ARCHIVÉ -  Transcription - Moncton, NB - 2000/03/09

TRANSCRIPT OF PROCEEDINGS

FOR THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

TRANSCRIPTION DES AUDIENCES DU

CONSEIL DE LA RADIODIFFUSION

ET DES TÉLÉCOMMUNICATIONS CANADIENNES

SUBJECT / SUJET:

BROADCASTING APPLICATIONS AND LICENCES/

DEMANDES ET LICENCES EN RADIODIFFUSION

HELD AT: TENUE À:

Hôtel Beauséjour Hôtel Beauséjour

Ballroom A Salle de bal A

750 Main Street 750, rue Main

Moncton, N.B. Moncton (N.-B.)

March 9, 2000 le 9 mars 2000

Volume 4

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès-verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

Canadian Radio-television and

Telecommunications Commission

Conseil de la radiodiffusion et des

télécommunications canadiennes

Transcript / Transcription

Public Hearing / Audience publique

Broadcasting Applications and Licences/

Demandes et licences en radiodiffusion

BEFORE / DEVANT:

Joan Pennefather Chairperson / Présidente

Andrew Cardozo Commissioner / Conseiller

Andrée Noël Commissioner / Conseillère

ALSO PRESENT / AUSSI PRÉSENTS:

Peter McCallum Commission Legal Counsel /

Conseiller juridique

Lynne Poirier Hearing Manager /

Gestionnaire de l'audience

Lynda MacDonald Hearing Secretary /

Secrétaire de l'audience

HELD AT: TENUE À:

Hôtel Beauséjour Hôtel Beauséjour

Ballroom A Salle de bal A

750 Main Street 750, rue Main

Moncton, N.B. Moncton (N.-B.)

March 9, 2000 le 9 mars 2000

Volume 4

TABLE OF CONTENTS / TABLE DES MATIÈRES

PAGE

PHASE I

Presentation by / Présentation par:

New Brunswick Broadcasting Co., Limited 736

PHASE II

Intervention by / Intervention par:

Maritime Broadcasting System Limited 831

CHSR Broadcasting Inc. 855

Courier Newspapers Ltd. 876

The National Campus and Community Radio Association/

L'Association Nationale des Radios Étudiantes et

Communautaires 887

PHASE III

Reply by / Réplique par:

New Brunswick Broadcasting Co., Limited 904

Moncton, N.B. / Moncton (N.-B.)

--- Upon resuming on Thursday, March 9, 2000

at 0900 / L'audience reprend le jeudi 9 mars

à 0900

3826 MS MacDONALD: Madame la Présidente, I would like to provide an overview of today's agenda. We will hear applications by New Brunswick Broadcasting Company for licences to carry on English-language FM radio undertakings at Saint John, New Brunswick, and St. Stephen, New Brunswick.

3827 The applicant has agreed to 30 minutes for doing its presentation of the two applications, so the presentation will be combined.

3828 The presentation will be followed by interventions from interested parties.

3829 Finally, the applicant will have an opportunity to comment or rebut interventions filed to its applications.

3830 The application for the Saint John market is for a broadcasting licence to carry on an English language FM radio programming station at Saint John, New Brunswick. The new station would operate on frequency 97.3 MHz (channel 247C) with an effective radiated power of 55,000 watts.

3831 The application is conditional on Commission approval of the New Brunswick Broadcasting Limited application for a broadcasting licence to carry on an English language FM radio undertaking at St. Stephen, which is also scheduled at this hearing.

3832 The St. Stephen proposal is for a broadcasting licence to carry on an English language FM radio undertaking. The new station would operate on frequency 98.1 MHz (channel 251B) with an effective radiated power of 40,000 watts.

3833 Again, this application is conditional on Commission approval for a broadcasting licence for an English language FM radio undertaking at Saint John.

3834 I would now like to ask New Brunswick Broadcasting to make their presentation. If you could introduce the panel members. Thank you. You may begin when you are ready. Thank you.

PRESENTATION / PRÉSENTATION

3835 MR. FERGUSON: Thank you.

3836 Good morning, bonjour. Before we begin our formal presentation, I would like to introduce the members of the panel from New Brunswick Broadcasting Company Limited. To my immediate left, Ms Patricia Shea, CHSJ Radio. To my extreme left, Ms Jill Darrah, Human Resources Manager for J.D. Irving Limited, our parent corporation. To my immediate right, Mr. Peter Scholten, Controller and Business Manager of New Brunswick Broadcasting. And at the second table, Mr. Jim Robson, Broadcast Consultant to New Brunswick Broadcasting.

3837 Madam Chair and Commissioners, our appearance before you today seeking approval to establish new FM stations at Saint John on 97.3 and at St. Stephen on 98.1 are the most important licensing initiatives ever undertaken by New Brunswick Broadcasting Company Limited.

3838 We say "most important" in the context that current market forces have placed CHSJ at a tremendous competitive disadvantage. As such, approval of these two non-severable FM undertakings are crucial to the continuance of CHSJ's 66 years of broadcasting service to Greater Saint John, crucial to CHSJ's ability to compete in the Saint John radio market on more equitable terms, and crucial to NBBC's efforts to achieve long-term stability for its broadcast undertakings.

3839 In return, NBBC's new FM undertakings for Saint John and St. Stephen will each have a profoundly beneficial impact on those communities that they propose to serve and will enhance and further the objectives of the Act and the Canadian broadcasting system.

3840 NBBC's "Contemporary Adult Hit" format on 97.3 will, if licensed, ensure the stability of Saint John's heritage radio station, CHSJ and its 66 years of continuous service to New Brunswickers;

3841 restore a more competitive balance within the Saint John radio market;

3842 introduce a significant level of true programming diversity and listener choice to the Greater Saint John Region; extend a local/regionally-relevant diverse FM programming service to the rapidly growing, and largely unserved, Kennebecasis Valley communities of Rothesay, Quispamsis, as well as Grand Bay-Westfield;

3843 specifically target to, and address the listening needs and interests of the underserved 35-54 year old demographic within the Greater Saint John Region;

3844 provide greater exposure through regular air play of Canadian contemporary artists, many of whom are not heard on Saint John radio; introduce a unique series of spoken-word programming initiatives that will inform, entertain and educate the 35-54 year old demographic and the broader community;

3845 establish a dedicated NBBC Legislative News Bureau in Fredericton, which will provide locally-relevant news and information packages to the various communities within Greater Saint John and Charlotte County;

3846 invest a minimum of $238,000 in direct and indirect Canadian Talent Development initiatives, across the licence term, for the benefit of current and developing local Canadian artists and performers;

3847 provide two highly attractive life group clusters to the Greater Saint John business community looking for a cost effective advertising vehicle to reach and service the 35-54 demographic;

3848 stabilize Saint John's badly undervalued local advertising rates and bring them back closer to their true market value; and

3849 ensure the preservation of a strong, independent, local broadcast voice amidst the growing ownership concentration within New Brunswick's private radio sector.

3850 Equally, NBBC's proposed "Country/Adult Contemporary" format on 98.1 FM-St. Stephen will, if licensed:

3851 introduce a "first Canadian local radio programming service" to the 28,000 residents of Charlotte County, who, both currently and historically, are, and have been, largely dependent on American border stations for their daily radio programming fare;

3852 repatriate and reverse the 86 per cent Canadian listenership factor currently enjoyed by Maine radio stations;

3853 provide Charlotte County businesses with direct access to their New Brunswick customer base, via a cost-effective local Canadian radio advertising vehicle;

3854 repatriate Canadian revenue currently spent on American border radio stations, thereby generating "new advertising dollars" for Canadian radio and for Canada's broadcasting system;

3855 introduce locally-relevant, intelligent, informative and community-driven news, public service information and other spoken-word initiatives, specifically designed to meet the needs and interests of Charlotte County communities and their residents;

3856 expose Charlotte County residents to Canada's private commercial radio sector, including the ability to hear Canadian artists on their own St. Stephen radio station on a regular daily basis;

3857 provide a meaningful "window of exposure" for Canadian talent to American listeners in the State of Maine, and to the more than 2 million tourists entering Canada annually via the international border crossing at St. Stephen;

3858 afford an ongoing opportunity for diverse community groups, organizations and cultural communities, such as the St. Croix Scoodic Band of the Passamaquoddy Tribe, among others, to participate on-air, reflecting their culture and heritage to the broader community;

3859 provide direct access to local talent within Charlotte County to gain valuable on-air exposure of their talents; and

3860 invest a minimum of $119,000 in direct and indirect Canadian talent-development initiatives across the first licence term, for the benefit of current and developing local Canadian artists and performers.

3861 MR. SCHOLTEN: Madam Chair and Commissioners, as career broadcasters, NBBC applauded the Commission's policy initiatives contained within its revised "Commercial Radio Policy" as set out in Public Notice 1998-41, initiatives that are bold in their direction and creative in their goal to ensure a strong, well-financed radio industry that is better poised to achieve its obligations under the Act and to meet the challenges of a new century.

3862 The Commission's decisions to revise its Common Ownership Policy and to revoke its Radio Market Policy of 1991 are timely and in step with the reality of today's evolving and high competitive communications environment.

3863 One of the first broadcasting organizations to benefit from the revised Common Ownership Policy was Maritime Broadcasting System Limited. In Decision CRTC 98-469, Maritime was approved to acquire the assets of CFBC and CJYC-FM, which, along with their existing CIOK-FM, gave them ownership of three of the four commercial stations in the Saint John market.

3864 Since Maritime's three-station combo has come into play, it has dominated the market. The net effect of Maritime's activities, relative to the manner in which they are operating their near-monopoly, has seriously impacted on CHSJ's viability and ability to compete.

3865 If such a "competitive imbalance" within the Saint John radio market is allowed to continue, it will not only destroy CHSJ-FM, but will seriously undermine the public interest in terms of reducing the level of diversity and choice, two of the cornerstones upon which the Commission's Commercial Radio Policy rests.

3866 Our understanding of the Commission's objective in revising its Commercial Radio Policy was to strengthen radio and encourage competition, thereby stimulating diversity and listener choice within the marketplace, rather than a licence for broadcasters to use the privilege of multiple station ownership as a weapon against a lone competitor in the same marketplace.

3867 An internationally known and respected market consultant, engaged by NBBC to evaluate the Saint John radio market and verify format opportunities, characterized CHSJ's stand-alone status in the following manner:

3868 The consultant went on to say:

3869 In essence, the above-noted observations, relative to the competitive environment within the Saint John radio market, have come to fruition and the situation will only worsen if the status quo prevails.

3870 MR. FERGUSON: Madam Chair and Commissioners, NBBC, through its heritage station CHSJ, has been a part of broadcasting and a good corporate citizen of the Saint John community since 1934. Over the past 66 years of continuous operation, CHSJ has built a proud legacy of service and commitment to the Saint John Region and we hope to continue that privilege into the future.

3871 In order to do so, however, there is a critical need to restore a more competitive balance to the Saint John radio market. The hard reality is that Maritime's three-station dominance will continue to negate any competitive efforts on the part of a orphan CHSJ, unless there is a correction to the current competitive imbalance within the market.

3872 It was essentially against that background that NBBC formulated the "strategic radio broadcast development plan" now before the Commission. An integral part of that plan was the necessity to provide CHSJ with a sister FM station in Saint John in order to compete on more even terms with Maritime's three-station combo.

3873 The second integral component to NBBC's strategic plan was to concurrently establish a "first, Canadian locally-originated, full-service FM station" at St. Stephen. This would effectively incorporate the residents of Charlotte County into the Canadian broadcasting system by providing them with a Canadian listening alternative to the American border stations on which they are nearly totally dependent for their daily radio programming.

3874 In evaluating the St. Stephen initiative, NBBC concluded that Charlotte County deserved nothing less than a full-service FM station of its own, as opposed to becoming part of a satellite service originating from Saint John, with local service inserts across the broadcast day.

3875 It was also evident that, in order to make the full-service option viable, the St. Stephen initiative should be developed concurrently with the proposed new Saint John FM undertaking. In doing so, NBBC could apply the common operating synergies of its Saint John and St. Stephen radio operations in a similar manner to how Maritime is able to capitalize on cost savings and efficiencies through the combined operations of its three stations in Saint John.

3876 Simply stated, the reason why our Saint John and St. Stephen applications are non-severable is because NBBC needs the combined cost savings and operating efficiencies that can be realized from its existing CHSJ-FM, coupled with its proposed two new FM undertakings, in order to compete more effectively with Maritime's dominant three-station combo in Saint John.

3877 Before proceeding with the application process, NBBC commissioned the internationally-known program consultant McVay Media to conduct an independent study and analysis of the Saint John radio market, with a view to identifying what format opportunities exist and how they will enhance diversity and choice within the Greater Saint John Region.

3878 Essentially, the McVay report was designed to ascertain the programming opportunities, identify a viable format niche for a partner radio station for CHSJ, and demonstrate the competitive positions and weaknesses and strengths for broadcasting in the Saint John market.

3879 The end result of the McVay Media market analysis is that a significant format opportunity clearly exists for a Contemporary Adult Hit FM that will singularly target the largely underserved 35-54 demographic across the Greater Saint John Region.

3880 While Maritime's three stations are well positioned to cover the 18-54 demo, both male and female, because the market lacks an 18-34 singularly targeted station like Rock or CHR, these stations are able to address the young end of the demographic and then spill into the upper end, thus winning the 35-44 numbers by default.

3881 The net effect is that both CIOK-FM and CJYC-FM off far too broad a spectrum to create a significant coalition of loyal 35-54 year old listeners, particularly when given an alternative choice that would better identify with and fulfil their programming interests and needs.

3882 In the final analysis, there is not a clear-cut targeted Contemporary station available in the Saint John market.

3883 If approved, NBBC's Contemporary Adult Hit FM station will target the core 35-44, (skewing 45-54), demographic within the Greater Saint John Region, with a particular focus on the underserved Kennebecasis Valley communities of Rothesay, Quispamsis as well as Grand Bay-Westfield.

3884 MS SHEA: Madam Chair and Commissioners, at the stoke of midnight, January 1, 1998, the character and complexion of the Greater Saint John Region changed forever because on that date nine Saint John area incorporated municipalities were formally amalgamated into four main communities: the City of Saint John, Rothesay, Quispamsis and Grand Bay-Westfield which now constitute the Greater Saint John Region.

3885 Today, the extended borders of Rothesay, Quispamsis and Grand Bay-Westfield encompass a population in excess of 30,000 persons whose median age is predominantly in the 35 to 54 demographic range for both males and females.

3886 Essentially, these well-educated, high-income earners, as a group, are interested in children, parenting, education, health and fitness, career/business, financial planning/investment, their homes, the economy, computers and the Internet, and in maintaining a vibrant, balanced and meaningful lifestyle for their families and themselves.

3887 We would add that, despite the dramatic shift in population from the city to these outlying bedroom communities, there is no Saint John Adult Contemporary radio station that specifically targets and adequately serves this large and evergrowing 35 to 44 year old segment of the Greater Saint John Region's population.

3888 NBBC, in developing its musical and spoken-word programming components for 97.3-FM has been sensitive to the needs and interests of the 35 to 56 year-old adult listener residing in these outlying communities.

3889 The net result of our efforts is a more music based station that will narrowcast to the 35 to 54 year-old female audience and broad-base to a 35 to 54 year-old underserved adult listener.

3890 In catering specifically to the listening needs and interests of the Region's 35 to 54 demographic, the musical and spoken-word programming that 97.3-FM will provide is programming that is not now available on existing Saint John radio stations.

3891 The musical selections played will be totally consistent with the station's Contemporary Adult Hit format and the tastes of its targeted audiences. This includes popular songs by both Canadian and international artists that are seldom, if ever, exposed in the Saint John market. Further, NBBC will not subject its listeners to songs drawn from an eclectic mix of other formats targeting younger contemporary genre and artists.

3892 With respect to the spoken word, NBBC will ensure that its programming is intelligent, community driven, relevant and diverse, with a focus on the interests and informational needs of its singularly targeted 35 to 54 demographic.

3893 While we have discussed in detail many of the spoken-word features that will add true programming diversity and listener choice to the Greater Saint John region in our application, the following are a few examples of the kind of programming diversity that 97.3 will bring to its listening audience:

3894 through the establishment of its own Provincial Legislative News Bureau, coverage of provincial stories and news items from the New Brunswick Legislature in Fredericton will be orientated towards their relevance and importance to the four major communities within the Greater Saint John Region and their inhabitants;

3895 the station's treatment of news generally will be targeted at its 35-plus audience, and those issues and concerns that are most directly relevant to the local communities in which they live;

3896 overall news content will be enhanced by more lifestyle-related material in such areas as health, children, families, education and consumer information;

3897 to achieve the above-noted objectives, such program features as "Mothering Matters, The Parent Report, Official Kid-Approved Adventures, To your Good Health, and Looney Spoons" will add tremendous new diversity to the Greater Saint John market;

3898 through its weekly 30-minute program entitled "Cross Currents," NBBC's new 97.3-FM station will discuss and examine a wide spectrum of lifestyle issues that affect women aged 35-plus and their family units;

3899 the program "Tapestry" will profile a different multicultural community from the Greater Saint John Region each week as a positive means of building bridges of awareness and understanding between the broader community and its many component parts. The multicultural composition of Greater Saint John, like other major centres across Canada, is rapidly evolving and growing, and, as such, is in need of a voice.

3900 While these programs are but a brief snapshot of what NBBC will bring to the market, they illustrate the kind of diversity and choice that the 35-plus listener within the Greater Saint John market can expect from 97.3-FM

3901 MR. SCHOLTEN: Madam Chair and Commissioners, another important criteria for the Commission's consideration is, of course, the market's ability to sustain a new player without undue impact on existing licences.

3902 In this regard, there is little doubt that the Greater Saint John community is ready, able and willing to support a new FM undertaking.

3903 As NBBC has outlined in comprehensive detail in our application, New Brunswick in general, and the Greater Saint John Region in particular, has entered into a new wave of industrial development and economic growth and activity that may be the biggest ever.

3904 Government, industry and community leaders have outlined the Region's exciting new growth, development and future potential in precise terms over the past several months. Their excitement not only lies in the several world-class business organizations, but the attendant industrial projects they have planned, or under way, but also in the large number of IT, telecommunications, manufacturing, transportation and service-oriented sectors that are creating new jobs and investment opportunities and their associated economic spin-offs throughout the region.

3905 Perhaps Steve Carson, General Manager of Enterprise Saint John best captured the spirit and essence of the new Saint John when he stated recently to a group of business people "we're looking to measure this next boom in decades, not years."

3906 Hence, the current level of new economic activity, coupled with the future promise of sustained economic growth for Saint John and the province across many years, there is no question that the Greater Saint John Region can not only support a new FM radio station, but is, in fact, badly in need of NBBC's proposed new Contemporary Adult Hit station and the exciting diversity and added listener choice that it will bring to the marketplace.

3907 NBBC would add that no single media organization in New Brunswick is better positioned or will benefit as greatly from this new era of economic growth and development than Maritime and its three-station combo in Saint John and its other strategically placed radio stations throughout the province.

3908 MS SHEA: Madam Chair and Commissioners, with respect to Canadian Talent Development, we have outlined in great detail in our application the initiatives and commitments that NBBC will undertake over the term of the licence.

3909 In both our Saint John and St. Stephen applications, NBBC has taken a three-pronged approach to its Canadian Talent Development initiatives, namely; annual direct expenditures; indirect costs for on-air talent promotion; and new programming undertakings which will highlight local Canadian talent through on-air exposure on each station's daily and weekly program schedule.

3910 First, with respect to Saint John, NBBC will invest a minimum $238,000 in direct and indirect Canadian Talent Development initiatives over the licence term for the benefit of current and developing local Canadian artists and performers.

3911 Of this amount, a minimum of $28,000 in direct spending initiatives will be allocated over the licence term in the form of bursaries to students and direct grant programs to the broader artistic community within the Greater Saint John Region.

3912 Further to the direct expenditure initiatives, NBBC has committed to an annual minimum budget of $30,000 or $210,000 over seven years, in indirect costs for the on-air promotion of concerts, performers, artistic programs in the community and other initiatives that will assist in the exposure and furtherance of local talent.

3913 With respect to St. Stephen, NBBC will invest a minimum of $119,000 in direct and indirect Canadian Talent Development initiatives over the licence term.

