said earlier, at the end of the day it's not about Golden West or about Fabmar, it's about Humboldt, and you have the tough call now.
1123 Thank you.
1124 THE CHAIRPERSON: Thank you very much for your comforting parting words, Mr. Hildebrand.
1125 THE CHAIRPERSON: Madam Secretary...
1126 THE SECRETARY: Thank you, Mr. Chair.
1127 This completes the consideration of Items 1 and 2 on the agenda.
1128 THE CHAIRPERSON: All right. It looks like we are running ahead of schedule, or are we?
1129 Phase IV is done, okay. So I would like to call a break, and we will reconvene in 15 minutes.
--- Upon recessing at 1425
--- Upon resuming at 1443
1130 THE CHAIRPERSON: Madam Secretary, would you do the honours and introduce our next applicant. Thank you.
1131 THE SECRETARY: Thank you, Mr. Chair.
1132 We will now proceed with Item 3 on the agenda, which is an application by Corus Audio & Advertising Services Ltd. for a broadcasting licence to operate a regional, English-language, Category 2 specialty television programming undertaking, to be known as Local1.
1133 Appearing for the applicant is Mr. Bryan Ellis.
1134 Please introduce your colleague.
1135 You will then have 20 minutes to make your presentation.
1136 MR. ELLIS: Thanks very much.
1137 Good afternoon, Mr. Chair and Commissioners. My name is Bryan Ellis and I am Vice-President of Content Management for Corus Entertainment.
1138 With me is Sylvie Courtemanche, Vice-President of Government Relations.
1139 Mr. Maavara is not able to join us here today, but sends his regrets.
1140 We are delighted to be here today to discuss our plans to launch a regional Category 2 service in western Canada to be known as Local1. Before getting into the programming details, let me briefly describe where the idea for Local1 originated.
1141 For over 10 years our wholly-owned subsidiary, Corus Custom Networks, provided an exempt TV listings channel on the basic analog service of cable systems in western Canada. It combined an onscreen program guide with a teleshopping and still-image advertising opportunity for local businesses in each market it served.
1142 The TV listing service was a relatively robust business for several years, at its peak achieving advertising revenues of approximately $12 million in 2007-08.
1143 Despite its success at that time, however, we knew that this level of performance could not be sustained in the long run. As a forward-thinking broadcaster, Corus strives to anticipate changes in the communications environment, and to adapt our business to reflect those changes.
1144 In the case of the TV listing service, we knew that the transition to digital cable, with its more sophisticated electronic program guide, meant that there would no longer be a need for an analog channel guide. It would become outdated and increasingly irrelevant as the take-up of digital cable gained momentum.
1145 In short, the TV listing service, although successful at the time, was quickly becoming a sunset business.
1146 In fact, Persons 2-plus with access to analog cable dropped 36 percent from 2004 to 2009, while Persons 2-plus with access to digital cable increased 138 percent during the same period. Revenues dropped from $9.3 million in 2009 to only $4.4 million in the most recent broadcast year, ended August 31, 2010.
1147 Given these significant declines, which could not be reversed, we took the difficult decision to discontinue the TV listing service at the end of August of this year.
1148 As this was taking place, however, we were thinking of ways to adapt the old service and transition it to a digital environment. We quickly recognized that we could capitalize on the proprietary software that we had developed for the analog listings channel.
1149 We also assessed the potential market demand for local news, weather and information delivered in this form.
1150 Our technology platform allows us to tailor unique local content from video and data information that we collect from a number of different sources. The software can target this content to individual communities or specific residential zones, producing a series of unique local channels.
1151 In Vancouver, for example, Corus Custom Networks created and delivered customized content to four distinct zones or communities.
1152 The digital cable transition provides us with the opportunity to use this technology to replace the old TV listing service with an innovative digital service. This new service could provide a broad range of hyperlocal content tailored for individual communities.
1153 Our informal survey of the market, as illustrated by the hundreds of positive interventions filed with the Commission, gave us confidence that we had a viable idea. Our proposal for the regional Category 2 service, Local1, is the result.
1154 Local1 will feature an on-air presentation based on a multi-zone screen. At any given time, a viewer will have immediate access to local news, sports headlines, information about community activities and events, road reports, and local weather conditions and forecasts.
1155 Although operating under a single regional Category 2 licence, Local1 will, in effect, be a series of unique hyperlocal channels. It will be a service that viewers in each small town and big city will view as their own personal Local1.
1156 Here is a brief video clip to illustrate the Local1 concept.
--- Video presentation
1157 MS COURTEMANCHE: As you can see in the screen shots appended to our opening remarks, the screen real estate in any given community will be subdivided into five to seven distinct zones, with each zone dedicated to specific content relevant to that community. Two of the on-screen zones will provide windows for video content. One will have audio content at any given time, and the other will not. This multi-zone screen format allows us to provide a comprehensive and continuous package of local news, weather forecasts, sports scores, road conditions, and information about community activities and events.
1158 One of Local1's compelling features will be the delivery of hosted local news, information and weather segments, updated regularly during the day, using one of the video windows on the screen.
1159 At launch, our plan is to produce unique hosted local segments for ten communities in western Canada. The number of communities receiving individual hosted local segments will be increased over time, as resources permit.
1160 The provision of hosted local weather forecasts, tailored for the individual community in which it is distributed, is a unique feature of the Local1 service. It distinguishes the weather portion of our service from the more regional and national orientation of The Weather Network.
1161 Having said that, it is important to understand that this video window will contain more than just weather. We believe that the service will provide an even more compelling experience if it includes a broader range of video content. This will further complement the hyperlocal text, images and graphical content that will be provided in other zones on the screen.
1162 The Local1 platform will be able to collect a vast amount of information about things that matter to individual communities -- municipal council meetings, Chamber of Commerce activities, community groups and fundraisers, minor sports and so on.
1163 The hosts of our video segments will be able to include this type of information in their community coverage. For example, if Local1 were in operation this fall, our segments would be an excellent vehicle to report on local municipal election candidates and issues.
1164 In addition, the sample program wheel included with the application identified other segments, such as The Green Minute feature and the Earth TV feature. These segments provide other relevant video content, covering topics well beyond the confines of weather information.
1165 Beyond the content broadcast in the video window, other local news and information will be continuously available in the other zones of the screen. This information will be drawn from a number of diverse content providers.
1166 For example, we will make use of the local and regional feeds of third party subscription services, such as Canadian Press.
1167 We will also draw upon the feeds provided by municipalities and provincial governments, by provincial motor associations, and by various government bodies, with traffic camera images and webcam shots.
1168 Municipalities and individual viewers will have the ability to create, upload and share information for local broadcasts on Local1 using a dedicated website and our broadcast technology engine. We will make Local1 as user friendly as possible, leveraging new media platforms and social media sites such as Twitter and Facebook to solicit user-generated content.
1169 A local viewer, for example, will be able to contribute videos and photos of interest to the community. Municipalities will be able to upload community news and announcements about local activities and events. Our in-house editors will review all uploaded content to ensure suitability for broadcast.
1170 This user input feature will reinforce the hyperlocal nature of Local1, increasing its value to viewers. It builds on the concept that Corus Radio utilized in Edmonton with iNews 880 and extends it to a linear television channel.
1171 Given the intensely local nature of this service, we are seeking your approval to sell a limited amount of local advertising in each community where Local1 is distributed, up to a maximum of six minutes per hour.
1172 The balance of our advertising would be national. This proposal is consistent with the Commission's fundamental principle that a licensee should be allowed to solicit local advertising only in markets where it also provides local programming.
1173 Our ability to broadcast local advertising will enable Local1 to provide an entry-level television advertising vehicle. It will give small merchants an opportunity to reach their customers on television at an affordable rate.
1174 As a discretionary digital cable service, Local1's local advertising revenues will be very modest, less than $3 million by the third year of operation.
1175 This is considerably less than the $12 million in revenues that our analog TV listing service was able to achieve just two years ago in the 2008 broadcast year and well below the $4.4 million revenue performance of the analog service for the year ended two months ago.
1176 It is self-evident that at this level of activity Local1 will have negligible impact on the revenues of other licensed broadcasters.
1177 MR. ELLIS: Finally a word on distribution.
1178 Local1 will rely on cable carriage in western Canada to reach viewers. The technology we will employ to provide hyperlocal elements of our service cannot be fully implemented through DTH carriage. We need access to the cable head-ends in individual communities to operate Local1.
1179 In addition to BDU distribution, Local1 is also designed to exploit other viewing platforms, internet, mobile and out of home. Content will be repurposed for distribution by whatever means available.
1180 Mr. Chair and Commissioners, our proposal meets all of the criteria for the licensing of a Category 2 service. It does not directly compete with any existing analog specialty or Category 1 service.
1181 Local1 will provide a unique, new and essential local news and information service to residents of communities large and small in western Canada. It will be a new type of hyperlocal service not currently available from any other source in the regulated broadcasting system.
1182 That completes our opening remarks. Thank you for your attention and we would be pleased to respond to your questions.
1183 THE CHAIRPERSON: Thank you very much.
1184 This is undoubtedly a very innovative proposal and it has captured my attention and that of the Commission. It is, you know, very creative and because of that I will be asking a lot of questions that sort of come with the territory of groundbreaking because we truly want to understand what this is.
1185 I will make a deal with you that there may be some areas that are going to become proprietary, in which case, you know, you may reserve the right to ask for -- either to not submit any information at all or perhaps, if necessary, a written submission which I would prefer not to have to do. But with that all in place I will start the questioning.
1186 You are making an application to use an exempt channel for the purpose of -- using this exempt channel which you had provided the service to before, and the application is for what you were calling a regional Category 2 licence.
1187 And I was wondering if you could in your terms, so that we could start matching up terminology, define what you determine is a region given all of the regional licences that have been granted in the past.
1188 MS COURTEMANCHE: Well, in the past you have had a number of licences that have been granted on a regional basis.
1189 For instance, many, many years ago the Commission authorized pay services so one region is the same region that we would be serving. We currently are the licensees of that, our Movie Network and our Encore Avenue. So there are a number of examples in which the Commission split the country up and decided to licence accordingly.
1190 You know CablePulse 24 is a regional service. It's a regional news service that, you know, services southern Ontario. You currently have a number of cable systems which are licensed on a regional basis.
1191 You know, I note that the application form itself for a Category 2 has a box, "national or regional". So I'm assuming that the Commission has longstanding experience in licensing regional services and that's why we came.
1192 One of the reasons, just so you understand why we did come, based only a regional and not a national basis, is that we were building on an existing service that was only available in western Canada. So you know, I think it's safe to assume that had that service been available across Canada we probably would be looking at a national service.
1193 But we are looking to build on the experience that we gained and the knowledge that we have with the various advertisers and take that and bring it to a digital environment in an innovative, very different way. Obviously, it's a different beast but that's why we came in as a regional service.
1194 Hope that helps.
1195 THE CHAIRPERSON: In pursuit of aligning our visions as to what is regional, from my limited experience on the Commission of a few years, I have gone back and tried to get more exacting terms in front of myself to see what the Commission has regarded as regional.
