ARCHIVÉ -  Transcription - Burnaby, BC - 2000/11/22

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.

Vancouver, British Columbia / Vancouver (C-B)

--- Upon resuming on Wednesday, November 22, 2000

at 0900 / L'audience reprend le mercredi

22 novembre 2000 à 0900

THE CHAIRPERSON: Good morning.

3022 Before we start, Madam Secretary, I just noticed in the front left row there there are quite a few women. I guess that is so up on the panel we won't feel so lonely, given the remarks we have been making.

--- Laughter / Rires

3023 MS VOGEL: Thank you, Madam Chair.

3024 The first item on our agenda this morning is an application by Jim Pattison Industries Ltd. for a broadcasting licence to carry on an English-language FM radio programming undertaking at Vancouver.

3025 The new station would operate on a frequency of 94.5 megahertz, with an effective radiated power of 37,000 watts.

3026 The applicant is proposing a smooth jazz specialty format with at least 50 per cent of the music drawn from subcategory 34, which is jazz and blues.

3027 Please proceed whenever you are ready.

APPLICATION / APPLICATION

3028 MR. ARNISH: Thank you, Madam Secretary.

3029 Good morning, Madam Chair, Members of the Commission and Commission staff. My name is Rick Arnish. I am President of the Jim Pattison Broadcast Group.

3030 We are very pleased to be in front of you this morning to present to you our application for a new smooth jazz FM station to serve the greater Vancouver region.

3031 Before starting our presentation, it is my pleasure to present the COOL-FM team.

3032 To my immediate right is Mr. Jim Pattison, the President and CEO of the Jim Pattison Group.

3033 Next to Mr. Pattison is Gerry Siemens, the Vice-President and General Manager of CKBD, the unforgettable 600-AM and CJJR 93.7 JRFM. Mr. Siemens quarterbacked the development of this application and will run COOL-FM on a day-to-day basis.

3034 Beside Gerry is Gord Eno, the Program Director of our Vancouver stations and our resident expert on smooth jazz.

3035 To Gord's right is Lennea Durant, Arts and Community Events Co-ordinator at 600-AM, who will become the Arts Editor of COOL-FM.

3036 Right behind me is Bill Dinicol, the Controller of the Jim Pattison Broadcast Group.

3037 Beside Bill is Sheila Dunn, the Marketing and Promotions Manager of our Vancouver stations.

3038 Next to Sheila is Mark Rogers, the General Sales Manager for JRFM and the unforgettable 600-AM.

3039 Beside Mark is Angela Kelman of the Juno Award-winning country group Farmer's Daughter. Angela has recently completed a smooth jazz project.

3040 Beside Angela is Gary Jessop, a partner in Blake, Cassels and Graydon, our regulatory counsel.

3041 At the third table, starting on your left, is Joe Lenski, Executive Vice-President and Co-founder of Edison Media Research, who conducted our consumer research.

3042 Next to Mr. Lenski is Michael Korenberg, Managing Director of Corporate Development of the Jim Pattison Group.

3043 Beside Michael is Dan Roach of Broadcast Technical Services.

3044 Also present in the audience is Scott Corbett, Vice-President and General Manager, Pattison Outdoor for the Pacific Region.

3045 I would also like to ask the members of our local Vancouver radio team to stand. Without their participation we would not be in front of you today.

3046 Madam Chair, we are now ready to start our presentation.

3047 Gerry.

3048 MR. SIEMENS: Good morning, Madam Chair.

3049 When the CRTC issued its radio commercial policy in April of 1998, we were eager to apply for a new station to serve Vancouver. We commissioned economic research from Malatest and Associates that assured us that the market could support a new station.

3050 The past few years have seen a growing consolidation of media ownership in Vancouver. Since we filed, you have licensed a new TV station in Victoria, with a rebroadcaster in Vancouver to CHUM, who owned two radio stations in this market, and we expect even more competition for advertising revenues in the future.

3051 For a new station to be financially viable in a niche format, it must be integrated with existing stations. We believe that a new station must:

3052 One, provide a new and diverse choice;

3053 Two, be based on a realistic business plan;

3054 Three, have minimal impact on the existing players; and

3055 Four, have the financial resources of a strong local owner.

3056 As early as the spring of 1999 we asked Edison Research to take a look at the market, with the goal of finding the format that would best meet these objectives. The research, conducted in the summer of 1999, showed a strong interest in the smooth jazz format, particularly amongst the 35 to 54 year old age group.

3057 Other formats also tested well amongst various age groups, but the respondents identified existing Vancouver stations in those formats. Less than one-fifth mentioned any one station playing smooth jazz music, significantly lower than any other format tested.

3058 The conclusions were clear: A smooth jazz station would provide the most diversity in the market, while still attracting sufficient listeners to be viable.

3059 About a third of the hours tuned will come from those not currently listening to Vancouver radio stations by repatriating listeners and expanding the hours tuned. The loss of audience by existing stations will be spread across a number of them, resulting in negligible impact on any one station.

3060 We also looked at how this format would fit into the existing Vancouver radio landscape. If you will direct your attention to the screen, you will see a chart we provided in our application and which we have since updated to include recent changes in the market.

3061 We applauded the existing music station on the chart, showing how new or old the music played is, and how hard or soft. There is a clear void for a station playing new and soft music, exactly the smooth jazz format.

3062 Based on our research we prepared and filed a specialty application in this format. We made this decision before the licensing of a smooth jazz station in Hamilton, and our initial filing was for a specialty format.

3063 Now I would like to ask Gord Eno to speak about this exciting new station.

3064 MR. ENO: Thank you, Gerry.

3065 The smooth jazz format evolved from the adult contemporary format in the United States. The music is generally melodic instrumental music with a distinctive jazz flavour.

3066 If you would turn your attention to the screen, you can see where the format fits. Although the format shares some AC artists, there are a significant number of them that would not play. They are on the list on the left.

3067 The format plays a lot of jazz, but not the more traditional jazz which we would play in our specialty programs. The traditional artists are on the far right of the diagram.

3068 The sound will be a cool harmonious mixture of instrumentals and vocals, of smooth jazz tinged popular music and distinctive smooth jazz music. COOL-FM will play at least 80 per cent different music than any other station in Vancouver. In fact, we expect to exceed this.

3069 We have committed to a specialty format with at least 50 per cent jazz, Category 34, and no more than 30 per cent from Category 21, pop rock and dance.

3070 In fact, an examination of our music list that we filed with our application shows that we will be often closer to 70 per cent jazz, Category 34, or even higher.

3071 COOL-FM will be an oasis of tasteful music, no musak but challenging selections by some of today's best players. It will be diverse in sound, with low repetition, just enough familiarity to attract listeners and enough new music to entice them to listen longer.

3072 We plan to further diversify the sound through special shows to give listeners more background on the music and to sample some of its various forms as well as its roots in traditional jazz.

3073 On the scree,n you can see that every day at noon "Lunch Set" will provide an opportunity for our listeners to select the songs we play by making requests.

3074 On Sunday the "Brunch Bunch" will allow a longer and more relaxed version of the daily program, three hours of listener requests.

3075 We will showcase the variety of smooth jazz through a range of station-produced and specialty programs.

3076 The Dave Koz radio show, hosted by a core artist of the format.

3077 Legendary jazz musician Ramsey Lewis explores the jazz roots of the format each week.

3078 Local smooth and traditional jazz will also have its place on "Upper Levels" to be hosted by a local jazz expert.

3079 The latest CD releases will be aired on IPO, Initial Public Offering.

3080 Concerts from around Vancouver, British Columbia, and the country will be heard every Saturday night on "Somewhere Live, A Concert in Your Radio".

3081 Our concerts and other broadcasts of smooth and other jazz are part of our regular programming schedule and have not been included in our Canadian talent development.

3082 Our audience will be well-educated, upscale adults interested in what is going on in the news, the economy and the arts. COOL-FM will provide all of the services that our audience will expect, regular news, sports, weather, traffic and business reports.

3083 Lennea Durant will now outline our commitment to the arts.

3084 MS DURANT: Thank you, Gord.

3085 Good morning, Madam Chair.

3086 COOL-FM will provide much needed coverage of arts and culture in the Lower Mainland.

3087 As you can see on the screen, information on arts and culture will be an integral part of our schedule. We intend to meet our audience's needs in several ways.

3088 "On The Street" is an entertainment billboard that airs four times a day.

3089 "Arts & Stuff", an arts feature also broadcast four times daily, will highlight concert information, gallery and theatre openings, and other cultural events of interest to our community.

3090 Our arts coverage will culminate with a Sunday morning called "Into the Arts". Our magazine program will preview upcoming weeks' performances, visual and literary art events, using on-location interviews and coverage.

3091 Should we be licensed, I will become COOL-FM's full-time Arts and Culture Editor.

3092 Thank you.

3093 MR. ENO: The station will meet a high level of Canadian content, particularly given the high dependence on Category 3 music.

3094 In our application we propose to blend our Canadian content between the two categories and meet 25 per cent from day one. This will be augmented by 2 per cent each year until we reach at least 35 per cent.

3095 We were excited to discover an extensive library of Canadian smooth jazz recordings. The addition of some more traditional Canadian jazz and some Canadian folk pop and acoustic music that receive airplay at present will also allow us to program a high quality sound the very first year without compromising the integrity of the sound nor overly repeating Canadian artists.

3096 But, frankly, it will be a lot of work and require a lot of ingenuity.

3097 Our ability to increase the Canadian content is based on the increase in production we expect to happen because, first, the presence of our station, along with the recently licensed smooth jazz Hamilton station in Hamilton, The Wave, will mean that record companies can depend on airplay for their artists.

3098 Second, our funding to FACTOR as well as two CDs per year from Project COOL will kick-start the production of new smooth jazz recordings.

3099 Third, the promotion of new and emerging artists through our COOL Around Town concerts, the indirect support from the station, and the support of other Pattison Group resources.

3100 Record sales are driven by radio stations' airplay, financial support, promotion through concerts, videos and other marketing. Increased sales mean that record companies are willing to fund a new artist in the genre, or invest in that critical second or third CD.

3101 With increased availability of Canadian content recordings, the increase in our commitment will be quite attainable.

3102 If additional stations in this format are launched in other markets, the momentum will mean that we can increase by 5 per cent per year to reach our goal of 35 per cent by the third year of operations.

3103 Now, for an artist's point of view, I would like to introduce award-winning Angela Kelman.

3104 MS KELMAN: Thank you, Gord.

3105 Good morning.

3106 The success of Farmer's Daughter in the Lower Mainland was due to a significant degree to the support that JRFM gave us. They supported and promoted our records and made a big difference in our career.

3107 I have recently recorded a new smooth jazz CD entitled Café Brazilia. I know that the presence of COOL-FM in Vancouver will make my chances of breaking through that much greater.

3108 As am emerging artist I understand the boost that support like Project COOL and the COOL Around Town concert series can give to a new artist.

3109 My personal experience with the Pattison Broadcasting people assures me that they will support local artists. Not just airplay, although they will give lots of that, but promotional and other exposure. I know that their proposals to support Canadian musicians have that essential ingredient -- commitment.

3110 MR. SIEMENS: Thank you, Angela.

3111 Canadian talent development initiatives were designed to make effective use of resources to ensure the development of this relatively new genre of Canadian music. We identified three key activities: the recording of national talent; the recording of local talent; and exposure of local talent live.

3112 Rather than reinvent the wheel for our national component, we decided to turn to the experts, FACTOR.

3113 Over the course of the licence we will provide FACTOR with $560,000 for recordings by Canadian smooth jazz talent. We need an early and regular supply of Canadian content recordings and local artists need a leg up, so COOL-FM has committed $1.19 million in direct spending and almost $1 million in indirect spending to the recording of two CD compilations annually.

3114 A free concert will be held in Vancouver showcasing the artists and broadcast as part of our concert program "Somewhere Live".

3115 Our third initiative, the COOL Around Town concert series, will provide exposure of local artists in live venues. We will fund a series of concerts featuring Canadian artists, with a special emphasis on local musicians.

3116 Our intent is to work with existing organizations. We already have agreements in principle with the Maple Ridge Jazz and Blues Festival, the Capilano College and the Vancouver Jazz Festival to fund live smooth jazz performances.

3117 COOL-FM will provide $350,000 in direct costs, all going to Canadian musicians fees, as well as $56,000 in indirect support for the concerts.

3118 MR. ARNISH: When the Jim Pattison Group of companies decide to do something, we commit the resources required to achieve success. Pattison Group companies have come onboard to support our CTD activities.

3119 Our television stations will create world class music videos for the Project COOL winners, as we have done in the past for other artists.

3120 We will also produce two one-hour concert specials each year. These specials will be broadcast on our Kamloops television station and also on the Prince George and Medicine Hat stations, subject, of course, to your approval of the ownership transfer which is a non-appearing item on this hearing. Since they will qualify as priority programming, we are confident that they will get airplay on other stations across the country, thereby providing additional promotion and exposure for Canadian and B.C. smooth jazz talent.

3121 Pattison Outdoor will provide free billboard space to promote the project COOL CDs and COOL Around Town concerts. Pattison supports the arts community with over $900,000 annually in Vancouver alone for outdoor signs and transit shelter posters.

3122 The grocery stores in our group, Urban Fare and Save-On-Foods will also swing into gear. COOL-FM will present live local musicians every Saturday night in the Urban Fare Bistro. Once a month we will broadcast a live concert from that venue. As well, Urban Fare and all Save-On-Food stores will front-rack the Project COOL CDs.

3123 Beautiful British Columbia, a quarterly magazine will put an insert in each edition providing advertising and an order form for the CDs. In addition, Beautiful B.C. will list them in their annual Best of B.C. Gift Catalogue. Proceeds from the sale of the CDs will go to our award-winning Basics for Babies program, which provides basic needs for the babies of disadvantaged residents of the Lower Mainland.

3124 We have one other initiative of which we are very proud. We have concluded an agreement with Pacific Academy, an educational institution in Surrey. The Academy will soon announce the construction of a state-of-the-art broadcast and new media centre.

3125 We will fund $50,000 per year to the Academy to provide evening and weekend classes in sound recording and video arts, free of charge to adult learners from the four designated employment equity groups. The students will be selected by an advisory board, and I am pleased to inform you that former CRTC Commissioner Sally Warren has agreed to sit on that Board.

3126 COOL-FM has also committed that on its first day of operation a minimum of 50 per cent of its workforce will come from the designated groups.

3127 MR. SIEMENS: Madam Chair, you have a large number of applicants before you for the last frequency in Vancouver. We are all making promises about our contributions to our communities, to Canadian talent and to the system. But to make these contributions there must be a business case.

3128 We are here as radio broadcasters who have a long history of running niche formats here in Vancouver. We know that a new format, and particularly one appealing to the upper end of the key 18 to 54 year old demographic, takes a while to find its feet. No matter how expensive the advertising campaign, audiences take a while to come to a new kind of service.

3129 Madam Chair, Members of the Commission, we have the history of developing niche radio formats in the Vancouver market -- it's what we do -- and we have learned to be patient. We know that this new format will work, given time, and we are committed to making it work.

3130 We are confident in our ability to meet the ambitious commitments that we have made to you for two reasons: We have a realistic and attainable business plan and the corporate connections of the Pattison Group enable our realistic spending commitments to go a long way.

3131 Jimmy.

3132 MR. PATTISON: Madam Chair, I first became involved in broadcasting some 35 years ago when we bought an insolvent AM station in Vancouver, which we still operate today. At that time all private radio stations were locally owned, except one. From then to now, I have seen virtually every English-speaking radio and TV station in Vancouver move from local ownership to the east, with a higher and higher degree of concentration, power and control move into the hands of fewer and fewer people.

3133 And even though WIC was a strong competitor of ours, I, like many other people living in B.C., was very sorry to see them disappear. They were a strong B.C.-based broadcasting voice in this country.

3134 This leaves us as the radio people in Vancouver who have the most experience and knowledge of this market.

3135 Over the 35 years I have been in radio here in Vancouver, we have had some lean years due to the commodity-based economy that we live in. And, as you might expect, given the consolidation of broadcast properties in Canada, we have had numerous opportunities to sell out or switch our niche country FM station to a more popular format.

3136 Maybe we would have been financially better off if we had done so, however Vancouver and B.C. is my home and the company's headquarters and I and our company have a strong emotional attachment and financial commitment to Vancouver and this part of the world where we are one of the largest employers in Vancouver and British Columbia operating in a number of different businesses.

3137 I think the Commission will agree with me that local ownership, in most cases, does bring additional benefits to any community, if that owner can survive the economics and the competitive power that goes with consolidation, which is the way of the world today in almost any business that I see.

3138 At present, none of the local TV or English-language radio stations have local ownership, other than our two stations and one AM station which I understand is in-between owners.

3139 In relative terms, we are small operators in the Vancouver market, but an additional station would significantly help us in competing for advertising dollars with the following powerful eastern-based chains which dominate Vancouver: Canwest, headquartered in Winnipeg; CTV, headquartered in Toronto; Rogers, headquartered in Toronto; Corus, headquartered in Toronto; CHUM, headquartered in Toronto; Standard, headquartered in Toronto.

3140 Today Vancouver, Canada's second largest English-speaking city, has become a city of branch offices in the broadcast industry. It is dominated by multi-station groups operating in all the major markets in Canada. For us to compete, I feel that we could be at a risk with only one AM and one FM station in Vancouver, our only major market.

3141 With your support of this application, we are committed to once again attempt to make Vancouver the head office for a significant B.C.-based broadcasting entity.

3142 Rick.

3143 MR. ARNISH: Thank you for your attention, Madam Chair, Members of the Commission.

3144 We are now ready for your questions.

3145 THE CHAIRPERSON: Thank you.

3146 I will be questioning the panel today. Welcome gentlemen, and ladies.

--- Laughter / Rires

3147 THE CHAIRPERSON: I know you have been here all week. You probably know the areas on which I will be questioning, which are programming, Canadian talent development, your Canadian content and the economic analysis, market analysis and financial projections.

3148 Maybe we could start with Canadian talent development.

3149 I guess what I would be interested in hearing is a little bit more about the strategic alliance with the Pacific Academy. If you could just tell me a little bit about that institution and your relationship with them in a variety of different ways.

3150 I think in particular, aside from the specifics here, we would like to know the extent to which it is publicly accessible, who decides how the public accesses it in terms of these initiatives and what are the criteria, when it is available, and that kind of thing.

3151 MR. SIEMENS: Okay. Thank you for asking.

3152 Pacific Academy is a private school in Surrey with currently about 1,200 students from Grade K through Grade 12. It is on about 35 to 40 acres. It is a beautiful facility.

3153 It has, adjacent to the school, a 1,500 seat auditorium that is used for concerts, not just for the school but for the community-at-large. That facility is made available to theatre groups, to music groups, they stage concerts there, they stage fundraisers there, and all sorts of different things.

3154 With regard to our relationship to the school, the school receives -- I should mention as well, Ms Grauer, that some representatives from Pacific Academy will be here next week to speak to you, so if there is anything I can't answer I'm sure that they will be happy to.

3155 They do make their facility available after hours and on weekends to all sorts of different people who come to them who are looking for a facility, whether it is to stage a fundraiser or other things.

3156 The Jim Pattison Foundation does make available monies for some of the facilities, but they receive -- none of those monies finance the operating of the school. The school is responsible for finding its own operating funds. It gets some funds from the provincial government and some it raises itself.

3157 THE CHAIRPERSON: So they are a provincially funded private school?

3158 MR. SIEMENS: Yes.

3159 THE CHAIRPERSON: Thank you.

3160 During the deficiency process you were asked to provide a rationale for us to consider the $10,000 yearly expenditure toward artwork and printing for bus shelters as part of the annual direct costs pertaining to the Project COOL initiatives.

3161 As you know, generally eligible third party contributions would include FACTOR, national and provincial music organizations, performing arts groups, schools and scholarship recipients. So in the event the Commission concludes that these costs don't quality as CTD, where would you redirect these expenditures?

3162 MR. SIEMENS: We put that in because although we do benefit from some -- from exposure through Pattison Outdoor, and because that is an intercompany transfer, we thought that would be an indirect expense. We didn't claim that.

3163 However, the printing of artwork, that has to go to -- I mean, that is real money that we have to spend.

3164 If you decide to disallow that, I would think we would redirect that to either FACTOR or the COOL Around Town concert series, more likely the latter because I think the local musicians could benefit from that.

3165 THE CHAIRPERSON: Thank you.

3166 Who would have the responsibility to administer the funds relating to Project COOL?

3167 MR. SIEMENS: That would likely fall to the program director, Mr. Eno.

3168 THE CHAIRPERSON: So it would be within the station?

3169 MR. SIEMENS: Yes, ma'am.

3170 THE CHAIRPERSON: How will you publicize the contest and have you developed any guidelines for applicants?

3171 MR. SIEMENS: The contest will be publicized on the air, obviously. We have made mention of all sorts of promos that we would --

3172 THE CHAIRPERSON: You did in your oral remarks, yes.

3173 MR. SIEMENS:  -- account for promoting it on the air.

3174 I think initially, because we do believe this audience is going to build slowly, that we will have to also spend some money to publicize in newspaper or other facilities.

3175 To answer the second part of your question, at this point we have not developed a criteria. We will be asking for demo tapes from musicians and we will form a panel of three people, to be a judge and jury I suppose.

3176 THE CHAIRPERSON: You will select the jury, would you?

3177 MR. SIEMENS: I think that the jury will consist of one person from our staff, Mr. Stewart from the Maple Ridge Jazz and Blues Festival, and someone else, whom we have not yet determined.

3178 THE CHAIRPERSON: Thank you.

3179 I had some questions on your spoken word programming. I think we have actually seen a fair amount of that elaborated on here in your oral presentation today.

3180 What I would like to know is: To what extent is the programming here -- and perhaps you could also tell me about your existing AM and FM -- locally produced and how much is syndicated or -- how much is locally originated, not necessarily station produced, and how much is syndicated programming?

3181 MR. SIEMENS: Sure. I will have Mr. Eno talk about the spoken word programming on COOL-FM.

3182 On our existing stations we do everything locally, with the exception of, I believe, one syndicated program, a countdown show on the FM station that airs on Sunday mornings, and a Frank Sinatra special which airs on the AM station on Saturday evenings -- Sunday evenings.

3183 Gord will speak to the rest of your question.

3184 THE CHAIRPERSON: Thank you.

3185 MR. ENO: For the locally produced programming on COOL-FM, it will all be locally produced, with the exception of two syndicated programs, one being the Dave Koz radio show and the other one The Legends of Jazz with Ramsey Lewis. Otherwise it is all locally produced.

3186 THE CHAIRPERSON: Thank you.

3187 Now, the music. As you know -- I'm going to get Commissioner Cram to get her calculator, because I think her math, as bad as it is, is better than mine.

3188 We have been struggling to get an understanding of the Category 2, the Category 3, other categories, what percentage, is it blended, is it -- from each category. I think we understand from you, but just let me go through it -- let me get it.

--- Pause / Pause

3189 THE CHAIRPERSON: You are having a minimum 50 per cent from Category 34. No more than 30 per cent from Categories 21 and 22. So that takes us to about 80 per cent. Right? Where would the balance, any other music come from?

3190 MR. SIEMENS: Madam Chair, I think that the way we have laid out our music plans, our intention was, first of all, to provide diversity in the marketplace. That was one of the reasons that we laid them out that way.

3191 The second was to make it easy for ourselves to administer so that we could stay within the spirit of the licence, within the letter of the licence and with the spirit of what is a specialty licence and still have the flexibility to move in and out of categories without having to brainstorm: Is this jazz? Is this easy listening? Is this pop?

3192 So we built it this way so that we could move in and out of the categories and not have to get into a tug-o-war with each other, or for Commission staff, when they come to monitor our tapes, to have to wonder were we in compliance or not. So that is why we built that flexibility in there.

3193 We commit to at least 50 per cent Category 34 and not more than 30 per cent Categories 21 and 22. In reality there would be no 22, so let's just say 21.

3194 But certainly we will play some 23, which will be acoustic. We will play some 24, which will be easy listening. We will play some world beat. So that really was the reason for our rationale. But it will be at least 50 per cent jazz and, as the music list we submitted indicates, if you go through that, more likely 70-75 per cent jazz.

3195 THE CHAIRPERSON: Okay.

3196 Now, you have also proposed -- it is a blended rate.

3197 MR. SIEMENS: Yes.

3198 THE CHAIRPERSON: Clearly when we look at this, one of our concerns is how are we going to -- in evaluating the competing proposals, where are we going to find the highest levels of Canadian content, and particularly with a lower blended rate, you know, that it is not seen to be sliding over too much into AC.

3199 I'm going to go through this. I know that legal staff is going to bat clean-up at the end of all of it if I have missed some clarifications on some of the categories, but do you understand what I'm saying?

3200 What kind of assurances do we have from you that --

3201 MR. SIEMENS: You are wondering if we are going to play all of the Canadian content from Category 2.

3202 THE CHAIRPERSON: Not all of it. You have said you are not going to do all of it, but certainly when we are evaluating competing applications in this format as proposed, we want to ensure that we can compare them fairly and we don't end up in a situation where we have that kind of situation.

3203 MR. SIEMENS: Okay. Well, thank you for the opportunity to try to explain.

3204 When we looked at -- we looked at playing 35 per cent Canadian content from Category 2 and, by the letter of the regulation, 20 per cent from Category 3. We could do it that way, certainly, but again we get into blurred areas.

3205 I know you have been struggling with that all week, what is 2 and what is 3, because some of the stuff is right on the line.

3206 So we thought, again for the ease of administration, what happens if we play a blended rate of 25 per cent or 30 per cent. So we did the arithmetic and we found out that we actually would expose more Canadian music if it was evenly distributed between Category 2 and Category 3. If we blended it, we wind up playing about 40-45 songs Canadian more a week at 25 per cent. So that is why we decided to go that way.

3207 We would not overload the Category 2 with Canadian content, because I think it comes down to what is compatible within the format. I think there is just -- it comes down to an availability of music from Category 21 that is compatible with this format and it wouldn't be realistic to think that we would overload that one category. That would harm ourselves as well as the Canadian performers.

3208 With regard to growing it, we have made a commitment to grow it by 2 per cent a year. By the end of term we will be at 35 per cent. Mr. Eno alluded in his comments that we think we can probably get there quicker.

3209 I should mention as well that that is a floor, it is not a ceiling.

3210 THE CHAIRPERSON: I had some questions later on about format and maybe this is a good time to ask them and you can help me.

3211 I know you referred, both in your application and in your remarks today, about your commitment to the country format and the suggestion that you could have switched to a more lucrative format and that you have chosen not to for a variety of reasons.

3212 I think when we look at the competing applications here today and when we talk about diversity, part of the benefits of consolidation in the new commercial policy was that hopefully we would see more formats, more diversity.

3213 I wonder if you could elaborate for me a bit about, certainly we see a lot -- there is competition in some formats in the market. Presumably the most lucrative formats have the most stations competing for those listeners.

3214 You have a country format, with nobody else doing it, a lower share perhaps and perhaps not as profitable as some of the other stations in the market. What is your rationale there and how does it play out with, for instance, doing this kind of a format at this time?

3215 Do you know what I'm saying? Having a sense of the overall market and format choices and why you don't switch or why you would switch. Am I making myself clear, yes or no?

3216 MR. SIEMENS: I believe so.

3217 We have been in country music in this market for 15 years and it is not an easy market to do country music in. It has never been so.

3218 JRFM signed on in 1986 and was not immediately successful. In fact, Mr. Pattison and Mr. Arnish could bear out, I think it took -- I wasn't with the company at the time, but I think it took six or seven years to get it into the black. Now we are at a point where it is doing okay. You see that in your numbers.

3219 Why do we stay with it? Well, it is kind of what we do. We have made a commitment to the format, we have made a commitment to our listeners; 260,000 people per week depend on us for that radio station, to supply it. We have made a commitment to our clients.

3220 Have we talked about changing it? Innumerable times. But it is making a small profit, we do have a commitment to the listeners, in addition to which we feel we have an obligation to the country music society here in Canada.

3221 Toronto lost its country music station. If it were to lose Vancouver as well, I think the country music industry would be in big trouble. I don't think I am overstating the case when I say we take that very seriously. The B.C. CMA would cease to exist. We take that very seriously.

3222 So we feel we have an obligation, not just to our listeners but to the industry, to be a voice. So that is why we stay with it.

3223 How does that apply here? I guess I could only say that we know how to operate niche formats, we know how to do it very well -- it's what we do -- and we honour our commitments.

3224 I hope that answers your question.

3225 THE CHAIRPERSON: It does. It really is -- I think that what all of us here on the panel and the Commission are faced with is a highly competitive process here for this frequency. A number of the -- most of the commercial applicants -- or highly commercial applicants, I should say, are applying for this one format. And the more I think we know and understand the local market and the formats and the profitability levels of one over another and why people choose -- some people switch, some people stick with the formats, and the better understanding we have of that I think it just informs our -- will help inform our decision or choice or whatever.

3226 So thank you.

--- Pause / Pause

3227 THE CHAIRPERSON: Back to the Canadian content commitment, that condition of licence requiring you to broadcast a minimum of 25 per cent, increasing to 35. You are prepared to accept these commitments as a condition of licence, are you?

3228 MR. SIEMENS: Yes.

3229 THE CHAIRPERSON: Should we not accept your blended Canadian content level, what percentage of weekly Category 3 content would you accept by condition of licence?

3230 MR. SIEMENS: We would start at 25 per cent and grow to 35 per cent over the term of licence.

3231 THE CHAIRPERSON: It may be a typo, in fact, in your application, I think its the Executive Summary of your Supplementary Brief, you make a reference to Category 35. I think it's a typo, but I just want to make sure.

3232 MR. ENO: That is a typo.

3233 THE CHAIRPERSON: Okay. Thank you.

3234 Now market study.

3235 You made reference to the Edper(ph) Study in the U.S. -- and I don't know if there is anybody who can speak to that -- in which it talked about the appeal of this format, I think to Asian markets. Is that --

3236 MR. SIEMENS: That's correct.

3237 THE CHAIRPERSON: I'm wondering if you could just elaborate for me on how they came up with that?

3238 MR. SIEMENS: All right.

3239 Madam Chair, if you don't mind, I will ask Mr. Lenski to answer that question.

3240 THE CHAIRPERSON: Thank you.

3241 MR. LENSKI: Good morning, Madam Chair.

3242 In our market research study here in Vancouver we interviewed a random sample of the English-speaking market and it did include over 15 per cent of visible minorities, mostly Asians, and we found that the Asians that we interviewed had a higher level of preference for the smooth jazz format as we tested it. According to our projections, 36 per cent of the core audience and 25 per cent of the overall audience for the smooth jazz format would come from the Asian community here.

3243 THE CHAIRPERSON: Do you know why that is?

3244 MR. LENSKI: It seems -- and this also seems to be true in the United States, because there are several Pacific markets in the United States with high Asian communities, like San Francisco and Los Angeles, that have successful smooth jazz stations.

3245 I think it is a format that seems to be accessible across the board. There doesn't seem to be any particular ethnic or racial appeal specific to the format. It is also highly instrumental, which makes it also more accessible across languages. It also seems that it also has an upscale appeal and in markets where Asians are part of that community as well it seems to have appeal across that demographic.

3246 THE CHAIRPERSON: Okay. I think I misspoke myself and bungled the names. It was the Interep Study in the States, and of course you are the Edison Study here.

3247 But the Interep --

3248 MR. LENSKI: Well, the Interep Study is a compilation of all the smooth jazz listening in the United States, and they find a similar trend across the United States. We have done a specific study in this market that seems to confirm what the Interep Study sees in the United States.

3249 THE CHAIRPERSON: So the Interep Study is based on actual listeners, whereas yours is a sample of potential listeners.

3250 MR. LENSKI: Right. And they seem to confirm the same facts.

3251 THE CHAIRPERSON: Thank you.

3252 I know your study also showed that a Vancouver audience would be female skewed. Can you elaborate on that a bit, too, for me?

3253 MR. LENSKI: Yes. According to our study, 59 per cent of the listeners to a smooth jazz station would be female. I think different markets in the United States have different ranges. Some smooth jazz stations are 50/50, some are female skewed. I think it depends on the competitive framework in the market.

3254 From our study in Vancouver, it seems that this music, one, has more appeal to women 35-54 and also that the other choices in the market for women 35-54 are less than what the choices for men in that age group are. So that's why we think this format will skew female.

3255 THE CHAIRPERSON: Thank you.

3256 Now, I also want to go back to part of your other commitments, which is the employment equity initiative

3257 As I say, we noticed that we are suddenly seeing at least more women in the audience today. I don't know how that is, but I guess the message got out that we were asking questions.

3258 But I wonder if you could elaborate for me on the $50,000 initiative that you have in here, but also your proposals with respect to employment equity and also your sort of corporate philosophy and your track record and do you measure your results and do you have set goals?

3259 MR. ARNISH: Thank you, Madam Chair.

3260 I will start and then turn it over to Mr. Siemens.

3261 We think that our track record in employment equity -- in our small group as we know it today we have six radio stations and one television station here in the Province of British Columbia -- has been a good track record. I don't say that it is at the very top end of employment equity initiatives. In our interpretation of it, we are certainly in the middle of the pack.

3262 But we can also certainly improve upon those initiatives and we are going to have a great opportunity here on two fronts, one with the -- if you approve our acquisition of Monarch Broadcasting, that is one area, and another is the initiative that we are proposing here with COOL-FM in Vancouver.

3263 We have policies in place that we review on a regular basis with our management team in our radio and television operations to ensure that wherever we can we can hire people in the four designated groups.

3264 We have done an excellent job, in our opinion, of one group, and that is certainly women. It is tougher in a smaller market, for example in Kamloops and Kelowna, in some of the groups, visual minorities, aboriginal people and people with disabilities, to hire people that are experienced in the broadcasting business. In fact, we have had people in some of those other three designated groups who have been excellent employees only to be gobbled up by the major market players here in Vancouver and elsewhere across the country.

3265 But we think that what we are proposing to you today with our employment equity initiative is a step up, is a great -- golden opportunity, actually, for our group to make a major commitment to employment equity in the four designated groups.

3266 I will have Mr. Siemens talk about those initiatives.

3267 MR. SIEMENS: Thank you, Rick, and I will in just a moment.

3268 But I think that one of the things one of the other applicants said yesterday is, we are making progress as an industry, and I think that is true. When I look around our radio station in Vancouver, we are making progress. It is not coming as quickly as some of us would like, but we are making progress.

3269 I looked at our on-air staff the other day. We have 17 full and part-time people on our staff at Vancouver Radio, which is the name we use within our division to identify ourselves; 17 full-time and part-time staff, seven of them women, one a visible minority. So that is almost half way and so that is encouraging.

3270 In our sales department, more than half of our sales representatives, our account executives, are women. One is eligible for aboriginal status. So that is making progress.

3271 It takes a while, but we are trying to get there. That is one of the reasons.

3272 I think the other thing is, when you are talking about a new radio station, it is a lot easier -- because we find that people are staying in their jobs a lot longer than they were in this industry now. I think it's consolidation and people get to a place where they are comfortable and they are enjoying themselves and they are making a contribution and they want to stay. They don't move on as quickly.

3273 And that is great. We are glad for that. It makes managing a lot less of a headache, but it also makes it harder to bring in new people into the workforce. So when we start a new radio station, what a great time, because it is easier to start a new station and meet an employment equity objective than it is to retrofit an existing operation.

3274 So that is why we have made a commitment to you that 50 per cent of the new staff will be from the four designated groups.

3275 Now, to your question about the employment equity program at Pacific Academy, we are very excited about this. It will be open to the four groups. They will make an application to the radio station. This will be publicized on the air.

3276 Sally Warren has agreed to sit on the panel, a former CRTC Commissioner, so we are excited about that. There will also be a representative from the radio station and, I would think, a representative from Pacific Academy on the panel.

3277 And twice a year we will conduct continuing adult education programs at Pacific Academy. These people will be taught radio arts, some visual arts and some new media. It follows, because we work very closely with BCIT and other secondary institutions, that there will be work experience available within the radio station and our experience has been that work experience, at least a lot of them stay on after. So it is an opportunity.

3278 We have a young woman here today who was a work experience student with BCIT and she is now one of Ms Dunn's assistants in the Promotions Department and our community events reporter.

3279 So, you know, people come, they do their work experience, at least some of them stick and we are happy to have them. I think this is a real opportunity to kick-start the employment equity program.

3280 THE CHAIRPERSON: Tell me, do you -- I mentioned this when I was talking to Mr. Slaight at Standard in terms of the whatever initiative, they are active in CWC, you have some initiatives here and things you do on an ongoing basis, but I wonder if you consider, as a federally regulated company and as one that is using the public airwaves, do you feel any special responsibility, given that, to show leadership and take leadership in some of these areas in terms of maybe being a bit more aggressive than you might otherwise be, with recruitment, with training, with promotion of the four designated groups?

3281 MR. ARNISH: Absolutely. We take that as an active responsibility as a broadcasting company here in British Columbia.