3914 Of this amount, a minimum of $14,000 in direct spending initiatives will be allocated over the licence term in the form of bursaries to students and a direct grants program to the diverse artistic community within Charlotte County.

3915 Beyond the direct expenditures, NBBC will commit to an annual minimum budget of $15,000, or $105,000 over seven years, in indirect costs for the on-air promotion of concerts, performers, artistic programs in the community and other initiatives that will contribute to local Charlotte County talent development.

3916 In formulating its Canadian Talent Development undertakings and, in particular, its direct spending initiatives for both Saint John and St. Stephen, NBBC feels that its proposed minimum spending levels are realistic and affordable for a start-up situation in each market. The initiatives are meaningful and will be productive for both the local talent they will assist and the Canadian broadcasting system as a whole.

3917 NBBC would add that its proposals for new programming undertakings, which will highlight local talent through on-air exposure on each station's daily and weekly program schedule, will have a profoundly beneficial impact on local developing Canadian talent. Often, the sheer value of access to regular air play and exposure is the greatest service a broadcaster can render to developing artists and performers.

3918 MR. FERGUSON: madam Chair and Commissioners, NBBC is excited by the prospect of establishing a first Canadian local radio service for Charlotte County residents.

3919 The time should be long past when local radio service in Charlotte County is defined in terms of the amount of Canadian programming and commercial content provided, on any given day, by American radio stations operating out of Calais and Brewer, Maine.

3920 We would note that the reward for American broadcasters providing an element of local programming and commercial service to parts of Charlotte County is an 86 per cent share of radio tuning by Canadians and a captive Canadian business community and its radio advertising dollars.

3921 While Canadian radio stations, including the CBC's CBD-FM, Maritime's K-100 and NBBC's CHSJ-FM put signals into various parts of Charlotte County, the reality is that all three stations originate in Saint John, and hence do not provide any locally-relevant programming or community service to Charlotte County residents.

3922 In the final analysis, there is no Canadian radio station resident in Charlotte County and solely dedicated to providing a full and comprehensive radio broadcasting service to Charlotte County residents, and the attendant business community.

3923 What is equally evident is the fact that Charlotte County's economy, like that of other areas of New Brunswick, is currently in the acceleration mode, with much more economic activity to come and the need for a locally relevant, full service resident Canadian radio station to serve the listening needs of Charlotte County has never been greater.

3924 Madam Chair and Commissioners, the repatriation of listeners and advertising dollars will have a very positive impact on Canadian radio and the Canadian broadcasting system.

3925 For Canadian radio, the repatriation factors translate into more hours tuned and a strengthening of its overall economic base. For the Canadian broadcasting system, it means an extension of service to Canadians who were previously disenfranchised from the system. It means another news voice in the marketplace to enhance diversity and choice for the benefit of the listening public. It means another vehicle through which Canadian artists and performers across many artistic endeavours, can have their work discovered and exposed. It means a general strengthening of Canada's music industry, and its participants in all attendant areas of related activity, and it means a further enhancement of the economic and cultural fibre of the country's broadcasting system as a whole.

3926 MS SHEA: NBBC has provided a detailed analysis of its programming proposals for the St. Stephen 98.1-FM station in our application. We would, however, stress that our commitment is to provide Charlotte County residents with a localized, informative and entertaining Canadian radio station.

3927 In programming the musical component of 98.1-FM, NBBC proposes to carefully blend Adult Contemporary and Country Music on an initial 50/50 ratio to address the musical tastes of a Charlotte County population of 28,000, the majority of whom fall within the 25 to 54 demographic range.

3928 NBBC is excited about the opportunity to expose Charlotte County listeners to the many Canadian artists whose music and songs are seldom, if ever, played on the Calais and Brewer radio stations. This was very evident during NBBC's monitoring of WQDY and WCRQ. On the odd occasion, when a Canadian artist like Shania Twain was played, there was never any indication that she was a Canadian country superstar.

3929 Not only will Charlotte County radio listeners be exposed to Canada's finest AC and Country artists daily. They will have the opportunity to hear their own local talent and developing artists perform on their own local Canadian FM radio station.

3930 With respect to news programming, the primary focus will be on locally-relevant stories originating in the various communities throughout Charlotte County. This is in keeping with NBBC's experience that local news stories are what matter most to listeners because they regard them as the stores that are most likely to affect their lives. Hence, the proposed news coverage ratios will be 70 per cent local, 15 per cent provincial/regional, 10 per cent national and 5 per cent international.

3931 Turning next to those other spoken word programming elements that form a vital part of the station's service to the community, the primary focus, once again, will be on the local communities and the activities, issues, interests and concerns relevant t their inhabitants. Such information will be presented to the community through live and produced public service announcements, telephone interviews and the use of actuality materials from various community sources.

3932 Given the lifestyle and vocation of Charlotte County residents, a strong emphasis will be placed on local weather conditions and forecasts, including a daily focus on marine weather conditions and forecasts, Bay of Fundy tidal information and trade market commodity prices for seafood products.

3933 With respect to the area of special programs and program features, we would note that in view of the rich, renowned and storied French and Loyalist heritage of Charlotte County, the station will produce an ongoing series of program features on Charlotte County's diverse heritage and culture. These would include live and produced community profiles and historical capsules, using primarily local authors, curators and storytellers.

3934 With the St. Andrew's campus of the New Brunswick Community College located within its primary coverage area, the station would seek to take advantage of such a rich programming resource by producing a weekly feature detailing news, accomplishments, activities and career counselling at the facility.

3935 As a further means of reflecting Charlotte County's rich cultural heritage, the St. Stephen FM will provide ongoing assistance and airtime for the St. Croix Scoodic Band of the Passamaquoddy Tribe based near St. Andrews.

3936 In the final analysis, the programming opportunities are virtually limitless, and, as such, NBBC will carefully track the St. Stephen FM's programming and community service activities to ensure that they are, in fact, addressing the needs and interests of Charlotte County residents and to make adjustments where appropriate.

3937 MR. FERGUSON: Madam Chair and Commissioners, in conclusion, NBBC would refer back to Public Notice 1998-41 in which the Commission stated:

3938 We respectfully suggest that our application for a Contemporary Adult Hit FM station on frequency 97.3 more than meets the criteria set out in the Commission's revised Radio Policy of 1998.

3939 The licensing of our Saint John FM proposal will yield many key public benefits, including the restoration of a competitive balance within the Saint John radio market and the introduction of true programming diversity and added listener choice to the underserved 35-54 demographic within the Greater Saint John Region.

3940 With respect to the St. Stephen application, this represents a unique opportunity to add an important first time Canadian radio service to an area that has been served for generations by a foreign broadcaster. The time is long overdue to bring Charlotte County and its residents into the Canadian broadcasting system's family.

3941 Essentially, it is with all the aforementioned elements in mind that NBBC respectfully urges the Commission to approve its applications for a new FM radio station at Saint John and a first time local Canadian FM radio station at St. Stephen to serve Charlotte County.

3942 On behalf of my NBBC colleagues, I wish to thank you, Madam Chair and Commissioners, for this opportunity to present our application.

3943 We look forward to any questions that you and your colleagues may have for us.

3944 THE CHAIRPERSON: Thank you for your presentation and good morning.

3945 MR. FERGUSON: Good morning.

3946 THE CHAIRPERSON: I am just getting assembled with all the papers here.

3947 A very thorough presentation and I'd like to go back on a few points in it a little later as we go through some questions.

3948 Just to give you an overview of the areas I would like to pursue with you this morning, I will approach both applications at the same time. Are you having trouble hearing me?

3949 MR. FERGUSON: Just a bit, Madam Chair.

3950 THE CHAIRPERSON: What the problem is is that this is tabled so we speak there when we really want to speak there and you can't really move it. So I will just move me.

3951 MR. FERGUSON: That's fine.

3952 THE CHAIRPERSON: Is this better?

3953 MR. FERGUSON: Yes. Thank you.

3954 THE CHAIRPERSON: Excellent.

3955 So if we look where we want to review some of the points in the applications, I will review them together, Saint John/St. Stephen, and obviously ask a couple of questions in fact on that very point of the non-severability of the two.

3956 The first area will be demand for the proposed format in Saint John and St. Stephen.

3957 The second area, financial issues in both applications.

3958 Third, an area you have mentioned frequently this morning, the competitive state of the Saint John market and I'll include in that the impact of your St. Stephen application.

3959 Fourth, in programming we'll review the areas of spoken word in both applications, music format, local programming, particularly the news bureau, Canadian Talent Development Saint John and St. Stephen. I have technical questions.

3960 Finally, as you know, we return the mic to you at the end of all of this to do a summary and, as you know, the Commission recently released decisions for Victoria, Kelowna and London and each decision contained an introductory statement which outlines the specific factors that the Commission considers to be relevant to the evaluation of competitive applications under the Commercial Radio Policy. I will ask you to address these factors with respect to your application.

3961 So, if we begin with demand, the supplementary brief submitted with your application states that your proposed format would target the 35 to 44 demographic and that the existing Maritime station serve the 18 to 54 demographic.

3962 The Commission's analysis of the audience profiles of both CIOK-FM and CJYC-FM indicates that the bulk of their audience comes in fact from the 25 to 44 age demographic, not the 18 to 54.

3963 Here are my questions then related and I wanted you to note that we have a different profile than you have presented in your supplementary brief. Therefore, in your view, how does Maritime currently differentiate CIOK-FM and CJYC-FM? What are the differences in their music and news programming?

3964 MR. FERGUSON: Madam Chair, in formulating the strategic radio development project that we have before you, one of our first steps was to commission McVay Media, the internationally respected radio consultancy, to conduct a thorough analysis of the Saint John radio market.

3965 McVay Media is quite familiar with the Saint John market, having done a great deal of work in the past for New Brunswick Broadcasting.

3966 The McVay report, and it was quite extensive, clearly identifies that CIOK-FM, based on a thorough analysis of their music, skews as young as 18 years of age, as old as 54 and that is clearly evident throughout the complete analysis report.

3967 And further, in regards to CJYC-FM, their core is 18, in fact almost as young as 12, but 18 to 34 clearly.

3968 The conclusions reached by the McVay study indicate that clearly for CIOK there is no clearly coalition of listeners being that broadly based; 18-54 really not being a demographic; it's a family reunion.

3969 In the case of CJYC-FM, the station clearly targets a younger audience.

3970 The ultimate conclusion of the McVay study clearly demonstrates that where the bulk of the population is in the Greater Saint John Region, and I would venture to say in most centres right across Canada, is between the ages of 35 and 44, and clearly if you focus on that demographic break out, clearly we believe that demographic break out is not being served, not specifically in terms of music or in terms of the spoken word features on the radio station.

3971 THE CHAIRPERSON: So the first point, am I to understand then that you say that the stations which you say serve 18 to 54, does that mean that the playlist has such a wide variety of artists and that they are attempting to appeal to all age groups, is that what I am to conclude from your remark as to what this -- I think you called it in your remarks this morning a far too broad a spectrum?

3972 MR. FERGUSON: Exactly, Madam Chair.

3973 THE CHAIRPERSON: Is that what you are saying?

3974 MR. FERGUSON: Exactly.

3975 THE CHAIRPERSON: My concern about that is that to look at that in terms of your application, again I repeat what we have from the fall '99 BBM is a different view of where the station CIOK and CJYC are in fact at the moment and they, in fact, have the bulk of their audience coming from 25 to 54 both, not 18 -- in other words, they seem to be very much in the same focus, more focused, if you will, less broad, 18 to 54, more focused 25 to 44 that you are in fact focusing on. Do you have any comment on that?

3976 MR. FERGUSON: Madam Chair, the issue of music and over the 37 years that I've been in this business, probably the most subjective area of radio programming, I have to put my credibility, trust and faith into an analysis such as we had done by McVay Media. They are the experts. I know to my ear to hear music, for instance, Back Street Boys or music that skews quite young, I really on my own can't put it in focus or establish it as a specific demographic or age group.

3977 To return to what I said before, there is no question that CIOK-FM operates intentionally a very broadly based music format, skewing from very young, wherever you want to cut it off, up to 54 and perhaps even a little bit beyond. You cannot, we believe, clearly serve a specific demographic within that range. You cannot attract a life group cluster as important as 35-44.

3978 THE CHAIRPERSON: Well, let's move on then, to say for sake of argument we'll move, okay, 35-44 is where you are heading.

3979 MR. FERGUSON: And, Madam Chair, excuse me, if I could add one thing, I noted yesterday, Mr. Garry Barker, Vice-President of Programming for Maritime, speaking in the context of their FM station here in Moncton, was asked that question specifically, I believe it came from counsel, and he said their FM station here in Moncton is broadly based intentionally.

3980 THE CHAIRPERSON: That being said and if we take for sake of discussion the fact that we see the cluster in the Saint John market which we are addressing today towards the 25 to 44, it would appear to us that the younger audiences, if we look at focusing, are not served. Why did you not choose a CHR format? You have chosen an AC format. CIOK is adult contemporary. CJYC is adult contemporary and if we continue our discussion around demographics we will agree that it is possible that the same audience is served by the existing stations as you propose, with the same format you propose. Why did you not choose to go towards a different audience with a different format, such as CHR?

0950

3981 MR. FERGUSON: Madam Chair, in looking at the results of the McVay study, one of the conclusions seemed to fit exactly with the results of our independent analysis of the Saint John market in trying to identify a format niche for a new FM radio station.

3982 As Ms Shea mentioned in our opening presentation, it was only a couple of years ago, following several years of study by the New Brunswick government, that a total of nine municipalities in the periphery of Saint John were amalgamated and we now have four key municipalities, the City of Saint John, Rothesay, Quispamsis and Grand Bay-Westfield.

3983 A very quick study of the demographics in those communities, those bedroom communities of the Saint John area will show you overwhelmingly the bulk of the population is between 35 and 44. these are young families, for the most part. Seventy nine per cent of people who work in Saint John don't live in Saint John. They live in these periphery communities. It's where they make their homes. It's where they have their families. It's where their lifestyle is developed. It's where they shop. It's where they play. The bulk of the population, both male and female, is clearly 35-44.

3984 So to answer your question, I think we saw this as the major part of the population that's not being served, as opposed to a younger life group. Yes, absolutely.

3985 MS SHEA: Madam Commissioner, currently there are four radio stations, commercial stations, on the air in Saint John. CHSJ which is all country, an NBBC station, skewing 25 to 54; CFBC which is the oldies station skewing the older listener; CILK, knowing as K-100, the light rock station, skewing 18 to 54; CJYC, known as C-98, the classic rock station, skewing toward primarily the older male listener. The other three stations that we've mentioned we are competing against are all operated by Maritime Broadcasting.

3986 Starting on page 56 of our supplementary brief you will find monitors of the music that is being heard on K-100 and C-98. As part of the application process, NBBC commissioned a monitoring service of K-100 and C-98 because we too wanted to know as well what is and what is not being played in the Greater Saint John area.

3987 There is no reason to reinvent the wheel. We don't have any intention of duplicating service that is already being provided.

3988 We found conclusive evidence that a number of the artists who we propose to play on contemporary adult hit 97.3 are never heard on the radio in the Greater Saint John area.

3989 It has been a year since we began this process and we are happy to report that nothing has changed in terms of K-100's programming. Generally, when a new application is introduced to a market the existing players tend to try to close the gap to eliminate the need for a new station and that gap is still glaringly obvious wide open in Saint John.

3990 Unfortunately, for us at NBBC not everybody is a country music fan. It would be great if they were. We wouldn't have to be here today, not that we are not happy to be here, please don't misunderstand me.

3991 CHSJ has a very loyal fan base. However, we don't have anywhere to grow. Country listeners might be persuaded to scan the dial to other formats, but listeners to other formats are not prepared to listen to country. 97.3 with its contemporary adult hit format would present a second life group cluster, that's our phrase of the day, life group cluster, which we can offer to our business community and we can serve the listeners as well.

3992 As we heard in the presentation earlier this week from a Moncton applicant, they used the expression "a pool of music that is shared by many different formats". We will use the example of Shania Twain who we mentioned in our opening remarks. The latest Shania Twain single will be heard on a variety of stations. We play it on a country station, she crosses a lot of borders.

3993 The difference with 97.3 though is that we play a catalogue of music from each artist and we will be programming contemporary adult hit music consistently without all the other genres that K-100 currently plays.

3994 THE CHAIRPERSON: Thank you. That's helpful.

3995 The term "adult contemporary, contemporary adult" though you will agree with me there is -- we are talking essentially about the same artists. In many cases you may in fact find differences in the programming and so on, but currently the Maritime station CIOK and CJYC-FM are deemed adult contemporary, so one would assume if you also are calling your proposed format adult contemporary or contemporary adult, albeit the distinctions you have given me, you are essentially aiming at a similar format for similar demographics. So what percentage of your audience share in the Saint John market do you expect will come from the existing Maritime listeners, specifically CIOK-FM and CJYC-FM?

3996 MR. FERGUSON: I would think, Madam Chair, in our studies putting together the application, and if I understand your question correctly, what percentage of share would come from those two stations specifically?

3997 THE CHAIRPERSON: That's correct, yes.

3998 MR. FERGUSON: I would expect somewhere in the area of 25 to 30 per cent.

3999 THE CHAIRPERSON: A final question, just -- is it my final question? I knew I'd get that in somewhere this week. How much duplication will exist between your proposed new service and the combined operation of CIOK-FM and CJYC-FM? Once again, can you be specific on where you will be duplicating what is currently available on the market?

4000 MR. FERGUSON: I'll let Patty answer that.

4001 MS SHEA: This is very exciting because as a morning radio host Mr. Ferguson has never encouraged me to use as much time in front of a microphone.

4002 There are many local, regional, Canadian and international artists appealing to our target demographic, 35 to 44, female, who are not being heard in Saint John. If you would like specific names, we have got a number of people that as a result of our monitoring, people like Brent Mason who is from Saint John, Rita McNeill, The Barra Macneils, Rawlins Cross, they're regional artists. Canadian artists like Céline Dion and Bruce Cockburn. International artists like Bette Middler and Neil Diamond.

4003 As we said, we would play a catalogue of music from these artists. They are just simply not being heard, as well from time to time we'd record live and broadcast on 97.3, live performances at venues around Saint John.

4004 We estimate -- we've got numbers. We talk about the shared pool of music, music that we consider to be seldom heard, still considered new and music that is never heard. We broke it down.

4005 No more than 30 per cent of the music that we would play on 97.3 would come from that shared pool of music, people like Shania Twain and the Coors, who are heard in a variety of formats. Again, the difference being we would play their catalogue, not just the current hit. Shania has more than one song out. She has a number of albums. We would play the whole catalogue.

4006 Thirty five per cent of the music that would air on 97.3 we classify as new because it is seldom heard. If an artist is only played once a week, we don't consider that to be heavy airplay. People like Van Morrison or Bette Middler might be heard occasionally on the other stations. Again, we would play their catalogue of music serving our listeners.

4007 And then there is that 35 per cent that would be music that is totally new to the market, never heard, artists like Kenny G or Neil Diamond or The Barra Macneils. One of Canada's most exciting new artists, to give you an example, is Diana Krall, a jazz-based artists, a great example of the music that 97.3 would bring to the Saint John radio listening market because we play not only her latest hit from the one that won her a Grammy, an American award, but the catalogue of her four CDs that got her to that point.

4008 She's now recognized internationally. When she played in Saint John at the Imperial Theatre last fall, hundreds of people bought tickets and turned out to hear her play, but they can't hear her music on radio in Saint John and that's the kind of service, that's the kind of void that we would fill with 97.3.

4009 THE CHAIRPERSON: Thank you. We will move to St. Stephen. I have a question regarding page 104 of your supplementary brief.

4010 You say the net effect of Charlotte County residents dependence on American border stations for locally relevant news programming, community service announcements and information, weather forecasts and advertising content from local New Brunswick businesses is that those same American border stations collectively achieve an 86 per cent share of radio tuning in Charlotte County, page 104, the last paragraph on the page.

4011 My question is regarding this 86 per cent share of tuning in Charlotte County to American stations. This seems high, 86 per cent. It does not match the Commission's records which come from the fall '98 BBM, where we are looking at a number of all U.S. stations at 20 per cent share with other FMs 18 per cent.