1196 In instances where you have made specific reference to Citytv or CP24, it seems that in those instances that you drew upon as examples, they are regional, regional within a province, a region within a province. And in some instances I found that there were -- regional licences were granted to serve an entire province. I have never seen all of western Canada described as a region before and I --
1197 MS COURTEMANCHE: Well, the pay service is western Canada.
1198 THE CHAIRPERSON: Yes.
1199 MS COURTEMANCHE: That's an example where a service, you know, services an entire region just like the Astral movie service services an entire east of Manitoba.
1200 THE CHAIRPERSON: Okay.
1201 MS COURTEMANCHE: So that's your perfect example.
1202 THE CHAIRPERSON: Okay, perfect.
1203 Are you using existing technology that was developed for the purpose of the alphanumeric service you were providing before?
1204 MR. ELLIS: In most cases, yes.
1205 THE CHAIRPERSON: And is this -- is it a requisite for you to provide the technology at the head-ends to make this work?
1206 MR. ELLIS: Exactly.
1207 THE CHAIRPERSON: And if you were to negotiate other carriage agreements with other BDUs you would be following through on that installation of technology?
1208 MR. ELLIS: Exactly.
1209 THE CHAIRPERSON: Is this technology proprietary to you?
1210 MR. ELLIS: The play units are basically regular computers with a very large video driver. So from that perspective there is nothing proprietary about that.
1211 It is the technology behind the screen zones and the ability for us to have the advertisers literally do their commercials, pay for their commercials and send the commercials to us to traffic those and then get them into the windows.
1212 Now, there are lots of other suppliers. Bil Trainor, Capitol Networks, you know, who has done the Pulse 24 system for example, has his own system.
1213 Over the course of 15 years that the service plus -- the service has been around, we have had an opportunity very gradually to build upon the technology and make this into something a little more robust and, quite frankly, unique.
1214 THE CHAIRPERSON: Does this technology require matching technology at the other end of the set-top box that Shaw employs versus other BDUs? Is any part of this distribution methodology -- involve IP addressability?
1215 MR. ELLIS: It does indeed. We send the signal to the play out units, if you will, via IP internet.
1216 THE CHAIRPERSON: Interesting.
1217 Where is master control going to be?
1218 MR. ELLIS: We are thinking at this point it will definitely be in Alberta and most likely it will be Calgary.
1219 THE CHAIRPERSON: Okay. Please correct me if I'm mistaken in this. Your proposal for programming is based on a wheel. Is that correct?
1220 MR. ELLIS: Correct.
1221 THE CHAIRPERSON: Does that then lead me to assume that everything is running consecutively?
1222 I know that in traditional alphanumeric you know with tickers, RSS feeds and so on, there is a lot going on all at once but with respect to specific line items within your programming wheel within that video box, let's say, will there be consecutive programming appearing so that within the wheel you will go to a weather segment within that video portion and then later a news segment and so on throughout the programming hour?
1223 MR. ELLIS: Correct. That video window, if you will, on the left-hand side of the screen is really the anchor and for all intensive purposes that's where the wheel emanates from.
1224 All of the ticker information as it's so described, and the other windows, will depend on volume, how many times it loops through for example.
1225 THE CHAIRPERSON: M'hmm.
1226 Where would this video content en masse come from? Where are you planning to emanate it from?
1227 MR. ELLIS: Well, obviously some of it we are going to create ourselves but we want to make use of every bit of new technology social networking platform that we can access. So if there happened to be a new video version of Twitter in the next year and a half or two we would pull video from there. We would ask for user-generated content and have that sent to us via web.
1228 So a variety of sources.
1229 We don't intend to have people on the street, our employee shooting news content. It would be very much a pull -- if I can use that technical term --
1230 THE CHAIRPERSON: M'hmm.
1231 MR. ELLIS: -- to describe how we get the information.
1232 MS COURTEMANCHE: Yeah, we have become more of an aggregator as opposed to you know a creator, other than the window in the left where we are going to actually produce and, you know, do those news and weather elements.
1233 The rest is really going to be as an aggregator, but an aggregator in a different way because we are going to look to aggregate from a variety of sources and platforms and the opportunities for people to engage in that service are going to be larger than as otherwise available to, you know, the common -- to the public.
1234 THE CHAIRPERSON: Your application indicates that this will be a news, weather and community information channel. Is that correct?
1235 From my grade school reckoning on the math, when -- and this has been a critique of intervenors -- when you look at the wheel and you look at a 30-minute segment and you pull out the various forms of weather; national, regional, local, I get 14 minutes. And when you pull out six minutes of commercials per half-hour you are up to 20 minutes, and then pull out bumpers and promos and so on for another minute and a half or two minutes, you are down to eight minutes for news and community.
1236 Is that the plan?
1237 MR. ELLIS: Sorry, I was just going to jump in on that.
1238 In terms of the left-hand side of the screen in that window I think that's a valid comment. However, if you look at the information, availabilities provided by the other four to five windows that's not the case. There is continual streams of content going on the other areas.
1239 So I think we have to look at what's available in the seven zones, not just the ones in terms of that content calculation.
1240 MS COURTEMANCHE: Yeah, our local news and information window is not restricted to what's going to be on the audiovisual component. It really is those multi-zones, so where it is going to be you know constantly fed and changed.
1241 So you have to look at the whole visual experience to when you are looking at what we are providing from a news and information perspective. Yes, there will be some on that but there is also lots going on elsewhere.
1242 MR. ELLIS: And if you look at the content frame that we provided back at the opening remarks you will see that there is also, where the traffic picture is, that's another video source for us. We can actually switch from one on the left-hand side with audio to the one on the right with audio depending on what's happening and what -- it's totally flexible.
1243 MS COURTEMANCHE: Right. So --
1244 MR. ELLIS: I guess the point is that you can't just count the content that's in the left-hand window. You have to look at the totality.
1245 MS COURTEMANCHE: It's a very busy screen but that's the idea.
1246 MR. ELLIS: Oh, yeah.
1247 MS COURTEMANCHE: The idea is to get as much, you know, information and opportunities to speak about these local communities.
1248 We felt this was the best way to -- and given the nature of the service that we wanted to offer which was just really hyperlocal. You couldn't just have, you know, a screen, a full screen and get that type of granular, really granular type of information that we want to get out.
1249 So this really required this type of a model.
1250 THE CHAIRPERSON: It almost begs asking the question as a regulator, how do we -- how do we monitor and measure that? It's like playing a Shania Twain record behind a newscast and using that as a contribution to Canadian content.
1251 MS COURTEMANCHE: You know, the contributions of a Cat 2, currently is through your Canadian program -- well, your Canadian content. As you know, it grows over three years.
1252 This service from day one it's going to be 100 percent Canadian content by virtue of what --
1253 THE CHAIRPERSON: I'm making inference to local content, Mrs. Courtemanche.
1254 MS COURTEMANCHE: Oh, sorry.
1255 THE CHAIRPERSON: Yeah.
1256 MS COURTEMANCHE: How do we measure the local content?
1257 THE CHAIRPERSON: M'hmm.
1258 MS COURTEMANCHE: Because what you are saying is at the end of the day you are only counting the audiovisual component of it. And I would say that the audiovisual component of this is going to be Canadian and it's going to be local Canadian, 100 percent.
1259 THE CHAIRPERSON: Your initial launch plans, understandably, involve major and secondary markets and it could be argued that in opening up the service in a market like Vancouver which I know well, it's not difficult to be local and regional at the same time because of the nature of that market.
1260 How do you propose to follow through on your locality, your hyperlocality for the purpose of justifying your request for selling local avails when you start to get down to the Salmon Arms of this world? How does that work?
1261 MR. ELLIS: We battled that same issue with the TV listing service in Vancouver. And you are familiar with the Vancouver market. You may remember that the TV listing service basically served the whole of Vancouver.
1262 THE CHAIRPERSON: Yeah.
1263 MR. ELLIS: We decided, I guess probably about three years ago now, to try and experiment to divide Vancouver, as I said in the opening remarks, into the four zones. That turned out to be very successful.
1264 We felt intuitively that it would work, that there was -- that the areas were very distinct and so we took the chance and we did it. So we were going to --
1265 MS COURTEMANCHE: Well, I was just going to say, is that in large communities because of the technology, the way we are going to become hyperlocal is doing exactly what Bryan just said, is we are going to start breaking it down in to zones.
1266 So we already do -- well, we did that in Vancouver. We broke it down in four zones. In large centres that's what we would have to do, to really get to the granular level and break it down.
1267 MR. ELLIS: Sorry, so I was just going to say that we benefit from the fact that Shaw had an infrastructure that supported that type of zonal arrangement where we could put four playback units, you know, in various head-ends.
1268 THE CHAIRPERSON: M'hmm.
1269 MR. ELLIS: That will not be the case in every community.
1270 THE CHAIRPERSON: So you will be relying more on alphanmumeric and other feeds to be hyperlocal?
1271 MR. ELLIS: Yes, yes.
1272 THE CHAIRPERSON: But that's informatics. That's not programming.
1273 MS COURTEMANCHE: It's alphanumeric and it's not programs as defined under the Broadcasting Act, you are absolutely correct.
1274 But having said; that at the end of the day we are coming up with an innovative proposal. There are other services out there that do use the multi-screen.
1275 We think that at this point in time the Commission -- although its jurisdiction and the way you count and so on and so forth is very defined. And we think that we can still fit in because we are proposing local content within the audiovisual screen in the communities where we are going to have, you know, those playbacks. That's going to be local and that's going to be audiovisual and that could be counted and monies will flow and so on and so forth.
1276 But we are just saying that we are looking to provide something that's innovative to people and we think that, you know, the Commission can look at the entire experience even though its jurisdiction is limited to the programs.
1277 But I think it's still fine for the Commission to look at these types of services and say, you know, the whole experience it's Canadian. It provides valued information. It provides a service to communities that wouldn't otherwise be available. So I think it's valuable for you to look at the whole thing.
1278 From a regulatory perspective you are --
1279 THE CHAIRPERSON: And make no mistake. We are looking at this.
1280 MS COURTEMANCHE: Yes.
1281 THE CHAIRPERSON: We are very open-minded because it is a very innovative proposal.
1282 MS COURTEMANCHE: Right.
1283 THE CHAIRPERSON: But it bends a lot of conventional regulation and --
1284 MS COURTEMANCHE: I don't think it bends. What I think what it does is that it takes, you know, conventional regulation and it takes it to the next step to where we are all going. I think that in the future people are less interested in just relying on, you know, being entertained. They want to participate in the media process.
1285 To the extent that traditional media engages people we will keep them interested to traditional broadcasting. Otherwise, they are just going to go to other platforms that are not regulated.
1286 This is really taking -- you know, people who would consume non-regulated product, it keeps them in the regulatory sphere where they are contributing to, you know, expenses and content and so on and so forth.
1287 But notwithstanding that, we still think that the Commission can apply its current rules and regulations to this service and it's not a problem.
1288 MR. ELLIS: The other point I wanted to make was that there are still people who are aggregating the content, editing the content and making sure it goes back into the pipe.
1289 So there is an expenditure for people managing that local content and, as such of course, it does qualify as a CPE expenditure.