3282 We certainly have done, in our opinion, a good job in promoting a number of women, even in our own management team let alone on-air and in sales and creative and production as well.

3283 I think it is the responsibility of all broadcasters, all federally regulated companies. It's not really even the broadcasting community, it is the federally regulated companies right across our great land that we take these initiatives seriously, and we certainly have done that in the Jim Pattison Broadcast Group.

3284 This initiative we are talking about in Vancouver, we really think this is a big step up for the four designated groups. This is a whole new initiative. No one else has talked about it as well.

3285 We haven't rolled this into Canadian talent development, we are making this an employment equity issue with our new station and I think it sends a direct message to the Commission and to the community as a whole that we do take employment equity very seriously.

3286 THE CHAIRPERSON: You know, certainly some of the discussions we have been having around the awarding of this frequency, as you know, it is a very competitive process. We have applications right across the whole range of formats. We have a French-language application, we have different formats, which will all have varying degrees of market value, if I can put it that way. Some will be worth more than others.

3287 We have had discussions with some of the applicants which have placed the value of a commercial FM to be, if we were to award it to a commercial operator, anywhere from $20 to $40 million, and I suspect that might even be somewhat conservative given the health of this market.

3288 So in evaluating all of these commercial applications, we need to be looking at the accuracy -- or not accuracy, but the revenue projections of all the applicants to see whether they are within the ballpark of what might be expected and to see what commitments are being made that would be commensurate with the value of a licence.

3289 There are tangible commitments and there are intangible commitments. We have talked a bit here today about the specific Canadian talent development commitments that you have made, we have certainly seen from some of the others, and we will be seeing more. We have talked about a tangible benefit, which is your employment equity initiative, but also maybe an intangible element is the extent to which the four designated groups -- you know, that there is that kind of commitment on the part of a broadcasting enterprise.

3290 Then, of course, there is exposure for Canadian artists. These are Canadian airwaves and this is public property and we have to be making a decision about what is the best use of the public's property in this. That doesn't mean that there isn't an important place for successful strong Canadian private broadcasters, but we have to balance all of this together with listeners and diversity of available music out there, or formats.

3291 The other thing certainly that I have spoken to -- we all have to a number of the different applicants -- is ownership issues. You have touched on it a bit here this morning.

3292 How important is local ownership and how should we look at that?

3293 We talked yesterday to Telemedia and also, I think, to the Craig applicants about the fact that they operate smaller market radio stations in western Canada, some in British Columbia, some in other parts of the west, and to what extent or should we be considering those things.

3294 So I know you certainly talked about it a bit this morning, but I know that in particular, Mr. Pattison, you have been the Chair of a large public enterprise, you have been in public life and in private life, and I think maybe have some appreciation with the challenges we face here in terms of how do we evaluate what is best for the public. So I wonder if you might -- any of you.

3295 MR. ARNISH: Well, if I can start first, Madam Chair, and I'm sure Mr. Pattison would have some comments on that.

3296 As we all know in this country, and as we made in our presentation this morning, most of the major broadcasting companies are now centred in central Canada, in Toronto. Canwest is in Winnipeg. Even you talked about Telemedia, their head office is in Montreal although they are not here in Vancouver.

3297 We, in our group, feel this very strong and we think it is in the best interests of the Canadian broadcasting system and the general public that we have more diverse ownership voices in the marketplace and at the end of the day in British Columbia there isn't, at this point in time in this market, any other local major broadcasting group, other than ourselves, if indeed the Commission will give us the approval for the acquisition of the Monarch Broadcasting Group.

3298 We really believe for our companies here in Vancouver, even though we did apply right out of the gate, in our application process we were the only ones initially to apply for a specialty licence for smooth jazz here in Vancouver, which we are very proud of. We thought in putting our application together -- we have been working on this application for over two years -- that that is the way that we should go, that is what the market was telling us, that this was the hole in the market in the format that they wanted.

3299 But having said all that, for us as a broadcasting group in British Columbia, and hopefully soon to be in Alberta as well, we have to have a beachhead here in Vancouver to grow our regional broadcasting group.

3300 British Columbia and Alberta, quite frankly, in our opinion, we believe anyway, need to have a stronger voice in the Canadian broadcasting business. In Vancouver, Corus has four radio stations; Rogers has three to five, depending on the market conditions in the Lower Mainland, and we certainly believe that having a third station here in Vancouver is going to allow us to compete very competitively against those larger broadcast groups from central Canada and also be able to allow us to grow our broadcasting group, not only in British Columbia and Alberta, but perhaps across the rest of the country.

3301 You talked about local ownership and what does it bring to the table. Well, we certainly know the area, we know the Province of British Columbia very well, we know the community of Vancouver and the Lower Mainland. A perfect example, of course, is that Mr. Pattison mentioned this morning that he has been in the radio business here in Vancouver for over 35 years.

3302 We also know that there is -- you know, we know the community. We know that there is more than one jazz festival in Vancouver. We know that in the Lower Mainland there is the Maple Ridge Blues Festival, other festivals as well, so when we hear other applicants talk about the Vancouver Jazz Festival, that's great, it's a wonderful event here that happens annually in Vancouver, but we know the community. We know that there are other jazz festivals here in the Lower Mainland area that need support as well.

3303 We understand the community's needs. For example, we know that the market is well-served with news programming but, in our opinion, lacks a consistent arts and cultural focus, which we have proposed to you today in our application for Vancouver. In fact, we are the only ones to propose this kind of initiative for COOL-FM.

3304 You alluded to it earlier, we do understand programming niche formats here in Vancouver. We talk about the country format in JRFM, the adult standard format on the AM station. We are niche program players in this marketplace.

3305 It would have been very easy for our company to have just flipped out of country to a more populist format and, yes, perhaps our revenues would have been much greater than what they are today, I'm sure they probably would have been. But, as Mr. Siemens alluded to earlier, that would have been uncommitting to the marketplace for country music listeners. They would have become disenfranchised, and we just don't operate that way.

3306 We need a strong voice in the west and we believe that strong voice has to be here in British Columbia. And we certainly hope that we can provide that kind of service, being a strong regional broadcaster in British Columbia and Alberta in the future.

3307 With that, I would like to have Mr. Pattison say a few words.

3308 MR. SIEMENS: I think Mr. Pattison is going to maybe make a comment later.

3309 I just wanted to make -- as part of your question you were wondering about the benefits, the Canadian talent benefits as one of the things you have to take into account. You mentioned the value of a licence in Vancouver. I just wanted to come back to that, if you don't mind.

3310 I must say, we kind of disagree with the value of the station that was bandied about in this room yesterday. I heard $40 million a few times.

3311 It is true, I think, the average revenues for FM in this market may be $10 million with a PBIT of around $4 million. I wouldn't disagree with that. But we run a niche format. We have discussed that. You have seen in our annual returns the profits and revenues for JRFM are significantly less than that.

3312 I think that is important, because we have applied here for a specialty licence. All of our competitors for the smooth jazz formats have, one, applied for a Group 2 licence and then changed it at some point in the application process. They did not submit new revenues.

3313 We know from our experience that niche formats grow slower, and we are the only applicant who saw that. So we project to attain $5.4 million by year seven. That is slow growth. If value is four times revenues, as Telemedia suggested yesterday, then the value of the station is really more about $20 million. Our third party direct uncontestable benefits represent over 10 per cent of that amount.

3314 So I just wanted to make that point because I think it is important.

3315 MR. PATTISON: Is there anything that hasn't been answered there that you would like to hear?

3316 THE CHAIRPERSON: Well, maybe we can wait for the end when I ask everyone to -- but I really do think that one of the things we struggle with now is that the value of these licences in these markets is high, even if it is at the lower end, and we have to consider a lot of tangible and intangible elements when we are dealing with the public's property.

3317 So it was really a matter of -- I think particularly, for me as a British Columbian, and I know for Commissioner Cram and others at the Commission, this issue of consolidation, which we know to be good for the industry and certainly, as you have said, it is happening across the board in all industries. It is happening. We are not going to be able to stop it, but what are some of the other things that we need to be considering and thinking about and how important are they?

3318 Particularly, is it important for the country? That is important to me and I think, you know, as a native British Columbian there is no secret about the fact that I think these things are -- I'm not saying your application, we have other western applicants here and we have other Vancouver applicants here, but I just thought you might be in a unique perspective to comment on that for us.

3319 MR. PATTISON: Well, value really only comes into play when you sell it, because you can't pay your salaries to people without cash. There are people who flip stations and then they make the money on values.

3320 But if you are a long-term player, which some people are, then the value is just really a piece of paper that you hope some day that maybe it is worth it if you sell it at a given time. In my time with the radio business here in Vancouver, I have seen the values go up and go down, but it doesn't mean anything until you actually turn them into cash.

3321 As I understand it, you are not supposed to traffic in licences and I suppose there has to be a waiting period or some period of time until you sell something.

3322 I'm not a big fan of values, because it is cash that counts. If we go into this business and we start losing money, which we will in this particular station, it is going to be cash flow that we have to make it through the night and the valley with.

3323 So I really think that today the value only depends if somebody wants to sell it, when you would allow them to transfer the licence and flip it. Our history is that we haven't done that.

3324 THE CHAIRPERSON: Thank you.

3325 I wonder if you might elaborate a bit on your corporate strategy.

3326 I know you have some other acquisitions pending, and when you talk about consolidation and what has been sold out of this market, certainly there were buyers and it just was kind of unfortunate that they didn't happen to be local buyers.

3327 So, to a certain extent, a lack of local buyers has led to these assets leaving the province and not any regulatory impediment to the loss of the assets.

3328 MR. PATTISON: I'm not sure I understand the question exactly.

3329 THE CHAIRPERSON: I'm sorry, I distracted myself.

3330 You talked about the loss of B.C. ownership, whether it is WIC and the other stations, and they have been sold to eastern interests, whether it is Canwest, which is Manitoba, or Toronto, or Montreal for that matter.

3331 But my question is -- well, my comment is: There have been no buyers locally for those assets, which is why they have left, and I don't think there has been any regulatory reason, unless you can tell me why there haven't been local buyers.

3332 So then my question to you is: What is your corporate strategy in terms of your future in the broadcasting business, medium to longer-term.

3333 MR. PATTISON: Well, first of all, in regards to being a buyer, you have to have the opportunity and sometimes you don't know about the opportunity and sometimes it is an auction.

3334 We have been unable to make the mathematics work in some of these values or the prices, because in the final analysis it has to get paid for. In some cases we just could not make the arithmetic work. Sometimes we have not had the opportunity.

3335 Our strategy going forward is to take one step at a time. We have made this move -- well, recently we bought -- since we got in the radio business initially, 35 years ago, then we applied 15 years ago for an FM, got that in Vancouver, and then we bought the radio and television assets in Kamloops, also in the last 15 years. In the last couple of years or so, maybe three years, we bought Kelowna. We were concentrating in British Columbia to tie it in with the management out of Kamloops.

3336 Opportunity came along to us to buy Monarch and we negotiated a transaction for their assets, with the idea of concentrating on western Canada, being British Columbia and Alberta and any other opportunities that fit in with our management, and also based on sound values, as you rightly mention. But it has to get paid for and those values click in when we buy them and when the deal closes.

3337 So our strategy is to try to add to our assets in this business, providing we can make the arithmetic work.

3338 As I have said, we have not been short-term players. We have been committed. We have not done anything but do what we said we were going to do, and that is why I think that today, if you give us this opportunity, that you can count on us to do what we say we are going to do.

3339 Because there is always the possibility, and quite often in a commodity-based economy, which B.C. is in many ways, is that you need the staying power of when the business plan doesn't work out. Sometimes our projections aren't satisfactory or they don't work out, so we need the staying power to go through, if it is necessary, the valley.

3340 So our strategy is to grow the business, western Canada, prices that we can afford, and any opportunities such as this that come up.

3341 Does that answer you question?

3342 THE CHAIRPERSON: It does indeed.

3343 MR. PATTISON: Thank you.

3344 THE CHAIRPERSON: Thank you.

3345 Now, technical questions.

3346 As you know, there are other applicants wishing to use 94.5, including CBC which has proposed it for la Chaîne culturelle. You have indicated in your 14 August letter that the CBC could use other frequencies, namely 91.9 and 92.3.

3347 I'm wondering if you have conducted any studies to confirm these frequencies could in fact be used here?

3348 MR. SIEMENS: Madam Chair, I'm going to ask Dan Roach from Broadcast Technical to speak to your question in just a moment, but I wanted to make mention this morning that -- I wouldn't suggest we have a solution here, but I think we have an idea that you might like to consider.

3349 Much has been said the last couple of days of 88.1 as a frequency that might be able to be utilized to some extent. I think Mr. Roach is going to talk to the fact that la Chaîne Première -- pardon my French -- is at 97.7 and it is a mono service.

3350 Now, if we look at 88.1, there is real problems with that in a multipath situation if it is a stereo service, but if it were a mono service the coverage that that signal provides is actually quite, quite good.

3351 So we might suggest that there is an opportunity there to move la Chaîne Première from 97.7, which would open up that frequency, to 88.1, and then you have both 97.7, which is a full power stereo signal available, as well as 94.5.

3352 Now, I'm not a technical engineer by any stretch of the imagination. I do know how to turn on the CD machine in my radio, and it ends about there.

3353 Dan, could you maybe elaborate a little bit on some of the other discussions we have had?

3354 MR. ROACH: Thank you, and good morning. You stole my thunder a little bit there.

3355 But the Commission has heard, I think, in the last few days, that there are a number of other opportunities and they are all impaired. And some of the impairments may be impossible to overcome, some look like they have a little bit of promise, but even if they can be overcome they are not competitive with the other FM licences in this market, which are all Class Cs and they are all running hellbent for leather with as much power as they can.

3356 We do have tests that we have seen from Saturna. Saturna was abandoned as a potential site. It was actually completely built by a private broadcaster and then the results were not good. He was looking for Victoria. That is the old CFMS, now CIOC.

3357 Lots of signal from Saturna, but poor stereo performance because of multipath.

3358 A similar situation with Salt Spring years ago with CJAZ at 92.1.

3359 Lots of signal in Vancouver, Victoria and Nanaimo. Unfortunately poor stereo performance but a gang buster's mono signal. Probably as a regional transmitter location, Salt Spring may be the best that there is for this part of the world.

3360 We are thinking that 97.7 is under-utilized in Vancouver because it is completely unimpaired. It is a full 100 kilowatt Class C. They are running in mono. It could be used as a stereo signal.

3361 There are a number of opportunities, either from Saturna -- Saturna has been discussed as an allocation that could be dropped into Vancouver. Of course, the farther it gets from Saturna Island the lower power that is going to be permitted because of potential for interference to CHEK-TV.

3362 But if it is left on Saturna Island, as I say, there is good coverage except that the stereo performance is poor. It might be a good location for the mono French service, allowing 97.7 to be used for stereo French service here.

3363 Another thought was with Salt Spring. As I say, Salt Spring was intended as a regional stereo channel. Didn't work out very well for CJAZ. Although lots of signal in mono, the stereo performance is not so good. CBC took it on as a rebroadcaster of CBU-FM in stereo and discovered the same problems. As a matter of fact, they had to put in a rebroadcaster for the Victoria area because the stereo performance was so poor.

3364 Here is 92.1, another 100 kilowatt channel -- they are scarce enough these days -- is being used for Victoria nominally, and yet the performance in Victoria is poor enough they have to put in a rebroad -- low power rebroad for Victoria. It makes 92.1, I think, largely redundant. It provides some coverage to the Sunshine Coast, I guess, that otherwise wouldn't be available, but there might be some other avenues available for that specific area.

3365 92.1 would make a very good mono source for the whole region. Alternatively, it could be moved to Vancouver or, if CBC chose to replace that omnidirectional antenna that CJAX originally put in to get coverage in all these areas before we discovered that the stereo was very poor, if they put in a directional antenna aimed towards the nominal market of Victoria, that opens up 92.3 as a potential Class B for Vancouver.

3366 So there are lots of opportunities the CBC has that the rest of us don't. I think that there are a number of ways that they could accomplish what they want to do.

3367 THE CHAIRPERSON: Do you have copies of these studies you have done that you could file with us?

3368 MR. SIEMENS: Yes, indeed.

3369 THE CHAIRPERSON: Thank you very much.

3370 If for any reason 94.5 was not available, would you be able, ready and willing to use another frequency, either one of those alternatives or another one if it could be found?

3371 MR. SIEMENS: The short answer to your question is yes.

3372 If I might just have a moment, though, it wouldn't be without its problems.

3373 Mr. Roach has covered the other frequencies, I think, to some extent and I won't go over that again, but 88.1 or 88.3, as an example, from the maps that we have seen, would cover downtown Vancouver certainly, Burnaby, Coquitlam, parts of Surrey. It would not cover the whole market as a whole. So that would be a bit awkward.

3374 We have on file support, as an example, from the Maple Ridge Jazz and Blues Festival, and a lesser frequency wouldn't cover that area. So that would be a bit of a disadvantage.

3375 But we would certainly take it and we would keep our commitments to Canadian talent and Canadian talent initiatives intact.

3376 THE CHAIRPERSON: Thank you.

3377 Are you aware of any AM frequencies that are available?

3378 MR. ROACH: There are several. A few AM broadcasters locally, as you know, have moved to AM. In addition, of course, there is always the AM expansion band.

3379 THE CHAIRPERSON: Do you have studies with that that you could file with the Commission?

3380 MR. ROACH: I haven't prepared anything for this specific application, but there have been several that I am aware of that have been prepared recently for this area, so that I know there are frequencies available.

3381 THE CHAIRPERSON: Thank you.

3382 Would you be willing to use the AM frequency?

3383 MR. SIEMENS: Not for this format, no.

3384 THE CHAIRPERSON: Thank you.

3385 I guess my last question is, I think we have asked every applicant to elaborate on why, in closing, they should be awarded this frequency.

3386 MR. ARNISH: Thank you very much, Madam Chair.

3387 I will respond to that and then have Mr. Pattison say a few comments as well.

3388 We think that we should be awarded a new licence for Vancouver in the frequency 94.5 because we propose a new and diverse format of smooth jazz, including lots of smooth jazz, a nice taste of more traditional jazz, a range of music features included with that as well.

3389 We will provide a variety of on-air programming that we consider part of the business of running a radio station, and have not included this as Canadian talent development.

3390 A realistic and ambitious approach to Canadian content. Twenty-five per cent exceeds what we would be required by regulation and we have committed to increase it over the course of the licence, as you heard this morning.

3391 We have clear and unequivocal benefits for Canadian musicians leading to the increasing the supply of recordings and developing the careers of our musicians. This is where the best bang for the buck for an emerging format lies. Our direct dollar expenditures all go to recording and live exposure of Canadian talent. They will be supplemented by the important promotional activities of the Pattison Group of companies.

3392 As I mentioned earlier, we do reflect the community. A new and needed commitment to reflecting the arts and culture scene will be part of COOL-FM. We have employment equity initiatives that will reflect Vancouver's make-up. Canadian talent development initiatives will focus on local and regional talent.

3393 We have extensive experience in and commitment to niche formats. As we mentioned earlier in our presentation, we were also the only applicant to apply for a Specialty 3 licence from the very start.

3394 Local ownership and diversity in the ownership of the national broadcasting system is extremely important as well, and I will ask Mr. Pattison to comment on that.

3395 MR. PATTISON: Yesterday afternoon when I was here and when I heard Commissioner Demers ask this question I thought about it going home last night. I think that there are probably five important reasons that you would consider awarding us this licence.

3396 The first one is, which we have said, we have been here 35 years, we have done what we said we would do, and you can count on us to do what we say we are going to do.

3397 Number two is that Vancouver is the only major market that we are in and we need to strengthen our competitive position if we are going to be a player in this business, in my opinion.

3398 Thirdly, I think that by awarding us this licence it would help restore some balance to the dominance of the eastern chains as it relates to this market.

3399 If something goes wrong with our business plan, which could well happen, revenues or shortfall or the economy dips, or whatever can go wrong, that it is my opinion that we have the staying power to stick with it, as we have the country format through the ups and downs, finally getting to where we have some reasonable return.

3400 Lastly, is that our company has been a strong contributor to this area of Vancouver and British Columbia for charity, non-profit organizations, and I think that something like this -- this part of the world has been very good to us and to me and our company and, over time, if this station becomes successful, it seems to me that it will help us to make more contributions to this part of the world where we live.

3401 Thank you.

3402 THE CHAIRPERSON: Thank you.

3403 Commissioner Cardozo.

3404 COMMISSIONER CARDOZO: Thank you, Madam Chair.

3405 Thank you for the information you have provided so far. I just want to go a little further down the road that Commission Grauer has discussed with you and which you have provided a lot of information on, the issue of local ownership.

3406 I have listened carefully to what you have said in the opening remarks and in your responses in the last half hour or so. I'm wondering what your thoughts are if I can just take you one step further.

3407 It seems to me -- correct me if I'm wrong -- that what you are saying is that in a hearing of this kind, a competitive hearing where the Commission is awarding a licence, that we should be using the opportunity to balance out what the marketplace is not doing, namely the marketplace deals are resulting in ownership being gravitated towards central Canada, especially Toronto.

3408 I am careful about what I'm saying here because there are Toronto-based and broadcasters from outside the province who are applying here, so I am not at all saying this is what I think, but I'm asking what you think in this regard -- whether in a hearing of this kind we should either be giving preference or paying special attention or being fully cognizant, however you want to put it, to balancing out that type of regional issue.

3409 I understand clearly what you said. I also note the word "emotional", which I think is an important word in terms of where ownership is based and I understand that very well.

3410 What is your thought on how we should proceed in these types of hearings in general?

3411 MR. PATTISON: Are you directing that question to me?

3412 COMMISSIONER CARDOZO: Sure. You are the boss, you can decide which one answers, as I understand it.

3413 MR. PATTISON: There are two bosses we have, the bank and the public, and they pretty well tell us what to do.

3414 I think that it is an opportunity to try to balance the scales a little bit. I don't know -- the other opportunity, of course, that you have is in the approval process.

3415 In this part of the world, as I'm sure you realize, there is a feeling, obviously, and has been for a long time, that the mountains are a barrier and whether we like it or not it is a fact of life that things tend to gravitate to the east in just about every industry. A business gets sold out to the capital pools and yet you try to balance it. That is the job -- the unenviable job that you people have.

3416 But the fact of the matter is that consolidation is here and it will continue, in my opinion, and the only opportunity you have is to make a decision on who owns what to balance that, and this may be one of the opportunities.

3417 COMMISSIONER CARDOZO: In that marketplace where some of the B.C.-based smaller companies have been sold out or have been bought up by central Canadian companies, you have been part of that with Monarch.

3418 It seemed when you were answering a question earlier to Commissioner Grauer that perhaps you felt that you are not in the loop enough to be able to grab onto these opportunities when they happen. Are you not one of the big enough players? Is that the issue?

3419 MR. PATTISON: Well, what happens sometimes, usually there are two ways that people sell up.

3420 One of them is they don't want anybody to know about it because of their employees, or whatever. Sometimes it is a family issue. So they will quietly come and ask you to sign a confidentiality agreement that nobody knows and we would like to sell our asset. Then assume you work out a deal and you agree on it, and then everybody announces it. That is one way, but the deal is essentially done, except in your case for regulatory approval.

3421 The other case is, you go to an auction where you tell the whole world you are going to sell it. Then everybody and their dog shows up and makes an offer on it. In some cases, in the first case, we may not be privy to that.

3422 The second opportunity is that when the auctions do come, if we think it will work for us, then our arithmetic sometimes works and sometimes it doesn't. In the case of Monarch it did. But sometimes these prices get to high -- back to values -- that's when they turn into cash. Then you have real money.

3423 COMMISSIONER CARDOZO: If somebody wants to sell here, if they were thinking of a British Columbian with deep pockets, Jim Pattison is one of the first names that would come to their mind, I would think.

3424 Do you get called on -- I don't want to ask about any individual cases, but are you in that kind of loop where you would get called on?

3425 MR. PATTISON: Yes. And I could give you examples, privately, of those incidents, if you wish.

3426 COMMISSIONER CARDOZO: No, I'm not looking for any private -- I just wanted to get that in a general sense.

3427 Lastly, then, there are, in the group of people applying for applications here -- I'm not sure of the exact numbers, perhaps three or four at least, who are Vancouver-based. I don't want to get into the competitive issue just yet, because you will have a chance in a subsequent phase to discuss that, but based on what you have said today, on the issue of a Vancouver-owned company, are you all about the same? The others are smaller than you or totally new players.

3428 MR. PATTISON: I'm not sure I understand the question.

3429 COMMISSIONER CARDOZO: I'm not sure how I -- I guess it is probably a thought I should keep to myself for later on.

--- Laughter / Rires

3430 THE CHAIRPERSON: There will be other opportunities, Mr. Cardozo.

3431 COMMISSIONER CARDOZO: I think I will put it under the other opportunities for now.

3432 Thank you.

--- Laughter / Rires

3433 THE CHAIRPERSON: Thank you.

3434 Commissioner Cram.

3435 COMMISSIONER CRAM: Thank you.

3436 I do want to sort of continue the philosophical discussion of western-based broadcasters or smaller broadcasters and fighting the goliaths in Toronto. I hear you, I think the words were "We have to have a beachhead here to grow our group." The problem -- and I think you said that, Mr. Arnish.

3437 The problem I see in that is twofold: One, you already have a beachhead. You have two stations in the second largest English market in Canada, whereas -- which leads to the second problem.

3438 I don't want to sound like I'm talking about the Visigoths and the Huns, but when you invade across the mountains you will be competing with Craig in Alberta, and you want the money from this market to compete with Craig, who do not have a beachhead in the second largest English market.

3439 Similarly with NewCap. If you invade Alberta you will again be competing in a different media, thus far, with NewCap, who again don't have any beachhead in the second largest English market.

3440 So while I understand your position, from the other perspective that you need the war chest to fight it out in Alberta, how do you rationalize that with -- how do we deal with that? Because I am then looking at Craig and NewCap and will they say they need a beachhead too and you already have two stations.

3441 MR. ARNISH: Excellent question.

3442 In response to that, we are not talking about invading Alberta. When we talk about a beachhead in Vancouver --

3443 COMMISSIONER CRAM: I use hyperbole.

3444 MR. ARNISH: Yes, I realize that.

--- Laughter / Rires

3445 MR. ARNISH: We are talking about being able to compete here in Vancouver with our two stations against the Corus four stations and the Rogers three or four or five stations here in the Lower Mainland, also, to compete here in Vancouver against the other national chains, the CHUM Radio Group and Standard Broadcasting as well.

3446 To be competitive in this marketplace, because consolidation has taken place here in the Lower Mainland, we really do feel that we need another station so that we can compete against them here in the Vancouver market.

3447 I understand what you say about Craig and NewCap Broadcasting, but in Alberta, for example, we are not going to be competing against them in any of the markets -- if we receive approval from the Commission -- that we will be assuming and acquiring from Monarch Broadcasting.

3448 Craig is in television in Alberta and in Calgary and Edmonton, as you know, where the Monarch stations are in small to medium markets in the Province of Alberta. Rolling out our strategy as we move forward, we will look at opportunities that are presented to us or opportunities that we may seek out as well in medium to small markets.

3449 But the major concern here in Vancouver is being able to compete against those major broadcasting groups that now have a group of stations here in Vancouver, or at least have major market stations right across the country.

3450 Gerry, do you want to add anything?

3451 MR. SIEMENS: Well, if I could just finish that point, Rick.

3452 We are competing at this hearing with a couple of the national companies Mr. Pattison mentioned whose market shares are already considerably larger in this market than ours are because, as we mentioned earlier, not to go down that road again, but we have chosen to be in the niche format.

3453 The second thing would be that we believe that it would be very difficult, given that Corus have four stations here, Rogers have three Vancouver stations, I suppose, and five regionally, it would be very difficult for an independent to, as a stand-alone operator, make it against the stiff competition in this market.

3454 COMMISSIONER CRAM: What do you think of the concept that I think Mr. Craig raised yesterday that in this round we should consider only granting a licence to the smaller players because the larger players -- which I think you are, Mr. Pattison -- have the ability to buy a licence and that the smaller players and the newer players don't have that financial ability to buy a licence, for whatever their value is?

3455 MR. ARNISH: Well, we consider ourselves -- yes, we are owned by a parent company that is very large, but we run our group, and our group has to be run as an independent group of the entire Jim Pattison Group, just like all the other 51 divisions in our company operate on a day-to-day basis.

3456 We consider ourselves to be a small broadcasting group that, again, if the approval is given for Monarch, we are looking at growing regionally in British Columbia and in Alberta.

3457 You know, we came to the decision back 18 months ago at the very minimum when we put our application together that we weren't in the process, if I can use your words, of trying to buy a licence here in Vancouver.

3458 I think we have been very respectful of the philosophy of the Commission related to the regulations regarding Canadian talent development. We haven't tried, in a sense, to buy the licence by putting $8, $10, $12, $14 million into CTD. We have to be responsible to our business plans as an independent group of the Jim Pattison Group.

3459 Mr. Craig is quite right, in our opinion as well, when you look at small market broadcasters we all have to have that opportunity to grow and compete against the larger broadcasting groups.

3460 But we are not here to buy a licence. We have presented a very responsible business plan to the Commission for a niche format for Vancouver that we know at the end of the day that we can ride out the good and the bad times with that format and be a contributor to the development of Canadian talent and the mosaic here in the Lower Mainland.

3461 MR. PATTISON: If I may just add a word to that.

3462 I think the biggest worry that we have is: Are we big enough to be a player in this game? We are sitting here with two licences, or two stations in Vancouver, and our biggest concern is: In fact can we compete in this market?

3463 Maybe Mike Korenberg, who is one of my associates, might like to just comment on that, please.

3464 MR. KORENBERG: The issue, I think, for us as an applicant for the last licence, this licence, is not based on being western only, it is based on the ability of the stations that are already here in Vancouver to be able to survive in Vancouver. Clearly there is an issue with an AM licence in most major markets, and with the FM licence, because of our commitment to the niche format, there simply isn't the revenue opportunity that there is to the other ones who have chosen to go in a much more popular way.

3465 I think the second point that is an advantage, and maybe Mr. Craig's comments could be construed this way, that the other applicants that are chains have other major markets from which they derive significant profitability. Those markets tend not to be as resource-based and commodity-driven as this economy, which is our only major market, as Mr. Pattison and Mr. Arnish said.

3466 So for us to be able to survive and to be able to provide the special voice that we hope to for the listeners that are interested in this music, we feel it is important to have a strong enough business base here in the city.

3467 Thank you.

3468 COMMISSIONER CRAM: I know I'm going where angels fear to tread, but I understand the Conference Board has given a diversification factor for Vancouver of .82, which is the third highest in the country, which to me, if I understand the diversification factor, means quite a resiliency in the economy because of its diversification.

3469 Is it not the third highest diversification factor in Canada?

3470 MR. KORENBERG: I think it is. I think the issue always comes to: From what base are you diversifying? If it was a very small base, then any progress at all represents a significant increase in diversification.

3471 But information available within the last month from the Business Council of British Columbia indicates that resource industries remain important in this province. Resource-based products as a percentage of B.C.'s international exports are 77 per cent, as a percentage of manufacturing shipments are 71 per cent, as a percentage of exported goods to other provinces is 63 per cent, and while we laud the achievements of hi-tech companies in particular and other manufacturing firms that have come here, the service sector is what has grown the biggest in this province. That is what has allowed it to diversity, but it still depends heavily on the resource economy to be successful in its own right.

3472 Thank you.

3473 COMMISSIONER CRAM: You are talking about the province as opposed to the city. Is that correct?

3474 MR. KORENBERG: Yes. Yes, I am.

3475 COMMISSIONER CRAM: Yes.

3476 On the Edper(ph) Study I would like to get an idea of the sample size of the study and then the number of Asians and the number of visible minorities that were actually interviewed.

3477 MR. LENSKI: Yes. We interviewed 500 people 18 to 54. Of those 500, 65 were Asian and 81 were visible minority, if you include Asian, black and native aboriginals.

3478 COMMISSIONER CRAM: I think the word is: What is the level of competence, then, in your statement that over 15 per cent -- that there is a higher interest by Asians? Plus or minus what percentage?

3479 MR. LENSKI: Well, it's a sample size of 65, which isn't the largest sample size that you can imagine, but the increase -- the higher preference was significantly higher. It was 12 per cent of that sample said they would have a favourite station of smooth jazz as opposed to 6 per cent of the entire sample, and that is a significantly higher level, even with the smaller sample size.

3480 COMMISSIONER CRAM: Thank you.

3481 I think I'm going to leave Cancon to others who are braver than I.

3482 Thank you very much.

3483 THE CHAIRPERSON: Thank you, Commissioner.

3484 I think legal has some questions for you.

3485 MR. RHÉAUME: Thank you, Madam Chair.

3486 I just have a couple of very brief questions, which you have answered partly, Mr. Siemens.

3487 If the Commission were not to accept your blended Cancon approach, I believe you said that you would commit to Category 3 Canadian content, 25 per cent escalating up to 35 per cent.

3488 So this would actually represent the chart that you have handed out this morning, the blue and green chart. Is that a fair statement?

3489 MR. SIEMENS: Yes, that is correct.

3490 MR. RHÉAUME: So this could be a condition of licence on Category 3 material?

3491 MR. SIEMENS: We would accept that, yes.

3492 MR. RHÉAUME: Thank you.

3493 How about reasonable distribution of -- or scheduling in a reasonable manner, I think the regs state?

3494 MR. ENO: It would be distributed reasonably throughout the day and we would observe the 6:00 a.m. to 6:00 p.m. as well.

3495 MR. RHÉAUME: The reason I'm asking about the reasonable manner is, one of the charts that you have provided -- in fact you have highlighted a number of programs, and most of them appear to be evenings and weekends, other, possibly, than the Lunch Set.

3496 So I'm not sure if I quite understood the nature of these programs and what these programs represent in terms of your smooth jazz music.

3497 MR. ENO: If you would like, I can address each program specifically, or I could generalize.

3498 I will generalize it first, if you wish.

3499 MR. RHÉAUME: Maybe I will rephrase my question.

3500 Why would it be that there would appear not to be any highlight program during drive time, let's say, in the morning?

3501 MR. ENO: The programs that we have that we call specialty programs are more I guess what you would best consider foreground programming, which are not passive listening. I think that if -- we put those programs there when the listeners are more apt to make an appointment to listen, will seek out that type of music.

3502 Those programs also, I think, generally would spread the spectrum of the music that we propose to play. In fact, it would probably -- those are the areas where IPO, for instance, is a new CD release program, and we would expand the parameters of the music that we would generally program throughout the day in that area.

3503 The same with Upper Levels, especially Upper Levels, would probably be very serious in the aspects of traditional jazz there.

3504 And the Cancon --

3505 MR. SIEMENS: The Cancon, though, will be evenly distributed throughout the broadcast day, these programs notwithstanding.

3506 MR. RHÉAUME: Thank you.

3507 Category 2 music now, which could represent up to 50 per cent of your music menu.

3508 Would we be relying on the regulations for that, the 35 per cent during the broadcast week and the 35 per cent reasonable distribution? Would we use the reg for your Category 2 music, the radio regulations?

3509 MR. SIEMENS: What we have suggested is 25 per cent blended. So that would be 25 per cent of the music we play, regardless of whether it is Category 3 or Category 2, at the end of the day would be Canadian content.

3510 If I heard you correctly, would we accept 35 per cent?

3511 MR. RHÉAUME: The reason I'm asking you that: If your blended is not acceptable and we go to a condition of licence on Category 3 at 35 per cent, what are you suggesting for Category 2, which could represent 50 per cent of your music?

3512 MR. SIEMENS: I see. All right.

3513 Well, then we would accept 35 per cent. I guess that is the short answer.

3514 I do think that there is a little bit of a negative in accepting a condition of 35 per cent across the board just because we have been working in this format off-line for a year and-a-half now.

3515 At first we were concerned as to where we would find the Canadian content. As we have learned the format, we have learned that there is sufficient available to sustain 25 per cent and grow it to 35.

3516 If you would take comfort from a condition of licence of 35 per cent, we would accept that. Our concern would only be that we might be in a position where we would burn some of the artists or the music and that would be a negative for everyone, but we would certainly take that.

3517 MR. RHÉAUME: Thank you.

3518 I don't think there is a need for a condition of licence on Category 2. The radio regulations do address this.

3519 So you would be covered by the radio regulations for Category 2 and you would have a condition of licence for Category 3. Does that work?

3520 MR. SIEMENS: That's understood.

3521 MR. RHÉAUME: Thank you.

3522 Thank you, Madam Chair.

3523 THE CHAIRPERSON: Thank you very much.

3524 I think we will take our morning break, but before we do I would like to welcome -- what have I done with my paper -- the Broadcast Performing Arts Class from Columbia Academy who are here with us today, with Sterling Fox, their instructor/ broadcaster. Welcome.