4012 So if we assume the other, even if we assume the other are American, that's 46 per cent total, not 86. Can you explain the 86 per cent?

4013 MR. FERGUSON: Madam Chair, yes, I can and the 86 per cent, essentially, comes from research that has been produced by the American broadcasters in the State of Maine. We were able to obtain copies of audience research that was done from the United States. This research was done in Charlotte County specifically, and used as a marketing tool widely distributed by radio stations in Calais, Maine to advertisers in New Brunswick.

4014 This -- I am taking it off the top of my head at this point, WQDY-FM in Calais was attributed with a 46 per cent audience share. To a lesser degree, a hot country station out of Brewer, Maine was also -- they were, I believe, in the area of about a 22 per cent share and then to a smaller extent a couple of other FM broadcasters also operating from the United States. That's essentially where that figure came from.

4015 In our analysis of the suppressed data from BBM for Charlotte, Saint John and King's Counties, it seemed to essentially confirm the American research, perhaps not to the same degree, but obviously and clearly the American FM stations dominated the Charlotte County area/

4016 THE CHAIRPERSON: Thank you.

4017 I will move on to a financial question now. This question touches on both applications.

4018 Your projected statements of preoperating costs submitted as Schedule 14 with your applications indicate you would spend $50,000 and $15,000 respectively in promotion of the proposed Saint John and St. Stephen stations. Can you elaborate on your proposed plans for promoting new radio stations and do you see this as sufficient in order to get people moving to your stations?

4019 MR. FERGUSON: I'll defer to Mr. Scholten.

4020 MR. SCHOLTEN: The $50,000 for the new FM in Saint John, that would be coupled with in the first years of operation on that station not having so much advertising content because we want to position ourselves in that market to make our format known to give us a good placing and let our audience know where we are, that more format would be available to the station. That would be a way of also promoting the station.

4021 We wouldn't be looking for huge revenue amounts from that station on the outset. $50,000 can go a long way.

4022 NBBC is already known in the marketplace. We're veteran broadcasters and we can assure the community that we will do a good job and this station is what they need.

4023 THE CHAIRPERSON: You have $50,000 advertising marked in Schedule 14, in Schedule 14 for Saint John.

4024 In Schedule 14 for St. Stephen you have advertising and promotional materials. I am interested in the St. Stephen 15, considering that you are saying this is the first Canadian local station in your proposal. Can you be a little more specific on what you are going to be doing in St. Stephen with $15,000?

4025 MR. FERGUSON: Madam Chair, I'd initially respond to that question by saying I spent 10 years of my career managing two radio stations in Windsor, Ontario, a market that this Commission declared a number of years ago as being the most unique broadcasting market in Canada, given the immediate proximity of the seventh-largest city of the United States of America less than half a mile away, and it's 64 radio stations, unregulated American radio stations.

4026 So after 10 years of working in the Windsor market, I think -- in the context of a border situation, I think I deserve the right to be able to say been there, done that and got the T-shirt.

4027 In the case of St. Stephen, you really can't compare St. Stephen and Calais, Maine on the same basis as Windsor, Ontario and Detroit. St. Stephen and Calais are virtually the same size. They share many commonalities, not only the drinking water supply, the fire departments back each other up as though there's no international border there at all.

4028 However, there is established in St. Stephen in Charlotte County a very strong habit and heritage of listening to American radio because there has never been specifically oriented Canadian radio.

4029 We have calculated that in terms of launching the service we would not require so much of the financial resources that would be required in Saint John. Simply put, the service will be so unique that we don't feel that we would require anything beyond that minimum amount of money to begin to establish a presence.

4030 We know it's going to take us a fairly lengthy period of time to establish a solid audience base, but we are comfortable with those figures in terms of promotional for the launch and we are also very confident that we will develop fairly quickly a loyal audience base.

4031 THE CHAIRPERSON: Thank you.

4032 If we turn now to impact on advertising revenues, in your letter to the Commission dated July 2, you note the proposed new station will attract 15 per cent of their revenues from local radio, 40 per cent from an increase in advertising budgets, 30 per cent from other media and 15 per cent from new radio dollars.

4033 Generally, how do you arrive at the prediction that 40 per cent of your revenues would come from increases in advertising budgets and what other media are likely to be affected by a new radio station?

4034 MR. FERGUSON: Madam Chair, were you speaking Saint John or St. Stephen?

4035 THE CHAIRPERSON: The letter of July 2 is, I believe, referring to Saint John. Just let me check that. It's a long letter.

4036 Here we are, Question 9. It's page 9 of the July 2 letter.

4037 MR. FERGUSON: Yes, I have it.

4038 THE CHAIRPERSON: If you would like to address it. It's your response, so if you would like to proceed.

4039 MR. FERGUSON: Yes. Thank you.

4040 I will defer to Mr. Scholten on this.

4041 MR. SCHOLTEN: The question on the 40 per cent, we would suggest that that would come from increased advertising budgets. There is all the indicators for the Saint John region are predicting an economic boom.

4042 This, in conjunction with an expanded demographic that we will now cover and the target market that is more specific to the 35-54 audience, it will meet the exact needs of those advertisers who want to reach their customers.

4043 It could also be some of these increased advertising budgets could be value-added dollars, that we have a number that potentially could be common advertisers at both locations in Saint John and St. Stephen, that these would be value-added dollars for exposure to the Charlotte County market.

4044 Specifically, it's targeting that very new format target of 35 to 54.

4045 MR. FERGUSON: If I might add, Madam Chair, we see particularly the Saint John FM station as being more clearly targeted and, therefore, more efficient and cost effective to an advertiser.

4046 Currently, if an advertiser wants to buy let's say K-100 in Saint John and he specifically wants to target adults 35 to 44, there is a massive waste of tonnage there in terms of age spread that he really doesn't want to reach, but he is going to reach them anyway.

4047 What we see is a more clearly focused radio station through the process of establishing a specific life cluster with a reach 35-54 in total, thereby making it more efficient to the advertiser and we believe this will be attractive to him and these numbers reflect that.

4048 MR. SCHOLTEN: Madam Chair, your other question involved other media.

4049 THE CHAIRPERSON: That's correct.

4050 MR. SCHOLTEN: The new format would take some dollars away again with that specific target involved, that 35-44, 35-54, from advertisers that are using the print media.

4051 THE CHAIRPERSON: So it's largely print media then, the other media that you are referring to in your list here?

4052 MR. FERGUSON: Yes.

4053 THE CHAIRPERSON: Thirty per cent.

4054 I am just looking at the July 2 letter. I had had another question, but I think you have covered it.

4055 Yes, the St. Stephen market -- the reason I asked about your promotional cost was also related to the whole issue of what you have tabled as advertising dollars currently being spent by Canadian businesses in U.S. borders, so I was curious to know if there's a connection as to establishing the St. Stephen situation in relation to your estimate of the amount of sharing going to the United States stations.

4056 Let's go now to one of the main points of this discussion and your application and presentation, the competitive imbalance in the market which you have tabled with us. And, as you know, it is one of the most relevant factors to be -- one of the relevant factors to be considered when the Commission is evaluating applications.

4057 Your supplementary brief and again this morning presents several points in this regard. For example, on page 75 you point out, I think you also repeated that this morning, that should CHSJ be unable to secure another signal, it will be continually at a loss, both financially and from a rating standpoint and you will be unable to compete with Maritime in attracting listeners, to a point that you cannot attract sufficient dollars.

4058 If we then go on on that point, we also note page 3 of your supplementary brief, where you state that "The cost savings and operating deficiencies accruing from NBBC's existing CHSJ-FM, coupled with its proposed Saint John and St. Stephen FM undertakings, will in turn enable it to compete on more equal terms with Maritime's dominant three-station combo in Saint John," unquote. So if we can explore that a little bit.

4059 MR. FERGUSON: Yes.

4060 THE CHAIRPERSON: What competitive advantages does the three-station combination provide for Maritime Broadcasting Systems Limited?

4061 MR. FERGUSON: Simply put, Madam Chair, they have a choke hold on the market. They drive the market. They are clearly the market leader. They enjoy an audience share in excess of 60 per cent put together. They can basically do what they want to do with a three-station combo.

4062 They can, in order to attract advertising to one station, they can run another station as a loss leader and run bonus commercials. They drive the market rate. Very often it's down, as opposed to up. They are clearly the market leader.

4063 THE CHAIRPERSON: Now, how would the proposed addition of two new stations in Saint John and St. Stephen address these particular advantages?

4064 MR. FERGUSON: It would ultimately, Madam Chair, restore a competitive balance to the marketplace. CHSJ-FM is a stand alone radio station against a three-station combination in the market, a three-station combination that enjoys, according to our estimates, a cost savings of almost three-quarters of a million dollars, $750,000 a year.

4065 When the two radio stations previously owned by Fundy, CFBC and CJYC, merged with K-100, immediately there was a cost saving resulting from the synergies, the operating synergies of those three stations.

4066 In developing our strategic plan that is before you today, immediately we identified the need for a sister radio station in Saint John for CHSJ to provide an additional revenue stream and to provide for some cost operating synergies.

4067 We then looked at St. Stephen and, initially, we looked at St. Stephen in terms of a satellite operation, much of its programming coming out of Saint John, but as we got deeper and deeper into the Charlotte County research, we realized no, Charlotte County can support its own radio station. In fact, Charlotte County deserves its own radio station.

4068 So really what we are asking for, Madam Chair, is an opportunity to restore competitive balance by being able to enjoy exactly the same operating efficiencies as Maritime Broadcasting does.

4069 THE CHAIRPERSON: Would you call it a levelling of the playing field?

4070 MR. FERGUSON: I've heard that phrase somewhere earlier this week as a matter of fact, a couple of times, of course within the context of the Moncton market. But as Mr. Russell said, all he is asking for is a level playing field. That's exactly what we would ask for.

4071 THE CHAIRPERSON: How would the St. Stephen station, a station which you say is going to serve a local market called St. Stephen, contribute to levelling the playing field in Saint John?

4072 MR. FERGUSON: By allowing us to enjoy the operating efficiencies and in effect open a third revenue stream, which will -- much of the operation, behind the scene operation, if I can describe it that way for St. Stephen, would be based in Saint John; administration, technical, accounting, production, copy, traffic. All of those elements would be based in Saint John, allowing us to focus on programming and news being generated in St. Stephen.

4073 We would then have three revenue streams. We would then enjoy the operating efficiencies and synergies of three radio stations just as our competitors do.

4074 MS SHEA: Madam Chair, we can't overstate the commercial aspect, the sales aspect. Mr. Scholten can tell more about what it's like for our sales people to work in the Saint John market, what they are up again.

4075 For us who are on the air in the morning, when you see our sales people trying to make their budgets, trying to compete against three other stations with just the one, it's very difficult to serve the listener when you've got such a heavy commercial load.

4076 THE CHAIRPERSON: Yes, I think the panel can see that. I was also on to how St. Stephen contributes to that very situation, plus the broader scope that you were referring to and I'd like to come back to it.

4077 Obviously, I am concerned at this time to continue to look at how St. Stephen works through this. In the context of the specific question on the table, which is how St. Stephen fits in in terms of synergies, you've mentioned revenue stream, in terms of level playing field. That's what I was after, how the St. Stephen works.

4078 Let me look at it from another point of view. On page 17 of your brief you state that"

4079 What would be the financial impact on CHSJ-FM if your proposal were denied? Could CHSJ-FM continue to compete in the Saint John market?

4080 MR. SCHOLTEN: I'd like to step in and offer a response to that, Madam Chair.

4081 It was assumed that in 2000, the year 2000, the total market would drop to 4.3 million, resulting from devalued rates prevalent in the Saint John market.

4082 Rates have been on the decline since 1996, as illustrated by the graphs that are in the supplementary brief on pages 22 and 23. Operating results of today's date reveal that these rates have not improved.

4083 Even though all economic indicators reflect growth in the coming year, the rate slashing has had a negative impact on actual dollars spent in the Saint John radio market. The advertisers are getting more for less and they have been accustomed to expect these rates from radio.

4084 The re-establishment of a realistic rate will not happen overnight.

4085 So without a sister station to aid CHSJ-FM, we would be continually being forced to increase our commercial minutes at a devalued rate.

4086 THE CHAIRPERSON: So your response to my question of: Could CHSJ continue to compete?

4087 MR. SCHOLTEN: It would be very difficult and we would have operating losses.

4088 MR. FERGUSON: Madam Chair, if I could just add a point. Throughout this process over the past year, year and a half that we have been working on our strategic development plan, it is clearly apparent that currently in the Saint John market CHSJ-FM cannot sell its way out of its problem.

4089 And after numerous efforts at downsizing and automation, we can't save our way out of the problem. Clearly, we have to take a proactive approach here and develop a second and a third revenue stream, enjoying the synergies of all three stations.

4090 We are coming in with a new format, a target of 35-54, a different life cluster than Maritime are currently serving, and simply put, Country 94 cannot grow our country audience any further. Country, in a sense, is a specialty audience. It's very difficult to manufacture new country music fans.

4091 The new Saint John FM will allow us to grow, will allow us to develop and build.

4092 PRESIDING MEMBER: The term "synergies" gives me my segue into the next question, if we could turn to that. In fact, in your supplementary brief on page 107 you say that:

Page 107.

4093 MR. FERGUSON: That's correct.

4094 THE CHAIRPERSON: Is this an annual saving or spread over five years?

4095 MR. FERGUSON: That would be an annual saving.

4096 Madam Chair, I would invite Mr. Scholten to speak to that.

4097 MR. SCHOLTEN: Again, if the synergies were put in place in Saint John to handle the administrative functions for both the St. Stephen operation and the new FM station, we would save costs if these were stand alone stations in areas like salaries, which is the greatest expense that radio is faced with today, the greatest single expense.

4098 There would be savings in the areas of not having two General Managers, two Business Managers, traffic co-ordinators which plot all the commercial spots on our logs, copy writers, engineering staff, production people.

4099 THE CHAIRPERSON: Here we go again. We are only chuckling because this has happened two or three times this week, so if you would just wait a second. It's not a plot, it just keeps happening.

4100 If you would continue with your -- you were in fact running through my next question, which is to elaborate on the types of synergies that you expect. If you would continue, please.

4101 MR. SCHOLTEN: Before the lights went out I think we were in the area of copy writing, engineering services. We could retain the services of one engineer that would be able to service all three of these stations and their towers and transmitting facilities.

4102 In programming and promotion, we could have one person dedicated to the promotion, a full-time person dedicated to the promotion of these radio stations on an ongoing basis and have that person's time shared equally amongst these stations.

4103 Other areas that we were looking at having some savings, is traffic and billing systems. They are unique to radio. They are industry specific. You have to pay licences and operating fees to maintain these systems. We are looking at savings in that area.

4104 Having the administration done in Saint John for three stations, we can purchase or utilize one accounting/billing system that would service all three stations.

4105 THE CHAIRPERSON: Now, has all of this been factored into your business plan?

4106 MR. SCHOLTEN: Yes.

4107 THE CHAIRPERSON: How would the St. Stephen operation contribute to these savings? Will it not be operated as a separate station? You made it sound like it very much is part of a group, as opposed to a separate station. So could you elaborate on how the St. Stephen operation contributes to the savings and comment on my point, will it be operated as a separate station or not?

4108 MR. SCHOLTEN: It would be operated as a separate station. The key individuals that would be at the location would not have to involve themselves in the normal administrative duties, that they would be handled in Saint John on their behalf. That would make us more competitive in that market.

4109 MR. FERGUSON: Not only, Madam Chair, administrative duties in St. Stephen, but also accounting, billing, engineering.

4110 THE CHAIRPERSON: But St. Stephen is not a satellite? You said it's not a satellite?

4111 MR. FERGUSON: It's not a satellite. It will be a stand alone radio station, just most of the administrative, accounting, technical functions would be based in Saint John. Programming and news, clearly, would be based in St. Stephen and would function in St. Stephen.

4112 THE CHAIRPERSON: You may want to come back on that point later and help us to clarify that. As you can see, it's an important component of this, as a rationale for what you say is a level playing field is restoring a competitive balance in the Saint John market. That, in and of itself, is a question and then how St. Stephen is factored into that is a question.

4113 Let's look at the link then a little further in terms of the non-severability of the applications. If we go to page 106 of your supplementary brief, I would like to have a closer look at that particular page, which I think is the page that outlines the rationale for non-severability.

4114 If we look at the middle of the page, you say that:

et cetera.

4115 You then go on to explain why Saint John and St. Stephen applications are non-severable just above, and noting that:

4116 You repeat that in paragraph 3, in effect saying, in order to develop Saint John it is necessary to do it in concert with -- St. Stephen, it is necessary to do it in concert with Saint John and conversely. In order to restore a reasonable degree of competitive balance in Saint John, you need to have the combined synergies.

4117 I understand to some extent, if you look at the fourth full paragraph that in order to develop St. Stephen it is necessary to do it in concert with Saint John, but I am not sure I understand the converse. In other words, you are saying that you are developing the St. Stephen market in order to compete in Saint John. Is that correct?

4118 MR. FERGUSON: Partly correct, but only in regards to revenues and operating efficiencies. The St. Stephen operation is totally separate and apart in terms of programming and news from the Saint John operation.

4119 THE CHAIRPERSON: But I can understand you saying that you could -- the St. Stephen operation could require the Saint John application to succeed, but why does the Saint John application require the St. Stephen application? In other words, if the Commission decides to deny your St. Stephen application and approves the Saint John proposal, would you still implement the Saint John proposal?

4120 MR. FERGUSON: I think we would. In fact, I know we would, should the Commission deny St. Stephen and approve Saint John, absolutely.

4121 As we have outlined this morning, Madam Chair, we really have no alternative. We have no way currently in which to grow, in which to remain stable. Yes, we would accept the second station in Saint John, regrettably walk away from St. Stephen, but we'd be back. We'd be back to apply again for St. Stephen because we believe there is a vital need for a Canadian radio service in Charlotte County and as a Canadian broadcaster I get upset when I think of the fact that in the year 2000 there are 28,000 Canadians who have never had their own private radio service. I think that's incredible.

4122 MR. ROBSON: Madam Chair, if I --

4123 THE CHAIRPERSON: I'm sorry, if I may, just while I have it in my thoughts, just so that I am being clear, I understand your point about St. Stephen in and of itself and Saint John in and of itself, but what I am addressing is your comment on page 106 where you say that:

4124 In other words, you seem to have said that Saint John and St. Stephen are dependent upon each other, so that our question is if we proceed with Saint John but not St. Stephen, will Saint John still go ahead, meaning that they are severable to a certain extent?

4125 MR. FERGUSON: Madam Chair, in putting these applications together we realized that it was vital that they be considered non-severable, that they be considered co-dependent. That was the only way that we could provide the level of service that we want to provide in St. Stephen as a stand alone operation.

4126 We need the synergies of three to maintain the proper level of service in St. Stephen, where there has never been a local Canadian radio service.

4127 THE CHAIRPERSON: That part is clearer than the other way to say that you absolutely need St. Stephen to develop the proposal in Saint John. That's the part that --

4128 MR. FERGUSON: The major part, Madam Chair, is revenue and a revenue stream.

4129 THE CHAIRPERSON: I'm sorry, Mr. Robson, I interrupted you. Did you want to add a point?

4130 MR. ROBSON: Well, I think it was partially covered in the subsequent exchange. Perhaps we will come back at a later point, Madam Chair. Thank you.

4131 THE CHAIRPERSON: Okay.

4132 We could come back to that point as we go through some other aspects of the applications, but let's turn to programming and are you all right? Are we glad I'm going back to programming? Is it all right to continue, or do you need a break, or are you all right to carry on?

4133 MS SHEA: Let's go, Madam Chair.

4134 THE CHAIRPERSON: Okay. I have my orders.

4135 MS SHEA: Please.

4136 THE CHAIRPERSON: Programming. I think the brief outlines very extensively the programs that you are proposing and you went through it again this morning. I have a question on the spoken word programming. We note that members of the community will be invited to host some of your spoken word programs. In fact, you state in your description of the program "Tapestry" that various multicultural groups and organizations will be invited to participate in the program.

4137 You state that the form and substance will be left to each group to determine how they wish to portray their community. You are experienced broadcasters, I am sure you understand that the Broadcast Act states that all persons who are licensed to carry on broadcasting undertakings have a responsibility for the programs they broadcast, section 3(1)(h), and that the programming should provide a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern, sections 3(1)(4).