1290 THE CHAIRPERSON: Let me ask you this and, again, interrupt at any time if I'm off base or I'm operating with wrong information because I'm just trying to understand what we are looking at here.
1291 When you net out the commercial content in a given half-hour or hour and you look at the percentage of content left, arguably give or take a few percentage points, the preponderance of the content within a half-hour of your wheel is weather, not news and not community.
1292 And if you are prepared to sort of accept that as a general statement, why would this Commission look at your proposal when we have a weather network that by our reckoning requires genre protection because of its nature?
1293 MS COURTEMANCHE: Well, there is a couple of issues, is that -- again, we are going to go back to the fact that, yes, you are talking about the audiovisual part, you know what does that contribute as versus -- we will go back to the fact that there is a bunch of information that is provided you know other than that.
1294 But having said that, the audiovisual component of the weather network is a national and regional service. It's local where it says that it does -- you know it provides local news or local weather information to 1,200. Well, that's text and graphics. They don't do that through their audiovisual.
1295 You know they don't report. They don't have a person reporting just for Flin Flon. That's audio and you accept that. You say they are providing.
1296 Well, if it's good for them it should be good for us. You know, I look at that and I say, well, if their text and graphics component provides the local service that you say is sufficient then why wouldn't you know the local news and text portion that we are willing to provide is sufficient for our local news and information?
1297 You know, last week at the Montreal hearing Commissioner Poirier said, "What's good for Minou is good for Pitou". Well, that's the way I looked at it. I thought, yeah. To me that makes sense.
1298 So the audiovisual component that we are going to offer is going to be distinct from the Weather Network because we are going to have this person who is standing up there and is reporting solely for Calgary. Then there will be some -- you know and there will be a different reporter for Vancouver and there will be a different one for Saskatoon.
1299 You know, the Weather Network doesn't have a dedicated newscast just for that particular locale.
1300 THE CHAIRPERSON: Okay.
1301 MS COURTEMANCHE: So that makes us different.
1302 THE CHAIRPERSON: Then I must have missed something because I need you to walk me through where all this content is going to be coming from other than Calgary because I don't think your proposal really indicates that.
1303 Where is the weather going to be coming from in Saskatoon and in Winnipeg?
1304 MR. ELLIS: We will use the same services that most of the other weather providers use.
1305 THE CHAIRPERSON: No, I am not talking about --
1306 MS COURTEMANCHE: No, I think that --
1307 THE CHAIRPERSON: I'm talking weathercasts.
1308 MS COURTEMANCHE: Yeah, and maybe what we haven't explained --
1309 THE CHAIRPERSON: Because I'm picking up on Ms Courtemanche's point that they are -- sorry -- the weather channel is not doing that, but you are saying you will but you are not telling me how.
1310 MS COURTEMANCHE: Okay. Perhaps what we were going to say is that we are going to be producing separate segments.
1311 So there is the wheel. There will be a segment produced for Calgary. So in that wheel there is going to be a segment produced for Calgary. We are also going to be producing a segment for Edmonton.
1312 And I'm sorry. I don't have the list.
1313 Can you give me the list of the cities, Bryan?
1314 So what we are going to do is we are going to have a half-hour wheel for Vancouver, Victoria, Nanaimo, Kelowna, Calgary, Edmonton, Red Deer Lethbridge, Saskatoon, Winnipeg.
1315 THE CHAIRPERSON: M'hmm.
1316 MS COURTEMANCHE: That's pre-recorded but a wheel that's addressed to that city or those cities alone.
1317 THE CHAIRPERSON: Okay.
1318 MS COURTEMANCHE: And over time we will add and the on-air person will, you know, provide a newscast on a wheel or news and weather -- you know, you are right, mostly weather information, but it's going to be just for that locale. The audio version person is going to say, "Here is the weather for Calgary" and "Here is what is going on for Calgary" and "Here is what is going for Kelowna".
1319 THE CHAIRPERSON: Is --
1320 MS COURTEMANCHE: That's what different to the Weather Network.
1321 THE CHAIRPERSON: And is that difference spelled out in your application?
1322 MS COURTEMANCHE: We thought we had. Perhaps -- I must admit I am a little surprised that, you know, that didn't get through. I thought that that was clear by our application.
1323 So if it isn't, I'm very sorry. I can tell you that that's what we tried to do.
1324 THE CHAIRPERSON: That's why we have a hearing.
1325 MS COURTEMANCHE: And the application form, if I can just -- sorry --
1326 THE CHAIRPERSON: Please.
1327 MS COURTEMANCHE: -- refer to the supplementary brief we tried to make this clear at page 6 where we said that:
"At full deployment Local1 will produce a total of 48 hosted segments each day with on-air talent. It will provide hosted weather information with a strong focus on local conditions but we will also do some news and information." (As read)
1328 So yeah, the 48 hosted segments is -- here is how it's going to work. There is going to be a national cast updated three times daily. So that's three.
1329 THE CHAIRPERSON: M'hmm.
1330 MS COURTEMANCHE: Then there is a regional/western Canada cast that's updated three times daily, so that's three.
1331 Then you have provincial. There is going to be four of those, one for each province, you know your casts. That's updated three times daily. And that's 12.
1332 And then there is 10 local casts that are going to be updated three times daily and that's 30.
1333 So that's how you get to your 48 hosted segments.
1334 So if that wasn't clear we would be happy to provide this information in writing so that it's absolutely clear what it is we are intending to do. And that's why we will be very different.
1335 THE CHAIRPERSON: It was clear that there would be hosted segments. What I perhaps got all caught up on was the hyperlocality, assuming that you were meaning that content would be generated at least on a provincial/regional basis not from a single source for an entire half of a country, albeit crafted for a local market.
1336 That to me isn't local. That's content that has local inference but, you know, I would throw a radio station application out if they were trying to broadcast to a market from another city.
1337 MR. ELLIS: We would be happy to provide that clarification.
1338 THE CHAIRPERSON: I would like that.
1339 MS COURTEMANCHE: Yeah, obviously we will do that. Thank you.
1340 THE CHAIRPERSON: If I may, because I can go on forever in this line of questioning but again I really have a lot of territory to cover.
1341 On the remaining eight minutes of content with respect to news and community you are intimating -- and I certainly understand this. I have got a 21-year old daughter and she got me into Twitter and it has become reputed to break more stories than conventional news services and all that wonderful stuff that's going along with social media, the accuracy of which however is suspect.
1342 But with that said, I heard you say today that your intent is to make available this channel for the uploading of community or user or viewer-generated content that would be managed through some type of a site manager and edited for appropriateness and accuracy. And appreciating again the ingenuity of that content, is that not just community access by a different form?
1343 If somebody wants to put a 30-second video segment together on their quilting society or their dog club, is that not what community television all about?
1344 MS COURTEMANCHE: Community television, we believe it tries to go beyond the access that we are intending to provide because although that is going to be a component of the service it's not the entire service.
1345 So, yes, it is the role of community television to provide access but traditionally it's done in a more long form program, half an hour; hour, whatever. Community television doesn't typically give you the 10, 15, 30-second, one minute-type access that we are going to provide. So I think that distinguishes the type of access that community television is going to provide.
1346 Community television tries to form people. You know we won't be bringing people into studios to try to train them on how to become a broadcaster. So I think the whole experience is going to be very, very different.
1347 THE CHAIRPERSON: On news, will news be generated from a single source in your master in Calgary and again tailored to local markets?
1348 How are you going to be able to get hyperlocal when you do get to the point toward the end of your first licence period and you are talking to a market of -- a subscriber base in a cable region of 1,500 people? How are you going to get that stuff back up and processed and back down?
1349 MR. ELLIS: A lot of it, quite frankly, we rely on this push technology where -- sorry, the pull technology.
1350 THE CHAIRPERSON: Yeah.
1351 MR. ELLIS: Where communities are providing, much like they do for information radio in other markets, to send the information and post it on our website or send it to us through conventional IP means. It's something you obviously wrestle with because how much content are you going to get initially? When does the tipping point happen where you are inundated with material?
1352 I don't have an answer for you in terms of when that tipping point is, but we do know that based on our experience and talking to the information radio people at various times that, you know, it takes a while for the momentum to build and that information to be sent in.
1353 But, as I said, we do not have or intend to have people on the street in a conventional television broadcast arrangement with cameras searching for news and taking that route. It's quite different and quite distinct from --
1354 MS COURTEMANCHE: Yeah, I give you as an example tourist information radio. It's all programmed out of one location in Halifax for all of Canada. So what happens is that people know that that's where you send your information. It's processed and then it's redistributed across the country.
1355 This is a bit of a model like that where you know over time people will know that we are an aggregator of that type of information and an opportunity to get. We obviously have to establish relationships, but we will.
1356 We are going to have to go out and meet with the community. You know meet the chambers of commerce and mayors which is what we did because, as you know, we had 538 supporting applications. We talked to a lot of people on this. So we went to see a lot of people.
1357 So once deployed, that's exactly what we would do. We would have to go out there and talk to these people and say, "Here is what we can do for you. This is the kind of service that we can make available".
1358 That kind of contact and the fact that we will repeat it on air and that it will be available that, you know, we will solicit both on the audiovisual component of the service as well as on the texting and graphics component. We will solicit that type of user or, excuse me, content. So we think that using all of those tools we will be able to, you know, get lots of content.
1359 Quite frankly our radio experience demonstrates to us that there is really a pent-up demand. A lot of people would like to get that type of granular type of information available.
1360 Radio does a terrific job of doing that but sometimes they just can't handle it all. So you know we would be another vehicle to get that granular information out.
1361 MR. ELLIS: And if you look at the success that YouTube has had in generating that type of content you know we have seen that grow and grow and we are optimistic that once people are aware of this service and can see themselves reflected in their community they will take advantage of it, whether that's textual, whether that's video, not sure at this point.
1362 MS COURTEMANCHE: You know we are experiencing it right now in Edmonton where, you know, people send us -- I was looking at our website I-880 News, you know, where there is a webcam of -- sorry -- a clip of you know an accident and rollover or the ice pilot, you know, in an old DC-3 and there is -- the whole story was provided and it was actually quite excellent.
1363 THE CHAIRPERSON: I get the point.
1364 MS COURTEMANCHE: So you know I think the point is that we are -- this is a different beast. There is no doubt about it. We know we have to --
1365 THE CHAIRPERSON: Yes.
1366 MS COURTEMANCHE: -- we are going to have to market it any --
1367 THE CHAIRPERSON: Well, on the subject of that -- sorry, it's just that we are time constrained. I think you have given me a good answer, a fulsome answer to that question.
1368 But I'm glad also that you mentioned the traffic and tourist services that are out there. But they are distinctly utilities as was this audiovisual service you provided before on this same channel. It was a utility. It wasn't broadcasting. It was informatics.
1369 And this is a broadcasting application and with it come programming obligations particularly if you want us to be favourable in consideration of your request for exemption to be able to sell local avails.
1370 I go back to what you have just described to me which sounds more like a utility and, yet, you are drawing inference to examples that we should also look at in this decision which are things like CP24 and Citytv. While they are regional and, you know, arguably smaller regional than what you are applying for, they made pretty substantial programming commitments to that local market area in return for that franchise to be able to sell advertising. I don't see that here.