3525 We will be back at 11 o'clock.

3526 Thank you.

--- Upon recessing at 1047 / Suspension à 1047

--- Upon resuming at 1106 / Reprise à 1106

3527 THE CHAIRPERSON: We are ready to continue.

3528 Madam Secretary.

3529 MS VOGEL: Thank you, Madam Chair.

3530 Our next applicant is Focus Entertainment Group Inc., and they are applying for a broadcasting licence to carry on an English-language FM radio programming undertaking at Vancouver.

3531 The new station would operate on frequency 94.5 megahertz, with an effective radiated power of 46,000 watts.

3532 The applicant is proposing an urban music service.

3533 Please go ahead whenever you are ready.

APPLICATION / APPLICATION

3534 MR. TONY ROTA: Thank you.

3535 Hello, Madam Chair and Commissioners. My name is Tony Rota and I am Vice-President of Focus Entertainment and one of the founding members.

3536 Before beginning the formal part of our presentation, I am very pleased to introduce the members of our panel.

3537 To my immediate right is Mr. Don Hamilton, Chairman Elect of Focus Entertainment's Board of Directors. Mr. Hamilton is a distinguished Vancouver broadcaster and businessman with 39 years of experience in radio. His wisdom and expertise will be of immense value to our organization in bring BEAT 94.5 FM to air, if licensed.

3538 To Mr. Hamilton's left is Abir Saadi, Art Director, Multimedia for LEAP Creative Group. Ms Saadi, with her international experience as an art director in broadcast media in Israel, London, Europe and Vancouver, will be heavily involved in the launching and promotions of BEAT 94.5 FM's urban music station, if approved.

3539 To my immediate right is Maximus Clean, Program Director for BEAT 94.5 FM, DJ extrordinaire and one of the foremost urban experts in North America.

3540 To Maximus' right is Destiny Bound, local urban radio personality and nightclub and event promoter. With her expertise in urban music and broadcast experience, Destiny is part of BEAT 94.5 FM's team of urban music professionals.

3541 Immediately behind me is Jim Robson, broadcast consultant and cranky old taskmaster for Focus Entertainment and President of Robson Broadcast Consultants Inc.

3542 To Mr. Robson's left is Duncan MacKay, President of Pollara, one of Canada's best known market research companies.

3543 To Mr. MacKay's left is Vice-President Connie Cheng of Pollara's western operations, Vancouver office.

3544 To Connie's left is Nancy Scaglione, whose broadcast background, knowledge of and involvement with Vancouver's multicultural communities, will greatly assist her as Focus Entertainment's Community Action Director.

3545 To Mr. Robson's immediate right is Sean Lalla, a Vancouver urban concert promoter, local urban music representative for Universal Records and distributor of Hip Hop Magazine. Mr. Lalla's expertise in urban music and the recording and concert promotional area and magazine industry are essential to his role as Focus Entertainment's Canadian Talent Development Co-ordinator.

3546 To Mr. Lalla's left is Sketch J. Imani, local urban artist, producer and business owner who has been involved in the entertainment industry for over 10 years, with performances and releases in England, Hong Kong, the United States and Canada.

3547 To the far left, at the third table, is John Rota, President of Focus Entertainment and founding member.

3548 To John's right is Grant McCormick of HN Telecom, Focus Entertainment's Broadcast Consulting Engineer.

3549 To Mr. McCormick's right is Blake Cowan, major investor/shareholder in Focus Entertainment. Blake is part of the Cowan family whose roots in the Vancouver business community go back over 100 years. As you can see, Blake is well preserved.

3550 On John Rota's right is Drew Henni, the third founding member of Focus Entertainment.

3551 Now, at this time we would like to share our presentation with you today.

3552 Thank you.

--- Applause / Applaudissements

3553 MR. CLEAN: Madam Chair and Commissioners, Focus Entertainment appears before you today seeking approval to bring BEAT 94.5 FM and its one-of-a-kind urban music format to a large awaiting audience throughout the greater Vancouver region.

3554 Approval of BEAT 94.5 FM's unique urban music format will add significant diversity and listener choice to Vancouver and fill the programming service voids amongst the various demographic components within the broader 18 to 54 year old listenership spectrum to be served.

3555 Through its inclusive program schedule, our new station, The Beat, will reflect the richness of Vancouver's cultural diversity by giving the city's growing multicultural communities a daily voice and a presence on mainstream radio.

3556 The Beat's commitment of $3.5 million in direct and indirect expenditures on Canadian talent development, will greatly benefit Vancouver's developing urban artists in need of financial support and access to air time to further their careers.

3557 In short, the essence of The Beat's programming approach can be described as diverse, inclusive, locally relevant, community-driven and talent focused.

3558 MR. HAMILTON: Madam Chair and Commissioners, over the past decade British Columbia's urban music scene has evolved to the point where Vancouver, like Toronto, has truly become a major urban music centre.

3559 In recent months, Canada's urban music sector has taken a giant step forward through the Commission's licensing of the country's first urban music formatted radio station to Milestone Communications of Toronto.

3560 Today, an equal opportunity exists to advance Canada's west coast urban music sector and its artistry a further giant step forward by licensing the country's second urban music formatted radio station to Focus Entertainment of Vancouver.

3561 Beyond fulfilling the essential missing link in Vancouver's otherwise thriving urban music community, the licensing of The Beat will result in a dedicated urban music formatted radio station in each of Canada's two largest urban music centres, Toronto and Vancouver.

3562 Such a dual licensing action will meaningfully assist in firmly establishing this vibrant new FM programming format within the Canadian broadcasting system.

3563 As well, it will greatly enhance efforts in both key urban music markets in the cross-promotion, development and on-air exposure of Canadian urban music talent, which to this point has been penalized by the Canada-wide lack of urban music radio outlets to cater to their artistic need.

3564 Crossing eras, genres, generations and cultures, urban music encompasses the sounds of rhythm and blues, gospel, soul, Caribbean rhythms, motown, funk, world beat, hip hop, house and rap. It is percussive music whose sound reflects the complexity of our contemporary city life.

3565 Results of an extensive Vancouver Audience Research Study by Pollara, one of Canada's best known market research organizations, clearly defines a broadly based, culturally diverse audience aged 18 to 54 in search of a local mainstream radio voice that will play their music and provide greater listener choice.

3566 Given the absence of a dedicated local urban formatted station, Vancouver listeners interested in urban music have to tune in to KUBE 93.3 in Seattle.

3567 Beyond tuning to KUBE, Vancouver urban enthusiasts must look to other means of accessing the music of their choice including: downloading urban artists from the Internet; buying tapes and CDs at local music stores; tapping into Vancouver's vibrant urban music club scene; and attending the growing number of major urban concerts that come to Vancouver. Urban music concerts have sold out the 21,000-seat General Motors Place within hours.

3568 MR. HAMILTON: Madam Chair and Commissioners, Focus Entertainment, a wholly Vancouver-owned media company, is responding to the demonstrated need for a full service urban music FM station in Vancouver.

3569 The three founding members of Focus Entertainment represent a new generation of local independent broadcasters who, along with their shareholder/partner, the Cowan family, one of the oldest and most distinguished business families of Vancouver, adds fresh ownership to an increasingly concentrated media environment.

3570 Tony and John Rota and Drew Henni are three young ethnic Canadian entrepreneurs who bring energy, creativity, a fresh voice and a deep love of urban music to their vision for The Beat. Their dream is to answer the listening needs of Vancouver's urban music audience and to provide a structure and an access vehicle for local urban artists to develop and expose their talents locally and abroad.

3571 Helping them to realize their objective is a community-based board of directors chaired by myself, Don Hamilton. I am a Vancouver broadcaster and businessman with 39 years experience in radio. In fact, in my career I have now brought three Vancouver radio stations to air and I hope to make this my fourth success.

3572 Focus is also privileged to have, as its Program Director Maximus Clean, one of the foremost music experts in North America. As Vancouver's original urban radio broadcaster, Maximus brings 13 years of diverse urban entertainment experience to The Beat.

3573 In addition to the board of directors and the talents of Maximus Clean, and other urban music professionals like Sean Lalla, our proposed Canadian Talent Development Co-ordinator, Focus Entertainment, if approved, will put in place the best professional broadcast management team available.

3574 MS BOUND: Madam Chair and Commissioners, the urban music format enjoys great popularity in the United State,s where at least one urban music station is amongst the top five radio stations in virtually every major city. This is due, in large part, to urban music's broad appeal to listeners from all cultural backgrounds.

3575 Such is also the case in Vancouver, as evidenced by Pollara's research, which demonstrates that local multicultural audience represent the highest potential reach for The Beat. For example, among the Southeast Asian and Chinese communities, The Beat's projected reach is 23 per cent and 21 per cent respectively.

3576 Although it is one of the most culturally diverse cities in Canada, there is little evidence of the richness of the cultural tapestry that is Vancouver on local mainstream radio.

3577 The Pollara market research study shows that 45 per cent of The Beat's core audience believes that the cultural diversity of Vancouver is not well reflected on local mainstream radio.

3578 As such, The Beat, through its urban music and inclusive spoken word, will make Vancouver's multiculturalism a vital part of its mainstream radio station by implementing a variety of programming initiatives, including:

3579 the on-air exposure and presentation of local ethnic urban talent;

3580 a stringer correspondent network that will report daily on local news, events and activities from the various cultural communities across the region;

3581 the airing several times a day of brief vignettes on local person, groups and organizations, past and present, who are part of the area's history and development;

3582 the airing of such regularly scheduled programs as Culturally Speaking, Canadian Spotlights, Canadian World Beat Rhythms, West Coast Hip Hop, Youth Vibes, Local Spotlight, Urban Showcase and Urban Affairs; and

3583 the staging of our Canadian talent development initiatives as Rhythmic Roots & BBQ.

3584 I would like to add that many of the persons directly involved with The Beat come from diverse ethnic backgrounds and will be highly visible within the station and throughout greater Vancouver.

3585 That fact, coupled with Focus Entertainment's employment equity initiatives, will place The Beat at the forefront of Vancouver radio stations in celebrating the region's rich cultural diversity on a daily basis.

3586 The time is overdue for broadcasters to include visible minorities as an essential part of the mainstream community they are licensed to serve.

3587 MR. CLEAN: Madam Chair and Commissioners, The Beat will air one of the most diverse playlists on Canadian radio in terms of artists featured and distinct musical selections not heard anywhere else in Vancouver.

3588 Given the prominence of emerging and established Canadian urban artists on The Beat, the level of Canadian content will far exceed the required minimum 35 per cent.

3589 The Beat will program a full mix of urban musical styles, including rhythm and blues, hip hop, soul, world beat, reggae, motown, gospel, house and retro funk, with a special focus on spotlighting Canadian talent throughout the programming day by way of vignettes, Canadian artist tributes and segments on emerging Canadian talent.

3590 The mix of music will be refreshing and energetic in the mornings, innovative and locally relevant throughout the day and exciting in the evenings. New music will be featured in the evenings, as well as international urban selections and home-grown talent.

3591 Weekends will also be variety-filled on The Beat with a number of specialty programs featuring music ranging from west coast hip hop to soca/calypso, soul, gospel, motown and reggae.

3592 An equally differentiating factor that sets The Beat apart from other Vancouver radio stations is its spoken word programming. Locally relevant and community-driven, it is central to The Beat's overall approach of serving its 18 to 54 year old listening constituency and its local and Canadian urban artistry.

3593 MS BOUND: The Beat spoken word will strongly complement its music by talking to local and visiting urban artists, profiling their careers and providing insights into their music. This will include such regular programs as Women in Music, Canadian Spotlights, Soul Classics, Canadian World Beat Rhythms, West Coast Hip Hop and Local Spotlight.

3594 Further, programs such as Culturally Speaking, a daily 20-minute segment following the 6:00 p.m. news, will serve as a calendar of events for the urban community, bringing Vancouverites together in a true urban setting.

3595 On weekends we will invite the community to participate by addressing locally relevant urban issues on an urban affairs call-in program, as well as opening our airwaves to local urban news with the show Youth Vibes that will highlight events and news of interest to Vancouver's youth.

3596 Cybershow Interactive, a state-of-the-art program, will have two live webcams in the on-air studio. The show will be hosted simultaneously on the World Wide Web and on-line listeners may offer their input and requests on the fly. Hosts will also be able to respond to listeners through an open chat room and the music played by the live DJ will be both urban and electronic. Every week, topics of discussion relevant to the urban cyber-community will be featured.

3597 A further component that will distinguish The Beat from other Vancouver stations are the on-air personalities who will greatly influence the sound of the station. In short, The Beat will return personality radio to Vancouver.

3598 MR. TONY ROTA: Madam Chair and Commissioners, a thorough analysis of Focus Entertainment's application underlines the fact that The Beat is talent-focused both in terms of its regular daily program schedule and its Canadian talent development initiatives.

3599 As such, we propose to closely integrate The Beat's regular program schedule with the station's talent development initiatives to ensure maximum benefits accrue to Vancouver's urban talent.

3600 By combining the synergies of live daily programming with the $2.8 million in direct expenditure commitments and $700,000 in indirect on-air promotion of talent, the net impact of The Beat's co-ordinated talent development approach will be profoundly beneficial to local and Canadian music artists and the genre in which they work.

3601 While time prevents a thorough discussion of our $3.5 million in direct and indirect talent development program, we hope you will have questions about our far-reaching talent initiatives following this presentation.

3602 MR. MacKAY: Madam Chair and Commissioners, the comprehensive market research conducted by Pollara clearly demonstrates a strong demand for The Beat and its unique urban music format from both a listener and a commercial perspective.

3603 Based on the views and opinions of Vancouver's radio audience, there is a clear need for greater choice and variety. Fifty-one per cent of the respondents to our survey stated that most local radio stations offer similar types of programming. Forty-one per cent said they are often unable to find programming that they like on local radio. Some 65 per cent of the respondents stated that they would listen to radio more often if their preferred programming was available. Finally, only 26 per cent stated that they were very satisfied with Vancouver's choice of radio stations.

3604 Top-of-mind mentions, and our structured perceptual map demonstrates, that a significant proportion of Vancouver's radio audience would like to hear more programming that is similar to The Beat's urban music format concept.

3605 When a description of The Beat's proposed format was read to respondents, the reaction was very positive among most of the Vancouver audience. Overall, 59 per cent indicated that they would probably or definitely listen to this station, while 84 per cent believed that The Beat would be a positive addition to Vancouver radio, regardless of whether they themselves would listen to the station.

3606 From a listener perspective, Pollara's research underlined the fact that urban music and related urban lifestyle elements are very popular and in demand by Vancouver's radio audience. Pollara's study illustrated, among many important factors, that a wide-ranging audience awaits The Beat. The research indicates that while the station's core musical styles have significant appeal to the 18 to 34 age demographics, the 35 to 54 demographic also responds positively to many of the urban related artists within their genre.

3607 In the end, The Beat's urban format attracts a very wide age demographic ranging from 18 to 54 years.

3608 The net effect with the foregoing is that The Beat's projected audience would achieve a 17 per cent reach in year one, which would place it fourth in the market.

3609 With respect to the revenue potential research study, our review of the industry data shows a very healthy Vancouver radio market with a current value of $87 million, projected to increase to $89 million in 2001, and finally to $99 million in 2005.

3610 The Beat is projected to achieve a 17 per cent reach and a 4.1 market share in year one. By applying the current share point value for the average Vancouver FM station, which is estimated at $1 million, The Beat's 4.1 share would achieve revenues of $4.1 million in year one, rising to $6.9 million by year five.

3611 Given the healthy state of the Vancouver market, and its projected level of growth driven by a strong economy and related strong retail sales, we believe that the Vancouver market can easily accommodate The Beat's urban music format without any undue impact on existing stations. It is our view that The Beat's format will increase listenership among Vancouver's radio audience, repatriate listeners from American-based stations, and attract new advertising dollars to the local Vancouver market.

3612 MR. TONY ROTA: Madam Chair and Commissioners, it is also important to stress the fact that Focus Entertainment's broadly based urban station will fully optimize the utilization of the 94.5 frequency for the benefit of the greater Vancouver region and the Canadian broadcasting system as a whole.

3613 It should also be noted that Focus Entertainment is not aware of any opposing interventions by existing Vancouver broadcasters filed against our application for the 94.5 frequency.

3614 In conclusion, Focus Entertainment firmly believes that the elements contained within our application will contribute to the achievement of the objective of the Broadcasting Act, as outlined by the Commission's Commercial Radio Policy 1998, and meets all of the criteria and expectations that the Commission established in its call for the applications for Vancouver.

3615 Focus Entertainment has the urban music expertise, the financial resources, the broadcast and business experience of its stellar board of directors, and the corporate will and passion to succeed in establishing The Beat as a strong business and artistic model for future urban music stations in Canada.

3616 Madam Chair and Commissioners, we present to you The Beat.

--- Multimedia presentation / Présentation multimédia

--- Applause / Applaudissements

3617 MR. TONY ROTA: Focus Entertainment thanks you for this opportunity to present our application and we look forward to your questions.

3618 Thank you.

3619 THE CHAIRPERSON: Thank you very much.

3620 I will now ask Commissioner Cram to question.

3621 COMMISSIONER CRAM: Thank you.

3622 I think we have another microphone on somewhere.

--- Technical difficulties / Difficultés techniques

3623 COMMISSIONER CRAM: Thank you.

3624 I have to say it: Do I have to call you Mr. Clean?

--- Laughter / Rires

3625 MR. CLEAN: Maximus is fine.

3626 COMMISSIONER CRAM: Mr. Tony Rota, you understand, and Mr. John Rota, when I say "Mr. Rota" I will be meaning Mr. Tony Rota unless I say "Mr. John Rota", just so we have ourselves clarified.

3627 I will be going through issues of programming, CTD, demand analysis and audience, your financial projections, ownership issues and, of course, the technical issues.

3628 Starting with programming, I would like to start with the open line show that you are proposing to have on Sundays.

3629 I am certain that you know of our policy under Public Notice 88-213 about abusive comment, balance and high standards.

3630 MR. TONY ROTA: Is that addressed to Maximus Clean?

3631 COMMISSIONER CRAM: It was to --

3632 MR. TONY ROTA: Okay.

3633 COMMISSIONER CRAM: Frankly, I will address everything to you, Mr. Rota, and then you may wish to ask others to add.

3634 MR. TONY ROTA: Okay.

3635 In regards to your question, I would like to address this to Maximus Clean.

3636 COMMISSIONER CRAM: Okay.

3637 MR. CLEAN: Talking about the urban affairs show, which will be aired on Sunday mornings, this will be a live call-in show addressing the hard-hitting issues, in particular the issues pertaining to the urban community.

3638 Now, as far as making sure that we follow certainly all the regulations, we want it to be clear that at all times we will ensure there is a balance in the programming and that we will always air both sides to any argument or any topic. We will absolutely strive for balance and all responsibilities and a code of ethics will be spelled out in the employment manual to ensure fairness.

3639 In regards to programming becoming, say, controversial, that is, of course, the intended focus for us, to be able to discuss urban issues and to be able to talk openly with the community.

3640 COMMISSIONER CRAM: So you say you will have a code of ethics and a program manual. These have not been established as yet?

3641 MR. CLEAN: No, not as yet.

3642 COMMISSIONER CRAM: When would you anticipate developing them?

3643 MR. CLEAN: I would say immediately after licensing.

3644 Tony, did you want to add to that?

3645 MR. TONY ROTA: Yes. I mean, we would definitely -- if approval is granted to Focus Entertainment, we would strongly get our manual together.

3646 COMMISSIONER CRAM: Then I noticed that you have already hired or propose to hire a Community Action Director, Ms Scaglione.

3647 MS SCAGLIONE: Scaglione.

3648 COMMISSIONER CRAM: Maybe either Mr. Rota or you, Ms Scaglione, can give me your job description? What do you do?

3649 MR. TONY ROTA: Ms Scaglione.

3650 MS SCAGLIONE: What do I do currently or what would I do as the representative?

3651 COMMISSIONER CRAM: Upon licensing as the Community Action Director?

3652 MS SCAGLIONE: If licensed, as the Community Action Director -- I come from an ethnic background myself. My maiden name Antolchich(ph) would reflect this. Currently I am very, very proud of my Croatian heritage and have been an active member, both with the Sarajevo Folk Dance Ensemble and the Croatian Cultural Community Centre for over 15 years.

3653 Currently, in my job position now, I am the Special Event Co-ordinator for the B.C. and Yukon Territory Building and Construction Trades Council. I handle all of the fundraising and I am very active and I have been for the past eight years.

3654 Representing The BEAT 94.5 FM as the Community Action Director, it would be my job to reach out and embrace Vancouver's multiculturalism and give it a face, a voice and an ongoing presence in mainstream radio.

3655 COMMISSIONER CRAM: Did I understand it correctly that you will actually also be the person on urban affairs? Do I have that correct, that you will be the host of that Sunday morning show?

3656 MR. TONY ROTA: That is correct.

3657 COMMISSIONER CRAM: Thank you

--- Croatian spoken / Croate parlé

3658 COMMISSIONER CRAM: I also noticed that you were talking about having community correspondents. In your written presentation today you talk about stringers. It is for news activities and events.

3659 Are you going to be tapping into sort of existing organizations, having volunteers, or are you going to be having paid stringers? Can you give me a concept of how you are going to set this network up?

3660 MR. TONY ROTA: I would just like Mr. Maximus Clean to touch on this.

3661 MR. CLEAN: Commissioner, we feel that as far as our community stringers are concerned that Vancouver is well-served already by the many stations and their news outlets, so we are -- the focus of our news, of course, will be from the various communities using our correspondent and stringer network.

3662 Now, we will select correspondents from the various communities and use journalism students wherever possible.

3663 To answer your question as to whether they will specifically come from any organizations, that doesn't have to be the case, but we will pick, from the various communities, people who are able to fill this position. With that training, these community correspondents will also have the ability to further their careers in radio broadcasting with The Beat.

3664 COMMISSIONER CRAM: Did you say they were volunteers, or will they be paid?

3665 MR. CLEAN: They will be paid on a per-story basis.

3666 COMMISSIONER CRAM: Okay. I wanted to give you an example of, every time I read my paper from Regina I see a whole bunch of announcements about one particular organization, normally it is AA or something, and nothing about anything else. How are you going to ensure that you are going to get into every crook and cranny in Vancouver and not over-report one and under-report another group or interest group?

3667 MR. CLEAN: Again, the most important thing for us is that we are striving for balance, and that includes balance in community reporting as well.

3668 For example, we have outlined some key communities, for example the Caribbean community, the Southeast Asian community, the Chinese community, the European community, the First Nations community, the Latin community, and even the community of students. So we will have more than one correspondent from each community to ensure proper balance.

3669 COMMISSIONER CRAM: These will be sort of like part-time or contracts?

3670 MR. CLEAN: Absolutely.

3671 COMMISSIONER CRAM: You are talking about a format that is to radio a new format, and would you agree with me that there is going to be some substantial work to build audience in the medium of radio for this format, Mr. Rota?

3672 MR. TONY ROTA: Well, we first would like to say that we appreciate the Commission finally recognizing the licensing of the first urban format in Toronto and, basically, being a Vancouver-based company, being involved in the community, we have been working on our own research for two years. Basically, when we brought on Pollara to do our marketing research, they just basically -- they confirmed our information, our own knowledge.

3673 Maybe at this point I would like to get Mr. MacKay to touch on my --

3674 MR. MacKAY: I would like to comment on the market demand. I know you were going to come to that anyway, but maybe I will --

3675 COMMISSIONER CRAM: Pardon me?

3676 MR. MacKAY: I understand you were going to come to that anyway, but I can fill in at this point.

3677 COMMISSIONER CRAM: No. Actually, I was moving into CTD and I was talking about whether Mr. Rota believes they have to build an audience or if they think the 17 per cent is going to be there.

3678 MR. MacKAY: Well, if I could respond, I think that there is a considerable amount of audience there already. There is a competing station from Seattle that Maximus mentioned in his presentation which already gets a substantial audience in the 18 to 34 prime demographic, in fact has a four reach in Vancouver already.

3679 Clearly there is a -- and that is in the same format as the one being proposed by this station, in addition to which, interestingly, we asked people what kind of music they listen to on a regular basis, and even though there is no outlet here for this type of music, that 17 per cent is based principally on people supplying their own music, i.e., buying records, doing the things that people have to do if the format isn't served comprehensively by one outlet.

3680 So as the person responsible on the team for the marketing research and the estimates of the audience, I would say, yes, there is going to be some work involved in capturing that audience because they are not going to know -- 100 per cent of them may not know on the first day that you are going to be there, but I think this audience will build very quickly because there is a substantial pent-up demand in this marketplace for this format, this type of music, and it is evidenced by some of the activities that these gentlemen undertake in the community, and I think they mentioned that in some aspects of the presentation.

3681 COMMISSIONER CRAM: And you agree with me that as a licensee there is also the good corporate citizenship that is normally required in any given market. In other words, if you get a licence you would be doing a lot of things just simply because you were a good corporate licensee.

3682 You have to say yes if you are going to agree.

--- Laughter / Rires

3683 MR. TONY ROTA: I'm sorry, can you just repeat the question?

3684 COMMISSIONER CRAM: As a licensee in any market you also, in addition to the need to build your audience, have the duty or the need to be a good corporate citizen, in other words to be involved in public issues in terms of Canada Day, issues such as that, in order to maintain your audience and build your audience.

3685 MR. TONY ROTA: At this time I would like maybe Don Hamilton to touch on this.

3686 MR. HAMILTON: With the little experience that I have had putting three stations on the air in Vancouver, plus the overview of a major national involvement in broadcasting, it is my observation that stations that are not good corporate citizens are not stations. They are not successful broadcasters.

3687 The key to broadcasting is community involvement, appreciation, getting the listeners and holding them. There is only really one way to do that and that is to become totally immersed in the community.

3688 So we would certainly be good corporate citizens, and I suspect we would go far beyond what other stations have done extremely well in the past, successful stations. We can go far beyond because of the unique approach that we have and the solid base that we have and the solid research that we have that indicates that they really want us out there.

3689 COMMISSIONER CRAM: So if CTD did not exist, as part of your normal good, exceptional corporate citizenship, would you not be sponsoring concerts? Would you not be sponsoring contests and music awards? Would you not being hiring somebody to co-ordinate that good corporate citizenship?

3690 MR. HAMILTON: Well, we are certainly going to have very tangible roots that stretch into the community at every level and at every -- well, at every level and with every ethnic group and with every music group.

3691 I couldn't speculate as to what might happen if we didn't do all those things. I mean, you have to give people a reason to listen. If we are sponsoring concerts, or co-sponsoring concerts, we are being involved immediately with 21,000 people a night at General Motors Place. They have to get there, they have to get home, they have to talk to their community and they have to have a voice to express how much they enjoyed or what they felt about the concert. I mean, I couldn't imagine running a radio station that didn't do that.

3692 COMMISSIONER CRAM: So a good lot of it, then, is part of just good corporate citizenship, whether or not we require some sort of Canadian development?

3693 MR. HAMILTON: Yes. I think good corporate citizenship means more than joining the Board of Trade. It is a total community involvement. It becomes a way of life in broadcasting.

3694 COMMISSIONER CRAM: So in all likelihood you would do some concerts, contests, music awards and hire somebody to co-ordinate it, even if we didn't require a CTD?

3695 MR. HAMILTON: Yes.

3696 COMMISSIONER CRAM: Can we go into the CTD co-ordinator part. Well, the LTD Co-ordinator part of your CTD.

3697 You know our policy, I'm sure Mr. Robson has told you, that habitually staff salaries are seen as a cost of business and not normally qualified as Canadian talent development. Can you tell me why here you believe there should be an exception?

3698 MR. TONY ROTA: Well, Commissioner Cram, we feel this is a very important role for this individual to play to basically do the execution of our initiative.

3699 At this point I would maybe like Mr. Maximus Clean to touch on this.

3700 MR. CLEAN: Thank you.

3701 Commissioner, we take the development of local and Canadian talent very seriously. For us to take an existing staff member and ask them to fulfil this full-time year-round position we don't think would be feasible. We therefore felt a need to reach out to the urban community and pick someone with appropriate experience and knowledge of the local scene familiar with the endeavours of local artists with ample experience in event planning.

3702 While this individual will not be a staff member, they will work hand-in-glove with the programming department to legitimize this opportunity.

3703 And, of course, audio recordings made from any of these initiatives will be subsequently aired and put into playlists on The Beat.

3704 We feel that an outside community rep will optimize those dollars by focusing in on these tasks where it would be unrealistic to take a staff member and ask them to do the same.

3705 At this point I would like to offer to see if Sean Lalla, who will be our Canadian Talent Development Co-ordinator, would like to add anything else.

3706 Sean.

3707 MR. LALLA: I will just run with my experience, Madam Chair and Commissioners.

3708 I am currently employed full-time by Universal Music, a division of Universal Studios. That position was created specifically for me. Outside of our head office in Toronto, my position was the first specialized full-time urban music-related position. My position title is -- I'm sorry, my official title is Urban Music Consultant.

3709 There are currently five major record labels, Universal is the largest and has an urban market share of more than 50 per cent.

3710 Prior to Universal's purchase of Polygram in 1998 there were six major labels. Of those original six. I have worked for three of them and have been offered positions with two others. Again, all positions were urban-related.

3711 I am also sole proprietor of Spectrum Entertainment, Vancouver's number one producer and promoter of urban concerts and events. Spectrum is, overall, the number two urban concert promoter in Canada, behind only REMG Concerts in Toronto.

3712 Thus far, in the year 2000, Spectrum has put on 32 events, averaging almost three per month.

3713 Spectrum has, in the past, worked for and with House of Blues Concerts Canada, this country's largest promoter of multi-genre concerts from rock to urban to country, et cetera.

3714 I am an adjudicator for the Canadian Academy of Recording Arts and Science. More specifically, I judge some of the urban music categories for the Juno Awards.

3715 I am also an adjudicator for FACTOR, the Foundation to Assist Canadian Talent on Records, again the urban music category.

3716 I also publish an urban music magazine named Third Eye.

3717 As well, I have music retail experience, having worked for Virgin, Canada's largest record store, and FWUH, Vancouver's number one specialized urban music retailer.

3718 I have served both as moderator and panellist for Music West, western Canada's number one music conference and festival. I also book urban acts for Music West.

3719 When it comes to urban music expertise I am considered among the top two or three minds in the city. That said, as Urban Talent Development Co-ordinator I will be applying to the position my multiple skills that I have learned via my various projects and positions.

3720 COMMISSIONER CRAM: Thank you. I think he is over qualified.

--- Laughter / Rires

3721 COMMISSIONER CRAM: Is this a full-time position?

3722 MR. TONY ROTA: Yes, it is.

3723 COMMISSIONER CRAM: Again, I'm sorry, I get right back to -- this individual will also be providing -- you may not want to take the job now that I have said you are over qualified -- but this individual will be providing us with annual reports, something which licensees do, I mean that is their job. This individual would be, as you say, Maximus would know the artists. That is your job as a licensee.

3724 This individual would be planning events. I see, if I have it correct, the concert, the BBQ one and a contest and a music award. Again I ask you why this should be exceptional and should be considered CTV and not just a business expense.

3725 MR. TONY ROTA: Maximus.

3726 MR. CLEAN: Well, again I would like to emphasize that it would be, we feel, unfeasible for us to take any one of our existing staff members and ask them to commit to the full-time responsibilities of the talent development co-ordinator. We feel that not only do we need someone coming from a very experienced background, which of course Sean does, but we need them to focus their full-time talents on these particular initiatives. Again, we just don't feel that taking anyone from a staff position where they would obviously have other responsibilities to the station, would give our talent development initiative -- would do them justice.

3727 MR. ROBSON: Madam Chair, if I might just piggyback for a moment.

3728 The Vancouver urban music scene, I guess like the Toronto urban music scene and other centres across the country -- and of course you heard a similar application in Calgary a few weeks ago -- unlike many of the other music genres where you have an infrastructure in place, it is our view that the urban music scene needs that kind of focus and that kind of attention in Vancouver with an urban station in Vancouver, as Maximus said, rather than try to incorporate all of the background and the qualifications that are required to take that Canadian talent benefits package, in this case $2.8 million in direct expenditures.

3729 Focus wants to make sure that every nickel of that $2.8 million is brought to fruition and the benefits that accrue are to the optimum. That is why, from our perspective, the $45,000 allocation per year for a Canadian talent development co-ordinator is totally relevant to the direct expenditure and development of Canadian talent, if that is any help.

3730 COMMISSIONER CRAM: Thank you.

3731 Moving on to boot camp, Beat Boot Camp, one day four weeks in a row. How many are you anticipating will be participating?

3732 MR. TONY ROTA: Maximus, do you want to touch on this?

3733 MR. CLEAN: Yes. Again, In The Beat Boot Camp initiative, which we are looking to spend $15,000 in the first year on, will take place in the fall of every year and, as you said, it will run over the course of a month, four weeks and one day per week.

3734 I'm sorry, would you rephrase your question again?

3735 COMMISSIONER CRAM: How many participants are there?

3736 MR. CLEAN: Yes.

3737 COMMISSIONER CRAM: How many do you plan.

3738 MR. CLEAN: Okay. So what we are looking for is that we would ask the members of the community that are up-and-coming artists or people wishing to hone their skills to come and be a part of The Beat Boot Camp. It will be open to drop-ins and it will be -- of course we will require registration, but it will be open to people coming in.

3739 So I can't actually give you a specific number, but we are looking to fill perhaps a nightclub venue or perhaps a community centre with all these different components of Beat Boot Camp, be it turntable skills, microphone skills, the business of conducting or reading contracts for the music industry. So there will be many classes taught by qualified instructors over a four-week period.

3740 COMMISSIONER CRAM: So essentially it is, again, inclusive. There would be no -- you wouldn't be looking at a specific age group for the participants and you wouldn't be choosing them, it would just be sort of a drop-in almost.

3741 MR. CLEAN: Exactly.

3742 COMMISSIONER CRAM: I wanted to then move on to Rhythmic Roots with the BBQ, Urban Music Awards and The Beat's Starmaker.

3743 You, in each of these, had in your budgets monies for advertising, promotion and marketing. If I can call it the BBQ, the concert BBQ there was $7,500, in Starmaker there was $20,000 and in the awards there was $10,000. In the awards you referred to print and other advertising promo and marketing. All of these, though, they will be to third parties, this $3,750 out of all of these initiatives, they will be to third parties?

3744 MR. TONY ROTA: Maximus.

3745 MR. CLEAN: Yes. When we look at, for example, the Urban Music Awards where we have a budget of $10,000 for the advertising, marketing and promotion of the event, we will, of course, advertise it on our station, but in addition to that we feel the need to take out print and magazine advertising, perhaps television and billboard advertising and, of course, to a certain extent, Internet advertising as well on the World Wide Web.

3746 COMMISSIONER CRAM: So if we can start with -- which one do you have in front of you, Maximus?

3747 MR. CLEAN: The Urban Music Awards.

3748 COMMISSIONER CRAM: You have the awards?

3749 So there is a $10,000 budget. Can you give me a breakdown of an expenditure for print for billboards, the expenditures you have been referring to?

3750 MR. CLEAN: I would say that certainly it is no secret that to advertise in any of the leading publications or in the dailies would be quite expensive and $10,000 actually does not go a long way in terms of advertising on a large scale. So a lot of that we will have to be quite creative with.

3751 But, as I said, with the breakdown we would have, for example, quarter page ads in newspapers, we might have magazine ads. And again, anything that we can do on our own Web site to supplement Internet advertising, we would absorb that cost as well.

3752 COMMISSIONER CRAM: So you don't have a breakdown of print, billboards and other manners of advertising or promotion to market that specific sum of $10,000?

3753 MR. CLEAN: We don't have a specific breakdown on how we would -- oh, I'm sorry, we do have.

3754 COMMISSIONER CRAM: No, it's a breakdown of the actual budget number of $10,000.

3755 MR. CLEAN: At this time, Commissioner, we don't have a breakdown of those specific figures.

3756 Perhaps I could get Mr. Hamilton to comment.

3757 MR. HAMILTON: Well, I think you are absolutely right that $10,000 doesn't go a long way, but then we are so highly stratified -- we will be so highly stratified that we will be able to reach into communities with some of the lesser media that service that community. There are 54 weekly newspapers, I believe, in the Vancouver Metro area. That would certainly be part of it. Some of those are foreign language newspapers and they are extremely good value.

3758 I suppose that you would probably go to the location of the event, if it is a single location, and try to acquire some of the billboards around the location and the event for some period of time before the event. But I just don't think it has occurred to us to take a budget figure and break it down below a figure of $10,000.

3759 COMMISSIONER CRAM: So you would agree with me, then, that there is also no breakdown for the same expense with the Rhythmic Roots, with BBQ and for the Starmaker, The Beat Starmaker.

3760 MR. TONY ROTA: Maximus.

3761 MR. CLEAN: I would say that along the same lines, we have certainly budgeted enough for advertising and promotions, but we don't have a specific breakdown on how we are going to approach the advertising.