4138 In light of this, could you tell us what mechanisms are in place to ensure that each program will be of high standard and respect the objectives of the Broadcasting Act as stated?

4139 MR. FERGUSON: Go ahead.

4140 MS SHEA: Madam Chair, we would work with the community groups that we would mention in our brief and in our application. We would certainly want to make sure that they have the opportunity to get their ideas and issues and present them in a format where they will be listened to by the community.

4141 We don't want to have somebody come in off the street and not knowing how to use the equipment or present their ideas or how to flesh out a half-hour program and just put something on the air to satisfy some kind of a requirement. We want to make sure they have the opportunity to present their ideas in the best way possible.

4142 THE CHAIRPERSON: Do you have specific guidelines, however, which can assure the Commission that these programs which involve the community groups will in fact follow the Act? Do you have internal guidelines and mechanisms to that effect?

4143 MR. FERGUSON: Madam Chair, I would point out that in 1997, CHSJ applied to convert its stand alone AM service (off microphone) was launched in January 1998.

1036

4144 As part of our application we included what we believe were significant programming initiatives, not only in the area of Canadian Talent Development, local Canadian oriented music program for local and Canadian talent, called -- its Canadian "A".

4145 We developed the framework for a totally new type of Canadian Talent Development initiative, as well as other programming features involving the arts community orientation.

4146 We are very proud to say, Madam Chair, that after two years those programs and those initiatives have been very successful and I would point to our track record there as a means of providing you with the assurance that we would endeavour to produce these programs with the Broadcasting Act and its call for programming of high standards in mind. We believe we have a track record already established most recently, just in the past couple of years.

4147 THE CHAIRPERSON: Thank you.

4148 I will leave it to legal counsel if there is anything further required in terms of anything specific on that point. I am referring to a very specific policy, so perhaps if there's anything left open he'll come back to that I'm sure.

4149 On Canadian Talent Development, once again I don't need to go through the various projects with you for both markets. They're fairly itemized. I had a little trouble working out some of the numbers, but I think we are connected on that, but I am curious about one thing. You have decided in both cases not to proceed with the CAB plan.

4150 MR. FERGUSON: That's correct.

4151 THE CHAIRPERSON: Why is that? I'm just interested, it's not that -- I am interested to know why you didn't.

4152 MR. FERGUSON: Madam Chair, we have a great deal of respect and we support the CAB plan, just as well as we have respect and support for FACTOR.

4153 We would much prefer to see particularly the direct funds, the direct cash involved in the Canadian Talent Development go directly into the hands of the performers.

4154 As I was mentioning just a couple of minutes ago, this was one of the key initiatives in our recent application when we were converting CHSJ and we developed the grant program, the bursary program and we included in our application for the new Saint John FM, as well as St. Stephen, the basic framework that we established a couple of years ago in this new approach and we hope to build on this.

4155 THE CHAIRPERSON: Thank you. That is what I thought you might answer, but I just wanted to be sure because this, as you know, is a very important component in the process.

4156 MR. FERGUSON: Absolutely.

4157 THE CHAIRPERSON: I am also interested in the news bureau that you have proposed in both applications. In fact, I think, if I am not incorrect, the news bureau at the provincial Legislature in Fredericton is part of the -- you say it will exist if both applications go forward.

4158 MR. FERGUSON: Yes.

4159 THE CHAIRPERSON: And if I am incorrect in that you can tell me.

4160 But I wanted to ask you if the Saint John application is approved, but not the St. Stephen, would you still proceed with the news bureau concept?

4161 MR. FERGUSON: Absolutely. We believe it brings a very significant level of diversity to the marketplace. Virtually every radio station in the province relies currently on Broadcast News for coverage from the provincial Legislature.

4162 Broadcast News is a very respected, reputable news organization. However, because it does serve virtually the whole province, its scope is primarily regional or provincial, and we see the creation of our own news bureau in the vital location of the provincial Legislature to cover not only the Legislature, but government and Opposition news on an ongoing basis.

4163 This is an opportunity for us to specifically target material of specific interest to Saint John, of specific interest to St. Stephen with Charlotte County.

4164 This initiative, I think, is one of the cornerstones of the whole application. I think it's one of the fundamentals.

4165 THE CHAIRPERSON: Thank you.

4166 We'll go back to music. You have clarified your description of Adult Contemporary format, but we note that in your application that you have indicated in any broadcast week no more than 10 per cent hit material will be broadcast. Would the majority of the music then from Category 2 be pre-1981 music selections and, if yes, why is this hit level so low?

4167 As you know, why would you commit to a 10 per cent level when the regulations allow for a much higher level?

4168 MR. FERGUSON: Diversity would be the short answer. Diversity in the marketplace. We touched on that earlier, Madam Chair, when Patty was talking about playing key artists, but more a catalogue of key artists.

4169 THE CHAIRPERSON: It's curious because you talked a lot about Shania and I don't think we'll be even looking at her catalogue pre-1981. I think that's a more recent catalogue, inclusive of hits. So I am curious to know why a number of the artists mentioned in your application, Céline Dion, Alanis Morrisette, Elton John -- well, that's okay, Mariah Carey, et cetera, are artists who we assume the catalogue is fairly substantial post-1981. So I was just interested to know why you would propose a 10 per cent hit level?

4170 MR. FERGUSON: And also referring back, Madam Chair, to Patty's earlier remarks on the music that is self, if ever, programmed in the Saint John market currently that we will emphasize, primarily to create diversity.

4171 THE CHAIRPERSON: So it's more the level at the choice you make, the Diana Krall's, et cetera.

4172 MR. FERGUSON: Yes.

4173 THE CHAIRPERSON: I just hope that in fact -- I assume they will have a lot more hits, so I am not sure why you would choose that.

4174 Local programming. I have a question regarding St. Stephen's local programming, two questions in fact. We note that during the broadcast week you would offer religious programs, such as Focus on the Family, Billy Graham and The People's Gospel Hour, as well as live church services. Could you tell us how many hours a week would be devoted to religious programs?

4175 MR. FERGUSON: Off the top of my head, Madam Chair, I don't have that. I wasn't anticipating that question. I would say in the neighbourhood of 10 to 12 hours a week.

4176 THE CHAIRPERSON: And are you prepared to deal with requests seeking alternative viewpoint programming as expected under the religious broadcasting policy?

4177 MR. FERGUSON: Absolutely.

4178 THE CHAIRPERSON: While we are at the St. Stephen local programming, could you just again elaborate on how the spoken word programming will be specifically relevant to the St. Stephen market?

4179 MR. FERGUSON: In doing the research for the application, Madam Chair, it became increasingly apparent the difference between Saint John and Charlotte County, complete difference in lifestyle, complete difference in vocation and it was with this uniqueness in mind that we developed our programming thrust and our programming framework.

4180 I would invite Patty to speak to programming in Charlotte County.

4181 MS SHEA: Madam Chair and Commissioners, I would apologize if my earlier excitement was read as disrespect or a too casual way to present the ideas, but we have got such an opportunity. I am so excited as a programmer and a former news person when you see newsrooms and program departments across the country in radio slashed with operations across the country running on bare bones. It's so exciting to have the opportunity to be able to do what we get into radio in the first place to do; to do all these exciting programs to serve the public.

4182 Now, having said that, we can go through a few of the programming initiatives for St. Stephen, if you would like some detail on those.

4183 THE CHAIRPERSON: It is really just to get a sense from you again on how this St. Stephen application addresses local programming and the relevance to the community.

4184 I noted -- you may want to come back in your closing remarks because I pointed out to you that there are some critical factors we look at and certainly in my opening remarks I also underlined the relevance to the community.

4185 In the context of this joint application, if you will, I think it has been clear that I have been looking at some aspects of this as to how the St. Stephen or Charlotte County would be served by the proposal. If you just wanted to highlight for me some of the relevance to St. Stephen specifically that you see in your proposal. Don't worry about enthusiasm, it isn't a problem.

4186 MS SHEA: As Mr. Ferguson has mentioned this morning, residents of St. Stephen have never had local radio programming because of where they are located geographically they of course get the American radio stations loudly and clearly.

4187 The Canadian radio stations, CIOK, CHSJ, other radio stations, sort of go into parts of Charlotte County, hit and miss, but not on a regular basis.

4188 While the stories, of course -- for example, in the newsroom and the American stations, the stores in St. Stephen would be treated as local stories because of the area, but, for example, we will have somebody at the Legislature in New Brunswick. When the Member rises in the House to speak to issues specific to aquaculture, for example, in St. Stephen, our reporter will be able to provide that information to the community in St. Stephen. The Maine Legislature won't really care about St. Stephen.

4189 As well, the programming features highlight the Canadians. We have mentioned the culture, the rich French and Loyalist heritage of St. Stephen and Charlotte County as a whole. We have got a new program we are suggesting called Maple Leaf Memoirs, a station-produced feature, ongoing, clearly reflecting the diverse culture and heritage and community specific to Charlotte County, including live and produced profiles and historical capsules of the community, using primarily local authors, museum curators, storytellers who tell the Canadian story.

4190 The St. Stephen campus of the New Brunswick Community College is located within the primary coverage area of the proposed new St. Stephen radio station. We have got a weekly feature called On Campus that would provide residents of that area with all the latest information from there, upcoming events, accomplishments from the school, students and instructors both would have a new voice within the community.

4191 Keep in mind that the weekly newspaper that St. Stephen residents have as their local paper will be able to bring them information and radio deadlines are immediate. If something happens, we can tell them about it right away. They don't have that now and they never have had that.

4192 THE CHAIRPERSON: Thank you.

4193 While we are in St. Stephen, just back to the music selection again. Once again my question on the hit level that you've chosen. You have proposed that in any broadcast week no more than 10 per cent hit material would be broadcast, so again would the majority of the music from Category 2 be pore-1981 music selections? This I understand in St. Stephen we are looking at Adult Contemporary/Country combination.

4194 MR. FERGUSON: That's correct.

4195 THE CHAIRPERSON: So why have you chosen the 10 per cent hit level, as opposed to a higher per cent hit level?

4196 MR. FERGUSON: I would have to respond to that, Madam Chair, essentially for the same reasons we did so in Saint John, diversity.

4197 THE CHAIRPERSON: Thank you.

4198 Some technical questions and I will just table them with you. We note that the 97.3 MHz frequency you propose and the 96.9 MHz frequency proposed by Atlantic Stereo Limited are second adjacent channels. That is, there are only 400 kHz separation between them on the FM dial.

4199 In the event that your proposal and that of Atlantic Stereo are approved, Industry Canada advises that a potential for a small zone of interference is to be expected. The expected interference would be confined to a small zone inside your proposed 0.5 millivolt per metre contour in the northeast part of the service area. Are you aware of this potential interference situation?

4200 MR. FERGUSON: Yes, we are and as Mr. Gordon Elder with Atlantic Stereo told the Commission yesterday, this has been discussed and our engineering consultants are aware of it as well. It is not a problem as far as we are concerned.

4201 THE CHAIRPERSON: Thank you.

4202 Saint John has some Class C frequencies available in the educational band. Could these frequencies or any other available frequency be used to meet your coverage objectives for Saint John, while at the same time solving the interference problem?

4203 MR. FERGUSON: According to our consulting engineers, 97.3 represents the best utilization of that frequency. It is the optimum utilization of that frequency, as opposed to that frequency being used in Sussex or in any other location.

4204 THE CHAIRPERSON: Are there any others that you feel could be used if there was any difficulty on the interference level? Are you looking at any others or --

4205 MR. FERGUSON: There were, I believe, Madam Chair, one or two others, but clearly in the view of our engineering consultants 97.3 was the best and it represented optimum utilization of that resource.

4206 THE CHAIRPERSON: Thank you.

4207 I am now at my final question, though it's not your final answer I am sure. There are a few more questions ahead.

4208 I indicated to you at the beginning of our discussion that I would ask you at the end to do two things basically to summarize and perhaps answer any of the questions I didn't ask and you wanted to answer, but also to address the specific factors that the Commission considers to be generally relevant to the evaluation of competitive applications under the Commercial Radio Policy.

4209 These factors, as you well know, were in the decisions for Victoria, Kelowna and London. So I would like you, if you would, to take this opportunity to address these factors and tell us which are most relevant to your application in the Saint John market?

4210 MR. FERGUSON: Madam Chair, the first thing I would say, I would note the approval recently of an adult -- a Contemporary Adult hit FM format that was given to one of my former alma maters, the CHUM group in London, Ontario. This I think is probably a situation that is most closely, at least we see as most closely in line with our current situation and our application in Saint John.

4211 THE CHAIRPERSON: Is there anything else you want to add in terms of the factors we have laid out in those decisions or is that --

4212 MR. FERGUSON: Perhaps, Madam Chair, if we could have a brief adjournment. I am not sure I am sensing properly what you are looking for.

4213 THE CHAIRPERSON: Certainly, if you wish, and we will have a couple of other questions. If you would like to take five minutes, let me reiterate so I hope we can be clear.

4214 In its decisions in Victoria, Kelowna and London there is an introductory statement regarding the evaluation factors that the Commission would take into consideration in choosing a candidate in the competitive process.

4215 MR. FERGUSON: Yes. I'm sorry, I am not familiar with that evaluation.

4216 THE CHAIRPERSON: Just let me lay it out and then perhaps you'd want to take a short moment; the quality of the application is one factor.

4217 MR. FERGUSON: Yes.

4218 THE CHAIRPERSON: Diversity of news voices in the market is another factor.

4219 MR. FERGUSON: Yes.

4220 THE CHAIRPERSON: Market impact and the competitive state of the market. Four basic factors which we use in weighing applications.

4221 MR. FERGUSON: Madam Chair, in our oral submission I stated a number of benefits for both Saint John and for Charlotte County if these licences are approved.

4222 Short of reading each and every one of those again, I would refer you back to those benefits that we set out in order for both applications.

4223 In addition, I would suggest that as part of the Commission's criteria in licensing these stations you would look at our strategic business development plan, one that we believe is achievable and realistic.

4224 NBBC believes that both frequencies of 97.3 and 98.1 will achieve the optimum utilization of these scarce public resources, restoring a competitive balance to the Saint John marketplace is critical to New Brunswick Broadcasting and CHSJ-FM and critical in supplying diversity and listener choice.

4225 Approving these two licences would result in more Canadian Talent Development initiatives and bring Charlotte County residents into the Canadian broadcasting fold.

4226 And last but not least, in a time when ownership concentration in New Brunswick is on the rise, the licensing of these two stations will ensure that a strong local, independent voice prevails.

4227 THE CHAIRPERSON: Thank you.

4228 I have completed my questions. Commissioner Cardozo has a question and legal counsel has a question. So if you agree, we can continue and complete this section of this phase.

4229 MR. FERGUSON: Fine.

4230 COMMISSIONER CARDOZO: Thank you, Madam Chair.

4231 Just a couple of quick things I wanted to understand from you. I guess this goes to the core of the two applications that you have, following up from your discussion with the Chair.

4232 I just draw your attention to page 7 of your oral presentation today, where you have talked about the strategic radio broadcast development plan in the third paragraph on that page. I will just read a couple of sentences. You say:

4233 My reading of these two is that the service to Charlotte County and St. Stephen is going to be -- I don't want to use the word "benefit", but a great new source of radio programming for the residents of that area, so the residents really get something out of that.

4234 But your application in Saint John, from your plan, is more a financial issue for your station in order to have, in your words, the sister FM to the FM that you already have.

4235 MR. FERGUSON: That's correct.

4236 COMMISSIONER CARDOZO: So in terms of the advantage to the listeners, there is a lot in your plan in terms of St. Stephen, but in terms of Saint John your focus is more the economic viability of your corporation?

4237 MR. FERGUSON: Commissioner Cardozo, I think it's -- if I can answer your question this way, we don't appear before you today cap in hand. There is a quid pro quo here. I think we have included some very significant programming initiatives in Saint John that specifically speak to diversity, programming initiatives that are currently not being done in Saint John.

4238 Yes, we need that sister FM station for CHSJ in order to grow, in order to develop, in order to compete. But, as I say, we are not here just asking, you know, cap in hand for purely financial reasons.

4239 I think we have included significant initiatives, not only in programming, in Canadian Talent Development that will benefit the community in Saint John.

4240 COMMISSIONER CARDOZO: So what you are saying is the quid pro quo for the Saint John FM is the benefits and what you would offer in St. Stephen?

4241 MR. FERGUSON: Absolutely.

4242 COMMISSIONER CARDOZO: Some of the programs you mentioned for your proposed FM in Saint John were the provincial legislative news bureau, Cross Currents, Tapestry and other programs of that nature. Do you have programs of that nature in your current FM station?

4243 MR. FERGUSON: At CHSJ?

4244 COMMISSIONER CARDOZO: Right.

4245 MR. FERGUSON: Yes, we have -- Patty, would you like to speak to that? We have our It's Canadian Eh, which is our weekly program, a 30-minute show that features local and Canadian talent.

4246 We have a daily, or five days a week an arts update feature which was part of our last licence renewal, CHSJ.

4247 We also have a top 20 country music countdown program which features extensive interviews with performers, performers' biographies and news and information on concerts and promotional tours.

4248 MS SHEA: And it's Canadian.

4249 COMMISSIONER CARDOZO: In terms of synergies, if you had your current FM and the FM in St. Stephen, and you were not granted the new FM in Saint John, would that give you some measure of comfort in terms of synergies where you'd have at least two stations?

4250 MR. FERGUSON: No, unfortunately, it wouldn't, Commissioner Cardozo. It's for that very reason we have maintained the position that these applications are non-severable. We need the synergies, the three stations together in order for New Brunswick Broadcasting to stabilize itself, to remain viable, just as our major competition in Saint John enjoys the operating efficiencies of three radio stations. All we are asking for is a level playing field.

4251 COMMISSIONER CARDOZO: To coin a term.

4252 MR. FERGUSON: To coin a term.

4253 COMMISSIONER CARDOZO: Lastly, on the technical issue there are a couple of interviews with concerns about the campus station in Fredericton, and there is also an intervention by the Fredericton Multicultural Association that has programming in various languages from the campus station in Fredericton.

4254 MR. FERGUSON: Yes.

4255 COMMISSIONER CARDOZO: Do you think their concerns are valid, that your frequency will cut into theirs?

4256 MR. FERGUSON: Well, Commissioner Cardozo, we are reliably informed by our engineering consultants that their concerns in regards to potential interference are really unfounded.

4257 However, in my discussions with the station management at CHSR I have indicated to them that we would be prepared to assist them in any way, any reasonable way, I'll add that, if they down the road decide to change frequencies. Not necessarily direct financial support, but we are prepared to work with them in any way that we can.

4258 COMMISSIONER CARDOZO: That issue may come up later on and you may want to address it further in the reply phase.

4259 MR. FERGUSON: Yes. Thank you.

4260 COMMISSIONER CARDOZO: We will see where that takes us, but that's very helpful. Thank you very much.

4261 MR. ROBSON: Madam Chair, before we leave this particular phase of the process, perhaps I could just go back momentarily and maybe help put this reliance on a sister station and the St. Stephen station and so on into a little clearer perspective.

4262 THE CHAIRPERSON: Just a second, Mr. Robson. If I could, we are not quite finished this phase.

4263 MR. ROBSON: Okay. Fine.

4264 THE CHAIRPERSON: I respect that we could come back for a bit of a wrap up on that point, but I would like Commissioner Noël and legal counsel to put their questions first and then we may come back.

4265 COMMISSIONER NOËL: That is exactly what my question was all about. You mentioned that if you were granted St. Stephen and not Saint John it is not a workable proposition.

4266 MR. FERGUSON: That's correct.

4267 COMMISSIONER NOËL: But if you are granted Saint John and not St. Stephen it would be regrettable, but a workable proposition?

4268 MR. FERGUSON: It would be a workable proposition, but I would serve notice here and now we will be back again to apply for St. Stephen.

4269 COMMISSIONER NOËL: That's what I wanted to know. Thank you.

4270 THE CHAIRPERSON: Thank you. I was going to ask you to clear that up because that's what I thought I heard in our conversation.