1371 I mean I see that you have the capability -- you have a technological capability that you are trying to innovate and I'm very supportive of innovation. But this starts to look a little bit like crackers and peanut butter where all the crackers is, is a delivery system for the peanut butter and the peanut butter in this sense is six minutes of local avails and you are trying to sell me your cracker and tell me that it's something else.
1372 I just don't see the fullness of your argument that this is a broadcasting service particularly with your own admission that you don't know where the tipping point is as you get into the real true essence of what you call hyperlocal, which is the most local of local markets and where you are going to peter out on your ability to be local from a programming standpoint.
1373 MS COURTEMANCHE: Well, I guess I'm a little confused because if the Weather Network is a broadcast service I'm not sure the difference --
1374 THE CHAIRPERSON: They are not asking to sell local avails.
1375 MS COURTEMANCHE: Yeah, but -- okay.
1376 Understood, but on the local side I guess what we would, you know, come back and say to you is that on the fulsomeness -- and you are right -- is that if -- and we can't give you a commitment as to you know how much news and information because we are not going to have as you know the newsrooms or the reporters out on the fields. Really, what we are looking for is something that's very different.
1377 I think, you know, at this point in time it's up to the Commission to decide whether the local and the sort of visual experience has to be of a certain qualitative nature for it to be justifiable or to not only be licensed but also to have the opportunity to avail yourselves of local --
1378 THE CHAIRPERSON: Right.
1379 MS COURTEMANCHE: -- revenues.
1380 And I understand your dilemma. We have -- you know we looked at it very carefully. We said at this point in time this is what we can do. This is what we can offer.
1381 Yes, it does have a very utilitarian type of feel and perhaps look to it. But, again, we have looked at it not just on the audiovisual component. We really looked at it as a whole product and on that basis we said, you know, there is going to be a lot of rich local content.
1382 On that basis we thought that we should have an opportunity to sell locally to a maximum obviously of six minutes based on -- just remember that the Rogers application in Toronto was going to repurpose existing television and radio. It's not going to be original. CP is, of course, original content but the Rogers' proposal was to repurpose existing content and the Commission found that that was sufficient in order to be licensed.
1383 So I'm just putting that as a point out there.
1384 MR. ELLIS: The other example that I like to give, a different medium, but information radio again is a utility. They sell locally and it is a broadcast licence.
1385 So I think there are examples. We are not just a utility. I think we are a service as well.
1386 THE CHAIRPERSON: Excellent.
1387 Ms Courtemanche, you have just beautifully segued into the next segment of my questioning, which is to do with the radio component.
1388 Corus is an excellent broadcaster. It operates a significant number of radio stations across the country and there had been intimations that those resources on the ground in various markets would be sources of content for this application by virtue of providing RSS feeds and other information.
1389 Could you give me a more illustrative example of how that inter-relationship works between the local radio station and their contribution to Local1 in their area? How much of a participation are they enjoying?
1390 Can you give me a feel for this?
1391 MR. ELLIS: Sure. I think what our editors will do is scour online all of our radio websites. They will take obviously the textual information from those websites. If they see that there is an actuality that they would like to bring forward we have the ability through IP currently to do that, to get access to it.
1392 Again, it's a bit of us scanning them, them scanning us and sharing that information. I don't think there is anything particularly either unique or proprietary about that.
1393 THE CHAIRPERSON: Okay. With respect, to use a broadcast term, the nulls and voids of distribution within Shaw's footprint in western Canada, this province being one of them, what is your intent with respect to growth first within the rest of this western Canadian region that you are proposing to service and beyond that? Is this a service you contemplate that will go across the country?
1394 MR. ELLIS: I don't think we would contemplate the rest of the country as this point. We would seek to expand our coverage beyond the Shaw systems first.
1395 MS COURTEMANCHE: Yes. I mean I think that it will depend on the success we have. You know we would want to, you know, fully deploy in the 64 communities that we hope to serve.
1396 I think that if we were going to do anything beyond western Canada it would be probably a second licence term. I can't imagine that we would be doing anything of that sort in the first licence term.
1397 In any event, we couldn't because if we were to get a licence it would be solely to western Canada. So if we thought to, you know, service elsewhere we have to come back for an amendment to our licence in order to service other parts of the country.
1398 MR. ELLIS: The other point I was going to make was that our TV listing service was not outside of this western region. This is a market that we know. We are trying to find a way to repatriate that revenue so we are not anticipating at this point going beyond.
1399 THE CHAIRPERSON: As I indicated earlier this -- in analyzing the content within a programming hour from the purposes of the Commission in granting a licence is challenging enough.
1400 How do you propose to make your submissions vis-à-vis your programming logs? How are you going to get your head around that?
1401 MS COURTEMANCHE: Well, any service -- most services -- a lot of specialty services act on the basis of a wheel.
1402 THE CHAIRPERSON: Yeah.
1403 MS COURTEMANCHE: So you know the same way we would log for a wheel on a specialty service we are going to do in this context. We wouldn't do it any differently. It shouldn't be a problem at all.
1404 THE CHAIRPERSON: Okay. So you are not going to really contemplate trying to parse out how much textual content that being --
1405 MS COURTEMANCHE: No, no, no. No, no, we understand. When I told you earlier, I meant that we understand your dilemma that you have a set of regulations, you have a framework.
1406 We are not trying to change that. We understand that we have to make this work within that particular framework.
1407 So yes, we would file on the basis of traditional logs, which is for the audiovisual component and we understand that that's what we would have to be filing on a monthly basis with the Commission.
1408 THE CHAIRPERSON: Okay. So moving forward on this exact point, as you go into year three, year four and you are encouraged to start working into your smaller markets trying to find out where your breaking point is or tipping point on content, it would seem to me that, again, you are going to -- this is a subjective opinion -- find yourself coming up short in your ability to program moving footage or moving video for ultra-small markets.
1409 Yet, we are to contemplate granting you the ability to sell avails in those ultra-small markets because you can. That would seem to me to put the need to go to go back and look at the other local programming content to justify your claim to be hyperlocal.
1410 It was a little convoluted. Do you get the --
1411 MS COURTEMANCHE: Okay, no, no. Look, can I -- I understand your concern absolutely. We want to be clear today and I think -- I told Bryan earlier I don't think we were clear in our application. Let me be clear today.
1412 We only intend to sell in local markets where we provide a specific audiovisual local content. If we are in a market and we are not capable of providing we will not sell in that market, period.
1413 So the restriction on local advertising we should probably have put a condition and condition of licence to say that it is -- the local ad sales will only occur or soliciting will only occur in those markets where we provide a distinct audiovisual component. If we don't we will not solicit local advertising.
1414 We didn't make that clear.
1415 THE CHAIRPERSON: Yes.
1416 MS COURTEMANCHE: And I said to Bryan we have to make that clear today.
1417 THE CHAIRPERSON: Oh, yeah.
1418 MS COURTEMANCHE: And I hope that's very clear.
1419 THE CHAIRPERSON: Honestly, as innovative as this is, you can drive a truck through parts of this proposal with respect to our --
1420 MS COURTEMANCHE: Right.
1421 THE CHAIRPERSON: -- ability to make a decision on it.
1422 MS COURTEMANCHE: Right.
1423 THE CHAIRPERSON: It disappointed me a little bit because you guys are -- you have a lot of smart people in your shop and you are making our job very tough. It's caused me a lot of late nights.
1424 Let's go on to another fun subject which is the Shaw/Corus relationship. I have had the benefit of sitting in on your analyst's phone call pursuant to your last quarter, which I think was last week.
1425 MS COURTEMANCHE: Yes.
1426 THE CHAIRPERSON: And it was brought up as it is regularly that as questioned to your president, that Corus is always looking at the appropriateness of whether or not it should merge with Shaw. It's not a question of it but when. It's a question of appropriateness.
1427 So with that sort of cloud looming over our heads what safeguards should we be putting in place to ensure that there is not an undue advantage with respect to the common ownership -- the potential common ownership?
1428 As an add-on to that question, and what comfort do we have with respect to the existing relationship that that type of preference doesn't exist?
1429 MS COURTEMANCHE: Well, the same issue, Commissioner Simpson, arised in the context of the Rogers' application for Toronto where CTV raised those exact issues. The Commission responded in its decision and said it's not a problem.
1430 We have got the affiliate rule, the three to one or the five to one that's going to become three to one, and we have undue preference. So the Commission dismissed those issues in that decision.
1431 I can tell you that Shaw Communications operates independently of Corus and Corus independents -- operates. We have distinct boards. We are listed separately on the TSX. We have a fiduciary obligation in law to operate separately.
1432 Ultimately, the JR Trust does, you know, control Corus. That's true. But for all purposes -- I can tell you that in the context of the BDU review in 2008 we said quite a few things that I'm sure raised some hair in the Shaw Communications household. But at the end of the day we are separate.
1433 The Commission did, many years ago, before you sat as a commissioner, Commissioner Simpson, create structural rules you know between DTH and other people. You know, at the end of the day, they got rid of those conditions of licence when they saw that, you know, people do act separately.
1434 But more importantly, what the Commission did is it introduced these undue preference regulations in all of your regulations. You didn't have them before. Now, you have them everywhere. You have them in the specialty and pay rules. You have them in the BDU rules. It used to be they would only be in the BDU rules.
1435 Well, that's changed. So your environment, your regulatory environment has changed as well as your affiliate rules.
1436 So to me the Commission has stated that, you know, this is how we are going to treat it. It's exactly what you said in the Rogers decision that, yeah, we don't have to worry about that. We have a regulatory environment that deals with those issues.
1437 So that would be my response.
1438 THE CHAIRPERSON: Well, in the -- granted in the three and one, as it's going to become --
1439 MS COURTEMANCHE: M'hmm.
1440 THE CHAIRPERSON: -- the distinction is that they would be unrelated services. And I wonder aloud if in the future this particular application, if it's given the green light, would not trigger other applications of similar form, to the extent that another Category B would come in requesting the opportunity to sell local avails.
1441 How would Shaw respond to that if the three and one kicks in because of you and you create three more competitors and it's just like you? What's going to happen to the advertising, the local avail advertising market, or is this something you have considered?
1442 MS COURTEMANCHE: You know what's going to come down -- I guess what you are saying is that you know is this a type of service on -- because of the ability to -- are you talking from Shaw's perspective to come up with some more or just anybody? Just I'm not clear on your question.
1443 THE CHAIRPERSON: Because this is a rather --
1444 MS COURTEMANCHE: Right.
1445 THE CHAIRPERSON: -- innovative and precedential --
1446 MS COURTEMANCHE: So how many more of these?
1447 THE CHAIRPERSON: Yeah.
1448 MS COURTEMANCHE: Okay. Well, at the end of the day, every time they carry an affiliated service which we are -- according to the Commission's rules we are an affiliated company.
1449 THE CHAIRPERSON: M'hmm.
1450 MS COURTEMANCHE: And so if you carry one Corus company then Shaw has an obligation to carry three unrelated.
1451 THE CHAIRPERSON: That's correct.
1452 MS COURTEMANCHE: So what it means is that if you know as many affiliated-type services then Shaw has an obligation to carry three more. Well, they have only so much bandwidth, I can tell you.