3762 However, there is one other component that I would like to mention, of course, which is free advertising, word-of-mouth, and we are able to do that by getting local urban enthusiasts, in particular artists, to be able to take part of that.

3763 For instance, with the urban awards where we will be recognizing the talents of local artists, we might get someone like Sketch J. Imani here to comment on how we could promote that event.

3764 Sketch.

3765 MS IMANI: Thank you.

3766 In the past -- first of all, I have to say that I am quite encouraged by this opportunity for us to acquire an urban station, figuring Toronto was recently granted one and Vancouver being the next largest city to have concerts in urban venues and events like that, this is very encouraging.

3767 But in response to your question, in the past whenever urban enthusiasts, whether it is hip hop artists, reggae artists, world beat musicians, and so forth, have wanted people to come to their events. Lack of funds have forced us to become far more creative.

3768 The use of street teams, hiring -- getting student volunteers to do a lot of hand-to-hand advertising, things like that, in exchange for a free ticket to a show; offering prizes for students who can come up with more creative ways to have people arrive at different venues for our shows, a lot of those types of things. Those are -- they don't cost so much in money, but maybe in time.

3769 But being creative that way, holding contests, and so forth like that, is a way that we have been able to get lots of people to come to different shows and, as we have said, before we have sold out not only GM Place but other smaller venues as well because, you know, the hunger for hip hop or other urban music is out there and it is just a matter of feeding the need really.

3770 MR. LALLA: If I may piggyback. As Talent Development Co-ordinator it is my duty to spend that money. As a concert promoter in the urban genre, I do so very creatively.

3771 Print media is not my primary tool. As she said, with the street team handbill handing out is basically what sells our shows, and it is fairly inexpensive.

3772 MR. ROBSON: Madam Chair, I just might add that I think the basic approach that Focus Entertainment as taken with its Canadian talent development initiatives is they assessed the need within the market where the voids are in terms of developing would-be urban artists and even existing and established urban artists: How can they best help?

3773 So they identified seven specific initiatives. I think the scholarship program is pretty much self-evident. That is a straight passthrough.

3774 In looking at these other initiatives, they took the different component parts that would be necessary to bring that initiative to fruition and to make sure that the optimum benefits flow through to the system so that at the end of the day you have artists exposed on-the-air through regular program scheduling and the like.

3775 As Mr. Hamilton said, I don't think, for example, that they have taken the $10,000 allocation for the urban music awards for advertising and specifically broke it down, "X" amount for the Vancouver Sun, the Georgia Strait, that type of thing. They more or less dealt in global figures.

3776 COMMISSIONER CRAM: In the event that the Commission decides that either the co-ordinator position or the advertising promo and marketing costs do not constitute CTD, number one, would you still have the position of co-ordinator?

3777 MR. TONY ROTA: Don, would you like to touch on this point?

3778 MR. HAMILTON: I think the short answer is: Yes. The longer answer is: Absolutely, yes.

3779 COMMISSIONER CRAM: Number two, if we say either one of these amounts are not CTD, would you accept a condition of licence to redirect the monies to another eligible --

3780 MR. HAMILTON: Same answer.

3781 COMMISSIONER CRAM: Thank you.

3782 Believe me, I am not an accountant, but under the awards and the BBQ there are "miscellaneous expenses". Now, I don't want to exaggerate this. I think in one of the files we had we had $16,000 in miscellaneous expenses, but this time we have $1,000.

3783 How do we know that this is going to be an eligible CTD expenditure when it is miscellaneous?

3784 MR. TONY ROTA: Maximus.

3785 MR. CLEAN: I think miscellaneous in regard to the Urban Music Awards, and seeing how it is only $1,000, can refer to anything from, say, catering costs to maybe something on stage having broken and needing an immediate replacement or even last-minute sound system rentals, that kind of thing. It is not something that we -- we basically put in the figure as a contingency. That is why it is miscellaneous.

3786 COMMISSIONER CRAM: In the awards CTD portion you had $8,000 for statues and $2,000 for a cash prize essentially for the design of the statue. How can we call this direct CTD?

3787 MR. TONY ROTA: Maximus.

3788 MR. CLEAN: When we developed this initiative one of the things that we wanted to do was to be able to reach out to Vancouver's urban and artistic community as well. Certainly there are a lot of students out there enrolled in colleges of design. We wanted to give them an opportunity to design something of significance and importance for our station and indeed for the Urban Music Awards. So what we were proposing is to offer a prize, a cash prize, to the best design, which we would ultimately use, mould, and turn into the statuette, the award figurine.

3789 COMMISSIONER CRAM: Our people say that constitutes 15 per cent of the total budget. Couldn't it be spent more profitably going directly to the actual artists involved?

3790 MR. CLEAN: We feel that when you actually think about the importance of this particular statuette -- I mean, if you look at, say, the Academy Awards, you think immediately of the Oscar. Now, we certainly have high hopes for the Urban Music Awards and we want it to last and prosper and grow, possibly on to becoming a nationally televised show of real prominence and significance.

3791 So I think that to offer $2,000 for someone to design a statuette or a figurine that may last a few decades is not extravagant by any means. You know, if you look at it 10-15 years down the line, if this particular Urban Music Awards becomes as prestigious as we would like it to be, then again you are looking at $2,000 truly well spent.

3792 COMMISSIONER CRAM: Is your contemplation, then, that the design will not change every year?

3793 MR. CLEAN: The design will not change. We discussed that perhaps as it grows the actual -- what do you call it?

3794 COMMISSIONER CRAM: Statue.

3795 MR. CLEAN: The actual statuette and what it is made out of might kind of get upgraded. It might go from wood to silver to gold or platinum --

--- Laughter / Rires

3796 MR. CLEAN:  -- but aside from that, fundamentally the design will not change.

3797 MR. ROBSON: Essentially, it is a one-time cost, Madam Commissioner, that would prevail throughout the ages.

3798 COMMISSIONER CRAM: Thank you.

3799 MR. LALLA: If I may add further to that in respect to you asking if the money would be better spent on talent costs. Award shows are used primarily as promotional vehicles for artists. Most of the American award shows and Canadian award shows artists don't even get paid. So it is strictly a promotional thing. So $17,000 is actually a lot of money versus what you see going on with other award shows.

3800 COMMISSIONER CRAM: You mean the $17,000 talent fees for the awards?

3801 MR. LALLA: Correct.

3802 COMMISSIONER CRAM: Yes.

3803 Can you confirm with me, Mr. Rota, Mr. Maximus, that those talent fees will be only for the artist, or will they be for the host also?

3804 MR. TONY ROTA: Maximus.

3805 MR. CLEAN: Again, what we are looking at, Commissioner, with talent fees, is any of the talent that we will be actually having to pay for and whether that is the actual host -- one of the examples we listed in our supplementary brief was Canadian recording artist Deborah Cox.

3806 COMMISSIONER CRAM: Yes.

3807 MR. CLEAN: Obviously someone of that stature we would have to pay to host the show. So she would be one of the people. Then, of course, any of the Canadian acts or recording artists that will actually be performing within the show, again, will have to be paid. Those are all part and parcel of the talent fees.

3808 COMMISSIONER CRAM: Mr. Hamilton, I'm going to direct this to you because you normally answer these kinds of questions.

3809 On the statues and on the cash prize, should we decide it does not qualify as Canadian talent development, number one, will those disbursements still go ahead?

3810 MR. HAMILTON: Yes.

3811 COMMISSIONER CRAM: And, number two, again should we decide that it is not qualified as CTD, will you agree to a COL redirecting the money to an eligible CTD?

3812 MR. HAMILTON: Yes.

3813 COMMISSIONER CRAM: Thank you, Mr. Hamilton. You're my kind of guy.

--- Laughter / Rires

3814 COMMISSIONER CRAM: On the Starmaker fund, I notice you are talking about a CD and the proceeds of sale of the CD will go to FACTOR.

3815 Number one, I didn't notice anywhere in the file -- I saw the Web phone-in show, but I didn't notice anywhere in the file that you would be selling or facilitating the sale of urban artist CDs on your Web site.

3816 Certainly we discussed this in Calgary with a lot of the applicants. Have you been setting up your Web sites so that you can either link up to sell the artist's CDs or sell the compilation CD that you are talking about here?

3817 MR. CLEAN: Well, before I get Sean Lalla to comment on this, I would like to say that we are absolutely cyber-savvy in terms of a full integration with our Web sites, not only with our Web sites but with the Web sites of any of these potential artists that we develop or discover.

3818 So to answer your question in short: Yes, we will be selling them through our Web site, making them available to not only urban music enthusiasts within the Lower Mainland but certainly internationally.

3819 But, more importantly, we will be able to link to other artist's sites. So if we discover an artist, for example, with Sketch on her Web site, that she would also be able to offer the same product to her fans as well.

3820 Sean, would you like to comment a little more?

3821 MR. LALLA: I don't have much more to add, but it is a very simple thing. Just from my record label background, I do have strong retail ties. It is just a matter of us taking orders on the site and getting a retailer such as Sam's or HMV to fill it. It is literally that simple. We have not discussed this fully, but it is almost like a given.

3822 COMMISSIONER CRAM: It goes without saying?

3823 MR. LALLA: Yes, correct.

3824 COMMISSIONER CRAM: Like with the cyber --

3825 MR. LALLA: Savvy.

3826 COMMISSIONER CRAM:  -- savvy crowd that you are. I just learned e-mail two years ago.

3827 Anyway, when we talk about the proceeds of sale of the compilation CD, the CD from the Starmaker -- no, it's the Starmaker CD I think -- money going to FACTOR. Do you have any idea how much that would be?

3828 MR. CLEAN: Well, we are talking about the proceeds of the CD going to FACTOR, so obviously we would have to factor our own costs in for a limited run, but I can't at this time give you a specific cost breakdown for CD manufacturing and costs of printing and all that.

3829 COMMISSIONER CRAM: So is this an amount, the net proceeds, or the proceeds, whichever -- is this amount included in the $30,000 that you are giving to FACTOR annually with the 5 per cent increase, or is this amount in addition to that?

3830 MR. CLEAN: This amount is in addition to what we have already pledged.

3831 COMMISSIONER CRAM: Okay. Thank you.

3832 In, I believe it is your supplementary brief, you said you would be approaching FACTOR to obtain their agreement that money sent to them would go to urban artists in, I believe, Vancouver and/or B.C. Have you obtained a letter from FACTOR?

3833 MR. TONY ROTA: Don, would you like to touch on this point?

3834 MR. HAMILTON: I don't know the answer.

--- Laughter / Rires

3835 MR. HAMILTON: I don't know.

3836 COMMISSIONER CRAM: Brevity is wit and I'm really --

3837 MR. TONY ROTA: I am going to have to unloosen my seat-belt here. I am a little nervous, so just bear with me.

3838 COMMISSIONER CRAM: Sure. Yes.

3839 So in your supplementary brief you said that you would be approaching FACTOR to obtain their agreement that the monies you give to FACTOR would be for urban artists in, I believe, either the Vancouver or British Columbia scene. Have you followed up on that and do you have a letter back from FACTOR?

3840 MR. TONY ROTA: Maybe I will let Jim Robson touch on this.

3841 MR. ROBSON: Commissioner Crumb, the --

3842 COMMISSIONER CRAM: It's Cram,

3843 MR. ROBSON: Cram, I'm sorry.

3844 The intent would be that the $30,000 that would be allocated to the FACTOR fund each year, that it be returned to the Vancouver area. FACTOR certainly has shown a willingness for that type of facilitation in the past and we don't endeavour that there would be a problem with this.

3845 FACTOR has not been approached specifically on that point, but certainly that would be the case.

3846 COMMISSIONER CRAM: I believe you said in your supplementary brief you were approaching FACTOR. Am I out to lunch?

3847 MR. ROBSON: No, I certainly wouldn't say that.

3848 FACTOR will be contacted and that request made. That would be part of the condition that we would fund that particular initiative, that local artists get the full benefit.

3849 COMMISSIONER CRAM: Yes.

3850 MR. TONY ROTA: Mrs. Cram, basically the answer you are looking for is: We will specifically request that FACTOR allocate the annual grant monies to the Vancouver, B.C. region to assist local urban artists.

3851 COMMISSIONER CRAM: Correct, yes.

3852 So that has not been done, but you will do it? Okay.

3853 MR. TONY ROTA: That's right.

3854 COMMISSIONER CRAM: I believe I saw somewhere that you will provide us with an annual accounting, should we agree that Mr. Lalla gets the position and you pay for it. In any event, you will provide us with an annual accounting of the CTD expenditures?

3855 MR. TONY ROTA: Don, would you touch on this point, please?

3856 MR. HAMILTON: I'm getting good at this.

3857 The answer is yes.

3858 COMMISSIONER CRAM: Thank you, sir.

--- Laughter / Rires

3859 MR. HAMILTON: Could I also say that I want to be sure that we are reflecting properly the attitude that we have when we are talking about CTD.

3860 We are terribly proud of what we are going to do. We have done a lot of planning, we have invested a lot of hours talking about how to handle the whole CDD -- I can't say it, CTD thing.

3861 We would be delighted if the Commission would consider -- and I haven't talked to my colleagues about this -- why don't you have a form that we can file with you after every event. Why don't you have a standard national form that says "Here is what Station X did on the July holiday weekend to meet the requirements or express the community interest in", or whatever it is.

3862 We would be happy to send in the form. We can have it signed. We can have it audited. I mean, we are terribly proud. We want everyone to know what we are doing. We don't want to hide anything anywhere and we don't want to play with figures going back and forward. We don't want to be an accounting company, we want to be a radio station.

3863 COMMISSIONER CRAM: And now I'm going to go into the statistical stuff, and I don't want to be a statistician either.

3864 Mr. MacKay -- is it MacKay or McKay?

3865 MR. MacKAY: MacKay.

3866 COMMISSIONER CRAM: You polled 1,000 people, bigger than most in this particular hearing. Why didn't you include the 12 to 18 demographic?

3867 MR. MacKAY: Part of the demographic, according to the rules of CAMRO, cannot be approached without the permission of their parents.

3868 COMMISSIONER CRAM: All right.

3869 MR. MacKAY: It is a tremendously difficult group to properly empanel for the purposes of research. BBM does it through the use of diaries, which are obviously permission through a gatekeeper in the household.

3870 Doing that on the telephone is intrusive and against the rules of our industry association. If somebody has done it by telephone, I would have to say that it is outside the boundaries of the rules that govern our professional conduct.

3871 COMMISSIONER CRAM: I have a couple of issues. I read every agonizing word of your report, not that it wasn't scintillating, don't --

--- Laughter / Rires

3872 COMMISSIONER CRAM: But sometimes to me, I think that 9 and 9 don't equal 18.

3873 It is because I see you looking at trying to attract two significant demographics, 18 to 34 and the 35 to 54. I am a neophyte. I think they have different tastes, different lifestyles.

3874 So if I could take you to page 12 of your report, it is page 41 of the public record -- do you have that?

3875 MR. MacKAY: I am familiar with what you are referring to.

3876 COMMISSIONER CRAM: It's not your perceptual --

3877 MR. MacKAY: No, I know what it is. I am familiar with what you are asking.

3878 COMMISSIONER CRAM: For the benefit of Mr. Blackwell, and anybody else who is here, I notice that classical is the seventh most popular overall demographic preference.

3879 But what I see you doing here is, you are going to take the number 9, motown; number 9, modern R&B; number 10, reggae; number 11, dance music; number 12, rap; and number 13, techno; and you add them all up to be fourth.

3880 MR. MacKAY: You don't add them all up.

3881 COMMISSIONER CRAM: Well, that is --

3882 MR. MacKAY: But ostensibly the genre is captured by those specific musical styles.

3883 So what we did in the research -- and I think you should understand this much anyway -- is that we took the urban format and broke it down into some of its granular components instead of just asking it generally. I mean, we could have said: How likely is it -- or how often do you listen to urban music such as, and combined all of those into one and said R&B, motown, techno, rap, et cetera.

3884 But the goal of the research was to discover how each of these specific granular elements of the format played to the audience within Vancouver.

3885 And you are quite right, some parts of it are more attractive to older people because it was created when they were younger people. Some parts of it are more attractive to younger people. But the musicologists will tell you that all of it is related and there is an opportunity to put it together as a single format that works.

3886 That is why when we asked people overall: Would you listen to this radio station that did this and this and this and this and this, you would get about 60 per cent saying they would either definitely or probably listen to it, after having gone through this description. So they are well educated by the time we get to that question.

3887 COMMISSIONER CRAM: Yes.

3888 MR. MacKAY: So I think you are quite right, I mean, music isn't of a piece, right, it isn't a whole, it is elements woven together to create something comprehensive and I think, you know --

3889 These guys are better able to speak to the relationship amongst the various bits of the format than I am. We were only engaged to test it.

3890 MS BOUND: If I may add, as well, to Mr. MacKay's comments, that is one of the most unique features of urban music is that it is absolutely inclusive. There is nothing specifically only for 12 to 13 years olds and nothing only specifically for a person who is 54 years of age.

3891 In addition, if you want to go even further, for example sampling is highly used in urban music where, let's say, you have a rap song that samples an old motown song, now you have a person in high school listening to this new artist with this rap song, but then you have a person who is much older who grew up with motown also being reminded about something that they grew up with. So it appeals to all age ranges. So it is absolutely inclusive.

3892 So it is not a surprise, actually, to myself, and I'm sure to a lot of urban enthusiasts, that a person who is 54 years old will listen literally to something the same as a 12 year old, each one having its own preference as well.

3893 COMMISSIONER CRAM: Mr. MacKay, I hate to belabour this, but let's say I was a 35 to 54 year old female -- which of course I'm not, I'm much younger --

--- Laughter / Rires

3894 COMMISSIONER CRAM:  -- and it shows at 55, very, very high, that I like motown. Now, when I am asked that question and I say: Do I like motown and would I like a station with motown, I'm thinking -- at least I would think I would be thinking: Yes, I want a station that is 100 per cent motown. So what is going to be my reaction --

3895 MR. MacKAY: I would say you should move to Detroit.

--- Laughter / Rires

3896 COMMISSIONER CRAM: That was going to be my reaction when it is only one of, you know, one, two, three, four, five, six genres and it includes a genre such as rap that I have only an 11 per cent care for. Like how do you cater to that?

3897 MR. MacKAY: I will make one comment and then I'm going to pass it over to the programming.

3898 My comment would be that there is another category in there that only gets approximately 13 per cent less support from the same females, or that were females in the marketplace in that age group, modern R&B at 42 per cent.

3899 So you have another little bit to the puzzle. You have 55 per cent saying we are interested in this particular component, motown, which of course is going to appeal to some of the upper end of that -- I will confess that I am in that age group, despite the fact that some of us here don't want to --

3900 COMMISSIONER CRAM: My mother never told her age.

--- Laughter / Rires

3901 MR. MacKAY: Well, your mother and I are from a different generation, obviously.

--- Laughter / Rires

3902 MR. MacKAY: I am proud of the fact that I am in this demographic.

3903 But, you know, that would appeal to me and, you know, and some of the modern R&B stuff, maybe. I daresay some of us were tapping our feet to what we heard in the video presentation.

3904 So I think there are two processes here: You get an audience to sample your station and then you try to bridge to the other music which is in the same genre through creative programming.

3905 Having said that, I am going to turn it over to the creative programmer, because I am not him, and that is Mr. Clean, and he might explain to you how that is going to work.

3906 MR. CLEAN: Well, Commissioner, I think that one of the wonderful aspects of programming music for this particular station, The Beat, is in the fact that if you enjoy motown it is likely that you will enjoy the related urban musical genres around it.

3907 We have found, for example, through Mr. MacKay's research, that R&B and reggae are very bridging in terms of its universal appeal to listeners. Indeed, when I go out to a reggae function or concert, I see people truly, you know, from the very young to the very old all enjoying the same music.

3908 Now, having said that, in particular if you are looking for the motown experience, not only do we offer a motown-only program on the weekends, but what you have then is you have the ability to listen to -- whether it is one in every six selections being a motown hit or classic, you also have, as Destiny alluded to, artists that sample music from past eras. That is the unique element about urban music.

3909 For example, I can tell you specifically there was a song released a year and-a-half ago that was originally by the Jackson Five, as you might recall the hit, "I Want You Back". That was one of the original Jackson Five motown hits. That was taken by Puff Daddy, the same vocal track with the original Jackson Five, layered on top of another beat, with then added vocals, rap vocals by the artist Black Rob.

3910 Now, all of a sudden, you truly have the bridging of both forms of music. You have hip hop and you have motown, and you have the original recording artist on that one and same track. So for these reasons we see that the music that we want to program will be absolutely attractive to our wide demographic of 18 to 54.

3911 MR. MacKAY: That's what I would have said.

--- Laughter / Rires

3912 COMMISSIONER CRAM: I'm sorry, I must say I remain to be convinced, because in the sense of I look at this and I look at your perceptual map two pages later, Mr. MacKay, and I see motown being closer to jazz, R&B being closer to soft rock, retro '80s.

3913 MR. MacKAY: There are no definitive answers when it comes to music.

3914 COMMISSIONER CRAM: Yes.

3915 MR. MacKAY: Obviously people have tastes that encompass top 40 and at the same time are R&B. They also have tastes that encompass at the same time reggae and R&B and reggae and motown.

3916 I'm not saying that is a -- there is nothing definitive in musical taste. I'm sure you all understand that.

3917 COMMISSIONER CRAM: So is this going to become something, then, like appointment television, multicultural television --

3918 MR. MacKAY: I don't think so. I think --

3919 COMMISSIONER CRAM:  -- where I tune in for my motown --

3920 MR. MacKAY: No.

3921 COMMISSIONER CRAM:  -- today and then tomorrow, you know.

3922 MR. MacKAY: My understanding -- and again I will get the programmers to clarify this -- is that there are two elements to the programming strategy. One is, yes, to present some of these new forms, but at the same time within the regular music mix to rotate through the forms throughout the day.

3923 Maximus, do you want to talk a little bit more about how you plan to program the various formats?

3924 MR. CLEAN: Actually, one of the wonderful things that we feel that we have incorporated in the programming of the music will be the fact that you might solely enjoy motown, Commissioner Cram, however we feel that you would be enlightened and educated by some of the other programming that exists, and indeed you might find that you are truly gravitated towards contemporary R&B.

3925 So we think that truly it is an opportunity to expose the urban audience to all the different specific musical genres within it.

3926 I believe, Don, you had a comment.

3927 MR. HAMILTON: Well, I have an anecdotal comment that doesn't directly relate here, but what is going through my mind is this: I buy a lot of books. I buy them on the Internet from Amazon. I buy them during the evening hours and say "Send me this book", and they do.

3928 The next morning I look at the screen and here is a message from Amazon and it says "Thanks for you order. It is now in the mail. It is all gone. And, by the way, Mr. Hamilton, since you have ordered Book X by Author Y, you may just enjoy these three books by" authors I have never heard of. And guess what, I buy them and I do enjoy them and I get introduced to a whole new way of life because of Amazon's inventiveness of lairing.

--- Applause / Applaudissements

3929 MR. MacKAY: And we thought he was just a "yes" man.

--- Laughter / Rires

3930 MR. MacKAY: Let me refer to this perceptual map again. The perceptual map, I mean, we expose everything when we do research, right. That is one of our great -- it is a positive. It's the double-edged sword, it is also our great failing.

3931 But what we have done in the perceptual map is taken the genres, mapped them against people's taste and drawn a circle around the ones that these fellows intend to program within the station. I guess it is up to everyone to decide whether or not they are close enough to one another to make it a commercial success, not to me particularly because I am not a musicologist, but I think someone who has experience in the music does understand the relationship and can make that work. But that is only an opinion, for what it's worth.

3932 MR. LALLA: If I might just say, actually Universal distributes Motown Records. I am technically an employee of Motown Records also.

3933 There are artists who also will bridge the gap. Some of you might actually own Carlos Santana's album, which an old-school fellow collaborates with young rappers, such as the case with Earth, Wind and Fire who has collaborated with Wyclef Jean, Old Dirty Bastard I believe. The Temptations have also done stuff like that to bridge the gap and to make it more accessible for both sides.

3934 MR. TONY ROTA: Sketch, can we maybe just get your views, please?

3935 MS IMANI: Sure. Basically saying how would you know that someone in the age 34 to 54 category might want to hear young hip hop or newer artists on the radio. My response would be to look the other way and say how many younger people want to hear motown and want to hear Gladys Knight and the Pips. I mean, I loved the song Midnight Train to Georgia, but it was written and recorded way before I was born, but I still appreciate the music.

3936 I also find that that music influences and helps me to appreciate when I am writing music myself, because I have something to aspire to. It serves as roll models for me to put out quality music and I feel that as an artist I have a responsibility to pay homage to the people who -- my predecessors, as well to give some legacy that in future generations they will be influenced by what I put out.

3937 I want again to say, Aretha Franklin was the big hit back in the day. Now, how many of you all know about Lauren Hill? Everyone says "Well, who is Lauren Hill influenced by"? Well, Lauren Hill just produced Aretha Franklin's last album, several successful tracks on that. One hand feeds the other and it is basically helping us to appreciate and celebrate that diversity and the multiculturalism within our society.

3938 I believe that is what The Beat will reflect, that you don't have to be one age group to enjoy one category of music. Music is for everyone and it is a universal language. It is a multicultural thing, just like our city is, and that is why we have The Beat.

--- Applause / Applaudissements

3939 THE CHAIRPERSON: I wonder if we could ask the audience to refrain from the applause. It is very distracting for us.

3940 If we could just go through the questioning. Thank you very much.

3941 We recognize your enthusiasm and it is wonderful, but it is distracting for us.

3942 Thank you.

3943 COMMISSIONER CRAM: Another one of my problems with the demand analysis -- and I actually expected that somebody here was going to be saying to me: We are not really talking about the demographic, we are talking about lifestyle and it is the lifestyle to which this appeals. Because we heard this before and it seems to me the commonality between your demographics is, in fact, their lifestyle

3944 These are a very active bunch of people who go to dance clubs -- on page 26, it's in your report.

3945 MR. MacKAY: That is in the research, yes.

3946 COMMISSIONER CRAM: Yes. Downloading, you should play CDs, go skiing, read Georgia Strait, na-na, na-na, na.

3947 MR. MacKAY: They are out there.

3948 COMMISSIONER CRAM: Pardon me?

3949 MR. MacKAY: They are out there.

3950 COMMISSIONER CRAM: Yes. Then that leads me to: When are they going to have the time to tune in?

3951 MR. MacKAY: I guess in their cars when they are going to all these places.

3952 COMMISSIONER CRAM: Yes. Because I don't see -- I'm looking at this and I have a hard time thinking when they would have time to tune in.

3953 Then secondly you say: There may be increased listenership.

3954 MR. MacKAY: Yes. I think that comes from another source.

3955 COMMISSIONER CRAM: Okay.

3956 MR. MacKAY: There are two reasons. Frankly, I believe that people who are active listen to the radio in order to get information about the things they ought to be doing. That is one of the great things radio does, it provides that information to the community.

3957 And radio's peak hours are morning and noon and, as you know, afternoon drive. So typically, although these people may be very active, I would suspect that most of them have to work, so they follow the same cyclical patterns on a daily basis as the rest of us do, and our research showed that their consumption of radio was somewhat the same as everyone else's.

3958 In terms of incremental tuning, I think there is a pool of unclaimed hours that are being tuned to a radio station in Seattle. I think that that is an important one to remember. I looked at some of the statistics and we submitted them in the supplementary brief.

3959 This is a station that has practically no audible signal in the Vancouver marketplace, KUBE. It is a station which is not on cable. You practically have to go up to the top of Mount Seymore to get it. And there is still in the 18 to 34 age group a four and three reach in the marketplace. So that is there if somebody wants to take the format that they are playing into the Vancouver marketplace and reclaim some of that.

3960 The other thing is that in the marketplace as a whole there is a format hole at 18 to 34. That is quite evident. There is not a -- I think there is only one other station, perhaps two, that service that marketplace, whereas there are many rock stations and soft rock stations that are servicing principally ages 35 and over.

3961 So it is a substantial hole. The philosophy of the marketplace is to pursue the demographic pig in the python, the boomers as they get older and find formats that suit them.

3962 Contrarily, if you have fewer formats to service the younger people, my suggestion is that if you bring new ones into the marketplace you will experience some incremental tuning.

3963 Now, having said that, you are right, people have things they do in their day that takes up most of their time and finding extra tuning is going to be difficult, but I think there are some indications here that it could happen.

3964 I wouldn't overclaim that. I think that is just -- you know, there are a few hints that because of the format hole, because of the alternative stations in Seattle and other places, that this could be one area where there would be some repatriation and incremental tuning.

3965 COMMISSIONER CRAM: Okay.

3966 MR. LALLA: If I may add, the reason that some of these people are spending so much time at clubs is that it is the only area, only place they can go to hear the music for free.

3967 COMMISSIONER CRAM: Did I understand you right, you say there is unclaimed listening with KUBE?

3968 MR. MacKAY: I'm saying the listening with KUBE has -- what I meant, I'm speaking metaphorically.

3969 This station will take that listening, if it is licensed. 94.5 and KUBE essentially are going to -- well, KUBE programs, to some degree, in the way that 94.5 plans to, therefore that tuning to KUBE could come, just as the point was made in Toronto with respect to Milestone, that there was dance station in, I believe it was Buffalo, that could repatriate tuning in Buffalo to Toronto.

3970 So we believe this station could repatriate the KUBE, which is being accomplished, by the way, at some effort, I must say, by the people who have to tune the station in. Because I tried it and I couldn't get it in my hotel. So it is a difficult station to receive.

3971 COMMISSIONER CRAM: Okay. So you don't mean that the BBMs don't show --

3972 MR. MacKAY: Well, that is the other thing. They possibly might not show other tuning because, of course, BBMs are oriented to measuring Canadian radio stations, but the unsuppressed reach reports showed four and three in the 18 to 34.

3973 COMMISSIONER CRAM: Yes, in your own demographic, in your core demographic.

3974 MR. MacKAY: In the first demographic, yes.

3975 COMMISSIONER CRAM: Yes.

3976 The other thing is, the core demographic or core audience, these people are hooked to the Internet. I happen to know somebody who is 17 and-a-half, I don't know how you are going to scrape them away from downloading music, which is what your core audience does.

3977 MR. MacKAY: Yes. But that is complementary, that is not necessarily in our -- we do another research project called New Media Perspectives. Do you know David Ellis of Omni Communications? He is one of our partners in that. He and I together think of ourselves as Internet experts, you know, older Internet experts.

3978 We find that the use by young people of the Internet to satisfy their musical tastes is often complementary to listening and purchasing records and going to concerts, so the activity tends to sort of snowball, if you will.

3979 It is not necessarily you have to scrape them away from the Internet and get them onto the radio. In fact, you could listen to the radio on the Internet. I suppose is you are listening to the commercials, that counts as audience.

3980 If somebody wants to claim that, the BBM diary does not make the distinction, as far as I know, between listening to a radio station in real audio stream and listening to a radio station off your radio, and in fact it shouldn't, should it. I don't think so, but somebody might argue that it should, but I don't think it should.

3981 COMMISSIONER CRAM: I don't know whether -- I know in the presentation today you talked about the significant component of listeners being the ethnic listeners. What does "ethnic" mean? Visible minority --

3982 MR. MacKAY: Well, I am a sociologist and if you want the technical definition I will give it to you, but that would probably be too boring.

3983 Minority ethnic groups generally mean either visible minority ethnic groups or non-visible minority ethnic groups, which usually means people who come from a specific ancestry and are in the minority. They don't have to be -- English and European is an ethnicity, as far as I am concerned, and sociologically and anthropologically speaking they quality.

3984 But in this case, on page 25, Figure 6, we identify -- because we only had sample adequately large to identify with any kind of confidence any skews in the reach of the station as it was described to these people, that two groups stood out, South Asian and Chinese who self-identified themselves. And we saw some skews towards the station amongst those groups which we thought indicated a slightly higher interest amongst those groups in the format that was being proposed.

3985 Having said that, I would imagine the majority of the population in this city falls into categories outside of English/French ethnicity. So really it is the majority if it's not the mainstream, let's put it that way.

3986 MR. TONY ROTA: Commissioner, if I may --

3987 COMMISSIONER CRAM: Mr. Rota and Mr. Maximus, what did you mean by that?

3988 MR. CLEAN: Yes. If I may just add to the whole experience to define the ethnic audience, I would like to say that in having been a nightclub DJ right here in the City of Vancouver for over a decade, I can tell you firsthand that the audience has truly changed. Where groups used to be segregated before by race, they are now truly integrated by music and urban culture.

3989 The second and third generations of Canadians are now English-speaking and their ethnicity is reflected more by their musical choices. We definitely feel that it is time to integrate visible minorities into the mainstream instead of, say, narrowcasting or pigeonholing their media access or their ability to share their cultures with the masses. We feel that we would be negligent if we didn't include the whole range, the whole spectrum of ethnic minorities into the programming mix.

3990 We feel that on top of that I wanted to touch very quickly on the repatriation and the Internet factors as well, where listening to KUBE from here in Vancouver is staticky and it's okay. You know, when I'm -- on the radio in the mornings people are always calling in saying "Yes, I heard the selection from KUBE, would you play it for me here?" Because they want to hear it crystal clear. They want to hear it broadcast over local airwaves.

3991 Now, on top of that what we can provide is access to local information of relevance, local events and, of course, be able to add a component that KUBE would never program, which is Canadian programming, what is uniquely ours, what is uniquely Vancouver.

3992 Now, as far as downloading music off the Internet, I think it's great. I think people should be able to share, you know, their creativity on a site like MP3.com where, you know, musicians who are not signed are able to upload their own MPEG files and share them with the masses out there.

3993 One of the strengths of having a station that is netcasting is that we will be heard all over the world. We will be able to expose Canadian talent worldwide to people listening, whether it is in Africa, whether it is down in the United States, whether it is in the Orient, they will get our message, just as I am just as attracted to listening to worldwide broadcasts of urban music stations from all over.

3994 So I think that in a nutshell, looking at what is ethnic, what is feasible in terms of people's listening habits and the whole repatriation factor, I think that we have that all covered.

3995 COMMISSIONER CRAM: Mr. MacKay, can you tell me -- when you say you used the word "ethnic" you were referring to Southeast Asian and Chinese. Can you --

3996 MR. MacKAY: No. What I said was the only two groups we could identify with statistical reliability in terms of their musical tastes were those two groups, but we have other groups in the research, on page 20 of our research report.

3997 COMMISSIONER CRAM: Yes, I read that.

3998 So what was the size of the Southeast Asian sample that you spoke of?

3999 MR. MacKAY: I don't have the exact size with me, but they were representative of the population and sufficient to make this report.

4000 I'm sorry, I don't have that.

4001 COMMISSIONER CRAM: They were directly representative?

4002 MR. MacKAY: Yes. It was a proportionate sample of the population. I would think in the order of just over 100 or so.

4003 COMMISSIONER CRAM: How about 80, 8 per cent, 8.8?

4004 MR. MacKAY: Something like that.

4005 COMMISSIONER CRAM: And the Chinese?

4006 MR. MacKAY: Over 20, from various origins. It's not just Chinese. As you realize, Chinese is not just from China but from other Asian markets.

4007 COMMISSIONER CRAM: Yes. Because you know what I'm getting at, at page 31 when you show the difference in preference, or the difference in the whole ethnicity in the size of household, occupation and the core audience and the total Vancouver audience, what is the difference between the percentage of 12 and the percentage of 8 in the number of people?

4008 MR. MacKAY: These are not -- I would say these are trends in the data and we found other trends in the data that are similar when we looked at, for example, the reach --

4009 COMMISSIONER CRAM: So they are not that terribly reliable?

4010 MR. MacKAY: They are not as reliable as the whole sample is. But the 23 and 21 per cent on the reach are more reliable than these.

4011 COMMISSIONER CRAM: Okay. But yet at the bottom of that page you talked about based on small sample sizes when you are referring to the 21 and 23 at page 25.

4012 MR. MacKAY: Right.

4013 COMMISSIONER CRAM:

"As such, projections of reach should be considered directional in nature." (As read)

4014 MR. MacKAY: Well, I think that that is fair. And again, as I said --

4015 COMMISSIONER CRAM: So it means we should have less confidence of --

4016 MR. MacKAY: Absolutely.

4017 COMMISSIONER CRAM:  -- those numbers than we would of the sort of non-ethnic numbers?

4018 MR. MacKAY: No. The whole of the market represents the market. The whole of the data, the 59 per cent of people who said they would probably or definitely listen, is based on the 1,000. That represents the Vancouver market and I would say that since we weren't engaged to do a research project amongst any of the specific minority ethnic groups in the population, we would take it that that represents the market as stated by StatsCan, which has this representative cross-section of various ethnicities within it. Then when we looked at the data we found there were some skews towards various groups, at least to the degree that we could discern in the larger groups that make up this population.