4271 If we would, Mr. Robson, I will ask legal counsel and then again you may want to clarify.

4272 MR. McCALLUM: Thank you.

4273 Did you consider the option of changing the format of CHSJ-FM into a Contemporary Adult Hit format or the format you are applying for for Saint John?

4274 MR. FERGUSON: No, we did not. CHSJ has been serving the country music audience in Saint John in excess of I believe 20 years. We did not consider that a viable option, to abandon a loyal, dedicated audience core. No, it wasn't considered at all.

4275 MR. McCALLUM: I thought it might have been considered and rejected, for example?

4276 MR. FERGUSON: Well, very quickly rejected. I'll put it that way. Not an option.

4277 MR. McCALLUM: Thank you.

4278 Just on the Canadian Talent Development initiatives, in this morning's presentations you highlighted some of them in your application, I think particularly at pages 15 and 16. There were two other I guess indirect contributions that you mention in your supplementary brief at page 103 for St. Stephen. All I wanted to do was confirm that these other indirect contributions still remain in your plans. There is one weekly talent show and you gave an indirect air time value of $78,000 I think per year, and also cultural and artistic events and activities for $46,000 annually in indirect benefits. My question is: Do these still remain in your plans?

4279 MR. FERGUSON: Absolutely.

4280 MR. McCALLUM: Similarly, for St. Stephen, you didn't mention in this morning's presentation an initiative that you mention at page 133 of your supplementary brief, where you talk about showcasing local Charlotte County artists through on-air exposure with an annual air time value of $37,000 per year. This remains in your plan as well?

4281 MR. FERGUSON: It does.

4282 MR. McCALLUM: Thank you.

4283 On the hits question that was asked a little bit earlier, the 10 per cent hits for I guess both Saint John and St. Stephen, if the Commission made it a condition of licence that this 10 per cent hits be adhered to, I take it you would respect that?

4284 MR. FERGUSON: Always have. Absolutely.

4285 MR. McCALLUM: In both places of course?

4286 MR. FERGUSON: Yes.

4287 MR. McCALLUM: Thank you.

4288 Finally, in a question asked about the possible interference between the two frequencies, your frequency applied for of 97.3 and that applied for by Atlantic Stereo, your answer to Commissioner Pennefather was that the engineering consultants have discussed it and believe that it's not a problem. Can you say what steps would be taken to resolve any interference problems that might arise?

4289 MR. FERGUSON: Not without consultation. I would have to refer back to our engineering consultants. This was an issue which came to our attention quite some time ago and I am not certain exactly what has been discussed specifically.

4290 I would hesitate to give you a firm response here and now without having an opportunity to speak with our engineering consultant. All I was advised was it is not viewed as a serious problem.

4291 MR. McCALLUM: In other words, it can be addressed?

4292 MR. FERGUSON: Yes.

4293 MR. McCALLUM: And your commitment would be to address it in whatever way it takes. Is that it?

4294 MR. FERGUSON: That's my understanding, no question. Yes.

4295 MR. McCALLUM: Thank you, Madam Chair.

4296 THE CHAIRPERSON: Thank you, counsel.

4297 Did you want to have any further comment?

4298 MR. FERGUSON: Just in summation, Madam Chair.

4299 Was there something you wanted to say, Patty?

4300 MS SHEA: You had mentioned, Madam Chair, about the diversity of the news voice and I wondered if you might like me to elaborate on that for you?

4301 THE CHAIRPERSON: You may want to come back to that in your reply.

4302 MS SHEA: Okay.

4303 MR. FERGUSON: Madam Chair, I would just by way of summation reiterate that it's vital to understand that these are most important applications to New Brunswick Broadcasting. We would underline the critical importance of these.

4304 We ask that you seriously give consideration to our situation being a stand alone FM station up against a three station combination that is market dominant. The applications that we have submitted directly address our ability to stabilize New Brunswick Broadcasting and to help us be proactive and begin to grow.

4305 And in return, New Brunswick Broadcasting brings what it believes to be programming initiatives of significant value, which translate into tangible community benefits.

4306 THE CHAIRPERSON: Thank you.

4307 Madam Secretary.

4308 MS MacDONALD: Thank you, Madam Chairman.

4309 We will pause for approximately 20 minutes and reconvene at 11:30. Thank you.

4310 When we return we will start with the next phase and that will be to hear from interested parties through the process of listening to interventions. Thank you.

--- Recess at 1110 / Suspension à 1110

--- Resuming at 1130 / Reprise à 1130

4311 MS MacDONALD: We will now proceed to Phase II, where we will hear interventions from interested parties.

4312 Each intervenor is given up to 10 minutes for his or her presentation. Questions by members of the panel may also follow each intervention.

4313 The first intervention is by Maritime Broadcasting System and we note that Maritime Broadcasting System has submitted two interventions, the first for the Saint John proposal and the second for the St. Stephen proposal.

4314 The intervenor has agreed to 10 minutes for both presentations. I would ask the intervenor to come forward and make their presentation please.

4315 If you could introduce the members of your group and begin whenever you are ready. Thank you.

INTERVENTION / INTERVENTION

4316 MR. RUSSELL: Hello again. I am Merv Russell, the President and CEO of Maritime Broadcasting System Limited and with me today on my far left is Kelley Ryder, our General Manager of CJCW in Sussex. Next to me is Mark Lee, our General Manager of our stations in Saint John, and also with me are Garry Barker, our Executive Vice-President and Vice-President of Programming for MBS and back here is Brian Sawyer our Consulting Engineer, and on my right behind me is Darren Nantes, our Chief Financial Officer.

4317 We are here today in opposition to the applications of New Brunswick Broadcasting for new FM stations in Saint John and St. Stephen.

4318 Our comments today will address four key concerns:

4319 One, the Saint John market cannot support another station without an adverse impact on existing operations and, in particular, CFBC-AM. These negative repercussions will jeopardize local service to the detriment of listeners and the broadcasting system.

4320 Two, the applications do not meet the criteria established by the Commission for evaluating new proposals. First, due to the adverse impact on existing stations and overall service to the community and, secondly, because the proposed Saint John stations represent no real diversity.

4321 MR. LEE: Three, the difficulties complained of by New Brunswick Broadcasting regarding CHSJ-FM are not due to any actions taken by Maritime, but rather business choices made by New Brunswick Broadcasting. CHSJ-FM is well equipped to meet the challenges of the marketplace. Contrary to their assertions, CHSJ-FM should not be viewed as a stand-alone operation, but rather as part of a powerful corporate family that derives significant benefits from its sister companies in other media.

4322 We believe -- number four, we believe New Brunswick Broadcasting is attempting to secure a new FM in Saint John through the promise of a station for St. Stephen. In our view, this is entirely inappropriate, and the suggestion that service to St. Stephen is viable, only where a new licence is issued for Saint John, that's inaccurate.

4323 MR. RUSSELL: Ladies and gentlemen of the commission, let me begin with the negative impact on the market.

4324 Maritime is the licensee of three stations in Saint John. Under the Commercial Radio Policy of 1998, we were permitted to add CJYC-FM and CFBC-AM to our existing FM, CIOK.

4325 Since that time, we have worked hard to improve the efficiencies of the stations and to enhance local programming and Canadian Talent Development. In the last three years, MBS has spent $1.1 million on capital and leasehold improvements in Saint John.

4326 Nevertheless, CJYC-FM only returned to a positive cash flow in the last broadcast year and CFBC, our heritage AM, continues to be unprofitable.

4327 Maritime's ownership of these three stations is central to ensuring that all three can continue as contributors to the Saint John community. However, common ownership alone is not enough to sustain these operations. The market must also be capable of supporting all the stations licensed for it.

4328 In our view, this would not be the case if another station was licensed for Saint John. CHSJ-FM has only been operating on the FM band for two years. In many respect,s the market is still absorbing the impact of their transition.

4329 New Brunswick Broadcasting suggests that it requires another FM station in order to address difficulties caused by Maritime and CHSJ's station as a stand-alone station in Saint John.

4330 We disagree.

4331 First, single station FMs operate quite successfully in a number of markets. We reject New Brunswick Broadcasting's assertion that simply because it only owns one FM in Saint John it is somehow disadvantaged.

4332 This was clearly not the case in Saint John. Prior to May 1998, CIOK-FM, our station, was a stand-alone FM and was number one in the Saint John market. For years K-100 as a stand-alone FM, dominated the Saint John market against the combo of CFBC and CJYC-FM, owned at the time by Fundy Broadcasting, and CHSJ-FM owned by the Irving family. It is clear that K-100's stand-alone success refutes the Irving request for another FM.

4333 We believe that any difficulties faced by CHSJ-FM are largely of their own making and are not due to the actions of Maritime. It should be noted that our company supported CHSJ's application to convert the station to FM and firmly believe that fulfils an important role in the Saint John market.

4334 CHSJ-FM offers a distinct listening choice. It has its own audience niche and, therefore, it should be more than capable of attracting a healthy advertising base.

4335 However, on page 30 of the Irving supplementary brief, I quote:

4336 The question has to be asked, how much do they think they need. It will probably never be enough.

4337 We reject New Brunswick Broadcasting's labelling of CHSJ as an orphan, as stated in Mr. Ferguson's response to the Commission, dated February 21, 2000.

4338 New Brunswick Broadcasting is a wholly-owned subsidiary of Brunswick News Inc., which publishes most of New Brunswick's daily newspapers, including the Telegraph Journal and the times Globe in Saint John.

4339 Brunswick News is controlled by the Irving family, one of the most powerful business families in Canada, let alone the Maritimes. The notion that CHSJ-FM lacks the resources necessary to compete with Maritime is ludicrous. The financial resources are available, perhaps the broadcast skills are not.

4340 MR. BARKER: This proposal by New Brunswick Broadcasting would add nothing to the diversity of the Saint John radio marketplace. The contemporary adult hit format proposed will simply duplicate the music of CIOK-FM. Proof of this is readily apparent.

4341 On page 87 of the application, numerous artists were listed as being the core of the new station. Further, it is stated that "these artists are only minimally exposed if heard at all in Saint John". This is absolutely incorrect. You will note that in a monitor of CIOK for the broadcast week of February 27, 2000, proposed artist Céline Dion was featured 33 times on CIOK. Not only are these artists played on CIOK, they are for the most part our core artists. And this has been the case for the past four to five years minimum.

4342 Of all the 28 artists mentioned in the New Brunswick Broadcasting proposal, four were not played on CIOK that week. Interestingly, of those four, three were featured on CFBC.

4343 The 35-54 demographic is extremely well served now in Saint John. CFBC, our oldies AM station, is clearly targeted to 35 to 54s. New Brunswick Broadcasting's own research shows that virtually all of the artists they propose appeal to 35 to 54 year olds. These are the same artists that have been, and will be played on CIOK-FM. Add CHSJ's country format, and there are three formats that are clearly satisfying the needs of 35 to 54 year olds.

4344 Thus, there is nothing from a musical format standpoint in their application that would add any diversity whatsoever to Saint John radio.

4345 MR. RUSSELL: Finally, we take exception to New Brunswick Broadcasting's attempt to improve its application for a second FM in Saint John by linking it to the introduction of first-time service to St. Stephen.

4346 We agree that first time radio service for St. Stephen would be welcomed. However, such service does not need to be linked with the approval of another FM in Saint John. It is clear to us that New Brunswick Broadcasting has made these applications unseverable for its own purposes and not because of any economic imperatives.

4347 If New Brunswick Broadcasting was serious about new radio service to St. Stephen and Charlotte County, it could have used the template of CJCW Sussex, without the necessity of a further application for Saint John.

1145

4348 Our station, CJCW, has served Sussex, a town of 3,900 people, and King's County, with a population of 67,000, for a quarter of a century.

4349 In 1975, the Commission approved the application for CJCW to serve this area, but it was obvious the community of 3,900 could not support the station with local, live programming 24 hours a day. As a result, CJCW joins our Moncton station at 6 p.m. in the evening overnight until 6 .am.

4350 Rather than submitting an unseverable application for another station in Saint John to sustain the St. Stephen service, all the Irving applicants had to do was use CHSJ-FM as the mother station to guarantee continuous service to St. Stephen.

4351 Now, I have asked Kelley Rider, our General Manager of CJCW to join us and answer any questions you might have on this small community radio success story.

4352 In summation, Maritime submits New Brunswick Broadcasting is well positioned to continue as a vigorous competitor. It has a station recently converted to the FM band with a distinct format and audience.

4353 Moreover, it is part of a large and powerful medica conglomerate, which dwarfs the resources of Maritime Broadcasting. It is naive to believe that it requires a second FM in Saint John to compete.

4354 Furthermore, the introduction of this station would have a serious negative impact on existing operations. In particular, our heritage AM, CFBC, would see a reduction in revenues which would impair its ability to continue delivering its high level of local news and information. Another FM competitor would inevitably jeopardize our local programming.

4355 As such, we believe these applications are not in the best interests of Saint John listeners or the Canadian broadcasting system. They fail to fulfil the test on diversity, meaningful direct Canadian Talent Development initiatives, and have presented an inadequate business plan that lacks any substantive and qualified research.

4356 We would be pleased to answer any questions that the Commission might have.

4357 THE CHAIRPERSON: Thank you, Mr. Russell and colleagues.

4358 Commissioner Cardozo, please.

4359 COMMISSIONER CARDOZO: Thank you, Madam Chair.

4360 Good morning, Mr. Russell and colleagues.

4361 MR. RUSSELL: Good morning.

4362 COMMISSIONER CARDOZO: It's nice to see some of you again and some of you for the first time at this hearing. I just have a few questions that I wanted to go through with you and let me start first at some of the phrases that we coin at these hearings, one of them being level playing field, which might have been your genius at one point earlier in the week. The other being surrounded and out-gunned three to one, as CHSJ feels.

4363 What's your sense of their request, their feeling that they are out-gunned and they'd like a level playing field?

4364 MR. RUSSELL: I take full credit for the level playing field, but I should create the distinction of what we were really talking about. I am the author of that for this hearing.

4365 As Mr. Templeton is, I feel an intervention coming on. I thought that was a great line.

4366 COMMISSIONER CARDOZO: We won't go too far into the previous hearing that we have concluded.

4367 MR. RUSSELL: That's right.

4368 COMMISSIONER CARDOZO: Go ahead.

4369 MR. RUSSELL: Clearly, what I was making reference to was that we were looking for an FM in a competitive application environment and in consideration that the market with $6.4 million and there was another $1.4 for community broadcasts, nearly $8 million. We felt fully that being an AM alone in a competitive application for another hot country station we required a level playing field.

4370 From the perspective of Saint John, we understand, you know, how the Irving application must feel, three against one. However, it's strictly within the rules and regulations of the CRTC Commercial Radio Policy. We are just getting two of those stations clearly on their feet and we do take exception to another statement from the Irving application, their supplementary brief on page 62, when they said:

4371 Allow me to assure you, Mr. Commissioner, if we're the gorilla, the Irving media empire is the whole wild kingdom.

4372 COMMISSIONER CARDOZO: I'm not sure I want to go down that phrase too much, and it's not Mr. Lee you were talking about in terms of being a gorilla, I take it.

4373 But let me pursue one aspect of it. It seems to me that what you are saying is now is not the time for this new FM and I don't know whether that means sometime later might be.

4374 When we look at your stable of stations in Saint John, you purchased a couple of them just a couple of years ago and I recall being part of that decision not long ago. They weren't doing all that great, but, with respect, your company has quite a reputation of being able to take on either stations that are doing well or not doing well and turning them around and making them do well or do better.

4375 So you knew what you were getting into. You obviously did your due diligence there and you knew that you would have some challenges getting the two new stations going and, from what I understand, your latest figure suggests that you have gotten -- you have sort of passed the point of hard times and you are doing fairly well now with those stations.

4376 MR. RUSSELL: I think they are quickly reaching that bell curve. We are small town broadcasters and get this perception that we are the big bad guys, that you don't see any other competitive applications for Saint John, so I think that sort of puts it into focus.

4377 But there was a chart up there yesterday that sort of reminded me we own the world, but we serve small markets like Sussex, 3,900; Weymouth, 1,200; Digby, 2,200; Middleton, 900, 1,100 people. I mean there's no great lineup for applications for those markets, but we do know how to go and get the synergies out of the properties we purchase. It comes after a long experience of being hands on operators in small markets.

4378 When the challenge was presented to us to buy CFBC-AM and CJYC-FM, Nesbitt Burns put out 52 expressions of interest. We were the only taker. So we had a formidable hurdle to overcome. Those two stations in 1996, combined, the two I am referring to, CFBC and CJYC, had pretax losses of $132,000. In 1997, they had pretax losses of $77,000. In 1998, they had a pretax profit between then, when we started getting the synergies in place, of $156,000 and in 1999 they had a loss of $10,000. We ran into some difficulties.

4379 But we do have the resources and we do have the managerial experience in broadcast. We have hundreds of years of management experience and we will turn those stations around, but the introduction of a not well research FM, that we go in a direct hit on CIOK and on CJYC and damage CFBC, our heritage AM, at this time, would be inappropriate.

4380 The thing that I find a little unnerving in the situation is the fact that they are unseverable.

4381 COMMISSIONER CARDOZO: Was that "unnerving" or "on Irving"?

4382 MR. RUSSELL: That the applications are unseverable between St. Stephen and Saint John, and we understand the importance of serving small markets. We are the specialist. That's why people, our intervenors those these big numbers because we are in little towns.

4383 We understand the importance of first-time service in St. Stephen, but we don't think it justifies a new FM, poorly research and poorly studied, to take on our established stations that we are just now getting back to health.

4384 MR. BARKER: If I may just add, that when we are talking about a level playing field, we have to remember back to just the spring of 1998 when CHSJ in a six-station market, including the two CBCs, had a 27.2 share. Now that share is 15.2.

4385 Ms Shea mentioned earlier that we have not changed the programming in the last year or two on K-100. We have not changed the programming on any of those stations, yet they have gone from a 27.2 to a 15.2 share.

4386 COMMISSIONER CARDOZO: Would your opposition to this application be as fervent if it was a different company involved? Is it because of Irving's other properties and their role in the media that you are concerned about this?

4387 MR. LEE: I think that along with the demographics that the Irving company is proposing to service, as alluded to earlier, is well serviced as the BBMs have indicated. There are three stations currently servicing that particular demographic and that is a direct competition to our -- if there is an orphan in town, it is on the AM dial and that happens to be CFBC and that is direct competition to CFBC and the oldies format is 35-54.

4388 COMMISSIONER CARDOZO: Okay.

4389 Do you anticipate, if we were to grant this application, do you anticipate or do you have any sense in percentage terms of how it would affect you financially?

4390 MR. LEE: Yes, I do, under you. I can speak to -- it has been a very difficult go. If I can just take you back into history. In 1987 when Maritime came into the marketplace we were that lone radio station that the Irving family is now referring to and it wasn't easy. It was tough. It was five years of slugging and trying to make it work. We picked a niche in the marketplace. We thought there was an availability for that 35-54 demographic and after five years of real hard work and struggle with the BBMs, we started to get a measure of success. The next five years we've grown.

4391 The Saint John market  -- I'll digress. I can proudly say I've lived there for the past 30 years and love it. And when I drove into town the very first time on the west side, next to the Irving pulp mill, there's a sign that says "Welcome to Saint John. Population 9,200 people."

4392 Well, we're about 60-odd thousand right now. Yes, we have grown, but that went to the bedroom communities. The Kennebecasis Valley that Mr. Ferguson spoke of wasn't there in '69. It's there now and he's right. They are 25,000, but they are not new. They're transplanted.

4393 In essence, to oversimplify it, since 1990 we were at 122,000 in the Greater Saint John area. Today in the year 2000 we are 133,000. That's Census Canada. That's less than 1 per cent growth per annum.

4394 Financially, it has been extremely difficult. Our rates are just not -- but it's a real, real tough go.

4395 If the Irvings get another radio station, with the newspapers, that's an extremely difficult competitor to take on, and we are just starting to see the light of day. And that's how I can answer to you, Commissioner.

4396 COMMISSIONER CARDOZO: What are the kind of synergies that you have now with the three stations?

4397 MR. LEE: Economy of scales. You know, as referred to there is one general manager, one receptionist, two engineers, I'm sorry, those types of jobs are consolidated and it makes it more viable to operate, but at the end of the year there are three separate radio stations, three distinct sounds, three distinct newsrooms and on and on, and the broadcasting is what we do.