1453 So at the end of the day you know you have to negotiate carriage and if we do negotiate on then there is that obligation to provide opportunities to unrelated. That's how you have dealt with it.
1454 I don't see any reason to change the environment. The environment is what it is. It's there regardless.
1455 That environment wasn't created based on whether somebody has access to local avails or not. It was created as a total solution because currently the system does allow for specialty services to and limited -- you know obviously to a limited extent. But the precedent is out there.
1456 In certain circumstances, yes, specialty services can have access to local avails. Is this going to create a slew of applications? I don't know.
1457 You know, specialty services by their nature traditionally are national in focus. They are really not so much a local type. This is, as you know, quite innovative and quite different.
1458 Could it happen? I just don't know. You know if you are going to get a bunch of children's channels that are going to cater to only Calgary. I just don't see that happening that much, those opportunities out there.
1459 MR. ELLIS: In terms of this channel specifically, if we don't do it somebody else will.
1460 THE CHAIRPERSON: M'hmm.
1461 MS COURTEMANCHE: Yeah, we think that this -- you know we really think that this is an idea where -- and you know we hear it from other people. We just honestly believe that if we don't do it somebody else is going to come along and do it and may very well do it outside of the --
1462 THE CHAIRPERSON: Sure.
1463 MS COURTEMANCHE: -- regulated environment.
1464 You know your point is taken very well, Commissioner Simpson. What you are trying to say to me very kindly is to say, is this really not more of a broadband type of service and why aren't you actually doing it that way? That's an interesting question.
1465 Obviously, we think that the broadcasting environment still is a terrific aggregator. It brings eyeballs. You know, it gets people engaged in the system.
1466 But to the extent that we encourage this type of activity outside of the regulated system, it's the contributions and the Broadcasting Act objectives that are going to suffer because it's going to happen outside of the system. We would prefer to bring it in where it is contributing and it's actually fulfilling public policy objectives.
1467 THE CHAIRPERSON: I will tell you why I asked that question. This is not so much a -- this is a little bit of a statement but I would like your opinion because I respect you as broadcasters and I think you fully understand the impact of this kind of a proposal.
1468 Digital conversion is going to happen next year. There is still a big question mark, a cloud if you like, over some broadcasters who are trying to decide whether the $2-$3 million cost is worth it as opposed to handing in a licence and going purely through cable distribution.
1469 Now, it has been said to me that this application -- and again this is not damning you with any praise but it's a compliment about -- I mean I feel like it. This is really a non over-the-air OTA but all networked up. So it's trying to get the best of both worlds in that it's trying to be a local programmer, however possible that is, enjoy the benefits of local avail sales as well as national sales, and on the other hand be a network Category 2 broadcaster distributed through cable.
1470 My concern is that in this next 24 months; well, not even that, in this next 10 months we are going to see potentially a possible shakeout of a lot of OTAs who may choose to zig when everybody else zags with respect to going digital. It has crossed my mind several times that one of the avenues that they could go is to go this route as a local OTA. So they give up their broadcast licence, go to Shaw and say, "We like this. We want one".
1471 Will it be up -- are you saying that it's a bandwidth problem or a corporate ownership problem or a technology problem that they might say no?
1472 So there is the rhetorical question. Help me out here.
1473 MS COURTEMANCHE: You know CTV in its interventions said something really interesting. It said a service like Local1 may complement local broadcasters in markets like Vancouver, Calgary, Edmonton but the services it provides are quite different from the in-depth professional news offered by local broadcasters like CGM. It's not only the news. It would be all the public affairs, drama. I think we are very different to local, you know local television.
1474 But I take your question which is going far beyond that. You are -- the Commission and local broadcasters have a larger predicament, is that there is a significant investment that they need in order to make to take all the current analog operations and convert them to, you know, over-the-air and digital transmission. In some markets it's going to occur and in other markets it's not going to occur.
1475 Is the alternative just to turn around and say, well, let's stop this nonsense and just do -- yeah, I think some people are looking and I think that's probably why last week or two weeks ago, I should say, that you know Shaw proposed that $23 million of its benefit monies go towards digital conversions because, quite frankly, there is no additional money to be made by a broadcaster by doing digital conversion.
1476 THE CHAIRPERSON: Yeah.
1477 MS COURTEMANCHE: So it is a problem.
1478 We are facing the problem too. We are in non-mandatory markets.
1479 MR. ELLIS: In Kingston and Peterborough --
1480 MS COURTEMANCHE: Yeah, right.
1481 MR. ELLIS: -- and Oshawa and we are looking at having to convert our Brighton transmitter.
1482 MS COURTEMANCHE: Yeah, but you know what? Kingston is in a market that is right, right across Lake Ontario from the States. Well, you know what? We don't have a choice because the States has gone digital and we are just going to have to do the conversion. And in Brighton we are in the channels that we have to vacate so we are going to do it.
1483 What's going to happen long term? I don't know. You are right. There is a lot of changes that are going to occur over the last 18 or the next -- sorry -- 18 to 24 months, not only from digital conversion, just from an ownership perspective.
1484 I mean on the heels of the Shaw/Canwest you have the Bell/CTV transaction and I think there is going to be more transactions over the next 18 to 24 months.
1485 THE CHAIRPERSON: M'hmm.
1486 MS COURTEMANCHE: But you know my experience in broadcasting has been that there is always some turbulence. This is the most least static environment that I have ever operated in.
1487 Before I got into communications I worked in three different tribunals. I worked for the National Transportation Agency and I also worked for the National Energy Board. So I know the regulatory environment. I can tell you those two other regulatory environments there is not a lot of changes that happen. I got into the communications environment. It's lightening speed. I can hardly keep up.
1488 All I can tell you is that if you are concerned that, you know, the future and something that could happen could overtake or this could hamper or even be an impetus for something else to happen, I don't buy that. I think what's happening right now in the industry is going to happen regardless of whether you licence a small Category 2 service.
1489 There are bigger imperatives going on than this particular application. This is not what's going to drive our world. It's the Googles of this world. It's all kinds of things. So I just don't see us being that significant.
1490 THE CHAIRPERSON: Understand, thank you.
1491 Mr. Ellis, you seem to be the sharp cookie with respect to technological understanding. I hope you are because I have got a question for you.
1492 What is the upper limit in terms of what a cable BDU like Shaw can handle in terms of a number of these services? Do you have any kind of a measure?
1493 MR. ELLIS: I don't. I can only give you an example and that is we could produce this tomorrow in HD. We believe that there is not an appetite to consume the type of bandwidth that HD would consume for this type of service.
1494 THE CHAIRPERSON: M'hmm.
1495 MR. ELLIS: So we know it's finite. I can't respond from the cable side as to how many.
1496 THE CHAIRPERSON: Okay. More questions.
1497 Is it a fair question to ask what sums you have to pay for this Local1 service?
1498 MS COURTEMANCHE: We asked to keep that information confidential.
1499 THE CHAIRPERSON: Right.
1500 MS COURTEMANCHE: You granted that request and we would like to --
1501 THE CHAIRPERSON: Okay, yeah.
1502 MS COURTEMANCHE: -- maintain that confidentiality. You know it is -- Category 2 services do have to negotiate their carriage onto the system so we would like to keep those negotiations as confidential as possible.
1503 THE CHAIRPERSON: M'hmm.
1504 I wear the accessibility issue on my sleeve after doing the hearing last year and I want to bring out a question regarding your reply to a deficiency question on our part.
1505 You had indicated that you did not believe that it would be appropriate to overlay second audio description services because it would repeat what is already being conveyed by the IR presenter. Is that correct?
1506 MS COURTEMANCHE: That's correct.
1507 THE CHAIRPERSON: Okay.
1508 Are there any other plans to make -- there is beyond compliance requirements now -- any other innovative technologies that you have got up your sleeve that would make this more user-friendly to accessible audiences beyond described --
1509 MS COURTEMANCHE: Well, I mean we are not available of any technology right now that we could overlay, Commissioner Simpson, on this. I'm as interested as you are on these issues.
1510 I can tell you that it was Corus that got the broadcasters back to the table on closed captioning to make sure that the working groups got their work done. So I can tell you that we work very, very closely. We are part of the industry group that's working on described video. We monitor all the developments.
1511 But I can tell you quite frankly if there is a leader in the world not just in Canada on accessibility issues, it is Canada. I can tell you on closed captioning and also on described video we are doing more than anybody else. Jurisdictions are coming to us and asking us what we are up to. So you can be proud of what you are doing.
1512 What I will tell you is that if there is anything out there that does become available we will certainly look at it and see how we can work -- function in the system. We are just not aware of it right now.
1513 THE CHAIRPERSON: Okay. With respect to your rollout -- again, going back to some of the major holes, I think, in your application and one that I did not understand, you intimated that there would be a major market, a secondary market rollout initially and ultimately it is your intention by the end of your first term to be everywhere you want to or can be with the Shaw distribution system.
1514 With that very wide parameter, is it just your intention to only offer this service in those major and secondary markets first, or will there be some form of that service in the smaller markets as well at the launch? And if you are going to be going system-wide but only producing content for your rollout markets will you be attempting to sell avails in the smaller markets?
1515 MS COURTEMANCHE: We will not sell in those markets unless we provide discrete audiovisual programming that's locally focused. If we can rollout and we can't provide local then we won't sell local.
1516 THE CHAIRPERSON: There has got to be a schedule and a commitment that we can hang out hat on that --
1517 MS COURTEMANCHE: We would be prepared to come back in reply with a very specific commitment in that regard.
1518 THE CHAIRPERSON: To not only --
1519 MS COURTEMANCHE: Absolutely.
1520 THE CHAIRPERSON: When you choose to rollout, how you rollout and what we can determine is the programming content commitment that would allow you to then start being active in that secondary or tertiary market.
1521 On the revenue stream I was a little confused by two apparently conflicting statements. One was that it is your ask of us to allow you to sell six out of 12 minutes in the local market. Yet, elsewhere in your submission you intimated that your revenue as a percentage of the total, 75 percent of the revenue would be coming from the local avail sales. Is that correct?
1522 MR. ELLIS: That's correct. And the reason for that is that, much like TVL, this will be a rated service. The national advertisers will not commit in the early stages of this without numbers and we anticipated that the national revenue will be a build.
1523 So initially it will be more dependent on local than it will be in the end. Our experience with TVL, for example, is that 40 percent in the last year was national revenue. We anticipate mirroring that example.
1524 MS COURTEMANCHE: But on the local side and on any of the sales, quite frankly, national and local -- and Bryan, perhaps you can explain a little bit better is how we come in as far as the buy goes?
1525 I will let Bryan explain how the short of food chain works and where we are situated within that food chain.
1526 MR. ELLIS: Again, a practical example of what happened at TVL, first of all it was the conventional television -- from a national perspective conventional television bought specialty second, radio third and then we are very much an entry-level advertising vehicle chosen to fill holes if there were any, gaps in the national advertising.
1527 I think the same is probably true from a local advertising perspective. They will choose the radio and the newspaper first before they turn to us.