4019 So I guess the answer is: Yes, the total sample is more reliable than sub-samples and that is a statistical rule.

4020 COMMISSIONER CRAM: So what conclusion can I draw as a result of that footnote on page 25?

4021 MR. MacKAY: I would say that if you did this study repeatedly in this market over, you know, five or six or seven times, you would probably find the same tendencies in the data and I would be surprised if you weren't, since this was based on a larger sample of 1,000. Therefore, the subgroups do have validity.

4022 COMMISSIONER CRAM: But what I'm trying to say is: What conclusion can I draw from that footnote?

4023 MR. MacKAY: I guess that --

4024 COMMISSIONER CRAM: And I ask you -- no. Wait, please.

4025 I ask you: Can I say I can be pretty darn sure about the numbers on anything but the Southeast Asian, Chinese issues?

4026 MR. MacKAY: I think you could say --

4027 COMMISSIONER CRAM: And I can be possibly sure about the numbers on the ethnic?

4028 MR. MacKAY: Yes. I think --

4029 COMMISSIONER CRAM: Is that the conclusion I can draw?

4030 MR. MacKAY: Relatively -- it is relatively, I think -- relatively certain that in the whole of the market that these statistics are solid.

4031 When you get into the subgroups within the market, they have a reliability which is probably, if it's a 2 per cent error in the total, there might be an 8 per cent error in the smaller groups.

4032 COMMISSIONER CRAM: Okay. So plus or minus 8?

4033 MR. MacKAY: Something in that order, depending what group we are talking about.

4034 COMMISSIONER CRAM: Okay.

4035 MR. MacKAY: However, the proportions that would listen across demographic groups have lower levels of statistical error associated with them, since they are proportions of the whole rather than sub-samples onto themselves.

4036 So, for example, if we said a group was 1 per cent of the population, we can't say 1 per cent plus or minus 10 per cent. It's impossible. It can't be minus 11 because we found some.

4037 So obviously when we say X per cent of people within the reach audience when we just ask them the question "Would you listen?" said yes, that proportion is not subject to the same error as a sub-sample of 100 would be as a standalone. So there is more certainty in that.

4038 So I would say, repeat this study N number of times, you will always find that South Asian and Chinese members of the audience will find this format more attractive than European, U.K. origin individuals.

4039 COMMISSIONER CRAM: Thank you.

4040 I was going to move onto something else, but Madam Chair was asking if we all needed a break and I think we all need to clear our head after this. I will stop with the statistics and the demand study.

4041 Madam Chair.

4042 THE CHAIRPERSON: Okay. It is now five to 1:00, let's break and be back at 2:15.

4043 Thank you.

4044 MR. TONY ROTA: Thank you.

--- Upon recessing at 1255 / Suspension à 1255

--- Upon resuming at 1415 / Reprise à 1415

4045 THE CHAIRPERSON: Commissioner Cram.

4046 COMMISSIONER CRAM: Thank you, Madam Chair.

4047 In your supplementary brief, and particularly at pages 8, 9, 10 and 11 -- and I will take you to the second line of page 8, there is a discussion about:

"...the potential for BEAT 94.5 FM to repatriate advertising dollars that are currently being spent on Washington State U.S.A. radio stations." (As read)

4048 I want to tie that up with your letter of August 23 of this year where you say 35 per cent of your revenues will come from existing stations. Does that include this repatriation to which you are referring at page 8 on your supplementary brief?

4049 MR. TONY ROTA: I would like Jim Robson to address this.

4050 MR. ROBSON: Commissioner Cram, no, 35 per cent was revenue that would be derived from the existing Vancouver stations. I don't think we have a qualitative number to plug into the Seattle stations in terms of revenue.

4051 We make the statement that in repatriating listeners from the Seattle station we presume there would be some commercial component to that, but, as I say, we don't have a fixed number on it as, for example, the Buffalo-Toronto situation where I think there was something in the order of $1 million bleeding across the border to Buffalo stations.

4052 But to come back more precisely to your point, the 35 per cent would be from existing Vancouver players.

4053 COMMISSIONER CRAM: But this isn't a situation like KVOS in television where there is advertising revenue being sought here, is there, from the Washington radio stations? I didn't know they sold ads up here.

4054 MR. HAMILTON: Madam Commissioner, I suspect the only advertisements that would be from Canada -- on KUBE for instance, which is the station we are talking about -- would be related to promotions of shows or stars or music groups. It is almost prohibitive now with our dollar the way it is to buy time in America for anything unless you are getting a very direct, very specific and very fast benefit.

4055 So the short answer is: There is nothing on there, I don't think, to be repatriated.

4056 COMMISSIONER CRAM: Thank you.

4057 In terms of your expenses, your expenses show that more than 40 per cent of them are attributable to sales and promotion. In your letter of August 23, the deficiency letter, you say in year one you will be spending $1.3 million on sales and promo.

4058 I have two questions. Will this be approximately the same for the remainder of the term, $1.3 million?

4059 MR. TONY ROTA: Yes.

4060 COMMISSIONER CRAM: And what are your marketing plans with $1.3 million?

4061 MR. TONY ROTA: Jim, would you like to stress on this, please?

4062 MR. ROBSON: I think Abir would have some comments on that.

4063 MR. TONY ROTA: Abir.

4064 MS SAADI: Thank you.

4065 Madam Chair, could I ask you to repeat the question?

4066 COMMISSIONER CRAM: I was referring to in a letter dated August 23. There was a reference to $1.3 million in expenses, being more than 40 per cent of your total expenses, being put into sales and promotion.

4067 I asked if that would be the same for the remainder of the term and the answer was yes.

4068 I then asked what were the marketing plans.

4069 MS SAADI: Okay.

4070 Without unveiling all our information, what I can say at this point is that we will be -- is that should this station be granted it will be well branded using a launching campaign and a pre-launching campaign, a launching campaign to generate interest in the public and -- I'm sorry, a pre-launching campaign to generate interest and a launching campaign to solidify the interest.

4071 The way we would be doing this would be through co-op efforts. We appreciate that Focus Entertainment is working with a local Vancouver company, so that the money and the efforts will remain in Vancouver.

4072 Thank you.

4073 MR. TONY ROTA: Don, would you like to --

4074 MR. HAMILTON: It is not untraditional for a new station to do cross-promotions especially aimed at demographics or music being played. So certainly in launching the station we would want to do a cross-promotion with everywhere this music and this audience is being listened to or, indeed, where it lives.

4075 So you will see throughout Vancouver in targeted companion businesses a variety of co-operative promotion and advertising.

4076 There is another technique which is called forced listening, which is quite traditional in the broadcast business, where if you can find your listener, to start with, let's say at seven o'clock in the morning, you find a variety of ways through other promotions and rewards to keep that listener as long as you can all day, or to be sure that listener comes back if he or she is only available on a Saturday or Sunday.

4077 Those are called forced listening promotions and they usually have significant prize awards. Sometimes the prizes build over a period of weeks, and indeed it could be over months. That is unlikely these days, but it certainly could be weeks.

4078 We intend to cross-promote on forced listening promotions supported by all media advertising, supported by everyone in the business of serving the market that we are after, all the nightclubs, all the musical groups, all the record companies, and in that way structuring our commitment of dollars to whatever commitment we can get from them that is important to that promotion.

4079 So Vancouver will certainly know about us.

4080 COMMISSIONER CRAM: This will go on throughout the whole term?

4081 MR. HAMILTON: Well, you will start heavy at the first. You start heavy at the first and you taper off, and then when the fall BBM approaches you usually start another promotion two or three or four weeks before the BBM to either keep people there or bring people back.

4082 So the big promotions in broadcast are virtually always September, October, November, and then, to a lesser degree, depending on the format of the station, if they are after the young audience then they would be large again in June, July and August. But by and large the big promotions are September, October, November and then bring them back April-May.

4083 COMMISSIONER CRAM: So I guess what I don't understand is, officially you want the recognition. You want to advertise in other media to attract people to your station. So the $1.3 million would be primarily for that in the first couple of years and then gradually being replaced, I guess I would say, by the what you call forced --

4084 MR. HAMILTON: Forced listening.

4085 COMMISSIONER CRAM:  -- the forced listening and increasing sort of the prizes in the forced listening. Is that how that works?

4086 MR. HAMILTON: Yes. You want to create a habit. People usually listen to one or two stations. I can't give you any statistics, it is just based on experience. People have a couple of favourite stations, any combination you want. What you want to do is attempt to make your station and your demographic their number one choice.

4087 COMMISSIONER CRAM: Thank you, Mr. Hamilton.

4088 I notice in your Administration and General -- I will address it to you, Mr. Rota, but of course you can -- that you have much lower costs than normal. These, however, normally and habitually include music royalty fees, fees paid to your beloved regulator, the CRTC, and professional and office supplies. In your case they do not appear to be included. Why are they not?

4089 It is the Administration and General.

4090 MR. HAMILTON: Is there a page?

4091 COMMISSIONER CRAM: I don't have it actually, but I can find it. It's your proforma, Schedule 9.

--- Pause / Pause

4092 MR. HAMILTON: This is administration costs. This is telephone and studio lease. I don't have those other ones.

4093 COMMISSIONER CRAM: Do you have the general one?

4094 MR. HAMILTON: I don't have Schedule 9.

--- Pause / Pause

4095 MR. TONY ROTA: Just one moment, please.

--- Pause / Pause

4096 MR. HAMILTON: It's not in here.

--- Pause / Pause

4097 COMMISSIONER CRAM: Maybe I can state it another way and I will come back to it.

4098 MR. HAMILTON: Sure.

4099 COMMISSIONER CRAM: Where are your music royalty fees, CRTC fees, professional and office supplies reflected in your expenses?

4100 MR. HAMILTON: Oh, okay, I'm sorry.

4101 I'm on Version 5, Schedule 9.

4102 I don't know the answer. I don't know the answer, unless they have been taken off the top on revenue, which could be.

4103 MR. TONY ROTA: Jim, would you care to add two words here?

4104 MR. ROBSON: Madam Commissioner, the individual who put those particular numbers together -- I believe the answer is administration, but the particular individual who put those numbers together for us and the precision of those numbers, unfortunately, was not able to be with us at this hearing. But I believe it is under administration.

4105 COMMISSIONER CRAM: But you agree with me that in your schedules it is not broken out at all in the breakout of admin?

4106 MR. ROBSON: Not in finite detail, no.

4107 We could provide that. Subject to Madam Chair's ruling, we certainly could provide that detail and file it within whatever timeframe you would deem appropriate.

4108 COMMISSIONER CRAM: The question is: Where are the music royalty fees, CRTC fees, professional and office supplies reflected in your expenses, and if you could refer us to the appropriate schedule.

4109 THE CHAIRPERSON: Yes, if you can file that with us.

4110 COMMISSIONER CRAM: Now, Mr. MacKay -- is it MacKay or McKay?

4111 MR. MacKAY: It's Cram, isn't it?

4112 COMMISSIONER CRAM: Yes.

--- Laughter / Rires

4113 COMMISSIONER CRAM: MacKay?

4114 MR. MacKAY: It's MacKay.

4115 COMMISSIONER CRAM: My grandmother's name was MacKay and --

4116 MR. MacKAY: Just remember the Isle of Sky, Commissioner.

4117 COMMISSIONER CRAM: Yes. And then I talk to everybody else and they say it's McKay.

4118 On your study assumptions you talked about there being no other AM or FM-licensed -- presumably you mean during the license term, the seven year license term?

4119 MR. MacKAY: That there should be no others?

4120 COMMISSIONER CRAM: Yes.

4121 MR. MacKAY: In terms of the time periods set out in these presumptions, yes. Not beyond that.

4122 COMMISSIONER CRAM: Your assumption was also based on the fact that there would be a new CHUM television station and a born-again CKVU station. Is that correct?

4123 MR. MacKAY: There is going to be some change in the television market, but we would feel that these are not going to affect these projections, which we feel are relatively conservative with respect to the environment.

4124 COMMISSIONER CRAM: I noticed in your assumptions, though, you only talked about two television stations, you talked about the new one and the reborn one, especially given -- and this is to you, Mr. Rota, and of course anybody can answer -- especially given your purported ethnic appeal and recognizing the possibility that there may be a third over-the-air television station that is multicultural, what does this do to your projections?

4125 MR. TONY ROTA: I would like Jim Robson to actually touch on this point, please.

4126 MR. MacKAY: Well, I could -- and I think I might be able to answer that as well, and maybe Don could.

4127 It depends on the format of that station, obviously, and what they intend to do within the marketplace. If that is a language station, depending on third language programming to a great degree, then it will have a different impact on the market than if it is what I would call a principally English broadcasting cultural version of ethnic broadcasting which is of a different flavour.

4128 So if you could illuminate that for me, I would be able to answer. It is not licensed yet, right, so how would you know.

4129 So let me say, on the presumption that there is going to be a preponderance of language broadcasting I would say it has little effect, because this is an English-language application in radio that is ostensibly programmed to music interests, whereas ethnic stations on television which are programmed ostensibly to linguistic communities, have an entirely different approach, I think, to culture, if you will. Indeed, I think that has been shown in many markets.

4130 And it is a different generation and a different generation of immigration, and so on and so forth, and I think it is a big story, but I think that is the bottom line.

4131 COMMISSIONER CRAM: What about the revenue projections though?

4132 MR. MacKAY: No, I think they are solid notwithstanding.

4133 COMMISSIONER CRAM: So your revenue projections would not change?

4134 MR. MacKAY: No. The whole market might go up with another television station, but I don't think it is going to -- I think the pool for radio is solid and increasing and I don't think that these entrants into the marketplace are going to have a strong impact on that, given that the target that we are looking at has specific appeal to the buyer, which is not going to be, I don't think, in any way impacted by these other licenses.

4135 MR. TONY ROTA: Commissioner Cram, if Don Hamilton may add further.

4136 MR. HAMILTON: I think there is another area of problematical impact and that depends on when the station would be licensed. If we have had two or three or four years under our belt, I'm certain there would be no impact on us at all.

4137 As Duncan has already said, I really don't see any impact for the other reasons that he has mentioned, between now and then.

4138 MR. MacKAY: I might add that this market has -- according to the media buyers we talked to -- has a shortage of revenue anyway. Again, it depends on the format of the station, but there is a substantial demand, unfulfilled demand.

4139 I agree with Don, if this station comes on the air earlier, they can solidify their position in the marketplace, then I don't honestly believe it is going to have a great effect on it.

4140 COMMISSIONER CRAM: If we, in this round, found that we could license another FM, what would that do to your projections?

4141 MR. MacKAY: It depends on the format. If it is a --

4142 COMMISSIONER CRAM: What would be the worst format? What would be the --

4143 MR. MacKAY: The worst format would be another urban music station, I suspect. And the best, maybe you could license a jazz station.

4144 COMMISSIONER CRAM: So if we license a jazz station it would have the least impact?

4145 MR. MacKAY: I would say any station that skews very old, like formats like classical and jazz won't have -- would have a very minimal impact on a station that skews to the mainstream and younger. I mean, you can only go -- how high could --

4146 COMMISSIONER CRAM: So it skews over 54 you mean?

4147 MR. MacKAY: How high can you go?

--- Laughter / Rires

4148 MR. MacKAY: I think that, yes, classical skews over 55.

4149 COMMISSIONER CRAM: Okay.

4150 MR. MacKAY: It always has. I was with the CBC for a while and that was one of our problems, you know, we couldn't attract younger audiences, and I think it is still the case in the classical services.

4151 COMMISSIONER CRAM: So you are fairly confident that pretty well notwithstanding anything that your assumptions will stand. Is that where you are --

4152 MR. MacKAY: I think that the general assumptions with respect to the viability of the business plan on the revenue side are solid, I mean give or take a percentage here or there. They are top-down and bottom-up projections that we have tried to verify in both directions. They are relatively conservative with respect to the expectations of the station and its obvious, you know, there is a time period through which it is going to develop.

4153 So all that being said, and given the state of the market, the inventory in the market, the economic health of the market, certainly these numbers are achievable, whether they are the precise numbers. They are estimates, as we say throughout, and they are based on industry informants, third party statistical data and other information from the buying side.

4154 So all that being said, you know, we are fairly confident that these can be achieved.

4155 COMMISSIONER CRAM: Mr. Rota, should something terrible happen and Mr. MacKay be wrong and Mr. Jimmy Pattison be right that there may be rough times ahead, do the owners have additional funds to be able to make it through the rough times, just like Mr. Pattison was speaking about?

4156 MR. TONY ROTA: Commissioner Cram, at this point I would like our fourth shareholder, Mr. Blake Cowan, to address this, please.

4157 MR. COWAN: I'm Blake Cowan representing the Cowan family. I would like to say we are delighted to have the opportunity to join you here today and to be part of this process.

4158 Your question is a good one and, I think as Duncan has referred to, you put your best research -- you do your best research. I think we have an incredible team here that really knows what is happening in the market and has a very solid feel for an untapped market that is not currently being served.

4159 However, that doesn't mean to say, you know, you don't get road bumps along the way. As the financial backers of The Beat, we are prepared to hit those road bumps and move beyond them because we have great faith in terms of the direction and the underlying fundamentals.

4160 If you would bear with me, I wouldn't mind just giving a little bit of background to our family and the reason for our involvement in this, because I think it does tie in nicely the local independent aspect that I think that this submission is doing a good job articulating.

4161 As has been referred to in the brief, the Cowan family does have a long history in Vancouver. My great grandfather came here in 1886, he was Mayor of Vancouver in 1907, and amongst other things developed land that is still in our family today.

4162 We have a strong sense of local pride that comes from being part of the founding history and contributing to the growth and evolution of Vancouver over the years. We hope to be continuing that family tradition by making history here today.

4163 Being quite familiar with the requirements of starting and growing successful ventures, we are really delighted by the energy, the foresight and the solid business planning of the principals of Focus Entertainment and the substantial guidance of the seasoned veterans that we have here today. And the fact that they have been able to attract some of this talent I think bodes well for this project.

4164 The Cowan family is passionate about our commitment to the local market. Our whole family lives here. We have a diversity of interests that range from real estate to Internet investments.

4165 This investment criteria of the radio station fits quite nicely with that. Like real estate, there is a limited supply.

4166 The location and fundamentals are important and, also in this age of convergence of different media types, it does compliment our Internet investments. For example, I am a co-founder of a company that is in the process of implementing a B.C. Internet Web portal for the British Columbia Ministry of Education. With our partners -- and this is my company, but our partners tell us at IBM, by September 2001 we will be reaching over 600,000 B.C. students and over 400,000 B.C. parents.

4167 Just as an example, because there had been some discussion about the use of the Internet earlier, this Internet portal could provide a strong complementary tie-in for The Beat to get its message out to help develop new Canadian talent and to provide traffic to the proposed Cybershow Interactive.

4168 In summary, over the years I have taken pride in standing my sons in front of the Parliament Buildings in Victoria, and other buildings around Vancouver, while sharing with them the family history about how the stone that built those buildings was quarried by one of their great-great grandfathers from Haddington Island, which is up the coast by Alert Bay and that was quarried in the late 1800s and interestingly and quite remarkably Haddington Island is and has been continuously owned by the family since that time and is still in the family.

4169 I hope that shows our commitment to what we put our money into.

4170 I now hope to be able to point to them with the same pride, the Cowan's are helping to build the new culturally and ethnically diverse Vancouver by linking people of all ages together through a vibrant new radio initiative, The Bear 94.5 FM.

4171 Thank you.

4172 COMMISSIONER CRAM: Mr. Cowan, can you at least assure me that -- I will use the word deep pockets, that you have, that they will be available at least to the extent of perhaps 50 per cent of Mr. Pattison's deep pockets for the use of this station, should it come into rough times?

4173 MR. COWAN: I don't know if I would draw the comparison to Mr. Pattison, but I would certainly give you our firm assurance that this station has our commitment and that we have examined the financials, we have examined the underlying fundamentals and we are very comfortable and indeed excited about the potential should it be licensed.

4174 Yes, we are committed to it.

4175 COMMISSIONER CRAM: Thank you.

4176 MR. MacKAY: Could I, Commissioner, just add to that. I had this discussion earlier.

4177 Because it is tied into the revenue assumptions of course I was involved in this discussion, and the revenue assumption would have to be missed by 25 per cent in order for this to happen, which is a fairly significant shortfall of revenue assumption. So we would have to be really wrong. So maybe I should put some money in this and say we will back them, but that is the extent of the difference between the level of investment at this point and some presumptions about revenue.

4178 So there is some cushioning in there already against revenue shortfalls.

4179 COMMISSIONER CRAM: Thank you.

4180 Now, I will start with you, Mr. Rota.

4181 Cowan Properties Ltd., I think, will be purchasing 30 per cent upon the obtaining of the licence. At least that is what the correspondence says. Is that correct?

4182 MR. TONY ROTA: We basically -- our shareholders agreement is still being construed. We are still in the process of ironing out all the details.

4183 COMMISSIONER CRAM: But it is upon obtaining the licence?

4184 MR. TONY ROTA: Yes.

4185 COMMISSIONER CRAM: And it is a 30 per cent share?

4186 MR. TONY ROTA: That's correct.

4187 COMMISSIONER CRAM: The remaining three of you, Mr. John Rota and Mr. Jim Henni will be equal shareholders as a consequence?

4188 MR. TONY ROTA: That is correct.

4189 COMMISSIONER CRAM: You did provide us with a draft of your shareholders' agreement, but it was a draft of the four shareholders with Focus. Can we be assured that the shareholders' agreement with Cowan Properties will be the same or identical to the original shareholders' agreement between the three of you?

4190 MR. TONY ROTA: At this point, yes, I can say that.

4191 COMMISSIONER CRAM: But it hasn't been completed. Is that --

4192 MR. TONY ROTA: It has not been completed.

4193 MR. COWAN: No. And I think in fairness to the business -- the nature of the business structure, I think that we would have to say that we would have to review it, but the nature and the intent and the clause -- I mean, if you went clause-by-clause I don't think you can say it is going to be exact. So technically -- we have to be correct here, so from a technical perspective it is not going to be exact, but in the spirit and the nature, yes, I think that that would be accurate.

4194 COMMISSIONER CRAM: In the to be decided agreement -- I will call it the Cowan agreement, just for shorthand -- are all decisions to be taken in the same manner as under the first shareholders' agreement, that is that there must be unanimity among the directors?

4195 MR. TONY ROTA: That is correct.

4196 COMMISSIONER CRAM: And in the Cowan agreement, what happens in the event of deadlock? Is there an arbitration cause or the same as the buy-out clause in the first one?

4197 MR. TONY ROTA: It's the same as on the first one, the buy-out.

4198 COMMISSIONER CRAM: After Cowan Properties becomes a shareholder, who will be controlling Focus? By that I mean, as you say, all decisions will be made by the directors, 100 per cent board of directors, so there will be no shareholder control or majority shareholder control? I'm sorry, I'm getting legal on you and I apologize.

4199 But it will again be total control by 100 per cent of the directors. Is that --

4200 MR. TONY ROTA: That's correct.

4201 COMMISSIONER CRAM: One final thing and then I will get into frequencies, my favourite subject.

4202 On page 9 of your supplemental brief, which is at page 323 of the record, at paragraph 3 it states:

"Should the Commission license an urban music station in the Toronto market, Focus would quickly move to form a solid working relationship with that licensee in the interest of cross-promoting east and west coast urban artists throughout Canada and the United States." (As read)

4203 What have you done to date?

4204 MR. TONY ROTA: In terms of the relationship with Milestone?

4205 COMMISSIONER CRAM: Yes.

4206 MR. TONY ROTA: Well, it is premature at this point since Standard -- they are backing -- or they are actually -- they are one of the shareholders for the Milestone group, so it is kind of premature, but as soon as -- if we were so fortunate to be licensed, we would quickly engage in a relationship nationwide, Toronto and Vancouver.

4207 COMMISSIONER CRAM: Okay. So that is just precluded because of the circumstances of this application. Is that what you are saying?

4208 MR. TONY ROTA: That is correct.

4209 MR. ROBSON: Commissioner Cram, if I might just take a moment and perhaps enlighten you a bit further on that, at the time that this application was being prepared for Vancouver, it wasn't completely concurrently with Toronto, but it was within the timeframe that the Toronto decision, of course, hadn't been handed down at that point if there would be an urban licensee or who in fact that urban licensee would be.

4210 I think where Focus Entertainment is coming from is that in the event there was a licence granted in Toronto for an urban format and a licence granted in Vancouver, the obvious synergies between the two organizations for the benefit of the urban infrastructure across the country as a whole, and specifically in each of the two markets, it would be obviously very well worth pursuing.

4211 The reason Focus hasn't knocked on Milestone's door to this point again, as Mr. Rota alluded, in the Toronto Milestone situation you have a participation by Standard and we just thought it better if we should be licensed in Vancouver then it would be in everyone's interest for Milestone and Focus to come together and there would be many areas of common interest.

4212 That is just kind of an overview of the intent of that statement.

4213 COMMISSIONER CRAM: I understand the intent. I was actually looking at the actual words of saying "moving quickly to establish" and I just wanted to see if that was happening.

4214 As you know, other applicants wish to use the same frequencies that you wish to use. One of them is CBC for la Chaîne culturelle. Have you proposed any alternate frequencies that la Chaîne could use, or you could use?

4215 MR. TONY ROTA: At this time, Commissioner Cram, I would like maybe Grant McCormick from HN Telecom to give you some insight.

4216 MR. McCORMICK: Good afternoon.

4217 Any other frequency, as you have heard previously, in this congested Vancouver market would have limited parameters and limited coverage. This is a commercial station application. The existing stations in the Vancouver area are all Class C, full power Class C stations, and we have been competing with those existing stations. So, consequently, we did not look for an alternate channel, we just looked for the final allotment for Vancouver.

4218 COMMISSIONER CRAM: So given that, can you please tell us why this licence should be granted to you, Focus, instead of the CBC or any other commercial applicant?

4219 MR. TONY ROTA: Commissioner Cram, what we feel -- just one moment, please

--- Pause / Pause

4220 THE CHAIRPERSON: Perhaps I could take this opportunity to ask everyone else who might have an on cell phone to turn it off.

4221 MS BOUND: If I may make a comment here, Commissioner Cram, in regards to your question as to why Focus would be best able to optimally use the frequency, aside from, let's say, the applicant CBC who wants to make it a French-language station.

4222 As I recall, for the lack of better words, I think about myself and I think about my parents who were born in the Philippines and yes, certainly they would love to hear their language on commercial radio. Language is definitely important when it comes to mainstream radio, however in looking at -- in thinking about myself, with my parents wanting to hear their language on radio, I myself would want to hear my music on commercial radio, and I think urban music is a market that has been underserved so to speak.

4223 Not to say that other language-based or ethnic radio stations have not fulfilled their goal in satisfying the need for language to be represented on the radio, but there is still a larger market that is definitely underserved, or just not served at all.

4224 So that is just something personal from me, that that is why I believe that Focus would probably be -- would the best to make use of the 94.5 frequency.

4225 MR. TONY ROTA: Madam Cram, just before I make my closing remarks, I would just like maybe Don Hamilton to touch on some points, please.

4226 MR. HAMILTON: Madam Commissioner, you raised the subject of the CBC and the frequency. Something really hit me over the weekend when we were having our rehearsal conversations, and that is -- I'm sorry, I wasn't here for the CBC here, but as I understand it they propose to serve 23,000 people. The concerts that we will sponsor and promote in the first year will probably exceed 25, and each of them serve 21,000 people.

4227 Through our concerts alone we are talking about service to hundreds of thousands of people, even though some of them are the same, in other words they repeat themselves. It seems a shame, it seems a national shame that the CBC could tie up a frequency without having a specific target beyond 23,000 listeners. That seems very, very strange to me. As I understand it, they were unable to describe or define where it was they intended to go with their strategy and expansion of whatever service they had in mind.

4228 I am able to see this from several sides. I sat on the CBC Board and Executive Committee for seven and-a-half years.

4229 COMMISSIONER CRAM: Long years.

--- Laughter / Rires

4230 MR. HAMILTON: The last one and-a-half were the longest, yes.

4231 It was an extremely interesting exercise. I was the first broadcaster in the history of the CBC to be appointed to its board by the Prime Minister, which says something about former boards and former Prime Ministers I guess, too. But I saw this firsthand.

4232 What I really saw was that CBC is not manageable. There are so many bosses at the CBC, all the way from the Commission to DOC to Department of Labour to, when I was there, 27 unions, which we brought down to four, to the minister's office, to the Prime Minister's office, to the committee, the House Committee, it goes on and on and on and everybody has a different dream.

4233 I don't know where the dream of the 23,000 came from because it didn't occur during my watch, but I just see it as a national calamity that they would even almost be allowed to file an application that was so offensive to the Broadcasting Act. I wanted to get that in.

--- Laughter / Rires

4234 MR. HAMILTON: It seems to me that what they are asking for reflects a very small community, and what we are asking for reflects a very large community, a very inclusive community, a very broadly based community.

4235 We intend to deal with the leaders, the presidents, the past-presidents -- and I will come back to that -- of every major organization from Horseshoe Bay to Maple Ridge, and that is about 40 miles. We intend to be the most visible voice for organizations that have had no voice in this community, and those that have had a voice, it has been weak and infrequent. We intend to change the social values of people who are very dependent on each other, but in many cases don't know other groups.

4236 Being such a widely inclusive station, and using a major frequency the way it should be use, is something that we are going to be very proud of but, more importantly, you are going to be proud of if you grant us the licence.

4237 COMMISSIONER CRAM: Thank you.

4238 MR. TONY ROTA: Thank you, Mr. Hamilton.

4239 MS IMANI: Madam Chair, if I can just add.

4240 COMMISSIONER CRAM: I thought, Mr. Rota, you had something to say. I'm sorry.

4241 MR. TONY ROTA: Sketch.

4242 COMMISSIONER CRAM: If it was somebody else, I'm sorry.

4243 MR. TONY ROTA: Sketch, would you like to make another comment?

4244 MS IMANI: Yes, if I could give the artist's perspective as to how it would help the community here.

4245 Just to say that British Columbia and greater Vancouver area in general is known for its multiculturalism and its diversity and having a station such as The Beat that would reflect that and celebrate that with events such as the different off-air initiatives that they have like the BBQ, the Urban Music Awards and such things like that, helps someone such as myself, who is a visible minority, who is a women, who cannot get records played on local radio.

4246 When I go to other stations they say "Well, are you being played in Vancouver" and I say "No". And they listen to the songs that I have and they say "Well, why not?" and I say "Well, they just won't play it." Then they say "Well, that doesn't make any sense." But if they play it elsewhere I am getting success all over the place.

4247 But I walk down the street here in Vancouver and people say "Why can't we hear the people who live here on our radio station?" I think that not just myself but other artists, urban artists, whether it is world beat, reggae music, motown-related type music, when given an opportunity to present themselves that way again will help bring back fans that are taking to the United States to go listen to their music. They are listening to things in their basements, and so forth. And they will just, again repatriate our listeners and broaden --

4248 I really just have to say that it is really frustrating to be someone in Vancouver right now knowing that there is a need, knowing that there is a want. People are hungry for the music and, frankly, artists are going to pick up and leave and will move to Toronto in order to be fed, because it is just ridiculous.

4249 MR. LALLA: Further to what Sketch was saying, it hit an all-time -- the frustration hit an all-time high about two years ago when a local group by the name of The Rascalz, who had a gold record, a number one video on MuchMusic, could not get their record played in Vancouver, and to this date that record has still not been played commercially. That hopefully was not a sign of things to come.

4250 Furthermore, one thing we didn't touch on was demand for advertising on our urban station.

4251 As a representative of Universal I think I could also speak for Warner, BMG, EMI and Sony. We have a lot of money that we cannot spend to advertise these urban titles. Between January of this year and today, Universal has put out 93 urban titles, of which we have only advertised 12. We have had money to advertise the remaining 81, we have just had no appropriate venue. And you can increase that, you can multiply that by the other labels if you wish, a number of other labels.

4252 On top of that, we pulled up Sound Scan numbers this morning. Sound Scan monitors each individual record's sale in terms of individual titles. Of the top 100, 25 were urban.

4253 As part of my job I have to monitor radio airplay and to my knowledge only 13 of these 25 records are actually receiving commercial radioplay in Vancouver.

4254 That could also go hand-in-hand with consumer demand, but -- I'm sorry, the people who are buying these records, I tend to believe that they do want to hear this music on radio.

4255 Thank you.

4256 MR. HAMILTON: Madam Commissioner, could I just add, at the risk of being the only one in the room that lived through it, licensing urban stations at this time in the year 2000 is very, very similar to the introduction of a thing that nobody wanted to acknowledge in 1953 called rock and roll. Rock and roll had the same story that we have just heard from these two intervenors here. I was there. I saw it happen and I watched it explode and really take over the industry.

4257 I don't know if urban is going to take over the industry, but I know it is going to be heard and one way or another all those people who want it are going to find ways to listen to it, perhaps at the expense of the industry. But if you or members of your family can recall the explosion in July of 1954 in Toronto, with a station called CHUM, a daytimer with 1,000 watts that no one could find, much less listen to, and that started the revolution, with your licensing recently in Toronto and our requisition to be licensed we think we can start a similar explosion.

4258 MR. TONY ROTA: Madam Cram, are there any more questions or can I make my closing?

4259 COMMISSIONER CRAM: That was supposed to be a request for your final, but I have two questions.

4260 If another FM frequency were found, would you be willing to take that one?

4261 MR. TONY ROTA: Madam Cram, since our whole business plan has been predicated around 94.5 we won't say no, but we will have to kind of see how the numbers will work, if we have to do cutbacks, because the whole business plan will change.

4262 But the answer to your question is: We would consider it.

4263 COMMISSIONER CRAM: Would you take an AM frequency?

4264 MR. TONY ROTA: No.

4265 COMMISSIONER CRAM: Now, tell us how good you are and why we should license you.

--- Laughter / Rires

4266 MR. TONY ROTA: Thank you, Madam Cram. Thank you.

4267 Madam Chair and Commissioners, we respectfully submit that Focus Entertainment's application represents the best use of 94.5, Vancouver's last high-powered FM frequency, a frequency that should be occupied by a local applicant offering a unique format.

4268 Approval of The Beat will significantly add to the musical and spoken word programming diversity and listener choice within the greater Vancouver radio market. This diversity and added listener choice directly responds to the Vancouver radio listening audience on their stated complaints about the lack of variety and the degree of programming sameness amongst local radio stations.

4269 The Beat's investment of $3.5 million in direct and indirect expenditures on Canadian talent development will have an immediate and lasting impact on local and Canadian urban talent whose time has come to benefit from access to a dedicated urban music station to champion their talents and expose them to the fullest.

4270 The Beat's urban music format will close the missing link amongst Vancouver's radio spectrum, while fulfilling an integral part of what hopefully will become an urban music network of radio stations in key urban music communities across Canada. Urban stations in Toronto and Vancouver are the anchors for any such network.

4271 The Beat will achieve financial viability on the basis of its realistic and responsible business plan, without causing undue impact on other local Vancouver radio stations.

4272 The Beat will further strengthen the Vancouver radio market and ultimately the Canadian broadcasting system by increasing the listenership and hours tuned to local radio, repatriating Canadian listeners from Seattle-based radio stations and attracting new radio dollars.

4273 In addition, The Beat's urban formatted station will make a further significant contribution to the achievement of the broadcasting policy objectives set out in subparagraph 3(1)(d)(iii) of the Broadcasting Act by increasing the reflection of the cultural and racial diversity of Canadian society and Canadian radio programming, by adding to the new ownership diversity within the Vancouver radio market and the Canadian broadcasting system, and by creating several important new employment equity opportunities within the Vancouver radio market and the Canadian broadcasting system.

4274 The above, coupled with our determination to reflect the rich cultural diversity of Vancouver's multicultural communities, by giving them a daily presence and a voice on mainstream radio, makes Focus a worthy recipient for 94.5.

4275 Thank you, Madam Chair and Commissioners.

4276 COMMISSIONER CRAM: Thank you very much.

4277 Madam Chair.

4278 THE CHAIRPERSON: Thank you Commissioner Cram.

4279 I think Commissioner Cardozo has a question.

4280 COMMISSIONER CARDOZO: We spent a lot of time with you and certainly got a lot of information in our answers, so I will just very quickly ask you a question.

4281 I do, though, want to -- maybe I misunderstood you, Mr. Hamilton. I don't often state my views, but I would suggest that the view that the CBC, in applying for la Chaîne culturelle, that we as a federal regulator would consider that inappropriate that they would apply or that we would consider it is really something that I wouldn't share at all.

4282 Everyone has the right to apply for a station and we are bound to consider all applications equally. I will just state that.

4283 MR. HAMILTON: Thank you.

4284 I accept your explanation and understand it.

4285 Let me make my position clear. Were I on the CBC Board, I would resign.

4286 COMMISSIONER CARDOZO: Okay.

4287 There was one other statement I have to classify under really rubbing it in when Sketch Imani said "Midnight Train to Georgia" by Gladys Knight and the Pips is before you were born. That is mea. Nineteen seventy-four.