4398 We don't do anything else. That's all we do is broadcasting and we try to do it as best we can.

4399 COMMISSIONER CARDOZO: How do your two adult contemporary stations differ?

4400 MR. LEE: One is, if I might be so bold in a blue collar town to say it -- like a country music radio station has a certain niche in the market, has its own genre, K-100 is more upwardly mobile, white collar, in the Kennebecasis Valley as Mr. Ferguson referred to.

4401 Ironically, what he said is our prime audience and has been, that's the 2.1 kids, the two garages and two cars, mom and dad are working, upwardly mobile, combined income, that is our audience, primary audience in Saint John and C-98 is more of a rock and roll, blue collar, if you will, skews a bit younger in audience demographic. It goes to about 44, but clearly CFBC, 35-54; K-100, 25-54 for a long time and C-98 since we've turned it to adult rock, 18-44.

4402 There are now those three stations, CHSJ-FM, 35-54. My goodness, I mean that market is clearly overserved, or to use the buzz term in our business, superserved.

4403 COMMISSIONER CARDOZO: At the end of your presentation today on page 9, you say:

4404 I am wondering if you differentiate between the two applications, whether you think the St. Stephen application, in your view, is more in the best interests than the Saint John application?

4405 MR. RUSSELL: Mr. Commissioner, I am sure any first-time service to a new community, and we've dealt with that on a number of occasions in our group of stations, does serve the Canadian broadcast system well, i.e. our service to small towns like Middleton, Weymouth, Digby and Sussex.

4406 So I believe that clearly the approval of a station for St. Stephen would serve the Canadian broadcast system better than the approval of a station for Saint John.

4407 However, I am glad that it was clarified today because at one stage it was severable and at one stage it wasn't severable. As long as it remains unseverable, I feel poorly for the people of St. Stephen if it is not approved.

4408 COMMISSIONER CARDOZO: This may be a precocious question, or certainly would allow you a precocious answer, but do you think they can have useful synergies between the current FM and St. Stephen?

4409 MR. RUSSELL: We're a living example of that. We do that every day. Ms Ryder is our manager of CJCW. Maybe it's best that Kelley explains the success, a 25-year success of a small community radio station story.

4410 MS RYDER: We have very much made a commitment to the local community. We have also worked in conjunction to maximize our resources by broadcasting in conjunction with our Moncton radio station.

4411 We have created employment opportunities and we have continued to make sure that we are maximizing the opportunities to the community, whether it be through various fundraising efforts and to continue on to develop that and solidify it.

4412 We have some other economic concerns as well with regard to the other mining area that is sort of unique to the Sussex area, so it's a slog there too. So we have to make sure that all of us together as a unit are maximizing our resources.

4413 MR. RUSSELL: To more specifically answer your question, if the Irvings were interested in St. Stephen they could have guaranteed the success of the St. Stephen application by using CHSJ-FM as a support system, not a new FM.

4414 COMMISSIONER CARDOZO: Okay. A precocious answer. I appreciate your views on all the questions I've asked. Thank you very much.

4415 Thank you, Madam Chair.

4416 THE CHAIRPERSON: Legal counsel

4417 MR. McCALLUM: Just on the profitability of the stations, I believe the Commission usually looks at profit before interest and taxes. When you gave the figures earlier, particularly for the 1999 financial year, where you said there was a loss, that's a loss after interest, I take it, before taxes, but after interest?

4418 MR. RUSSELL: I believe you are correct on that, after interest, yes.

4419 MR. McCALLUM: Because from the annual returns that you filed with the Commission, which you know that Commission staff have looked at, it appears that there is a substantial turnaround when you look at profit before interest and taxes. My question to you is: Do you expect that -- assuming for the sake of argument a status quo scenario, do you expect that turnaround to continue?

4420 MR. RUSSELL: I think there is good reason to, but contrary to the Irving application with regards to great economic times in Saint John, I think that Mr. Lee has a different point of view on that.

4421 This past weekend there were 70 jobs announced to be laid off at the Coast Guard.

4422 MR. LEE: We are talking the drydock several years ago had 2,500 employees. Today there are 300 employees.

4423 The Saint John refinery, very shortly there will be 3,000 less jobs. These are high-paying jobs in our community. It would be interesting to note that our average wage in the City of Saint John is 11 per cent below the national average of Canada, 11 per cent below the national average in Canada.

4424 MR. McCALLUM: I take it you have also turned around the listening to the two stations as well from the recent BBM numbers?

4425 MR. RUSSELL: Yes.

4426 MR. McCALLUM: Particularly the two FM stations?

4427 MR. RUSSELL: I think it's quite easy for us to suggest that CJYC-FM was in total disarray when we acquired it from Fundy, that the emphasis was on the AM. It was a dying technology and it was an oldies format. We refined through the keen ear and the talents of Garry Barker, our Vice-President of Programming and Mark Lee who is an excellent programmer of 30 years, they fine tuned it and it's on its way back to health.

4428 MR. McCALLUM: Basically, your PBIT tracks both the synergies that you have been able to make use of having the three stations in the Saint John market, plus the success you have had in turning the stations around from the previous status. Is that correct?

4429 MR. RUSSELL: That's true. That's why we purchased them from Fundy and that's why we invested a further $1.1 million into the market in the last three years.

4430 MR. McCALLUM: Given that profitability is up and given that the listening is up from your acquisition, can you say what would be the impact of licensing this new station then given these facts?

4431 MR. RUSSELL: I think it would certainly change the direction of which the improvements are heading and it would directly impact, particularly this application, would directly impact our AM and we understand the natural way that AMs are going these days.

4432 MR. McCALLUM: Thank you.

4433 MR. RUSSELL: Thank you.

4434 THE CHAIRPERSON: Thank you very much, Mr. Russell.

4435 MR. RUSSELL: Thank you. It will be the last time you'll see us -- today.

4436 THE CHAIRPERSON: Oh, I was going to say --

4437 MR. RUSSELL: Thank you very much. You've been most kind.

4438 THE CHAIRPERSON: Thank you.

4439 Madam Secretary.

4440 MS MacDONALD: Thank you, Madam Chairman.

4441 I would now like to invite our next intervenor, CHSR Broadcasting Inc. to present its intervention to New Brunswick Broadcasting's proposal for the St. Stephen, New Brunswick market.

4442 I would remind the intervenor is given up to 10 minutes for the presentation.

4443 For the record, if you could please introduce the members of your panel and you may begin whenever you are ready. Thank you.

INTERVENTION / INTERVENTION

4444 MS WARD: Good afternoon, Madam Chairperson and Commissioners.

4445 THE CHAIRPERSON: Good afternoon. We are right on the mark here. It is the afternoon.

4446 MS WARD: Yes.

4447 First of all, I would like to introduce the panel that we have. We have John Mathews of Promethean. He is our technical consultant. Myself, I am Tristis Ward. I am the Station Manager for CHSR. This is Alan Wong to my left. He is the Program Director for CHSR and, finally, Melissa Kaestner over here to my far left. She is our fundraising co-ordinator and sales representative for CHSR.

4448 Okay. I am a little bit nervous, if I could have a bit of indulgence here.

4449 THE CHAIRPERSON: Take it easy. Just relax. Take your time.

4450 MS WARD: I'm used to speaking alone in a room.

4451 Our presentation today focuses on our reasons for intervening against the proposed St. Stephen station by New Brunswick Broadcasting Co. Ltd, the impact potential interference will have on service to our community and the solutions that we feel the CRTC could support.

4452 In brief, CHSR-FM is an unprotected station operating at 50 watts on 97.9. Because of its low power, CHSR-FM has a substantial audience outside of its 54 dBu contour. The proposed St. Stephen station may cause interference to the south of our tower, affecting up to one quarter of CHSR's audience.

4453 It is our belief that the Commission should ask the applicant to cover the cost of technical solutions to protect CHSR's present audience and to recognize this contribution as a significant benefit.

4454 THE CHAIRPERSON: You can slow down just a little bit.

4455 MS WARD: I'm sorry.

4456 CHSR-FM is the community based campus station located on the University of New Brunswick/St. Thomas Campus. We began in 1961 as a closed circuit station and were granted an FM licence in 1981. We were one of the pioneers of Canadian campus/community radio and have taken that role seriously by striving for quality community access programming and rewarding participation experience for our volunteers. We have a long-established audience throughout our community of service.

4457 The proposed St. Stephen radio station, if granted a licence under its current application, would result in a reduction of the interference-free coverage of CHSR-FM. Some of the audience that we have developed over 20 years will cease to be within the interference-free contour.

4458 We have expressed our concerns regarding this in our intervention filed on February 10th. In their response to the intervention, New Brunswick Broadcasting Co. Ltd. provided an analysis based on realistic topography which shows that CHSR's present realistic 54 dBu contour is not threatened by interference. Their map shows a distance of 17 kilometres from their 48 dBu contour.

4459 We do not question this finding, but rather would like to point out that there is a misunderstanding about how a small station like ourselves manages to serve our community.

4460 If we relied only on our 54 dBu contour, we would be restricted in coverage to an area that covers not much more than the campus and the downtown core of Fredericton.

4461 Because up until now CHSR's frequency was free of interference, a loyal audience developed and receives a good quality interference-free signal out to the 40 dBu contour. Most radios still work within the 48 dBu contour, that's half of the 54 dBu signal strength, or the 42 dBu contour, a quarter of the 54 dBu signal strength, in absence of interference.

4462 Because CHSR serves our community with only 50 watts, a large listening audience in areas outside the 54 dBu contour are part of the community and may be subject to interference from the proposed St. Stephen station.

4463 When stations occupy first adjacent channels, interference is deemed to take place when the desired signal is less than twice the strength of the undesired. So, for instance, if a listener is in an area where CHSR reaches 48 dBu, there will be interference if the interfering signal from St. Stephen reaches 42 dBu. This interfering contour comes much closer to Fredericton than St. Stephen's 48 dBu. The southern sections of our community would likely be affected by this and the resulting potential interference could impact on up to a quarter of our audience.

4464 At the time that we went on the FM Band our members raised a considerable amount of money and were granted what we felt was a generous media budget by the student unions which support us. However, the burden of expense for Class A coverage was too great, and we were forced to apply as a low power unprotected station.

4465 The price in broadcast coverage was known right from the planning stages: We have a much weaker signal to the south. The suburban population in that direction were and are just as important to us as the campus and downtown.

4466 Our inability to enclose the community we intended to serve within our 54 dBu contour was a restriction which had no affordable solution. We were forced to rely instead on a signal as weak as 40 dBu to reach the outer areas of the community.

4467 We considered the barrier to be a temporary one. It was our intention, from the beginning, to apply for higher power. However, the cost of that application was always considered prohibitive by the student unions of our universities, and while a project was begun several years back, it was continuously hampered by competing priorities on a shoestring budget.

4468 As of May 1, 1999, CHSR Broadcasting Inc. gained financial independence from the student unions and immediately began making renewed plans to improve our broadcast and coverage. Although the project is already under way, it will take time to raise enough capital to complete it.

4469 The areas where CHSR-FM will lose its interference-free coverage likely will not be in the near future able to develop their own community access radio to replace our service. They are very small centres which rely on Fredericton to provide their avenues of expression. As well, a reduced audience area would restrict the ability of CHSR to effectively fulfil our service commitments.

4470 MR. WONG: Madam Chairperson and Commissioners, as Program Director at CHSR-FM, it is my duty and responsibility to ensure that diversity on our program schedule and accessibility to the airwaves is promoted and maintained. We play an important role in a region that lacks the infrastructure necessary to make new Canadians and marginalized residents feel completely welcome and at ease.

4471 CHRS's programming offers a broad variety of voices and choices that brings comfort and support to many different communities, while fostering tolerance among the general population through cultural sharing and social education.

4472 Our broadcast range currently covers Fredericton, its suburbs, and the municipalities encircling the city. CHSR's relationship with these communities is a symbiotic one; we help provide a welcoming and supportive atmosphere for new immigrants via our accessibility and diverse programming, while they, in turn, contribute to our volunteer base, without which we would not be able to fulfil our mandate.

4473 Therefore, interference with our signal from NBBC's proposed radio station in St. Stephen could have serious ramifications for our operations as well as for the areas we serve.

4474 A number of our volunteers come from towns that would fall within the affected zone, such as New Maryland and Rusagonis, as well as the native reserves at Kingsclear and Oromocto. Losing our listenership in these areas would mean losing the ability to draw new volunteers to join CHSR, which would ultimately have a negative impact on our program schedule. Indeed, the presence of certain shows unique to CHSR can be directly attributed to our audiences beyond Fredericton's downtown core.

4475 To give an example, for almost a decade we have been airing a show called Baha'i Voice, which is aimed at followers of the Baha'i faith. This half-hour program would not have come into existence were it not for the voluntarism of Baha'is living in New Maryland who desired to hear and share programming reflecting their experiences. Disruption of our signal in places like New Maryland would discourage other emerging and developing communities from joining CHSR and broadcasting material that is relevant to them.

4476 Also on our schedule is Fredericton A.M., our breakfast show run by and dedicated to the interests of mature and senior citizens from Fredericton and the surrounding vicinities. Since its first broadcast in November 1999, Fredericton A.M. has gained a very large following, receiving a barrage of accolades, donations and requests daily from Stanley to Oromocto to Harvey. Fredericton A.M. supplies a valuable and beneficial service to an often neglected generation. If the signal from the proposed station in St. Stephen overlaps onto ours, then our older listeners in the affected areas would face exclusion from accessing one of the few sources of music and information that speaks to them.

4477 As Article 14 of the CRTC policy on campus radio states, "Campus stations play a unique and valuable role in the communities they serve." It is my hope that we be able to continue to fulfil this role for all the communities we presently serve.

4478 MS KAESTNER: CHSR-FM plays an essential role in local talent development in our area. We do so by broadcasting demos and by holding special events in Fredericton and its outlying communities. Should our listening audience be decreased due to the signal of the proposed station in St. Stephen, that role will be severely lessened and the local scene will be greatly affected.

4479 First, CHSR provides the ability for new acts to get a demo recording to the public. By CHSR's own request, it is part of our licence to air one demo recording per hour. Furthermore, if a band does not have a demo, CHSR's production studio is open for that purpose. With decreased broadcast coverage, fewer people will hear these demos.

4480 Second, CHSR hosts all ages oriented events, like Battle of the Bands, punk shows and raves. These events feature emerging local and independent artists, most of them previously unknown. Based upon the turnout and feedback, we have succeeded in showing that there is a large pool of local talent in these genres. As well, despite the current negative perception of the punk scene and the rave scene portrayed by the mainstream media, CHSR has successfully held events that are free of drugs and alcohol, violence, harassment and death. Because of this, CHSR has helped pave the way for future events in the Fredericton area.

4481 The fact that these events have been problem free and are the largest of their kind in Fredericton is due to the massive turnout at each event. While we promote these events through posters and word of mouth, CHSR relies heavily upon on-air spots to reach our listening audience. As our postering efforts tend to be directed at downtown Fredericton businesses such as bars, music stores and cafes, those outside of the city centre tend not to see them. It is obvious that should our broadcast area be affected, so will the success of each event.

4482 For example, the entrants of Battle of the Bands were required to preregister and submit demos to enter the cost. One third of the Fredericton bands were from Oromocto and New Maryland. They learned about the competition by tuning in to CHSR.

4483 Consequently, all of their demos are currently in our Playbox which consists of almost 200 current titles. The 30 most requested and played albums of the week comprise our Top 30 Chart, which is distributed nationally and internationally. Since the Battle on February 12th, almost all of the 19 competitors have charted for at least three weeks. This week's chart has three of these bands. Again to state the obvious, this will be affected if our interference-free coverage area is less than it is now.

4484 As you can see, CHSR provides an irreplaceable contribution to local talent development. And in order for us to be successful in doing this, we count on our listenership in Fredericton and outlying areas to tune in and to come to the events. All of these things come together to create a healthy and thriving local scene. If areas such as Oromocto, New Maryland and Silverwood cannot tune in due to the potential interference, they will not hear the music and they won't be at the events. This will lead to less than successful events, meaning less exposure for the local artists, which ultimately leads to fewer local artists.

4485 Please help CHSR to protect the local scene. Thank you.

4486 MS WARD: Hopefully we have been able to convey in this presentation how great the need for protection against interference is for our communities, how fragile the current service that CHSR provides is and the necessity of guaranteeing the continued coverage of CHSR-FM to our loyal audience.

4487 We have received assurances that the St. Stephen station will not interfere with our present 54 dBu coverage. This assumes a coverage area which is inadequate to serve our entire community. We understand how such confusion can arise. No one in the industry expects a full-time radio station to be so dependant on such a weak signal.

4488 NBBC has been co-operative with CHSR in some other ways. They have assured us that they will not ask the station to move on the band. This is despite the fact that CHSR's frequency, being third adjacent to their simultaneous application intended for Saint John at 97.3 MHz, will interfere with a tiny part of that station's coverage area in Fredericton.

4489 We also note that in their response to our intervention that NBBC was prepared to assist CHSR-FM's operations in any way they could, but that direct funding was out of the question. We believe that this offer was made out of a genuine sense of responsibility to community access radio.

4490 However, CHSR needs cash, equipment and co-operation to solve this problem. We believe that NBBC will reconsider its position now that it better understands what is at stake for CHSR.

4491 It is not our position that the proposed station not be granted a licence, but rather that accommodations be made to allow us to continue interference-free broadcasting to our community.

4492 We request that a condition of licence be imposed on NBBC that requires they provide a timely technical solution to our coverage needs to ensure that our present audience continues to receive adequate service.

4493 Further, we would like to suggest that the CRTC encourage the applicant by recognizing the applicant's contribution as a significant benefit to the Canadian broadcasting system.

4494 THE CHAIRPERSON: Thank you.

4495 Commissioner Noël, please.

4496 COMMISSIONER NOËL: I am not sure if my ears are as fast as your tongue.

4497 MR. WONG: We rehearsed that.

4498 COMMISSIONER NOËL: Actually, we have not seen your documentation here prior to this intervention. There are actually little questions I want to ask, but my main concern before you showed us your document was to know if you had a study of some sort to anchor your intervention. I guess you have provided us with a copy and did you provide the NBBC people with a copy of this?

4499 MS WARD: We did correspond with NBBC after they filed their response, when we realized that they had misunderstood, did attempt to convey this exact information.

4500 We didn't have the maps on hand at the time, but we basically put the essence of what these conveyed into that letter.

4501 COMMISSIONER NOËL: And there are still discussions ongoing with NBBC about the way to resolve this problem?

4502 MS WARD: Well, we actually haven't received a response to the letter yet. We are anticipating, of course, that they will enter into a dialogue with us to try to solve the problem.

4503 COMMISSIONER NOËL: I don't have any other questions. My questions were all related to the fact that we didn't have a study on file. Thank you very much.

4504 THE CHAIRPERSON: Legal counsel

4505 MR. McCALLUM: Just to clarify, one of the maps that is attached at the back, after the chart I guess, it's a map that says Stacey, Lawson Associates. Is that the map that NBBCL provided?

4506 MS WARD: Yes. The line that you see on the map, the striped line, which comes fairly close to CHSR-FM's realistic 54 dBu contour, that line was simply added on by Promethean to indicate where we believe the interference -- the signals will meet, but otherwise this is their map that we have used to show this.

4507 MR. McCALLUM: Sorry, I see a dotted line and an arrow pointing to it. I see sort of a little striped line closer to Fredericton. Are you referring to that line?

4508 MS WARD: Yes, I am referring to that.

4509 MR. McCALLUM: That's the one that has been added by yourselves?

4510 MS WARD: yes.

4511 MR. McCALLUM: Can you explain what that line represents again, please?

4512 MR. MATHEWS: That is roughly where we expect the interference-free contour to lie for CHSR and a line beyond which coverage will not necessarily be interference free from the new proposal from St. Stephen.

4513 MR. McCALLUM: Again, I am not quite sure I understand. What dBu strength does it represent coming from Fredericton and what dBu strength does it represent coming from St. Stephen?

4514 MR. MATHEWS: That varies along the length of the line. It simply represents the ratio between the two, the point at which that ratio is no longer adequate to protect the Fredericton service.