1528 We have been lucky in the TVL business to see a lot of our customers grow from that entry level and then again to buy beyond our small service.
1529 MS COURTEMANCHE: Yeah, sometimes what happens is that our advertisers would start with us. They would grow and then they would leave us to go to radio and local television and we would lose them.
1530 But we are okay with that. We are happy to see them grow and then we just look for some more entry levels.
1531 So that's why we are convinced on the impact that, you know, because we are very different on the food chain that that's -- we are not your -- because of the content we provide you know, just on a TV listing service there is nothing really attractive about a TV listing service. People advertise on them, quite frankly, on the TV listing service just because it was the pricing and the -- entry level pricing that they could get. It wasn't because of the service quite frankly.
1532 You know I don't want to be mean but --
1533 MR. ELLIS: Sorry. The churn level on TV listing service is much higher than radio for example. It's about 30 percent. We are certainly higher than that.
1534 THE CHAIRPERSON: In your -- you just know this one is coming.
1535 In your community television intervention Corus was very adamant that local markets were stressed and that the potential of a community television station selling local advertising would not be good for the incumbents at all, given the economy and the like.
1536 What has changed?
1537 MS COURTEMANCHE: Not so much that changed. What we thought was -- at that particular time, as we said in our reply to interventions is that, you know, we really saw the local community's TV station as different just because of its positioning on the dial, you know, basic service, that type of zero to 13 type of offering.
1538 So at that particular time we said we really think that, you know, given that sort of preferred type of carriage that that kind of carriage is more of a concern from a local perspective because of the programming.
1539 Also, it's more a long form programming than what you know we are going to provide which is as you know a much different beast than either local television or local community television.
1540 THE CHAIRPERSON: I am glad that is being written down because I don't think I understood the answer. I'm sorry. That's all right. I will move on.
1541 Mr. Ellis, in your submission you said that because of the delays in coming before the Commission you had elected to wind up the audiovisual company. Is that correct?
1542 MR. ELLIS: That's absolutely correct.
1543 THE CHAIRPERSON: So last night I'm in my hotel room and I'm looking at Channel 11 which is a Shaw service and I'm looking at basically this audiovisual service.
1544 My question is who is maintaining that service and who is selling the advertising that's on it now?
1545 MR. ELLIS: Shaw is maintaining the service. They felt that there was still a need to provide, even despite the dwindling analog environment, that there be an analog service. They have indicated to us and they have indicated to advertisers that this will end. When exactly I don't know but it will come to an end.
1546 We had a number of contracts that extended beyond the August 31st period. They graciously agreed to continue running those ads so that the advertisers weren't left high and dry but they are not, to my knowledge, actively soliciting new advertising but they are going to carry advertising that is there.
1547 If they can, through other means, gain advertising then they will but it's a rapidly sun-setting business with Shaw, that's correct.
1548 THE CHAIRPERSON: Okay.
1549 My last question before I turn it over to my compatriots is it has been argued in interventions, and I'm very interested to hear your answer, that because this is ostensibly a local service that you are providing that economic analysis on a market-by-market basis is necessary. Otherwise, your application is really incomplete.
1550 How do you answer that?
1551 MR. ELLIS: I think the first answer on that is the fact that our TV listing service is in the market and it was in the market, was active.
1552 THE CHAIRPERSON: But that was an exempt channel. That's not what we are talking about here. This is a brand new application.
1553 MR. ELLIS: It is indeed a new application but, as we said all along, we are trying to repatriate the money that was moving out.
1554 MS COURTEMANCHE: Although it's a different service, we are going to be looking for the same advertisers, the advertisers which advertised on the TV listing service and did not harm local television and radio because it's operating for 25 years. Yes, it's a different service but we are targeting the same amount of money.
1555 There is $12 million two years ago that was being extracted from the system that had no impact on broadcasters and those are the people we are going to target with a different beast but it's the same people. We are not looking to target another advertising base. Based on our rate cards, that's how we are going to operate.
1556 So that's why we think -- you know, we equate the two even though it's not the same service because we are targeting the same advertisers.
1557 THE CHAIRPERSON: Thank you.
1558 Commissioner Molnar, do you have any questions?
1559 COMMISSIONER MOLNAR: Thank you.
1560 I'm just going to follow up with what has been discussed right now, that it's repatriating the money from the exempt channel listing service.
1561 You are anticipating that this will be $3 million whereas you generated $12 million out of the exempt listing service. One might argue just based on what you were saying, "Who wants to be advertising on a listing service?" I mean you were saying it was kind of the bottom of the bucket.
1562 You are providing a more robust service coming forward, more relevant to the viewers potentially. So why is it now you are forecasting revenue that is so significantly less than what you were able to generate on your TV listing service?
1563 MR. ELLIS: A much smaller base.
1564 COMMISSIONER MOLNAR: Because it's solely digital?
1565 MR. ELLIS: No, it's a smaller base because we are only servicing the smaller base of communities. It's much smaller than the TVL listing service which was, of course, ubiquitous across western Canada in many, many more communities than we will serve here.
1566 COMMISSIONER MOLNAR: So your TV listing service was in more than 64 locations?
1567 MR. ELLIS: Correct.
1568 MS COURTEMANCHE: Available across Shaw all of it in western Canada so it's available everywhere.
1569 COMMISSIONER MOLNAR: It couldn't have been very many more significantly large locations, though.
1570 I mean when I look at the locations in your top ten those if I was to do some sort of subscriber analysis which I haven't done, but I would say that that would be the bulk of Shaw's subscribers that are existing in those 10 communities. If you have moved to 64 you must have the bulk of the Shaw subscribers in these 64 you have targeted in here.
1571 MR. ELLIS: I think you are correct. The difference is, though, that the advertiser realizes that we are servicing a much smaller area in terms of digital versus the analog.
1572 Now, we obviously know that the digital market is growing and will at some point take over and we expect that throughout the course of the seven-year licence period that -- we are certainly hopeful that we will be back to that $12 million level. But initially we are very conservative about what we will be able to garner.
1573 MS COURTEMANCHE: Plus, we have to realize that, you know, we are starting up a new service and therefore, you know, as Bryan said earlier, on the TV listing service we actually had BBM data that supported buys for our service.
1574 Well, for the first year of a Cat 2 we are not going to have any data to provide to anybody as far as, you know, justifying eyeballs or who is actually tuning in, in order to sell. So we had to be conservative because any start-up, you know, even though we are going to target the same people, we don't have any proof of how many eyeballs we are delivering.
1575 So that's one of the reasons why we were very conservative.
1576 COMMISSIONER MOLNAR: I think I will just leave with a comment that it's not convincing to me when you are moving to digital, when you are targeting the same base, when you have had preliminary discussions with Shaw; you have an ongoing relationship. You have your technology and all of their head-ends. You are going to the same base on the growing digital customer base and you are proposing that revenues will drop by -- you know, from $12 to $3 million and therefore that $3 million, based upon it being $3 million there is a minimal impact on local advertisers in the market.
1577 MS COURTEMANCHE: Well, Commissioner Molnar, the best evidence I can give you is the real evidence. Last year we pulled in $4.4 million, so $12 million was two years ago and we went down from $12 to $4.4 million.
1578 COMMISSIONER MOLNAR: That's comparing analog to digital, right?
1579 MS COURTEMANCHE: Well, it's --
1580 MR. ELLIS: The same advertisers.
1581 MS COURTEMANCHE: -- the same advertisers.
1582 COMMISSIONER MOLNAR: But a different subscriber base.
1583 MS COURTEMANCHE: A bigger subscriber base. So it's a bigger subscriber base and you know it is clearly a business where the opportunities were going down. So you know to grow it back up again we just think that it's not going to happen overnight especially with the new service.
1584 I take your point but, like I say, my best evidence is last year we went down to $4.4 million.
1585 COMMISSIONER MOLNAR: And you are proposing to use the same rates with this service?
1586 MR. ELLIS: Largely, yes.
1587 COMMISSIONER MOLNAR: Okay.
1588 You may not be aware but I live in Regina so it's -- you know, seeing the 64 communities you have targeted, clearly all Shaw communities, not necessarily the largest populated communities in western Canada, arguably not the communities most in need of an additional local voice. You know what comes to mind very clearly for me is Brandon as an example without -- having lost its local television station, does not have local news and information right now.
1589 Have you given thought to moving to those kinds of communities?
1590 MR. ELLIS: We would love to be able to negotiate carriage with West Man in the case of Brandon and access certainly in Saskatchewan. We would love to be able to do that.
1591 COMMISSIONER MOLNAR: But you are not proposing to us that you would have local -- a local program, a hyperlocal programming program for those communities?
1592 MR. ELLIS: If we could get carriage we certainly would.
1593 MS COURTEMANCHE: Yeah.
1594 COMMISSIONER MOLNAR: Have you talked to anyone?
1595 MR. ELLIS: I haven't, but that is not an exhaustive survey.
1596 MS COURTEMANCHE: Yeah. I think it's our intention to -- if we were to get a licence from the Commission in those communities that we haven't identified.
1597 In particular the community that you have identified, Brandon, I think it is incumbent on us to go back and look at, you know, the proposal and say, you know, there are some communities that really would like this type of service and we will try to negotiate carriage.
1598 So I think that it's a fair comment. We actually talked about this yesterday and said, you know, yeah, absolutely. You know, we would.
1599 I guess the point was, is that here is where we were already operating so we think -- I mean you have to understand. We really took a sunset business and tried to make it digital based on what we were doing previously. That's why you have those 64 communities. It's because it's where we were already. We had a sales force we understood. We knew we had a relationship with those communities. That's why we identified them.
1600 But if we were to service and be a true service to all of western Canada it's incumbent on us to reach out to other distributors. Hopefully we can secure carriage and if we can secure carriage then it would be incumbent on us to -- as long as we can get access to their head-end to provide the same type of service that we would for Shaw systems that would be local and perhaps fill that void that you have just identified.
1601 COMMISSIONER MOLNAR: And I want to understand this technology. You said that Shaw took over your existing analog service, TV listing service and they are kind of running it to its natural decline.
1602 And the technology used for that is not the same technology you need to deploy your new service?
1603 MR. ELLIS: They are using our technology. Just to give you an example if we had over 40 people they have retained one person permanently and two people on a contract basis.
1604 COMMISSIONER MOLNAR: And the equipment in their head-ends that is supplying that is your equipment that would also be used to supply Local1?
1605 MR. ELLIS: We would -- as you can imagine, technology changes over the course of the years. We would replace all of that with new equipment.
1606 MS COURTEMANCHE: They are using the old stuff.
1607 MR. ELLIS: Yeah.
1608 MS COURTEMANCHE: We are proposing to update. I mean what we are doing is we are building on the proprietary stuff that we have now but it is going to have to be beefed up in order to offer the Local1 service.
1609 So what's being used by Shaw is the old stuff. We would have some new equipment and software and so on and so forth for the new Local1.
1610 MR. ELLIS: The service life is about done.
1611 MS COURTEMANCHE: Yeah.
1612 COMMISSIONER MOLNAR: Okay. So then the real only tie you have to 64 communities is your advertising relationship because the equipment in all that needs to be replaced anyway.