--- Laughter / Rires

4288 COMMISSIONER CARDOZO: Nineteen seventy-four wasn't that long ago.

4289 MS IMANI: And, in all truth, it wasn't very long before I was born, but I'm still old enough to appreciate it.

--- Laughter / Rires

4290 MS IMANI: I am still old enough to appreciate it and I do own it on vinyl.

4291 COMMISSIONER CARDOZO: Good. I'm glad you appreciate it.

4292 Just a question about how any or all of you feel about how urban music would rate in Vancouver.

4293 In the case of Toronto, Milestone put an application forward and was granted a licence. One of the core aspects of their application was that it was giving the black community in Toronto a chance to have their voice heard. Numerically speaking, the starting base of Milestone's urban format was the black community, recognizing that the music had a fair bit of interest beyond the black community, among other minorities and the white population, if we can call it that.

4294 The black community isn't as large in the Vancouver area and I'm wondering if you can just give us a sense as to whether urban music has the same kind of appeal, whether we can make that same kind of judgment as we did in Toronto for here, given that, say, the two larger communities here are the Chinese-Canadian and Indo-Canadian communities.

4295 You haven't talked about Bhangri, for example, which maybe fits under rap or something like that. Just your thoughts on how urban music would play with the particular minority communities and the majority community here.

4296 MR. CLEAN: Commissioner, it is our stance that urban music truly transcends racial boundaries, age boundaries and, in may ways, even cultural boundaries.

4297 Now, we have the statistics by Pollara to indicate that where we may not have a large black community, we certainly have a large Southeast Asian community, we have a large Chinese community as well. Research backs up that that is also their preferred choice in music.

4298 And again, to reiterate something that I was saying a little bit earlier, from having been a nightclub DJ for over a decade right here in the City of Vancouver I can tell you that the audiences -- really, their main preference in coming out now is urban music, whereas say 10-15 years ago in Vancouver nightclubs, especially downtown core nightclubs, would have been hesitant to program, say, an urban night for fear that perhaps there wasn't enough of an Afro-Canadian community to support it. Now you will find that every single nightclub in the entire Lower Mainland has at least one very strong urban night.

4299 So I think that speaks volumes in the fact that we are saying that urban music is truly the music of Vancouver, it is truly culturally diverse, and it is truly at the level of such acceptance and popularity that it truly transcends racial boundaries.

4300 MS BOUND: If I may also add to that, that is once again what I was stating previous, is that that is a unique feature of urban music is that it absolutely does transcend in so many different areas, whether it is culture, ethnicity or age. That is just a unique feature of urban music.

4301 I myself, you know, working on the radio as a radio personality playing urban music, oftentimes we do a special event, it could be a youth event, it could be an over 19 years of age event. Whatever it is, when we look out into the crowd all we are seeing are people who love this music. We are seeing all -- not just different ethnicities but different walks of life, people from different geographical locations.

4302 People will travel, will drive half and hour, 45 minutes, into the downtown core because there is an urban music event going on. I think that speaks volumes as to the effect of this type of music. You know, you don't need a specific ethnic background for it all.

4303 Just like GM Place, I mean the thought that we can fill GM Place with an urban music event or concert, the Hard Knock Life Life Tour, Redman and Method Man, you know, the Dr. Dre concert, 21,000 people of all different walks of life, all different cultural backgrounds to fill that, without a commercial station to boot, this is all strictly done by word-of-mouth, by handout flyers, by announcements on very limited urban music programs that do exist right now currently. But all of that is done and you can fill a place like GM Place with 21,000 people, that has to say something about the market that we are discussing.

4304 I have been approached by 12 year olds, 8 year olds and 54 year olds, 65 year olds all saying the same thing, "I love the music you play".

4305 Thank you.

4306 COMMISSIONER CARDOZO: Certainly I can remember, if I can go back, Ms Imani, when Carlos Santana didn't even have a first name.

--- Laughter / Rires

4307 MS BOUND: Also too, on the record I would like to say that Gladys Knight and the Pips, that song, I wasn't born too long after that.

--- Laughter / Laughter

4308 COMMISSIONER CARDOZO: Thank you for saying that. Thank you for that.

4309 THE CHAIRPERSON: Enough. Enough.

4310 COMMISSIONER CARDOZO: I think I will stop there too.

4311 MS IMANI: I would like just to add onto also the other point, that I do have Santana records as well, and Black Magic Woman is one of my favourite cuts.

4312 Also saying that the visual representation within the black community may not be here, but I think the appreciation for the music is here. With the B.C. and, like I said before, Vancouver being a very multicultural society, we have programs in our schools that celebrate that diversity, celebrate multiculturalism. Having a station for people to tune into that says "Look, it doesn't matter what the colour of your skin is, it is about the content of your character and what you put out and how you serve your community" is the best way that The Beat can serve Vancouver and I think that is the reason why we are all here.

4313 MR. CLEAN: Just one comment before -- I'm sorry.

4314 You did mention music forms such as Bhangri music, which again we consider to be a very important part of urban music in a world beat component and we indeed have shows designed to reflect that diversity as well.

4315 THE CHAIRPERSON: I have, actually, one question of clarification for Mr. MacKay.

4316 When you were talking to Commissioner Cram --

4317 MR. MacKAY: Wait a minute. Are you going to get that name right, because we have been --

4318 THE CHAIRPERSON: MacKay?

4319 MR. MacKAY: Yes. Because we have been told it is not "Crumb", we know that.

4320 THE CHAIRPERSON: I'm sorry. I'm sorry.

--- Laughter / Rires

4321 THE CHAIRPERSON: In your discussion with Commissioner Cram about the possibility of introducing a television station, what impact that might have --

4322 MR. MacKAY: Right.

4323 THE CHAIRPERSON:  -- you said this market has a shortage of revenue. I think you meant inventory.

4324 MR. MacKAY: A shortage of -- that's correct, a shortage of inventory.

4325 THE CHAIRPERSON: Good. I just wanted to make sure we --

4326 MR. MacKAY: Yes. And particularly inventory that addresses this age group.

4327 THE CHAIRPERSON: Right. Right.

4328 MR. MacKAY: And radio is cheaper than TV.

4329 THE CHAIRPERSON: I understand that. I just wanted to make sure because --

4330 MR. MacKAY: I just get all those --

4331 THE CHAIRPERSON:  -- of course, a shortage of revenue is quite different than a shortage of inventory.

4332 MR. MacKAY: Thank you. I misspoke.

4333 THE CHAIRPERSON: Yes.

4334 I don't have any other questions, but I did, Mr. Hamilton, want to just say that you mentioned that you weren't here on monday morning when we heard the CBC, and I think it is really important to mention that we, the CRTC, have been calling on the CBC to extend both French and English-language services to every province and to a certain population of people within that province, and so it is very much a part of a process.

4335 We had, I think, a very good discussion with the CBC and we also discussed the challenges for us in trying to meet what are a number of different competing pressures and interests and needs in this community which has very few frequencies. So a lot of these discussions are how are we going to try to balance all of this and come up with something that can address as many of those as possible, while acknowledging, of course, that while there isn't a large French-language population it doesn't mean that it isn't important to somehow find a way to get that service here.

4336 So I just wanted to make sure you understood that it is something the CRTC has called upon the CBC to do. So without belabouring --

4337 MR. HAMILTON: As a Canadian I am very proud of that. They just have to get their priorities sorted out.

4338 THE CHAIRPERSON: Thank you very much. Thank you very much.

4339 I think that's -- oh, I'm sorry. Counsel.

4340 Counsel has no questions.

4341 MR. TONY ROTA: Once again, thank you, Madam Chair and Commissioners.

4342 THE CHAIRPERSON: Pardon me?

--- Pause / Pause

4343 THE CHAIRPERSON: We are clear. We have no questions from counsel.

4344 MR. TONY ROTA: Thank you.

4345 THE CHAIRPERSON: We won't actually take our break. I don't know how long it is going to take -- we will take a break.

4346 Take five.

--- Upon recessing at 1518 / Suspension à 1518

--- Upon resuming at 1525 / Reprise à 1525

4347 THE CHAIRPERSON: I think we will get started.

4348 I would like to say that while we are running a little late, we will sit long enough to hear and feel we have fully explored this application.

4349 So we will get started with this and then, at some point, take a short break.

4350 Madam Secretary.

4351 MS VOGEL: Thank you, Madam Chair.

4352 Next on our agenda is an application by Future Radio Inc. for a broadcasting licence to carry on an English-language FM radio programming undertaking at Vancouver.

4353 The new station would operate on frequency 94.5 megahertz, with an effective radiated power of 37,000 watts.

4354 The applicant is proposing an urban rhythm service.

4355 Please go ahead whenever you are ready.

APPLICATION / APPLICATION

4356 MR. STOREY: Thank you.

4357 Good afternoon, Madam Chair, Commissioners. My name is Bob Storey. I have been in the broadcast industry in Canada for a longer time than I care to admit, but most recently in the Lower Mainland as an officer and minority shareholder of South Fraser Broadcasting.

4358 South Fraser was the original applicant licensee for radio stations CISL 650 AM and Z95.3 AM. When, after 15 years, the majority shareholder decided to sell, I found myself without broadcast involvement in the Lower Mainland, prematurely as I thought, and for the first time in nearly 20 years.

4359 Jim McLaughlin, who will address you shortly, a friend and colleague for a quarter of a century, had moved to South Fraser at my instance. It was a coup for an independent to win over such an experienced, highly respected broadcaster. Regretfully, Jim's stay as general manager was short lived, as he left with the sale.

4360 So when Jim approached me about this recent call for new applications, I accepted with enthusiasm. The opportunity to work in radio in Vancouver, with old colleagues and new friends, was too much to resist, especially to work again with Jim, who is the driving force behind this application.

4361 MR. McLAUGHLIN: Thank you, Bob.

4362 I should say a couple of things about Bob -- after all he said some nice things about me -- and he would never say them about himself.

4363 Since his premature departure from South Fraser, as he put it, he has channelled his energies in Vancouver and elsewhere by his abiding passion is his work as a sport volunteer, promoting olympic athletes in Canada and abroad. He is a Director of the Canadian Olympic Association, the only North American President of an olympic winter sport, and he has been recognized as a sportsman and builder as a member of the Canadian Olympic Sport Hall of Fame.

4364 In Vancouver, he serves as a Director of the Vancouver Whistler Bid for 2010 Olympic Games.

4365 Let me introduce the rest of my colleagues. We are a local application. Everyone involved is active in our community or in our industry, or both.

4366 First, on my right, is Vera Radyo. Vera is an expert in multiculturalism and immigrant settlement. She became involved with us because she has identified that local radio done right, in the common language of English, is a powerful tool to bridge cultural differences. She will tell you about the community we hope to serve.

4367 To her right is Ellie O'Day. Ellie is a music institution in Vancouver. I don't think anyone has ever called Ellie an institution before. She has been fostering and promoting local musicians for a long time. Ellie helped design our Canadian talent development program, and you will hear details from her later. We are proud she has chosen to be part of this project. You see, Ellie is a jazz fan of some renown.

4368 Immediately behind Ellie is Matthew McBride, an experienced broadcaster and our programming expert. Matthew will explain how we will program for our community by being out in it every day.

4369 Beside Matthew is Dan McKinnon, a young man who discovered our formal application early on in the process and became an avid advocate.

4370 And Sarah Storey, who has worked on this application for over a year and is now a law student in Halifax.

4371 Beside Sarah is Kaan Yigit, partner with Solutions Research Group, responsible for our format selections, and perhaps more importantly, the Canadian music industry research that is appended to our application.

4372 Behind Kaan is Robert Buchan, our regulatory counsel.

4373 Beside Bob is Mike Calyniuk, our partner and financial advisor. Mike is an accountant with PriceWaterhouseCoopers here in Vancouver.

4374 Madam Chair, I will now begin our presentation.

4375 I believe the Commission has heard quite a bit recently about urban rhythm, or just urban as it is sometimes called. It is a culturally diverse format that is adaptable to local influences and fits hand-in-glove with the diverse community in the Lower Mainland. Later, Matthew McBride will tell you more about our innovative programming plans for Vancouver.

4376 Our application started in the spring of 1998, some two and-a-half years ago, when I began meeting personally with over 50 leaders in both the music and cultural communities in the Lower Mainland. I wanted to get back into my profession. I went into those interviews to reacquaint myself with the issues important to my community and how radio could play a role in providing solutions.

4377 Time and again I was told that it was extremely difficult to explain one's cultural and life practices to the rest of the community, that there were few vehicles to explain the issues and provide understanding across cultural lines. I was also told that young people were the place to start, that they were more open to change, and that young people wanted very much to fit into their new surroundings. Help the young people understand each other better and over time the whole community benefits.

4378 The information I gleaned from those 50-plus interviews resulted in the foundation for this application. It also, happily, introduced me to Vera Radyo and Ellie O'Day.

4379 It became very clear that if I wanted to know what the community needs and wants, I would need an expert to help, and that expert is Vera Radyo.

4380 MS RADYO: Thank you, Jim.

4381 I advised Jim about the rich cultural diversity of the people who live in Vancouver and suggested to him that radio cannot only entertain, but it can also build bridges of understanding amongst people.

4382 This beautiful City of Vancouver is different. It is not Toronto, Montreal or even Calgary. We are no longer mostly European. Each year B.C. receives 35,000 to 50,000 immigrants. Not only do we have a strong Asian influence here, but we also have over 70 different ethnic groups in the region.

4383 Large scale diversity requires us to build bridges of understanding. This is everyone's responsibility. Radio can be a significant tool to influence public opinion and build community harmony.

4384 When a community accepts a mode of communication it confers great power. It can provide a voice for those we do not usually hear from. It can entertain and involve, it can improve the quality of community life.

4385 Radio can link youth of all cultures through their music and their common language. Today in Vancouver for kids, that common language is English. Radio that connects can provide opportunities for youth to talk about their issues as they see them, and not how we adults see them.

4386 I have worked with the Future's team on this application and am convinced that it will benefit this community. I want to be part of The Future.

4387 MR. McLAUGHLIN: Thank you, Vera.

4388 Once we refined our understanding of our community and confirmed the unserved constituency, it was important to do formal research about the music. The message from my interviews with people from the music industry was clear: Play our music.

4389 I contacted Kaan Yigit of Solutions Research and asked him for two separate research pieces: the first to explore music formats in Vancouver; the second to follow up on the airplay of new music and Canadian talent development initiatives in general.

4390 In the first phase of the research we explored music tastes among teens and young adults. There are over half a million teens and young adults in the 12 to 24 age bracket in Vancouver. They are an important group.

4391 Before deciding on which format to put forward, we looked at impressions of different types of music and radio format. The results show that urban music is very popular amongst this age group. In addition, participants in our research told us that only a limited amount of this kind of music is available in Vancouver.

4392 In the second phase we put some of the ideas about the new station to the test as part of a large scale survey that resulted in the following conclusions:

4393 Number one: Core urban styles such as R&B and hip hop are ranked as number 1 and number 2 among teens 12 to 17 and young adults 18 to 24 in Vancouver.

4394 Two: The Future has the potential to become the number 2 ranked station in the market in the teen and young adult demographics, behind 95.3, but ahead of XFM and CFOX. In terms of age profile, the future will predominantly be a 12 to 24 radio station. Eighty-three per cent of the future audience is in this age group.

4395 In summary, our consumer research confirms what we know from CD sales and other independent research. The urban format is the winner among teens and young adults and it is not currently available in Vancouver.

4396 Solutions Research Group also conducted a series of one-on-one interviews among representatives of the Canadian music industry, including major record labels, independent Canadian labels, and artist managers.

4397 Representatives of the music industry told us that their number one challenge continues to be getting access to airplay on radio to introduce and develop new Canadian artists.

4398 They told us that in terms of airplay, established higher profile artists and older Canadian hits tend to take precedence over up-and-comers. They told us in no uncertain terms that new and up-and-coming Canadian artists still face an uphill battle in gaining quality airplay, despite Canadian content requirements.

4399 Participants in this research told us about the importance of increasing the airtime available for new artists. They said that many Canadian talent development initiatives do not have significant impact unless they are supported by meaningful airplay. They also suggested making adjustments to Canadian content rules to allow for greater access by new artists.

4400 With this input from our community and the research on format and music in hand, we were ready to form our programming plans.

4401 Matthew.

4402 MR. McBRIDE: Thank you, Jim.

4403 The program plan for The Future is all about tomorrow's radio listeners. The challenge, to reach today's youth through their common language within the context of Vancouver's unique cultural make-up. Music is the common thread and the format is urban rhythm. The Future will appeal directly to those new, young radio fans.

4404 Beside me is Dan McKinnon, a young man who embodies everything about The Future's program. Dan, on hearing about our proposed format, immediately launched into action mode, collecting more than 300 letters of support for The Future. His actions were completely unsolicited but, as you can imagine, extremely welcome.

4405 He sought out support for The Future from those who are most likely to listen to the station, and the results are astounding. I strongly urge you to ask him all about his experience in this regard.

4406 Our program plan is simple: Play new music.

4407 The Future will play and support local and regional artists, the new and exciting artists that kids love to hear on the radio. But we will present the music with a difference. We are committing to taking The Future to a location within our coverage area every day, from Maple Ridge to Lion's Bay; from Cloverdale to Bowan Island. We will broadcast live from a different location every day of the week. This assures that The Future will know its audience and the audience will know us.

4408 Our total commitment to Canadian content is 42 per cent, with a strong emphasis on new music. But the most exciting component of our music application is that every hour of every day of every week of the year The Future will reserve one playlist position for a deserving local artist who hasn't received significant airplay elsewhere, because airplay is what makes a song a hit and a musician a star.

4409 In summary, the program plan for The Future is: 42 per cent Canadian content; one new local artist every hour, every day; on location in the community every day; a commitment to community news seven days a week; and a music format strongly endorsed by the target audience.

4410 MR. McLAUGHLIN: Thank you, Matthew.

4411 Ellie will now outline our final piece, the Canadian talent development program.

4412 MS O'DAY: I am known to people on the Lower Mainland in the '80s as a radio DJ and music writer, and in the '90s as Executive Director of the Pacific Music Industry Association. Perhaps one of my distinguishing approaches to all of these was to localize them. You always knew what city I was broadcasting or writing from.

4413 I moved on from radio because radio seemed to become frozen in time, even thought the playlists changed. They might have local news, but not local views.

4414 I truly believe that in order to anticipate healthy change in our rapidly changing community, we must reach the youth and begin involving them in its evolution. I wanted to be part of a radio station that would respond to and include the voices of a diverse youth of this community. It is idealistic, but I think it is the only path to a society that can be more tolerant, comfortable with itself, open to a new social order and become a model for the rest of the country.

4415 As Vera explained, diversity is Vancouver's asset. We have a wealth of talent, a heady brew of influences, a vibrant society, unique cross-cultural blends. This is apparent in our cuisine, our fashion, our public face, but nowhere is Vancouver's difference more clearly defined than in its new music.

4416 This radio station is committed to playing new music and we have the responsibility to help create it. I have had the opportunity to work with and even manage a number of Canadian talent development programs representing Pacific Music as an eligible third party. On behalf of The Future I had a chance to draw from all of these and from what worked and what didn't in the past.

4417 How do develop a Canadian talent development program which will directly provide opportunities to talent, give them space to grow, a hothouse, and then provide them with the exposure to be heard? We developed seven initiatives.

4418 Interplay. Drawing from Vancouver's unique strengths we came up with this project which will foster collaboration. It will invite artists to interact with each other, mix and match, and see what interesting works they would come up with. Interplay will invite cross-cultural, cross-genre and cross-stylistic collaborations, acoustic and electronic. A sort of more playful Canada Council kind of a project. Interplay will invest $64,000 each year, underwriting the cost of producing 16 collaborations annually.

4419 That covers production, but production needs exposure and marketing to flourish. As you heard, The Future will expose one new record an hour. These will be enriched by Interplay's very west coast creations. Plus, the recordings will be posted at The Future Web site.

4420 We will also help local artists with invaluable marketing tools by making annual contributions to video production and Web site design. As someone who works currently as a publicist, I can tell you that electronic press kits are becoming more and more important and so cost and time-efficient for both promotion and communication with agents, festivals and broadcasters.

4421 To play our part in sustaining Vancouver's live music scene, we will underwrite the production promotion of one concert per month in our Infusion Concert Series. The artists will be presented professionally, they will be paid like professionals, and will benefit from a promotional on-air campaign and exposure.

4422 Jim McLaughlin is one of the founding fathers of FACTOR and I previously sat on FACTOR's Regional Advisory Board. The Future will make an annual commitment of $27,000.

4423 The Future will give $24,000 annually to Pacific Music, which provides resources for all aspects of the B.C. music industry and excels at professional development for emerging artists.

4424 We will support the Fraser MacPherson Music Scholarship Fund, named for a legendary west coast independent bandleader, with $6,000 annually. Each winter $2,000 scholarships go to successful young instrumentalists to age 25 to be spent to further their musical careers.

4425 We want to make a useful and meaningful contribution to our local talent, and we want The Future to be the station where you hear that talent.

4426 MR. McLAUGHLIN: Thank you, Ellie.

4427 There you have it, a new urban rhythm youth-oriented radio station: A new format, a diverse voice, in touch with its community and out in that community every single day. Forty-two per cent Canadian content in the music and playing one new Canadian record every single hour, 24 hours a day. Over $2 million in Canadian talent development.

4428 This application is respectfully submitted by a team of independent, experienced, well-financed, local radio broadcasters. We understand the challenge, we know our community, and we have the resources and the energy. Most of all, we know what makes Vancouver different and how radio can make a difference for Vancouver's youth.

4429 We would like your permission to be part of that Future.

4430 Thank you.

4431 THE CHAIRPERSON: Thank you very much.

4432 Commissioner Pennefather will question.

4433 COMMISSIONER PENNEFATHER: Thank you, Madam Chair.

4434 Good afternoon, ladies and gentlemen, and welcome.

4435 We will cover some basic areas in your application. As you probably noticed, having following the deliberations for the last couple of days, we go through various segments of the application and there are some specific questions and some broader areas that I would like to discuss with you.

4436 We will look at your studies, which you reference yourself in your opening remarks, Mr. McLaughlin; your programming proposals; your Canadian talent development initiatives, and that includes some questions about the report you included regarding the whole concept of Canadian talent development; and technical questions, which I'm sure won't surprise you.

4437 But stepping back, I would like to start with your supplementary brief, I think it is the third paragraph, in which you say that your goals are: first, to find an unserved audience and, secondly, to design a radio station proposal which derives its identity from the community.

4438 I am interested in those two goals and, as you will see as we go forward, how the two work or not together. I'm trying to determine, and I need your help in doing this, which comes first, to a certain extent.

4439 First of all, let me just ask you to comment on the goal you described as designing a radio station proposal which derives its identity from the community. What does that mean?

4440 MR. McLAUGHLIN: It means that it is important to us to reflect correctly the community we live in, and the best way to do that is to be out in that community and have the community be part of the radio station, the community issues, the community problems, the community successes, whatever the issues may be. So what we wanted to do was to touch the community and have the community be able to touch us.

4441 We didn't want to be on the 20th floor of a downtown highrise. That is the reason we propose the satellite unit that will be out every day, so that our audience will get to know us. They will know who we are and where we are and what we are doing. And they can come and talk to us, and they can also talk to our listeners. So that over time, you know, our whole identity, our whole raison d'être comes out of the community that we are in.

4442 COMMISSIONER PENNEFATHER: Let's leave that there as a general comment and go, then, to the next goal I underlined, which was to find an unserved audience. In so doing obviously we will discuss the study that Mr. Yigit put in your brief regarding the Vancouver radio study.

4443 The community you have come up with, or the unserved market you have come up with, if I daresay, is a relatively narrow one, in other words the 12 to 29 age group.

4444 I think that conclusion, if I summarize correctly from the studies, is the result of questions describing various music choices. I think R&B, hip hop and what you call new music come out as predominantly supported by the 12 to 29 age group. In fact, I think you say 83 per cent of your audience will come from the 12 to 29 age group.

4445 Why have you decided on this definition of the community you are saying you are out there to service. The 12 to 29 age group. Why so narrow a group, if I can put it that way?

4446 MR. McLAUGHLIN: First of all, if I could disagree just slightly, approximately half a million Vancouverites fall into that category. So it is not a super narrow group, if I may say so.

4447 We didn't start out with the preconceived notion that that would be our target. We started out trying to find out where the voids were.

4448 I have been in the broadcasting business for a number of years and it is pretty easy for me to look at the spectrum and see what is missing, if you will, just in an off-the-top-of-my-head sense, from this marketplace, and also what is here.

4449 In very simple terms, the community that we discovered that was crying out for service more than any other was the younger end of the spectrum. I believe that is a result of what has happened with the change in CRTC regulations, on hits versus non-hits, et cetera. It allowed Z95 to move away from the bottom end or the lower age group end of the spectrum and into a pop hit format, leaving unserved the whole new music bottom end, if you will -- now by "bottom end" I mean younger -- the younger demographic.

4450 That is where new music comes from. New music belongs to kids. New music -- now, adults are welcome to enjoy it, but new music belongs to kids.

4451 COMMISSIONER PENNEFATHER: We are covering a number of things so I want to make sure that I follow you.

4452 Obviously what I'm getting at is also your choice of format, and it is a choice which we have heard today and we have heard in other discussions, inclusive of Toronto, because you have focused in on a particular format and also focusing on the 12 to 29 year olds, that that covers a broader audience than the 12 to 28 year olds. In fact, you compare your application to the Milestone application in Toronto, and I will mention that for this particular point. At this time they in fact received a licence for the 25 to 54 age group.

4453 So in coming up with this particular age group, which you say is unserved and yet I think the most successful radio station in this community serves teens and young adults, the very group you are focusing on.

4454 So it is important for us to understand how and why you decided, and it is in this sense that I say the age group is narrow. Because for this particular format we look at other studies and see that in fact it works for, and perhaps moreso with a much broader scope of audience.

4455 So what brought you to the conclusion that for this format this was -- and for this so-called unserved audience, which in fact is served now by perhaps the most successful station in Vancouver, what brought your conclusion together?

4456 MR. McLAUGHLIN: Perhaps we could start, if I would ask Kaan Yigit to start by responding and we will go from there.

4457 COMMISSIONER PENNEFATHER: Mr. Yigit.

4458 MR. YIGIT: Thank you, Jim.

4459 A couple of things. Just going back to the population figures, just to set the context, the 12 to 29 demographic in the greater Vancouver area, which is Vancouver, CMA or, as BBM measures it, central area, is just over half a million, 550,000 as for the latest estimate, and the total population in the area is 1.8 million. So as a percentage of total population we are looking at roughly 30 per cent of the population. So that is number one.

4460 Number two is urban format as it is presented to you. First of all, urban format can have different skews depending on what the music mix actually would be. I think Matthew could speak to that later.

4461 COMMISSIONER PENNEFATHER: I would appreciate it if you did that, because actually your study --

4462 MR. YIGIT: I won't --

4463 COMMISSIONER PENNEFATHER:  -- chooses certain elements of what we understand as urban.

4464 MR. YIGIT: That's correct. And you remember, in fact, that it was -- I was involved with the Milestone application in Toronto, also with the market research there. There are differences between markets in terms of composition, in terms of population composition. So Milestone could do, in the Toronto market, an older skewing urban format and do it well because of the cultural and ethnic factors in addition to everything else.

4465 In the Vancouver market, younger skewing urban is more appropriate, for a number of reasons but the fundamental one being the very significant difference in cultural composition. If you look at places where there are urban formats you will see different flavours.

4466 Now in certain American cities you will see three different urban formats, one that skews very young, similar to what The Future is proposing; another one which is called an urban adult contemporary, which is closer to what Milestone will probably do in Toronto; and another one called dancing oldies, which is skewed -- it is an urban-based format skewing over 45 years of age.

4467 So depending on the market and the market composition, you could choose between those three variations, if you will, of the format.

4468 The second thing is, in terms of the power of this target group of half a million, let me just again put that in context also.

4469 There are 64 million CDs sold in Canada on a yearly basis. Of that, roughly about five million are sold in the greater Vancouver area, just about 8 per cent, and of that roughly 20 per cent, one million are in the general urban genre.

4470 So the demographic itself has this proportionate strength in terms of influencing what happens at the retail scene or in the music scene.

4471 COMMISSIONER PENNEFATHER: So if I understand, you are saying that you described a particular kind of urban rhythm, which is, I think the term you use, urban rhythm, your format. Am I correct?

4472 MR. McLAUGHLIN: Yes.

4473 COMMISSIONER PENNEFATHER: To those you contacted through your study, and you describe it as R&B, hip hop and new music -- what is new music? What does it mean?

4474 MR. YIGIT: Definitions will vary by who you ask the question to, but typically I think most people will agree that it is anywhere between 6 to 12 month period from the release of an album.

4475 Matthew.

4476 COMMISSIONER PENNEFATHER: So a timing description, not a description of the kind of music?

4477 MR. YIGIT: Well, it is two things. One, a timing description, but for the younger demographic it simply means that it is not old stuff, it's not my father's stuff, it is new music, today's music, that relates to me. So it has that kind of interpretation.

4478 COMMISSIONER PENNEFATHER: Did you want to --

4479 MR. McBRIDE: Yes. The definition of new music varies by station. There is no industry standard. From day of release to a station with a youth focus, a new record might only last six or eight weeks or 10 or 12, whereas on a station targeting 25-54, that new record could be 10 to 12 months.

4480 COMMISSIONER PENNEFATHER: So it is in terms of the nature of your audience requires that there be more new music than perhaps some of the oldies?

4481 MR. McBRIDE: They consume a much higher volume of music and therefore you are certainly churning them over.

4482 COMMISSIONER PENNEFATHER: Okay.

4483 So in those terms, then, what you describe as R&B and hip hop, the premise of the business plan and your proposal is based on that kind of music which is not currently available in the Vancouver market.

4484 MR. McBRIDE: Yes.

4485 COMMISSIONER PENNEFATHER: And it is important, then, for me to understand what would draw the young audience from the CKZZ-FM, which is the most successful station in Vancouver for this particular demographic, what would draw them from that station to your station?

4486 I see the young gentleman beside you ready to answer.

4487 MR. McBRIDE: Perhaps you could direct the question to Dan, because he will tell you.

4488 COMMISSIONER PENNEFATHER: That would be great.

4489 MR. McKINNON: Okay. Well, I will tell you what I have been doing.

4490 Upon hearing about the radio station I was very passionate, I was very happy to hear about it because I know so many people in my school that I have met that are very passionate about this type of music that it is just amazing it is not on the radio anywhere.

4491 You will find a little bit on Z, but it will be once an hour and it goes quite typically with music that does not go with rap and hip hop. Like there will be Backstreet Boys or *NSYNC or Britney Spears, but that is something that most of the people don't like listening to and it is very frustrating for them to have to like change the station to hear what they want.

4492 As you heard, it is the number one type of music for this and it is very important to have it being -- you know, have a radio station like that.

4493 COMMISSIONER PENNEFATHER: Where are you and your friends hearing it now?

4494 MR. McKINNON: Well, right now we have to revert to Napster or go through the -- try to listen to it on Z, where it will be played like once an hour.

4495 COMMISSIONER PENNEFATHER: Okay. We will come back to that --

4496 MR. McKINNON: Okay.

4497 COMMISSIONER PENNEFATHER:  -- in terms of the business plan, but I was just curious to know. Because part of the proposal here is to listen to a radio version of that as opposed to downloading the music. As Commissioner Cram said earlier, how we want to make sure that people are actually going to tear themselves away from the computer and listen on the radio.

4498 MR. McKINNON: If it was, I would, personally.

4499 COMMISSIONER PENNEFATHER: Okay. We will come back. Jump in any time.

4500 MR. STOREY: Excuse me, Commissioner Pennefather.

4501 COMMISSIONER PENNEFATHER: Yes.

4502 MR. STOREY: If I might add just a technical answer to your question, which is talking about Z and its control of the marketplace from 12 to 29.

4503 The simple reason is, there is no other competition. What radio stations do is they age. Ten years ago Z was a music station for young people like this. Today it isn't. It is a thing that radio stations do, particularly one on the low end, they move along with their listener.

4504 When they move along with their listener, the people behind them usually don't have a replacement until someone comes along and makes a new application, until we get a new -- or a format correction.

4505 What has happened in this particular market at this time is the moving, which is a natural progression and is very successful, has gone on, and there is no place for the young listeners to go, so they stay there, as we have just heard indicated, kind of part-time. But it is not playing predominantly their music. That phenomena happens always when you have a radio station that starts at the lower end, as it matures and grows older it goes with its listeners.

4506 So those listeners from Z from 10 years ago, those 19 year olds, are now 29 and there is a new group of 19 year olds who are very much different. The program -- the Generation D, if you will.

4507 COMMISSIONER PENNEFATHER: We constantly want to remind us all of the passage of time here.

--- Laughter / Rires

4508 MR. STOREY: I don't like it either.

4509 COMMISSIONER PENNEFATHER: I must say, if it wasn't for music, though, we would -- that is a link, I think, that keeps us all -- at least we all want to mention we are in touch with some of this music.

4510 I am going to keep, though, on a discussion around the audience.

4511 The first discussion was related to a study of the radio market and why you thought this particular audience was unserved for the kind of music that you describe.

4512 There is another way that you approach this through the Radyo Report.

4513 I see that Ms Radyo is with us. I hope I am pronouncing your name properly. Am I? Radyo?

4514 MS RADYO: Fine.

4515 COMMISSIONER PENNEFATHER: This study gives a view of the demographic and social profile of the Lower Mainland and I think you repeated its conclusion in your remarks today, which is that:

"A youth-oriented station should be inclusive in its approach. It should link to a broad range of young people regardless of ethnicity, regardless of culture, regardless of whether they were born in Canada or not." (As read)

4516 Now, obviously I would like to translate that into your choice of format and how the programming is going to really reflect that conclusion.

4517 But perhaps first you could expand a little bit on that conclusion, tell us why you think generally the youth-oriented station will have an impact and what you mean by the all-inclusive approach, from your point of view.

4518 MS RADYO: In taking a look at the youth market that we are talking about, it is important to understand that youth here, you have youth who are born here, youth who have come abroad, youth from a wide range of cultural backgrounds. You can go to a high school in east Vancouver and 90 per cent of the kids will be visible minorities -- or I guess they are the majority, 10 per cent will be caucasian.

4519 And we have a tremendous mix and a tremendous cultural diversity in the Lower Mainland and certainly in Vancouver, Richmond, nearly half the population are visible minority.

4520 So when you have diversity, it is important for all of us, CRTC, community agencies, media, radio, to play our role in building bridges, bridges of understanding, because that is what diversity requires us to do.

4521 So youth are much more open to building bridges, they have grown up with the diversity, they are open to understanding it, and they are more comfortable with one another.

4522 So we see that through the radio station and some of the programming that there are opportunities for kids to talk about the issues that are important to them. They can talk about what it is like growing up Chinese in Vancouver; South Asian kids can talk about advantages and disadvantages of arranged marriages. Kids can talk about, you know, what it is like living in Maple Ridge or Pitt Meadows, that there is really significant opportunity through the community voices, youth voices portion of the radio station and with the mobile van being out in the community to link to that community and build bridges of understanding.

4523 I think it is -- music is a link, and that is the hook that gets the kids there, but then there is more.

4524 COMMISSIONER PENNEFATHER: I will get back to a question when we get to programming in more detail about how what you are saying is a goal for such a youth-oriented station really translates in this proposal, what specific elements work.

4525 But just so I understand, you see this station as -- and correct me if I'm wrong. The point of including this study with this particular application was to say that a youth-oriented station would play a particular role in dealing with providing a more culturally diverse approach to radio.

4526 What is it about the format, the urban format which does that?

4527 MR. McLAUGHLIN: Matthew.

4528 MR. McBRIDE: The format has a broad appeal across virtually all cultural lines within that age bracket. I know it has been referred to earlier in these hearings about the association with a black listener, but our research and the format in general performs well across any demographic spectrum. So if there is a demand there for this type of format, it is not -- it is the format that will reach all of the cultures and subcultures that exist here in the Lower Mainland, which there are 70. It doesn't matter what background you come from, the kids will listen to it.

4529 COMMISSIONER PENNEFATHER: Well, that is important because, of course, your report includes a breakdown of the demographic profile in this community, and certainly as Commissioner Cram and Commissioner Cardozo were discussing earlier, certainly the make-up of this community in terms of its visible minority composition is very different if we compare to the Milestone and the reason why the urban station was granted to them in terms of the format, what that was designed to do.

4530 In this particular instance, it seems to me, that you are looking at a format which attracts youth primarily.

4531 MR. McBRIDE: Correct.

4532 COMMISSIONER PENNEFATHER: And as a second step, you feel that this particular music, kind of music, which however -- correct me if I'm wrong -- is different from the urban music selected by Milestone will also have cross-cultural diversity.

4533 MR. McBRIDE: There are three very distinct types of urban music format and, yes, this is the youth-oriented one.

4534 COMMISSIONER PENNEFATHER: And that is very different from the kind of youth music -- the kind of music that young people 12 to 29, which is a pretty big span, are listening to right now. It is totally different?