4515 MR. McCALLUM: Again, where does your signal normally meet in relation to that line? Where does it normally intersect that line?

4516 MR. MATHEWS: I am not quite sure if I follow your question.

4517 MR. McCALLUM: I am thinking about 3 millivolts per metre signal strength, for example.

4518 MR. MATHEWS: I could extend a bit on that. For instance, at the mid-point of that line, directly south below Fredericton, that would be at roughly the 48 dBu contour of CHSR. It would be the 42 dBu interfering contour from the St. Stephen proposal.

4519 MR. McCALLUM: Is that about where I read "17 kilometre clearance"?

4520 MR. MATHEWS: Just above that point, yes.

4521 MR. McCALLUM: So that's where your three millimetre --

4522 MR. MATHEWS: That's the point at which interference begins to kick in from St. Stephen if you are trying to receive the Fredericton signal, yes.

4523 MR. McCALLUM: And what signal of yours hits that point there then?

4524 MR. MATHEWS: That's about the 48 dBu signal for CHSR and roughly the 42 dBu signal for St. Stephen. It's an approximation.

4525 MR. McCALLUM: Okay. Just one clarification, your last paragraph in your written intervention at page 15, where you say:

et cetera.

4526 In this context we are considering NBBCL as the applicant. Do you mean NBBCL or do you mean CHSR?

4527 MS WARD: I meant NBBC. Obviously, if a commercial endeavour takes the opportunity to assist the non-profit sector, I believe that there should be some sort of recognition for that be given. So if they were to assist us and prevent us from losing our coverage area to the south, then we believe that they should be recognized for that. We think that's a good thing for commercial broadcasters to do.

4528 MR. McCALLUM: So when you say:

In that context you mean NBBCL's contribution?

4529 MS WARD: Yes.

4530 MR. McCALLUM: Thank you.

4531 THE CHAIRPERSON: Commissioner Cardozo has a question.

4532 COMMISSIONER CARDOZO: Thank you, Madam Chair.

4533 I just want to get some more specificity to what you have said because it's still a bit vague in my mind. I suppose it would have been useful if there had been more communication between you and NBBC before this hearing and one way I guess would have been if you had a specific proposal to them.

4534 They will have a chance to reply in the final stage of this hearing. I just want to get very clearly what it is you are looking for from them and then that will be on the record and then I'd like to hear the response. The hint I got earlier was that they were not looking at financial assistance, but they would assist you. What do you need or do you think that you could reasonably ask them for?

4535 MS WARD: Unfortunately, the need does involve a certain amount of financial assistance. We don't have the money to increase our coverage or to move to a different frequency to prevent this immediate interference. It is going to happen as soon as they turn on their transmitter and we will lose those communities we serve.

4536 I mean, I am not sure really what they are prepared to give because we haven't actually gotten beyond that general description that they would be prepared to do something. So I can't tell you. I can tell you what we would like to ask for. I can't tell you how that might fit in their plans.

4537 The best thing for CHSR I think would be for us to be able to increase in power to the extent where we can contain our current coverage area within a 54 dBu contour, within basically a protected range on the same frequency that we currently occupy.

4538 To move to a different frequency and then go up in power, or to move to a different frequency and then face the possibility of being boxed in or overwhelmed again by another applicant would be far more expensive for us, and also it has other drawbacks in the way of public relations. We do not have at all a budget for public relations for the station beyond what we already put out in order to cover our existence from year to year as a non-profit shoestring organization. We do what we can.

4539 I have to say that realistically we are not able to convey to our entire coverage area that CHSR is still in existence on a different signal. So we would prefer to stay on the same signal, just so that we don't confuse our audience.

4540 I guess a third possibility, although I doubt it's very palatable for either party, would be if they were to delay going on the air, giving CHSR enough time to raise the money ourselves, if they don't have the money to provide for it. However, it would take us a little bit more time to do this. It certainly couldn't be done within maybe a two-year period. Maybe we might need two to two and a half years in order to accomplish that goal.

4541 COMMISSIONER CARDOZO: Thank you.

4542 Thank you, Madam Chair.

4543 COMMISSIONER NOËL: Maybe they could provide you with a loan?

4544 MS WARD: Well, CHSR has managed to stay debt free and managed to be able to keep our operations from being in a deficit position for a long time due to some careful planning.

4545 We're a little bit on shaky ground. Even though we are a 40-year old organization, we are also a one-year old organization, in that we only gained financial independence last year, and so for us to take on a loan at this time is really almost as terrifying as moving to a new signal. We are not really sure what that would do to our budget, what that might do to future management decisions and how that would restrict us.

4546 We are hoping that since this isn't necessarily our fault that we would not have to end up in a debt situation.

4547 THE CHAIRPERSON: Thank you very much.

4548 Madam Secretary, we will continue.

4549 MS MacDONALD: Thank you, Madam Chairman.

4550 I would now like to invite the next intervenor, Courier Newspapers Ltd. to come and make its presentation to the New Brunswick Broadcasting proposal for the St. Stephen, New Brunswick market. I would remind the intervenor that you are given up to 10 minutes for your presentation and if you could please introduce yourself for the record. You may begin whenever you are ready. Thank you.

INTERVENTION / INTERVENTION

4551 MS CUNNINGHAM: Thank you.

4552 THE CHAIRPERSON: Hello. Welcome.

1232

4553 MS CUNNINGHAM: Madam Chair, members of the CRTC, my name is Heather Cunningham and I am here today in opposition of the proposed radio station in St. Stephen.

4554 I am President of Courier Newspapers Limited, which publishes two award winning community newspapers, one being the St. Croix Courier, which began publishing in 1865. It is the oldest independent weekly in Atlantic Canada. We are an employee-owned company, have been since 1987 and today I am speaking on behalf of the 19 shareholders and employees.

4555 We are not a huge corporation with unlimited resources. We are very active members in our community and in organizations in our community, particularly business organizations, such as the St. Stephen area Chamber of Commerce, the BIA Association, the St. Stephen Development Board.

4556 Our employees and our shareholders are very involved and knowledgeable of and interested in the communities that we live in and we serve.

4557 We are the paper of record for Charlotte County, we have been for 135 years and with that in mind before I proceed with concerns about the application, I would like to bring forth an issue concerning this CRTC process.

4558 It's our understanding that these public hearings, that this entire process is an opportunity for which the public is invited to be involved with. There are 28,000 people in Charlotte County that turn to the pages of the St. Croix Courier every week for news and information, but at no time did the CRTC publish notice of this hearing or this process in the St. Croix Courier.

4559 The CRTC did not provide them with information in their own community newspaper. Instead, the ad appeared in the Telegraph Journal, which is a provincial daily paper owned by Brunswick News which owns New Brunswick Broadcasting which happens to be the applicant.

4560 This could be seen as a conflict and should have been considered by the CRTC. We are disappointed in the lack of proper CRTC notification given to our readers and can't help but notice that we are the only intervenor from Charlotte County involved in this process.

4561 Moving on, we maintain that St. Stephen is an international community, unlike others that are in the province. Woodstock is 22 kilometres from the border. Edmundston is a city with a much larger population. We have a very small population. We sit directly on the border. Our bridge spans about a tenth of a kilometre to Calais, Maine. We are separated only by the St. Croix River.

4562 We are somewhat isolated, both St. Stephen and Calais, in that we are each an hour, at least an hour away from any other larger centre, such as Saint John or Fredericton or Bangor, Maine.

4563 Historically we have relied on each other because our populations in these two communities are not large enough to maintain separate services. Calais has an indoor pool. Calais has a McDonald's. St. Stephen has an arena and a Kentucky Fried Chicken. They have Wal-Mart. We have Canadian Tire. They have radio stations. We happen to own newspaper presses.

4564 The potential advertising revenue expected to be generated for this proposed radio station in St. Stephen is of great concern to us. NBBC Broadcasting makes numerous references in its application to the economic growth in southern New Brunswick and I think we need to take a closer look at that.

4565 In Charlotte County we have three offshore islands, Grand Manan, Deer Island and Campobello. They rely on fishing and very seasonal tourism.

4566 On the mainland there is a community by the name of St. George. It relies heavily on aquaculture and exporting. The community of Blacks Harbour may be familiar to you. It's home to Connors Brothers Limited, a huge exporter who has grown into world markets, providing hundreds of jobs for that community, but retail is almost non-existent in that particular community. St. Andrews, another name that you may be familiar with, a famous summer resort area, very seasonal. Most businesses are open for five months of the year.

4567 In St. Stephen there has been industry growth. We have a business park that appears to be flourishing. Most of the businesses are in the trade of export. These exporters do not need to advertise locally. Their markets are not here. There are no new advertising dollars generated. Jobs are created, but there is no growth in retail and we could ask the question why.

4568 The retail base in St. Stephen had already started to erode long before cross-border shopping, which consequently resulted in a number of additional small local retailers closing.

4569 In NBBC's response to our intervention they stated that, and I quote:

4570 But we would argue that when products and services are no longer available locally, shoppers are forced to go elsewhere out of their local market and a pattern develops.

4571 In St. Stephen this continues to be the case. New jobs do not appear to mean growth in retail. Consumers continue to leave the community and the county in search of selection, variety and more competitive pricing.

4572 NBBC's response to our intervention also made reference to comments made by St. Stephen Mayor Alan Gilmore in his annual State of the Town Address, as printed in our paper, the St. Croix Courier.

4573 The applicant maintains that Mayor Gilmore's positive comments prove the economic growth in the region. True, they are very positive comments concerning industry, waterfront development, et cetera, but it should be pointed out that the word "retail" appears nowhere in this entire article. Why? Because there was nothing positive to comment on.

4574 I have included in a handout that you have been provided with a copy of an interview with St. Stephen Development Officer Don Saunders. In the Tuesday, March 7th edition of the Courier he explains the state of retail in our community.

4575 For the benefit of those on the Commission who have never visited St. Stephen, I have also included in my handout a number of photos of retail locations that can be seen throughout the community's business district, which extends from the town limits to the International Bridge, a distance of two and a half kilometres. The captions under each photo, I believe, are self-explanatory to further indicate the retail situation in St. Stephen.

4576 So the question remains, why is New Brunswick Broadcasting so interested in coming to St. Stephen? They argue that the 28,000 residents of Charlotte County have waited long enough for their own radio station. In the Telegraph Journal from Tuesday, March 7th in an article entitled "New Brunswick/Maine Radio Stations Fight for Listeners Saint John Broadcaster Hopes to Open New Station in St. Stephen" it reads:

4577 This statement is somewhat of a mystery to us. We know of no attempts made by any radio station to ever consider locating in Charlotte County. Why now? Certainly not because of growth in retail or growth in advertising revenue.

4578 In the same Telegraph Journal article it read:

4579 This may be the case in some border regions across the country, but it's not the case in the St. Croix Valley.

4580 WQDY radio, for instance, has serviced our international region for over 40 years, broadcasting Canadian community events, Canadian live election coverage, Canadian hockey and basketball, Canadian information and news. It also happens to be owned by two Canadian-born citizens and many of their staff are Canadian and reside in Canada.

4581 Are Charlotte County residents lacking Canadian exposure? We think not. Our public broadcaster, CBC, does a marvellous job. Listeners who choose to do so tune in to some Saint John radio stations and the local radio stations happen to be operating from the other side of the St. Croix River, but still very much a part of the extended border community in which we live.

4582 We have been accused by New Brunswick Broadcasting of submitting an intervention that is largely self-serving. I would ask what interventions at these hearings are any different than ours? Both those in favour and those opposed are simply expressions of concerns or endorsement that are made by an individual, an organization or a business that have an interest in the outcome.

4583 Is the application by New Brunswick Broadcasting for an FM radio station in St. Stephen self-serving? Certainly it is. Are they applying for this radio station in Charlotte County for the benefit of 28,000 residents or for their own benefit?

4584 In conclusion, we would suggest that the only reason a non-severable application has been made for St. Stephen is with the hope that they will achieve what they really want, which is approval for an FM station in Saint John, New Brunswick. Thank you.

4585 THE CHAIRPERSON: Thank you.

4586 Commissioner Noël please.

4587 COMMISSIONER NOËL: Mrs. Cunningham, I will just -- before we start, you know we have broad regulating powers, but I don't think they are that broad and we don't yet regulate the newspaper industry, or not yet at least.

4588 MS CUNNINGHAM: No.

4589 COMMISSIONER NOËL: Then the question I am asking you is in that circumstance why should the Commission be concerned with increasing media competition in Charlotte County?

4590 MS CUNNINGHAM: I think that the basis of their argument has been all along that we have been without for so long, that St. Stephen has been without a radio station, and our concern is that unless you have lived in a border community and done business in a border community that you may not understand totally what it is like to be in a situation where you are subjected constantly to fluctuation of the value of the dollar.

4591 These communities are totally -- when you talk about non-severable they are non-severable. I know that you cannot appreciate maybe fully the position that we are in, but we have been here since 1865 and the basis of them entering our market now is that there is a service that has never been provided in the community in which we have been serving this whole time, and we would like to point out that it may not be the type of service that is found in other areas and other communities and other cities in Atlantic Canada or in the country, but that we have had community service and community radio in which we can call our own and have called our own for a number of years.

4592 COMMISSIONER NOËL: I don't have any more questions.

4593 THE CHAIRPERSON: That completes our questions. Thank you for being here.

4594 MS CUNNINGHAM: Thank you very much.

4595 THE CHAIRPERSON: Madam Secretary, please.

4596 MS MacDONALD: Thank you, Madam Chair.

4597 I would now invite the next intervenor, the National Campus and Community Radio Association/L'Association Nationale des Radios Étudiantes et Communautaires to come forward to present its intervention to New Brunswick Broadcasting's proposal for the St. Stephen, New Brunswick market. Again, I would remind the intervenor is given up to 10 minutes for the presentation. For the record, I would ask the intervenor to introduce herself. Thank you.

INTERVENTION / INTERVENTION

4598 MS YORK: Good afternoon, Commissioners, staff members of the Canadian Radio-television and Telecommunications Commission and colleagues. My name is Fiona York and I am making a presentation to you as the President of the National Campus/Community Radio Association. I am also the station manager of CKDU-FM, a community-based campus station in Halifax, Nova Scotia.

4599 The national Campus/Community Radio Association, or NCRA, is a non-profit organization committed to volunteer-based, community and campus radio broadcasting in Canada. The NCRA is dedicated to advancing the role and increasing the effectiveness of campus and community radio in Canada. It provides information and networking services to its members, representing the interests of the sector and promoting public awareness and appreciation for community and campus radio in Canada and abroad.

4600 The NCRA filed a letter on February 10th, 2000 to the CRTC opposing the application of the New Brunswick Broadcasting Company Limited. The NCRA is acting in solidarity with CHSR-FM in Fredericton, for the reasons stated in their letter of February 10th, 2000 and in their presentation today.

4601 Additionally, and in particular, we are concerned that the successful application of the New Brunswick Broadcasting Company Limited may have an irrevocably detrimental impact on campus and community stations across the country.

4602 My remarks today, therefore, are not intended to further the statements and technical contentions of CHSR, as I feel my colleagues there have made sufficient mention of those important points. But rather, I wish to address, in order, the absolutely necessary role of campus and community stations, such as CHSR, in the Canadian broadcasting spectrum, and the need for formal protection of small stations.

4603 This is a case of a small, unprotected secondary station being endangered by a primary commercial station. If CHSR were to lose part of its coverage due to the encroaching primary station, the listenership would lose the irreplaceable and valuable service of a community-based campus station. The loss of coverage by a secondary station resulting from interference by a primary station damages the ability of the broadcast system to fulfil the spirit and ideals of the Canadian Broadcasting Act.

4604 The NCRA believes that the Broadcasting Policy for Canada, as described in the Broadcasting Act, is currently enacted and fulfilled by the efforts of campus and community broadcasters. These small stations, ranging from 50 to 18,000 watts, in both mandate and legislation epitomize many of the defining aspects of the Act.

4605 The Commission's FM Policy for the Nineties deregulated, to some extent, commercial broadcasters, at the same time as campus and community stations were growing in their ability to provide diverse programming. We feel strongly that CHSR and other campus and community stations are providing an essential service not provided by commercial stations, and that jeopardizing the coverage of these stations in effect jeopardizes the legislated mandate for the Canadian broadcasting spectrum.

4606 The Act makes several references to supporting Canadian talent and expression, especially locally. The new campus radio policy and the stations' own histories show that this is undertaken with enthusiasm, faith and goodwill.

4607 Referring to selections of Category 3, specialty, music that must be Canadian content, the campus radio policy, Public Notice 2000-12, states in section 47:

4608 Indeed, the Campus Radio Music Use Study: Aggregation of Canadian Content Data, compiled by the CRTC in 1998, indicates that Cancon in Category 3 selections ranges from 16 per cent to 20 per cent on campus stations.

4609 In section 45 of Public Notice 2000-12, the new campus radio policy, the Commission notes that:

4610 Conversely, the Commission's new policy for commercial radio stations, released in 1999, includes the specific requirements that Canadian musical selections be played in prime time hours and in non-montage formats

4611 In Public Notice 2000-12, section 62, the Commission states that:

and further says that it expects campus stations to continue to undertake initiatives in this regard.

4612 CKDU, for example, released its third compilation of local artists in 1999; the same year we hosted a series of shows featuring unsigned local acts that was broadcast live on the station, and were a major supporter of the internationally-known Atlantic Canadian alternative music festival. CAPR in Cape Breton organizes an annual Thanksgiving weekend event promoting local bands.

4613 I attended the annual Breakfast with the Broadcasters at the 1998 Music Week organized by the Music Industry Association of Nova Scotia, during which every local artist present complained that they received little or not promotion by the local commercial radio stations. Our current chart has 20 per cent local acts in the top 30; one to two local releases placed in the top five at CKDU from May to September 1999. CHSR has already outlined in detail its efforts on behalf of local artists and regional talent.

4614 In addition to the preceding, it was suggested at the Campus Radio Review Discussion, held at the University of Victoria on June 12, 1998, that programming at campus and community stations is so rich in its diversity and its presentation so informative, that programmers could be considered Canadian talent and their training the development of national talent.

4615 These are examples of the spirited undertaking of a national broadcasting directive by campus and community radio stations. Should coverage of a secondary licensee such as CHSR not be protected from encroachment by primary stations, these contributions could be lost.

4616 The Broadcasting Act gives consideration to multiculturalism, aboriginal programming and bilingualism. There are currently in existence many francophone community radio stations in Quebec, a multilingual but heavily francophone oriented community station in Montreal, and a bilingual community based campus station in Ottawa. In addition, many other community based campus stations have French-language programs; both CKDU-FM in Halifax and CHSR have weekly programs produced in French.

4617 CHSR-FM in Fredericton also offers a weekly aboriginal program, and other community and campus stations have programs produced by First Nations people, including CKDU-FM and CKCU-FM in Ottawa. CKDU has, in addition, broadcast an annual full-day feature program dedicated to aboriginal issues, and a one-time full-day show critically examining the impact of the 1492 "discovery" of the Americas on indigenous peoples.

4618 In 1997, CFUV in Victoria devoted three full days to a First Nations broadcast. Most campus and community stations routinely air contemporary and traditional Canadian music by First Nations artists, such as Tudjaat and The Fire This Time.

4619 In terms of multiculturalism, it cannot be disputed that campus and community radio stations play a huge and growing role as media outlets for cultural communities across the country. For several years, CKDU has wavered at the 15 per cent mark for ethnic programs, broadcast in English, a third language, or a combination of the two. CKDU currently airs, among other ethnic shows, three Arabic programs and a yearly, award-winning all-day Arabic broadcast; Arabic is reportedly the second-most spoken language in Nova Scotia. This has been similar to the experience of most community based campus stations, as they found that they are often the only media or communication tool for new communities or ethnic groups in a particular area.

4620 The Commission responded in 1999 with increased percentages of ethnic programming that can be aired on non-ethnic, campus and community radio stations. The CRTC now allows such stations to broadcast up to 40 per cent third-language programming, according to Public Notice 1999-117.

4621 All of this indicates that bilingualism, multiculturalism and aboriginal peoples are well served by campus and community radio stations. Allowing primary stations' signals to block or limit coverage of secondary stations means that there will be less attention provided to these issues.

4622 Range and variety are also referred to in the Broadcasting Act. We feel that we make significant contributions in these areas as well.