1613 And I want to make sure -- and I apologize. I know that you had quite an extended discussion with Commissioner Simpson on this but sometimes I need to hear things more than twice to understand.
1614 Despite having said on page 6 here that local:
"...we are seeking your approval to sell a limited amount of local advertising in each community where Local1 is distributed."
1615 You have said now that it is not where it is distributed. You are saying only where you will be providing unique local content for that community?
1616 MS COURTEMANCHE: Correct, and that's why we said we would come back and clarify our commitment in that regard to Commissioner Simpson.
1617 We understand that that is not clear and we will be coming back and reply to state specifically when and at what particular moment we would avail ourselves or feel that it's appropriate for us to avail ourselves of the opportunity to sell locally.
1618 COMMISSIONER MOLNAR: So if at the beginning you were creating local programming only for the 10 centres, you said initially, arguably that's the only authority you need from us.
1619 MS COURTEMANCHE: Yeah.
1620 COMMISSIONER MOLNAR: And if you were licensed as a Cat 2 you could provide it to the other 64 communities. You could provide it to any community if a BDU chose to pickup your service.
1621 MS COURTEMANCHE: Yeah, I said we couldn't sell locally. We could be carried by anywhere. As long as you give us the licence for western Canada any licensed BDU in Canada would be authorized to offer our service.
1622 COMMISSIONER MOLNAR: Right.
1623 MS COURTEMANCHE: The only thing I would distinguish is in which communities we could actually sell locally.
1624 COMMISSIONER MOLNAR: Right. And at this point you are committing to create local programming for 10.
1625 MS COURTEMANCHE: Correct.
1626 COMMISSIONER MOLNAR: Okay, thank you. That's all.
1627 THE CHAIRPERSON: Thank you very much.
1628 Commissioner --
1629 MR. ELLIS: Just one point of clarification.
1630 We would need to put a box at the head-end. It's not that they would just be able to pluck us out of the air. We would have to have the box there at the head-end.
1631 THE CHAIRPERSON: Right.
1632 Commissioner Duncan...?
1633 COMMISSIONER DUNCAN: Okay. So possibly some of my questions will be repetitive but, again, probably need to hear the answers a few times to absorb it all.
1634 I'm just going back now to the 64 or 65 communities -- 64?
1635 MS COURTEMANCHE: 64.
1636 COMMISSIONER DUNCAN: And 10 are the ones that are listed in the application that will be the -- they will be hyperlocal and they will be your initial stations.
1637 And is there a schedule for the rollout? I have a list here of all the stations -- as to when the others would be rolled out?
1638 MS COURTEMANCHE: Sorry. We will provide that tomorrow. At the same time we provide the information we will provide you with the rollout breakdown.
1639 COMMISSIONER DUNCAN: Okay. And when you do that are you able to also identify the ones that would be likely to have your hyperlocal service?
1640 MS COURTEMANCHE: Will do.
1641 COMMISSIONER DUNCAN: Okay.
1642 So at this point can you tell me what percentage of the 64 will end up with the hyperlocal service?
1643 MS COURTEMANCHE: We are hoping that eventually they all will. That's the objective. But we will -- yeah, otherwise we can't sell locally.
1644 So our objective is that that's what we want to do because we want to have the ability to sell locally. So if we don't, we don't sell locally. Because we do want to then that's our objective, is to get there.
1645 COMMISSIONER DUNCAN: So within three -- well, you are going to give us a schedule.
1646 MS COURTEMANCHE: Yeah. I think that we had talked about 45 within four years and 64 by year seven. That was what we were talking about.
1647 COMMISSIONER DUNCAN: And they will have your hyperlocal service?
1648 MR. ELLIS: Correct.
1649 COMMISSIONER DUNCAN: Which I understand then, from the conversation here, is just the left side of the screen, the video component?
1650 MS COURTEMANCHE: That's correct.
1651 COMMISSIONER DUNCAN: That's just for local component?
1652 MS COURTEMANCHE: Excuse me, yes, sorry. You are right. I apologize, yes.
1653 What I meant to say is that for regulatory purposes you care about the video, audiovisual, but just so you understand the 64 would have the whole package, would be hyperlocal.
1654 COMMISSIONER DUNCAN: So initially until you got the equipment -- well, you are going to have the equipment in the head-end anyway.
1655 As soon as the system is put in place in a cable system they automatically get the hyperlocal service. Is that the idea?
1656 MR. ELLIS: Let me try again on that.
1657 We would put a box in the head-end once we have negotiated carriage. Then we can do the hyperlocal in each market.
1658 COMMISSIONER DUNCAN: Okay. So dealing with the Shaw systems first, the 64 systems, it's just going to be a matter of getting the equipment into it.
1659 I know you referred to negotiation but assuming it's going to be successful then it's just as soon as the box goes into that particular system you are able to offer and will offer the hyperlocal?
1660 MR. ELLIS: Correct.
1661 COMMISSIONER DUNCAN: Okay. And so just a quick, for me if you would -- your point on the video distinguishing it from the Weather Network is that yours is just that, the video is local and theirs is national -- regional?
1662 MS COURTEMANCHE: Regional, yeah. So you know there will be a national and regional component in ours but we will also have a local segment, a local, local segment on the audiovisual component.
1663 COMMISSIONER DUNCAN: So recently in Halifax when the hurricane went through the Weather Network offered extensive coverage. You would not be doing that then, full screen --
1664 MS COURTEMANCHE: For?
1665 COMMISSIONER DUNCAN: To cover the storm, the hurricane when it went through.
1666 MS COURTEMANCHE: In another part of the country?
1667 COMMISSIONER DUNCAN: No, no, if it was here.
1668 MS COURTEMANCHE: Oh, if we would have the capability of doing it, yes. But I mean is it our intention to do that?
1669 I think that, you know, because we would be a local news and information service I think we would probably want to do -- but as we said earlier, we are not going to have reporters or people out on, you know, the streets. I mean we rely on existing sources for weather and from the news we are going to use commercial services and other fees, you know, and subscription services and so on and so forth. So we will report on it.
1670 You know, whether we would actually turnaround and become -- you know, what Weather Network did is get into full blown, back to back coverage.
1671 COMMISSIONER DUNCAN: I think, yeah, I have got my own answer because I'm thinking I'm understanding better what the Weather Network would have done. I assume that the coverage on the storm would have gone across the country but yours will just go in that particular community, not over all 64.
1672 MS COURTEMANCHE: Exactly. But for instance if, in Winnipeg, it has another flood --
1673 COMMISSIONER DUNCAN: M'hmm.
1674 MS COURTEMANCHE: -- and we are in Winnipeg, well, we are going to cover the flood. I mean obviously for that --
1675 COMMISSIONER DUNCAN: In Winnipeg, right.
1676 MS COURTEMANCHE: Exactly. But in Saskatoon there is no flood so we are not -- you know that's --
1677 COMMISSIONER DUNCAN: Okay. I understand now.
1678 MS COURTEMANCHE: -- not the issue. But there might be a hurricane in Edmonton and we will cover it there.
1679 COMMISSIONER DUNCAN: Okay, no, then I understand. That's fine.
1680 MS COURTEMANCHE: No, not a hurricane, a tornado, sorry.
1681 COMMISSIONER DUNCAN: It would be more likely there, I guess. Yeah.
1682 MS COURTEMANCHE: I'm not the on-air person, thank goodness.
1683 COMMISSIONER DUNCAN: It strikes me that the editors that you are going to have in place to see that the content is acceptable are going to have a pretty hectic job when all 64 are up and running.
1684 MR. ELLIS: That's absolutely correct.
1685 COMMISSIONER DUNCAN: And will they all be -- you had indicated, I think, initially in an answer to Commissioner Simpson in an answer that they would likely be in Calgary?
1686 MR. ELLIS: That's the model, yes.
1687 COMMISSIONER DUNCAN: And even when you reach your full 64 it would still be?
1688 MR. ELLIS: Yeah, I don't think there is any magic about the number of communities served and where the base is.
1689 COMMISSIONER DUNCAN: Okay.
1690 MS COURTEMANCHE: But as far as number of people just so you understand, the TV listing service had I think about 52 employees -- oh, sorry, in the forties, sorry. But at one point I think they were up to 52 anyway.
1691 So we are going to have a fairly significant staff in order to -- you know we are not going to do this with 10 people. I mean I think that we are looking at what kind of a complement.
1692 MR. ELLIS: And the 52 people that we have mentioned in our application, does not include salespeople.
1693 MS COURTEMANCHE: Right. So we are talking a fairly significant complement of people to do this.
1694 But you are right. We had experience with this in -- we had -- in Quebec we run a news network, a radio news network, and all of our web content is vetted by three dedicated staff.
1695 I'm not saying that this is just going to be three staff but it's fairly -- it's manageable when it's got dedicated staff which we would have in this circumstance as well.
1696 COMMISSIONER DUNCAN: So --
1697 MR. ELLIS: We have also spoken to. Sorry --
1698 COMMISSIONER DUNCAN: No, go ahead. That's all right.
1699 MR. ELLIS: -- a company that aggregates Twitter feeds and social media content and distils it down to the top ten issues.
1700 COMMISSIONER DUNCAN: So this would be like a third party, I suppose, to do that?
1701 MR. ELLIS: Yes, yeah.
1702 COMMISSIONER DUNCAN: Oh, okay.
1703 So 52 people would be sort of on the creative end, then management perhaps and 40 for sales just approximately?
1704 MR. ELLIS: No, in fact the 52 does not include any salespeople at all.
1705 COMMISSIONER DUNCAN: No.
1706 MR. ELLIS: It is all a small technical crew in that most of our production will be automated and robotic cameras. The rest of the people will be talent, editorial and the editor-type function.
1707 COMMISSIONER DUNCAN: Okay.
1708 MR. ELLIS: It's really some new classifications in terms of employees that even we at Corus have not had before.
1709 COMMISSIONER DUNCAN: So did I understand you to say then above these 52 would be the sales force?
1710 MR. ELLIS: Correct.
1711 COMMISSIONER DUNCAN: And that might be 40 people?
1712 MR. ELLIS: In our past experiences we have used a combination of staff, sales people. We have also used a lot of contractors, people who sell community. Newspapers might also be able to sell the TV listings channel. We anticipate we will use the same model for this type of --
1713 COMMISSIONER DUNCAN: So that the sales people that you had for the TVL listings they are just gone on to other things. I suppose you may recover some of them.
1714 MR. ELLIS: That's correct.
1715 COMMISSIONER DUNCAN: You may not want to or you might?
1716 MR. ELLIS: We have had them talk to our radio folks but, no, they are gone.
1717 COMMISSIONER DUNCAN: So speaking of the other agencies or whatever that you might use to sell your programming guide service, and you intend to use here third parties to sell as well?
1718 MR. ELLIS: Some, yes.
1719 COMMISSIONER DUNCAN: Yeah, and so what --
1720 MR. ELLIS: Not all.
1721 COMMISSIONER DUNCAN: No. Will you -- how will the Corus radio stations play into that, like will they do any of the selling?