4535 MR. McBRIDE: I hate to sort of rely on statistics, but I have a representative of an urban chart from radio and records. This is an industry standard type of reference chart and it is based entirely on airplay. I cross-referenced that with the published report from Z95 for Saturday, the 11th of November, and out of the 30 songs on each chart there are only two occasions of the same song appearing.

4536 That can be difficult to understand, but CHR, or a Z95-style station, is a station that plays a song when it becomes a hit, regardless of what genre it is, whereas urban format is a genre in itself.

4537 That is the difference between formats. That type of ratio of cross-occurrence of song is pretty consistent across Sound Scan sale charts as well.

4538 COMMISSIONER PENNEFATHER: Okay. I think we will come back to it when we talk about specifics in programming, because I still have trouble getting the goals straight of whether the choice is one that deals with a different format because that attracts a certain audience 12 to 29 or because you see music as bridging cross-cultural differences.

4539 That is why it is important to understand the specifics of the kind of music you are dealing with and the programming approach you are taking and the approach you are taking to assuring cultural diversity in the management and in the presentations of the station.

4540 If we look at this, though, from another point of view, which is your choice of demographic, your choice of formatting in regards to your revenue and audience share projections, I just have a couple of questions in that area too, which were outlined in the August 21 deficiency letter.

4541 In that letter in your response to a question you say that the station will achieve 70 per cent of its tuning in year one. It is the August 21st deficiency letter. I think you see a 12 share in the first year, but going to 17 by year four.

4542 That is pretty quick in terms of achieving that level, 70 per cent of your tuning in year one. I wanted to know what factors will allow Future to reach this goal so quickly.

4543 MR. McLAUGHLIN: The popularity of the music style and the fact that it simply doesn't exist in the marketplace now and the very high demand the research shows for it.

4544 COMMISSIONER PENNEFATHER: Did you want to add something?

4545 MR. YIGIT: Yes. And I just wanted to actually bring a little bit of context too.

4546 We have an independent transmonitor on music that my firm actually produces and we have been tracking different formats since 1996. Appeal of urban actually doubled between 1996 and 2000 among teens and young adults. So part of it is simply that.

4547 Secondly, any youth-oriented radio station takes off typically much faster than an adult-oriented radio station. Just to give you an example, when KISS changed formats in Toronto, they start at 3.5, 4.5 and now they are, within a year, 8 share points. Virtually doubled. So that trajectory will be fairly --

4548 COMMISSIONER PENNEFATHER: And you feel you could repeat the same access to the market as -- obviously that speed of -- that dominance, shall I say, of the market is what concerns us in terms of your ability to achieve your level of audience share in so quick a time.

4549 MR. McLAUGHLIN: Well, I have been involved in broadcasting in this community since 1977 and so I feel we have a pretty good grasp of this community and how we can perform in it.

4550 My simple answer is, yes, I am very confident that we can reach and in fact exceed the targets. I feel they may even be conservative.

4551 That being said, we have built some cushion into all our plans and certainly aren't concerned about weathering a slight under-performance of some kind.

4552 COMMISSIONER PENNEFATHER: That was my next question.

4553 If you did not achieve that level in year one, let's say you achieved 50 per cent of that level, what would be the impact on your business plan?

4554 MR. McLAUGHLIN: There would be very little impact. You will note in our business plan that we don't, at any point in the plan, draw down our credit line with the bank for example, nor do we use rather a substantial reserve of cash that we propose keeping available to us. So that if our audience share does not perform as we feel it will, that will translate into slightly lower sales, but we have the cash reserves to compensate.

4555 COMMISSIONER PENNEFATHER: I was going to come to that question and I will just ask you to elaborate a little bit more in this sense, that indeed if the share is not what you planned, the revenues will be affected. And you predict relatively high revenues by year five compared to other applications.

4556 Now you, if licensed, would be a new player in the industry. We have information regarding certainly your experience, you and Mr. Storey in the radio sector, but I would appreciate it if you would elaborate on the previous radio experience of the management team and the owners of Future, which we don't have as much information about and it is related directly to your point in terms of --

4557 MR. McLAUGHLIN: All right.

4558 COMMISSIONER PENNEFATHER:  -- the capacity to absorb the losses that may or may not occur.

4559 MR. McLAUGHLIN: I am the General Manager and will lead the management team.

4560 Matthew McBride is our Program Director. Matthew is a long-time broadcaster. We worked together at Z95 and CISL a number of years ago. Matthew since that time has held senior management positions in two or three stations across the prairies. Matthew can comment on that further, if you wish.

4561 Our Sales Manager, unfortunately, I must keep confidential, but you have my assurance that our candidate for sales manager is exceptionally competent.

4562 And we have Mr. Calyniuk from PriceWaterhouse as our accountant, and he was our accountant at Z95 and CISL historically, so we have him to keep us on the straight and narrow.

4563 COMMISSIONER PENNEFATHER: So if revenues and ratings are lower than anticipated, you could be required to sustain additional cash shortfalls in the early years. Should this happen, are the owners and lenders ready to invest additional funds?

4564 MR. McLAUGHLIN: Yes.

4565 COMMISSIONER PENNEFATHER: Thank you.

4566 I think at this point, Madam Chair, if we wanted to take a break, I am about to go into Canadian talent development, so this would be a good time.

4567 THE CHAIRPERSON: Right. We will take 15 minutes.

--- Upon recessing at 1618 / Suspension à 1618

--- Upon resuming at 1635 / Reprise à 1635

4568 THE CHAIRPERSON: We will continue.

4569 COMMISSIONER PENNEFATHER: Thank you, Madam Chair.

4570 MR. McLAUGHLIN: Commissioner, I wonder before you start, during the break we had a chance to caucus a little bit here on our side and I have to confess I'm a little bit of a slow starter. So I wouldn't mind us trying another run at answering your first couple of questions which I don't think we did a very good job of because, frankly, I don't think I understood the question.

4571 So if I may --

4572 COMMISSIONER PENNEFATHER: By all means, but I also wanted to -- let me clarify too that they are going to come back. They are like a framework for everything in terms of the goals of the station. In fact, I was going to come back and ask Ms Radyo a couple of other questions, just so that we go through her report a little bit more before we go to Canadian talent development.

4573 Please, go ahead.

4574 MR. McLAUGHLIN: Thank you.

4575 You will recall in the presentation, I mentioned that i had spent some considerable time and conducted over 50 face-to-face interviews in the community. When I did those interviews, I did them from everybody, in terms of age group, from kids to adults, even people my age, and I did it with musicians and I did it with community leaders and I will call it social agencies, that sort of thing.

4576 The message I got from everybody, from the music side I got the message very clearly that urban was the new direction in music, if you will. I also got it very clearly that you needed to play new music on the air for it to succeed. So those were kind of the two issues that I learned there.

4577 When I went into the community side of my interviewing, I got back a really simple message, and the message was that people who need service are younger, the younger end of the spectrum. And the reason that they said they needed the service was they needed to learn to communicate and interact and become part of the larger Vancouver community, because it is so diverse they needed that spokesman for them and for they viewpoint and what ties them together, of course, is the music. That age group likes that music.

4578 So after spending some time ruminating on that, I called Kaan Yigit and I said, "Kaan, this is what it is in this market. I mean, that's the direction, there is no question in my mind". And he said to me, "You're wrong". And I said, "Well, you better come out here, because I am not wrong".

4579 Kaan.

4580 COMMISSIONER PENNEFATHER: How brave of you.

4581 MR. McLAUGHLIN: Well, perhaps I didn't say "wrong", I just said, "Well, gee I wonder".

--- Laughter / Rires

4582 MR. McLAUGHLIN: We did some exploratory research prior to preparing the quantitative study that is filed with the Commission, simply because Jim approached us with the target in mind of the underserved or the general parameters in mind, and then the issue became: Well, what format within each group has the highest potential for tuning.

4583 My initial scepticism also stands from the fact that I used to -- I was actually involved with Z95.3 in the early 1990s doing research and wasn't quite sure what the station sounded like, but knew that it actually had a fairly significant younger demographic with its listening base. So that was the basis.

4584 We came out and did a series of focus groups, representing literally a microcosm of the age group in Vancouver. And we did a number of different things, I mean, the fundamental one being we actually had montages of different radio stations, existing stations and possibly new stations, and asked them which ones they liked most. It's a fairly common radio-format type of research idea.

4585 But not only that. The second set of questions was, "Okay, well, I know you like that, but do you actually get this on the air and is there a station like it in Vancouver?".

4586 So the clear winner -- the fact that the urban style or genre wasn't a big surprise, but what was actually surprising to us was the margin by which it was winning, so the strength of the sentiment as to how strong the potential format is.

4587 We have heard stories of kids congregating in friends' houses to watch BET, which is not even available on cable in Vancouver, it is available via StarChoice. We also heard of kids trying to wire up their houses to pick up KUBE, which is a rhythmic urban-style station in Seattle.

4588 So that gave, in essence, the context, or provided the context for the follow-up study. And the research results in that context were not a surprise whatsoever.

4589 Again, I want to make the distinction obviously that this is a younger-leaning urban format as opposed to what you have heard, for example, in Toronto. There was another one in Calgary, probably also younger-leaning because of the difference in demographic composition. But urban format currently has no peer in terms of popularity among young people in Canada, no matter which market you go to.

4590 To add one final point to this. The question was raised as to how Vancouver ranks in terms of interest in urban compared to Toronto or Montreal.

4591 It is very competitive. It's not as -- again, Toronto being what it is is slightly different, but Vancouver is stronger than, for example, Montreal. It is stronger than many other major markets and the rest of Canada.

4592 So it is up there in terms of its potential for the format.

4593 COMMISSIONER PENNEFATHER: Thank you, that has been very helpful. Yes, you have understood my question and that's why I asked it.

4594 There is a combination of things here before we get to the stats and the very important steps that Mr. Yigit and others have to take to put the business case together before that.

4595 Your interviews and your interest in this proposal had to do with an assessment of not only what the music was about, but the voice which you just mentioned is missing.

4596 Why I wanted to go back to Ms Radyo's report was that we don't make assumptions about what the voice looks like and sounds like right now -- and I am not just talking about music, I am talking about who we are talking about.

4597 So I wondered if you could -- and following right from your point, Mr. McLaughlin, about the youth profile, the younger end of the spectrum, which covers a fair age group, but nevertheless if you could just tell us a little bit more from your report -- and there is a reason this report was with your application, was to define this audience, this segment of the population as people as opposed to also audience share and other terms like that.

4598 What are we talking about? Tell us a little bit more about the profile of the youth that you feel -- the youth component, the spectrum of this Vancouver area and why you feel radio and this radio proposal will do the things you say are needed for the youths of this community?

4599 MS RADYO: I want to preface that my background is not at all in broadcast. My background is in community and in multiculturalism and I work for and with various community agencies.

4600 So the profile of the youth in the Lower Mainland is reflective of the general demographic profile. As I mentioned, we have significant immigration. Generally we get about 20 per cent of Canada's share of immigration, compared to about 13 per cent of our population. So we have a significant percentage of people who were not born here, who have immigrated from other countries.

4601 Eighty per cent of our immigrants come from Asia, from the various, you know, China, Hong Kong, Taiwan, India, Vietnam, Korea, and 80 per cent of those immigrants settle in the Lower Mainland.

4602 So in terms of youth, certain parts of the community have clusters of certain ethnic groups, like there are more Iranians in North Vancouver. In Richmond, there is a very strong Chinese, Asian population. In Surrey, there is a very strong Indian, Punjabi population. But all the Lower Mainland is very mixed. And you notice that diversity more predominantly in Vancouver and maybe a little bit less so in some of the far outlying suburbs, but it is there.

4603 So with young people, they are growing up with diversity and it is something that they -- it is just a fact of life for them. When we talk to young people -- and we actually have some of our young intervenors who are in the audience here today and they are just dying to tell you, and will get the opportunity next week, about why they think that this particular music format is what their age group wants.

4604 These kids are amazing. They have surveyed, on their own initiative -- they heard about this application and they surveyed 200 kids in east Vancouver in their neighbourhood and they are preparing a program for you. But they are dying to tell you why this music genre is what really appeals to them.

4605 And they and other kids have told us that there really is no public forum for them to talk about their issues as they see them and not how we adults see them. They don't want their teachers, their youth workers, their counsellors talking about the issues. They want a format for them to be able to express their issues.

4606 They are really excited about the mobile band that will be out in the community every day, because it is not just something they listen to on the radio station, they can actually see it and touch it and they can meet the people and they can interact.

4607 Jim has said to kids, "You know, we will give you this half hour. You produce it". Kids are really excited about that, and technology makes that possible.

4608 Young people have also told us that they want a youth advisory to help deal with how the programming might happen and who might get what time and various other aspects of the station, and Jim has agreed to a youth advisory committee.

4609 So I don't know if I answered your question.

4610 COMMISSIONER PENNEFATHER: Yes, thank you, you did, in the sense that I think I would like to go into the specifics of the programming elements as well. But before we get there it was important to understand the portrait that you see of the youth and why Mr. McLaughlin discovered what he did in his interviews and follow up in a more specific study in terms of the voice, the diversity. Of course, we will be interested in seeing how that translates into programming.

4611 MR. STOREY: I wonder if I could just add a little to that --

4612 COMMISSIONER PENNEFATHER: Sure.

4613 MR. STOREY:  -- because I was struggling.

4614 When we were speaking the other night and Vera had explained a lot to me about how the dynamics of this particular community had changed, and then I was talking separately with Matthew, and what I asked them to do was saying, "Okay, I'm an old guy and I understand radio and I do understand a little bit about these trends, but explain to me how radio is going to work and how it isn't going to be just somebody talking about doing programs for kids and how is the voice going to work. What is going to happen?"

4615 We started out and I ended up being told about a typical class of 18 year old kids, 17 year old kids who will be 18 when this radio goes on the air.

4616 In this class of 20 kids, 15 of them probably did not come from Vancouver originally, five of them were born here. Of the 20 kids, perhaps 12 different cultures were being represented. Of those, maybe 10-11 or all 12 are of different colour.

4617 So what happens is, in that community they have the interest of the school, they have come, recently some of them, as close as three or four years or two years, others have been there a longer time, and they have a community of interest in their music and what they do out of school. So the radio that plays their music is a shared thing.

4618 They have lots of problems culturally because they have the baggage of their parents and grandparents, if you will. They are in a new location, a new situation, but they listen to the same radio station. If that radio station goes out into the community, using its spoken word portion of the radio station, goes to the kids and says, "We are not going to do a program about you. We are not going to ask that experts talk about you. What we are going to do is give you what you have shown you like. You are the programmable generation".

4619 For the last 10 years every kid that has been around and growing up knows how to program his own life. He knows how to program his cell phone, he knows how to program the computer, he knows how to program all the stuff that we don't remember how to do or never learned. They know how to do it and they do it as a matter of rote.

4620 They also participate in things that were never 10 years ago. In television, for instance, the Speaker's Corner phenomenon where kids will go on and say, "I'm going to be part of a program. I'm going to go in and I'm going to talk quite comfortably to a little hole that has a camera behind it. I'm going to say what I think. I'm going to express my point of view and I'm going to do it in my timeframe. That's a 30-second sound byte. If I don't like my neighbour, if I don't like my teacher, if I really like a rock star, if I'm really happy about an award I have won, I'm going to do it in 30 seconds and then I'm going to go away, but all my peers are going to see that or all my peers are going to hear it".

4621 That is the kind of programming that we want to do and that is what we mean by being out in the community. And that is why the van is important, because if we can get the kids to participate that way, and if we can reflect that in the programming rather than doing a program about them, maybe it's a kid who has a problem, who says, "I don't know what to do about this,they are picking on me at school, bullying". It's a 30-second shot, he gets it. He is anonymous, but it's on the air.

4622 The programmers when it goes back into the studio, when Matthew gets a hold of it, he has four or five of these, he blocks them together. Then he can go out for the experts, the community people who will give a 30-second sound byte back telling that kid what they can do or what they can do in general. What you don't do is a program about an issue where it is all experts or are talking heads.

4623 That's what we mean about the spoken word part of the outreach. But the music is the bridge, the music is the commonality. A 14-year-old kid who comes to Vancouver, by 18, whenever he comes from, he's a Vancouverite first and he is interacting with a whole bunch of different cultures, and they are changing all the time. They are evolving more rapidly I think here than in many places.

4624 So he is a Vancouverite first, he is a Canadian second, and if he had a hyphen, that comes last, after just a few years. And the commonality of the English language, the commonality of the music, allows you the chance to go out into that community and reflect the community to itself.

4625 COMMISSIONER PENNEFATHER: Thank you.

4626 MR. STOREY: I'm not going to talk too much more. That's about all I can do.

4627 COMMISSIONER PENNEFATHER: No, we are here to get to the bottom of things, but also to not only understand the goals but some specifics.

4628 And I'm going to change my mind, I'm going to just wait a minute on Canadian talent development and continue, since you are discussing it, on programming, and just ask some specifics about the programming spoken word component, just to complete the picture you have drawn.

4629 If we look at local programming, which is described in Schedule 5 of your application, I have a few questions.

4630 How many hours of locally produced programming do you intend to air over the course of the broadcast week?

4631 MR. McLAUGHLIN: Commissioner, attached to our spoken brief is an Appendix 2 which contains a chart on this subject which might help the discussion.

4632 COMMISSIONER PENNEFATHER: I have that. I just wanted to confirm how much is locally produced and how much is not locally produced.

4633 MR. McBRIDE: The entire program is locally produced.

4634 COMMISSIONER PENNEFATHER: Thank you.

4635 You have also proposed a focus on news -- and this is why I wanted to get to this question -- news that targets a youth market dealing with issues of concern to youth. I think this is page 177.

4636 MR. McBRIDE: Yes.

4637 COMMISSIONER PENNEFATHER: How will you determine what are youth-related issues?

4638 MR. McBRIDE: Many of the youth-related issues are the same issues that involve adults but their perspective on it is different.

4639 I have a couple of examples that will illuminate that concept.

4640 One of them is a recent civic strike here in Vancouver where the bulk of the city services were suspended for a number of weeks and there was garbage piling up on every street corner, and that's an adult issue. Taking out the trash is for grownups. And you heard about that on every newscast, but what you never heard on those newscasts was that the swimming pools were closed, and the skating rinks were closed, and the facilities for youth services were closed, but you wouldn't hear a thing about it on any radio station in this market.

4641 The other example is the issue of gay and lesbian clubs in high schools, which is a very hot issue in the Surrey school district right now. Over the course of this discussion, which has been going on for some time, we have heard from every expert on earth, we have heard from every trustee, every hopeful trustee, and every parent they could round up. But in my recollection, I haven't seen a single high school student represented in the media discussing that issue. That is how our news will be a little bit different.

4642 COMMISSIONER PENNEFATHER: Will you be having young people as part of the team through your mobiles, and so on? How will you get that?

4643 MR. McBRIDE: Well, they will certainly provide the commentary for the news, when we are looking for the opinion component of the news. Rather than speculating or calling in an adult to interpret the situation, we will be physically in the community so the ability to get a response from the community exists every single day.

4644 COMMISSIONER PENNEFATHER: My question was related to perspective. As you know, we had a phrase some years ago, "It matters who makes it", in other words perspective is part and parcel of who is holding the camera and writing the script, and in that sense we discussed earlier the diversity of the youth, not just your young, but your young from a variety of backgrounds.

4645 How will you maintain a balance of information with such a diverse society? How will you ensure that in fact the news is also reflecting that diversity?

4646 MR. McLAUGHLIN: Commissioner, I'm an old newsman. I started in the business in news. And I can assure you that our station will cover the basics and the bases at all times. Things like the American election and things that are more adult-focused are still of importance and interest. They may not get the scope, in other words we may not dwell upon them, but they will indeed be reported.

4647 The same is true -- the easiest example I can use is the sports area. While the adult radio stations talk about the B.C. Lions football game or the Canucks hockey game, yes, we will give those scores, because the kids like football teams too, but what we are going to cover are the high school basketball games and the high school football games, university games, those sorts of things which no one touches.

4648 COMMISSIONER PENNEFATHER: I appreciate that comment although you might have done better to mention the Montreal Alouettes this time.

--- Laughter / Rires

4649 THE CHAIRPERSON: Oh, not so fast!

--- Laughter / Rires

4650 COMMISSIONER PENNEFATHER: See everywhere, but it has been a while.

4651 But I was really after a slightly different point. Let me ask it a slightly different way as well. You say, on page 173 of your application, that:

"Our intent is to hire staff that accurately reflects the multicultural make up of the Vancouver market". (As read)

4652 And on the same page, you say:

"The Future staff will be strongly encouraged to interpret events according to cultural influences and viewpoints and we will work towards providing the isolated communities with a common voice in Vancouver". (As read)

4653 I was also asking the question on this line: How will you specifically and concretely assure that staff reflects the multicultural nature of our society and that what we hear, yes, from both a youth and adult point of view, but also reflects the multicultural diverse society which you have laid out as one of the bases for your proposal?

4654 MR. McLAUGHLIN: One of the sort of happy results of all that time I spent in the community doing those interviews is that I now have contacts throughout that community, and indeed, I guess you could say I have made promises to a number of people out there, that I would do exactly what you are talking about.

4655 But I have the ability to go back to those people when it is time to hire, and go back to all those contacts, and get access because many of those agencies act as employment counselling for their people and whatnot. So that is one source.

4656 There is also -- let me just make an overall point first.

4657 We have to reflect the community we live in in terms of our staffing. We need people on staff to go to. We need to be able to go to somebody on staff to ask them about their community and about their culture and those sorts of things. If we don't have that access, we can't ever hope to reflect it back to our listenership community. So it is a very important consideration.

4658 So one of the things we did to help us with this is we went to BCIT. Now, I didn't realize that Brian Antonson from BCIT was going to do a presentation to you at the beginning of this hearing but, in any event, we went to BCIT because, first of all, it is a wonderful organization and does a really good job of training young broadcasters, but, frankly, I wanted a leg up on his graduates.

4659 So we went to him and have made an agreement with him that we will provide them with airtime if they provide us with two different programming features, one of them which will run Sunday evenings, which is a two-hour music formatted show done by their students, and my stipulation to them was that it is music that is not heard on any radio station, including ours, in the Lower Mainland.

4660 The other program we offered them is a one-hour program Sunday mornings. They have their own in-house radio station at BCIT and they produce a full day's programming every day. They do a one hour, noon hour news package, news and information package. I have asked them to -- each week I have allotted one hour to them to either run the best of the previous week or a cut and paste of "the best of" from all the week. So in that way we stay in touch with the younger market and we get staff.

4661 COMMISSIONER PENNEFATHER: Thank you.

4662 Obviously, as you know, over the last couple of days we have been discussing employment equity with certain companies who have more than 100 employees that are under federal regulation. In your case, I am interested in any specific employment equity plan that you may have for the four designated groups, both for on-air presence and for staffing.

4663 Also part of my question was the results, then, in terms of what is heard and what is presented on-air will be presented by a diverse staff.

4664 MR. McLAUGHLIN: We don't have an employment equity plan to sort of hand to you at this meeting, but we have all operated under employment equity plans in the past and we will certainly have one in place before we hire. We will go on-air with a full representation in the four points in employment equity.

4665 But I will go further than that. Because of the visible minorities, the large amount of visible minorities in this community, we will work particularly hard in that area because we benefit from it. We want the cultural influences inside our organization.

4666 COMMISSIONER PENNEFATHER: Thank you.

4667 MS RADYO: If I could just add. The employment equity is something that I have sort of worked with a fair bit and a lot of people can work the numbers game, and in this station we are looking at something that is much more. It is not a numbers game, it is a true reflection. And also ensuring that the environment is welcoming and supportive and nurturing to people of all cultural groups and all diversities that are present. As Jim mentioned, we have good connections with the B.C. Coalition for People with Disabilities, First Nations groups, multicultural agencies.

4668 We know where to find a broad sector of people and the environment that we will create in the station, through training, through the organizational culture, will be one that will be modelled in the community and a true representation of diversity and diversity at its best.

4669 COMMISSIONER PENNEFATHER: Thank you. Very, very interesting.

4670 As Commissioner Cram said the other day, we are also listening, but are also regulators so sometimes we need some specifics. This is a competitive process and those specifics are important to us.

4671 Speaking of which, we will move on to Canadian talent development.

4672 I have a number of questions, but I guess we will start with the study, Perspectives on Canadian Talent Development in Radio, a study which brings out a number of important points.

4673 I guess we could reiterate in summary that the research tells us that the three main challenges facing record labels, artists and their managers in the development of new Canadian talent, is: finding space to introduce and develop artists; airplay access on radio and shelf space at retail; competition, that is breaking through or getting noticed in a fragmented, highly competitive music market; and financial resources, having access to financial resources substantial enough to properly promote and develop new Canadian artists.

4674 You also, I believe, in doing these interviews and came up with some interesting comments on Canadian talent development per se in terms of the Canadian development initiatives in radio as they currently stand. I think, as mentioned in your opening remarks, some of the comments coming back said that some artists, managers, whomever was interviewed, could not really point to any specific so-called Canadian talent development initiatives.

4675 Fundamentally, if I'm correct in interpreting your report, it's airplay. Bottom line, airplay and promotion.

4676 I would like to know what your conclusions are from this report. First, generally, and then in terms of your own initiatives, what this report has meant, and what you expect us to take away from this report. Because it comes up with some conclusions that should give us some reflection, I think, and I'm wondering what you think we should conclude from the report and then we will get back to how it has affected your own approach.

4677 MR. McLAUGHLIN: I'm going to ask Kaan to answer the first part of that question, if I might, because he is better at interpretation of things like this than I am.

4678 MR. YIGIT: Thank you.

4679 As you noticed in the appendix to the report, we covered, in our interviews, the range of representation regionally, in terms of size of company, Canadian, multinational, artist management, major international labels, spoke to people in various areas within these organizations, marketing, radio-television promotions, A&R, artists and repertoire, and sales.

4680 In the case of smaller Canadian labels, in particular, most of the people we spoke to were CEOs of the organization, as well as, of course, involving the radio promotions and carting the records over to retail because they are in fact small in size.

4681 But the fundamental thing that came out -- and if you look at the interview schedule at the back, you will see that it was a very general interview. There was no leading anything. We just asked point blank the first question: What are some of the main challenges facing you as an artist manager or as a major label rep dealing with radio or sales?

4682 So basically what came out was again, in that sequence, the three points you have read, the self space concept came out as number one, which is slightly counterintuitive considering the fact that Canadian content quotas are now raised to 35 per cent in Canada.

4683 But basically what they were saying is, without radio airplay -- which, by the way, works better if there is video -- you don't really stand a chance in building our artists.

4684 Not only that, it is not just simply airplay. There are two components with this: quality of airplay, which is typically defined as when something is played. And then quantity of airplay. So we had people, as you read in this report, saying, "Well, if it's a few spins at 3:00 a.m. that is not going to do anything. You have to have both. You have to have the commitment".

4685 The second layer of this was the importance for building new artist careers, the importance of having shelf space for them, specifically. So the issue then for Sarah McLaughlin, Bryan Adams, the Tragically Hip, Our Lady Peace or some of the bigger names, some of the up-and-comers, are now competing with a fairly large group of Canadian artists.

4686 What do you take from this? The context of the exploration was to see what would come out in terms of radio's role in Canadian talent development, and I think what it ties into is the commitment that Future makes in terms of setting out separate distinct shelf space for new Canadian artists.

4687 That is the linkage, I think, that is the take away from this piece that Future applied to its plans.

4688 COMMISSIONER PENNEFATHER: So there is an impact of this, then, on the normal course of doing business and the role of the radio station in that regard as far as developing Canadian talent, and then there is the Canadian talent development initiatives as per the CRTC's guidelines 91-11 and 95-196 in terms of what is and isn't acceptable as direct and indirect Canadian talent development.

4689 It is the combination of these which I had some concern to try to straighten out in terms of what it meant for your proposals.

4690 So perhaps I could ask you, if we went through the proposal specifically it would help us to understand what the theory translates into and how your approach ends up.

4691 Just as a starter, I found that Schedule 4 was a more detailed layout of your proposal than the application itself, that is to say the supplementary brief. And the deficiency letter of, I think, August 21st, gave a little bit more detail.

4692 I have to clear one thing up first. Your Canadian talent development initiatives are $300,000 a year over the seven years, and they include the $27,000 to FACTOR, to the C&B plan. Is that correct?

4693 MR. McLAUGHLIN: Yes. I was in Calgary, and like an unnamed Commissioner, my math isn't real good.

--- Laughter / Rires

4694 COMMISSIONER PENNEFATHER: Now, who would that be?

4695 MR. McLAUGHLIN: I'm sworn to secrecy.

4696 But that number should read $301,000, because I originally submitted $26,000 for the FACTOR --

4697 COMMISSIONER PENNEFATHER: I saw that.

4698 MR. McLAUGHLIN:  -- and it was supposed to be $27,000. And that was my error.

4699 COMMISSIONER PENNEFATHER: I thought the $300,000 was $27,000 because of the -- but is the $27,000 over and above the $300,000 or is it included in the --

4700 MR. McLAUGHLIN: It is included in.

4701 COMMISSIONER PENNEFATHER: All right. So $301,000. Thank you.

4702 Now, the $26,000 -- 27,000 is what it should be -- is it going to FACTOR?

4703 MR. McLAUGHLIN: Yes.

4704 COMMISSIONER PENNEFATHER: And do you have any agreement with FACTOR regarding the use of this initiative, inclusive of perhaps support to local talent?

4705 MR. McLAUGHLIN: No, I don't.

4706 If I could back up a little bit and explain that in a little more detail. When we were doing our Canadian talent development project I started with the research that I asked Kaan to do, that you have been discussing with him. The reason I did is, when I was out doing the interviews and talking with the music industry in Vancouver I found out a number of things.

4707 The first was, they kept telling me to play the record. And I finally got smart enough to ask them, "What does play the record mean?". They told me, "It means don't play it once or twice. You have to put it in what people seem to call medium rotation", meaning some numbers 16, 17, 18 plays a week. And they also told me, "You have to play it other than at 11 o'clock at night or 2 o'clock in the morning. So I picked that up.

4708 You need to understand that I am an original -- there were four of us who originally founded FACTOR, and I am very proud of FACTOR, but I heard something when I was out in the community that disturbed me greatly, and it was this: The music community in the Lower Mainland -- and please understand I am generalizing, I admit that -- but the message I got was that: We in Vancouver don't get our fair share. It is a long way to Toronto where the decisions are made and we don't get to play.

4709 Now, I am not telling you that that is a true statement, but I am telling that is the impression abroad in the land, in the Lower Mainland. In radio we have a saying, "Perception is reality".

4710 So I was kind of upset about that and that is actually what led me to ask Kaan to do the research on Canadian talent development initiatives, because I came to the conclusion that I couldn't give the bulk of my money, the $2 million, to FACTOR. I wouldn't be doing justice to the musicians in the Lower Mainland.

4711 COMMISSIONER PENNEFATHER: That's why I asked you, do you have an agreement with FACTOR that in fact that portion itself could come back here.

4712 MR. McLAUGHLIN: No, I don't. I wanted to give FACTOR something, so I simply went with that portion.

4713 Now, I must also tell you, a little bit in my defence, when I was a director of FACTOR we did not allow monies to be targeted and so I didn't even know at the time I put all this together that you could target. I don't know that I would have, but I didn't know you could.

4714 COMMISSIONER PENNEFATHER: The $2.1 million, then, let's go on to what you have defined as Canadian talent development over and above that. Again I am keeping in mind the study and all along we want to make sure we understand why you are proposing certain projects as Canadian talent development as we, the CRTC, understand it and the rules around that, and how that relates to what you would do in the normal course of business, particularly with the outlook that you have on the importance of Canadian talent development per se.

4715 I just want to make one factual check with you. There was a way that the supplementary brief was written that could lead to some confusion. There is only one $2.1 million fund. Am I correct?

4716 MR. McLAUGHLIN: That is correct.

4717 COMMISSIONER PENNEFATHER: And that is broken down into the various projects.

4718 MR. McLAUGHLIN: Yes.

4719 COMMISSIONER PENNEFATHER: There was a small way you could read it that there was a fund and there was then all the projects.

4720 MR. McLAUGHLIN: I apologize for that.

4721 COMMISSIONER PENNEFATHER: The reason perhaps that that reading could have been made was the discussion of the committee which is proposed. You refer to a committee which will guide the overall direction of what you call the new fund, which is why there may be some confusion.

4722 So you are talking about a committee to guide the overall direction of the various projects: Interplay, Future Infusion, video production, Web site development, scholarship fund, music, specific music, industry and FACTOR -- not FACTOR.

4723 What is their role -- I have several questions -- who will select the members and how long is their tenure. I will start with that.

4724 MR. McLAUGHLIN: I'm going to turn this over to Ellie, but before I do, Ellie will chair the committee. Her background is in music. As we said in the introduction, she ran the Pacific Music Industry Association here in Vancouver as its Executive Director for a number of years, and in fact Ellie was one of the creators of the organization. So she is closely in touch with the music scene.

4725 The reason for the committee, the fundamental reason for the committee, is to ensure that the money goes to artists. We don't need to put money into infrastructure. We don't need to give consultants money or whatever. We want artists to get this money, and that is Ellie's first mandate.

4726 Now I will turn it over to Ellie.

4727 COMMISSIONER PENNEFATHER: Thank you.

4728 If you could start, Ms O'Day, then, with a description of the committee which appears to govern all the projects.

4729 MS O'DAY: Primarily the committee would be overseeing -- which were the first four that I described, because the others are donations to existing established organizations. So those are just direct contributions.

4730 What the committee would really look after is the interplay, the concert series, the video production and the Web sites, which are the marketing initiatives for artists to further their own careers.

4731 A lot of this came out of the work that I did at Pacific Music. In my introduction, I mentioned what I did in the '80s and the '90s, but what a lot of people here don't know about me is my degree from the '60s is actually in cultural anthropology, primarily folklore and ethnomusicology.

4732 When I was at Pacific Music, that is when I started to notice how the city was changing and, just briefly, one of the things that opened my eyes is that I volunteer for the YWCA and I mentor young women, and they primarily pair me, and other women who volunteer for this, with the daughters of families who are immigrants to the city. And it is a way to orient the young women into the city and also give them some exposure to a professional woman and what professional women do.

4733 But that opened my eyes to the composition of our high schools when we go to school concerts, and so on. So I started to realize that a lot of infrastructure that we had in Canada, which includes such things as the conferences that we have annually, like the Music West and Canadian Music Week, to me really address an industry of 20 years ago almost. They really weren't addressing the community that I lived in.

4734 So I made a lot of initiatives when I was at Pacific Music to try to meet the rest of the community. They weren't participating. And I don't think it was because we didn't have anything for them, I think we had lots of services for them, I think they just had never met us before, and I think people just don't access opportunities when they just don't know about them.

4735 So I started to make those overtures into the community and that is what exposed me to this. And also in the first meeting that I had with Jim is what I told him about the city as well.

4736 One of the things that is particularly unique about Vancouver and the music community is that that is one of the places where I found lots of integration at the professional musician level, not the emerging musicians but those who are well involved, whether they are touring internationally, many of whom are also participating as working in the school system, presenting programs in the schools.

4737 One thing that is unique to Vancouver -- and I have asked these musicians if they find it anywhere else and I have yet to get a response that is positive really -- is that there seems to be this real appetite for cross-cultural interplay, which is where I got the idea for this Interplay program, where people from many cultures get together and form musical groups. Some of them are ad hoc, but many of them have become more formalized.

4738 Let me just give you a couple of examples. One locally is a group called AZZA(ph). AZZA has four members, one musician from China, one from France, one from South America and one who is a native Canadian fellow who happens an ethnomusicologist as well, and they make a kind of music that I can't describe other than using the inclusive term world beat or world music.

4739 Another one comes to mind, Azuma Taiko(ph). By the name of it, it infers that there is a Japanese drum element to it. But there happens to be a black African-North American percussionist in that group and sometimes a flautist that plays with that group. Another Chinese group I know works with an Italian composer.

4740 These kinds of things have been going on in the community and I think they are one of the key elements that have really opened the eyes of this community to the richness that is here.

4741 So one of the initiatives that I first brought to Jim was this idea of Interplay which was, and I described as my little playful Canada Council project --

4742 COMMISSIONER PENNEFATHER: Could I just interrupt?

4743 MS O'DAY: Yes.

4744 COMMISSIONER PENNEFATHER: Sorry to interrupt you. I was going to ask you about Interplay, but before you get there I had asked about the committee that is going to oversee all these projects. It is important to get a sense of who they are, what their mandate is, have you chosen the committee, how are you going to maintain some continuity?

4745 I am concerned because -- I sound like in the movie theatres when they say, "If you have a concern, please call". I have a concern.