4623 Campus and community stations play an essential role as local, community-based services that provide airtime to multicultural, francophone and aboriginal groups, promote Canadian talent and offer highly diverse programs not heard anywhere else.

4624 The New Brunswick Broadcasting Company Limited application is an example of a large broadcasting entity endangering the coverage of a small, unprotected community-based campus radio station. As a secondary station lacking the financial means for a costly upgrade to primary, CHSR would have no recourse in this situation. Placing this type of financial burden on a small station could result in either its succumbing to the larger station, or the forfeit of its non-market driven orientation in favour of more financially favourable or advertiser-friendly programs.

4625 The CRTC states in Public Notice 2000-12, section 14:

4626 The CRTC has indicated by the creation of a "developmental licence" for both campus and community licensees that it recognizes the importance of independent, community-based and student-oriented radio stations; now the CRTS needs to protect the unprotected small stations.

4627 There must be a mechanism in place to prevent unprotected secondary stations from the possible loss or decrease of coverage. There are currently over 20 such stations, and the new "developmental" licence ensures that there will be many more such stations in the next few years. This may be accomplished by:

4628 A one-time donation encouraged and recognized by the Commission;

4629 An annual percentage-based contribution; or

4630 The creation and implementation of a CRTC-mandated commercial radio fee that supports small non-profit stations.

4631 The continuing development of the constructive relationship between for-profit and not-for-profit radio stations requires that the for-profit stations must recognize the important role of campus and community radio stations play in providing diversity in the Canadian broadcasting system.

4632 In closing, I ask the Commission to consider CHSR's request for the protection of their frequency and coverage, in the interest of their community, listenership and irreplaceable service. I also ask the Commission to consider the creation of a mechanism to protect secondary-status stations from interference from commercial stations, in the interests of a diverse, multicultural and strong Canadian broadcasting system.

4633 Thank you for your attention. I would be pleased to respond to any questions.

4634 THE CHAIRPERSON: Thank you very much, Ms York.

4635 Commissioner Cardozo, please.

4636 COMMISSIONER CARDOZO: Thank you, Madam Chair, and welcome here, Ms York.

4637 I just have a few questions. I appreciate the overview you have provided us from the perspective of the NCCRA on our policy, especially the new campus policy which your organization was quite actively involved with.

4638 There are a number of things you have mentioned here in terms of what CHSR do and perhaps what community or campus stations do in terms of serving the student body, as well as the wider community, especially with regard to multicultural needs, francophone needs, the aboriginal needs.

4639 Let me just ask you about CHSR. The three proposals you've got on the last page of your oral submission, you are suggesting that the one-time donation, the annual percentage-based contribution and the radio fee, that be paid by who, by the commercial stations. Is that your suggestion or by the campus?

4640 MS YORK: Are you at item (c)? Oh, the annual percentage-based contribution?

4641 COMMISSIONER CARDOZO: There are three things you are suggesting there, (a), (b) and (c) on the last page of your oral submission.

4642 MS YORK: Each of them would be fees that were paid by commercial stations, but in (a) and (c) we are suggesting that they be mandated by the CRTC, so it would be a mechanism for the CRTC to ensure that these stations had the financial resources to protect themselves and that it be done through commercial stations.

4643 COMMISSIONER CARDOZO: The issue which you raised here and also in your written submission, which is the concern faced by I think in your written submission you suggest by a large number of campus stations, that you can get I guess crowded out by other stronger frequencies. Is that an issue that you address during the review of our campus policy, or is this something you have been addressing for a while, or is this the first time?

4644 MS YORK: I believe this did not come up during the review, but it is something that this case we feel highlights. We feel very strongly that there should be a mechanism because otherwise there are these stations. I think actually the review may have brought that forward to us because of the creation of the developmental licence, where we can see that there are going to be a large number of groups now that we are taking advantage of that. So there will be many more stations in this position.

4645 COMMISSIONER CARDOZO: So it's not all campus radio stations that would face this type of situation?

4646 MS YORK: It's the unprotected, the secondary stations or the ones that are 50 watts and under. So looking right now at the stations, the FM stations, the campus and community stations, there are about 20 that fit into that category now but, of course, we can see that increasing.

4647 We also know that historically there are stations already that were in that position that actually did -- were not able to compete with the commercial stations. There are already stations who have been impacted by this type of situation.

4648 So here it is being brought to life by the situation with CHSR. We want to see that, of course, we are interested in this particular case, but we also wanted to see that there is some mechanism to protect these stations in these circumstances.

4649 COMMISSIONER CARDOZO: And what is your recommendation with regards to CHSR, as to how we --

4650 MS YORK: CHSR is asking for what I have here --

4651 COMMISSIONER CARDOZO: Sorry, let me put it differently. What is your recommendation to how we should address the St. Stephen application?

4652 MS YORK: I would support what CHSR has requested, which is a one-time donation from the St. Stephen application that would cover the cost for them and they have gone into detail on that, but we would support that.

4653 They have also suggested that it be recognized by the CRTC and there have been applications where it has been specifically noted in the Public Notice, if an applicant has been approved by the CRTC that they have made a particular contribution and that has been recognized as their contribution to the community or a donation.

4654 COMMISSIONER CARDOZO: How did you become aware, or I should have asked CHSR this question, but do you know how they became aware of this particular concern to their frequency?

4655 MS YORK: I believe that it was noted by their engineer, but only very shortly before the close of the intervention period, so they didn't have a lot of time.

4656 I know that they worked very hard to have a dialogue with the applicant to resolve the situation without having to be at the hearing to ask the CRTC to resolve it. But I believe it was brought to their attention by their engineer.

4657 COMMISSIONER CARDOZO: Okay. Thanks very much. Those are my questions.

4658 THE CHAIRPERSON: Legal counsel

4659 MR. McCALLUM: Just to be clear, you are suggesting that the one-time donation be recognized by the Commission as a Canadian Talent Development initiative. Is that what you are suggesting?

4660 MS YORK: That might be the only mechanism that exists right now to do that in the case of CHSR because I know that commercial stations are asked already to make donations for Canadian Talent Development and that has been done in the past too. There is one situation already where there is a commercial station that makes an annual contribution to the NCRA for campus and community stations for that purpose.

4661 But when I suggest that that might be one of the options that is used on a more long-term basis, it wouldn't necessarily be in the form of Canadian Talent Development, but that is probably one logical possibility.

4662 MR. McCALLUM: And what is the example that you refer to?

4663 MS YORK: Standard Broadcasting.

4664 MR. McCALLUM: And where?

4665 MS YORK: Sorry?

4666 MR. McCALLUM: And where?

4667 MS YORK: They are a network, so they are not based in one -- they have a number of stations. They are not based in one particular place.

4668 MR. McCALLUM: Are they giving it to the national organization then?

4669 MS YORK: They provide funds to the national organization and they are distributed partly in the form of cash awards to campus and community stations every year.

4670 MR. McCALLUM: Across the country?

4671 MS YORK: Yes.

4672 MR. McCALLUM: Thank you.

4673 THE CHAIRPERSON: Thank you very much.

4674 Thank you, Ms York.

4675 Madam Secretary.

4676 MS MacDONALD: Thank you, Madam Chair.

4677 This concludes the presentation by appearing intervenors and we will now move to the next phase which is Phase III, where New Brunswick Broadcasting Company Limited is given an additional 10 minutes to comment on or rebut interventions filed to its applications. Again, questions may follow.

4678 I would ask that members of the applicant come forward to make their presentation. Thank you.

4679 I would also ask that members of the panel introduce themselves again for the record. Thank you.

4680 THE CHAIRPERSON: Please proceed, Mr. Ferguson.

REPLY / RÉPLIQUE

4681 MR. FERGUSON: Madam Chair, first of all, in regards to the intervention by Maritime Broadcasting, despite the fact that there were some factual points in their intervention that we would take serious issue with, we are going to let our response to their intervention that was issued in writing, we are going to let that stand.

4682 In regards to the intervention from CHSR radio, do I understand correctly that new information has been provided to the Commission in regards to that matter? And, if so, New Brunswick Broadcasting has not had an opportunity to look at that information.

4683 THE CHAIRPERSON: I will turn to legal counsel.

4684 MR. McCALLUM: The only information that has been attached, and they should give you a copy of it, is a chart from the music that they have. The second page of their presentation has the same chart that you had in response to your intervention with the dotted line added.

4685 The next page of it is a topographical map showing Fredericton and outlying communities.

4686 MR. FERGUSON: Because we had not seen any of that new information, so I would hesitate to respond to the intervention from CHSR at this point until we have had a chance to --

4687 MR. McCALLUM: What sort of time do you need to look at that? As I say, the second-to-last page is an aerial photo of Fredericton and surrounding area and the last page is CHSR 97.7 Sound Guide, so what sort of time do you need to look at that?

4688 MR. FERGUSON: Even just a few minutes, counsel.

4689 THE CHAIRPERSON: Certainly.

4690 MR. FERGUSON: Now, in terms of the remainder of our rebuttal time, there are a couple of key points that New Brunswick Broadcasting would like to make and to ensure that the Commission understands our position.

4691 First of all, we opened our hearing this morning with discussion about the Commission's analysis of the Maritime stations here in Saint John and there seemed to be some confusion or certainly discrepancy between your analysis and our analysis.

4692 It was clearly established by the report that we commissioned by an internationally recognized music consultancy that in the case of K-100 in Saint John that its program format was 18 to 54. This is an extensive report and we are more than happy to turn it over to the Commission. This report formed the basis to a large extent of our identification of the key demographic of 35-44 on which to base our application.

4693 THE CHAIRPERSON: Could you just give me a few moments now, Mr. Ferguson?

4694 MR. FERGUSON: Absolutely.

4695 THE CHAIRPERSON: I will just take a few moments to confer with counsel. Thank you.

--- Pause / Pause

4696 THE CHAIRPERSON: I'm back. Thank you for your offer, but considering that the conclusions are available and this is reply phase, thank you for your offer, but we don't feel we need the report. Thank you.

4697 MR. FERGUSON: Thank you, Madam Chair.

4698 The second point that we would like to make revolves around the area of revenue, advertising revenue which we discussed this morning. There seemed to be, at least in our minds, some misunderstanding as to whether or not we clearly made the point in terms of development of new advertising dollars.

4699 New Brunswick Broadcasting carefully surveyed its existing clients, at least many of its existing clients, with the outline of our proposed FM service and the fact that it would be skewed 35-44 would they find that an attractive advertising buy in combination with Country 94 and our 25-54 spread. So that's where that 40 per cent of revenue, that's where that figure came from primarily.

4700 Now, in regards to one other point that we would like to address and I think it is probably best if I turn to our broadcast consultant, Mr. Robson, to speak to the third issue. Jim.

4701 MR. ROBSON: Thank you.

4702 Madam Chair, if I may just take a few moments, I'd like to perhaps try to put into sharper context the business plan that New Brunswick Broadcasting has put forward to the Commission and on which these applications are predicated.

4703 In the course of doing that I would perhaps like to address a couple of kind of hit and run aspects of the Maritime intervention as well. The first thing I would want to put on the record and to show very clearly is that they quoted the spring '98 figure of 27.2 share.

4704 What they neglected to qualify is that that 27.2 share in the spring '98 BBM was the combination of the simulcast of CHSJ-AM as part of the conversion to the FM. So, in essence, you had the AM and the FM in that 27.2 per cent share. Do you understand what I am saying?

4705 In the fall '98 BBM, the 27.2 nosedived to 15.2 because once you extrapolate the simulcast impact of the former AM, then that's the realm of the FM share and that was the reality of the marketplace.

4706 In that context, when you asked earlier what the impact of the Maritime three-station combo would be on CHSJ as a stand-alone, I think there are many yardsticks to measure that by, not the least of which is the fact that, as I say, in the fall '98 BBM CHSJ's share, central 12 plus, the Saint John market was 15.2 per cent.

4707 The cumulative share of the other three commercial stations in the market, all of which are part of that Maritime three-station combo was 61.2 per cent. So on the one hand you've got 61.2 per cent competing with a single station with a 15.2 per cent share. So I think that perhaps put it into perspective

4708 Now, the fall '99 BBM was almost a mirror image. Again, CHSJ's central coverage 12-plus. The share was 16.2 versus the cumulative share of the Maritime three-station combo of 61.7 per cent. So again it mirrors the advantage, be it Saint John or be it any market where you have a situation where you have under common ownership one broadcaster with three entities competing against a stand-alone entity, you are going to get those kinds of numbers. So, obviously, it raises the question what is the competitive balance within that market? How does that degree of competitive imbalance within that or any other given market serve the public interest?

4709 And then, of course, as Mr. Ferguson had alluded to, Madam Chair, when you've got that kind of an advantage in the market in this case, the Saint John market, the ability to be able to sell in combination, the ability to be able to perhaps put more commercial inventory on a couple of other stations to free up the inventory for the third station and there is any number of combinations that you can apply when you own the market, when you drive the market. You can virtually do anything that you want, all of that at the expense of the lone competitor.

4710 So one of the basic elements that NBBC requires in order to sustain its CHSJ operation is to have a sister station within the Saint John marketplace that can come anywhere near to having a competitiveness against that Maritime three-station combo, and it's not because it's Maritime. Whoever has the three-station combo has the advantage.

1315

4711 Now, as Ms Shea had mentioned earlier when she was describing her programming, CHSJ as a stand-alone country station that has a demographic skewing 25-54, which is atypical of most country stations in the country, it does not have the ability to add to its audience base, in large part because while country listeners are very loyal to country stations and a country station would surf for another country station before they would go to --

4712 THE CHAIRPERSON: Mr. Robson, could I interrupt just briefly?

4713 MR. ROBSON: Yes.

4714 THE CHAIRPERSON: And I am afraid brief is the order of the day. I appreciate your explanation. We are at reply phase. We may be entering into discussion and time is -- speaking of numbers, time is running. So if I could ask you to conclude that point and then we will complete your presentation.

4715 MR. ROBSON: Well, I was under the understanding that we would have an opportunity to come back on these points and clarify.

4716 THE CHAIRPERSON: Indeed, and you have explained yourself very clearly on that point, but I am concerned to watch the time.

4717 MR. ROBSON: That's fine then, Madam Chair.

4718 I guess in essence then what we are saying is that one of the fundamental reasons why New Brunswick Broadcasting needs that sister station is to then have another life cluster or another station in which they can effectively compete against the three-station combo, that they can go to the advertising community with the ability to be able to achieve a combined buy.

4719 Just one final comment then, Madam Chair. I don't want to go beyond our time, and that is with respect to the St. Stephen application. I think there is perhaps a bit of a misconception here.

4720 Certainly the addition of the St. Stephen application to the overall three-station mix would assist the Saint John station, but it's more flowing the other way. The Saint John station, the synergies there would be necessary in order to provide a full service St. Stephen station, which we think the people of Charlotte County deserve.

4721 While you don't have a Canadian competitor in St. Stephen, you have an unregulated American competitor who has made no secret to the effect that they are going to continue to take advertising out of New Brunswick and they are going to be even increasingly more aggressive. So you need the synergies of the Saint John stations in concert with St. Stephen in order to put a full service St. Stephen station up and running to serve the Canadian interest there. Thank you very much.

4722 MR. FERGUSON: Madam Chair, if I can just respond to counsel. I would -- in regard to the CHSR intervention, I would assure this Commission that discussions with CHSR regarding their concerns will, in fact, be ongoing. We have already tried to assure the intervenor in that regard several weeks ago, but we will continue to address their concerns and, hopefully, we will be able to find some way in which we can provide them some support, or at least some assurance that -- I mean it is not our intention to cover -- with the signal 98.1 it is not our intention to cover anything other than Charlotte County.

4723 One other comment I might make, Madam Chair, in response to the intervention from the St. Croix Courier newspaper, simply put, we do not apologize for our efforts to bring a Canadian broadcasting service to St. Stephen and Charlotte County. Thank you.

4724 THE CHAIRPERSON: Thank you very much.

4725 Counsel.

4726 MR. McCALLUM: Could you respond specifically to what CHSR said at page 15 of its intervention, where they asked that a condition of licence be imposed on NBBCL?

4727 MR. FERGUSON: Obviously I can't agree to that without some discussion. When CHSR first approached me directly, the issue was us changing our applications that we had before the Commission and redirecting those direct cash payments in Canadian talent to their radio station.

4728 I told Ms Ward that we had no intention of changing our applications that were currently before this Commission. Furthermore, my initial reaction was I didn't think that a campus radio station qualified as a recipient for -- under the Canadian Talent initiatives, that they qualified.

4729 Quite frankly, I was somewhat puzzled in our initial discussions just as to where CHSR was coming from, and as a result of our further study of the engineering issue and our consulting engineers assured us that they didn't anticipate any problem whatsoever in terms of interference, this issue has not gone away.

4730 I guess what I am saying, Madam Chair, I suspect there's another agenda at work here. Now, I am perfectly willing to sit down and discuss with CHSR, as we have said, other areas where we may be of assistance, but my first reaction is no, I wouldn't agree to this as a condition of licence. It requires that we provide a timely technical solution.

4731 I also note on another page, Mr. Counsel, on page 14:

4732 I don't recall that conversation at all, quite frankly, unless I am forgetting something, but I don't recall assuring them that we wouldn't ask them to move.

4733 I can't anticipate at this point in time that we would have to, but in terms of giving them blanket assurance prior to this hearing, no, I am sorry, I don't recall that and that concerns me somewhat.

4734 But having said that, please, I am more than happy to sit down with the station management. As we said in our letter of intervention, we think that campus and community radio plays a vital role in this country. They capture what we think is in many ways the true spirit of the community, if you can say that, extremely diverse programming. In fact, campus and community radio stations do now a lot of things that I think commercial radio used to do and do very well.

4735 Be that as it may, I think campus and community radio is perhaps not cognizant of a lot of the problems that commercial broadcasters are facing, and to come to us cap in hand, I mean when the basis of our very argument is that our financial situation in Saint John is extremely serious, no, I can't see us being in a position, certainly not for the next couple of years anyway of being able to provide you with direct funding.

4736 MR. McCALLUM: Do you have any response to the National Campus Association's request that there be some sort of funding and the Commission recognize that as some sort of talent development initiative?

4737 MR. FERGUSON: Other than to say, Mr. Counsel, it's worth discussing, but beyond that I wouldn't make any commitments.

4738 MR. McCALLUM: So that would not be acceptable as a condition of licence, I take it?

4739 MR. FERGUSON: No.

4740 MR. McCALLUM: And is there any condition of licence in that area that you could be comfortable with or really none?

4741 MR. FERGUSON: I would want to do a little more examination, discussion on the issue before making any kind of commitment.

4742 MR. McCALLUM: I understand.

4743 Thank you very much.

4744 THE CHAIRPERSON: Thank you, counsel.

4745 That completes our questioning and this phase of the hearing. Thank you very much, Mr. Ferguson.

4746 MR. FERGUSON: Thank you, Madam Chairman.

4747 THE CHAIRPERSON: Madam Secretary, does that complete our work for the day and for the hearing?

4748 MS MacDONALD: Yes. Thank you, Madam Chair.

4749 This does conclude the oral presentations for the appearing items on the agenda of this hearing.

4750 I would like to note for the record, however, there are six additional items which are included as part of the agenda of this hearing and even though there is no oral presentation, these applications, nevertheless, are part of the public hearing and as such they will be considered by the Commission and a decision will be rendered at a later date. Thank you.

4751 THE CHAIRPERSON: Thank you, Madam Secretary.

4752 This concludes this public hearing. I would like to thank my colleagues, Commissioners Noël and Cardozo and, of course, the excellent CRTC staff. We would all like to thank our court reporter and our translators who were tested on many moments and, as I noted yesterday, we thank applicants and intervenors for your participation and collaboration.

4753 Ceci conclut cette audience. Je remercie mes collègues, le personnel du CRTC ainsi que la "reportrice", le rapporteur, la traductrice et les techniciens.

4754 I wouldn't want to leave out the technicians. I didn't say it in English and so I will say it again. Thank you very much to the technicians, except for the occasional power cord missing, all went very well.

4755 Nous remercions tous les participants de leur collaboration et bonne fin de journée.

4756 Merci.

4757 Thank you everyone.

--- Whereupon the hearing adjourned at 1328 /

L'audience se termine à 1328