1722 MR. ELLIS: They did not under the TVL model and we don't anticipate they will.
1723 COMMISSIONER DUNCAN: Don't anticipate.
1724 MR. ELLIS: We do, however, have web sales people who work in the radio stations. They may be cross-purposed but I don't envisage that happening but it could be possible.
1725 COMMISSIONER DUNCAN: Are they web sales people or are they web developer?
1726 MR. ELLIS: Web sales.
1727 COMMISSIONER DUNCAN: So they make cold calls?
1728 MR. ELLIS: It's not a very large staff. Our experience has been that web sales for the radio group is a tough go.
1729 COMMISSIONER DUNCAN: And what would they be called, cold calls? Is that what you do? Is that how it would work?
1730 MR. ELLIS: Yes, but they are also leveraging buys that were made on the radio station as well.
1731 COMMISSIONER DUNCAN: Oh, sure, so they are not cold. Okay, all right.
1732 What will you do at -- it occurred to me that what if the data is slow coming in -- well, not the data. There you are adding on other agencies but for your video portion, your hyper portion, what would you do at the outset when you know you have to build up or expect immediately you are going to be able to fill it?
1733 MR. ELLIS: No, we would probably work with the window wheel as we specified in the application.
1734 COMMISSIONER DUNCAN: So just --
1735 MR. ELLIS: As additional content comes in we will shorten parts of the wheel and expand others.
1736 COMMISSIONER DUNCAN: Okay. So this fixed -- this portion where the gentleman here is doing the --
1737 MS COURTEMANCHE: Well, there is the webcam on the traffic. We can get that anytime because that's available. That's a source that is already set.
1738 COMMISSIONER DUNCAN: Yes. Yeah.
1739 MS COURTEMANCHE: So that's something we can do anytime. That doesn't to be ramped up.
1740 COMMISSIONER DUNCAN: It's just I think where the gentleman is doing the weather that would be -- it's the only one that you might have to build up. The others, I assume, you can pretty well have from day one?
1741 MR. ELLIS: That's correct.
1742 MS COURTEMANCHE: Oh, yeah.
1743 COMMISSIONER DUNCAN: Yeah. So I'm just wondering, like, will you do your own creative if you don't have it at that point or are you suggesting that you will just dedicate more of the screen to these feeds?
1744 MR. ELLIS: We have the ability to do that but we would anticipate that with the resources that we have we would have video content throughout the -- one advantage of the Corus group is that we do have access to content.
1745 MS COURTEMANCHE: Just to understand correctly is your question that, are we going to have somebody live day one?
1746 COMMISSIONER DUNCAN: Yeah. I'm just wondering how you are going to fill it because --
1747 MS COURTEMANCHE: The answer is yes. I think there was a little misunderstanding. The answer is yes.
1748 We are going to start producing day one. We won't launch the channel until we are in a position to fill this frame with content that we will have produced in addition to --
1749 COMMISSIONER DUNCAN: So am I right that --
1750 MS COURTEMANCHE: -- there will be other stuff that we will acquire from other sources but, you know, obviously we need to be able to produce that component, yes.
1751 COMMISSIONER DUNCAN: So the people that are sending you in their Twitter feeds or whatever, that will end up in here. Initially on day one --
1752 MR. ELLIS: It could very well, yes.
1753 COMMISSIONER DUNCAN: -- you won't be able to fill that with that information.
1754 MS COURTEMANCHE: Oh, no, no.
1755 MR. ELLIS: Correct.
1756 MS COURTEMANCHE: Obviously we have to build on that stuff.
1757 COMMISSIONER DUNCAN: Yeah, okay.
1758 MS COURTEMANCHE: Yes, obviously that's going to take time because we have to -- as I said to Commissioner Simpson earlier, we are going to have to, you know, go out there and market and talk to people and you know it's going to take time to ramp it up.
1759 So obviously that's -- you know it's like any service, and service starts with a particular look and over time it builds its content.
1760 COMMISSIONER DUNCAN: Okay, thank you.
1761 The box there that says Calgary weather that you told us was just a webcam, so you are able to remove it, make it smaller, whatever you want depending on --
1762 MR. ELLIS: That's correct.
1763 COMMISSIONER DUNCAN: Yeah.
1764 MR. ELLIS: Yeah, it's very flexible.
1765 COMMISSIONER DUNCAN: So --
1766 MR. ELLIS: Some communities may have five zones. Others may have seven.
1767 COMMISSIONER DUNCAN: So when they have those seven zones for example would it be like the Vancouver example that you gave at the hyper portion, what I'm calling the video part, will have seven different -- possible?
1768 MR. ELLIS: Yes, it is possible. I think we would have to look at how distinct would the content be for a city like Vancouver in terms of weather for example. The four districts of Vancouver may not. The weather may not be that different.
1769 COMMISSIONER DUNCAN: M'hmm.
1770 MR. ELLIS: Technically, yes, we do have that capability.
1771 COMMISSIONER DUNCAN: Do you think that the Weather Network's concern that this is duplicating their service is justifiable?
1772 MS COURTEMANCHE: Well, based on the fact, as what we said earlier, we are far more granular than what they are capable of providing. So you know that's why we think we are different.
1773 I mean obviously, yeah, the look. I mean, you know, there is -- yes, we look the same. There is an on-air person who is talking about the weather, yes, absolutely.
1774 But the Commission has traditionally, you know, said that even you know depending on how targeted a program is it will distinguish it from another service. So you know national news is a different service to local news. Well, we think that, you know, national and regional -- weather is different too because it's more granular and focused. So we think it complements it. It doesn't directly compete.
1775 COMMISSIONER DUNCAN: All right. I just have one more question.
1776 I'm just wondering, because I don't recall reading it in the material, what will happen to your proposal if we don't approve the sale of local ads?
1777 MR. ELLIS: From a financial perspective I think it would -- it just wouldn't fly. It wouldn't be sustainable.
1778 COMMISSIONER DUNCAN: Okay, all right. Thank you.
1779 MS COURTEMANCHE: Yeah, because it's the basis of the previous model that we are looking to get at, so yeah.
1780 COMMISSIONER DUNCAN: Okay, I understand. Thank you.
1781 Thank you, Mr. Chairman.
1782 THE CHAIRPERSON: Thank you very much, Commissioner Duncan.
1783 I have to come back on two more questions if I may.
1784 Ms Courtemanche, did I just hear you say that this service will not be competitive with the Weather Network but it will be better?
1785 MS COURTEMANCHE: No, it will complement, not be better.
1786 THE CHAIRPERSON: More granular.
1787 MS COURTEMANCHE: More granular in the sense that it will provide a level of detail that the Weather Network does on a -- you know it's graphic. I mean you know, obviously the Weather Network provides a very granular level of weather information with its text and graphics.
1788 What I'm saying is from the audiovisual component we will have a granular level of weather forecasts and information that the Weather Network doesn't provide. It provides it from a texting graphics basis. We are going to do it from an audiovisual basis and also a texting graphics basis.
1789 THE CHAIRPERSON: Okay, thank you.
1790 With respect to your submission that will be coming in after the hearing, your written submission, might I ask you to contemplate synchronizing a recast of your weather projection so as you move into next generation markets after your launch we have a good understanding of the financial impact of what that means on a market-by-market basis?
1791 I know it's detailed but it's important. Is that possible so that the revenue forecast is synchronized to the rollout?
1792 MS COURTEMANCHE: I think we understand your question. We have some -- I'm assuming we have some granular information as to how we currently, you know, get revenues from our existing markets. So I think that's -- well, we will figure it out but we will give you the information that you require.
1793 THE CHAIRPERSON: So that we can understand the --
1794 MS COURTEMANCHE: I think it's fairly --
1795 THE CHAIRPERSON: -- escalating impact on each market.
1796 MS COURTEMANCHE: You know, it's obvious to everyone in this room that the majority of our revenues come from larger markets so that's not -- I forget what the percentage is but we will provide that to you.
1797 So what we can do is we can provide you with the kind of granularity that we currently are aware with, with our TV listing service, and then we can make some projections based on what we think would happen as we rollout over the licence term.
1798 THE CHAIRPERSON: Okay, one more question.
1799 With respect to any limitations should this licence be granted, Commissioner Duncan had earlier asked what would happen if we denied your request on avails. What would your response be with respect to other conditions of licence that we might impose on you, not including but what conditions of licence or what would your response be to a position of some conditions of licence with respect to adjustments to your programming such as in weather? What would your reaction be?
1800 MS COURTEMANCHE: What would be the conditions of licence?
1801 THE CHAIRPERSON: If we would put an imposition -- if we were to apply a condition of licence that alters your present proposal for content, programming content such as readjusting the percentage of weather to news to community?
1802 MS COURTEMANCHE: Just to be clear, the problem that we would have with the Commission providing or imposing a specific news component on the audiovisual is that we are reliant -- we are an aggregator. We are not actually producing and we don't have people out in the field producing the news. So you know we -- you know, depending on how the flow occurs we -- a certain percentage we might not be able to do.
1803 So that's where the problem is, is if the Commission was to come up with a percentage and say, well, you have -- you know, on the audiovisual component let's say -- and I don't want to use a number but let's say 30 percent of that has to be news and information, well, depending on how we are able to aggregate it we may or may not be able to do it depending if we have that information, enough of it at that granular level to do it.
1804 Because we are not -- like I say, we don't have a newsroom and so --
1805 THE CHAIRPERSON: So the percentage of weather you are offering now is more because it's available to you, to repurpose, as opposed to news and community, correct?
1806 MS COURTEMANCHE: Right.
1807 THE CHAIRPERSON: Okay.
1808 MS COURTEMANCHE: So it is what it is, yeah.
1809 THE CHAIRPERSON: Okay. I think that pretty much wraps it up unless anyone has got any last minute questions.
1810 Does legal have any additions to the file?
1811 MS HULLEY: I will just read the undertakings onto the record.
1812 THE CHAIRPERSON: Thanks.
1813 MS HULLEY: I have -- I will call them three undertakings. The first is in response to a question from Commissioner Simpson and it's:
"Provide a breakdown of the 48 individual hosted segments referred to at page 6 of the supplementary brief."
1814 And then in response to questions from all of the Commissioners:
"Identify those markets that will have the hyperlocal service, provide a schedule for the rollout to these markets and provide a clear commitment to a COL limiting local advertising to those markets."
1815 And then the third but related undertaking:
"If necessary, revise the revenue projections to reflect the schedule of that rollout."
1816 I believe you committed to provide the first two pieces of information in your reply tomorrow. If it's acceptable we would put the due date for the third in the reply as well.
1817 Thank you very much.
1818 THE CHAIRPERSON: Madam Secretary, any other business?
1819 THE SECRETARY: This concludes Phase I for Item 3 on the agenda.
1820 Thank you, Mr. Chair.
1821 THE CHAIRPERSON: I would like to thank you very much, Mr. Ellis and Ms Courtemanche, for coming to the great province of Saskatchewan to make your presentation. It was very interesting and an enjoyable afternoon.
1822 Thank you very much. We are going to adjourn for the day and convene tomorrow at nine o'clock.
--- Whereupon the hearing adjourned at 1642, to resume on Thursday, October 7, 2010 at 0900
Lynda Johansson Jean Desaulniers
Monique Mahoney Sue Villeneuve
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