4746 This committee will have the freedom to create new programs or to change the course of existing ones. So you can understand, before we get started in the various programs we would have to know, if you are getting a licence on the basis of certain initiatives, that those initiatives aren't going to change and that the Commission would have to be informed if they did.

4747 MR. McLAUGHLIN: If I could quickly add, with the concurrence of the CRTC.

4748 COMMISSIONER PENNEFATHER: That was not here, so I thought it was important to check that.

4749 MR. McLAUGHLIN: Fair enough.

4750 COMMISSIONER PENNEFATHER: But also it gives us certainly a view of Canadian talent expenditures that would be changing -- au fur et à measure -- as things go forward. So it is important that we understand that the committee is there to oversee, but there would be a more rigorous set-up in those terms.

4751 How many people would be on this committee, Ms O'Day?

4752 MS O'DAY: We haven't firmed up an exact number, but I find, having run juries in this city for a number of organizations, including having been a representative for FACTOR here, that a jury has to have a minimum of five people.

4753 COMMISSIONER PENNEFATHER: It's a jury?

4754 MS O'DAY: A jury. A group that would be overseeing this, just to be functional. It needs to have a minimum of five people, perhaps up to 11. I find that a manageable group in order to really have some dialogue.

4755 In the same way I would pull together a jury for any funding program in the arts, is to look at a cross-section of people. We are looking at involving somebody who is a musician, somebody who works for a record label, somebody who produces concerts, somebody who may be a record producer, just so that we ensure that we have a real cross-section of the people who work in the industry and different perspectives.

4756 COMMISSIONER PENNEFATHER: Now, is the cost of this, administrative costs, connected to this committee in the projects themselves or in general administration, or where is it?

4757 MR. McLAUGHLIN: It's in the administration. Nothing comes out of the fund for the artists.

4758 COMMISSIONER PENNEFATHER: If we get back, then, to the projets, the one you call Interplay, which I think you describe as a playful Canada Council project, and I will tell you ahead of time what my questions are so that you could focus on that.

4759 You call them collaborations so it would be important to understand what that is.

4760 Again, back to how do artists get involved? Do they apply or are they chosen randomly? Could you give us specific examples, which I think you were about to do.

4761 How will it be set up?

4762 And will it end as a CD or a live concert?

4763 MS O'DAY: First the collaboration. Somewhat in the groups that I described a lot of these start as ad hoc or informal collaborations where people just have an idea to get together and share some of their music. I think a lot of that generated in the professional community because folk festivals really encouraged that sort of thing and that is why we are finding it quite active in our world music community.

4764 I do find that that is beginning to penetrate into the younger emerging musicians that are coming out because they are hearing a lot of these groups now performing as more formal groups.

4765 My idea was to provide the resources for young people to initiate these kinds of projects. I keep hearing about young people having ideas to do these things. Often they don't know recording studios or often they just don't have the financial resources, or they may have a general idea but really need some input from some professional producers or musicians to help them realize some these ideas.

4766 So that is what I mean by collaborations, is bringing together people that will help them actualize the idea that's in their mind.

4767 COMMISSIONER PENNEFATHER: So would that be a concert or a CD in the end, or would it just be a jam session or a getting together or a training session?

4768 MS O'DAY: The idea is to actually put it on-air on the station.

4769 COMMISSIONER PENNEFATHER: On the station.

4770 MS O'DAY: I'm going to back up a little bit because of your comments about CDs.

4771 I managed quite a number -- over seven years I managed Canadian talent development projects for other stations in this community because of my role at Pacific Music. We were the acting third party. Throughout those years people who were involved, the young competitors, either volunteered comments, or sometimes I would talk to them as a postmortem, after we had each year's competition, and repeatedly I heard a couple of comments.

4772 One was that many musicians find very little appeal in public competitions. They don't really feel like they like battling it out with each other.

4773 There was a comment in this morning's paper about the SOCAN Songwriters Award and they said that Sarah McLaughlin and Amanda Marshall were battling it out for number one. Well, that's a media term, but artists don't like to be winners and losers. That's not what the artists are about. So they really wanted to get away from the contest part of things.

4774 The other thing I found about the CD was often the resulting product from these competitions. There are a couple of problems with what happens to those after the fact, not with the CD in itself. The CD in itself would become a sample CD that the artists could use for their own promotional purposes. Beyond that nothing much happens with them.

4775 Some of the stations may highlight one track or two that might be appropriate for airplay on their station. No other station in the market would ever touch another station's CD. It's just one of those proprietary kinds of things.

4776 The thing that disappointed me was, some of these companies are larger national companies and these were not even shared with their affiliates in other cities, which I found really unfortunate.

4777 So I found that a lot of the participating artists were underwhelmed about the idea of being on one of these CDs because they felt they really didn't go anywhere.

4778 COMMISSIONER PENNEFATHER: So let me be clear, Interplay, though, is not for established artists, it is for young --

4779 MS O'DAY: Emerging artists.

4780 COMMISSIONER PENNEFATHER:  -- emerging artists, I understand, and that the committee would have some kind of selection process.

4781 The music that you were describing as you went through this, is it the music that we described, discussed earlier as what will be the urban rhythm format of the station? It sounded much broader than that.

4782 MS O'DAY: It is, and that is where we are trying to introduce the participation of the community because we do already have some instances of -- I'm going to call it delicious crossover, because that's what it is to me. Bhangri was brought up in the last interview with the last group and that is certainly one of the areas where we are seeing some younger emerging artists in this market.

4783 There is quite an undercurrent of crossovers with urban music and Latino in this market, which is another growing sort of segment of the immigrant population.

4784 The Asian groups that are here have been working with some of the Latin musicians and some of the dance artists in town, again to put together these mixtures of music. One of the reasons that we said that urban is one of the most sort of malleable kinds of formats is because it does sort of take a little -- in a chameleon sort of way, it does take on other colours and flavours so that it can start to incorporate some of those influences. What we would like to do is just give play to some of those influences in this marketplace to give it a little bit of that unique sound.

4785 COMMISSIONER PENNEFATHER: One of the reasons I'm asking is not to try to put things in boxes, but rather we have to be clear. We discussed at length earlier what kind of music we were aiming at for this proposal, and we also just discussed this question about what artists really wanted and that is airplay.

4786 So if you say to me that Interplay is designed eventually for airplay, there has to be a connection there somewhere in terms of the choices that are being made. I understand the need for playful projects, but I'm trying to fit the two together and one of the main questions is your report.

4787 Are we after promoting the station or are we after promoting the artists? There is the connection that throughout all of these I am interested in your comments on. Because, I'm not making a value judgment here, but it is going to be airplay because that is what artists are looking for, that is your business.

4788 MS O'DAY: Yes.

4789 MR. McLAUGHLIN: Let me, if I could, back up a little bit and talk about another project that ties directly to this, and that is our 42 per cent Cancon.

4790 COMMISSIONER PENNEFATHER: Thank you.

4791 MR. McLAUGHLIN: The 42 per cent Cancon -- now this explanation I hope I'm up to explaining it because it can get confusing. But let me try to explain it this way: We are going to play 35 per cent Cancon as required like everyone else does. But our research told us something we could do for the Canadian music industry was give shelf space, if you will, airplay, to new Canadian artists.

4792 We feel our mandate is to be predominantly local, because after all we are a Vancouver radio -- or we hope to be a Vancouver radio station, so we should support our community's artists. So we intend to be predominantly local.

4793 We have offered, or put in place, one airplay selection every hour for new music. That allows for approximately seven new artists to be on the air at any given time, receiving a rotation of 17, 18 plays a week. Now, the math can get a little confusing, so --

4794 COMMISSIONER PENNEFATHER: We will leave it to Commissioner Cram then.

--- Laughter / Rires

4795 COMMISSIONER PENNEFATHER: Staying away a little bit from the math, I thank you for bringing that up. It was important too.

4796 I didn't have the question because it was explained quite clearly, but it speaks to the point I'm trying to make through this, is we, in the end, have to look at what is "Canadian talent development" --

4797 MR. McLAUGHLIN: That's right.

4798 COMMISSIONER PENNEFATHER:  -- as we now set it up and as we have our guidelines, and what you are planning to do as part of your normal course of business in terms of development of Canadian talent in the area of urban rhythm music.

4799 If I could, through again describing another couple of projets, if we could come back to this point, questions on the Future Infusion concert series.

4800 You have described the promotion of a concert series as part of your CTD initiatives. Would these concerts be simulcast live on the station or rebroadcast to air at any time, or is this strictly a promotional venture?

4801 MR. McLAUGHLIN: Some would go on-air live, some wouldn't. I mean, you don't know what the circumstances are.

4802 Let me back up a little bit and give you the fundamental reason for this particular proposal.

4803 The new young artists can get airplay, and airplay is terrific, so we are going to give them airplay. But they, like us, need to touch the community and the community needs to be able to come and touch them. And so in order to give them the exposure that they need to make their careers grow, we propose the concert series. And each concert will have three or four or five, depending, of the artists we have been giving new music airplay to so that our audience can go and see them and touch them and hear their music live and help build that career.

4804 So it is a synergistic kind of thing in building the careers of these new young artists.

4805 COMMISSIONER PENNEFATHER: Are these just Canadian artists, or other artists as well?

4806 MR. McLAUGHLIN: Yes, they are solely Canadian artists, predominantly local.

4807 COMMISSIONER PENNEFATHER: Now, you have given us a cost breakdown of that in your deficiency letter.

4808 If I move on to the video production, there is not a cost breakdown in the deficiency letter and I wonder if you could provide us with a breakdown of the costs associated with the video production initiative?

4809 MS O'DAY: We actually identified that as two music videos based on, actually, the MuchMusic budget. So I didn't do an individual breakdown. I used that as a basic guideline, the VideoFact program. I used their basic budget breakdown as a foundation for a typical music video for a new artists.

4810 MR. McLAUGHLIN: We can supply a copy of that budget, if you desire.

4811 COMMISSIONER PENNEFATHER: Yes, I would appreciate that, because as in other breakdowns it is important we see what is included. Because some of the elements, such as on-air promotion, are normally indirect Canadian Talent Development Guidelines 91-11. So it would be important.

4812 MR. McLAUGHLIN: There is no on-air promotion in the budget.

4813 COMMISSIONER PENNEFATHER: Okay.

4814 Now, still on this video production, you have stated that your committee, which we discussed earlier, would adjudicate submissions for funding of video productions and would then forward payment to eligible artists upon receipt of invoices for production once completed.

4815 Given the high costs associated with the production of music videos, does distributing the funds on a cost-recovery basis limit access to this funding to artists who are already established, rather than helping out new artists who are less likely to have the funds readily available before production begins?

4816 Could you explain why you feel this would be the most effective way of distributing these funds for video production?

4817 MR. McLAUGHLIN: I think the answer to that question is: We shouldn't have written it that way. It wasn't our intention to block anything out. I think someone got caught up in prose.

4818 COMMISSIONER PENNEFATHER: Well, it is in your supplementary brief and again not clear.

4819 MR. McLAUGHLIN: I know the background to it is a concern that when you are dealing in that much money that the money be spent on its intended project.

4820 COMMISSIONER PENNEFATHER: Yes.

4821 MR. McLAUGHLIN: So what we didn't want to do was get in a position where we got a phone call from somebody that said, "Send me by 30 grand". We wanted to be sure that it was paying bills to actually accomplish what we were trying to accomplish.

4822 I'm quite happy to remove that stipulation and take the administration in-house, as it were, and that is not a problem for us.

4823 COMMISSIONER PENNEFATHER: Thank you. And you will provide breakdown of costs, just so that that project is clearer.

4824 MR. McLAUGHLIN: Yes.

4825 COMMISSIONER PENNEFATHER: The Web site development -- Web sites, I should say. There are a few questions here.

4826 You mention your Web site development initiative would provide grants to artists whose work would be hosted on the Web site. Would these grants be available exclusively to recording artists or could these grants be allocated to other artists, for example Web designers?

4827 MS O'DAY: The artists are the music artists, but they would have to get somebody to design a Web site, and it is to cover their costs of having the design done on their behalf. But the idea is to give them, the music artist, a marketing tool to reach their audience and any other people.

4828 I know, I work as a publicist so I am using that kind of format these days very often for getting out information to booking agents and all sorts of things these days. So it is not just to reach their audience, but also to use it as a promotional tool.

4829 In other words, today we use electronic press kits in many ways to get out information. So it is on two behalfs, directly to your fans, and also directly to the business people in media.

4830 COMMISSIONER PENNEFATHER: I would like some clarification on another point, and this may be connected to it.

4831 You are committed to the development of two different sites, as I understand the deficiency letter.

4832 MR. McLAUGHLIN: Yes, that's correct.

4833 COMMISSIONER PENNEFATHER: And this brings us a little bit back to the discussion we were having with Mr. McKinnon about music and where we hear it and where we get it.

4834 The two sites, one is developed, devoted to the promotion of your station --

4835 MR. McLAUGHLIN: That's correct.

4836 COMMISSIONER PENNEFATHER:  -- and its activities, including audio streaming of the station.

4837 Can you please explain why your proposal to stream your station on the Internet should be accepted as Canadian talent development and not seen as promotion and a normal cost of doing business?

4838 MR. McLAUGHLIN: It's not proposed as Canadian talent development, Commissioner.

4839 COMMISSIONER PENNEFATHER: Okay.

4840 MR. McLAUGHLIN: The Web site proposal that is proposed as Canadian talent development is solely to help artists produce their Web sites to promote their careers.

4841 COMMISSIONER PENNEFATHER: That's important because you have one listing called Web site development at -- Web site development, $420,000.

4842 MR. McLAUGHLIN: Yes.

4843 COMMISSIONER PENNEFATHER: So is that $420,000 --

4844 MR. McLAUGHLIN: That is the artistic Web site that --

4845 COMMISSIONER PENNEFATHER: The one site. Not yours, but the second one.

4846 MR. McLAUGHLIN: Nothing to do with us.

4847 COMMISSIONER PENNEFATHER: Just back to your site for a moment, will it be different programming or duplication of what is on the air?

4848 MR. McLAUGHLIN: I am going to ask Matthew to get involved here. He is our dot com billionaire in waiting.

--- Laughter / Rires

4849 MR. McBRIDE: Well, thank you, Jim.

4850 COMMISSIONER PENNEFATHER: We wish!

4851 MR. McBRIDE: I believe it was submitted in our deficiency letter, our radio station plans for Web site development has two specific sites. One of them is a site that every commercial entity in the world seems to have right now, which is a presence on the Internet. We will stream our program as produced and have all the bells and whistles and gongs.

4852 The second one is a Web site that is devoted entirely to playing the new acts that we are working with in the Vancouver area. In other words, it will be a 100 per cent Canadian content radio station.

4853 It will be Internet only, unless you are handing out a ton of licences. It will not be branded according to Future. We will create it as a completely separate brand that will stream nothing but local talent.

4854 That could turn out to be regional because you can't turn away somebody from Sicamous.

4855 COMMISSIONER PENNEFATHER: So there is the Web site that is the station's Web site that is being streamed on the Internet as is, as you would hear it on the radio.

4856 MR. McBRIDE: Yes.

4857 COMMISSIONER PENNEFATHER: There is a second Web site which is focused on promotion of Canadian talent.

4858 The costs in the deficiency letter, do they relate to both or just to the second Web site?

4859 MR. McBRIDE: Just to the second Web site.

4860 COMMISSIONER PENNEFATHER: So the $21,000 capital and the annual operating $36,000 is just the second Web site?

4861 MR. McBRIDE: That is devoted entirely to the 100 per cent Canadian content local artist Web site.

4862 COMMISSIONER PENNEFATHER: And about the second Web site, would artists be charged for the hosting of music and/or promotional items at this Web site or would it be free service?

4863 MR. McBRIDE: The artist will not bear any cost in the operation of that Web site.

4864 COMMISSIONER PENNEFATHER: You mentioned that 50 per cent of commercial and promotional airtime on this site would be offered to those artists who have their works appear on this site.

4865 What would the other 50 per cent consist of?

4866 MR. McBRIDE: Well, our anticipation is that it would be picked up by people who were presenting those acts in a nightclub, for instance. A nightclub that might be bringing an act in might also wish to pick up some advertising on the site where the artist is being featured, and for other general revenues.

4867 We don't know what sort of commercial interest this site is going to have.

4868 COMMISSIONER PENNEFATHER: Okay.

4869 But this is the Web site you call Canadian talent development at $420,000.

4870 MR. McBRIDE: No, not at all. None of those figures are included in our Canadian talent development initiatives at all.

4871 COMMISSIONER PENNEFATHER: I think they are listed -- certainly there is Web site development listed as one of your Canadian talent development initiatives.

4872 MR. McBRIDE: That is for the artists' Web site, not this one.

4873 COMMISSIONER PENNEFATHER: That's the one I'm talking about, the second Web site is called the Artists' Web site.

4874 MR. McLAUGHLIN: Commissioner, maybe I can help you here.

4875 We have two separate issues that we have, unfortunately, between us mixed together.

4876 In our Canadian talent development program, we have set aside a total of $420,000, that is $60,000 a year, to allow artists to set up their own personal Web site for their act, I'm going to call it, to promote their career and their records or CDs or whatever. That is part of helping build -- our help to build their careers.

4877 Now, as an entirely separate issue, the station will have two station Web sites, nothing to do with these artists' Web sites. On one of them we will stream the station, much as everybody else does. On the other one we will run another mini radio station, if you will, that will be entirely Canadian and it will feature all the Canadian acts, frankly, that we can find, but certainly the local acts.

4878 We intend to give them half the advertising space on that Web site to promote themselves, and the other half we -- get ready for it -- we intend to sell. Now, I don't know anybody who has ever sold it, but we are going to give it a try.

4879 No one has quite figured out these Web sites and how to make money from them and stuff, so this is really our experiment.

4880 We were asked for the financial breakdown. It's not a lot of money, but we think it's worth the experiment. But it's an entirely separate issue from our Canadian talent development support.

4881 COMMISSIONER PENNEFATHER: Okay.

4882 Piecing it all together, because the deficiency letter largely describes what I think is Future's second Web site. Am I correct?

4883 MR. McBRIDE: Yes, that is correct.

4884 COMMISSIONER PENNEFATHER: The Schedule 4 Web site development describes:

"...a grant for artists of $15,000 towards design, including graphic and sound design and interactive elements, which will be hosted at the future Web site." (As read)

4885 Whose future Web site? Yours?

4886 MS O'DAY: This will be more in the form of links to our Web site. I think that is the clearest way to -- this is more giving out four grants for artists to have their own personal group, whatever, Web site developed as a promotional vehicle personally for them, but it would be hosted from our site.

4887 I mean, they could have as many other links obviously to many other sites as well, but every Web site has to be hosted somewhere.

4888 COMMISSIONER PENNEFATHER: But this hosted Web site for the artist is Future's -- are they connected, then, to Future's second Web site? Is that the host one, just so I'm clear? That's the one that is described as not streaming.

4889 MR. McLAUGHLIN: No, it would be connected to Future's own streaming Web site because that is where their music is being played.

4890 COMMISSIONER PENNEFATHER: Okay.

4891 And the questions I was asking regarding Canadian talent and 50 per cent commercial airtime was related to the second Web site. It has nothing to do with these grants we were just talking about?

4892 MR. McLAUGHLIN: Nothing whatsoever.

4893 COMMISSIONER PENNEFATHER: Okay.

4894 MR. McLAUGHLIN: I'm sorry to create the confusion.

4895 COMMISSIONER PENNEFATHER: Well, I think you will agree with me that between Schedule 4 and the deficiency, the deficiency described what I assumed would be the host for the grants.

4896 The Fraser MacPherson Scholarship Fund, you have proposed it contribute $6,000 a year over the licence term to this initiative. We note that is a third-party fund that is used to distribute scholarships to young instrumentalists under 25 years of age.

4897 Could you tell us a little bit more about this organization or provide that information with some specific examples of who benefits from these scholarships?

4898 MS O'DAY: I can certainly answer that.

4899 The fund is in its seventh year. It was founded by Pacific Music Industry Association and some members from the AFFM local and it was established actually while Fraser was still alive. He passed away in the year that the organization was founded.

4900 The initial fundraising, I believe, brought in -- and this is while I was at PMI -- brought in four scholarships. Since then, with fundraising there have been a minimum of five $2,000 scholarships given out every year, and fundraising continues and has actually in the last year approached a number of broadcasters to take an opportunity to make a donation to the Fraser MacPherson Fund with Canadian talent development dollars as a way -- because the money goes directly to the artists. It is always a $2,000 cheque.

4901 The process is that applications are invited for November deadlines every year. They are adjudicated by the music community, by professional musicians. It is based on the actual performance. This is not a songwriting competition, it is not a band competition, it is about the individual musician. It is about developing your playing ability.

4902 And the results over the past six years have been pretty well split between students of classical music and students of jazz music. There have been some applicants, and actually it seems to be increasing every year, of people coming from pop, rock, folk areas, and that definitely seemed to increase in the past year.

4903 So that to me says that the word is getting out beyond the formal music teachers, which seems to be where the word is spread initially, is those people who are involved in the professional music community.

4904 So we are hoping, by involving the station with it, to grow the information as well. In other words, get the word out to a much broader community to apply for these.

4905 COMMISSIONER PENNEFATHER: Thank you.

4906 Just as a general question on Canadian talent development, and wrapping it up. As you can see, we go through in some detail so that we are satisfied that each initiative is truly following the guidelines of Canadian talent development. Should the Commission find that any elements or any of these projects are not Canadian talent development, will you direct those resources elsewhere?

4907 MR. McLAUGHLIN: Absolutely.

4908 COMMISSIONER PENNEFATHER: And could you give me some idea of where those resources would be directed?

4909 MR. McLAUGHLIN: They would continue to be directed to artists and, more specifically, to urban music artists in the community.

4910 COMMISSIONER PENNEFATHER: Thank you.

4911 I am going to turn to frequency questions, which we frequently seem to ask. I'm sorry, it is getting late in the day.

--- Laughter / Rires

4912 COMMISSIONER PENNEFATHER: That was bad.

4913 However I don't wish to make light of the question. It is rather a fundamental and important part of our discussion.

4914 As you know, other applicants wish to use the frequency 94.5 in Vancouver. One of these applicants is the CBC, which proposed to use that frequency for its la Chaîne culturelle transmitter.

4915 You have not proposed an alternate frequency or any alternate frequencies that might be suitable for either your application or for the CBC.

4916 Have you or your engineering consultants conducted studies to find alternate frequencies that could possibly be used in Vancouver either for your application or for the CBC and, if so, what are your findings?

4917 MR. McLAUGHLIN: No, we have not conducted such studies. 94.5 is the best frequency available. And it is not just market demand and numbers, but the CBC's proposal doesn't seem to us to be the best use of the frequency.

4918 We are small independent broadcaster, and while we know we can compete in serving those half a million young people we need every advantage a good signal would give us and, therefore, we feel we are the best choice for the frequency.

4919 A gentleman by the name of Doug Allan is our engineer and did our engineering brief for us, and I believe he will be appearing before you maybe tomorrow -- I can't remember my timing -- and I'm sure he will be happy to answer any further questions, but that is as far as I can go.

4920 COMMISSIONER PENNEFATHER: So if for any reason 94.5 in Vancouver were not available, would you be able, ready and willing to use another frequency, if one could be found, for your proposed FM station?

4921 MR. McLAUGHLIN: The short answer is yes, but it would make our job competing as the little guy in the market considerably more difficult.

4922 COMMISSIONER PENNEFATHER: Would you be willing to use an AM frequency?

4923 MR. McLAUGHLIN: No, we would not.

4924 COMMISSIONER PENNEFATHER: You responded that you were the best choice for 94.5. I would like to go back to that question and offer you a chance to sum up and tell us why, in fact, perhaps in a little more detail, you are the best choice for the 94.5 frequency?

4925 MR. McLAUGHLIN: All right.

4926 We are an independent, well-financed broadcaster with a sound business plan. We are an experienced local broadcaster who knows his community and its needs. The 12 to 24-year-old group is the most underserved demographic in the Lower Mainland and our proposed programming, spoken word and music, provides what they want. Our programming spoken word and new music is distinct and adds to the diversity of radio voices in Vancouver.

4927 Our commitment to be out in the community will ensure that the unique evolving cultural diversity of Vancouver's youth will be reflected in every aspect of our programming. We will play 42 per cent Canadian content, including one new Canadian record every hour of every day.

4928 Thank you.

4929 COMMISSIONER PENNEFATHER: Thank you.

4930 Those are my questions, Madam Chair.

4931 THE CHAIRPERSON: Thank you, Commissioner Pennefather.

4932 I believe Commissioner Cram has a question.

4933 COMMISSIONER CRAM: It is almost a philosophical question.

4934 I noticed the distinction between the formats that yourself and Focus have been talking about, and what I see, I see a dichotomy in your application which is that, on the one hand, you are commercial and you want to make money, and you are looking for the underserved demographic and, who knows, the demographic you found may in fact have more disposable income than the demographic Focus found, because they are 15 year olds and they apparently do now have more disposable income.

4935 Also the second aspect that I find very intriguing, which is the sociological, the psychological issue of the sort of uniting factor, the bridging factor and developing, hopefully, a new generation of -- not to say, Dan, that you are not tolerant -- but developing a generation of Canadians that don't just consider it political correctness but are truly tolerant.

4936 Do you think that even with an older demographic the urban format would have that same impact, the sociological/psychological impact?

4937 MR. McLAUGHLIN: No.

4938 Maybe I could describe it this way: Let's take two families, each with a kid. The grandparents don't speak English, or maybe a little bit. They are from two different cultures, these two kids. Their grandparents don't get along, don't have anything in common, don't see each other, or anything else.

4939 If you move down to the parents of those same two families, and they can communicate and they likely do business together. They don't likely socialize, but they do business together. Move down now to the kids and they are at McDonald's having a hamburger and fries and listening to urban music.

4940 That is the fundamental issue, change comes in the younger demographics. I will only speak for myself here, no one else in the room, but, you know, when you get a little older you get a little set in your ways.

4941 COMMISSIONER CRAM: Thank you.

4942 I actually had one more question.

4943 When you talk about one new song every hour, you don't really mean that. You mean how many original songs per week on a rotation of 16 times?

4944 MR. McLAUGHLIN: Approximately seven. I mean, it is going to vary between six and eight, I think.

4945 So if you look at it this way, there are 126 hours in the 6:00 a.m. to midnight. If you divide that by 18, you get seven -- or at least I do.

4946 COMMISSIONER CRAM: So in every week, there will be six to eight new original selections, one of which will be aired hourly.

4947 MR. McLAUGHLIN: Correct.

4948 COMMISSIONER CRAM: Thank you.

4949 Thank you very much.

4950 MR. McLAUGHLIN: Every hour, including the evening show, afternoon drive, the whole thing,

4951 Also through the all-night show. I mean, we never tend to talk about the all-night show, but we intend our programming to be kind of seamless all the way through. So we will do the Canadian and the new music in the all-night show as well.

4952 COMMISSIONER CRAM: Thank you.

4953 THE CHAIRPERSON: I believe Commissioner Cardozo has a question.

4954 COMMISSIONER CARDOZO: I have a quick also semi-philosophical question.

4955 I just want to seek your thoughts or guidance to us on this. We have heard over the last three days at least three genres of music -- smooth jazz, classical music and urban music -- who all have put forward very convincing cases that the genres are not played enough in this market and the artists from this market don't have enough access to airplay.

4956 So my question to you is: Why do you think -- what suggestion do you have to us as to how we should pick one of the three that would be most deserving, if there were only one FM. And do you think your format or any of the others may happen through a market process, whereby an existing FM might convert to one of the three formats which would, in a sense, take it off our plate?

4957 MR. McLAUGHLIN: All right. I'm going to get two or three people to help me answer this, but let's start with the market process.

4958 Classical, the market will not go there. It is a very marginal format. The Commission is well aware that there are stations in a few cities that have had some success after a really tough go of it. So no one is going to quickly or easily flip formats into a format that will give them less return, likely, than what they currently have.

4959 To go to the smooth -- oh, by the way, before I say anything more, all three formats, if you had three licences to give out, there is no reason not to licence all three. Let us be really clear about that -- but you don't, and I am aware of that.

4960 If we go over to the smooth jazz, it is an adult contemporary format, mainly background music. It is instrumentals and a lot of that. It is a format I looked at. It does not serve the size -- it does not meet the needs of the large un-met younger audience, the un-met needs of the younger audience, but it is an AC format -- we used to call it easy rock.

4961 That kind of format has been around and it has morphed into smooth jazz, and it is a very listenable format for very well-served people. That age demographic has a number of radio stations in this town, all the way from talk, various forms of talk into various forms of music.

4962 I have lost my train of thought, now. I apologize.

4963 Am I answering your question?

4964 COMMISSIONER CARDOZO: Your station being as deserving as you say it is, and as badly needed, why would another existing player not just flip into an urban music format?

4965 MR. McLAUGHLIN: It's interesting you asked the question that way. Let me see if I can answer you.

4966 There were two opportunities in the past short period of time for a station to do that. One was the Rogers station when Rogers bought Star and changed -- it's now called XFM, that is how they refer to it -- and they went new rock, which is just a totally different direction.

4967 I was very fearful, because keep in mind -- they did that last -- don't shoot me, January? It might have been February.

4968 I can assure you, I was tightly tuned to my radio when they went on the air because I had been working on my application for a year at that point, pretty near. I had a year of my life invested in it, and I thought, "Oh, boy, here it goes".

4969 But they didn't go there. I can't put words in their mouth and certainly Ted Rogers hasn't called me and told me -- I believe they went that route because of the demographic fit with their other stations in the market.

4970 When you are a multiple station owner, the demographic fit between your stations is really important in your ability to generate substantially increased sales. In other words, you start to control certain areas. You can hike your prices, good thing from my viewpoint, not from the advertisers'. So that decision was made on grounds different than the kind of market forces. They are trying to create their sales strategy out of the positioning of their radio station.

4971 The other one that changed did so just this past week, and that was CFOX. Now, CFOX didn't really change. They did a re-launch of themselves. CFOX was the rock FM station. And just so you know, I was involved with CFOX. Bob and I both, as a matter of fact, had a hand in getting the call letters for the FOX originally when it was launched as a rock station.

4972 The FOX aged. Remember earlier we were talking about that issue of the audience aging? Well, the FOX got to the point -- I don't mean to be flippant, but I guess their audience got so old they died or something.

4973 The real issue is that FOX has taken their station back to their original beginning. So their heritage is 30 years as a rock icon in this community. They chose not to walk a way from that.

4974 COMMISSIONER CARDOZO: But just back then to your application, you are basically saying you don't think anybody else is going to do it.

4975 MR. McLAUGHLIN: No, I don't. I don't think they are at all.

4976 MR. STOREY: Can I just add a little bit to that?

4977 From a strategic standpoint, it is not just a matter of flipping, it is what you give up when you flip, and for someone to move into a genre which is at the bottom end of an aging radio station is a big risk if you already have an established audience. You have to think about it.

4978 That is why in most situations -- and Z, when we were involved in that earlier on, most situations a new voice comes into the marketplace with a new applicant and a new way, otherwise you get permutations of existing voices.

4979 MR. YIGIT: If I could add one point?

4980 This afternoon I just looked up the latest fall of 1999 BBMs and I found 16 originating stations from Vancouver accounting for 88 per cent of total hours tuned. So that is 5.5 share points per station on average. So you could flip a coin, pick a format, on average you will get five points.

4981 Now there are 12 share points not accounted for by local stations.

4982 So to add to Jim's point earlier, you could possibly have two stations, one seven share, one five share, to take that 12 without even going into existing stations. Of course, it doesn't work practically that way, but the point I am making is Vancouver has a large market, 1.8 million people. Relatively speaking the number of signals compared to major North American markets isn't really substantial. What you find in terms of niche format diversity, the larger the number of stations in any market you go -- you go to Philadelphia, there are 25 stations, there are three variations of urban, because the smaller the pie gets the more if it in your best interest to specialize in something that is narrower.

4983 So the only way to get the formats on-line is to add more stations to the market. Because unless that is the case some of the clients we would have in radio markets across Canada, we would simply say, "Hey, why bother specializing this much when you could actually have your cake and eat it too, play a little bit of pop, a bit of rock", it depends on the market situation. But that is one of the fundamentals.

4984 The second, on the philosophical question -- and I have been asking this myself also, because as somebody who has been in the research business, not only in the research business but actually specializing in media communications in entertainment areas, this is something that we come across all the time. There are legitimate cases to be made for each format, each musical style that you have heard, but there is one difference, I would say, from my standpoint.

4985 First of all, I would argue that pound-for-pound urban has larger numbers of people in Vancouver that would follow it compared to the other formats, notwithstanding what else might be filed.

4986 But, more importantly I think, the impact of that format would be greater, for lack of a better word, from a cultural expression standpoint because it targets the youth market.

4987 Why? Because -- and this also ties into our obsession with youth as a culture -- they create, they buy, they consume cultural products. As we get older, we have 2.4 kids and a car and a mortgage, you are not out there buying CDs. A 17 year old is -- well, increasingly less in some ways -- which makes it, in fact more difficult, or more important to open up the shelf space for that marketplace.

4988 In the 10-12 years that I have been in the business, I am getting less and less -- one the first filters we do in research is what comes to mind when you think for artists, and in the urban format also there is a systemic problem. Of the 20 artists that kids would rhyme off off the top of their heads, maybe one would be Canadian. In the rock and country and other formats that has changed over the past 10 years. It used to be Bryan Adams, and that's it and now there is a list of 10 artists that you can come up with. That is another part of the puzzle.

4989 THE CHAIRPERSON: Thank you.

4990 MR. McKINNON: If I could add something here ,I went around to kids all around the Lower Mainland and told them about this station, because I am actually very passionate about the station. I am really wanting it to go through. Everyone I talked to was extremely supportive.

4991 I got 330 letters of support for the station from all over the Lower Mainland, Surrey, Port Coquitlam, Vancouver, North Vancouver, all over, which I sent to you guys.

4992 From these letters, there were a couple of themes that we continually being revisited. Kids were listening to the KUBE, 93.3, even though it is extremely fuzzy, it is hard to hear, but simply because of the music genre they are listening to KUBE. It is also targeted towards an American audience. No Canadian content.

4993 They are fed up with listening to Z. They don't like having to listen to the bubble gum pop that is on Z just to hear one good song that they like, but they are listening to Z by default because that is pretty much the only place where they can find hip hop or rap, even though it is very rarely on.

4994 I don't know if you guys have kids, but to get a teenager to sacrifice 30 minutes of their time to think through and write a letter is extremely hard.

--- Laughter / Rires

4995 MR. McKINNON: However, I did have quite a success in this matter. A lot of kids were very passionate about it. They were very supportive of the station. They told me that if it was on they would definitely listen to it, if it were to come out. I was actually astounded by the support of the station.

4996 I just wanted to let you guys know that.

4997 THE CHAIRPERSON: Thank you very much.

4998 I don't have any questions. I just had a similar one to Commissioner Cardozo's, so a very short verification. That is -- I think Mr. Yigit perhaps can address it best -- with the XFM introduction and the repositioning of CFOX -- I know you have discussed it and I know that the spoken word format is here, but let's put it aside and talk only about music selections -- how far have they moved towards this urban format?

4999 Because you talked about KISS-FM in Toronto and I think said that it has, and I had thought that XFM for one was pretty close to that. So if I could just get a -- and I could be wrong.

5000 MR. YIGIT: X and FOX now between the two of them have covered all there is to cover in the rock area pretty well, and Z is over in the middle covering really the full range. Just to pick up on Dan's point, it is not the best station for kids, it is the least objectionable. It is more like politics, you don't choose the best leader, you choose the one that you least disagree with. Same idea.

--- Laughter / Rires

5001 MR. YIGIT: So they get --I'm sorry, maybe that's not a good --

5002 COMMISSIONER CRAM: We can't talk about that.

--- Laughter / Rires

5003 MR. YIGIT: So really you have the rock end covered and you have Z in the middle covering CHR, which is even broader than KISS in Toronto. So you can't fit in any more rock sounds there.

5004 THE CHAIRPERSON: Okay. I guess maybe what I want to make sure I understood what that XFM and the new FOX do not do -- there is no crossover of the music between this and theirs.

5005 MR. YIGIT: Virtually none.

5006 THE CHAIRPERSON: Great. Thank you.

5007 MR. McBRIDE: Commissioner, a head-to-head comparison on a playlist yielded one title in common between our proposed playlist and the XFM CFOX playlists.

5008 THE CHAIRPERSON: Okay. So you have done that since the re-launch.

5009 MR. McBRIDE: One title in common. Yes.

5010 THE CHAIRPERSON: Thank you very much.

5011 Our counsel doesn't have any questions, I don't think.

5012 Anybody? No? No? No?

5013 Thank you very much.

5014 We will be back at 9:00 tomorrow morning.

--- Whereupon the hearing adjourned at 1822, to resume

on Thursday, November 23, 2000 at 0900 / L'audience

est ajournée à 1822, pour reprendre le jeudi

23 novembre 2000 à 0900